§ 216-A — Applicability of not-for-profit corporation law

New York § 216-A

• Jurisdiction: New York
• Law EDN: Education
• Title 1: General Provisions Article 1 Short Title and Definitions (§§
• Part 1: General Organization
• Art. 5: University of the State of New York

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§ 216-a. Applicability of not-for-profit corporation law. 1. The term\n"education corporation" as used in this section means a corporation (a)\nchartered or incorporated by the regents or otherwise formed under this\nchapter, or (b) formed by a special act of this state with its principal\npurpose an education purpose and which is a member of the university of\nthe state of New York, or (c) formed under laws other than the statutes\nof this state which, if it were to be formed currently under the laws of\nthis state, might be chartered by the regents, and which has been\nauthorized to conduct its activities in this state by the regents or as\nan authorized foreign education corporation with the consent of the\ncommissioner. A corporation as defined in the business corporation law\nis not an education corporation under this section.\n 2. An education corporation formed prior to September first, nineteen\nhundred seventy-three which has authority to issue stock, is subject to\nthe business corporation law in all matters involving shares of stock.\nTo that extent, the not-for-profit corporation law does not apply to\nsuch education corporation.\n 3. A corporation within clause (c) of subdivision one of this section\n(a) may be granted authority to conduct activities in this state by the\nregents pursuant to this section and subject to such provisions, not\ninconsistent with this section, as the regents may prescribe, or (b)\nwith the consent of the commissioner, may receive authority under\narticle 13 (Foreign Corporations) of the not-for-profit corporation law\nto conduct activities in this state as an authorized foreign\nnot-for-profit corporation. If required by the commissioner and subject\nto such provisions, not inconsistent with this section, as he may\nprescribe, an authorized foreign not-for-profit corporation shall be\ndesignated as an "authorized foreign education corporation" in its\ncertificate of authority filed with the department of state. A foreign\ncorporation granted authority by the regents hereunder or an "authorized\nforeign education corporation" is an "education corporation" under this\nsection.\n 4. Except as provided in subdivisions 2 and 3 of this section, the\nnot-for-profit corporation law applies to a domestic education\ncorporation and an authorized foreign education corporation, provided\nthat:\n a. If a provision of the not-for-profit corporation law conflicts with\na provision of this chapter or of a special act by which an education\ncorporation is formed, the provision of this chapter or of such special\nact shall prevail and the not-for-profit corporation law shall not apply\nin such case. If an applicable provision of this chapter or of such\nspecial act relates to a matter embraced in the not-for-profit\ncorporation law but is not in conflict therewith, both provisions shall\napply.\n b. An education corporation to which the not-for-profit corporation\nlaw is made applicable by this section shall be treated as a "corp-\noration", "domestic corporation", "foreign corporation", or "authorized\nforeign corporation" as such terms are used in the not-for-profit\ncorporation law as modified by this section, except that the purposes of\nan education corporation shall not thereby be extended.\n c. The following provisions of the not-for-profit corporation law\nshall not apply to education corporations: section one hundred five,\nsection one hundred fourteen, paragraph (a) of section two hundred one,\nparagraphs (b) and (c) of section two hundred two, section two hundred\nfive, section three hundred one, section three hundred two, section\nthree hundred three, article four except paragraphs (b) through (p) of\nsection four hundred four and section four hundred five, section five\nhundred nine, article eight except section eight hundred four, section\nnine hundred seven, section one thousand twelve and article fourteen.\n d. The following adjusting provisions shall apply in the application\nof the not-for-profit corporation law under this section:\n (1) The opening clause of paragraph (a) of section one hundred twelve\nshall read: "At the request of the regents of the university of the\nstate of New York, the attorney-general may maintain an action or\nspecial proceeding:"\n (2) The first sentence of section five hundred one shall read: "Except\nwhen the charter or certificate of incorporation so permits, a\ncorporation shall not have stock or shares or certificates for stock or\nfor shares, but may issue nontransferable membership certificates or\ncards to evidence membership, whether or not connected with any\nfinancial contribution to the corporation, as provided in section six\nhundred one (Members). The fact that the corporation is an education\ncorporation, and that the membership certificate or card is\nnon-transferable shall be noted conspicuously on the face or back of\neach such certificate or card."\n (3) The first sentence of paragraph (b) of section five hundred eleven\nshall read as follows: "Upon presentation of the petition, the Court\nshall direct that notice of the application be given promptly to the\nattorney general and the commissioner, and in its discretion may direct\nthat notice of the application be given, personally or by mail, to any\nperson interested therein, as member, officer or creditor of the\ncorporation."\n (4) Paragraph (a) of section five hundred fifteen shall read as\nfollows: "Except when the charter or certificate of incorporation\nauthorizes the issuance of stock, a corporation shall not pay dividends\nor distribute any part of its income or profit to its members, directors\nor officers."\n (5) Section five hundred twenty shall include after the words, "suit\nof the attorney general" the following words, "at the request of the\nregents of the university of the state of New York,"\n (6) Paragraph (b) of section seven hundred three, and section seven\nhundred four shall not reduce the term of office of directors as\nprovided in the charter or certificate of incorporation of a\ncorporation, or of the number of classes into which its board is\ndivided, if, as of September first, nineteen hundred seventy-three, such\nterm of office of a director is greater than five years or the board is\ndivided into more than five classes. Such term of office or number of\nclasses shall not be increased after September first, nineteen hundred\nseventy-three.\n (7) The requirement of the affirmative vote of a majority of the\nentire board under paragraph (f) of section seven hundred fifteen for\nfixing the salaries of officers, if not done in or pursuant to the\nby-laws, shall not apply where the number of the entire board is over\ntwenty. In such case the affirmative vote of a number of directors at\nleast equal to the applicable quorum requirement of such board for the\ntransaction of business shall be sufficient.\n (8) Section seven hundred sixteen shall not apply to a loan by an\neducation corporation if its board, in the discharge of its duty to the\ncorporation, finds that such loan (1) is in the best interests of the\neducation corporation and (2) is (a) to an officer or director thereof\npursuant to a plan of employee or faculty assistance, or (b) to a busi-\nness corporation the shares of which are wholly owned by such education\ncorporation, or (c) to a not-for-profit corporation which is controlled\nby such education corporation, or by a group of education corporations\nincluding such education corporation, or (d) to any corporation on the\nboard of which a director or officer of such education corporation is\nserving as a director at the request of the board of such lending\neducation corporation; provided, however, that any loan by an education\ncorporation to any corporation or other entity in which a director or\nofficer of such education corporation has, directly or indirectly, a\nsubstantial financial interest, is prohibited. The provisions of this\nsubparagraph shall not apply to a private foundation under section two\nhundred sixteen-b of this chapter.\n (9) The opening clause of paragraph (b) of section seven hundred\ntwenty shall read as follows: "An action may be brought for the relief\nprovided in this section and in paragraph (a) of section seven hundred\nnineteen (Liabilities of director in certain cases) by the attorney\ngeneral at the request of the regents of the university of the state of\nNew York, by the corporation, or, in the right of the corporation, by\nany of the following:"\n (10) Under section nine hundred six, if any constituent corporation or\nthe consolidated corporation is or would be an education corporation,\nthe consent of the commissioner shall be endorsed on or annexed to the\ncertificate of merger or consolidation prior to the filing by the\ndepartment of state.\n (11) In addition to the requirements of section nine hundred nine\n(Consent to filing), the consent of the regents shall be endorsed on or\nannexed to a certificate of merger or consolidation if any constituent\nor consolidated corporation was chartered, or formed by special act with\na purpose for which a corporation might be created by the regents.\n (12) The opening clause of paragraph (a) of section eleven hundred one\nshall read: "At the request of the regents of the university of the\nstate of New York, the attorney general may bring an action for the\ndissolution of a corporation upon one or more of the following grounds:"\n (13) The opening clause of paragraph (a) of section eleven hundred two\nshall read: "With the consent of the regents of the university of the\nstate of New York, a petition for the judicial dissolution of a\ncorporation may be presented:"\n (14) The opening clause of paragraph (a) of section twelve hundred two\nshall read: "Upon notice to the attorney general and the commissioner, a\nreceiver of the property of a corporation can be appointed only by the\ncourt, and in one of the following cases:"\n e. Any reference in the not-for-profit corporation law to the delivery\nof any certificate or other instrument to the department of state for\nfiling shall refer to and provide for corresponding action of the\nregents or the commissioner relating thereto, as the case may be, except\nthat in cases where the commissioner consents to the filing under\narticle thirteen of the not-for-profit corporation law of a certificate\nof authority in which the authorized foreign corporation is designated\nas an "authorized foreign education corporation", filing under article\nthirteen shall mean filing with the department of state.\n 5. Every corporation to which the not-for-profit corporation law is\nmade applicable by this section, is a charitable corporation as defined\nin paragraph (a) of section one hundred two (Definitions) of the\nnot-for-profit corporation law under all applicable provisions of that\nlaw.\n 6. From and after the effective date of this section the general\ncorporation law shall not apply to an education corporation.\n 7. For the purpose of this section and elsewhere in this chapter, the\neffective date of the not-for-profit corporation law as to corporations\nto which the not-for-profit corporation law is made applicable by this\nsection, shall be September one, nineteen hundred seventy-three.\n 8. Nothing in this section shall impair the rights and powers,\notherwise granted by law, of the courts or the attorney general of this\nstate.\n