NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8116C
SPONSOR: Perry TITLE OF BILL:
An act to allow certain entities to convert their status of filing as a
not-for-profit organization to a for-profit entity; and providing for
the repeal of such provisions upon expiration thereof
PURPOSE:
Allows certain entities to convert their status of filing as a not-for-
profit organization to a for-profit entity
JUSTIFICATION:
Enterprising business entrepreneurs are often advised to incorporate a
business to protect personal assets from loss suffered by the business
in the event of lawsuits. Incorporation of a business however, often
carries a cost of legal fees which can be too costly for someone with a
dollar and a dream. To save money, risk taking entrepreneurs, sometimes
choose "do it yourself routes" and make mistakes that can have signif-
icant consequences on the outcome of the business venture. When this
occurs, our rules and regulations should provide a process for
correction of mistakes.
Currently, our incorporation registration laws do not provide a process
to correct errors that can be made during the business registration
process. For example, when an intended for profit business is inadvert-
ently registered as a not-for-profit business. Enactment of this law
will establish a process for businesses who are inadvertently registered
under the wrong classification to convert to the correct business
status.
PRIOR LEGISLATIVE HISTORY:
None.
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
This act shall take effect immediately and expire and be deemed repealed
180 days after enactment.
STATE OF NEW YORK
________________________________________________________________________
8116--C
Cal. No. 486
2015-2016 Regular Sessions
IN ASSEMBLY
June 9, 2015
___________
Introduced by M. of A. PERRY -- read once and referred to the Committee
on Corporations, Authorities and Commissions -- committee discharged,
bill amended, ordered reprinted as amended and recommitted to said
committee -- reported and referred to the Committee on Codes --
reported from committee, advanced to a third reading, amended and
ordered reprinted, retaining its place on the order of third reading
AN ACT to allow certain entities to convert their status of filing as a
not-for-profit organization to a for-profit entity; and providing for
the repeal of such provisions upon expiration thereof
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Notwithstanding any provision of law to the contrary, a
2 business incorrectly incorporated, as a not-for-profit corporation under
3 section four hundred two of the not-for-profit corporation law shall be
4 permitted to convert its status of filing as a not-for-profit corpo-
5 ration to a for-profit corporation under section four hundred two of the
6 business corporation law if the incorporator or incorporators submit to
7 the attorney general sworn statements under the penalties of perjury
8 certifying the following:
9 (1) that legal advice had not been sought or received as to the appro-
10 priate course of action that would have resulted in correct registration
11 allowing for the intended for-profit operation of the entity;
12 (2) the entity at no time received the benefits and/or privileges of
13 being recognized as a not-for-profit corporation, such as being exempt
14 from incurring any local, state, or federal taxes;
15 (3) the entity throughout its operation as a not-for-profit corpo-
16 ration did not at any time solicit and/or receive any private and/or
17 public grants or charitable donations; and
18 (4) the office of the attorney general has provided written indi-
19 cations that either it does not object to, or it approves of, the
20 proposed conversion.
21 § 2. This act shall take effect immediately and shall expire and be
22 deemed repealed one hundred eighty days after such date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11296-15-6
