NY State Senate Bill 2017-S8637A

Senate Bill S8637A

2017-2018 Legislative Session

Relates to audit committee membership and voting requirements of the board of certain corporations

download bill text pdf

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 11, 2018	print number 8637a
Jun 11, 2018	amend and recommit to corporations, authorities and commissions
May 10, 2018	referred to corporations, authorities and commissions

Bill Amendments

Original

A (Active)

2017-S8637 - Details

See Assembly Version of this Bill:: A10304
Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Not-for-Profit Corporation Law
Laws Affected:: Amd §§902 & 1002, N-PC L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S1897, S7361, A222
2021-2022: S3265, A213

2017-S8637 - Summary

Relates to requiring a two-thirds vote of the board in certain circumstances.

2017-S8637 - Sponsor Memo

                                
 
BILL NUMBER: S8637

SPONSOR: GALLIVAN
 
TITLE OF BILL:

An act to amend the not-for-profit corporation law, in relation to
voting requirements of the board of certain corporations

 
PURPOSE:

To require a two-thirds majority vote of a corporation's entire board
for a consolidation, merger or dissolution.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one of the bill amends the opening paragraph of paragraph a of
section 902 of the not-for-profit corporation law to require that the
board of a corporation proposing to participate in a merger or consol-
idation shall adopt, by a vote of two-thirds of the entire board of each
corporation, or by a vote of the number of directors required under the
certificate of incorporation, by-laws, this chapter, and any other

applicable law, a plan of merger or consolidation.

Section two amends subparagraph 1 of paragraph a of section 1002 of the
not-for-profit corporation law to require a vote by two-thirds of the
entire board of a corporation in order to dissolve the corporation.

Section three provides the effective date.

 
JUSTIFICATION:

This bill will amend the Not-for-Profit Corporation Law (NPCL) in
relation to corporate consolidation, merger or dissolution.  Currently,
the NPCL allows boards to authorize such actions by a simple majority of
a quorum of the board, whereas the law requires a higher standard for
other corporate action. For example, to change the number of directors,
the vote of a majority of the entire board is required; to elect an
officer or to purchase or sell real property on behalf of the corpo-
ration, a two-thirds majority vote of the entire board is needed. Since
the decision to merge, consolidate, or dissolve is arguably the most
important decision that a corporation can make, this bill will amend the
NPCL to require a vote in favor of such action by two-thirds of the
corporation's entire board, or alternatively, by a vote of the number of
directors required under the corporation's certificate of incorporation,
its by-laws, this chapter, and any other applicable law.

 
PRIOR LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
On the ninetieth day after it shall have become a law.

2017-S8637 - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8637
 
                             I N  S E N A T E
 
                               May 10, 2018
                                ___________
 
 Introduced  by Sen. GALLIVAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN  ACT  to  amend  the  not-for-profit  corporation law, in relation to
   voting requirements of the board of certain corporations
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  opening paragraph of paragraph (a) of section 902 of
 the not-for-profit corporation law is amended to read as follows:
   The board of each corporation proposing to participate in a merger  or
 consolidation under section 901 (Power of merger or consolidation) shall
 adopt,  BY A VOTE OF TWO-THIRDS OF THE ENTIRE BOARD OF EACH CORPORATION,
 OR BY A VOTE OF THE NUMBER OF DIRECTORS REQUIRED UNDER  THE  CERTIFICATE
 OF  INCORPORATION, BY-LAWS, THIS CHAPTER AND ANY OTHER APPLICABLE LAW, a
 plan of merger or consolidation, setting forth:
   § 2. Subparagraph 1 of paragraph (a) of section 1002 of  the  not-for-
 profit  corporation  law, as amended by chapter 549 of the laws of 2013,
 is amended to read as follows:
   (1) In the case of a vote by the board of directors: (i) the number of
 directors required under the certificate of incorporation, by-laws, this
 chapter and any other applicable law; [or]
   (ii) TWO-THIRDS OF THE ENTIRE BOARD OF THE CORPORATION; OR
   (III) if the number of directors actually holding office  as  such  at
 the  time of the vote to adopt the plan is less than the number required
 to constitute a quorum of directors under the  certificate  of  incorpo-
 ration,  the  by-laws,  this  chapter  or  any other applicable law, the
 remaining directors unanimously;
   § 3. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.
 
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD15253-04-8

2017-S8637A (ACTIVE) - Details

See Assembly Version of this Bill:: A10304
Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Not-for-Profit Corporation Law
Laws Affected:: Amd §§902 & 1002, N-PC L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S1897, S7361, A222
2021-2022: S3265, A213

2017-S8637A (ACTIVE) - Summary

Relates to requiring a two-thirds vote of the board in certain circumstances.

2017-S8637A (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S8637A

SPONSOR: GALLIVAN
 
TITLE OF BILL:  An act to amend the not-for-profit corporation law, in
relation to voting requirements of the board of certain corporations

 
PURPOSE:

To require a two-thirds vote of a corporation's board members present at
the time of the vote, for a proposed consolidation, merger or dissol-
ution of the corporation, so long as there is a quorum at that time.
 
SUMMARY OF SPECIFIC PROVISIONS:

Section one of the bill amends the opening paragraph of paragraph a of
section 902 of the not-for-profit corporation law to require that the
board of a corporation proposing to participate in a merger or consol-
idation shall adopt, by a vote of two-thirds of the board present, if a
quorum is present at that time, of each corporation, or by a vote of the
number of directors required under the certificate of incorporation,
by-laws, this chapter, and any other applicable law, a plan of merger or
consolidation.

Section two amends subparagraph 1 of paragraph a of section 1002 of the
not-for-profit corporation law to require a vote by two-thirds of the
directors present at the time of the vote, if a quorum is present at
that time in order to dissolve the corporation.

Section three provides the effective date.

 
JUSTIFICATION:

This bill will amend the Not-for-Profit Corporation Law (NPCL) in
relation to corporate consolidation, merger or dissolution.  Currently,
the NPCL allows boards to authorize such actions by a simple majority of
a quorum of the board, whereas the law requires a higher standard for
other corporate action. For example, to change the number of directors,
the vote of a majority of the entire board is required; to elect an
officer or to purchase r sell real property on behalf of the corpo-
ration, a two-thirds majority vote of the entire board is needed.  Since
the decision to merge, consolidate, or dissolve is arguably the most
important decision that a corporation can make, this bill will amend the
NPCL to require a vote in favor of such action by two-thirds of the
directors present at the time of the vote, if a quorum is present at
that time, or alternatively, by a vote of the number of directors
required under the corporation's certificate of incorporation, its
by-laws, this chapter, and any other applicable law.

 
PRIOR LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
On the ninetieth day after it shall have become a law.

2017-S8637A (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8637--A
 
                             I N  S E N A T E
 
                               May 10, 2018
                                ___________
 
 Introduced  by Sen. GALLIVAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and   Commissions  --  committee  discharged,  bill  amended,  ordered
   reprinted as amended and recommitted to said committee
 
 AN ACT to amend the  not-for-profit  corporation  law,  in  relation  to
   voting requirements of the board of certain corporations

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The opening paragraph of paragraph (a) of  section  902  of
 the not-for-profit corporation law is amended to read as follows:
   The  board of each corporation proposing to participate in a merger or
 consolidation under section 901 (Power of merger or consolidation) shall
 adopt, BY A VOTE OF TWO-THIRDS OF THE DIRECTORS PRESENT AT THE  TIME  OF
 THE  VOTE,  IF  A  QUORUM  IS  PRESENT AT THAT TIME, OR BY A VOTE OF THE
 NUMBER OF DIRECTORS REQUIRED UNDER  THE  CERTIFICATE  OF  INCORPORATION,
 BY-LAWS,  THIS CHAPTER AND ANY OTHER APPLICABLE LAW, a plan of merger or
 consolidation, setting forth:
   § 2. Subparagraph 1 of paragraph (a) of section 1002 of  the  not-for-
 profit  corporation  law, as amended by chapter 549 of the laws of 2013,
 is amended to read as follows:
   (1) In the case of a vote by the board of directors: (i) the number of
 directors required under the certificate of incorporation, by-laws, this
 chapter and any other applicable law; [or]
   (ii) TWO-THIRDS OF THE DIRECTORS PRESENT AT THE TIME OF THE VOTE, IF A
 QUORUM IS PRESENT AT THAT TIME; OR
   (III) if the number of directors actually holding office  as  such  at
 the  time of the vote to adopt the plan is less than the number required
 to constitute a quorum of directors under the  certificate  of  incorpo-
 ration,  the  by-laws,  this  chapter  or  any other applicable law, the
 remaining directors unanimously;
   § 3. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD15253-06-8

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