SECTION 1. Chapter 12 of the General Laws is hereby amended by inserting after section 8F the following section:-
Section 8F 1/2. (a) For the purposes of this section, the following words shall have the following meanings:-
“Compensation”, anything given or received for or on account of services, not including (i) reimbursement for costs and expenses reasonably incurred by the independent officer, director or trustee in the course and support of such service, or (ii) any noncash items of value that may be set forth in regulations by the attorney general.
“Independent officer, director or trustee”, an officer, director or trustee of a public charity, not including an employee of the public charity or an employee of a subsidiary or affiliate of the public charity.
“Massachusetts based public charity”, a public charity incorporated or otherwise organized in Massachusetts or, if incorporated or organized outside of Massachusetts, that primarily conducts its business in Massachusetts.
“Professional fiduciary services”, fiduciary services provided as part of the ordinary course of the trade or business of an individual or institution.
(b) No Massachusetts based public charity required to be registered under section 8E and to file annual reports under section 8F shall provide compensation to any independent officer, director or trustee for service as an independent officer, director or trustee except with the approval of the attorney general under this section; provided, however, that an independent officer, director or trustee who provides professional fiduciary services to a Massachusetts based public charity may receive compensation for providing those services but shall not receive compensation for otherwise serving as an independent officer, director or trustee except with the approval of the attorney general under this section.
Any Massachusetts based public charity intending to provide compensation to any independent officer, director or trustee shall file an application with the division, on the forms and with the supporting information and documentation as the attorney general shall from time to time prescribe, requesting the approval of the attorney general to provide compensation.
The attorney general may adopt and promulgate guidelines, rules or regulations to carry out the provisions of this section including, but not limited to, the criteria for granting approval and the time period during which the approval shall be effective. The criteria shall recognize that service as an independent officer, director or trustee of a public charity is recognized as a voluntary contribution of time and expertise to benefit the community served by the public charity and that any departure from the voluntary nature of that service requires a clear and convincing showing that compensation is necessary to enable the public charity to attract and retain experienced and competent individuals to serve as independent officers, directors or trustees. These regulations may also authorize the attorney general to exempt categories of charities from the prohibition of this section if the exemption serves the public interest. Any regulations allowing for an exemption shall set forth the criteria for granting an exemption.
If the attorney general approves an application for compensation, the amount paid as compensation shall be limited to the amount the Massachusetts based public charity reasonably determines to be necessary to accomplish the purposes for which compensation is paid. The attorney general may rescind the approval for compensation if he finds that any compensation paid under this section is in excess of that reasonably necessary to accomplish the purposes for which compensation is approved and paid.
SECTION 2. Section 1 shall take effect 6 months after the effective date of this act.
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