New York Laws
Article 5 - Corporate Finance
511 - Share Distributions and Changes.

(a) A corporation may make pro rata distributions of its authorized
but unissued shares to holders of any class or series of its outstanding
shares, subject to the following conditions:
(1) If a distribution of shares having a par value is made, such
shares shall be issued at not less than the par value thereof and there
shall be transferred to stated capital at the time of such distribution
an amount of surplus equal to the aggregate par value of such shares.
(2) If a distribution of shares without par value is made, the amount
of stated capital to be represented by each such share shall be fixed by
the board, unless the certificate of incorporation reserves to the
shareholders the right to fix the consideration for the issue of such
shares, and there shall be transferred to stated capital at the time of
such distribution an amount of surplus equal to the aggregate stated
capital represented by such shares.
(3) A distribution of shares of any class or series may be made to
holders of the same or any other class or series of shares unless the
certificate of incorporation provides otherwise, provided, however, that
in the case of a corporation incorporated prior to the effective date of
subparagraph (4) of this paragraph, then so long as any shares of such
class remain outstanding a distribution of shares of any class or series
of shares of such corporation may be made only to holders of the same
class or series of shares unless the certificate of incorporation
permits distribution to holders of another class or series, or unless
such distribution is approved by the affirmative vote or the written
consent of the holders of a majority of the outstanding shares of the
class or series to be distributed.
(4) A distribution of any class or series of shares shall be subject
to the preemptive rights, if any, applicable to such shares pursuant to
this chapter.
(b) A corporation making a pro rata distribution of authorized but
unissued shares to the holders of any class or series of outstanding
shares may at its option make an equivalent distribution upon treasury
shares of the same class or series, and any shares so distributed shall
be treasury shares.
(c) A change of issued shares of any class which increases the stated
capital represented by those shares may be made if the surplus of the
corporation is sufficient to permit the transfer, and a transfer is
concurrently made, from surplus to stated capital, of an amount equal to
such increase.
(d) No transfer from surplus to stated capital need be made by a
corporation making a distribution of its treasury shares to holders of
any class of outstanding shares; nor upon a split up or division of
issued shares of any class into a greater number of shares of the same
class, or a combination of issued shares of any class into a lesser
number of shares of the same class, if there is no increase in the
aggregate stated capital represented by them.
(e) Nothing in this section shall prevent a corporation from making
other transfers from surplus to stated capital in connection with share
distributions or otherwise.
(f) Every distribution to shareholders of certificates representing a
share distribution or a change of shares which affects stated capital or
surplus shall be accompanied by a written notice (1) disclosing the
amounts by which such distribution or change affects stated capital and
surplus, or (2) if such amounts are not determinable at the time of such
notice, disclosing the approximate effect of such distribution or change
upon stated capital and surplus and stating that such amounts are not
yet determinable.
(g) When issued shares are changed in any manner which affects stated
capital or surplus, and no distribution to shareholders of certificates
representing any shares resulting from such change is made, disclosure
of the effect of such change upon the stated capital and surplus shall
be made in the next financial statement covering the period in which
such change is made that is furnished by the corporation to holders of
shares of the class or series so changed or, if practicable, in the
first notice of dividend or share distribution or change that is
furnished to such shareholders between the date of the change of shares
and the next such financial statement, and in any event within six
months of the date of such change.