Law Pamphlet 9
EDUCATION CORPORATIONS

Appendix A
EDUCATION LAW

§210. Registrations

The regents may register domestic and foreign institutions in terms of New York standards, and fix the value of degrees, diplomas and certificates issued by institutions of other states or countries and presented for entrance to schools, colleges and the professions in this state.

§214. Institutions in the university

The institutions of the university shall include all secondary and higher educational institutions which are now or may hereafter be incorporated in this state, and such other libraries, museums, institutions, schools, organizations and agencies for education as may be admitted to or incorporated by the university. The regents may exclude from such membership any institution failing to comply with law or with any rule of the university.

§215. Visitation and reports

The regents, or the commissioner of education, or their representatives, may visit, examine into and inspect, any institution in the university and any school or institution under the educational supervision of the state, and may require, as often as desired, duly verified reports therefrom giving such information and in such form as the regents or the commissioner of education shall prescribe. For refusal or continued neglect on the part of any institution in the university to make any report required, or for violation of any law or any rule of the university, the regents may suspend the charter or any of the rights and privileges of such institution.

§216. Charters

Under such name, with such number of trustees or other managers, and with such powers, privileges and duties, and subject to such limitations and restrictions in all respects as the regents may prescribe in conformity to law, they may, by an instrument under their seal and recorded in their office, incorporate any university, college, academy, library, museum, or other institution or association for the promotion of science, literature, art, history or other department of knowledge, or of education in any way, associations of teachers, students, graduates of educational institutions, and other associations whose approved purposes are, in whole or in part, of educational or cultural value deemed worthy of recognition and encouragement by the university. No institution or association which might be incorporated by the regents under this chapter shall, without their consent, be incorporated under any other general law. An institution or association which might be incorporated by the regents under this chapter may, with the consent of the commissioner of education, be formed under the business corporation law or pursuant to the not-for-profit corporation law if such consent of the commissioner of education is attached to its certificate of incorporation.

§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 such special act by which an education corporation is formed, the provision of this chapter or of a 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 “corporation”, “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 thirteen, 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, section five hundred eighteen, section five hundred twenty-one to the extent that it refers to section five hundred eighteen, paragraph (d) of section seven hundred six, article eight except section eight hundred four, section nine hundred seven, section one thousand eleven, section one thousand twelve and article fourteen.

d. The following adjusted 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 bylaws, 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 interest 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 business 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 delivering 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 type B corporation 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.

No individual, association, partnership, company or corporation not authorized by special charter from the legislature of this state or by charter from the regents to operate a museum, or arboretum shall knowingly use, advertise or transact business under the names "museum," or "arboretum," or any name, title or descriptive material indicating or tending to imply that said individual, association, partnership, company or corporation conducts, carries on, or is such a business when it is not, or that it is authorized to operate as such, unless the right to do so has been granted by the regents or the commissioner in writing. Any violation of this paragraph shall be a misdemeanor. Notwithstanding any other provision of this section, an individual, association, partnership, company or corporation doing business under any of such names on the effective date of this paragraph may come into compliance with this paragraph by obtaining consent of the regents or the commissioner within one year of such effective date.

§217. Provisional charters

On evidence satisfactory to the regents that the conditions for an absolute charter will be met within a prescribed time, they may grant a provisional charter which shall be replaced by an absolute charter when the conditions have been fully met; otherwise, after the specified time, on notice from the regents to this effect, the provisional charter shall terminate and become void and shall be surrendered to the regents. No such provisional charter shall give power to confer degrees.

§218. Conditions of incorporation

1. No institution shall be given power to confer baccalaureate or higher degrees in this state unless it shall have financial resources which, in the judgment of the regents, are adequate to ensure satisfactory conduct of its degree programs and achievement of its stated educational goals; and no institution for higher education shall be incorporated without suitable provision, approved by the regents, for educational resources and programs. No institution shall institute or have any faculty or department of education in any place or be given power to confer any degree not specifically authorized by its charter; and no corporation shall, under authority of any general act, extend its business to include establishing or carrying on any educational institution or work, without the consent of the board of regents.
2. No institution shall be given power to confer associate degrees in this state unless it shall possess financial resources which, in the judgment of the regents, are adequate to insure satisfactory conduct of its degree programs and achievement of its stated educational goals.

§219. Change of name or charter

1. The regents may, at any time, for sufficient cause, by an instrument under their seal and recorded in their office, change the name, or alter, suspend or revoke the charter or certificate of incorporation of any domestic corporation which they might incorporate under section two hundred sixteen, or any certificate of authority of a foreign corporation which they have issued or to which the commissioner has consented, (a) if subject to their visitation, or, (b) if authorized, chartered or incorporated by the regents or under a general law; provided that, unless on three-fourths request of the trustees of the corporation, no name shall be changed and no charter or certificate shall be altered, suspended or revoked, nor shall any rights or privileges thereunder be suspended or repealed by the regents, until they have mailed to the usual address of every director or trustee of the corporation concerned at least thirty days’ notice of a hearing when any objections to the proposed change will be considered, and until ordered by a vote at a meeting of the regents at which the notices have specified that action is to be taken on the proposed change. A certified copy of such order of the regents, under their seal, to change the name, or alter, suspend or revoke a certificate of incorporation of any domestic corporation filed by the department of state under a general law, or certificate of authority of any foreign corporation filed by the department of state under a general law, shall be delivered by the regents to such department. The order shall become effective upon the filing of such certified copy by the department of state.
2. Any notice to a trustee whose address is not readily ascertainable may be mailed to him in care of the institution. Where it appears that any institution incorporated by the regents has ceased to function, and the regents after diligent effort are unable to ascertain the names of the surviving trustees, if any, and their addresses or any address for the institution formerly maintained by the corporation, and are therefore unable to send the thirty-day notice to the trustees in the manner prescribed in this section they may give such thirty days’ notice by causing the same to be published once a week for three successive weeks prior to the date of such hearing in a daily or weekly newspaper published or printed in the place where the said corporation or its principal office is or was located; or if there be no such paper, then in a daily or weekly paper published or printed within the county, if there be one, or, if not in an adjoining county to that in which such corporation or its principal office is or was located.
3. Whenever the trustees of any such corporation shall determine, upon three-fourths vote to dissolve the corporation, they may petition the regents to issue an order of dissolution. If it appears to the satisfaction of the regents that there is no sufficient reason for the continuance of the corporation, that all taxes chargeable to the corporation have been paid, and, if the corporation has stock provisions, that the outstanding stock has been surrendered for cancellation, the regents shall thereupon have power to dissolve the corporation.
4. Whenever the charter or incorporation of an institution is revoked or an order of dissolution made pursuant to the provisions of this section, it shall be the duty of the trustees and/or the custodians of the permanent academic records of such institution to file the same with the state education department, or with such other agency as may be approved by said department where they shall be kept available for future reference. In the event, however, that an application is made to the supreme court for an order directing the disposition of assets of such educational corporation pursuant to the provisions of section two hundred twenty of this chapter and such order is thereupon made, the disposition of such permanent academic records may be directed therein. A copy of the order shall be filed with the education department by the applicant and such order shall so provide.
5. An education corporation may file an assumed name certificate pursuant to section one hundred thirty of the general business law, provided that the consent of the regents is endorsed or annexed thereto. Any education corporation that has filed an assumed name certificate with the secretary of state prior to the effective date of this subdivision shall file a copy of such certificate with the department no later than ninety days after the effective date of this subdivision.