2023 New York Laws › BNK - Banking › Article 15 - General Provisions Applicable to Banking Stock Corporations, Limited Liability Investment Companies, and Limited Liability Trust Companies › Title 5 - Corporate Finance › 5005 - Transferable Rights to Purchase Shares; Imposition of Restrictions or Conditions Thereon.

§ 5005.   Transferable   rights  to  purchase  shares;  imposition  of
restrictions or conditions thereon. 1. Except as otherwise  provided  in
this  section  or  in  the  organization  certificate, a corporation may
create and issue, whether or not in connection with the issue  and  sale
of  any  of  its  capital notes, debentures or shares, rights or options
entitling the holders thereof to purchase  from  the  corporation,  upon
such  consideration,  terms and conditions as may be fixed by the board,
shares of any class or series, whether authorized but  unissued  shares,
treasury shares or shares to be purchased or acquired.
2.  (a)  In the case of a corporation that has a class of voting stock
registered pursuant to section twelve of the Exchange Act, the terms and
conditions of such rights or options may  include,  without  limitation,
restrictions or conditions that preclude or limit the exercise, transfer
or receipt of such rights or options by an interested shareholder or any
transferee of any such interested shareholder or that invalidate or void
such  rights  or  options held by any such interested shareholder or any
such transferee. For the purposes of this subdivision, the terms "voting
stock", "Exchange Act" and "interested shareholder" shall have the  same
respective  meanings  as are set forth in section nine hundred twelve of
the business corporation law except that for this purpose references  in
said  section  of  the  business corporation law to a "resident business
corporation" shall be read  instead  to  refer  to  a  "corporation"  as
defined by section one thousand one of this chapter.
(b)  Determinations  of  the  board  of  directors  whether to impose,
enforce or waive or otherwise render  ineffective  such  limitations  or
conditions  as  are permitted by paragraph (a) of this subdivision shall
be subject to judicial review in an appropriate proceeding in which  the
courts  formulate or apply appropriate standards in order to insure that
such limitations or conditions are imposed, enforced or  waived  in  the
best long-term interests and short-term interests of the corporation and
its  stockholders  considering,  without  limitation,  the prospects for
potential growth, development, productivity  and  profitability  of  the
corporation.
3.  The  consideration for shares to be purchased under any such right
or option shall comply with the requirements of  section  five  thousand
four of this chapter.
4.  The  terms and conditions of such rights or options, including the
time or times at or within which and the price or prices at  which  they
may  be exercised and any limitations upon transferability, shall be set
forth or incorporated by reference  in  the  instrument  or  instruments
evidencing such rights or options.
5.  If  there  is  shareholder  approval  for  the issue of rights and
options, such approval may provide  that  the  board  is  authorized  by
certificate  of  amendment  under  section  eight  thousand five of this
chapter to increase the authorized shares of any class or series to such
number as will be sufficient, when added to  the  previously  authorized
but  unissued shares of such class or series, to satisfy any such rights
or  options  entitling  the  holders  thereof  to  purchase   from   the
corporation authorized but unissued shares of such class or series.
6.  In  the  absence  of fraud in the transaction, the judgment of the
board shall be conclusive as  to  the  adequacy  of  the  consideration,
tangible  or  intangible,  received or to be received by the corporation
for the issue of rights or options for the purchase from the corporation
of its shares.
7. The provisions of this section are inapplicable to  the  rights  of
the  holders  of  convertible  shares,  capital  notes  or debentures to
acquire shares upon the exercise of conversion privileges under  section
five thousand sixteen of this chapter.
8.  The  provisions  of this section are inapplicable to the rights of
officers, directors and employees of a corporation who have been  issued
options  to purchase authorized and unissued shares of its capital stock
under or by reference to section one hundred forty-a of this chapter.