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Governor Cuomo Issues Major Change To How A Board Of Directors May Act (And Other Significant Changes Affecting How We Conduct Business)


Business Corporation Law (“BCL”) §708(b) allows any action required or permitted to be taken by a board (or any committee thereof) to be taken without a meeting if all members of the board (or the committee) consent in writing to the adoption of a resolution authorizing the action. On March 18, 2020, Governor Cuomo issued  Executive Order No. 202.5 which modifies BCL §708(b) by permitting consent via electronic mail provided the consent is accompanied by information reasonably demonstrating  that the transmission was authorized by the consenting  board/committee member.  Unless renewed, “electronic consent” is valid through April 17, 2020.

In addition to this significant change, the following recent executive orders have modified how businesses may now handle their business:

1)  Executive Order No. 202.7 addresses the acts of Notaries. As per this executive order, any notarial act  required under New York State law may  now  be performed utilizing audio-video technology provided  the following protocol is implemented: (i) the person seeking the Notary’s services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after, (ii) the video conference must allow for direct interaction between the person signing the instrument (the “Signer”) and the Notary (e.g., no pre-recorded videos of the Signer), (iii) the Signer must affirmatively represent that he/she is physically situated in the State of New York, (iv) the Signer must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed, and (v) the Notary may notarize the transmitted copy of the document and transmit the same back to the Signer. In such event, the Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty (30) days after the date of execution. Unless renewed, “virtual notarization” is valid through April 18, 2020.

On March 31, 2020, New York’s Department of State issued guidance concerning this Executive Order. Most notably, if the Notary and Signer are in different counties, the Notary should indicate on the document the county where each person is located. Electronic transmission can be sent in any format (e.g., PDF, JPEG, TIFF) provided it is a legible copy. The Notary must print and sign the document in ink (no electronic signatures). Finally, it is advised (although not required) that the Notary (i) keep a notary log on each notarization and (ii) indicate on the document that the notarization was made pursuant to Executive Order No. 202.7.

2) Executive Order No. 202.8 modifies BCL §602(a) , BCL §605(a) and BCL §605(b): Under §602(a), the initial by-laws of a corporation must be adopted at an organization meeting. §605(a) and §605(b) address meetings where shareholders are required or permitted to take any action, notices regarding same and adjournments of such meetings. This executive order temporarily suspends same to the extent they require meetings of shareholders to be noticed and held at a physical location. Unless renewed, these changes are valid through April 19, 2020.

Any issues raised in this article may be addressed to either Brian Adelman who can be reached at (516) 265-1184 or at badelman@moritthock.com or to Jill Braunstein who can be reached at (516) 265-1182 or at jbraunstein@moritthock.com 

 

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