§ 89-F — Approval of issues of stock, bonds and other forms of indebtedness

§ 89-f. Approval of issues of stock, bonds and other forms of\nindebtedness. A water-works corporation organized or existing, or\nhereafter incorporated, under or by virtue of the laws of the state of\nNew York, may issue stocks, bonds, notes or other evidences of\nindebtedness payable at periods of more than twelve months after the\ndate thereof, or a receiver of such a corporation, if duly authorized by\nlaw, may issue receiver's certificates, when necessary for the\nacquisition of property, the construction, completion, extension or\nimprovement of its water system, or for the improvement or maintenance\nof its service or for the discharge or lawful refunding of its\nobligations or for the reimbursement of moneys actually expended from\nincome or from any other moneys in the treasury of the corporation not\nsecured or obtained from the issue of stocks, bonds, notes or other\nevidences of indebtedness of such corporation, within five years next\nprior to the filing of an application with the commission for the\nrequired authorization, for any of the aforesaid purposes except\nmaintenance of service and except replacements in cases where the\napplicant shall have kept its accounts and vouchers of such expenditure\nin such manner as to enable the commission to ascertain the amount of\nmoneys so expended and the purposes for which such expenditure was made;\nprovided and not otherwise that there shall have been secured from the\ncommission an order authorizing such issue, and the amount thereof, and\nstating the purposes to which the issue or proceeds thereof are to be\napplied, and that, in the opinion of the commission, the money, property\nor labor to be procured or paid for by the issue of such stock, bonds,\nnotes or other evidences of indebtedness is or has been reasonably\nrequired for the purposes specified in the order, and that except as\notherwise permitted in the order in the case of bonds, notes and other\nevidences of indebtedness, such purposes are not in whole or in part\nreasonably chargeable to operating expenses or to income. Stock may be\nissued to stockholders as a stock dividend provided that there shall\nhave been secured from the commission an order authorizing such issue\nand a transfer of surplus to capital in an amount equal to the par or\nstated value of the stock so authorized and stating that a sum equal to\nthe amount to be so transferred was expended for the purposes enumerated\nin this section. Stock may be issued to an employee or director of a\nwaterworks corporation under a stock option plan pursuant to which such\ncorporation grants options to its employees or directors to purchase\nshares of stock, such options to be exercisable for a stated period of\ntime to purchase shares of stock at the market value of the stock at the\ntime of issuance of the option, provided that there shall have been\nsecured from the commission an order authorizing such issue and that the\nproceeds from the exercise of the stock options are needed for one of\nthe purposes enumerated in this section. The issue of stocks, bonds or\nother evidences of indebtedness, within the meaning of this section,\nshall include the sale hereafter by any such corporation of its stocks,\nbonds or other evidences of indebtedness previously issued and\nreacquired, whether originally issued at, before or after the time this\nsection takes effect, provided, however, for good cause shown the\ncommission may exempt from the restriction hereof stocks, bonds or other\nevidences of indebtedness. For the purpose of enabling it to determine\nwhether it should issue such an order, the commission shall make such\ninquiry or investigation, hold such hearings and examine such witnesses,\nbooks, papers, documents or contracts as it may deem of importance in\nenabling it to reach a determination. Such corporation shall not without\nthe consent of the commission apply said issue or any proceeds thereof\nto any purpose not specified in such order. Such corporation may issue\nnotes, for proper corporate purposes and not in violation of any\nprovision of this or of any other act, payable at periods of not more\nthan twelve months without such consent; but no such notes shall, in\nwhole or in part, directly or indirectly be refunded by any issue of\nstock or bonds or by any evidences of indebtedness running for more than\ntwelve months without the consent of the commission. The commission\nshall have power to require every such corporation to file with the\ncommission after the issuance of stocks, bonds, notes or other evidences\nof indebtedness, issued with or without the approval of the commission\nas herein provided, a notice of such transaction in such form as the\ncommission may prescribe. Provided, however, that the commission shall\nhave no power to authorize the capitalization of any franchise to be a\ncorporation nor to authorize the capitalization of any franchise or the\nright to own, operate or enjoy any franchise whatsoever in excess of the\namount (exclusive of any tax or annual charge) actually paid to the\nstate or to any political subdivision thereof as the consideration for\nthe grant of such franchise or right, nor to authorize the issuance of\nany stocks or other securities for any purposes other than those\nenumerated in this section. Nor shall the capital stock of a corporation\nformed by the merger or consolidation of two or more other corporations,\nexceed the sum of the capital stock of the corporations, so\nconsolidated, at the par value thereof, or such sum and any additional\nsum actually paid in cash; nor shall any contract for consolidation or\nlease be capitalized in the stock of any corporation whatever; nor shall\nany corporation hereafter issue any bonds against or as a lien upon any\ncontract for consolidation or merger.\n