New York Banking Law

Article 5-A
New York business Development Corporation

   Section 
        210. Establishment.
        211. Economic regions.
        212. Purposes, powers and operation.
        213. Board of directors.
        214. Committees.
        215. Membership.
        216. Capital stock.
        217. Surplus, obligations and depositories.
        218. Supervision and reports.
        219. Unissued securities and reorganization.
        220. Participation.

  S 210. Establishment.
  1. There is hereby created a corporation which shall be known as the
"New York Business Development Corporation". Process in any action or
proceeding against such corporation may be served upon the secretary of
state, as agent of such corporation for such purpose. If such
corporation fails to commence business by April first, nineteen hundred
fifty-eight, its existence shall terminate and the provisions of this
article shall become null and void.
  2. The business corporation law applies to the New York Business
Development Corporation, except that in case of a conflict between the
business corporation law and this article the provisions of this article
shall govern. If there is in this article a provision relating to a
matter embraced in the business corporation law and not in conflict
therewith, both provisions shall apply. The New York Business
Development Corporation shall be treated as a "corporation", or
"domestic corporation", as such terms are used in the business
corporation law, except that the purposes for which such corporation is
formed under this article shall not thereby be extended.
  3. For the purpose of this section and elsewhere in this article, the
effective date of the business corporation law as to the New York
Business Development Corporation shall be September first, nineteen
hundred sixty-four.

  S 211. Economic regions. For the purposes of this article, the state
is hereby divided into twelve economic regions, as follows:
  1. Binghamton region. The counties of Broome, Chenango, Delaware and
Otsego.
  2. Capital district-Champlain region. The counties of Clinton, Essex,
Rensselaer, Albany, Saratoga, Schoharie, Schenectady, Warren and
Washington.
  3. Elmira region. The counties of Chemung, Schuyler, Steuben, Tioga
and Tompkins.
  4. Mid-Hudson region. The counties of Dutchess, Columbia, Greene,
Orange, Putnam, Sullivan and Ulster.
  5. Mohawk Valley region. The counties of Fulton, Hamilton, Herkimer,
Montgomery and Oneida.
  6. Nassau-Suffolk region. The counties of Nassau and Suffolk.
  7. New York city region. The counties of Bronx, Kings, New York,
Queens and Richmond.
  8. Niagara-southwestern region. The counties of Allegany, Cattaraugus,
Chautauqua, Erie and Niagara.
  9. Northern region. The counties of Franklin, Jefferson, Lewis and St.
Lawrence.
  10. Rochester region. The counties of Genesee, Livingston, Monroe,
Ontario, Orleans, Seneca, Wayne, Wyoming and Yates.
  11. Syracuse region. The counties of Cayuga, Cortland, Madison,
Onondaga and Oswego.
  12. Westchester-Rockland region. The counties of Rockland and
Westchester.

  S 212. Purposes, powers and operation. 1. (a) The purposes of such
corporation shall be to assist, promote, encourage and, through the
cooperative efforts of the institutions and corporations which shall,
from time to time, become members thereof, develop and advance the
business prosperity and economic welfare of the state; to encourage and
assist in the location of new business and industry in the state and to
rehabilitate and retain existing business and industry; to stimulate and
assist in the expansion of all kinds of business activity which will
tend to promote the business development and maintain the economic
stability of the state, provided maximum opportunities for employment,
encourage thrift and improve the standard of living of the citizens of
the state; to cooperate and act in conjunction with other organizations,
public or private, the objects of which are the promotion and
advancement of industrial, commercial, agricultural and recreational
developments in the state; to furnish money and credit to approved and
deserving applicants, for the promotion, development and conduct of all
kinds of business activity in the state, thereby establishing a source
of credit not otherwise readily available; and to provide financial
assistance in the form of loans to small businesses unable to obtain
financing from other private sources, including, but not limited to,
assistance to women and minority-owned business enterprises and small
businesses located in economically distressed areas. For the purposes of
this article, "economically distressed areas" shall mean areas
determined by the commissioner of the department of economic development
on the basis of criteria indicative of economic distress, including
poverty rates, numbers of persons receiving public assistance,
unemployment rates, rate of employment decline, population loss, rate of
per capita income change, decline in economic activity and private
investment, and such other indicators as the commissioner deems
appropriate. Economically distressed areas may include cities,
municipalities, block numbering areas, and census tracts.
  (b) The corporation shall undertake the following programs in
furtherance of the above objectives: (i) establish regional offices at
locations throughout New York, with sufficient staffing to advise,
develop and package financial assistance for small and medium sized
businesses; (ii) develop a comprehensive outreach program to increase
the visibility and awareness of the corporation`s programs, including
allocating budget and staff to establish and maintain an aggressive and
extensive marketing program of the corporation`s program of assistance
to small and medium sized businesses, providing for specific outreach to
minority and women owned enterprises, and entering into cooperative
relationships with local chambers of commerce, local development
agencies, local development corporations and other community based
financial intermediaries as set forth in subdivision three of this
section; (iii) establish and operate, or affiliate with a small business
investment company and a specialized small business investment company;
and (iv) establish a pilot export financing program, using personnel
from the private sector, to evaluate whether the corporation can play a
significant role in the growth of the export industry in the state. The
corporation shall undertake the programs enumerated herein at such times
as its board of directors determines that the corporation`s capital base
and available funds are adequate to support the operation of such
program. The programs enumerated herein may be modified by the
corporation as may be necessary to meet the changing needs of the
state`s economy, as determined by the board of directors.
  2. In furtherance of the purposes set forth in subdivision one of this
section, and in addition to the powers conferred on stock corporations
by general laws, such corporation shall, subject to the restrictions and
limitations contained in this article, have the following powers:
  (a) To borrow money and otherwise incur indebtedness for any of its
purposes; to issue its bonds, debentures, notes or other evidences of
indebtedness, whether secured or unsecured, therefor; and to secure the
same by mortgage, pledge, deed of trust or other lien on its property,
franchises, rights and privileges of every kind and nature or any part
thereof.
  (b) To assist, promote, encourage and through the cooperative efforts
of the institutions and corporations which shall, from time to time,
become members thereof, develop and advance the business prosperity and
economic welfare of the state; to encourage and assist in the location
of new business and industry in the state and to rehabilitate existing
business and industry; to evaluate, assess and determine the value of a
patent right and to take, sell or transfer an agreement or note pursuant
to section five hundred fifty of the general business law, to lend money
to, and to guarantee, endorse, or act as surety on the bonds, notes,
contracts, or other obligations of, or otherwise assist financially, any
person, firm, corporation or association, and to establish and regulate
the terms and conditions with respect to any such loans or financial
assistance and the charges for interest and service connected therewith;
provided, however, that it shall not be the intention hereof to take
from banking organizations any such loans or commitments as may be
desired by such organizations generally in the ordinary course of their
business.
  (c) To purchase, receive, hold, lease, or otherwise acquire, and to
sell, convey, mortgage, lease, pledge, or otherwise dispose of, upon
such terms and conditions as its board of directors may deem advisable,
real and personal property, together with such rights and privileges as
may be incidental and appurtenant thereto and the use thereof,
including, but not restricted to, any real or personal property acquired
by such corporation from time to time in the satisfaction of debts or
enforcement of obligations.
  (d) To acquire the good will, business, rights, real and personal
property and other assets, or any part thereof, of such persons, firms,
corporations, joint stock companies, associations or trusts as may be in
furtherance of the corporate purposes provided herein, and to assume,
undertake, guarantee or pay the obligations, debts and liabilities of
any such person, firm, corporation, joint stock company, association or
trust; to acquire improved or unimproved real estate for the purpose of
constructing industrial plants or other business establishments thereon
or for the purpose of disposing of such real estate to others for the
construction of industrial plants or other business establishments, and,
in furtherance of the corporate purposes provided herein, to acquire,
construct, or reconstruct, alter, repair, maintain, operate, sell,
lease, or otherwise dispose of industrial plants or business
establishments.
	(e) To acquire, subscribe for, own, hold, sell, assign, transfer,
mortgage, pledge or otherwise dispose of the stock, shares, bonds,
debentures, notes or other securities and evidences of interest in, or
indebtedness of, any person, firm, corporation, joint stock company,
association or trust, and while the owner or holder thereof, to exercise
all the rights, powers and privileges of ownership, including the right
to vote thereon.
  (f) To cooperate with and avail itself of the facilities of the state
department of commerce and any other government agencies; and to
cooperate with and assist, and otherwise encourage, local organizations
in the various communities in the state in the promotion, assistance and
development of the business prosperity and economic welfare of such
communities and of the state.
  (g) (1) To acquire a patent right or any part thereof, from such
persons, firms, corporations, joint stock companies, associations or
trusts as may be in furtherance of the corporate purposes provided
herein; (2) to assume, undertake, guarantee or pay the obligations,
debts and liabilities of any such person, firm, corporation, joint stock
company, association or trust; (3) to set forth specific criteria and
standards by which the corporation shall evaluate the patent and the
value of patent rights evolving from that patent; and (4) to allow
ownership of the patent to remain with the borrower and to accept a
percentage of the patent rights as collateral on a loan for capital
formation of a business.
  (h) With respect to funds administered by the corporation, to obtain
loan guarantees from any state or federal program to guarantee loans
made to small businesses by the corporation with such funds.
  3. The corporation may contract or otherwise affiliate with local
development corporations and other local development organizations
certified for this purpose by the commissioner of the department of
economic development throughout the state, including, but not limited
to, not-for-profit corporations established pursuant to article nine of
the economic development law, to market the programs of the corporation
to small and medium sized businesses, to provide technical, financial
packaging and loan application assistance to business owners seeking
financial assistance from the corporation, including but not limited to
minority owned business enterprises and small and medium sized
businesses located in economically distressed areas.

  S 213. Board of directors. 1. All the corporate powers of such
corporation shall be exercised by a board of directors consisting of a
maximum of thirty persons, all of whom shall be of full age, residents
of the state and at least one-half of whom shall be citizens of the
United States.
  2. The president of such corporation, who shall be appointed by the
board, shall serve as a director.
  3. At each annual meeting of such corporation, the members of such
corporation shall elect up to ten directors for a term of one year, who
shall, to the extent possible, represent different economic regions as
defined in section two hundred eleven of this article. The exact number
shall be established in the by-laws by the board of directors. In such
elections, members of such corporation shall have one vote each.
  4. At such annual meetings the stockholders of such corporation shall
elect up to seven directors for a term of one year each. The exact
number shall be established in the by-laws by the board of directors.
  5. One director shall be appointed by any of the entities that are
members or stockholders of such corporation and whose membership or
stockholder interest meets a minimum commitment as established in the
by-laws by the board of directors.
  6. The directors elected by the members and the stockholders shall
elect three additional directors: one representing minority interests,
one representing women`s interests, and one representing regional or
local development corporations` interests.
  7.  The state commissioner of the department of economic development
shall be a director exofficio.
  7-a. Two directors shall be appointed by the governor, who shall serve
at the pleasure of the governor; one director shall be appointed by the
temporary president of the senate, who shall serve at the pleasure of
the temporary president; one director shall be appointed by the senate
minority leader, who shall serve at the pleasure of the minority leader;
and one appointed by the assembly minority leader, who shall serve at
the pleasure of the minority leader; and one director shall be appointed
by the speaker of the assembly, who shall serve at the pleasure of the
speaker.
  8. If any director shall lose his citizenship or shall cease to be a
resident of the state, he shall immediately vacate his position as a
director and such position shall thereupon be deemed vacant.
  9. If any vacancy occurs in the elected membership of the board of
directors through death, resignation or otherwise, the remaining
directors shall elect a person to fill such vacancy for the unexpired
term.
  10. Upon the expiration of their terms, the elected directors shall
continue as such until their successors have been elected and have
qualified.
  11. The board of directors shall elect one of its members as chairman
and one of its members as vice-chairman of such board, shall adopt
by-laws for such corporation, and may appoint such officers and
employees as it deems advisable.

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  S 214. Committees. 1. There shall be a loan committee of such
corporation for each of the twelve economic regions as defined in
section two hundred eleven of this chapter or such other regions as the
board of directors shall designate for this purpose.  Each such
committee shall include such persons as the board of directors shall
designate.
  2. The board of directors of such corporation may establish an office
for any such loan committee, within such committee`s economic region.
  3. Every application to such corporation for a loan or financial
assistance shall be made through the loan committee for the economic
region wherein the applicant resides or maintains a regular place of
business, or directly to one of the regional offices of the corporation.
Any such applications made to a regional office shall be promptly
referred to the loan committee for the economic region wherein the
applicant resides or maintains a regular place of business. All such
applications shall thereupon be reviewed by such regional loan committee
and promptly transmitted by it to the central loan committee established
by the board of directors for consideration, along with the
recommendations of such regional loan committee with respect thereto.
  4. The board of directors shall have the responsibility to appoint all
necessary board and officer committees to provide for prudent management
and oversight of such corporation.
 
S 215. Membership. 1. The members of such corporation shall include
such banking organizations, insurance and surety companies as may make
application for membership in such corporation, and membership shall
become effective upon the acceptance of such applications by the board
of directors. Each member shall lend funds to such corporation as and
when called upon by it to do so, but the total amount on loan by any
member at any one time shall not exceed the following limit to be
determined as of the time it became a member, and such amount shall
thereafter be readjusted annually in the event of any change in the base
of the loan limit of such member; national banking associations,
state-chartered commercial banks and trust companies, two per cent of
capital stock and surplus; New York savings and loan associations, two
per cent of the surplus account determined as provided in article ten,
section three hundred eighty-five; savings banks, two percent of net
worth as defined in article six, section two hundred forty-four; stock
insurance companies, two per cent of capital and surplus; surety and
casualty companies, two per cent of capital and surplus; mutual
insurance companies, two per cent of surplus to policy holders; and
comparable limits for other banking, loaning and insurance
organizations, as established by the board of directors; provided,
however, that the total amount on loan by any member at anyone time
shall not exceed ten million dollars, provided further, however, that
any member having a loan limit in excess of ten million dollars may
elect that its total amount on loan at any one time to such corporation
shall equal said loan limit but in any event shall not exceed twenty
million dollars. In the event that two or more members shall merge or
consolidate, the organization as so merged or consolidated shall elect
that its total amount on loan to such corporation shall be equal to the
combined loan limits of such members determined immediately before the
merger or consolidation but in no event to exceed twenty-five million
dollars at any one time outstanding. All loan limits shall be
established at the thousand dollar nearest to the amount computed on an
actual basis. All calls of funds which members are committed to lend to
such corporation shall be prorated by such corporation among the members
in the same proportion that the maximum loan limit of each bears to the
aggregate loan limits of all members of such corporation. Upon six
months` prior written notice to the board of directors, a member of such
corporation may withdraw from membership, effective at the end of such
six month period and, after the effective date of such withdrawal, such
member shall be free of obligations hereunder except those accrued or
committed by such corporation prior to such effective date of
withdrawal. Notwithstanding the provisions of any other law, general or
special, the notes or other interest-bearing obligations of such
corporation, issued in accordance with and by virtue of this article and
the by-laws of such corporation, shall be legal investments for the
banking, insurance and surety organizations, and other non-public
entities who become members of such corporation, up to but in no event
exceeding the loan limits established herein.

  2. Other entities may make application for membership in such
corporation according to such terms and criteria as established by the
board of directors; except that such other entities may not include
public benefit corporations established under the laws of the state of
New York.

  S 216. Capital stock. The capital stock of such corporation shall be
five hundred thousand shares of common and preferred stock, in such
amounts as shall be established in the by-laws by the board of
directors, with the preferred stock having such relative rights,
preferences and limitations as shall be established in the by-laws by
the board of directors.  At least a majority of the capital stock of
such corporation shall at all times be held by residents of the state or
by persons, firms or corporations engaged in doing business therein.

  S 217. Surplus, obligations and depositories. 1. Such corporation
shall set apart as an earned surplus all of its net earnings in each and
every year until such earned surplus shall equal the total of the
paid-in capital and paid-in surplus then outstanding.  Said earned
surplus shall be held in cash, invested in United States government
bonds, or as provided in such corporation`s by-laws, and shall be kept
and used to meet losses and contingencies of such corporation and,
whenever the amount of earned surplus shall become impaired, it shall be
built up again to the required amount in the manner provided for its
original accumulation.
  2. At no time shall the total obligations of such corporation exceed
ten times the amount of its paid-in capital and surplus, not including
therein the earned surplus, or two hundred fifty million dollars,
whichever is greater.
  3. Such corporation shall not deposit any of its funds in any banking
organization unless such banking organization has been designated as a
depository by a vote of the majority of all of the directors of such
corporation, exclusive of any director who is an officer or director of
the depository so designated. Such corporation shall not receive money
on deposit. Such corporation shall not make any loans directly or
indirectly to any of its officers or to any firms in which any of its
officers is a member or officer.

  S 218. Supervision and reports. Such corporation shall be subject to
the supervision, examination and control of the superintendent of banks
in the same manner as banking organizations are so supervised, examined
and controlled by him pursuant to this chapter, and shall be examined by
him annually, but such corporation shall not be deemed to be a banking
organization nor be required to pay a fee for such an examination. Such
corporation shall make an annual report of its condition to the
governor, legislature and superintendent of banks, on or before January
first of each year.
  Commencing January first, nineteen hundred eighty-six, such annual
report shall contain but not be limited to the following:
  a. information on the cost and sources of funds and capital and the
total allowable maximum amount available from members, the maximum
amount committed by each individual member, and the corporation`s
outstanding liabilities to members;
  b. classification of firms in the corporation`s portfolio by standard
industrial code, including a breakdown of (i) size of firms by sales and
number of employees, (ii) number and percentage of loans to
manufacturing, service and wholesale businesses, and (iii) number and
percentage of loans to traditional industries and to high technology
firms within the manufacturing sector;
  c. information on the types of financing provided by the corporation,
including guaranteed loans, the size and term of loans, and a breakdown
of investments by senior debt, subordinated debt and equity financings;
  d. information on interest rates of loans, including percentage of
fixed rate and variable rate loans;
  e. information on the use of capital provided by the corporation,
including number of working capital loans, loans to assist leveraged
buyouts by employees, management or others, and secured mortgages for
plant expansion or new production facilities;
  f. information on how the corporation is fulfilling its mission to
assist women and minority owned businesses;
  g. information on resources and actions taken to advance the
corporation`s marketing program;
  h. information on the corporation`s regional offices, including a
description of the volume of business and the nature of loan activity at
each office;
  i. information on the activities of the corporation`s MESBIC; and
  j. information on the corporation`s pilot export financing program,
including the number of firms serviced and the types of assistance
provided.

  S 219. Unissued securities and reorganization. 1. The holders of
capital stock of such corporation shall not, as such, have any
preemptive or preferential right to purchase or subscribe for any part
of the unissued or new issue of capital stock of such corporation,
whether now or hereafter authorized or issued, or to purchase or
subscribe for any bonds or other obligations, whether or not convertible
into stock of such corporation, now or hereafter authorized or issued.
  2. Whenever a compromise or arrangement or any plan of reorganization
of such corporation is proposed between such corporation and its
creditors, members or stockholders, the supreme court, by virtue of its
general equity powers may, on application of such corporation or of any
creditor, member or stockholder thereof, or on the application of any
receiver or receivers appointed for such corporation, order a meeting of
such creditors, members or stockholders, as the case may be, as may be
affected by the proposed compromise or arrangement or plan of
reorganization, which shall be called in such manner as the said court
directs. If, at such meeting, such compromise or arrangement or plan of
reorganization is agreed to by or on behalf of the creditors, if
affected thereby, holding two-thirds in amount of the claims against
such corporation, and by or on behalf of the stockholders, if affected
thereby, holding the majority of capital stock, and by or on behalf of
the members, if affected thereby, holding two-thirds in amount of the
outstanding notes or other interest-bearing obligations of such
corporation as provided for in section two hundred fifteen of this
chapter, and if such agreement shall be further evidenced by the written
acceptance of said creditors, stockholders and members, duly filed in
the said court, such compromise or arrangement or plan of reorganization
shall, if approved by the said court as just and equitable, be binding
on all creditors, stockholders or members, as the case may be, who are
affected thereby, and also on such corporation. All persons who become
creditors, stockholders or members of such corporation shall be deemed
to have become creditors, stockholders or members subject in all
respects to this section, and the same shall be absolutely binding upon
them. For the purposes of this subdivision only, members shall not be
deemed to be creditors and shall act under this subdivision as a
separate class.

  * S 220. Participation. 1. Notwithstanding any rule at common law or
any provision of any general or special law or any provision in their
respective charters, agreements of association, articles of
organization, certificates of incorporation, or trust indentures:
  (a) All domestic corporations organized for the purpose of carrying on
business within this state, including, without implied limitation, any
railroad or transportation corporation, and all trusts, are hereby
authorized to acquire, purchase, hold, sell, assign, transfer, mortgage,
pledge or otherwise dispose of any bonds, securities or other evidences
of indebtedness created by, or the shares of the capital stock of the
corporation established by this article and, while owners of said stock,
to exercise all the rights, powers and privileges of ownership,
including the right to vote thereon, all without the approval of any
regulatory authority of this state;
  (b) All banking organizations are hereby authorized to become members
of the corporation established by this article and to make loans to such
corporation as provided herein;
  (c) All banking organizations are hereby authorized to acquire,
purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise
dispose of any bonds, securities or other evidences of indebtedness
issued by such corporation or the shares of its capital stock, and while
owners of said stock, to exercise all the rights, powers and privileges
of ownership, including the right to vote thereon, all without the
approval of any regulatory authority of this state. The amount of
capital stock of such corporation which any banking organization is
authorized to acquire pursuant to the authority granted herein shall be
in addition to the amount of capital stock in corporations which such
banking organization may otherwise be authorized to acquire.
  2. Notwithstanding the provisions of any general, special or local
law, the notes and other interest-bearing obligations of the corporation
shall be legal investments for any fund defined in section one hundred
seventy-six of the retirement and social security law; provided however,
that any such investment shall meet the criteria contained in
subdivision seven of section one hundred seventy-seven of the retirement
and social security law, and shall be made only pursuant to a loan
agreement between such fund and the corporation. Provided further,
however, that such agreement shall not permit loans exceeding the lesser
of: (i) two percent of the assets of such fund; or (ii) one hundred
million dollars principal amount.
  * NB Expired December 31, 1988
  S 220. Participation. Notwithstanding any rule at common law or any
provision of any general or special law or any provision in their
respective charters, agreements of association, articles of
organization, certificates of incorporation, or trust indentures:
  1. All domestic corporations organized for the purpose of carrying on
business within this state, including, without implied limitation, any
railroad or transportation corporation, and all trusts, are hereby
authorized to acquire, purchase, hold, sell, assign, transfer, mortgage,
pledge or otherwise dispose of any bonds, securities or other evidences
of indebtedness created by, or the shares of the capital stock of the
corporation established by this article and, while owners of said stock,
to exercise all the rights, powers and privileges of ownership,
including the right to vote thereon, all without the approval of any
regulatory authority of this state;
  2. All banking organizations are hereby authorized to become members
of the corporation established by this article and to make loans to such
corporation as provided herein;
  3. All banking organizations are hereby authorized to acquire,
purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise
dispose of any bonds, securities or other evidences of indebtedness
issued by such corporation or the shares of its capital stock, and while
owners of said stock, to exercise all the rights, powers and privileges
of ownership, including the right to vote thereon, all without the
approval of any regulatory authority of this state. The amount of
capital stock of such corporation which any banking organization is
authorized to acquire pursuant to the authority granted herein shall be
in addition to the amount of capital stock in corporations which such
banking organization may otherwise be authorized to acquire.