N.Y. Public Service Law § 101: Authority to issue stock, bonds and other forms of indebtedness

§ 101. Authority to issue stock, bonds and other forms of

indebtedness. A telegraph or telephone corporation may, when authorized

by the commission, issue stock, bonds, notes or other evidences of

indebtedness payable at periods of more than twelve months after the

date thereof, or a receiver of such a corporation, if duly authorized by

law, may issue receiver's certificates, when necessary for the

acquisition of property, the construction, completion, extension or

improvement of its facilities or the improvement or maintenance of its

service within the state, or for the discharge or lawful refunding of

its obligations, or reimbursement of moneys actually expended from the

income from any source, within five years next prior to the filing of

the application therefor, or for any of such purposes, provided,

however, that no authority shall be granted authorizing such issue for

reimbursement of moneys expended from income for betterments or

replacements unless the applicant shall have kept its accounts and

vouchers of such expenditures in such manner as to enable the commission

to ascertain the amount of moneys so expended and the purposes for which

such expenditures were made. Stock may be issued to stockholders as a

stock dividend provided that there shall have been secured from the

commission authority for such issuance and for a transfer of surplus to

capital in an amount equal to the par or stated value of the stock so

authorized and that the applicant has certified in the application for

authority that a sum equal to the amount to be so transferred was

expended for the purposes enumerated in this section. Stock may be

issued to an employee or director of a telegraph or telephone

corporation under a stock option plan pursuant to which such corporation

grants options to its employees or directors to purchase shares of

stock, such options to be exercisable for a stated period of time to

purchase shares of stock at the market value of the stock at the time of

issuance of the option, provided that there shall have been secured from

the commission authority for such issuance and that the applicant has

certified in the application for authority that the proceeds from the

exercise of the stock options are needed for one of the purposes

enumerated in this section. The issue of stocks, bonds or other

evidences of indebtedness, within the meaning of this section, shall

include the sale by any such corporation of any such securities

previously issued in compliance with the provisions of this section and

subsequently reacquired by such corporation, provided, however, for good

cause shown the commission may exempt from the restriction hereof

stocks, bonds or other evidences of indebtedness. The application for

authority shall state the amount of any such issue and the purposes to

which it or its proceeds are to be applied and shall certify that the

money, property or labor procured or to be procured or paid for by such

issue or its proceeds has been or is reasonably required for the

purposes specified in the application for authority, and that such

purposes are in no part reasonably chargeable to operating expenses or

to income except in the case of bonds, notes or other evidences of

indebtedness as may be specifically identified in the application for

authority. For the proceeds from a federal loan, a telegraph or

telephone corporation shall provide notice to the public service

commission of receipt of such issue but shall not be required to file an

application for authority. For the purpose of enabling the commission to

determine whether it should authorize such issuance, the commission

shall have the power to make such inquiry or investigation, hold such

hearings and examine such witnesses, books, papers, documents or

contracts as it may determine of importance in enabling it to reach a

determination. Except in instances where a telegraph or telephone

corporation has notified the commission it is engaged in securing a

federal loan for the expansion of broadband services, no such

corporation shall, without the consent of the commission, apply any such

issue or its proceeds to any purpose not specified in the application

for authority. Such telegraph corporation or telephone corporation may

issue notes for proper corporate purposes and not in violation of any

provision of this chapter or of any other act, payable at periods of not

more than twelve months without the consent of the commission; but no

such note shall, in whole or in part, directly or indirectly, be

refunded by any issue of stock or bonds, or by any evidences of

indebtedness running for more than twelve months, without the consent of

the commission. No telegraph corporation or telephone corporation shall

be required, however, to apply to the commission for authority to issue

stocks, bonds, notes or other evidence of indebtedness except for the

acquisition of property, the construction, completion, extension or

improvement of its facilities, or the improvement or maintenance of its

service within the state, or the discharge or refunding of obligations,

or reimbursement of moneys actually expended for such purposes. The

commission shall have power to require every such corporation to file

with the commission after the issuance of stocks, bonds, notes or other

evidences of indebtedness issued with or without the approval of the

commission as provided in this section, a notice of such transaction in

such form as the commission may prescribe. The commission shall have no

power to authorize the capitalization of any franchise or right to be a

corporation, nor to authorize the capitalization of any franchise or the

right to own, operate or enjoy any franchise whatsoever in excess of the

amount (exclusive of any tax or annual charge) actually paid to the

state or any political subdivision thereof, as the consideration of the

grant of such franchise or right, nor to authorize the issuance of any

stocks or other securities for any purposes other than those enumerated

in this section. Nor shall the corporate stock of the corporation formed

by the merger or consolidation of two or more other corporations exceed

the sum of the capital stock of the corporations so consolidated, at the

par value thereof, or such sum and any additional sum actually paid in

cash; nor shall any contract for consolidation or lease be capitalized

in the stock of any corporation whatever; nor shall any corporation

hereafter issue any bonds against or as a lien upon any contract for

consolidation or merger. Notwithstanding the foregoing provisions of

this section, any application for approval under this section shall be

deemed granted by the commission forty-five days after such application

is filed for approval, unless the commission, or its designee,

determines and informs the applicant in writing within such forty-five

day period that the public interest requires the commission's review and

its written order.