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New York Education Law Section 216-a - Applicability Of Not-for-profit Corporation Law.Legal Research Home > New York Lawyer > Education > New York Education Law Section 216-a - Applicability Of Not-for-profit Corporation Law.
§ 216-a. Applicability of not-for-profit corporation law. 1. The term
"education corporation" as used in this section means a corporation (a)
chartered or incorporated by the regents or otherwise formed under this
chapter, or (b) formed by a special act of this state with its principal
purpose an education purpose and which is a member of the university of
the state of New York, or (c) formed under laws other than the statutes
of this state which, if it were to be formed currently under the laws of
this state, might be chartered by the regents, and which has been
authorized to conduct its activities in this state by the regents or as
an authorized foreign education corporation with the consent of the
commissioner. A corporation as defined in the business corporation law
is not an education corporation under this section.
2. An education corporation formed prior to September first, nineteen
hundred seventy-three which has authority to issue stock, is subject to
the business corporation law in all matters involving shares of stock.
To that extent, the not-for-profit corporation law does not apply to
such education corporation.
3. A corporation within clause (c) of subdivision one of this section
(a) may be granted authority to conduct activities in this state by the
regents pursuant to this section and subject to such provisions, not
inconsistent with this section, as the regents may prescribe, or (b)
with the consent of the commissioner, may receive authority under
article 13 (Foreign Corporations) of the not-for-profit corporation law
to conduct activities in this state as an authorized foreign
not-for-profit corporation. If required by the commissioner and subject
to such provisions, not inconsistent with this section, as he may
prescribe, an authorized foreign not-for-profit corporation shall be
designated as an "authorized foreign education corporation" in its
certificate of authority filed with the department of state. A foreign
corporation granted authority by the regents hereunder or an "authorized
foreign education corporation" is an "education corporation" under this
section.
4. Except as provided in subdivisions 2 and 3 of this section, the
not-for-profit corporation law applies to a domestic education
corporation and an authorized foreign education corporation, provided
that:
a. If a provision of the not-for-profit corporation law conflicts with
a provision of this chapter or of a special act by which an education
corporation is formed, the provision of this chapter or of such special
act shall prevail and the not-for-profit corporation law shall not apply
in such case. If an applicable provision of this chapter or of such
special act relates to a matter embraced in the not-for-profit
corporation law but is not in conflict therewith, both provisions shall
apply.
b. An education corporation to which the not-for-profit corporation
law is made applicable by this section shall be treated as a "corp-
oration", "domestic corporation", "foreign corporation", or "authorized
foreign corporation" as such terms are used in the not-for-profit
corporation law as modified by this section, except that the purposes of
an education corporation shall not thereby be extended.
c. The following provisions of the not-for-profit corporation law
shall not apply to education corporations: section one hundred five,
section one hundred thirteen, section one hundred fourteen, paragraph
(a) of section two hundred one, paragraphs (b) and (c) of section two
hundred two, section two hundred five, section three hundred one,
section three hundred two, section three hundred three, article four
except paragraphs (b) through (p) of section four hundred four and
section four hundred five, section five hundred nine, section five
hundred eighteen, section five hundred twenty-one to the extent that it
refers to section five hundred eighteen, paragraph (d) of section seven
hundred six, article eight except section eight hundred four, section
nine hundred seven, section one thousand eleven, section one thousand
twelve and article fourteen.
d. The following adjusting provisions shall apply in the application
of the not-for-profit corporation law under this section:
(1) The opening clause of paragraph (a) of section one hundred twelve
shall read: "At the request of the regents of the university of the
state of New York, the attorney-general may maintain an action or
special proceeding:"
(2) The first sentence of section five hundred one shall read: "Except
when the charter or certificate of incorporation so permits, a
corporation shall not have stock or shares or certificates for stock or
for shares, but may issue nontransferable membership certificates or
cards to evidence membership, whether or not connected with any
financial contribution to the corporation, as provided in section six
hundred one (Members). The fact that the corporation is an education
corporation, and that the membership certificate or card is
non-transferable shall be noted conspicuously on the face or back of
each such certificate or card." (3) The first sentence of paragraph (b)
of section five hundred eleven shall read as follows: "Upon presentation
of the petition, the Court shall direct that notice of the application
be given promptly to the attorney general and the commissioner, and in
its discretion may direct that notice of the application be given,
personally or by mail, to any person interested therein, as member,
officer or creditor of the corporation."
(4) Paragraph (a) of section five hundred fifteen shall read as
follows: "Except when the charter or certificate of incorporation
authorizes the issuance of stock, a corporation shall not pay dividends
or distribute any part of its income or profit to its members, directors
or officers."
(5) Section five hundred twenty shall include after the words, "suit
of the attorney general" the following words, "at the request of the
regents of the university of the state of New York,"
(6) Paragraph (b) of section seven hundred three, and section seven
hundred four shall not reduce the term of office of directors as
provided in the charter or certificate of incorporation of a
corporation, or of the number of classes into which its board is
divided, if, as of September first, nineteen hundred seventy-three, such
term of office of a director is greater than five years or the board is
divided into more than five classes. Such term of office or number of
classes shall not be increased after September first, nineteen hundred
seventy-three.
(7) The requirement of the affirmative vote of a majority of the
entire board under paragraph (f) of section seven hundred fifteen for
fixing the salaries of officers, if not done in or pursuant to the
by-laws, shall not apply where the number of the entire board is over
twenty. In such case the affirmative vote of a number of directors at
least equal to the applicable quorum requirement of such board for the
transaction of business shall be sufficient.
(8) Section seven hundred sixteen shall not apply to a loan by an
education corporation if its board, in the discharge of its duty to the
corporation, finds that such loan (1) is in the best interests of the
education corporation and (2) is (a) to an officer or director thereof
pursuant to a plan of employee or faculty assistance, or (b) to a busi-
ness corporation the shares of which are wholly owned by such education
corporation, or (c) to a not-for-profit corporation which is controlled
by such education corporation, or by a group of education corporations
including such education corporation, or (d) to any corporation on the
board of which a director or officer of such education corporation is
serving as a director at the request of the board of such lending
education corporation; provided, however, that any loan by an education
corporation to any corporation or other entity in which a director or
officer of such education corporation has, directly or indirectly, a
substantial financial interest, is prohibited. The provisions of this
subparagraph shall not apply to a private foundation under section two
hundred sixteen-b of this chapter.
(9) The opening clause of paragraph (b) of section seven hundred
twenty shall read as follows: "An action may be brought for the relief
provided in this section and in paragraph (a) of section seven hundred
nineteen (Liabilities of director in certain cases) by the attorney
general at the request of the regents of the university of the state of
New York, by the corporation, or, in the right of the corporation, by
any of the following:"
(10) Under section nine hundred six, if any constituent corporation or
the consolidated corporation is or would be an education corporation,
the consent of the commissioner shall be endorsed on or annexed to the
certificate of merger or consolidation prior to the filing by the
department of state.
(11) In addition to the requirements of section nine hundred nine
(Consent to filing), the consent of the regents shall be endorsed on or
annexed to a certificate of merger or consolidation if any constituent
or consolidated corporation was chartered, or formed by special act with
a purpose for which a corporation might be created by the regents.
(12) The opening clause of paragraph (a) of section eleven hundred one
shall read: "At the request of the regents of the university of the
state of New York, the attorney general may bring an action for the
dissolution of a corporation upon one or more of the following grounds:"
(13) The opening clause of paragraph (a) of section eleven hundred two
shall read: "With the consent of the regents of the university of the
state of New York, a petition for the judicial dissolution of a
corporation may be presented:"
(14) The opening clause of paragraph (a) of section twelve hundred two
shall read: "Upon notice to the attorney general and the commissioner, a
receiver of the property of a corporation can be appointed only by the
court, and in one of the following cases:"
e. Any reference in the not-for-profit corporation law to the delivery
of any certificate or other instrument to the department of state for
filing shall refer to and provide for corresponding action of the
regents or the commissioner relating thereto, as the case may be, except
that in cases where the commissioner consents to the filing under
article thirteen of the not-for-profit corporation law of a certificate
of authority in which the authorized foreign corporation is designated
as an "authorized foreign education corporation", filing under article
thirteen shall mean filing with the department of state.
5. Every corporation to which the not-for-profit corporation law is
made applicable by this section, is a type B corporation under all
applicable provisions of that law.
6. From and after the effective date of this section the general
corporation law shall not apply to an education corporation.
7. For the purpose of this section and elsewhere in this chapter, the
effective date of the not-for-profit corporation law as to corporations
to which the not-for-profit corporation law is made applicable by this
section, shall be September one, nineteen hundred seventy-three.
8. Nothing in this section shall impair the rights and powers,
otherwise granted by law, of the courts or the attorney general of this
state.
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Last modified: August 13, 2006 |