Authorizes certain corporations with both charitable and business purposes to elect to be a non-charitable corporation

BILL NUMBER:S7762

Title of bill

An act relating to authorizing certain corporations to elect to be a non-charitable corporation

Purpose or general idea of bill

To clarify the authority of the corporation formed pursuant to Chapter 880 of the Laws of New York of 1937, TIAA Board of Overseers ("Overseers") and the corporation formed pursuant to Chapter 124 of the Laws of New York of 1952, College Retirement Equities Fund ("CREF" and, together with Overseers, the "affected corporations").

Summary of specific provisions

This bill provides that on or after July 1, 2014, TIAA Board of Overseers and College Retirement Equities Fund, New York Not-for-Profit corporations, may elect to be non-charitable corporations under the Not-for-Profit Corporation Law by providing written notice of such election to the Attorney General and certifying in such written notice that it is not exempt from federal income tax, and does not solicit or receive charitable contributions, or accept receipt of donations of assets, for charitable purposes. Such notice shall be accompanied by the approval of a justice of the supreme court, and ten days' written notice of the application for such approval shall be given to the Attorney General.

The affected corporations will be subject to the provisions of Section 513 (Administration of Assets Received for Specific Purposes) and Section 908 (Merger or Consolidation of Business and Not-for-Profit Corporations) of the Not-for-Profit Corporation Law as non-charitable corporations, provided that any merger with a business corporation shall require (a) a supreme court order approving the plan of merger or consolidation, or (b) Attorney General approval of the plan of merger or consolidation. In addition, the affected corporations shall be subject to all other provisions of Articles 1, 5, 6, 7, 8, 9 and 10 of the Not-for-Profit Corporation Law that would have been applicable to the corporations were they charitable corporations.

Justification

It has come to the attention of the state legislature that the affected corporations do not solicit or receive charitable contributions, nor accept receipt of donations of assets, for charitable purposes. Pursuant to the Non-Profit Revitalization Act, the affected corporations, which are currently Type B not-for-profit corporations, would automatically be deemed to be "charitable corporations." This characterization may create unintended consequences as neither affected corporation is structured as a charity. The bill allows the affected corporations to elect to be "non-charitable corporations" with court approval and notice to the New York Attorney General. In addition, the bill provides that the affected corporations will, after such an election, remain subject to the enumerated provisions of the Not-for-Profit Corporation Law as if they were charitable corporations, while preserving the affected corporations' ability to take certain actions that would have been permissible had such affected corporations converted to Type C

not-for-profit corporations prior to the enactment of the Non-Profit Revitalization Act.

Prior legislative history

New bill

Fiscal implications

None

Effective date

Immediately.