Prohibits certain employees of a not-for-profit corporation from serving on the corporation's governing board or from hiring family members

BILL NUMBER:S5310

Title of bill

An act to amend the not-for-profit corporation law, in relation to prohibiting certain employees of a not-for-profit corpo- ration from serving on the corporation's governing board or from hiring family members

Purpose

This legislation requires not-profit-corporations to have in their by-laws policies regarding employees involvement on governing boards, the hiring of family members of both employees and governing board members, and the handling of issues arising from conflicts of business interests. It also provides oversight of these by-laws by the State Attorney General.

Summary of provisions

Section 1. Amends Section 602 of the not-for-profit corporation law by adding four new paragraphs as follows:

(g) requires by-laws of a not-for-profit corporation to contain a policy on:

1. employees serving on a governing body and the percentage of the membership of the governing body that must be independent of the organ- ization

2. hiring of family members of employees and governing body members

3. Conflict of interest covering business interests

(h) Requires all by-laws in this section to be available for review by the Attorney General upon request

(i) Prohibits employees of the not-for-profit corporation from:

1. Serving as Chair of the organization's governing board

2. Serving as a voting member of the organization's governing board

(j) Prohibits any person related to any executive or member of a govern- ing body by blood or marriage shall be employed by the organization except with approval of two-thirds of the members of the governing body.

(k) These provisions do not apply to cemetery corporations formed under Article 15

Section 2:Effective date one year after it shall have become law.

Justification

This legislation is intended to close current loopholes in State law and provide a streamlined and fair system across the board for all not-for- profit corporations in New York State while also providing safeguards that can be reviewed by the Attorney General. This legislation will provide for more oversight of these boards and their actions to ensure that taxpayers funds are not misappropriated and boards are operating properly and legally.

Legislative history

2013-14: S.5315-B Rules/ No Same As

Fiscal implications

None to State.

Effective date

This act shall take effect one year after it shall have become a law.