Director Voting Under the New York Nonprofit Revitalization Act

The New York Nonprofit Revitalization Act of 2013 brings about many changes to the laws governing New York’s nonprofits as of July 1, 2014.  Some aspects of the new law, however, are merely technical in nature, designed to keep up with developments in technology without changing the essential rules of nonprofit governance.

Not-for-Profit Corporation Law Section 708(c), for example, expands the ability of directors to “attend” meetings of the board without being physically present by allowing participation by videoconference.  Provided that all directors at the meeting can hear and interact with each other and participate meaningfully in the discussion, participation of directors by teleconference or electronic means continues to be allowed.

As was permitted before enactment of the Revitalization Act, directors may consent in writing to resolutions that adopt board action without the need to hold an actual meeting of the board.  Under Not-for-Profit Corporation Law Section 708(b), such director actions by written consent continue to require unanimous approval of the board.  The Revitalization Act expands the methods by which directors may communicate their unanimous written consent to also include use of email.

Other nonprofit governance changes under the Revitalization Act to catch up with developments in technology are the provisions that allow notices of director meetings and waivers of notice to be provided by use of email or facsimile.  Notices provided to or from directors by these electronic means will be permissible alternatives to traditional written notifications.

Another change that arises on July 1 is a slight variation with respect to the meaning of “entire board.”  The Revitalization Act eliminates some of the confusion that arose under the existing law with respect to entities that provide for a range in the number of directors.  Under the act, if the bylaws provide for a fixed number of directors, then the “entire board”  consists of that number of directors; if the bylaws provide for a range between a minimum and maximum number, then “entire board” consists of the number of directors within that range that were elected as of the most recently held election of directors.  As before, absent such a provision in the bylaws, "entire board" continues to refer to the total number of directors entitled to vote without vacancies.

 

Article written by Rebecca A. Koval, Associate Attorney with Hinman, Howard & Kattell, LLP in the Binghamton, New York office. To contact Ms. Koval please email her at rkoval@hhk.com or call her at (607) 723-5341.

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