NY Not for Profit Corp L § 715 (2021)
2021 New York Laws NPC - Not-For-Profit Corporation Article 7 - Directors and Officers 715 - Related Party Transactions.

§ 715.  Related party transactions.  (a)  No  corporation  shall  enter  into any related party transaction unless the transaction is determined by  the  board,  or  an  authorized committee  thereof, to be fair, reasonable and in the corporation's best interest at the time of such determination. Any director, officer or key person who has an interest in a related party transaction shall disclose in good faith to the board, or  an  authorized  committee  thereof,  the material facts concerning such interest.  (b)  With  respect  to  any  related  party  transaction  involving  a charitable corporation and in which a related party  has  a  substantial financial  interest,  the  board  of  such corporation, or an authorized committee thereof, shall:  (1) Prior to  entering  into  the  transaction,  consider  alternative transactions to the extent available;  (2)  Approve  the  transaction by not less than a majority vote of the directors or committee members present at the meeting; and  (3) Contemporaneously document in writing the basis for the  board  or authorized  committee's  approval,  including  its  consideration of any alternative transactions.  (c) The certificate of incorporation, by-laws or any policy adopted by the  board  may  contain  additional  restrictions  on   related   party transactions  and  additional  procedures  necessary  for the review and approval of such  transactions,  or  provide  that  any  transaction  in violation of such restrictions shall be void or voidable.  (d)  Unless  otherwise provided in the certificate of incorporation or the by-laws, the board shall have authority to fix the  compensation  of directors for services in any capacity.  (e) The fixing of compensation of officers, if not done in or pursuant to  the by-laws, shall require the affirmative vote of a majority of the entire board unless a higher proportion is set  by  the  certificate  of incorporation or by-laws.  (f)  The  attorney  general  may  bring  an  action to enjoin, void or rescind  any  related  party  transaction  or  proposed  related   party transaction that violates any provision of this chapter or was otherwise not  reasonable  or in the best interests of the corporation at the time the transaction was approved, or to seek restitution, and the removal of directors or officers, or seek to require any person or entity to:  (1) Account for any profits made from such transaction, and  pay  them to the corporation;  (2) Pay the corporation the value of the use of any of its property or other assets used in such transaction;  (3)  Return  or  replace  any  property  or  other  assets lost to the corporation as a result of such transaction, together with any income or appreciation lost to the corporation by reason of such  transaction,  or account  for any proceeds of sale of such property, and pay the proceeds to the corporation together with interest at the legal rate; and  (4) Pay, in the case of willful and intentional conduct, an amount  up to double the amount of any benefit improperly obtained.  (g) The powers of the attorney general provided in this section are in addition  to  all  other powers the attorney general may have under this chapter or any other law.  (h) No related  party  may  participate  in  deliberations  or  voting relating  to  a  related  party  transaction  in  which he or she has an interest; provided that nothing in this section shall prohibit the board or authorized committee from requesting that  a  related  party  present information as background or answer questions concerning a related party transaction at a board or committee meeting prior to the commencement of deliberations or voting relating thereto.  (i)  In  an  action  by  any  person or entity other than the attorney general, it shall be a defense to a claim of violation of any provisions of this section that a transaction  was  fair,  reasonable  and  in  the corporation's  best  interest  at  the time the corporation approved the transaction.  (j)  In  an  action  by the attorney general with respect to a related party transaction not approved in accordance with paragraphs (a) or  (b) of  this  section  at  the  time  it  was  entered  into,  whichever  is applicable, it shall be a  defense  to  a  claim  of  violation  of  any provisions of this section that (1) the transaction was fair, reasonable and  in  the  corporation's  best  interest  at the time the corporation approved the transaction and (2) prior to receipt  of  any  request  for information by the attorney general regarding the transaction, the board has:  (A)  ratified the transaction by finding in good faith that it was fair, reasonable and in the corporation's best interest at the time  the corporation  approved  the transaction; and, with respect to any related party transaction involving a charitable  corporation  and  in  which  a related   party   has   a  substantial  financial  interest,  considered alternative  transactions  to  the  extent  available,   approving   the transaction  by  not  less  than  a  majority  vote  of the directors or committee members present at the meeting; (B) documented in writing  the nature  of  the  violation  and the basis for the board's or committee's ratification of the transaction; and (C) put into  place  procedures  to ensure that the corporation complies with paragraphs (a) and (b) of this section as to related party transactions in the future.