N.Y. Not-for-Profit Corporation Law § 504: Subventions

§ 504. Subventions.

(a) The certificate of incorporation may provide that the corporation

shall be authorized by resolution of the board to accept subventions

from members or non-members on terms and conditions not inconsistent

with this chapter, and to issue certificates therefor. Subvention

certificates shall be nontransferable unless such resolution provides

that they shall be transferable, either at will or subject to specified

restrictions.

(b) A subvention shall consist of money or other property, tangible or

intangible, actually received by the corporation or expended for its

benefit or for its formation or reorganization, or a combination

thereof. In the absence of fraud in the transaction, the judgment of the

board as to the value of the consideration received by the corporation

shall be conclusive.

(c) The rights of holders of subvention certificates shall at all

times be subordinate to the rights of creditors of the corporation.

(d) The resolution of the board may provide that holders of subvention

certificates shall be entitled to a fixed or contingent periodic payment

out of the corporate assets equal to a percentage of the original amount

or value of the subvention, but such payment shall not exceed two-thirds

of the maximum interest rate authorized pursuant to section 5-501 of the

general obligations law.

(e) The resolution of the board may provide that a subvention shall be

redeemable, in whole or in part, at the option of the corporation at

such price or prices (not to exceed the original amount or value of the

subvention plus any periodic payments due or accrued thereon), within

such period or periods, and on such terms and conditions, not

inconsistent with this chapter, as are stated in the resolution.

(f) The resolution of the board may provide that holders of all or

some subvention certificates shall have the right to require the

corporation after a specified period of time to redeem such

certificates, in whole or in part, at a price or prices that do not

exceed the original amount or value of the subvention plus any periodic

payments due or accrued thereon, upon an affirmative showing that the

financial condition of the corporation will permit the required payment

to be made without impairment of its operations or injury to its

creditors. The right to require redemption may in addition be

conditioned upon the occurrence of a specified event. For the purpose of

enforcing their rights under this paragraph, holders of subvention

certificates shall be entitled to inspect the books and records of the

corporation.

(g) Holders of subvention certificates, upon dissolution of the

corporation, shall be entitled, after the claims of creditors have been

satisfied, to a repayment of the original amount or value of the

subvention plus any periodic payments due or accrued thereon, unless a

lesser sum is specified in the certificate of incorporation or the

resolution of the board concerning such subvention.