N.Y. Public Service Law § 69: Approval of issues of stock, bonds and other forms of indebtedness; approval of mergers or consolidations

§ 69. Approval of issues of stock, bonds and other forms of

indebtedness; approval of mergers or consolidations. A gas corporation

or electric corporation organized or existing, or hereafter

incorporated, under or by virtue of the laws of the state of New York,

may issue stocks, 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,

including the stock or bonds of any other corporation incorporated for,

or engaged in, the same or a similar business, in this state or any

other state, or proposing to operate or operating under a franchise from

the same or any other municipality, for the construction, completion,

extension or improvement of its plant or distributing system, or for the

improvement or maintenance of its service or for the discharge or lawful

refunding of its obligations or for the reimbursement of moneys actually

expended from income or from any other moneys in the treasury of the

corporation not secured or obtained from the issue of stocks, bonds,

notes or other evidences of indebtedness of such corporation, within

five years next prior to the filing of an application with the

commission for the required authorization, for any of the aforesaid

purposes except maintenance of service and except replacements in cases

where the applicant shall have kept its accounts and vouchers of such

expenditure in such manner as to enable the commission to ascertain the

amount of moneys so expended and the purposes for which such expenditure

was made; provided and not otherwise that there shall have been secured

from the commission an order authorizing such issue, and the amount

thereof, and stating the purposes to which the issue or proceeds thereof

are to be applied, and that, in the opinion of the commission, the

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

stock, bonds, notes or other evidences of indebtedness is or has been

reasonably required for the purposes specified in the order, and that

except as otherwise permitted in the order in the case of bonds, notes

and other evidences of indebtedness, such purposes are not in whole or

in part reasonably chargeable to operating expenses or to income. Stock

may be issued to stockholders as a stock dividend provided that there

shall have been secured from the commission an order authorizing such

issue and a transfer of surplus to capital in an amount equal to the par

or stated value of the stock so authorized and stating 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 gas corporation or electric 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 an order

authorizing such issue and 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. For the purpose of enabling it to determine whether it

should issue such an order, the commission shall make such inquiry or

investigation, hold such hearings and examine such witnesses, books,

papers, documents or contracts as it may deem of importance in enabling

it to reach a determination. Such corporation shall not without the

consent of the commission apply said issue or any proceeds thereof to

any purpose not specified in such order. Such gas corporation or

electric corporation may issue notes, for proper corporate purposes and

not in violation of any provision of this or of any other act, payable

at periods of not more than twelve months without such consent; but no

such notes 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. 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 herein provided, a notice of such

transaction in such form as the commission may prescribe. Provided,

however, that the commission shall have no power to authorize the

capitalization of any franchise 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 to any political

subdivision thereof as the consideration for 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 capital stock of a 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.

A permission or approval by the public service commission of a merger

or consolidation shall not be deemed to be an approval of the value of

any property or accounts of any company involved in the merger at the

time of the merger, nor shall any such permission or approval be

construed to be a certification by the public service commission that

the bonds and/or capital stock of any such merged, merging or

consolidating corporations are represented in value by commensurate

physical assets of such corporations, nor shall such approval be

evidence as to the value of any such property or account in subsequent

rate proceedings or before any court or public body.