N.Y. Transp. Law § 129
A common carrier existing, or hereafter incorporated, under or by virtue of the laws of the state of New York, may issue stocks, bonds, notes or other evidences of indebtedness payable at periods of more than twelve months after the date thereof, or a receiver of such a corporation, if duly authorized by law, may issue receiver's certificates, when necessary for the acquisition of property, the construction, completion, extension or improvement of its facilities, or for the improvement or maintenance of its service or for the discharge or lawful refunding of its obligations or for the reimbursement of moneys actually expended from income or from any other moneys in the treasury of the corporation not secured by or obtained from the issue of stocks, bonds, notes or other evidences of indebtedness of such corporation, within five years next prior to the filing of an application with the commissioner for the required authorization, for any of the aforesaid purposes except maintenance of service and except replacements in cases where the applicant shall have kept its accounts and vouchers of such expenditure in such manner as to enable the commissioner to ascertain the amount of moneys so expended and the purposes for which such expenditure was made; provided and not otherwise that there shall have been secured from the commissioner an order authorizing such issue, and the amount thereof and stating the purposes to which the issue or proceeds thereof are to be applied, and that, in the opinion of the commissioner, the money, property or labor to be procured or paid for by the issue of such stock, bonds, notes or other evidences of indebtedness is or has been reasonably required for the purposes specified in the order, and that except as otherwise permitted in the order in the case of bonds, notes and other evidences of indebtedness, such purposes are not in whole or in part, reasonably chargeable to operating expenses or to income; but this provision shall not apply to any lawful issue of stock, to the lawful execution and delivery of any mortgage or to the lawful issue of bonds thereunder, which shall have been duly approved by the board of railroad commissioners before July first, nineteen hundred seven. Stock may be issued to stockholders as a stock dividend provided that there shall have been secured from the commissioner an order authorizing such issue and a transfer of surplus to capital in an amount equal to the par or stated value of the stock so authorized and stating that a sum equal to the amount to be so transferred was expended for the purposes enumerated in this section. The issue of stocks, bonds or other evidences of indebtedness, within the meaning of this section, shall include the sale by any such corporation of any such securities previously issued in compliance with this section and subsequently reacquired by such corporation, provided, however, for good cause shown the commissioner may exempt from the restriction hereof stocks, bonds or other evidences of indebtedness. For the purpose of enabling him to determine whether he should issue such an order, the commissioner shall make such inquiry or investigation, hold such hearings and examine such witnesses, books, papers, documents or contracts as he may deem of importance in enabling him to reach a determination. Such corporation shall not without the consent of the commissioner apply said issue or any proceeds thereof to any purpose not specified in such order. Such common carrier may issue notes for proper corporate purposes and not in violation of law, payable at periods of not more than twelve months without such consent but no such notes shall, in whole or in part, directly or indirectly, be refunded, by any issue of stock or bonds or by any evidences of indebtedness running for more than twelve months without the consent of the commissioner. The commissioner shall have power to require every such carrier to file with the commissioner after the issuance of stocks, bonds, notes or other evidences of indebtedness, issued with or without the approval of the commissioner as herein provided, a notice of such transaction in such form as the commissioner may prescribe. Provided, however, that the commissioner shall have no power to authorize the capitalization of any franchise to be a corporation nor to authorize the capitalization of any franchise or the right to own, operate or enjoy any franchise whatsoever in excess of the amount (exclusive of any tax or annual charge) actually paid to the state or to a political subdivision thereof as the consideration for the grant of such franchise or right, nor to authorize the issuance of any stocks or other securities for any purposes other than those enumerated in this section; nor shall the capital stock, bonds and other evidences of debt of a corporation formed by the merger or consolidation of two or more other corporations, exceed the sum of the capital stock, bonds and other evidences of debt of the corporations so consolidated, at the par value thereof, or such sum and any additional sum actually paid in cash; nor shall any contract for consolidation or lease be capitalized in the stock of any corporation whatever; nor shall any corporation hereafter issue any bonds against or as a lien upon any contract for consolidation or merger.
N.Y. Transp. Law § 129