Exempts clergymen from certain provisions of the not-for-profit corporation law

BILL NUMBER:S5654

Title of bill

An act to amend the religious corporations law, in relation to exempting clergymen from certain provisions of the not-for-profit corporation law

Purpose or general idea of bill

To provide an exception for clergyman to the prohibition on not-for-profit employees serving as chairperson of the board of directors of the corporation and for related party transactions

Summary of specific provisions

Section one amends paragraph (c) of subdivision 1 of section 2-b of the religious corporations law, as amended by chapter 549 of the laws of 2013, to add paragraphs (b) and (c) of section five hundred fifty-five and paragraph (f) of section seven hundred thirteen of the not-for-profit corporations law, as exclusions under the religious corporations law. Adds that clergyman are not to be deemed a related party for related party transactions

Section two of the bill establishes the effective date.

Justification

Paragraph (f) of section 713 of the Not-For-Profit Law was added in the Not-For-Profit Revitalization Act of 2013 and will become effective on January 1, 2016.

The intent of paragraph (f) was to prevent employees of a not-for-profit corporation from serving as chair of the not-for-profit's board of directors. Some not-for-profit corporations, particularly religious organizations, have a governance structure where the chair is an employee of the corporation and this prohibition would be an undue hardship.

This bill, would further exempt religious corporations from these onerous provisions.

Prior legislative history

This is a new bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.