LBD14985-08-6
A. 10365--B 2
payments, PROPERTY OR SERVICES from, the corporation or an affiliate of
the corporation [for] IF THE AMOUNT PAID BY THE CORPORATION TO THE ENTI-
TY OR RECEIVED BY THE CORPORATION FROM THE ENTITY FOR SUCH property or
services [in an amount which], in any of the last three fiscal years,
[exceeds the lesser of twenty-five thousand dollars or two percent of
such entity's consolidated gross revenues] EXCEEDED THE LESSER OF TEN
THOUSAND DOLLARS OR TWO PERCENT OF SUCH ENTITY'S CONSOLIDATED GROSS
REVENUES IF THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS LESS THAN FIVE
HUNDRED THOUSAND DOLLARS; TWENTY-FIVE THOUSAND DOLLARS IF THE ENTITY'S
CONSOLIDATED GROSS REVENUE WAS FIVE HUNDRED THOUSAND DOLLARS OR MORE BUT
LESS THAN TEN MILLION DOLLARS; ONE HUNDRED THOUSAND DOLLARS IF THE ENTI-
TY'S CONSOLIDATED GROSS REVENUE WAS TEN MILLION DOLLARS OR MORE; or (iv)
is not and does not have a relative who is a current owner, whether
wholly or partially, director, officer or employee of the corporation's
outside auditor or who has worked on the corporation's audit at any time
during the past three years. For purposes of this [subdivision,] SUBPAR-
AGRAPH, THE TERMS: "COMPENSATION" DOES NOT INCLUDE REIMBURSEMENT FOR
EXPENSES REASONABLY INCURRED AS A DIRECTOR OR REASONABLE COMPENSATION
FOR SERVICE AS A DIRECTOR AS PERMITTED BY PARAGRAPH (A) OF SECTION 202
(GENERAL AND SPECIAL POWERS) OF THIS CHAPTER; AND "payment" does not
include charitable contributions, dues or fees paid to the corporation
for services which the corporation performs as part of its nonprofit
purposes, OR PAYMENTS MADE BY THE CORPORATION AT FIXED OR NON-NEGOTIABLE
RATES OR AMOUNTS FOR SERVICES RECEIVED, provided that such services BY
AND TO THE CORPORATION are available to individual members of the public
on the same terms, AND SUCH SERVICES RECEIVED BY THE CORPORATION ARE NOT
AVAILABLE FROM ANOTHER SOURCE.
(23) "Related party" means (i) any director, officer or key [employee]
PERSON of the corporation or any affiliate of the corporation[, or any
other person who exercises the powers of directors, officers or key
employees over the affairs of the corporation or any affiliate of the
corporation]; (ii) any relative of any individual described in clause
(i) of this [subdivision] SUBPARAGRAPH; or (iii) any entity in which any
individual described in clauses (i) and (ii) of this [subdivision]
SUBPARAGRAPH has a thirty-five percent or greater ownership or benefi-
cial interest or, in the case of a partnership or professional corpo-
ration, a direct or indirect ownership interest in excess of five
percent.
(24) "Related party transaction" means any transaction, agreement or
any other arrangement in which a related party has a financial interest
and in which the corporation or any affiliate of the corporation is a
participant, EXCEPT THAT A TRANSACTION SHALL NOT BE A RELATED PARTY
TRANSACTION IF: (I) THE TRANSACTION OR THE RELATED PARTY'S FINANCIAL
INTEREST IN THE TRANSACTION IS DE MINIMIS, (II) THE TRANSACTION WOULD
NOT CUSTOMARILY BE REVIEWED BY THE BOARD OR BOARDS OF SIMILAR ORGANIZA-
TIONS IN THE ORDINARY COURSE OF BUSINESS AND IS AVAILABLE TO OTHERS ON
THE SAME OR SIMILAR TERMS, OR (III) THE TRANSACTION CONSTITUTES A BENE-
FIT PROVIDED TO A RELATED PARTY SOLELY AS A MEMBER OF A CLASS OF THE
BENEFICIARIES THAT THE CORPORATION INTENDS TO BENEFIT AS PART OF THE
ACCOMPLISHMENT OF ITS MISSION WHICH BENEFIT IS AVAILABLE TO ALL SIMILAR-
LY SITUATED MEMBERS OF THE SAME CLASS ON THE SAME TERMS.
(25) "Key [employee] PERSON" means any person [who is in a position to
exercise substantial influence over the affairs of the corporation, as
referenced in 26 U.S.C. S 4958(f)(1)(A) and further specified in 26 CFR
S 53.4958-3(c), (d) and (e), or succeeding provisions to the extent such
provisions are applicable], OTHER THAN A DIRECTOR OR OFFICER, WHETHER OR
A. 10365--B 3
NOT AN EMPLOYEE OF THE CORPORATION, WHO (I) HAS RESPONSIBILITIES, OR
EXERCISES POWERS OR INFLUENCE OVER THE CORPORATION AS A WHOLE SIMILAR TO
THE RESPONSIBILITIES, POWERS, OR INFLUENCE OF DIRECTORS AND OFFICERS;
(II) MANAGES THE CORPORATION, OR A SEGMENT OF THE CORPORATION THAT
REPRESENTS A SUBSTANTIAL PORTION OF THE ACTIVITIES, ASSETS, INCOME OR
EXPENSES OF THE CORPORATION; OR (III) ALONE OR WITH OTHERS CONTROLS OR
DETERMINES A SUBSTANTIAL PORTION OF THE CORPORATION'S CAPITAL EXPENDI-
TURES OR OPERATING BUDGET.
S 2. Section 114 of the not-for-profit corporation law, as amended by
chapter 549 of the laws of 2013, is amended to read as follows:
S 114. Visitation of supreme court.
Charitable corporations, whether formed under general or special laws,
with their books and vouchers, shall be subject to the visitation and
inspection of a justice of the supreme court, or of any person appointed
by the court for that purpose. If it appears by the verified petition of
a member, director, officer or creditor of any such corporation, that
it, or its directors, officers, members, key [employees] PERSONS or
agents, have misappropriated any of the funds or property of the corpo-
ration, or diverted them from the purpose of its incorporation, or that
the corporation has acquired property in excess of the amount which it
is authorized by law to hold, or has engaged in any business other than
that stated in its certificate of incorporation, the court may order
that notice of at least eight days, with a copy of the petition, be
served on the corporation, the attorney general and the persons charged
with misconduct, requiring them to show cause at a time and place speci-
fied, why they should not be required to make and file an inventory and
account of the property, effects and liabilities of such corporation
with a detailed statement of its transactions during the twelve months
next preceding the granting of such order. On the hearing of such appli-
cation, the court may make an order requiring such inventory, account
and statement to be filed, and proceed to take and state an account of
the property and liabilities of the corporation, or may appoint a refer-
ee for that purpose. When such account is taken and stated, after hear-
ing all the parties to the application, the court may enter a final
order determining the amount of property so held by the corporation, its
annual income, whether any of the property or funds of the corporation
have been misappropriated or diverted to any other purpose than that for
which such corporation was incorporated, and whether such corporation
has been engaged in any activity not covered by its certificate of
incorporation. An appeal may be taken from the order by any party
aggrieved to the appellate division of the supreme court, and to the
court of appeals, as in a civil action. No corporation shall be required
to make and file more than one inventory and account in any one year,
nor to make a second account and inventory, while proceedings are pend-
ing for the statement of an account under this section.
S 3. Section 309 of the not-for-profit corporation law, as added by
chapter 549 of the laws of 2013, is amended to read as follows:
S 309. Personal jurisdiction and service of process on non-domiciliary
resident director, officer, key [employee] PERSON or agent.
A person, by becoming a director, officer, key [employee] PERSON or
agent of a corporation is subject to the personal jurisdiction of the
supreme court of the state of New York, and in an action or proceeding
by the attorney general under this chapter process may be served upon
such person as provided in section three hundred thirteen of the civil
practice law and rules.
A. 10365--B 4
S 4. Paragraphs (a) and (e) of section 712 of the not-for-profit
corporation law, paragraph (a) as amended by chapter 549 of the laws of
2013 and paragraph (e) as amended by chapter 555 of the laws of 2015,
are amended to read as follows:
(a) [If the] THE certificate of incorporation [or the], THE by-laws
[so provide], OR the board[, by resolution adopted by a majority of the
entire board, may designate from among its members an executive commit-
tee and other committees] MAY CREATE COMMITTEES OF THE BOARD, each
consisting of three or more directors[, and each of which, to the extent
provided in the resolution or in the certificate of incorporation or
by-laws, shall have all the authority of the board]. THE BOARD SHALL
APPOINT THE MEMBERS OF SUCH COMMITTEE OF THE BOARD, EXCEPT THAT IN THE
CASE OF ANY EXECUTIVE COMMITTEE OR SIMILAR COMMITTEE HOWEVER DENOMI-
NATED, THE APPOINTMENT SHALL BE MADE BY A MAJORITY OF THE ENTIRE BOARD,
PROVIDED THAT IN THE CASE OF A BOARD OF THIRTY MEMBERS OR MORE, THE
APPOINTMENT SHALL BE MADE BY AT LEAST THREE-QUARTERS OF THE DIRECTORS
PRESENT AT THE TIME OF THE VOTE, IF A QUORUM IS PRESENT AT THAT TIME. IN
ADDITION, THE BY-LAWS MAY PROVIDE THAT DIRECTORS WHO ARE THE HOLDERS OF
CERTAIN POSITIONS IN THE CORPORATION SHALL BE EX-OFFICIO MEMBERS OF
SPECIFIC COMMITTEES. EACH SUCH COMMITTEE SHALL HAVE THE AUTHORITY OF THE
BOARD TO THE EXTENT PROVIDED IN A BOARD RESOLUTION OR IN THE CERTIFICATE
OF INCORPORATION OR BY-LAWS, except that no [such] committee OF ANY KIND
shall have authority as to the following matters:
(1) The submission to members of any action requiring members'
approval under this chapter.
(2) The filling of vacancies in the board of directors or in any
committee.
(3) The fixing of compensation of the directors for serving on the
board or on any committee.
(4) The amendment or repeal of the by-laws or the adoption of new
by-laws.
(5) The amendment or repeal of any resolution of the board which by
its terms shall not be so amendable or repealable.
(6) THE ELECTION OR REMOVAL OF OFFICERS AND DIRECTORS.
(7) THE APPROVAL OF A MERGER OR PLAN OF DISSOLUTION.
(8) THE ADOPTION OF A RESOLUTION RECOMMENDING TO THE MEMBERS ACTION ON
THE SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY
ALL THE ASSETS OF A CORPORATION OR, IF THERE ARE NO MEMBERS ENTITLED TO
VOTE, THE AUTHORIZATION OF SUCH TRANSACTION.
(9) THE APPROVAL OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION.
(e) Committees, other than committees of the board, whether created by
the board or by the members, shall be committees of the corporation. No
such committee shall have the authority to bind the board. [Provisions
of this chapter applicable to officers generally shall apply to members
of such committees.] Members of such committees of the corporation, who
may be non-directors, shall be elected or appointed in the manner set
forth in the by-laws, or if not set forth in the by-laws, in the same
manner as officers of the corporation.
S 5. Paragraph (c) of section 712-a of the not-for-profit corporation
law is REPEALED.
S 6. Paragraph (f) of section 713 of the not-for-profit corporation
law, as added by chapter 549 of the laws of 2013, is amended to read as
follows:
(f) No employee of the corporation shall serve as chair of the board
or hold any other title with similar responsibilities, UNLESS THE BOARD
APPROVES SUCH EMPLOYEE SERVING AS CHAIR OF THE BOARD BY A TWO-THIRDS
A. 10365--B 5
VOTE OF THE ENTIRE BOARD AND CONTEMPORANEOUSLY DOCUMENTS IN WRITING THE
BASIS FOR THE BOARD APPROVAL; PROVIDED, HOWEVER, THAT NO SUCH EMPLOYEE
SHALL BE CONSIDERED AN INDEPENDENT DIRECTOR FOR THE PURPOSES OF THIS
CHAPTER.
S 7. Paragraph (a) of section 715 of the not-for-profit corporation
law, as amended by chapter 549 of the laws of 2013, is amended and two
new paragraphs (i) and (j) are added to read as follows:
(a) No corporation shall enter into any related party transaction
unless the transaction is determined by the board, OR AN AUTHORIZED
COMMITTEE THEREOF, to be fair, reasonable and in the corporation's best
interest at the time of such determination. Any director, officer or key
[employee] PERSON who has an interest in a related party transaction
shall disclose in good faith to the board, or an authorized committee
thereof, the material facts concerning such interest.
(I) IN AN ACTION BY ANY PERSON OR ENTITY OTHER THAN THE ATTORNEY
GENERAL, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS
OF THIS SECTION THAT A TRANSACTION WAS FAIR, REASONABLE AND IN THE
CORPORATION'S BEST INTEREST AT THE TIME THE CORPORATION APPROVED THE
TRANSACTION.
(J) IN AN ACTION BY THE ATTORNEY GENERAL WITH RESPECT TO A RELATED
PARTY TRANSACTION NOT APPROVED IN ACCORDANCE WITH PARAGRAPHS (A) OR (B)
OF THIS SECTION AT THE TIME IT WAS ENTERED INTO, WHICHEVER IS APPLICA-
BLE, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS OF
THIS SECTION THAT (1) THE TRANSACTION WAS FAIR, REASONABLE AND IN THE
CORPORATION'S BEST INTEREST AT THE TIME THE CORPORATION APPROVED THE
TRANSACTION AND (2) PRIOR TO RECEIPT OF ANY REQUEST FOR INFORMATION BY
THE ATTORNEY GENERAL REGARDING THE TRANSACTION, THE BOARD HAS: (A) RATI-
FIED THE TRANSACTION BY FINDING IN GOOD FAITH THAT IT WAS FAIR, REASON-
ABLE AND IN THE CORPORATION'S BEST INTEREST AT THE TIME THE CORPORATION
APPROVED THE TRANSACTION; AND, WITH RESPECT TO ANY RELATED PARTY TRANS-
ACTION INVOLVING A CHARITABLE CORPORATION AND IN WHICH A RELATED PARTY
HAS A SUBSTANTIAL FINANCIAL INTEREST, CONSIDERED ALTERNATIVE TRANS-
ACTIONS TO THE EXTENT AVAILABLE, APPROVING THE TRANSACTION BY NOT LESS
THAN A MAJORITY VOTE OF THE DIRECTORS OR COMMITTEE MEMBERS PRESENT AT
THE MEETING; (B) DOCUMENTED IN WRITING THE NATURE OF THE VIOLATION AND
THE BASIS FOR THE BOARD'S OR COMMITTEE'S RATIFICATION OF THE TRANS-
ACTION; AND (C) PUT INTO PLACE PROCEDURES TO ENSURE THAT THE CORPORATION
COMPLIES WITH PARAGRAPHS (A) AND (B) OF THIS SECTION AS TO RELATED PARTY
TRANSACTIONS IN THE FUTURE.
S 8. Paragraph (a) of section 715-a of the not-for-profit corporation
law, as added by chapter 549 of the laws of 2013, is amended to read as
follows:
(a) Except as provided in paragraph (d) of this section, [every corpo-
ration] THE BOARD shall adopt, AND OVERSEE THE IMPLEMENTATION OF, AND
COMPLIANCE WITH, a conflict of interest policy to ensure that its direc-
tors, officers and key [employees] PERSONS act in the corporation's best
interest and comply with applicable legal requirements, including but
not limited to the requirements set forth in section seven hundred
fifteen of this article.
S 9. Subparagraph 2 of paragraph (b) of section 715-a of the not-for-
profit corporation law, as added by chapter 549 of the laws of 2013, is
amended to read as follows:
(2) procedures for disclosing a conflict of interest [to the audit
committee or, if there is no audit committee,] OR POSSIBLE CONFLICT OF
INTEREST to the board OR TO A COMMITTEE OF THE BOARD, AND PROCEDURES FOR
THE BOARD OR COMMITTEE TO DETERMINE WHETHER A CONFLICT EXISTS;
A. 10365--B 6
S 10. Paragraph (a) of section 715-b of the not-for-profit corporation
law, as added by chapter 549 of the laws of 2013, is amended to read as
follows:
(a) Except as provided in paragraph (c) of this section, THE BOARD OF
every corporation that has twenty or more employees and in the prior
fiscal year had annual revenue in excess of one million dollars shall
adopt, AND OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE WITH, a whist-
leblower policy to protect from retaliation persons who report suspected
improper conduct. Such policy shall provide that no director, officer,
employee or volunteer of a corporation who in good faith reports any
action or suspected action taken by or within the corporation that is
illegal, fraudulent or in violation of any adopted policy of the corpo-
ration shall suffer intimidation, harassment, discrimination or other
retaliation or, in the case of employees, adverse employment conse-
quence.
S 11. Subparagraphs 2 and 3 of paragraph (b) of section 715-b of the
not-for-profit corporation law, subparagraph 2 as added by chapter 549
of the laws of 2013 and subparagraph 3 as amended by chapter 555 of the
laws of 2015, are amended to read as follows:
(2) A requirement that an employee, officer or director of the corpo-
ration be designated to administer the whistleblower policy and to
report to [the audit committee or other committee of independent direc-
tors or, if there are no such committees, to] the board OR AN AUTHORIZED
COMMITTEE THEREOF, EXCEPT THAT DIRECTORS WHO ARE EMPLOYEES MAY NOT
PARTICIPATE IN ANY BOARD OR COMMITTEE DELIBERATIONS OR VOTING RELATING
TO ADMINISTRATION OF THE WHISTLEBLOWER POLICY; [and]
(3) A REQUIREMENT THAT THE PERSON WHO IS THE SUBJECT OF A WHISTLEBLOW-
ER COMPLAINT NOT BE PRESENT AT OR PARTICIPATE IN BOARD OR COMMITTEE
DELIBERATIONS OR VOTE ON THE MATTER RELATING TO SUCH COMPLAINT, PROVIDED
THAT NOTHING IN THIS SUBPARAGRAPH SHALL PROHIBIT THE BOARD OR COMMITTEE
FROM REQUESTING THAT THE PERSON WHO IS SUBJECT TO THE COMPLAINT PRESENT
INFORMATION AS BACKGROUND OR ANSWER QUESTIONS AT A COMMITTEE OR BOARD
MEETING PRIOR TO THE COMMENCEMENT OF DELIBERATIONS OR VOTING RELATING
THERETO; AND
(4) A requirement that a copy of the policy be distributed to all
directors, officers, employees and to volunteers who provide substantial
services to the corporation. For purposes of this subdivision, posting
the policy on the corporation's website or at the corporation's offices
in a conspicuous location accessible to employees and volunteers are
among the methods a corporation may use to satisfy the distribution
requirement.
S 12. The section heading and paragraph (a) of section 720 of the
not-for-profit corporation law, as amended by chapter 549 of the laws of
2013, are amended to read as follows:
Actions against directors, officers and key [employees] PERSONS.
(a) An action may be brought against one or more directors, officers,
or key [employees] PERSONS of a corporation to procure a judgment for
the following relief:
S 13. Subparagraphs 3, 6, 7 and 8 of paragraph (a) of section 8-1.9 of
the estates, powers and trusts law, subparagraphs 3, 6 and 7 as amended
by chapter 555 of the laws of 2015 and subparagraph 8 as added by chap-
ter 549 of the laws of 2013, are amended to read as follows:
(3) "Key [employee] PERSON" means any person OTHER THAN A TRUSTEE,
WHETHER OR NOT AN EMPLOYEE, who [is in a position to exercise substan-
tial influence over the affairs of the trust, as referenced in 26 U.S.C.
section 4958(f)(1)(A) and further specified in 26 C.F.R. section
A. 10365--B 7
53.4958-3(c), (d) and (e), or succeeding provisions to the extent such
provisions are applicable] (I) HAS RESPONSIBILITIES, OR EXERCISES POWERS
OF INFLUENCE OVER THE TRUST AS A WHOLE SIMILAR TO THE RESPONSIBILITIES,
POWERS, OR INFLUENCE OF TRUSTEES AND OFFICERS; (II) MANAGES THE TRUST,
OR A SEGMENT OF THE TRUST THAT REPRESENTS A SUBSTANTIAL PORTION OF THE
ACTIVITIES, ASSETS, INCOME OR EXPENSES OF THE TRUST; OR (III) ALONE OR
WITH OTHERS CONTROLS OR DETERMINES A SUBSTANTIAL PORTION OF THE TRUST'S
CAPITAL EXPENDITURES OR OPERATING BUDGET.
(6) "Related party" means (i) any trustee or key [employee] PERSON of
the trust or any affiliate of the trust [or any other person who exer-
cises the powers of a trustee or key employee over the affairs of the
trust or any affiliate of the trust]; (ii) any relative of any individ-
ual described in clause (i) of this [subdivision] SUBPARAGRAPH; or (iii)
an entity in which any individual described in clauses (i) and (ii) of
this [subdivision] SUBPARAGRAPH has a thirty-five percent or greater
ownership or beneficial interest or, in the case of a partnership or
professional corporation, a direct ownership interest in excess of five
percent.
(7) "Independent trustee" means a trustee who: (i) is not, and has not
been within the last three years, an employee of the trust or an affil-
iate of the trust, and does not have a relative who is, or has been
within the last three years, a key [employee] PERSON of the trust or an
affiliate of the trust; (ii) has not received, and does not have a rela-
tive who has received, in any of the last three fiscal years, more than
ten thousand dollars in direct compensation from the trust or an affil-
iate of the trust [(other than reimbursement for expenses or the payment
of trustee commissions or reasonable compensation as permitted by law
and the governing instrument)]; (iii) is not a current employee of or
does not have a substantial financial interest in, and does not have a
relative who is a current officer of or have a substantial financial
interest in, any entity that has [made payments] PROVIDED PAYMENTS,
PROPERTY OR SERVICES to, or received payments, PROPERTY OR SERVICES
from, the trust or an affiliate of the trust [for] IF THE AMOUNT PAID BY
THE TRUST TO THE ENTITY OR RECEIVED BY THE TRUST FROM THE ENTITY FOR
SUCH property or services [in an amount which], in any of the last three
fiscal years, [exceeds the lesser of twenty-five thousand dollars or two
percent of such entity's consolidated gross revenues] EXCEEDED THE LESS-
ER OF TEN THOUSAND DOLLARS OR TWO PERCENT OF SUCH ENTITY'S CONSOLIDATED
GROSS REVENUE IF THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS LESS THAN
FIVE HUNDRED THOUSAND DOLLARS; TWENTY-FIVE THOUSAND DOLLARS IF THE ENTI-
TY'S CONSOLIDATED GROSS REVENUE WAS FIVE HUNDRED THOUSAND DOLLARS OR
MORE BUT LESS THAN TEN MILLION DOLLARS; ONE HUNDRED THOUSAND DOLLARS IF
THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS TEN MILLION DOLLARS OR MORE;
or (iv) is not and does not have a relative who is a current owner,
whether wholly or partially, director, officer or employee of the
trust's outside auditor or who has worked on the trust's audit at any
time during the past three years. For purposes of this [subdivision,]
SUBPARAGRAPH, THE TERMS: "COMPENSATION" DOES NOT INCLUDE REIMBURSEMENT
FOR EXPENSES OR THE PAYMENT OF TRUSTEE COMMISSIONS OR REASONABLE COMPEN-
SATION AS PERMITTED BY LAW AND THE GOVERNING INSTRUMENT; AND "payment"
does not include charitable contributions, dues or fees paid to the
trust for services which the trust performs as part of its nonprofit
purposes, OR PAYMENTS MADE BY THE TRUST AT FIXED OR NON-NEGOTIABLE RATES
OR AMOUNTS FOR SERVICES RECEIVED, PROVIDED THAT SUCH SERVICES BY AND TO
THE TRUST ARE AVAILABLE TO INDIVIDUAL MEMBERS OF THE PUBLIC ON THE SAME
A. 10365--B 8
TERMS, AND SUCH SERVICES PROVIDED TO THE TRUST ARE NOT AVAILABLE FROM
ANOTHER SOURCE.
(8) "Related party transaction" means any transaction, agreement or
any other arrangement in which a related party has a financial interest
and in which the trust or any affiliate of the trust is a participant,
EXCEPT THAT A TRANSACTION SHALL NOT BE A RELATED PARTY TRANSACTION IF:
(I) THE TRANSACTION OR THE RELATED PARTY'S FINANCIAL INTEREST IN THE
TRANSACTION IS DE MINIMIS, (II) THE TRANSACTION WOULD NOT CUSTOMARILY BE
REVIEWED BY THE BOARD, OR BOARDS OF SIMILAR ORGANIZATIONS, IN THE ORDI-
NARY COURSE OF BUSINESS AND IS AVAILABLE TO OTHERS ON THE SAME OR SIMI-
LAR TERMS, OR (III) THE TRANSACTION CONSTITUTES A BENEFIT PROVIDED TO A
RELATED PARTY SOLELY AS A MEMBER OF A CLASS OF THE BENEFICIARIES THAT
THE TRUST INTENDS TO BENEFIT AS PART OF THE ACCOMPLISHMENT OF ITS
MISSION WHICH BENEFIT IS AVAILABLE TO ALL SIMILARLY SITUATED MEMBERS OF
THE SAME CLASS ON THE SAME TERMS.
S 14. Subparagraph 3 of paragraph (b) of section 8-1.9 of the estates,
powers and trusts law is REPEALED.
S 15. Subparagraph 1 of paragraph (c) of section 8-1.9 of the estates,
powers and trusts law, as added by chapter 549 of the laws of 2013, is
amended and two new subparagraphs 7 and 8 are added to read as follows:
(1) Notwithstanding any provision of the trust instrument to the
contrary, no trust shall enter into any related party transaction unless
the transaction is determined by the trustees, OR AN AUTHORIZED COMMIT-
TEE THEREOF, to be fair, reasonable and in the trust's best interest at
the time of such determination. Any trustee, officer or key employee who
has an interest in a related party transaction shall disclose in good
faith to the trustees, or an authorized committee thereof, the material
facts concerning such interest.
(7) IN AN ACTION BY ANY PERSON OR ENTITY OTHER THAN THE ATTORNEY
GENERAL, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS
OF THIS PARAGRAPH THAT A TRANSACTION WAS FAIR, REASONABLE AND IN THE
TRUST'S BEST INTEREST AT THE TIME THE TRUST APPROVED THE TRANSACTION.
(8) IN AN ACTION BY THE ATTORNEY GENERAL WITH RESPECT TO A RELATED
PARTY TRANSACTION NOT APPROVED IN ACCORDANCE WITH SUBPARAGRAPH ONE OR
TWO OF THIS PARAGRAPH AT THE TIME IT WAS ENTERED INTO, WHICHEVER IS
APPLICABLE, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY
PROVISIONS OF THIS PARAGRAPH THAT (I) THE TRANSACTION WAS FAIR, REASON-
ABLE AND IN THE TRUST'S BEST INTEREST AT THE TIME THE TRUST APPROVED THE
TRANSACTION AND (II) PRIOR TO RECEIPT OF ANY REQUEST FOR INFORMATION BY
THE ATTORNEY GENERAL REGARDING THE TRANSACTION, THE TRUSTEES HAVE: (A)
RATIFIED THE TRANSACTION BY FINDING IN GOOD FAITH THAT IT WAS FAIR,
REASONABLE AND IN THE TRUST'S BEST INTEREST AT THE TIME THE TRUSTEE
APPROVED THE TRANSACTION; AND, WITH RESPECT TO ANY RELATED PARTY TRANS-
ACTION INVOLVING A CHARITABLE CORPORATION AND IN WHICH A RELATED PARTY
HAS A SUBSTANTIAL FINANCIAL INTEREST, CONSIDERED ALTERNATIVE TRANS-
ACTIONS TO THE EXTENT AVAILABLE, APPROVING THE TRANSACTION BY NOT LESS
THAN A MAJORITY VOTE OF THE TRUSTEES OR COMMITTEE MEMBERS PRESENT AT THE
MEETING; (B) DOCUMENTED IN WRITING THE NATURE OF THE VIOLATION AND THE
BASIS FOR THE TRUSTEES' OR COMMITTEE'S RATIFICATION OF THE TRANSACTION;
AND (C) PUT INTO PLACE PROCEDURES TO ENSURE THAT THE TRUSTEE COMPLIES
WITH SUBPARAGRAPHS ONE AND TWO OF THIS PARAGRAPH AS TO RELATED PARTY
TRANSACTIONS IN THE FUTURE.
S 16. Subparagraph 1 of paragraph (d) of section 8-1.9 of the estates,
powers and trusts law, as added by chapter 549 of the laws of 2013, is
amended to read as follows:
A. 10365--B 9
(1) Except as provided in subparagraph four of this paragraph, every
trust shall adopt, AND OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE
WITH, a conflict of interest policy to ensure that its trustees, offi-
cers and key [employees] PERSONS act in the best interest of the trust
and its beneficiaries and comply with applicable legal requirements,
including but not limited to the requirements set forth in this para-
graph.
S 17. Clause (B) of subparagraph 2 of paragraph (d) of section 8-1.9
of the estates, powers and trusts law, as added by chapter 549 of the
laws of 2013, is amended to read as follows:
(B) procedures for disclosing a conflict of interest [to the audit
committee or, if there is no audit committee,] OR POSSIBLE CONFLICT OF
INTEREST to the trustees OR TO A COMMITTEE OF THE TRUSTEES, AND PROCE-
DURES FOR THE TRUSTEES OR COMMITTEE TO DETERMINE WHETHER A CONFLICT
EXISTS;
S 18. Subparagraph 1 of paragraph (e) of section 8-1.9 of the estates,
powers and trusts law, as added by chapter 549 of the laws of 2013, is
amended to read as follows:
(1) Except as provided in subparagraph three of this paragraph, THE
TRUSTEES OF every trust that has twenty or more employees and in the
prior fiscal year had annual revenue in excess of one million dollars
shall adopt, AND OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE WITH, a
whistleblower policy to protect from retaliation persons who report
suspected improper conduct. Such policy shall provide that no officer,
trustee, employee or volunteer of a trust who in good faith reports any
action or suspected action taken by or within the trust that is illegal,
fraudulent or in violation of any adopted policy of the trust shall
suffer intimidation, harassment, discrimination or other retaliation or,
in the case of employees, adverse employment consequence.
S 19. Clauses (B) and (C) of subparagraph 2 of paragraph (e) of
section 8-1.9 of the estates, powers and trusts law, clause (B) as added
by chapter 549 of the laws of 2013 and clause (C) as amended by chapter
555 of the laws of 2015, are amended to read as follows:
(B) A requirement that a trustee, officer or employee of the trust be
designated to administer, the whistleblower policy and to report to [the
audit committee or other committee of independent trustees, or to] the
trustees OR AN AUTHORIZED COMMITTEE THEREOF, EXCEPT THAT TRUSTEES WHO
ARE EMPLOYEES MAY NOT PARTICIPATE IN ANY BOARD OR COMMITTEE DELIBER-
ATIONS OR VOTING RELATING TO ADMINISTRATION OF THE WHISTLEBLOWER POLICY;
[and]
(C) A REQUIREMENT THAT THE PERSON WHO IS THE SUBJECT OF A WHISTLEBLOW-
ER COMPLAINT NOT BE PRESENT AT OR PARTICIPATE IN BOARD OR COMMITTEE
DELIBERATION OR VOTE ON THE MATTER RELATING TO SUCH COMPLAINT, PROVIDED
THAT NOTHING IN THIS SUBPARAGRAPH SHALL PROHIBIT THE BOARD OR COMMITTEE
FROM REQUESTING THAT THE PERSON WHO IS SUBJECT TO THE COMPLAINT PRESENT
INFORMATION AS BACKGROUND OR ANSWER QUESTIONS AT A COMMITTEE OR BOARD
MEETING PRIOR TO THE COMMENCEMENT OF DELIBERATIONS OR VOTING RELATING
THERETO; AND
(D) A requirement that a copy of the policy be distributed to all
trustees, officers, employees and volunteers, with instructions on how
to comply with the procedures set forth in the policy. For purposes of
this subdivision, posting the policy on the corporation's website or at
the corporation's offices in a conspicuous location accessible to
employees and volunteers are among the methods a corporation may use to
satisfy the distribution requirement.
A. 10365--B 10
S 20. Severability. If any clause, sentence, paragraph, section or
part of this act shall be adjudged by any court of competent jurisdic-
tion to be invalid, the judgment shall not affect, impair, or invalidate
the remainder thereof, but shall be confined in its operation to the
clause, sentence, paragraph, section or part thereof directly involved
in the controversy in which the judgement shall have been rendered.
S 21. This act shall take effect on the one hundred eightieth day
after it shall have become a law; provided, however, that the amendments
to paragraph (f) of section 713 of the not-for-profit corporation law
made by section six of this act shall take effect on the same date and
in the same manner as section 132 of chapter 549 of the laws of 2013, as
amended, takes effect.