S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  10930

                          I N  A S S E M B L Y

                               May 4, 2010
                               ___________

Introduced  by M. of A. BENJAMIN -- Multi-Sponsored by -- M. of A. TOWNS
  -- (at request of the Banking Department) -- read once and referred to
  the Committee on Banks

AN ACT to amend the banking law, in relation to authorized and  unissued
  shares  of  banks,  trust companies, stock-form savings banks, savings
  and loan associations and  investment  companies  and  to  change  the
  presumption  as  to  preemptive rights for shareholders of such insti-
  tutions

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subdivision  3  of  section  4001  of the banking law, as
amended by chapter 360 of the laws  of  1984,  is  amended  to  read  as
follows:
  3.  The  amount  of its AUTHORIZED capital stock, the number of shares
into which such capital stock shall be divided and the par value of  the
shares,  which capital stock shall amount to not less than the [amounts]
MINIMUM AMOUNT prescribed by the banking board, NOR MORE THAN THE AGGRE-
GATE OF (A) THE AMOUNT OF CAPITAL STOCK THE CORPORATION EXPECTS TO  SELL
IN  ITS INITIAL OFFERING OF SHARES AND (B) SUCH ADDITIONAL AMOUNT AS MAY
BE APPROVED BY THE BANKING BOARD.
  S 2. Subdivisions 1, 2, 3, 4 and 5 of section 6021 of the banking law,
as added by chapter 849 of the laws of 1964, paragraph (b)  of  subdivi-
sion  5  as  amended  by chapter 315 of the laws of 2008, are amended to
read as follows:
  1. As used in this section, the term:
  (a) "Unlimited dividend rights" means the right without limitation  as
to  amount  either  to  all  or  to a share of the balance of current or
liquidating dividends after the payment of dividends on any shares enti-
tled to a preference.
  (b) "Equity  shares"  means  shares  of  any  class,  whether  or  not
preferred  as  to  dividends  or  assets,  which have unlimited dividend
rights.
  (c) "Voting rights" means the right to vote for the election of one or
more directors, excluding a right so to vote which is dependent  on  the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD15513-02-0

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happening  of  an  event specified in the organization certificate which
would change the voting rights of any class of shares.
  (d)  "Voting  shares"  means  shares  of  any  class which have voting
rights.
  (e) "Preemptive right" means the right to  purchase  shares  or  other
securities to be issued, as such right is defined in this section.
  (F) "NEW SHARES OR SECURITIES" MEANS NEW EQUITY SHARES OF ANY CLASS OR
ANY  SHARES  OR  OTHER  SECURITIES CONVERTIBLE INTO EQUITY SHARES OF ANY
CLASS.
  2. THE PREEMPTIVE RIGHTS PROVIDED FOR IN  SUBDIVISION  THREE  OF  THIS
SECTION  SHALL  NOT APPLY TO NEW SHARES OR SECURITIES OF ANY CORPORATION
WHOSE ORGANIZATION CERTIFICATE IS APPROVED ON  OR  AFTER  THE  EFFECTIVE
DATE OF THIS SUBDIVISION, UNLESS EXPRESSLY PROVIDED FOR IN THE ORGANIZA-
TION CERTIFICATE OF SUCH CORPORATION, WHICH MAY INCORPORATE BY REFERENCE
THE  PREEMPTIVE RIGHTS SET FORTH IN THIS SECTION, OR FURTHER MODIFY SUCH
PREEMPTIVE RIGHTS.
  3. Except as otherwise provided in the organization  certificate,  and
except as provided in this section, [the holders of equity shares of any
class,]  in  case  of  the  proposed issuance by the corporation of [its
equity shares of any class or any shares or other securities convertible
into its equity shares of any class, shall,] NEW SHARES OR SECURITIES:
  (A) if the issuance of the [equity shares proposed  to  be  issued  or
issuable upon conversion of such other securities] NEW SHARES OR SECURI-
TIES  would adversely affect the unlimited dividend rights of [such] THE
holders OF EXISTING EQUITY SHARES OF ANY CLASS, SUCH HOLDERS SHALL  have
the right during a reasonable time and on reasonable conditions, both to
be fixed by the board, to purchase such NEW shares or securities in such
proportions as shall be determined as provided in this section[.]; AND
  [3.  Except as otherwise provided in the organization certificate, and
except as provided in this section, the holders of voting shares of  any
class, in case of the proposed issuance by the corporation of its voting
shares  of  any class or any shares or other securities convertible into
its voting shares of any class, shall,]
  (B) if SUCH NEW SHARES OR SECURITIES ARE VOTING SHARES  OF  ANY  CLASS
AND the issuance of the [voting shares proposed to be issued or issuable
upon conversion of such other securities] NEW SHARES OR SECURITIES would
adversely  affect  the  voting  rights of [such] THE holders OF EXISTING
SHARES OF ANY CLASS, SUCH HOLDERS SHALL have the right during a  reason-
able  time  and on reasonable conditions, both to be fixed by the board,
to purchase such NEW shares or other securities in such  proportions  as
shall be determined as provided in this section.
  4.  The preemptive right provided for in [subdivisions two and] SUBDI-
VISION three OF THIS SECTION  shall  entitle  stockholders  having  such
rights to purchase the shares or other securities to be offered for sale
as  nearly  as practicable in such proportions as would, if such preemp-
tive right were exercised,  preserve  the  relative  unlimited  dividend
rights  and  voting  rights of such holders and at a price or prices not
less favorable than the price or prices at which such  shares  or  other
securities  are  proposed  to  be  offered  for  sale to others, without
deduction of such reasonable expenses of and compensation for the  sale,
underwriting  or  purchase  of such shares or other securities by under-
writers or dealers as may lawfully be paid by the corporation.  In  case
each  of  the  shares entitling the holders thereof to preemptive rights
does not confer the same unlimited dividend right or voting  right,  the
board  shall  apportion the shares or other securities to be offered for
sale among the stockholders having preemptive rights to purchase them in

A. 10930                            3

such proportions as in the opinion of the board shall preserve as far as
practicable the relative unlimited dividend rights and voting rights  of
the  holders at the time of such offering. The apportionment made by the
board  shall,  in the absence of fraud or bad faith, be binding upon all
stockholders.
  5. Unless otherwise provided in the organization  certificate,  shares
or  other securities offered for sale shall not be subject to preemptive
rights UNDER SUBDIVISIONS TWO AND THREE OF THIS SECTION if they:
  (a) Are to be issued by the board to effect a merger  or  offered  for
consideration other than cash;
  (b) Are to be issued or subjected to options under section one hundred
forty-a of this chapter;
  (c)  Are to be issued to satisfy conversion rights theretofore granted
by the corporation;
  (d) Are treasury shares; or
  (e) Are part of the shares or  other  securities  of  the  corporation
authorized in its original organization certificate and are issued, sold
or optioned within two years from the date of filing such certificate.
  S 3. This act shall take effect immediately.