30 Nov Recent Amendments Modernize New York’s Not-For-Profit Corporation Law
On November 21, 2022, Governor Hochul signed into law a bill (A.9969/S.9047), effective immediately, that amends provisions of the New York Not-For-Profit Corporation Law (“NPCL”) relating to action by the board or members without a meeting, board vacancies, and director quorum requirements. The amendments are intended to modernize the NPCL to align with current practices, streamline procedures, and eliminate unnecessary regulatory burdens for New York nonprofits.
Action Without a Meeting
The bill amends Sections 614(a) and 708(b) of the NPCL to explicitly permit unanimous consent of members and the board, respectively, to act without a meeting by “electronic means,” in addition to through electronic mail. This amendment aligns the NPCL with nonprofits’ increasing use of digital portals to collect votes and contemplates other electronic mechanisms that may be used for these purposes as other technologies develop.
Board Vacancies
The bill amends Section 705(c) of the NPCL to allow replacement directors to fill the unexpired portion of their predecessor’s term, or to hold office for a term to be determined by the board which ends at an annual meeting. Prior to this amendment, directors were only permitted to fill a vacancy until the next annual members or directors meeting at which the election of directors is in the regular order of business, which presented problems for nonprofits with classified boards.
Director Quorum
The bill amends Section 708(d) of the NPCL to clarify that directors who are required to leave a meeting due to a conflict of interest do not disrupt the quorum and are considered to be present at the time of the vote for purposes of determining if a quorum is present at that time. This amendment clarifies a previous revision to Section 708(d) and will enable nonprofits to operate more efficiently.
What Should Nonprofits Do Now?
The amendments may impact New York nonprofits’ governance processes and procedures. New York nonprofits should review their governance documents, including their certificates of incorporation and bylaws, to determine if revisions are warranted in light of these amendments, and consult legal counsel for assistance as needed.
Questions?
Please contact the White Plains Office of Pro Bono Partnership at 914-328-0674 if you have questions.
This document is provided as a general informational service to volunteers, clients, and friends of Pro Bono Partnership. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does distribution of this document create an attorney-client relationship.