KRS 198A.060: Requirements for loan agreement or articles of incorporation of assisted

entities -- Limit on return of investment of stockholders or members.

(1) The loan agreement or the articles of incorporation, association, partnership or other

governing docume nts of any sponsor, builder or developer assisted under this

chapter shall contain, in addition to other requirements of law:

(a) That the corporation, cooperative or association has been organized to provide

housing facilities and such social, recreationa l, commercial and community

facilities as may be incidental or appurtenant thereto for persons or families of

lower and moderate income;

(b) That the operations of the corporation, cooperative or association may be

supervised by the Kentucky Housing Corpor ation and that the corporation,

cooperative or association shall enter into such agreements with the Kentucky

Housing Corporation as the Kentucky Housing Corporation from time to time

requires, providing for regulation by the Kentucky Housing Corporation of the

planning, development and management of any residential housing undertaken

by the corporation, cooperative or association and their disposition of the

property and franchises;

(c) That the Kentucky Housing Corporation shall have the power to appoint to the

board of directors of the corporation, cooperative or association a number of

new directors, which number shall be sufficient to constitute a majority of the

board, if the corporation, cooperative or association has received a loan or

advance under this chapter and the Kentucky Housing Corporation determines

that the loan or advance is in jeopardy of not being repaid, or that the

residential housing for which the loan or advance was made is in jeopardy of

not being constructed.

(2) The articles of incorporation, association, partnership or other governing documents

of any limited dividend corporation, association or entity of any sponsor, builder or

developer assisted under this chapter shall provide, in addition to other

requirements of law, that eve ry stockholder or member shall be deemed to have

agreed that he shall not receive from the corporation, association or entity in

repayment of his investment any sums in excess of the face value of the investment

attributable to his respective interest plus cumulative dividend payments at such rate

as the Kentucky Housing Corporation deems to be reasonable and proper.