Sec. 16. (a) A corporation qualifying as a lessor corporation under this chapter may, in furtherance of its corporate purposes, issue and sell stock, bonds, and other securities. Mortgage bonds issued by a lessor corporation that are a first lien on the leased property are legal and proper investments for state banks and trust companies, insurance companies, and fiduciaries. Bonds issued under this section may be callable upon notice in the manner provided in the mortgage indenture, at premiums up to five percent (5%) with accrued and unpaid interest.

(b) Stocks, bonds, and other securities issued by a lessor corporation shall be sold in the manner provided in IC 5-1-11. However, the notice of sale shall be published in the manner required for bonds of the county in which the school building is located.

(c) Shares of common stock issued by a lessor corporation are not required to be sold at a public sale. The price of the shares shall be determined by the lessor corporation, but the price of the shares may not exceed the lesser of:

(1) the necessary expense of incorporation, preparation of preliminary plans and specifications, and other preliminary expense necessary to the preparation of the proposed lease and publication of notice of the lease; or

(2) a sum equal to five percent (5%) of the proposed cost of the building or buildings.

(d) None of the costs of construction of the building, the purchase of the equipment for the building, or the incidental expenses in connection with the construction or purchase may be paid from stocks, bonds, or securities of the lessor corporation unless those stocks, bonds, or securities are sold at public sale as provided in this section.

(e) The approval of the securities commissioner is not required in connection with the issuance and sale of any stocks, bonds, or other securities of the lessor corporation.

(f) A part of the proceeds from stocks, bonds, or other securities sold at public sale may be used to reimburse the incorporators or any other person or persons who may have advanced funds for essential preliminary expenses as provided for in this section, with interest on the amount reimbursed not to exceed five percent (5%).

[Pre-2006 Recodification Citation: 21-5-11-9.]

As added by P.L.2-2006, SEC.170.