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This entry was published on 2014-11-28
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SECTION 101
Authority to issue stock, bonds and other forms of indebtedness
Public Service (PBS) CHAPTER 48, ARTICLE 5
§ 101. Authority to issue stock, bonds and other forms of
indebtedness. A telegraph or telephone corporation may, when authorized
by the commission, issue stock, bonds, notes or other evidences of
indebtedness payable at periods of more than twelve months after the
date thereof, or a receiver of such a corporation, if duly authorized by
law, may issue receiver's certificates, when necessary for the
acquisition of property, the construction, completion, extension or
improvement of its facilities or the improvement or maintenance of its
service within the state, or for the discharge or lawful refunding of
its obligations, or reimbursement of moneys actually expended from the
income from any source, within five years next prior to the filing of
the application therefor, or for any of such purposes, provided,
however, that no authority shall be granted authorizing such issue for
reimbursement of moneys expended from income for betterments or
replacements unless the applicant shall have kept its accounts and
vouchers of such expenditures in such manner as to enable the commission
to ascertain the amount of moneys so expended and the purposes for which
such expenditures were made. Stock may be issued to stockholders as a
stock dividend provided that there shall have been secured from the
commission authority for such issuance and for a transfer of surplus to
capital in an amount equal to the par or stated value of the stock so
authorized and that the applicant has certified in the application for
authority that a sum equal to the amount to be so transferred was
expended for the purposes enumerated in this section. Stock may be
issued to an employee or director of a telegraph or telephone
corporation under a stock option plan pursuant to which such corporation
grants options to its employees or directors to purchase shares of
stock, such options to be exercisable for a stated period of time to
purchase shares of stock at the market value of the stock at the time of
issuance of the option, provided that there shall have been secured from
the commission authority for such issuance and that the applicant has
certified in the application for authority that the proceeds from the
exercise of the stock options are needed for one of the purposes
enumerated in this section. The issue of stocks, bonds or other
evidences of indebtedness, within the meaning of this section, shall
include the sale by any such corporation of any such securities
previously issued in compliance with the provisions of this section and
subsequently reacquired by such corporation, provided, however, for good
cause shown the commission may exempt from the restriction hereof
stocks, bonds or other evidences of indebtedness. The application for
authority shall state the amount of any such issue and the purposes to
which it or its proceeds are to be applied and shall certify that the
money, property or labor procured or to be procured or paid for by such
issue or its proceeds has been or is reasonably required for the
purposes specified in the application for authority, and that such
purposes are in no part reasonably chargeable to operating expenses or
to income except in the case of bonds, notes or other evidences of
indebtedness as may be specifically identified in the application for
authority. For the proceeds from a federal loan, a telegraph or
telephone corporation shall provide notice to the public service
commission of receipt of such issue but shall not be required to file an
application for authority. For the purpose of enabling the commission to
determine whether it should authorize such issuance, the commission
shall have the power to make such inquiry or investigation, hold such
hearings and examine such witnesses, books, papers, documents or
contracts as it may determine of importance in enabling it to reach a
determination. Except in instances where a telegraph or telephone
corporation has notified the commission it is engaged in securing a
federal loan for the expansion of broadband services, no such
corporation shall, without the consent of the commission, apply any such
issue or its proceeds to any purpose not specified in the application
for authority. Such telegraph corporation or telephone corporation may
issue notes for proper corporate purposes and not in violation of any
provision of this chapter or of any other act, payable at periods of not
more than twelve months without the consent of the commission; but no
such note shall, in whole or in part, directly or indirectly, be
refunded by any issue of stock or bonds, or by any evidences of
indebtedness running for more than twelve months, without the consent of
the commission. No telegraph corporation or telephone corporation shall
be required, however, to apply to the commission for authority to issue
stocks, bonds, notes or other evidence of indebtedness except for the
acquisition of property, the construction, completion, extension or
improvement of its facilities, or the improvement or maintenance of its
service within the state, or the discharge or refunding of obligations,
or reimbursement of moneys actually expended for such purposes. The
commission shall have power to require every such corporation to file
with the commission after the issuance of stocks, bonds, notes or other
evidences of indebtedness issued with or without the approval of the
commission as provided in this section, a notice of such transaction in
such form as the commission may prescribe. The commission shall have no
power to authorize the capitalization of any franchise or right to be a
corporation, nor to authorize the capitalization of any franchise or the
right to own, operate or enjoy any franchise whatsoever in excess of the
amount (exclusive of any tax or annual charge) actually paid to the
state or any political subdivision thereof, as the consideration of the
grant of such franchise or right, nor to authorize the issuance of any
stocks or other securities for any purposes other than those enumerated
in this section. Nor shall the corporate stock of the corporation formed
by the merger or consolidation of two or more other corporations exceed
the sum of the capital stock of the corporations so consolidated, at the
par value thereof, or such sum and any additional sum actually paid in
cash; nor shall any contract for consolidation or lease be capitalized
in the stock of any corporation whatever; nor shall any corporation
hereafter issue any bonds against or as a lien upon any contract for
consolidation or merger. Notwithstanding the foregoing provisions of
this section, any application for approval under this section shall be
deemed granted by the commission forty-five days after such application
is filed for approval, unless the commission, or its designee,
determines and informs the applicant in writing within such forty-five
day period that the public interest requires the commission's review and
its written order.