N.Y. Transportation Law § 129: Approval of securities

§ 129. Approval of securities. A common carrier 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,

the construction, completion, extension or improvement of its

facilities, 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 by 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 commissioner 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 commissioner 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 commissioner 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 commissioner, 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; but this provision shall

not apply to any lawful issue of stock, to the lawful execution and

delivery of any mortgage or to the lawful issue of bonds thereunder,

which shall have been duly approved by the board of railroad

commissioners before July first, nineteen hundred seven. Stock may be

issued to stockholders as a stock dividend provided that there shall

have been secured from the commissioner 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. 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 this section and subsequently reacquired by such

corporation, provided, however, for good cause shown the commissioner

may exempt from the restriction hereof stocks, bonds or other evidences

of indebtedness. For the purpose of enabling him to determine whether he

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

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

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

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

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

any purpose not specified in such order. Such common carrier may issue

notes for proper corporate purposes and not in violation of law, 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 commissioner. The commissioner shall have power to require every

such carrier to file with the commissioner after the issuance of stocks,

bonds, notes or other evidences of indebtedness, issued with or without

the approval of the commissioner as herein provided, a notice of such

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

however, that the commissioner 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 a 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, bonds and other evidences of debt of a

corporation formed by the merger or consolidation of two or more other

corporations, exceed the sum of the capital stock, bonds and other

evidences of debt 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.