Prior to the COVID-19 pandemic, New York corporations, not-for-profit corporations, and religious organizations were required to hold in-person meetings of shareholders, members, and trustees. With the spread of COVID-19 came state-wide stay-at-home orders, thus making it extremely difficult, if not impossible, for corporations and organizations to comply with emergency orders and meeting requirements under the law.
However, on June 17, 2020, Governor Cuomo signed Bill S.8412, which provides for the remote conduct of certain practices and procedures relating to board meetings utilizing electronic and/or audio-visual technologies such as Zoom or Microsoft Teams.
For not-for-profits in particular, this legislation amended Section 603 of the NYS Not-for-Profit Corporation Law to permit virtual meetings on a temporary basis. Under this legislation, not-for-profit corporations and religious organizations may hold virtual meetings through December 31, 2021, for the duration of the State Disaster Emergency declared by NYS Executive Order 202.
Notably, the State Disaster Emergency has generally only been extended for thirty days at a time. Thus, not-for-profits and religious organizations must be careful in monitoring notice requirements under the law and their own governing documents.
For example, under NYS Not-for-Profit Corporation Law Section 605(a), notice of a meeting of members may not be given less than ten nor more than fifty days before the meeting.
In the event that New York State does not extend the State Disaster Emergency less than ten days prior to a virtual board meeting, a board may potentially violate the notice requirement if a copy of the notice is delivered with a new physical meeting place, but done so less than ten days prior to the meeting date.
Similarly, the decision to hold meetings solely as a virtual meeting may not violate any express terms of an entity’s governing documents, such as the by-laws or articles of incorporation. Shareholders, board members, and trustees are encouraged to seek legal assistance in following changes under NYS law as well as reviewing organizational and governing documents to ensure compliance with all relevant legal mandates.
At Gross Shuman P.C., our Business and Corporate Law Practice is led by attorneys who have decades of experience helping business clients navigate myriad challenges. Since COVID-19 hit, we have worked closely with clients leading for-profit, non-profit, and religious entities of all sizes. The goal is always the same – to understand your unique circumstance and to craft a strategy that best meets your needs. If you have any questions or concerns, give us a call.
Carolyn DeVaughn is an attorney with Gross Shuman P.C. She can be reached via email at firstname.lastname@example.org or by phone at 716-854-4300 ext. 242.