§ 511 — Share distributions and changes

New York § 511

• Jurisdiction: New York
• Law BSC: Business Corporation
• Art. 5: Corporate Finance

Text

§ 511. Share distributions and changes.\n (a) A corporation may make pro rata distributions of its authorized\nbut unissued shares to holders of any class or series of its outstanding\nshares, subject to the following conditions:\n (1) If a distribution of shares having a par value is made, such\nshares shall be issued at not less than the par value thereof and there\nshall be transferred to stated capital at the time of such distribution\nan amount of surplus equal to the aggregate par value of such shares.\n (2) If a distribution of shares without par value is made, the amount\nof stated capital to be represented by each such share shall be fixed by\nthe board, unless the certificate of incorporation reserves to the\nshareholders the right to fix the consideration for the issue of such\nshares, and there shall be transferred to stated capital at the time of\nsuch distribution an amount of surplus equal to the aggregate stated\ncapital represented by such shares.\n (3) A distribution of shares of any class or series may be made to\nholders of the same or any other class or series of shares unless the\ncertificate of incorporation provides otherwise, provided, however, that\nin the case of a corporation incorporated prior to the effective date of\nsubparagraph (4) of this paragraph, then so long as any shares of such\nclass remain outstanding a distribution of shares of any class or series\nof shares of such corporation may be made only to holders of the same\nclass or series of shares unless the certificate of incorporation\npermits distribution to holders of another class or series, or unless\nsuch distribution is approved by the affirmative vote or the written\nconsent of the holders of a majority of the outstanding shares of the\nclass or series to be distributed.\n (4) A distribution of any class or series of shares shall be subject\nto the preemptive rights, if any, applicable to such shares pursuant to\nthis chapter.\n (b) A corporation making a pro rata distribution of authorized but\nunissued shares to the holders of any class or series of outstanding\nshares may at its option make an equivalent distribution upon treasury\nshares of the same class or series, and any shares so distributed shall\nbe treasury shares.\n (c) A change of issued shares of any class which increases the stated\ncapital represented by those shares may be made if the surplus of the\ncorporation is sufficient to permit the transfer, and a transfer is\nconcurrently made, from surplus to stated capital, of an amount equal to\nsuch increase.\n (d) No transfer from surplus to stated capital need be made by a\ncorporation making a distribution of its treasury shares to holders of\nany class of outstanding shares; nor upon a split up or division of\nissued shares of any class into a greater number of shares of the same\nclass, or a combination of issued shares of any class into a lesser\nnumber of shares of the same class, if there is no increase in the\naggregate stated capital represented by them.\n (e) Nothing in this section shall prevent a corporation from making\nother transfers from surplus to stated capital in connection with share\ndistributions or otherwise.\n (f) Every distribution to shareholders of certificates representing a\nshare distribution or a change of shares which affects stated capital or\nsurplus shall be accompanied by a written notice (1) disclosing the\namounts by which such distribution or change affects stated capital and\nsurplus, or (2) if such amounts are not determinable at the time of such\nnotice, disclosing the approximate effect of such distribution or change\nupon stated capital and surplus and stating that such amounts are not\nyet determinable.\n (g) When issued shares are changed in any manner which affects stated\ncapital or surplus, and no distribution to shareholders of certificates\nrepresenting any shares resulting from such change is made, disclosure\nof the effect of such change upon the stated capital and surplus shall\nbe made in the next financial statement covering the period in which\nsuch change is made that is furnished by the corporation to holders of\nshares of the class or series so changed or, if practicable, in the\nfirst notice of dividend or share distribution or change that is\nfurnished to such shareholders between the date of the change of shares\nand the next such financial statement, and in any event within six\nmonths of the date of such change.\n