Court Opinion

ID: 3575709
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:27:55.931953+00
Date Added: 2024-06-11T13:49:56.752847
License: Public Domain

HON.W. KENNETH CHAVE, JR. Town Attorney, Hempstead
This is in response to your letter wherein you request an opinion of the Attorney General as to whether or not the directors of the Town of Hempstead Local Development Corporation may be compensated by reason of their attendance at meetings of directors for the purpose of conducting corporate business.
This Corporation was formed pursuant to Article 19 of the Membership Corporation Law. That law was repealed and replaced by the Not-For-Profit Corporation Law on September 1, 1970. Article 14, section 1411 of the new law not only continued the existence of all local development corporations formed under the former Membership Corporation Law, but also provided additional alternate methods of incorporation, amendment or reincorporation of such existing corporations. The aforementioned section 1411 is verbatim of its counterpart section 235 of the Membership Corporation Law. Not-For-Profit Corporation Law, § 715(e) authorizes compensation to directors only if provided in the certificate of incorporation or the by-laws.
The certificate of incorporation, the subject of this inquiry, provides in paragraph "FOURTH" as follows:
  "None of the directors, officers, members or employees of the corporation shall receive or be lawfully entitled to receive any pecuniary profit from the operation thereof but may receive reasonable compensation for services rendered and property delivered in effecting one or more of its corporate purposes."
This provision clearly indicates that compensation is permitted for rendering services in pursuance of the purposes of the Corporation. Since the Corporation did not adopt by-laws to further define or clarify the provision in paragraph "FOURTH" above, it would appear that paragraph "FOURTH" in effect places a limitation on permitting compensation only for "the rendering of services in effecting one or more of its corporate purposes."
From all of the foregoing, it would appear that the Town of Hempstead Local Development Corporation may provide compensation to its directors for attendance at corporate meetings in pursuance of corporate purposes pursuant to Paragraph "FOURTH" of its certificate of incorporation as authorized by Not-For-Profit Corporation Law, § 715(e).