§ 2853. Nursing home companies; how created. 1. Notwithstanding the
provisions of any other law or requirement to the contrary, non-profit
nursing home companies shall be incorporated and organized pursuant to
the not-for-profit corporation law and this article.

In addition to those matters required to be set forth in the
certificate of incorporation by the not-for-profit corporation law, the
certificate shall state:

a. That, among the purposes for which it is formed, the company is to
plan, construct, erect, build, acquire, alter, reconstruct,
rehabilitate, own, maintain and operate one or more nursing home
projects pursuant to this article.

b. The number of directors, which shall be not less than three nor
more than thirty-five. One additional director may be designated by the
commissioner. In the absence of fraud or bad faith, the director
appointed by the commissioner shall not be personally liable for the
debts, obligations or liabilities of the company.

c. That the real property of the company shall not be sold,
transferred, encumbered or assigned except as permitted by the
provisions of this article.

d. That the company has been organized exclusively to serve a public
purpose and that it shall be and remain subject to the supervision and
control of the commissioner pursuant to the provisions of article
twenty-eight of this chapter and this article.

e. That all income and earnings of the company shall be used
exclusively for its corporate purposes.

f. That no part of the net income or net earnings of the company shall
inure to the benefit or profit of any private individual, firm or
corporation.

2. Notwithstanding the provisions of any other law or requirement to
the contrary, limited-profit nursing home companies shall be
incorporated and organized pursuant to this article.

A limited-profit nursing home company may be created by three or more
persons, approved by the commissioner, by making, subscribing,
acknowledging and filing with the secretary of state a certificate which
shall state, in addition to those matters required to be set forth in
such certificate by the business corporation law to the extent that such
law is not inconsistent with this article:

a. That among the purposes for which it is formed, the company is to
plan, construct, erect, build, acquire, alter, reconstruct,
rehabilitate, own, maintain and operate one or more nursing home
projects pursuant to this article.

b. The number of directors, which shall not be less than three nor
more than thirty-five and who shall be elected by the shareholders of
the company. One additional director, who shall not be a shareholder and
who need not meet other qualifications which may be prescribed by the
certificate of incorporation or the by-laws, may be designated by the
commissioner. In the absence of fraud or bad faith, the director
appointed by the commissioner shall not be personally liable for the
debts, obligations or liabilities of the company.

c. That the real property of the company shall not be sold,
transferred, encumbered or assigned except as permitted by the
provisions of this article.

d. That the company has been organized to serve a public purpose and
that it shall be and remain subject to the supervision and control of
the commissioner pursuant to the provisions of article twenty-eight of
this chapter and this article; that so long as this article remains
applicable to any project of the company, all real and personal property
acquired by it, and all structures erected or rehabilitated by it, shall
be deemed to be acquired, rehabilitated or created for the proper
effectuation of the purposes of this article, and that the directors and
shareholders or debenture holders of such company shall be deemed to
have agreed that they shall at no time receive or accept from such
company in repayment of their investment in its shares or debentures any
sums in excess of the par value of the share or debentures, together
with such dividends, interest or other compensation as are prescribed by
or permitted under this article, and that, upon dissolution of the
company, any surplus remaining after the payment of all its obligations
shall be distributed and disposed of and title to the property may be
conveyed in fee, only as prescribed by this article.

e. That the entire amount to be paid in cash or property by the
shareholders and debenture holders shall be at least five percentum of
the project cost.

f. That in the event of a violation by a company of any provision of
the certificate of incorporation or of law or of the loan or mortgage
contract or any order of the commissioner or of any rules and
regulations duly promulgated pursuant to the provisions of this chapter,
the commissioner may remove any or all of the existing directors of the
company and appoint such person or persons whom the commissioner deems
advisable, including officers and employees of the department, as new
directors to serve in the places of those removed; that directors so
appointed by the commissioner who are officers or employees of the
department shall serve in such capacity without compensation; and that
any directors so appointed by the commissioner shall serve only for a
period coexistent with the duration of such violation or until the
commissioner is assured in a manner satisfactory to him against
violations of a similar nature.

The provisions of section thirty-five-a of the social services law
shall not be applicable to a limited-profit nursing home company,
notwithstanding any contrary provisions contained therein.