N.Y. Public Service Law § 82: Approval of issues of stock, bonds and other forms of indebtedness

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

indebtedness. A steam corporation organized or existing, or hereafter

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

may 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 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 stock, bonds, notes or other evidences of

indebtedness of such corporation, within ten 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 steam

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 steam 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 corporations exceed

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

the par value thereof, or such sum or 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.