§ 13 — Limited-profit housing companies; how created

New York § 13

• Jurisdiction: New York
• Law PVH: Private Housing Finance
• Art. 2: Limited-profit Housing Companies

Text

§ 13. Limited-profit housing companies; how created. A company may be\ncreated by three or more persons, approved by the commissioner, by\nmaking, subscribing, acknowledging and filing with the secretary of\nstate a certificate which shall be entitled and endorsed "Certificate of\nIncorporation of (name of company) pursuant to the Limited-Profit\nHousing Companies Law"; provided that if the company is to be organized\nto undertake a municipally-aided project the commissioner shall not\napprove such persons unless they shall have been first approved by the\nsupervising agency; provided further that no company shall be created to\nprovide aged care accommodations or accommodations for handicapped\npersons under this article, except under this article and the\nnot-for-profit corporation law. The certificate shall state:\n 1. The name of the proposed company.\n 2. The purposes for which it is to be formed which shall include among\nother things a provision that the company is to plan, acquire,\nconstruct, own, maintain, and operate projects pursuant to the terms and\nprovisions of this article.\n 3. Except in the case of a not-for-profit corporation, the amount of\nthe capital shares, and if any be preferred shares, the preference\nthereof.\n 4. Except in the case of a not-for-profit corporation, the number of\nshares of which capital shall consist, all of which shall have a par\nvalue.\n 5. The municipality, as well as the county within this state, in which\nits principal business office is to be located, and the address to which\nthe secretary of state shall mail a copy of process in any action or\nproceeding against the corporation which may be served upon him.\n 6. Its duration, which shall be: (a) not less than the period for\nwhich the loans contracted for under this article and the interest\nthereon remain unpaid in whole or in part; and (b) not less than the\nperiod for which tax exemption is granted pursuant to section\nthirty-three of this article; and (c) in any event not less than\nthirty-five years from the date of occupancy of any project, except as\nmay be provided in sections thirty-five and thirty-six of this article.\n 7. The number of directors, which shall not be less than three nor\nmore than twenty-one, and who shall be elected by the stockholders or\nmembers of the corporation. Unless required by the certificate of\nincorporation or the by-laws, directors need not be stockholders.\nDirectors appointed by the commissioner pursuant to subdivision fifteen\nof this section or by the supervising agency pursuant to paragraph (c)\nof subdivision sixteen of this section need not be stockholders or meet\nother qualifications which may be prescribed by the certificate of\nincorporation or the by-laws. In a corporation undertaking a state-aided\nproject one additional director may be designated by the commissioner,\nand, in the case of all state-aided mutual companies, such additional\ndirector shall be designated by the commissioner at the creation of the\ncompany and shall serve from the time of such designation at least until\na board of directors has been elected by the tenants entitled to\noccupancy in the project by reason of ownership of shares in such\ncompany. In a corporation undertaking a municipally-aided project one\nadditional director may be designated by the supervising agency, and, in\nthe case of all municipally-aided mutual companies, such additional\ndirector shall be designated by the supervising agency at the creation\nof the company and shall serve from the time of such designation at\nleast until a board of directors has been elected by the tenants\nentitled to occupancy in the project by reason of ownership of shares in\nsuch company. The director appointed by the commissioner or the\nsupervising agency need not be a stockholder or meet other\nqualifications which may be prescribed by the certificate of\nincorporation or the by-laws. In the absence of fraud or bad faith the\ndirector appointed by the commissioner hereunder or the supervising\nagency or the directors appointed by the commissioner or by the\nsupervising agency pursuant to subdivision fifteen or paragraph (c) of\nsubdivision sixteen respectively of this section shall not be personally\nliable for the debts, obligations or liabilities of the corporation.\nDirectors of a mutual housing company are to serve in that capacity\nwithout salary but may be reimbursed for expenses incurred directly\nrelating to the duties of the director's office.\n 8. The names and post-office addresses of the directors until the\nfirst annual meeting.\n 9. The names and post-office addresses of the subscribers to the\ncertificate, and a statement of the number of shares of stock which each\nagrees to take in the company.\n 10. That, except in the case of a company to be aided by a loan from\nthe federal government or any agency or instrumentality thereof, or if\nthe mortgage or mortgage bonds which are to be used in financing the\ncompany's project are to be insured by the federal government or any\nagency or instrumentality thereof, the entire amount to be paid in cash\nor property by the shareholders and income debenture holders shall be at\nleast five per centum of the project cost in the case of an urban rental\ncompany and a mutual company. The provisions of this subdivision shall\nnot apply to a non-profit company incorporated pursuant to the\nprovisions of the not-for-profit corporation law and this article for\nthe purpose of providing housing for staff members, employees or\nstudents of a college, university, hospital or child care institution\nand their immediate families, or for aged or handicapped persons of low\nincome, nor to a municipally-aided non-profit company nor to a\nmunicipally-aided mutual company, nor to a low income non-profit housing\ncompany.\n 11. That, so long as this article shall remain applicable to any\nproject of the company, its real property shall not be sold,\ntransferred, encumbered or assigned except as permitted by the terms and\nprovisions of this article.\n 12. That all of the subscribers to the certificate are of full age,\nthat at least two-thirds of them are citizens of the United States, and\nthat at least one of the persons named as director is a citizen of the\nUnited States and a resident of the state of New York.\n 13. That the company has been organized to serve a public purpose and\nthat it shall be and remain subject to the supervision and control of\nthe commissioner, or, if the company is organized to undertake a\nmunicipally aided project, of the supervising agency, except as\notherwise provided in this article, so long as this article remains\napplicable to any project of the company; that all real and personal\nproperty acquired by it, and all structures erected or rehabilitated by\nit, shall be deemed to be acquired, rehabilitated or created for the\nproper effectuation of the purposes of this article, and that the\ndirectors and subscribers of such company shall be deemed to have agreed\nthat they shall at no time receive or accept from such company in\nrepayment of their investment in its stock any sums in excess of the par\nvalue of the stock, together with such dividends or other compensation\nas are prescribed by or permitted under this article, and that, upon\ndissolution of the company, any surplus remaining after the payment of\nall its obligations shall be distributed and disposed of and title to\nthe property may be conveyed in fee, only as prescribed by this article.\n 14. The certificate may provide that in the event that income\ndebentures are issued by the company the owners thereof may be given the\nsame right to vote as they would have if possessed of certificates of\nstock of the amount and par value of the income debentures held by them.\nIf provision is made for the issuance of income debentures interest\nshall be paid by the company on income debentures only out of net\nearnings of the company that would be applicable to payment of dividends\nif there were no income debentures.\n 15. That in the event of a violation by a state-aided company of any\nprovision of the certificate of incorporation or of law or of the loan\nor mortgage contract or any order of the commissioner or of any rules\nand regulations duly promulgated pursuant to the provisions of this\narticle the commissioner may remove any or all of the existing directors\nof the company and appoint such person or persons whom the commissioner\ndeems advisable, including officers and employees of the division of\nhousing and community renewal, as new directors to serve in the places\nof those removed; that directors so appointed by the commissioner who\nare officers or employees of the division of housing and community\nrenewal shall serve in such capacity without compensation; and that any\ndirectors so appointed by the commissioner shall serve only for a period\ncoexistent with the duration of such violation or until the commissioner\nis assured in a manner satisfactory to him against violations of a\nsimilar nature.\n 16. If the company is organized to undertake a municipally-aided\nproject, such certificate shall contain:\n (a) A declaration that the original directors, officers, subscribers\nand income debenture holders possessing the right to vote, shall be\ndeemed at the time of accepting such offices, or subscribing to the\nstock or income debentures to have agreed not to resign from the company\nand not to sell their stock or income debentures prior to the completion\nof the project and the certification of the total actual project cost by\nthe supervising agency, except with the consent of the supervising\nagency.\n (b) A declaration that the shares of stock and the income debentures\nof the company shall be issued only in such amounts and form as may be\napproved by the supervising agency and that no stock shall be redeemed,\npurchased or retired and no income debentures shall be redeemed prior to\ntheir dates of maturity or purchased or retired by the company during\nthe period in which the loan by the municipality is in force or for\nwhich tax exemption is granted pursuant to section thirty-three of this\narticle, except with the consent of the supervising agency.\n (c) A provision that in the event of a violation by the company of any\nprovision of the certificate of incorporation or of law or of the loan\nor mortgage contract or of any rules and regulations duly promulgated\npursuant to the provisions of this article, the supervising agency may\nremove any or all of the existing directors of the company and appoint\nsuch person or persons which the supervising agency in its sole\ndiscretion deems advisable, including officers or employees of the\nsupervising agency, as new directors to serve in the places of those\nremoved; that directors so appointed by the supervising agency who are\nofficers or employees of the supervising agency shall serve in such\ncapacity without compensation; and that any directors so appointed by\nthe supervising agency shall serve only for a period coexistent with the\nduration of such violation or until the supervising agency is assured in\na manner satisfactory to it against violations of a similar nature.\n (d) A provision that the supervising agency or its duly authorized\nrepresentative shall be notified in writing of and shall have the right\nto attend all meetings of the board of directors or of the stockholders\nand income debenture holders of the company.\n (e) A provision that the sale of stock by a stockholder or the company\nor the sale of income debentures, the holders of which possess the right\nto vote, by any such holder or the company, shall be subject to the\nconsent of the supervising agency.\n (f) Such other provisions, not inconsistent with law, as the\nsupervising agency may deem necessary to protect the investment of the\nmunicipality and to carry out the purposes of this article.\n 17. The certificate of incorporation of a non-profit company\nincorporated pursuant to the provisions of the not for-profit\ncorporation law and this article shall, in addition to all other matters\nrequired by law to be stated therein, state:\n a. That its purpose is to provide housing and auxiliary facilities for\nstaff members, employees or students of any college, university,\nhospital, child care institution and their immediate families, for aged\nor handicapped persons of low income, or for any one of the above\npurposes, or to provide housing accommodations pursuant to the terms and\nprovisions of this article in the case of a municipally-aided non-profit\ncompany, or to provide housing accommodations pursuant to the provisions\nof this article in the case of a low income non-profit housing company;\n b. That the directors or trustees are and at all times shall be\nofficers, directors or trustees of such college, university, hospital or\nchild care institution, or, in the case of a non-profit company\nproviding housing for aged or handicapped persons of low income or of a\nmunicipally-aided non-profit company providing housing accommodations\npursuant to the terms and provisions of this article, or of a low income\nnon-profit housing company providing housing accommodations pursuant to\nthe provisions of this article, of a corporation organized pursuant to\nthe provisions of the not-for-profit corporation law;\n c. That the property of such company shall upon dissolution vest in\nsuch college, university, hospital, child care institution, or\nnot-for-profit corporation, and\n d. That no part of the net earnings of such college, university,\nhospital, child care institution or not-for-profit corporation shall\ninure to the benefit of any private individual.\n 18. That the secretary of state is designated as the agent of the\ncompany upon whom process in any action or proceeding against it may be\nserved.\n