Section 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.