New York Business Corporation Law

consolidated law of New York (law ID BSC).

CHAPTER 855 AN ACT in relation to business corporations, constituting chapter four of the consolidated laws Became a law April 24, 1961, with the approval of the Governor. Passed, by a majority vote, three-fifths being present The People of the State of New York, represented in Senate and Assembly, do enact as follows: Article 1. Short title; definitions; application; certificates, miscellaneous. (§§ 101-112) 2. Corporate purposes and powers. (§§ 201-203) 3. Corporate name and service of process. (§§ 301-308) 4. Formation of corporations. (§§ 401-409) 5. Corporate finance. (§§ 501-520) 6. Shareholders. (§§ 601-630) 7. Directors and officers. (§§ 701-727) 8. Amendments and changes. (§§ 801-808) 9. Merger or consolidation; guarantee; disposition of assets; share exchanges. (§§ 901-913) 10. Non-judicial dissolution. (§§ 1001-1009) 11. Judicial dissolution. (§§ 1101-1118) 12. Receivership. (§§ 1201-1218) 13. Foreign corporations. (§§ 1301-1320) 15. Professional Service Corporations. (§§ 1501-1516) 15-A. Foreign professional service corporations. (§§ 1525-1533). 16. Security Takeover Disclosure Act. (§§ 1600-1613) 17. Benefit corporations. (§§ 1701-1709) 20. Effective Date. (§ 2001)

ARTICLE 1 SHORT TITLE; DEFINITIONS; APPLICATION; CERTIFICATES, MISCELLANEOUS Section 101. Short title. 102. Definitions. 103. Application. 104. Certificates; requirements, signing, filing,

effectiveness. 104-A. Fees. 105. Certificates; corrections. 106. Certificates as evidence. 107. Corporate seal as evidence. 108. When notice or lapse of time unnecessary; notices dispensed with when delivery is prohibited. 109. Actions or special proceedings by attorney-general. 110. Reservation of power. 111. Effect of invalidity of part of chapter; severability. 112. References.

Text as published by the New York State Senate (Open Legislation).

Article 1

§ 101 Short title.

§ 101. Short title.

This chapter shall be known as the "Business Corporation Law".

§ 102 Definitions.

§ 102. Definitions. (a) As used in this chapter, unless the context otherwise requires, the term: (1) "Authorized person" means a person, whether or not a shareholder, officer or director, who is authorized to act on behalf of a corporation or foreign corporation. (2) "Bonds" includes secured and unsecured bonds, debentures, and notes. (3) "Certificate of incorporation" includes (A) the original certificate of incorporation or any other instrument filed or issued under any statute to form a domestic or foreign corporation, as amended, supplemented or restated by certificates of amendment, merger or consolidation or other certificates or instruments filed or issued under any statute; or (B) a special act or charter creating a domestic or foreign corporation, as amended, supplemented or restated. (4) "Corporation" or "domestic corporation" means a corporation for profit formed under this chapter, or existing on its effective date and theretofore formed under any other general statute or by any special act of this state for a purpose or purposes for which a corporation may be

formed under this chapter, other than a corporation which may be formed under the cooperative corporations law. (5) "Director" means any member of the governing board of a corporation, whether designated as director, trustee, manager, governor, or by any other title. The term "board" means "board of directors". (7) "Foreign corporation" means a corporation for profit formed under laws other than the statutes of this state, which has as its purpose or among its purposes a purpose for which a corporation may be formed under this chapter, other than a corporation which, if it were to be formed currently under the laws of this state, could not be formed under this chapter. "Authorized", when used with respect to a foreign corporation, means having authority under article 13 (Foreign corporations) to do business in this state. (7-a) "Infant" means a person who has not attained the age of eighteen years. (8) "Insolvent" means being unable to pay debts as they become due in the usual course of the debtor's business. (9) "Net assets" means the amount by which the total assets exceed the total liabilities. Stated capital and surplus are not liabilities. (10) "Office of a corporation" means the office the location of which is stated in the certificate of incorporation of a domestic corporation, or in the application for authority of a foreign corporation or an amendment thereof. Such office need not be a place where business activities are conducted by such corporation. (11) "Process" means judicial process and all orders, demands, notices or other papers required or permitted by law to be personally served on a domestic or foreign corporation, for the purpose of acquiring jurisdiction of such corporation in any action or proceeding, civil or criminal, whether judicial, administrative, arbitrative or otherwise, in this state or in the federal courts sitting in or for this state. (12) "Stated capital" means the sum of (A) the par value of all shares with par value that have been issued, (B) the amount of the consideration received for all shares without par value that have been issued, except such part of the consideration therefor as may have been allocated to surplus in a manner permitted by law, and (C) such amounts not included in clauses (A) and (B) as have been transferred to stated capital, whether upon the distribution of shares or otherwise, minus all

reductions from such sums as have been effected in a manner permitted by law. (13) "Surplus" means the excess of net assets over stated capital. (14) "Treasury shares" means shares which have been issued, have been subsequently acquired, and are retained uncancelled by the corporation. Treasury shares are issued shares, but not outstanding shares, and are not assets.

§ 103 Application.

§ 103. Application. (a) This chapter applies to every domestic corporation and to every foreign corporation which is authorized or does business in this state. This chapter also applies to any other domestic corporation or foreign corporation of any type or kind to the extent, if any, provided under this chapter or any law governing such corporation and, if no such provision for application is made, to the extent, if any, that the stock corporation law applied to such corporation immediately prior to the effective date of this chapter.

This chapter also applies to a corporation of any type or kind, formed for profit under any other chapter of the laws of this state except a chapter of the consolidated laws, to the extent that provisions of this chapter do not conflict with the provisions of such unconsolidated law. If an applicable provision of such unconsolidated law relates to a matter embraced in this chapter but is not in conflict therewith, both provisions shall apply. Any corporation to which this chapter is made applicable by this paragraph shall be treated as a "corporation" or "domestic corporation" as such terms are used in this chapter, except that the purposes of any such corporation formed or formable under such unconsolidated law shall not thereby be extended. For the purpose of this paragraph, the effective date of this chapter as to corporations to which this chapter is made applicable by this paragraph shall be June one, nineteen hundred seventy-three.

This chapter shall not apply to a domestic corporation of any type or kind heretofore or hereafter formed under the banking law, insurance law, railroad law, transportation corporations law or cooperative

corporations law, or under any other statute or special act for a purpose or purposes for which a corporation may be formed under any of such laws except to the extent, if any, provided under such law. It shall not apply, except to the extent, if any, provided under the banking law, insurance law, railroad law, transportation corporations law or cooperative corporations law, to a foreign corporation of any type or kind heretofore or hereafter formed which (1) has as its purpose or among its purposes a purpose for which a corporation may be formed only under the insurance law, banking law, railroad law, transportation corporations law or cooperative corporations law, and (2) is either an authorized insurer as defined in the insurance law or does in this state only the kind of business which can be done lawfully by a corporation formed under the banking law, railroad law, transportation corporations law or cooperative corporations law, as the case may be. After the effective date of this chapter the stock corporation law shall not apply to any corporation of any type or kind. The general corporation law shall not apply to a corporation of any type or kind to which this chapter applies. A reference in any statute of this state, which makes a provision of the stock corporation law applicable to a corporation of any type or kind, shall be deemed and construed to refer to and make applicable the corresponding provision, if any, of this chapter. (b) This chapter applies to commerce with foreign nations and among the several states, and to corporations formed by or under any act of congress, only to the extent permitted under the constitution and laws of the United States. (c) The enactment of this chapter shall not affect the duration of a corporation which is existing on the effective date of this chapter. Any such existing corporation, its shareholders, directors and officers shall have the same rights and be subject to the same limitations, restrictions, liabilities and penalties as a corporation formed under this chapter, its shareholders, directors and officers. (d) This chapter shall not affect any cause of action, liability, penalty or action or special proceeding, which on the effective date of this chapter, is accrued, existing, incurred or pending but the same may be asserted, enforced, prosecuted or defended as if this chapter had not been enacted. (e) After the effective date of this chapter no corporation shall be

formed under the stock corporation law.

§ 104 Certificates; requirements, signing, filing, effectiveness.

§ 104. Certificates; requirements, signing, filing, effectiveness. (a) Every certificate or other instrument relating to a domestic or foreign corporation which is delivered to the department of state for filing under this chapter, other than a certificate of existence under section 1304 (Application for authority; contents), shall be in the English language, except that the corporate name may be in another language if written in English letters or characters. (c) Whenever such instrument is required to set forth the date when a certificate of incorporation was filed by the department of state, the original certificate of incorporation is meant. This requirement shall be satisfied, in the case of a corporation created by special act, by setting forth the chapter number and year of passage of such act. (d) Every such certificate required under this chapter to be signed and delivered to the department of state shall, except as otherwise specified in the section providing for such certificate, be signed either by an officer, director, attorney-in-fact or duly authorized person and include the name and the capacity in which such person signs such certificate. (e) If an instrument which is delivered to the department of state for filing complies as to form with the requirements of law and there has been attached to it the consent or approval of the state official, department, board, agency or other body, if any, whose consent to or approval of such instrument or the filing thereof is required by any statute of this state and the filing fee and tax, if any, required by any statute of this state in connection therewith have been paid, the instrument shall be filed and indexed by the department of state. No certificate of authentication or conformity or other proof shall be required with respect to any verification, oath or acknowledgment of any instrument delivered to the department of state under this chapter, if such verification, oath or acknowledgment purports to have been made before a notary public, or person performing the equivalent function, of one of the states, or any subdivision thereof, of the United States or the District of Columbia. Without limiting the effect of section four hundred three of this chapter, filing and indexing by the department of

state shall not be deemed a finding that a certificate conforms to law, nor shall it be deemed to constitute an approval by the department of state of the name of the corporation or the contents of the certificate, nor shall it be deemed to prevent any person with appropriate standing from contesting the legality thereof in an appropriate forum. (f) Except as otherwise provided in this chapter, such instrument shall become effective upon the filing thereof by the department of state. (g) The department shall make, certify and transmit electronically a copy of each such instrument to the clerk of the county in which the office of the domestic or foreign corporation is or is to be located. The county clerk shall file and index such copy.

§ 104-A Fees.

§ 104-A. Fees.

Except as otherwise provided, the department of state shall collect the following fees pursuant to this chapter: (a) For the reservation of a corporate name pursuant to section three hundred three of this chapter, twenty dollars. (b) For the resignation of a registered agent for service of process pursuant to section three hundred five of this chapter, and for the resignation for receipt for process pursuant to section three hundred six-A of this chapter, sixty dollars. (c) For service of process on the secretary of state pursuant to section three hundred six, paragraph (e) of section three hundred six-A, or three hundred seven of this chapter, forty dollars. No fee shall be collected for process served on behalf of a county, city, town or village or other political subdivision of the state. (d) For filing a certificate of incorporation pursuant to section four hundred two of this chapter, one hundred twenty-five dollars. (e) For filing a certificate of amendment pursuant to section eight hundred five of this chapter, sixty dollars. (f) For filing a certificate of change pursuant to paragraph (a) of section eight hundred five-A of this chapter, thirty dollars, and for filing a certificate of change pursuant to paragraph (b) of section eight hundred five-A of this chapter, five dollars.

(g) For filing a restated certificate of incorporation pursuant to section eight hundred seven of this chapter, sixty dollars. (h) For filing a certificate of merger or consolidation pursuant to section nine hundred four of this chapter, or a certificate of exchange pursuant to section nine hundred thirteen (other than paragraph (g) of section nine hundred thirteen) of this chapter, sixty dollars. (i) For filing a certificate of merger of a subsidiary corporation pursuant to section nine hundred five of this chapter, or a certificate of exchange pursuant to paragraph (g) of section nine hundred thirteen of this chapter, sixty dollars. (j) For filing a certificate of merger or consolidation pursuant to section nine hundred four-a of this chapter, a certificate of merger or consolidation pursuant to section nine hundred four-b of this chapter, or a certificate of merger or consolidation of domestic and foreign corporations pursuant to section nine hundred seven of this chapter, sixty dollars. (k) For filing a certificate of dissolution pursuant to section one thousand three of this chapter, sixty dollars. (l) For filing an application by a foreign corporation for authority to do business in New York state pursuant to section thirteen hundred four of this chapter, two hundred twenty-five dollars. (m) For filing a certificate of amendment of an application for authority by a foreign corporation pursuant to section thirteen hundred nine of this chapter, sixty dollars. (n) For filing a certificate of change of application for authority by a foreign corporation pursuant to paragraph (b) of section thirteen hundred nine-A of this chapter, thirty dollars, and for filing a certificate of change pursuant to paragraph (c) of section thirteen hundred nine-A of this chapter, five dollars. (o) For filing a certificate of surrender of authority pursuant to section thirteen hundred ten of this chapter, sixty dollars. (p) For filing a statement of the termination of existence of a foreign corporation pursuant to section thirteen hundred eleven of this chapter, sixty dollars. There shall be no fee for the filing by an authorized officer of the jurisdiction of incorporation of a foreign corporation of a certificate that the foreign corporation has been dissolved or its authority or existence has been otherwise terminated or

cancelled in the jurisdiction of its incorporation. (q) For filing a certificate of incorporation by a professional service corporation pursuant to section fifteen hundred three of this chapter, one hundred twenty-five dollars. (r) For filing a statement or amendment pursuant to section four hundred eight of this chapter with the department of state, nine dollars. This fee shall not apply to statements submitted through the department of taxation and finance pursuant to paragraph eight of section four hundred eight of this chapter. (s) For filing any other certificate or instrument, sixty dollars.

§ 105 Certificates; corrections.

§ 105. Certificates; corrections.

Any certificate or other instrument relating to a domestic or foreign corporation filed by the department of state under this chapter may be corrected with respect to any informality or error apparent on the face, incorrect statement or defect in the execution thereof including the deletion of any matter not permitted to be stated therein. A certificate, entitled "Certificate of correction of............ (correct title of certificate and name of corporation)" shall be signed and delivered to the department of state. It shall set forth the name of the corporation, the date the certificate to be corrected was filed by the department of state, a statement as to the nature of the informality, error, incorrect statement or defect, the provision in the certificate as corrected or eliminated and if the execution was defective, the proper execution. The filing of the certificate by the department of state shall not alter the effective time of the instrument being corrected, which shall remain as its original effective time, and shall not affect any right or liability accrued or incurred before such filing. A corporate name may not be changed or corrected under this section. The provisions of this section shall apply to all instruments and certificates heretofore and hereafter filed with the department of state.

§ 106 Certificates as evidence.

§ 106. Certificates as evidence.

(a) Any certificate or other instrument filed by the department of state relating to a domestic or foreign corporation and containing statements of fact required or permitted by law to be contained therein, shall be received in all courts, public offices and official bodies as prima facie evidence of such facts and of the execution of such instrument. (b) Whenever by the laws of any jurisdiction other than this state, any certificate by any officer in such jurisdiction or a copy of any instruments certified or exemplified by any such officer, may be received as prima facie evidence of the incorporation, existence or capacity of any foreign corporation incorporated in such jurisdiction, or claiming so to be, such certificate when exemplified, or such copy of such instrument when exemplified shall be received in all courts, public offices and official bodies of this state, as prima facie evidence with the same force as in such jurisdiction. Such certificate or certified copy of such instrument shall be so received, without being exemplified, if it is certified by the secretary of state, or official performing the equivalent function as to corporate records, of such jurisdiction.

§ 107 Corporate seal as evidence.

§ 107. Corporate seal as evidence.

The presence of the corporate seal on a written instrument purporting to be executed by authority of a domestic or foreign corporation shall be prima facie evidence that the instrument was so executed.

§ 108 When notice or lapse of time unnecessary; notices dispensed with

§ 108. When notice or lapse of time unnecessary; notices dispensed with when delivery is prohibited. (a) Whenever, under this chapter or the certificate of incorporation or by-laws of any corporation or by the terms of any agreement or instrument, a corporation or the board or any committee thereof is authorized to take any action after notice to any person or persons or after the lapse of a prescribed period of time, such action may be taken without notice and without the lapse of such period of time, if at any time before or after such action is completed the person or persons entitled to such notice or entitled to participate in the action to be

taken or, in the case of a shareholder, by his attorney-in-fact, submit a signed waiver of notice of such requirements. (b) Whenever any notice or communication is required to be given to any person by this chapter, the certificate of incorporation or by-laws, or by the terms of any agreement or instrument, or as a condition precedent to taking any corporate action and communication with such person is then unlawful under any statute of this state or of the United States or any regulation, proclamation or order issued under said statutes, then the giving of such notice or communication to such person shall not be required and there shall be no duty to apply for license or other permission to do so. Any affidavit, certificate or other instrument which is required to be made or filed as proof of the giving of any notice or communication required under this chapter shall, if such notice or communication to any person is dispensed with under this paragraph, include a statement that such notice or communication was not given to any person with whom communication is unlawful. Such affidavit, certificate or other instrument shall be as effective for all purposes as though such notice or communication had been personally given to such person. (c) Whenever any notice or communication is required or permitted by this chapter to be given by mail, it shall, except as otherwise expressly provided in this chapter, be mailed to the person to whom it is directed at the address designated by him for that purpose or, if none is designated, at his last known address. Such notice or communication is given when deposited, with postage thereon prepaid, in a post office or official depository under the exclusive care and custody of the United States post office department. Such mailing shall be by first class mail except where otherwise required by this chapter.

§ 109 Actions or special proceedings by attorney-general.

§ 109. Actions or special proceedings by attorney-general. (a) The attorney-general may maintain an action or special proceeding: (1) To annul the corporate existence or dissolve a corporation that has acted beyond its capacity or power or to restrain it from the doing of unauthorized business; (2) To annul the corporate existence or dissolve any corporation that has not been duly formed;

(3) To restrain any person or persons from acting as a domestic or foreign corporation within this state without being duly incorporated or from exercising in this state any corporate rights, privileges or franchises not granted to them by the law of the state; (4) To procure a judgment removing a director of a corporation for cause under section 706 (Removal of directors); (5) To dissolve a corporation under article 11 (Judicial dissolution); (6) To restrain a foreign corporation or to annul its authority to do business in this state under section 1303 (Violations). (7) Upon written application, ex parte, for an order to the supreme court at a special term held within the judicial district where the office of the corporation is located, and if the court so orders, to inspect the books and records of the corporation to the extent that such inspection is available to shareholders and directors under the law of this state. Such application shall contain a statement that the inspection is necessary to protect the interests of the people of this state. This paragraph applies to every corporation, no shares of which are listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national or an affliated securities association. This paragraph does not apply to a corporation all shares of which are owned either directly or through a wholly owned subsidiary by a corporation or corporations to which this paragraph does not apply. (8) To collect any fines payable to the department of state pursuant to section four hundred nine of this chapter. (b) In an action or special proceeding brought by the attorney-general under any of the provisions of this chapter: (1) If an action, it is triable by jury as a matter of right. (2) The court may confer immunity in accordance with the provisions of section 50.20 of the criminal procedure law. (3) A temporary restraining order to restrain the commission or continuance of the unlawful acts which form the basis of the action or special proceeding may be granted upon proof, by affidavit, that the defendant or defendants have committed or are about to commit such acts. Application for such restraining order may be made ex parte or upon such notice as the court may direct. (4) If the action or special proceeding is against a foreign

corporation, the attorney-general may apply to the court at any stage thereof for the appointment of a temporary receiver of the assets in this state of such foreign corporation, whenever it has assets or property of any kind whatsoever, tangible or intangible, within this state. (5) When final judgment in such action or special proceeding is rendered against the defendant or defendants, the court may direct the costs to be collected by execution against any or all of the defendants or by order of attachment or other process against the person of any director or officer of a corporate defendant. (6) In connection with any such proposed action or special proceeding, the attorney-general may take proof and issue subpoenas in accordance with the civil practice law and rules. (c) In any such action or special proceeding against a foreign corporation which has not designated the secretary of state as its agent for service of process under section 304 (Statutory designation of secretary of state as agent for service of process), any of the following acts in this state by such foreign corporation shall constitute the appointment by it of the secretary of state as its agent upon whom process against such foreign corporation may be served: (1) As used in this paragraph the term "resident" shall include individuals, domestic corporations and foreign corporations authorized to do business in the state. (2) Any act done, or representation made as part of a course of the solicitation of orders, or the issuance, or the delivery, of contracts for, or the sale of, property, or the performance of services to residents which involves or promotes a plan or scheme to defraud residents in violation of the laws or the public policy of the state. (3) Any act done as part of a course of conduct of business in the solicitation of orders from residents for property, goods or services, to be delivered or rendered within this state to, or on their behalf, where the orders or contracts are executed by such residents within this state and where such orders or contracts are accompanied or followed by an earnest money desposit or other down payment or any installment payment thereon or any other form of payment, which payment is either delivered in or transmitted from the state. (4) Any act done as part of the conduct of a course of business with

residents which defrauds such residents or otherwise involves or promotes an attempt by such foreign corporation to circumvent the laws of this state. (d) Paragraphs (b), (c), (d) and (e) of section 307 (Service of process on unauthorized foreign corporation) shall apply to process served under paragraph (c).

§ 110 Reservation of power.

§ 110. Reservation of power.

The legislature reserves the right, at pleasure, to alter, amend, suspend or repeal in whole or in part this chapter, or any certificate of incorporation or any authority to do business in this state, of any domestic or foreign corporation, whether or not existing or authorized on the effective date of this chapter.

§ 111 Effect of invalidity of part of chapter; severability.

§ 111. Effect of invalidity of part of chapter; severability.

If any provision of this chapter or application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared severable.

§ 112 References.

§ 112. References.

Unless otherwise stated, all references in this chapter to articles or sections refer to the articles or sections of this chapter, and all references in any section of this chapter to a lettered or numbered paragraph or subparagraph refer to the paragraph or subparagraph so lettered or numbered in such section.

ARTICLE 2 CORPORATE PURPOSES AND POWERS

Section 201. Purposes. 202. General powers. 203. Defense of ultra vires.

Article 2

§ 201 Purposes.

§ 201. Purposes. (a) A corporation may be formed under this chapter for any lawful business purpose or purposes except to do in this state any business for which formation is permitted under any other statute of this state unless such statute permits formation under this chapter. If, immediately prior to the effective date of this chapter, a statute of this state permitted the formation of a corporation under the stock corporation law for a purpose or purposes specified in such other statute, such statute shall be deemed and construed to permit formation of such corporation under this chapter, and any conditions, limitations or restrictions in such other statute upon the formation of such corporation under the stock corporation law shall apply to the formation thereof under this chapter. (b) The approval of the industrial board of appeals is required for the filing with the department of state of any certificate of incorporation, certificate of merger or consolidation or application of a foreign corporation for authority to do business in this state which states as the purpose or one of the purposes of the corporation the formation of an organization of groups of working men or women or wage earners, or the performance, rendition or sale of services as labor consultant or as advisor on labor-management relations or as arbitrator or negotiator in labor-management disputes. (c) In time of war or other national emergency, a corporation may do any lawful business in aid thereof, notwithstanding the purpose or purposes set forth in its certificate of incorporation, at the request or direction of any competent governmental authority. (d) A corporation whose statement of purposes specifically includes the establishment or operation of a child day care center, as that term is defined in section three hundred ninety of the social services law, shall provide a certified copy of the certificate of incorporation, each amendment thereto, and any certificate of merger, consolidation or dissolution involving such corporation to the office of children and

family services within thirty days after the filing of such certificate, amendment, merger, consolidation or dissolution with the department of state. This requirement shall also apply to any foreign corporation filing an application for authority under article thirteen of this chapter, any amendments thereto, and any surrender of authority or termination of authority in this state of such corporation. (e) A corporation may not include as its purpose or among its purposes the establishment or maintenance of a hospital or facility providing health related services, as those terms are defined in article twenty-eight of the public health law unless its certificate of incorporation shall so state and such certificate shall have annexed thereto the approval of the public health and health planning council.

§ 202 General powers.

§ 202. General powers. (a) Each corporation, subject to any limitations provided in this chapter or any other statute of this state or its certificate of incorporation, shall have power in furtherance of its corporate purposes: (1) To have perpetual duration. (2) To sue and be sued in all courts and to participate in actions and proceedings, whether judicial, administrative, arbitrative or otherwise, in like cases as natural persons. (3) To have a corporate seal, and to alter such seal at pleasure, and to use it by causing it or a facsimile to be affixed or impressed or reproduced in any other manner. (4) To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated. (5) To sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, or create a security interest in, all or any of its property, or any interest therein, wherever situated. (6) To purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, employ, sell, lend, lease, exchange, transfer, or otherwise dispose of, mortgage, pledge, use and otherwise deal in and with, bonds and other obligations, shares, or other securities or

interests issued by others, whether engaged in similar or different business, governmental, or other activities. (7) To make contracts, give guarantees and incur liabilities, borrow money at such rates of interest as the corporation may determine, issue its notes, bonds and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its property or any interest therein, wherever situated. (8) To lend money, invest and reinvest its funds, and take and hold real and personal property as security for the payment of funds so loaned or invested. (9) To do business, carry on its operations, and have offices and exercise the powers granted by this chapter in any jurisdiction within or without the United States. (10) To elect or appoint officers, employees and other agents of the corporation, define their duties, fix their compensation and the compensation of directors, and to indemnify corporate personnel. (11) To adopt, amend or repeal by-laws, including emergency by-laws made pursuant to subdivision seventeen of section twelve of the state defense emergency act, relating to the business of the corporation, the conduct of its affairs, its rights or powers or the rights or powers of its shareholders, directors or officers. (12) To make donations, irrespective of corporate benefit, for the public welfare or for community fund, hospital, charitable, educational, scientific, civic or similar purposes, and in time of war or other national emergency in aid thereof. (13) To pay pensions, establish and carry out pension, profit-sharing, share bonus, share purchase, share option, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions for any or all of its directors, officers and employees. (14) To purchase, receive, take, or otherwise acquire, own, hold, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise deal in and with its own shares. (15) To be a promoter, partner, member, associate or manager of other business enterprises or ventures, or to the extent permitted in any other jurisdiction to be an incorporator of other corporations of any type or kind. (16) To have and exercise all powers necessary or convenient to effect

any or all of the purposes for which the corporation is formed. (b) No corporation shall do business in New York state under any name, other than that appearing in its certificate of incorporation, without compliance with the filing provisions of section one hundred thirty of the general business law governing the conduct of business under an assumed name.

§ 203 Defense of ultra vires.

§ 203. Defense of ultra vires. (a) No act of a corporation and no transfer of real or personal property to or by a corporation, otherwise lawful, shall be invalid by reason of the fact that the corporation was without capacity or power to do such act or to make or receive such transfer, but such lack of capacity or power may be asserted: (1) In an action by a shareholder against the corporation to enjoin the doing of any act or the transfer of real or personal property by or to the corporation. If the unauthorized act or transfer sought to be enjoined is being, or is to be, performed or made under any contract to which the corporation is a party, the court may, if all of the parties to the contract are parties to the action and if it deems the same to be equitable, set aside and enjoin the performance of such contract, and in so doing may allow to the corporation or to the other parties to the contract, as the case may be, such compensation as may be equitable for the loss or damage sustained by any of them from the action of the court in setting aside and enjoining the performance of such contract; provided that anticipated profits to be derived from the performance of the contract shall not be awarded by the court as a loss or damage sustained. (2) In an action by or in the right of the corporation to procure a judgment in its favor against an incumbent or former officer or director of the corporation for loss or damage due to his unauthorized act. (3) In an action or special proceeding by the attorney-general to annul or dissolve the corporation or to enjoin it from the doing of unauthorized business.

ARTICLE 3

CORPORATE NAME AND SERVICE OF PROCESS Section 301. Corporate name; general. 302. Corporate name; exceptions. 303. Reservation of name. 304. Statutory designation of secretary of state as agent for service of process. 304-a. Electronic service of process. 305. Registered agent for service of process. 306. Service of process. 306-A. Resignation for receipt of process. 307. Service of process on unauthorized foreign corporation. 308. Records and certificates of department of state.

Article 3

§ 301 Corporate name; general.

§ 301. Corporate name; general. (a) Except as otherwise provided in this chapter, the name of a domestic or foreign corporation: (1) Shall contain the word "corporation", "incorporated" or "limited", or an abbreviation of one of such words; or, in the case of a foreign corporation, it shall, for use in this state, add at the end of its name one of such words or an abbreviation thereof. (2) (i) Shall be such as to distinguish it from the names of corporations of any type or kind, or a fictitious name of an authorized foreign corporation filed pursuant to article thirteen of this chapter, as such names appear on the index of names of existing domestic and authorized foreign corporations of any type or kind, including fictitious names of authorized foreign corporations filed pursuant to article thirteen of this chapter, in the department of state, division of corporations, or a name the right to which is reserved. (ii) Shall be such as to distinguish it from (A) the names of domestic limited liability companies, (B) the names of authorized foreign limited liability companies, (C) the fictitious names of authorized foreign limited liability companies, (D) the names of domestic limited partnerships, (E) the names of authorized foreign limited partnerships, or (F) the fictitious names of authorized foreign limited partnerships, in each case, as such names appear on the index of names of existing domestic and authorized foreign limited liability companies, including

fictitious names of authorized foreign limited liability companies, in the department of state, or on the index of names of existing domestic or authorized foreign limited partnerships, including fictitious names of authorized foreign limited partnerships, in the department of state, or names the rights to which are reserved; provided, however, that no corporation that was formed prior to the effective date of this clause and no foreign corporation that was qualified to do business in this state prior to such effective date shall be required to change the name or fictitious name it had on such effective date solely by reason of such name or fictitious name being indistinguishable from the name or fictitious name of any domestic or authorized foreign limited liability company or limited partnership or from any name the right to which is reserved by or on behalf of any domestic or foreign limited liability company or limited partnership. (3) Shall not contain any word or phrase, or any abbreviation or derivative thereof, the use of which is prohibited or restricted by any other statute of this state, unless in the latter case the restrictions have been complied with. (4) Shall not contain any word or phrase, or any abbreviation or derivative thereof, in a context which indicates or implies that the corporation, if domestic, is formed or, if foreign, is authorized for any purpose or is possessed in this state of any power other than a purpose for which, or a power with which, the domestic corporation may be and is formed or the foreign corporation is authorized. (5)(A) Shall not contain any of the following phrases, or any abbreviation or derivative thereof: board of trade state police urban development chamber of commerce state trooper urban relocation community renewal tenant relocation (B) Shall not contain any of the following words, or any abbreviation or derivative thereof: acceptance endowment loan annuity fidelity mortgage assurance finance savings bank guaranty surety benefit indemnity title bond insurance trust

casualty investment underwriter doctor lawyer unless the approval of the superintendent of financial services is attached to the certificate of incorporation, or application for authority or amendment thereof; or that the word "doctor" or "lawyer" or an abbreviation or derivation thereof is used in the name of a university faculty practice corporation formed pursuant to section fourteen hundred twelve of the not-for-profit corporation law or a professional service corporation formed pursuant to article fifteen of this chapter, or a foreign professional service corporation authorized to do business in this state pursuant to article fifteen-A of this chapter, the members or shareholders of which are composed exclusively of doctors or lawyers, respectively, or are used in a context which clearly denotes a purpose other than the practice of law or medicine. (6) Shall not, unless the approval of the state board of standards and appeals is attached to the certificate of incorporation, or application for authority or amendment thereof, contain any of the following words or phrases, or any abbreviation or derivative thereof: union, labor, council, industrial organization, in a context which indicates or implies that the domestic corporation is formed or the foreign corporation authorized as an organization of working men or women or wage earners or for the performance, rendition or sale of services as labor or management consultant, adviser or specialist, or as negotiator or arbitrator in labor-management disputes. (7) Shall not, unless the approval of the state department of social services is attached to the certificate of incorporation, or application for authority or amendment thereof, contain the word "blind" or "handicapped". Such approval shall be granted by the state department of social services, if in its opinion the word "blind" or "handicapped" as used in the corporate name proposed will not tend to mislead or confuse the public into believing that the corporation is organized for charitable or non-profit purposes related to the blind or the handicapped. (8) Shall not contain any words or phrases, or any abbreviation or derivation thereof in a context which will tend to mislead the public into believing that the corporation is an agency or instrumentality of the United States or the state of New York or a subdivision thereof or

is a public corporation. (9) Shall not contain any word or phrase, or any abbreviation or derivation thereof, which, separately, or in context, shall be indecent or obscene, or shall ridicule or degrade any person, group, belief, business or agency of government, or indicate or imply any unlawful activity. (10) Shall not, unless the approval of the attorney general is attached to the certificate of incorporation, or application for authority or amendment thereof, contain the word "exchange" or any abbreviation or derivative thereof. Such approval shall not be granted by the attorney general, if in his opinion the use of the word "exchange" in the proposed corporate name would falsely imply that the corporation conducts its business at a place where trade is carried on in securities or commodities by brokers, dealers, or merchants. (11) Shall not, unless the consent of the commissioner of education is endorsed on or annexed to the certificate of incorporation, contain the words "school;" "education;" "elementary;" "secondary;" "kindergarten;" "prekindergarten;" "preschool;" "nursery school;" "museum;" "history;" "historical;" "historical society;" "arboretum;" "library;" "college;" "university" or other term restricted by section two hundred twenty-four of the education law; "conservatory," "academy," or "institute," or any abbreviation or derivative of such terms. Such consent shall not be granted by the commissioner of education, if in the commissioner's opinion, the use of such terms in the corporate name is likely to mislead or confuse the public into believing that the corporation is organized for non-profit educational purposes or for educational business purposes that are not specified in the corporate purposes and powers contained in its certificate of incorporation.

§ 302 Corporate name; exceptions.

§ 302. Corporate name; exceptions. (a) Any reference to a corporation in this section except as otherwise provided herein shall include both domestic and foreign corporations. (b) The provisions of section 301 (Corporate name; general): (1) Shall not require any corporation, existing or authorized under any statute on the effective date of this chapter, to add to, modify or otherwise change its corporate name; provided, however, that any

corporation organized or qualified to do business in this state under this chapter which contains in its name any of the following words or phrases or any abbreviation or derivation thereof, "community renewal", "tenant relocation", "urban development" or "urban relocation", shall plainly and legibly state immediately following its name in any writing issued or authorized to be issued by it upon which its name appears, including, but not limited to, advertising material letterheads, business cards and building directories and signs, the phrase "not a governmental agency". (2) Shall not prevent a corporation with which another corporation is merged, or which is formed by the reorganization or consolidation of one or more other corporations or upon a sale, lease, exchange or other disposition to a domestic corporation of all or substantially all the assets of another domestic corporation, including its name, as provided in paragraph (b) of Section 909 (Sale, lease, exchange or other disposition of assets), from having the same name as any of such corporations if at the time such other corporation was authorized or existing under any statute of this state. (3) Shall not prevent a foreign corporation from being authorized under a name which is similar to the name of a corporation of any type or kind existing or authorized under any statute, if the department of state finds, upon proof by affidavit or otherwise as it may determine, that a difference between such names exists in the terms or abbreviations indicating corporate character or otherwise, that the applicant has engaged in business as a corporation under its said name for not less than ten consecutive years immediately prior to the date of its application that the business to be conducted in this state is not the same as or similar to the business conducted by the corporation with whose name it may conflict and that the public is not likely to be confused or deceived, and if the applicant shall agree in its application for authority to use with its corporate name, in this state, to be placed immediately under or following such name, the words "a ......... (name of jurisdiction of incorporation) corporation". (4) Shall not prevent a "small business investment corporation" as defined in an act of congress entitled "Small Business Investment Act of 1958" from including the word "investment" as part of its name if such word is coupled with the words "small business".

(5) Shall not prevent an "investment company" as defined in an act of congress entitled "Investment Company Act of 1940" from including the word "finance" or "bond" as part of its name, if the approval of the superintendent of financial services is attached to the certificate of incorporation, application for authority, or amendment thereof. (6) Shall not prevent a broker or dealer in securities, as defined in an act of congress entitled "Securities Exchange Act of 1934", from including the word "investment" as part of its name if such word is coupled with the words "broker" or "brokers" and if such broker or dealer is registered with the securities and exchange commission under the provisions of section fifteen of the securities exchange act of nineteen hundred thirty-four and is also registered with the attorney general under the provisions of section three hundred fifty-nine-e of the general business law. (7) Shall not prevent an association of banks or trust companies organized as a non-profit membership corporation for the promotion of the interests of member banks from including the word "bankers" as part of its corporate name. (8) Shall not prevent a bank holding company, as long as it is required to be registered under article III-A of the banking law or under the federal Bank Holding Company Act, as each may be amended from time to time, from using the words "bank", "banker" or "trusts" or any abbreviation, derivative or combination thereof as part of its corporate name, if the approval of the superintendent of financial services is attached to the certificate of incorporation, application for authority, or amendment thereof.

§ 303 Reservation of name.

§ 303. Reservation of name. (a) A corporate name may be reserved by: (1) Any person intending to form a domestic corporation. (2) Any domestic corporation intending to change its name. (3) Any foreign corporation intending to apply for authority to do business in this state. (4) Any authorized foreign corporation intending to change its name. (5) Any person intending to incorporate a foreign corporation and to have it apply for authority to do business in this state.

(b) A fictitious name for use pursuant to section 1301 of this chapter, may be reserved by: (1) Any foreign corporation intending to apply for authority to do business in this state, pursuant to paragraph (d) of section 1301 of this chapter. (2) Any authorized foreign corporation intending to change its fictitious name under which it does business in this state. (3) Any authorized foreign corporation which has changed its corporate name in its jurisdiction, such new corporate name not being available in this state. (c) Application to reserve a corporate name shall be delivered to the department of state. It shall set forth the name and address of the applicant, the name to be reserved and a statement of the basis under paragraph (a) or (b) for the application. The secretary of state may require that there be included in the application a statement as to the nature of the business to be conducted by the corporation. If the name is available for corporate use, the department of state shall reserve the name for the use of the applicant for a period of sixty days and issue a certificate of reservation. The restrictions and qualifications set forth in subparagraphs (a) (3), (4), (5), (6) and (7) of section 301 (Corporate name; general) are not waived by the issuance of a certificate of reservation. The certificate of reservation shall include the name of the applicant, the name reserved and the date of the reservation. The certificate of reservation (or in lieu thereof an affidavit by the applicant or by his agent or attorney that the certificate of reservation has been lost or destroyed) shall accompany the certificate of incorporation or the application for authority when either is delivered to the department of state. (d) The secretary of state may extend the reservation for additional periods of not more than sixty days each, upon the written request of the applicant, his attorney or agent delivered to the department of state, to be filed before the expiration of the reservation period then in effect. Such request shall have attached to it the certificate of reservation of name. Not more than two such extensions shall be granted. (e) Upon the request of the applicant, delivered to the department of state before the expiration of the reserved period, the department shall cancel the reservation.

(f) Any application or request under this section shall be signed by the applicant, his attorney or agent. (g) Upon the receipt of an application to reserve a corporate name by the department of state pursuant to this section, the department shall confirm such receipt by mail or email to the applicant at the address or email address set forth in such application. In addition, the department shall include, but not be limited to including, the following information in such mailing or email: (1) contact information, including, but not limited to website, address and telephone number, of the New York state small business development center serving their region; (2) contact information, including, but not limited to website, address and telephone number, of the New York state entrepreneurship assistance center serving their region; (3) contact information, including, but not limited to the website, address and telephone number of business mentor NY; and (4) contact information, including, but not limited to website, address and telephone number, of empire state development. Information regarding empire state development shall include direction to resources available on such website to support and assist new businesses.

§ 304 Statutory designation of secretary of state as agent for service

§ 304. Statutory designation of secretary of state as agent for service of process. (a) The secretary of state shall be the agent of every domestic corporation and every authorized foreign corporation upon whom process against the corporation may be served. (b) No domestic or foreign corporation may be formed or authorized to do business in this state under this chapter unless in its certificate of incorporation or application for authority it designates the secretary of state as such agent. (c) Any designation by a domestic or a foreign corporation of the secretary of state as such agent, which designation is in effect on the effective date of this chapter, shall continue. Every domestic or foreign corporation, existing or authorized on the effective date of this chapter, which has not designated the secretary of state as such agent, shall be deemed to have done so. Any designation prior to the

effective date of this chapter by a foreign corporation of an agent other than the secretary of state shall terminate on the effective date of this chapter. (d) Any designated post office address to which the secretary of state shall mail a copy of process served upon him or her as agent of a domestic corporation or a foreign corporation, shall continue until the filing of a certificate or other instrument under this chapter directing the mailing to a different post office address and any designated email address to which the secretary of state shall email notice of the fact that process has been electronically served upon him or her as agent of a domestic corporation or foreign corporation shall continue until the filing of a certificate or other instrument under this chapter changing or deleting the email address.

§ 304-a Electronic service of process.

§ 304-a. Electronic service of process.

The secretary of state shall advise any corporation subject to the laws of this chapter in prominent written form as follows: (a) electronic service of process authorized by the provisions of this chapter is an optional program at no additional cost to the user; (b) any corporation subject to the laws of this chapter will continue to receive service of process by mail unless such corporation notifies the secretary of an affirmative choice to receive service of process by way of the program through electronic means, in which case digital copies will be made accessible but paper documents will not be mailed; and (c) such choice may be reversed by the corporation at any time and, thereafter, service by mail will resume.

§ 305 Registered agent for service of process.

§ 305. Registered agent for service of process. (a) In addition to such designation of the secretary of state, every domestic corporation or authorized foreign corporation may designate a registered agent in this state upon whom process against such corporation may be served. The agent shall be a natural person who is a resident of or has a business address in this state or a domestic corporation or foreign corporation of any type or kind formed, or

authorized to do business in this state, under this chapter or under any other statute of this state. (b) Any such designation of a registered agent may be made, revoked or changed as provided in this chapter. (c) A registered agent may resign as such agent. A certificate, entitled "Certificate of resignation of registered agent of .......... (name of designating corporation) under section 305 of the Business Corporation Law", shall be signed by him and delivered to the department of state. It shall set forth: (1) That he resigns as registered agent for the designating corporation. (2) The date the certificate of incorporation or the application for authority of the designating corporation was filed by the department of state. (3) That he has sent a copy of the certificate of resignation by registered mail to the designating corporation at the post office address on file in the department of state specified for the mailing of process or if such address is the address of the registered agent, then to the office of the designating corporation in the jurisdiction of its formation or incorporation. (d) The designation of a registered agent shall terminate thirty days after the filing by the department of state of a certificate of resignation or a certificate containing a revocation or change of the designation, whichever is filed earlier. A certificate designating a new registered agent may be delivered to the department of state by the corporation within the thirty days or thereafter.

§ 306 Service of process.

§ 306. Service of process. (a) Service of process on a registered agent may be made in the manner provided by law for the service of a summons, as if the registered agent was a defendant. (b) (1) * Service of process on the secretary of state as agent of a domestic or authorized foreign corporation shall be made in the manner provided by clause (i) or (ii) of this subparagraph. Either option of service authorized pursuant to this subparagraph shall be available at no extra cost to the consumer.

• NB Effective until February 24, 2027
• Service of process on the secretary of state as agent of a domestic or authorized foreign corporation shall be made in the manner provided by clause (i), (ii) or (iii) of this subparagraph. Each option of service authorized pursuant to this subparagraph shall be available at no extra cost to the consumer.
• NB Effective February 24, 2027 (i) Personally delivering to and leaving with the secretary of state or a deputy, or with any person authorized by the secretary of state to receive such service, at the office of the department of state in the city of Albany, duplicate copies of such process together with the statutory fee, which fee shall be a taxable disbursement. Service of process on such corporation shall be complete when the secretary of state is so served. The secretary of state shall promptly send one of such copies by certified mail, return receipt requested, to such corporation, at the post office address, on file in the department of state, specified for the purpose. If a domestic or authorized foreign corporation has no such address on file in the department of state, the secretary of state shall so mail such copy, in the case of a domestic corporation, in care of any director named in its certificate of incorporation at the director's address stated therein or, in the case of an authorized foreign corporation, to such corporation at the address of its office within this state on file in the department. (ii) Electronically submitting a copy of the process to the department of state together with the statutory fee, which fee shall be a taxable disbursement, through an electronic system operated by the department of state, provided the domestic or authorized foreign corporation has an email address on file in the department of state to which the secretary of state shall email a notice of the fact that process has been served electronically on the secretary of state. Service of process on such corporation shall be complete when the secretary of state has reviewed and accepted service of such process. The secretary of state shall promptly send a notice of the fact that process has been served to such corporation at the email address on file in the department of state, specified for the purpose and shall make a copy of the process available to such corporation.
• (iii) Provided process is served by or on behalf of the state or a

city, town, village or other political subdivision of the state, by electronically submitting a copy of the process to the department of state, through an electronic system operated by and with capabilities determined by the department of state, together with the statutory fee, if required, which fee shall be a taxable disbursement. Service of process on such corporation shall be complete when the secretary of state has reviewed and accepted service of such process. The secretary of state shall promptly either: (A) send a copy of such process by certified mail, return receipt requested, to such corporation, at the post office address, on file in the department of state, specified for the purpose or, if a domestic or authorized foreign corporation has no such address on file in the department of state, the secretary of state shall so mail such copy, in the case of a domestic corporation, in care of any director named in its certificate of incorporation at the director's address stated therein or, in the case of an authorized foreign corporation, to such corporation at the address of its office within this state on file in the department; or (B) email a notice of the fact that process against the corporation has been served electronically on the secretary of state to the email address on file in the department of state, specified for the purpose and shall make a copy of the process available to such corporation.

• NB Effective February 24, 2027 (2) An additional service of the summons may be made pursuant to paragraph four of subdivision (f) of section thirty-two hundred fifteen of the civil practice law and rules. (c) If an action or special proceeding is instituted in a court of limited jurisdiction, service of process may be made in the manner provided in this section if the office of the domestic or foreign corporation is within the territorial jurisdiction of the court. (d) Nothing in this section shall affect the right to serve process in any other manner permitted by law.

§ 306-A Resignation for receipt of process.

§ 306-A. Resignation for receipt of process. (a) The party (or his/her legal representative) whose post office address has been supplied by a domestic corporation or authorized foreign corporation as its address for process may resign. A certificate

entitled "Certificate of Resignation for Receipt of Process under Section 306-A of the Business Corporation Law" shall be signed by such party and delivered to the department of state. It shall set forth: (1) The name of the corporation and the date that its certificate of incorporation or application of authority was filed by the department of state. (2) That the address of the party has been designated by the corporation as the post office address to which the secretary of state shall mail a copy of any process served on the secretary of state as agent for such corporation, and that such party wishes to resign. (3) That sixty days prior to the filing of the certificate of resignation with the department of state the party has sent a copy of the certificate of resignation for receipt of process by registered or certified mail to the address of the registered agent of the designating corporation, if other than the party filing the certificate of resignation, for receipt of process, or if the resigning corporation has no registered agent, then to the last address of the designating corporation known to the party, specifying the address to which the copy was sent. If there is no registered agent and no known address of the designating corporation, the party shall attach an affidavit to the certificate stating that a diligent but unsuccessful search was made by the party to locate the corporation, specifying what efforts were made. (4) That the designating corporation is required to deliver to the department of state a certificate of amendment or change providing for the designation by the corporation of a new address and that upon its failure to file such certificate, its authority to do business in this state shall be suspended, unless the corporation has previously filed a biennial statement under section four hundred eight of this chapter, in which case the address of the principal executive office stated in the last filed biennial statement shall constitute the new address for process of the corporation, and no such certificate of amendment or change need be filed. (b) Upon the failure of the designating corporation to file a certificate of amendment or change providing for the designation by the corporation of the new address after the filing of a certificate of resignation for receipt of process with the secretary of state, its authority to do business in this state shall be suspended unless the

corporation has previously filed a statement under section four hundred eight of this chapter, in which case the address of the principal executive office stated in the last filed statement, shall constitute the new address for process of the corporation provided such address is different from the previous address for process, and the corporation shall not be deemed suspended. (c) The filing by the department of state of a certificate of amendment or change or statement under section four hundred eight of this chapter providing for a new address by a designating corporation shall annul the suspension and its authority to do business in this state shall be restored and continue as if no suspension had occurred. (d) The resignation for receipt of process shall become effective upon the filing by the department of state of a certificate of resignation for receipt of process. (e) (1) In any case in which a corporation suspended pursuant to this section would be subject to the personal or other jurisdiction of the courts of this state under article three of the civil practice law and rules, process against such corporation may be served upon the secretary of state as its agent pursuant to this section. Such process may issue in any court in this state having jurisdiction of the subject matter. (2) Service of such process upon the secretary of state shall be made by personally delivering to and leaving with him or his deputy, or with any person authorized by the secretary of state to receive such service, at the office of the department of state in the city of Albany, a copy of such process together with the statutory fee, which fee shall be a taxable disbursement. Such service shall be sufficient if notice thereof and a copy of the process are: (i) delivered personally within or without this state to such corporation by a person and in manner authorized to serve process by law of the jurisdiction in which service is made, or (ii) sent by or on behalf of the plaintiff to such corporation by registered or certified mail with return receipt requested to the last address of such corporation known to the plaintiff. (3) (i) Where service of a copy of process was effected by personal service, proof of service shall be by affidavit of compliance with this section filed, together with the process, within thirty days after such service, with the clerk of the court in which the action or special

proceeding is pending. Service of process shall complete ten days after such papers are filed with the clerk of the court. (ii) Where service of a copy of process was effected by mailing in accordance with this section, proof of service shall be by affidavit of compliance with this section filed, together with the process, within thirty days after receipt of the return receipt signed by the corporation, or other official proof of delivery or of the original envelope mailed. If a copy of the process is mailed in accordance with this section, there shall be filed with the affidavit of compliance either the return receipt signed by such corporation or other official proof of delivery, if acceptance was refused by it, the original envelope with a notation by the postal authorities that acceptance was refused. If acceptance was refused, a copy of the notice and process together with notice of the mailing by registered or certified mail and refusal to accept shall be promptly sent to such corporation at the same address by ordinary mail and the affidavit of compliance shall so state. Service of process shall be complete ten days after such papers are filed with the clerk of the court. The refusal to accept delivery of the registered or certified mail or to sign the return receipt shall not affect the validity of the service and such corporation refusing to accept such registered or certified mail shall be charged with knowledge of the contents thereof. (4) Service made as provided in this section without the state shall have the same force as personal service made within this state. (5) Nothing in this section shall affect the right to serve process in any other manner permitted by law.

§ 307 Service of process on unauthorized foreign corporation.

§ 307. Service of process on unauthorized foreign corporation. (a) In any case in which a non-domiciliary would be subject to the personal or other jurisdiction of the courts of this state under article three of the civil practice law and rules, a foreign corporation not authorized to do business in this state is subject to a like jurisdiction. In any such case, process against such foreign corporation may be served upon the secretary of state as its agent. Such process may issue in any court in this state having jurisdiction of the subject matter.

(b) Service of such process upon the secretary of state shall be made in the manner provided by subparagraph one or two of this paragraph. Either option of service authorized pursuant to this paragraph shall be available at no extra cost to the consumer. (1) Personally delivering to and leaving with him or his deputy, or with any person authorized by the secretary of state to receive such service, at the office of the department of state in the city of Albany, a copy of such process together with the statutory fee, which fee shall be a taxable disbursement. (2) Electronically submitting a copy of the process to the department of state together with the statutory fee, which fee shall be a taxable disbursement, through an electronic system operated by the department of state. Such service shall be sufficient if notice thereof and a copy of the process are: (1) Delivered personally without this state to such foreign corporation by a person and in the manner authorized to serve process by law of the jurisdiction in which service is made, or (2) Sent by or on behalf of the plaintiff to such foreign corporation by registered mail with return receipt requested, at the post office address specified for the purpose of mailing process, on file in the department of state, or with any official or body performing the equivalent function, in the jurisdiction of its incorporation, or if no such address is there specified, to its registered or other office there specified, or if no such office is there specified, to the last address of such foreign corporation known to the plaintiff. (c) 1. Where service of a copy of process was effected by personal service, proof of service shall be by affidavit of compliance with this section filed, together with the process, within thirty days after such service, with the clerk of the court in which the action or special proceeding is pending. Service of process shall be complete ten days after such papers are filed with the clerk of the court.

2. Where service of a copy of process was effected by mailing in accordance with this section, proof of service shall be by affidavit of compliance with this section filed, together with the process, within thirty days after receipt of the return receipt signed by the foreign corporation, or other official proof of delivery or of the original envelope mailed. If a copy of the process is mailed in accordance with

this section, there shall be filed with the affidavit of compliance either the return receipt signed by such foreign corporation or other official proof of delivery or, if acceptance was refused by it, the original envelope with a notation by the postal authorities that acceptance was refused. If acceptance was refused, a copy of the notice and process together with notice of the mailing by registered mail and refusal to accept shall be promptly sent to such foreign corporation at the same address by ordinary mail and the affidavit of compliance shall so state. Service of process shall be complete ten days after such papers are filed with the clerk of the court. The refusal to accept delivery of the registered mail or to sign the return receipt shall not affect the validity of the service and such foreign corporation refusing to accept such registered mail shall be charged with knowledge of the contents thereof. (d) Service made as provided in this section shall have the same force as personal service made within this state. (e) Nothing in this section shall affect the right to serve process in any other manner permitted by law.

§ 308 Records and certificates of department of state.

§ 308. Records and certificates of department of state.

The department of state shall keep a record of each process served upon the secretary of state under this chapter, including the date of service. It shall, upon request made within ten years of such service, issue a certificate under its seal certifying as to the receipt of the process by an authorized person, the date and place of such service and the receipt of the statutory fee. Process served upon the secretary of state under this chapter shall be destroyed by him after a period of ten years from such service.

ARTICLE 4 FORMATION OF CORPORATIONS Section 401. Incorporators. 402. Certificate of incorporation; contents. 403. Certificate of incorporation; effect.

404. Organization meeting. 405-a. Institution for children; approval of certificate.
405. Filing of a certificate of incorporation; facility for alcoholism or alcohol abuse, substance abuse, substance dependence, or chemical abuse or dependence.
406. Statement; filing.
407. Penalty for failure to file; cure.

Article 4

§ 401 Incorporators.

§ 401. Incorporators.

One or more natural persons of the age of eighteen years or over may act as incorporators of a corporation to be formed under this chapter.

§ 402 Certificate of incorporation; contents.

§ 402. Certificate of incorporation; contents. (a) A certificate, entitled "Certificate of incorporation of ...... (name of corporation) under section 402 of the Business Corporation Law", shall be signed by each incorporator, with his name and address included in such certificate and delivered to the department of state. It shall set forth: (1) The name of the corporation. (2) The purpose or purposes for which it is formed, it being sufficient to state, either alone or with other purposes, that the purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under this chapter, provided that it also state that it is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained. By such statement all lawful acts and activities shall be within the purposes of the corporation, except for express limitations therein or in this chapter, if any. (3) The county within this state in which the office of the corporation is to be located. (4) The aggregate number of shares which the corporation shall have the authority to issue; if such shares are to consist of one class only, the par value of the shares or a statement that the shares are without

par value; or, if the shares are to be divided into classes, the number of shares of each class and the par value of the shares having par value and a statement as to which shares, if any, are without par value. (5) If the shares are to be divided into classes, the designation of each class and a statement of the relative rights, preferences and limitations of the shares of each class. (6) If the shares of any preferred class are to be issued in series, the designation of each series and a statement of the variations in the relative rights, preferences and limitations as between series insofar as the same are to be fixed in the certificate of incorporation, a statement of any authority to be vested in the board to establish and designate series and to fix the variations in the relative rights, preferences and limitations as between series and a statement of any limit on the authority of the board of directors to change the number of shares of any series of preferred shares as provided in paragraph (e) of section 502 (Issue of any class of preferred shares in series). (7) A designation of the secretary of state as agent of the corporation upon whom process against it may be served and the post office address within or without this state to which the secretary of state shall mail a copy of any process against it served upon him or her. The corporation may include an email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon him or her. (8) If the corporation is to have a registered agent, his name and address within this state and a statement that the registered agent is to be the agent of the corporation upon whom process against it may be served. (9) The duration of the corporation if other than perpetual. (b) The certificate of incorporation may set forth a provision eliminating or limiting the personal liability of directors to the corporation or its shareholders for damages for any breach of duty in such capacity, provided that no such provision shall eliminate or limit: (1) the liability of any director if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated

section 719, or (2) the liability of any director for any act or omission prior to the adoption of a provision authorized by this paragraph. (c) The certificate of incorporation may set forth any provision, not inconsistent with this chapter or any other statute of this state, relating to the business of the corporation, its affairs, its rights or powers, or the rights or powers of its shareholders, directors or officers including any provision relating to matters which under this chapter are required or permitted to be set forth in the by-laws. It is not necessary to set forth in the certificate of incorporation any of the powers enumerated in this chapter.

§ 403 Certificate of incorporation; effect.

§ 403. Certificate of incorporation; effect.

Upon the filing of the certificate of incorporation by the department of state, the corporate existence shall begin, and such certificate shall be conclusive evidence that all conditions precedent have been fulfilled and that the corporation has been formed under this chapter, except in an action or special proceeding brought by the attorney-general. Notwithstanding the above, a certificate of incorporation may set forth a date subsequent to filing, not to exceed ninety days after filing, upon which date corporate existence shall begin.

§ 404 Organization meeting.

§ 404. Organization meeting. (a) After the corporate existence has begun, an organization meeting of the incorporator or incorporators shall be held within or without this state, for the purpose of adopting by-laws, electing directors to hold office until the first annual meeting of shareholders, except as authorized under section 704 (Classification of directors), and the transaction of such other business as may come before the meeting. If there are two or more incorporators, the meeting may be held at the call of any incorporator, who shall give at least five days' notice thereof by mail to each other incorporator, which notice shall set forth the time and place of the meeting. Notice need not be given to any

incorporator who attends the meeting or submits a signed waiver of notice before or after the meeting. If there are more than two incorporators, a majority shall constitute a quorum and the act of the majority of the incorporators present at a meeting at which a quorum is present shall be the act of the incorporators. An incorporator may act in person or by proxy signed by the incorporator or his attorney-in-fact. (b) Any action permitted to be taken at the organization meeting may be taken without a meeting if each incorporator or his attorney-in-fact signs an instrument setting forth the action so taken. (c) If an incorporator dies or is for any reason unable to act, action may be taken as provided in such event in paragraph (c) of section 615 (Written consent of shareholders, subscribers or incorporators without a meeting).

§ 405-a Institution for children; approval of certificate.

§ 405-a. Institution for children; approval of certificate.

Every certificate of incorporation which includes among its corporate purposes, the authority to care for children through the establishment or operation of an institution for destitute, delinquent, abandoned, neglected or dependent children shall have endorsed thereon or annexed thereto the approval of the office of children and family services. Provided, however, nothing herein shall authorize such corporation to place out or board out children, as those terms are defined in the social services law, or to care for children in a facility other than an institution possessing an operating certificate issued by the office of children and family services. No certificate of incorporation shall be approved pursuant to this section on or after June first, two thousand seven.

§ 406 Filing of a certificate of incorporation; facility for alcoholism

§ 406. Filing of a certificate of incorporation; facility for alcoholism or alcohol abuse, substance abuse, substance dependence, or chemical abuse or dependence.

Every certificate of incorporation which includes among its corporate

purposes the establishment or operation of a program of services for alcoholism or alcohol abuse, substance abuse, substance dependence, or chemical abuse or dependence shall have endorsed thereon or annexed thereto the approval of the commissioner of the state office of alcoholism and substance abuse services.

§ 408 Statement; filing.

§ 408. Statement; filing.

1. Except as provided in paragraph eight of this section, each domestic corporation, and each foreign corporation authorized to do business in this state, shall, during the applicable filing period as determined by subdivision three of this section, file a statement setting forth: (a) The name and business address of its chief executive officer. (b) The street address of its principal executive office. (c) The post office address within or without this state to which the secretary of state shall mail a copy of any process against it served upon him or her. Such address shall supersede any previous address on file with the department of state for this purpose. (d) The number of directors constituting the board and how many directors of such board are women.

2. Except as provided in paragraph eight of this section, such statement shall be made on forms prescribed by the secretary of state, and the information therein contained shall be given as of the date of the execution of the statement. Such statement shall only request reporting of information required under paragraph one of this section. It shall be signed and delivered to the department of state.

3. Except as provided in paragraph eight of this section, for the purpose of this section the applicable filing period for a corporation shall be the calendar month during which its original certificate of incorporation or application for authority were filed or the effective date thereof if stated. The applicable filing period shall only occur: (a) annually, during the period starting on April 1, 1992 and ending on March 31, 1994; and (b) biennially, during a period starting on April 1

and ending on March 31 thereafter. Those corporations that filed between April 1, 1992 and June 30, 1994 shall not be required to file such statements again until such time as they would have filed, had this subdivision not been amended.

4. The provisions of paragraph (g) of section one hundred four of this chapter shall not be applicable to filings pursuant to this section.

5. The provisions of this section and section 409 of this article shall not apply to a farm corporation. For the purposes of this subdivision, the term "farm corporation" shall mean any domestic corporation or foreign corporation authorized to do business in this state under this chapter engaged in the production of crops, livestock and livestock products on land used in agricultural production, as defined in section 301 of the agriculture and markets law. However, this exception shall not apply to farm corporations that have filed statements with the department of state which have been submitted through the department of taxation and finance pursuant to paragraph eight of this section.

6. No such statement shall be accepted for filing when a certificate of resignation for receipt of process has been filed under section three hundred six-A of this chapter unless the corporation has stated a different address for process which does not include the name of the party previously designated in the address for process in such certificate.

7. A domestic corporation or foreign corporation may amend its statement to change the information required by subparagraphs (a) and (b) of paragraph one of this section. Such amendment shall be made on forms prescribed by the secretary of state. It shall be signed and delivered to the department of state.

8. (a) The commissioner of taxation and finance and the secretary of state may agree to allow corporations to provide the statement specified in paragraph one of this section on tax reports filed with the department of taxation and finance in lieu of biennial statements. This

agreement may apply to tax reports due for tax years starting on or after January first, two thousand sixteen. (b) If the agreement described in subparagraph (a) of this paragraph is made, each corporation required to file the statement specified in paragraph one of this section that is also subject to tax under article nine or nine-A of the tax law shall include such statement annually on its tax report filed with the department of taxation and finance in lieu of filing a statement under this section with the department of state and in a manner prescribed by the commissioner of taxation and finance. However, each corporation required to file a statement under this section must continue to file the biennial statement required by this section with the department of state until the corporation in fact has filed a tax report with the department of taxation and finance that includes all required information. After that time, the corporation shall continue to deliver annually the statement specified in paragraph one of this section on its tax report in lieu of the biennial statement required by this section. (c) If the agreement described in subparagraph (a) of this paragraph is made, the department of taxation and finance shall deliver to the department of state for filing the statement specified in paragraph one of this section for each corporation that files a tax report containing such statement. The department of taxation and finance must, to the extent feasible, also include the current name of the corporation, department of state identification number for such corporation, the name, signature and capacity of the signer of the statement, name and street address of the filer of the statement, and the email address, if any, of the filer of the statement.

§ 409 Penalty for failure to file; cure.

§ 409. Penalty for failure to file; cure.

1. Each corporation which has failed to file its statement within the time required by this chapter after thirty days shall be shown to be past due on the records of the department of state.

2. Each corporation which has failed to file its statement for two years shall be shown to be delinquent on the records of the department

of state sixty days after a notice of delinquency has been mailed to the last known address of such corporation. Such delinquency shall be removed from the records of the department of state upon the filing of the current statement required by section four hundred eight of this article, and the payment of a fine of two hundred fifty dollars.

3. The notice of delinquency shall state the cure and fine for such delinquency as determined by subdivision two of this section and the period during which such delinquency shall be foreborne without the imposition of such fine.

4. This section shall not apply to corporations that have submitted a statement pursuant to paragraph eight of section four hundred eight of this chapter.

ARTICLE 5 CORPORATE FINANCE Section 501. Authorized shares. 502. Issue of any class of preferred shares in series. 503. Subscription for shares; time of payment, forfeiture for default. 504. Consideration and payment for shares. 505. Rights and options to purchase shares; issue of rights and options to directors, officers and employees. 506. Determination of stated capital. 507. Compensation for formation, reorganization and financing. 508. Certificates representing shares. 509. Fractions of a share or scrip authorized. 510. Dividends or other distributions in cash or property. 511. Share distributions and changes. 512. Redeemable shares. 513. Purchase, redemption and certain other transactions by a corporation with respect to its own shares. 514. Agreements for purchase by a corporation of its own shares. 515. Reacquired shares. 516. Reduction of stated capital in certain cases.

518. Corporate bonds.
519. Convertible or exchangeable shares and bonds.
520. Liability for failure to disclose required information.

Article 5

§ 501 Authorized shares.

§ 501. Authorized shares. (a) Every corporation shall have power to create and issue the number of shares stated in its certificate of incorporation. Such shares may be all of one class or may be divided into two or more classes. Each class shall consist of either shares with par value or shares without par value, having such designation and such relative voting, dividend, liquidation and other rights, preferences and limitations, consistent with this chapter, as shall be stated in the certificate of incorporation. The certificate of incorporation may deny, limit or otherwise define the voting rights and may limit or otherwise define the dividend or liquidation rights of shares of any class, but no such denial, limitation or definition of voting rights shall be effective unless at the time one or more classes of outstanding shares or bonds, singly or in the aggregate, are entitled to full voting rights, and no such limitation or definition of dividend or liquidation rights shall be effective unless at the time one or more classes of outstanding shares, singly or in the aggregate, are entitled to unlimited dividend and liquidation rights. (b) If the shares are divided into two or more classes, the shares of each class shall be designated to distinguish them from the shares of all other classes. Shares which are entitled to preference in the distribution of dividends or assets shall not be designated as common shares. Shares which are not entitled to preference in the distribution of dividends or assets shall be common shares, even if identified by a class or other designation, and shall not be designated as preferred shares. (c) Subject to the designations, relative rights, preferences and limitations applicable to separate series and except as otherwise permitted by subparagraph two of paragraph (a) of section five hundred five of this article, each share shall be equal to every other share of the same class. With respect to corporations owning or leasing residential premises and operating the same on a cooperative basis,

however, provided that (1) liquidation or other distribution rights are substantially equal per share, (2) changes in maintenance charges and general assessments pursuant to a proprietary lease have been and are hereafter fixed and determined on an equal per-share basis or on an equal per-room basis or as an equal percentage of the maintenance charges, and (3) voting rights are substantially equal per share or the certificate of incorporation provides that the shareholders holding the shares allocated to each apartment or dwelling unit owned by the corporation shall be entitled to one vote in the aggregate regardless of the number of shares allocated to the apartment or dwelling unit or the number of shareholders holding such shares, shares of the same class shall not be considered unequal because of variations in fees or charges payable to the corporation upon sale or transfer of shares and appurtenant proprietary leases that are provided for in proprietary leases, occupancy agreements or offering plans or properly approved amendments to the foregoing instruments.

§ 502 Issue of any class of preferred shares in series.

§ 502. Issue of any class of preferred shares in series. (a) If the certificate of incorporation so provides, a corporation may issue any class of preferred shares in series. Shares of each such series when issued, shall be designated to distinguish them from shares of all other series. (b) The number of shares included in any or all series of any classes of preferred shares and any or all of the designations, relative rights, preferences and limitations of any or all such series may be fixed in the certificate of incorporation, subject to the limitation that, unless the certificate of incorporation provides otherwise, if the stated dividends and amounts payable on liquidation are not paid in full, the shares of all series of the same class shall share ratably in the payment of dividends including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends were declared and paid in full, and in any distribution of assets other than by way of dividends in accordance with the sums which would be payable on such distribution if all sums payable were discharged in full. (c) If any such number of shares or any such designation, relative right, preference or limitation of the shares of any series is not fixed

in the certificate of incorporation, it may be fixed by the board, to the extent authorized by the certificate of incorporation. Unless otherwise provided in the certificate of incorporation, the number of preferred shares of any series so fixed by the board may be increased (but not above the total number of authorized shares of the class) or decreased (but not below the number of shares thereof then outstanding) by the board. In case the number of such shares shall be decreased, the number of shares by which the series is decreased shall, unless eliminated pursuant to paragraph (e) of this section, resume the status which they had prior to being designated as part of a series of preferred shares. (d) Before the issue of any shares of a series established by the board, a certificate of amendment under section 805 (Certificate of amendment; contents) shall be delivered to the department of state. Such certificate shall set forth: (1) The name of the corporation, and, if it has been changed, the name under which it was formed. (2) The date the certificate of incorporation was filed by the department of state. (3) That the certificate of incorporation is thereby amended by the addition of a provision stating the number, designation, relative rights, preferences, and limitations of the shares of the series as fixed by the board, setting forth in full the text of such provision. (e) Action by the board to increase or decrease the number of preferred shares of any series pursuant to paragraph (c) of this section shall become effective by delivering to the department of state a certificate of amendment under section 805 (Certificate of amendment; contents) which shall set forth: (1) The name of the corporation, and, if it has been changed, the name under which it was formed. (2) The date its certificate of incorporation was filed with the department of state. (3) That the certificate of incorporation is thereby amended to increase or decrease, as the case may be, the number of preferred shares of any series so fixed by the board, setting forth the specific terms of the amendment and the number of shares so authorized following the effectiveness of the amendment.

When no shares of any such series are outstanding, either because none were issued or because no issued shares of any such series remain outstanding, the certificate of amendment under section 805 may also set forth a statement that none of the authorized shares of such series are outstanding and that none will be issued subject to the certificate of incorporation, and, when such certificate becomes accepted for filing, it shall have the effect of eliminating from the certificate of incorporation all matters set forth therein with respect to such series of preferred shares.

§ 503 Subscription for shares; time of payment, forfeiture for default.

§ 503. Subscription for shares; time of payment, forfeiture for default. (a) Unless otherwise provided by the terms of the subscription, a subscription for shares of a corporation to be formed shall be irrevocable, except with the consent of all other subscribers or the corporation, for a period of three months from its date. (b) A subscription, whether made before or after the formation of a corporation, shall not be enforceable unless in writing and signed by the subscriber. (c) Unless otherwise provided by the terms of the subscription, subscriptions for shares, whether made before or after the formation of a corporation, shall be paid in full at such time, or in such installments and at such times, as shall be determined by the board. Any call made by the board for payment on subscriptions shall be uniform as to all shares of the same class or of the same series. If a receiver of the corporation has been appointed, all unpaid subscriptions shall be paid at such times and in such installments as such receiver or the court may direct. (d) In the event of default in the payment of any installment or call when due, the corporation may proceed to collect the amount due in the same manner as any debt due the corporation or the board may declare a forfeiture of the subscriptions. The subscription agreement may prescribe other penalties, not amounting to forfeiture, for failure to pay installments or calls that may become due. No forfeiture of the subscription shall be declared as against any subscriber unless the amount due thereon shall remain unpaid for a period of thirty days after

written demand has been made therefor. If mailed, such written demand shall be deemed to be made when deposited in the United States mail in a sealed envelope addressed to the subscriber at his last post office address known to the corporation, with postage thereon prepaid. Upon forfeiture of the subscription, if at least fifty percent of the subscription price has been paid, the shares subscribed for shall be offered for sale for cash or a binding obligation to pay cash at a price at least sufficient to pay the full balance owed by the delinquent subscriber plus the expenses incidental to such sale, and any excess of net proceeds realized over the amount owed on such shares shall be paid to the delinquent subscriber or to his legal representative. If no prospective purchaser offers a cash price or a binding obligation to pay cash sufficient to pay the full balance owed by the delinquent subscriber plus the expenses incidental to such sale, or if less than fifty percent of the subscription price has been paid, the shares subscribed for shall be cancelled and restored to the status of authorized but unissued shares and all previous payments thereon shall be forfeited to the corporation and transferred to surplus. (e) Notwithstanding the provisions of paragraph (d) of this section, in the event of default in payment or other performance under the instrument evidencing a subscriber's binding obligation to pay a portion of the subscription price or perform services, the corporation may pursue such remedies as are provided in such instrument or a related agreement or under law.

§ 504 Consideration and payment for shares.

§ 504. Consideration and payment for shares. (a) Consideration for the issue of shares shall consist of money or other property, tangible or intangible; labor or services actually received by or performed for the corporation or for its benefit or in its formation or reorganization; a binding obligation to pay the purchase price or the subscription price in cash or other property; a binding obligation to perform services having an agreed value; or a combination thereof. In the absence of fraud in the transaction, the judgment of the board or shareholders, as the case may be, as to the value of the consideration received for shares shall be conclusive. (c) Shares with par value may be issued for such consideration, not

less than the par value thereof, as is fixed from time to time by the board. (d) Shares without par value may be issued for such consideration as is fixed from time to time by the board unless the certificate of incorporation reserves to the shareholders the right to fix the consideration. If such right is reserved as to any shares, a vote of the shareholders shall either fix the consideration to be received for the shares or authorize the board to fix such consideration. (e) Treasury shares may be disposed of by a corporation on such terms and conditions as are fixed from time to time by the board. (f) Upon distribution of authorized but unissued shares to shareholders, that part of the surplus of a corporation which is concurrently transferred to stated capital shall be the consideration for the issue of such shares. (g) In the event of a conversion of bonds or shares into shares, or in the event of an exchange of bonds or shares for shares, with or without par value, the consideration for the shares so issued in exchange or conversion shall be the sum of (1) either the principal sum of, and accrued interest on, the bonds so exchanged or converted, or the stated capital then represented by the shares so exchanged or converted, plus (2) any additional consideration paid to the corporation for the new shares, plus (3) any stated capital not theretofore allocated to any designated class or series which is thereupon allocated to the new shares, plus (4) any surplus thereupon transferred to stated capital and allocated to the new shares. (h) Certificates for shares may not be issued until the amount of the consideration therefor determined to be stated capital pursuant to section 506 (Determination of stated capital) has been paid in the form of cash, services rendered, personal or real property or a combination thereof and consideration for the balance (if any) complying with paragraph (a) of this section has been provided, except as provided in paragraphs (e) and (f) of section 505 (Rights and options to purchase shares; issue of rights and options to directors, officers and employees). (i) When the consideration for shares has been provided in compliance with paragraph (h) of this section, the subscriber shall be entitled to all the rights and privileges of a holder of such shares and to a

certificate representing his shares, and such shares shall be fully paid and nonassessable. (j) Notwithstanding that such shares may be fully paid and nonassessable, the corporation may place in escrow shares issued for a binding obligation to pay cash or other property or to perform future services, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against the obligation, until the obligation is performed. If the obligation is not performed in whole or in part, the corporation may pursue such remedies as are provided in the instrument evidencing the obligation or a related agreement or under law.

§ 505 Rights and options to purchase shares; issue of rights and

§ 505. Rights and options to purchase shares; issue of rights and options to directors, officers and employees. (a) (1) Except as otherwise provided in this section or in the certificate of incorporation, a corporation may create and issue, whether or not in connection with the issue and sale of any of its shares or bonds, rights or options entitling the holders thereof to purchase from the corporation, upon such consideration, terms and conditions as may be fixed by the board, shares of any class or series, whether authorized but unissued shares, treasury shares or shares to be purchased or acquired or assets of the corporation. (2) (i) In the case of a domestic corporation that has a class of voting stock registered with the Securities and Exchange Commission pursuant to section twelve of the Exchange Act, the terms and conditions of such rights or options may include, without limitation, restrictions or conditions that preclude or limit the exercise, transfer or receipt of such rights or options by an interested shareholder or any transferee of any such interested shareholder or that invalidate or void such rights or options held by any such interested shareholder or any such transferee. For the purpose of this subparagraph, the terms "voting stock", "Exchange Act" and "interested shareholder" shall have the same meanings as set forth in section nine hundred twelve of this chapter; (ii) Determinations of the board of directors whether to impose, enforce or waive or otherwise render ineffective such limitations or conditions as are permitted by clause (i) of this subparagraph shall be

subject to judicial review in an appropriate proceeding in which the courts formulate or apply appropriate standards in order to insure that such limitations or conditions are imposed, enforced or waived in the best long-term interests and short-term interests of the corporation and its shareholders considering, without limitation, the prospects for potential growth, development, productivity and profitability of the corporation. (b) The consideration for shares to be purchased under any such right or option shall comply with the requirements of section 504 (Consideration and payment for shares). (c) The terms and conditions of such rights or options, including the time or times at or within which and the price or prices at which they may be exercised and any limitations upon transferability, shall be set forth or incorporated by reference in the instrument or instruments evidencing such rights or options. (d) The issue of such rights or options to one or more directors, officers or employees of the corporation or a subsidiary or affiliate thereof, as an incentive to service or continued service with the corporation, a subsidiary or affiliate thereof, or to a trustee on behalf of such directors, officers or employees, shall be authorized as required by the policies of all stock exchanges or automated quotation systems on which the corporation's shares are listed or authorized for trading, or if the corporation's shares are not so listed or authorized, by a majority of the votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon, or authorized by and consistent with a plan adopted by such vote of shareholders. If, under the certificate of incorporation, there are preemptive rights to any of the shares to be thus subject to rights or options to purchase, either such issue or such plan, if any shall also be approved by the vote or written consent of the holders of a majority of the shares entitled to exercise preemptive rights with respect to such shares and such vote or written consent shall operate to release the preemptive rights with respect thereto of the holders of all the shares that were entitled to exercise such preemptive rights.

In the absence of preemptive rights, nothing in this paragraph shall require shareholder approval for the issuance of rights or options to

purchase shares of the corporation in substitution for, or upon the assumption of, rights or options issued by another corporation, if such substitution or assumption is in connection with such other corporation's merger or consolidation with, or the acquisition of its shares or all or part of its assets by, the corporation or its subsidiary. (e) A plan adopted by the shareholders for the issue of rights or options to directors, officers or employees shall include the material terms and conditions upon which such rights or options are to be issued, such as, but without limitation thereof, any restrictions on the number of shares that eligible individuals may have the right or option to purchase, the method of administering the plan, the terms and conditions of payment for shares in full or in installments, the issue of certificates for shares to be paid for in installments, any limitations upon the transferability of such shares and the voting and dividend rights to which the holders of such shares may be entitled, though the full amount of the consideration therefor has not been paid; provided that under this section no certificate for shares shall be delivered to a shareholder, prior to full payment therefor, unless the fact that the shares are partly paid is noted conspicuously on the face or back of such certificate. (f) If there is shareholder approval for the issue of rights or options to individual directors, officers or employees, but not under an approved plan under paragraph (e), the terms and conditions of issue set forth in paragraph (e) shall be permissible except that the grantees of such rights or options shall not be granted voting or dividend rights until the consideration for the shares to which they are entitled under such rights or options has been fully paid. (g) If there is shareholder approval for the issue of rights and options, such approval may provide that the board is authorized by certificate of amendment under section 805 (Certificate of amendment; contents) to increase the authorized shares of any class or series to such number as will be sufficient, when added to the previously authorized but unissued shares of such class or series, to satisfy any such rights or options entitling the holders thereof to purchase from the corporation authorized but unissued shares of such class or series. (h) In the absence of fraud in the transaction, the judgment of the

board shall be conclusive as to the adequacy of the consideration, tangible or intangible, received or to be received by the corporation for the issue of rights or options for the purchase from the corporation of its shares. (i) The provisions of this section are inapplicable to the rights of the holders of convertible shares or bonds to acquire shares upon the exercise of conversion privileges under section 519 (Convertible shares and bonds).

§ 506 Determination of stated capital.

§ 506. Determination of stated capital. (a) Upon issue by a corporation of shares with a par value, the consideration received therefor shall constitute stated capital to the extent of the par value of such shares. (b) Upon issue by a corporation of shares without par value, the entire consideration received therefor shall constitute stated capital unless the board within a period of sixty days after issue allocates to surplus a portion, but not all, of the consideration received for such shares. No such allocation shall be made of any portion of the consideration received for shares without par value having a preference in the assets of the corporation upon involuntary liquidation except all or part of the amount, if any, of such consideration in excess of such preference, nor shall such allocation be made of any portion of the consideration for the issue of shares without par value which is fixed by the shareholders pursuant to a right reserved in the certificate of incorporation, unless such allocation is authorized by vote of the shareholders. (c) The stated capital of a corporation may be increased from time to time by resolution of the board transferring all or part of the surplus of the corporation to stated capital. The board may direct that the amount so transferred shall be stated capital in respect of any designated class or series of shares.

§ 507 Compensation for formation, reorganization and financing.

§ 507. Compensation for formation, reorganization and financing.

The reasonable charges and expenses of formation or reorganization of

a corporation, and the reasonable expenses of and compensation for the sale or underwriting of its shares may be paid or allowed by the corporation out of the consideration received by it in payment for its shares without thereby impairing the fully paid and nonassessable status of such shares.

§ 508 Certificates representing shares.

§ 508. Certificates representing shares. (a) The shares of a corporation shall be represented by certificates or shall be uncertificated shares. Certificates shall be signed by the chairman or a vice-chairman of the board or the president or a vice-president and the secretary or an assistant secretary or the treasurer or an assistant treasurer of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. The signatures of the officers upon a certificate may be facsimiles if: (1) the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or its employee, or (2) the shares are listed on a registered national security exchange. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue. (b) Each certificate representing shares issued by a corporation which is authorized to issue shares of more than one class shall set forth upon the face or back of the certificate, or shall state that the corporation will furnish to any shareholder upon request and without charge, a full statement of the designation, relative rights, preferences and limitations of the shares of each class authorized to be issued and, if the corporation is authorized to issue any class of preferred shares in series, the designation, relative rights, preferences and limitations of each such series so far as the same have been fixed and the authority of the board to designate and fix the relative rights, preferences and limitations of other series. (c) Each certificate representing shares shall state upon the face thereof: (1) That the corporation is formed under the laws of this state. (2) The name of the person or persons to whom issued.

(3) The number and class of shares, and the designation of the series, if any, which such certificate represents. (d) Shares shall be transferable in the manner provided by law and in the by-laws. (e) The corporation may issue a new certificate for shares in place of any certificate theretofore issued by it, alleged to have been lost or destroyed, and the board may require the owner of the lost or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss or destruction of any such certificate or the issuance of any such new certificate. (f) Unless otherwise provided by the articles of incorporation or by-laws, the board of directors of a corporation may provide by resolution that some or all of any or all classes and series of its shares shall be uncertificated shares, provided that such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to paragraphs (b) and (c) of this section. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.

§ 509 Fractions of a share or scrip authorized.

§ 509. Fractions of a share or scrip authorized. (a) A corporation may, but shall not be obliged to, issue fractions of a share either represented by a certificate or uncertificated, which shall entitle the holder, in proportion to his fractional holdings, to exercise voting rights, receive dividends and participate in liquidating distributions. (b) As an alternative, a corporation may pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined. (c) As an alternative, a corporation may issue scrip in registered or

bearer form over the manual or facsimile signature of an officer of the corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a shareholder except as therein provided. Such scrip may be issued subject to the condition that it shall become void if not exchanged for certificates representing full shares or uncertificated full shares before a specified date, or subject to the condition that the shares for which such scrip is exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of such scrip, or subject to any other conditions which the board may determine. (d) A corporation may provide reasonable opportunity for persons entitled to fractions of a share or scrip to sell such fractions of a share or scrip or to purchase such additional fractions of a share or scrip as may be needed to acquire a full share.

§ 510 Dividends or other distributions in cash or property.

§ 510. Dividends or other distributions in cash or property. (a) A corporation may declare and pay dividends or make other distributions in cash or its bonds or its property, including the shares or bonds of other corporations, on its outstanding shares, except when currently the corporation is insolvent or would thereby be made insolvent, or when the declaration, payment or distribution would be contrary to any restrictions contained in the certificate of incorporation. (b) Dividends may be declared or paid and other distributions may be made either (1) out of surplus, so that the net assets of the corporation remaining after such declaration, payment or distribution shall at least equal the amount of its stated capital, or (2) in case there shall be no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If the capital of the corporation shall have been diminished by depreciation in the value of its property or by losses or otherwise to an amount less than the aggregate amount of the stated capital represented by the issued and outstanding shares of all classes having a preference upon the distribution of assets, the directors of such corporation shall not declare and pay out of such net profits any dividends upon any shares until the deficiency in the amount of stated

capital represented by the issued and outstanding shares of all classes having a preference upon the distribution of assets shall have been repaired. A corporation engaged in the exploitation of natural resources or other wasting assets, including patents, or formed primarily for the liquidation of specific assets, may declare and pay dividends or make other distributions in excess of its surplus, computed after taking due account of depletion and amortization, to the extent that the cost of the wasting or specific assets has been recovered by depletion reserves, amortization or sale, if the net assets remaining after such dividends or distributions are sufficient to cover the liquidation preferences of shares having such preferences in involuntary liquidation.

§ 511 Share distributions and changes.

§ 511. Share distributions and changes. (a) A corporation may make pro rata distributions of its authorized but unissued shares to holders of any class or series of its outstanding shares, subject to the following conditions: (1) If a distribution of shares having a par value is made, such shares shall be issued at not less than the par value thereof and there shall be transferred to stated capital at the time of such distribution an amount of surplus equal to the aggregate par value of such shares. (2) If a distribution of shares without par value is made, the amount of stated capital to be represented by each such share shall be fixed by the board, unless the certificate of incorporation reserves to the shareholders the right to fix the consideration for the issue of such shares, and there shall be transferred to stated capital at the time of such distribution an amount of surplus equal to the aggregate stated capital represented by such shares. (3) A distribution of shares of any class or series may be made to holders of the same or any other class or series of shares unless the certificate of incorporation provides otherwise, provided, however, that in the case of a corporation incorporated prior to the effective date of subparagraph (4) of this paragraph, then so long as any shares of such class remain outstanding a distribution of shares of any class or series of shares of such corporation may be made only to holders of the same class or series of shares unless the certificate of incorporation permits distribution to holders of another class or series, or unless

such distribution is approved by the affirmative vote or the written consent of the holders of a majority of the outstanding shares of the class or series to be distributed. (4) A distribution of any class or series of shares shall be subject to the preemptive rights, if any, applicable to such shares pursuant to this chapter. (b) A corporation making a pro rata distribution of authorized but unissued shares to the holders of any class or series of outstanding shares may at its option make an equivalent distribution upon treasury shares of the same class or series, and any shares so distributed shall be treasury shares. (c) A change of issued shares of any class which increases the stated capital represented by those shares may be made if the surplus of the corporation is sufficient to permit the transfer, and a transfer is concurrently made, from surplus to stated capital, of an amount equal to such increase. (d) No transfer from surplus to stated capital need be made by a corporation making a distribution of its treasury shares to holders of any class of outstanding shares; nor upon a split up or division of issued shares of any class into a greater number of shares of the same class, or a combination of issued shares of any class into a lesser number of shares of the same class, if there is no increase in the aggregate stated capital represented by them. (e) Nothing in this section shall prevent a corporation from making other transfers from surplus to stated capital in connection with share distributions or otherwise. (f) Every distribution to shareholders of certificates representing a share distribution or a change of shares which affects stated capital or surplus shall be accompanied by a written notice (1) disclosing the amounts by which such distribution or change affects stated capital and surplus, or (2) if such amounts are not determinable at the time of such notice, disclosing the approximate effect of such distribution or change upon stated capital and surplus and stating that such amounts are not yet determinable. (g) When issued shares are changed in any manner which affects stated capital or surplus, and no distribution to shareholders of certificates representing any shares resulting from such change is made, disclosure

of the effect of such change upon the stated capital and surplus shall be made in the next financial statement covering the period in which such change is made that is furnished by the corporation to holders of shares of the class or series so changed or, if practicable, in the first notice of dividend or share distribution or change that is furnished to such shareholders between the date of the change of shares and the next such financial statement, and in any event within six months of the date of such change.

§ 512 Redeemable shares.

§ 512. Redeemable shares. (a) Subject to the restrictions contained in section 513 (Purchase, redemption and certain other transactions by a corporation with respect to its own shares) and paragraph (b) of this section, a corporation may provide in its certificate of incorporation for one or more classes or series of shares which are redeemable, in whole or in part, at the option of the corporation, the holder or another person or upon the happening of a specified event. (b) No redeemable common shares, other than shares of an open-end investment company, as defined in an act of congress entitled "Investment Company Act of 1940", as amended, or of a member corporation of a national securities exchange registered under a statute of the United States such as the Securities Exchange Act of 1934, as amended, or of a corporation described in this paragraph, shall be issued or redeemed unless the corporation at the time has outstanding a class of common shares that is not subject to redemption. Any common shares of a corporation which directly or through a subsidiary has a license or franchise to conduct its business, which license or franchise is conditioned upon some or all of the holders of such corporation's common shares possessing prescribed qualifications, may be made subject to redemption by the corporation to the extent necessary to prevent the loss of, or to reinstate, such license or franchise. (c) Shares of any class or series which may be made redeemable under this section may be redeemed for cash, other property, indebtedness or other securities of the same or another corporation, at such time or times, price or prices, or rate or rates, and with such adjustments, as shall be stated in the certificate of incorporation.

(d) Nothing in this section shall prevent a corporation from creating sinking funds for the redemption or purchase of its shares to the extent permitted by section 513 (Purchase, redemption and certain other transactions by a corporation with respect to its own shares).

§ 513 Purchase, redemption and certain other transactions by a

§ 513. Purchase, redemption and certain other transactions by a corporation with respect to its own shares. (a) Notwithstanding any authority contained in the certificate of incorporation, the shares of a corporation may not be purchased by the corporation, or, if redeemable, convertible or exchangeable shares, may not be redeemed, converted or exchanged, in each case for or into cash, other property, indebtedness or other securities of the corporation (other than shares of the corporation and rights to acquire such shares) if the corporation is then insolvent or would thereby be made insolvent. Shares may be purchased or redeemed only out of surplus. (b) When its redeemable, convertible or exchangeable shares are purchased by the corporation within the period during which such shares may be redeemed, converted or exchanged at the option of the corporation, the purchase price thereof shall not exceed the applicable redemption, conversion or exchange price stated in the certificate of incorporation. Upon a redemption, conversion or exchange, the amount payable by the corporation for shares having a cumulative preference on dividends may include the stated redemption, conversion or exchange price plus accrued dividends to the next dividend date following the date of redemption, conversion or exchange of such shares. (c) No domestic corporation which is subject to the provisions of section nine hundred twelve of this chapter shall purchase or agree to purchase more than ten percent of the stock of the corporation from a shareholder for more than the market value thereof unless such purchase or agreement to purchase is approved by the affirmative vote of the board of directors and a majority of the votes of all outstanding shares entitled to vote thereon at a meeting of shareholders unless the certificate of incorporation requires a greater percentage of the votes of the outstanding shares to approve.

The provisions of this paragraph shall not apply when the corporation

offers to purchase shares from all holders of stock or for stock which the holder has been the beneficial owner of for more than two years.

The terms "stock", "beneficial owner", and "market value" shall be as defined in section nine hundred twelve of this chapter.

§ 514 Agreements for purchase by a corporation of its own shares.

§ 514. Agreements for purchase by a corporation of its own shares. (a) An agreement for the purchase by a corporation of its own shares shall be enforceable by the shareholder and the corporation to the extent such purchase is permitted at the time of purchase by section 513 (Purchase or redemption by a corporation of its own shares). (b) The possibility that a corporation may not be able to purchase its shares under section 513 shall not be a ground for denying to either party specific performance of an agreement for the purchase by a corporation of its own shares, if at the time for performance the corporation can purchase all or part of such shares under section 513.

§ 515 Reacquired shares.

§ 515. Reacquired shares. (a) Shares that have been issued and have been purchased, redeemed or otherwise reacquired by a corporation shall be cancelled if they are reacquired out of stated capital, or if they are converted shares, or if the certificate of incorporation requires that such shares be cancelled upon reacquisition. (b) Any shares reacquired by the corporation and not required to be cancelled may be either retained as treasury shares or cancelled by the board at the time of reacquisition or at any time thereafter. (c) Neither the retention of reacquired shares as treasury shares, nor their subsequent distribution to shareholders or disposition for a consideration shall change the stated capital. When treasury shares are disposed of for a consideration, the surplus shall be increased by the full amount of the consideration received. (d) Shares cancelled under this section are restored to the status of authorized but unissued shares. However, if the certificate of incorporation prohibits the reissue of any shares required or permitted to be cancelled under this section, the board by certificate of

amendment under section 805 (Certificate of amendment; contents) shall reduce the number of authorized shares accordingly.

§ 516 Reduction of stated capital in certain cases.

§ 516. Reduction of stated capital in certain cases. (a) Except as otherwise provided in the certificate of incorporation, the board may at any time reduce the stated capital of a corporation in any of the following ways: (1) by eliminating from stated capital any portion of amounts previously transferred by the board from surplus to stated capital and not allocated to any designated class or series of shares; (2) by reducing or eliminating any amount of stated capital represented by issued shares having a par value which exceeds the aggregate par value of such shares; (3) by reducing the amount of stated capital represented by issued shares without par value; or (4) by applying to an otherwise authorized purchase, redemption, conversion or exchange of outstanding shares some or all of the stated capital represented by the shares being purchased, redeemed, converted or exchanged, or some or all of any stated capital that has not been allocated to any particular shares, or both. Notwithstanding the foregoing, if the consideration for the issue of shares without par value was fixed by the shareholders under section 504 (Consideration and payment for shares), the board shall not reduce the stated capital represented by such shares except to the extent, if any, that the board was authorized by the shareholders to allocate any portion of such consideration to surplus. (b) No reduction of stated capital shall be made under this section unless after such reduction the stated capital exceeds the aggregate preferential amounts payable upon involuntary liquidation upon all issued shares having preferential rights in the assets plus the par value of all other issued shares with par value. (c) When a reduction of stated capital has been effected under this section, the amount of such reduction shall be disclosed in the next financial statement covering the period in which such reduction is made that is furnished by the corporation to all its shareholders or, if practicable, in the first notice of dividend or share distribution that

is furnished to the holders of each class or series of its shares between the date of such reduction and the next such financial statement, and in any event to all its shareholders within six months of the date of such reduction.

§ 518 Corporate bonds.

§ 518. Corporate bonds. (a) No corporation shall issue bonds except for money or other property, tangible or intangible; labor or services actually received by or performed for the corporation or for its benefit or in its formation or reorganization; a binding obligation to pay the purchase price thereof in cash or other property; a binding obligation to perform services having an agreed value; or a combination thereof. In the absence of fraud in the transaction, the judgment of the board as to the value of the consideration received shall be conclusive. (b) If a distribution of its own bonds is made by a corporation to holders of any class or series of its outstanding shares, there shall be concurrently transferred to the liabilities of the corporation in respect of such bonds an amount of surplus equal to the principal amount of, and any accrued interest on, such bonds. The amount of the surplus so transferred shall be the consideration for the issue of such bonds. (c) A corporation may, in its certificate of incorporation, confer upon the holders of any bonds issued or to be issued by the corporation, rights to inspect the corporate books and records and to vote in the election of directors and on any other matters on which shareholders of the corporation may vote.

§ 519 Convertible or exchangeable shares and bonds.

§ 519. Convertible or exchangeable shares and bonds. (a) Unless otherwise provided in the certificate of incorporation, and subject to the restrictions in section 513 (Purchase, redemption and certain other transactions by a corporation with respect to its own shares) and paragraphs (c) and (d) of this section, a corporation may issue shares or bonds convertible into or exchangeable for, at the option of the holder, the corporation or another person, or upon the happening of a specified event, shares of any class or shares of any series of any class or cash, other property, indebtedness or other

securities of the same or another corporation. (b) If there is shareholder approval for the issue of bonds or shares convertible into, or exchangeable for, shares of the corporation, such approval may provide that the board is authorized by certificate of amendment under section 805 (Certificate of amendment; contents) to increase the authorized shares of any class or series to such number as will be sufficient, when added to the previously authorized but unissued shares of such class or series, to satisfy the conversion or exchange privileges of any such bonds or shares convertible into, or exchangeable for, shares of such class or series. (c) No issue of bonds or shares convertible into, or exchangeable for, shares of the corporation shall be made unless: (1) A sufficient number of authorized but unissued shares, or treasury shares, of the appropriate class or series are reserved by the board to be issued only in satisfaction of the conversion or exchange privileges of such convertible or exchangeable bonds or shares when issued; (2) The aggregate conversion or exchange privileges of such convertible or exchangeable bonds or shares when issued do not exceed the aggregate of any shares reserved under subparagraph (1) and any additional shares which may be authorized by the board under paragraph (b); or (3) In the case of the conversion or exchange of shares of common stock other than into other shares of common stock, there remains outstanding a class or series of common stock not subject to conversion or exchange other than into other shares of common stock, except in the case of corporations of the type described in the exceptions to the provisions of paragraph (b) of section 512 (Redeemable shares). (d) No privilege of conversion may be conferred upon, or altered in respect to, any shares or bonds that would result in the receipt by the corporation of less than the minimum consideration required to be received upon the issue of new shares. The consideration for shares issued upon the exercise of a conversion or exchange privilege shall be that provided in paragraph (g) of section 504 (Consideration and payment for shares). (e) When shares have been converted or exchanged, they shall be cancelled. When bonds have been converted or exchanged, they shall be cancelled and not reissued except upon compliance with the provisions

governing the issue of convertible or exchangeable bonds.

§ 520 Liability for failure to disclose required information.

§ 520. Liability for failure to disclose required information.

Failure of the corporation to comply in good faith with the notice or disclosure provisions of paragraphs (f) and (g) of section 511 (Share distributions and changes), or paragraph (c) of section 516 (Reduction of stated capital in certain cases), shall make the corporation liable for any damage sustained by any shareholder in consequence thereof.

ARTICLE 6 SHAREHOLDERS Section 601. By-laws. 602. Meetings of shareholders. 603. Special meeting for election of directors. 604. Fixing record date. 605. Notice of meetings of shareholders. 606. Waivers of notice. 607. List of shareholders at meetings. 608. Quorum of shareholders. 609. Proxies. 610. Selection of inspectors at shareholders' meetings. 611. Duties of inspectors at shareholders' meetings. 612. Qualification of voters. 613. Limitations on right to vote. 614. Vote of shareholders. 615. Written consent of shareholders, subscribers or incorporators without a meeting. 616. Greater requirement as to quorum and vote of shareholders. 617. Voting by class or classes of shares. 618. Cumulative voting. 619. Powers of supreme court respecting elections. 620. Agreements as to voting; provision in certificate of incorporation as to control of directors. 621. Voting trust agreements.

622. Preemptive rights.
623. Procedure to enforce shareholder's right to receive payment for shares.
624. Books and records; right of inspection, prima facie evidence.
625. Infant shareholders and bondholders.
626. Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor.
627. Security for expenses in shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor.
628. Liability of subscribers and shareholders.
629. Certain transfers or assignments by shareholders or subscribers; effect.
630. Liability of shareholders for wages due to laborers, servants or employees.

Article 6

§ 601 By-laws.

§ 601. By-laws. (a) The initial by-laws of a corporation shall be adopted by its incorporator or incorporators at the organization meeting. Thereafter, subject to section 613 (Limitations on right to vote), by-laws may be adopted, amended or repealed by a majority of the votes cast by the shares at the time entitled to vote in the election of any directors. When so provided in the certificate of incorporation or a by-law adopted by the shareholders, by-laws may also be adopted, amended or repealed by the board by such vote as may be therein specified, which may be greater than the vote otherwise prescribed by this chapter, but any by-law adopted by the board may be amended or repealed by the shareholders entitled to vote thereon as herein provided. Any reference in this chapter to a "by-law adopted by the shareholders" shall include a by-law adopted by the incorporator or incorporators. (b) The by-laws may contain any provision relating to the business of the corporation, the conduct of its affairs, its rights or powers or the rights or powers of its shareholders, directors or officers, not inconsistent with this chapter or any other statute of this state or the certificate of incorporation.

§ 602 Meetings of shareholders.

§ 602. Meetings of shareholders.

• (a) Meetings of shareholders may be held at such place, within or without this state, as may be fixed by or under the by-laws, or if not so fixed, as determined by the board of directors. For the duration of the state disaster emergency declared by executive order two hundred two that began on March seventh, two thousand twenty, or until December thirty-first, two thousand twenty-one, whichever is later, if, pursuant to this paragraph or the by-laws of the corporation, the board of directors is authorized to determine the place of a meeting of shareholders, the board of directors may, in its sole discretion, determine that the meeting be held solely by means of electronic communication, the platform/service of which shall be the place of the meeting for purpose of this article.
• NB Separately amended; cannot be put together
• (a) Meetings of shareholders may be held at such place, within or without this state, as may be fixed by or under the by-laws, or if not so fixed, as determined by the board of directors. If, pursuant to this paragraph or the by-laws of the corporation, the board of directors is authorized to determine the place of a meeting of shareholders, the board of directors may, in its sole discretion, determine that the meeting be held solely by means of electronic communication, the platform/service of which shall be the place of the meeting for purpose of this article.
• NB Separately amended; cannot be put together (b) (i) A corporation may, if authorized by the board of directors: (1) implement reasonable measures to provide shareholders not physically present at a shareholders' meeting a reasonable opportunity to participate in the proceedings of the meeting substantially concurrently with such proceedings; and/or (2) provide reasonable measures to enable shareholders to vote or grant proxies with respect to matters submitted to the shareholders at a shareholders' meeting by means of electronic communication; provided that the corporation shall, if applicable, (A) implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of electronic communication is a shareholder of record and (B) keep a record of any

vote or other action taken by a shareholder participating and voting by means of electronic communications at a shareholders' meeting. A shareholder participating in a shareholders' meeting by this means is deemed to be present in person at the meeting. (ii) Nothing required in subparagraph (i) of this paragraph shall limit, restrict or supersede other forms of voting and participation. (iii) For purposes of this paragraph, "reasonable measures" with respect to participating in proceedings shall include, but not be limited to, audio webcast or other broadcast of the meeting and for voting shall include but not be limited to telephonic and internet voting. (c) A meeting of shareholders shall be held annually for the election of directors and the transaction of other business on a date fixed by or under the by-laws. A failure to hold the annual meeting on the date so fixed or to elect a sufficient number of directors to conduct the business of the corporation shall not work a forfeiture or give cause for dissolution of the corporation, except as provided in paragraph (c) of section 1104 (Petition in case of deadlock among directors or shareholders). (d) Special meetings of the shareholders may be called by the board and by such person or persons as may be so authorized by the certificate of incorporation or the by-laws. At any such special meeting only such business may be transacted which is related to the purpose or purposes set forth in the notice required by section 605 (Notice of meetings of shareholders). (e) Except as otherwise required by this chapter, the by-laws may designate reasonable procedures for the calling and conduct of a meeting of shareholders, including but not limited to specifying: (i) who may call and who may conduct the meeting, (ii) the means by which the order of business to be conducted shall be established, (iii) the procedures and requirements for the nomination of directors, (iv) the procedures with respect to the making of shareholder proposals, and (v) the procedures to be established for the adjournment of any meeting of shareholders. No amendment of the by-laws pertaining to the election of directors or the procedures for the calling and conduct of a meeting of shareholders shall affect the election of directors or the procedures for the calling or conduct in respect of any meeting of shareholders

unless adequate notice thereof is given to the shareholders in a manner reasonably calculated to provide shareholders with sufficient time to respond thereto prior to such meeting.

§ 603 Special meeting for election of directors.

§ 603. Special meeting for election of directors. (a) If, for a period of one month after the date fixed by or under the by-laws for the annual meeting of shareholders, or if no date has been so fixed, for a period of thirteen months after the formation of the corporation or the last annual meeting, there is a failure to elect a sufficient number of directors to conduct the business of the corporation, the board shall call a special meeting for the election of directors. If such special meeting is not called by the board within two weeks after the expiration of such period or if it is so called but there is a failure to elect such directors for a period of two months after the expiration of such period, holders of ten percent of the votes of the shares entitled to vote in an election of directors may, in writing, demand the call of a special meeting for the election of directors specifying the date and month thereof, which shall not be less than sixty nor more than ninety days from the date of such written demand. The secretary of the corporation upon receiving the written demand shall promptly give notice of such meeting, or if he fails to do so within five business days thereafter, any shareholder signing such demand may give such notice. The meeting shall be held at the place fixed in the by-laws or, if not so fixed, at the office of the corporation. (b) At any such special meeting called on demand of shareholders, notwithstanding section 608 (Quorum of shareholders), the shareholders attending, in person or by proxy, and entitled to vote in an election of directors shall constitute a quorum for the purpose of electing directors, but not for the transaction of any other business.

§ 604 Fixing record date.

§ 604. Fixing record date. (a) For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting,

or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the by-laws may provide for fixing or, in the absence of such provision, the board may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. (b) If no record date is fixed: (1) The record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if no notice is given, the day on which the meeting is held. (2) The record date for determining shareholders for any purpose other than that specified in subparagraph (1) shall be at the close of business on the day on which the resolution of the board relating thereto is adopted. (c) When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless the board fixes a new record date under this section for the adjourned meeting.

§ 605 Notice of meetings of shareholders.

§ 605. Notice of meetings of shareholders. (a) Whenever under the provisions of this chapter shareholders are required or permitted to take any action at a meeting, notice shall be given stating the place, date and hour of the meeting, the means of electronic communications, if any, by which shareholders and proxyholders may participate in the proceedings of the meeting and vote or grant proxies at such meeting and, unless it is the annual meeting, indicating that it is being issued by or at the direction of the person or persons calling the meeting. Notice of a special meeting shall also state the purpose or purposes for which the meeting is called. Notice of any meeting of shareholders may be written or electronic. If, at any meeting, action is proposed to be taken which would, if taken, entitle shareholders fulfilling the requirements of section 623 (Procedure to enforce shareholder's right to receive payment for shares) to receive

payment for their shares, the notice of such meeting shall include a statement of that purpose and to that effect and shall be accompanied by a copy of section 623 or an outline of its material terms. Notice of any meeting shall be given not fewer than ten nor more than sixty days before the date of the meeting, provided, however, that such notice may be given by third class mail not fewer than twenty-four nor more than sixty days before the date of the meeting, to each shareholder entitled to vote at such meeting. If mailed, such notice is given when deposited in the United States mail, with postage thereon prepaid, directed to the shareholder at the shareholder's address as it appears on the record of shareholders, or, if the shareholder shall have filed with the secretary of the corporation a request that notices to the shareholder be mailed to some other address, then directed to him at such other address. If transmitted electronically, such notice is given when directed to the shareholder's electronic mail address as supplied by the shareholder to the secretary of the corporation or as otherwise directed pursuant to the shareholder's authorization or instructions. An affidavit of the secretary or other person giving the notice or of a transfer agent of the corporation that the notice required by this section has been given shall, in the absence of fraud, be prima facie evidence of the facts therein stated. (b) When a meeting is adjourned to another time or place, it shall not be necessary, unless the by-laws require otherwise, to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned and the means of electronic communications, if any, by which shareholders and proxyholders may participate in the proceedings of the meeting and/or vote or grant proxies at the meeting are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. However, if after the adjournment the board fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to notice under paragraph (a). (c) Nothing required in paragraphs (a) and (b) of this section shall limit, restrict or supersede other forms of voting and participation.

§ 606 Waivers of notice.

§ 606. Waivers of notice.

Notice of meeting need not be given to any shareholder who submits a waiver of notice whether before or after the meeting. Waiver of notice may be written or electronic. If written, the waiver must be executed by the shareholder or the shareholder's authorized officer, director, employee or agent by signing such waiver or causing his or her signature to be affixed to such waiver by any reasonable means, including, but not limited to, facsimile signature. If electronic, the transmission of the waiver must either set forth or be submitted with information from which it can reasonably be determined that the transmission was authorized by the shareholder. The attendance of any shareholder at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, shall constitute a waiver of notice by such shareholder.

§ 607 List of shareholders at meetings.

§ 607. List of shareholders at meetings.

A list of shareholders as of the record date, certified by the corporate officer responsible for its preparation or by a transfer agent, shall be produced at any meeting of shareholders upon the request thereat or prior thereto of any shareholder. If the right to vote at any meeting is challenged, the inspectors of election, or person presiding thereat, shall require such list of shareholders to be produced as evidence of the right of the persons challenged to vote at such meeting, and all persons who appear from such list to be shareholders entitled to vote thereat may vote at such meeting.

§ 608 Quorum of shareholders.

§ 608. Quorum of shareholders. (a) The holders of a majority of the votes of shares entitled to vote thereat shall constitute a quorum at a meeting of shareholders for the transaction of any business, provided that when a specified item of business is required to be voted on by a particular class or series of shares, voting as a class, the holders of a majority of the votes of shares of such class or series shall constitute a quorum for the

transaction of such specified item of business. (b) The certificate of incorporation or by-laws may provide for any lesser quorum not less than one-third of the votes of shares entitled to vote, and the certificate of incorporation may, under section 616 (Greater requirement as to quorum and vote of shareholders), provide for a greater quorum. (c) When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. (d) The shareholders present may adjourn the meeting despite the absence of a quorum.

§ 609 Proxies.

§ 609. Proxies. (a) Every shareholder entitled to vote at a meeting of shareholders or to express consent or dissent without a meeting may authorize another person or persons to act for him by proxy. (b) No proxy shall be valid after the expiration of eleven months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the shareholder executing it, except as otherwise provided in this section. (c) The authority of the holder of a proxy to act shall not be revoked by the incompetence or death of the shareholder who executed the proxy unless, before the authority is exercised, written notice of an adjudication of such incompetence or of such death is received by the corporate officer responsible for maintaining the list of shareholders. (d) Except when other provision shall have been made by written agreement between the parties, the record holder of shares which he holds as pledgee or otherwise as security or which belong to another, shall issue to the pledgor or to such owner of such shares, upon demand therefor and payment of necessary expenses thereof, a proxy to vote or take other action thereon. (e) A shareholder shall not sell his vote or issue a proxy to vote to any person for any sum of money or anything of value, except as authorized in this section and section 620 (Agreements as to voting; provision in certificate of incorporation as to control of directors); provided, however, that this paragraph shall not apply to votes, proxies or consents given by holders of preferred shares in connection with a

proxy or consent solicitation made available on identical terms to all holders of shares of the same class or series and remaining open for acceptance for at least twenty business days. (f) A proxy which is entitled "irrevocable proxy" and which states that it is irrevocable, is irrevocable when it is held by any of the following or a nominee of any of the following: (1) A pledgee; (2) A person who has purchased or agreed to purchase the shares; (3) A creditor or creditors of the corporation who extend or continue credit to the corporation in consideration of the proxy if the proxy states that it was given in consideration of such extension or continuation of credit, the amount thereof, and the name of the person extending or continuing credit; (4) A person who has contracted to perform services as an officer of the corporation, if a proxy is required by the contract of employment, if the proxy states that it was given in consideration of such contract of employment, the name of the employee and the period of employment contracted for; (5) A person designated by or under an agreement under paragraph (a) of section 620. (g) Notwithstanding a provision in a proxy, stating that it is irrevocable, the proxy becomes revocable after the pledge is redeemed, or the debt of the corporation is paid, or the period of employment provided for in the contract of employment has terminated, or the agreement under paragraph (a) of section 620 has terminated; and, in a case provided for in subparagraphs (f) (3) or (4), becomes revocable three years after the date of the proxy or at the end of the period, if any, specified therein, whichever period is less, unless the period of irrevocability is renewed from time to time by the execution of a new irrevocable proxy as provided in this section. This paragraph does not affect the duration of a proxy under paragraph (b). (h) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a purchaser of shares without knowledge of the existence of the provision unless the existence of the proxy and its irrevocability is noted conspicuously on the face or back of the certificate representing such shares. (i) Without limiting the manner in which a shareholder may authorize

another person or persons to act for him as proxy pursuant to paragraph (a) of this section, the following shall constitute a valid means by which a shareholder may grant such authority. (1) A shareholder may execute a writing authorizing another person or persons to act from him as proxy. Execution may be accomplished by the shareholder or the shareholder's authorized officer, director, employee or agent signing such writing or causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature. (2) A shareholder may authorize another person or persons to act for the shareholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be reasonably determined that the telegram, cablegram or other electronic transmission was authorized by the shareholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the nature of the information upon which they relied. (j) Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to paragraph (i) of this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

§ 610 Selection of inspectors at shareholders' meetings.

§ 610. Selection of inspectors at shareholders' meetings. (a) The board of directors shall appoint one or more inspectors to act at the meeting or any adjournment thereof and make a written report thereof. The board of directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no

inspector or alternate has been appointed, or if such persons are unable to act at a meeting of shareholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. (b) Unless otherwise provided in the certificate of incorporation or by-laws, paragraph (a) of this section shall not apply to a corporation that does not have a class of voting stock that is listed on a national securities exchange or authorized for quotation on an interdealer quotation system of a registered national securities association. Notwithstanding the foregoing, any corporation may take the actions set forth in paragraph (a) of this section.

§ 611 Duties of inspectors at shareholders' meetings.

§ 611. Duties of inspectors at shareholders' meetings. (a) The inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting or any shareholder entitled to vote thereat, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. Any report or certificate made by them shall be prima facie evidence of the facts stated and of the vote as certified by them. (b) In determining the validity and counting of proxies, ballots and consents, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies and consents, any information provided in accordance with section 609 (Proxies), ballots and the regular books and records of the corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies, ballots and consents submitted by or on

behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification pursuant to paragraph (a) of this section shall specify the precise information considered by them including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is reliable. (c) The date and time (which need not be a particular time of day) of the opening and the closing of the polls for each matter upon which the shareholders will vote at a meeting shall be announced by the person presiding at the meeting at the beginning of the meeting and, if no date and time is so announced, the polls shall close at the end of the meeting, including any adjournment thereof. No ballot, proxies or consents, nor any revocation thereof or changes thereto, shall be accepted by the inspectors after the closing of polls in accordance with section 605 (Notice of meetings of shareholders) unless the supreme court at a special term held within the judicial district where the office of the corporation is located upon application by a shareholder shall determine otherwise. (d) Unless otherwise provided in the certificate of incorporation or by-laws, paragraphs (a) and (c) of this section shall not apply to a corporation that does not have a class of voting stock that is listed on a national securities exchange or authorized for quotation on an interdealer quotation system of a registered national securities association. Notwithstanding the foregoing, any corporation may take the actions set forth in paragraphs (a) and (c) of this section.

§ 612 Qualification of voters.

§ 612. Qualification of voters. (a) Every shareholder of record shall be entitled at every meeting of shareholders to one vote for every share standing in his name on the record of shareholders, unless otherwise provided in the certificate of incorporation. (b) Treasury shares and shares held by another domestic or foreign

corporation of any type or kind, if a majority of the shares entitled to vote in the election of directors of such other corporation is held by the corporation, shall not be shares entitled to vote or to be counted in determining the total number of outstanding shares. (c) Shares held by an administrator, executor, guardian, conservator, committee, or other fiduciary, except a trustee, may be voted by him, either in person or by proxy, without transfer of such shares into his name. Shares held by a trustee may be voted by him, either in person or by proxy, only after the shares have been transferred into his name as trustee or into the name of his nominee. (d) Shares held by or under the control of a receiver may be voted by him without the transfer thereof into his name if authority so to do is contained in an order of the court by which such receiver was appointed. (e) A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, or a nominee of the pledgee. (f) Redeemable shares which have been called for redemption shall not be deemed to be outstanding shares for the purpose of voting or determining the total number of shares entitled to vote on any matter on and after the date on which written notice of redemption has been sent to holders thereof and a sum sufficient to redeem such shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders of the shares upon surrender of certificates therefor. (g) Shares standing in the name of another domestic or foreign corporation of any type or kind may be voted by such officer, agent or proxy as the by-laws of such corporation may provide, or, in the absence of such provision, as the board of such corporation may determine. (h) If shares are registered on the record of shareholders of a corporation in the name of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the secretary of the corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect:

(1) If only one votes, the vote shall be accepted by the corporation as the vote of all; (2) If more than one vote, the act of the majority so voting shall be accepted by the corporation as the vote of all; (3) If more than one vote, but the vote is equally divided on any particular matter, the vote shall be accepted by the corporation as a proportionate vote of the shares; unless the corporation has evidence, on the record of shareholders or otherwise, that the shares are held in a fiduciary capacity. Nothing in this paragraph shall alter any requirement that the exercise of fiduciary powers be by act of a majority, contained in any law applicable to such exercise of powers (including section 10-10.7 of the estates, powers and trusts law); (4) When shares as to which the vote is equally divided are registered on the record of shareholders of a corporation in the name of, or have passed by operation of law or by virtue of any deed of trust or other instrument to two or more fiduciaries, any court having jurisdiction of their accounts, upon petition by any of such fiduciaries or by any party in interest, may direct the voting of such shares for the best interest of the beneficiaries. This subparagraph shall not apply in any case where the instrument or order of the court appointing fiduciaries shall otherwise direct how such shares shall be voted; and (5) If the instrument or order furnished to the secretary of a corporation shows that a tenancy is held in unequal interests, a majority or equal division for the purposes of this paragraph shall be a majority or equal division in interest. (i) Notwithstanding the foregoing paragraphs, a corporation shall be protected in treating the persons in whose names shares stand on the record of shareholders as the owners thereof for all purposes.

§ 613 Limitations on right to vote.

§ 613. Limitations on right to vote.

The certificate of incorporation may provide, except as limited by section 501 (Authorized shares), either absolutely or conditionally, that the holders of any designated class or series of shares shall not be entitled to vote, or it may otherwise limit or define the respective voting powers of the several classes or series of shares, and, except as

otherwise provided in this chapter, such provisions of such certificate shall prevail, according to their tenor, in all elections and in all proceedings, over the provisions of this chapter which authorizes any action by the shareholders.

§ 614 Vote of shareholders.

§ 614. Vote of shareholders. (a) Directors shall, except as otherwise required by this chapter or by the by-laws or certificate of incorporation as permitted by this chapter, be elected by a plurality of the votes cast at a meeting of shareholders by the holders of shares entitled to vote in the election. (b) Whenever any corporate action, other than the election of directors, is to be taken under this chapter by vote of the shareholders, it shall, except as otherwise required by this chapter or by the certificate of incorporation as permitted by this chapter or by the specific provisions of a by-law adopted by the shareholders, be authorized by a majority of the votes cast in favor of or against such action at a meeting of shareholders by the holders of shares entitled to vote thereon. Except as otherwise provided in the certificate of incorporation or the specific provision of a by-law adopted by the shareholders, an abstention shall not constitute a vote cast.

§ 615 Written consent of shareholders, subscribers or incorporators

§ 615. Written consent of shareholders, subscribers or incorporators without a meeting. (a) Whenever under this chapter shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by the holders of all outstanding shares entitled to vote thereon or, if the certificate of incorporation so permits, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. In addition, this paragraph shall not be construed to alter or modify the provisions of any section or any provision in a certificate of incorporation not inconsistent with this chapter under which the written consent of the holders of less than all outstanding shares is sufficient

for corporate action. (b) No written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this paragraph to the corporation, written consents signed by a sufficient number of holders to take action are delivered to the corporation by delivery to its registered office in this state, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. (c) Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing. (d) Written consent thus given by the holders of such number of shares as is required under paragraph (a) of this section shall have the same effect as a valid vote of holders of such number of shares, and any certificate with respect to the authorization or taking of any such action which is to be delivered to the department of state shall recite that written consent has been given in accordance with this section and that written notice has been given as and to the extent required by this section. (e) When there are no shareholders of record, such action may be taken on the written consent signed by a majority in interest of the subscribers for shares whose subscriptions have been accepted or their successors in interest or, if no subscription has been accepted, on the written consent signed by the incorporator or a majority of the incorporators. When there are two or more incorporators, if any dies or is for any reason unable to act, the other or others may act. If there is no incorporator able to act, any person for whom an incorporator was acting as agent may act in his stead, or if such other person also dies or is for any reason unable to act, his legal representative may act.

§ 616 Greater requirement as to quorum and vote of shareholders.

§ 616. Greater requirement as to quorum and vote of shareholders. (a) The certificate of incorporation may contain provisions specifying either or both of the following:

(1) That the proportion of votes of shares, or the proportion of votes of shares of any class or series thereof, the holders of which shall be present in person or by proxy at any meeting of shareholders, including a special meeting for election of directors under section 603 (Special meeting for election of directors), in order to constitute a quorum for the transaction of any business or of any specified item of business, including amendments to the certificate of incorporation, shall be greater than the proportion prescribed by this chapter in the absence of such provision. (2) That the proportion of votes of shares, or votes of shares of a particular class or series of shares, that shall be necessary at any meeting of shareholders for the transaction of any business or of any specified item of business, including amendments to the certificate of incorporation, shall be greater than the proportion prescribed by this chapter in the absence of such provision. (b) An amendment of the certificate of incorporation which changes or strikes out a provision permitted by this section, shall be authorized at a meeting of shareholders by two-thirds of the votes of the shares entitled to vote thereon, or of such greater proportion of votes of shares, or votes of shares of a particular class or series of shares, as may be provided specifically in the certificate of incorporation for changing or striking out a provision permitted by this section. (c) If the certificate of incorporation of any corporation contains a provision authorized by this section, the existence of such provision shall be noted conspicuously on the face or back of every certificate for shares issued by such corporation, except that this requirement shall not apply to any corporation having any class of any equity security registered pursuant to Section twelve of the Securities Exchange Act of 1934, as amended.

§ 617 Voting by class or classes of shares.

§ 617. Voting by class or classes of shares. (a) The certificate of incorporation may contain provisions specifying that any class or classes of shares or of any series thereof shall vote as a class in connection with the transaction of any business or of any specified item of business at a meeting of shareholders, including amendments to the certificate of incorporation.

(b) Where voting as a class is provided in the certificate of incorporation, it shall be by the proportionate vote so provided or, if no proportionate vote is provided, in the election of directors, by a plurality of the votes cast at such meeting by the holders of shares of such class entitled to vote in the election, or for any other corporate action, by a majority of the votes cast at such meeting by the holders of shares of such class entitled to vote thereon. (c) Such voting by class shall be in addition to any other vote, including vote by class, required by this chapter and by the certificate of incorporation as permitted by this chapter.

§ 618 Cumulative voting.

§ 618. Cumulative voting.

The certificate of incorporation of any corporation may provide that in all elections of directors of such corporation each shareholder shall be entitled to as many votes as shall equal the number of votes which, except for such provisions as to cumulative voting, he would be entitled to cast for the election of directors with respect to his shares multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he may see fit, which right, when exercised, shall be termed cumulative voting.

§ 619 Powers of supreme court respecting elections.

§ 619. Powers of supreme court respecting elections.

Upon the petition of any shareholder aggrieved by an election, and upon notice to the persons declared elected thereat, the corporation and such other persons as the court may direct, the supreme court at a special term held within the judicial district where the office of the corporation is located shall forthwith hear the proofs and allegations of the parties, and confirm the election, order a new election, or take such other action as justice may require.

§ 620 Agreements as to voting; provision in certificate of

§ 620. Agreements as to voting; provision in certificate of

incorporation as to control of directors. (a) An agreement between two or more shareholders, if in writing and signed by the parties thereto, may provide that in exercising any voting rights, the shares held by them shall be voted as therein provided, or as they may agree, or as determined in accordance with a procedure agreed upon by them. (b) A provision in the certificate of incorporation otherwise prohibited by law because it improperly restricts the board in its management of the business of the corporation, or improperly transfers to one or more shareholders or to one or more persons or corporations to be selected by him or them, all or any part of such management otherwise within the authority of the board under this chapter, shall nevertheless be valid: (1) If all the incorporators or holders of record of all outstanding shares, whether or not having voting power, have authorized such provision in the certificate of incorporation or an amendment thereof; and (2) If, subsequent to the adoption of such provision, shares are transferred or issued only to persons who had knowledge or notice thereof or consented in writing to such provision. (c) A provision authorized by paragraph (b) shall be valid only so long as no shares of the corporation are listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national or affiliated securities association. (d) (1) Except as provided in paragraph (e), an amendment to strike out a provision authorized by paragraph (b) shall be authorized at a meeting of shareholders by (A) (i) for any corporation in existence on the effective date of subparagraph (2) of this paragraph, two-thirds of the votes of the shares entitled to vote thereon and (ii) for any corporation in existence on the effective date of this clause the certificate of incorporation of which expressly provides such and for any corporation incorporated after the effective date of subparagraph (2) of this paragraph, a majority of the votes of the shares entitled to vote thereon or (B) in either case, by such greater proportion of votes of shares as may be required by the certificate of incorporation for that purpose. (2) Any corporation may adopt an amendment of the certificate of

incorporation in accordance with the applicable clause or subclause of subparagraph (1) of this paragraph to provide that any further amendment of the certificate of incorporation that strikes out a provision authorized by paragraph (b) of this section shall be authorized at a meeting of the shareholders by a specified proportion of votes of the shares, or votes of a particular class or series of shares, entitled to vote thereon, provided that such proportion may not be less than a majority. (e) Alternatively, if a provision authorized by paragraph (b) shall have ceased to be valid under this section, the board may authorize a certificate of amendment under section 805 (Certificate of amendment; contents) striking out such provision. Such certificate shall set forth the event by reason of which the provision ceased to be valid. (f) The effect of any such provision authorized by paragraph (b) shall be to relieve the directors and impose upon the shareholders authorizing the same or consenting thereto the liability for managerial acts or omissions that is imposed on directors by this chapter to the extent that and so long as the discretion or powers of the board in its management of corporate affairs is controlled by any such provision. (g) If the certificate of incorporation of any corporation contains a provision authorized by paragraph (b), the existence of such provision shall be noted conspicuously on the face or back of every certificate for shares issued by such corporation.

§ 621 Voting trust agreements.

§ 621. Voting trust agreements. (a) Any shareholder or shareholders, under an agreement in writing, may transfer his or their shares to a voting trustee or trustees for the purpose of conferring the right to vote thereon for a period not exceeding ten years upon the terms and conditions therein stated. The certificates for shares so transferred shall be surrendered and cancelled and new certificates therefor issued to such trustee or trustees stating that they are issued under such agreement, and in the entry of such ownership in the record of the corporation that fact shall also be noted, and such trustee or trustees may vote the shares so transferred during the term of such agreement. (b) The trustee or trustees shall keep available for inspection by

holders of voting trust certificates at his or their office or at a place designated in such agreement or of which the holders of voting trust certificates have been notified in writing, correct and complete books and records of account relating to the trust, and a record containing the names and addresses of all persons who are holders of voting trust certificates and the number and class of shares represented by the certificates held by them and the dates when they became the owners thereof. The record may be in written form or any other form capable of being converted into written form within a reasonable time. (c) A duplicate of every such agreement shall be filed in the office of the corporation and it and the record of voting trust certificate holders shall be subject to the same right of inspection by a shareholder of record or a holder of a voting trust certificate, in person or by agent or attorney, as are the records of the corporation under section 624 (Books and records; right of inspection, prima facie evidence). The shareholder or holder of a voting trust certificate shall be entitled to the remedies provided in that section. (d) At any time within six months before the expiration of such voting trust agreement as originally fixed or as extended one or more times under this paragraph, one or more holders of voting trust certificates may, by agreement in writing, extend the duration of such voting trust agreement, nominating the same or substitute trustee or trustees, for an additional period not exceeding ten years. Such extension agreement shall not affect the rights or obligations of persons not parties thereto and shall in every respect comply with and be subject to all the provisions of this section applicable to the original voting trust agreement.

§ 622 Preemptive rights.

§ 622. Preemptive rights. (a) As used in this section, the term: (1) "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 entitled to a preference. (2) "Equity shares" means shares of any class, whether or not preferred as to dividends or assets, which have unlimited dividend

rights. (3) "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 happening of an event specified in the certificate of incorporation which would change the voting rights of any class of shares. (4) "Voting shares" means shares of any class which have voting rights, but does not include bonds on which voting rights are conferred under section 518 (Corporate bonds). (5) "Preemptive right" means the right to purchase shares or other securities to be issued or subjected to rights or options to purchase, as such right is defined in this section. (b) (1) With respect to any corporation incorporated prior to the effective date of subparagraph (2) of this paragraph, except as otherwise provided in the certificate of incorporation, 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, or the proposed granting by the corporation of rights or options to purchase, its equity shares of any class or any shares or other securities convertible into or carrying rights or options to purchase its equity shares of any class, shall, if the issuance of the equity shares proposed to be issued or issuable upon exercise of such rights or options or upon conversion of such other securities would adversely affect the unlimited dividend rights of such holders, have the right during a reasonable time and on reasonable conditions, both to be fixed by the board, to purchase such shares or other securities in such proportions as shall be determined as provided in this section. (2) With respect to any corporation incorporated on or after the effective date of this subparagraph, the holders of such shares shall not have any preemptive right, except as otherwise expressly provided in the certificate of incorporation. (c) Except as otherwise provided in the certificate of incorporation, and except as provided in this section, the holders of voting shares of any class having any preemptive right under this paragraph on the date immediately prior to the effective date of subparagraph (2) of paragraph (b) of this section, in case of the proposed issuance by the corporation of, or the proposed granting by the corporation of rights or options to purchase, its voting shares of any class or any shares or other

securities convertible into or carrying rights or options to purchase its voting shares of any class, shall, if the issuance of the voting shares proposed to be issued or issuable upon exercise of such rights or options or upon conversion of such other securities would adversely affect the voting rights of such holders, have the right during a reasonable time and on reasonable conditions, both to be fixed by the board, to purchase such shares or other securities in such proportions as shall be determined as provided in this section. (d) The preemptive right provided for in paragraphs (b) and (c) shall entitle shareholders having such rights to purchase the shares or other securities to be offered or optioned for sale as nearly as practicable in such proportions as would, if such preemptive 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 underwriters 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 or optioned for sale among the shareholders having preemptive rights to purchase them in 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 shareholders. (e) Unless otherwise provided in the certificate of incorporation, shares or other securities offered for sale or subjected to rights or options to purchase shall not be subject to preemptive rights under paragraph (b) or (c) of this section if they: (1) Are to be issued by the board to effect a merger or consolidation or offered or subjected to rights or options for consideration other than cash; (2) Are to be issued or subjected to rights or options under paragraph (d) of section 505 (Rights and options to purchase shares; issue of

rights and options to directors, officers and employees); (3) Are to be issued to satisfy conversion or option rights theretofore granted by the corporation; (4) Are treasury shares; (5) Are part of the shares or other securities of the corporation authorized in its original certificate of incorporation and are issued, sold or optioned within two years from the date of filing such certificate; or (6) Are to be issued under a plan of reorganization approved in a proceeding under any applicable act of congress relating to reorganization of corporations. (f) Shareholders of record entitled to preemptive rights on the record date fixed by the board under section 604 (Fixing record date), or, if no record date is fixed, then on the record date determined under section 604, and no others shall be entitled to the right defined in this section. (g) The board shall cause to be given to each shareholder entitled to purchase shares or other securities in accordance with this section, a notice directed to him in the manner provided in section 605 (Notice of meetings of shareholders) setting forth the time within which and the terms and conditions upon which the shareholder may purchase such shares or other securities and also the apportionment made of the right to purchase among the shareholders entitled to preemptive rights. Such notice shall be given personally or by mail at least fifteen days prior to the expiration of the period during which the shareholder shall have the right to purchase. All shareholders entitled to preemptive rights to whom notice shall have been given as aforesaid shall be deemed conclusively to have had a reasonable time in which to exercise their preemptive rights. (h) Shares or other securities which have been offered to shareholders having preemptive rights to purchase and which have not been purchased by them within the time fixed by the board may thereafter, for a period of not exceeding one year following the expiration of the time during which shareholders might have exercised such preemptive rights, be issued, sold or subjected to rights or options to any other person or persons at a price, without deduction of such reasonable expenses of and compensation for the sale, underwriting or purchase of such shares by

underwriters or dealers as may lawfully be paid by the corporation, not less than that at which they were offered to such shareholders. Any such shares or other securities not so issued, sold or subjected to rights or options to others during such one year period shall thereafter again be subject to the preemptive rights of shareholders. (i) Except as otherwise provided in the certificate of incorporation and except as provided in this section, no holder of any shares of any class shall as such holder have any preemptive right to purchase any other shares or securities of any class which at any time may be sold or offered for sale by the corporation. Unless otherwise provided in the certificate of incorporation, holders of bonds on which voting rights are conferred under section 518 shall have no preemptive rights.

§ 623 Procedure to enforce shareholder's right to receive payment for

§ 623. Procedure to enforce shareholder's right to receive payment for shares. (a) A shareholder intending to enforce his right under a section of this chapter to receive payment for his shares if the proposed corporate action referred to therein is taken shall file with the corporation, before the meeting of shareholders at which the action is submitted to a vote, or at such meeting but before the vote, written objection to the action. The objection shall include a notice of his election to dissent, his name and residence address, the number and classes of shares as to which he dissents and a demand for payment of the fair value of his shares if the action is taken. Such objection is not required from any shareholder to whom the corporation did not give notice of such meeting in accordance with this chapter or where the proposed action is authorized by written consent of shareholders without a meeting. (b) Within ten days after the shareholders' authorization date, which term as used in this section means the date on which the shareholders' vote authorizing such action was taken, or the date on which such consent without a meeting was obtained from the requisite shareholders, the corporation shall give written notice of such authorization or consent by registered mail to each shareholder who filed written objection or from whom written objection was not required, excepting any shareholder who voted for or consented in writing to the proposed action and who thereby is deemed to have elected not to enforce his right to

receive payment for his shares. (c) Within twenty days after the giving of notice to him, any shareholder from whom written objection was not required and who elects to dissent shall file with the corporation a written notice of such election, stating his name and residence address, the number and classes of shares as to which he dissents and a demand for payment of the fair value of his shares. Any shareholder who elects to dissent from a merger under section 905 (Merger of subsidiary corporation) or paragraph (c) of section 907 (Merger or consolidation of domestic and foreign corporations) or from a share exchange under paragraph (g) of section 913 (Share exchanges) shall file a written notice of such election to dissent within twenty days after the giving to him of a copy of the plan of merger or exchange or an outline of the material features thereof under section 905 or 913. (d) A shareholder may not dissent as to less than all of the shares, as to which he has a right to dissent, held by him of record, that he owns beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial owner as to less than all of the shares of such owner, as to which such nominee or fiduciary has a right to dissent, held of record by such nominee or fiduciary. (e) Upon consummation of the corporate action, the shareholder shall cease to have any of the rights of a shareholder except the right to be paid the fair value of his shares and any other rights under this section. A notice of election may be withdrawn by the shareholder at any time prior to his acceptance in writing of an offer made by the corporation, as provided in paragraph (g), but in no case later than sixty days from the date of consummation of the corporate action except that if the corporation fails to make a timely offer, as provided in paragraph (g), the time for withdrawing a notice of election shall be extended until sixty days from the date an offer is made. Upon expiration of such time, withdrawal of a notice of election shall require the written consent of the corporation. In order to be effective, withdrawal of a notice of election must be accompanied by the return to the corporation of any advance payment made to the shareholder as provided in paragraph (g). If a notice of election is withdrawn, or the corporate action is rescinded, or a court shall determine that the shareholder is not entitled to receive payment for his shares, or the

shareholder shall otherwise lose his dissenters' rights, he shall not have the right to receive payment for his shares and he shall be reinstated to all his rights as a shareholder as of the consummation of the corporate action, including any intervening preemptive rights and the right to payment of any intervening dividend or other distribution or, if any such rights have expired or any such dividend or distribution other than in cash has been completed, in lieu thereof, at the election of the corporation, the fair value thereof in cash as determined by the board as of the time of such expiration or completion, but without prejudice otherwise to any corporate proceedings that may have been taken in the interim. (f) At the time of filing the notice of election to dissent or within one month thereafter the shareholder of shares represented by certificates shall submit the certificates representing his shares to the corporation, or to its transfer agent, which shall forthwith note conspicuously thereon that a notice of election has been filed and shall return the certificates to the shareholder or other person who submitted them on his behalf. Any shareholder of shares represented by certificates who fails to submit his certificates for such notation as herein specified shall, at the option of the corporation exercised by written notice to him within forty-five days from the date of filing of such notice of election to dissent, lose his dissenter's rights unless a court, for good cause shown, shall otherwise direct. Upon transfer of a certificate bearing such notation, each new certificate issued therefor shall bear a similar notation together with the name of the original dissenting holder of the shares and a transferee shall acquire no rights in the corporation except those which the original dissenting shareholder had at the time of transfer. (g) Within fifteen days after the expiration of the period within which shareholders may file their notices of election to dissent, or within fifteen days after the proposed corporate action is consummated, whichever is later (but in no case later than ninety days from the shareholders' authorization date), the corporation or, in the case of a merger or consolidation, the surviving or new corporation, shall make a written offer by registered mail to each shareholder who has filed such notice of election to pay for his shares at a specified price which the corporation considers to be their fair value. Such offer shall be

accompanied by a statement setting forth the aggregate number of shares with respect to which notices of election to dissent have been received and the aggregate number of holders of such shares. If the corporate action has been consummated, such offer shall also be accompanied by (1) advance payment to each such shareholder who has submitted the certificates representing his shares to the corporation, as provided in paragraph (f), of an amount equal to eighty percent of the amount of such offer, or (2) as to each shareholder who has not yet submitted his certificates a statement that advance payment to him of an amount equal to eighty percent of the amount of such offer will be made by the corporation promptly upon submission of his certificates. If the corporate action has not been consummated at the time of the making of the offer, such advance payment or statement as to advance payment shall be sent to each shareholder entitled thereto forthwith upon consummation of the corporate action. Every advance payment or statement as to advance payment shall include advice to the shareholder to the effect that acceptance of such payment does not constitute a waiver of any dissenters' rights. If the corporate action has not been consummated upon the expiration of the ninety day period after the shareholders' authorization date, the offer may be conditioned upon the consummation of such action. Such offer shall be made at the same price per share to all dissenting shareholders of the same class, or if divided into series, of the same series and shall be accompanied by a balance sheet of the corporation whose shares the dissenting shareholder holds as of the latest available date, which shall not be earlier than twelve months before the making of such offer, and a profit and loss statement or statements for not less than a twelve month period ended on the date of such balance sheet or, if the corporation was not in existence throughout such twelve month period, for the portion thereof during which it was in existence. Notwithstanding the foregoing, the corporation shall not be required to furnish a balance sheet or profit and loss statement or statements to any shareholder to whom such balance sheet or profit and loss statement or statements were previously furnished, nor if in connection with obtaining the shareholders' authorization for or consent to the proposed corporate action the shareholders were furnished with a proxy or information statement, which included financial statements, pursuant to Regulation 14A or Regulation

14C of the United States Securities and Exchange Commission. If within thirty days after the making of such offer, the corporation making the offer and any shareholder agree upon the price to be paid for his shares, payment therefor shall be made within sixty days after the making of such offer or the consummation of the proposed corporate action, whichever is later, upon the surrender of the certificates for any such shares represented by certificates. (h) The following procedure shall apply if the corporation fails to make such offer within such period of fifteen days, or if it makes the offer and any dissenting shareholder or shareholders fail to agree with it within the period of thirty days thereafter upon the price to be paid for their shares: (1) The corporation shall, within twenty days after the expiration of whichever is applicable of the two periods last mentioned, institute a special proceeding in the supreme court in the judicial district in which the office of the corporation is located to determine the rights of dissenting shareholders and to fix the fair value of their shares. If, in the case of merger or consolidation, the surviving or new corporation is a foreign corporation without an office in this state, such proceeding shall be brought in the county where the office of the domestic corporation, whose shares are to be valued, was located. (2) If the corporation fails to institute such proceeding within such period of twenty days, any dissenting shareholder may institute such proceeding for the same purpose not later than thirty days after the expiration of such twenty day period. If such proceeding is not instituted within such thirty day period, all dissenter's rights shall be lost unless the supreme court, for good cause shown, shall otherwise direct. (3) All dissenting shareholders, excepting those who, as provided in paragraph (g), have agreed with the corporation upon the price to be paid for their shares, shall be made parties to such proceeding, which shall have the effect of an action quasi in rem against their shares. The corporation shall serve a copy of the petition in such proceeding upon each dissenting shareholder who is a resident of this state in the manner provided by law for the service of a summons, and upon each nonresident dissenting shareholder either by registered mail and publication, or in such other manner as is permitted by law. The

jurisdiction of the court shall be plenary and exclusive. (4) The court shall determine whether each dissenting shareholder, as to whom the corporation requests the court to make such determination, is entitled to receive payment for his shares. If the corporation does not request any such determination or if the court finds that any dissenting shareholder is so entitled, it shall proceed to fix the value of the shares, which, for the purposes of this section, shall be the fair value as of the close of business on the day prior to the shareholders' authorization date. In fixing the fair value of the shares, the court shall consider the nature of the transaction giving rise to the shareholder's right to receive payment for shares and its effects on the corporation and its shareholders, the concepts and methods then customary in the relevant securities and financial markets for determining fair value of shares of a corporation engaging in a similar transaction under comparable circumstances and all other relevant factors. The court shall determine the fair value of the shares without a jury and without referral to an appraiser or referee. Upon application by the corporation or by any shareholder who is a party to the proceeding, the court may, in its discretion, permit pretrial disclosure, including, but not limited to, disclosure of any expert's reports relating to the fair value of the shares whether or not intended for use at the trial in the proceeding and notwithstanding subdivision (d) of section 3101 of the civil practice law and rules. (5) The final order in the proceeding shall be entered against the corporation in favor of each dissenting shareholder who is a party to the proceeding and is entitled thereto for the value of his shares so determined. (6) The final order shall include an allowance for interest at such rate as the court finds to be equitable, from the date the corporate action was consummated to the date of payment. In determining the rate of interest, the court shall consider all relevant factors, including the rate of interest which the corporation would have had to pay to borrow money during the pendency of the proceeding. If the court finds that the refusal of any shareholder to accept the corporate offer of payment for his shares was arbitrary, vexatious or otherwise not in good faith, no interest shall be allowed to him. (7) Each party to such proceeding shall bear its own costs and

expenses, including the fees and expenses of its counsel and of any experts employed by it. Notwithstanding the foregoing, the court may, in its discretion, apportion and assess all or any part of the costs, expenses and fees incurred by the corporation against any or all of the dissenting shareholders who are parties to the proceeding, including any who have withdrawn their notices of election as provided in paragraph (e), if the court finds that their refusal to accept the corporate offer was arbitrary, vexatious or otherwise not in good faith. The court may, in its discretion, apportion and assess all or any part of the costs, expenses and fees incurred by any or all of the dissenting shareholders who are parties to the proceeding against the corporation if the court finds any of the following: (A) that the fair value of the shares as determined materially exceeds the amount which the corporation offered to pay; (B) that no offer or required advance payment was made by the corporation; (C) that the corporation failed to institute the special proceeding within the period specified therefor; or (D) that the action of the corporation in complying with its obligations as provided in this section was arbitrary, vexatious or otherwise not in good faith. In making any determination as provided in clause (A), the court may consider the dollar amount or the percentage, or both, by which the fair value of the shares as determined exceeds the corporate offer. (8) Within sixty days after final determination of the proceeding, the corporation shall pay to each dissenting shareholder the amount found to be due him, upon surrender of the certificates for any such shares represented by certificates. (i) Shares acquired by the corporation upon the payment of the agreed value therefor or of the amount due under the final order, as provided in this section, shall become treasury shares or be cancelled as provided in section 515 (Reacquired shares), except that, in the case of a merger or consolidation, they may be held and disposed of as the plan of merger or consolidation may otherwise provide. (j) No payment shall be made to a dissenting shareholder under this section at a time when the corporation is insolvent or when such payment would make it insolvent. In such event, the dissenting shareholder shall, at his option: (1) Withdraw his notice of election, which shall in such event be deemed withdrawn with the written consent of the corporation; or

(2) Retain his status as a claimant against the corporation and, if it is liquidated, be subordinated to the rights of creditors of the corporation, but have rights superior to the non-dissenting shareholders, and if it is not liquidated, retain his right to be paid for his shares, which right the corporation shall be obliged to satisfy when the restrictions of this paragraph do not apply. (3) The dissenting shareholder shall exercise such option under subparagraph (1) or (2) by written notice filed with the corporation within thirty days after the corporation has given him written notice that payment for his shares cannot be made because of the restrictions of this paragraph. If the dissenting shareholder fails to exercise such option as provided, the corporation shall exercise the option by written notice given to him within twenty days after the expiration of such period of thirty days. (k) The enforcement by a shareholder of his right to receive payment for his shares in the manner provided herein shall exclude the enforcement by such shareholder of any other right to which he might otherwise be entitled by virtue of share ownership, except as provided in paragraph (e), and except that this section shall not exclude the right of such shareholder to bring or maintain an appropriate action to obtain relief on the ground that such corporate action will be or is unlawful or fraudulent as to him. (l) Except as otherwise expressly provided in this section, any notice to be given by a corporation to a shareholder under this section shall be given in the manner provided in section 605 (Notice of meetings of shareholders). (m) This section shall not apply to foreign corporations except as provided in subparagraph (e) (2) of section 907 (Merger or consolidation of domestic and foreign corporations).

§ 624 Books and records; right of inspection, prima facie evidence.

§ 624. Books and records; right of inspection, prima facie evidence. (a) Each corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders, board and executive committee, if any, and shall keep at the office of the corporation in this state or at the office of its transfer agent or registrar in this state, a record containing the names

and addresses of all shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof. Any of the foregoing books, minutes or records may be in written form or in any other form capable of being converted into written form within a reasonable time. (b) Any person who shall have been a shareholder of record of a corporation upon at least five days' written demand shall have the right to examine in person or by agent or attorney, during usual business hours, its minutes of the proceedings of its shareholders and record of shareholders and to make extracts therefrom for any purpose reasonably related to such person's interest as a shareholder. Holders of voting trust certificates representing shares of the corporation shall be regarded as shareholders for the purpose of this section. Any such agent or attorney shall be authorized in a writing that satisfies the requirements of a writing under paragraph (b) of section 609 (Proxies). A corporation requested to provide information pursuant to this paragraph shall make available such information in written form and in any other format in which such information is maintained by the corporation and shall not be required to provide such information in any other format. If a request made pursuant to this paragraph includes a request to furnish information regarding beneficial owners, the corporation shall make available such information in its possession regarding beneficial owners as is provided to the corporation by a registered broker or dealer or a bank, association or other entity that exercises fiduciary powers in connection with the forwarding of information to such owners. The corporation shall not be required to obtain information about beneficial owners not in its possession. (c) An inspection authorized by paragraph (b) may be denied to such shareholder or other person upon his refusal to furnish to the corporation, its transfer agent or registrar an affidavit that such inspection is not desired for a purpose which is in the interest of a business or object other than the business of the corporation and that he has not within five years sold or offered for sale any list of shareholders of any corporation of any type or kind, whether or not formed under the laws of this state, or aided or abetted any person in procuring any such record of shareholders for any such purpose. (d) Upon refusal by the corporation or by an officer or agent of the

corporation to permit an inspection of the minutes of the proceedings of its shareholders or of the record of shareholders as herein provided, the person making the demand for inspection may apply to the supreme court in the judicial district where the office of the corporation is located, upon such notice as the court may direct, for an order directing the corporation, its officer or agent to show cause why an order should not be granted permitting such inspection by the applicant. Upon the return day of the order to show cause, the court shall hear the parties summarily, by affidavit or otherwise, and if it appears that the applicant is qualified and entitled to such inspection, the court shall grant an order compelling such inspection and awarding such further relief as to the court may seem just and proper. (e) Upon the written request of any shareholder, the corporation shall give or mail to such shareholder an annual balance sheet and profit and loss statement for the preceding fiscal year, and, if any interim balance sheet or profit and loss statement has been distributed to its shareholders or otherwise made available to the public, the most recent such interim balance sheet or profit and loss statement. The corporation shall be allowed a reasonable time to prepare such annual balance sheet and profit and loss statement. (f) Nothing herein contained shall impair the power of courts to compel the production for examination of the books and records of a corporation. (g) The books and records specified in paragraph (a) shall be prima facie evidence of the facts therein stated in favor of the plaintiff in any action or special proceeding against such corporation or any of its officers, directors or shareholders.

§ 625 Infant shareholders and bondholders.

§ 625. Infant shareholders and bondholders. (a) A corporation may treat an infant who holds shares or bonds of such corporation as having capacity to receive and to empower others to receive dividends, interest, principal and other payments and distributions, to vote or express consent or dissent, in person or by proxy, and to make elections and exercise rights relating to such shares or bonds, unless, in the case of shares, the corporate officer responsible for maintaining the list of shareholders or the transfer

agent of the corporation or, in the case of bonds, the treasurer or paying officer or agent has received written notice that such holder is an infant. (b) An infant holder of shares or bonds of a corporation who has received or empowered others to receive payments or distributions, voted or expressed consent or dissent, or made an election or exercised a right relating thereto, shall have no right thereafter to disaffirm or avoid, as against the corporation, any such act on his part, unless prior to such receipt, vote, consent, dissent, election or exercise, as to shares, the corporate officer responsible for maintaining the list of shareholders or its transfer agent or, in the case of bonds, the treasurer or paying officer had received written notice that such holder was an infant. (c) This section does not limit any other statute which authorizes any corporation to deal with an infant or limits the right of an infant to disaffirm his acts.

§ 626 Shareholders' derivative action brought in the right of the

§ 626. Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor. (a) An action may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates of the corporation or of a beneficial interest in such shares or certificates. (b) In any such action, it shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law. (c) In any such action, the complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort. (d) Such action shall not be discontinued, compromised or settled, without the approval of the court having jurisdiction of the action. If the court shall determine that the interests of the shareholders or any class or classes thereof will be substantially affected by such discontinuance, compromise, or settlement, the court, in its discretion,

may direct that notice, by publication or otherwise, shall be given to the shareholders or class or classes thereof whose interests it determines will be so affected; if notice is so directed to be given, the court may determine which one or more of the parties to the action shall bear the expense of giving the same, in such amount as the court shall determine and find to be reasonable in the circumstances, and the amount of such expense shall be awarded as special costs of the action and recoverable in the same manner as statutory taxable costs. (e) If the action on behalf of the corporation was successful, in whole or in part, or if anything was received by the plaintiff or plaintiffs or a claimant or claimants as the result of a judgment, compromise or settlement of an action or claim, the court may award the plaintiff or plaintiffs, claimant or claimants, reasonable expenses, including reasonable attorney's fees, and shall direct him or them to account to the corporation for the remainder of the proceeds so received by him or them. This paragraph shall not apply to any judgment rendered for the benefit of injured shareholders only and limited to a recovery of the loss or damage sustained by them.

§ 627 Security for expenses in shareholders' derivative action brought

§ 627. Security for expenses in shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor.

In any action specified in section 626 (Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor), unless the plaintiff or plaintiffs hold five percent or more of any class of the outstanding shares or hold voting trust certificates or a beneficial interest in shares representing five percent or more of any class of such shares, or the shares, voting trust certificates and beneficial interest of such plaintiff or plaintiffs have a fair value in excess of fifty thousand dollars, the corporation in whose right such action is brought shall be entitled at any stage of the proceedings before final judgment to require the plaintiff or plaintiffs to give security for the reasonable expenses, including attorney's fees, which may be incurred by it in connection with such action and by the other parties defendant in connection therewith for which the corporation may

become liable under this chapter, under any contract or otherwise under law, to which the corporation shall have recourse in such amount as the court having jurisdiction of such action shall determine upon the termination of such action. The amount of such security may thereafter from time to time be increased or decreased in the discretion of the court having jurisdiction of such action upon showing that the security provided has or may become inadequate or excessive.

§ 628 Liability of subscribers and shareholders.

§ 628. Liability of subscribers and shareholders. (a) A holder of or subscriber for shares of a corporation shall be under no obligation to the corporation for payment for such shares other than the obligation to pay the unpaid portion of his subscription which in no event shall be less than the amount of the consideration for which such shares could be issued lawfully. (b) Any person becoming an assignee or transferee of shares or of a subscription for shares in good faith and without knowledge or notice that the full consideration therefor has not been paid shall not be personally liable for any unpaid portion of such consideration, but the transferor shall remain liable therefor. (c) No person holding shares in any corporation as collateral security shall be personally liable as a shareholder but the person pledging such shares shall be considered the holder thereof and shall be so liable. No executor, administrator, guardian, trustee or other fiduciary shall be personally liable as a shareholder, but the estate and funds in the hands of such executor, administrator, guardian, trustee or other fiduciary shall be liable.

§ 629 Certain transfers or assignments by shareholders or subscribers;

§ 629. Certain transfers or assignments by shareholders or subscribers; effect.

Any transfer or assignment by a shareholder of his shares, or by a subscriber for shares of his interest in the corporation, shall not relieve him of any liability as a shareholder or subscriber if at the time of such transfer or assignment the aggregate of the corporation's property, exclusive of any property which it may have conveyed,

transferred, concealed, removed, or permitted to be concealed or removed, with intent to defraud, hinder or delay its creditors, is not at a fair valuation sufficient in amount to pay its debts, or if such condition is imminent.

§ 630 Liability of shareholders for wages due to laborers, servants or

§ 630. Liability of shareholders for wages due to laborers, servants or employees. (a) The ten largest shareholders, as determined by the fair value of their beneficial interest as of the beginning of the period during which the unpaid services referred to in this section are performed, of every domestic corporation or of any foreign corporation, when the unpaid services were performed in the state, no shares of which are listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national or an affiliated securities association, shall jointly and severally be personally liable for all debts, wages or salaries due and owing to any of its laborers, servants or employees other than contractors, for services performed by them for such corporation. Before such laborer, servant or employee shall charge such shareholder for such services, he shall give notice in writing to such shareholder that he intends to hold him liable under this section. Such notice shall be given within one hundred and eighty days after termination of such services, except that if, within such period, the laborer, servant or employee demands an examination of the record of shareholders under paragraph (b) of section 624 (Books and records; right of inspection, prima facie evidence) of this article, such notice may be given within sixty days after he has been given the opportunity to examine the record of shareholders. An action to enforce such liability shall be commenced within ninety days after the return of an execution unsatisfied against the corporation upon a judgment recovered against it for such services. The provisions of this paragraph shall not apply to an investment company registered as such under an act of congress entitled "Investment Company Act of 1940." (b) For the purposes of this section, wages or salaries shall mean all compensation and benefits payable by an employer to or for the account of the employee for personal services rendered by such employee. These shall specifically include but not be limited to salaries, overtime,

vacation, holiday and severance pay; employer contributions to or payments of insurance or welfare benefits; employer contributions to pension or annuity funds; and any other moneys properly due or payable for services rendered by such employee. (c) A shareholder who has paid more than his pro rata share under this section shall be entitled to contribution pro rata from the other shareholders liable under this section with respect to the excess so paid, over and above his pro rata share, and may sue them jointly or severally or any number of them to recover the amount due from them. Such recovery may be had in a separate action. As used in this paragraph, "pro rata" means in proportion to beneficial share interest. Before a shareholder may claim contribution from other shareholders under this paragraph, he shall, unless they have been given notice by a laborer, servant or employee under paragraph (a), give them notice in writing that he intends to hold them so liable to him. Such notice shall be given by him within twenty days after the date that notice was given to him by a laborer, servant or employee under paragraph (a).

ARTICLE 7 DIRECTORS AND OFFICERS Section 701. Board of directors. 702. Number of directors. 703. Election and term of directors. 704. Classification of directors. 705. Newly created directorships and vacancies. 706. Removal of directors. 707. Quorum of directors. 708. Action by the board. 709. Greater requirement as to quorum and vote of directors. 710. Place and time of meetings of the board. 711. Notice of meetings of the board. 712. Executive committee and other committees. 713. Interested directors. 714. Loans to directors. 715. Officers. 716. Removal of officers.

717. Duty of directors.
718. List of directors and officers.
719. Liability of directors in certain cases.
720. Action against directors and officers for misconduct.
721. Nonexclusivity of statutory provisions for indemnification of directors and officers.
722. Authorization for indemnification of directors and officers.
723. Payment of indemnification other than by court award.
724. Indemnification of directors and officers by a court.
725. Other provisions affecting indemnification of directors and officers.
726. Insurance for indemnification of directors and officers.
727. Annual reports for certain transactions required.

Article 7

§ 701 Board of directors.

§ 701. Board of directors.

Subject to any provision in the certificate of incorporation authorized by paragraph (b) of section 620 (Agreements as to voting; provision in certificate of incorporation as to control of directors) or by paragraph (b) of section 715 (Officers), the business of a corporation shall be managed under the direction of its board of directors, each of whom shall be at least eighteen years of age. The certificate of incorporation or the by-laws may prescribe other qualifications for directors.

§ 702 Number of directors.

§ 702. Number of directors. (a) The board of directors shall consist of one or more members. The number of directors constituting the board may be fixed by the by-laws, or by action of the shareholders or of the board under the specific provisions of a by-law adopted by the shareholders. If not otherwise fixed under this paragraph, the number shall be one. As used in this article, "entire board" means the total number of directors which the corporation would have if there were no vacancies. (b) The number of directors may be increased or decreased by amendment

of the by-laws, or by action of the shareholders or of the board under the specific provisions of a by-law adopted by the shareholders, subject to the following limitations: (1) If the board is authorized by the by-laws to change the number of directors, whether by amending the by-laws or by taking action under the specific provisions of a by-law adopted by the shareholders, such amendment or action shall require the vote of a majority of the entire board. (2) No decrease shall shorten the term of any incumbent director.

§ 703 Election and term of directors.

§ 703. Election and term of directors. (a) At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting except as authorized by section 704 (Classification of directors). The certificate of incorporation may provide for the election of one or more directors by the holders of the shares of any class or series, or by the holders of bonds entitled to vote in the election of directors pursuant to section 518 (Corporate bonds), voting as a class. (b) Each director shall hold office until the expiration of the term for which he is elected, and until his successor has been elected and qualified.

§ 704 Classification of directors.

§ 704. Classification of directors. (a) The certificate of incorporation or the specific provisions of a by-law adopted by the shareholders may provide that the directors be divided into either two, three or four classes. All classes shall be as nearly equal in number as possible. The terms of office of the directors initially classified shall be as follows: that of the first class shall expire at the next annual meeting of shareholders, the second class at the second succeeding annual meeting, the third class, if any, at the third succeeding annual meeting, and the fourth class, if any, at the fourth succeeding annual meeting. (b) At each annual meeting after such initial classification, directors to replace those whose terms expire at such annual meeting shall be elected to hold office until the second succeeding annual

meeting if there are two classes, the third succeeding annual meeting if there are three classes, or the fourth succeeding annual meeting if there are four classes. (c) If directors are classified and the number of directors is thereafter changed: (1) Any newly created directorships or any decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as possible. (2) When the number of directors is increased by the board and any newly created directorships are filled by the board, there shall be no classification of the additional directors until the next annual meeting of shareholders.

§ 705 Newly created directorships and vacancies.

§ 705. Newly created directorships and vacancies. (a) Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the board for any reason except the removal of directors without cause may be filled by vote of the board. If the number of the directors then in office is less than a quorum, such newly created directorships and vacancies may be filled by vote of a majority of the directors then in office. Nothing in this paragraph shall affect any provision of the certificate of incorporation or the by-laws which provides that such newly created directorships or vacancies shall be filled by vote of the shareholders, or any provision of the certificate of incorporation specifying greater requirements as permitted under section 709 (Greater requirements as to quorum and vote of directors). (b) Unless the certificate of incorporation or the specific provisions of a by-law adopted by the shareholders provide that the board may fill vacancies occurring in the board by reason of the removal of directors without cause, such vacancies may be filled only by vote of the shareholders. (c) A director elected to fill a vacancy, unless elected by the shareholders, shall hold office until the next meeting of shareholders at which the election of directors is in the regular order of business, and until his successor has been elected and qualified. (d) Unless otherwise provided in the certificate of incorporation or

by-laws, notwithstanding the provisions of paragraphs (a) and (b) of this section, whenever the holders of any class or classes of shares or series thereof are entitled to elect one or more directors by the certificate of incorporation, any vacancy that may be filled by the board or a majority of the directors then in office, as the case may be, shall be filled by a majority of the directors elected by such class or classes or series thereof then in office, or, if no such director is in office, then as provided in paragraph (a) or (b) of this section, as the case may be.

§ 706 Removal of directors.

§ 706. Removal of directors. (a) Any or all of the directors may be removed for cause by vote of the shareholders. The certificate of incorporation or the specific provisions of a by-law adopted by the shareholders may provide for such removal by action of the board, except in the case of any director elected by cumulative voting, or by the holders of the shares of any class or series, or holders of bonds, voting as a class, when so entitled by the provisions of the certificate of incorporation. (b) If the certificate of incorporation or the by-laws so provide, any or all of the directors may be removed without cause by vote of the shareholders. (c) The removal of directors, with or without cause, as provided in paragraphs (a) and (b) is subject to the following: (1) In the case of a corporation having cumulative voting, no director may be removed when the votes cast against his removal would be sufficient to elect him if voted cumulatively at an election at which the same total number of votes were cast and the entire board, or the entire class of directors of which he is a member, were then being elected; and (2) When by the provisions of the certificate of incorporation the holders of the shares of any class or series, or holders of bonds, voting as a class, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series, or the holders of such bonds, voting as a class. (d) An action to procure a judgment removing a director for cause may

be brought by the attorney-general or by the holders of ten percent of the outstanding shares, whether or not entitled to vote. The court may bar from re-election any director so removed for a period fixed by the court.

§ 707 Quorum of directors.

§ 707. Quorum of directors.

Unless a greater proportion is required by the certificate of incorporation, a majority of the entire board shall constitute a quorum for the transaction of business or of any specified item of business, except that the certificate of incorporation or the by-laws may fix the quorum at less than a majority of the entire board but not less than one-third thereof.

§ 708 Action by the board.

§ 708. Action by the board. (a) Except as otherwise provided in this chapter, any reference in this chapter to corporate action to be taken by the board shall mean such action at a meeting of the board.

• (b) Unless otherwise restricted by the certificate of incorporation or the by-laws, any action required or permitted to be taken by the board or any committee thereof may be taken without a meeting if all members of the board or the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the board or committee shall be filed with the minutes of the proceedings of the board or committee. For the duration of the state disaster emergency declared by executive order two hundred two that began on March seventh, two thousand twenty, or until December thirty-first, two thousand twenty-one, whichever is later, notwithstanding any provision of law to the contrary, the written consent of a member may be made electronically, where such consent is submitted via electronic mail along with information from which it can be reasonably determined that the transmission was authorized by such member.
• NB Separately amended; cannot be put together
• (b) Unless otherwise restricted by the certificate of incorporation

or the by-laws, any action required or permitted to be taken by the board or any committee thereof may be taken without a meeting if all members of the board or the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the board or committee shall be filed with the minutes of the proceedings of the board or committee. Notwithstanding any provision of law to the contrary, the written consent of a member may be made electronically, where such consent is submitted via electronic mail, text, or other secured platform for electronic communications, along with information from which it can be reasonably determined that the transmission was authorized by such member.

• NB Separately amended; cannot be put together (c) Unless otherwise restricted by the certificate of incorporation or the by-laws, any one or more members of the board or any committee thereof may participate in a meeting of such board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. (d) Except as otherwise provided in this chapter, the vote of a majority of the directors present at the time of the vote, if a quorum is present at such time, shall be the act of the board. (e) In the case of corporations owning or leasing residential premises and operating the same on a cooperative basis, changes including the adoption, amendment or repeal of the by-laws by the board of directors shall be provided to the members, stockholders, and delegates of such corporation in writing, by physical or electronic means, within ten days of such adoption. (f) Upon the adoption, amendment or repeal of by-laws by the board of directors of a corporation owning or leasing residential premises and operating the same on a cooperative basis pursuant to subdivision (e) of this section, where such change would have a direct effect on the resident's occupancy or the rules of the building, the board of directors shall post the adopted, amended, or repealed by-laws conspicuously to ensure tenants will be aware of such adoption.

§ 709 Greater requirement as to quorum and vote of directors.

§ 709. Greater requirement as to quorum and vote of directors. (a) The certificate of incorporation may contain provisions specifying either or both of the following: (1) That the proportion of directors that shall constitute a quorum for the transaction of business or of any specified item of business shall be greater than the proportion prescribed by this chapter in the absence of such provision. (2) That the proportion of votes of directors that shall be necessary for the transaction of business or of any specified item of business shall be greater than the proportion prescribed by this chapter in the absence of such provision. (b) (1) An amendment of the certificate of incorporation which changes or strikes out a provision permitted by this section shall be authorized at a meeting of shareholders by (A) (i) for any corporation in existence on the effective date of subparagraph (2) of this paragraph, two-thirds of the votes of all outstanding shares entitled to vote thereon, and (ii) for any corporation in existence on the effective date of this clause the certificate of incorporation of which expressly provides such and for any corporation incorporated after the effective date of subparagraph (2) of this paragraph, a majority of the votes of all outstanding shares entitled to vote thereon or (B) in either case, such greater proportion of votes of shares, or votes of a class or series of shares, as may be provided specifically in the certificate of incorporation for changing or striking out a provision permitted by this section. (2) Any corporation may adopt an amendment of the certificate of incorporation in accordance with any applicable clause or subclause of subparagraph (1) of this paragraph to provide that any further amendment of the certificate of incorporation that changes or strikes out a provision permitted by this section shall be authorized at a meeting of the shareholders by a specified proportion of the votes of the shares, or particular class or series of shares, entitled to vote thereon, provided that such proportion may not be less than a majority.

§ 710 Place and time of meetings of the board.

§ 710. Place and time of meetings of the board.

Meetings of the board, regular or special, may be held at any place within or without this state, unless otherwise provided by the certificate of incorporation or the by-laws. The time and place for holding meetings of the board may be fixed by or under the by-laws, or, if not so fixed, by the board.

§ 711 Notice of meetings of the board.

§ 711. Notice of meetings of the board. (a) Unless otherwise provided by the by-laws, regular meetings of the board may be held without notice if the time and place of such meetings are fixed by the by-laws or the board. Special meetings of the board shall be held upon notice to the directors. (b) The by-laws may prescribe what shall constitute notice of meeting of the board. A notice, or waiver of notice, need not specify the purpose of any regular or special meeting of the board, unless required by the by-laws. (c) Notice of a meeting need not be given to any director who submits a signed waiver of notice whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to him. (d) A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the by-laws so provide, notice of any adjournment of a meeting of the board to another time or place shall be given to the directors who were not present at the time of the adjournment and, unless such time and place are announced at the meeting, to the other directors.

§ 712 Executive committee and other committees.

§ 712. Executive committee and other committees. (a) If the certificate of incorporation or the by-laws so provide, the board, by resolution adopted by a majority of the entire board, may designate from among its members an executive committee and other committees, each consisting of one or more directors, and each of which, to the extent provided in the resolution or in the certificate of incorporation or by-laws, shall have all the authority of the board, except that no such committee shall have authority as to the following

matters: (1) The submission to shareholders of any action that needs shareholders' approval under this chapter. (2) The filling of vacancies in the board of directors or in any committee. (3) The fixing of compensation of the directors for serving on the board or on any committee. (4) The amendment or repeal of the by-laws, or the adoption of new by-laws. (5) The amendment or repeal of any resolution of the board which by its terms shall not be so amendable or repealable. (b) The board may designate one or more directors as alternate members of any such committee, who may replace any absent or disqualified member or members at any meeting of such committee. (c) Each such committee shall serve at the pleasure of the board. The designation of any such committee, the delegation thereto of authority, or action by any such committee pursuant to such authority shall not alone constitute performance by any member of the board who is not a member of the committee in question, of his duty to the corporation under section 717 (Duty of directors).

§ 713 Interested directors.

§ 713. Interested directors. (a) No contract or other transaction between a corporation and one or more of its directors, or between a corporation and any other corporation, firm, association or other entity in which one or more of its directors are directors or officers, or have a substantial financial interest, shall be either void or voidable for this reason alone or by reason alone that such director or directors are present at the meeting of the board, or of a committee thereof, which approves such contract or transaction, or that his or their votes are counted for such purpose: (1) If the material facts as to such director's interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the board or committee, and the board or committee approves such contract or transaction by a vote sufficient for such purpose without counting the vote of such interested director or, if the votes of the

disinterested directors are insufficient to constitute an act of the board as defined in section 708 (Action by the board), by unanimous vote of the disinterested directors; or (2) If the material facts as to such director's interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of such shareholders. (b) If a contract or other transaction between a corporation and one or more of its directors, or between a corporation and any other corporation, firm, association or other entity in which one or more of its directors are directors or officers, or have a substantial financial interest, is not approved in accordance with paragraph (a), the corporation may avoid the contract or transaction unless the party or parties thereto shall establish affirmatively that the contract or transaction was fair and reasonable as to the corporation at the time it was approved by the board, a committee or the shareholders. (c) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board or of a committee which approves such contract or transaction. (d) The certificate of incorporation may contain additional restrictions on contracts or transactions between a corporation and its directors and may provide that contracts or transactions in violation of such restrictions shall be void or voidable by the corporation. (e) Unless otherwise provided in the certificate of incorporation or the by-laws, the board shall have authority to fix the compensation of directors for services in any capacity.

§ 714 Loans to directors.

§ 714. Loans to directors. (a) A corporation may not lend money to or guarantee the obligation of a director of the corporation unless: (1) the particular loan or guarantee is approved by the shareholders, with the holders of a majority of the votes of the shares entitled to vote thereon constituting a quorum, but shares held of record or beneficially by directors who are benefitted by such loan or guarantee shall not be entitled to vote or to be included in the determination of

a quorum; or (2) with respect to any corporation in existence on the effective date of this subparagraph (2) the certificate of incorporation of which expressly provides such and with respect to any corporation incorporated after the effective date of this subparagraph (2), the board determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees. (b) The fact that a loan or guarantee is made in violation of this section does not affect the borrower's liability on the loan.

§ 715 Officers.

§ 715. Officers. (a) The board may elect or appoint a president, one or more vice-presidents, a secretary and a treasurer, and such other officers as it may determine, or as may be provided in the by-laws. (b) The certificate of incorporation may provide that all officers or that specified officers shall be elected by the shareholders instead of by the board. (c) Unless otherwise provided in the certificate of incorporation or the by-laws, all officers shall be elected or appointed to hold office until the meeting of the board following the next annual meeting of shareholders or, in the case of officers elected by the shareholders, until the next annual meeting of shareholders. (d) Each officer shall hold office for the term for which he is elected or appointed, and until his successor has been elected or appointed and qualified. (e) Any two or more offices may be held by the same person. When all of the issued and outstanding stock of the corporation is owned by one person, such person may hold all or any combination of offices. (f) The board may require any officer to give security for the faithful performance of his duties. (g) All officers as between themselves and the corporation shall have such authority and perform such duties in the management of the corporation as may be provided in the by-laws or, to the extent not so provided, by the board. (h) An officer shall perform his duties as an officer in good faith

and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances. In performing his duties, an officer shall be entitled to rely on information, opinions, reports or statements including financial statements and other financial data, in each case prepared or presented by: (1) one or more other officers or employees of the corporation or of any other corporation of which at least fifty percentum of the outstanding shares of stock entitling the holders thereof to vote for the election of directors is owned directly or indirectly by the corporation, whom the officer believes to be reliable and competent in the matters presented, or (2) counsel, public accountants or other persons as to matters which the officer believes to be within such person's professional or expert competence, so long as in so relying he shall be acting in good faith and with such degree of care, but he shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs his duties shall have no liability by reason of being or having been an officer of the corporation.

§ 716 Removal of officers.

§ 716. Removal of officers. (a) Any officer elected or appointed by the board may be removed by the board with or without cause. An officer elected by the shareholders may be removed, with or without cause, only by vote of the shareholders, but his authority to act as an officer may be suspended by the board for cause. (b) The removal of an officer without cause shall be without prejudice to his contract rights, if any. The election or appointment of an officer shall not of itself create contract rights. (c) An action to procure a judgment removing an officer for cause may be brought by the attorney-general or by ten percent of the votes of the outstanding shares, whether or not entitled to vote. The court may bar from re-election or reappointment any officer so removed for a period fixed by the court.

§ 717 Duty of directors.

§ 717. Duty of directors. (a) A director shall perform his duties as a director, including his duties as a member of any committee of the board upon which he may serve, in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances. In performing his duties, a director shall be entitled to rely on information, opinions, reports or statements including financial statements and other financial data, in each case prepared or presented by: (1) one or more officers or employees of the corporation or of any other corporation of which at least fifty percentum of the outstanding shares of stock entitling the holders thereof to vote for the election of directors is owned directly or indirectly by the corporation, whom the director believes to be reliable and competent in the matters presented, (2) counsel, public accountants or other persons as to matters which the director believes to be within such person's professional or expert competence, or (3) a committee of the board upon which he does not serve, duly designated in accordance with a provision of the certificate of incorporation or the by-laws, as to matters within its designated authority, which committee the director believes to merit confidence, so long as in so relying he shall be acting in good faith and with such degree of care, but he shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs his duties shall have no liability by reason of being or having been a director of the corporation. (b) In taking action, including, without limitation, action which may involve or relate to a change or potential change in the control of the corporation, a director shall be entitled to consider, without limitation, (1) both the long-term and the short-term interests of the corporation and its shareholders and (2) the effects that the corporation's actions may have in the short-term or in the long-term upon any of the following: (i) the prospects for potential growth, development, productivity and profitability of the corporation;

(ii) the corporation's current employees; (iii) the corporation's retired employees and other beneficiaries receiving or entitled to receive retirement, welfare or similar benefits from or pursuant to any plan sponsored, or agreement entered into, by the corporation; (iv) the corporation's customers and creditors; and (v) the ability of the corporation to provide, as a going concern, goods, services, employment opportunities and employment benefits and otherwise to contribute to the communities in which it does business.

Nothing in this paragraph shall create any duties owed by any director to any person or entity to consider or afford any particular weight to any of the foregoing or abrogate any duty of the directors, either statutory or recognized by common law or court decisions.

For purposes of this paragraph, "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the corporation, whether through the ownership of voting stock, by contract, or otherwise.

§ 718 List of directors and officers.

§ 718. List of directors and officers. (a) If a shareholder of a corporation, in person or by his attorney or agent, or a representative of the district attorney or of the secretary of state, the attorney general, or other state official, makes a written demand on a corporation to inspect a current list of its directors and officers, the corporation shall, within two business days after receipt of the demand and for a period of one week thereafter, make the list available for such inspection at its office during usual business hours. (b) Upon refusal by the corporation to make a current list of its directors and officers available, as provided in paragraph (a), the person making a demand for such list may apply, ex parte, to the supreme court at a special term held within the judicial district where the office of the corporation is located for an order directing the corporation to make such list available. The court may grant such order or take such other action as it may deem just and proper.

§ 719 Liability of directors in certain cases.

§ 719. Liability of directors in certain cases. (a) Directors of a corporation who vote for or concur in any of the following corporate actions shall be jointly and severally liable to the corporation for the benefit of its creditors or shareholders, to the extent of any injury suffered by such persons, respectively, as a result of such action: (1) The declaration of any dividend or other distribution to the extent that it is contrary to the provisions of paragraphs (a) and (b) of section 510 (Dividends or other distributions in cash or property). (2) The purchase of the shares of the corporation to the extent that it is contrary to the provisions of section 513 (Purchase or redemption by a corporation of its own shares). (3) The distribution of assets to shareholders after dissolution of the corporation without paying or adequately providing for all known liabilities of the corporation, excluding any claims not filed by creditors within the time limit set in a notice given to creditors under articles 10 (Non-judicial dissolution) or 11 (Judicial dissolution). (4) The making of any loan contrary to section 714 (Loans to directors). (b) A director who is present at a meeting of the board, or any committee thereof, when action specified in paragraph (a) is taken shall be presumed to have concurred in the action unless his dissent thereto shall be entered in the minutes of the meeting, or unless he shall submit his written dissent to the person acting as the secretary of the meeting before the adjournment thereof, or shall deliver or send by registered mail such dissent to the secretary of the corporation promptly after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. A director who is absent from a meeting of the board, or any committee thereof, when such action is taken shall be presumed to have concurred in the action unless he shall deliver or send by registered mail his dissent thereto to the secretary of the corporation or shall cause such dissent to be filed with the minutes of the proceedings of the board or committee within a reasonable time after learning of such action. (c) Any director against whom a claim is successfully asserted under this section shall be entitled to contribution from the other directors

who voted for or concurred in the action upon which the claim is asserted. (d) Directors against whom a claim is successfully asserted under this section shall be entitled, to the extent of the amounts paid by them to the corporation as a result of such claims: (1) Upon payment to the corporation of any amount of an improper dividend or distribution, to be subrogated to the rights of the corporation against shareholders who received such dividend or distribution with knowledge of facts indicating that it was not authorized by section 510, in proportion to the amounts received by them respectively. (2) Upon payment to the corporation of any amount of the purchase price of an improper purchase of shares, to have the corporation rescind such purchase of shares and recover for their benefit, but at their expense, the amount of such purchase price from any seller who sold such shares with knowledge of facts indicating that such purchase of shares by the corporation was not authorized by section 513. (3) Upon payment to the corporation of the claim of any creditor by reason of a violation of subparagraph (a) (3), to be subrogated to the rights of the corporation against shareholders who received an improper distribution of assets. (4) Upon payment to the corporation of the amount of any loan made contrary to section 714, to be subrogated to the rights of the corporation against a director who received the improper loan. (e) A director shall not be liable under this section if, in the circumstances, he performed his duty to the corporation under paragraph (a) of section 717. (f) This section shall not affect any liability otherwise imposed by law upon any director.

§ 720 Action against directors and officers for misconduct.

§ 720. Action against directors and officers for misconduct. (a) An action may be brought against one or more directors or officers of a corporation to procure a judgment for the following relief: (1) Subject to any provision of the certificate of incorporation authorized pursuant to paragraph (b) of section 402, to compel the defendant to account for his official conduct in the following cases:

(A) The neglect of, or failure to perform, or other violation of his duties in the management and disposition of corporate assets committed to his charge. (B) The acquisition by himself, transfer to others, loss or waste of corporate assets due to any neglect of, or failure to perform, or other violation of his duties. (C) In the case of directors or officers of a benefit corporation organized under article seventeen of this chapter: (i) the failure to pursue the general public benefit purpose of a benefit corporation or any specific public benefit set forth in its certificate of incorporation; (ii) the failure by a benefit corporation to deliver or post an annual report as required by section seventeen hundred eight of article seventeen of this chapter; or (iii) the neglect of, or failure to perform, or other violation of his or her duties or standard of conduct under article seventeen of this chapter. (2) To set aside an unlawful conveyance, assignment or transfer of corporate assets, where the transferee knew of its unlawfulness. (3) To enjoin a proposed unlawful conveyance, assignment or transfer of corporate assets, where there is sufficient evidence that it will be made. (b) An action may be brought for the relief provided in this section, and in paragraph (a) of section 719 (Liability of directors in certain cases) by a corporation, or a receiver, trustee in bankruptcy, officer, director or judgment creditor thereof, or, under section 626 (Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor), by a shareholder, voting trust certificate holder, or the owner of a beneficial interest in shares thereof. (c) This section shall not affect any liability otherwise imposed by law upon any director or officer.

§ 721 Nonexclusivity of statutory provisions for indemnification of

§ 721. Nonexclusivity of statutory provisions for indemnification of directors and officers.

The indemnification and advancement of expenses granted pursuant to, or provided by, this article shall not be deemed exclusive of any other

rights to which a director or officer seeking indemnification or advancement of expenses may be entitled, whether contained in the certificate of incorporation or the by-laws or, when authorized by such certificate of incorporation or by-laws, (i) a resolution of shareholders, (ii) a resolution of directors, or (iii) an agreement providing for such indemnification, provided that no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled. Nothing contained in this article shall affect any rights to indemnification to which corporate personnel other than directors and officers may be entitled by contract or otherwise under law.

§ 722 Authorization for indemnification of directors and officers.

§ 722. Authorization for indemnification of directors and officers. (a) A corporation may indemnify any person made, or threatened to be made, a party to an action or proceeding (other than one by or in the right of the corporation to procure a judgment in its favor), whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the corporation served in any capacity at the request of the corporation, by reason of the fact that he, his testator or intestate, was a director or officer of the corporation, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation and, in criminal actions or proceedings, in addition,

had no reasonable cause to believe that his conduct was unlawful. (b) The termination of any such civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such director or officer did not act, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation or that he had reasonable cause to believe that his conduct was unlawful. (c) A corporation may indemnify any person made, or threatened to be made, a party to an action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he, his testator or intestate, is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of any other corporation of any type or kind, domestic or foreign, of any partnership, joint venture, trust, employee benefit plan or other enterprise, against amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense or settlement of such action, or in connection with an appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation, except that no indemnification under this paragraph shall be made in respect of (1) a threatened action, or a pending action which is settled or otherwise disposed of, or (2) any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such portion of the settlement amount and expenses as the court deems proper. (d) For the purpose of this section, a corporation shall be deemed to have requested a person to serve an employee benefit plan where the

performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be considered fines; and action taken or omitted by a person with respect to an employee benefit plan in the performance of such person's duties for a purpose reasonably believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation.

§ 723 Payment of indemnification other than by court award.

§ 723. Payment of indemnification other than by court award. (a) A person who has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in section 722 shall be entitled to indemnification as authorized in such section. (b) Except as provided in paragraph (a), any indemnification under section 722 or otherwise permitted by section 721, unless ordered by a court under section 724 (Indemnification of directors and officers by a court), shall be made by the corporation, only if authorized in the specific case: (1) By the board acting by a quorum consisting of directors who are not parties to such action or proceeding upon a finding that the director or officer has met the standard of conduct set forth in section 722 or established pursuant to section 721, as the case may be, or, (2) If a quorum under subparagraph (1) is not obtainable or, even if obtainable, a quorum of disinterested directors so directs; (A) By the board upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in such sections has been met by such director or officer, or (B) By the shareholders upon a finding that the director or officer has met the applicable standard of conduct set forth in such sections. (c) Expenses incurred in defending a civil or criminal action or proceeding may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking

by or on behalf of such director or officer to repay such amount as, and to the extent, required by paragraph (a) of section 725.

§ 724 Indemnification of directors and officers by a court.

§ 724. Indemnification of directors and officers by a court. (a) Notwithstanding the failure of a corporation to provide indemnification, and despite any contrary resolution of the board or of the shareholders in the specific case under section 723 (Payment of indemnification other than by court award), indemnification shall be awarded by a court to the extent authorized under section 722 (Authorization for indemnification of directors and officers), and paragraph (a) of section 723. Application therefor may be made, in every case, either: (1) In the civil action or proceeding in which the expenses were incurred or other amounts were paid, or (2) To the supreme court in a separate proceeding, in which case the application shall set forth the disposition of any previous application made to any court for the same or similar relief and also reasonable cause for the failure to make application for such relief in the action or proceeding in which the expenses were incurred or other amounts were paid. (b) The application shall be made in such manner and form as may be required by the applicable rules of court or, in the absence thereof, by direction of a court to which it is made. Such application shall be upon notice to the corporation. The court may also direct that notice be given at the expense of the corporation to the shareholders and such other persons as it may designate in such manner as it may require. (c) Where indemnification is sought by judicial action, the court may allow a person such reasonable expenses, including attorneys' fees, during the pendency of the litigation as are necessary in connection with his defense therein, if the court shall find that the defendant has by his pleadings or during the course of the litigation raised genuine issues of fact or law.

§ 725 Other provisions affecting indemnification of directors and

§ 725. Other provisions affecting indemnification of directors and officers.

(a) All expenses incurred in defending a civil or criminal action or proceeding which are advanced by the corporation under paragraph (c) of section 723 (Payment of indemnification other than by court award) or allowed by a court under paragraph (c) of section 724 (Indemnification of directors and officers by a court) shall be repaid in case the person receiving such advancement or allowance is ultimately found, under the procedure set forth in this article, not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so advanced by the corporation or allowed by the court exceed the indemnification to which he is entitled. (b) No indemnification, advancement or allowance shall be made under this article in any circumstance where it appears: (1) That the indemnification would be inconsistent with the law of the jurisdiction of incorporation of a foreign corporation which prohibits or otherwise limits such indemnification; (2) That the indemnification would be inconsistent with a provision of the certificate of incorporation, a by-law, a resolution of the board or of the shareholders, an agreement or other proper corporate action, in effect at the time of the accrual of the alleged cause of action asserted in the threatened or pending action or proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (3) If there has been a settlement approved by the court, that the indemnification would be inconsistent with any condition with respect to indemnification expressly imposed by the court in approving the settlement. (c) If any expenses or other amounts are paid by way of indemnification, otherwise than by court order or action by the shareholders, the corporation shall, not later than the next annual meeting of shareholders unless such meeting is held within three months from the date of such payment, and, in any event, within fifteen months from the date of such payment, mail to its shareholders of record at the time entitled to vote for the election of directors a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation. (d) If any action with respect to indemnification of directors and officers is taken by way of amendment of the by-laws, resolution of

directors, or by agreement, then the corporation shall, not later than the next annual meeting of shareholders, unless such meeting is held within three months from the date of such action, and, in any event, within fifteen months from the date of such action, mail to its shareholders of record at the time entitled to vote for the election of directors a statement specifying the action taken. (e) Any notification required to be made pursuant to the foregoing paragraph (c) or (d) of this section by any domestic mutual insurer shall be satisfied by compliance with the corresponding provisions of section one thousand two hundred sixteen of the insurance law. (f) The provisions of this article relating to indemnification of directors and officers and insurance therefor shall apply to domestic corporations and foreign corporations doing business in this state, except as provided in section 1320 (Exemption from certain provisions).

§ 726 Insurance for indemnification of directors and officers.

§ 726. Insurance for indemnification of directors and officers. (a) Subject to paragraph (b), a corporation shall have power to purchase and maintain insurance: (1) To indemnify the corporation for any obligation which it incurs as a result of the indemnification of directors and officers under the provisions of this article, and (2) To indemnify directors and officers in instances in which they may be indemnified by the corporation under the provisions of this article, and (3) To indemnify directors and officers in instances in which they may not otherwise be indemnified by the corporation under the provisions of this article provided the contract of insurance covering such directors and officers provides, in a manner acceptable to the superintendent of financial services, for a retention amount and for co-insurance. (b) No insurance under paragraph (a) may provide for any payment, other than cost of defense, to or on behalf of any director or officer: (1) if a judgment or other final adjudication adverse to the insured director or officer establishes that his acts of active and deliberate dishonesty were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or

(2) in relation to any risk the insurance of which is prohibited under the insurance law of this state. (c) Insurance under any or all subparagraphs of paragraph (a) may be included in a single contract or supplement thereto. Retrospective rated contracts are prohibited. (d) The corporation shall, within the time and to the persons provided in paragraph (c) of section 725 (Other provisions affecting indemnification of directors or officers), mail a statement in respect of any insurance it has purchased or renewed under this section, specifying the insurance carrier, date of the contract, cost of the insurance, corporate positions insured, and a statement explaining all sums, not previously reported in a statement to shareholders, paid under any indemnification insurance contract. (e) This section is the public policy of this state to spread the risk of corporate management, notwithstanding any other general or special law of this state or of any other jurisdiction including the federal government.

§ 727 Annual reports for certain transactions required.

§ 727. Annual reports for certain transactions required. (a) A condominium created pursuant to the real property law or a cooperative housing corporation created pursuant to this chapter, shall, at least once each year: (1) require that each director, as defined in paragraph five of subdivision (a) of section one hundred two of this chapter, receive a copy of section seven hundred thirteen of this chapter; and (2) submit an annual report to the shareholders, which shall be signed by each such director, containing information on any contracts made, entered into, or otherwise voted on by the board of directors where one or more of the directors was an interested director, pursuant to section seven hundred thirteen of this chapter. (b) The annual report required by subdivision (a) of this section shall include, but not be limited to, the following: (1) a list of all contracts voted on by the board of directors, including information on the contract recipient, contract amount, and the purpose of entering into the contract; (2) the record of each meeting including director attendance, voting

records for contracts, and how each director voted on such contracts; and (3) the date of each vote on each contract, and the date the contract would be and remain valid. (c) If the annual report required by subdivision (a) of this section would, notwithstanding the requirements of this section, contain no information because of the absence of any actions taken by the board that would otherwise qualify for inclusion in such annual report, then the board shall instead submit to the shareholders a document, signed by each director, indicating: "No actions taken by the board were subject to the annual report required pursuant to section 727 of the Business Corporation Law".

ARTICLE 8 AMENDMENTS AND CHANGES Section 801. Right to amend certificate of incorporation. 802. Reduction of stated capital by amendment. 803. Authorization of amendment or change. 804. Class voting on amendment. 805. Certificate of amendment; contents. 805-A. Certificate of change; contents. 806. Provisions as to certain proceedings. 807. Restated certificate of incorporation. 808. Reorganization under act of congress.

Article 8

§ 801 Right to amend certificate of incorporation.

§ 801. Right to amend certificate of incorporation. (a) A corporation may amend its certificate of incorporation, from time to time, in any and as many respects as may be desired, if such amendment contains only such provisions as might be lawfully contained in an original certificate of incorporation filed at the time of making such amendment. (b) In particular, and without limitation upon such general power of amendment, a corporation may amend its certificate of incorporation, from time to time, so as: (1) To change its corporate name.

(2) To enlarge, limit or otherwise change its corporate purposes. (3) To specify or change the location of the office of the corporation. (4) To specify or change the post office address to which the secretary of state shall mail a copy of any process against the corporation served upon him. (5) To make, revoke or change the designation of a registered agent, or to specify or change the address of its registered agent. (6) To extend the duration of the corporation or, if the corporation ceased to exist because of the expiration of the duration specified in its certificate of incorporation, to revive its existence. (7) To increase or decrease the aggregate number of shares, or shares of any class or series, with or without par value, which the corporation shall have authority to issue. (8) To remove from authorized shares any class of shares, or any shares of any class, whether issued or unissued. (9) To increase the par value of any authorized shares of any class with par value, whether issued or unissued. (10) To reduce the par value of any authorized shares of any class with par value, whether issued or unissued. (11) To change any authorized shares, with or without par value, whether issued or unissued, into a different number of shares of the same class or into the same or a different number of shares of any one or more classes or any series thereof, either with or without par value. (12) To fix, change or abolish the designation of any authorized class or any series thereof or any of the relative rights, preferences and limitations of any shares of any authorized class or any series thereof, whether issued or unissued, including any provisions in respect of any undeclared dividends, whether or not cumulative or accrued, or the redemption of any shares, or any sinking fund for the redemption or purchase of any shares, or any preemptive right to acquire shares or other securities. (13) As to the shares of any preferred class, then or theretofore authorized, which may be issued in series, to grant authority to the board or to change or revoke the authority of the board to establish and designate series and to fix the number of shares and the relative rights, preferences and limitation as between series.

(14) To strike out, change or add any provision, not inconsistent with this chapter or any other statute, relating to the business of the corporation, its affairs, its rights or powers, or the rights or powers of its shareholders, directors or officers, including any provision which under this chapter is required or permitted to be set forth in the by-laws, except that a certificate of amendment may not be filed wherein the duration of the corporation shall be reduced. (15) To specify, change or delete the email address to which the secretary of state shall email a notice of the fact that process against the corporation has been electronically served upon him or her. (c) A corporation created by special act may accomplish any or all amendments permitted in this article, in the manner and subject to the conditions provided in this article.

§ 802 Reduction of stated capital by amendment.

§ 802. Reduction of stated capital by amendment. (a) A corporation may reduce its stated capital by an amendment of its certificate of incorporation under section 801 (Right to amend certificate of incorporation) which: (1) Reduces the par value of any issued shares with par value. (2) Changes issued shares under subparagraph (b) (11) of section 801 that results in a reduction of stated capital. (3) Removes from authorized shares, shares that have been issued, reacquired and cancelled by the corporation. (b) This section shall not prevent a corporation from reducing its stated capital in any other manner permitted by this chapter.

§ 803 Authorization of amendment or change.

§ 803. Authorization of amendment or change. (a) Amendment or change of the certificate of incorporation may be authorized by vote of the board, followed by vote of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders; provided, however, that, whenever the certificate of incorporation requires action by the board of directors, by the holders of any class or series of shares, or by the holders of any other securities having voting power by the vote of a greater number or proportion than is required by any section of this article, the

provision of the certificate of incorporation requiring such greater vote shall not be altered, amended, or repealed except by such greater vote; and provided further that an amendment to the certificate of incorporation for the purpose of reducing the requisite vote by the holders of any class or series of shares or by the holders of any other securities having voting power that is otherwise provided for in any section of this chapter that would otherwise require more than a majority of the votes of all outstanding shares entitled to vote thereon shall not be adopted except by the vote of such holders of class or series of shares or by such holders of such other securities having voting power that is at least equal to that which would be required to take the action provided in such other section of this chapter. (b) Alternatively, any one or more of the following changes may be authorized by or pursuant to authorization of the board: (1) To specify or change the location of the corporation's office. (2) To specify or change the post office address to which the secretary of state shall mail a copy of any process against the corporation served upon him. (3) To make, revoke or change the designation of a registered agent, or to specify or change the address of its registered agent. (4) To specify, change or delete the email address to which the secretary of state shall email a notice of the fact that process against the corporation has been electronically served upon him or her. (c) This section shall not alter the vote required under any other section for the authorization of an amendment referred to therein, nor alter the authority of the board to authorize amendments under any other section. (d) Amendment or change of the certificate of incorporation of a corporation which has no shareholders of record, no subscribers for shares whose subscriptions have been accepted and no directors may be authorized by the sole incorporator or a majority of the incorporators.

§ 804 Class voting on amendment.

§ 804. Class voting on amendment. (a) Notwithstanding any provision in the certificate of incorporation, the holders of shares of a class shall be entitled to vote and to vote as a class upon the authorization of an amendment and, in addition to

the authorization of the amendment by a majority of the votes of all outstanding shares entitled to vote thereon, the amendment shall be authorized by a majority of the votes of all outstanding shares of the class when a proposed amendment would: (1) Exclude or limit their right to vote on any matter, except as such right may be limited by voting rights given to new shares then being authorized of any existing or new class or series. (2) Change their shares under subparagraphs (b) (10), (11) or (12) of section 801 (Right to amend certificate of incorporation) or provide that their shares may be converted into shares of any other class or into shares of any other series of the same class, or alter the terms or conditions upon which their shares are convertible or change the shares issuable upon conversion of their shares, if such action would adversely affect such holders, or (3) Subordinate their rights, by authorizing shares having preferences which would be in any respect superior to their rights. (b) If any proposed amendment referred to in paragraph (a) would adversely affect the rights of the holders of shares of only one or more series of any class, but not the entire class, then only the holders of those series whose rights would be affected shall be considered a separate class for the purposes of this section.

§ 805 Certificate of amendment; contents.

§ 805. Certificate of amendment; contents. (a) To accomplish any amendment, a certificate of amendment, entitled "Certificate of amendment of the certificate of incorporation of ...................................(name of corporation) under section 805 of the Business Corporation Law", shall be signed and delivered to the department of state. It shall set forth: (1) The name of the corporation and, if it has been changed, the name under which it was formed. (2) The date its certificate of incorporation was filed by the department of state. (3) Each amendment effected thereby, setting forth the subject matter of each provision of the certificate of incorporation which is to be amended or eliminated and the full text of the provision or provisions, if any, which are to be substituted or added.

(4) If an amendment provides for a change of shares, the number, par value and class of issued shares changed, the number, par value and class of issued shares resulting from such change, the number, par value and class of unissued shares changed, the number, par value and class of unissued shares resulting from such change and the terms of each such change. If an amendment makes two or more such changes, a like statement shall be included in respect to each change. (5) If any amendment reduces stated capital, then a statement of the manner in which the same is effected and the amounts from which and to which stated capital is reduced. (6) The manner in which the amendment of the certificate of incorporation was authorized. If the amendment was authorized under paragraph (d) of section eight hundred three of this chapter, then a statement that the corporation does not have any shareholders of record or any subscribers for shares whose subscriptions have been accepted and no directors. (b) Any number of amendments or changes may be included in one certificate under this section. Such certificate may also include any amendments or changes permitted by other sections and in that case the certificate shall set forth any additional statement required by any other section specifying the contents of a certificate to effect such amendment or change. (c) In the case of a change of shares, the shares resulting from such change, shall upon the filing of the certificate of amendment, be deemed substituted for the shares changed, in accordance with the stated terms of change.

§ 805-A Certificate of change; contents.

§ 805-A. Certificate of change; contents. (a) Any one or more of the changes authorized by paragraph (b) of section 803 (Authorization of amendment or change) may be accomplished by filing a certificate of change which shall be entitled "Certificate of change of .......... (name of corporation) under section 805-A of the Business Corporation Law" and shall be signed and delivered to the department of state. It shall set forth: (1) The name of the corporation, and if it has been changed, the name under which it was formed.

(2) The date its certificate of incorporation was filed by the department of state. (3) Each change effected thereby. (4) The manner in which the change was authorized. (b) A certificate of change which changes only the post office address to which the secretary of state shall mail a copy of any process against a corporation served upon him or her, and/or the email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon the secretary of state and/or the address of the registered agent, provided such address being changed is the address of a person, partnership or other corporation whose address, as agent, is the address to be changed, and/or the email address being changed is the email address of a person, partnership or corporation whose email address, as agent, is the email address to be changed, or who has been designated as registered agent for such corporation, may be signed and delivered to the department of state by such agent. The certificate of change shall set forth the statements required under subparagraphs (a) (1), (2) and (3) of this section; that a notice of the proposed change was mailed to the corporation by the party signing the certificate not less than thirty days prior to the date of delivery to the department and that such corporation has not objected thereto; and that the party signing the certificate is the agent of such corporation to whose address the secretary of state is required to mail copies of process, and/or the agent of the corporation to whose email address the secretary of state is required to mail a notice of the fact that process against it has been electronically served upon the secretary of state, and/or the registered agent, if such be the case. A certificate signed and delivered under this paragraph shall not be deemed to effect a change of location of the office of the corporation in whose behalf such certificate is filed.

§ 806 Provisions as to certain proceedings.

§ 806. Provisions as to certain proceedings. (a) The department of state shall not file a certificate of amendment reviving the existence of a corporation unless the consent of the state tax commission to the revival is delivered to the department. If the name of the corporation being revived is not available under section 301

(Corporate name; general) for use by a corporation then being formed under this chapter, the certificate of amendment shall change the name to one which is available for such use. (b) The following provisions shall apply to amendments and changes under this article, except under section 808 (Reorganization under act of congress): (1) The stated capital in respect of any shares without par value resulting from a change of issued shares shall be the amount of stated capital in respect of the shares changed or, if such stated capital is reduced by the amendment, the reduced amount stated in the certificate of amendment. No corporation shall change issued shares into both shares with par value and shares without par value unless the stated capital in respect of the shares so changed or, if such stated capital is reduced by the amendment, the reduced amount of stated capital stated in the certificate of amendment, exceeds the par value of the shares with par value resulting from such change; and the amount of such excess shall be the stated capital in respect of the shares without par value resulting from such change. (2) No corporation shall increase the aggregate par value of its issued shares with par value, unless, after giving effect to such increase, the stated capital is at least equal to the amount required by subparagraph (a) (12) of section 102 (Definitions). (3) No reduction of stated capital shall be made by amendment unless after such reduction the stated capital exceeds the aggregate preferential amount payable upon involuntary liquidation upon all issued shares having preferential rights in assets plus the par value of all other issued shares with par value. (4) Any changes that may be made in the relative rights, preferences and limitations of the authorized shares of any class by any certificate of amendment which does not eliminate such shares from authorized shares or change them into shares of another class, shall not for the purpose of any statute or rule of law effect an issue of a new class of shares. (5) No amendment or change shall affect any existing cause of action in favor of or against the corporation, or any pending suit to which it shall be a party, or the existing rights of persons other than shareholders; and in the event the corporate name shall be changed, no suit brought by or against the corporation under its former name shall

abate for that reason. (6) A holder of any adversely affected shares who does not vote for or consent in writing to the taking of such action shall, subject to and by complying with the provisions of section 623 (Procedure to enforce shareholder's right to receive payment for shares), have the right to dissent and to receive payment for such shares, if the certificate of amendment (A) alters or abolishes any preferential right of such shares having preferences; or (B) creates, alters or abolishes any provision or right in respect of the redemption of such shares or any sinking fund for the redemption or purchase of such shares; or (C) alters or abolishes any preemptive right of such holder to acquire shares or other securities; or (D) excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class.

§ 807 Restated certificate of incorporation.

§ 807. Restated certificate of incorporation. (a) A corporation, when authorized by the board, may restate in a single certificate the text of its certificate of incorporation without making any amendment or change thereby, except that it may include any one or more of the amendments or changes which may be authorized by the board without a vote of shareholders under this chapter. Alternatively, a corporation may restate in a single certificate the text of its certificate of incorporation as amended thereby to effect any one or more of the amendments or changes authorized by this chapter, when authorized by the required vote of the holders of shares entitled to vote thereon. (b) A restated certificate of incorporation, entitled "Restated certificate of incorporation ....... (name of corporation) under section 807 of the Business Corporation Law", shall be signed and delivered to the department of state. It shall set forth: (1) The name of the corporation and, if it has been changed, the name under which it was formed. (2) The date its certificate of incorporation was filed by the department of state. (3) If the restated certificate restates the text of the certificate of incorporation without making any amendment or change, then a

statement that the text of the certificate of incorporation is thereby restated without amendment or change to read as therein set forth in full. (4) If the restated certificate restates the text of the certificate of incorporation as amended or changed thereby, then a statement that the certificate of incorporation is amended or changed to effect one or more of the amendments or changes authorized by this chapter, specifying each such amendment or change and that the text of the certificate of incorporation is thereby restated as amended or changed to read as therein set forth in full. (5) If an amendment, effected by the restated certificate, provides for a change of issued shares, the number and kind of shares changed, the number and kind of shares resulting from such change and the terms of change. If any amendment makes two or more such changes, a like statement shall be included in respect to each such change. (6) If the restated certificate contains an amendment which effects a reduction of stated capital, then a statement of the manner in which the same is effected and the amounts from which and to which stated capital is reduced. (7) The manner in which the restatement of the certificate of incorporation was authorized. (c) A restated certificate need not include statements as to the incorporator or incorporators, the original subscribers for shares or the first directors. (d) Any amendment or change under this section shall be subject to any other section, not inconsistent with this section, which would be applicable if a separate certificate were filed to effect such amendment or change. (e) Notwithstanding that the corporation would be required by any statute to secure from any state official, department, board, agency or other body, any consent or approval to the filing of its certificate of incorporation or a certificate of amendment, such consent or approval shall not be required with respect to the restated certificate if such certificate makes no amendment and if any previously required consent or approval had been secured. (f) Upon filing by the department, the original certificate of incorporation shall be superseded and the restated certificate of

incorporation, including any amendments and changes made thereby, shall be the certificate of incorporation of the corporation.

§ 808 Reorganization under act of congress.

§ 808. Reorganization under act of congress. (a) Whenever a plan of reorganization of a corporation has been confirmed by a decree or order of a court in proceedings under any applicable act of congress relating to reorganization of corporations, the corporation shall have authority, without action of its shareholders or board, to put into effect and carry out the plan and decree and orders of the court relative thereto, and take any proceeding and any action for which provision is made in any statute governing the corporation or for which provision is or might be made in its certificate of incorporation or by-laws and which is provided for in such plan or directed by any such decree or order. (b) Such authority may be exercised, and such proceedings and actions may be taken, as may be directed by any such decree or order, by the trustee or trustees of such corporation appointed in the reorganization proceedings, or if none is acting, by any person or persons designated or appointed for the purpose by any such decree or order, with like effect as if exercised and taken by unanimous action of the board and shareholders of the corporation. (c) Any certificate, required or permitted by law to be filed or recorded to accomplish any corporate purpose, shall be signed, and verified or acknowledged, under any such decree or order, by such trustee or trustees or the person or persons referred to in paragraph (b), and shall certify that provision for such certificate is contained in the plan of reorganization or in a decree or order of the court relative thereto, and that the plan has been confirmed, as provided in an applicable act of congress, specified in the certificate, with the title and venue of the proceeding and the date when the decree or order confirming the plan was made, and such certificate shall be delivered to the department of state. (d) A shareholder of any such corporation shall have no right to receive payment for his shares and only such rights, if any, as are provided in the plan of reorganization. (e) Notwithstanding section 504 (Consideration and payment for

shares), such corporation may, after the confirmation of such plan, issue its shares, bonds and other securities for the consideration specified in the plan of reorganization and may issue warrants or other optional rights for the purchase of shares upon such terms and conditions as may be set forth in such plan. (f) If after the filing of any such certificate by the department of state, the decree or order of confirmation of the plan of reorganization is reversed or vacated or such plan is modified, such other or further certificates shall be executed and delivered to the department of state as may be required to conform to the plan of reorganization as finally confirmed or to the decree or order as finally made. (g) Except as otherwise provided in this section, no certificate filed by the department of state hereunder shall confer on any corporation any powers other than those permitted to be conferred on a corporation formed under this chapter. (h) If, in any proceeding under any applicable act of congress relating to reorganization of corporations, a decree or order provides for the formation of a new domestic corporation or for the authorization of a new foreign corporation to do business in this state under a name the same as or similar to that of the corporation being reorganized, the certificate of incorporation of the new domestic corporation or the application of the new foreign corporation shall set forth that it is being delivered pursuant to such decree or order and be endorsed with the consent of the court having jurisdiction of the proceeding. After such certificate of incorporation or application has been filed, the corporation being reorganized shall not continue the use of its name except in connection with the reorganization proceeding and as may be necessary to adjust and wind up its affairs, and thirty days after such filing, the reorganized domestic corporation shall be automatically dissolved or the authority of the reorganized foreign corporation to transact business in this state shall cease. To the extent that the adjustment and winding up of the affairs of such dissolved corporation is not accomplished as a part of the proceeding or prescribed by the decree or order of such court, it shall proceed in accordance with the provisions of article 10 (Non-judicial dissolution). (i) This section shall not relieve any corporation from securing from any state official, department, board, agency or other body, any consent

or approval required by any statute.

ARTICLE 9 MERGER OR CONSOLIDATION; GUARANTEE; DISPOSITION OF ASSETS; SHARE EXCHANGES Section 901. Power of merger or consolidation. 902. Plan of merger or consolidation. 903. Authorization by shareholders. 904. Certificate of merger or consolidation; contents. 904-a. Merger or consolidation of corporations with other business entities; certificate of merger or consolidation. 904-b. Merger or consolidation of business corporations into non-profit corporations. 905. Merger of parent and subsidiary corporations. 906. Effect of merger or consolidation. 907. Merger or consolidation of domestic and foreign corporations. 908. Guarantee authorized by shareholders. 909. Sale, lease, exchange or other disposition of assets. 910. Right of shareholder to receive payment for shares upon merger or consolidation, or sale, lease, exchange or other disposition of assets, or share exchange. 911. Mortgage or pledge of, or security interest in, corporate property. 912. Requirements relating to certain business combinations. 913. Share exchanges.

Article 9

§ 901 Power of merger or consolidation.

§ 901. Power of merger or consolidation. (a) Two or more domestic corporations may, as provided in this chapter: (1) Merge into a single corporation which shall be one of the constituent corporations; or (2) Consolidate into a single corporation which shall be a new corporation to be formed pursuant to the consolidation.

(b) Whenever used in this article: (1) "Merger" means a procedure of the character described in subparagraph (a) (1). (2) "Consolidation" means a procedure of the character described in subparagraph (a) (2). (3) "Constituent corporation" means an existing corporation that is participating in the merger or consolidation with one or more other corporations. (4) "Surviving corporation" means the constituent corporation into which one or more other constituent corporations are merged. (5) "Consolidated corporation" means the new corporation into which two or more constituent corporations are consolidated. (6) "Constituent entity" means a domestic or foreign corporation or other business entity, that is participating in the merger or consolidation with one or more domestic or foreign corporations. (7) "Other business entity" means any person other than a natural person, general partnership (including any registered limited liability partnership or registered foreign limited liability partnership) or a domestic or foreign business corporation. (8) "Person" means any association, corporation, joint stock company, estate, general partnership (including any registered limited liability partnership or foreign limited liability partnership), limited association, limited liability company (including a professional service limited liability company), foreign limited liability company (including a foreign professional service limited liability company), joint venture, limited partnership, natural person, real estate investment trust, business trust or other trust, custodian, nominee or any other individual or entity in its own or any representative capacity. (c) One or more domestic corporations and one or more other business entities, or one or more foreign corporations and one or more other business entities may as provided by any other applicable statute and this chapter: (1) Merge into a single domestic or foreign corporation or other business entity, which shall be one of the constituent entities; or (2) Consolidate into a single domestic or foreign corporation or other business entity, which shall be a new domestic or foreign corporation or other business entity to be formed pursuant to the consolidation.

§ 902 Plan of merger or consolidation.

§ 902. Plan of merger or consolidation. (a) The board of each corporation proposing to participate in a merger or consolidation under section 901 (Power of merger or consolidation) shall adopt a plan of merger or consolidation, setting forth: (1) The name of each constituent entity and, if the name of any of them has been changed, the name under which it was formed; and the name of the surviving corporation, or the name, or the method of determining it, of the consolidated corporation. (2) As to each constituent corporation, the designation and number of outstanding shares of each class and series, specifying the classes and series entitled to vote and further specifying each class and series, if any, entitled to vote as a class; and, if the number of any such shares is subject to change prior to the effective date of the merger or consolidation, the manner in which such change may occur. (3) The terms and conditions of the proposed merger or consolidation, including the manner and basis of converting the shares of each constituent corporation into shares, bonds or other securities of the surviving or consolidated corporation, or the cash or other consideration to be paid or delivered in exchange for shares of each constituent corporation, or a combination thereof. (4) In case of merger, a statement of any amendments or changes in the certificate of incorporation of the surviving corporation to be effected by such merger; in case of consolidation, all statements required to be included in a certificate of incorporation for a corporation formed under this chapter, except statements as to facts not available at the time the plan of consolidation is adopted by the board. (5) Such other provisions with respect to the proposed merger or consolidation as the board considers necessary or desirable.

§ 903 Authorization by shareholders.

§ 903. Authorization by shareholders. (a) The board of each constituent corporation, upon adopting such plan of merger or consolidation, shall submit such plan to a vote of shareholders in accordance with the following: (1) Notice of meeting shall be given to each shareholder of record, as

of the record date fixed pursuant to section 604 (Fixing record date), whether or not entitled to vote. A copy of the plan of merger or consolidation or an outline of the material features of the plan shall accompany such notice. (2) The plan of merger or consolidation shall be adopted at a meeting of shareholders by (i) for corporations in existence on the effective date of this clause the certificate of incorporation of which expressly provides such or corporations incorporated after the effective date of subclause (A) of clause (ii) of this subparagraph, a majority of the votes of the shares entitled to vote thereon or (ii) for other corporations in existence on the effective date of this clause, two-thirds of the votes of all outstanding shares entitled to vote thereon. Notwithstanding any provision in the certificate of incorporation, the holders of shares of a class or series of a class shall be entitled to vote together and to vote as a separate class if both of the following conditions are satisfied: (A) such shares will remain outstanding after the merger or consolidation or will be converted into the right to receive shares of stock of the surviving or consolidated corporation or another corporation, and (B) the certificate or articles of incorporation of the surviving or consolidated corporation or of such other corporation immediately after the effectiveness of the merger or consolidation would contain any provision which, is not contained in the certificate of incorporation of the corporation and which, if contained in an amendment to the certificate of incorporation, would entitle the holders of shares of such class or such one or more series to vote and to vote as a separate class thereon pursuant to section 804 (Class voting on amendment).

In such case, in addition to the authorization of the merger or consolidation by the requisite number of votes of all outstanding shares entitled to vote thereon pursuant to the first sentence of this subparagraph (2), the merger or consolidation shall be authorized by a majority of the votes of all outstanding shares of the class entitled to vote as a separate class. If any provision referred to in subclause (B) of clause (ii) of this subparagraph would affect the rights of the holders of shares of only one or more series of any class but not the

entire class, then only the holders of those series whose rights would be affected shall together be considered a separate class for purposes of this section. (b) Notwithstanding shareholder authorization and at any time prior to the filing of the certificate of merger or consolidation, the plan of merger or consolidation may be abandoned pursuant to a provision for such abandonment, if any, contained in the plan of merger or consolidation.

§ 904 Certificate of merger or consolidation; contents.

§ 904. Certificate of merger or consolidation; contents. (a) After adoption of the plan of merger or consolidation by the board and shareholders of each constituent corporation, unless the merger or consolidation is abandoned in accordance with paragraph (b) of section 903 (Authorization by shareholders), a certificate of merger or consolidation, entitled "Certificate of merger (or consolidation) of ......and ..... into ..... (names of corporations) under section 904 of the Business Corporation Law", shall be signed on behalf of each constituent corporation and delivered to the department of state. It shall set forth: (1) The statements required by subparagraphs (a) (1), (2) and (4) of section 902 (Plan of merger or consolidation). (2) The effective date of the merger or consolidation if other than the date of filing of the certificate of merger or consolidation by the department of state. (3) In the case of consolidation, any statement required to be included in a certificate of incorporation for a corporation formed under this chapter but which was omitted under subparagraph (a) (4) of section 902. (4) The date when the certificate of incorporation of each constituent corporation was filed by the department of state. (5) The manner in which the merger or consolidation was authorized with respect to each constituent corporation. (b) The surviving or consolidated corporation shall thereafter cause a copy of such certificate, certified by the department of state, to be filed in the office of the clerk of each county in which the office of a constituent corporation, other than the surviving corporation, is

located, and in the office of the official who is the recording officer of each county in this state in which real property of a constituent corporation, other than the surviving corporation, is situated.

§ 904-a Merger or consolidation of corporations with other business

§ 904-a. Merger or consolidation of corporations with other business entities; certificate of merger or consolidation. (a) After adoption of the agreement of merger or consolidation by the board and shareholders of each corporation participating in the merger or consolidation, unless the merger or consolidation is abandoned in accordance with paragraph (b) of section nine hundred three of this article, subdivision (d) of section one thousand two of the limited liability company law or other applicable statute, and the surviving or resulting entity is a corporation, foreign corporation, or other business entity for which the laws of this state do not provide for the filing of a certificate of merger or consolidation with the department of state, a certificate of merger or consolidation, entitled "Certificate of merger (or consolidation) of ..... and..... into ..... (names of constituent entities) under section nine hundred four-a of the business corporation law," shall be signed on behalf of each constituent entity and delivered to the department of state. It shall set forth: (1) The name of each constituent entity and, if the name of any of them has been changed, the name under which it was formed; (2) The date when the certificate of incorporation or articles of organization of each domestic constituent entity was filed by the department of state; (3) If a constituent entity is a foreign business corporation or foreign other business entity, the jurisdiction and date of filing of its initial certificate of incorporation or formation document, if any and the date when its application for authority was filed by the department of state or if no such application has been filed, a statement to such effect and (if the constituent foreign corporation is the surviving entity) that it is not to do business in this state until an application for such authority shall have been filed with the department of state; (4) A statement that an agreement of merger or consolidation has been approved and executed by each constituent entity;

(5) The name of the surviving or consolidated corporation; (6) If the surviving or resulting entity is a domestic corporation, in case of a merger, a statement of any amendments or changes in the certificate of incorporation of the surviving corporation to be effected by such merger; in case of consolidation, all statements required to be included in a certificate of incorporation for a corporation formed under this chapter; (7) If the surviving or resulting entity is a foreign corporation or other business entity, an agreement that the surviving or consolidated foreign corporation or other business entity may be served with process in this state in any action or special proceeding for the enforcement of any liability or obligation of any domestic or foreign entity, previously amenable to suit in this state, which is a constituent entity in such merger or consolidation, and for the enforcement, as provided in this chapter, of the right of shareholders or members of any constituent domestic entity to receive payment for their interests against the surviving or consolidated corporation; (8) If the surviving or resulting entity is a foreign corporation or other business entity, a designation of the secretary of state as its agent upon whom process against it may be served in the manner set forth in paragraph (b) of section three hundred six of this chapter, in any action or special proceeding, and a post office address, within or without this state, to which the secretary of state shall mail a copy of any process against it served upon him or her. The corporation may include an email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon him or her. Such post office address shall supersede any prior address designated as the address to which process shall be mailed and such email address shall supersede any prior email address designated as the email address to which a notice shall be sent; (9) If the surviving or resulting entity is a foreign corporation, an agreement that, subject to the provisions of section six hundred twenty-three of this chapter, section one thousand five of the limited liability company law and any applicable statute, the surviving or consolidated foreign corporation will promptly pay to the shareholders of each constituent domestic corporation and owners of any constituent other business entity the amount, if any, to which they shall be

entitled under the provisions of this chapter and the limited liability company law or any applicable statute relating to the right of shareholders, owners and members to receive payment for their interests; (10) The effective date of the merger or consolidation if other than the date of filing of the certificate of merger or consolidation by the department of state; (11) For each foreign corporation, foreign limited liability company or other business entity, a statement that such merger or consolidation is permitted by its jurisdiction of incorporation or organization and is in compliance therewith; (12) That the agreement of merger or consolidation is on file at a place of business of the surviving or resulting domestic or foreign corporation and shall state the address thereof. (b) The surviving or consolidated domestic or foreign corporation shall thereafter cause a copy of such certificate, certified by the department of state, to be filed in the office of the clerk of each county in which each office of a participating domestic or foreign corporation, other than the surviving corporation, is located, and in the office of the official who is the recording officer of each county in this state in which real property of a participating domestic or foreign corporation, other than the surviving corporation, is situated.

§ 904-b Merger or consolidation of business corporations into

§ 904-b. Merger or consolidation of business corporations into non-profit corporations. (a) A domestic business corporation may be merged or consolidated into a domestic corporation formed under section two hundred one (Purposes) of the not-for-profit corporation law and authorized to do business under article forty-three of the insurance law. (b) With respect to procedure, including approval by members or authorization by shareholders, the domestic not-for-profit corporation shall comply with the not-for-profit corporation law and the domestic business corporation shall comply with the provisions of this chapter. (c) The plan of merger or consolidation, pursuant to this section, shall set forth all matters required by section nine hundred two of the not-for-profit corporation law or section 902 (Plan of merger or consolidation) and the terms and conditions of the proposed merger or

consolidation, including the manner and basis of converting shares, bonds or other securities in each constituent corporation into membership or other interest of the surviving or consolidated corporation, or the cash or other consideration to be paid or delivered in exchange for shares, bonds or other securities in each constituent corporation, or a combination thereof. (d) After adoption of the plan of merger or consolidation by the board and shareholders or members of each constituent corporation, unless the merger or consolidation is abandoned in accordance with paragraph (b) of section 903 (Authorization by shareholders) and paragraph (b) of section nine hundred three of the not-for-profit corporation law, a certificate of merger or consolidation, entitled "Certificate of merger (or consolidation) of ........ and.......... into ........... (names of corporations) under section 904-b of the Business Corporation Law", shall be signed on behalf of each constituent corporation and delivered to the department of state. (e) The certificate required to be filed pursuant to this section shall set forth the statements required by paragraph (a) of section nine hundred four of the not-for-profit corporation law or paragraph (a) of section nine hundred four (Adoption of the plan of merger or consolidation). (f) No certificate shall be filed pursuant to this section until an order approving the plan of merger or consolidation and authorizing the filing of the certificate has been made by the supreme court, as provided in section nine hundred seven of the not-for-profit corporation law. (g) Upon the filing of the certificate of merger or consolidation by the department of state or on such date subsequent thereto, not to exceed thirty days, as shall be set forth in such certificate, the merger or consolidation shall be effected. (h) The surviving or consolidated domestic corporation shall thereafter cause a copy of such certificate, certified by the department of state, to be filed in the office of the clerk of each county in which the office of a constituent corporation, other than the surviving corporation, is located, and in the office of the official who is the recording officer of each county in this state in which real property of a constituent corporation, other than the surviving corporation, is

situated. (i) When such merger or consolidation has been effected, it shall be subject to the not-for-profit corporation law and the effect of such merger or consolidation shall be the same as in the case of the merger or consolidation of domestic corporations under section nine hundred five of the not-for-profit corporation law, except that in subparagraph three of paragraph (b) of such section the word "member" shall be read to include the word "shareholder" as the latter is defined in this chapter.

§ 905 Merger of parent and subsidiary corporations.

§ 905. Merger of parent and subsidiary corporations. (a) Any domestic corporation owning at least ninety percent of the outstanding shares of each class of another domestic corporation or corporations may either merge such other corporation or corporations into itself without the authorization of the shareholders of any such corporation or merge itself and one or more of such other corporations into one of such other corporations with the authorization of the parent corporation's shareholders in accordance with paragraph (a) of section 903 (Authorization by shareholders). In either case, the board of such parent corporation shall adopt a plan of merger, setting forth: (1) The name of each corporation to be merged and the name of the surviving corporation, and if the name of any of them has been changed, the name under which it was formed. (2) The designation and number of outstanding shares of each class of each corporation to be merged and the number of such shares of each class, if any, owned by the surviving corporation; and if the number of any such shares is subject to change prior to the effective date of the merger, the manner in which such change may occur. (3) The terms and conditions of the proposed merger, including the manner and basis of converting the shares of each subsidiary corporation to be merged not owned by the parent corporation into shares, bonds or other securities of the surviving corporation, or the cash or other consideration to be paid or delivered in exchange for shares of each such subsidiary corporation, or a combination thereof. (4) If the parent corporation is not the surviving corporation, provision for the pro rata issuance of shares of the surviving

corporation to the shareholders of the parent corporation on surrender of any certificates therefor. (5) If the parent corporation is not the surviving corporation, a statement of any amendments or changes in the certificate of incorporation of the surviving corporation to be effected by the merger. (6) Such other provisions with respect to the proposed merger as the board considers necessary or desirable. (b) If the surviving corporation is the parent corporation, a copy of such plan of merger or an outline of the material features thereof shall be given, personally or by mail, to all holders of shares of each subsidiary corporation to be merged not owned by the parent corporation, unless the giving of such copy or outline has been waived by such holders. (c) A certificate of merger, entitled "Certificate of merger of ..... into ..... (names of corporations) under section 905 of the Business Corporation Law", shall be signed and delivered to the department of state by the surviving corporation. If the surviving corporation is the parent corporation and such corporation does not own all shares of each subsidiary corporation to be merged, such certificate shall be delivered not less than thirty days after the giving of a copy or outline of the material features of the plan of merger to shareholders of each such subsidiary corporation, or at any time after the waiving thereof by the holders of all of the outstanding shares of each such subsidiary corporation not owned by the surviving corporation. The certificate shall set forth: (1) The statements required by subparagraphs (a) (1), (2), (4) and (5) of this section. (2) The effective date of the merger if other than the date of filing of the certificate of merger by the department of state. (3) The date when the certificate of incorporation of each constituent corporation was filed by the department of state. (4) A statement that the plan of merger was adopted by the board of directors of the parent corporation. (5) If the surviving corporation is the parent corporation and such corporation does not own all the shares of each subsidiary corporation to be merged, either the date of the giving to holders of shares of each such subsidiary corporation not owned by the surviving corporation of a

copy of the plan of merger or an outline of the material features thereof, or a statement that the giving of such copy or outline has been waived, if such is the case. (6) If the parent corporation is not the surviving corporation, a statement that the proposed merger has been approved by the shareholders of the parent corporation in accordance with paragraph (a) of section 903 (Authorization by shareholders). (d) The surviving corporation shall thereafter cause a copy of such certificate, certified by the department of state, to be filed in the office of the clerk of each county in which the office of a constituent corporation, other than the surviving corporation, is located, and in the office of the official who is the recording officer of each county in this state in which real property of a constituent corporation, other than the surviving corporation, is situated. (e) Paragraph (b) of section 903 (Authorization by shareholders) shall apply to a merger under this section. (f) The right of merger granted by this section to certain corporations shall not preclude the exercise by such corporations of any other right of merger or consolidation under this article.

§ 906 Effect of merger or consolidation.

§ 906. Effect of merger or consolidation. (a) Upon the filing of the certificate of merger or consolidation by the department of state or on such date subsequent thereto, not to exceed thirty days, as shall be set forth in such certificate, the merger or consolidation shall be effected. (b) When such merger or consolidation has been effected: (1) Such surviving or consolidated corporation shall thereafter, consistently with its certificate of incorporation as altered or established by the merger or consolidation, possess all the rights, privileges, immunities, powers and purposes of each of the constituent corporations. (2) All the property, real and personal, including subscriptions to shares, causes of action and every other asset of each of the constituent entities, shall vest in such surviving or consolidated corporation without further act or deed. (3) The surviving or consolidated corporation shall assume and be

liable for all the liabilities, obligations and penalties of each of the constituent entities. No liability or obligation due or to become due, claim or demand for any cause existing against any such constituent entity, or any shareholder, member, officer or director thereof, shall be released or impaired by such merger or consolidation. No action or proceeding, whether civil or criminal, then pending by or against any such constituent entity, or any shareholder, member, officer or director thereof, shall abate or be discontinued by such merger or consolidation, but may be enforced, prosecuted, settled or compromised as if such merger or consolidation had not occurred, or such surviving or consolidated corporation may be substituted in such action or special proceeding in place of any constituent entity. (4) In the case of a merger, the certificate of incorporation of the surviving corporation shall be automatically amended to the extent, if any, that changes in its certificate of incorporation are set forth in the plan of merger; and, in the case of a consolidation, the statements set forth in the certificate of consolidation and which are required or permitted to be set forth in a certificate of incorporation of a corporation formed under this chapter shall be its certificate of incorporation.

§ 907 Merger or consolidation of domestic and foreign corporations.

§ 907. Merger or consolidation of domestic and foreign corporations. (a) One or more foreign corporations and one or more domestic corporations may be merged or consolidated into a corporation of this state or of another jurisdiction, if such merger or consolidation is permitted by the laws of the jurisdiction under which each such foreign corporation is incorporated. With respect to such merger or consolidation, any reference in paragraph (b) of section 901 (Power of merger or consolidation) to a corporation shall, unless the context otherwise requires, include both domestic and foreign corporations. (b) With respect to procedure, including the requirement of share- holder authorization, each domestic corporation shall comply with the provisions of this chapter relating to merger or consolidation of domestic corporations, and each foreign corporation shall comply with the applicable provisions of the law of the jurisdiction under which it is incorporated.

(c) The procedure for the merger of a subsidiary corporation or corporations under section 905 (Merger of parent and subsidiary corporations) shall be available where either a subsidiary corporation or the corporation owning at least ninety percent of the outstanding shares of each class of a subsidiary is a foreign corporation, and such merger is permitted by the laws of the jurisdiction under which such foreign corporation is incorporated. (d) If the surviving or consolidated corporation is, or is to be, a domestic corporation, a certificate of merger or consolidation shall be signed and delivered to the department of state as provided in section 904 (Certificate of merger or consolidation; contents) or 905 (Merger of parent and subsidiary corporations), as the case may be. In addition to the matters specified in such sections, the certificate shall set forth as to each constituent foreign corporation the jurisdiction and date of its incorporation and the date when its application for authority to do business in this state was filed by the department of state, and its fictitious name used in this state pursuant to article thirteen of this chapter, if applicable, or, if no such application has been filed, a statement to such effect. (e) If the surviving or consolidated corporation is, or is to be, formed under the law of any jurisdiction other than this state: (1) It shall comply with the provisions of this chapter relating to foreign corporations if it is to do business in this state. (2) It shall deliver to the department of state a certificate, entitled "Certificate of merger (or consolidation) of ..... and ..... into ..... (names of corporations) under section 907 of the Business Corporation Law", which shall be signed on behalf of each constituent domestic and foreign corporation. It shall set forth: (A) If the procedure for the merger or consolidation of a constituent domestic corporation was effected in compliance with sections 902 (Plan of merger or consolidation) and 903 (Authorization by shareholders), the following: (i) The statements required by subparagraphs (a) (1) and (2) of section 902. (ii) The effective date of the merger or consolidation if other than the date of filing of the certificate of merger or consolidation by the department of state.

(iii) The manner in which the merger or consolidation was authorized with respect to each constituent domestic corporation and that the merger or consolidation is permitted by the laws of the jurisdiction of each constituent foreign corporation and is in compliance therewith. (B) If the procedure for the merger of a subsidiary corporation was effected in compliance with section 905, the following: (i) The statements required by subparagraphs (a) (1), (2), (4) and (5) of section 905. (ii) The effective date of the merger if other than the date of filing of the certificate of merger by the department of state. (iii) If the surviving foreign corporation is the parent corporation and such corporation does not own all the shares of a subsidiary do- mestic corporation being merged, either the date of the giving to hold- ers of shares of each subsidiary domestic corporation not owned by the surviving foreign corporation of a copy of the plan of merger or an outline of the material features thereof, or a statement that the giving of such copy or outline has been waived, if such is the case. (iv) That the merger is permitted by the laws of the jurisdiction of each constituent foreign corporation and is in compliance therewith. (v) If the parent domestic corporation is not the surviving corporation, a statement that the proposed merger has been approved by the shareholders of the parent domestic corporation in accordance with paragraph (a) of section 903 (Authorization by shareholders). (C) The jurisdiction and date of incorporation of the surviving or consolidated foreign corporation, the date when its application for authority to do business in this state was filed by the department of state, and its fictitious name used in this state pursuant to article thirteen of this chapter, if applicable, or, if no such application has been filed, a statement to such effect and that it is not to do business in this state until an application for such authority shall have been filed by such department. (D) The date when the certificate of incorporation of each constituent domestic corporation was filed by the department of state and the jurisdiction and date of incorporation of each constituent foreign corporation, other than the surviving or consolidated foreign corporation, and, in the case of each such corporation authorized to do business in this state, the date when its application for authority was

filed by the department of state. (E) An agreement that the surviving or consolidated foreign corporation may be served with process in this state in any action or special proceeding for the enforcement of any liability or obligation of any domestic corporation or of any foreign corporation, previously amenable to suit in this state, which is a constituent corporation in such merger or consolidation, and for the enforcement, as provided in this chapter, of the right of shareholders of any constituent domestic corporation to receive payment for their shares against the surviving or consolidated corporation. (F) An agreement that, subject to the provisions of section 623 (Procedure to enforce shareholder's right to receive payment for shares), the surviving or consolidated foreign corporation will promptly pay to the shareholders of each constituent domestic corporation the amount, if any, to which they shall be entitled under the provisions of this chapter relating to the right of shareholders to receive payment for their shares. (G) A designation of the secretary of state as its agent upon whom process against it may be served in the manner set forth in paragraph (b) of section 306 (Service of process), in any action or special proceeding, and a post office address, within or without this state, to which the secretary of state shall mail a copy of any process against it served upon him or her. The corporation may include an email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon him or her. Such post office address shall supersede any prior address designated as the address to which process shall be mailed and such email address shall supersede any prior email address designated as the email address to which a notice shall be sent. (H)(i) A certification that all fees and taxes (including penalties and interest) administered by the department of taxation and finance which are then due and payable by each constituent domestic corporation have been paid and that a cessation franchise tax report (estimated or final) through the anticipated date of the merger or consolidation (which return, if estimated, shall be subject to amendment) has been filed by each constituent domestic corporation and (ii) an agreement that the surviving or consolidated foreign corporation will within

thirty days after the filing of the certificate of merger or consolidation file the cessation franchise tax report, if an estimated report was previously filed, and promptly pay to the department of taxation and finance all fees and taxes (including penalties and interest), if any, due to the department of taxation and finance by each constituent domestic corporation. (f) Upon the filing of the certificate of merger or consolidation by the department of state or on such date subsequent thereto, not to exceed ninety days, as shall be set forth in such certificate, the merger or consolidation shall be effected. (g) The surviving or consolidated domestic corporation or foreign corporation shall thereafter cause a copy of such certificate, certified by the department of state, to be filed in the office of the clerk of each county in which the office of a constituent corporation other than the surviving corporation is located, and in the office of the official who is the recording officer of each county in this state in which real property of a constituent corporation, other than the surviving corporation, is situated. (h) If the surviving or consolidated corporation is, or is to be, formed under the law of this state, the effect of such merger or consolidation shall be the same as in the case of the merger or consolidation of domestic corporations under section 906 (Effect of merger or consolidation). If the surviving or consolidated corporation is, or is to be, incorporated under the law of any jurisdiction other than this state, the effect of such merger or consolidation shall be the same as in the case of the merger or consolidation of domestic corporations, except in so far as the law of such other jurisdiction provides otherwise.

§ 908 Guarantee authorized by shareholders.

§ 908. Guarantee authorized by shareholders.

A guarantee may be given by a corporation, although not in furtherance of its corporate purposes, when authorized at a meeting of shareholders by two-thirds of the votes of all outstanding shares entitled to vote thereon. If authorized by a like vote, such guarantee may be secured by a mortgage or pledge of, or the creation of a security interest in, all

or any part of the corporate property, or any interest therein, wherever situated.

§ 909 Sale, lease, exchange or other disposition of assets.

§ 909. Sale, lease, exchange or other disposition of assets. (a) A sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the usual or regular course of the business actually conducted by such corporation, shall be authorized only in accordance with the following procedure: (1) The board shall authorize the proposed sale, lease, exchange or other disposition and direct its submission to a vote of shareholders. (2) Notice of meeting shall be given to each shareholder of record, whether or not entitled to vote. (3) The shareholders shall approve such sale, lease, exchange or other disposition and may fix, or may authorize the board to fix, any of the terms and conditions thereof and the consideration to be received by the corporation therefor, which may consist in whole or in part of cash or other property, real or personal, including shares, bonds or other securities of any other domestic or foreign corporation or corporations, by vote at a meeting of shareholders of (A) for corporations in existence on the effective date of this clause the certificate of incorporation of which expressly provides such or corporations incorporated after the effective date of this clause, a majority of the votes of all outstanding shares entitled to vote thereon or (B) for other corporations in existence on the effective date of this clause, two-thirds of the votes of all outstanding shares entitled to vote thereon. (b) A recital in a deed, lease or other instrument of conveyance executed by a corporation to the effect that the property described therein does not constitute all or substantially all of the assets of the corporation, or that the disposition of the property affected by said instrument was made in the usual or regular course of business of the corporation, or that the shareholders have duly authorized such disposition, shall be presumptive evidence of the fact so recited. (c) An action to set aside a deed, lease or other instrument of conveyance executed by a corporation affecting real property or real and

personal property may not be maintained for failure to comply with the requirements of paragraph (a) unless the action is commenced and a notice of pendency of action is filed within one year after such conveyance, lease or other instrumment is recorded or within six months after this subdivision takes effect, whichever date occurs later. (d) Whenever a transaction of the character described in paragraph (a) involves a sale, lease, exchange or other disposition of all or substantially all the assets of the corporation, including its name, to a new corporation formed under the same name as the existing corporation, upon the expiration of thirty days from the filing of the certificate of incorporation of the new corporation, with the consent of the state tax commission attached, the existing corporation shall be automatically dissolved, unless, before the end of such thirty-day period, such corporation has changed its name. The adjustment and winding up of the affairs of such dissolved corporation shall proceed in accordance with the provisions of article 10 (Non-judicial dissolution). (e) The certificate of incorporation of a corporation formed under the authority of paragraph (d) shall set forth the name of the existing corporation, the date when its certificate of incorporation was filed by the department of state, and that the shareholders of such corporation have authorized the sale, lease, exchange or other disposition of all or substantially all the assets of such corporation, including its name, to the new corporation to be formed under the same name as the existing corporation. (f) Notwithstanding shareholder approval, the board may abandon the proposed sale, lease, exchange or other disposition without further action by the shareholders, subject to the rights, if any, of third parties under any contract relating thereto.

§ 910 Right of shareholder to receive payment for shares upon merger or

§ 910. Right of shareholder to receive payment for shares upon merger or consolidation, or sale, lease, exchange or other disposition of assets, or share exchange. (a) A shareholder of a domestic corporation shall, subject to and by complying with section 623 (Procedure to enforce shareholder's right to receive payment for shares), have the right to receive payment of the fair value of his shares and the other rights and benefits provided by

such section, in the following cases: (1) Any shareholder entitled to vote who does not assent to the taking of an action specified in clauses (A), (B) and (C). (A) Any plan of merger or consolidation to which the corporation is a party; except that the right to receive payment of the fair value of his shares shall not be available: (i) To a shareholder of the parent corporation in a merger authorized by section 905 (Merger of parent and subsidiary corporations), or paragraph (c) of section 907 (Merger or consolidation of domestic and foreign corporations); or (ii) To a shareholder of the surviving corporation in a merger authorized by this article, other than a merger specified in subclause (i), unless such merger effects one or more of the changes specified in subparagraph (b) (6) of section 806 (Provisions as to certain proceedings) in the rights of the shares held by such shareholder; or (iii) Notwithstanding subclause (ii) of this clause, to a shareholder for the shares of any class or series of stock, which shares or depository receipts in respect thereof, at the record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to vote upon the plan of merger or consolidation, were listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. (B) Any sale, lease, exchange or other disposition of all or substantially all of the assets of a corporation which requires shareholder approval under section 909 (Sale, lease, exchange or other disposition of assets) other than a transaction wholly for cash where the shareholders' approval thereof is conditioned upon the dissolution of the corporation and the distribution of substantially all of its net assets to the shareholders in accordance with their respective interests within one year after the date of such transaction. (C) Any share exchange authorized by section 913 in which the corporation is participating as a subject corporation; except that the right to receive payment of the fair value of his shares shall not be available to a shareholder whose shares have not been acquired in the exchange or to a shareholder for the shares of any class or series of stock, which shares or depository receipt in respect thereof, at the

record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to vote upon the plan of exchange, were listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. (2) Any shareholder of the subsidiary corporation in a merger authorized by section 905 or paragraph (c) of section 907, or in a share exchange authorized by paragraph (g) of section 913, who files with the corporation a written notice of election to dissent as provided in paragraph (c) of section 623. (3) Any shareholder, not entitled to vote with respect to a plan of merger or consolidation to which the corporation is a party, whose shares will be cancelled or exchanged in the merger or consolidation for cash or other consideration other than shares of the surviving or consolidated corporation or another corporation.

§ 911 Mortgage or pledge of, or security interest in, corporate

§ 911. Mortgage or pledge of, or security interest in, corporate property.

The board may authorize any mortgage or pledge of, or the creation of a security interest in, all or any part of the corporate property, or any interest therein, wherever situated. Unless the certificate of incorporation provides otherwise, no vote or consent of shareholders shall be required to approve such action by the board.

§ 912 Requirements relating to certain business combinations.

§ 912. Requirements relating to certain business combinations. (a) For the purposes of this section: (1) "Affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified person. (2) "Announcement date", when used in reference to any business combination, means the date of the first public announcement of the final, definitive proposal for such business combination. (3) "Associate", when used to indicate a relationship with any person, means (A) any corporation or organization of which such person is an

officer or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of voting stock, (B) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, and (C) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person. (4) "Beneficial owner", when used with respect to any stock, means a person: (A) that, individually or with or through any of its affiliates or associates, beneficially owns such stock, directly or indirectly; or (B) that, individually or with or through any of its affiliates or associates, has (i) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the beneficial owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered stock is accepted for purchase or exchange; or (ii) the right to vote such stock pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a person shall not be deemed the beneficial owner of any stock under this item if the agreement, arrangement or understanding to vote such stock (X) arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made in accordance with the applicable rules and regulations under the Exchange Act and (Y) is not then reportable on a Schedule 13D under the Exchange Act (or any comparable or successor report); or (C) that has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (ii) of clause (B) of this subparagraph), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock. (5) "Business combination", when used in reference to any domestic corporation and any interested shareholder of such corporation, means: (A) any merger or consolidation of such corporation or any subsidiary

of such corporation with (i) such interested shareholder or (ii) any other corporation (whether or not itself an interested shareholder of such corporation) which is, or after such merger or consolidation would be, an affiliate or associate of such interested shareholder; (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with such interested shareholder or any affiliate or associate of such interested shareholder of assets of such corporation or any subsidiary of such corporation (i) having an aggregate market value equal to ten percent or more of the aggregate market value of all the assets, determined on a consolidated basis, of such corporation, (ii) having an aggregate market value equal to ten percent or more of the aggregate market value of all the outstanding stock of such corporation, or (iii) representing ten percent or more of the earning power or net income determined on a consolidated basis, of such corporation; (C) the issuance or transfer by such corporation or any subsidiary of such corporation (in one transaction or a series of transactions) of any stock of such corporation or any subsidiary of such corporation which has an aggregate market value equal to five percent or more of the aggregate market value of all the outstanding stock of such corporation to such interested shareholder or any affiliate or associate of such interested shareholder except pursuant to the exercise of warrants or rights to purchase stock offered, or a dividend or distribution paid or made, pro rata to all shareholders of such corporation; (D) the adoption of any plan or proposal for the liquidation or dissolution of such corporation proposed by, or pursuant to any agreement, arrangement or understanding (whether or not in writing) with, such interested shareholder or any affiliate or associate of such interested shareholder; (E) any reclassification of securities (including, without limitation, any stock split, stock dividend, or other distribution of stock in respect of stock, or any reverse stock split), or recapitalization of such corporation, or any merger or consolidation of such corporation with any subsidiary of such corporation, or any other transaction (whether or not with or into or otherwise involving such interested shareholder), proposed by, or pursuant to any agreement, arrangement or understanding (whether or not in writing) with, such interested

shareholder or any affiliate or associate of such interested shareholder, which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of voting stock or securities convertible into voting stock of such corporation or any subsidiary of such corporation which is directly or indirectly owned by such interested shareholder or any affiliate or associate of such interested shareholder, except as a result of immaterial changes due to fractional share adjustments; or (F) any receipt by such interested shareholder or any affiliate or associate of such interested shareholder of the benefit, directly or indirectly (except proportionately as a shareholder of such corporation) of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by or through such corporation. (6) "Common stock" means any stock other than preferred stock. (7) "Consummation date", with respect to any business combination, means the date of consummation of such business combination, or, in the case of a business combination as to which a shareholder vote is taken, the later of the business day prior to the vote or twenty days prior to the date of consummation of such business combination. (8) "Control", including the terms "controlling", "controlled by" and "under common control with", means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person's beneficial ownership of ten percent or more of a corporation's outstanding voting stock shall create a presumption that such person has control of such corporation. Notwithstanding the foregoing, a person shall not be deemed to have control of a corporation if such person holds voting stock, in good faith and not for the the purpose of circumventing this section, as an agent, bank, broker, nominee, custodian or trustee for one or more beneficial owners who do not individually or as a group have control of such corporation. (9) "Exchange Act" means the Act of Congress known as the Securities Exchange Act of 1934, as the same has been or hereafter may be amended from time to time. (10) "Interested shareholder", when used in reference to any domestic

corporation, means any person (other than such corporation or any subsidiary of such corporation) that (A) (i) is the beneficial owner, directly or indirectly, of twenty percent or more of the outstanding voting stock of such corporation; or (ii) is an affiliate or associate of such corporation and at any time within the five-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of twenty percent or more of the then outstanding voting stock of such corporation; provided that (B) for the purpose of determining whether a person is an interested shareholder, the number of shares of voting stock of such corporation deemed to be outstanding shall include shares deemed to be beneficially owned by the person through application of subparagraph four of this paragraph but shall not include any other unissued shares of voting stock of such corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (11) "Market value", when used in reference to stock or property of any domestic corporation, means: (A) in the case of stock, the highest closing sale price during the thirty-day period immediately preceding the date in question of a share of such stock on the composite tape for New York stock exchange-listed stocks, or, if such stock is not quoted on such composite tape or if such stock is not listed on such exchange, on the principal United States securities exchange registered under the Exchange Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the thirty-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the board of directors of such corporation in good faith; and (B) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the board of directors of such corporation in good faith. (12) "Preferred stock" means any class or series of stock of a

domestic corporation which under the by-laws or certificate of incorporation of such corporation is entitled to receive payment of dividends prior to any payment of dividends on some other class or series of stock, or is entitled in the event of any voluntary liquidation, dissolution or winding up of the corporation to receive payment or distribution of a preferential amount before any payments or distributions are received by some other class or series of stock. (14) "Stock" means: (A) any stock or similar security, any certificate of interest, any participation in any profit sharing agreement, any voting trust certificate, or any certificate of deposit for stock; and (B) any security convertible, with or without consideration, into stock, or any warrant, call or other option or privilege of buying stock without being bound to do so, or any other security carrying any right to acquire, subscribe to or purchase stock. (15) "Stock acquisition date", with respect to any person and any domestic corporation, means the date that such person first becomes an interested shareholder of such corporation. (16) "Subsidiary" of any person means any other corporation of which a majority of the voting stock is owned, directly or indirectly, by such person. (17) "Voting stock" means shares of capital stock of a corporation entitled to vote generally in the election of directors. (b) Notwithstanding anything to the contrary contained in this chapter (except the provisions of paragraph (d) of this section), no domestic corporation shall engage in any business combination with any interested shareholder of such corporation for a period of five years following such interested shareholder's stock acquisition date unless such business combination or the purchase of stock made by such interested shareholder on such interested shareholder's stock acquisition date is approved by the board of directors of such corporation prior to such interested shareholder's stock acquisition date. If a good faith proposal is made in writing to the board of directors of such corporation regarding a business combination, the board of directors shall respond, in writing, within thirty days or such shorter period, if any, as may be required by the Exchange Act, setting forth its reasons for its decision regarding such proposal. If a good faith proposal to

purchase stock is made in writing to the board of directors of such corporation, the board of directors, unless it responds affirmatively in writing within thirty days or such shorter period, if any, as may be required by the Exchange Act, shall be deemed to have disapproved such stock purchase. (c) Notwithstanding anything to the contrary contained in this chapter (except the provisions of paragraphs (b) and (d) of this section), no domestic corporation shall engage at any time in any business combination with any interested shareholder of such corporation other than a business combination specified in any one of subparagraph (1), (2) or (3): (1) A business combination approved by the board of directors of such corporation prior to such interested shareholder's stock acquisition date, or where the purchase of stock made by such interested shareholder on such interested shareholder's stock acquisition date had been approved by the board of directors of such corporation prior to such interested shareholder's stock acquisition date. (2) A business combination approved by the affirmative vote of the holders of a majority of the outstanding voting stock not beneficially owned by such interested shareholder or any affiliate or associate of such interested shareholder at a meeting called for such purpose no earlier than five years after such interested shareholder's stock acquisition date. (3) A business combination that meets all of the following conditions: (A) The aggregate amount of the cash and the market value as of the consummation date of consideration other than cash to be received per share by holders of outstanding shares of common stock of such corporation in such business combination is at least equal to the higher of the following: (i) the highest per share price paid by such interested shareholder at a time when he was the beneficial owner, directly or indirectly, of five percent or more of the outstanding voting stock of such corporation, for any shares of common stock of the same class or series acquired by it (X) within the five-year period immediately prior to the announcement date with respect to such business combination, or (Y) within the five-year period immediately prior to, or in, the transaction in which such interested shareholder became an interested shareholder, whichever

is higher; plus, in either case, interest compounded annually from the earliest date on which such highest per share acquisition price was paid through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of common stock since such earliest date, up to the amount of such interest; and (ii) the market value per share of common stock on the announcement date with respect to such business combination or on such interested shareholder's stock acquisition date, whichever is higher; plus interest compounded annually from such date through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of common stock since such date, up to the amount of such interest. (B) The aggregate amount of the cash and the market value as of the consummation date of consideration other than cash to be received per share by holders of outstanding shares of any class or series of stock, other than common stock, of such corporation is at least equal to the highest of the following (whether or not such interested shareholder has previously acquired any shares of such class or series of stock): (i) the highest per share price paid by such interested shareholder at a time when he was the beneficial owner, directly or indirectly, of five percent or more of the outstanding voting stock of such corporation, for any shares of such class or series of stock acquired by it (X) within the five-year period immediately prior to the announcement date with respect to such business combination, or (Y) within the five-year period immediately prior to, or in, the transaction in which such interested shareholder became an interested shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which such highest per share acquisition price was paid through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of such class or series of stock since such earliest date, up to the amount of such interest; (ii) the highest preferential amount per share to which the holders of

shares of such class or series of stock are entitled in the event of any voluntary liquidation, dissolution or winding up of such corporation, plus the aggregate amount of any dividends declared or due as to which such holders are entitled prior to payment of dividends on some other class or series of stock (unless the aggregate amount of such dividends is included in such preferential amount); and (iii) the market value per share of such class or series of stock on the announcement date with respect to such business combination or on such interested shareholder's stock acquisition date, whichever is higher; plus interest compounded annually from such date through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of such class or series of stock since such date, up to the amount of such interest. (C) The consideration to be received by holders of a particular class or series of outstanding stock (including common stock) of such corporation in such business combination is in cash or in the same form as the interested shareholder has used to acquire the largest number of shares of such class or series of stock previously acquired by it, and such consideration shall be distributed promptly. (D) The holders of all outstanding shares of stock of such corporation not beneficially owned by such interested shareholder immediately prior to the consummation of such business combination are entitled to receive in such business combination cash or other consideration for such shares in compliance with clauses (A), (B) and (C) of this subparagraph. (E) After such interested shareholder's stock acquisition date and prior to the consummation date with respect to such business combination, such interested shareholder has not become the beneficial owner of any additional shares of voting stock of such corporation except: (i) as part of the transaction which resulted in such interested shareholder becoming an interested shareholder; (ii) by virtue of proportionate stock splits, stock dividends or other distributions of stock in respect of stock not constituting a business combination under clause (E) of subparagraph five of paragraph (a) of this section;

(iii) through a business combination meeting all of the conditions of paragraph (b) of this section and this paragraph; or (iv) through purchase by such interested shareholder at any price which, if such price had been paid in an otherwise permissible business combination the announcement date and consummation date of which were the date of such purchase, would have satisfied the requirements of clauses (A), (B) and (C) of this subparagraph. (d) The provisions of this section shall not apply: (1) to any business combination of a domestic corporation that does not have a class of voting stock registered with the Securities and Exchange Commission pursuant to section twelve of the Exchange Act, unless the certificate of incorporation provides otherwise; or (2) to any business combination of a domestic corporation whose certificate of incorporation has been amended to provide that such corporation shall be subject to the provisions of this section, which did not have a class of voting stock registered with the Securities and Exchange Commission pursuant to section twelve of the Exchange Act on the effective date of such amendment, and which is a business combination with an interested shareholder whose stock acquisition date is prior to the effective date of such amendment; or (3) to any business combination of a domestic corporation (i) the original certificate of incorporation of which contains a provision expressly electing not to be governed by this section, or (ii) which adopts an amendment to such corporation's by-laws prior to March thirty-first, nineteen hundred eighty-six, expressly electing not to be governed by this section, or (iii) which adopts an amendment to such corporation's by-laws, approved by the affirmative vote of a majority of votes of the outstanding voting stock of such corporation, excluding the voting stock of interested shareholders and their affiliates and associates, expressly electing not to be governed by this section, provided that such amendment to the by-laws shall not be effective until eighteen months after such vote of such corporation's shareholders and shall not apply to any business combination of such corporation with an interested shareholder whose stock acquisition date is on or prior to the effective date of such amendment; or (4) to any business combination of a domestic corporation with an interested shareholder of such corporation which became an interested

shareholder inadvertently, if such interested shareholder (i) as soon as practicable, divests itself of a sufficient amount of the voting stock of such corporation so that it no longer is the beneficial owner, directly or indirectly, of twenty percent or more of the outstanding voting stock of such corporation, and (ii) would not at any time within the five-year period preceding the announcement date with respect to such business combination have been an interested shareholder but for such inadvertent acquisition; or (5) to any business combination with an interested shareholder who was the beneficial owner, directly or indirectly, of five percent or more of the outstanding voting stock of such corporation on October thirtieth, nineteen hundred eighty-five, and remained so to such interested shareholder's stock acquisition date.

§ 913 Share exchanges.

§ 913. Share exchanges. (a) (1) Two domestic corporations may, as provided in this section, participate in the consummation of a plan for binding share exchanges. (2) Whenever used in this article: (A) "Acquiring corporation" means a corporation that is participating in a procedure pursuant to which such corporation is acquiring all of the outstanding shares of one or more classes of a subject corporation. (B) "Subject corporation" means a corporation that is participating in a procedure pursuant to which all of the outstanding shares of one or more classes of such corporation are being acquired by an acquiring corporation. (b) The board of the acquiring corporation and the board of the subject corporation shall adopt a plan of exchange, setting forth: (1) The name of the acquiring corporation and the name of the subject corporation, and, if the name of either of them has been changed, the name under which it was formed; (2) As to the acquiring corporation and the subject corporation, the designation and number of outstanding shares of each class and series, specifying the classes and series entitled to vote and further specifying each class and series, if any, entitled to vote as a class; and, if the number of any such shares is subject to change prior to the effective date of the exchange, the manner in which such change may

occur; (3) The terms and conditions of the proposed exchange, including the manner and basis of exchanging the shares to be acquired for shares, bonds or other securities of the acquiring corporation, or the cash or other consideration to be paid or delivered in exchange for such shares to be acquired, or a combination thereof; and (4) Such other provisions with respect to the proposed exchange as the board considers necessary or desirable. (c) The board of the subject corporation, upon adopting the plan of exchange, shall submit such plan, except as provided in paragraph (g) of this section, to a vote of shareholders in accordance with the following: (1) Notice of meeting shall be given to each shareholder of record, as of the record date fixed pursuant to section 604 (Fixing record date), whether or not entitled to vote. A copy of the plan of exchange or an outline of the material features of the plan shall accompany such notice. (2) (A) The plan of exchange shall be adopted at a meeting of shareholders by (i) for any corporation in existence on the effective date of subclause (ii) of this clause, two-thirds of the votes of all outstanding shares entitled to vote thereon and (ii) for any corporation in existence on the effective date of this subclause the certificate of incorporation of which expressly provides such and for any corporation incorporated after the effective date of this subclause, a majority of the votes of all outstanding shares entitled to vote thereon. Notwithstanding any provision in the certificate of incorporation, the holders of shares of a class or series of a class shall be entitled to vote together and to vote as a separate class if both of the following conditions are satisfied:

1. Such shares will be converted into shares of the acquiring corporation, and

2. The certificate or articles of incorporation of the acquiring corporation immediately after the share exchange would contain any provision which is not contained in the certificate of incorporation of the subject corporation and which, if contained in an amendment to the

certificate of incorporation of the subject corporation, would entitle the holders of shares of such class or such one or more series to vote and to vote as a separate class thereon pursuant to section 804 (Class voting on amendment).

In such case, in addition to the authorization of the exchange by the proportion of votes indicated above of all outstanding shares entitled to vote thereon, the exchange shall be authorized by a majority of the votes of all outstanding shares of the class entitled to vote as a separate class. If any provision referred to in subclause 2 of this clause (A) would affect the rights of the holders of shares of only one or more series of any class but not the entire class, then only the holders of those series whose rights would be affected shall together be considered a separate class for purposes of this section.

Notwithstanding shareholder authorization and at any time prior to the filing of the certificate of exchange, the plan of exchange may be abandoned pursuant to a provision for such abandonment, if any, contained in the plan of exchange. (B) Any corporation may adopt an amendment of the certificate of incorporation which provides that such plan of exchange shall be adopted at a meeting of the shareholders by vote of a specified proportion of the holders of outstanding shares, or class or series of shares, entitled to vote thereon, provided that such proportion may not be less than a majority and subject to the second sentence of clause (A) of this subparagraph (2). (d) After adoption of the plan of exchange by the board of the acquiring corporation and the board of the subject corporation and by the shareholders of the subject corporation entitled to vote thereon, unless the exchange is abandoned in accordance with paragraph (c), a certificate of exchange, entitled "Certificate of exchange of shares of ..............., subject corporation, for shares of ............., acquiring corporation, or other consideration, under section 913 of the Business Corporation Law", shall be signed on behalf of each corporation and delivered to the department of state. It shall set forth: (1) the statements required by subparagraphs (1) and (2) of paragraph (b) of this section;

(2) the effective date of the exchange if other than the date of filing of the certificate of exchange by the department of state; (3) the date when the certificate of incorporation of each corporation was filed by the department of state; (4) the designation of the shares to be acquired by the acquiring corporation and a statement of the consideration for such shares; and (5) the manner in which the exchange was authorized with respect to each corporation. (e) Upon the filing of the certificate of exchange by the department of state or on such date subsequent thereto, not to exceed thirty days, as shall be set forth in such certificate, the exchange shall be effected. When such exchange has been effected, ownership of the shares to be acquired pursuant to the plan of exchange shall vest in the acquiring corporation, whether or not the certificates for such shares have been surrendered for exchange, and the acquiring corporation shall be entitled to have new certificates registered in its name or at its direction. Shareholders whose shares have been so acquired shall become entitled to the shares, bonds or other securities of the acquiring corporation, or the cash or other consideration, required to be paid or delivered in exchange for such shares pursuant to the plan. Subject to any terms of the plan regarding surrender of certificates theretofore evidencing the shares so acquired and regarding whether such certificates shall thereafter evidence securities of the acquiring corporation, such certificates shall thereafter evidence only the right to receive the consideration required to be paid or delivered in exchange for such shares pursuant to the plan or, in the case of dissenting shareholders, their rights under section 910 (Right of shareholder to receive payment for shares upon merger or consolidation, or sale, lease, exchange or other disposition of assets, or share exchange) and section 623 (Procedure to enforce shareholder's right to receive payment for shares). (f) (1) A foreign corporation and a domestic corporation may participate in a share exchange, but, if the subject corporation is a foreign corporation, only if such exchange is permitted by the laws of the jurisdiction under which such foreign corporation is incorporated. With respect to such exchange, any reference in subparagraph (2) of paragraph (a) of this section to a corporation shall, unless the context

otherwise requires, include both domestic and foreign corporations, and the provisions of paragraphs (b), (c), (d) and (e) of this section shall apply, except to the extent otherwise provided in this paragraph. (2) With respect to procedure, including the requirement of shareholder authorization, a domestic corporation shall comply with the provisions of this chapter relating to share exchanges in which domestic corporations are participating, and a foreign corporation shall comply with the applicable provisions of the law of the jurisdiction under which it is incorporated. (3) If the subject corporation is a foreign corporation, the certificate of exchange shall set forth, in addition to the matters specified in paragraph (d), the jurisdiction and date of incorporation of such corporation and a statement that the exchange is permitted by the laws of the jurisdiction of such corporation and is in compliance therewith. (g) (1) Any corporation owning at least ninety percent of the outstanding common shares, having full voting rights, of another corporation may acquire by exchange the remainder of such outstanding common shares, without the authorization of the shareholders of any such corporation and with the effect provided for in paragraph (e) of this section. The board of the acquiring corporation shall adopt a plan of exchange, setting forth the matters specified in paragraph (b) of this section. A copy of such plan of exchange or an outline of the material features thereof shall be given, personally or by mail, to all holders of shares of the subject corporation that are not owned by the acquiring corporation, unless the giving of such copy or outline has been waived by such holders. (2) A certificate of exchange, entitled "Certificate of exchange of shares of .........., subject corporation, for shares of .........., acquiring corporation, or other consideration, under paragraph (g) of section 913 of the Business Corporation Law" and complying with the provisions of paragraph (d) and, if applicable, subparagraph (3) of paragraph (f) shall be signed, verified and delivered to the department of state by the acquiring corporation, but not less than thirty days after the giving of a copy or outline of the material features of the plan of exchange to shareholders of the subject corporation, or at any time after the waiving thereof by the holders of all the outstanding

shares of the subject corporation not owned by the acquiring corporation. (3) The right of exchange of shares granted by this paragraph to certain corporations shall not preclude the exercise by such corporations of any other right of exchange under this article. (4) The procedure for the exchange of shares of a subject corporation under this paragraph (g) of this section shall be available where either the subject corporation or the acquiring corporation is a foreign corporation, and, in case the subject corporation is a foreign corporation, where such exchange is permitted by the laws of the jurisdiction under which such foreign corporation is incorporated. (h) This section does not limit the power of a domestic or foreign corporation to acquire all or part of the shares of one or more classes of another domestic or foreign corporation by means of a voluntary exchange or otherwise. (i) (1) A binding share exchange pursuant to this section shall constitute a "business combination" pursuant to section nine hundred twelve of this chapter (Requirements relating to certain business combinations) if the subject corporation is a domestic corporation and the acquiring corporation is an "interested shareholder" of the subject corporation, as such term is defined in section nine hundred twelve of this chapter. (2) With respect to convertible securities and other securities evidencing a right to acquire shares of a subject corporation, a binding share exchange pursuant to this section shall have the same effect on the rights of the holders of such securities as a merger of the subject corporation. (3) A binding share exchange pursuant to this section which is effectuated on or after September first, nineteen hundred ninety-one is intended to have the same effect as a "merger" in which the subject corporation is a surviving corporation, within the meaning of any provision of the certificate of incorporation, bylaws or other contract or instrument by which the subject corporation was bound on September first, nineteen hundred eighty-six, unless it is apparent on the face of such instrument that the term "merger" was not intended to include a binding share exchange.

ARTICLE 10 NON-JUDICIAL DISSOLUTION Section 1001. Authorization of dissolution. 1002. Dissolution under provision in certificate of incorporation. 1003. Certificate of dissolution; contents. 1004. Certificate of dissolution; filing. 1005. Procedure after dissolution. 1006. Corporate action and survival of remedies after dissolution. 1007. Notice to creditors; filing or barring claims. 1008. Jurisdiction of supreme court to supervise dissolution and liquidation. 1009. Applicability to dissolution under other provisions.

Article 10

§ 1001 Authorization of dissolution.

§ 1001. Authorization of dissolution. (a) A corporation may be dissolved under this article. Such dissolution shall be authorized at a meeting of shareholders by (i) for corporations the certificate of incorporation of which expressly provides such or corporations incorporated after the effective date of paragraph (b) of this section, a majority of the votes of all outstanding shares entitled to vote thereon or (ii) for other corporations, two-thirds of the votes of all outstanding shares entitled to vote thereon, except, in either case, as otherwise provided under section 1002 (Dissolution under provision in certificate of incorporation). (b) Any corporation may adopt an amendment of the certificate of incorporation providing that such dissolution shall be authorized at a meeting of shareholders by a specified proportion of votes of all outstanding shares entitled to vote thereon, provided that such proportion may not be less than a majority.

§ 1002 Dissolution under provision in certificate of incorporation.

§ 1002. Dissolution under provision in certificate of incorporation. (a) The certificate of incorporation may contain a provision that any

shareholder, or the holders of any specified number or proportion of shares or votes of shares, or of any specified number or proportion of shares or votes of shares of any class or series thereof, may require the dissolution of the corporation at will or upon the occurrence of a specified event. If the certificate of incorporation contains such a provision, a certificate of dissolution under section 1003 (Certificate of dissolution; contents) may be signed, verified and delivered to the department of state as provided in section 104 (Certificate; requirements, signing, filing, effectiveness) when authorized by a holder or holders of the number or proportion of shares or votes of shares specified in such provision, given in such manner as may be specified therein, or if no manner is specified therein, when authorized on written consent signed by such holder or holders; or such certificate may be signed, verified and delivered to the department by such holder or holders or by such of them as are designated by them. (b) An amendment of the certificate of incorporation which adds a provision permitted by this section, or which changes or strikes out such a provision, shall be authorized at a meeting of shareholders by vote of all outstanding shares, whether or not otherwise entitled to vote on any amendment, or of such lesser proportion of shares and of such class or series of shares, but not less than a majority of all outstanding shares entitled to vote on any amendment, as may be provided specifically in the certificate of incorporation for adding, changing or striking out a provision permitted by this section. (c) If the certificate of incorporation of any corporation contains a provision authorized by this section, the existence of such provision shall be noted conspicuously on the face or back of every certificate for shares issued by such corporation.

§ 1003 Certificate of dissolution; contents.

§ 1003. Certificate of dissolution; contents. (a) A certificate of dissolution, entitled "Certificate of dissolution of ......... (name of corporation) under section 1003 of the Business Corporation Law", shall be signed and delivered to the department of state. It shall set forth: (1) The name of the corporation and, if its name has been changed, the name under which it was formed.

(2) The date its certificate of incorporation was filed by the department of state. (3) The name and address of each of its officers and directors. (4) That the corporation elects to dissolve. (5) The manner in which the dissolution was authorized.

§ 1004 Certificate of dissolution; filing.

§ 1004. Certificate of dissolution; filing. (a) The department shall not file such certificate unless the consent of the state department of taxation and finance to the dissolution is attached thereto. Upon such filing, the corporation is dissolved. (b) Notwithstanding paragraph (a) of this section, with respect to any corporation that has done business in the city of New York and incurred liability for any tax or charge under chapter six, seven, eight, ten, eleven, twelve, thirteen, fourteen, fifteen, twenty-one, twenty-four, twenty-five or twenty-seven of title eleven of the administrative code of the city of New York, the department shall not file such certificate unless the consent of the commissioner of finance of the city of New York to the dissolution is also attached thereto.

§ 1005 Procedure after dissolution.

§ 1005. Procedure after dissolution. (a) After dissolution: (1) The corporation shall carry on no business except for the purpose of winding up its affairs. (2) The corporation shall proceed to wind up its affairs, with power to fulfill or discharge its contracts, collect its assets, sell its assets for cash at public or private sale, discharge or pay its liabilities, and do all other acts appropriate to liquidate its business. (3) After paying or adequately providing for the payment of its liabilities: (A) The corporation, if authorized at a meeting of shareholders by a majority of the votes of all outstanding shares entitled to vote thereon may sell its remaining assets, or any part thereof, for shares, bonds or other securities or partly for cash and partly for shares, bonds or other securities, and distribute the same among the shareholders

according to their respective rights. In the case of a sale under this subparagraph where the consideration is in whole or in part other than cash, any shareholder, entitled to vote thereon, who does not vote for or consent in writing to such sale, shall, subject to and by complying with the provisions of section 623 (Procedure to enforce shareholder's right to receive payment for shares), have the right to receive payment for his shares. Section 909 (Sale, lease, exchange or other disposition of assets) is not applicable to a sale of assets under this paragraph. (B) The corporation, whether or not it has made a sale under subparagraph (A), may distribute any remaining assets, in cash or in kind or partly each, among its shareholders according to their respective rights. (b) When there are no shareholders, upon dissolution all subscriptions for shares shall be cancelled and all obligations of the corporation to issue shares or of the subscribers to pay their subscriptions shall terminate, except for such payments as may be required to enable the corporation to pay its liabilities. (c) Upon the winding up of the affairs of the corporation, any assets distributable to a creditor or shareholder who is unknown or cannot be found, or who is under disability and for whom there is no legal representative, shall be paid to the state comptroller as abandoned property within six months from the date fixed for the payment of the final liquidating distribution, and be subject to the provisions of the abandoned property law.

§ 1006 Corporate action and survival of remedies after dissolution.

§ 1006. Corporate action and survival of remedies after dissolution. (a) A dissolved corporation, its directors, officers and shareholders may continue to function for the purpose of winding up the affairs of the corporation in the same manner as if the dissolution had not taken place, except as otherwise provided in this chapter or by court order. In particular, and without limiting the generality of the foregoing: (1) The directors of a dissolved corporation shall not be deemed to be trustees of its assets; title to such assets shall not vest in them, but shall remain in the corporation until transferred by it in its corporate name. (2) Dissolution shall not change quorum or voting requirements for the

board or shareholders, or provisions regarding election, appointment, resignation or removal of, or filling vacancies among, directors or officers, or provisions regarding amendment or repeal of by-laws or adoption of new by-laws. (3) Shares may be transferred and determinations of shareholders for any purpose may be made without closing the record of shareholders until such time, if any, as such record may be closed, and either the board or the shareholders may close it. (4) The corporation may sue or be sued in all courts and participate in actions and proceedings, whether judicial, administrative, arbitrative or otherwise, in its corporate name, and process may be served by or upon it. (b) The dissolution of a corporation shall not affect any remedy available to or against such corporation, its directors, officers or shareholders for any right or claim existing or any liability incurred before such dissolution, except as provided in sections 1007 (Notice to creditors; filing or barring claims) or 1008 (Jurisdiction of supreme court to supervise dissolution and liquidation).

§ 1007 Notice to creditors; filing or barring claims.

§ 1007. Notice to creditors; filing or barring claims. (a) At any time after dissolution, the corporation may give a notice requiring all creditors and claimants, including any with unliquidated or contingent claims and any with whom the corporation has unfulfilled contracts, to present their claims in writing and in detail at a specified place and by a specified day, which shall not be less than six months after the first publication of such notice. Such notice shall be published at least once a week for two successive weeks in a newspaper of general circulation in the county in which the office of the corporation was located at the date of dissolution. On or before the date of the first publication of such notice, the corporation shall mail a copy thereof, postage prepaid and addressed to his last known address, to each person believed to be a creditor of or claimant against the corporation whose name and address are known to or can with due diligence be ascertained by the corporation. The giving of such notice shall not constitute a recognition that any person is a proper creditor or claimant, and shall not revive or make valid, or operate as a

recognition of the validity of, or a waiver of any defense or counterclaim in respect of any claim against the corporation, its assets, directors, officers or shareholders, which has been barred by any statute of limitations or become invalid by any cause, or in respect of which the corporation, its directors, officers or shareholders, has any defense or counterclaim. (b) Any claims which shall have been filed as provided in such notice and which shall be disputed by the corporation may be submitted for determination to the supreme court under section 1008 (Jurisdiction of supreme court to supervise dissolution and liquidation). A claim filed by the trustee or paying agent for the holders of bonds or coupons shall have the same effect as if filed by the holder of any such bond or coupon. Any person whose claim is, at the date of the first publication of such notice, barred by any statute of limitations is not a creditor or claimant entitled to any notice under this section or section 1008. The claim of any such person and all other claims which are not timely filed as provided in such notice except claims which are the subject of litigation on the date of the first publication of such notice, and all claims which are so filed but are disallowed by the court under section 1008, shall be forever barred as against the corporation, its assets, directors, officers and shareholders, except to such extent, if any, as the court may allow them against any remaining assets of the corporation in the case of a creditor who shows satisfactory reason for his failure to file his claim as so provided. If the court requires a further notice under section 1008, any reference to a notice in this section shall, to the extent that the court so orders, mean such further notice, except that a claim which has been filed in accordance with a notice under this section need not be refiled under such further notice. (c) Notwithstanding this section and section 1008, tax claims and other claims of this state, of the United States and of the department of finance of the city of New York shall not be required to be filed under those sections, and such claims shall not be barred because not so filed, and distribution of the assets of the corporation, or any part thereof, may be deferred until determination of any such claims. (d) Laborer's wages shall be preferred claims and entitled to payment before any other creditors out of the assets of the corporation in excess of valid prior liens or encumbrances.

§ 1008 Jurisdiction of supreme court to supervise dissolution and

§ 1008. Jurisdiction of supreme court to supervise dissolution and liquidation. (a) At any time after the filing of a certificate of dissolution under this article the supreme court in the judicial district where the office of the corporation was located at the date of its dissolution, in a special proceeding instituted under this section, upon the petition of the corporation, or, in a situation approved by the court, upon the petition of a creditor, claimant, director, officer, shareholder, subscriber for shares, incorporator or the attorney-general, may suspend or annul the dissolution or continue the liquidation of the corporation under the supervision of the court and may make all such orders as it may deem proper in all matters in connection with the dissolution or the winding up of the affairs of the corporation, and in particular, and without limitation of the generality thereof, in respect of the following: (1) The determination of the validity of the authorization of the dissolution of the corporation and of the execution and delivery of the certificate of dissolution under this article. (2) The adequacy of the notice given to creditors and claimants and if it is determined to have been inadequate, the requirement of such further notice as the court may deem proper. (3) The determination of the validity and amount or invalidity of any claims which have been presented to the corporation. (4) The barring of all creditors and claimants who have not timely filed claims as provided in any such notice, or whose claims have been disallowed by the court, as against the corporation, its assets, directors, officers and shareholders. (5) The determination and enforcement of the liability of any director, officer, shareholder or subscriber for shares, to the corporation or for the liabilities of the corporation. (6) The payment, satisfaction or compromise of claims against the corporation, the retention of assets for such purpose, and the determination of the adequacy of provisions made for payment of the liabilities of the corporation. (7) The disposition or destruction of records, documents and papers of

the corporation. (8) The appointment and removal of a receiver under article 12 (Receivership) who may be a director, officer or shareholder of the corporation. (9) The issuance of injunctions for one or more of the purposes and as provided in section 1115 (Injunction). (10) The return of subscription payments to subscribers for shares, and the making of distributions, in cash or in kind or partly each, to the shareholders. (11) The payment to the state comptroller, as abandoned property, of assets under paragraph (c) of section 1005 (Procedure after dissolution). (b) Orders under this section may be entered ex parte, except that if such special proceeding was not instituted upon petition of the corporation, notice shall be given to the corporation in such manner as the court may direct. Notice shall be given to such other persons interested, and in such manner, as the court may deem proper, of any hearings and of the entry of any orders on such matters as the court shall deem proper. All orders made by the court under this section shall be binding upon the attorney-general, the corporation, its officers, directors, shareholders, subscribers for shares, incorporators, creditors and claimants. (c) (1) Simultaneously with the institution of such special proceeding for annulment of the dissolution, the petitioner shall apply to the department of state to reserve the corporation name to the corporation. If such name shall not be available for use, the petitioner forthwith upon being notified thereof shall apply to such department for the reservation of another and available name and any judgment or order of annulment made in such proceeding shall order and direct the petitioner to execute a certificate of change of the corporate name to such other name. (2) The clerk of the court, or such other person as the court may direct, shall transmit a certified copy of the judgment or order of annulment of the dissolution, together with the certificate of change of corporate name in the appropriate case, to the department of state, and a certified copy of such judgment or order to the clerk of the county in which the office of the corporation was located on the date of the

dissolution. Upon filing by the department of state, the annulment of dissolution shall be effected.

§ 1009 Applicability to dissolution under other provisions.

§ 1009. Applicability to dissolution under other provisions.

The provisions of sections 1005 (Procedure after dissolution), 1006 (Corporate action and survival of remedies after dissolution), 1007 (Notice to creditors; filing or barring claims) and 1008 (Jurisdiction of supreme court to supervise dissolution and liquidation) shall apply to a corporation dissolved by expiration of its period of duration or under section two hundred three-a of the tax law.

ARTICLE 11 JUDICIAL DISSOLUTION Section 1101. Attorney-general's action for judicial dissolution. 1102. Directors' petition for judicial dissolution. 1103. Shareholders' petition for judicial dissolution. 1104. Petition in case of deadlock among directors or shareholders. 1104-a. Petition for judicial dissolution under special circumstances. 1105. Contents of petition for judicial dissolution. 1106. Order to show cause; issuance, publication, service, filing. 1107. Amending papers. 1108. Referee. 1109. Hearing and decision. 1110. Application for final order. 1111. Judgment or final order of dissolution. 1112. Venue. 1113. Preservation of assets; appointment of receiver. 1114. Certain sales, transfers, security interests and judgments void. 1115. Injunction. 1116. Discontinuance of action or special proceeding.

1117. Applicability of other provisions.
1118. Purchase of petitioner's shares; valuation.

Article 11

§ 1101 Attorney-general's action for judicial dissolution.

§ 1101. Attorney-general's action for judicial dissolution. (a) The attorney-general may bring an action for the dissolution of a corporation upon one or more of the following grounds: (1) That the corporation procured its formation through fraudulent misrepresentation or concealment of a material fact. (2) That the corporation has exceeded the authority conferred upon it by law, or has violated any provision of law whereby it has forfeited its charter, or carried on, conducted or transacted its business in a persistently fraudulent or illegal manner, or by the abuse of its powers contrary to the public policy of the state has become liable to be dissolved. (b) An action under this section is triable by jury as a matter of right. (c) The enumeration in paragraph (a) of grounds for dissolution shall not exclude actions or special proceedings by the attorney-general or other state officials for the annulment or dissolution of a corporation for other causes as provided in this chapter or in any other statute of this state.

§ 1102 Directors' petition for judicial dissolution.

§ 1102. Directors' petition for judicial dissolution.

If a majority of the board adopts a resolution that finds that the assets of a corporation are not sufficient to discharge its liabilities or that a dissolution will be beneficial to the shareholders, it may present a petition for its dissolution.

§ 1103 Shareholders' petition for judicial dissolution.

§ 1103. Shareholders' petition for judicial dissolution. (a) If the shareholders of a corporation adopt a resolution stating that they find that its assets are not sufficient to discharge its liabilities, or that they deem a dissolution to be beneficial to the shareholders, the shareholders or such of them as are designated for

that purpose in such resolution may present a petition for its dissolution. (b) A shareholders' meeting to consider such a resolution may be called, notwithstanding any provision in the certificate of incorporation, by the holders of shares representing ten percent of the votes of all outstanding shares entitled to vote thereon, or if the certificate of incorporation authorizes a lesser proportion of votes of shares to call the meeting, by such lesser proportion. A meeting under this paragraph may not be called more often than once in any period of twelve consecutive months. (c) Such a resolution may be adopted at a meeting of shareholders by vote of a majority of the votes of all outstanding shares entitled to vote thereon or if the certificate of incorporation requires a greater proportion of votes to adopt such a resolution, by such greater proportion.

§ 1104 Petition in case of deadlock among directors or shareholders.

§ 1104. Petition in case of deadlock among directors or shareholders. (a) Except as otherwise provided in the certificate of incorporation under section 613 (Limitations on right to vote), the holders of shares representing one-half of the votes of all outstanding shares of a corporation entitled to vote in an election of directors may present a petition for dissolution on one or more of the following grounds: (1) That the directors are so divided respecting the management of the corporation's affairs that the votes required for action by the board cannot be obtained. (2) That the shareholders are so divided that the votes required for the election of directors cannot be obtained. (3) That there is internal dissension and two or more factions of shareholders are so divided that dissolution would be beneficial to the shareholders. (b) If the certificate of incorporation provides that the proportion of votes required for action by the board, or the proportion of votes of shareholders required for election of directors, shall be greater than that otherwise required by this chapter, such a petition may be presented by the holders of shares representing more than one-third of the votes of all outstanding shares entitled to vote on non-judicial

dissolution under section 1001 (Authorization of dissolution). (c) Notwithstanding any provision in the certificate of incorporation, any holder of shares entitled to vote at an election of directors of a corporation, may present a petition for its dissolution on the ground that the shareholders are so divided that they have failed, for a period which includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election and qualification of their successors.

§ 1104-a Petition for judicial dissolution under special circumstances.

§ 1104-a. Petition for judicial dissolution under special circumstances. (a) The holders of shares representing twenty percent or more of the votes of all outstanding shares of a corporation, other than a corporation registered as an investment company under an act of congress entitled "Investment Company Act of 1940", no shares of which are listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national or an affiliated securities association, entitled to vote in an election of directors may present a petition of dissolution on one or more of the following grounds: (1) The directors or those in control of the corporation have been guilty of illegal, fraudulent or oppressive actions toward the complaining shareholders; (2) The property or assets of the corporation are being looted, wasted, or diverted for non-corporate purposes by its directors, officers or those in control of the corporation. (b) The court, in determining whether to proceed with involuntary dissolution pursuant to this section, shall take into account: (1) Whether liquidation of the corporation is the only feasible means whereby the petitioners may reasonably expect to obtain a fair return on their investment; and (2) Whether liquidation of the corporation is reasonably necessary for the protection of the rights and interests of any substantial number of shareholders or of the petitioners. (c) In addition to all other disclosure requirements, the directors or those in control of the corporation, no later than thirty days after the filing of a petition hereunder, shall make available for inspection and

copying to the petitioners under reasonable working conditions the corporate financial books and records for the three preceding years. (d) The court may order stock valuations be adjusted and may provide for a surcharge upon the directors or those in control of the corporation upon a finding of wilful or reckless dissipation or transfer of assets or corporate property without just or adequate compensation therefor.

§ 1105 Contents of petition for judicial dissolution.

§ 1105. Contents of petition for judicial dissolution.

A petition for dissolution shall specify the section or sections of this article under which it is authorized and state the reasons why the corporation should be dissolved. It shall be verified by the petitioner or by one of the petitioners.

§ 1106 Order to show cause; issuance; publication, service, filing.

§ 1106. Order to show cause; issuance; publication, service, filing. (a) Upon the presentation of such a petition, the court shall make an order requiring the corporation and all persons interested in the corporation to show cause before it, or before a referee designated in the order, at a time and place therein specified, not less than four weeks after the granting of the order, why the corporation should not be dissolved. In connection therewith, the court may order the corporation, its officers and directors, to furnish the court with a schedule of all information, known or ascertainable with due diligence by them, deemed pertinent by the court, including a statement of the corporate assets and liabilities, and the name and address of each shareholder and of each creditor and claimant, including any with unliquidated or contingent claims and any with whom the corporation has unfulfilled contracts. (b) A copy of the order to show cause shall be published as prescribed therein, at least once in each of the three weeks before the time appointed for the hearing thereon, in one or more newspapers, specified in the order, of general circulation in the county in which the office of the corporation is located at the date of the order. (c) A copy of the order to show cause shall be served upon the state

tax commission and the corporation and upon each person named in the petition, or in any schedule provided for in paragraph (a), as a shareholder, creditor or claimant, except upon a person whose address is stated to be unknown, and cannot with due diligence be ascertained by the corporation. The service shall be made personally, at least ten days before the time appointed for the hearing, or by mailing a copy of the order, postage prepaid, at least twenty days before the time so appointed, addressed to the person to be served at his last known address. (d) A copy of the order to show cause and the petition shall be filed, within ten days after the order is entered, with the clerk of the county where the office of the corporation is located at the date of the order. A copy of each schedule furnished to the court under this section shall, within ten days thereafter, be filed with such clerk. (e) Publication, service and filing provided for in this section shall be effected by the corporation or such other persons as the court may order.

§ 1107 Amending papers.

§ 1107. Amending papers.

At any stage, before final order, the court may grant an order amending the petition or any other paper filed in the action or special proceeding, with like effect as though originally filed as amended, or otherwise as the court may direct.

§ 1108 Referee.

§ 1108. Referee.

If a referee was not designated in the order to show cause, the court, in its discretion, may appoint a referee when or after the order is returnable. The court may at any time appoint a successor referee.

§ 1109 Hearing and decision.

§ 1109. Hearing and decision.

At the time and place specified in the order to show cause, or at any

other time and place to which the hearing is adjourned, the court or the referee shall hear the allegations and proofs of the parties and determine the facts. The decision of the court or the report of the referee shall be made and filed with the clerk of the court with all convenient speed.

§ 1110 Application for final order.

§ 1110. Application for final order.

When the hearing is before a referee, a motion for a final order must be made to the court upon notice to each party to the action or special proceeding who has appeared therein. The notice of motion may be served as prescribed for the service of papers upon an attorney in an action in such court. When the hearing is before the court, a motion for a final order may be made at the hearing or at such time and upon such notice as the court prescribes.

§ 1111 Judgment or final order of dissolution.

§ 1111. Judgment or final order of dissolution. (a) In an action or special proceeding under this article if, in the court's discretion, it shall appear that the corporation should be dissolved, it shall make a judgment or final order dissolving the corporation. (b) In making its decision, the court shall take into consideration the following criteria: (1) In an action brought by the attorney-general, the interest of the public is of paramount importance. (2) In a special proceeding brought by directors or shareholders, the benefit to the shareholders of a dissolution is of paramount importance. (3) In a special proceeding brought under section 1104 (Petition in case of deadlock among directors or shareholders) or section 1104-a (Petition for judicial dissolution under special circumstances) dissolution is not to be denied merely because it is found that the corporate business has been or could be conducted at a profit. (c) If the judgment or final order shall provide for a dissolution of the corporation, the court may, in its discretion, provide therein for the distribution of the property of the corporation to those entitled

thereto according to their respective rights. (d) The clerk of the court or such other person as the court may direct shall transmit certified copies of the judgment or final order of dissolution to the department of state and to the clerk of the county in which the office of the corporation was located at the date of the judgment or order. Upon filing by the department of state, the corporation shall be dissolved. (e) The corporation shall promptly thereafter transmit a certified copy of the judgment or final order to the clerk of each other county in which its certificate of incorporation was filed.

§ 1112 Venue.

§ 1112. Venue.

An action or special proceeding under this article shall be brought in the supreme court in the judicial district in which the office of the corporation is located at the time of the service on the corporation of a summons in such action or of the presentation to the court of the petition in such special proceeding.

§ 1113 Preservation of assets; appointment of receiver.

§ 1113. Preservation of assets; appointment of receiver.

At any stage of an action or special proceeding under this article, the court may, in its discretion, make all such orders as it may deem proper in connection with preserving the property and carrying on the business of the corporation, including the appointment and removal of a receiver under article 12 (Receivership), who may be a director, officer or shareholder of the corporation.

§ 1114 Certain sales, transfers, security interests and judgments void.

§ 1114. Certain sales, transfers, security interests and judgments void.

A sale, mortgage, conveyance or other transfer of, or the creation of a security interest in, any property of a corporation made, without prior approval of the court, after service upon the corporation of a summons in an action, or of an order to show cause in a special

proceeding, under this article in payment of or as security for an existing or prior debt or for any other or for no consideration, or a judgment thereafter rendered against the corporation by confession or upon the acceptance of any offer, shall be void as against such persons and to such extent, if any, as the court shall determine.

§ 1115 Injunction.

§ 1115. Injunction. (a) At any stage of an action or special proceeding under this article, the court may, in its discretion, grant an injunction, effective during the pendency of the action or special proceeding or such shorter period as it may specify in the injunction, for one or more of the following purposes: (1) Restraining the corporation and its directors and officers from transacting any unauthorized business and from exercising any corporate powers, except by permission of the court. (2) Restraining the corporation and its directors and officers from collecting or receiving any debt or other property of the corporation, and from paying out or otherwise transferring or delivering any property of the corporation, except by permission of the court. (3) Restraining the creditors of the corporation from beginning any action against the corporation, or from taking any proceedings in an action theretofore commenced, except by permission of the court. Such injunction shall have the same effect and be subject to the same provisions of law as if each creditor upon whom it is served was named therein.

§ 1116 Discontinuance of action or special proceeding.

§ 1116. Discontinuance of action or special proceeding.

An action or special proceeding for the dissolution of a corporation may be discontinued at any stage when it is established that the cause for dissolution did not exist or no longer exists. In such event, the court shall dismiss the action or special proceeding and direct any receiver to redeliver to the corporation all its remaining property.

§ 1117 Applicability of other provisions.

§ 1117. Applicability of other provisions. (a) Subject to the provisions of this article, the provisions of sections 1005 (Procedure after dissolution), 1006 (Corporate action and survival of remedies after dissolution), 1007 (Notice to creditors; filing or barring claims) and 1008 (Jurisdiction of supreme court to supervise dissolution and liquidation) shall apply to a corporation dissolved under this article. (b) Any orders provided for in section 1008, may be made at any stage of an action or special proceeding for dissolution of a corporation under this article, and if the corporation is dissolved under this article, the court may retain jurisdiction for the purpose of making such orders, after the dissolution, in such action or special proceeding. The court may also make such orders in separate special proceedings, as provided in section 1008. (c) Notice to creditors and claimants, provided for in section 1007, may also be given, by order of the court, at any stage of an action or special proceeding for dissolution of a corporation under this article.

§ 1118 Purchase of petitioner's shares; valuation.

§ 1118. Purchase of petitioner's shares; valuation. (a) In any proceeding brought pursuant to section eleven hundred four-a of this chapter, any other shareholder or shareholders or the corporation may, at any time within ninety days after the filing of such petition or at such later time as the court in its discretion may allow, elect to purchase the shares owned by the petitioners at their fair value and upon such terms and conditions as may be approved by the court, including the conditions of paragraph (c) herein. An election pursuant to this section shall be irrevocable unless the court, in its discretion, for just and equitable considerations, determines that such election be revocable. (b) If one or more shareholders or the corporation elect to purchase the shares owned by the petitioner but are unable to agree with the petitioner upon the fair value of such shares, the court, upon the application of such prospective purchaser or purchasers or the petitioner, may stay the proceedings brought pursuant to section 1104-a of this chapter and determine the fair value of the petitioner's shares as of the day prior to the date on which such petition was filed,

exclusive of any element of value arising from such filing but giving effect to any adjustment or surcharge found to be appropriate in the proceeding under section 1104-a of this chapter. In determining the fair value of the petitioner's shares, the court, in its discretion, may award interest from the date the petition is filed to the date of payment for the petitioner's share at an equitable rate upon judicially determined fair value of his shares. (c) In connection with any election to purchase pursuant to this section: (1) If such election is made beyond ninety days after the filing of the petition, and the court allows such petition, the court, in its discretion, may award the petitioner his reasonable expenses incurred in the proceeding prior to such election, including reasonable attorneys' fees; (2) The court, in its discretion, may require, at any time prior to the actual purchase of petitioner's shares, the posting of a bond or other acceptable security in an amount sufficient to secure petitioner for the fair value of his shares.

ARTICLE 12 RECEIVERSHIP Section 1201. Action by judgment creditor for sequestration. 1202. Appointment of receiver of property of a domestic or foreign corporation. 1203. Temporary and permanent receiver. 1204. Oath and security. 1205. Designation of depositories by court. 1206. Powers of permanent receiver. 1207. Duties of receiver upon appointment. 1208. Penalty for concealing property from receiver. 1209. Recovery of assets. 1210. Order of payment by receiver. 1211. Final distribution by receiver. 1212. Disposition of moneys retained; surplus; unclaimed distributions. 1213. Omission or default of receiver.

1214. Application by attorney-general for removal of receiver and to close receivership.
1215. Resignation by receiver; filling any vacancy.
1216. Final accounting; notice; duty of attorney-general.
1217. Commissions.
1218. Special provisions relating to actions or special proceedings against foreign corporations.

Article 12

§ 1201 Action by judgment creditor for sequestration.

§ 1201. Action by judgment creditor for sequestration.

Where final judgment for a sum of money has been rendered against a corporation, and an execution issued thereupon to the sheriff of the county where the corporation does its general business, or where its office is located, has been returned wholly or partly unsatisfied, the judgment creditor may maintain an action to procure a judgment sequestrating the property of the corporation and providing for a distribution thereof.

§ 1202 Appointment of receiver of property of a domestic or foreign

§ 1202. Appointment of receiver of property of a domestic or foreign corporation. (a) A receiver of the property of a corporation can be appointed only by the court, and in one of the following cases: (1) An action or special proceeding brought under article 10 (Non-judicial dissolution) or 11 (Judicial dissolution). (2) An action under section 1201 (Action by judgment creditor for sequestration). (3) An action brought by the attorney-general or by a shareholder to preserve the assets of a corporation, which has no officer within this state qualified to administer them. (4) An action to preserve the assets in this state, of any kind, tangible or intangible, of a foreign corporation which has been dissolved, nationalized or its authority or existence otherwise terminated or cancelled in the jurisdiction of its incorporation or which has ceased to do business, brought by any creditor or shareholder of such corporation or by one on whose behalf an order of attachment

against the property of such corporation has been issued. (b) A receiver shall be subject to the control of the court at all times and may be removed by the court at any time. (c) All actions or special proceedings brought by or against a receiver shall have a preference upon the calendars of all courts next in order to actions or special proceedings brought by the people of the state of New York.

§ 1203 Temporary and permanent receiver.

§ 1203. Temporary and permanent receiver. (a) At any stage before final judgment or final order in an action or special proceeding brought under this article, the court may appoint one or more receivers of the property of the corporation or of the property in this state of a foreign corporation against which an action has been brought under subparagraph (a) (4) of section 1202 (Appointment of receiver of property of a domestic or foreign corporation). Notice of an application for the appointment of a receiver shall be given to the attorney-general and to such other persons and in such manner as the court directs. The determination by the court of the necessity or advisability of appointing a receiver or an attorney for a receiver, and the allowance of expenses, commissions or compensation to the receiver or his attorney, shall be subject to review on appeal. This provision shall not affect any other right to review on appeal. (b) A receiver appointed by or under a final judgment or order in an action or special proceeding, or a temporary receiver who is continued by the final judgment or order, is a permanent receiver. The court may confer upon a temporary receiver the powers, and subject him to the duties of a permanent receiver, or so much thereof as it deems proper.

§ 1204 Oath and security.

§ 1204. Oath and security. (a) A receiver, before entering upon his duties, shall: (1) Take and subscribe an oath that he will faithfully, honestly and impartially discharge the trust committed to him, and the oath shall be filed with the clerk of the court in which the action or special proceeding is pending. (2) File with the clerk of such court a bond to the people, with at

least two sufficient sureties or a bond executed by any fidelity or surety company authorized by the laws of this state to transact business, in a penalty fixed by the court appointing him, conditioned for the faithful discharge of his duties as receiver. The court may at any time direct a receiver to give a new bond with new sureties and with like condition.

§ 1205 Designation of depositories by court.

§ 1205. Designation of depositories by court.

All orders appointing a receiver of a corporation shall designate therein one or more places of deposit, wherein all funds of the corporation not needed for immediate disbursement shall be deposited and no other deposits and no investment of such funds shall be made, except upon the order of the court.

§ 1206 Powers of permanent receiver.

§ 1206. Powers of permanent receiver. (a) A permanent receiver, upon qualifying under section 1204 (Oath and security), shall be vested with title to all the property of the corporation wherever situated or of the property in this state of a foreign corporation against which an action or special proceeding has been brought under subparagraph (a) (4) of section 1202 (Appointment of receiver of property of a domestic or foreign corporation), for the benefit of the creditors and shareholders of the corporation. (b) A permanent receiver shall have the power: (1) To sue in his own name or otherwise for the recovery of the property, debts and causes of action of the corporation. No set-off or counterclaim shall be allowed in any such action for any demand unless it was owing by the corporation to the defendant before the commencement of the action or special proceeding in which the receiver was appointed or unless it shall have been incurred by the receiver subsequent to his appointment. (2) To sell at public or private sale all the property vested in him, in such manner and on such terms and conditions as the court shall direct, and to make necessary transfers and conveyances thereof. (3) To examine on oath, to be administered by him, any person

concerning any matter pertaining to or affecting the receivership. (4) To settle or compound any demands by or against the receivership. (c) When more than one receiver is appointed, all provisions in this article in reference to one receiver shall apply to them. (d) When more than one receiver is appointed, the debts and property of the corporation may be collected and received by any of them; when more than two receivers are appointed, the powers and rights conferred on them may be exercised by any two. (e) When more than one receiver is appointed, the survivor or survivors of such receivers shall have all the powers and right of the receivers.

§ 1207 Duties of receiver upon appointment.

§ 1207. Duties of receiver upon appointment. (a) Upon appointment and qualification, a receiver shall have the following duties: (1) To give immediate notice of his appointment by publication once a week for two successive weeks in two newspapers of general circulation in the county where the office of the corporation is located or, in the case of a foreign corporation against which an action has been brought under subparagraph (a) (4) of section 1202 (Appointment of receiver of property of a domestic or foreign corporation), in a newspaper of general circulation as directed by the court, requiring: (A) All persons indebted to the corporation to render an account of all debts owing by them to the corporation and to pay the same to the receiver at a specified place and by a specified day. (B) All persons having in their possession any property of the corporation to deliver the same to the receiver at the specified place and by the specified day. (C) All creditors and claimants, including any with unliquidated or contingent claims and any with whom the corporation has unfulfilled contracts, to present their claims to the receiver in writing and in detail at a specified place and by a specified day, which shall not be less than six months after the first publication of such notice. Whenever a receiver is appointed in dissolution proceedings under article 10 (Non-judicial dissolution) or article 11 (Judicial dissolution), section 1007 (Notice to creditors; filing or barring

claims) shall apply and shall control the giving of notice to creditors and claimants and the filing and barring of claims. (2) To call a general meeting of the creditors of the corporation within four months from the date of his appointment by a notice to be published as directed in subparagraph (a) (1), setting forth the time and place of such meeting, which time shall be not more than two months, nor less than one month after the first publication of such notice. At such meeting, or at an adjournment thereof, the receiver shall present a statement of all accounts and demands for and against the corporation, its subsisting contracts, and the money and other assets in his hands. (3) To keep true books of account of all moneys received and expended by him as receiver, which books shall be open for inspection at reasonable times by creditors or other persons interested therein. On or before the first day of February in each year, for the preceding calendar year, and at such other times as the court shall direct, the receiver shall file with the clerk of the court by which he was appointed a verified statement showing the assets received, the disposition thereof, the money on hand, all payments made, specifying the persons to whom paid and the purpose of the payments, the amount necessary to be retained to meet necessary expenses and claims against the receiver, and the distributive share in the remainder of each person interested therein. A copy of such statement shall be served by the receiver upon the attorney-general within five days after the filing thereof.

§ 1208 Penalty for concealing property from receiver.

§ 1208. Penalty for concealing property from receiver.

Any persons having possession of property belonging to the corporation, who shall wrongfully withhold such property from the receiver after the day specified in the notice given under section 1207 (Duties of receiver upon appointment), shall forfeit to the receiver double the value of such property, and the same may be recovered in an action by the receiver.

§ 1209 Recovery of assets.

§ 1209. Recovery of assets.

(a) Whenever a receiver, by verified petition to the supreme court at a special term held in the judicial district in which he was appointed shall show that he has good reason to believe that any person has in his possession or under his control, or has wrongfully concealed, withheld or disposed of, any property of the corporation, or that any person can testify concerning such facts, the court, with or without notice, shall make an order requiring such person to appear before the court or a referee, at a time and place designated, and submit to an examination concerning such facts. In such order, or at any time thereafter, in its discretion, the court may enjoin and restrain such person from disposing of any property of the corporation in his possession or under his control. (b) In any examination under such order, the court may confer immunity in accordance with the provisions of section 50.20 of the criminal procedure law; provided that no immunity shall be conferred except upon twenty-four hours prior written notice to the appropriate district attorney having an official interest therein. (c) A person so ordered to appear shall be entitled to the same fees and mileage, to be paid at the time of serving the order, as are allowed by law to witnesses subpoenaed to attend and testify in an action in the supreme court, and shall be subject to the same penalties upon failure to appear and testify in obedience to such order as are provided by law in the case of witnesses who fail to obey a subpoena to appear and testify in an action. (d) A person appearing for examination in obedience to such order shall be sworn, and shall be entitled to be represented on such examination by counsel, and may be cross-examined, or may make a voluntary statement in his own behalf concerning the subject of his examination. (e) The testimony taken under such order shall be signed and sworn to by the person examined, and be filed in the office of the clerk of the county where the action or proceeding is pending. If it shall appear that any person is wrongfully concealing or withholding, or has in his possession or under his control, any property of the corporation, on notice to him, the court may make an order requiring him forthwith to deliver it to the receiver, subject to the further order of the court.

§ 1210 Order of payment by receiver.

§ 1210. Order of payment by receiver. (a) Laborers' wages shall be preferred claims and entitled to payment before any other creditors out of the assets of the corporation in excess of valid prior liens or encumbrances. (b) The receiver shall subject to any prior liens or encumbrances distribute the residue of the moneys in his hands, among the creditors whose claims have been proved and allowed, as follows: (1) All debts due by such corporation to the United States, and all debts entitled to a preference under the laws of the United States. (2) All debts that may be owing by the corporation as trustee. (3) Judgments against the corporation, to the extent of the value of the real property on which they are liens. (4) All other creditors, in proportion to their respective demands, without preference to specialty debts.

§ 1211 Final distribution by receiver.

§ 1211. Final distribution by receiver. (a) If there remains property of the corporation after the first distribution, the receiver shall, within one year thereafter, make a final distribution among the creditors entitled thereto. Notice that such distribution will be the final distribution to creditors shall be published once a week for two consecutive weeks in a newspaper of general circulation in the county where the office of the corporation is located. (b) A creditor or claimant who failed to prove his claim before the first distribution and who proves it before the final one shall receive the sum he would have been entitled to on the first distribution before any further distribution shall be made to other creditors or claimants. (c) Unless the court shall otherwise direct, no other distribution shall be made thereafter to creditors, except to those having pending actions against the corporation or the receiver. (d) After the final distribution to creditors, the receiver shall not be answerable to any creditor or claimant, unless his claim shall have been proved before or at the time specified in the notice of the final distribution.

§ 1212 Disposition of moneys retained; surplus; unclaimed

§ 1212. Disposition of moneys retained; surplus; unclaimed distributions. (a) When any action pending at the time of the final distribution shall be terminated, the receiver shall apply the moneys retained by him to the payment of the amount recovered, and his necessary charges and expenses incurred therein. (b) After the final distribution to creditors and after deducting his charges and expenses, the receiver shall distribute any surplus among the shareholders of the corporation, in accordance with their respective rights. (c) Any portion of the assets distributable to a creditor or shareholder who is unknown or cannot be found, or who is under disability and for whom there is no legal representative, shall be paid by the receiver to the state comptroller as abandoned property within six months from the date fixed for the payment of the final liquidating distribution, and be subject to the provisions of the abandoned property law.

§ 1213 Omission or default of receiver.

§ 1213. Omission or default of receiver.

Upon notice to the attorney-general and upon such notice to creditors or others interested as the court shall direct, the court may, in the furtherance of justice, relieve a receiver from any omission or default, on such conditions as may be imposed, and, on compliance therewith, confirm his action.

§ 1214 Application by attorney-general for removal of receiver and to

§ 1214. Application by attorney-general for removal of receiver and to close receivership. (a) Whenever he deems it to be to the advantage of the shareholders, creditors or other persons interested in the assets of any corporation for which a receiver has been appointed, the attorney-general may move: (1) For an order removing the receiver and appointing another in his stead; (2) To compel the receiver to account;

(3) For such other and additional orders as may facilitate the closing of the receivership.

§ 1215 Resignation by receiver; filling any vacancy.

§ 1215. Resignation by receiver; filling any vacancy. (a) A receiver may petition the court appointing him for an order to show cause why he should not be permitted to resign. (b) The petition shall be accompanied by a verified account of all the assets of the corporation received by him, of all payments or other disposition thereof made by him, of the remaining assets of the corporation in respect to which he was appointed receiver and the situation of the same, and of all his transactions as receiver. Thereupon, the court shall grant an order directing notice to be given to the sureties on his official bond and to all persons interested in the property of the corporation to show cause, at a time and place specified, why the receiver should not be permitted to resign. Such notice shall be published once in each week for six successive weeks in one or more newspapers as the court shall direct. If it shall appear that the proceedings of the receiver in the discharge of his trust have been fair and honest and that there is no good cause to the contrary, the court shall make an order permitting such receiver to resign. Thereupon he shall be discharged and his powers as receiver shall cease, but he shall remain subject to any liability incurred prior to the making of such order. The court, in its discretion, may require the expense of such proceeding to be paid by the receiver presenting the petition. (c) Any vacancy created by resignation, removal, death or otherwise, may be filled by the court, and the property of the receivership shall be delivered to the remaining receivers or, if there are none, to the successor appointed by the court. The court may summarily enforce delivery by order in the action or special proceeding in which the receiver was appointed.

§ 1216 Final accounting; notice; duty of attorney-general.

§ 1216. Final accounting; notice; duty of attorney-general. (a) Within one year after qualifying, the receiver shall apply to the court for a final settlement of his accounts and for an order for

distribution, or, upon notice to the attorney-general, for an extension of time, setting forth the reasons therefor. If the receiver has not so applied for a settlement of his accounts or for such extension of time, the attorney-general or any creditor or shareholder may apply for an order that the receiver show cause why an accounting and distribution should not be had, and after the expiration of eighteen months from the time the receiver qualified, it shall be the duty of the attorney-general to apply for such an order on notice to the receiver. (b) Before presenting a final account, the receiver shall give notice of his intention to file it by publication, under subparagraph (a) (1) of section 1207 (Duties of receiver upon appointment), setting forth the time and place of filing and presentation to the court. The receiver shall also give not less than eight days' written notice to the sureties on his official bond. (c) Upon presentation of such account, the court shall hear the allegations, objections and proofs of all parties interested and allow or disallow such account, in whole or in part, and make a final order. The court may refer the account and the hearing, in whole or in part, to a referee who shall report thereon to the court.

§ 1217 Commissions.

§ 1217. Commissions. (a) A receiver shall be entitled, in addition to his necessary expenses, to such commissions upon the sums received and disbursed as may be allowed by the court, as follows: (1) On the first twenty thousand dollars, not exceeding five percent; (2) On the next eighty thousand dollars, not exceeding two and one-half percent; and (3) On the remainder, not exceeding one percent. (b) If the commissions of the receiver so computed do not amount to one hundred dollars, the court in its discretion may allow such sum not exceeding one hundred dollars as shall be reasonable. (c) When more than one receiver shall be appointed, the compensation herein provided shall be divided between them, as the court directs.

§ 1218 Special provisions relating to actions or special proceedings

§ 1218. Special provisions relating to actions or special proceedings

against foreign corporations. (a) In any action or special proceeding brought against a foreign corporation under this article, the following provisions shall apply: (1) Service of the summons in such action may be made personally within the state of New York, by delivery of the same to any officer or director of the corporation, or by publication pursuant to an order obtained as hereinafter provided. (2) An order directing service by publication of the summons shall be made upon application of a plaintiff in any such action and shall be founded upon a verified complaint, alleging that the defendant is a foreign corporation and has or may have or may be entitled to assets, credits, choses in action or other property, tangible or intangible within the state and that such corporation has been dissolved, nationalized or that its authority or existence has been terminated or cancelled in the jurisdiction of its incorporation, or that it has ceased to do business, and upon an affidavit reciting that personal service of the summons cannot be effected within the state with due diligence and that a temporary receiver of its property within the state of New York has been appointed pursuant to this article in such action and that a copy of the order appointing the receiver has been served personally by or on behalf of such receiver upon a person, firm or corporation holding property, tangible or intangible, of the said foreign corporation, or against whom a claim or demand in favor of such foreign corporation exists and that demand therefor has been made upon such person, firm or corporation by or on behalf of such receiver. (3) The order directing service of the summons shall require the publication thereof in a newspaper published in the state of New York in the English language at least once a week for four successive weeks, and shall also require the mailing on or before the date of the first publication of a copy of the summons, complaint and order to the corporation at its last known principal or head office in the state or country of its incorporation. (4) In any such action, the summons shall be served personally or an order directing service thereof by publication shall be obtained and the first publication thereof made within sixty days after the appointment of the temporary receiver, and if served by publication, the service shall be made complete by the continuance thereof.

(5) If served by publication, service of the summons shall be deemed complete on the date of the last publication. The action shall be deemed commenced upon the issuance of the summons. The order appointing the receiver and the papers upon which the same is granted shall be filed in the office of the clerk of the court where the action is triable within ten days after the order is made. (6) In the event that the defendant defaults in answering, or if after a trial the court is satisfied that the defendant has ceased to do business by reason of any thing or matter whatsoever, or that it has been dissolved, nationalized, or its authority or existence has been otherwise terminated or cancelled, the court shall thereupon direct judgment, appointing a permanent receiver and directing the receiver to liquidate the assets, credits, choses in action and property, tangible and intangible, in the state of New York of the said defendant, in the manner provided in this article. (7) The time between the cessation of business by the corporation or its dissolution or nationalization or the termination or cancellation of its authority or existence and the appointment of a receiver in this state pursuant to this article, whichever time is longer, plus three years after such appointment, shall not be a part of the time limited by domestic or foreign law for the commencement of an action or for the assertion of a claim therein by or on behalf of or against said corporation or by or against said receiver, whether or not said action or claim has heretofore been barred by any statute of limitations of this state or of any other state or country. (8) The existence of and causes of action of or against such corporation existing at the time of its dissolution, nationalization, or the termination or cancellation of its authority or existence, or arising thereafter, shall not be deemed ended, abated or affected thereby, nor shall actions brought by or against such corporation or a receiver appointed hereunder or any remedy therein be deemed to have ended or abated or to have been affected by reason of such dissolution, nationalization, or termination or cancellation of its authority or existence. This provision shall apply to all property, tangible and intangible, debts, demands, and choses in action of such corporation within the state of New York, and to all litigation heretofore or hereafter brought in the courts of the state or of the United States to

which the corporation or the receiver of said corporation appointed pursuant to the provisions of this article is a party. Any receiver appointed pursuant to the provisions of this article may be substituted for such corporation in any action or proceeding pending in the courts of the state or of the United States to which such corporation is a party and may intervene in any action or proceeding which relates to or affects any of the assets or claims of the corporation and revive any action which shall have heretofore or which may hereafter have abated, and such dissolution, nationalization, or termination or cancellation of its authority or existence in the jurisdiction of its incorporation, or any confiscatory law or decree thereof, shall not be deemed to have any extra-territorial effect or validity as to the property, tangible or intangible, debts, demands or choses in action of such corporation within the state or any debts or obligations owing to such corporation from persons, firms or corporations residing, sojourning or doing business in the state. Nothing contained in this subdivision shall be deemed to validate claims for or causes of action or actions to recover property located in or moneys payable in the jurisdiction of incorporation which are unenforcible under the laws of such jurisdiction. (9) If any receiver or trustee has heretofore been appointed in this state for such corporation or its property in any action or proceeding, either before or supplementary to judgment, otherwise than in an action brought pursuant to this article, such receiver or trustee may be appointed or continued as the receiver in any action brought pursuant to the provisions of this article. (10) The appointment of a receiver or the pendency of an action for the appointment of such receiver, shall until such receiver shall be discharged or until such action shall have terminated, be a bar to any subsequent application or action for the appointment of a receiver of the assets of the same corporation. (11) An action shall be commenced within three years from the discovery by the plaintiff or his predecessor in interest, of any asset of said corporation in the state of New York.

ARTICLE 13

FOREIGN CORPORATIONS Section 1301. Authorization of foreign corporations. 1302. Application to existing authorized foreign corporations. 1303. Violations. 1304. Application for authority; contents. 1305. Application for authority; effect. 1306. Powers of authorized foreign corporations. 1307. Tenure of real property. 1308. Amendments or changes. 1309. Certificate of amendment; contents, effect. 1309-A. Certificate of change; contents. 1310. Surrender of authority. 1311. Termination of existence. 1312. Actions or special proceedings by unauthorized foreign corporations. 1313. Actions or special proceedings by foreign corporations. 1314. Actions or special proceedings against foreign corporations. 1315. Record of shareholders. 1316. Voting trust records. 1317. Liabilities of directors and officers of foreign corporations. 1318. Liability of foreign corporations for failure to disclose required information. 1319. Applicability of other provisions. 1320. Exemption from certain provisions.

Article 13

§ 1301 Authorization of foreign corporations.

§ 1301. Authorization of foreign corporations. (a) A foreign corporation shall not do business in this state until it has been authorized to do so as provided in this article. A foreign corporation may be authorized to do in this state any business which may be done lawfully in this state by a domestic corporation, to the extent that it is authorized to do such business in the jurisdiction of its incorporation, but no other business. (b) Without excluding other activities which may not constitute doing business in this state, a foreign corporation shall not be considered to

be doing business in this state, for the purposes of this chapter, by reason of carrying on in this state any one or more of the following activities: (1) Maintaining or defending any action or proceeding, whether judicial, administrative, arbitrative or otherwise, or effecting settlement thereof or the settlement of claims or disputes. (2) Holding meetings of its directors or its shareholders. (3) Maintaining bank accounts. (4) Maintaining offices or agencies only for the transfer, exchange and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities. (c) The specification in paragraph (b) does not establish a standard for activities which may subject a foreign corporation to service of process under this chapter or any other statute of this state. (d) A foreign corporation whose corporate name is not acceptable for authorization pursuant to sections 301 and 302 of this chapter, may submit in its application for authority pursuant to section 1304 of this chapter, a fictitious name under which it shall do business in this state. A fictitious name submitted pursuant to this section shall be subject to the provisions of subparagraphs (2) through (9) of paragraph (a) of section 301 and 302 of this chapter. A foreign corporation authorized to do business in this state under a fictitious name pursuant to this section, shall use such fictitious name in all of its dealings with the secretary of state and in the conduct of its business in this state. The provisions of section one hundred thirty of the general business law shall not apply to any fictitious name filed by a foreign corporation pursuant to this section, and a filing under section one hundred thirty of the general business law shall not constitute the adoption of a fictitious name.

§ 1302 Application to existing authorized foreign corporations.

§ 1302. Application to existing authorized foreign corporations.

Every foreign corporation which on the effective date of this chapter is authorized to do business in this state under a certificate of authority heretofore issued to it by the secretary of state shall continue to have such authority. Such foreign corporation, its

shareholders, directors and officers shall have the same rights, franchises and privileges and shall be subject to the same limitations, restrictions, liabilities and penalties as a foreign corporation authorized under this chapter, its shareholders, directors and officers respectively. Reference in this chapter to an application for authority shall, unless the context otherwise requires, include the statement and designation and any amendment thereof required to be filed by the secretary of state under prior statutes to obtain a certificate of authority.

§ 1303 Violations.

§ 1303. Violations.

The attorney-general may bring an action to restrain a foreign corporation from doing in this state without authority any business for the doing of which it is required to be authorized in this state, or from doing in this state any business not set forth in its application for authority or certificate of amendment filed by the department of state. The attorney-general may bring an action or special proceeding to annul the authority of a foreign corporation doing in this state any business not set forth in its application for authority or certificate of amendment or the authority of which was obtained through fraudulent misrepresentation or concealment of a material fact or to enjoin or annul the authority of any foreign corporation which within this state contrary to law has done or omitted any act which if done by a domestic corporation would be a cause for its dissolution under section 1101 (Attorney-general's action for judicial dissolution) or to annul the authority of a foreign corporation that has been dissolved or had its authority or existence otherwise terminated or cancelled in the jurisdiction of its incorporation. The attorney-general shall deliver a certified copy of the order of annulment to the department of state. Upon the filing thereof by the department of state the authority of the foreign corporation to do business in this state shall be annulled. The secretary of state shall continue as agent of the foreign corporation upon whom process against it may be served in any action or special proceeding based upon any liability or obligation incurred by the foreign corporation within the state prior to the filing of the

certified copy of the order of annulment by the department of state.

§ 1304 Application for authority; contents.

§ 1304. Application for authority; contents. (a) A foreign corporation may apply for authority to do business in this state. An application, entitled "Application for authority of ...... (name of corporation) under section 1304 of the Business Corporation Law", shall be signed and delivered to the department of state. It shall set forth: (1) The name of the foreign corporation. (2) The fictitious name the corporation agrees to use in this state pursuant to section 1301 of this chapter, if applicable. (3) The jurisdiction and date of its incorporation. (4) The purpose or purposes for which it is formed, it being sufficient to state, either alone or with other purposes, that the purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under this chapter, provided that it also state that it is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained. By such statement all lawful acts and activities shall be within the purposes of the corporation, except for express limitations therein or in this chapter, if any. (5) The county within this state in which its office is to be located. (6) A designation of the secretary of state as its agent upon whom process against it may be served and the post office address within or without this state to which the secretary of state shall mail a copy of any process against it served upon him or her. The corporation may include an email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon him or her. (7) If it is to have a registered agent, his name and address within this state and a statement that the registered agent is to be its agent upon whom process against it may be served. (8) A statement that the foreign corporation has not since its incorporation or since the date its authority to do business in this state was last surrendered, engaged in any activity in this state,

except as set forth in paragraph (b) of section 1301 (Authorization of foreign corporations), or in lieu thereof the consent of the state tax commission to the filing of the application, which consent shall be attached thereto. (b) Attached to the application for authority shall be a certificate by an authorized officer of the jurisdiction of its incorporation that the foreign corporation is an existing corporation. If such certificate is in a foreign language, a translation thereof under oath of the translator shall be attached thereto.

§ 1305 Application for authority; effect.

§ 1305. Application for authority; effect.

Upon filing by the department of state of the application for authority the foreign corporation shall be authorized to do in this state any business set forth in the application. Such authority shall continue so long as it retains its authority to do such business in the jurisdiction of its incorporation and its authority to do business in this state has not been surrendered, suspended or annulled in accordance with law.

§ 1306 Powers of authorized foreign corporations.

§ 1306. Powers of authorized foreign corporations.

An authorized foreign corporation shall have such powers as are permitted by the laws of the jurisdiction of its incorporation but no greater powers than those of a domestic corporation formed for the business set forth in the application for authority.

§ 1307 Tenure of real property.

§ 1307. Tenure of real property.

A foreign corporation may acquire and hold real property in this state in furtherance of its corporate purposes and may convey the same by deed or otherwise in the same manner as a domestic corporation.

§ 1308 Amendments or changes.

§ 1308. Amendments or changes. (a) An authorized foreign corporation may amend or change its application for authority from time to time in any and as many of the following respects as may be desired if the amendments contain only such provisions as might be lawfully contained in an application for authority at the time of making such amendment: (1) To change its corporate name if such change has been effected under the laws of the jurisdiction of its incorporation. (2) To change its fictitious name filed pursuant to paragraph (d) of section 1301 of this chapter, to another fictitious name, if its true corporate name is not available for use in this state. (3) To delete its fictitious name filed pursuant to paragraph (d) of section 1301 of this chapter, if its true corporate name is now available for use in this state. (4) To adopt a fictitious name when the corporate name is changed and is not available in this state. (5) To enlarge, limit or otherwise change the business which it proposes to do in this state. (6) To change the location of its office in this state. (7) To specify or change the post office address to which the secretary of state shall mail a copy of any process against it served upon him. (8) To make, revoke or change the designation of a registered agent or to specify or change his address. (9) To change the jurisdiction of its incorporation if such change has been effected under laws permitting such a change to occur. (10) To specify, change or delete the email address to which the secretary of state shall email a notice of the fact that process against the corporation has been electronically served upon him or her.

§ 1309 Certificate of amendment; contents, effect.

§ 1309. Certificate of amendment; contents, effect. (a) To accomplish such amendment a certificate, entitled "Certificate of amendment of application for authority of ......(name of corporation) under section 1309 of the Business Corporation Law", shall be signed and delivered to the department of state. It shall set forth: (1) The name of the foreign corporation as it appears on the index of

names of existing domestic and authorized foreign corporations of any type or kind in the department of state, division of corporations and the fictitious name the corporation has agreed to use in this state pursuant to paragraph (d) of section 1301 of this chapter. (2) The jurisdiction of its incorporation. If the jurisdiction of its incorporation has been changed, a statement that the change of jurisdiction has been effected under laws permitting such a change to occur, citing such laws, and including the date the change in jurisdiction was so effected; and a statement that annexed to this certificate of amendment of application for authority is the certificate required by paragraph (b) of this section. (3) The date it was authorized to do business in this state. (4) Each amendment effected thereby. (5) If the true corporate name of the foreign corporation is to be changed, a statement that the change of name has been effected under the laws of the jurisdiction of its incorporation and the date the change was so effected. (6) If the business it proposes to do in this state is to be enlarged, limited or otherwise changed, a statement that it is authorized to do in the jurisdiction of its incorporation the business which it proposes to do in this state. (b) If the jurisdiction of its incorporation has been changed, annexed to the certificate of amendment of application for authority shall be a certificate by an authorized officer of the new jurisdiction of its incorporation that such foreign corporation is an existing corporation domiciled in that jurisdiction. If the annexed certificate by an authorized officer is not in the English language, there shall be attached thereto a translation thereof in the English language under oath of the translator. (c) If an authorized foreign corporation has changed its name in the jurisdiction of its incorporation, or has changed its jurisdiction of incorporation, it shall deliver to the department of state within twenty days after the change became effective in that jurisdiction a certificate of amendment under paragraph (a) of this section. Upon its failure to deliver such certificate, its authority to do business in this state shall upon the expiration of said twenty days be suspended. The filing by the department of state of a certificate of amendment

changing the corporate name or jurisdiction of incorporation within one hundred twenty days after the effective date of the change of name in the jurisdiction of its incorporation or of the change of jurisdiction of its incorporation effected under laws permitting such a change to occur shall annul the suspension, and its authority to do business in this state shall be restored and continue as if no suspension had occurred. The secretary of state shall continue as agent of the foreign corporation upon whom process against the foreign corporation may be served in the manner set forth in paragraph (b) of section 306 (Service of process), in any action or special proceeding based upon any liability or obligation incurred by it within this state before the filing of the certificate of amendment changing the corporate name or changing the jurisdiction of incorporation.

§ 1309-A Certificate of change; contents.

§ 1309-A. Certificate of change; contents. (a) In lieu of a certificate of amendment, an authorized foreign corporation, upon compliance with this section, may make any or all of the following changes in its application for authority: (1) To change the location of its office in this state. (2) To specify or change the post office address to which the secretary of state shall mail a copy of any process against it served upon him. (3) To make, revoke or change the designation of a registered agent or specify or change his address. (4) To specify, change or delete the email address to which the secretary of state shall email a notice of the fact that process against the corporation has been electronically served upon him or her. (b) To accomplish such change, a certificate entitled "Certificate of change of application for authority of .......... (name of corporation) under section 1309-A of the Business Corporation Law" shall be signed and delivered to the department of state.

It shall set forth: (1) The name of the foreign corporation as it appears on the index of names of existing domestic and authorized foreign corporations of any type or kind in the department of state, division of corporations and

the fictitious name the corporation has agreed to use in this state pursuant to paragraph (d) of section 1301 of this chapter. (2) The jurisdiction of its incorporation. (3) The date it was authorized to do business in this state. (4) Each change effected thereby. (c) A certificate of change of application for authority which changes only the post office address to which the secretary of state shall mail a copy of any process against an authorized foreign corporation served upon him or her, and/or the email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon the secretary of state and/or which changes the address of its registered agent, provided such address is the address of a person, partnership or other corporation whose address, as agent, is the address to be changed, and/or the email address being changed is the email address of a person, partnership or corporation whose email address, as agent, is the email address to be changed, and/or who has been designated as registered agent for such authorized foreign corporation, may be signed and delivered to the department of state by such agent. The certificate of change of application for authority shall set forth the statements required under subparagraphs (1), (2), (3) and (4) of paragraph (b) of this section; that a notice of the proposed change was mailed by the party signing the certificate to the authorized foreign corporation not less than thirty days prior to the date of delivery to the department and that such corporation has not objected thereto; and that the party signing the certificate is the agent of such foreign corporation to whose address the secretary of state is required to mail copies of process, and/or the agent of such foreign corporation to whose email address the secretary of state is required to mail a notice of the fact that process against it has been electronically served on the secretary of state and/or the registered agent, if such be the case. A certificate signed and delivered under this paragraph shall not be deemed to effect a change of location of the office of the corporation in whose behalf such certificate is filed.

§ 1310 Surrender of authority.

§ 1310. Surrender of authority. (a) An authorized foreign corporation may surrender its authority. A

certificate, entitled "Certificate of surrender of authority of ........ (name of corporation) under section 1310 of the Business Corporation Law", shall be signed and delivered to the department of state. It shall set forth: (1) The name of the foreign corporation as it appears on the index of names of existing domestic and authorized foreign corporations of any type or kind in the department of state, division of corporations or, the fictitious name the corporation has agreed to use in this state pursuant to paragraph (d) of section 1301 of this chapter. (2) The jurisdiction of its incorporation. (3) The date it was authorized to do business in this state. (4) That it surrenders its authority to do business in this state. (5) That it revokes the authority of its registered agent, if any, previously designated and consents that process against it in any action or special proceeding based upon any liability or obligation incurred by it within this state before the filing of the certificate of surrender may be served on the secretary of state after the filing thereof in the manner set forth in paragraph (b) of section 306 (Service of process). (6) A post office address within or without this state to which the secretary of state shall mail a copy of any process against it served upon him or her. The corporation may include an email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon him or her. (b) The department shall not file such certificate unless the consent of the state tax commission to the surrender of authority is attached thereto. (c) The authority of the foreign corporation to do business in this state shall terminate on the filing by the department of state of the certificate of surrender of authority. (d) The post office address and/or the email address specified under subparagraph (6) of paragraph (a) of this section may be changed. A certificate, entitled "Certificate of amendment of certificate of surrender of authority of ........ (name of corporation) under section 1310 of the Business Corporation Law", shall be signed as provided in paragraph (a) of this section and delivered to the department of state. It shall set forth: (1) The name of the foreign corporation.

(2) The jurisdiction of its incorporation. (3) The date its certificate of surrender of authority was filed by the department of state. (4) The changed post office address, within or without this state, to which the secretary of state shall mail a copy of any process against it served upon him or her and/or the changed email address to which the secretary of state shall email a notice of the fact that process against it has been electronically served upon him or her.

§ 1311 Termination of existence.

§ 1311. Termination of existence.

When an authorized foreign corporation is dissolved or its authority or existence is otherwise terminated or cancelled in the jurisdiction of its incorporation or when such foreign corporation is merged into or consolidated with another foreign corporation, a certificate of the secretary of state, or official performing the equivalent function as to corporate records, of the jurisdiction of incorporation of such foreign corporation attesting to the occurrence of any such event or a certified copy of an order or decree of a court of such jurisdiction directing the dissolution of such foreign corporation, the termination of its existence or the cancellation of its authority shall be delivered to the department of state. The filing of the certificate, order or decree shall have the same effect as the filing of a certificate of surrender of authority under section 1310 (Surrender of authority). The secretary of state shall continue as agent of the foreign corporation upon whom process against it may be served in the manner set forth in paragraph (b) of section 306 (Service of process), in any action or special proceeding based upon any liability or obligation incurred by the foreign corporation within this state prior to the filing of such certificate, order or decree and he or she shall promptly cause a copy of any such process to be mailed by certified mail, return receipt requested, to such foreign corporation at the post office address on file in his or her office specified for such purpose or a notice of the fact that process against such foreign corporation has been served on him or her to be emailed to the foreign corporation at the email address on file in his or her office specified for such purpose. The post office

address and/or email address may be changed by signing and delivering to the department of state a certificate of change setting forth the statements required under section 1309-A (Certificate of change; contents) to effect a change in the post office address and/or email address under subparagraph (a) (7) or (10) of section 1308 (Amendments or changes).

§ 1312 Actions or special proceedings by unauthorized foreign

§ 1312. Actions or special proceedings by unauthorized foreign corporations. (a) A foreign corporation doing business in this state without authority shall not maintain any action or special proceeding in this state unless and until such corporation has been authorized to do business in this state and it has paid to the state all fees and taxes imposed under the tax law or any related statute, as defined in section eighteen hundred of such law, as well as penalties and interest charges related thereto, accrued against the corporation. This prohibition shall apply to any successor in interest of such foreign corporation. (b) The failure of a foreign corporation to obtain authority to do business in this state shall not impair the validity of any contract or act of the foreign corporation or the right of any other party to the contract to maintain any action or special proceeding thereon, and shall not prevent the foreign corporation from defending any action or special proceeding in this state.

§ 1313 Actions or special proceedings by foreign corporations.

§ 1313. Actions or special proceedings by foreign corporations.

An action or special proceeding may be maintained by a foreign corporation, in like manner and subject to the same limitations, as an action or special proceeding brought by a domestic corporation, except as otherwise prescribed by statute.

§ 1314 Actions or special proceedings against foreign corporations.

§ 1314. Actions or special proceedings against foreign corporations. (a) An action or special proceeding against a foreign corporation may be maintained by a resident of this state or by a domestic corporation

of any type or kind for any cause of action. (b) Except as otherwise provided in this article, an action or special proceeding against a foreign corporation may be maintained by another foreign corporation of any type or kind or by a non-resident in the following cases only: (1) Where it is brought to recover damages for the breach of a contract made or to be performed within this state, or relating to property situated within this state at the time of the making of the contract. (2) Where the subject matter of the litigation is situated within this state. (3) Where the cause of action arose within this state, except where the object of the action or special proceeding is to affect the title of real property situated outside this state. (4) Where, in any case not included in the preceding subparagraphs, a non-domiciliary would be subject to the personal jurisdiction of the courts of this state under section 302 of the civil practice law and rules. (5) Where the defendant is a foreign corporation doing business or authorized to do business in this state. (c) Paragraph (b) does not apply to a corporation which was formed under the laws of the United States and which maintains an office in this state.

§ 1315 Record of shareholders.

§ 1315. Record of shareholders. (a) Any resident of this state who shall have been a shareholder of record of a foreign corporation doing business in this state upon at least five days' written demand may require such foreign corporation to produce a record of its shareholders setting forth the names and addresses of all shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof and shall have the right to examine in person or by agent or attorney at the office of the foreign corporation in this state or at the office of its transfer agent or registrar in this state or at such other place in the county in this state in which the foreign corporation is doing business as may be designated by the foreign corporation,

during the usual business hours, the record of shareholders or an exact copy thereof certified as correct by the corporate officer or agent responsible for keeping or producing such record and to make extracts therefrom. Resident holders of voting trust certificates representing shares of the foreign corporation shall for the purpose of this section be regarded as shareholders. Any such agent or authority shall be authorized in a writing that satisfies the requirements of a writing under paragraph (b) of section 609 (proxies). A corporation requested to provide information pursuant to this paragraph shall make available such information in the format in which such information is maintained by the corporation and shall not be required to provide such information in any other format. If a request made pursuant to this paragragh includes a request to furnish information regarding beneficial owners, the corporation shall make available such information in its possession regarding beneficial owners as is provided to the corporation by a registered broker or dealer or a bank, association or other entity that exercises fiduciary powers in connection with the forwarding of information to such owners. The corporation shall not be required to obtain information about beneficial owners not in its possession. (b) An examination authorized by paragraph (a) may be denied to such shareholder or other person upon his refusal to furnish to the foreign corporation or its transfer agent or registrar an affidavit that such inspection is not desired for a purpose which is in the interest of a business or object other than the business of the foreign corporation and that such shareholder or other person has not within five years sold or offered for sale any list of shareholders of any corporation of any type or kind, whether or not formed under the laws of this state, or aided or abetted any person in procuring any such record of shareholders for any such purpose. (c) Upon refusal by the foreign corporation or by an officer or agent of the foreign corporation to produce for examination or to permit an examination of the record of shareholders as herein provided, the person making the demand for production and examination may apply to the supreme court in the judicial district where the office of the foreign corporation within this state is located, upon such notice as the court may direct, for an order directing the foreign corporation, its officer or agent, to show cause why an order should not be granted directing

such production and permitting such examination by the applicant. Upon the return day of the order to show cause, the court shall hear the parties summarily, by affidavit or otherwise, and if it appears that the applicant is qualified and entitled to such examination, the court shall grant an order compelling such production for examination and awarding such further relief as to the court may seem just and proper. (d) Nothing herein contained shall impair the power of courts to compel the production for examination of the books of a foreign corporation. The record of shareholders specified in paragraph (a) shall be prima facie evidence of the facts therein stated in favor of the plaintiff in any action or special proceeding against such foreign corporation or any of its officers, directors or shareholders.

§ 1316 Voting trust records.

§ 1316. Voting trust records. (a) A voting trustee, appointed under a voting trust agreement to vote the shares of a foreign corporation doing business in this state, who either has an office in this state or has designated a transfer agent within this state, shall produce for examination and permit to be examined in this state, at the office of the foreign corporation or at his office or at the office of such transfer agent, a record of voting trust certificate holders setting forth their names, alphabetically arranged, and addresses, the number and class of shares represented by the certificates held by them respectively and the dates when they respectively became the owners thereof, upon the written demand of any resident of this state who shall have been a voting trust certificate holder or a shareholder of the foreign corporation for at least six months immediately preceding his demand, or of any resident of this state holding, or thereunto authorized in writing by the holders of, at least five percent of any class of the outstanding shares of such foreign corporation, either directly or as holders of voting trust certificates for such shares, subject to the same terms and conditions set forth with respect to the right of examination of the record of shareholders of the foreign corporation in section 1315 (Record of shareholders). (b) The voting trustee shall deposit an exact copy of the voting trust agreement with the foreign corporation at its office in this state or at

the office of the transfer agent in this state. (c) The copy of the voting trust agreement shall be subject to the same right of examination by voting trust certificate holders and by shareholders of the foreign corporation as is the record of shareholders of a corporation under section 624 (Books and records; right of inspection, prima facie evidence). (d) Upon refusal by a voting trustee or his transfer agent to produce for examination or to permit an examination of the record of voting trust certificate holders or of such copy of the voting trust agreement as herein provided, the person making the demand may apply to the supreme court, upon such notice as the court may direct, for an order directing the voting trustee or his transfer agent to show cause why an order should not be granted directing such production and permitting such examination. Upon the return day of the order to show cause, the court shall hear the parties summarily, by affidavit or otherwise, and if it appears that the applicant is entitled to such examination, the court shall grant an order compelling such production for examination and awarding such further relief as to the court may seem just and proper. (e) Where the voting trust agreement shall vest in the voting trustee the right to vote the shares of a foreign corporation which has an office in this state for the doing of business and either the principal business operation of which is conducted within this state or the greater part of its property is located within this state, the voting trust agreement is an express trust created under the laws of this state and the supreme court upon the petition of a voting trust certificate holder may exercise such power over the trustee named therein as is granted to the court by section one hundred twelve of the real property law.

§ 1317 Liabilities of directors and officers of foreign corporations.

§ 1317. Liabilities of directors and officers of foreign corporations. (a) Except as otherwise provided in this chapter, the directors and officers of a foreign corporation doing business in this state are subject, to the same extent as directors and officers of a domestic corporation, to the provisions of: (1) Section 719 (Liability of directors in certain cases) except

subparagraph (a) (3) thereof, and (2) Section 720 (Action against directors and officers for misconduct.) (b) Any liability imposed by paragraph (a) may be enforced in, and such relief granted by, the courts in this state, in the same manner as in the case of a domestic corporation.

§ 1318 Liability of foreign corporations for failure to disclose

§ 1318. Liability of foreign corporations for failure to disclose required information.

A foreign corporation doing business in this state shall, in the same manner as a domestic corporation, disclose to its shareholders of record who are residents of this state the information required under paragraph (c) of section 510 (Dividends or other distributions in cash or property), paragraphs (f) and (g) of section 511 (Share distributions and changes), paragraph (d) of section 515 (Reacquired shares), paragraph (c) of section 516 (Reduction of stated capital in certain cases), and shall be liable as provided in section 520 (Liability for failure to disclose required information) for failure to comply in good faith with these requirements.

§ 1319 Applicability of other provisions.

§ 1319. Applicability of other provisions. (a) In addition to articles 1 (Short title; definitions; application; certificates; miscellaneous) and 3 (Corporate name and service of process) and the other sections of article 13 (foreign corporations), the following provisions, to the extent provided therein, shall apply to a foreign corporation doing business in this state, its directors, officers and shareholders: (1) Section 623 (Procedure to enforce shareholder's right to receive payment for shares). (2) Section 626 (Shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor). (3) Section 627 (Security for expenses in shareholders' derivative action brought in the right of the corporation to procure a judgment in its favor).

(4) Section 630 (Liability of shareholders for wages due to laborers, servants or employees). (5) Sections 721 ( Nonexclusivity of statutory provisions for indemnification of directors and officers) through 726 (Insurance for indemnification of directors and officers), inclusive. (6) Section 808 (Reorganization under act of congress). (7) Section 907 (Merger or consolidation of domestic and foreign corporations).

§ 1320 Exemption from certain provisions.

§ 1320. Exemption from certain provisions. (a) Notwithstanding any other provision of this chapter, a foreign corporation doing business in this state which is authorized under this article, its directors, officers and shareholders, shall be exempt from the provisions of paragraph (e) of section 1316 (Voting trust records), subparagraph (a) (1) of section 1317 (Liabilities of directors and officers of foreign corporations), section 1318 (Liability of foreign corporations for failure to disclose required information) and subparagraph (a) (4) of section 1319 (Applicability of other provisions) if when such provision would otherwise apply: (1) Shares of such corporation were listed on a national securities exchange, or (2) Less than one-half of the total of its business income for the preceding three fiscal years, or such portion thereof as the foreign corporation was in existence, was allocable to this state for franchise tax purposes under the tax law.

ARTICLE 15 PROFESSIONAL SERVICE CORPORATIONS Section 1501. Definitions. 1502. Corporations organized under other provisions of law. 1503. Organization. 1504. Rendering of professional service. 1505. Professional relationships and liabilities. 1506. Purposes of incorporation. 1507. Issuance of shares.

1508. Directors and officers.
1509. Disqualification of shareholders, directors, officers and employees.
1510. Death or disqualification of shareholders.
1511. Transfer of shares.
1512. Corporate name.
1513. Business corporation law applicable.
1514. Triennial statement.
1515. Regulation of professions.
1516. Corporate mergers, consolidations and other reorganizations.

Article 15

§ 1501 Definitions.

§ 1501. Definitions.

As used in this article, unless the context otherwise requires, the term: (a) "licensing authority" means the regents of the university of the state of New York or the state education department, as the case may be, in the case of all professions licensed under title eight of the education law, and the appropriate appellate division of the supreme court in the case of the profession of law. (b) "Profession" includes any practice as an attorney and counselor-at-law, or as a licensed physician, and those occupations designated in title eight of the education law. (c) "Professional service" means any type of service to the public which may be lawfully rendered by a member of a profession within the purview of his or her profession. (d) "Professional service corporation" means a corporation organized under this article. (e) "Officer" does not include the secretary or an assistant secretary of a corporation having only one shareholder. (f) "Other business entity" means any person other than a natural person, general partnership or a domestic or foreign business corporation, and includes a professional service limited liability company formed pursuant to the provisions of the New York limited liability company law. (g) "Design professional service corporation" means a corporation

organized under this article practicing professional engineering, architecture, landscape architecture, geology, or land surveying, or practicing any combination of such professions. The provisions of this article applicable to professional service corporations shall apply to design professional service corporations except to the extent that any provision is either inconsistent with a provision expressly applying to design professional service corporations or not relevant thereto. (h) "Design professional" means an individual licensed and registered pursuant to title eight of the education law to practice professional engineering, architecture, landscape architecture, geology or land surveying. (i) "Employee stock ownership plan" (ESOP) means a defined contribution plan established pursuant to Section 4975(e)(7) of the Internal Revenue Code.

§ 1502 Corporations organized under other provisions of law.

§ 1502. Corporations organized under other provisions of law.

The provisions of this article shall not apply to corporations heretofore or hereafter duly organized under any other provision of law.

§ 1503 Organization.

§ 1503. Organization. (a) Notwithstanding any other provision of law, one or more individuals duly authorized by law to render the same professional service within the state may organize, or cause to be organized, a professional service corporation for pecuniary profit under this article for the purpose of rendering the same professional service, except that one or more individuals duly authorized by law to practice professional engineering, architecture, landscape architecture, land surveying or geology within the state may organize, or cause to be organized, a professional service corporation or a design professional service corporation for pecuniary profit under this article for the purpose of rendering such professional services as such individuals are authorized to practice. (b) The certificate of incorporation of a professional service corporation shall meet the requirements of this chapter and (i) shall

state the profession or professions to be practiced by such corporation and the names and residence addresses of all individuals who are to be the original shareholders, directors and officers of such corporation, and (ii) shall have attached thereto a certificate or certificates issued by the licensing authority certifying that each of the proposed shareholders, directors and officers is authorized by law to practice a profession which the corporation is being organized to practice and, if applicable, that one or more of such individuals is authorized to practice each profession which the corporation will be authorized to practice. (b-1) The certificate of incorporation of a design professional service corporation shall meet the requirements of this chapter, provided that shareholders may include employee stock ownership plans (ESOPs) and employees of the corporation not licensed as design professionals, and provided further however that: (i) greater than seventy-five percent of the outstanding shares of stock of the corporation are owned by design professionals and an ESOP (or ESOPs) with greater than seventy-five percent of the plan's voting trustees or greater than seventy-five percent of the plan's committee members being design professionals, (ii) an ESOP, either in part or in its entirety, shall not constitute part of the greater than seventy-five percent owned by design professionals unless greater than seventy-five percent of the plan's voting trustees or greater than seventy-five percent of the plan's committee members are design professionals, (iii) greater than seventy-five percent of the directors are design professionals, (iv) greater than seventy-five percent of the officers are design professionals, (v) the president, the chairperson of the board of directors and the chief executive officer or officers are design professionals, and (vi) the single largest shareholder is either a design professional or an ESOP with greater than seventy-five percent of the plan's voting trustees being design professionals and greater than seventy-five percent of the plan's committee members being design professionals. (b-2) The certificate of incorporation of a design professional service corporation shall:

(i) state the profession or professions to be practiced by such corporation, (ii) state the names and residence addresses of all individuals or ESOPs who are to be the original shareholders, directors and officers of such corporation, (iii) indicate the profession or professions of each original shareholder, director and officer who is a design professional, (iv) state the ownership interest of each original shareholder, and (v) indicate the names of the original officers and directors who are the president, the chairperson of the board of directors and the chief executive officer or officers. (b-3) The certificate of incorporation of a design professional service corporation shall have attached thereto a certificate or certificates issued by the licensing authority certifying that each of the proposed shareholders, directors and officers who is listed as a design professional is authorized by law to practice a profession which the corporation is being organized to practice and, if applicable, that one or more of such individuals is authorized to practice each profession which the corporation will be authorized to practice. The attached certificate or certificates shall also certify that the president, the chairperson of the board of directors and the chief executive officer or officers are authorized by law to practice a profession which the corporation is being organized to practice. (b-4) The certificate of incorporation of a design professional service corporation shall also have attached thereto a certificate or certificates issued by the licensing authority certifying that each of the shareholders, officers, directors and owners have been deemed to have been of good moral character as may be established by the regulations of the commissioner of education. (b-5) On or after January first, two thousand twelve, the state education department and the department of state shall allow an existing professional service corporation organized under this article and practicing professional engineering, architecture, landscape architecture, geology or land surveying, or practicing any combination of such professions to become a design professional service corporation as defined in this article, provided the professional service corporation meets all of the requirements to become a design

professional service corporation, including that its name shall end with the words "design professional corporation" or the abbreviation "D.P.C.", by amending its certificate of incorporation so that it contains the following statements: (1) the names and residence addresses of all individuals or ESOPs who will be the shareholders, directors and officers of the original design professional service corporation; and (2) the profession or professions of each shareholder, director and officer who is a design professional of the original design professional service corporation; and (3) the ownership interest of each shareholder of the original design professional service corporation; and (4) the names of the officers and directors who will be the president, the chairperson of the board of directors and the chief executive officer or officers of the original design professional service corporation. (i) The certificate of amendment shall have attached thereto a certificate or certificates issued by the licensing authority certifying that each of the proposed shareholders, directors and officers who is listed as a design professional is authorized by law to practice a profession which the corporation is organized to practice and, if applicable, that one or more of such individuals is authorized to practice each profession which the corporation will be authorized to practice. The attached certificate or certificates shall also certify that the proposed president, the chairperson of the board of directors and the chief executive officer or officers are authorized by law to practice a profession which the corporation is organized to practice. (ii) The certificate of amendment shall also have attached thereto a certificate or certificates issued by the licensing authority certifying that each of the proposed shareholders, officers, directors and owners listed have been deemed to have been of good moral character as may be established by the regulations of the commissioner of education. (iii) The certificate of amendment shall also have attached thereto: (A) a tax clearance issued by the department of taxation and finance certifying that the existing professional service corporation is current with respect to payment of its state tax liabilities and (B) a certificate of good standing from the state education department

certifying that the existing professional service corporation is authorized to provide professional services without restriction. (b-6) (1) Prior to the first day of March, two thousand nineteen, the state education department and the department of state shall allow an existing business corporation organized under article four of this chapter to become a professional service corporation as defined in this article for the purpose of practicing professional geology, provided that the surviving corporation meet all of the requirements to become a professional service corporation, including that the name of a professional service corporation shall end with the words "professional corporation" or the abbreviation "P.C." by amending its certificate of incorporation so that it contains the following: (i) the names and residence addresses of all individuals who will be the original shareholders, directors and officers of the professional service corporation; (ii) a statement that the professional service corporation is formed pursuant to this section; and (iii) a statement that the amendment shall not effect a dissolution of the corporation, but shall be deemed a continuation of its corporate existence, without affecting its then existing property rights or liabilities or the liabilities of its members or officers as such, but thereafter it shall have only such rights, powers and privileges, and be subject only to such other duties and liabilities, as a corporation created for the same purposes under this article. (2) The certificate of amendment shall have attached thereto a certificate or certificates issued by the licensing authority certifying that each of the proposed shareholders, directors and officers listed: (i) is authorized by law to practice a profession which the corporation is organized to practice and, if applicable, that one or more of such individuals is authorized to practice each profession which the corporation will be authorized to practice; and (ii) has been deemed to be of good moral character as may be established by the regulations of the commissioner of education. (3) The certificate of amendment shall also have attached thereto a tax clearance issued by the department of taxation and finance certifying that the existing business corporation is current with respect to payment of its state tax liabilities.

(4) Notwithstanding any provision of law to the contrary, any corporation formed under this section shall be required to comply with all applicable laws, rules, or regulations relating to the practice of a profession under title eight of the education law. (b-7) (1) Prior to the first day of March, two thousand nineteen, the state education department and the department of state shall allow an existing business corporation organized under article four of this chapter to become a design professional service corporation as defined in this article for the purpose of practicing professional geology, provided that the surviving corporation meet all of the requirements to become a design professional service corporation, including that the name shall end with the words "design professional service corporation" or the abbreviation "D.P.C." by amending its certificate of incorporation so that it contains the following: (i) the names and residence addresses of all individuals or ESOPs who will be the original shareholders, directors and officers of the professional service corporation; (ii) a statement that the design professional service corporation is formed pursuant to this section; (iii) the profession or profession of each shareholder, director and officer who is a design professional of the original design professional service corporation; (iv) the names of the officers and directors who will be the president, the chairperson of the board of directors and the chief executive officer or officers of the original design professional service corporation; (v) the ownership interest of each shareholder of the original design professional service corporation; and (vi) a statement that the amendment shall not effect a dissolution of the corporation, but shall be deemed a continuation of its corporate existence, without affecting its then existing property rights or liabilities or the liabilities of its members or officers as such, but thereafter it shall have only such rights, powers and privileges, and be subject only to such other duties and liabilities, as a corporation created for the same purposes under this article. (2) The certificate of amendment shall have attached thereto a certificate or certificates issued by the licensing authority certifying

that each of the proposed shareholders, directors and officers listed: (i) is authorized by law to practice a profession which the corporation is organized to practice and, if applicable, that one or more of such individuals is authorized to practice each profession which the corporation will be authorized to practice; and (ii) has been deemed to be of good moral character as may be established by the regulations of the commissioner of education. (3) The certificate of amendment shall also have attached thereto a tax clearance issued by the department of taxation and finance certifying that the existing business corporation is current with respect to payment of its state tax liabilities. (4) Notwithstanding any provision of law to the contrary, any corporation formed under this section shall be required to comply with all applicable laws, rules, or regulations relating to the practice of a profession under title eight of the education law. (c) A certified copy of the certificate of incorporation and of each amendment thereto shall be filed by the corporation with the licensing authority within thirty days after the filing of such certificate or amendment with the department of state. (d) A professional service corporation, including a design professional service corporation, other than a corporation authorized to practice law, shall be under the supervision of the regents of the university of the state of New York and be subject to disciplinary proceedings and penalties, and its certificate of incorporation shall be subject to suspension, revocation or annulment for cause, in the same manner and to the same extent as is provided with respect to individuals and their licenses, certificates, and registrations in title eight of the education law relating to the applicable profession. Notwithstanding the provisions of this paragraph, a professional service corporation authorized to practice medicine shall be subject to the prehearing procedures and hearing procedures as is provided with respect to individual physicians and their licenses in title II-A of article two of the public health law. (e) A corporation authorized to practice law shall be subject to the regulation and control of, and its certificate of incorporation shall be subject to suspension, revocation or annulment for cause by, the appellate division of the supreme court and the court of appeals in the

same manner and to the same extent provided in the judiciary law with respect to individual attorneys and counselors-at-law. Such corporation need not qualify for any certification under section four hundred sixty-four of the judiciary law, take an oath of office under section four hundred sixty-six of such law or register under section four hundred sixty-seven of such law. (f) The order of suspension, revocation or annulment of the certificate of incorporation of a professional service corporation pursuant to paragraphs (d) and (e) of this section shall be effective upon the filing of such order with the department of state. (g) The practices of creative arts therapy, marriage and family therapy, mental health counseling, and psychoanalysis shall not be deemed the same professional service for the purpose of paragraph (a) of this section, notwithstanding that such practices are all licensed under article one hundred sixty-three of the education law. (h) Any firm established for the business purpose of incorporating as a professional service corporation formed to lawfully engage in the practice of public accountancy, as such practice is defined under article one hundred forty-nine of the education law shall be required to show (1) that a simple majority of the ownership of the firm, in terms of financial interests and voting rights held by the firm's owners, belongs to individuals licensed to practice public accountancy in some state, and (2) that all shareholders of a professional service corporation whose principal place of business is in this state, and who are engaged in the practice of public accountancy in this state, hold a valid license issued under section seventy-four hundred four of the education law. For purposes of this paragraph, "financial interest" means capital stock, capital accounts, capital contributions, capital interest, or interest in undistributed earnings of a business entity. Although firms registered with the education department may include non-licensee owners, a registered firm and its owners must comply with rules promulgated by the state board of regents. Notwithstanding the foregoing, a firm incorporated under this section may not have non-licensee owners if the firm's name includes the words "certified public accountant," or "certified public accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is incorporated under this section shall be a natural person who actively

participates in the business of the firm or its affiliated entities. For purposes of this subdivision, "actively participate" means to provide services to clients or to otherwise individually take part in the day-to-day business or management of the firm or an affiliated entity. Such a firm shall have attached to its certificate of incorporation a certificate or certificates demonstrating the firm's compliance with this paragraph, in lieu of the certificate or certificates required by subparagraph (ii) of paragraph (b) of this section.

§ 1504 Rendering of professional service.

§ 1504. Rendering of professional service. (a) No professional service corporation, including a design professional service corporation, may render professional services except through individuals authorized by law to render such professional services as individuals. (b) Each final plan and report made or issued by a corporation practicing one or more of the professions of professional engineering, architecture, landscape architecture, land surveying or geology shall bear the name and seal of one or more professional engineers, architects, landscape architects, land surveyors or professional geologists, respectively, who are in responsible charge of such plan or report. (c) Each report, diagnosis, prognosis, and prescription made or issued by a corporation practicing medicine, dentistry, podiatry, optometry, ophthalmic dispensing, veterinary medicine, pharmacy, nursing, physiotherapy or chiropractic shall bear the signature of one or more physicians, dentists, podiatrists, optometrists, ophthalmic dispensers, veterinarians, pharmacists, nurses, physiotherapists, or chiropractors, respectively, who are in responsible charge of such report, diagnosis, prognosis, or prescription. (d) Each record, transcript, report and hearing report prepared by a corporation practicing certified shorthand reporting shall bear the signature of one or more certified shorthand reporters who are in responsible charge of such record, transcript, report, or hearing report. (e) Each corporation practicing public accounting or certified public accounting shall maintain records indicating the identity of each public

accountant or certified public accountant, respectively, who was responsible for each report or statement which is issued prepared or examined by such corporation. (f) Each opinion prepared by a corporation practicing law shall bear the signature of one or more attorneys and counsellors-at-law who are in responsible charge of such opinion. (g) In addition to the requirements in subdivisions (b) through (f), inclusive, each document prepared by a corporation which under the rules, regulations, laws or customs of the applicable profession is required to bear the signature of an individual in responsible charge of such document, shall be signed by one or more such individuals.

§ 1505 Professional relationships and liabilities.

§ 1505. Professional relationships and liabilities. (a) (i) Each shareholder, employee or agent of a professional service corporation and a design professional service corporation shall be personally and fully liable and accountable for any negligent or wrongful act or misconduct committed by him or by any person under his direct supervision and control while rendering professional services on behalf of such corporation. (ii) An employee stock ownership plan owning greater than twenty-five percent of the outstanding shares of a design professional service corporation organized under paragraph (b-1) of section fifteen hundred three of this article shall be under the supervision of the regents of the university of the state of New York, shall register with the state education department and shall be issued a certificate granting such employee stock ownership plan the authority to hold shares of such corporation. Such certificate shall be subject to professional misconduct provisions as set forth in article one hundred thirty of the education law. In addition, the failure to maintain an active registration with the state education department shall also subject such certificate to discipline as provided above. The secretary of state shall be the designated agent for service of process in any disciplinary matter involving a registered employee stock ownership plan. (iii) Any such employee stock ownership plan shall not influence, or attempt to influence, any decisions that fall within a design professional's scope of practice.

(b) The relationship of an individual to a professional service corporation or a design professional service corporation with which such individual is associated, whether as shareholder, director, officer, employee or agent, shall not modify or diminish the jurisdiction over him of the licensing authority and in the case of an attorney and counsellor-at-law, the other courts of this state.

§ 1506 Purposes of incorporation.

§ 1506. Purposes of incorporation.

No professional service corporation or design professional service corporation shall engage in any business other than the rendering of the professional services for which it was incorporated; provided that such corporation may invest its funds in real estate, mortgages, stocks, bonds or any other type of investments.

§ 1507 Issuance of shares.

§ 1507. Issuance of shares. (a) A professional service corporation may issue shares only to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice and who are or have been engaged in the practice of such profession in such corporation or a predecessor entity, or who will engage in the practice of such profession in such corporation within thirty days of the date such shares are issued. No shareholder of a professional service corporation shall enter into a voting trust agreement, proxy, or any other type agreement vesting in another person, other than another shareholder of the same corporation or a person who would be eligible to become a shareholder if employed by the corporation, the authority to exercise voting power of any or all of his shares. All shares issued, agreements made, or proxies granted in violation of this section shall be void. (b) A design professional service corporation may issue shares to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice and who are or have been engaged in the practice of such profession in such corporation or a predecessor entity, or who will engage in the practice

of such profession in such corporation within thirty days of the date such shares are issued. A design professional service corporation may also issue shares to employee stock ownership plans (ESOPs) and employees of the corporation not licensed as design professionals, provided that: (i) greater than seventy-five percent of the outstanding shares of stock of the corporation are owned by design professionals and an ESOP (or ESOPs) with greater than seventy-five percent of the plan's voting trustees or greater than seventy-five percent of the plan's committee members being design professionals, (ii) an ESOP, either in part or in its entirety, shall not constitute part of the greater than seventy-five percent owned by design professionals unless greater than seventy-five percent of the plan's voting trustees or greater than seventy-five percent of the plan's committee members are design professionals, (iii) greater than seventy-five percent of the directors are design professionals, (iv) greater than seventy-five percent of the officers are design professionals, (v) the president, the chairperson of the board of directors and the chief executive officer or officers are design professionals, and (vi) the single largest shareholder is either a design professional or an ESOP with greater than seventy-five percent of the plan's voting trustees being design professionals and greater than seventy-five percent of the plan's committee members being design professionals.

No shareholder of a design professional service corporation shall enter into a voting trust agreement, proxy or any other type of agreement vesting in another person, other than another shareholder of the same corporation, the authority to exercise voting power of any or all of his or her shares. All shares issued, agreements made or proxies granted in violation of this section shall be void. (c) Any firm established for the business purpose of incorporating as a professional service corporation pursuant to paragraph (h) of section fifteen hundred three of this article may issue shares to individuals who are authorized by law to practice in this state the profession which such corporation is authorized to practice or who will engage in the

practice of such profession in such corporation within thirty days of the date such shares are issued and may also issue shares to employees of the corporation not licensed as certified public accountants, provided that: (i) at least a simple majority of the outstanding shares of stock of the corporation are owned by certified public accountants, (ii) at least a simple majority of the directors are certified public accountants, (iii) at least a simple majority of the officers are certified public accountants, (iv) the president, the chairperson of the board of directors and the chief executive officer or officers are certified public accountants. No shareholder of a professional service corporation established pursuant to paragraph (h) of section fifteen hundred three of this article shall enter into a voting trust agreement, proxy or any other type of agreement vesting in another person, the authority to exercise voting power of any or all of his or her shares. All agreements made or proxies granted in violation of this section shall be void.

§ 1508 Directors and officers.

§ 1508. Directors and officers. (a) No individual may be a director or officer of a professional service corporation unless he is authorized by law to practice in this state a profession which such corporation is authorized to practice and is either a shareholder of such corporation or engaged in the practice of his profession in such corporation. (b) The directors and officers of a design professional service corporation may include individuals who are not design professionals, provided however that greater than seventy-five percent of the directors, greater than seventy-five percent of the officers and the president, the chairperson of the board of directors and the chief executive officer or officers are authorized by law to practice in this state a profession which such corporation is authorized to practice, and are either shareholders of such corporation or engaged in the practice of their professions in such corporation. (c) The directors and officers of any firm established for the business purpose of incorporating as a professional service corporation

pursuant to paragraph (h) of section fifteen hundred three of this article may include individuals who are not licensed to practice public accountancy in any state, provided however that at least a simple majority of the directors, at least a simple majority of the officers and the president, the chairperson of the board of directors and the chief executive officer or officers are authorized by law to practice in any state the profession which such corporation is authorized to practice, and are either shareholders of such corporation or engaged in the practice of their professions in such corporation.

§ 1509 Disqualification of shareholders, directors, officers and

§ 1509. Disqualification of shareholders, directors, officers and employees.

If any shareholder, director, officer or employee of a professional service corporation, including a design professional service corporation, who has been rendering professional service to the public becomes legally disqualified to practice his or her profession within this state, he or she shall sever all employment with, and financial interests (other than interests as a creditor) in, such corporation forthwith or as otherwise provided in section 1510 of this article. All provisions of law regulating the rendering of professional services by a person elected or appointed to a public office shall be applicable to a shareholder, director, officer and employee of such corporation in the same manner and to the same extent as if fully set forth herein. Such legal disqualification to practice his or her profession within this state shall be deemed to constitute an irrevocable offer by the disqualified shareholder to sell his or her shares to the corporation, pursuant to the provisions of section 1510 of this article or of the certificate of incorporation, by-laws or agreement among the corporation and all shareholders, whichever is applicable. Compliance with the terms of such offer shall be specifically enforceable in the courts of this state. A professional service corporation's failure to enforce compliance with this provision shall constitute a ground for forfeiture of its certificate of incorporation and its dissolution.

§ 1510 Death or disqualification of shareholders.

§ 1510. Death or disqualification of shareholders. (a) A professional service corporation, including a design professional service corporation, shall purchase or redeem the shares of a shareholder in case of his death or disqualification pursuant to the provisions of section 1509 of this article, within six months after the appointment of the executor or administrator or other legal representative of the estate of such deceased shareholder, or within six months after such disqualification, at the book value of such shares as of the end of the month immediately preceding the death or disqualification of the shareholder as determined from the books and records of the corporation in accordance with its regular method of accounting. The certificate of incorporation, the by-laws of the corporation or an agreement among the corporation and all shareholders may modify this section by providing for a shorter period of purchase or redemption, or an alternate method of determining the price to be paid for the shares, or both. If the corporation shall fail to purchase or redeem such shares within the required period, a successful plaintiff in an action to recover the purchase price of such shares shall also be awarded reasonable attorneys' fees and costs. Limitations on the purchase or redemption of shares set forth in section 513 of this chapter shall not apply to the purchase or redemption of shares pursuant to this section. Nothing herein contained shall prevent a corporation from paying pension benefits or other deferred compensation to or on behalf of a former or deceased officer, director or employee thereof as otherwise permitted by law. The provisions of this section shall not be deemed to require the purchase of the shares of a disqualified shareholder where the period of disqualification is for less than six months, and the shareholder again becomes eligible to practice his profession within six months from the date of disqualification. (b) Notwithstanding the provisions of paragraph (a) of this section, the corporation shall not be required to purchase or redeem the shares of a deceased or disqualified shareholder if such shares, within the time limit prescribed by paragraph (a) of this section, are sold or transferred to another professional pursuant to the provisions of section 1511 of this article.

§ 1511 Transfer of shares.

§ 1511. Transfer of shares. (a) No shareholder of a professional service corporation, including a design professional service corporation, may sell or transfer his or her shares in such corporation except to another individual who is eligible to have shares issued to him or her by such corporation or except in trust to another individual who would be eligible to receive shares if he or she were employed by the corporation. Nothing herein contained shall be construed to prohibit the transfer of shares by operation of law or by court decree. No transferee of shares by operation of law or court decree may vote the shares for any purpose whatsoever except with respect to corporate action under sections 909 and 1001 of this chapter. The restriction in the preceding sentence shall not apply, however, where such transferee would be eligible to have shares issued to him or her if he or she were an employee of the corporation and, if there are other shareholders, a majority of such other shareholders shall fail to redeem the shares so transferred, pursuant to section 1510 of this article, within sixty days of receiving written notice of such transfer. Any sale or transfer, except by operation of law or court decree or except for a corporation having only one shareholder, may be made only after the same shall have been approved by the board of directors, or at a shareholders' meeting specially called for such purpose by such proportion, not less than a majority, of the outstanding shares as may be provided in the certificate of incorporation or in the by-laws of such professional service corporation. At such shareholders' meeting the shares held by the shareholder proposing to sell or transfer his or her shares may not be voted or counted for any purpose, unless all shareholders consent that such shares be voted or counted. The certificate of incorporation or the by-laws of the professional service corporation, or the professional service corporation and the shareholders by private agreement, may provide, in lieu of or in addition to the foregoing provisions, for the alienation of shares and may require the redemption or purchase of such shares by such corporation at prices and in a manner specifically set forth therein. The existence of the restrictions on the sale or transfer of shares, as contained in this article and, if applicable, in the certificate of incorporation, by-laws, stock purchase or stock redemption agreement, shall be noted conspicuously on the face or back of every certificate

for shares issued by a professional service corporation. Any sale or transfer in violation of such restrictions shall be void. (b) A design professional service corporation shall purchase or redeem the shares of a non-design professional shareholder in the case of his or her termination of employment within thirty days after such termination. A design professional service corporation shall not be required to purchase or redeem the shares of a terminated non-design professional shareholder if such shares, within thirty days after such termination, are sold or transferred to another employee of the corporation pursuant to this article. (c) A firm established for the business purpose of incorporating as a professional service corporation pursuant to paragraph (h) of section fifteen hundred three of this article, shall purchase or redeem the shares of a non-licensed professional shareholder in the case of his or her termination of employment within thirty days after such termination. A firm established for the business purpose of incorporating as a professional service corporation pursuant to paragraph (h) of section fifteen hundred three of this article, shall not be required to purchase or redeem the shares of a terminated non-licensed professional shareholder if such shares, within thirty days after such termination, are sold or transferred to another employee of the corporation pursuant to this article.

§ 1512 Corporate name.

§ 1512. Corporate name. (a) Notwithstanding any other provision of law, the name of a professional service corporation, including a design professional service corporation, may contain any word which, at the time of incorporation, could be used in the name of a partnership practicing a profession which the corporation is authorized to practice, and may not contain any word which could not be used by such a partnership. Provided, however, the name of a professional service corporation may not contain the name of a deceased person unless (1) such person's name was part of the corporate name at the time of such person's death; or (2) such person's name was part of the name of an existing partnership and at least two-thirds of such partnership's partners become

shareholders of the corporation. (b) The name of a professional service corporation shall end with the words "Professional Corporation" or the abbreviation "P.C." The name of a design professional service corporation shall end with the words "design professional corporation" or the abbreviation "D.P.C." The provisions of subparagraph one of paragraph (a) of section 301 of this chapter shall not apply to a professional service corporation.

§ 1513 Business corporation law applicable.

§ 1513. Business corporation law applicable.

This chapter, except article 13 and article 15-A, shall be applicable to a professional service corporation, including a design professional service corporation, except to the extent that the provisions thereof conflict with this article. A professional service corporation, including a design professional service corporation, may consolidate or merge only with another corporation organized under this article or authorized to do business in this state under article 15-A of this chapter or authorized and registered to practice the same profession, or in the case of a design professional service corporation one or more professions as provided in paragraph (e) of section 1501 of this article, pursuant to the applicable provisions of subdivision six of section seventy-two hundred nine of the education law, subdivision four of section seventy-three hundred seven of the education law or subdivision four of section seventy-three hundred twenty-seven of the education law, or may be a member of a professional service limited liability company, a foreign professional service limited liability company, a registered limited liability partnership or foreign limited liability partnership, and only if all of the professions practiced by such corporations, limited liability companies or limited liability partnerships could be practiced by a single corporation organized under this article.

§ 1514 Triennial statement.

§ 1514. Triennial statement. (a) Each professional service corporation shall, at least once every three years on or before the date prescribed by the licensing authority,

furnish a statement to the licensing authority listing the name and residence address of each shareholder, director and officer of such corporation and certifying that all such individuals are authorized by law in this state to practice a profession which such corporation is authorized to practice. The statement shall be signed by the president or any vice-president of the corporation and attested to by the secretary or any assistant secretary of the corporation. (b) Each design professional service corporation shall, at least once every three years on or before the date prescribed by the licensing authority, furnish a statement to the licensing authority listing the names and residence addresses of each shareholder, director and officer of such corporation and certify as the date of certification and at all times over the entire three year period that: (i) greater than seventy-five percent of the outstanding shares of stock of the corporation are and were owned by design professionals and an ESOP (or ESOPs) with greater than seventy-five percent of the plan's voting trustees or greater than seventy-five percent of the plan's committee members being design professionals, (ii) greater than seventy-five percent of the directors are and were design professionals, (iii) greater than seventy-five percent of the officers are and were design professionals, (iv) the president, the chairperson of the board of directors and the chief executive officer or officers are and were design professionals, and (v) the single largest shareholder is and was either a design professional or an ESOP with greater than seventy-five percent of the plan's voting trustees being design professionals and greater than seventy-five percent of the plan's committee members being design professionals.

The statement shall be signed by the president or any design professional vice-president and attested to by the secretary or any assistant secretary of the corporation. (c) Each firm established for the business purpose of incorporating as a professional service corporation pursuant to paragraph (h) of section fifteen hundred three of this article shall, at least once every three

years on or before the date prescribed by the licensing authority, furnish a statement to the licensing authority listing the names and residence addresses of each shareholder, director and officer of such corporation and certify as the date of certification and at all times over the entire three year period that: (i) at least a simple majority of the outstanding shares of stock of the corporation are and were owned by certified public accountants, (ii) at least a simple majority of the directors are and were certified public accountants, (iii) at least a simple majority of the officers are and were certified public accountants, (iv) the president, the chairperson of the board of directors and the chief executive officer or officers are and were certified public accountants. The statement shall be signed by the president or any certified public accountant vice-president and attested to by the secretary or any assistant secretary of the corporation.

§ 1515 Regulation of professions.

§ 1515. Regulation of professions.

This article shall not repeal, modify or restrict any provision of the education law or the judiciary law regulating the professions referred to therein except to the extent in conflict herewith.

§ 1516 Corporate mergers, consolidations and other reorganizations.

§ 1516. Corporate mergers, consolidations and other reorganizations. (a) Notwithstanding any inconsistent provision of this article, and subject to the limitations in paragraph (d) of this section, a professional service corporation, including a design professional service corporation, pursuant to the provisions of article nine of this chapter, may be merged or consolidated with another corporation formed pursuant to the provisions of this chapter, with a corporation authorized and registered to practice the same profession pursuant to the applicable provisions of subdivision six of section seventy-two hundred nine of the education law (engineer or land surveyor), subdivision four of section seventy-three hundred seven of the education

law (architect) or subdivision four of section seventy-three hundred twenty-seven of the education law (landscape architect) of articles one hundred forty-five, one hundred forty-seven and one hundred forty-eight of the education law, or with a foreign corporation, or other business entity practicing the same profession or professions in this state or the state of its formation, or may be otherwise reorganized, provided that the corporation which survives or which is formed pursuant thereto is a professional service corporation, a design professional service corporation, a professional service limited liability company or a foreign professional service corporation practicing the same profession or professions in this state or the state of incorporation or, if one of the original corporations is authorized to practice pursuant to the provisions of either subdivision six of section seventy-two hundred nine, subdivision four of section seventy-three hundred seven or subdivision four of section seventy-three hundred twenty-four of the education law, a corporation authorized and registered to practice the same profession pursuant to the applicable provisions of subdivision six of section seventy-two hundred nine of the education law (engineer or land surveyor), subdivision four of section seventy-three hundred seven of the education law (architect) of articles one hundred forty-five, one hundred forty-seven and one hundred forty-eight or subdivision four of section seventy-three hundred twenty-seven of the education law. (b) If the surviving business entity is a professional corporation, the restrictions on the issuance, transfer or sale of shares of a professional service corporation or a design professional service corporation shall be suspended for a period not exceeding thirty days with respect to any issuance, transfer or sale of shares made pursuant to such merger, consolidation or reorganization, provided that: (i) no person who would not be eligible to be a shareholder in the absence of this section shall vote the shares of or receive any distribution from such corporation; (ii) after such merger, consolidation or reorganization, any professional service corporation or a design professional service corporation which survives or which is created thereby shall be subject to all of the provisions of this article; and (iii) shares thereafter only may be held by persons who are eligible to receive shares of such professional service corporation, design professional service corporation or such other corporation authorized

and registered to practice the same profession pursuant to the applicable provisions of subdivision six of section seventy-two hundred nine of the education law (engineer or land surveyor), subdivision four of section seventy-three hundred seven of the education law (architect) or subdivision four of section seventy-three hundred twenty-seven of the education law (landscape architect) of articles one hundred forty-five, one hundred forty-seven and one hundred forty-eight of the education law, which survives. Nothing herein contained shall be construed as permitting the practice of a profession in this state by a corporation which is not incorporated pursuant to the provisions of this article or authorized to do business in this state pursuant to the provisions of article fifteen-A of this chapter, authorized pursuant to subdivision six of section seventy-two hundred nine of the education law, authorized pursuant to subdivision four of section seventy-three hundred seven of the education law, authorized pursuant to subdivision four of section seventy-three hundred twenty-seven of the education law or authorized and registered to practice a profession pursuant to the applicable provisions of article one hundred forty-five, one hundred forty-seven or one hundred forty-eight of the education law. For the purposes of this section, other reorganizations shall be limited to those reorganizations defined in paragraph one of subsection (a) of section three hundred sixty-eight of the internal revenue code. (c) If the surviving business entity is a professional service limited liability company, the restrictions on the issuance, transfer or sale of membership interests of a professional service limited liability company other than the requirements of the first two sentences of subdivision (c) of section twelve hundred eleven of the limited liability company law, shall be suspended for a period not exceeding thirty days with respect to any issuance, transfer or sale of membership interests made pursuant to such merger or consolidation, provided that: (i) no person or business entity who would not be eligible to be a member in the absence of this section shall vote or receive any distribution from such limited liability company; (ii) after such merger or consolidation, any professional service limited liability company that survives or that is created thereby shall be subject to all the provisions of the limited liability company law; and (iii) membership interests thereafter may be held only by persons or business entities who are eligible to be a

member of such professional service limited liability company. Nothing herein contained shall be construed as permitting the practice of a profession in this state by a limited liability company that is not formed pursuant to the provisions of the limited liability company law or authorized to do business in the state pursuant to the provisions of article thirteen of the limited liability company law. (d) Notwithstanding the provisions contained in paragraphs (a), (b) and (c) of this section, no design professional service corporation shall be merged or consolidated with any entity unless such entity is a professional business organization lawfully organized to provide professional services pursuant to articles one hundred forty-five, one hundred forty-seven and one hundred forty-eight of the education law.

ARTICLE 15-A FOREIGN PROFESSIONAL SERVICE CORPORATIONS Section 1525. Definitions. 1526. Rendering of professional service. 1527. Professional relationships and liabilities. 1528. Foreign professional service corporation. 1529. Business corporation law applicable. 1530. Filing requirements. 1531. Annual statement. 1532. Regulation of professions. 1533. Licensing of individuals.

Article 15-A

§ 1525 Definitions.

§ 1525. Definitions.

As used in this article, unless the context otherwise requires, the term: (a) "Licensing authority" means the regents of the university of the state of New York or the state education department, as the case may be, in the case of all professions licensed under title eight of the education law, and the appropriate appellate division of the supreme court in the case of the profession of law. (b) "Profession" includes any practice as an attorney and

counsellor-at-law, or as a licensed physician, and those professions designated in title eight of the education law. (c) "Professional service" means any type of service to the public which may be lawfully rendered by a member of a profession within the purview of his profession. (d) "Foreign professional service corporation" means a professional service corporation, whether or not denominated as such, organized under the laws of a jurisdiction other than this state, all of the shareholders, directors and officers of which are authorized and licensed to practice the profession for which such corporation is licensed to do business; except that all shareholders, directors and officers of a foreign professional service corporation which provides health services in this state shall be licensed in this state. A foreign professional service corporation formed to lawfully engage in the practice of public accountancy as a firm, as such practice is defined under article one hundred forty-nine of the education law, or equivalent state law, shall be required to show (1) that a simple majority of the ownership of the firm, in terms of financial interests and voting rights held by the firm's owners, belongs to individuals licensed to practice public accountancy in some state, and (2) that all shareholders of a foreign professional service corporation whose principal place of business is in this state, and who are engaged in the practice of public accountancy in this state, hold a valid license issued under section seventy-four hundred four of the education law. For purposes of this paragraph, "financial interest" means capital stock, capital accounts, capital contributions, capital interest, or interest in undistributed earnings of a business entity. Although firms registered with the education department may include non-licensee owners, a registered firm and its owners must comply with rules promulgated by the state board of regents. Notwithstanding the foregoing, a firm registered with the education department may not have non-licensee owners if the firm's name includes the words "certified public accountant," or "certified public accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is operating under this section shall be a natural person who actively participates in the business of the firm or its affiliated entities, provided each beneficial owner of an equity interest in such entity is a natural person who actively participates in

the business conducted by the firm or its affiliated entities. For purposes of this paragraph, "actively participate" means to provide services to clients or to otherwise individually take part in the day-to-day business or management of the firm or an affiliated entity. (e) "Officer" does not include the secretary or an assistant secretary of a corporation having only one shareholder.

§ 1526 Rendering of professional service.

§ 1526. Rendering of professional service. (a) No foreign professional service corporation may render professional services in this state except through individuals authorized by law to render such professional services as individuals in this state. (b) Each final plan, drawing and report made or issued by a foreign professional service corporation practicing professional engineering, architecture, landscape architecture, geology or land surveying shall bear the name and seal of one or more professional engineers, architects, landscape architects, professional geologists or land surveyors, respectively, who are in responsible charge of such plan or report. (c) Each report, diagnosis, prognosis, and prescription made or issued by a foreign professional service corporation practicing medicine, dentistry, podiatry, optometry, ophthalmic dispensing, veterinary medicine, pharmacy, nursing, physiotherapy or chiropractic shall bear the signature of one or more physicians, dentists, podiatrists, optometrists, ophthalmic dispensers, veterinarians, pharmacists, nurses, physiotherapists, or chiropractors, respectively, who are in responsible charge of such report, diagnosis, prognosis, or prescription. (d) Each record, transcript, report and hearing report prepared by a foreign professional service corporation practicing certified shorthand reporting shall bear the signature of one or more certified shorthand reporters who are in responsible charge of such record, transcript, report, or hearing report. (e) Each report and statement prepared by a foreign professional service corporation practicing public accounting or certified public accounting shall bear the signature of one or more public accountants or certified public accountants, respectively, who are in responsible

charge of such report or statement. (f) Each opinion prepared by a foreign professional service corporation practicing law shall bear the signature of one or more attorneys and counsellors-at-law who are in responsible charge of such opinion. (g) In addition to the requirements in paragraphs (b) through (f) inclusive herein, each document prepared by a foreign professional service corporation which under the rules, regulations, laws or customs of the applicable profession is required to bear the signature of an individual in responsible charge of such document, shall be signed by one or more such individuals licensed to practice in this state.

§ 1527 Professional relationships and liabilities.

§ 1527. Professional relationships and liabilities. (a) Each shareholder, employee or agent of a foreign professional service corporation who performs professional services in this state on behalf of the corporation shall be personally and fully liable and accountable for any negligent or wrongful act or misconduct committed by him or by any person under his direct supervision and control while rendering such professional services, and shall bear professional responsibility for compliance by such corporation with all laws, rules and regulations governing the practice of the profession in this state. (b) The relationship of an individual to a foreign professional service corporation with which such individual is associated, whether as shareholder, director, officer, employee or agent, shall not modify or diminish the jurisdiction over him of the licensing authority and in the case of an attorney and counsellor-at-law, the other courts of this state.

§ 1528 Foreign professional service corporation.

§ 1528. Foreign professional service corporation.

No foreign professional service corporation shall engage in any business in this state other than the rendering of the professional services for which it is incorporated and is authorized to do business in this state; provided that such corporation may invest its funds in real estate, mortgages, stocks, bonds or any other type of investments.

§ 1529 Business corporation law applicable.

§ 1529. Business corporation law applicable.

Except for the provisions of sections thirteen hundred three, thirteen hundred four, thirteen hundred sixteen, thirteen hundred seventeen and thirteen hundred twenty, this chapter shall be applicable to a foreign professional service corporation to the extent that the provisions thereof are not in conflict with the provisions of this article. A foreign professional service corporation may practice in this state, or may consolidate or merge with another corporation, or may be a member of a professional service limited liability company, a foreign professional service limited liability company, a registered limited liability partnership or foreign limited liability partnership, only if all of the professions practiced by such corporations, limited liability companies or limited liability partnerships could be practiced by a single professional service corporation organized in this state; and, further, only if such foreign professional service corporation is domiciled in a state or territory of the United States the laws of which, at the time of application by such corporation under section fifteen hundred thirty of this article, contain a reciprocal provision under which professional service corporations domiciled in this state may similarly apply for the privilege of doing business in any such state or territory; provided further however, that nothing herein shall authorize a foreign professional service corporation practicing professional engineering, land surveying, geology, architecture and/or landscape architecture to be a member or partner of a professional service limited liability company, a foreign professional service limited liability company, a registered limited liability partnership or a foreign limited liability partnership unless all of the shareholders, directors and officers of such foreign professional service corporation are licensed to practice one or more of such professions in this state.

§ 1530 Filing requirements.

§ 1530. Filing requirements. (a) A foreign professional service corporation may apply for authority to do business in this state. An application entitled "Application for

Authority of .......... (name of corporation) under Section fifteen hundred thirty of the Business Corporation Law," shall be signed and delivered to the department of state. It shall set forth: (1) The name of the foreign professional service corporation. If the name does not end with the words "Professional Corporation" or the abbreviation "P.C.", it shall in addition to the foregoing set forth the name to be used in this state, ending with the words "Professional Corporation" or the abbreviation "P.C." (2) The jurisdiction and date of its incorporation. (3) A statement of the profession or professions to be practiced in this state and a statement that the foreign professional service corporation is authorized to practice such profession or professions in the jurisdiction of its incorporation. (4) The name, address and license number of each person within the foreign professional service corporation who is licensed to practice the profession or professions in this state. (5) The city, incorporated village or town and the county within this state in which its office is to be located. (6) A designation of the secretary of state as its agent upon whom process against it may be served and the post office address within or without this state to which the secretary of state shall mail a copy of any process against it served upon him. (7) If it is to have a registered agent, his name and address within this state and a statement that the registered agent is to be its agent upon whom process against it may be served. (8) A statement that the foreign professional service corporation has not since its incorporation or since the date its authority to do business in this state was last surrendered, engaged in any activity in this state, or in lieu thereof, the consent of the state tax commission to the filing of the application, which consent shall be attached thereto. (b) Attached to the application for authority shall be: (1) A certificate by an authorized officer of the jurisdiction of its incorporation that the foreign professional service corporation is an existing corporation. (2) A certificate or certificates issued by the licensing authority that each individual within the corporation intending to practice the

profession or professions in this state is licensed to practice said profession or professions in this state. In order to obtain said certificate or certificates, a copy of the certificate of incorporation shall be furnished to the licensing authority. (3) A certificate or certificates issued by the licensing authority in the case of a foreign professional service corporation providing health services that each shareholder, officer and director of the foreign professional service corporation is licensed to practice said profession in this state. (c) The fee for filing the application for authority shall be two hundred dollars, payable to the department of state, and the fee for a certificate of authority issued by the state education department shall be fifty dollars.

§ 1531 Annual statement.

§ 1531. Annual statement.

Each foreign professional service corporation shall, at least once of each year on or before the date prescribed by the licensing authority, furnish a statement to the licensing authority listing the name and residence address of each shareholder, director, officer and corporate employee licensed by such licensing authority and certifying that such individuals intending to practice a profession which such foreign professional service corporation is authorized to practice in this state are licensed to practice said profession in this state. In the case of a foreign professional service corporation providing health services, such statement shall also certify that each shareholder, officer and director of the corporation is licensed to practice said profession in this state. The statement shall be signed by the president or any vice-president of the corporation and attested to by the secretary or any assistant secretary of the corporation.

§ 1532 Regulation of professions.

§ 1532. Regulation of professions. (a) This article shall not repeal, modify or restrict any provision of the education law or the judiciary law or any rules or regulations adopted thereunder regulating the professions referred to therein except

to the extent in conflict herewith. (b) A foreign professional service corporation, other than a foreign professional service corporation authorized to practice law, shall be under the supervision of the regents of the university of the state of New York and be subject to disciplinary proceedings and penalties, and its authority to do business shall be subject to suspension, revocation or annulment for cause, in the same manner and to the same extent as is provided with respect to individuals and their licenses, certificates, and registrations in title eight of the education law relating to the applicable profession. Notwithstanding the provisions of this subdivision, a foreign professional service corporation authorized to practice medicine shall be subject to the prehearing procedures and hearing procedures as is provided with respect to individual physicians and their licenses in Title II-A of article two of the public health law. (c) A foreign professional service corporation authorized to practice law shall be subject to the regulation and control of, and its authority to do business shall be subject to suspension, revocation or annulment for cause by, the appellate division of the supreme court and the court of appeals in the same manner and to the same extent provided in the judiciary law with respect to individual attorneys and counselors-at-law. Such corporation need not qualify for any certification under section four hundred sixty-four of the judiciary law, take an oath of office under section four hundred sixty-six of such law or register under section four hundred sixty-seven of such law.

§ 1533 Licensing of individuals.

§ 1533. Licensing of individuals.

No officer, director, shareholder or employee of a foreign professional service corporation shall practice his or her profession in this state unless such individual is duly licensed to practice such profession in this state.

ARTICLE 16 SECURITY TAKEOVER DISCLOSURE ACT

Section 1600. Short title. 1601. Definitions. 1602. Disclosure requirement. 1603. Contents of registration statement. 1604. Enforcement. 1605. Violations; penalties. 1606. Administration. 1607. Prosecutions and immunity. 1608. Designation of secretary of state for service. 1609. Fraudulent, deceptive or manipulative practices. 1610. Exclusions. 1611. Validity; saving clause. 1612. Requirements for certain takeover bids. 1613. Private right of action.

Article 16

§ 1600 Short title.

§ 1600. Short title.

This article shall be known as the security takeover disclosure act.

§ 1601 Definitions.

§ 1601. Definitions.

As used in this article, the following terms shall have the following meanings: (a) "Takeover bid" means the acquisition of or offer to acquire by an offeror from an offeree, pursuant to a tender offer or request or invitation for tenders, any equity security of a target company, if after acquisition thereof the offeror would, directly or indirectly, be a beneficial owner of more than five percent of any class of the issued and outstanding equity securities of such target company.

Such term does not include: (1) Bids made by a dealer for his own account in the ordinary course of his business of buying and selling such security; (2) An offer to acquire such equity security solely in exchange for other securities, or the acquisition of such equity security pursuant to

such offer, for the sole account of the offeror, in good faith and not for the purpose of avoiding this section, and not involving any public offering of such other securities within the meaning of section four of title one of the "Securities Act of 1933", (48 Stat. 77, 15 U.S.C. 77 d (2)); as amended; (3) Any other offer to acquire an equity security, or the acquisition of such equity security pursuant to such offer, for the sole account of the offeror, from not more than fifty offerees, in good faith and not for the purpose of avoiding the provisions of this article; (4) Any offer or class of offer where, prior to making the offer, the offeror beneficially owns, directly or indirectly, a majority of the voting equity securities of the target company; (b) "Offeror" means a person who makes, or in any way participates or aids in making, a takeover bid, and includes persons acting jointly or in concert, or who intend to exercise jointly or in concert any voting rights attached to the securities for which such takeover bid is made. An "offeror" includes an issuer of securities whose securities are or are to be the subject of a takeover bid whether or not the issuer, upon acquisition, will become the beneficial owner of such securities. "An offeror" does not include any bank or broker-dealer in securities loaning funds to the offeror in the ordinary course of the business of the bank or broker-dealer in securities and not otherwise participating in the takeover bid, or any bank, broker-dealer in securities, attorney, accountant or consultant furnishing information or advice to an offeror and not otherwise participating in the takeover bid. (c) "Offeree" means the beneficial owner, residing in this state, of securities which an offeror acquires or offers to acquire in connection with a takeover bid. (d) "Target company" means a corporation, organized under the laws of this state and having its principal executive offices or significant business operations located within this state. (e) "Equity security" means any stock, bond, or other obligation of a target company, the holder of which has the right to vote for the election of members of the board of directors, or those exercising a similar function if the target company is not a corporation, of such target company. Equity security includes any security convertible into an equity security, and also includes any right, option or warrant to

purchase an equity security.

§ 1602 Disclosure requirement.

§ 1602. Disclosure requirement. (a) No offeror shall make a takeover bid unless as soon as practicable on the date of commencement of the takeover bid he files with the attorney general at his New York city office and delivers to the target company at its principal executive offices a registration statement containing the information required by section sixteen hundred three of this article. (b) An offeror shall make full and fair disclosure to offerees of the material information set forth in the registration statement filed pursuant to subdivision (a) of this section. (c) No solicitation or recommendation to the offerees of a target company to accept or reject a takeover bid shall be made by or on behalf of an offeror or a target company unless at the time copies of such solicitation or recommendation are first published, sent or given to such offerees, the person making such solicitation or recommendation has filed copies of the solicitation or recommendation with the attorney general at his New York city office.

§ 1603 Contents of registration statement.

§ 1603. Contents of registration statement. (a) The registration statement required to be filed pursuant to subdivision (a) of section sixteen hundred two of this article shall include:

1. Copies of all prospectuses, brochures, advertisements, circulars, letters, or other matter by means of which the offeror proposes to disclose to offerees all information material to a decision to accept or reject the offer;

2. The identity and background of all persons on whose behalf the acquisition of any equity security of the target company has been or is to be effected;

3. The exact title and number of shares outstanding of the class of

equity securities being sought, the number of such securities being sought and the consideration being offered therefor;

4. The source and amount of funds or other consideration used or to be used in acquiring any equity security, including a statement describing any securities, other than the existing capital stock or long term debt of the offeror, which are being offered in exchange for the equity securities of the target company and also including copies of all loan or credit agreements and letters of commitment used or to be used to secure financing for the acquisition of any equity security of the target company;

5. A statement of any plans or proposals which the offeror, upon gaining control, may have to liquidate the target company, sell its assets, effect a merger or consolidation of it, or make any other major change in its business, corporate structure, management personnel, or policies of employment;

6. The number of shares of any equity security of the target company of which each offeror is beneficial or record owner or has a right to acquire, directly or indirectly, together with the name and address of each person defined in this section as an offeror;

7. Particulars as to any contracts, arrangements, or understandings to which an offeror is party with respect to any equity security of the target company, including without limitation transfers of any equity security, joint ventures, loans or option arrangements, puts and calls, guarantees of loan, guarantees against loss, guarantees of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements, or understandings have been entered into;

8. Complete information on the organization and operations of the offeror, including without limitation the year of organization, form of organization, jurisdiction in which it is organized, a description of each class of the offeror's capital stock and of its long term debt, financial statements for the current period and for the three most

recent annual accounting periods, a description of pending legal proceedings other than routine litigation to which the offeror or any of its subsidiaries is a party or of which any of their property is the subject, a brief description of the business done and projected by the offeror and its subsidiaries and the general development of such business over the past five years, the names of all directors and executive officers together with biographical summaries of each for the preceding three years to date;

9. A statement as to the potential impact, if any, of the offeror's plans or proposals on the residents of New York state, including any material change in the location of the target company's offices or business activities within this state; any plant or facility relocation; any plant or facility closings; any significant reduction in the workforce at an individual plant or facility; any other material change in the number, job classification, compensation, or other terms and conditions of employment of persons employed by the target company in this state; any material change in the relationships of the target company with suppliers or customers within this state, or any other material changes in the target company's business, corporate structure, management, personnel or activities which would have a substantial impact on residents of this state;

10. Particulars as to any pension plans; profit sharing plans; savings plans; educational opportunities; relocation adjustments; labor relations records, including violations of the federal national labor relations act, occupational safety and health act of 1970, fair labor standards act, or employee retirement and income security act, as amended, finally adjudicated or settled within five years of the commencement of the takover bid; earnings and dividend growth; community activities; and charitable, cultural, educational and civic contributions of the offeror;

11. If the offeror is a natural person, information concerning his identity and background, including without limitation financial statements for the current and three preceding years, a description of his business activities and affiliations during that time period, and a

description of any pending legal or administrative proceedings, other than routine and immaterial litigation, to which the offeror is a party or of which any of his property is the subject; and

12. If debt securities or preferred stock are either offered in the takeover bid or used as a source of funds in making the takeover bid, the investment rating, if any, by a generally recognized rating service of such debt security or preferred stock. (b) If any material change occurs in the facts set forth in the registration statement required by subdivision (a) of section sixteen hundred two of this article, the offeror who filed such statement shall promptly notify the attorney general and the target company of such change in writing or by telephone confirmed in writing and shall amend the registration statement to reflect such change promptly but not later than the date such change is first published, sent or given to offerees. (c) The attorney general may permit the omission of any information required by subdivision (a) of this section to be included in the registration statement if he determines that such information is immaterial or otherwise unnecessary for the protection of offerees.

§ 1604 Enforcement.

§ 1604. Enforcement. (a) The attorney general may conduct such investigation as he deems necessary concerning any takeover bid for the purpose of determining compliance with the requirements of this article. As part of such investigation the attorney general may require persons to file statements in writing and under oath with his office, subpoena witnesses, compel their attendance, examine them under oath and require the production of books, records, documents and papers. (b) In the event the attorney general determines that any person is violating or about to violate any provision of this article, or any order, rule or regulation issued pursuant thereto, he may seek, in a court of competent jurisdiction, an injunction temporarily or permanently barring that person from making or taking part in or continuing a takeover bid or from taking up or paying for shares tendered by offerees pursuant to a takeover bid, and the court may grant the relief applied for or so much thereof as it may deem proper.

§ 1605 Violations; penalties.

§ 1605. Violations; penalties. (a) Every person who willfully violates any provision of this article shall be guilty of a class E felony; every person who willfully violates any order, rule or regulation issued pursuant thereto, shall be guilty of a class A misdemeanor. (b) A violation of any provision of this article shall constitute a fraudulent practice within the meaning of article twenty-three-A of the general business law. (c) Every person who violates any provision of this article shall be subject to a civil penalty of one thousand dollars per violation if a natural person or ten thousand dollars per violation if a corporation. When the violation is the failure to file a registration statement as required by subdivision (a) of section sixteen hundred two of this article, the failure to file a solicitation or recommendation as required by subdivision (c) of section sixteen hundred two of this article, or the failure to amend such registration statement as required by subdivision (b) of section sixteen hundred three of this article, each business day of non-registration or failure to file a recommendation or solicitation or failure to amend constitutes a separate violation. The penalty imposed by this section shall be cumulative and more than one penalty shall be recoverable in the same action in any court of competent jurisdiction.

§ 1606 Administration.

§ 1606. Administration. (a) This article shall be administered by the attorney general and employees designated by him within the department of law. The attorney general is hereby empowered to promulgate, alter, amend or revoke rules and regulations necessary to carry out the purposes of this article. (b) The attorney general may establish fees for the filing of any registration statement, not to exceed two thousand five hundred dollars, to recover the costs of administering this article. Such fees may vary according to the maximum consideration payable by the offeror for the securities which are the subject of the takeover bid.

§ 1607 Prosecutions and immunity.

§ 1607. Prosecutions and immunity. (a) The attorney general may prosecute every person charged with the commission of a criminal offense arising from the violation of any provision of this article. In all such proceedings, the attorney general may appear in person or by his deputy before any court of record or any grand jury and exercise all the powers and perform all the duties in respect of such actions or proceedings which the district attorney would otherwise be authorized or required to exercise or perform; or the attorney general may in his discretion transmit evidence, proof and information as to such offense to the district attorney of the county or counties in which the alleged violation has occurred, and every district attorney to whom such evidence, proof and information is so transmitted shall forthwith proceed to prosecute any corporation, company, association, or officer, manager or agent thereof, or any firm or person charged with such violation. In any such proceeding, wherein the attorney general has appeared either in person or by deputy, the district attorney shall only exercise such powers and perform such duties as are required of him by the attorney general or the deputy attorney general so appearing. (b) Upon any investigation before the attorney general or his deputy or other officer designated by him, or in any criminal proceeding before any court, magistrate or grand jury, pursuant to or for a violation of any of the provisions of this article, the attorney general, his deputy or other officer designated by him, or the court, magistrate or grand jury, may confer immunity in accordance with the provisions of section 50.20 of the criminal procedure law.

§ 1608 Designation of secretary of state for service.

§ 1608. Designation of secretary of state for service. (a) Every nonresident offeror, whether or not such offeror has filed a registration statement, except a foreign corporation which has appointed and keeps a resident agent in this state, shall be deemed to have appointed the secretary of state as his agent upon whom may be served any lawful process, authorized by this article, with the same effect as though served upon the offeror personally. (b) Service of process pursuant to this section shall be accomplished

by leaving a copy of the process in the office of the secretary of state, but it shall not be effective unless notice of the service and a copy of the process is sent by certified or registered mail to the nonresident offeror served, at his last known address.

§ 1609 Fraudulent, deceptive or manipulative practices.

§ 1609. Fraudulent, deceptive or manipulative practices. (a) No person shall make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any takeover bid or any solicitation of offerees in opposition to or in favor of any such takeover bid. (b) It shall constitute a violation of this article for any person who is in possession of material information relating to any takeover bid, which information he knows or has reason to know is nonpublic, which he acquired either before or after the commencement of the takeover bid, and which he knows or has reason to know has been acquired directly or indirectly from an offeror, a target company, or any officer, director, partner or employee or any other person acting on behalf of the offeror or target company, to purchase or sell or cause to be purchased or sold, within or from this state, any securities sought or to be sought by such takeover bid or any securities convertible into or exhangeable for any such securities or any option or right to obtain or to dispose of any such securities. (c) Fraudulent, deceptive or manipulative acts or practices include without limitation those acts and practices proscribed by rules and regulations which the attorney general is hereby empowered to adopt, promulgate, amend and rescind as is necessary to carry out the provisions of this section.

§ 1610 Exclusions.

§ 1610. Exclusions.

This article shall not apply when: (a) The offeror or the target company is a public utility or a public

utility holding company as defined in section two of the "Public Utility Holding Company Act of 1935," (49 Stat.803, 15 U.S.C. 79), as amended, and the takeover bid is subject to approval by the appropriate federal agency as provided in such act; (b) The offeror or the target company is a bank or a bank holding company as subject to the "Bank Holding Company Act of 1956," (70 Stat. 133, 12 U.S.C. 1841), and subsequent amendments thereto, and the takeover bid is subject to approval by the appropriate federal agency as provided in such act; (c) The offeror or the target company is a savings and loan holding company as defined in section two of the "Savings and Loan Holding Company Amendments of 1967," (82 Stat. 5, 12 U.S.C. 1730A), as amended, and the takeover bid is subject to approval by the appropriate federal agency as provided in such act; (d) The offeror and the target company are banks and the offer is part of a merger transaction subject to approval by appropriate federal or state supervisory authorities.

§ 1611 Validity; saving clause.

§ 1611. Validity; saving clause.

In the event any provision or application of this article shall be held illegal or invalid for any reason, such holding shall not affect the legality or validity of any other provision or application thereof.

§ 1612 Requirements for certain takeover bids.

§ 1612. Requirements for certain takeover bids.

If the takeover bid is not subject to the requirements of section 14(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(d), the following additional requirements shall apply to the takeover bid: (a) The takeover bid shall be made on the same terms to all offerees holding the same class or series of securities. (b) The period of time within which equity securities may be deposited pursuant to a takeover bid shall not be less than thirty business days. (c) Equity securities deposited pursuant to a takeover bid may be withdrawn at any time until the expiration of thirty business days after

the commencement of the takeover bid and at any time after the expiration of sixty-five days from the commencement of the takeover bid, if the shares have not been purchased, and until the expiration of ten business days following the date of commencement of another offeror's takeover bid for the same equity securities if the shares have not been purchased and if the bidder has received notice or otherwise has knowledge of the commencement of such takeover bid. (d) Where a takeover bid is made for less than all the outstanding equity securities of a class and where a greater number of such securities is deposited pursuant thereto than the offeror is bound or willing to take up and pay for, the securities taken up and paid for by the offeror shall be taken up and paid for as nearly as possible on a pro rata basis, disregarding fractions, according to the number of securities deposited by each shareholder. (e) Where an offeror increases the consideration offered in a takeover bid, the offeror shall pay the increased consideration for all equity securities accepted, whether such securities have been accepted by the offeror before or after the increase in consideration. (f) (1) Within ten days of the filing of a registration statement as required by section sixteen hundred two of this article the attorney general may schedule a public hearing or hearings or conduct such investigation as he deems necessary concerning any takeover bid for the purpose of determining compliance with the requirements of this article; (2) Any such hearing or investigation shall be declared by order of the attorney general; (3) Any initial hearing shall commence within twenty days of the filing of a registration statement. (g) In the event the attorney general shall schedule a public hearing or otherwise conduct an investigation pursuant to subdivision (f) of this section, the attorney general may also, in his discretion, issue an order staying the offeror from purchasing or paying for any shares tendered in response to its takeover bid at any time prior to such purchasing or paying for shares tendered. Every person shall comply with every such order. (h) In the event the attorney general shall issue a stay payment order pursuant to subdivision (g) of this section, the attorney general shall, no later than thirty days from the issuance of such stay payment order,

issue an order containing his findings of fact and conclusions of law. (i) Any stay payment order issued by the attorney general pursuant to subdivision (g) of this section shall automatically expire within sixty days from its issuance except where the attorney general has in his order containing findings of fact and conclusions of law conditioned the purchase and payment for shares tendered upon changes or modifications in the registration statement, in which event any stay payment order shall be vacated by the attorney general after he is satisfied that such changes or modifications have been publicly disseminated to offerees. (j) The attorney general may apply, on notice to the offeror and the target company, to a court of competent jurisdiction, and such court may grant an application, for good cause, to extend any of the time periods set forth in this section if an extension is necessary for the protection of offerees.

§ 1613 Private right of action.

§ 1613. Private right of action.

Any offeree whose equity securities are the subject of a takeover bid and who has been injured by any violation of this article may bring an action in his or her own name to enjoin such unlawful act or practice and to recover actual damages together with reasonable attorney fees in the event the offeree is successful.

ARTICLE 17 BENEFIT CORPORATIONS Section 1701. Application and effect of article. 1702. Definitions. 1703. Formation of benefit corporations. 1704. Election of an existing business corporation to become a benefit corporation. 1705. Termination of benefit corporation status. 1706. Corporate purposes. 1707. Standard of conduct for directors and officers. 1708. Annual benefit report. 1709. Conspicuous language on the face of certificates.

Article 17

§ 1701 Application and effect of article.

§ 1701. Application and effect of article. (a) This article shall be applicable to all benefit corporations. (b) The existence of a provision of this article shall not of itself create any implication that a contrary or different rule of law is or would be applicable to a business corporation that is not a benefit corporation. This article shall not affect any statute or rule of law that is or would be applicable to a business corporation that is not a benefit corporation. (c) Except as otherwise provided in this article, this chapter shall be applicable to all benefit corporations. The specific provisions of this article shall control over the general provisions of this chapter. (d) A provision of the certificate of incorporation or bylaws of a benefit corporation may not relax, be inconsistent with or supersede any provision of this article.

§ 1702 Definitions.

§ 1702. Definitions.

As used in this article, unless the context otherwise requires, the term: (a) "Benefit corporation" means a business corporation incorporated under this article and whose status as a benefit corporation has not been terminated as provided in this article. (b) "General public benefit" means a material positive impact on society and the environment, taken as a whole, assessed against a third-party standard, from the business and operations of a benefit corporation. (c) "Independent" means that a person has no material relationship with a benefit corporation or any of its subsidiaries. A material relationship between a person and a benefit corporation or any of its subsidiaries will be conclusively presumed to exist if: (1) the person is, or has been within the last three years, an employee of the benefit corporation or any of its subsidiaries; (2) an immediate family member of the person is, or has been within the last three years, an executive officer of the benefit corporation or

any of its subsidiaries; or (3) the person, or an entity of which the person is a director, officer or other manager or in which the person owns beneficially or of record five percent or more of the equity interests, owns beneficially or of record five percent or more of the shares of the benefit corporation. A percentage of ownership in an entity shall be calculated as if all outstanding rights to acquire equity interests in the entity had been exercised. (d) "Minimum status vote" means that, in addition to any other approval or vote required by this chapter, the certificate of incorporation or a bylaw adopted by the shareholders: (1) The holders of shares of every class or series that are entitled to vote on the corporate action shall be entitled to vote as a class on the corporate action; and (2) The corporate action must be approved by vote of the shareholders of each class or series entitled to cast at least three-quarters of the votes that all shareholders of the class or series are entitled to cast thereon. (e) "Specific public benefit," includes: (1) providing low-income or underserved individuals or communities with beneficial products or services; (2) promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business; (3) preserving the environment; (4) improving human health; (5) promoting the arts, sciences or advancement of knowledge; (6) increasing the flow of capital to entities with a public benefit purpose; and (7) the accomplishment of any other particular benefit for society or the environment. (f) "Subsidiary" means an entity in which a person owns beneficially or of record fifty percent or more of the equity interests. A percentage of ownership in an entity shall be calculated as if all outstanding rights to acquire equity interests in the entity had been exercised. (g) "Third-party standard" means a recognized standard for defining, reporting and assessing general public benefit that is: (1) developed by a person that is independent of the benefit

corporation; and (2) transparent because the following information about the standard is publicly available: (A) the factors considered when measuring the performance of a business; (B) the relative weightings of those factors; and (C) the identity of the persons who developed and control changes to the standard and the process by which those changes are made.

§ 1703 Formation of benefit corporations.

§ 1703. Formation of benefit corporations.

A benefit corporation shall be formed in accordance with this chapter except that its certificate of incorporation shall also state that it is a benefit corporation.

§ 1704 Election of an existing business corporation to become a benefit

§ 1704. Election of an existing business corporation to become a benefit corporation. (a) A business corporation may become a benefit corporation under this article by amending its certificate of incorporation so that it contains a statement that the corporation is a benefit corporation. The amendment shall not be effective unless it is adopted by at least the minimum status vote. (b) Any corporation that is not a benefit corporation that is a party to a merger or consolidation in which the surviving or consolidated corporation will be a benefit corporation must approve the plan of merger or consolidation by at least the minimum status vote in addition to any other vote required by this chapter, the certificate of incorporation or the bylaws. (c) Any corporation that is not a benefit corporation that is party to a merger or consolidation in which shares of stock of such corporation will be converted into a right to receive shares of stock of a benefit corporation must approve the plan of merger or consolidation by at least the minimum status vote in addition to any other vote required by this chapter, the certificate of incorporation or the bylaws.

§ 1705 Termination of benefit corporation status.

§ 1705. Termination of benefit corporation status. (a) A benefit corporation may terminate its status as such and cease to be subject to this article by amending its certificate of incorporation to delete the statement that the corporation is a benefit corporation. The amendment shall not be effective unless it is adopted by at least the minimum status vote. (b) If a benefit corporation is a party to a merger or consolidation in which the surviving or new corporation will not be a benefit corporation, the plan of merger or consolidation shall not be effective unless it is adopted by at least the minimum status vote in addition to any other vote required by this chapter, the certificate of incorporation or the bylaws. (c) Any benefit corporation that is party to a merger or consolidation in which shares of stock of such benefit corporation will be converted into a right to receive shares of stock of a corporation that is not a benefit corporation must approve the plan of merger or consolidation by at least the minimum status vote in addition to any other vote required by this chapter, the certificate of incorporation or the bylaws. (d) A sale, lease, conveyance, exchange, transfer, or other disposition of all or substantially all of the assets of a benefit corporation, unless the transaction is in the usual and regular course of business of the benefit corporation, shall not be effective unless the transaction is approved by at least the minimum status vote in addition to any other vote required by this chapter, the certificate of incorporation or the bylaws.

§ 1706 Corporate purposes.

§ 1706. Corporate purposes. (a) Every benefit corporation shall have a purpose of creating general public benefit. This purpose is in addition to its purposes under section two hundred one of this chapter and any specific purpose set forth in its certificate of incorporation under paragraph (b) of this section. The purpose to create general public benefit shall be a limitation on the other purposes of the benefit corporation, and shall control over any inconsistent purpose of the benefit corporation. (b) The certificate of incorporation of a benefit corporation may

identify one or more specific public benefits that it is the purpose of the benefit corporation to create in addition to its purposes under section two hundred one of this chapter and paragraph (a) of this section. The identification of a specific public benefit under this paragraph does not limit the obligation of a benefit corporation to create general public benefit. (c) The creation of general and specific public benefits as provided in paragraphs (a) and (b) of this section is in the best interests of the benefit corporation. (d) A benefit corporation may amend its certificate of incorporation to add, amend or delete the identification of a specific public benefit that it is the purpose of the benefit corporation to create. The amendment shall not be effective unless it is adopted by at least the minimum status vote.

§ 1707 Standard of conduct for directors and officers.

§ 1707. Standard of conduct for directors and officers. (a) In discharging the duties of their respective positions, the board of directors, committees of the board and individual directors and officers of a benefit corporation: (1) shall consider the effects of any action upon: (A) the ability for the benefit corporation to accomplish its general and any specific public benefit purpose; (B) the shareholders of the benefit corporation; (C) the employees and workforce of the benefit corporation and its subsidiaries and suppliers; (D) the interests of customers as beneficiaries of the general or specific public benefit purposes of the benefit corporation; (E) community and societal considerations, including those of any community in which offices or facilities of the benefit corporation or its subsidiaries or suppliers are located; (F) the local and global environment; and (G) the short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by the continued independence of the benefit corporation; (2) may consider:

(A) the resources, intent and conduct (past, stated and potential) of any person seeking to acquire control of the corporation; and (B) any other pertinent factors or the interests of any other group that they deem appropriate; and (3) shall not be required to give priority to the interests of any particular person or group referred to in subparagraphs one and two of this paragraph over the interests of any other person or group unless the benefit corporation has stated its intention to give priority to interests related to a specific public benefit purpose identified in its certificate of incorporation. (b) The consideration of interests and factors in the manner required by paragraph (a) of this section: (1) shall not constitute a violation of the provisions of sections seven hundred fifteen or seven hundred seventeen of this chapter; and (2) is in addition to the ability of directors to consider interests and factors as provided in section seven hundred seventeen of this chapter. (c) A director does not have a fiduciary duty to a person that is a beneficiary of the general or specific public benefit purposes of a benefit corporation arising from the status of the person as a beneficiary, unless otherwise stated in the certificate of incorporation or the bylaws of the benefit corporation.

§ 1708 Annual benefit report.

§ 1708. Annual benefit report. (a) A benefit corporation must deliver to each shareholder an annual benefit report including: (1) a narrative description of: (A) the process and rationale for selecting the third party standard used to prepare the benefit report; (B) the ways in which the benefit corporation pursued general public benefit during the year and the extent to which general public benefit was created; (C) the ways in which the benefit corporation pursued any specific public benefit that the certificate of incorporation states it is the purpose of the benefit corporation to create and the extent to which that specific public benefit was created; and

(D) any circumstances that have hindered the creation by the benefit corporation of general or specific public benefit; (2) an assessment of the performance of the benefit corporation, relative to its general public benefit purpose assessed against a third-party standard applied consistently with any application of that standard in prior benefit reports or accompanied by an explanation of the reasons for any inconsistent application and, if applicable, assessment of the performance of the benefit corporation, relative to its specific public benefit purpose or purposes; (3) the compensation paid by the benefit corporation during the year to each director in that capacity; and (4) the name of each person that owns beneficially or of record five percent or more of the outstanding shares of the benefit corporation. (b) The benefit report must be sent annually to each shareholder within one hundred twenty days following the end of the fiscal year of the benefit corporation. Delivery of a benefit report to shareholders is in addition to any other requirement to deliver an annual report to shareholders. (c) A benefit corporation must post its most recent benefit report on the public portion of its website, if any, except that the compensation paid to directors and any financial or proprietary information included in the benefit report may be omitted from the benefit report as posted. (d) Concurrently with the delivery of the benefit report to shareholders pursuant to paragraph (b) of this section, the benefit corporation must deliver a copy of the benefit report to the department for filing, except that the compensation paid to directors and any financial or proprietary information included in the benefit report may be omitted from the benefit report as filed under this section. (e) The annual benefit report shall be in addition to all other reporting requirements under this chapter.

§ 1709 Conspicuous language on the face of certificates.

§ 1709. Conspicuous language on the face of certificates.

All certificates representing shares of a benefit corporation shall contain, in addition to any other statements required by the business corporation law, the following conspicuous language on the face of the

certificate: "This entity is a benefit corporation organized under article seventeen of the New York business corporation law."

ARTICLE 20 EFFECTIVE DATE

Article 20

§ 2001 Effective date.

§ 2001. Effective date.

This act shall take effect September first, nineteen hundred sixty-three.