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SECTION 13
Limited-profit housing companies; how created
Private Housing Finance (PVH) CHAPTER 44-B, ARTICLE 2
§ 13. Limited-profit housing companies; how created. A company may be
created by three or more persons, approved by the commissioner, by
making, subscribing, acknowledging and filing with the secretary of
state a certificate which shall be entitled and endorsed "Certificate of
Incorporation of (name of company) pursuant to the Limited-Profit
Housing Companies Law"; provided that if the company is to be organized
to undertake a municipally-aided project the commissioner shall not
approve such persons unless they shall have been first approved by the
supervising agency; provided further that no company shall be created to
provide aged care accommodations or accommodations for handicapped
persons under this article, except under this article and the
not-for-profit corporation law. The certificate shall state:

1. The name of the proposed company.

2. The purposes for which it is to be formed which shall include among
other things a provision that the company is to plan, acquire,
construct, own, maintain, and operate projects pursuant to the terms and
provisions of this article.

3. Except in the case of a not-for-profit corporation, the amount of
the capital shares, and if any be preferred shares, the preference
thereof.

4. Except in the case of a not-for-profit corporation, the number of
shares of which capital shall consist, all of which shall have a par
value.

5. The municipality, as well as the county within this state, in which
its principal business office is to be located, and the address to which
the secretary of state shall mail a copy of process in any action or
proceeding against the corporation which may be served upon him.

6. Its duration, which shall be: (a) not less than the period for
which the loans contracted for under this article and the interest
thereon remain unpaid in whole or in part; and (b) not less than the
period for which tax exemption is granted pursuant to section
thirty-three of this article; and (c) in any event not less than
thirty-five years from the date of occupancy of any project, except as
may be provided in sections thirty-five and thirty-six of this article.

7. The number of directors, which shall not be less than three nor
more than twenty-one, and who shall be elected by the stockholders or
members of the corporation. Unless required by the certificate of
incorporation or the by-laws, directors need not be stockholders.
Directors appointed by the commissioner pursuant to subdivision fifteen
of this section or by the supervising agency pursuant to paragraph (c)
of subdivision sixteen of this section need not be stockholders or meet
other qualifications which may be prescribed by the certificate of
incorporation or the by-laws. In a corporation undertaking a state-aided
project one additional director may be designated by the commissioner,
and, in the case of all state-aided mutual companies, such additional
director shall be designated by the commissioner at the creation of the
company and shall serve from the time of such designation at least until
a board of directors has been elected by the tenants entitled to
occupancy in the project by reason of ownership of shares in such
company. In a corporation undertaking a municipally-aided project one
additional director may be designated by the supervising agency, and, in
the case of all municipally-aided mutual companies, such additional
director shall be designated by the supervising agency at the creation
of the company and shall serve from the time of such designation at
least until a board of directors has been elected by the tenants
entitled to occupancy in the project by reason of ownership of shares in
such company. The director appointed by the commissioner or the
supervising agency need not be a stockholder or meet other
qualifications which may be prescribed by the certificate of
incorporation or the by-laws. In the absence of fraud or bad faith the
director appointed by the commissioner hereunder or the supervising
agency or the directors appointed by the commissioner or by the
supervising agency pursuant to subdivision fifteen or paragraph (c) of
subdivision sixteen respectively of this section shall not be personally
liable for the debts, obligations or liabilities of the corporation.
Directors of a mutual housing company are to serve in that capacity
without salary but may be reimbursed for expenses incurred directly
relating to the duties of the director's office.

8. The names and post-office addresses of the directors until the
first annual meeting.

9. The names and post-office addresses of the subscribers to the
certificate, and a statement of the number of shares of stock which each
agrees to take in the company.

10. That, except in the case of a company to be aided by a loan from
the federal government or any agency or instrumentality thereof, or if
the mortgage or mortgage bonds which are to be used in financing the
company's project are to be insured by the federal government or any
agency or instrumentality thereof, the entire amount to be paid in cash
or property by the shareholders and income debenture holders shall be at
least five per centum of the project cost in the case of an urban rental
company and a mutual company. The provisions of this subdivision shall
not apply to a non-profit company incorporated pursuant to the
provisions of the not-for-profit corporation law and this article for
the purpose of providing housing for staff members, employees or
students of a college, university, hospital or child care institution
and their immediate families, or for aged or handicapped persons of low
income, nor to a municipally-aided non-profit company nor to a
municipally-aided mutual company, nor to a low income non-profit housing
company.

11. That, so long as this article shall remain applicable to any
project of the company, its real property shall not be sold,
transferred, encumbered or assigned except as permitted by the terms and
provisions of this article.

12. That all of the subscribers to the certificate are of full age,
that at least two-thirds of them are citizens of the United States, and
that at least one of the persons named as director is a citizen of the
United States and a resident of the state of New York.

13. That the company has been organized to serve a public purpose and
that it shall be and remain subject to the supervision and control of
the commissioner, or, if the company is organized to undertake a
municipally aided project, of the supervising agency, except as
otherwise provided in this article, so long as this article remains
applicable to any project of the company; that all real and personal
property acquired by it, and all structures erected or rehabilitated by
it, shall be deemed to be acquired, rehabilitated or created for the
proper effectuation of the purposes of this article, and that the
directors and subscribers of such company shall be deemed to have agreed
that they shall at no time receive or accept from such company in
repayment of their investment in its stock any sums in excess of the par
value of the stock, together with such dividends or other compensation
as are prescribed by or permitted under this article, and that, upon
dissolution of the company, any surplus remaining after the payment of
all its obligations shall be distributed and disposed of and title to
the property may be conveyed in fee, only as prescribed by this article.

14. The certificate may provide that in the event that income
debentures are issued by the company the owners thereof may be given the
same right to vote as they would have if possessed of certificates of
stock of the amount and par value of the income debentures held by them.
If provision is made for the issuance of income debentures interest
shall be paid by the company on income debentures only out of net
earnings of the company that would be applicable to payment of dividends
if there were no income debentures.

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

16. If the company is organized to undertake a municipally-aided
project, such certificate shall contain:

(a) A declaration that the original directors, officers, subscribers
and income debenture holders possessing the right to vote, shall be
deemed at the time of accepting such offices, or subscribing to the
stock or income debentures to have agreed not to resign from the company
and not to sell their stock or income debentures prior to the completion
of the project and the certification of the total actual project cost by
the supervising agency, except with the consent of the supervising
agency.

(b) A declaration that the shares of stock and the income debentures
of the company shall be issued only in such amounts and form as may be
approved by the supervising agency and that no stock shall be redeemed,
purchased or retired and no income debentures shall be redeemed prior to
their dates of maturity or purchased or retired by the company during
the period in which the loan by the municipality is in force or for
which tax exemption is granted pursuant to section thirty-three of this
article, except with the consent of the supervising agency.

(c) A provision that in the event of a violation by the company of any
provision of the certificate of incorporation or of law or of the loan
or mortgage contract or of any rules and regulations duly promulgated
pursuant to the provisions of this article, the supervising agency may
remove any or all of the existing directors of the company and appoint
such person or persons which the supervising agency in its sole
discretion deems advisable, including officers or employees of the
supervising agency, as new directors to serve in the places of those
removed; that directors so appointed by the supervising agency who are
officers or employees of the supervising agency shall serve in such
capacity without compensation; and that any directors so appointed by
the supervising agency shall serve only for a period coexistent with the
duration of such violation or until the supervising agency is assured in
a manner satisfactory to it against violations of a similar nature.

(d) A provision that the supervising agency or its duly authorized
representative shall be notified in writing of and shall have the right
to attend all meetings of the board of directors or of the stockholders
and income debenture holders of the company.

(e) A provision that the sale of stock by a stockholder or the company
or the sale of income debentures, the holders of which possess the right
to vote, by any such holder or the company, shall be subject to the
consent of the supervising agency.

(f) Such other provisions, not inconsistent with law, as the
supervising agency may deem necessary to protect the investment of the
municipality and to carry out the purposes of this article.

17. The certificate of incorporation of a non-profit company
incorporated pursuant to the provisions of the not for-profit
corporation law and this article shall, in addition to all other matters
required by law to be stated therein, state:

a. That its purpose is to provide housing and auxiliary facilities for
staff members, employees or students of any college, university,
hospital, child care institution and their immediate families, for aged
or handicapped persons of low income, or for any one of the above
purposes, or to provide housing accommodations pursuant to the terms and
provisions of this article in the case of a municipally-aided non-profit
company, or to provide housing accommodations pursuant to the provisions
of this article in the case of a low income non-profit housing company;

b. That the directors or trustees are and at all times shall be
officers, directors or trustees of such college, university, hospital or
child care institution, or, in the case of a non-profit company
providing housing for aged or handicapped persons of low income or of a
municipally-aided non-profit company providing housing accommodations
pursuant to the terms and provisions of this article, or of a low income
non-profit housing company providing housing accommodations pursuant to
the provisions of this article, of a corporation organized pursuant to
the provisions of the not-for-profit corporation law;

c. That the property of such company shall upon dissolution vest in
such college, university, hospital, child care institution, or
not-for-profit corporation, and

d. That no part of the net earnings of such college, university,
hospital, child care institution or not-for-profit corporation shall
inure to the benefit of any private individual.

18. That the secretary of state is designated as the agent of the
company upon whom process in any action or proceeding against it may be
served.