Rhode Island § 35-20-7 - Public Corporation Financial Integrity and Accountability

§ 35-20-7. Subsidiaries prohibited.

(a) Except as expressly authorized by law, no public corporation shall have the right to exercise or perform any of its powers and functions through any subsidiary or any other separate corporation or entity. Except as expressly authorized by law, no public corporation shall direct, require, or permit any of its directors, officers, or employees to create any subsidiary organizations.

(b) In any case in which a public corporation is expressly authorized by law to create or to act through a subsidiary or other separate corporation or entity, no such subsidiary or other separate corporation or entity shall have the power to issue bonds, notes or other securities without the authorization of the legislature. In accordance herewith, university heights housing corporation for the purpose of financing and/or rehabilitating university heights and RIH equity corporation for the purpose of financing investments in low-income housing tax credit eligible properties, which are subsidiaries of Rhode Island housing and mortgage finance corporation are specifically authorized to issue debt for their corporate purposes. Provided, however, that nothing herein shall prohibit a wholly owned subsidiary of a public corporation from issuing notes or other evidences of indebtedness where the only payee or obligee on the instruments is the subsidiary’s parent public corporation; and provided further, however, that nothing herein shall prohibit a wholly owned subsidiary of a public corporation from issuing notes or other evidences of indebtedness in connection with its purchase or lease of business equipment or other personal property used by the subsidiary in the ordinary course of its usual and regular business.