S T A T E O F N E W Y O R K
________________________________________________________________________
10930
I N A S S E M B L Y
May 4, 2010
___________
Introduced by M. of A. BENJAMIN -- Multi-Sponsored by -- M. of A. TOWNS
-- (at request of the Banking Department) -- read once and referred to
the Committee on Banks
AN ACT to amend the banking law, in relation to authorized and unissued
shares of banks, trust companies, stock-form savings banks, savings
and loan associations and investment companies and to change the
presumption as to preemptive rights for shareholders of such insti-
tutions
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subdivision 3 of section 4001 of the banking law, as
amended by chapter 360 of the laws of 1984, is amended to read as
follows:
3. The amount of its AUTHORIZED capital stock, the number of shares
into which such capital stock shall be divided and the par value of the
shares, which capital stock shall amount to not less than the [amounts]
MINIMUM AMOUNT prescribed by the banking board, NOR MORE THAN THE AGGRE-
GATE OF (A) THE AMOUNT OF CAPITAL STOCK THE CORPORATION EXPECTS TO SELL
IN ITS INITIAL OFFERING OF SHARES AND (B) SUCH ADDITIONAL AMOUNT AS MAY
BE APPROVED BY THE BANKING BOARD.
S 2. Subdivisions 1, 2, 3, 4 and 5 of section 6021 of the banking law,
as added by chapter 849 of the laws of 1964, paragraph (b) of subdivi-
sion 5 as amended by chapter 315 of the laws of 2008, are amended to
read as follows:
1. As used in this section, the term:
(a) "Unlimited dividend rights" means the right without limitation as
to amount either to all or to a share of the balance of current or
liquidating dividends after the payment of dividends on any shares enti-
tled to a preference.
(b) "Equity shares" means shares of any class, whether or not
preferred as to dividends or assets, which have unlimited dividend
rights.
(c) "Voting rights" means the right to vote for the election of one or
more directors, excluding a right so to vote which is dependent on the
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15513-02-0
A. 10930 2
happening of an event specified in the organization certificate which
would change the voting rights of any class of shares.
(d) "Voting shares" means shares of any class which have voting
rights.
(e) "Preemptive right" means the right to purchase shares or other
securities to be issued, as such right is defined in this section.
(F) "NEW SHARES OR SECURITIES" MEANS NEW EQUITY SHARES OF ANY CLASS OR
ANY SHARES OR OTHER SECURITIES CONVERTIBLE INTO EQUITY SHARES OF ANY
CLASS.
2. THE PREEMPTIVE RIGHTS PROVIDED FOR IN SUBDIVISION THREE OF THIS
SECTION SHALL NOT APPLY TO NEW SHARES OR SECURITIES OF ANY CORPORATION
WHOSE ORGANIZATION CERTIFICATE IS APPROVED ON OR AFTER THE EFFECTIVE
DATE OF THIS SUBDIVISION, UNLESS EXPRESSLY PROVIDED FOR IN THE ORGANIZA-
TION CERTIFICATE OF SUCH CORPORATION, WHICH MAY INCORPORATE BY REFERENCE
THE PREEMPTIVE RIGHTS SET FORTH IN THIS SECTION, OR FURTHER MODIFY SUCH
PREEMPTIVE RIGHTS.
3. Except as otherwise provided in the organization certificate, and
except as provided in this section, [the holders of equity shares of any
class,] in case of the proposed issuance by the corporation of [its
equity shares of any class or any shares or other securities convertible
into its equity shares of any class, shall,] NEW SHARES OR SECURITIES:
(A) if the issuance of the [equity shares proposed to be issued or
issuable upon conversion of such other securities] NEW SHARES OR SECURI-
TIES would adversely affect the unlimited dividend rights of [such] THE
holders OF EXISTING EQUITY SHARES OF ANY CLASS, SUCH HOLDERS SHALL have
the right during a reasonable time and on reasonable conditions, both to
be fixed by the board, to purchase such NEW shares or securities in such
proportions as shall be determined as provided in this section[.]; AND
[3. Except as otherwise provided in the organization certificate, and
except as provided in this section, the holders of voting shares of any
class, in case of the proposed issuance by the corporation of its voting
shares of any class or any shares or other securities convertible into
its voting shares of any class, shall,]
(B) if SUCH NEW SHARES OR SECURITIES ARE VOTING SHARES OF ANY CLASS
AND the issuance of the [voting shares proposed to be issued or issuable
upon conversion of such other securities] NEW SHARES OR SECURITIES would
adversely affect the voting rights of [such] THE holders OF EXISTING
SHARES OF ANY CLASS, SUCH HOLDERS SHALL have the right during a reason-
able time and on reasonable conditions, both to be fixed by the board,
to purchase such NEW shares or other securities in such proportions as
shall be determined as provided in this section.
4. The preemptive right provided for in [subdivisions two and] SUBDI-
VISION three OF THIS SECTION shall entitle stockholders having such
rights to purchase the shares or other securities to be offered for sale
as nearly as practicable in such proportions as would, if such preemp-
tive right were exercised, preserve the relative unlimited dividend
rights and voting rights of such holders and at a price or prices not
less favorable than the price or prices at which such shares or other
securities are proposed to be offered for sale to others, without
deduction of such reasonable expenses of and compensation for the sale,
underwriting or purchase of such shares or other securities by under-
writers or dealers as may lawfully be paid by the corporation. In case
each of the shares entitling the holders thereof to preemptive rights
does not confer the same unlimited dividend right or voting right, the
board shall apportion the shares or other securities to be offered for
sale among the stockholders having preemptive rights to purchase them in
A. 10930 3
such proportions as in the opinion of the board shall preserve as far as
practicable the relative unlimited dividend rights and voting rights of
the holders at the time of such offering. The apportionment made by the
board shall, in the absence of fraud or bad faith, be binding upon all
stockholders.
5. Unless otherwise provided in the organization certificate, shares
or other securities offered for sale shall not be subject to preemptive
rights UNDER SUBDIVISIONS TWO AND THREE OF THIS SECTION if they:
(a) Are to be issued by the board to effect a merger or offered for
consideration other than cash;
(b) Are to be issued or subjected to options under section one hundred
forty-a of this chapter;
(c) Are to be issued to satisfy conversion rights theretofore granted
by the corporation;
(d) Are treasury shares; or
(e) Are part of the shares or other securities of the corporation
authorized in its original organization certificate and are issued, sold
or optioned within two years from the date of filing such certificate.
S 3. This act shall take effect immediately.