2023 New York Laws › EDN - Education › Title 1 - General Provisions › Article 5 - University of the State of New York › Part 1 - General Organization › 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 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, article eight except section eight hundred  four,  section
nine hundred seven, 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 charitable corporation as defined
in paragraph (a)  of  section  one  hundred  two  (Definitions)  of  the
not-for-profit  corporation  law 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.