S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  10733

                          I N  A S S E M B L Y

                              June 18, 2012
                               ___________

Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Paulin) --
  read once and referred to the Committee on Governmental Operations

AN ACT to amend the executive law  and  the  not-for-profit  corporation
  law, in relation to compensation of executives of certain not-for-pro-
  fit corporations

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 63 of the executive law is amended by adding a  new
subdivision 14 to read as follows:
  14.  PROSECUTE  ALL  ACTIONS  IN CONNECTION WITH SECTION SEVEN HUNDRED
TWENTY-SEVEN AND SEVEN HUNDRED TWENTY-EIGHT OF THE NOT-FOR-PROFIT CORPO-
RATION LAW.
  S 2. Subparagraph 12 of paragraph (a) of section 202 of  the  not-for-
profit corporation law is amended to read as follows:
  (12)  To  elect or appoint officers, employees and other agents of the
corporation, define their duties, fix their reasonable compensation  and
the  reasonable  compensation  of  directors, and to indemnify corporate
personnel.  Such  compensation  shall  be  commensurate  with   services
performed, AND SUBJECT, WHERE APPLICABLE, TO SECTION SEVEN HUNDRED TWEN-
TY-SEVEN OF THIS CHAPTER.
  S  3.  Paragraph  (a) of section 717 of the not-for-profit corporation
law, as amended by chapter 490 of the laws of 2010, is amended  to  read
as follows:
  (a) Directors and officers shall discharge the duties of their respec-
tive  positions  in  good  faith and with the care an ordinarily prudent
person in a like position would exercise  under  similar  circumstances.
The  factors  set  forth in subparagraph one of paragraph (e) of section
552 (Standard of conduct in  managing  and  investing  an  institutional
fund),  if  relevant, must be considered by a governing board delegating
investment management of institutional funds  pursuant  to  section  514
(Delegation  of investment management).  For purposes of this paragraph,
the term institutional fund is defined  in  section  551  (Definitions).
FURTHERMORE, ANY COMPENSATION PROVIDED TO DIRECTORS, OFFICERS, EMPLOYEES

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15308-02-2
              

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AND  OTHER  AGENTS  OF  THE  CORPORATION  SHALL BE REASONABLE AND, WHERE
APPLICABLE, IS SUBJECT TO SECTION 727 (COMPENSATION OF EXECUTIVES).
  S  4.  Paragraph  (a) of section 719 of the not-for-profit corporation
law is amended by adding a new subparagraph 6 to read as follows:
  (6) THE PROVISION OF EXCESSIVE COMPENSATION  TO  DIRECTORS,  OFFICERS,
EMPLOYEES  AND  OTHER  AGENTS OF THE CORPORATION IN VIOLATION OF SECTION
727 (COMPENSATION OF EXECUTIVES), WHERE APPLICABLE.
  S 5. Paragraph (d) of section 719 of  the  not-for-profit  corporation
law is amended by adding a new subparagraph 6 to read as follows:
  (6)  UPON REIMBURSEMENT TO THE CORPORATION OF THE AMOUNT OF ANY EXCES-
SIVE COMPENSATION PROVIDED IN VIOLATION OF SECTION 727 (COMPENSATION  OF
EXECUTIVES), TO BE SUBROGATED TO THE RIGHTS OF THE CORPORATION AGAINST A
DIRECTOR,  OFFICER,  EMPLOYEE  OR OTHER AGENT WHO RECEIVED THE EXCESSIVE
COMPENSATION.
  S 6. Clauses (A) and (B) of subparagraph 1 of paragraph (a) of section
720 of the  not-for-profit  corporation  law  are  amended  to  read  as
follows:
  (A)  The  neglect  of,  [or]  THE  failure  to  perform,  or ANY other
violation of his duties in the management and disposition  of  corporate
assets committed to his charge.
  (B)  The  acquisition by himself, transfer to others, loss or waste of
corporate assets due to any neglect of, [or] THE failure to perform,  or
ANY  other  violation of his duties, INCLUDING VIOLATIONS OF SECTION 727
(COMPENSATION OF EXECUTIVES), PURSUANT TO SECTION 717 (DUTY OF DIRECTORS
AND OFFICERS).
  S 7. The not-for-profit corporation law is amended  by  adding  a  new
section 727 to read as follows:
S 727. COMPENSATION OF EXECUTIVES.
  (A)  DEFINITIONS.  FOR  THE PURPOSES OF THIS SECTION, UNLESS OTHERWISE
EXPRESSLY STATED OR CONTEXT CLEARLY REQUIRES:
  (1) "COMPENSATION" MEANS THE  AGGREGATE  VALUE  OF  ECONOMIC  BENEFITS
CONFERRED  IN EXCHANGE FOR THE PERFORMANCE OF SERVICES THAT ARE INCLUDED
FOR PURPOSES OF DETERMINING REASONABLENESS UNDER SECTION 26 U.S.C. 4958,
AS FURTHER SPECIFIED  IN  26  CFR  S53.4958-4(B)(II)(B),  OR  SUCCEEDING
PROVISIONS.
  (2)  "EXECUTIVE"  MEANS ANY PERSON WHO HAS ULTIMATE RESPONSIBILITY FOR
IMPLEMENTING THE DECISIONS OF THE GOVERNING BODY OR FOR SUPERVISING  THE
MANAGEMENT,  ADMINISTRATION, OR OPERATION OF THE ORGANIZATION, AS REFER-
ENCED IN 26 U.S.C.   S4958(F)(1)(A) AND  FURTHER  SPECIFIED  IN  26  CFR
S53.4958-3(C)(2), OR SUCCEEDING PROVISIONS.
  (3)  "FAMILY MEMBER" MEANS A SPOUSE, SIBLING (BY WHOLE OR HALF BLOOD),
SPOUSE OF A SIBLING (BY  WHOLE  OR  HALF  BLOOD),  PARENT,  GRANDPARENT,
CHILD,  GRANDCHILD, GREAT-GRANDCHILD, AND SPOUSE OF A CHILD, GRANDCHILD,
AND GREAT-GRANDCHILD.
  (B) COMPENSATION EXCHANGED BY A  NOT-FOR-PROFIT  CORPORATION  FOR  THE
PERFORMANCE  OF  SERVICES BY AN EXECUTIVE MUST BE REASONABLE CONSIDERING
FACTORS INCLUDING, BUT NOT LIMITED TO: COMPENSATION LEVELS PAID BY SIMI-
LARLY SITUATED ORGANIZATIONS, WHETHER OR NOT THEY QUALIFY AS A  NOT-FOR-
PROFIT  CORPORATION  AS DEFINED IN SECTION 102 (DEFINITIONS); THE AVAIL-
ABILITY OF SIMILAR SERVICES IN THE GEOGRAPHIC  AREA  OF  THE  APPLICABLE
PROVIDER OF SERVICES; CURRENT COMPENSATION SURVEYS COMPILED BY INDEPEND-
ENT  OUTSIDE  CONSULTANTS  OR  ENTITIES;  AND ACTUAL WRITTEN OFFERS FROM
SIMILAR INSTITUTIONS COMPETING FOR THE SERVICES OF THE APPLICABLE EXECU-
TIVE.
  (1) FOR THE PURPOSES OF THIS SECTION, WHETHER AN ORGANIZATION IS SIMI-
LARLY SITUATED SHALL BE DETERMINED BASED ON FACTORS INCLUDING,  BUT  NOT

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LIMITED TO:  GROSS ANNUAL REVENUE; GEOGRAPHIC LOCATION; AND THE DIVERSI-
TY AND COMPLEXITY OF PROGRAMS.
  (2)(A) IF A NOT-FOR-PROFIT CORPORATION RECEIVES OVER TWENTY-FIVE THOU-
SAND DOLLARS FROM THE STATE, THE NOT-FOR-PROFIT CORPORATION MUST ANNUAL-
LY SUBMIT A COMPLETED INTERNAL REVENUE SERVICE FORM 990, OR A COMPARABLE
FORM  DEVELOPED PURSUANT TO SUBCLAUSE (I) OF CLAUSE (B) OF THIS SUBPARA-
GRAPH, TO THE STATE AND FILED WITH THE ATTORNEY GENERAL.  SUCH COMPLETED
FORM OR INTERNAL REVENUE SERVICE FORM 990 SHALL  BE  PUBLICLY  AVAILABLE
UPON  REQUEST  AND  IF THE ORGANIZATION MAINTAINS A WEBSITE, IT SHALL BE
POSTED ON THE ORGANIZATION'S WEBSITE.
  (B) THE COMMISSIONERS OF DEVELOPMENTAL  DISABILITIES,  MENTAL  HEALTH,
ALCOHOLISM  AND  SUBSTANCE ABUSE SERVICES, CHILDREN AND FAMILY SERVICES,
HEALTH, CRIMINAL JUSTICE SERVICES AND THE DIRECTOR OF THE OFFICE FOR THE
AGING SHALL JOINTLY:
  (I) DEVELOP A FORM FOR USE BY THOSE  NOT-FOR-PROFIT  CORPORATIONS  WHO
ARE  NOT REQUIRED BY FEDERAL LAW TO COMPLETE AN INTERNAL REVENUE SERVICE
FORM 990. SUCH FORM SHALL REQUIRE NO MORE INFORMATION  THAN  THAT  WHICH
MUST BE SUBMITTED ON INTERNAL REVENUE SERVICE FORM 990;
  (II) PROMULGATE REGULATIONS THAT ALLOW A NOT-FOR-PROFIT CORPORATION TO
SUBMIT ONE COMPLETED INTERNAL REVENUE SERVICE FORM 990, OR ONE COMPLETED
COMPARABLE  FORM,  THROUGH  THE  POSTAL  SERVICE  OR ELECTRONICALLY, FOR
DISTRIBUTION TO ALL AGENCIES THAT PROVIDE FUNDING TO THE  NOT-FOR-PROFIT
CORPORATION; AND
  (III) ESTABLISH UNIFORM PROCEDURES FOR REVIEWING SUBMITTED FORMS; AND,
UPON A DETERMINATION THAT EXECUTIVE COMPENSATION APPEARS TO BE EXCESSIVE
IN VIOLATION OF THE STANDARDS ESTABLISHED IN THIS SECTION, FOR REFERRING
SUCH CASES TO THE ATTORNEY GENERAL FOR FURTHER INQUIRY.
  (C)  ANNUAL COMPENSATION EXCHANGED BY A NOT-FOR-PROFIT CORPORATION FOR
THE PERFORMANCE OF SERVICES BY AN EXECUTIVE SHALL BE CONSIDERED  REASON-
ABLE  IF IT DOES NOT EXCEED LEVEL I OF THE FEDERAL GOVERNMENT'S RATES OF
BASIC PAY FOR THE EXECUTIVE SCHEDULE PROMULGATED BY  THE  UNITED  STATES
OFFICE OF PERSONNEL MANAGEMENT.
  (D)  ANNUAL COMPENSATION EXCHANGED BY A NOT-FOR-PROFIT CORPORATION FOR
THE PERFORMANCE OF SERVICES BY AN EXECUTIVE THAT DOES EXCEED LEVEL I  OF
THE  FEDERAL  GOVERNMENT'S RATES OF BASIC PAY FOR THE EXECUTIVE SCHEDULE
SHALL BE PRESUMED TO BE REASONABLE IF THE FOLLOWING FOUR CONDITIONS  ARE
SATISFIED:
  (1)  THE  COMPENSATION  IS  APPROVED  IN ADVANCE BY THE GOVERNING BODY
(I.E., THE BOARD OF DIRECTORS, BOARD OF TRUSTEES, OR EQUIVALENT CONTROL-
LING BODY) OF THE NOT-FOR-PROFIT CORPORATION THAT IS  COMPOSED  ENTIRELY
OF  INDIVIDUALS  WHO  DO NOT HAVE A CONFLICT OF INTEREST WITH RESPECT TO
THE COMPENSATION ARRANGEMENT.
  (A) FOR THE PURPOSES OF DETERMINING WHETHER THE REQUIREMENTS  OF  THIS
PARAGRAPH HAVE BEEN MET WITH RESPECT TO A SPECIFIC COMPENSATION ARRANGE-
MENT,  AN  INDIVIDUAL  IS  NOT INCLUDED IN THE GOVERNING BODY WHEN IT IS
REVIEWING A TRANSACTION IF THAT INDIVIDUAL MEETS WITH OTHER MEMBERS ONLY
TO ANSWER QUESTIONS, AND OTHERWISE RECUSES HIMSELF OR HERSELF  FROM  THE
MEETING  AND IS NOT PRESENT DURING DEBATE AND VOTING ON THE COMPENSATION
ARRANGEMENT.
  (B) A MEMBER OF THE GOVERNING BODY DOES NOT HAVE A CONFLICT OF  INTER-
EST WITH RESPECT TO A COMPENSATION ARRANGEMENT ONLY IF THE MEMBER:
  (I)  IS  NOT AN EXECUTIVE PARTICIPATING IN, OR ECONOMICALLY BENEFITING
FROM, THE COMPENSATION ARRANGEMENT; AND IS NOT A FAMILY MEMBER  OF  SUCH
AN EXECUTIVE;

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  (II)  IS NOT IN AN EMPLOYMENT RELATIONSHIP SUBJECT TO THE DIRECTION OR
CONTROL OF ANY EXECUTIVE, OR THE FAMILY MEMBER OF ANY EXECUTIVE, PARTIC-
IPATING IN OR ECONOMICALLY BENEFITING FROM THE COMPENSATION ARRANGEMENT;
  (III)  DOES  NOT  RECEIVE  COMPENSATION  OR  OTHER  PAYMENT SUBJECT TO
APPROVAL BY ANY EXECUTIVE,  OR  THE  FAMILY  MEMBER  OF  ANY  EXECUTIVE,
PARTICIPATING  IN  OR  ECONOMICALLY  BENEFITING  FROM  THE  COMPENSATION
ARRANGEMENT;
  (IV) HAS NO MATERIAL FINANCIAL INTEREST AFFECTED BY  THE  COMPENSATION
ARRANGEMENT; AND
  (V)  DOES NOT APPROVE A TRANSACTION PROVIDING ECONOMIC BENEFITS TO ANY
EXECUTIVE, OR THE FAMILY MEMBER OF ANY EXECUTIVE, PARTICIPATING  IN  THE
COMPENSATION  ARRANGEMENT,  WHO  IN  TURN HAS APPROVED OR WILL APPROVE A
TRANSACTION PROVIDING ECONOMIC BENEFITS TO THE MEMBER.
  (2) THE GOVERNING BODY OBTAINED AND RELIED UPON APPROPRIATE DATA AS TO
COMPARABILITY PRIOR TO MAKING ITS DETERMINATION.
  (A) A GOVERNING BODY HAS APPROPRIATE  DATA  AS  TO  COMPARABILITY  IF,
GIVEN  THE  KNOWLEDGE  AND  EXPERTISE OF ITS MEMBERS, IT HAS INFORMATION
SUFFICIENT TO DETERMINE WHETHER  THE  COMPENSATION  ARRANGEMENT  IN  ITS
ENTIRETY IS REASONABLE. RELEVANT INFORMATION INCLUDES, BUT IS NOT LIMIT-
ED  TO:  COMPENSATION  LEVELS  PAID BY SIMILARLY SITUATED ORGANIZATIONS,
WHETHER OR NOT THEY QUALIFY AS A NOT-FOR-PROFIT CORPORATION  AS  DEFINED
IN  SECTION ONE HUNDRED TWO OF THIS CHAPTER; THE AVAILABILITY OF SIMILAR
SERVICES IN THE GEOGRAPHIC AREA OF THE APPLICABLE PROVIDER OF  SERVICES;
CURRENT  COMPENSATION  SURVEYS COMPILED BY INDEPENDENT FIRMS; AND ACTUAL
WRITTEN OFFERS FROM SIMILAR INSTITUTIONS COMPETING FOR THE  SERVICES  OF
THE APPLICABLE EXECUTIVE.
  (B)  HOWEVER,  FOR  SMALL  ORGANIZATIONS  WITH  ANNUAL  GROSS RECEIPTS
(INCLUDING CONTRIBUTIONS) OF LESS THAN  ONE  MILLION  DOLLARS  REVIEWING
COMPENSATION ARRANGEMENTS, THE GOVERNING BODY WILL BE CONSIDERED TO HAVE
APPROPRIATE DATA AS TO COMPARABILITY IF IT HAS DATA ON COMPENSATION PAID
BY  THREE COMPARABLE PROVIDERS OF SERVICES IN THE SAME OR SIMILAR COMMU-
NITIES FOR SIMILAR SERVICES.
  (I) FOR THE PURPOSES OF DETERMINING WHETHER THE ABOVE RULE  FOR  SMALL
ORGANIZATIONS  APPLIES,  AN  ORGANIZATION MAY CALCULATE ITS ANNUAL GROSS
RECEIPTS BASED ON AN AVERAGE OF ITS  GROSS  RECEIPTS  DURING  THE  THREE
PRIOR  TAXABLE  YEARS.  IF  ANY APPLICABLE NOT-FOR-PROFIT CORPORATION IS
CONTROLLED BY OR CONTROLS ANOTHER ENTITY, THE ANNUAL GROSS  RECEIPTS  OF
SUCH ORGANIZATIONS MUST BE AGGREGATED TO DETERMINE APPLICABILITY.
  (II)  FOR  PURPOSES  OF  THIS  PARAGRAPH,  CONTROL  BY  AN  APPLICABLE
NOT-FOR-PROFIT CORPORATION MEANS:
  1. IN THE CASE OF A STOCK CORPORATION, OWNERSHIP (BY VOTE OR VALUE) OF
MORE THAN FIFTY PERCENT OF THE STOCK IN SUCH CORPORATION;
  2. IN THE CASE OF A PARTNERSHIP, OWNERSHIP OF MORE THAN FIFTY  PERCENT
OF THE PROFITS INTERESTS OR CAPITAL INTERESTS IN THE PARTNERSHIP;
  3. IN THE CASE OF A NONSTOCK ORGANIZATION (I.E., AN ENTITY IN WHICH NO
PERSON HOLDS A PROPRIETARY INTEREST), THAT AT LEAST FIFTY PERCENT OF THE
DIRECTORS  OR  TRUSTEES  OF  THE  NOT-FOR-PROFIT  CORPORATION ARE EITHER
REPRESENTATIVES (INCLUDING TRUSTEES, DIRECTORS,  AGENTS,  OR  EMPLOYEES)
OF,  OR  DIRECTLY  OR INDIRECTLY CONTROLLED BY, AN APPLICABLE TAX-EXEMPT
ORGANIZATION; OR
  4. IN THE CASE OF ANY OTHER  ENTITY,  OWNERSHIP  OF  MORE  THAN  FIFTY
PERCENT OF THE BENEFICIAL INTEREST IN THE ENTITY.
  (3)  THE GOVERNING BODY ADEQUATELY DOCUMENTED THE BASIS FOR ITS DETER-
MINATION CONCURRENTLY WITH MAKING THAT DETERMINATION.
  (A) FOR A DECISION TO BE DOCUMENTED ADEQUATELY, THE WRITTEN  OR  ELEC-
TRONIC RECORDS OF THE GOVERNING BODY MUST NOTE:

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  (I)  THE  TERMS  OF THE TRANSACTION THAT WAS APPROVED, AND THE DATE IT
WAS APPROVED;
  (II)  THE MEMBERS OF THE GOVERNING BODY WHO WERE PRESENT DURING DEBATE
ON THE TRANSACTION THAT WAS APPROVED, AND THOSE WHO VOTED ON IT;
  (III) THE COMPARABILITY DATA OBTAINED AND RELIED UPON BY THE GOVERNING
BODY, AND HOW THE DATA WAS OBTAINED; AND
  (IV) ANY ACTIONS TAKEN WITH RESPECT TO  CONSIDERATION  OF  THE  TRANS-
ACTION BY ANYONE WHO IS OTHERWISE A MEMBER OF THE GOVERNING BODY BUT WHO
HAD A CONFLICT OF INTEREST WITH RESPECT TO THE TRANSACTION.
  (B)  IF THE GOVERNING BODY DETERMINES THAT REASONABLE COMPENSATION FOR
A SPECIFIC ARRANGEMENT IS HIGHER OR LOWER THAN THE RANGE OF COMPARABILI-
TY DATA OBTAINED, THE GOVERNING BODY  MUST  RECORD  THE  BASIS  FOR  ITS
DETERMINATION.  FOR  A  DECISION  TO BE DOCUMENTED CONCURRENTLY, RECORDS
MUST BE PREPARED BEFORE THE LATER OF THE NEXT MEETING OF  THE  GOVERNING
BODY  OR  SIXTY  DAYS AFTER THE FINAL ACTION OR ACTIONS OF THE GOVERNING
BODY ARE TAKEN. RECORDS MUST BE REVIEWED AND APPROVED BY  THE  GOVERNING
BODY AS REASONABLE, ACCURATE AND COMPLETE WITHIN A REASONABLE TIME PERI-
OD THEREAFTER.
  (4)  THE  COMPENSATION PROVIDED TO THE EXECUTIVE BY THE GOVERNING BODY
DOES NOT EXCEED THE HIGHEST COMPENSATION PROVIDED BY A  SIMILARLY  SITU-
ATED ORGANIZATION FOR SIMILAR SERVICES, AS IDENTIFIED IN THE COMPARABIL-
ITY DATA, BY MORE THAN TEN PERCENT.
  (E) IF THE FOUR CONDITIONS OF PARAGRAPH (D) OF THIS SECTION ARE SATIS-
FIED,  THEN  THE PERSON OR ENTITY BRINGING AN ACTION FOR RELIEF PURSUANT
TO SECTION SEVEN HUNDRED TWENTY OF THIS ARTICLE MAY REBUT  THE  PRESUMP-
TION THAT ARISES UNDER PARAGRAPH (D) OF THIS SECTION ONLY IF IT DEVELOPS
SUFFICIENT CONTRARY EVIDENCE TO REBUT THE PROBATIVE VALUE OF THE COMPAR-
ABILITY  DATA  RELIED  UPON  BY  THE GOVERNING BODY. WITH RESPECT TO ANY
FIXED PAYMENT, REBUTTAL EVIDENCE IS  LIMITED  TO  EVIDENCE  RELATING  TO
FACTS  AND CIRCUMSTANCES EXISTING ON THE DATE THE PARTIES ENTER INTO THE
CONTRACT PURSUANT TO WHICH THE PAYMENT IS MADE (EXCEPT IN THE  EVENT  OF
SUBSTANTIAL   NONPERFORMANCE).  WITH  RESPECT  TO  ALL  OTHER  PAYMENTS,
REBUTTAL EVIDENCE MAY INCLUDE FACTS AND CIRCUMSTANCES UP TO AND  INCLUD-
ING THE DATE OF PAYMENT.
  (F)  A NOT-FOR-PROFIT IS PROHIBITED FROM: (1) ENGAGING IN ANY ACT THAT
THE INTERNAL REVENUE SERVICE DETERMINES CONSTITUTES AN  "EXCESS  BENEFIT
TRANSACTION"  UNDER  SECTION  4958  OF THE INTERNAL REVENUE CODE; OR (2)
ENGAGING IN ANY ACT THAT WOULD  CONSTITUTE  AN  "EXCESS  BENEFIT  TRANS-
ACTION"  UNDER  THE  STANDARDS  OF  SECTION 4958 OF THE INTERNAL REVENUE
CODE.
  S 8. The not-for-profit corporation law is amended  by  adding  a  new
section 728 to read as follows:
S 728. WRITTEN POLICY REQUIRED.
  (A)  THE  GOVERNING  BODY OF A NOT-FOR-PROFIT CORPORATION SHALL HAVE A
WRITTEN POLICY ON:
  (1) EMPLOYEES SERVING ON SUCH GOVERNING  BODY,  THEIR  VOTING  RIGHTS,
RECUSAL  FROM DECISIONS OF THE 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;
AND
  (3) CONFLICT OF INTEREST COVERING BUSINESS INTERESTS.
  (B) EMPLOYEES OF A NOT-FOR-PROFIT CORPORATION ARE PROHIBITED FROM:
  (I) SERVING AS THE CHAIR OF SUCH ORGANIZATION'S GOVERNING BODY; AND
  (II) SERVING AS A VOTING MEMBER OF SUCH ORGANIZATION'S GOVERNING BODY.

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  (C) NO PERSON WHO IS RELATED TO ANY EXECUTIVE AS DEFINED  IN  SUBPARA-
GRAPH  TWO  OF  SUBPARAGRAPH  (A) OF SECTION 727 (COMPENSATION OF EXECU-
TIVES) OR ANY MEMBER OF A GOVERNING BODY BY BLOOD OR MARRIAGE  SHALL  BE
EMPLOYED BY SUCH ORGANIZATION, EXCEPT WITH THE APPROVAL OF TWO-THIRDS OF
THE MEMBERS OF THE GOVERNING BODY.
  (D)  ALL  WRITTEN  POLICIES  REQUIRED IN PARAGRAPH (A) OF THIS SECTION
SHALL BE AVAILABLE FOR REVIEW BY THE ATTORNEY GENERAL UPON REQUEST.
  S 9. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided, however, that the commissioners of
the offices for people with developmental disabilities,  mental  health,
alcoholism  and  substance abuse services, children and family services,
health, criminal justice services and the director of the office for the
aging shall immediately take the necessary actions to ensure that  forms
and  regulations  required  by section seven of this act are in place on
such effective date; and provided, further,  whereas  the  authority  to
promulgate  regulations  and  make  rules  is derived from an express or
implicit statutory grant provided  by  the  legislature,  all  agencies,
divisions  and  departments  of  the  state  are  hereby prohibited from
promulgating regulations and making rules pursuant to  section  8.38  of
title  9  of  the  official compilation of the New York Codes, Rules and
Regulations, or that otherwise  address  the  extent  and  nature  of  a
provider's  administrative  costs  and executive compensation, except as
required and necessary to implement the provisions  of  section  six  of
this act.