N.Y. BSC Law § 519

§ 519. Convertible or exchangeable shares and bonds.\n (a) Unless otherwise provided in the certificate of incorporation, and\nsubject to the restrictions in section 513 (Purchase, redemption and\ncertain other transactions by a corporation with respect to its own\nshares) and paragraphs (c) and (d) of this section, a corporation may\nissue shares or bonds convertible into or exchangeable for, at the\noption of the holder, the corporation or another person, or upon the\nhappening of a specified event, shares of any class or shares of any\nseries of any class or cash, other property, indebtedness or other\nsecurities of the same or another corporation.\n (b) If there is shareholder approval for the issue of bonds or shares\nconvertible into, or exchangeable for, shares of the corporation, such\napproval may provide that the board is authorized by certificate of\namendment under section 805 (Certificate of amendment; contents) to\nincrease the authorized shares of any class or series to such number as\nwill be sufficient, when added to the previously authorized but unissued\nshares of such class or series, to satisfy the conversion or exchange\nprivileges of any such bonds or shares convertible into, or exchangeable\nfor, shares of such class or series.\n (c) No issue of bonds or shares convertible into, or exchangeable for,\nshares of the corporation shall be made unless:\n (1) A sufficient number of authorized but unissued shares, or treasury\nshares, of the appropriate class or series are reserved by the board to\nbe issued only in satisfaction of the conversion or exchange privileges\nof such convertible or exchangeable bonds or shares when issued;\n (2) The aggregate conversion or exchange privileges of such\nconvertible or exchangeable bonds or shares when issued do not exceed\nthe aggregate of any shares reserved under subparagraph (1) and any\nadditional shares which may be authorized by the board under paragraph\n(b); or\n (3) In the case of the conversion or exchange of shares of common\nstock other than into other shares of common stock, there remains\noutstanding a class or series of common stock not subject to conversion\nor exchange other than into other shares of common stock, except in the\ncase of corporations of the type described in the exceptions to the\nprovisions of paragraph (b) of section 512 (Redeemable shares).\n (d) No privilege of conversion may be conferred upon, or altered in\nrespect to, any shares or bonds that would result in the receipt by the\ncorporation of less than the minimum consideration required to be\nreceived upon the issue of new shares. The consideration for shares\nissued upon the exercise of a conversion or exchange privilege shall be\nthat provided in paragraph (g) of section 504 (Consideration and payment\nfor shares).\n (e) When shares have been converted or exchanged, they shall be\ncancelled. When bonds have been converted or exchanged, they shall be\ncancelled and not reissued except upon compliance with the provisions\ngoverning the issue of convertible or exchangeable bonds.\n