N.Y. MHY Law § 31.22 — New York Code / Act MHY / Title E / Article 31 / Section 31.22
Approval of certain certificates of incorporation or articles of organization; granting of operating certificates
Status: in_force

§ 31.22 Approval of certain certificates of incorporation or articles of\n          organization; granting of operating certificates.\n  (a) No certificate of incorporation of a business or not-for-profit\ncorporation, or articles of organization of a limited liability company,\nshall hereafter be filed which includes among its corporate purposes or\npowers the establishment or operation of a facility for which an\noperating certificate is required by this article from the commissioner\nof the office of mental health or the solicitation of contributions for\nany such purpose, except with the written approval of the commissioner\nand, when otherwise required by law, the approval of a justice of the\nsupreme court endorsed on or annexed to the certificate of\nincorporation.\n  (b) An application for approval of the proposed certificate of\nincorporation or articles of organization shall be filed with the\ncommissioner together with such other forms and information as shall be\nprescribed by, or acceptable to, the commissioner.\n  The commissioner shall not approve a certificate of incorporation or\narticles of organization or grant an operating certificate unless he is\nsatisfied, insofar as applicable, as to (1) the public need for the\nservices or the facility which the proposed corporation or proposed\nprovider of services is empowered to perform or maintain at the time and\nplace and under the circumstances proposed; (2) the character,\ncompetence and standing in the community of the proposed incorporators,\ndirectors, sponsors, stockholders, members, managers, partners, or\noperators, provided that in making such determination the commissioner\nis authorized to consider whether or not, within ten years of the date\nof the application, any such persons have been denied renewal for cause\nof an operating certificate, or have had an operating certificate\nrevoked or suspended for cause, and such denial, revocation or\nsuspension was not reversed after an administrative hearing or other\nappeal, for a program or facility licensed or operated by a health,\nmental hygiene, social services or education agency or department of\nthis or any state or have failed to operate a program serving the\nmentally disabled, other disabled persons as defined in subdivision\ntwenty-one of section two hundred ninety-two of the executive law, the\naged, children or other persons receiving health, mental hygiene,\nresidential, social or educational services in continuous compliance\nwith applicable laws or regulations within the previous ten years in any\nstate; (3) the financial resources of the proposed corporation or\nproposed provider of services and its sources of future revenues; (4)\nthe availability of facilities or services which may serve as alternates\nor substitutes for the facility or services which the proposed\ncorporation or proposed provider of services is empowered to maintain or\nrender; (5) such other matters as he shall deem pertinent in the public\ninterest. The commissioner in approving the proposed certificate of\nincorporation or articles of organization or issuing the proposed\noperating certificate may request and consider information and advice\nfrom all available sources including local and regional mental health\nand health planning agencies and groups as to the matters set forth\nherein. If the commissioner proposes to disapprove the application he\nshall afford the applicant an opportunity to request a public hearing.\nThe commissioner shall not take any action contrary to the advice of the\nhealth systems agency for facilities other than community residences or\nresidential care centers for adults until he affords an opportunity to\nthe agency to request a public hearing and, if so requested, a public\nhearing shall be held. The commissioner, on his own motion, may hold a\npublic hearing on the application. Any public hearings held pursuant to\nthis subdivision may be conducted by the commissioner or by an\nindividual designated by the commissioner.\n  (c) (1) Any change in the person or entity which is the holder of an\noperating certificate of a facility for which an operating certificate\nhas been issued pursuant to this article shall be approved by the\ncommissioner in accordance with the provisions of this subdivision and\nsubdivisions (a) and (b) of this section, except that: (i) any such\nchange shall be subject to approval by the commissioner in accordance\nwith paragraph two of subdivision (b) of this section only with respect\nto the new person or entity, and any remaining persons or entities who\nhave not been previously approved for that facility in accordance with\nsuch paragraph; and (ii) any such change shall not be subject to\nparagraph one of subdivision (b) of this section.\n  (2) Any transfer, assignment or other disposition of ten percent or\nmore of the stock, membership interest or voting rights thereunder of a\ncorporation or a limited liability company which is the holder of an\noperating certificate for a facility providing mental hygiene services\nor any transfer, assignment or other disposition of the stock or voting\nrights thereunder of such a corporation which results in the ownership\nor control of more than ten percent of the stock, ownership or voting\nrights thereunder of such corporation or limited liability company by\nany person shall be subject to approval by the commissioner in\naccordance with the provisions of this subdivision and subdivisions (a)\nand (b) of this section and rules and regulations promulgated pursuant\nthereto. In the absence of such approval, the operating certificate of\nsuch facility shall be subject to revocation or suspension, except that:\n(i) any such transaction shall be subject to approval by the\ncommissioner in accordance with paragraph two of subdivision (b) of this\nsection only with respect to a new stockholder, member or a new\nprincipal stockholder; and (ii) any such transaction shall not be\nsubject to paragraph one of subdivision (b) of this section.\n  (3) No operating certificate shall be issued for a facility which\nwould be operated by any partnership or limited liability company, any\nof the members of which are not natural persons.\n  (4) No operating certificate shall be issued for a facility which\nwould be operated by a corporation any of the stock of which is owned by\nanother corporation or a limited liability company any of the stock of\nwhich is owned by another corporation.\n  (d) Where the approval required by subdivision (a) of this section has\nnot been obtained, the commissioner may institute and maintain an action\nin the supreme court through the attorney general to procure a judgment\ndissolving and vacating or annulling (1) the certificate of\nincorporation of any such corporation or articles of organization of any\nsuch limited liability company, or (2) the certificate of incorporation\nof any corporation or articles of organization of any such limited\nliability company hereafter incorporated or formed, the name, purposes,\nobjectives, or activities of which in any manner may reasonably lead to\nthe belief that the corporation or limited liability company possesses\nor may exercise any of such purposes.\n