N.Y. Banking Law § 517: How net earnings credited for dividend purposes, credits to surplus fund and to undivided profits, dividends to stockholders

§ 517. How net earnings credited for dividend purposes, credits to

surplus fund and to undivided profits, dividends to stockholders. When

the net earnings of an investment company having preferred shares issued

and outstanding have been determined at the close of a dividend period,

if the surplus fund does not equal twenty per centum of the investment

company's capital, one-tenth of such net earnings shall be credited to

the surplus fund, or so much thereof, less than one-tenth, as will make

such fund equal twenty per centum of such capital. The balance of such

net earnings, or the entire amount thereof if such fund equals such

twenty per centum, may be credited to the investment company's profit

and loss account; or, if its expenses and losses for such dividend

period exceed its gross earnings, such excess shall be charged to its

profit and loss account. The credit balance of such account shall

constitute the undivided profits at the close of such dividend period,

which undivided profits shall be available for dividends.

The directors of any investment company may annually, semi-annually or

quarterly, but not more frequently, declare such dividends as they shall

judge expedient from such undivided profits; provided, however, that the

directors of any such company may declare a dividend in the last month

of the fiscal year of such company, in lieu of any other semi-annual or

quarterly declaration in the same fiscal year. No investment company

shall declare any dividends to its stockholders until it shall have made

good any existing impairment of its capital and any existing

encroachment on its reserves required to be maintained against deposits.