New York eHealth Collaborative, Inc.
Conflict of Interests Policy
Adopted December 8, 2006
Article I
Article II
Article III
Article IV
Article V
Article VI
Article VII
Article VIII
Article I
Purpose
The purpose of this Conflict of Interests Policy is to protect the interest of New York eHealth Collaborative, Inc. (the "Corporation") when it is contemplating entering into a contract, transaction or arrangement that might benefit the private interest of a director or officer of the Corporation, or a member of a committee of the Corporation with board-delegated powers (a "Committee Member"), directly or indirectly.
The Corporation is incorporated under the New York State Not-for-Profit Corporation Law and is applying to the Internal Revenue Service for recognition as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "IRC").1 Accordingly, this policy incorporates the requirements of applicable New York State laws and regulations
governing conflicts of interest applicable to not-for-profit corporations, as well as general principles of conflicts of interest under the IRC.
This Conflict of Interests Policy does not take into consideration issues arising under the "intermediate sanctions" rules of IRC Section 4958.
Article II
Definitions
A. Conflict of Interests
A Conflict of Interests means any contract, transaction or arrangement involving the Corporation and an Interested Person (as defined below). A Conflict of Interests includes, but is not limited to, a Section 715 Conflict (as defined below).
B. Interested Person
The term "Interested Person" means, with respect to any contract, transaction or arrangement to which the Corporation is a party:
1. any of the Corporation's directors, officers or Committee Members if such person is a party to such contract, transaction or arrangement;
2. any of the Corporation's directors, officers or Committee Members if such person is a director, officer or employee of, or independent contractor to, any other corporation, firm, association or other entity that is a party to such contract, transaction or arrangement (or holds a position in such other corporation, firm, association or other entity with responsibilities or powers similar to those of a director or officer); or
3. any of the Corporation's directors, officers or Committee Members if such person has a direct or indirect financial interest in such contract, transaction or arrangement
C. Section 715 Conflict
The term "Section 715 Conflict" means a contract, transaction or arrangement described in
Section 715 of the New York State Not For-Profit Corporation Law (the "N-PCL"), i.e.:
1. A contract, transaction or arrangement between the Corporation and one of its directors or officers; and
2. A contract, transaction or arrangement between the Corporation and another corporation, firm, association or other entity in which one or more of the Corporation's directors or officers are directors or officers, or have a substantial financial interest. A "substantial financial interest" includes, but is not necessarily limited to, a 10% Financial Interest (as defined below).
D. 10% Financial Interest
A person has a 10% Financial Interest in any corporation, firm, association or other entity if such person has, directly or indirectly, through business, investment or Family, an aggregate
beneficial equity interest of 10 percent or more in such corporation, firm, association or other
entity.
E. Compensation
The term "Compensation" includes all forms of direct and indirect remuneration from the
Corporation, including gifts or favors from the Corporation that are substantial in nature.
F. Committee
The term "Committee" means a committee of the Board of Directors or a committee of the
Corporation.
G. Family
The "Family" of an individual shall include (i) such individual's parents, spouse, children and brothers and sisters, (ii) the parents, children and brothers and sisters of the individual's spouse and (iii) the spouses of the individual's parents, children and brothers and sisters.
Article III
Per Se Conflict of Interests
A. Loans
The Corporation shall not make a loan to (i) any of the Corporation's current directors or
officers; (ii) any corporation, firm, association or other entity in which any current director or officer is a director or officer (or holds a position in such corporation, firm, association or other entity with the responsibilities or powers similar to those of a director or officer); or (iii) any corporation, firm, association or other entity in which any director or officer has a direct or indirect substantial financial interest; provided, however, that if the Corporation is a "Type B" corporation, it may make a loan to another not-for-profit corporation that is a "Type B" corporation under Section 201 of the N-PCL (e.g., a corporation whose purposes are charitable, religious, educational, scientific, literary, cultural or the prevention of cruelty to children or animals); and provided further that (x) the purchase by the Corporation of bonds, debentures, or similar obligations of a type customarily sold in public offerings shall not be considered a loan for these purposes and (y) the ordinary deposit of funds in a bank shall not be considered a loan for these purposes.
B. Compensation Decisions
No director, officer or Committee Member who receives Compensation from the Corporation for services shall vote on matters pertaining to that person's Compensation.
Article IV
Procedures in Other Cases
A. Duty of Directors, Officers and Committee Members to Make Disclosure
In connection with any contract, transaction or arrangement between the Corporation and one or more third parties that is not described in Article Ill, if (i) any director, officer or Committee Member is an Interested Person or (ii) any director, officer or Committee Member knows or has reason to know of any other basis why such contract, transaction or arrangement may present a Conflict of Interests (either of the foregoing being referred to herein as a "Disclosure Event"), the relevant director, officer or Committee Member must disclose in good faith to the Board or
the Committee that is considering the contract, transaction or arrangement the material facts as to why such contract, transaction or arrangement may present a Conflict of Interests.
B. Determining Whether a Conflict of Interests Exists
1. If the Board or the Committee that is considering a contract, transaction or arrangement has been informed of or is otherwise aware of a potential Conflict of Interests,
a. any Interested Person shall leave the Board or Committee meeting while the remaining Board or Committee members discuss the contract, transaction or arrangement and the possible existence of a Conflict of Interests; and
b. the remaining Board or Committee members shall decide if the contract, transaction or arrangement presents a Conflict of Interests.
2. The Interested Person shall not be counted in determining the presence of a quorum for any vote concerning the existence of a Conflict of Interests.
3. No Interested Person shall participate in, or use personal influence with regard to, the
deliberations concerning the existence of a Conflict of Interests.
C. Procedures for Considering a Contract, Transaction or Arrangement Where a
Conflict of Interests Exists
The following procedures shall apply where the Board or Committee determines pursuant to Article IV, Section B, that a Conflict of Interests exists in connection with a contract, transaction or arrangement.
1. The Interested Person shall be required to leave the Board or Committee meeting while the remaining members discuss the contract, transaction or arrangement. However, the foregoing shall not apply in cases in which the Conflict of Interest is present solely by reason of the service of the Interested Person as a director or officer of the other party to such contract, transaction or arrangement and the Interested Person is so serving at the request of the Corporation. In these cases, the Interested Person shall be permitted to be present during the Board's or Committee's deliberations concerning the contract, transaction or arrangement.
2. If the Board or Committee determines that a Conflict of Interests exists because of a Section 715 Conflict, the contract, transaction or arrangement may be authorized, but only by a vote sufficient to approve the contract, transaction or arrangement without including the vote of the Interested Person.
3. If the Board or Committee determines that a Conflict of Interests exists because of a reason other than a Section 715 Conflict, the Board or Committee shall take such action as it deems appropriate under the circumstances (including, but not limited to, pursuing alternative transactions that would not present a Conflict of Interests).
D. Procedures for Considering a Contract, Transaction or Arrangement Where No
Conflict of Interests Exists
Following due deliberation pursuant to this Article IV, the Board or Committee may determine that a contract, transaction or arrangement does not present a Conflict of Interests. In such cases the Board or Committee need take no further action prior to approving the contract, transaction or arrangement pursuant other than its usual procedures for approving contracts, transactions or arrangements.
Article V
Violations of the Conflict of Interests Policy
If the Board or Committee has reasonable cause to believe that a director, officer or Committee Member has failed to make disclosure when there was a Disclosure Event and such director, officer or Committee Member knew or should have known that there was a Disclosure Event, the Board or Committee shall inform such director, officer or Committee Member of the basis for such belief and afford such director, officer or Committee Member an opportunity to explain the alleged failure to disclose.
If, after receiving the response of such director, officer or Committee Member and making such further investigation as may be warranted in the circumstances, the Board or Committee
determines that such director, officer or Committee Member has in fact failed to disclose a Conflict of Interests, it shall take appropriate disciplinary and corrective action, which may include, in its discretion, the removal of such director, officer or Committee Member from his or her positions with the Corporation.
Article VI
Records of Proceedings
The minutes of the Board and all Committees shall contain:
1. the names and positions of persons who disclosed that they were Interested Persons or otherwise were found to be Interested Persons, a description of the nature of the relationship and/or substantial financial interest which gave rise to such disclosure or identification, and a description of the contract, transaction or arrangement at issue;
2. the names of the directors who were present during the taking of the action to determine whether a Conflict of Interests was present, and the basis for there being a quorum for the taking of such action without including any interested directors;
3. the steps taken by the Board or Committee to determine whether a Conflict of Interests was present;
4. the Board's or Committee's decision as to whether a Conflict of Interests was present and the basis for such decision;
5. in a situation in which the Board or Committee decided that a Conflict of Interests was present because of a Section 715 Conflict, the Board's or Committee's decision as to whether to proceed with the contract, transaction or arrangement and the names of the persons who voted to approve the contract, transaction or arrangement; and
6. in a situation in which the Board or Committee decided that a Conflict of Interests was present for a reason other than a Section 715 Conflict, the actions taken by the Board or Committee pursuant to Article IV, Section C, paragraph 3 and the names of the persons who voted to approve the contract, transaction or arrangement.
Article VII
Annual Statements; Employees
1. Each director, officer and Committee Member shall annually sign a statement that affirms that such person (i) has received a copy of this Conflict of Interests policy, (ii) has read and understands the policy, (iii) has agreed to comply with the policy and (iv) understands that the Corporation is a tax-exempt organization and that, in order to maintain its Federal tax exemption under IRC Section 501(c)(3), the Corporation must engage primarily in activities which accomplish one or more of its tax-exempt purposes.
2. The Corporation will implement appropriate procedures to ensure that employees are aware of this policy and, where permitted by law, comply with the requirements of this policy.
Article VIII
Reviews and Amendments
1. The board of directors of the Corporation shall periodically review this Conflict of
Interests policy.
2. This Conflict of Interests Policy shall be amended by the Board of Directors from time to time as necessary to take into account developments in applicable New York State law and regulations, federal laws and regulations and federal tax law governing organizations described in IRC Section 50l(c)(3).
* * * *
1 Upon receipt of a determination letter from the Internal Revenue Service confirming the Corporation's status as an organization exempt from Federal income taxes under Section 501(c)(3) of the IRC, the phrase "is applying to the Internal Revenue Service for recognition" shall become "is recognized by the Internal Revenue Service".
|
