N.Y. Public Health Law § 2853: Nursing home companies; how created

§ 2853. Nursing home companies; how created. 1. Notwithstanding the

provisions of any other law or requirement to the contrary, non-profit

nursing home companies shall be incorporated and organized pursuant to

the not-for-profit corporation law and this article.

In addition to those matters required to be set forth in the

certificate of incorporation by the not-for-profit corporation law, the

certificate shall state:

a. That, among the purposes for which it is formed, the company is to

plan, construct, erect, build, acquire, alter, reconstruct,

rehabilitate, own, maintain and operate one or more nursing home

projects pursuant to this article.

b. The number of directors, which shall be not less than three nor

more than thirty-five. One additional director may be designated by the

commissioner. In the absence of fraud or bad faith, the director

appointed by the commissioner shall not be personally liable for the

debts, obligations or liabilities of the company.

c. That the real property of the company shall not be sold,

transferred, encumbered or assigned except as permitted by the

provisions of this article.

d. That the company has been organized exclusively to serve a public

purpose and that it shall be and remain subject to the supervision and

control of the commissioner pursuant to the provisions of article

twenty-eight of this chapter and this article.

e. That all income and earnings of the company shall be used

exclusively for its corporate purposes.

f. That no part of the net income or net earnings of the company shall

inure to the benefit or profit of any private individual, firm or

corporation.

2. Notwithstanding the provisions of any other law or requirement to

the contrary, limited-profit nursing home companies shall be

incorporated and organized pursuant to this article.

A limited-profit nursing home company may be created by three or more

persons, approved by the commissioner, by making, subscribing,

acknowledging and filing with the secretary of state a certificate which

shall state, in addition to those matters required to be set forth in

such certificate by the business corporation law to the extent that such

law is not inconsistent with this article:

a. That among the purposes for which it is formed, the company is to

plan, construct, erect, build, acquire, alter, reconstruct,

rehabilitate, own, maintain and operate one or more nursing home

projects pursuant to this article.

b. The number of directors, which shall not be less than three nor

more than thirty-five and who shall be elected by the shareholders of

the company. One additional director, who shall not be a shareholder and

who need not meet other qualifications which may be prescribed by the

certificate of incorporation or the by-laws, may be designated by the

commissioner. In the absence of fraud or bad faith, the director

appointed by the commissioner shall not be personally liable for the

debts, obligations or liabilities of the company.

c. That the real property of the company shall not be sold,

transferred, encumbered or assigned except as permitted by the

provisions of this article.

d. That the company has been organized to serve a public purpose and

that it shall be and remain subject to the supervision and control of

the commissioner pursuant to the provisions of article twenty-eight of

this chapter and this article; that so long as this article remains

applicable to any project of the company, all real and personal property

acquired by it, and all structures erected or rehabilitated by it, shall

be deemed to be acquired, rehabilitated or created for the proper

effectuation of the purposes of this article, and that the directors and

shareholders or debenture holders of such company shall be deemed to

have agreed that they shall at no time receive or accept from such

company in repayment of their investment in its shares or debentures any

sums in excess of the par value of the share or debentures, together

with such dividends, interest or other compensation as are prescribed by

or permitted under this article, and that, upon dissolution of the

company, any surplus remaining after the payment of all its obligations

shall be distributed and disposed of and title to the property may be

conveyed in fee, only as prescribed by this article.

e. That the entire amount to be paid in cash or property by the

shareholders and debenture holders shall be at least five percentum of

the project cost.

f. That in the event of a violation by a company of any provision of

the certificate of incorporation or of law or of the loan or mortgage

contract or any order of the commissioner or of any rules and

regulations duly promulgated pursuant to the provisions of this chapter,

the commissioner may remove any or all of the existing directors of the

company and appoint such person or persons whom the commissioner deems

advisable, including officers and employees of the department, as new

directors to serve in the places of those removed; that directors so

appointed by the commissioner who are officers or employees of the

department shall serve in such capacity without compensation; and that

any directors so appointed by the commissioner shall serve only for a

period coexistent with the duration of such violation or until the

commissioner is assured in a manner satisfactory to him against

violations of a similar nature.

The provisions of section thirty-five-a of the social services law

shall not be applicable to a limited-profit nursing home company,

notwithstanding any contrary provisions contained therein.