Selected Sections of the Education Law Relating to Education Corporations (Sections 220-224, Section 226)
Disclaimer: Sections from the Education Law are presented here for general informational purposes as a public service. Although reasonable efforts have been made to ensure that these sections are current, complete and accurate, the State Education Department does not warrant or represent that this information is current, complete and accurate. The statutes are subject to change on a regular basis. Readers are advised to consult McKinney's Consolidated Laws of New York (West Publishing Corporation) for the official exposition of the text of these statutes, as well as for amendments and any subsequent changes or revisions thereto.
§220. Distribution of assets
- Whenever the regents have revoked the charter of any educational corporation or dissolved such corporation pursuant to section two hundred nineteen of this chapter or whenever a provisional charter has expired, if the corporation has assets the board of trustees shall, within three months after such revocation, dissolution or expiration, petition the supreme court in the judicial district where the principal office of the corporation is or was located for an order directing the disposition of any and all property belonging to the corporation. Such petition shall be duly verified and shall set forth a complete statement of all the assets, together with their location and an estimate of their value, and also a statement of the ascertainable debts of the corporation.
- Such petition shall be accompanied by proof that notice of the time and place of such intended application to said court has been duly published once in each week for at least four weeks successively, next preceding such application, in a newspaper circulated in the county where such corporation is located.
- A copy of such petition shall be served upon the regents and the attorney general not less than ten days prior to such application.
- The court shall direct the sale of sufficient designated assets to pay any outstanding debts and the cost of dissolution. The regents and the board of trustees may present to the court their recommendation as to the disposition of the remaining property of the corporation if there be library books, objects of art or of historical significance, as far as possible they shall not be sold but shall be transferred to libraries, museums or educational institutions willing to accept them. If a charter contains a provision indicating a proposed disposition of the assets in case of dissolution, such provision shall be followed by the court in its order as far as practicable. If there by any surplus moneys after payment of debts and the expenses of liquidation, the court may direct that the same be devoted and applied to any such educational, religious, benevolent, charitable or other objects or purposes as the said trustees may indicate by their petition and the said court may approve.
- Upon the revocation of the charter of an educational corporation or its dissolution, the trustees of such corporation shall be empowered to continue in office for the purpose of settlement of the affairs of the corporation.
§221. Dissolution of educational institution by stockholders
- Meeting to consider application for dissolution, when to be called. The trustees of any educational corporation chartered by the regents or subject to their visitation and having capital stock, may, and upon the written application of any person owning or lawfully holding one-third of the said capital stock, must call a general meeting of the stockholders of the said corporation as hereinafter provided, for the purpose of determining whether or not such corporation shall surrender its charter and be dissolved and its property distributed among the stockholders thereof.
- Notice thereof, how published. The notice for such general meeting must state the object thereof and be subscribed by the chairman or other acting presiding officer and the secretary or acting secretary of the said corporation or board of trustees; it shall be published once a week for three successive weeks prior to such meeting in a daily or weekly newspaper circulated in the place where the principal office of such corporation is located; or if there be no such paper, then in a daily or weekly paper circulated within the county, if there be one, or, if not, in an adjoining county to that in which such corporation is located.
- Vote requisite for surrender of charter and dissolution. Whenever, at a meeting of the stockholders called as hereinbefore provided, any person or persons holding or qualified to vote upon a majority of the capital stock of such educational corporation shall vote to surrender the charter thereof and to dissolve the corporation, the trustees of such corporation, or a majority of them, must make and sign a certificate of such action, cause the same to be properly attested by the officers of the corporation and file the same, together with a copy of the published notice for the meeting at which such action was taken, and due proof of the publication thereof, in the office of the board of regents of the university of the state of New York and thereupon, if the said proceedings shall have been regularly conducted as above prescribed, the charter of said corporation shall be deemed to be surrendered and the said corporation dissolved.
- Powers of trustees of educational corporations upon dissolution. Upon the dissolution of such educational corporation as herein provided, or upon the revocation by the regents, pursuant to section two hundred nineteen of this chapter, of the charter of an educational corporation having outstanding shares of stock, the trustees thereof shall forthwith become and be trustees of the creditors and stockholders of the corporation dissolved. They shall have full power to settle the affairs of the said corporation; to collect and pay the outstanding debts; to sue for and recover debts and property thereof by the name of the trustees of such corporation; to sell and dispose of the property thereof, at public or private sale, and to divide among the stockholders the moneys or other property that shall remain after the payment of debts and necessary expenses.
- Notice to creditors to present claims, how published. The said trustees shall, after the dissolution of the said corporation, insert in a newspaper circulated in the place where the principal office of said corporation is located, or if there be none such then in a newspaper circulated within the county, if there be one, or, if not, in an adjoining county, a notice once in each week for three consecutive months, requiring all persons having claims against the said corporation dissolved to present the same with proof thereof to the said trustees at the place designated in such notice, on or before a day therein named which shall be not less than three months from the first publication thereof. In case any action shall be brought upon any claim which shall not have been presented to the said trustees within three months from the first publication of such notice, the said trustees shall not be chargeable for any assets, moneys or proceeds of the said corporation dissolved, which they may have paid in satisfaction of other claims against the said corporation, or in making distribution to the stockholders thereof, before the commencement of such action.
- Surrender of stock scrip, upon distribution of shareholders. Upon the distribution by the said trustees of assets or property, or the proceeds thereof, of the dissolved corporation among its stockholders, the said trustees may require the certificates of ownership of capital stock, if such have been issued, standing in the name of any stockholder claiming a distributive share, or under whom such share is claimed, to be surrendered for cancellation by such stockholder or person claiming the said share. In the event of the non-production of any such certificate, the said trustees may require satisfactory proof of the loss thereof, or of any other cause for such non-production, together with such security as they may prescribe, before payment of the distributive share to which the person claiming upon such share of stock may appear to be entitled.
- Notice of distribution, to absent and unknown shareholders. In case the said trustees upon such distribution by them of assets or property, or the proceeds thereof, of the dissolved corporation among its stockholders, shall be unable to find any of the said stockholders or the persons lawfully owning or entitled to any portion of the said capital stock, they shall give notice in the manner hereinabove provided for calling the general meeting of stockholders of such distribution, to the persons in whose names such stock shall stand upon the books of the said corporation, requiring them to appear at a time and place designated, to receive the portion of such assets or property to which they may be entitled; in case of the failure of any such persons to so appear, it shall be lawful for the said trustees to pay over and deliver to the county treasurer of the county wherein the principal office of such corporation was located, or to any trust company or other corporation located within such county and authorized to receive moneys on deposit under order or judgment of a court of record, the proportion of the assets, property or proceeds aforesaid which such non-appearing stock bears to the whole stock; the said trustees shall also deliver therewith a list of the persons entitled to receive the same, together with the separate amounts to which they shall be severally entitled.
- Liability of trustees, when to cease. Upon the payment and discharge of the debts and obligations of the corporation dissolved, as hereinbefore provided, and the distribution of its assets, property and proceeds among the stockholders thereof, and due provision made, as hereinabove prescribed, for the interests of non-appearing stockholders and such as can not be found, the said trustees shall become and be relieved and discharged from further duty, liability and responsibility by reason of their relation to the said corporation, or towards the stockholders thereof.
- Duties and liabilities of custodians. Any county treasurer, trust company or other corporation to whom assets, property or proceeds shall be delivered as herein provided, shall hold the same in trust for the persons designated and entitled to receive it; and upon receiving satisfactory proof of the right and title thereto, or upon the order of any court of record competent to adjudicate thereupon, shall pay over and deliver to any persons entitled to receive the same the portion of such proceeds, property or assets to which they shall be entitled.
§222. Suspension of operations
If any institution in the university shall discontinue its educational operations without cause satisfactory to the regents, it shall surrender its charter to them, subject, however, to restoration whenever arrangements satisfactory to the regents are made for resuming its work.
§223. Consolidation of corporations
Any two or more corporations chartered under the powers of the regents or incorporated under a special act of the legislature or under a general law for purposes for which a charter may be granted by the regents may enter into an agreement for the consolidation of such corporations, setting forth the terms and conditions of consolidation, the name of the proposed corporation, the place or places where the institution or institutions to be maintained is or are to be located, the number of its directors, which may be five or more, the time of the annual election and the names of the persons to be directors until the first annual meeting.
The agreement must be approved by three-fourths of the trustees or directors of such corporation at a meeting of the trustees or directors of each corporation, separately and specially called for that purpose, which approval, duly verified by the chairman and clerk of such meeting, shall be annexed to the petition. On presentation of a petition, together with the certificate of approval and the agreement for consolidation, and on such notice to interested parties as the regents shall prescribe, and after hearing such interested parties as desire to be heard, the regents may make and execute an order for the consolidation of the corporations on such terms and conditions as the regents may prescribe. When such order is made, such corporations shall become one corporation by the name designated in the order, and shall be subject only to such duties and obligations as a corporation formed under this chapter for the same purposes; and all the property belonging to the corporation so consolidated shall be vested in and transferred to the new corporation, to the same extent as if they had been contracted or incurred by it. If any corporation so consolidated was incorporated under a special act of the legislature or under a general law pursuant to which its certificate of incorporation was filed with the department of state, the regents shall deliver a certified copy of the order of consolidation to such department.
- a. No individual, association, partnership or corporation not holding university, college or other degree-conferring powers by special charter from the legislature of this state or from the regents, shall confer any degree or use, advertise or transact business under the name university or college, or any name, title or descriptive material indicating or tending to imply that said individual, association, partnership or corporation conducts, carries on, or is a school of law, medicine, dentistry, pharmacy, veterinary medicine, nursing, optometry, podiatry, architecture or engineering, unless the right to do so shall have been granted by the regents in writing under their seal.
b. Notwithstanding any other provision of law to the contrary, no individual, association, partnership or corporation operating an institution on a for-profit basis and holding degree-conferring powers granted by the regents pursuant to this subdivision shall, through a change of ownership or control, convey, assign or transfer such degree-conferring authority without the consent of the regents. For purposes of this subdivision, a change of ownership or control shall include, but shall not be limited to, merger or consolidation with any corporation; sale, lease, exchange or other disposition of all or substantially all of the assets of the institution; and the transfer of a controlling interest of the stock of a corporation.
- No person shall buy, sell or fraudulently or illegally make or alter, give, issue or obtain or attempt to obtain by fraudulent means any diploma, certificate or other instrument purporting to confer any literary, scientific, professional or other degree, or to constitute any license, or a duplicate thereof, or any certificate of registration, or to certify to the completion in whole or in part of any course of study in any university, college, academy or other educational institution.
- No person, firm, association or corporation shall offer or otherwise advertise a college degree in the state of New York without the prior written approval of the department, in accordance with the regulations of the commissioner of education, unless the institution offering or advertising such a degree is accredited by at least one accrediting commission recognized by the United States commissioner of education as a reliable authority for the purpose of accreditation at the post secondary level or unless the program leading to such degree is registered with the department of education of the state of New York. A violation of this subdivision is a violation punishable by a fine not to exceed five hundred dollars. Any newspaper or other advertising medium which carries said advertisement shall be exempt from the provisions of this subdivision.
- a. Notwithstanding the provisions of subdivision three of this section, the commissioner of education, boards of education, school authorities or authorized school officers shall not be required to accept for purposes of certification, recertification, licensure, appointment, promotional increment, or salary differential for pedagogic personnel, any diploma, degree or course credit from a university, college, academy, school or other institution of learning located outside the state of New York if such diploma, degree or course credit was granted without the requirement of on-campus attendance and if instruction and testing was transacted primarily by correspondence.
Any person making application for certification, recertification, licensure, appointment, promotional increment or salary differential may be required by the commissioner, or by boards of education, school authorities or authorized school officers to submit a signed statement or affidavit as part of such application to identify any diploma, degree or course credit which was granted by a university, college, academy, school or other institution of learning located outside the state of New York if such diploma, degree or course credit was granted without the requirement of on-campus attendance and if instruction and testing was transacted primarily by correspondence. A willful and wrongful misrepresentation on such application shall constitute grounds for disciplinary action in accordance with the provisions of this chapter, the rules of the regents, the regulations of the commissioner, or the bylaws, rules or regulations of such school authorities.
The provisions of this subdivision shall not apply to any diploma, degree or course credit completed before the effective date of this subdivision.
- No diploma or degree shall be conferred in this state except by a regularly organized institution of learning meeting all requirements of law and of the university, nor shall any person, with intent to deceive, falsely represent himself to have received any such degree or credential, nor shall any person append to his name any letters in the same form registered by the regents as entitled to the protection accorded to university degrees unless he shall have received from a duly authorized institution the degree or certificate for which the letters are registered. Counterfeiting or falsely or without authority making or altering in a material respect any such credential issued under seal shall be a felony; any other violation of this section shall be a misdemeanor; and any person who aids or abets another, or advertises or offers himself to violate the provisions of this section, shall be liable to the same penalties.
§226. Powers of trustees of institutions
The trustees of every corporation created by the regents, unless otherwise provided by law or by its charter, may:
- Number and quorum. Fix the term of office and number of trustees, which shall not exceed twenty-five, nor be less than five. If any institution has more than five trustees, the body that elects, by a two-thirds vote after notice of the proposed action in the call for a meeting, may reduce the number to not less than five by abolishing the office of any trustee which is vacant and filing in the regents’ office a certified copy of the action. A majority of the whole number shall be a quorum.
- Executive committee. Elect an executive committee of not less than five, who, in intervals between meetings of the trustees, may transact such business of the corporation as the trustees may authorize, except to grant degrees or to make removals from office.
- Meetings and seniority. Meet on their own adjournment or when required by their bylaws, and as often as they shall be summoned by their chairman, or in his absence by the senior trustees, on written request of three trustees. Seniority shall be according to the order in which the trustees are named in the charter or subsequently elected. Notice of the time and place of every meeting shall be mailed not less than five nor more than ten days before the meeting to the usual address of every trustee.
- Vacancies and elections; removals by board of regents. Fill any vacancy occurring in the office of any trustee by electing another for the unexpired term; provided, however, that where trustees are elected by the legal voters the person so appointed to fill any such vacancy shall hold office until the next annual election of trustees. The office of any trustee shall become vacant on his death, resignation, refusal to act, removal from office, expiration of his term, or any other cause specified in the charter. If any trustee shall fail to attend three consecutive meetings without excuse accepted as satisfactory by the trustees, he shall be deemed to have resigned, and the vacancy shall be filled. Any vacancy in the office of trustee continuing for more than one year, or any vacancy reducing the number of trustees to less than two-thirds of the full number may be filled by the regents. The regents may remove any trustee of a corporation created by them for misconduct, incapacity, neglect of duty, or where it appears to the satisfaction of the regents that the corporation has failed to or refuses to carry into effect its educational purposes. A hearing in the proceeding for the removal of such trustees shall be had before the board of regents or a committee thereof and the trustees shall be given at least ten days’ notice of the time and place of such hearing. In case of removal the regents may appoint successors to the trustees so removed. The provisions of this section as to removal and filling of vacancies in trustees shall not apply to corporations now or hereafter established and maintained by a religious denomination, order or sect. No person shall be ineligible as a trustee by reason of sex.
- Property holding. Take and hold by gift, grant, devise or bequest in their own right or in trust for any purpose comprised in the objects of the corporation, such additional real and personal property, beyond such as shall be authorized by their charter or by special or general statute, as the regents shall authorize within one year after the delivery of the instrument or probate of the will, giving, granting, devising or bequeathing such property, and such authority given by the regents shall make any such gift, grant, devise or bequest operative and valid in law. Any grant, devise or bequest shall be equally valid whether made in the corporate name or to the trustees of a corporation, and powers given to the trustees shall be powers of the corporation.
- Control of property. a. Buy, sell, mortgage, let and otherwise use and dispose of its property as they shall deem for the best interests of the institution; and also to lend or deposit, or to receive as a gift, or on loan or deposit, literary, scientific or other articles, collections, or property pertaining to their work; and such gifts, loans or deposits may be made to or with the university or any of its institutions by any person, or by legal vote of any board of trustees, corporation, association or school district, and any such transfer of property, if approved by the regents, shall during its continuance, transfer responsibility therefor to the institution receiving it, which shall also be entitled to receive any money, books or other property from the state or other sources to which said corporation, association or district would have been entitled but for such transfer.
b. Notwithstanding any other provision of law, prior to the discarding of used or surplus books or other such reading materials by trustees of a chartered public or free association library which receives over ten thousand dollars in state aid, such trustees shall offer to donate such books or materials to a not-for-profit corporation or political subdivision located within the area of the library system or offer to sell such books or materials to the general public. The trustees shall retain any proceeds received from the sale of such books and materials for the purpose of maintaining and improving library service within the system.
- Officers and employees. Appoint and fix the salaries of such officers and employees as they shall deem necessary who, unless employed under special contract, shall hold their offices during the pleasure of the trustees; but no trustee shall receive compensation as such. The president or chief executive officer of an association library corporation shall be elected by the trustees from their own number and shall be the chairman of the board.
- Removals and suspensions. Remove or suspend from office by vote of a majority of the entire board any trustee, officer or employee engaged under special contract, on examination and due proof of the truth of a written complaint by any trustee, of misconduct, incapacity or neglect of duty; provided, that at least one week’s previous notice of the proposed action shall have been given to the accused and to each trustee.
- Degrees and credentials. Grant such degrees and honors as are specifically authorized by their charter, and in testimony thereof give suitable certificates and diplomas under their seal; and every certificate and diploma so granted shall entitle the conferee to all privileges and immunities which by usage or statute are allowed for similar diplomas of corresponding grade granted by any institution of learning.
- Rules. Make all bylaws and rules necessary and proper for the purposes of the institution and not inconsistent with law or any rule of the university; but no rule by which more than a majority vote shall be required for any specified action by the trustees shall be amended, suspended or repealed by a smaller vote than that required for action thereunder.