WHERE AND HOW A CORPORATION HAND BOOK AND COM- PARATIVE DIGEST OF THE LAWS RELATING TO THE FORMATION. REGULATION AND TAXATION OF BUSINESS CORPORATIONS DELAWARE. MAINE, MASSACHUSETTS NEW JERSEY. NEW VORIC, PENNSYLVANIA The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924030064798 WHERE AND HOW A CORPORATION HAND BOOK AND COMPARATIVt: DIGEST OF THE LAWS OF DELAWARE, MAINE, MASSACHUSETTS, NEW JERSEY, NEW YORK AND PENNSYLVANIA, RELATING TO THE FORMATION, REGULATION AND TAXATION OF BUSINESS COr'PORATIONS, ARRANGED BY STATES AND IN NUMBERED PARAGRAPHS WHICH DEAL WITH THE SAME SUBJECT UNDER THE SAME NUMBER FOR EACH STATE By JOHN S. PARKER of the New York Bar FIFTH EDITION Revised 1914 containing chapters dealing with the formation and management of business corporations, procedure incident to incorporation, forms of articles of incorporation, minutes of organi- zation meetings, certificates of stock and bonds of various classes, and miscellaneous forms and comparative tables of organization taxes and fees and annual fran- chise or license taxes Copyright rgoj, iqob, igo'jt iqio and lqi4 by tv A . 2. T o t X S It should be observed that the comparative digrest of the General Corporation Laws of the various States is arranged by numbered paragraphs ■which deal Trith each subject under the same number for each State. "With this in mind comparisons may be readily made. PUBLISHER' S NOTE. ''WHERE AND HOW" was first published in ipoj. Four later editions have followed, the present (jgi4) being the Fifth. Each has received general approbation and has been accepted as a standard for reference in the offices of a great number of leading corporation lawyers. Information conveyed is accurate. The Author is a recognized authority on Corporation Law and has devoted his attention in his practice very largely to the subjects treated. ''WHERE AND HOW" conveys information in a form which affords ease for comparing the Corporation Laws of the States 7iamed, therefore is helpful in forming a conclusion as to WHERE it is advisable to apply for charters, giving information also HO W to do so. Although its publication entails large expense it is sold at a nominal price, for although not an advertising device, yet the service rendered is a permanent advertisement for the business enterprise of the publishers, who are specialists in the manufacture of Corporation Supplies, Slock Certificates, Bonds, etc., furnishing better quality than the ordinary, but at moderate prices ; giving an assortment of styles for Certificates and Bonds greater than found elsewhere. Quick delivery is a special feature of their business methods. See advertising pages at back of book. Samples are sent out on request. THE BRO UN-GREEN COMPANY, Corporation Printers and Stationers, 48 John Street, New York. PREFACE TO THE FIFTH EDITION. In the preparation of this edition, the entire work has been thoroughly revised and brought down to date. Part I is a short manual, in non-technical language, on the formation and management of business corporations. In Part II there are set forth, briefly and without comment, the provisions of law of Delaware, Maine, Massachusetts, New Jersey, New York and Pennsylvania, in relation to the formation, regulation and taxation of business corporations. The more important points to be taken into consideration in deciding where to form a business corporation are covered, and detailed information is given as to the procedure to be followed in each state in forming such a company. To facilitate comparison, the matter is arranged according to states and in numbered paragraphs, which deal with the same subject under the same number for each state. The subjects are arranged so as to conform in a general way to the arrangement of the Standard Digest and also to the uniform classification of the Corporation Manual, edited by the author, thus facilitating reference to those works for more extended treatment of the subjects covered in this handbook. Part III consists of forms and precedents of the various papers used in the incorporation of business companies in each of the states mentioned above. As copies of the Federal Income Tax Act and Regulations may readily be obtained from any Collector or the Commissioner of Internal Revenue, free of charge, it has been deemed unnecessary to include them in this handbook. Part IV is composed of comparative tables of organization taxes and fees, and of annual franchise or license taxes. Since the last edition of this book was published important amendments have been made to the corporation laws in all of the states treated. New York and Pennsylvania have enacted the Uniform Stock Transfer Act. The full text of the act will be found at page 104 et seq. In New Jersey material changes have been made in respect to the issue of stock for property and as to holding companies. Maine and Pennsylvania have adopted new laws for the regulation of foreign corporations. In Massachusetts an act has been passed for the taxation of stock transfers. JOHN S. PARKER. Mutual Life Buildings, New York. October 1, 1914. TABLE OF CONTENTS. PART I. FORMATION AND MANAGEMENT OF BUSINESS CORPORATIONS. Preliminary ..... 1. Historical Sketch of Incorporation 2. What is a Corporation 3. Advantages of Incorporation 4. Leading Charter-Granting States . 5. Where to Incorporate 6. Organization 7. The Charter 8. The By-Laws 9. The Stockholders . 10. Rights of Minority Stockholders . 11. Meetings of Stockholders 12. Quorumi of Stockholders 13. Voting by Stockholders . 14. Proxies ...... 15. Special Rights of Registered Stockholders 16. Cumulative Voting .... 17. Mode of Action by Directors . 18. Directors' Meetings 19. Powers and Duties of Directors 20. Executive and Other Committees 21. Appointment of Officers . 22. Powers and Duties of Officers 23. Minutes .... 24. Mode of Writing up Minutes of a Meeting 25. The Minute Book .... 26. Corporate Contracts . 27. Corporate Seal 28. Capital Stock and Shares . 29. Preferred Stock .... 30. Issue of Stock .... 31. Certificates of Stock 32. Stock Certificate Book 33. Transfer of Shares of Stock . 34. Issue of New Certificates . 35. Lost Certificates 36. Negotiability of Stock Certificates 37. Underwriting Subscriptions for Stock 38. Treasury Stock .... 39. Dividends .... 40. Stock Register 41. Stock Transfer Book 42. Stock Ledger 43. Hints on Transferring Stock. . 44. Corporation Accounting 45. Capital Stock Accounts . 46. Treasury Stock Accounts 47. Bond Issues and the Bond Account 48. Surplus and Dividend Accounts . 49. Rights of Foreign Corporations 50. How Foreign Corporations are Authorized to do Business Page 11 11 12 13 13 14 14 16 15 15 16 16 17 17 17 18 18 19 20 20 21 21 22 23 24 24 24 25 26 26 27 28 28 29 30 31 31 31 32 33 34 34 34 35 36 36 37 38 38 39 40 CONTENTS— CoNTiN UED PART II. A COMPARATIVE DIGEST OF THE LAWS OF DELAWARE, MAINE, MASSACHUSETTS, NEW JERSEY, NEW YORK AND PENN- SYLVANIA, RELATING TO THE FORMATION, REGULATION AND TAXATION OF BUSINESS CORPORATIONS. Page DELAWARE . . 43 MAINE .... .63 MASSACHUSETTS .... ... 81 UNIFORM STOCK TRANSFER ACT OF MASSACHUSETTS, NEW YORK AND PENNSYLVANIA .... 104 NEW JERSEY . . . . . . Ill NEW YORK .133 PENNSYLVANIA ,171 The laws of each State being arranged under the following uniform subject headings: 1 . Statutes under which business companies are incorporated and regulated. 2. Purposes for which business companies may be formed. 3. Incorporators. 4. Organization tax, official fees and incidental expenses. 5. Method of incorporation. 6. Commencement and duration of corporate existence. 7. Extension, of corporate existence. 8. Amendment of articles of incorporation. 9. Corporate name. 10. Principal office. 1 1 . Statutory resident agent or attorney. 12. By-Laws. 13. Corporate boolcs and records. 14. Annual reports. 15. Capital stock. 16. Minimum amount of capital with which a company may begin business. 17. Issue of stock; consideration for issue. 18. Par value of shares. 19. Increase of capital stock. 20. Decrease of capital stock. 21. Preferred stock and other classes of stock. 22. Certificates of stock. 23. Transfer of shares. 24. Meetings of stockholders. 25. Corporate acts which must be done or sanctioned by the stock- holders. 26. Voting by stockholders. 27. Cumulative voting. 28. Voting trusts. 29. Right of stockholders to inspect corporate books. 30. Liability of stockholders. 31. Directors. 32. Change of number of directors. 33. Statutory powers and functions of directors. 34. Directors' meetings. 35. Executive committee. 36. Officers other than directors. 37. Statutory liabilities of directors and officers. 38. Powers of corporations. 6 CONTENTS— Continued 39. Consolidation and merger with other corporations. 40. Dissolution and surrender of franchise. 41 . Forfeiture of charter. 42. Foreign corporations; how authorized to do business. 43. Foreign corporations; penalty for doing business without authority. 44. Foreign corporations; appointment of statutory resident agent or attorney. 45. Foreign corporations; books to be kept in the state. 46. Foreign corporations; penalty for neglect or refusal to keep or exhibit books. 47. Foreign corporations; liability to attachment. 48. Franchise taxes or license fees payable by domestic and foreign corporations; exemptions. 49. Taxation of property of domestic and foreign corporations. 50. Taxation of shares of stock. PART III. (A) FORMS AND PRECEDENTS. Forms of articles of incorporation^ minutes of organization meeting, etc., in the several states. DELAWARE. Form 1 . Certificate of incorporation 2. Minutes of first meeting of incorporators 3. Minutes of first meeting of directors . 4. By-Laws ...... of associa- MAINE. 5. Articles of association .... 6. Minutes of the first meeting of signers of articles tion . . _ . 7. Minutes of first meeting of the board of directors 8. Certificate of organization .... 9. Minutes of first annual meeting of stockholders 10. By-Laws ' MASSACHUSETTS. 1 1 . Agreement of association .... 12. Minutes of first meeting of incorporators 13. Minutes of first meeting of directors . 14. Articles of organization .... 15. By-Laws ....... NEW JERSEY. 16. Certificate of incorporation .... 17. Minutes of first meeting of incorporators 18. Minutes of first meeting of directors 19. By-Laws NEW YORK. 20. Certificate of incorporation ...... 21. Precedent of a certificate of incorporation providing for shares of stock without par value ...... 22. Minutes of meeting of incorporators .... 23. Minutes of first meeting of directors . . . . . 24. By-Laws Page . 193 193 194 195 199 199 200 202 203 204 . 208 209 . 209 211 . 211 214 215 215 216 221 221 224 225 225 CONTENTS— Continued PENNSYLVANIA. Form 25. Notice of application for charter ..... 230 26. Affidavit of publication 230 27. Application for charter 230 28. JVlinutes of first meeting of the corporation . . 232 29. Minutes of first meeting of directors ..... 233 30. By-Laws 233 (B) Precedents of clauses to be inserted in articles OF INCORPORATION; 31 . Special object-clauses . . . . 236 32. General object clauses ...... 241 33. Clauses providing for classes of stock . . . 242 (C) General forms. 34. Agreement to form a corporation and take shares therein . 245 35. Agreement for the sale of property in exchange for stock and bonds ........ 246 36. First mortgage coupon bond .... . 247 37. Certificate of stock (common form) . . . 248 38. Certificate of preferred stock (short form) . . 248 39. Certificate of preferred stock (full form) ... 249 40. Debenture .249 41. Debenture . . . . 250 42. Proxy . . . . 251 43. Secretary's oath .... 251 44. Subscription agreement . . . . 251 45. Transfer of subscription 251 46. Treasurer's bond . . . . 252 47. Waiver of notice of meeting . ... 252 PART IV. COMPARATIVE TABLES OF ORGANIZATION TAXES AND FEES, AND ANNUAL FRANCHISE OR LICENSE TAXES. Table Page 1 . Organization taxes and fees ...... ^55 2. Annual franchise or license taxes ..... 256 Index to forms ......... 257 General Index ......... 259 PART I. FORMATION AND MANAGEMENT OF BUSINESS CORPORATIONS. FORMATION AND MANAGEMENT OF BUSINESS CORPORATIONS. PRELIMINARY. This book is limited in its scope to that very large and important but indeterminate class of corporations commonly known by the name "business corporation," meaning thereby, speaking broadly, a corpora- tion having a capital stock divided into shares, organized for the purpose of carrying on business of a nature not involving the exercise of public service functions or otherwise affected with a public interest. It includes manufacturing, mercantile, mining and other industrial and trading companies. Of the states whose corporation laws are digested in this book, there are only two, however, Massachusetts and New York, where the term "business corporation" has obtained statutory as well as popular recognition. In using the book, it is, therefore, to be borne in mind that it does not purport to treat, except in so far as the rules stated apply to corporations generally, of banks, savings banks, trust companies, surety and indemnity companies, safe deposit companies, building and loan companies, insurance companies, or other moneyed corporations, railroad companies, street railway companies, telegraph companies, telephone companies, gas companies, electric light and power companies, canal companies, water companies, cemetery companies, turnpike and plank- road companies, or other public service corporations. 1. HISTORICAL SKETCH OF INCORPORATION. In primitive times, little capital was needed in the business of barter and trade. With the onward march of civilization, business became more complex, men banded together in commercial adventures, and the co-partnership relation was evolved. The limitations of this arrange- ment, and the necessities of commercial expansion, caused the partnership in large measure to give way to the corporation or stock company. Thousands of men now unite their capital in a single industry, where formerly such a combination of resources would have been impossible. The idea of a corporation as an artificial legal person distinct from the actual persons who compose it is very old. The earliest forms of corporate associations in England were the ecclesiastical corporations, municipalities, guilds, educational and eleemosynary corporations. The next in time of origin were the great trading and colonial companies of the seventeenth century. In 1600 the East India Company was chartered, whereby sums of various amounts were subscribed to the joint stock, and the profits were to be distributed in the same proportions. By 1692 there were only two other joint stock companies of importance in England, the Royal African Company and the Hudson's Bay Company. These corporations were monopolistic in character, and had the public object of managing and ordering the trades in which they were engaged, as well as the private one of profit for their members. At the end of the seventeenth century the advantages of incorporation seem to have been realized, and the granting of charters became more frequent. Extravagant commercial speculation and stock-jobbing characterized the history of the corporation in the early part of the eighteenth century. By 1720 upwards of two hundred companies had been formed for the 11 Formation and Management prosecution of every kind of enterprise, when it was discovered that many of these associations had not been chartered, and all but four came to an end. During the latter part of the century corporations gradually increased in number and importance. Progress was slow, and they were used mostly for establishing banks, insurance companies, canals, water works, and, to some extent, manufactures. Many of these companies were formed by the colonists to be operated in America. Prior to 1800 the modern law of corporations had not developed. The rules stated by Blackstone and other writers of that time are the rules which governed municipal and other early corporate associations. Out of this law the modern law has evolved and changes have been made both by the legislatures and the courts to meet the new con- ditions. The development of the present law practically began with the building of canals early in the nineteenth century, followed by the in- vention of the steam engine and its application to land and water transportation facilities, and the introduction of gas lighting in the larger cities. In 1768, Pennsylvania chartered the first corporation for business purposes in this country. This was a mutual insurance company, and was the only corporation for private profit in America whose charter antedated the Declaration of Independence. Massachusetts followed with a bank in 1784, and New York with an iron manufacturing com- pany in 1786. After this time the number rapidly increased, especially in Massachusetts. Insurance, banking, turnpike roads, toll-bridges, canals, and, to a limited extent, manufacturing were the enterprises which they carried on. Many of these companies were of a quasi- public character. Rapid growth of corporations followed the judicial decision of the questions which naturally arose as to the nature of the corporate bodies which had been created by the legislatures, their rights and duties, and the rights and liabihties of their stockholders. The English law of corporations was brought into harmony with American social con- ditions. The legislatures favored the policy of extreme liberality. The principle of free incorporation under general laws was established in the first half of the ninteenth century, and before this special charters were freely granted. New York is entitled to the honor of having passed the first general incorporation law for manufacturing companies, which was enacted in 1811. New Jersey followed in 1816, Pennsylvania in 1820, and Con- necticut in 1821. From these beginnings has grown up the great body of American corporation law, which has now become the most important and exten- sive branch of American law. 2. WHAT IS A CORPORATION? A corporation, in contemplation of law, is an artificial person hav- ing an existence independent of the members who from time to time compose it; it may be clothed with perpetual succession, and accord- ingly no change among those members occasioned by death, bankruptcy, retirement, admission of new members, or otherwise, affects the com- pany's identity; it still remains in law the same person, and continues to exist until dissolved according to law. It is vested with a personaUty distinct from that of the men who own its stock and who control and manage it. Business men are accustomed to look upon it as a person, and give it a personality. The stockholders merely have an interest measured by the proportion of their holdings in the corporation. This is not a mere abstraction, but is of the utmost importance in a practical way. Thus, a corporation's debts are its own, the stock- holders are not liable for them, nor are the directors. So also, a 12 Formation and Managem ent corporation's property is its own, and individual stockholders, even though they own all of the shares, cannot convey title to it. In this country a corporation can be created only by or pursuant to the provisions of an act of the legislature. In only three of the states included in this book (viz., Maine, Massachusetts and New York) is it now within the power of the legislature to grant special charters or acts of incorporation, and in those states such charters are rarely granted. In each of the states there are general acts under which com- panies may be formed for practically any lawful puipose. 3. ADVANTAGES OF INCORPORATION. The chief advantages of the corporate form of conducting business enterprises are, that it enables persons to associate themselves in busi- ness and limit their loss in case of failure to the amount invested, with no personal liability if the assets are not sufficient to pay the debts; that the continuity of the business is preserved indefinitely, so that the death, lunacy, bankruptcy or withdrawal of a member or members does not necessarily interrupt or in any manner affect it; that the man- agement is placed in selected hands, each with limited powers; that the interests of the several members are readily transferable; and that addi- tional capital may be brought in without disarranging the relations of existing members. None of these things is possible in an ordinary partnership; every member of a partnership is personally liable for all the debts contracted in carrying on the business, however great or small his interest; death, bankruptcy or withdrawal of any member terminates a partnership; every partner is the unlimited agent of the other partners in the trans- action of the partnership business, with power to contract liabilities to any amount; the interest of a partner cannot be sold and a new mem- ber cannot be admitted without the consent of the other partners. To a business man one of the principal advantages of incorpora- tion is that he can provide for the continuance of his business after his death, without subjecting his entire estate to the risk of the busi- ness 4. LEADING CHARTER-GRANTING STATES. The question is often asked why, in incorporating a business com- pany, it is sometimes advisable to obtain the charter from a state in which no part of the actual business is to be carried on. The reason is that under existing laws, foreign corporations may, in some cases, do business in certain states under more favorable condi- tions than domestic corporations. By the rules of comity a corporation organized under the laws of one state is permitted to have offices and places of business and to conduct its operations in other states, subject only to such restrictions and regulations as may be imposed by the statutes of such other states. While a state has full power to regulate all foreign corporations, with certain exceptions, doing business within its boundaries, or even to exclude them absolutely, none of the states has exercised such power to the full extent. The usual provision is that a foreign corporation may do business in the state upon filing a copy of its charter in the office of the secretary of state, together with a statement of the busi- ness proposed to be carried on, appointing an agent upon whom legal process may be served, and paying a license fee. Restrictive laws affecting domestic corporations are not usually applicable to foreign corporations. In a state where there are burdensome restrictions on domestic cor- porations, persons desiring to form a corporation freed from such re- strictions, obtain a charter from some other state whose laws are more liberal on such points, comply with the laws of their own state relating to foreign corporations and proceed to do business. Another consider- ation inducing persons to form a corporation under the laws of a state 13 Formation and Management where few, if any, of its business operations are to be carried on, is the fact that in the event of litigation the corporation may, at its option, invoke the jurisdiction of the Federal Courts. Whatever the motive, however, the courts have held that the citizens of a state have the right, if they desire, to secure a charter in another state, although the business is to be carried on wholly within their own state. In Part II of this work a digest and comparison is made of the business corporation laws of six leading charter-granting states. Their relative advantages and disadvantages may readily be determined. Recent decisions and statutory changes in New Jersey have, to a very large extent, deterred promoters and lawyers from Incorporating business companies under the laws of that state. This circumstance, with that of low organization fees and annual franchise taxes, has made Delaware and iWaine the leaders among the charter-granting states, so far as incorporation by non-residents is concerned. In New York there is the greatest number of corporations formed every year, and where the business is to be carried on wholly or largely in that state, it is now the practice of the best corporation lawyers to advise the incorporation of the company under the laws of that state, except where special circumstances exist. 5. WHERE TO INCORPORATE. Where a business corporation is to be formed one of the first ques- tions to be settled is, where to incorporate. There must be taken into consideration the nature of the business to be carried on, the powers requisite to carry on such business, the places where such business will be transacted, the amount of capital stock required, the features of the different classes of stock, if more than one class is to be created, and many other points. In many cases the conditions are such that there is a considerable latitude for choice; in others, one or more points which must be covered in a particular way will make it necessary to incor- porate in some particular state, without regard to other considerations. The matter of the amount of annual state taxes, although im- portant, is not in all cases the determining factor. In other cases this question of taxation is determining, and an error in selecting the state of incorporation may subject the company to double taxation without any compensating advantages in other respects. The answer to this question, where to incorporate, requires expert knowledge and a careful examination of the statutes and decisions of the different states, and it is hoped that the following part of this book will be found of assistance to attorneys and promoters of corporations by bringing before them in a manner capable of comparison the statu- tory provisions of the vaj-ious states, covering the most important points to be considered. 6. ORGANIZATION Having decided where to incorporate, the next question is, how to incorporate. The method of incorporation in each of the six states in- cluded in this book is outlined in the following pages. No such outline, however, can satisfactorily cover the subject, and it is of the greatest importance that the incorporation papers shall be drawn by a competent lawyer. In drafting the papers it is necessary to consider not only the de- tails of the business to be carried on, but where two or more persons are interested their individual characteristics also, and if capital is to be procured from outsiders, the nature of the securities to be offered must be carefully determined. 14 Formation and Management 7. THE CHARTER. In some of the states the certificate of incorporation is a formal document in which the matters which may be contained are defined by the statute. This is the case in Maine and Pennsylvania. In New York, New Jersey, Delaware and Massachusetts, however, the certificate of incorporation may contain provisions covering a wide variety of sub- jects. Business men desire to see clearly set forth in the incorporation papers the powers of the corporation and of the directors and officers, as well as the limitations and restrictions on the exercise of such powers. For this reason it is nearly always advisable to include In the certificate of incorporation, even though it may be unnecessary from a legal standpoint, a full and clear statement of such matters. It is sometimes desired also that there shall be certain limitations on the powers of the directors, or restrictions ori the rights of stock- holders to sell their shares of stock, to examine the books of the corporation, etc., or provision for voting trusts, or other provisions out of the ordinary. The time to provide for such matters is when the incorporation papers are drawn; it may be impossible to arrange for them later. It is sometimes desired that certain provisions shall not be subject to alteration or amendment. It is usual, therefore, to include such provisions in the certificate of incorporation, rather than in the by-laws, the procedure for amending the former being usually more formal and requiring a larger vote of stockholders, and it is sometimes expressly provided, when permitted by statute, that such provisions shall not be subject to change. The most important part of the charter or articles of incorporation is that which defines the objects of the company, that is, the kind of business in which the capital is to be employed. The charter is a contract, and the stockholders have the right to prevent any employ- ment of the capital in business operations not covered by it. It is important, therefore, for the incorporators to determine whether the scope of the business is to be broad or narrow. 8. THE BY-LAWS. The by-laws should supplement the certificate of incorporation, and the two together should contain as far as practicable the powers of the corporation, all limitations and restrictions on such powers, and all regulations as to the management of the business of the company and the conduct of its affairs, and regulations concerning the issue and transfer of the shares of stock. The forms of the certificate of incorporation and by-laws vary in each of the states, and the statute in some cases requires that certain matters shall be provided for in the certificate of incorporation and that others shall be provided for in the by-laws. A careful study of the statutory provisions of the particular state in which the corporation is to be formed is necessary, and familiarity with approved precedents is advisable. Owing to the frequent changes in the statutes, it is not expedient or even safe to follow blindly the provisions of old certi- ficates of incorporation or other papers. 9. THE STOCKHOLDERS. The stockholders of a corporation are usually limited in their powers to the election of directors, the making and amendment of by- laws, the making of amendments to the charter and the sanctioning of certain acts of the directors, such as mortgaging the property of the corporation, where such sanction is required by statute or by the charter or by-laws. The active management of the business is intrusted to the directors, and so long as the directors act within their powers the stockholders cannot interfere. It is always to be borne in mind, how- 15 Formation and Management ever, that the stockholders are the real proprietors of the business, and that the directors cannot very long effectively oppose the wishes of a majority in interest of the stockholders. As a general rule, where action is to be taken by stockholders, it must be at a meeting of the stockholders properly convened and held. In some cases, however, it is provided by statute or by the charter or by-laws that the written assent of all or of a prescribed proportion of the stockholders shall be sufficient. An examination of Part II of this book will indicate what particu- lar matters require action to be taken by the stockholders under the laws of each of the states covered. 10. RIGHTS OF MINORITY STOCKHOLDERS. Minority stockholders are not permitted to interfere with the acts of a corporation which are within its chartered powers, and which have been authorized by vote of the directors or stockholders, or which could be ratified by such vote. In such cases the courts proceed upon the principle that a stockholder who feels aggrieved must seek relief within the corporation itself by submitting the matter to the stockholders or directors convened at a meeting. If the act complained of is one that can be ratified by the stockholders, any relief which the court might give would be ineffectual, for the reason that the majority of the stockholders could convene a meeting and ratify such act. A different principle applies where the act complained of is one which is not within the powers of the corporation, or constitutes a breach of trust or fraud by the directors. As to such acts the courts will interfere at the instance of minority stockholders and enjoin the carrying out of the unauthorized or illegal act, or, if the act has been done and the company has suffered loss thereby, it will compel the offending directors to account to the corporation for such loss. Before a stockholder can bring such a suit against directors a demand must be made upon the board of directors to bring the suit. Such demand is not necessary, however, when the oifending directors are still in control of the board. Such suits are commonly called "stockholders' actions." The corporation must be made a party de- fendant, although it is in fact the real party complainant. 11. MEETINGS OF STOCKHOLDERS. The action of stockholders is usually expressed by vote at a meet- ing properly called and held in accordance with statutory regulations or the by-laws of the company. Meetings should be called in the manner prescribed in the by-laws or other regulations. Such provisions are usually found in the by-laws authorizing the president, board of directors or a prescribed number or proportion of the stockholders, for instance, two or more stock- holders, or any number of stockholders owning, say, one-fourth of the capital stock issued and outstanding, to call a special meeting of the stockholders. Notice of the meeting in accordance with the call is usually required to be given by the secretary, by mailing to each stock- holder a written notice stating the time and place of the meeting and the purpose for which it is called. The time, place and business to be transacted at the annual meet- ing of stockholders are usually prescribed in the by-laws, and unless the by-laws so require, it is not necessary to give notice to the stock- holders, as they are presumed to know the provisions of the by-laws. In New York the statute requires publication in a newspaper of notice of the annual meeting of stockholders, and it is often provided in the by-laws of corporations organized under the laws of other states that notice of annual meeting shall be given either by publication or by mail, and sometimes in both ways. 16 Formation and Ma na gemen t The statutes of the various states provide in many cases that notice of special meetings of stockholders called for certain specified purposes shall be given by publication, or in other specified ways. It is impor- tant, therefore, in every case where a stockholders' meeting is to be held to consult the statutes applicable, as well as the by-laws of the corporation. In construing provisions of statutes or by-laws in relation to giving notice of meetings, the rule is that where a certain number of days' notice is required, the day on which the meeting is to take place is not counted, and where a certain number of weeks is specified, it is held to require seven days for each week. Thus, where notice of an annual meeting must be published once a week for two weeks next preceding the meeting, fourteen days must elapse between the date of the first publication and the date of the meeting, not including the latter. 12. QUORUM OF STOCKHOLDERS. In order that there may be a legal meeting of stockholders there must be a quorum present or represented. The number of stockholders required to be present and the number of shares of stock required to be represented at the meeting in order to constitute a quorum are usually provided in the by-laws. In some cases, however, the matter is specially regulated by statute. In the absence of any statutory provision, or provision of the by- laws on the subject, any number of stockholders who attend at a regu- larly called meeting will be a quorum, and the acts of a majority of that quorum will be binding. In New York this is the rule as to the annual election of directors, and it is held in that state that the by-laws can- not require a majority of the stock or any other specified proportion of the stock to be represented to make a quorum. Unless the necessary quorum attends a meeting no action can be taken, although it is sometimes provided in the by-laws that those actually attending, although less than a quorum, may adjourn until a later time, and that if at such time a quorum shall be present the meeting may proceed to business. Where a meeting of stockholders is adjourned to a fixed time it is not necessary to give further notice to the stockholders, such adjourned meeting being considered as a continuation of the original meeting, and any business may be transacted at such adjourned meeting which could have been legally transacted at the original meeting. 13. VOTING BY STOCKHOLDERS. Unless the charter or by-laws provide to the contrary at all meet- ings of stockholders, each stockholder is entitled to cast one vote for each share of stock held by him and registered in his name on the books of the corporation. Such vote may be given either in person or by proxy, that is to say, the stockholder may by written instrument appoint some other person to vote in his place at the meeting. The ordinary method of voting is by a show of hands or by ayes and nays, but the statutes usually provide that elections of directors must be by ballot, and the by-laws usually provide that a stock vote shall be taken at the request of any stockholder on any question before the meeting. 14. PROXIES. Proxies are not required to be in any specified form, and if on their face they appear to give authority to the person named to vote and appear to be genuine, they must be accepted. In some of the states proxies are valid only for a specified period. In New York the selling of proxies is forbidden by law. It is sometimes provided in the by- laws that proxies shall be deposited with the secretary a certain time before the meeting. 17 Formation and Management It is usually provided in a proxy that the person named therein may appoint a substitute. In the larger corporations it is customary to name one or more alternates. In Pennsylvania, however, it is not permissible to include a power of substitution in a proxy. 15. SPECIAL RIGHTS OF REGISTERED STOCKHOLDERS. It is sometimes provided that a stockholder shall not be entitled to vote unless he has been a registered stockholder for a certain number of days prior to the time of such meetings, and in New Jersey and Dela- ware it is provided by statute that no stock shall be voted on at any election of directors which has been transferred on the books of the company within twenty days prior to such election. In the absence of such provision, however, all stockholders registered on the books at the time a meeting is held are entitled to vote. Where it is necessary that a stockholder shall be registered on the books a'certain number of days prior to the meeting, the question arises whether in case the meeting is adjourned, stockholders registered the necessary number of days prior to the time of the adjourned meeting, are entitled to vote, where they would not have been entitled to vote at the original meeting. The proper rule in such a case would seem to be that such stockholders should be permitted to vote. The transfer books are sometimes closed for a certain number of days preceding a meeting of the stockholders, but in such cases the by-laws should expressly provide therefor. 16. CUMULATIVE VOTING. In some states the right of cumulative voting is given to stock- holders by the constitution or by statute, and in others is permitted where provision therefor is contained in the charter. What is meant by cumulative voting is explained in the provision of the New York General Corporation Law (§24) that, if so provided in the certificate of incorporation, at all elections of directors each stockholder shall be entitled to as many votes as shall equal the num- ber of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them as he may see fit. The effect of cumulative voting is to give minority stockholders representation on the board of directors. RULES AND FORMULAE FOR CUMULATIVE VOTING. First Rule. — To ascertain how many votes a stockholder may cumulate on a particular number of directors, multiply the whole number of directors by the number of shares held and divide by the number to be cumulated on. This may be put in a simple algebraic formula as follows: First Formula. — Let d represent the whole number of directors; h, the number of shares held; n, the number of directors upon whom it is desired to cumulate votes; and x, the number of votes which may be cumulated on n. dh Then x = n For example, there are 5 directors to be elected, a person holds 200 shares, and he desires to cumulate his votes on 2 directors 5 X 200 X = = 500. 2 18 Formati on and Management Second Rule. — To determine the minimum number of shares a person must hold or control to elect a certain number of directors, multiply the whole number of shares by the number of directors it is desired to elect and divide by the whole number of directors plus one. The following formula may be used: Second Formula. — Let s represent the whole number of shares entitled to vote at the election ; d, the whole number of directors to be elected; n, the number of directors it is desired to elect; and x, the number of shares required to elect n. s n Then x = d+1 For example, there are 1000 shares outstanding; five directors to be elected; it is desired to know how many shares are needed to elect two directors. 1000 X 2 2000 x = = = 333j^ 5+ 1 6 But as a fraction of a share cannot be voted, the number required is 334. Third Rule. — To determine how many directors a stockholder or group of stockholders holding a certain number of shares may elect, multiply the whole number of directors plus one by the number of shares held and divide by the whole number of shares. The following formula may be used: Third Formula. — Let s represent the whole number of shares entitled to vote; d, the whole number of directors to be elected; h, the number of shares held; and x, the maximum number of directors h may elect. h (d+1) Then x = s For example, in the case supposed, it is desired to know how many directors a stockholder or combination of stockholders holding 400 shares may surely elect. 5 + 1 2400 x = X400 = = 2, 1000 1000 and applying the second rule and formula, it being found that only 334 shares are needed to elect 2 directors, the 66 additional shares held may be cumulated on one or more other candidates. There are many opportunities for surprise where cumulative voting is allowed, and, unless careful, the holders of a majority of the stock may lose control of the company. Thus in the case supposed, if the holders of 600 shares should cast a straight vote for five directors and the holders of the other 400 shares should cumulate their votes on three candidates, they would be successful, as they could cast 666 votes for each man on their ticket as against the 600 votes received by each of the majority candidates. In Pennsylvania, the right of cumulative voting is granted to stockholders by the constitution and cannot be taken from them. 17. MODE OF ACTION BY DIRECTORS. A single director has no power as such to act for the company. All powers of directors must be exercised as a board, and unless otherwise provided in the charter or by-laws, must be exercised at a meeting of the board duly called and held. Where the members of the board are scattered it is sometimes provided in the charter or by- laws that, except as to such matters as the statute requires to be acted 19 Formation and Management upon at a meeting of the directors, the directors may act by the written consent of all the directors, and that such written consent when recorded in the minute book shall have the force and validity of a resolution adopted at a duly convened meeting. In New Jersey, the courts have held that such a provision, even if contained in the certificate of incorporation, is invalid. 18. DIRECTORS' MEETINGS. Meetings of directors are of two kinds, regular or stated and spe- cial. As to regular meetings, if the place and time are fixed in the by-laws or by resolution of the board when so authorized by the by- laws, it is not necessary to give notice of each meeting to the several directors, as the provision of the by-laws or resolution is sufficient notice. As to special meetings of the directors, notice must be given to each director in the manner required by the by-laws. The by-laws should specify the number of days' notice that must be given of special meetings, and the manner of serving the notice, that is, by mail or telegraph, and it is sometimes provided that a shorter notice shall suf- fice where a director is notified in person. The notice should specify the place where the meeting is to be held unless the by-laws require all meetings to be held at a specified place, and should also specify the purpose or purposes for which the meeting is called. Notice is usually given by the secretary, and he Is required to send out notices of the meeting when directed to do so by the president or by one or more . directors, as may be provided in the by-laws. It is customary to provide that the directors may waive notice of any meeting. In the absence of such provision in the by-laws, it is questionable whether a waiver of notice by directors signed after the meeting has been held is valid. The by-laws should prescribe the number of directors who must be present at meetings of the board to make a quorum for the trans- action of business, and the general rule is that the vote of a majority of those present at a meeting at which there is a quorum is the valid act of the board and binds the company. In some cases, however, it is expressly provided by statute or by the charter or by-laws of the corporation that action by the directors upon certain matters shall require the affirmative vote of a majority or other specified proportion of the entire number of directors. In New York the statute provides that a majority of the directors shall be necessary to constitute a quorum for the transaction of business, unless otherwise provided in a by-law adopted by the stockholders. The fact that there are vacancies among the directors does not impair the validity of the acts of the directors so long as there is a quorum, and it is usually provided in the by-laws that any number of directors in office, although not a quorum, may fill vacancies. Directors cannot be represented at meetings or vote by proxy. 19. POWERS AND DUTIES OF DIRECTORS. The board of directors are the legal executive of the company and their power in the management of the business is usually full and un- restricted, and whatever acts may lawfully be done by the company may be done in its behalf by the board. It is sometimes provided, however, by statute or by the certificate of incorporation or by-laws, that as to certain acts the sanction of the stockholders shall be necessary. The directors are bound to observe the limits placed upon their powers in the charter, and if they transcend such powers and cause damage they incur liability. They must exercise ordinary care and 20 Formation and Management prudence in the trusts committed to them, the same degree of care and prudence that men prompted by self-interest generally exercise in their own affairs. Although directors are practically supreme in their powers, it does not follow that they cannot be held responsible for an abuse of such power. "There seems to be a mistaken notion in some minds that the rela- tion which exists between directors of a corporation and the corporation is that of principal and agent. This is not true. Such relation is, and always was, as to the property of the corporation, fiduciary in character, and while not strictly that of trustee and cestui que trust, yet it par- takes of such nature. The agency of the directors rests solely in their dealings with third persons, when they represent the corporation as its agent; but in dealings with the corporation, they act in a fiduciary capacity for the shareholders, as it is to their care that the shareholders, acting through the corporate entity, intrust the control of its property and the management of its business" (Mabon v. Miller, 81 App. Div., 17). And directors are accountable to the corporation for a breach of their duty. Accordingly, they cannot enter into binding contracts with the corporation, unless they can show that such contracts are beneficial to the company and that the terms are fair. 20. EXECUTIVE AND OTHER COMMITTEES. In many corporations the powers of the directors in the manage- ment of the ordinary business of the company are delegated to selected committees consisting of a few of the directors. In such cases the board will not meet except on extraordinary occasions and for the annual election of officers. In some of the states it is expressly provided by statute that the directors may delegate their powers to committees; in others, although the law is silent, it is assumed that such power exists. In such cases, however, there should be express provision therefor in the certificate of incorporation or by-laws. The usual provision for an executive com- mittee is as follows: "The board of directors shall elect from the directors an executive committee of (three) members and shall designate a chairman of such committee, who shall continue to be chairman during the pleasure of the board. The board of directors shall fill vacancies in the executive committee by election from the directors. "The executive committee shall fix its own rules of proceeding and shall meet where and as provided by such rules, or by resolution of the board of directors, but in every case the presence of a majority shall be necessary to constitute a quorum. "In every case the affirmative vote of a majority of all the members of the committee shall be necessary to the adoption of any resolution. "During the intervals between the meetings of the board of direc- tors, the executive committee shall possess and may exercise all the powers of the board of directors in the management and direction of the business of the company, in such manner as the executive com- mittee shall deem best for the interests of the company in all cases in which specific directions shall not have been given by the board of directors." It is sometimes provided that the executive committee may act by the written consent of all the members without meeting. 21. APPOINTMENT OF OFFICERS. The officers of the corporation, ordinarily, are a president, vice- president, a secretary and a treasurer, and there may be more than one 21 Formation and Management vice-president and one or more assistant secretaries or treasurers, and sucii othier officers as may be provided for in the by-laws. Usually officers of a corporation are appointed for the period of a year, but hold their offices subject to removal by the directors at any time. If the by-laws do not give such power of removal they may be amended so as to provide for it, and the directors may proceed to re- move an officer under the amended by-law. In cases of removal there may be questions of contract involved, and the directors should proceed cautiously so as not to involve the company in an action for damages. While the directors have the legal power to remove an officer, yet he may have a contract with the company to pay him a certain salary for a specified time, and in such cases a removal would be a breach of such contract. The by-laws may provide for the fixing of salaries of officers by the board of directors or by a committee or by the president or other officer. Where salaries are fixed by the board and an officer is a member of the board, he should not vote on the resolution fixing his own salary. If such a resolution were carried by his own vote it would be invalid, and he would not be entitled to recover against the corporation except for the fair value of the services rendered. It is sometimes expressly provided in the by-laws that the fact that an officer is a director shall not preclude him from receiving a salary as such officer, or from par- ticipating in the meeting at which the amount of such salary is fixed. To avoid any question as to the amount of officers' salaries, where the persons holding the offices are also in control of the board, the amounts should be definitely prescribed in a by-law adopted by the stockholders. 22. POWERS AND DUTIES OF OFFICERS. The officers of the corporation have such powers only as are con- ferred upon them by the by-laws of the company or by resolution of the board of directors. They are not general agents of the company and consequently cannot bind the company without authority. It is not necessary that such authority shall in all cases be expressly given; from its manner of doing business, persons dealing with a corporation may assume that the officers who are accustomed to exercise certain powers and to do certain acts have the necessary authority, and such persons are not required to inquire as to the provisions of the by-laws relating to the powers of such officers. If the directors of a corpora- tion, therefore, are accustomed to leave the entire management of its business to the president or general manager the acts of such officer in the ordinary course of business of the company cannot be questioned, either by the company itself or by third parties. It is usually provided by statute that certain papers shall be signed by, the president and secretary or by other specified officers of the cor- poration. For example, in New York, it is required by statute that certificates of stock shall be signed by the president or vice-president and secretary or treasurer. It is usually provided that the president shall preside at all meet- ings of the directors, and shall call to order and act as temporary chair- man of stockholders' meetings, and he is very often given the full management and control of the business during the intervals between the meetings of the directors or the meetings of the executive com- mittee, and it is customary to provide that all subordinate officers and employees shall be subject to his control. In other cases, the office of president is, to a large extent, honorary and the actual management of the business is placed in the hands of other officers. In every case it is advisable clearly to define the powers of the president in the by-laws. It is usual to provide in the by-laws for a vice-president, although not necessary under the laws of most of the states. The powers and 22 Formation and Management duties of the vice-president should be specified in the by-laws, and it is customary to provide that in the absence or disability of the president the vice-president may exercise his power and shall be required to per- form his duties. Other powers may be given to the vice-president to meet the requirements of each particular case. The secretary's powers and duties should be specified in the by- laws, and it is usual to provide that he shall act as clerk or secretary of all meetings of the directors and stockholders and sometimes also of the meetings of committees; that he shall keep the minutes of the meetings and record them in a book or books to be kept for that purpose, and he is usually given the custody of the seal of the cor- poration with power to affix it to papers which the directors have authorized to be executed, and to attest the seal when so affixed. The secretary is usually required to take an oath of office, and in some companies where it is part of his duty to handle funds he is required to give a bond. The secretary is usually given charge of or supervision over the stock certificate book, stock ledger and transfer book, and is sometimes made the transfer agent of the company. The treasurer is usually made the custodian of the funds and secu- rities of the corporation and is given charge of or supervision over" its books of account. He is usually required to give a bond to the com- pany, and is responsible for the loss of any moneys or other property of the corporation intrusted to his care. In order that he may be relieved from responsibility as to the moneys deposited in banks, it is usual to provide that the board of directors or executive committee shall by resolution designate the bank or trust company to be the depository of the funds of the corporation, and where such designation has been made, the treasurer will not be held responsible in case of the failure of the depository. The treasurer is usually required to sign certificates of stock, and where coupon bonds are issued the signature or a fac-simile engraving of it is affixed to each of the coupons. If the by-laws so provide, the offices of secretary and treasurer may be held by one person. Under the statutes of the different states certain reports are re- quired to be made by corporations, and it is made the duty of certain specified officers to make such reports, and penalties are sometimes provided for failure so to do. It is important, therefore, for every officer of a corporation to be familiar with the duties imposed upon him in this respect. 23. MINUTES. It is the duty of the secretary to keep minutes of all proceedings taken at the meetings of the stockholders and directors of the corpor- ation, and when such minutes are properly authenticated they are the proper evidence of the transactions at such meetings, and cannot be contradicted by parol testimony, although mistakes may be explained. Ordinarily the secretary of the company, or, in his absence, some person appointed to act as secretary of the meeting, will take notes dur- ing the proceedings and afterwards enter them at length in the minute book. It is advisable that all important resolutions should be written out in fjiU at the time they are offered and when passed handed to the secretary for entry in the minutes. The minutes need not be written in the hand-writing of the secretary, but may be prepared under his direction by a clerk or other person. While, as a general rule, it is not essential to the validity of certiorate proceedings that a record be made in the minute book, and such proceedings have been permitted to be proved by the testimony of witnesses, there are cases which have held that, where the statute requires minutes to be kept and proceedings taken for certain purposes to be entered in the minutes, unless so entered, such proceedings are 23 Formation and Management invalid. It is advisable, therefore, as a matter of precaution, in every case to have the minutes contain a full record of proceedings taken. It is not necessary to make a record of mere discussions of the direc- tors or stockholders which resulted in no action. 24. MODE OF WRITING UP MINUTES OF A MEETING. In writing up the minutes of a meeting the following matters should always be set forth: (1.) The time and place of holding the meeting. (2.) "Whether a regular or special meeting and how called. (3.) The names of stockholders present in person or represented by proxy, or, in case of a directors' meeting, the names of the directors present. (4.) The organization of the meeting by the election of a chair- man and secretary, unless the by-laws provide that certain officers of the company shall act in such capacities. (5.) The reading of the minutes of the last preceding meeting. (6.) The business transacted at the meeting. Adjournment and if the meeting is adjourned to a later time, the time and place of the adjourned meeting. Action at meetings is usually by way of resolution. There is no legal requirement as to the manner of framing resolu- tions for entry in the minutes. Any of the following forms may be adopted. "Upon motion of Mr. , seconded by Mr. it was resolved, that," etc. The names of those voting for and against the resolution may be set forth. "Upon motion, duly seconded, it was resolved, that," etc. "It was resolved, that," etc. The resolution itself should be framed in jslain language and should be brief and to the point. As a general thing the use of recitals com- mencing with "Whereas" is unnecessary. 25. THE MINUTE BOOK. Many corporations have adopted the loose leaf minute book, it being found convenient to have the minutes of meetings typewritten and inserted in the proper place in such books. There would seem to be no legal objection to the keeping of minutes in this manner. Several styles of books have been devised for this purpose, and when provided with a lock and key, such a book is for all practical purposes as secure as though it were permanently bound. A very convenient form of minute book is made with expanding back so that typewritten sheets may be pasted on the pages, or the minutes inscribed thereon in longhand, either or both. In addition to the record of the proceedings taken at meetings, it is advisable to copy in the minute book all waivers of notice, notices and other papers referred to in the minutes of meetings, and all contracts, deeds and other instruments authorized at such meetings, and all tax and other reports made by the corporation. The minute book should, as near as possible, contain a complete history of all corporate acts. Its usefulness may be increased by having a carefully prepared index. , 26. CORPORATE CONTRACTS. A contract with a corporation need not be under seal to bind it. A contract under seal is necessary only where it would have to be under seal if made by an individual, for example, a bond, deed, &c. It is customary, however, to have contracts of a formal nature sealed 24 Formation and Management with the corporate seal and signed in behalf of the company by one or more of its officers. Nor is it necessary that all contracts of a corporation shall be in writing. An officer or other person duly authorized by the direc- tors can bind a company by verbal contracts except where a contract is required by law to be in writing, for example, for the sale of land, where it is not to be performed within one year, or to pay the debt of another, or other cases covered by the statute of frauds. All contracts made in behalf of a corporation should be expressed to be made in its name and behalf. This is specially important in the case of promissory notes and other negotiable paper, for the reason that officers signing such paper and merely affixing the title of their offices after their signatures have been held personally liable thereon. The proper way to execute corporate contracts is to sign the name of the company followed by the word "by" and the signature of the officer executing the contract followed by the title of his office. Where the seal is used it is customary to write just below the impres- sion of the seal the word "attest," followed by the signature of the secretary, with the word "secretary" below. Where the name of the company is set forth in the body of the agreement as one of the parties, a short form of execution may be adopted: "For the Com- pany, by President [or other officer]." 27. CORPORATE SEAL. Every corporation should have a seal, and it is customary to affix the seal to all important contracts and papers executed in behalf of the company (see No. 26 above). The appearance of the corporate seal on a deed or other instrument is presumptive evidence that such instru- ment is the corporate act of the company. The seal of a private corporation is not self-proving, however; its authenticity must first be proved by competent evidence. The corporate seal is usually affixed to certificates of stock and negotiable bonds, but the fact that a bond otherwise negotiable in form is sealed with a corporate seal does not destroy its negotiability. There is no legal requirement as to the style or wording of the seal. Ordinarily it contains the name of the corporation, the name of the state where incorporated, the year of incorporation and the words "seal" or "corporate seal." A better form is to present the name of the company and the state of incorporation in the outer circle of the seal, and the words "Incorporated in 19 " in the center since it is quite obvious that the whole is a corporate seal. 28. CAPITAL STOCK AND SHARES. The capital stock of a corporation is the total amount of its author- ized capitalization fixed by its certificate of incorporation. It repre- sents the nominal or share capital as distinguished from the actual or property capital. The capital stock of a corporation is always divided into equal parts called shares, which conveniently represent the interest of the stockholders in the corporation. Capital stock is a generic term which covers both common and preferred stock, whether issued or un- issued, but does not include bonds or other corporate obligations. Where only one class of stock is authorized by the certificate of in- corporation, and the stockholders are on an absolute equality as to vot- ing, dividends, and participation in assets, it is designated as capital stock. In this case no one stockholder enjoys any rights or privileges over another stockholder and all the shares are on a common basis. Where two classes of stock are authorized, one of which enjoys certain rights and privileges, which entitle it to be designated "pre- 25 Formation and Management ferred stock,'' the remaining stock of the corporation, which has no special rights or privileges, is called "common stock." The right possessed by the owner of a share of stock has been described as "a fraction of all the rights and duties of the stockholders composing the corporation." Such right is personal property, even though the corporation's property is exclusively real estate. Important provisions as to shares of stock are contained in the Uniform Stock Transfer Law, now in force in Massachusetts, New York and Pennsylvania (see Appendix to the Massachusetts Section of Part II of this book). 29. PREFERRED STOCK. The term "preferred stock" of itself has no precise meaning in law. The rights of the holders depend entirely on the provisions of the certificate of incorporation or other contract providing for the issue of such stock read in connection with the statute authorizing it to be issued. Stock is sometimes preferred as to dividends or as to the repay- ment of the par amount in case of winding up or dissolution, or. as to both. Special voting powers are in some cases given to the holders of preferred stock. Dividends on preferred stock may be made cumulative or non- cumulative. Where it is provided that the holders shall have a pref- erential cuniulative dividend of, say, seven per cent, per annum, before any dividends shall be paid to the holders of common stock, it means that if dividends are not paid at such rate during any year the amount will be carried over and be payable out of the earnings of subsequent years before any dividends shall be paid on the common stock. Non- cumulative dividends are payable only out of the profits of each particular year and are not carried over. It would seem that, unless expressly provided to the contrary in the charter or by-laws, the directors have the same discretion as to declaring dividends on pre- ferred stock as in the case of common or ordinary stock. The holders of non-cumulative preferred stock are, therefore, practically at the mercy of the directors, and this fact makes such stock an uncertain investment, especially where the holders of the common stock are in control of the corporation. To meet this difficulty it is sometimes provided that the holders of preferred stock shall be entitled to be paid a certain dividend if the earnings during the year are sufficient, making it obligatory upon the directors in that event to declare such dividends. In some of the states there are special provisions as to preferred stock limiting the amount which may be issued and limiting the amount of preferential dividends. In other states there are no such limitations and preferred stock may be created on such terms as may be deemed advisable. Wherever preferred stock is to be issued the provisions for it should be drawn with great care and the questions as to the amount of dividends and whether they are to be cumulative or non-cumulative should be carefully considered. It is often a serious mistake in a new enterprise to provide for large cumulative dividends on preferred stock, as during the first years of development the accumulation of unpaid dividends may render the common stock worthless as a marketable security. In preparing the articles of incorporation or other instrument pro- viding for the issue of preferred shares, the following points should always be clearly covered: (1.) Whether dividends are to be cumulative or non-cumulative, and the annual rate of the preferential dividend. (2.) Whether the preferential dividend is exclusive of the right to receive further dividends. 26 Formation and Management (3.) Whether the dividends on the preferred stock for the full year must be actually declared and paid before any dividends shall be payable on the common stock, or whether the directors are to have power to declare dividends on both classes concurrently, quarterly or otherwise. (4.) Whether the holders of preferred shares are to be preferred as to return of capital in case of dissolution or winding up. (5.) Whether the holders of preferred shares are to have any special rights as to voting, or whether their rights in this respect are to be restricted, or limited or whether all voting rights are denied to them. (6.) Whether the company reserves the right to increase the amount of the preferred stock. (7.) Whether the preferred shares are to be subject to redemp- tion by the company, and if so the terms and conditions thereof. 30. ISSUE OF STOCK. Shares of stock are "issued" when they are subscribed or a con- tract is made for the payment of the same in property or other con- siderations as permitted by the laws of the state under which the com- pany is formed. In Part II of this book will be found the statutory provisions as to the issue of stock. Where such issue is permitted stock may be issued for property of any kind which may be suitable for the purposes of the corporation. Thus stock may be issued for the assets and good- will of a going business, for real estate, mines, patents, or other prop- erty. In some of the states it is provided by statute that stock may be issued for services rendered to the corporation. The statutes of several of the states now provide that where stock is issued in payment of property purchased the judgment of the direc- tors, in the absence of actual fraud in the transaction, is final and con- clusive as to the value of the property, and that such stock shall not subject the holders to any liability, either to the company or its credi- tors. It has been held, however, by the courts that gross overvaluation of property is strong evidence of fraud. In recent years the New Jersey courts have shown an increasing tendency to go back of the judgment of the directors. Where the capital stock of a corporation is not subscribed in full at the time of incorporation it is usually provided either by statute or by the certificate of incorporation that the directors may issue such stock from time to time to the aggregate amount authorized by the charter. Where stock is issued for money, it is usual to have subscriptions signed by the proposed stockholders. A subscription is not required to be in any particular form, but is binding if it clearly shows that the signer agrees to take and pay for a certain number of shares of stock of the corporation, and is accepted by some person authorized to accept it on behalf of the company. Under the laws of New York a subscription made after the incorporation of the company is not valid and cannot be enforced against the subscriber unless at the time of making it he pays ten per cent, of the amount thereof to the cornpany. A subscriber must pay the full par value of the shares ofstock subscribed by him at such time as the directors shall require. The action of the directors in requiring a payment to be made on account of a subscription is called an assessment of the stock, and stock which is not fully paid is called assessable stock. An assessment must be made in accordance with the provisions of law and the by-laws of the company, and notice must be given to each stockholder affected thereby in the manner required. If a stockholder refuses to pay the amount of an assessment he may be sued by the company for the same and the directors are also empowered to forfeit the stock and sell it to pay the amount due. In case of a forfeiture it is important 27 Formation and Management to comply strictly with all the provisions of law. The purchaser of forfeited stock takes it subject to the payment of the amount of unpaid and uncalled installments. 31. CERTIFICATES OF STOCK. Owners of shares of stock of a corporation are entitled to cer- tificates showing the number of shares which they own. Such certifi- cates are not the shares themselves, which are intangible, but merely represent such shares and bear much the same relation to the shares as does a deed to the real estate conveyed by it. They are a con- venient form of written evidence showing the interest of the holder in the corporation. Certificates of stock should not be issued until the full par value of the shares represented has been paid either in cash or property, unless it is stated on the face that they are not full paid. Subscribers for stock who have paid only a certain part of the par value of the shares subscribed are usually given receipts signed by the treasurer of the company showing the amounts of installments paid, which re- ceipts are made transferable in the same manner as certificates of stock. Under the New York law the certificate of incorporation may provide for the issue of partly paid stock, in which case the certifi- cates are required to specify the amount unpaid and it is provided that the holder thereof shall not be subject to any liability except for the payment to the corporation of the amount remaining unpaid upon such stock, and for the payment of indebtedness of employees, as provided by the stock corporation law. It is also provided that divi- dends on such partly paid stock shall be upon the basis of the amount paid on the stock and not on the par value. Under the Uniform Stock Transfer Law, now in force in iVlassa- chusetts. New York and Pennsylvania, certificates of stock are for all practical purposes negotiable instruments (see Appendix to the Massa- chusetts Section of Part II of this book). 32. STOCK CERTIFICATE BOOK. Where there is more than one class of stock, it is better prac- tice to provide separate books of certificates and to print on the face of each form of certificate a full statement of the rights, privileges and restrictions attached to each class, so that a purchaser may not be required to examine the charter or by-laws to learn the relative rights of the different classes of stockholders. Where there is but one kind of stock the form of stock certificate is simple and certificates of various styles of printing and quality of paper may be obtained from the stationers. Lithographed forms are kept in stock so that when ordering certificates it is only necessary that the name of the company, amount of authorized capital stock and par value .of the shares shall be printed in. Where it is not desired to order special lithographed forms, the certificates of the stock of different classes may be printed on the lithographed borders kept by the stationers. On the back of each certificate of stock there should be printed or lithographed a form of assignment and power of attorney to transfer the shares represented by the certificate on the books of the company. The stock certificates are usually numbered from 1 up, or if both preferred and common stock are issued, they should be numbered sepa- rately, as for example, P 1 and C 1 up to the number required. The stubs are numbered to correspond with the certificates, and at the time the certificate is issued, the corresponding stub should first be carefully filled in with the number of shares issued, to whom issued, the address of the owner, the date of issue, from whom transferred (if an original issue that fact should be stated) ; serial number of original certificate 28 Formation and Management from which transfer was made, num,ber of original shares, and number of shares transferred. From the data at hand on the stub, the corresponding name of the owner, number of shares and date of issue, should then be written in the certificate. The corporate seal is then impressed on the lower left- hand corner, and the certificate is signed, as statute or by-laws require, usually by the president and treasurer, or president and secretary, or their assistants. Ordinarily the certificate is now ready for delivery. In the larger corporations, however, it is customary to appoint a transfer agent and a registrar, usually two trust companies, or other corporations authorized by their charters to perform these services. In that event the new cer- tificate together with the one to be cancelled (or, if an original issue, the authority for such issue), must be presented to the transfer agent and registrar so that entry may be made in their transfer and registra- tion books. It is their duty to see that the certificate is properly issued, that the signatures are genuine, and that the issue does not exceed the total authorized number of shares of the corporation. One acts as a check upon the other, and if the certificate is regular, it is countersigned by both. When the certificate is delivered the receipt at the bottom of the stub should be dated and signed by the one to whom the certificate is issued, or his attorney, or a detached receipt in like form should be taken and pasted on the stub. 33. TRANSFER OF SHARES OF STOCK. Shares of stock being personal property may be sold and trans- ferred by the owners in the same manner as other personal property. The usual method of transferring shares is by delivery of the cer- tificate of stock with the form of bill of sale or assignment and the power of attorney printed on the back of such certificates signed in blank by the person named in the face of the certificates as the owner thereof, or by some person authorized to act in his behalf. The follow- ing is the standard form^ of such assignments: For value received. . . .hereby sell, assign and transfer unto shares of the capital stock represented by the within certificate and do hereby irrevocably constitute and appoint ' attorney to' transfer the said stock on the books of the within named company, with full power of substitution in the premises. Dated 191 In presence of NOTICE. — ^The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement or any change whatever. The name of the person to whom the shares are assigned and the name of the attorney may be filled in or left blank. If left blank any number of sales may be made merely by delivery of the certifi- cate. Where the names of the assignee and the attorney are filled in, however, it is necessary to obtain a new certificate issued in the name of such assignee, which must be signed on the back by him, before the shares can again be conveniently sold or a proper delivery be made. It is not necessary that the assignment shall be the one printed on the back of the certificate; an assignment on a separate paper is just as valid. Where the assignment of shares of stock has been made by delivery of the certificates properly endorsed as above described, the purchaser 29 Formatio n and Management becomes the owner of such shares and where such assignment has been made in good faith and for value the creditors of the assignor or trans- feror cannot reach such shares by attachment or levy of execution. While transfer in the above manner is sulBcient to vest the full title in the purchaser as between the parties to the transaction, the corporation itself is not bound to recognize the new stockholder until the. requirements of its by-laws have been complied with. These re- quirements usually are that the old certificate shall be surrendered to the company, and a transfer made on the transfer book of the com- pany by the old stockholder or by the person appointed attorney in the assignment. In Massachusetts, New York and Pennsylvania, the provisions of the Uniform Stock Transfer Law (see Appendix to Massachusetts Section in Part II of this book) should be consulted on this subject, and in Massachusetts and New York the Stock Transfer Tax Acts. When stock owned by a decedent is presented for transfer care should be taken that the requirements of the Inheritance Tax Laws have been complied with. 34. ISSUE OF NEW CERTIFICATES. Frequently a certificate that has been properly endorsed in blank may pass through many hands, by mere delivery without further en- dorsement. Such a delivery transfers the legal title to the shares as between the parties to the transfer, and is a common way of passing Stock Exchange certificates. Any person who may be the holder of the certificate has the right at any time to become a stockholder of record by filling in the blank in the assignment with his name, and his name or that of another as attorney, and presenting the certificate to the company to be cancelled and a new certificate issued to him. When a certificate is surrendered for transfer, or reissue, it is customary to paste it to the stub from which it was detached, punch the signatures and to write or stamp across the face of the certificate "Cancelled, by , dated, " The secretary or transfer agent then notes on the stub to whom the transfer was made and the number of the new certificate, and issues a new certificate or certificates to the person or persons designated as transferee or transferees. Where only-part of the shares are transferred, a new certificate is Issued to the owner, after the certificate or certificates have been issued to the transferee or transferees, for the balance of the shares. When this is done, there should be entered on the old stub, "Renewed by No " inserting the number of the new certificate, and on the stub of the new certificate, "Issued for No cancelled," inserting the number of the old certificate. Where a sale is contemplated, which may not be closed, it is advisable for the transferor to exchange his original certificate for two certificates made out to himself for the number of shares respectively to be sold and to be retained. Then if the sale takes place, he has simply to assign the certificate for the shares sold, leaving the new owner to get a certificate in his own name. Otherwise, if a certi- ficate is issued in the name of the proposed transferee, before the sale is consummated, and if for any reason the sale is not made, the trans- feror may be required to get the transferee of the shares meant to be sold and already transferred, to reassign them. The transfer agent, secretary, or other official called upon to make a transfer has the right to satisfy himself as to the genuineness of the signatures, the validity of the assignment, proof of ownership, and proof of identity where the certificate is presented by a stranger. The corporation is liable to the owner of the stock if it registers a forged, or unauthorized, or invalid transfer, unless the owner is estopped by his own acts; so also, where the corporation registers a' transfer 30 Formati on and Manage ment and issues a new certificate witfiout surrender of the outstanding cer- tificate, it may be held liable on both certificates to bona-fide purchasers and transferees thereof. 35. LOST CERTIFICATES. Where a certificate of stock has been lost, the corporation should, before issuing a new certificate, require proof of such loss to be made by affidavit, and that a bond of indemnity be given in double the value of the shares. Where the corporation is not satisfied with the proof or bond of indemnity offered it will refuse to issue a new certificate and will compel the claimant to institute proceedings in court, for which provision is made in the statutes of the different states. A judgment or decree of the court that a new certificate be issued will protect the cor- poration against liability by reason of the issue of such new certificate. In every such case, however, it is advisable to seek the advice of counsel at once. 36. NEGOTIABILITY OF STOCK CERTIFICATES. Certificates of stock are referred to as being negotiable. They are not negotiable, however, in the sense that a promissory note is negotiable. Certificates endorsed in blank may be passed from hand to hand in the market, but in case such a certificate is lost or stolen a subsequent purchaser will not obtain title as against the true owner. The liability of the corporation in case of lost or stolen certificates arises where such certificates have been presented for transfer and the transfer has been permitted to be made on the books of the cor- poration and a new certificate has been issued which gets into the hands of a bona-fide purchaser. It being then discovered that the sur- rendered certificate was lost or stolen the true owner may compel the corporation to issue a new certificate to him and the purchaser of the certificate which has been issued in lieu of the lost or stolen certificate surrendered may compel the corporation to issue to him a certificate of stock, or, in case such issue would result in an over-issue of stock, as where the total authorized capital stock is issued and out- standing, may recover damages from the corporation for the loss sus- tained by him. , In Massachusetts, New York and Pennsylvania, the law on this subject has been codified (see Appendix to Massachusetts Section in Part II of this book), and in those states certificates of stock now possess most of the qualities of negotiable instruments. 37. UNDERWRITING SUBSCRIPTIONS FOR STOCK. Of recent years the practice of underwriting the subscriptions of stock of corporations has grown up. In its simplest form under- writing is an agreement made by one or more persons or financial institutions to take and pay for at a specified price (in the case of an original issue of stock not less than the par value thereof) all shares which shall not be subscribed by the general public. Where a specified number of shares are so offered for general subscription it is a protection against failure to obtain subscriptions to the full amount of stock offered, and the fact that the issue of stock has been underwritten by responsible parties is of great assistance in obtain- ing subscriptions. For the risk which they assume underwriters are paid a commission in stock or cash. As it is doubtful whether a com- pany may legally pay commissions to underwriters out of capital, and as original issues of stock are as a rule not made at a greater price than the par value, the form of underwriting above described is rare. The form which underwriting usually takes is as follows: A corporation is formed to take over a business or to combine two or more businesses, and proper resolutions are passed by the 31 Formation and Management directors of the company providing for acquiring ttie property of tlie old business or businesses and the issue to the vendors of the entire capital stock. If the company is organized under the laws of a state where it is permitted to issue stock for property at a valuation to be determined by the directors, such stock is fully paid and being the property of the vendors may be disposed of or dealt with as they see fit. In order to provide the company with working capital the vendors donate a certain part of their holdings to the company to be sold at a price fixed by the board of directors. Such shares or a por- tion of them will then be offered to the public for subscription and an arrangement is made with underwriters to guarantee as above described that all of the shares offered shall be subscribed. As such shares are property in the hands of the company and are in effect surplus, the company may provide for the payment of commissions to the under- writers, either in cash or out of the proceeds of sales of such stock or by transfer to them of a portion of such stock. The commissions of the underwriters are sometimes paid directly by the vendors. Bonds are also underwritten and the procedure is similar to that above described in the case of shares of stock. As it is possible under the laws of many of the states to issue bonds at a discount, that is, at less than the par value, the matter of the payment of commissions to the underwriters may be arranged without recourse to the indirect method of first issuing them to the vendors and having the vendors donate them to the company. The term "underwriting" is also applied to a somewhat similar operation, where a bank or trust company, for instance, agrees to loan money to a company on the security of approved subscriptions for stock or bonds of the company assigned to it as collateral. 38. TREASURY STOCK. The term "treasury stock" is applied both to that portion of the authorized capital stock of a corporation which has not been issued, and to shares of stock which have once been issued and paid for in full and subsequently acquired by the company so as to constitute prop- erty in its possession subject to disposition in the same manner as other property owned by it. Where the term is used among business men it is ordinarily in the latter sense. Under present conditions investors will rarely pay par for stock of a new enterprise. Unless the persons who are getting up the cor- poration have sufficient capital themselves, it is usually necessary to obtain working capital for a new corporation by selling shares to the general investors, and it is almost always necessary to offer induce- ments to such investors. The inducements usually offered are either the sale of the shares at less than their par value or the sale of pre- ferred shares at par with a bonus of common stock. As explained above in referring to "underwriting," corporations are frequently formed to take over the goodwill, business and prop- erty of existing manufacturing or other business and stock is issued to the vendors in exchange. Where it is proposed to have only one kind of stock the vendors in such cases will donate a certain portion of the stock received by them to the company to be sold by the board of directors upon such terms as they shall deem advisable. Sometimes the additional working capital is obtained by having a class of preferred stock which is not issued to the vendors, and providing that all of the common stock shall be issued to the vendors, who afterwards donate a portion of the common stock to the company to be disposed of by the directors by way of bonus to the subscribers for the preferred stock at par. For instance, it may be provided that one share of such com- mon stock shall be given with each share of preferred stock subscribed, and other proportions of common and preferred stock may be provided, 32 Formation and Management as the experience of the promoters will show to be advisable under the conditions prevailing at the time. The question whether treasury stock donated to the corporation in the manner above described can be sold at less than par, at any price fixed by the directors, has not been settled by the courts. A well-recognized authority says on this subject: "We now come to the device of satisfying the law and at the same time render it possible to issue full-paid stock at practically less than par — namely, by 'treasury stock.' The fact that a person to whom the stock is issued returns a part of it as a gift to the corporation, or to trustees for the corporation to sell the same below par and put the proceeds in the corporate treasury for a working capital, does not necessarily prove fraud in the value put upon the property. The person receiving the stock may have been willing to sacrifice a part of his stock and prop- erty in order to make the rest more valuable. Such stock is called 'treasury stock' and the transaction has frequently been upheld by the courts. Such stock having once been legally issued as full paid stock and then donated back into the corporate treasury, can be legally sold for cash at less than par." (Cook on Corporations, Seventh Edition, § 192 et seq.) Treasury stock, using the term in the sense first referred to, that is, the unissued capital stock, can only be issued for cash at par or for property which the directors shall adjudge to be equal in value to the par value of the stock. It has been held in New Jersey that before such stock has been actually issued for property stockholders objecting to such issue may by instituting proper proceedings have the value of the property determined by the court, and if determined that such value is not equal to the par amount in money, an injunction against such issue will be ordered. 39. DIVIDENDS. A dividend is a portion of the surplus or earnings of a corporation distributed among the stockholders pursuant to action properly taken by the board of directors. It is unlawful to pay dividends except from the surplus or net profits; that is to say, 'before a dividend can be paid it must be determined either that the corporation has assets in excess of its liabilities and the par amount of the capital stock issued and outstanding or that it has net earnings from its business. If the capital has been impaired by losses it is not proper to pay dividends until the amount of such loss has been regained or the capital stock has been legally reduced to the amount of the actual capital or net assets. It has been held recently in New Jersey, however, that, if the original capital remains intact, even though the stock was issued for property at an excessive valuation, it is not necessary to re-value such property before declaring a dividend. In any case before declaring a dividend the ' directors should make a thorough examination into the financial condition of the company, and the statutory provisions of the state under which it is organized should be consulted. The power to declare dividends is vested in the board of directors, and the amount to be distributed as dividends rests in the discretion of the board. A stockholder cannot compel the directors to declare and pay dividends unless he can clearly show that their refusal is due to an abuse of discretion. A dividend once declared is a debt due the stockholder entitled to it, and if he sells his stock the purchaser is not entitled to such dividend unless it is expressly so agreed between them. It is custom- ary wlien a dividend is declared, that is, when the resolution providing for it is passed, to set a future date ,for such payment, and in the case of large corporations to provide th'at such dividend shall be pay- able to the stockholders of record at the close of business on a 33 Formation and Management specified day. All sales of stock made after such day are made ex-djvi- dend, that is, the purchaser is not entitled to receive such dividend. Where the directors deem it advisable not to pay dividends in cash but to reserve earnings for use as working capital a stock dividend is sometimes authorized and paid; that is, instead of cash an equivalent amount at par of the stock of the corporation is issued to the stock- holders. This will increase the shares of the capital stock issued and outstanding by the aggregate amount of such stock dividend. A stock dividend may be declared out of treasury stock or by increasing the authorized capital stock for the purpose. 40. STOCK REGISTER. The stock register, usually kept by the registrar of the corporation, is designed to furnish a complete record of the issue of the shares of stock of a company, and is a safeguard against overissues and dupli- cate issues. On the debi,t side are entered, in numerical order, particulars of all certificates of stock issued, including the number of the certificate, date of issue, name of stockholder, and number of shares issued. When a certificate of stock is surrendered and cancelled, an entry is made on the credit side. A balance taken at any time gives the amount of capital stock issued and outstanding. This balance should always equal the aggregate amount of shares credited to the respective stockholders of the com- pany in their individual accounts in the stock ledger, and must never exceed the amount of the authorized capital stock. 41. STOCK TRANSFER BOOK. In this book are entered all changes of ownership of the shares of the company, whether by sale, gift, or otherwise, and it is customary to enter also all changes of certificates made by splitting or consolidat- ing certificates owned by a stockholder, without a change of ownership of the shares. The manner in which transfers are to be registered may be, and usually is regulated by the by-laws and certificates of stock. After the assignment on the back of the certificate has, been filled in, as described in No. 31 above, it is customary for the assignee or his attorney to present the certificate to the company, or the transfer agent, for trans- fer. If the name of the attorney is omitted, the person having charge of the transfer book will fill in his own name as attorney. He will then register the transfer by filling in the particulars required in the several columns of the Stock Transfer Book and sign his name or initials in the last column. The registration of the transfer is thei' Complete. The old certificate of stock should then be cancelled and pasted on its stub iti the stock certificate book. A new certificate may then ' be issued to the transferee. Before allowing a transfer to be made on its books the transfei' officer or clerk of the corporation should satisfy himself that the signa- ture of the assignment and power of attorney authorizing the transfer is-gehuine. In case, of a forgery the Corporation will be liable to the actual owner and also to any bona-flde holder of the new certificate. ,,, . The statutory provisions as to the entry of transfers should be noted and carefully followed in each case, including the provisions of the S,to,ck Transfer Tax Acts irr Massachusetts and New York. . • 42. STOCK LEDGER. I 1 The. stock ledger corresponds to the ledger in a set of ordinary books, of account. Here are kept the accounts of the individual stock-- hoWers: with .rfcspectr to the shares acquired and held and transferred. 34 Formation and Management Each stockholder is credited with the number of shares acquired and debited from time to time with the number of shares transferred. This book is posted as to original subscribers of stock: (1) from the original subscription agreement or book, if any; (2) from the stubs of the Stock Certificate Book and the Stock Register; and as to stock- holders who acquire their shares by transfer, from (3) the Stock Transfer Book and the Stock Certificate Book. To make a complete ledger, which can be balanced, the Stock Ledger must be used in connection with the Stock Register, and the total number of shares credited to stockholders in the Ledger should be equal to the total number of shares debited in the Register. In some states the place of residence of the stockholder is re- quired to be given in the Stock Ledger, while in others it is sufBcient to state merely the post-ofBce address. It is usual to obtain from each stockholder the address to which he desires notices to be sent. The New York law requires the stock book, or ledger, to state when each stockholder became the owner of his shares. The only apparent purpose for this requirement is to fix the time the statute of limitations will begin to run in favor of the old stockholder. It is customary to enter the date the transfer is made on the books, unless the stockholder requires the actual date of sale to be given. In New York the Stock Transfer Tax Act requires the serial numbers of the canceled and issued certificates to be entered. In New York the amount paid on shares is also required to be given in the stock book, or ledger. This is entered in the last column. This means the amount paid to the corporation, not the amount paid by one person to another on a sale of shares, and after the first entry, this column need not be filled in. If payment on the original issue has been made otherwise than in money it should be so stated, The laws of New York provide heavy penalties for failure to keep a stock book, alphabetically arranged. The special features of a stock book for New York are usually combined in the stock ledger. The laws of Delaware, Massachusetts, Maine, New Jersey and Pennsylvania re- quire a stock ledger to be kept. 43. HINTS ON TRANSFERRING STOCK. Many mistakes and possible litigation will be avoided if stock- holders and company officers and transfer agents will act in accordance with the following rules in transferring stock: (1.) The name of the transferee should be given in full, without abbreviation; thus "John W. Doe." Avoid nicknames or diminutives. Always have the transferee give his place of residence, street and num- ber, and other address, if any, to which he wishes notices to be sent. (2.) Official, honorary and courtesy titles such as Judge, Gen., Hon., Rev., Dr., Mr. and the like should not be used, except that in the case of a woman Mrs. or Miss may be prefixed to indicate that she is or is not married. In transferring to a married woman always use her own Christian name. When a woman changes her name by marriage have transfer made to her new name, having her sign transfer on back of old certificate thus, "Mary Doe now Mrs. Mary Doe?" and issue new certificate accordingly. (3.) If the transferee is a minor [person under 21 years of age] so state in transfer, thus "John W. Doe, a minor," and give guardian's name and address. When such person attempts to transfer stock, proof should be required that he has become of age; otherwise the transfer must be made by the guardian. Where a guardian has been appointed bythe Court he-must exhibit his certificate of appointment. If possible avoid transferring stock to minors. . ' (4.) A transfer should not be made to a trustee, agent or attorr ney unless appointed • by written instrument. If properly - appointed, enter memorandum »in the Register o if Transfers and also in; the Stock 35 Formatio n and Management Ledger showing that transferee holds in representative capacity, and also make reference to such written instrument. If shares are held in the name of two or more trustees, all must sign the transfer. (5.) In transferring to a society or institution, ascertain whether incorporated and whether it has authority to hold and transfer stock. All transfers made by ofBcers or agents of corporations, societies, asso- ciations and institutions must be accompanied by documents properly authenticated showing their power to act in the premises. (6.) Shares of an intestate [deceased person leaving no will] must be transferred by the administrator, who must exhibit his letters of administration or certificate of appointment. Shares of a testate [deceased person leaving a will] must be transferred by the executor or administrator, who must exhibit a certified copy of the will and his letters testamentary or certificate of appointment. Before allowing transfer of shares owned by deceased person require proof that in- heritance or transfer tax, if any assessable, has been paid, or require waiver of.proper state officer to be filed. (7.) 'Where a transfer is made as collateral security and not absolutely, it should be so noted. (8.) Trustees, attorneys, agents, guardians, executors and admin- istrators should not transfer directly to themselves. (9.) If a certificate of stock is lost and the owner applies for a new certificate, require provisions of statute or by-laws to be strictly followed, as to proving loss and giving bond of indemnity. (10.) If for any reason a corporation officer or agent doubts the legality of proposed transfer legal advice should be taken before trans- fer is allowed or refused. (11.) In Massachusetts and New York, see that the stamp tax on transfers of stock has been paid. 44. CORPORATION ACCOUNTING. Corporate bookkeeping differs from ordinary bookkeeping only in that there are certain capital stock accounts instead of personal ac- counts with the members, and certain special accounts growing out of the corporate relation. The bookkeeping of a corporation should be more, rather than less comprehensive than that of a firm. Every corporation should adopt such forms of accounts as suit its particular business. They should embrace such a number of separate books as will enable the management to know exactly what is being done in every department and in every detail and at what cost. The general or private ledger is the only book that is necessarily affected when a private or partnership business is transferred to a cor- poration. A few new entries are required in this book to properly set forth the condition of the corporation. The Interests of the parties owning the corporation are represented by stock, and a "capital stock" account should be opened. TTie acquisition of treasury stock requires the opening of a "treasury stock" account. Bonds when issued require a "bond" account, and when interest accrues thereon, an "interest" account. Corporate losses or gains require a "surplus" account, and since profits when earned and divided are declared as dividends, there must be a "dividend" account. Otherwise the general principles of accounting apply. 45. CAPITAL STOCK ACCOUNTS. According to the practice of some accountants the "capital stock" account in the ledger shows as a credit the total amount of the author- ized capital stock; according to others it should show only the par amount of the capital stock actually issued and outstanding. The latter practice would seem to be preferable. Indtements to the net 36 Formation and Management wealth are not annually added to the original sum, which remains constant at the par value. To determine the actual present net worth of a corporation, this itemi must be combined with one or more other accounts, which show variations from this nominal capital and alter- ations in it due to business operations and other changes. Under the conditions set forth below, the following opening entries should be made: (a) Where all the stock is issued for cash. — The entries in this case are simple, incoming cash being debited, and outgoing "capital stock" credited. The entries may be as follows: Subscriptions $10,000 To Capital Stock $10,000 100 shares of stock subscribed at par as follows: A.B. 40 shares CD. 40 " E.F. 20 " When posted to the ledger, as the cash is received the cash account is debited and subscriptions account credited, until the item "subscrip- tions" disappears from among the assets, and there is substituted there- for cash or some other kind of property. This shows that the entire capital stock has been issued and is outstanding as a technical cor- porate liability. When both preferred and common stock have been issued, an account should be opened with each, the two accounts taking the place of the "capital stock" account. (b) Where all of the stock is issued for property. — In this case the journal entries are as follows: Property $10,000 To Capital Stock $10,000 100 shares of stock at par for plant, mines, etc. (See minutes of directors mefiting of 19 ; Minute Book, fol. ). In practice the various items of property, as real estate and build- ings, plant and machinery, tools, fixtures and furniture, materials, good- will and trade-marks, patents, merchandise, etc., are entered separately, and an account for each opened in the ledger. (c) Where stock is issued partly for cash and partly for property. — This would require two separate entries similar to the foregoing, which, when posted, will give a total credit to capital stock of $10,000. (d) Where stock is sold above par. — Where stock is sold above par in case of an original issue, "cash" is debited with the entire amount coming in, "capital stock" is credited with the full par value of the stock issued, and the excess is credited to "surplus" or "work- ing capital." Various other conditions may arise in the original issue of stock, but the foregoing examples will indicate the proper course to follow. 46. TREASURY STOCK ACCOUNTS. The term "treasury stock" not infrequently is erroneously used to designate stock that has been authorized but not issued. Such a use of the term is condemned by most accountants, on the ground that the term "treasury stock" should be limited to stock which has once been issued and subsequently reacquired and held as an asset. In the organization of corporations of a speculative nature, such as mining and some industrial corporations formed to work patents donations of stock to the treasury are frequently made. The laws of most of the states permit a more or less elastic valuation of mining property, patents, and the good will and trade-marks of manufacturing establishments, and it is a common practice to issue all of the stock of the corporation in payment for such property. A donation or 37 Formation and Management return of a certain portion of such stock is then made as a means of procuring worljing capital, and this treasury stoclc is then sold below par. (See No. 38 above). When a corporation acquires its own stock, whether by donation or purchase, it becomes an asset, and is debited to "treasury stock," at the price paid in the case of purchased stock, and at its estimated value in the case of donated stock. The corresponding credit in the case of stock purchased for cash, is the "cash" account, and in the case of donated stock, "donation" account. Thus in a simple case, the journal entries would be as follows: Treasury Stock $3,000 To Donation $3,000 50 shares donated to treasury to be sold at $60 per share for working capital. When the stock is sold the sale would be entered as follows: Cash $3,000 To Treasury Stock $3,000 50 shares of Treasury Stock sold at $60 per share. The "donation" account may then be closed as follows: Donation $3,000 To Working Capital $3,000 This method of accounting shows an apparent gain to the corpora- tion of $3,000. It is in effect an admission that the original valuation of the property upon which the stock was issued is fictitious. Never- theless it is often justified economically on the theory that the vendors, confident of the ultimate success of the enterprise, are willing to make the sacrifice in order to get started; while the investor is more willing to undertake the risk of providing working capital when he can pur- chase the stock below par. 47. BOND ISSUt:S AND THE BOND ACCOUNT. When a corporation sets out to borrow a large sum of money, from a number of people, extending over a period of years, it is customary to authorize a bond issue. Such bond issues take various forms, from the unsecured "debenture" to the first mortgage bond, secured by a deed of trust of the property of the corporation. A bond is a formal instru- ment, executed under seal of the corporation, and may or may not be negotiable. It is a direct corporate obligation and does not in any way partake of the nature of stock. Unless otherwise expressly provided by law, the power to incur corporate indebtedness lies with the directors, and they may at their discretion issue bonds without authorization from the stockholders. Statutory or constitutional provisions, however, limit this power in some states. Thus in New York mortgage bonds must be authorized by a two-thirds vote of the stockholders. In Pennsylvania and in some other states, they may be authorized by a majority of the voting stock. New Jersey specifically authorizes the issue of bonds convertible into stock, and in Delaware bondholders may be given the same rights as stockholders. Bonds, unlike stock, may in the absence of restrictive legislation be issued below par. Bonds, when issued, require a "bond" account, and accounts must also be kept with the interest on these bonds as it accrues. The entries in this case are not different in principle from those of capital stock, already discussed. 48. SURPLUS AND DIVIDEND ACCOUNTS. The surplus account, broadly speaking, represents the undivided profits of a corporation, out of which dividends may be declared, un 38 FORMAxiON AND MANAGEMENT practically all of the statesjit is illegal for the directors of a corporation to make dividends, except from the surplus or net profits arising from the business of such corporation. It is important, therefore, that the books of the corporation should show its exact financial condition, before an attempt is made by the directors to distribute the profits. A dividend is legitimate whenever real profits exist, and only when they so exist. A dividend ledger should be kept for the purpose of showing a record of all dividends declared and paid to stockholders. Such a record should show the name of the stockholder, number of shares, date of dividend, amount of the dividend and time of payment. In the case of cumulative preferred stockholders, where the dividends, if not paid in any one year, are carried over as a charge against profits until such times as they can be paid, such a record is of special importance. Dividends are usually paid in cash, but are sometimes paid in stock. Where a dividend is declared payable in cash, surplus is debited, and the "dividend" account is credited with the amount. Checks are then issued for the amount of the dividend declared, "cash" is credited, and the dividend account is charged, thus causing it to balance. Where profits properly applicable to dividends exist, and the directors consider it unwise to reduce the cash on hand by the pay- ment of a dividend, dividends are not infrequently declared in stock. Stock must be available for this purpose, either from unissued stock already in the treasury, or from an increase of capital stock legally authorized. If unissued stock is used, the entries will show that the stock already in the treasury has been decreased. Where new stock is authorized for the purpose, the entries would show an increase in the capital stock issued and outstanding. The new stock is issued without the reteipt of additional wealth, but that the wealth has previ- ously been received by the corporation will be shown by the credit to "surplus." "So long as €very dollar of stock issued by, a corporation is repre- sented by a dollar of property," says the court in Williams v. Western Union (93 N. Y., 190), "no harm can result to individuals or the public from distributing the stock to the stockholders." 49. RIGHTS OF FOREIGN CORPORATIONS. The problem of the fdreign corporation has given no little trouble to the legislatures and the courts of the various states. The growth of commerce and the increasing number of corporations that are carrying on business in two or more states has compelled the states, one by one, to pass statutes regulating such corporations. It is settled by abundant authority that the domicile of a corporation is the legal jurisdiction of its origin. It cannot migrate, and the only status it acquires in another state is by the law of comity, or express statutory provisions. In England, as early as 1729, it was held that a foreign corporation could bring suit in its courts, but could not be sued. As late as 1819 the New York Court of Chancery held that a foreign corporation could not be sued in the New York courts. Massachusetts followed this decision in 1834, and England upheld it as late as 1872. These decisions were based on the common law rule that process against a foreign corporation must be served on the head office. A state court could not by any method acquire jurisdiction to render a personal judg- ment against a foreign corporation. This strange perversion of justice, which prevented a creditor from bringing suit in his home state against a foreign corporation, was the earliest condition to be remedied by statute. The service of process was facilitated by a provision requiring a foreign corporation to appoint an 39 Formation and Management agent within the state authorized to accept service of process. Such a provision has now been adopted in every state. Statutory regulations of the business of foreign corporations are di- rected, generally speaking, to securing the rights of domestic creditors, stockholders or others dealing with such corporations. There is no reason, however, why foreign corporations should enjoy any greater privileges or immunities than those accorded to domestic corporations organized for similar purposes. It is a common statutory provision in many of the states that foreign corporations shall be subject to all the liabilities, restrictions and duties imposed upon domestic corporations of like character, and shall have no other or greater powers. Once admitted a foreign corporation is entitled to "the equal pro- tection of the laws," and to as favorable treatment as a domestic corporation. One of the most difBcult points to be decided is what is meant by "doing business" from the wording of the statutes. This question has been the subject of much judicial interpretation of no very enlightening nature. Speaking generally, a corporation is within the statute when it either has an established place of business or continuously conducts and concludes a series of transactions constituting a substantial portion of its regular business within the state. In most states a single transaction or occasional business transactions are not sufficient to require a cer- tificate of authority. The mere employment of traveling agents to take orders, which are approved and filled at the home office, by weight of authority does not come within the purview of the statute, since the contracts are made outside the state. SO. HOW FOREIGN CORPORATIONS ARE AUTHORIZED TO DO BUSINESS. The statutory requirements for obtaining permission for a foreign corporation to do business vary greatly in the different states. These provisions are set forth in Part II of this book, under No. 42 for each state. There is no uniformity in the matter of license or admission fees. This tax theoretically corresponds to the organization tax required of domestic corporations, but owing to its higher rate in some states, for- eign corporations are placed at a decided disadvantage. This is true in New York where the rate is two and one-half times the organization tax on domestic corporations. The penalties imposed upon foreign corporations for failure to qualify are often drastic. In New York contracts made in the state are unenforcible in the state courts, whether sued upon by the cor- poration, by its assignee or by those claiming under either. In Massa- chusetts such contracts are not invalid, but no recovery can be had. In New Jersey no action can be maintained. 40 PART II. A COMPARATIVE DIGEST OF THE LAWS OF DELAWARE, MAINE, MASSACHUSETTS, NEW JERSEY, NEW YORK AND PENNSYLVANIA, RELATING TO THE FORMATION, REGULATION AND TAXATION OF BUSINESS CORPORATIONS. DELAWARE. 1. STATUTES UNDER WHICH BUSINESS COMPANIES ARE INCORPORATED AND REGULATED. Business corporations are organized under "An act providing a general corporation law," being Cliapter 273 of tiie laws of 1899 (Vol. 21, Del. Laws). This act (cited herein as G. C. L.), with the several supplements and amendments enacted since 1899, contains the pro- visions of law regulating corporations. The act of 1899 was amended in many important particulars by Chapter 166 and the whole act re-enacted by Chapter 167 of the laws of 1901 (Vol. 22, Del. Laws). The act has been further amended since that time. Business corpora- tions are required to pay an annual franchise tax to the state under the provisions of "An act to raise revenue for the state by taxing certain corporations" (cited herein as Tax Act), being Chapter 166, Laws of 1899 (Vol. 21, Del. Laws). The tax act was amended in 1901, 1903, 1907 and 1913. 2. PURPOSES FOR WHICH BUSINESS COMPANIES MAY BE FORMED. A corporation may be formed under the general corporation law for the transaction of any lawful business or to promote or conduct any legitimate object or purpose other than banking (G. C. L., § 1). The act does not limit incorporation to one purpose; any number of .purposes may be 'set forth in the certificate of incorporation. An amendment of the act passed in 1903 authorizes the formation of_ corporations for constructing, maintaining and operating railroads, railways, telegraph or telephone lines, outside of this state. 3. INCORPORATORS. Any number of persons, not less than three, may form a corpora- tion under the general corporation law (G. C. L., § 1). There is no statutory provision as to residence or citizenship of incorporators, and certificates of incorporation are frequently filed where all the incor- porators are residents and citizens of other states or foreign countries. It is implied that incorporators shall be natural persons of full age. 4. ORGANIZATION TAX, OFFICIAL FEES AND INCIDENTAL EXPENSES. A state tax of ten cents for each $1,000 of the total authorized capital stock stated in the certificate of incorporation (minimum $10) or five cents for each $1,000 if the capital stock exceeds $2,000,000, must be paid to the Secretary of State at the time of filing the certificate of incorporation (G. C. L., § 129; as amended Mar. 29, 1907). The fee of the secretary of state for filing and indexing the certificate of incorporation is $2.00, and for certifying the copy of the certificate of incorporation to be filed in the ofBce of the Recorder of Deeds is usually about $4.50. (See Appendix, following No. 50, below.) The fee of the Recorder of Deeds for recording the certified copy of the certificate of incorporation is according to the length of the certificate; the usual charge is about $4. 43 Delaware S. METHOD OF INCORPORATION. First Step. Preparation, execution and acknowledgment of cer- tificate of incorporation. Prepare and have signed, sealed and acknowledged by the incor- porators one original certificate of incorporation. The signature should be attested by a subscribing witness. A complete copy of the certificate of incorporation should be prepared at the same time. The certificate of incorporation should set forth the following matters (G. C. L., § 5) : (1.) The name of the corporation, which name shall contain one of the words, "association," "company," "corporation," "club," "incor- porated," "society," "union," or "syndicate," and shall be such as to distinguish it from any other corporation engaged in the same business, or promoting or carrying on the same objects or purposes in this state. (See also No. 9 below as to use of word "trust" as part of name.) (2.) The name of the city or town, county or place within the county in which its principal office or place of business is to be located in this state, and the name of its resident agent (as amended in 1907). (3.) The nature of the business, or objects or purposes proposed to be transacted, promoted or carried on. If business is to be carried on without the state, a clause should be inserted empowering the company to conduct business in this state, other states, the District of Columbia, the territories and colonies of the United States, and in foreign countries, and have one or more offices out of this state, and to hold, purchase, mortgage and convey real and personal property out of this state (G. C. L., § 2). i(4.) The amount of the total authorized capital stock of the corporation, which shall not be less than two thousand dollars, the number of shares into which the same is divided and the par value of each share; the amount of capital stock with which it will commence business, which shall not be less than one thousand dollars; and if there be more than one class of stock created by .the certificate of incorporation, a description of the different classes with the terms on ' which the respective classes of stock are created. (5.) The names and places of residence of each of the original subscribers to the capital stock. (6.) Whether or not the corporation is to have perpetual existence; if not, the time when its existence is to commence and the time when its existence is to cease. (7.) Whether the private property of the stockholders shall be subject to the payment of corporate debts, and if so, to what extent. (8.) The certificate of incorporation may also contain any provi- sion which the incorporators may choose to insert for the regulation of the business and for the conduct of the affairs of the corporation, and any provisions creating, defining, limiting and regulating the powers of the corporation, the directors and the stockholders, or any classes of the stockholders; provided, such provisions are not contrary to the laws of this state. Claused may be inserted giving the directors the power to make and alter by-laws (G. C. L., § 12) ; giving directors power to fix the amount of profits to be reserved as working capital (G. C. L., § 34); providing for classification of directors (G. C. L., § 9); providing for voting by bondholders (G. C. L., § 29); and for voting by stockholders (G. C. L., § 17). The certificate of incorporation must be signed and sealed by each of the original subscribers to the capital stock (G. C. L., § 6). They should be natural persons, twenty-one years of age, and three or more in number. It will be noticed that in Delaware the directors for the first year are not named in the certificate of incorporation 44 Delaware The certificate of incorporation must be acknowledged before an officer authorized by the laws of the state to take acknowledgments of deeds, to be the act and deed of the signers respectively, and that the facts therein stated are truly set forth. If executed out of Delaware, acknowledgments may be taken before a notary public, commissioner of deeds for Delaware, or before any chancellor or judge of a court of record, with the seal of said court attached, or before a mayor of any city, with the seal of the city. In every case the officer before whom the acknowledgment is taken should affix his seal. Second Step. Filing certificate of incorporation in the office of the Secretary of State. The original certificate of incorporation and one copy should be delivered to the Secretary of State with the proper amount of the state tax of ten cents per $1,000 of the authorized capital stock, fee for filing and indexing $2.00, and fee for certifying copy about $4.50. If in proper form the Secretary of State will then file and record the original certificate and certify and return the copy. Third Step. Recording the certified copy of the certificate of incorporation in the office of the Recorder of Deeds. The copy of the certificate of incorporation certified by the Secretary of State should be recorded in the office of the recorder of deeds of the county in which the principal office as stated in the certificate of incorporation Is located. The recorder's fees are according to the length of the certificate, the usual charge being about $4.00. Fourth Step. Completing the Organization. The certificate of incorporation having been properly filed and the certified copy recorded, and the license tax paid, the law provides that the persons so associating, their successors and assigns, shall from the date of such filing be and constitute a body corporate (G. C. L., § 7.) A meeting of the incorporators should be held either on two weeks' notice by publication or two days' personal notice to all the incorporators, or the meeting may be held without such notice or publication, if all the Incorporators in writing waive notice and fix the time and place of meeting (G. C. L., § 11). This meeting may be held at any place within or without the state of Delaware (G. C. L., § 30), but it is customary to hold it at the place named in the certificate of incorporation as the principal office. A meeting of the directors should now be held on such notice as provided in the by-laws or pursuant to a written waiver of notice signed by all directors. At this meeting officers are appointed for the first year, their salaries are fixed, bond of treasurer provided for, and resolutions are adopted providing for the issue of the capital stock either for cash or in payment of property purchased. Where stock is issued for property purchased the resolution should be carefully framed to show that the directors have appraised such property and adjudged the value thereof to be the amount at par of the capital stock issued in payment thereof, the General Corporation Law providing that in the absence of actual fraud the judgment of the directors as to the value of the property purchased shall be conclusive (see No. 17 below). At this' meeting resolutions should be passed appointing a bank or trust company as depository of the funds of the company, and providing how checks shall be signed, providing for the payment of organization expenses, adopting forms of certificate of stock, providing for the establishment of the principal office and the appointment of the registered agent of the company in Delaware, providing for the establishment of the office out of the state, and for the transaction of such other matters as may be necessary in completing the organization of the company. (See Part III of this book, Form 3.) 45 Delaware 6. COMMENCEMENT AND DURATION OF CORPORATE EXISTENCE. The corporate existence commences on the date of filing the certifi- cate of incorporation (see No. 5 above), and may be perpetual or for a term of years. The duration must be specified in the certificate of incorporation (G. C. L., § 5). 7. EXTENSION OF CORPORATE EXISTENCE. The corporate existence may be extended by filing a certificate of the president and secretary, duly sworn or affirmed, with the secretary of state, and a certified copy thereof with the recorder of deeds (see G. C.L.,§ 131-4). 8. AMENDMENT OF ARTICLES OF INCORPORATION. Before payment of any part of the capital, the incorporators may make an amended certificate of incorporation which must be acknowl- edged and filed and a certified copy recorded in the same manner as the original certificate o^ incorporation. Such amended certificate may modify, change or alter the original certificate of incorporation in whole or in part (G. C. L., § 25). After payment of any part of the capital stock the corporation may from time to time, when and as desired, amend its charter of incor- poration, either by addition to its corporate powers and purposes, or diminution thereof; or by substitution of other powers and purposes, in whole or in part, for those prescribed by its charter; or by increasing or decreasing its authorized capital stock; or by changing the number and par value of the shares of its capital stock; or by changing its corporate title; or by making any other change or alteration in its charter of incorporation that may be desired; provided that such amendment, change or alteration shall contain only such provisions as it would be lawful and proper to insert in an original certificate of incor- poration made at the time of making such amendment. Every such amendment shall be made and effected in manner following, to wit: The board of directors shall adopt a resolution setting forth the amendment proposed, declaring its advisability, and calling a meeting of the stockholders for consideration thereof. Said meeting shall be called and held upon such notice as the corporation's charter or by-laws provide, and in the absence of such provision, upon notice thereof, either delivered to the stockholders or mailed to the stockholders' post-office address, if known, at least ten days before the date fixed for such meeting. At said meeting, a vote of the stockholders by ballot, in person or by proxy, shall be taken for and against the proposed amendment, which vote shall be conducted by two judges appointed for that purpose either by the directors or by the said meeting. Said judges shall decide upon the qualification of voters, and when the vote is completed, count and ascertain the number of shares voted respectively for and against said amendment, and declare whether the persons or bodies corporate holding the majority of the stock of said corporation (or of each class of stock, if there be more than one) have voted for or against the proposed amendment; and shall make out certificates accordingly in duplicate, stating the number of shares of stock voted for and against the amendment respectively, and subscribe and deliver the same to the secretary of the corporation. If it shall appear by said certificates of the judges that the persons or bodies corporate holding the majority of the stock of said corporation (or of each class of stock, if there be more than one) have voted in favor of the amendment, thereupon, the said corporation shall make, under its corporate seal, and the hands of its president and secretary, a certificate 46 Delaware accordingly, and the president shall duly execute the same before an officer authorized by the laws of this state to take acknowledgements of deeds; and the said certificate, so executed and acknowledged with one of the said judge's duplicate certificates attached, shall be filed in the office of the secretary of state, and a copy thereof certified by said secretary of state shall be recorded in the office of the recorder of the county in which the original charter of incorporation is recorded; or if the corporation shall have been created by special public act of the Legislature, then said certificate shall be recorded in the office of the recorder of any county where the business of the said corporation may be conducted. And upon filing and recording the same, the charter of said corporation shall be deemed to be amended accordingly. Provided, however, that no corporation shall decrease its authorized capital stock without paying or adequately securing such of its debts as are not then fully secured (G. C. L., § 26, as amended April 5, 1909). 9. CORPORATE NAME. No corporation now existing or hereinafter created under the laws of Delaware shall use the word "trust" as part of its name, except corporations reporting to and under the supervision of the insurance commissioner of the state; nor shall the name of any corporation now existing be amended so as Jo include the word "trust" unless such corporation shall report to and be under the supervision of the insurance commissioner of the state (L. 1911, c. 190, § 2). As to original selection of name and statutory regulations concern- ing same see No. 5 above. As to procedure for changing name see No. 8 above. The corporate name must be painted or printed in a conspicuous place on the principal office (G. C. L., § 33). 10. PRINCIPAL OFFICE. Every corporation shall maintain a principal office or place of business in this state, and shall have an agent, resident of this state, in charge thereof (G. C. L., § 32). A sign containing the name of the corporation must at all times be displayed in a conspicuous place at the principal office (G. C. L., § 33). An original or duplicate stock ledger containing the names and addresses of the stockholders and the number of shares held by them respectively must be kept at the principal office in the state (G. C. L., § 29). There is no statutory provision requiring the name of the agent and the location of the principal office to be stated in papers filed other than the certificate of incorporation. The board of directors of any corporation, organized under the laws of this state, may change the location of the principal office of such corporation within this state to any other place within this state by resolution adopted at a regular or special meeting of such board. Upon the adoption of a resolution as aforesaid, a copy thereof shall be filed in the office of the secretary of state, signed by the president and secretary of such corporation, and sealed with its corporate seal; and a certified copy recorded in the office of the recorder in and for the county to which said principal office is removed; for filing the said certificate, the secretary of state shall charge a fee of five dollars. (G. C. L., § 137, as amended in 1907.) 11. STATUTORY RESIDENT AGENT OR ATTORNEY. See Nos. 5 and 10 above. 12. BY-LAWS. The power to make and alter by-laws shall be in the stockholders, but any corporation may, in the certificate of incorporation, confer that power upon the directors. By-laws made by the directors under power 47 Delaware so conferred may be altered or repealed by the directors or stockholders. (G. C. L., § 12). Every corporation is expressly empowered to make by-laws not inconsistent with the Constitution or laws> of the United States or of this state, fixing and altering the number of its directors, for the management of its property, the regulation and government of its affairs, and for the certification and transfer of its stock, with penalties for the breach thereof not exceeding twenty dollars. (See G. C. L., § 2, II 6). The by-laws may provide that the stockholders and directors may hold their meetings and have an office or offices outside of the state. (See G. C. L., §§ 30, 32). The following matters may also be provided for in the by-laws: Appointment and powers of executive committee; by whom ofBcers shall be chosen; manner of filling vacancies; voting by stockholders; manner of transferring stock; giving power to directors to fix amount to be reserved before declaring dividends. 13. CORPORATE BOOKS AND RECORDS. An original or duplicate stock ledger containing the names and addresses of the stockholders and the number of shares held by them respectively, must be kept at the principal ofBc© in the state (G. C. L., § 29). A complete list of stockholders entitled to vote at each election of directors, arranged in alphabetical order, must be prepared and kept open to inspection at the place where the election is to be held for ten days prior to the election (G. C. L., § 29). There is no statutory provision requiring the general books of account to be kept in the state. 14. ANNUAL REPORTS. On or before the first Tuesday of January in each year, a business corporation is required to file an annual report with the secretary of state (see No. 48 below). IS. CAPITAL STOCK. There is no maximum limit; minimum amount, $2,000 (G. C. L., § 5.) The president and secretary or treasurer shall upon the written request of any creditor or stockholder make a certificate stating the amount of the installments or calls paid in cash or by the purchase of property, stating also the total amount of capital stock issued, which certificate shall be signed and sworn or affirmed to by the president and secretary or treasurer, and they shall within thirty days after the making of such certificate or certificates cause the certificate to be filed in the office of the secretary of state (G. C. L., § 23, as amended in 1903). For neglect or refusal to make and file this certificate for thirty days after written request so to do by a creditor or stockholder^ the act provides that the above officers shall be jointly and severally liable for all debts of the corporation contracted after the making of such demand and before the filing of such certificate (G. C. L., § 24). 16. MINIMUM AMOUNT OF CAPITAL WITH WHICH A COMPANY MAY BEGIN BUSINESS. One thousand dollars, which may be paid in money or property (G. C. L., § 14). 48 Delaware 17. ISSUE OF STOCK; CONSIDERATION FOR ISSUE. The constitution provides that no corporation shall issue stock except for money paid, labor, done or personal property, or real estate or leases thereof actually acquired by such corporation (Constitution, Art. IX., § 3). The statute provides that subscriptions to, or purchases of the capital stock of any corporation organized or to be organized under any law of this state, may be paid for, wholly or partly, by cash, by labor done, by personal property, or by real property or leases thereof; and the stock so issued shall be declared and taken to be fully paid stock and not liable to any further call, nor shall the holder thereof be liable for any further payments under the provisions of this act. And in the absence of actual fraud in the transaction, the judgment of the directors, as to the value of such labor, property, real estate or leases, shall be conclusive (G. C. L., § 14, as amended by 23 Del. Laws, c. 155). 18. PAR VALUE OF SHARES. Shares may be any amount (G. C. L., § S). 19. INCREASE OF CAPITAL STOCK. Every corporation, organized under the provisions of the general act may, at any meeting, increase its capital stock, and the number of shares therein, until it shall reach the amount named in the original certificate (G. C. L., § 27). As to the manner of increasing the amount of authorized capital stock see No. 8 above. 20. DECREASE OF CAPITAL STOCK. As to the manner of decreasing the amount of authorized capital stock see No. 8 above. The above provision, however, does not cover a reduction of the amount of capital stock issued and outstanding. Such amount may be reduced at any time by a vote of, or by the written consent of stock- holders representing two-thirds of the capital stock, after notice of the proposed decrease has been mailed to the address of each stockholder at least twenty days before the meeting is held for that purpose; and a statement of the reduction shall be signed and acknowledged by the president and a majority of the directors, and shall be filed and a certi- fied copy thereof recorded in the same manner as the certificate of incor- poration. No such reduction, however, shall be made in the stock of any corporation until all its debts which are not otherwise fully secured shall have been paid and discharged. The decrease of capital stock issued may be effected by retiring or reducing any class of the stock, or by drawing the necessary number of shares by lot for retirement, or by the surrender by every stockholder of his shares, and the issue to him in lieu thereof of a decreased number of shares, or by the purchase at not above par of certain shares for retirement, or by retiring shares owned by the corporation, or by reducing the par value of shares; and when any corporation shall decrease the amount of its capital stock hereinbefore provided, the certificate decreasing the same shall be published for three weeks, successively at least once in each week, in a newspaper published in the county in which the principal olBce of the corporation is located; the first publication to be made within fifteen days after the filing of sucih certificate, and in default thereof the directors of the corporation shall be jointly and severally liable for all the debts of the corporation contracted before the filing of the said certificate, and the stockholders shall also be liable for such sums as they may respectively receive of the amount so reduced ; provided, no such decrease of capital stock shall release the liability of any stockholder whose shares have not been fully paid, for debts of the corporation theretofore contracted (G. C. L., § 28). 49 Delaware 21. PREFERRED STOCK AND OTHER CLASSES OF STOCK. Every corporation shall have power to create two or more kinds of stock of such classes, with such designations, preferences and voting powers, or restriction or qualification thereof, as shall be stated and expressed in the certificate of incorporation; and the power to increase or decrease the stock, as in this act elsewhere provided, shall apply to all or any of the classes of stock; but at no time shall the total amount of the preferred stock exceed two-thirds of the actual capital paid in cash or property; and such preferred stock may, if desired, be made subject to redemption at not less than par, at a fixed time and price, to be expressed in the certificate thereof, and the holders thereof shall be entitled to receive, and the corporation shall be bound to pay thereon a fixed yearly dividend, to be expressed in the certificate, not exceeding eight per centum, payable quarterly, half-yearly or yearly, before any dividend shall be set apart or paid on the common stock, and such dividends may be made cumulative; and in no event shall a holder of preferred stock be personally liable for the debts of the corporation; but in case of insolvency, its debts and other liabilities shall be paid in preference to the preferred stock (G. C. L., § 13). Unless its original or amended charter or certificate of incorporation shall so provide, no corporation shall create preferred stock (G. C. L., ^ '^^' 22. CERTIFICATES OF STOCK. Every stockholder shall have a certificate, under the seal of the corporation, signed by the president, or a vice-president, and either the treasurer or an assistant treasurer, or the secretary or an assistant secretary, certifying the number of shares owned by him in such corpora- tion (G.C. L., § 15, as amended by L. 1913, c. 188). 23. TRANSFER OF SHARES. Shares of stock are transferable on the books of the corporation in such manner and under such regulations as the by-laws provide (G. C. L., § 16). A transfer made for collateral security shall be so expressed in the entry of the transfer (G. C. L., § 16). A transfer of shares of stock although not registered on the books of the company will protect the transferee against attaching creditors of the transferor, unless the transfer is fraudulent as against them (Allen v. Stewart, 7 Del. Rep. 287). 24. MEETINGS OF STOCKHOLDERS. Meetings of stockholders and elections of directors may be held at such place within or without the state of Delaware as may be provided in the by-laws (G. C. L., §§ 30, 32). Unless the charter or by-laws otherwise provide ten days' notice must be given of a meeting to vote upon an amendment to the certificate of incorporation (see No. 8 above). Notice of stockholders' meetings should be given in the manner prescribed in the by-laws. The statute requires twenty days' notice of a meeting of stockholders to reduce the issued capital stock (see No. 20 above), and of a meeting of stockholders to vote upon a merger agree- ment (see No. 39 below). Notice of a meeting to dissolve the corporation must be published in a newspaper in the county wherein the corporation shall have its principal office, at least four weeks successively, once a week, next preceding the time appointed for the meeting (see No. 40 below). 25. CORPORATE ACTS WHICH MUST BE DONE OR SANCTIONED BY THE STOCKHOLDERS. Annual election of directors; no quorum specified by statute. At common law any number of stockholders attending may elect directors (see New York, No. 25). 50 Delaware Amendment of certificate of incorporation; increase of capital stock; decrease of capital stock; change of number and par value of shares of capital stock; and change of name; afSrmative vote of the holders of a majority of the stock, or of each class of stock, if there be more than one (see No. 8 above). Reduction of issued capital stock; vote or written consent of stock- holders representing two-thirds of the capital stock (see No. 20 above). Merger or consolidation with other corporations; affirmative vote of stockholders of each corporation representing two-thirds in amount of its capital stock (see No. 39 below). Dissolution; affirmative vote oif two-thirds in interest of all the stockholders (see No. 40 below). 26. VOTING BY STOCKHOLDERS. Unless otherwise provided in the certificate of incorporation or by-laws, each stockholder, whether resident or non-resident, shall at every meeting of the stockholders be entitled tq one vote in person or by proxy for each share of the capital stock held by him, but no proxy shall be voted on after three years from its date ; nor shall any share be voted on at any election which has been transferred on the books of the corporation within twenty days next preceding such election (G. C. L., § 17). Unless otherwise provided in the by-laws, at meetings of stockholders, other than elections, stockholders are entitled to vote on all shares held at the time of the meeting. 27. CUMULATIVE VOTING. Cumulative voting may be provided for in the certificate of incor- poration. 28. VOTING TRUSTS. There is no statutory provision for voting trusts. 29. RIGHT OF STOCKHOLDERS TO INSPECT CORPORATE BOOKS. The original or duplicate stock ledger containing the names and addresses of the stockholders, and the number of shares held by them, respectively, shall, at all times, during the usual hours for business, be open to the examination of every stockholder at the principal office or place of business in this state (G. C. L., § 29). An alphabetical list of stockholders entitled to vote at the annual election must be kept at the p^ace where such election is to be held for ten days before such election, open to the inspection of any stockholder, and must also be produced at the annual election subject to the inspec- tion of any stockholder who may be present (G. C. L., § 29). 30. LIABILITY OF STOCKHOLDERS. Stockholders are liable to the extent of the amount unpaid on the shares of stock held by them (G. C. L., § 20), but no suit can be brought against the stockholder for any debt of the corporation until judgment has been obtained therefor against the corporation and execution returned unsatisfied (G. C. L., § 51). There is no statutory provision making stockholders liable after a bona-flde transfer of their shares. 31. DIRECTORS. There must be at least three directors (G. C. L., § 9). The directors may, if so stated in the original or amended certificate of incorporation or by a vote of the stockholders, be divided into one, two or three 51 Delavare classes; the term of office of those of the first class to expire at the annual meeting next ensuing, of the second class one year thereafter; and of the third class two years thereafter; and at each annual election held after such classification and election directors shall be chosen for the full term, as the case may be, to succeed those whose terms expire (G. C. L., § 9). At least one of the directors shall be a resident of the state (G. C. L., § 9). Each director shall own in his own right not less than three shares of stock (G. C. L., § 9). 32. CHANGE OF NUMBER OF DIRECTORS. The number of directors may be increased or decreased in the manner provided in the by-laws (G. C. L., § 2). It is not necessary to file any papers concerning such change In any public office. 33. STATUTORY POWERS AND FUNCTIONS OF DIRECTORS. The business of every corporation organized under the provisions of this act shall be managed by a board of not less than three directors, except as hereinafter provided (G. C. L., § 9; see No. 35 below as to executive committee). In addition to such general powers the act expressly empowers the directors to declare dividends (G. C. L., § 34) ; to declare advisability of amendments to certificate of incorporation (G. C. L., § 26) ; to change the location of the principal office (G. C. L., § 137) ; to make and alter by-laws when so authorized by certificate of incorporation (G. C. L., § 12) ; issue the capital stock and make assessments thereon (G. C. L., § 21); forfeit stock for non-payment of calls (G. C. L., § 22); appoint an executive committee (G. C. L., § 9); enter into agreements of con- solidation (G. C. L., § 59) ; declare advisability of dissolution (G. C. L., § 39). There is no statutory authority for directors acting by written consent, without meeting. 34. DIRECTORS' MEETINGS. The directors may hold their meetings and have an office or offices outside of the state if the by-laws so provide (G. C. L., § 32). A majority of them shall constitute a quorum for the transaction of busi- ness (G. C. L., § 9). 35. EXECUTIVE COMMITTEE. The board of directors may, by resolution passed by a majority of the whole board, designate two or more of their number to constitute an executive committee, who to the extent provided in said resolution or in the by-laws of said company, shall have and exercise the powers of the board of directors in the management of the business and affairs of the company, and may have power to authorize the seal of the company to be affixed to all papers which may require it (G. C. L., §9). 36. OFFICERS OTHER THAN DIRECTORS. Every corporation organized under this act shall have a president, secretary and treasurer, who shall be chosen by the directors or stock- holders, as the by-laws may direct; and shall hold their offices until their successors are chosen and qualified; the president shall be chosen from among the directors; the secretary shall be sworn to the faithful discharge of his duty, and shall record all the proceedings of the meetings of the corporation and directors in a book to be kept for that 52 Delaware purpose, and perform such other duties as shall be assigned to him; the treasurer may be required to give bond in such sum and with such surety or sureties as shall be provided by the by-laws, for the faithful discharge of his duty. The secretary and treasurer may or may not be the same person, and if the corporation have a vice-president, he may, if deemed advisable by the directors, hold the offices of vice-president and treasurer, or vice-president and secretary, but not the offices of vice-president, secretary and treasurer. The corporation may have such other officers, agents and factors as may be deemed necessary, who shall be chosen in such manner and hold their offices for such terms as may be prescribed by the by-laws, or determined by the board of directors, and may secure the fidelity of any or all of such officers by bond or otherwise; and may also provide by the by-laws for the qualification of any or all such officers before any person authorized by law to admin- ister an oath. A failure to elect annually a president, secretary, treasurer or other officers shall not dissolve a corporation (G. C. L., § 10). 37. STATUTORY LIABILITIES OF DIRECTORS AND OFFICERS. If the directors fail to publish a certificate of decrease of capital stock, they are jointly and severally liable for all the debts of the corporation contracted before the filing of the certificate (G. C. L., § 28). Directors jointly and severally are liable to the full amount of all dividends or reductions of capital illegally made, with interest (G. C. L., § 35). The president, secretary and treasurer neglecting or refusing to file certificate of payment of capital stock, after written request, are jointly and severally liable for all debts of the corporation contracted after the making of payments of capital stock and before the filing of such certificate (G. C. L., § 24). Any officer who makes or assents to a loan to an officer or to a loan to a stockholder upon the security of the stock of the corporation is liable until the repayment of the sum so loaned with interest (G. C. L., § 36). If the directors or officers of any corporation, organized under the provisions of this act, shall knowingly cause to be published or given out any written statement or report of the condition or business of the corporation that is false in any material respect, the officers and directors causing such report or statement to be published, or given out, or assenting thereto, shall be jointly and severally, individually liable for any loss or damage resulting therefrom (G. C. L., § 37). 38. POWERS OF CORPORATIONS, (a) In General. Every corporation created under the provisions of this act shall have power: (1.) To have succession, by its corporate name, for the time stated in its certificate of incorporation, and when no period is limited, it shall be perpetual. (2.) To sue and be sued, complain and defend in any court of law or equity. (3.) To make and use a common seal, and alter the same at pleasure. (4.) To hold, purchase and convey real and personal estate, and to mortgage any sucli real and personal estate with its franchises; the power to hold real and personal estate, except in the case of religious corporations, shall include the power to take the same by devise or bequest. (5.) To appoint such officers and agents as the business of the corporation shall require and to allow them suitable compensation. 53 Delaware (6.) To make by-laws not inconsistent with the Constitution or laws of the United States or of this State; fixing and altering the number of its directors, for the management of its property, the regulation and government of its affairs, and for the certification and transfer of its stock, with penalties for the breach thereof not exceeding twenty dollars. (7.) To wind up and dissolve itself, or to be wound up and dis- solved in the manner hereinafter mentioned. (8.) To conduct business in this state, other states, the District of Columbia, the territories and colonies of the United States and in foreign countries, and have one or more ofBces out of this state, and to hold, purchase, mortgage and convey real and personal property out of this state, provided such powers are included within the objects set forth in its certificate of incorporation (G. C. L., § 2). In addition to the powers enumerated in the second section of this act, every corporation, its officers, directors and stockholders, shall possess and exercise all the powers and privileges contained in this act, and the powers expressly given in its charter or in its certificate under which it was incorporated, so far as the same are necessary or convenient to the attainment of the objects set forth in such charter or certificate of incorporation; and shall be governed by the provisions and be subject to the restrictions and liabilities in this act contained, so far as the same are appropriate to and not inconsistent with such charter or act under which such corporation was formed; and no corporation shall possess or exercise any other corporate powers, except such incidental powers as shall be necessary to the exercise of the powers so given (G. C. L., § 3, as amended by L. 1911, c. 186, § 3). Corporations formed under the general act are prohibited from exercising banking powers (G. C. L., § 4). (b) Power to Borrow Money and Incur Debts; Corporate Bonds and Mortgages; Limitation of Amount of Indebtedness. Business corporations have the common law power to borrow money for corporate purposes, and are expressly authorized by statute to mortgage their ijeal and personal estate with their franchises (G. C. L., § 2). There is no statutory provision as to the manner of authorizing corporate mortgages. By an amendment of the general corporation law passed in 1901, corporations organized under that law are authorized to issue bonds and debentures and to confer upon the holders thereof the power to vote in respect of the corporate affairs and management of the company to the same extent and in the same manner as stockholders of the corporation as may be provided in the certificate of incorporation (G. C. L., § 29). There is no statutory limitation as to the amount of indebtedness that may be lawfully contracted by a business corporation. (c) Power to Hold Stocks and Bonds. Any corporation organized under the laws of this state may guar- antee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities, or evidence of indebtedness created by any other corporation or corpor- ations of this state, or any other state, country, nation or government, and white owner of said stock may exercise all the rights, powers and privileges of ownership including the right to vote thereon (G. C. L., § 135). Every corporation organized under this act shall have the power to purchase, hold, sell and transfer shares of its own capital stock; provided that no such corporation shall use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of the capital of the corporation; and provided 54 Delaware further that shares of its own capital stock belonging to the corporation shall not be voted upon directly or indirectly (G. C. L., § 19, as amended March 26, 1909). (d) Power to Carry on Business Without the State. Every corporation organized under the general corporation law is empowered to conduct business in this state, other states, the District of Columbia, the territories and colonies of the United States and in foreign countries, and have one or more ofBces out of this state, and to hold, purchase, mortgage and convey real and personal property out of this state, provided such powers are included within the objects set forth in its certificate of incorporation (G. C. L., § 2). 39. CONSOLIDATION AND MERGER WITH OTHER CORPORATIONS. Any two or more corporations organized under the provisions of this act, or existing under the laws of this state, for the purpose of carrying on any kind of business, may consolidate into a single corporation which may be either one of said consolidated corporations, or a new corpora- tion to be formed by means of such consolidation; the directors, or a majority of them, of such corporation, as desire to consolidate, may enter into an agreement signed by them, and under the corporate seals of the respective corporations, prescribing the terms and conditions of consolidation, the mode of carrying the same into effect, and stating such other facts as are necessary to be set out in articles of incorporation, as provided in this act, as well as the manner of converting the shares of each of the old corporations into the new, with such other details and provisions as are deemed necessary (G. C. L., § 59). Said agreement shall be submitted to the stockholders of each corporation, at a meeting thereof, called separately for the purpose of taking the same into consideration; of the time, place and object of which meeting due notice shall be given by publication at least once a week for four successive weeks in one or more newspapers pubhshed in the county wherein each corporation either has its principal office or conducts its business, and a copy of such notice shall be mailed to the last known post office address of each stockholder of each corpora- tion, at least twenty days prior to the date of such meeting, and at said meeting said agreement shall be considered and a vote by ballot, in person or by proxy, taken for the adoption or rejection of the same, each share entitling the holder thereof to one vote; and if the votes of stockholders of each corporation representing two-thirds in amount of its capital stock shall be for the adoption of the said agreement, then that fact shall be certified on said agreement by the secretary of each corporation, under the seal thereof; and the agreement so adopted and certified shall be signed by the president and secretary of each of said corporations under the corporate seals thereof and acknowledged by the president of each of such corporations before any officer authorized by the laws of this state to take acknowledgements of deeds to be the respective act, deed and agreement of each of said corporations and the agreement so certified and acknowledged shall be filed in the office of the secretary of state, and shall thence be taken and deemed to be the agreement and act of consolidation of the said corporations; and a copy of said agreement and act of consolidation, duly certified by the secretary of state under the seal of his office, shall also be recorded in the offices of the recorders of the counties of this state in which the respective corporations so consolidating shall have their original charters recorded, or if any of the corporations shall have been specially created by a public act of the legislature, then said agreement shall be recorded in the county where such corporation shall have had its principal place of business, and such record, or a certified copy thereof, shall be evidence 55 Delaware of the existence of the corporation created by the said agreement, and of the observance and performance of all antecedent acts and conditions necessary to the creation thereof (G. C. L., § 59). When the agreement is signed, acknowledged, filed and recorded, as in the preceding section is required, the separate existence of the constituent corporations shall cease, and the consolidated corporations shall become a single corporation in accordance with the said agreement, possessing ^11 the rights, privileges, powers and franchises, as well of a public. as of a private nature, and being subject to all the restrictions, disabilities and duties of each of such corporations so consolidated, and all and singular, the rights, privileges, powers and franchises of each of said corporations, and all property, real, personal and mixed, and all debts due on whatever account, as well for stock subscriptions as all other things in action or belonging to each of such corporations shall be vested in the consolidated corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectually the property of the consolidated corporation as they were of the several and respective former corporations, and the title to any real estate, whether by deed or otherwise, under the laws of this state, vested in either of such corporations, shall not revert or be in any way impaired by reason of this act; provided, that all rights of creditors and all liens upon the property of either of said former corporations shall be preserved unimpaired, and all debts, liabili- ties and duties of the respective former corporations shall thenceforth attach to said consolidated corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it (G. C. L., § 60). If any stockholder in either corporation consolidating as aforesaid, who objected thereto in writing, shall within twenty days after the agreement of consolidation has been filed and recorded, as aforesaid, demand in writing from the consolidated corporation payment of his stock, such consolidated corporation shall, within three months there- after, pay to him the value of the stock at the date of consolidation; in case of disagreement as to the value thereof, it shall be ascertained by three disinterested persons, one of whom shall be chosen by the stockholder, one by the directors of the consolidated corporation and the other by the two selected as aforesaid ; and in case the said award is not paid within sixty days from the making thereof, and notice thereof given to said stockholder and said consolidated corporation, the amount of the award shall be evidence of the amount due by said corporation, and may be collected as other debts are by law collectible; on receiving payment of the award, said stockholder shall transfer his stock to the said consolidated corporation, to be disposed of by the directors thereof, or to be retained for the benefit of the remaining stockholders (G. C. L., § 61). Any action or proceeding pending by or against either of the cor- porations consolidated may be prosecuted to judgment, as if such con- solidation had not taken place, or the new corporation may be substituted in its place (G .C. L., § 62). The liability of corporations created under this act, or existing under the laws of this state, or the stockholders or officers thereof, or the right or remedies of the creditors thereof, or of persons doing or transacting business with such corporation, shall not in any way be lessened or impaired by the sale thereof, or by the increase or decrease in the capital stock of any such corporation, or by the consolidation of two or more corporations, or by any change or amendment in the articles of incor- poration (G. C. L., § 63). When two or more corporations are consolidated, the consolidated corporation shall have power and authority to issue bonds or other obligations, negotiable or otherwise, and with or without coupons or interest certificates thereto attached, to an amount sufficient with its capital stock to provide for all the payments it will be required to make, 56 DELA'WARE or obligations it will be required to assume, in order to effect such consolidation; to secure the payment of which bonds and obligations it shall be lawful to mortgage its corporate franchise, rights, privileges and property, real, personal and mixed; and may issue capital stock, to such an amount as may be necessary, to the stockholders of such consolidated corporation in exchange or payment for the original shares, in the manner and on the terms specified in the agreement of con- solidation (G. C. L., § 64). 40. DISSOLUTION AND SURRENDER OF FRANCHISE. Before the payment of any part of the capital and before beginning business for which the corporation was created, the incorporators named in any certificate of incorporation may surrender all their corporate rights and franchises, by filing in the office of the secretary of state a certificate, verified by the oath or affirmation of a majority of the Incorporators named in the certificate of incorporation that no part of the capital has been paid and such business has not been begun, and surrendering all rights and franchises, and thereupon the said corporation shall be dissolved (G. C. L., § 38). If it should be deemed advisable, in the judgment of the board of directors, and most for the benefit of any corporation organized under this act, that it should be dissolved, the board, within ten days after the adoption of a resolution to that eifect by a majority of the whole board at any meeting called for that purpose, of which meeting every director shall have received at least three days' notice, shall cause notice of the adoption of such resolution to be mailed to each stockholder residing in the United States, and also, beginning within said ten days, cause a like notice to be inserted in a newspaper published in the county wherein the corporation shall have its principal office, at least four weeks successively, once a week, next preceding the time appointed for the same, of a meeting of the stockholders to be held at the office of the corporation, to take action upon the resolution so adopted by the board of directors, which meeting shall be held between the hours of ten o'clock in the forenoon and three o'clock in the afternoon of the day so named, and which meeting may be on the day so appointed, by consent of a majority in interest of the stockholders present, be adjourned from time to time, for not less than eight days at any one time, of which adjourned meeting notice by advertisement in said newspaper shall be given; and if at any such meeting two-thirds in interest of all the stockholders shall consent that a dissolution shall take place and signify their consent in writing, such consent, together with a list of the names and residences of the directors and officers, certified by the president and secretary and treasurer, shall be filed in the office of the secretary of state, who, upon being satisfied by due proof that the requirements aforesaid have been complied with, shall issue a certificate that such consent has been filed, and the board of directors shall cause such certificate to be published four weeks successively, at least once a week, in a newspaper published in said county; and upon the filing in the office of the secretary of state an affidavit of the manager or publisher of the said newspaper that said certificate has been published four weeks successively, and at least once a week, in said newspaper, the corporation shall be dissolved. Whenever all the stockholders shall consent in writing to a dissolution, no meeting or notice thereof shall be necessary, but on filing said consent in the office of the secretary of state, he shall forthwith issue a certificate of dissolution, which shall be published as above provided (G. C. L., § 39). 41. FORFEITURE OF CHARTER. Any corporation organized under the general corporation law shall forfeit all rights, privileges and franchises obtained thereunder, if it 57 Delaware shall fail for two years after its organization, to commence in good faith the business or to promote the objects or purposes for which it was organized (G. C. L., § 67). If the corporation shall for two successive years neglect or refuse to pay the state any tax which has been or shall be assessed against it or which it is required to pay under any law of this state and made payable into the state treasury, the charter of such corporation shall be void (Tax Act, § 10). On or before the first Tuesday of January in each year, the state treasurer is required to report to the Governor a list of all corporations which for two years next preceding such report, have failed, neglected or refused to pay the tax assessed against them or due by them, under the law of this state, and the Governor shall forthwith issue a proclama- tion declaring that the charters of such corporation are repealed (Tax Act, § 11). 42. FOREIGN CORPORATIONS; HOW AUTHORIZED TO DO BUSINESS. Every foreign corporation desiring to do business in the state is required to file in the office of the secretary of state a certified copy of its charter and the name or names of its authorized agent or agents in this state, together with a sworn statement of its assets and liabilities, and also to pay the secretary of state for the use of the state $10. A certificate issued by the secretary of state must be filed in the offices of the prothonotaries of the Superior Court in each of the counties of the state, containing the name of the agent or agents of the said foreign corporation, and the state wherein incorporated (20 Del. Laws, Chap. 513). There must also be paid to the secretary of state, to cover filing fees, etc., and fees of prothonotaries, the sum of $10.00. 43. FOREIGN CORPORATIONS; PENALTY FOR DOING BUSINESS WITHOUT AUTHORITY. Foreign corporations transacting business in the state without having first complied with the provisions of the act are subject to a fine of not less than $200 nor more than $500 for each and every offense (19 Del. Laws, c. 703). The agent also of such corporation is subject to fine. 44. FOREIGN CORPORATIONS; APPOINTMENT OF STATU- TORY RESIDENT AGENT OR ATTORNEY. See No. 42 above. 45. FOREIGN CORPORATIONS; BOOKS TO BE KEPT IN THE STATE. There is no statutory requirement as to the books of a foreign business corporation to be kept in this state. 46. FOREIGN CORPORATIONS; PENALTY FOR NEGLECT OR REFUSAL TO KEEP OR EXHIBIT BOOKS. None. See preceding paragraph. 47. FOREIGN CORPORATIONS; LIABILITY TO ATTACHMENT. Foreign corporations are subject to attachment merely on the ground that they are foreign corporations on claims exceeding $50 in amount (15 Del. Laws, c. 182). 58 Delaware 48. FRANCHISE TAXES OR LICENSE FEES PAYABLE BY DOMESTIC AND FOREIGN CORPORATIONS; EXEMPTIONS. Domestic business corporations are required to pay to the state treasurer on or before the first day of May in each year, a license fee or franchise tax as follows: Where the amount of the authorized capital stock d6es not exceed twenty-five dollars, they shall pay five dollars. Where the amount of the authorized capital stock exceeds twenty- five thousand dollars, but is not more than one hundred thousand dollars, they shall pay ten dollars. Where the authorized capital stock exceeds one hundred thousand dollars, and is not more than three hundred thousand dollars, they shall pay twenty dollars. Where the authorized capital stock exceeds three hundred thousand dollars, and is not more than five hundred thousand dollars, they shall pay twenty-flve dollars. Where the authorized capital stock exceeds five hundred thousand dollars, and is hot more than one million dollars, they shall pay fifty dollars, and the further sum of twenty-flve dollars per year on each million dollars or part thereof in excess of one million dollars. Provided they shall only be required to pay one-half of the amount of taxes scheduled above in cases where the company shall show in its annual report that it is not engaged in any business, but in no case shall the amount of tax be less than five dollars for any year (Tax Act, § 4, as amended in 1907). This act shall not apply to * * * manufacturing or mining or mercantile corporations whose capital stock actually paid in is invested in a business carried on within this state, and which is now subject to a license tax for the carrying on of said business under Chapter 117, Volume 13, Laws of Delaware, or to any corporations at least fifty per centum of whose capital stock issued and outstanding is invested in business carried on within this state, and if any other corporation shall have less than fifty per centum of its capital stock issued and out- standing invested in business carried on within this state, such company shall pay the annual license fee or franchise tax herein provided for companies not carrying on business in this state, but shall be entitled in the computation of such tax to a deduction from the amount of its capital stock issued and outstanding of the assessed value of its real and personal estate within this state. (Tax L., § 4, as amended by 27 Del. Laws, c. 20, 1913.) Every such business cbrporation shall file with the Secretary of State on or before the first Tuesday in January in each year an annual report which shall state the location of the principal office in this state, and the name of the agent upon whom service of process against said company may be served; the location or locations (town or towns), city or cities, stating the streets and numbers, if numbers there be) of the place or places of business of said company without this state; the names and addresses of all the directors and officers of the company, and when the terms of each expire; the date appointed for the next annual meeting of stockholders for the election of directors ; the amount of its authorized capital, the amount actually paid in, the amount invested in real estate, the tax annually thereon, and the amount invested in manufacturing or mining in this state, or both; and, if exempt from taxation under the provisions of the act so amended and published as aforesaid, the specific facts entitling such corporation to exemption from taxation aforesaid, provided, that no part of this section shall apply to corporations as are now by law under the supervision of the insurance commissioner; if such report is not so made and so filed the corporation shall forfeit to the state the sum of two hundred dollars, 59 Delaware to be recovered with costs in an action of debt, to be prosecuted by the Attorney General, who shall prosecute such actions whenever it shall appear that this section has been violated; and provided further, if such report shall not be so made and filed, all the directors of any such corporation who shall wilfully refuse to comply with provisions thereof and who shall be in office during the default shall at the time appointed for the next election, and for a period of one year thereafter be thereby rendered ineligible for election or appointment to any office in the company as directors or otherwise; no director shall be thus disqualified for the failure and to make and file such report if he shall file with the Secretary of State before the time appointed for holding the next election of directors after such default, a certificate stating that he has endeavored to have such report made and filed, but that the officers have neglected to make and file the same, and shall report the items required to be stated in such annual report so far as they are within his knowledge, or are obtainable from sources of such infor- mation open to him, verified by him to be true to the best of his knowledge, information and belief; the secretary of state shall upon application furnish blanks in proper form and shall safely keep in his office all such reports, which reports shall be open to the inspection of all persons at proper hours (Tax L., § 2). There is in this state the same provision for retaliatory taxation of foreign corporations as in New Jersey (Tax L., § 9), but as a matter of fact foreign business corporations are not required to pay any annual franchise or license taxes. 49. TAXATION OF PROPERTY OF DOMESTIC AND FOREIGN CORPORATIONS. Real estate of corporations is assessed in the same manner as that of an individual. Personal property, with the exception of live stock, is not taxable as such, but manufacturing and mercantile corpora- tions are required to pay annually a license tax based on the value of their property in the state (13 Del. Laws, c. 117; 22 Del. Laws, c. 17). 50. TAXATION OF SHARES OF STOCK, (a) Generally. Shares of stock are not taxed (Constitution, Art. IX, S 6; G. C. L., § 16). (b) Tax on Transfers. There is no tax on transfers of stock. (c) Inheritance and Succession Taxes. Shares of stock of both domestic and foreign corporations held by a resident decedent are subject to a collateral inheritance tax. Shares held by a non-resident decedent are not taxed (25 Del. Laws, c. 225). 60 Delaware APPENDIX. STATE TAXES REQUIRED TO BE PAID TO THE SECRETARY OF STATE, ON FILING ANY CERTIFICATE OR OTHER PAPER RELATING TO CORPORATIONS. Certificate of Incorporation. For each $1,000 of the total capital stock authorized $ 0.10 For each $1,000 of the total capital stock authorized, above $2,000,000 .05 In no case less than 10.00 Certificate of Increase. And for each $1,000 of increase of capital stock, additional (but in no case less than $5.00) .10 Certificate or Agreement of Consolidation or Merger. For each $1,000 of capital stock of new company, over and above the total capital stock of the companies so consolidated or merged 10 But in no case less than 20.00 Certificate of dissolution, change of name, amended certificate of organization, decrease of capital stock and increase or decrease of number of shares 10.00 Other certificates 5.00 Fees to Secretary of State for Certified Copies. Copying per line 02 For official seal on certificate 1.00 For receiving, filing and indexing any paper provided by law to be filed with him 2.00 For Recording Where Required by Law. Per line 01 Foreign Corporations. State Tax laOO Fee to Secretary of State and for use of Prothonotaries 10.00 61 MAINE. 1. STATUTES UNDER WHICH BUSINESS COMPANIES ARE INCORPORATED AND REGULATED. Business corporations are organized under and regulated by the pro- visions of chapter 47 of the Revised Statutes of 1904 (hereinafter cited as R. S.). Such chapter is commonly referred to as the "general law," as, for example, where corporations are organized under its provisions, they are said to be organized under the general law to distinguish them from corporations created by special act of the legislature. This chapter applies to all corporations organized by special acts of the legislature or under the general laws or of the state, except so far as it is inconsistent with such special acts or with public statutes, con- cerning particular classes of corporations (R. S., c. 47, § 1). Corporations are required to pay an annual franchise tax to the state under the provisions of chapter 8 of the Revised Statutes. 2. PURPOSES FOR WHICH BUSINESS COMPANIES MAY .BE FORMED. Under the general law a business corporation may be formed to carry on any lawful business anywhere, including corporations for manu- facturing, mechanical, mining or quarrying business, and also corpora- tions whose purpose is the carriage of passengers or freight, or both, upon the high seas, or from port to ports in this state to a foreign port or ports, or to a port or ports in other states, or the carriage of freight or passengers, or both, upon any waters Where such corporations may navigate; and excepting corporations for banking, insurance, the con- struction and operation of railroads or aiding in the construction thereof, and the business of savings banks, trust companies or corporations intended to derjve profit from the loan or use of money, and safe deposit companies, including the renting of safes in burglar-proof and flre-proof vaults; but corporations may also be formed under the gen- eral law to exercise the following corporate purposes in other states and jurisdictions, namely: the construction and operation of railroads or aiding in the construction thereof, telegraph or telephone companies, and gas or electrical companies, and in all such cases the articles of agreement and certificate of organization shall state that such business is to be carried on only in states and jurisdictions when and where permissible under the laws thereof (R. S., c. 47, § 6). Unless specially chartered, corporations cannot furnish electric power for use outside state, when such power is generated within the state limits. (Public Laws, 1909, c. 244.) 3. INCORPORATORS. Three or mofe persons may form a corporation under the general law (R. S., c. 47, § 6). There is no statutory provision as to residence or citizenship of incorporators. It is implied that incorporators shall be natural persons of full' age. 4. ORGANIZATION TAX, OFFICIAL FEES AND INCIDENTAL EXPENSES. At the time of filing the certificate of organization, a fee must be paid to the state treas'ttrer based upon the amount of authorized' capital stocfc/ast ■ follows :. i- ' , ' ' '' ^ ■"■■;■.': 63 Maine When the capital stock does not exceed ten thousand dollars, $10. When the capital stock exceeds ten thousand dollars and does not exceed five hundred thousand dollars, $50. When the capital stock exceeds five hundred thousand dollars, for each one hundred thousand dollars, $10 (§8). For instance, if capital is $750,000, fee is $75. The other official fees are: Fee of attorney general for examining and approving certificate of organization, $5 (R. S., c. 117, § 17). Fee of register of deeds for recording certificate of organization and certifying copy, $5 (L. 1905, c. 154). Fee of secretary of state for filing certified copy of the certificate of organization, $5 (R. S., c. 117, §17). Fee of secretary of state for certifying copy of certificate of organi- zation, 12 cents a page and $1.00 for certificate with seal of state (usually $3) (R. S., c. 117, § 17). 5. METHOD OF INCORPORATION. First Step. Preparation and execution of articles of association. Prepare and have signed by the incorporators, written articles of agreement setting forth the purpose of the corporation and the location in Maine. The agreement should also contain a waiver of notice of the meeting of associates and fix the time and place of such meeting. Unless such notice is waived, fourteen days notice of the meeting must be given personally or by publication in a newspaper (R. S., c. 47, § 7). Second Step. Meeting of associates. At such meeting the associates may organize into a corporation, adopt a corporate name, define the purposes of the corporation, fix the amount of capital stock, which shall not be less than $1,000, divide it into shares, and elect not less than three directors, a president, a clerk, treasurer and any other necessary officers and they may adopt a code of by-laws (R. S., c. 47, §7; L. 1907). This meeting must be held in the state of Maine. Third Step. Preparation, execution and verification of certificate of organization. A certificate of organization must then be prepared and signed by the president, treasurer and a majority of the board of directors setting forth : The name and purposes of the corporation. The amount of capital stock. The amount already paid in. The par value of the shares. The names and residences of the owners. The name of the county where the corporation is located. The number and names of the directors. The name and residence of the clerk (R. S., c. 47, § 8). Where preferred stock is to be issued it is usual to insert the amount of the preferred stock in the certificate. The certificate must be signed and sworn to by the president, treas- urer and directors signing the same. Fourth Step. Examination and approval of the certificate of organization by the attorney general. The certificate of organization must be submitted to the attorney general for examination and be certified by him to be properly drawn and signed and to be conformable to the constitution and laws (R. S., c. 47, § 8). Fifth Step. Recording certificate of organization in the registry of deeds. The certificate of organization, with the certificate of the attorney general, must be recorded in the registry of deeds, in the county where 64 Maine said corporation is located and a copy of the certificate certified by the register should be obtained (R. S., c. 47, § 8). Sixth Step. Filing certified copy of the certificate or organiza- tipn in the office of the secretary of state. Within sixty days after the meeting of incorporators the original certificate of organization with the copy certified by the register of deeds should be sent to the ofHce of the secretary of state. The certified copy is filed and the secretary of state enters the date of filing thereon, and also on the original certificate which is returned to and kept by the corporation; the certified copy is recorded in the secretary of state's ofBce. Before said certificate can be filed in the office of the secretary of state it is necessary to pay the state treasurer a fee based on the amount of authorized capital stock (see No. 4 above) and the treas- urer's receipt for such fee must be filed with the secretary of state before he files the certificate (R. S., c. 47, §8). Seventh Step. Completing the organization. From the time of filing the copy of such certificate in the secretary of state's office, the signer of ^aid articles and their successors and assigns shall be a corporation, the same as if incorporated by a special act with all the rights and powers, and subject to all the duties, obliga- tions and liabilities provided by this chapter [i. e., c. 47] (R. S., c. 47, § 10). It is to be noted that all the steps in the organization of a corpora- tion heretofore described must take place in the state of Maine (JWiller V. Ewer, 27 Me., 509). If the directors of the company are to be non-residents of Maine and they have not come to Maine for the purpose of effecting the organization the foregoing proceedings may be taken by nominal incor- porators and directors; in such case the by-laws adopted at the meeting of associates should fix some date immediately following the filing of the certificate of organization, as the time for holding the first annual elec- tion of directors; such election will then be held and the permanent board of directors may be elected. A meeting of the newly elected directors may then be held outside of the state upon such notice as provided in the by-laws or pursuant to a written waiver of notice signed by all of the directors. At this meeting officers are appointed for the first year, their salaries are fixed, bond of treasurer provided for, and resolutions are adopted providing for the issue of the capital stock either for cash or for services or in payment of property purchased. Where stock is issued for property purchased the resolution should be carefully framed to show that the directors have appraised such property and adjudged the value thereof to be the amount at par of the capital stock issued in payment thereof, the statute providing that in the absence of actual fraud the judgment of the directors as to the value of the property purchased or services rendered shall be conclusive (see No. 17 below). At this meeting resolutions should be passed appointing a bank or trust company as depository of the funds of the company, and providing how checks shall be signed, providing for the payment of organization expenses, adopting a seal and forms of certificate of stock, providing for the establishment of the office out of the state, and for the transaction of such other matters as may be necessary in completing the organization of the company. (See Part III of this book. Form 7.) 6. COMMENCEMENT AND DURATION OF CORPORATE EXISTENCE. The corporate existence commences at the time of filing the certified copy of the certificate of organization in the secretary of state's office. There is no limit prescribed by statute. Under the general principles of the common law, therefore, the duration is perpetual. 65 Maine 7. EXTENSION OF CORPORATE EXISTENCE. As the corporate existence of every corporation is perpetual, there is no statutory provision on this subject. 8. AMENDMENT OF ARTICLES OF INCORPORATION. There is no express statutory authority for amending the statement of purposes in the certificate of organization. The statute provides that whenever a corporation shall make a change in its certificate of organi- zation in any manner for the more convenient transaction of its business it shall forward a notice of such change to the secretary of state, who shall record the same in a book kept for that purpose (R. S., c. 47, § 45). The attorney general holds that this relates only to such changes as are expressly authorized by the statute, such as change of name, increase or decrease of capital stock, change of par value of shares, etc. 9. CORPORATE NAME. The corporate name is adopted at the meeting of associates, and must be set forth in the certificate of organization (see No. 5 above). The following words may not be used as part of the name of a corpora- tion organized under the general law: "bank," "savings," "savings bank," "savings department," "trust," "trust company," "banking," or "trust and banking company" (P. L. 1905, c. 171). A corporation, at a legal meeting of its stockholders, may vote to change its name and adopt a new one; and when the proceedings of such meeting, certified by the clerk thereof, are returned to the office of the secretary of state to be recorded by him, the name shall be deemed changed; and the corporation, under its new name, has the same rights, powers and privileges, and is subject to the same duties, obligations and liabilities as before, and may sue and be sued by its new name; but no action brought against it by its former name shall be defeated on that account, but on motion of either party, the new name may be substituted therefor in the action (R. S., c. 47, § 47). 10. PRINCIPAL OFFICE. The location of the office in the state of Maine must be set forth in the certificate of organization (R. S., c. 47, § 6). Every corporation shall have a clerk who is a resident of the state, and shall keep, at some fixed place within the state, a clerk's office, where shall be kept their records (minutes of stockholders' meetings), and a book showing a true and complete list of all stockholders, their residences and the amount of stock held by each (R. S., c. 47, § 20). There is no provision of statute requiring a transfer book to be kept in the state. The name and residence of the clerk must be set forth in the certificate of organiza- tion (R. S., c. 47, § 6). Whenever there is a change in the office of clerk, the clerk shall within twenty days after acceptance file a certificate of his election in the registry of deeds (R. S., c. 47, § 22). The location may be changed from one county to another in the state by vote of a majority of the stock issued. A certificate of such change signed by the clerk or other officer must be filed in the registry of deeds in each of said counties within twenty days (R. S., c. 47, § 52). The clerk may resign by filing his resignation with the registry of deeds in the county where the certificate of his election was or ought to have been filed and such resignation takes effect from and after its receipt by the register of deeds (R. S., c. 47, § 23). U. STATUTORY RESIDENT AGENT OR ATTORNEY. See No. 10 above. 66 Maine 12. BY-LAWS. The by-laws are usually adopted at the meeting of associates (R. S., c. 47, § 7). Corporations may determine in their by-laws the manner of calling and conducting meetings, the number of members that con- stitute a quorum, the number of votes to be given by shareholders, by whom any or all officers except president and directors shall be elected, by whom vacancies in the board of directors or other offices may be filled, the tenure of the several offices, the mode of voting by proxy, and of selling shares for neglect to pay assessments; and may enforce such by-laws by penalties not exceeding twenty dollars (R. S., c. 47, § 47; L. 1907). By-laws must be consistent with the laws of the state and their charters (R. S., c. 47, § 46). Preferred stock may be provided for in the by-laws (R. S., c. 47, § 49). The by-laws may provide for and define the powers of executive and other committees (R. S., c. 47, § 19). While the powers of the corporation cannot be extended by any pro- visions in the by-laws, all matters relating to the powers of the directors and the conduct of the business, not expressly covered by statute, may and should be fully provided for in the by-laws. The directors have no power to make by-laws, consequently if the by-laws are not adopted at the meeting of associates they should be adopted at the first meeting of stockholders held after the filing of the certificate of organization. 13. CORPORATE BOOKS AND RECORDS. See No. 10 above. 14. ANNUAL REPORTS. Business corporations are required on or before the first day of June to file in the office of the secretary of state a return, signed by the president or treasurer, verified under oath, containing the names of the directors, president, treasurer and clerk, with the residence of each, the location of the principal office in the state and the amount of the authorized capital stock (R. S., c. 47, § 26). The attorney general, upon application by any corporation, and satis- factory proof that it has ceased to transact business, shall file a certificate of that fact with the secretary of state, and shall give a duplicate certificate to the corporation; and thereupon such corporation shall be excused from filing annual returns with the secretary of state (R. S., c. 47, § 31). For failure to file the return, the corporation is subject to a penalty of five hundred dollars to the state (R. S., c. 47, § 27). 15. CAPITAL STOCK. The authorized capital stock must not be less than $1,000; there is no maximum limitation. There is no statutory provision as to when any part of the capital shall be paid in, and no certificate of payment of capital stock is required to be made. 16. MINIMUM AMOUNT OF CAPITAL WITH WHICH A COMPANY MAY BEGIN BUSINESS. No statutory provision. 17. ISSUE OF STOCK; CONSIDERATION FOR ISSUE. The capital stock subscribed for any corporation is declared to be and stands for the security of all creditors thereof; and no payment upon any subscription to or agreement for the capital stock of any corporation, shall be deemed a payment within the purview of this chap- 67 Maine ter, unless bona-flde made in cash, or in some other matter or thing at a bona-flde and fair valuation thereof (R. S., c. 47, § 87). Any corporation may purchase mines, manufactories and other property necessary for its business, and the stock of any company or companies owning, mining, manufacturing or producing materials or other property necessary for its business, and issue stock to the amount of value thereof in payment therefor, and may likewise issue stock for services rendered to such corporation and the stock so issued shall be full paid stock and not liable to any further call or payment thereon; and in the absence of actual fraud in the transaction, the judgment of the directors as to the value of the property purchased, or services rendered, shall be conclusive (R. S., c. 47, § 50). 18. PAR VALUES OF SHARES. Shares may be any amount. Any corporation organized under this chapter may change the par value of its shares at a meeting of the stockholders called for the pur- pose by a vote representing a majority of the stock issued, and a certificate thereof signed by the president or clerk shall be filed in the office of the secretary of state in the same manner as provided by law for changes in charter or certificate of organization (R. S., c. 47, § 36). See also No. 20 below. 19. INCREASE OF CAPITAL STOCK. If the stockholders of any corporation created by special charter and not charged with the performance of any public duty, or organized under the general laws of the state, find that the amount of its capital stock is insufficient for the purposes for which said corporation is organized, or that the number of directors is inconvenient for the trans- action of its business, the stockholders may by a vote representing a majority of the stock issued, increase the amount of its capital stock to any amount, and may change the number of directors in like manner, and the corporation shall file a certificate thereof with the secretary of state within ten days thereafter, and thereupon said vote shall take effect. MC^hen the capital stock is increased from ten thousand dollars or less to not exceeding five hundred thousand dollars, the corporation shall pay the treasurer of state for the use of the state the sum of forty dollars. When the capital stock is increased to any amount ex- ceeding five hundred thousand dollars, it shall pay to the treasurer of state for the use of the state the sum of ten dollars for each one hun- dred thousand dollars of such increase, and the treasurer's receipt for the same shall be filed with the secretary of state before he shall be authorized to receive any certificate of any increase of capital stock (R. S., c. 47, § 39). 20. DECREASE OF CAPITAL STOCK. If the stockholders of any corporation organized under this chapter shall desire to decrease the amount of its capital stock, the stockholders, at a meeting duly called for the purpose, or at any annual meeting, when notice shall have been given of such proposed action in the call therefor, may by a vote representing a majority of all the stock issued, decrease the amount of its capital stock to any amount desired, and the corporation shall give notice of such change to the secretary of state within ten days thereafter. And each stockholder shall, within three months after such meeting, surrender such a proportion of his stodc as the amount of decrease shall bear to the amount of the capital stock before the decrease, so that each stockholder shall have the same proportion of the whole capital stock of the company as before the decrease; provided, however, that if at the time of such decrease there 68 Maine shall remain in the treasury of said corporation any unissued capital stock, such decrease may be eifected by first retiring such unissued capital stock not exceeding the amount of such decrease. This section shall not affect or prejudice in any way the rights of creditors of such corporation existing at the time when the reduction of its capital stock authorized hereunder shall be consummated (R. S., c. 47, § 40, as amended by L. 1911, c. 129). Whenever the assets of a corporation have been so diminished by losses or depreciation of property, that its capital is impaired, such corporation, at any meeting of the stockholders legally called therefor, with the consent of not less than two-thirds in amount of all its out- standing stock, expressed at such meeting or at any adjournment thereof, may reduce such stock to the extent of such impairment, and thereupon the par value of all shares issued or to be issued shall be reduced pro- portionally (R. S., c. 47, § 41). Within thirty days after such reduction any stockholder who has not agreed thereto, may file a bill in equity in any county in which said corporation has an established place of business, or in which it held its last stockholders' meeting, for a revision of its proceedings in making said reduction, upon which bill such proceedings may be annulled or modified, so that such reduction shall not exceed the actual impairment of capital. The action of the court, or^ if no bill is filed as aforesaid, the action of the corporation, as provided in the preceding section, shall be conclusive upon all parties, whether stockholder or creditors, and such reduction shall not create any personal liabiUty of any stockholder or officer thereof (R. S., c. 47, § 42). The clerk of said corporation shall file with the secretary of state a certified copy of such proceedings, within thirty days after they are taken, or forfeit one thousand dollars, to be recovered by action of debt in favor of any existing or future creditor of such corporation first suing therefor in any court or county in which a transitory action be- tween the same parties may be brought (R. S., c. 47, § 43). Simultaneously with or after such reduction of its stock, such cor- poration may from time to time authorize the issue of new shares of the reduced par value, until the gross capital equals the gross capital authorized by its charter or articles of association before such reduc- tion was made, although the new shares increase the whole issue beyond the number authorized by such charter or articles (R. S., c. 47, § 44). 21. PREFERRED STOCK AND OTHER CLASSES OF STOCK. Every corporation may create two' or more kinds of stock, with such classes and with such designations, preferences and voting powers, or restrictions or qualifications thereof, as shall be fixed and determined in the by-laws, or by vote, of the stockholders at a meeting duly called for the purpose (R. S., c. 47, § 49). Any proportion of the capital stock may be preferred stock; and there is no limit as to the amount of pref- erential dividends. 22. CERTIFICATES OF STOCK. Certificates of shares with the seal of the corporation afflxed, shall be issued to those entitled to them by transfer or otherwise, signed by the president or vice-president, and by the cashier, clerk, secretary, treasurer or assistant treasurer. Neither shall sign blanks and leave them for use by the other, nor sign them without knowledge of the apparent title of the person to whom they are issued, unless the cor- poration has a duly authorized transfer agent whose duty it is to countersign each certificate issued. In case of the absence or disability of either of said officers, the signature of a majority of the directors in his stead is sufficient (R. S., c. 47, § 34, as amended by Public Laws 1911, c. 135). 69 Maine 23. TRANSFER OF SHARES. When the capital of a corporation is divided into shares, and certifi- cates thereof are issued, they may be transferred by indorsement and delivery. The delivery of a certificate of stock of a corporation to a bona-fide purchaser or pledgee for value, together with a written trans- fer of the same, or a written power of attorney to sell, assign and transfer the same, signed by the owner of the certificate, shall be a sufficient delivery to transfer the title against all parties (R. S., c. 47, § 34). No transfer shall affect the right of the corporation to pay any dividend due upon the stock, or to treat the holder of record as the holder in fact, until such transfer is recorded upon the books of the corporation or a new certificate is issued to the person to- whom it has been so transferred (R. S., c. 47, § 35, as amended by Public Laws 1911, c. 135). 24. MEETINGS OF STOCKHOLDERS. All meetings of the stockholders must be held within the state of Maine (27 Me., 509; 38 Me., 343). The manner of calling and conducting meetings is to be determined by the by-laws (§ 46). Unless the by-laws otherwise provide it is necessary to give notice to each stockholder of every meeting of stock- holders (20 Me., 37). Notice may be waived by stockholders (68 Me., 81). When all the members of a corporation are present in person or by proxy at a meeting and sign a written consent on the record thereof, such meeting is legal (R. S., c. 47, § 16). In case a corporation organized under the general laws shall fail to elect directors within six months after the time provided in its by-laws for the annual meeting the supreme judicial court shall have jurisdiction in equity, upon application by any one or more of its stockholders holding at least fifty per cent, of the capital stock issued, to appoint a board of directors for such corporation not exceeding in membership the number authorized by the by-laws. Such appointments may be made from among the stockholders or otherwise as the court may see fit. The application shall be made by petition filed in the county where such corporation is located and brought in behalf of all stockholders desiring to be joined therein; and such notice shall be given to the corporation and its stockholders as the court may direct. Such appointees of the court shall have the same rights, powers and duties and the same tenure in office as directors duly elected by the stockholders at the annual meeting held at the time prescribed therefor in the by-laws, next prior to the date of the court's appointment would have had (Public Laws 1911, c. 104). 25. CORPORATE ACTS WHICH MUST BE DONE OR SANCTIONED BY THE STOCKHOLDERS. Annual election of directors; quorum to be provided in the by-laws, vote of majority of those present controlling (R. S., c. 47, § 47). Change of name; quorum to be provided by by-laws and act of majority of those present controlling (R. S., c. 47, § 47). Increase of capital stock; vote of majority of the stock issued (R, S., c. 47, § 39). Decrease of capital stock; vote of majority of all the stock issued at a meeting called for the purpose, or at any annual meeting pursuant to notice (R. S., c. 47, § 40). Creation of preferred stock; vote of majority in interest of stock- holders at a meeting duly called for the purpose (R. S., c. 47, § 49). 70- Maine Reduction of capital stock when impaired; consent of not less than two-thirds in amount of outstanding stock at any meeting of stock- holders legally called therefor (R. S., c. 47, § 41). Change of par value of shares; vote of a majority of the stock issued at meeting called for the purpose (R. S., c. 47, § 36). Change of number of directors; vote of majority of the stock issued (R. S., c. 47, § 39). Change of location from one county to another; vote representing a majority of stock issued (R. S., c. 47, § 52). Sale of corporate franchises; vote of majority in interest of stock- holders at an annual or special meeting (R. S., c. 47, § 66). Dissolution; vote of majority in interest of stockholders at a meet- ing legally called therefor (R. S., c. 47, § 80). 26. VOTING BY STOCKHOLDERS. The by-laws should prescribe the number of members to constitute a quorum at meetings of the stockholders and the number of votes to be given by shareholders (R. S., c. 47, § 47). It is usual to provide that the presence in person or by proxy of the holders of a majority of the outstanding shares of stock shall constitute a quorum and that each stockholder shall have one vote for each share of stock registered in his name on the books of the corporation. In the absence of such provision the common law rule prevails, and two or more stockholders would constitute a quorum, and each stockholder would be entitled to one vote only, without reference to the number of shares held. Shareholders may be represented by proxies granted not more than thirty days before the meeting which shall be named therein; they are not valid after a final adjournment thereof. They may be represented by a genera] power of attorney, produced at the meeting, until it is revoked (R. S., c. 47, § 17). There is no statutory provision limiting the right to vote to stock- holders registered on the books on a certain day prior to the date of meeting. When stock is pledged as security, the pledgor has the exclusive right to vote thereon (R. S., c. 47, § 18). 27. CUMULATIVE VOTING. There is no statutory provision as to cumulative voting. 28. VOTING TRUSTS. There is no statutory provision on this subject. 29. RIGHT OF STOCKHOLDERS TO INSPECT CORPORATE BOOKS. All corporations, existing by virtue of the laws of this state, shall have a clerk who is a resident of this state, and shall keep, at some fixed place within the state, a clerk's office where shall be kept their records and a book showing a true and complete list of all stockholders, their residences and the amount of stock held by each; and such book, or a duly proved copy thereof, shall be competent evidence in any court of this state to prove who are stockholders in such cprporation and the amount of stock held by each stockholder. Such records and stock book shall be open at all reasonable hours to the inspection of persons inter- ested, who may take copies and minutes therefrom of such parts as con- cern their interests, and have them produced in court on trial of an action in which they are interested. The above provisions as to list of stock- holders shall not apply to any corporation doing business in this state and having a treasurer's office at some fixed place inl the state where a 71 Maine stock book is kept giving the names, residences and amount of stock of each stockholder (R. S., c. 47, § 20). Any officer or member of a corporation who prevents access to and use of the records and books as provided in the preceding section, is liable for all damages occasioned thereby, in an action on the case (R. S., c. 47, §21). 30. LIABILITY OF STOCKHOLDERS. No stockholder in any business corporation is liable for the debts of or claims against such corporation beyond any amounts withdrawn or not paid in, as provided in the two following sections (R. S., c. 47, § 86). The capital stock subscribed for any corporation is declared to be and stands for the security of all creditors thereof; and no payment upon any subscription to or agreement for the capital stock of any corporation, shall be deemed a payment within the purview of this chapter, unless bona-flde made in cash, or in some other matter or thing at a bona-flde and fair valuation thereof (R. S., c. 47, § 87). No dividend declared by any corporation from its capital stock or in violation of law, no withdrawal of any portion of such stock, directly or indirectly, no cancellation or surrender of any stock, and no transfer thereof in any form to the corporation which issued it, is valid as against any person who has a lawful and bona-flde judgment against said corporation, based upon any claim in tort or contract or for any penalty, or as against any receivers, trustees or other persons appointed to close up the affairs of an insolvent corporation (R. S., c. 47, § 88). Any person having such judgment, or any such trustees, receivers or other persons appointed to close up the affairs of an insolvent cor- poration, may, within two years after their right of action herein given accrues, commence an action on the case or bill in equity, without demand or other previous formalities, against any persons, if a bill in equity, jointly or severally, otherwise severally, who have subscribed for or agreed to take stock in said corporation and have not paid for the same; or who have received dividends declared from the capital stock, or in violation of law; or who have withdrawn any portion of the capital stock, or cancelled and surrendered any of their stock, and received any valuable consideration therefor from the corporation, ex- cept its own stock or obligation therefor; or who have transferred any of their stock to the corporation as collateral security or otherwise, and received any valuable consideration therefor as aforesaid; and in such action they may recover the amount of the capital stock so remaining unpaid or withdrawn, not exceeding the amounts of said judgments or the deficiency of the assets of such insolvent corporation. But no stockholder is liable for the debts of the corporation not contracted during his ownership of such unpaid stock, nor for any mortgage debt of said corporation; and no action for the recovery of the amounts hereinbefore mentioned shall be maintained against a stockholder unless proceedings to obtain judgment against the corporation are commenced during the ownership of such stock, or within one year after its transfer by such stockholder, is recorded on the corporation books (R. S., c. 47, § 89). A defendant in such suit may prove that he has already in good faith paid by himself or through another person who has assumed his stock or subscription to any person holding a bona-flde judgment, or to any such trustee or receiver, or other person authorized to receive it, or to the corporation itself, the whole or any part of any amounts for which he would be liable under this chapter; or that he has already in good faith and without collusion been sued for, and is still in peril of being compelled to pay, such amounts in whole or in part, to some other person, in which latter case the suit may be continued to await, on payment of defendant's costs from term to term; or he may prove that 72 Maine the amounts illegally received by him from said corporation were re- ceived more than two years before the claim arose on which such judgment was obtained, or if the suit is by trustees, receivers or other such person, more than two years before the commencement of the legal proceeding by virtue of which such corporation passed into the hands of trustees or receivers; or he may prove the invalidity of such judgment in any particular which could avail the corporation on a writ of error, or that said judgment was not bona-flde; or he may prove that he has bona-flde claims in contract or tort, several, or joint with other persons, against said corporation, absolute or contingent, or which could be availed of by set-off in court or on execution, for the whole or any part of the amounts for which he would be liable under this chapter; or in case his stock was transferred to such corporation as collateral security or as payment, he may either prove that the same was so transferred in good faith as security or payment for, or of an anterior liability incurred without any concurrent agreement for the transfer of such stock, and for which the corporation was unable to obtain other sufficient security or payment, or in such case he may prove that what- ever sum was received thereon has been in whole or part repaid to such corporation; and proof of any of such matters is a full or partial defense for such defendant (R. S., c. 47, § 90). When members of a corporation are liable for its debts, or for any acts of its officers or members, or to contribute for money paid on account of such debts or acts, the amount due may be recovered of such corporation by an action at law, or a bill in equity; and the court may make all necessary orders and decrees (R. S., c. 47, § 91). The Supreme Court has held that only the original subscriber is liable under the foregoing provisions, and that the liability to creditors does not follow the stock into the hands of a transferee (see Morgan v. Howland, 89 Me., 484). 31. DIRECTORS. There must be at least three directors (R. S., c. 47, § 19). The by-laws may provide for the division of directors into classes, and their election for a longer term than one year (R. S., c. 47, § 19). There is no statutory requirement as to residence or citizenship of directors. Directors must be and remain stockholders, except that a member of another corporation which owns stock and has a right to vote thereon, may be a director (R. S., c. 47, § 19). 32. CHANGE OF NUMBER OF DIRECTORS. The number of directors may be changed in the same manner as an increase of capital stock is authorized (see No. 19 above). 33. STATUTORY POWERS AND FUNCTIONS OF DIRECTORS. All the powers of the corporation may be and usually are by the by-laws vested in the directors (50 Me., 301). The by-laws should define their powers. The president must be elected by the directors (R. S., c. 47, § 19). Dividends of profit may be made by the directors (R. S., c. 47, § 32). Directors should act at meetings, although it has been held that they may make ordinary contracts without a meeting or vote (36 Me., 78). Tliey may act through committees whose powers shall be defined in the by-laws (R. S., c. 47, § 19). 34. DIRECTORS' MEETINGS. There are no statutory regulations as to meetings of directors, except that express authority is given for the holding of the same with- out the state (R. S., c. 47, § 19). 73 Maine 35. EXECUTIVE COMMITTEE. Directors may act through committees whose powers shall be de- fined in the by-laws (R. S., c. 47, § 19). 36. OFFICERS OTHER THAN DIRECTORS. The statute provides that corporations shall have a president, direc- tors, clerk, treasurer and any other desirable officers. Such officers shall be chosen annually, and shall continue in office until others are chosen and qualified in their stead. The president must be elected by the directors from their number. The treasurer shall give bond for the faithful discharge of his duties, in such sum, and with such sureties as are required. The clerk shall be sworn, and shall record all votes of the corporation in a book kept for that purpose (R. S., c. 47, § 19). The by-laws may determine by whom any or all officers, except presi- dent and directors shall be elected, and by whom vacancies shall be filled (R. 8., c. 47, § 47; as amended in 1907). See further as to the clerk. No. 10 above. 37. STATUTORY LIABILITIES OF DIRECTORS AND OFFICERS. Dividends of profit may be made by the directors, but the capital or the debts due shall not thereby be reduced, until all debts due from the corporation are paid. Any officer or member, who votes or aids to make a dividend in violation hereof shall be fined not exceeding two thousand dollars, and imprisoned less than one year; and all simis received for such dividends may be recovered by any creditor of the corporation in an action on the case (R. S., c. 47, § 32). If any officer of a corporation, charged by law with the duty of making and causing to be published, any statement in regard to such corporation, neglects to do so, such officer, in addition to penalties already provided, forfeits five hundred dollars to the prosecutor, to be recovered by action of debt, or action on the case (R. S., c. 47, § 30). See No. 20 above as to penalty imposed on clerk for failure to file certificate of reduction of capital stock. See also No. 29 above as to penalties for refusing access to books. 38. POWERS OF CORPORATIONS, (a) In General. Corporations may sue and be sued, plead and be impleaded, in their corporate name; have a common seal alterable at pleasure; elect all necessary officers; prescribe their duties and fix their compensation; make by-laws consistent with the laws of the state and their charters; and hold and convey lands and other property (R. S., c. 47, § 46). (b) Power to Borrow Money and Incur Debts; Corporate Bonds and Mortgages; Limitation of Amount of Indebtedness. Corporations have the same power as individuals to borrow money and mortgage their property to secure the same. There is no statutory requirement as to the manner of authorizing mortgages of corporate property. Unless the by-laws require, it is not necessary to obtain the assent of stockholders to the making of a mortgage. Bonds may be issued on the serial payment plan (P. L., 1907, c. 71, §§ 1-3, as modified by P. L., 1909, c. 8). There is no statutory limitation as to the amount of Indebtedness which may be lawfully contracted by a corporation. 74 Maine (c) Power to Hold Stocks and Bonds. , Any corporation organized under this chapter and any corporation organized for manufacturing, mechanical, mining or quarrying business, under special act of the legislature, may purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of indebtedness created by any other corporation or corporations of this or any other state, territory or country, and while owners of such stock may exercise all the rights, powers and privileges of ownership, including the right to vote thereon (R. S., c. 47, § 51). (d) Power to Carry on Business Without the State. Any corporation of this state may conduct business in other states, territories, or possessions of the United States, or in foreign countries, and have one or more ofBcers out of the state, and may hold, purchase, mortgage and convey real estate and personal property out of this state (R. S., c. 47, § 48). Directors may hold meetings without the state and there transact business and perform all corporate acts not expressly required by statute to be performed within the state (R. S., c. 47, § 19). 39. CONSOLIDATION AND MERGER WITH OTHER CORPORATIONS. There are no statutory provisions on this subject. 40. DISSOLUTION AND SURRENDER OF FRANCHISE. Except where otherwise provided by statute, whenever at any meet- ing of its stockholders, legally called therefor, such stockholders vote to dissolve such corporation, a bill in equity against the same for dis- solution thereof, may be filed by any officer, stockholder or creditor in the supreme judicial court, in the county in which it has an established place of business, or in which it held its last stockholders' meeting; upon said bill, such notice shall be given as may be ordered by any justice of said court, in term time or vacation, and upon proof thereof, such proceedings may be had according to the usual course of suits in equity, that said corporation shall be dissolved and terminated. Upon proof that there are no existing liabilities against said corporation, and no existing assets thereof, requiring distribution among the stockholders, said court may dissolve said corporation without the appointment of trustees or receivers (R. S., c. 47, § 80). Corporations may also be dissolved pursuant to the provisions of chap. 85, Laws of 1905, which, however, so far as insolvent corporations are concerned, has been held to be suspended by the Federal Bankruptcy Act. 41. FORFEITURE OF CHARTER. The organization of any corporation under any general law of the state becomes null and void within two years from the day when its certificate of incorporation has been filed in the office of the secretary of state, unless such corporation shall have commenced actual business under its organization (R. S., c. 1, § 6, cl. xxix). If any corporation liable to taxation under section eighteen [i. e., annual franchise tax] shall for one year neglect or refuse to pay to the state any tax or penalty assessed against it hereunder, its charter shall be liable to forfeiture as hereinafter provided (R. S., c. 8, § 21). 75 Maine 42. FOREIGN CORPORATIONS; HOW AUTHORIZED TO DO BUSINESS. Every corporation established under laws other than those of this state for any lawful purpose other than as a bank, savings bank, trust company, surety company, safe deposit company, insurance company or public service company, which has a usual place of business in this state or which is engaged in business in this state permanently or temporarily, without a usual place of business therein, shall before doing business in this state, in writing appoint a resident of the state having an office or place of business therein to be its true and lawful attorney upon whom all lawful processes in any action or proceedings against it may be served, and in such writing, which shall set forth said attorney's place of residence, shall agree that any lawful process against it which is served on said attorney shall be of the same legal force and validity as if served on it, and that the authority shall continue in force so long as any liability remains outstanding against it in this state. The power of attorney and a copy of the vote authorizing its execution, duly certified and authenticated, shall, upon payment of a fee of ten dollars, be filed in the office of the secretary of state and copies certified by him shall be sufficient evidence thereof. Service of such process shall be made by leaving a copy of the process in the hands or in the office of the said attorney, and such service shall be sufficient service upon the corporation. Such appointment shall continue in force until revoked by an instrument in writing designating in a like manner some other person upon whom such process may be served. Such instrument shall be filed in the manner provided herein for the original appointment and shall be accompanied by a fee of five dollars payable to the secretary of state (Public Laws 1911, c. 152, § 1). Every such foreign corporation before transacting business in this state, shall, upon payment of a fee of ten dollars which is in addition to the fee provided in section one of this act, file with the secretary of state a copy of its charter, articles or certificate of incorporation, certified under the seal of the state or country in which such corporation is incorporated by the secretary of state thereof or by the officer having charge of the original record therein, a true copy of its by-laws and a certificate in such form as the secretary of state may require, setting forth : (a) The name of the corporation; (b) the location of its principal office; (c) the names and addresses of its president, treasurer, clerk or secretary and of the members of its board of directors; (d) the date of its annual meeting for the election of officers; (e) the amount of its capital stock, authorized and issued, the number and par value of its shares and the amount paid in thereon to its treasurer. Said certificates shall be subscribed and sworn to by its president, treasurer or clerk. The officers and directors of such corporation shall be subject to the same penalties and liabilities for false and fraudulent statements and returns as officers and directors of a domestic corpora- tion. Every officer of such a corporation which fails to comply with the requirements of this section and of sections one and five and every agent thereof who transacts business as such in this state shall, for such failure, be liable to a fine of not more than five hundred dollars. Such failure shall not affect the validity of any contract with such corporation, but no action shall be maintained or recovery had in any of the courts of this state by any such foreign corporation so long as it fails to comply with the requirements of said sections (Id., § 2). The secretary of state shall refuse to accept or file the charter, certificate or other papers of, or accept appointment as attorney for service for, any such corporation which does a business in this state, 76 Maine the transaction of which by domestic corporation is not then permitted by the laws of this state (Id., § 3). All such foreign corporations shall, within thirty days after the payment in of an increase of capital stock, upon payment of a fee of ten dollars, file in the office of the secretary of state a certificate of the amount of such increase and the fact of such payment, signed and sworn to by its president, treasurer or clerk. Within thirty days after the vote of such corporation authorizing a reduction of its capital stock, a copy of such vote, signed and sworn to by the clerk of the corporation, shall, upon payment of a fee of ten dollars be filed in the office of the secretary of state (Id., § 4). Every such foreign corporation shall annually, on or before the first day of March, pay to the state treasurer for the use of the state a license fee of ten dollars. It shall also annually within thirty days after the date fixed for its annual meeting, or within thirty days after the final adjournment of said meeting, but not more than three months after the date so fixed for said meeting, prepare and file in the office of the secretary of state, a certificate signed and sworn to by its president, treasurer or clerk showing change or the changes, if any, in the par- ticulars included in the certificate required by section 2 made since the filing of said certificate or of the last annual report. If no changes have occurred, a certificate to that effect shall be sufficient (Id., § 5). Any foreign corporation which omits to file the certificate required by section five shall forfeit to the state not less than five nor more than ten dollars for each day for fifteen days after the expiration of the period therein named, and not less than ten nor more than two hundred dollars for each day thereafter, during which such omission continues (Id., § 6). The secretary of state, upon the failure of any such corporation to file the certificate required by section five, shall forthwith notify such corporation, and the notice shall contain a copy of this and the two preceding sections, but failure on the part of the secretary of state to so notify shall not relieve any corporation of any of the duties or liabilities imposed thereon by this act (Id., § 7). The officers of such foreign corporations shall be jointly and severally liable for all the debts and contracts of the corporation con- tracted or entered into while they are officers thereof, if any statement or report which is required by the provisions of this act is made by them which is false in any material representation and which they know to be false; but only the officers who sign such statement of report shall be so liable (Id., § 8). 43. FOREIGN CORPORATIONS; PENALTY FOR DOING BUSINESS WITHOUT AUTHORITY. See No. 42 above. 44. FOREIGN CORPORATIONS; APPOINTMENT OF STATU- TORY RESIDENT AGENT OR ATTORNEY. See No. 42 above. 45. FOREIGN CORPORATIONS; BOOKS TO BE KEPT IN THE STATE No statutory provision on this subject. , 46. FOREIGN CORPORATIONS; PENALTY FOR NEGLECT OR REFUSAL TO KEEP OR EXHIBIT BOOKS. No statutory provision on this subject. 77 Maine 47. FOREIGN CORPORATIONS; LIABILITY TO ATTACH- MENT. Corporations existing by the laws of another state or of a foreign jurisdiction, may sue or be sued by their corporate name in this state; and if they have property in this state it may be attached and appraised and set-off on execution as the property of non-resident individuals. The acts of their agents have the same effect as the acts of agents of foreign private persons, unless prohibited by law (R. S., c. 47, § 76). 48. FRANCHISE TAXES OR LICENSE FEES PAYABLE BY DOMESTIC AND FOREIGN CORPORA- TIONS; EXEMPTIONS. An annual state franchise tax must be paid on or before the first day of September upon the authorized capital stock of a domestic busi- ness corporation as follows: $1,000 to $50,000, inclusive, $5. $50,000 to $200,000, last inclusive, $10. $200,000 to $500,000, last inclusive, $50. $500,000 to $1,000,000, last inclusive, $75. On each $1,000,000 or any part thereof, in excess of $1,000,000, $50 (R. S., c. 8, § 18; as amended in 1907). The board of state assessors shall, on or before the first day of July, annually, assess an annual franchise tax upon the authorized capital stock and certify the same to the secretary of state, who shall thereupon notify each corporation of the amount of said tax assessed to it. Such tax shall become due and payable into the state treasury on the first day of September thereafter (R. S., c. 8, § 19). There is no exemption of manufacturing or other kinds of busi- ness corporations from paymient of the annual franchise tax, except in the following case: The attorney general, upon application by any corporation, and satisfactory proof that it has ceased to transact busi- ness, shall file a certificate of the fact with the secretary of state, and shall give a duplicate certificate to the corporation; and thereupon such corporation shall be excused from filing annual returns with the sec- retary of state (R. S., c. 47, § 31), and such corporation is exempt from paying the annual franchise tax, so long as its franchises remain unused (R. S., c. 47, § 26; c. 8, § 18). Foreign corporations are required to pay an annual license fee of ten dollars (see No. 42 above). 49. TAXATION OF PROPERTY OF DOMESTIC AND FOREIGN CORPORATIONS. Real estate is subject to taxation in the same manner as real estate owned by individuals. All personal property within or without the state, except in cases enumerated in the following section, shall be assessed to the owner in the town where he is an inhabitant on the first day of each April (R. S., c. 9, § 12). The excepted cases referred to are: Machinery employed in any branch of manufacture, goods manufactured or unmanufactured, and real estate belonging to any corporation, except when otherwise expressly provided, shall be assessed to such corporation in the town or place where they are situated or employed; and in assessing stock- holders for their shares in any such corporation, their proportional part of'the assessed value of such machinery, goods and real estate shall be deducted from the value of such shares (R. S., c. 9, § 13). The property of a corporation, both real and personal, is taxable for state, county, city, town, school district and parochial taxes, to be assessed and collected in the same manner and with the same effect as 78 Maine upon similar taxable property owned by individuals (R. S., c. 9, § 16). Buildings, lands and all other property of manufacturing, mining, smelting and other corporations are taxed in the town where located (R. S., c. 9, § 25; L. 1907, c. 16). Corporations whose property and business are outside of Maine are not taxed. SO. TAXATION OF SHARES OF STOCK, (a) Generally. Stockholders are assessed and taxed upon their shares as personal property (R. S., c. 9, § 5). But see No. 49 above as to deducting pro- portional part of value of machinery, goods, etc. Non-resident holders of stock of a corporation whose property and business are outside of Maine are not taxed on their shares. (b) Tax on Transfers. There is no tax on transfers of stock. (c) Inheritance and Succession Taxes. Estates of resident decedents are taxed on shares of stock of both domestic and foreign corporations within the jurisdiction of the state. Estates of non-resident decedents are taxed on shares of domestic corporations to the extent that the Maine inheritance tax exceeds the tax at the place of residence. Property of either resident or non-resident decedents if situated without the state and if taxed by a foreign state or country is only taxed in Maine, if the Maine tax is greater than the foreign tax and then only for the amount in excess. When the personal estate passing from any deceased person not an inhabitant or resident of this state * * * shall consist of stocks, bonds or other debt or certificate of indebtedness of any corporation organized under the laws of Maine, no collateral inheritance tax shall be assessed upon the same unless said corporation shall at the time of such decease have tangible property within the state exceeding $1,000 in value. (Public Laws 1911, c. 163, § 92.) The attorney general upon satisfactory evidence and payment of a $5.00 fee to the use of the state shall file a certificate in the office of the secretary of state stating that the corporation has no tangible prop- erty within the state exceeding $1,000 in value. Otherwise, such estates are taxed on the shares of both domestic and foreign corporations. (Id., c. 163. § 92.) See also as to inheritance taxes R. S., c. 8; L. 1905, c. 124; L. 1909, cc. 186, 187; L. 1911, c. 163; L. 1913, c. 190. APPENDIX. ORGANIZATION FEES AND DUTIES. Attorney General $5.00 Secretary of State 5.00 Register of Deeds (usually) 5.00 State Treasurer: On capitalization of $1,000 to $10,000 10.00 On capitalization of $10,000 to $500,000 50.00 On capitalization in excess of $500,000, for each $100,000. . 10.00 79 MASSACHUSETTS. 1. STATUTES UNDER WHICH BUSINESS COMPANIES ARE INCORPORATED AND REGULATED. Business corporations are organized under The Business Corpora- tion Law of 1903, being Cliapter 437 of tlie Acts of 1903 (cited iierein as B. C. L.). This act also contains general regulations for business corporations. The act has been amended from time to time. The tax law is found in Laws of 1909, c. 490, Part 111, § 39 et seq. as amended by L. 1914, c. 198. 2. PURPOSES FOR WHICH BUSINESS COMPANIES MAY BE FORMED. A corporation may be formed under the Business Corporation Law for any lawful purpose (B. C. L., § 7), except to carry on the business of a bank, savings bank, co-operative bank, trust company, surety or iiidemnity company, safe deposit company, insurance company, railroad, electric railroad or street railway company, telegraph or telephone company, gas or electric light, heat or power company, canal, aqueduct or water company, cemetery or crematory company, or any other corporations which have the right to take or condemn land within the commonwealth, or to exercise franchises in public ways granted by the commonwealth or by any county, city or town (B. C. L., § 1, as amended L. 1910, c. 385). Until 1912 the act did not authorize the formation of corporations to buy and sell real estate, but by chap. 595 (L. 1912, p. 453) of the acts of 1912, amending § 7 of the Business Corporation Law, that restriction was removed, with the following pro- viso: "provided, that the agreement of association of a corporation formed for the purpose of acquiring, holding, managing, improving, leasing, buying and selling real estate shall state the term of the dura- tion of the corporation, such term not to exceed fifty years." The Business Corporation Law provides that "except as herein- before provided, the provisions of this section shall not be construed to prohibit the organization of a corporation under the provisions of this act for the purpose of carrying on any lawful business outside of this commonwealth" (B. C. L., § 1, L. 1910, c. 385). A corporation is not limited to one purpose, but may be formed to carry on as many different kinds of business as are set forth in the agreement of association. 3. INCORPORATORS. Three or more persons may form a business company (B. C. L., § 7). There are no statutory requirements as to the residence or citi- zenship of incorporators. They should be natural persons of the age of twenty-one years or over. 4. ORGANIZATION TAX, OFFICIAL FEES AND INCIDENTAL EXPENSES. The fee for filing and recording the articles of organization, includ- ing the issuing by the secretary of the commonwealth of the certificate of incorporation, is one-twentieth of one per centum on the total author- 81 Massachusetts ized capital stock; but not in any case less than $25 (B. C. L., § 88; as amended by Acts of 1907, c. 396). There are no other organization fees. S. METHOD OF INCORPORATION. First Step. Preparation and execution of agreement of associa- tion. Prepare and have signed by the incorporators an original agree- ment of association, which shall state (B. C. L., § 8) : (a) That the subscribers thereto associate themselves with the in- tention of forming a corporation. (b) The corporate name assumed, which shall indicate that it is a corporation, as distinguished from a natural person or a partnership; but it shall not assume the name of another domestic corporation, or of a foreign corporation, or of any partnership or association, carrying on business in this commonwealth at the time of such organization or within three years prior thereto, or a name so similar thereto as to be liable to be mistaken for it, except with the consent in writing of such existing corporation, association or partnership filed with the articles of organization (B. C. L., § 5). (c) The location of the principal office of the corporation in the commonwealth, and elsewhere in the case of corporations organized to do business wholly outside the commonwealth. (d) The purposes for which the corporation is formed and the nature of the business to be transacted. (e) The total amount of capital stock of the corporation, which shall not be less than $1,000, to be authorized; the par value of the shares, which shall not be less than $5; the number of shares into which the capital stock is to be divided, and the restrictions, if any, imposed upon their transfer; and, if there are to be two or more classes of stock, a description of the different classes and a statement of the terms on which they are to be created and of the method of voting thereon. (f) Any other provisions not inconsistent with law for the con- duct and regulation of the business of the corporation, for its voluntary dissolution, or for limiting, defining or regulating the powers of the corporation, or of its directors or stockholders, or any class of stock- holders. (g) The subscriber or subscribers by whom the first meeting of the incorporators shall be called. (h) The names and residences of the incorporators and the amount of the stock subscribed for by each. Second Step. First meeting of incorporators. The first meeting of the incorporators shall be called by a notice signed, either by such subscriber to the agreement of association as may be designated therein, or by a majority of the subscribers to such agreement; and such notice shall state the time, place and purposes of the meeting. A copy of such notice must be mailed or delivered per- sonally to each incorporator at least seven days before the time ap- pointed for the meeting, and another copy with an affidavit of one of the signers that the notice has been duly served, shall be recorded with the records of the corporation. If all the incorporators shall, in writing, indorsed upon the agreement of association, waive such notice and fix the time and place of the meeting, no notice shall be required (B. C. L., § 9). At such first meeting, or at any adjournment thereof, the incor- porators shall organize by the choice, by ballot, of a temporary clerk, wHb shall be sworn, by the adoption of by-laws, and by the election in such manner as the by-laws may determine of directors, of a treas- urer, of a clerk and of such other officers as the by-laws may pre- scribe. The temporary clerk shall make and attest a record of the 82 Massachusetts proceedings until the clerk has been chosen and sworn, including a record of such choice and qualification (B. C. L., § 10). Third Step. Preparation, signing and verification of articles of organization. A majority of the directors elected at the first meeting shall' forth- with make, sign and make oath to articles setting forth (B. C. L., § 11) : (a) A true copy of the agreement of association and the names of the subscribers thereto. (b) The date of the first meeting and of the successive adjourn- ments thereof, if any. (c) The amount of capital stock then to be issued; the amount thereof to be paid for in full in cash; the amount thereof to be paid for in cash by Installments and the installment to be paid before the corporation commences business; and the amount thereof to be paid for in property. If such property consists in any part of real estate, its location, area and the amount of stock to be issued therefor shall be stated; if any part of such property is personal, it shall be described in such detail as the commissioner of corporations may require, and the amount of stock to be issued therefor stated. If any part of the capital stock is issued for services or expenses, the nature of such services or expenses and the amount of stock which is issued therefor shall be clearly stated. (d) The name, residence and post-office address of each of the officers of the corporation. Fourth Step. Submission of articles of organization and record of the first meeting of incorporators to the commissioner of corpora- tions. The articles of organization and record of the first meeting of the incorporators shall be submitted to the commissioner of corporations, who shall examine them and who may require such amendment thereof or such additional information, as he may consider necessary. If he finds that the articles conform to the provisions of the business corpora- tion law he shall so certify and indorse his approval thereupon (B. C. L., § 12). Fifth Step. Filing of articles of organization in the office of the secretary of the commonwealth. The amount of the organization fee of one-twentieth of one per centum of the total amount of the authorized capital stock (minimum fee, $25) must be paid, and upon payment thereof, the articles of organization as approved by the commissioner of corporations must be filed in the office of the secretary of the commonwealth, who shall cause them and the endorsement thereon to be recorded (B. C. L., § 12). Sixth Step. Issue of certificate of incorporation. The secretary of the commonwealth shall thereupon issue a certifi- cate of incorporation in the following form (B. C. L., § 12) : COJVIMONWEALTH OF MASSACHUSETTS. Be It Known that whereas (the names of the subscribers to the agreement of association) have associated themselves with the intention of forming a corporation under the name of (the name of the corpora- tion), for the purpose (the purpose declared in the agreement of association), with a capital stock of (the amount fixed in the agree- ment of association, with a statement of the several classes into which the stock is divided and their respective amounts, and of the method of paying for such stock, whether by cash in full, cash on installments, property, or partly cash and partly property), and have complied with the provisions of the statutes of this commonwealth in such case made and provided, as appears from the articles of organization of said cor- poration, duly approved by the commissioner of corporations and rec- orded in this office: now, therefore, I (the name of the secretary), 83 Massachusetts secretary of the commonwealth of Massachusetts, do herby certify that said (the names of the subscribers to the agreement of association), their associates and successors, are legally organized and established as, and are hereby made, an existing corporation under the name of (name of the corporation), with the powers, rights and privileges, and subject to the limitations, duties and restrictions, which by law apper- tain thereto. Witness my official signature hereunto subscribed, and the great seal of the commonwealth of Massachusetts hereunto affixed, this day of in the year (the date of filing of the articles of organization). Such certificate shall have the force and effect of a special charter (B. C. L., § 12). The organization is complete upon the filing of the articles of organization in the office of the secretary of the commonwealth. The certificate of incorporation or a certified copy thereof shall be conclu- sive evidence of the existence of such corporation (B. C. L., § 12). 6. COMMENCEMENT AND DURATION OF CORPORATE EXISTENCE. The existence of the corporation begins upon the filing of the arti- cles of organization in the office of the secretary of the commonwealth (B. C. L., § 12), and is perpetual (B. C. L., § 4). Chapter 595 of the Acts of 1912 limits the duration of a real estate company to fifty years (see No. 2 above). 7. EXTENSION OF CORPORATE EXISTENCE. No statutory provision, as the corporate existence is perpetual. 8. AMENDMENT OF ARTICLES OF INCORPORATION. Every corporation may, at a meeting duly called for the purpose, by the vote of a majority of all its stock, or, if two or more classes of stock have been issued, of a majority of each class outstanding and entitled to vote, authorize an increase or a reduction of its capital stock and determine the terms and manner of the disposition of such increased stock, may authorize a change of the location of its principal office or plac^ of business in this commonwealth or a change of the par value of the shares of its capital stock, or may authorize proceed- ings for its dissolution under the provisions of section 51 (B. C. L., § 40). It may, at a meeting duly called for the purpose, by the vote of two-thirds of all its stock, or, if two or more classes of stock have been issued, of two-thirds of each class of stock outstanding and enti- tled to vote, or by a larger vote if the agreement of association so re- quires, change its corporate name, the nature of its business, the classes of its capital stock subsequently to be issued and their voting power, or make any other lawful amendment or alteration in its agreement of association or articles of organization, or sell, lease or exchange all its property and assets, including its good will and its corporate franchise, upon such terms and conditions as it deems expedient. Articles of amendment signed and sworn to by the president, treas- urer and a majority of the directors shall, within thirty days after said meeting, be prepared, setting forth such amendment or alteration, and stating that it has been duly adopted by the stockholders. Such articles shall be submitted to the commissioner of corporations, who shall ex- amine them in the same manner as the original articles of organization. If he finds that they conform to the requirements of law, he shall so certify and indorse his approval thereon, and they shall thereupon be 84 Massachusetts filed in the ofiBce of the secretary of the commonwealth, who, upon pay- ment of the fee hereinafter provided, shall cause them, and the indorse- ment thereon, to be recorded. No amendment or alteration of the agree- ment of association or articles of organization shall take effect until said articles of amendment shall have been filed in the office of the secretary of the commonwealth as aforesaid (B. C. L., § 41). The fee on filing articles of amendment is five dollars, or, if the capital stock is increased one-twentieth of one per cent, of the amount of such increase (B. C. L., § 89; Acts of 1907, c. 396). 9. CORPORATE NAME. As to original selection of name, see No. 5 above. The name may be changed by amendment of the agreement of asso- ciation (see No. 8 above). 10. PRINCIPAL OFFICE. The location of the principal office must be set forth in the agree- ment of association (B. C. L., § 8), and the location and street address in each annual report (B. C. L., § 45). Meetings of stockholders are not required to be held at the prin- cipal office, unless so provided in the by-laws, but such meetings must be held in the commonwealth (B. C. L., § 20). The location of the principal office may be changed by amendment of the agreement of association (see No. 8 above). 11. STATUTORY RESIDENT AGENT OR ATTORNEY. No statutory requirement on this subject, except that the clerk must be a resident of the commonwealth. A corporation which fails to keep a clerk of the corporation within the commonwealth is liable to a fine of five hundred dollars (Acts of 1907, c. 282). 12. BY-LAWS. The by-laws are adopted in the first instance by the incorporators at their first meeting or at any adjournment thereof (B. C. L., § 10). The statute provides that every corporation may determine by its by- laws the time and place of holding and the manner of conducting its meetings, and, in accordance with the provisions of section 18 (see No. 25 below), of electing its officers, the powers, duties and tenure of its officers, the number of its directors, the numbef of stockholders and of directors necessary to constitute a quorum, the manner of calling regular and special meetings of the directors, the expediency of provid- ing for an executive committee, the number of members thereof, and the duties which may be delegated to it, the method of making demand for payment of subscriptions to its capital stock, the conditions under which a new certificate of stock may be issued in place of a certificate which is alleged to have been lost or destroyed, the method in general of trans- acting its business and the manner by which the by-laws may be altered, amended or repealed (B. C. L., § 13). The by-laws may also provide for and prescribe the manner of choosing or appointing agents and officers, other than directors, a treas- urer and a clerk, and prescribe manner of filling vacancies (B. C. L., §§ 17, 18). The by-laws may also define the powers of the directors and stock- holders (B. C. L., § 19). 13. CORPORATE BOOKS AND RECORDS. The agreement of association, an attested copy of the articles of organization and of articles in amendment of said agreement or of said articles and of the by-laws, with a reference on the margin of the 85 Massachusetts copy of the by-laws to all amendments thereof, and a true record of all meetings of stockholders shall be kept at the principal office in the commonwealth for the inspection of the stockholders (B. C. L., § 30). The stock and transfer books, which shall contain a complete list of all stockholders, their residences and the amount of stock held by each, shall be kept at an office of the corporation in this commonwealth for the inspection of the stockholders (B. C. L., § 30). See also No. 50, subd. (b) below. 14. ANNUAL REPORTS. Every corporation shall annually, within thirty days after the date fixed in its by-laws for its annual meeting last preceding the date of such report, or within thirty days after the final adjournment of said meeting, but not more than three months after the date so fixed for said meeting, prepare a report of condition which shall be signed and sworn to by its president, treasurer and at least a majority of its directors stating (B. C. L., § 45) : 1. The name of the corporation. 2. The location (with street address) of its principal office in this commonwealth, and elsewhere in the case of a corporation organized to do business wholly outside the commonwealth. 3. The date of its last preceding annual meeting. 4. The total amount of its authorized capital stock; the amount issued and outstanding and the amount then paid thereon; the class or classes, if any, into which it is divided; the par value and number of its shares. 5. The names and addresses of all the directors and officers of the corporation, and the date at which the term of office of each expires. 6. A statement of the assets and liabilities of the corporation as of the date of the end of its last fiscal year, to be made substantially in the following form: Assets. Real estate Machinery Merchandise Manufactures, merchandise, materials and stock in process. Cash and debts receivable Patent rights Trade marks Good-will Profit and loss Total Liabilities. Capital stock Accounts payable Funded indebtedness Floating indebtedness Surplus Profit and loss Total Such report shall be submitted to the commissioner of corpora- tions, who shall examine it and if he finds that it conforms to the requirements of the act, he shall indorse his approval thereon; and upon the payment of a fee of $5.00, it may be filed in the office of the sec- retary of the commonwealth, who shall receive and preserve it in book- 86 Massachusetts form convenient for reference and open to public inspection (B. C. L., §§ 46, 90). As to pen'alty for not filing report see No. 48 below. Such report of a corporation which has a capital stock of $100,000 or more shall be accompanied by written statement under oath by an auditor to be employed for each ensuing fiscal year by a committee of three stockholders who are not directors which shall be selected at each annual meeting of the stockholders, or, if there are not three stock- holders other than directors able and willing to servei on such comi- mittee, then to be employed by the directors, stating that such report represents the true condition of the affairs of such corporation as dis- closed by its books at the time of making such audit (B. C. L., § 47). The statement of the auditor shall be filed by him with said report in the ofSce of the secretary of the commonwealth and shall be at- tached to and form a part of it. The auditor shall be sworn to the faith- ful performance of his duties; and the officers of the corporation who sign the said report of condition shall certify thereon that the auditor was duly elected and qualified, as herein provided (B. C. L., §' 47, as amended Acts of 1909, c. 326). If a corporation fails to file its report of condition within thirty days after the date of its annual meeting or of a final adjournment thereof, the commissioner of corporations shall give notice by mail, postage prepaid, to such corporation of its default. If it omits to file such report within thirty days after such notice of default has been given, it shall forfeit to the commonwealth not less than five nor more than ten dollars for each day for fifteen days after the expiration of the said thirty days, and not less than ten nor more than two hundred dollars for each day thereafter during which such default continues, or any other sum, not greater than the maximum penalty or forfeiture, which the court may deem just and equitable. If a corporation fails for two successive years to file its annual report of condition, the supreme judicial court, upon application by the commissioner of corporations, after notice and hearing, may decree a dissolution of the corporation. (B. C. L., § 49, as amended by Acts of 1914, c. 198). Whenever any change is made in the officers of a domestic corpora- tion the corporation shall forthwith file in the office of the commis- sioner of corporations a certificate of such change signed and sworn to by the president, clerk and a majority of its directors. If such cer- tificate is not filed within thirty days after such change the corporation is liable to a fine of five hundred dollars, and every officer failing to perform the duty imposed by the act is subject to a like fine (see Acts of 1907, c. 282, as amended by Acts of 1908, c. 180). As to tax report see No. 48 below. 15. CAPITAL STOCK. There is no maximum limit. JVlinimum amount authorized $1,000 (B. C. L., §■ 8). 16. MINIMUM AMOUNT OF CAPITAL WITH WHICH A COMPANY MAY BEGIN BUSINESS. No statutory requirement, except that the articles of organization are required to set forth the amount of capital stock to be paid for in cash by installments and the installment to be paid before the corpora- tion commences business (B. C. L., § 11). 17. ISSUE OF STOCK; CONSIDERATION FOR ISSUE. Capital stock may be issued for cash, property, tangible or intang- ible, services or expenses. Stock which is issued for cash may be paid for in full before it is issued or by installments. If it is paid for by in- stallments, the stock certificate shall be legibly stamped with the word 87 Massachusetts " per. cent, paid up, balance payable [stating manner and time of payment] and shares subject to forfeiture if unpaid," the proportion and terms of payment being stated to agree with the facts; and, as each installment is demanded and paid, the certificate shall be stamped accordingly (B. C. L., § 14). No stock shall be at any time issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued has been actually received or incurred by, or conveyed or rendered to, the corporation; and the president, treasurer and directors shall be jointly and severally liable to any stockholder of the corporation for actual damages caused to him by such issue (B. C. L., § 14). Stock may be issued subsequent to the issue of stock certified by the articles of organization if a certificate is prepared within thirty days after the date when the issue of such additional stock has been author- ized, and is signed and sworn to by the president, treasurer and a majority of the directors setting forth (B. C. L., § 14) : (a) The total amount of capital stock authorized; (b) The amount of stock already issued for cash payable by in- stallments and the amount paid thereon; also the amount of full paid stock already issued for cash, property, services or expenses; (c) The amount of additional stock to be issued for cash, property, services or expenses, respectively; _(d) A description of said property, and a statement of the nature of said services or expenses in the manner required by the section re- lating to the articles of organization (see No. 5, "Third Step" above). Such certificate shall be submitted to the commissioner of corpora- tions, who shall examine it in the same manner as the original articles of organization. If he finds that it conforms to the requirements of law, he shall so certify and indorse his approval thereon, and it shall thereupon be filed in the office of the secretary of the commonwealth, who, upon payment of a fee of $5, shall cause it and the indorsement thereon to be recorded. No issue of stock subsequent to the issue certi- fied by the articles of organization shall be lawful until said certificate shall have been filed in the office of secretary of the commonwealth as aforesaid (B. C. L., § 14). 18. PAR VALUE OF SHARES. Shares shall not be less than $5 each (B. C. L., § 8). 19. INCREASE OF CAPITAL STOCK. For method of increasing authorized capital stock see No. 8 above. If an increase in the total amount of the capital stock of any cor- poration shall have been authorized by vote of its stockholders in ac- cordance with the provisions of section 40, the articles of amendment shall also set forth: (a) the total amount of capital stock already authorized; (b) the amount of stock already issued for cash payable by installments and the amount paid thereon; and the amount of full paid stock already issued for cash, property, services or expenses; (c) the amount of additional stock authorized; (d) the amount of such stock to be issued for cash, property, services or expenses, respectively; (e) a description of said property and a statement of the nature of said services or expenses, in the manner required by the provisions of section 5 [see No. 17 above] (B. C. L., § 42). 20. DECREASE OF CAPITAL STOCK. For method of decreasing authorized capital stock see No. 8 above. If a reduction of the capital stock of any corporation shall have been authorized by its stockholders in accordance with the provisions of section 40, the articles of amendment shall also set forth (a) the 88 Massachusetts total amount of capital stock already authorized and issued; (b) the amount of the reduction and the manner in which it shall be effected; (c)_ a copy of the vote authorizing the reduction. No reduction of capital stock shall be lawful which renders the corporation bankrupt or insolvent, but the capital stock may be reduced by the surrender of every stockholder of his shares and the issue to him in lieu thereof of a proportional decreased number of shares, if the assets of such cor- poration are not reduced thereby, without creating any liability of the stockholders of such corporation in case of the subsequent bankruptcy of such corporation (B. C. L., § 43). 21. PREFERRED STOCK AND OTHER CLASSES OF STOCK. Every corporation may create two or more classes of stock with such preferences, voting powers, restrictions and qualifications thereof as shall be fixed in the agreement of association or in an amendment of such agreement (B. C. L., § 27). As to form of preferred stock certificate see No. 22 below. 22. CERTIFICATES OF STOCK. Each stockholder shall be entitled to a certificate, in form con- formable to the provisions of section fourteen (see No. 17 above), which shall be signed by the president and by the treasurer of the corporation, shall be sealed with its seal and shall certify the num- ber of shares held by him in such corporation. Each certificate of stock which by the agreement of association or amended agreement is limited as to its voting rights, or which is preferred as to its dividend or as to its share of the principal upon dissolution, shall have a sufficient state- ment of such limitation or preference plainly written or stamped upon it, and each certificate subsequently issued of any class of stock in the corporation shall have printed or stamped thereon the clause of such agreement of association or amended agreement authorizing the issue of stock in any respect preferred or limited (B. C. L., § 26). See also Uniform Stock Transfer Act, p. 104 et seq. below. 23. TRANSFER OF SHARES. See also Uniform Stock Transfer Act, p. 104 et seq. below. The delivery of a certificate of stock by the person named as the stockholder in such certificate or by a person entrusted by him with its possession for any purpose to a bona-fide purchaser or pledgee for value, with a written transfer thereof, or with a written power of attorney to sell, assign or transfer the same, signed by the person named as the stockholder in such certificate, shall be a sufficient delivery to transfer title as against all persons; but no such transfer shall affect the right of the corporation to pay any dividend due upon the stock, or to treat the holder of record as the holder in fact, until it has been recorded upon the books of the corporation, or until a new certificate has been issued to the person to whom' it has been so transferred (B. C. L., § 28). The agreement of association may provide for restrictions on the transfer of shares of stock (B. C. L., § 8). Stock shall not be transferred upon the books of the corporation, except as provided in section 30 (see No. 17 above), if any installments thereon remain overdue and unpaid (B. C. L., § 28). A pledgee of stock transferred as collateral security shall be enti- tled to a new certificate if the instrument of transfer substantially describes the debt or duty which is intended to be secured thereby. Such new certificate shall express on its face that it is held as collateral 89 Massachusetts security, and the name of the pledgor shall be stated thereon, who alone shall be liable as a stockholder, and entitled to vote thereon (B. C. L., § 28). A corporation organized under the laws of this commonwealth which shall record a transfer of any share of its stock made by a foreign executor, administrator or trustee, or issue a new certificate for a share of its stock at the instance of a foreign executor, administrator or trustee, before all inheritance taxes have been paid, shall be liable for such tax in an action of contract brought by the treasurer and receiver general (see Acts, 1909, c. 490, Part IV, § 15). Securities or assets belonging to the estate of a deceased non- resident shall not be delivered or transferred to a foreign executor, administrator or legal representative of said decedent, unless such executor, administrator or legal representative has been licensed to receive such securities or' assets under the provisions of section three of chapter one hundred and forty-eight of the Revised Laws, without serving notice upon the tax commissioner of the time and place of such intended delivery or transfer, seven days at least before the time of such delivery or transfer, but the notice required by section three of said chapter one hundred and forty-eight to be given to the treasurer and receiver general shall be given to the tax commissioner in regard to all property subject to the provisions of this part, instead of being given to the treasurer and receiver general. The tax commissioner, either personally or by representative, may examine such securities or assets at the time of such delivery or transfer. Failure to serve such notice or to allow such examination shall render the person or corpora- tion making the delivery or transfer liable, in an action of contract brought by the treasurer and receiver general, to the payment of the tax due upon said securities or assets. (L. 1909, c. 490, Part IV, § 16.) See also No. 50, subd. (b) below as to tax on transfers. 24. MEETINGS OF STOCKHOLDERS. There shall be an annual meeting of the stockholders and the time and place of holding it, and the manner of conducting it, shall be fixed by the by-laws; but it shall be held within ninety days after the end of the fiscal year of the corporation. All meetings of stockholders shall be held in the commonwealth. A written or printed notice, stating the place, day and hour thereof, shall be given by the clerk, at least seven days before such meeting, to each stockholder by leaving such notice with him or at his residence or usual place of business, or by mailing it, postage prepaid, and addressed to each stockholder at his address as it appears upon the books of the corporation. Unless the by-laws otherwise provide, a majority in interest of all stock issued and out- standing and entitled to vote shall constitute a quorum. Notices of all meetings of stockholders shall state the purposes for which the meet- ings are called. No notice of the time, place or purpose of any regular or special meeting of the stockholders shall be required if every stockholder, or his attorney thereunto authorized, by a writing which is filed with the records of the meeting, waives such notice (B. C. L., § 20; Acts of 1904, c. 207). Special meetings of the stockholders may be called by the president or by a majority of the directors, and shall be called by the clerk upon written application of three or more stockholders who are entitled to vote and who hold at least one-tenth part in interest of the capital stock, stating the time, place and purpose of the meeting (B. C. L., § 22). If the date of the annual meeting is changed, a certificate, signed and sworn to by the clerk, must be filed in the office of the commis- sioner of corporations (Acts of 1905^ c. 222). 90 Massachusetts 25. CORPORATE ACTS WHICH MUST BE DONE OR SANC- TIONED BY THE STOCKHOLDERS. Annual election of directors, treasurer and clerk; unless the by-laws otherwise provide, a majority in interest of all stock issued and out- standing and entitled to vote shall constitute a quorum' (B. C. L., §§ 18, 20). Increase of capital stock; reduction of capital stock; change of location of principal office; change of par value of shares; dissolution; vote of a majority of all the stock, or, if two or more classes of stock have been issued, of a majority of each class outstanding and entitled to vote at a meeting called for the purpose (B. C. L., § 40). Change of corporate name; change of nature of business; change of the classes of stock subsequently to be issued and their voting power; any other lawful amendment or alteration in the agreement of association or articles of organization (for example, classification of directors; see No. 31 below; or classification of stock; see No. 21 above) ; sale, lease or exchange of all the property and assets, including the good-will and corporate franchises; vote of two-thirds of all the stock, or, if two or more classes of stock have been issued, of two- thirds of each class of stock outstanding and entitled to vote, or a larger vote if the agreement of association so requires, at a meeting called for that purpose (B. C. L., § 40). 26. VOTING BY STOCKHOLDERS. Stockholders who are entitled to vote shall, except as provided in § 93 (relating to co-operative associations), have one vote for each share of stock owned by them: provided, that in corporations having two or more classes of stock of diiferent par value the voting powers of the different classes may be fixed, in accordance with the provisions of section twenty-seven (see No. 21 above), in proportion to such par values respectively. Capital stock shall not be voted upon if any installment of the subscription therefor which has been duly demanded under the provisions of § 16 is overdue and unpaid. Stockholders may vote either in person or by proxy. No proxy which is dated more than six months before the meeting named therein shall be accepted, and no such proxy shall be valid after the final adjournment of such meeting. (B. C. L., § 24, as amended by L. 1912, c. 175.) See No. 21 above as to restrictions upon right to vote when there are two or more classes of stock. 27. CUMULATIVE VOTING. No statutory provision. 28. VOTING TRUSTS. No statutory provision. 29. RIGHT OF STOCKHOLDERS TO INSPECT CORPORATE BOOKS. See No. 13 above. 30. LIABILITY OF STOCKHOLDERS. Stockholders are liable to the corporations for the amount unpaid on shares of stock held by them (B. C. L., § 16). An original subscriber for stock continues to be liable to the cor- poration after such stock has been transferred by him, and such liability 91 Massachusetts may be enforced where a judgment has been obtained against the delinquent holder of such stock and remains unsatisfied for thirty days (B. C. L., § 16). The stockholders of a corporation which reduces its capital stock contrary to the provision of the Act (see No. 20 above) shall be liable for the payment of the debts and contracts of the corporation existing at the time of such reduction to the extent of the amount withdrawn and paid to them respectively (B. C. L., § 33). The stockholders of a corporation shall also be liable for all money due to operatives for services rendered within six months before demand made upon the corporation and its neglect or refusal to make such payment (B. C. L., § 33). The liability of stockholders cannot be enforced unless it has been adjudicated bankrupt or unless judgment has been obtained against the corporation and execution has been returned unsatisfied (B. C. L., § 36). 31. DIRECTORS. There must be at least three directors (B. C. L., § 17). Every cor- poration may, by its articles of organization or by an amendment thereto, divide its directors into classes and prescribe the tenure of ofBce of the several classes; but no class shall be elected for a shorter period than one year or for a longer period than five years, and the term of ofBce of at least one class shall expire in each year (B. C. L., § 18). None of the directors are required to be residents of the common- wealth. Every director, unless the by-laws otherwise provide, shall be a stockholder (B. C. L., § 18). Vacancies are filled in the manner prescribed in the by-laws, and in default of such by-law, by the directors (B. C. L., § 18). 32. CHANGE OF NUMBERS OF DIRECTORS. The number of directors may be increased or decreased in the manner provided in the by-laws. It is not necessary to file any papers concerning such change. 33. STATUTORY POWERS AND FUNCTIONS OF DIRECTORS. The board of directors may exercise all the powers of the corpora- tion, except such as are conferred by law, or by the by-laws of the corporation upon the stockholders (B. C. L., § 19). 34. DIRECTORS' MEETINGS. Meetings of the board of directors may be held within or without the commonwealth (B. C. L., § 25), at such place as may be determined by the by-laws (B. C. L., § 13). The manner of calling regular and special meetings of the directors and the number of directors necessary to constitute a quorum, may be determined by the by-laws (B. C. L., § 13). Any meeting of the board of directors shall be a legal meeting without notice if each director, by a writing which is filed with the records of the meeting waives, such notice (B. C. L., § 25). 35. EXECUTIVE COMMITTEE. A corporation may, by its by-laws, provide for an executive com- mittee to be elected from and by its board of directors. To such committee may be delegated the management of the current and 92 Massachusetts ordinary business of the corporation, and such other duties as the by-laws may prescribe (B. C. L., ,§ 19). 36. OFFICERS OTHER THAN DIRECTORS. The business of every corporation shall be managed and conducted by a president, a board of not "less than three directors, a clerk, a treasurer and such other officers and such agents as the corporation by its by-laws shall authorize (B. C. L., § 17). The directors, the treasurer, the clerk and such other officers as the by-laws may prescribe shall be elected annually by the stockholders by ballot and the president shall be elected annually by and from the board of directors. Every director, unless the by-laws otherwise provide, shall be a stockholder. The treasurer may be required to give a bond for the faithful performance of his duty in such sum and with such sureties as the by-laws may prescribe. The clerk, who shall be a resi- dent of this commonwealth, shall be sworn and shall record all votes of the corporation in a book to be kept for that purpose. Every corpora- tion may by its articles of organization or by an amendment to such articles adopted as hereinafter provided, divide its directors into classes and prescribe the tenure of office of the several classes; but no class shall be elected for a shorter period than one year or for a longer period than five years, and the term' of office of at least one class shall expire in each year. Except as herein otherwise provided, the officers of a corporation shall hold office for one year and until their successors are chosen and qualified. The manner of choosing or of appointing all other agents and officers and of filling all vacancies shall be pre- scribed by the by-laws, and, in default of such by-law, vacancies may be filled by the board of directors (B. C. L., § 18). 37. STATUTORY LIABILITIES OF DIRECTORS AND OFFICERS. The directors of every corporation shall be jointly and severally liable for the debts and contracts of the corporation in the following cases (B. C. L., § 35) : First. For declaring or assenting to a dividend if the corporation is, or thereby is rendered, bankrupt or insolvent, to the extent of such dividend. Second. For debts contracted between the time of making or assenting to a loan, to a stockholder or director and the time of its payment, to the extent of such loan. Directors who vote against declaring said dividend or who vote against making said loan shall not be liable as aforesaid. The directors who sign the articles of organization are jointly and severally liable to any stockholder of the corporation for actual damages caused by any statement therein which is false and which they know to be false (B. C. L., § 11). The president, treasurer and directors are jointly and severally liable to any stockholder of the corporation for actual damages caused to him by the issue of stock for which cash, so far as due, or the property, services or expenses, for which it was authorized to be issued has not been actually received or incurred by, or conveyed or rendered to the corporation (B. C. L.,.§ 14). If any officer or agent of the corporation having charge of the copies of the articles of organization and amendments thereof, and of the by-laws, and of the books or records, refuses or neglects to exhibit them or to submit them to the examination of stockholders, he or the corporation shall be liable to any stockholder for all actual damages sustained by reason of such refusal or neglect (B. C. L., § 30). The president, treasurer and directors of every corporation shall be jointly and severally liable for all the debts and contracts of the 93 Massachusetts corporation contracted or entered into while they are officers thereof if any stock is issued in violation of the provisions of § 14 (see No. 17 above) or if any statement or report which is required by the provisions of this act is made by them which is false in any material representation and which they know, or on reasonable examination could have known, to be false; but only the officers who sign such statement or report shall be so liable (§ 34, as amended by Acts of 1911, c. 488, § 1). Any person who shall wilfully make false report to the . . . commissioner of corporations, or who shall testify or affirm falsely to any material fact in any matter wherein an oath or affirmation is required or authorized, or who shall make any false entry or memo- randum upon any book, report, paper or statement of any company making report to any of the said commissions or commissioners, with intent in any case to deceive the commission or commissioner, or any agent appointed to examine the affairs of any such company, or to deceive the stockholders or any officer of any such company, or to injure or defraud any such company, and any person who with like intent aids or abets another in any violation of this act, shall be pun- ished by a fine of not more than one thousand dollars, or by imprison- ment for not more than one year, or by both such fine and imprison- ment. (Acts of 1911, c. 184.) Whoever knowingly makes, executes, files or publishes any report or statement required by law to be made, executed, filed or published by a corporation in this commonwealth, whether such corporation is organized under the laws of this commonwealth or elsewhere, or whoever causes the same to be done, which report or statement is false in any material representation, shall be punished by imprisonment for not more than three years, or by a fine of not more than five thousand dollars, or by both such fine and imprisonment. (Acts of 1914, c. 661, § 1.) 38. POWERS OF CORPORATIONS, (a) In General. Every corporation which is subject to the provisions of this act shall have the following powers and privileges and shall be subject to the following liabilities: (a) To have perpetual succession in its corporate name, unless a period for its duration is limited by special law. (b) To sue or be sued in its corporate name, and to prosecute or defend to final judgment an execution or decree in any court of law or equity. (c) To have a capital stock to such an amount as may be fixed in its agreement of association or articles of organization or of amend- ment as hereinafter provided. (d) To have a corporate seal, which it may alter at pleasure. (e) To elect all necessary officers, fix their compensation and define their duties. (f) To hold, purchase, convey, mortgage or lease within or with- out this commonwealth such real or personal property as the purposes of the corporation may require. (g) To make contracts, incur liabilities and borrow money on its credit and for its use. (h) To make by-laws not inconsistent with the laws of this commonwealth for regulating its government and for the administration of its affairs as hereinafter provided. (i) To be dissolved or to have its affairs wound up in the manner hereinafter provided (B. C. L., § 4). (j) To adopt plan of compensation for injured employees (L. 1908, c. 489, § 1). 94 Massachusetts (k) No corporation shall pay or contribute in order to aid, promote or prevent the nomination or election of any person to public office (L. 1908, c. 483, § 1). The sale or transfer, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the corporation's business, of any part or the whole of the assets of a corporation which is subject to the provisions of chapter four hundred and thirty-seven of the acts of the year nineteen hundred and three, and acts in amend- ment thereof and in addition thereto, and which is liable to taxation thereunder, shall be fraudulent and void as against the commonwealth, unless such corporation shall, at least five days before the sale or transfer, notify the treasurer and receiver general of the proposed sale or transfer and of the price, terms and conditions thereof, and of the character and location of said assets. Whenever such a corporation shall make such a sale or transfer, the tax imposed by said chapter, or by acts in amendment thereof or in addition thereto, shall become due and payable at the time when the treasurer and receiver general is so notified, or, if he is not so notified, at the time when he should have been notified. Nothing in this act shall apply to sales by receivers, assignees under a voluntary assignment for the benefit of creditors, trustees in bankruptcy, or by public officers under judicial process. (Acts of 1910, c. 187.) (b) Power to Borrov(r Money and Incur Debts; Corporate Bonds and Mortgages; Limitation of Amount of Indebtedness. See clause (g) above. There is no statutory provision as to the manner of authorizing or executing corporate mortgages, and unless the by-laws otherwise pro- vide the directors may authorize the making of a mortgage and the issuance of bonds. There is no statutory limitation on the amount of indebtedness. (c) Power to Hold Stocks and Bonds. The statute does not expressly authorize corporations to hold the stocks and bonds of other corporations, although power is given to all corporations subject to the provisions of the business corporation law to hold, purchase, convey, mortgage or lease within or without this commonwealth such real or personal property as the purposes of the corporation may require (B. C. L., § 4), and to issue stock for property, tangible or intangible (B. C. L., § 14). Whether a corporation may be formed under the act for the express purpose of holding stocks of corporations is not clear. No corporation organized under or subject to the provisions of chapter four hundred and thirty-seven of the acts of the year nineteen hundred and three, except a corporation which by special law of this commonwealth is authorized to hold stock in a public service corpora- tion, shall hereafter purchase or acquire, take or hold, directly or indirectly, more than ten per cent of the total capital stock of a corporation organized under the general or special laws of the common- wealth for the purpose of carrying on within the commonwealth the business of a railroad, street railway, electric railroad, elevated railway, gas or electric light, heat or power company. (L. 1913, p. 391.) (d) Power to Carry on Business without the State. Corporations may be organized for the purpose of carrying on business outside of the commonwealth (B. C. L., §§ 1, 4), and every corporation may hold, purchase, convey, mortgage or lease without this commonwealth such real or personal property as the purposes of the corporation may require (B. C. L., § 4), and the meetings of the board of directors may be held without the commonwealth (B. C. L., § 25). 95 Massachusetts 39. CONSOLIDATION AND MERGER WITH OTHER CORPORATIONS. There is no statutory provision for the consolidation and merger of business corporations. 40. DISSOLUTION AND SURRENDER OF FRANCHISE. A corporation which desires to close its affairs may, unless other- wise provided in the agreement of association, by the vote of a majority of all its stock, or, if two or more classes of stock have been issued, of a majority of each class outstanding and entitled to vote, authorize a petition for its dissolution to be filed in the supreme judicial court or in the superior court setting forth in substance the grounds of the application; and the court, after notice to parties interested and a hearing, may decree a dissolution of the corporation. A corporation so dissolved shall be held to be extinct in all respects as if its corporate existence had expired by the limitation of its charter (B. C. L., § 51). Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and of enabling it gradually to settle and close its affairs, to dispose of and convey its property and to divide its capital stock, but not for the purpose of continuing the business for which it was established (B. C. L., § 52). 41. FORFEITURE OF CHARTER. If a corporation fails for two successive years to file its annual report of condition, the supreme judicial court, upon application by the commissioner of corporations, after notice and a hearing, may decree a dissolution of the corporation (B. C. L., § 49). 42. FOREIGN CORPORATIONS; HOW AUTHORIZED TO DO BUSINESS. No foreign business corporation organized for purposes for which domestic corporations may be organized under the provisions of the Business Corporation Law shall engage or continue in any kind of busi- ness in this commonwealth the transaction of which by domestic corporations is not permitted by the laws of this commonwealth (B. C. L., § 57). Every such foreign corporation which has a usual place of business in this commonwealth, or which is engaged in this commonwealth, permanently or temporarily, and with or without a usual place of business therein, in the construction, erection, alteration or repair of a building, bridge, railroad, railway or structure of any kind, shall, before doing business in this commonwealth, comply with the following requirements: (1.) It shall in writing appoint the commissioner of corporations and his successor in office to be its true and lawful attorney upon whom all lawful processes in any action or proceeding against it may be served, and in such writing shall agree that any lawful process against it which is served on said attorney shall be of the same legal force and validity as if served on it, and that the authority shall con- tinue in force so long as any liability remains outstanding against it in this commonwealth. The power of attorney and a copy of the vote authorizing its execution, duly certified and authenticated, shall be filed in the office of the commissioner, and copies thereof certified 96 Massachusetts by him shall be sufBcient evidence thereof (B. C. L., § 58; as amended by Acts of 1905, c. 242). (2.) It shall also file with the commissioner of corporations a copy of its charter, articles or certificate of incorporation, certified under the seal of the state or country in which such corporation is incor- porated by the secretary of state thereof or by the officer having charge of the original record thereof, a true copy of its by-laws, and a certificate in such form as the commissioner of corporations may require, setting forth (B. C. L., § 60) : (a) The name of the corporation; (b) The location of its principal office; (c) The names and the addresses of its president, treasurer, clerk or secretary, and of the members of its board of directors; (d) The date of its annual meeting for the election of officers; (e) The amount of its capital stock, authorized and issued, the number and par value of its shares, the amount paid in thereon to its treasurer, and, if any part of such payment has been made otherwise than in money, of the details of such payment, so far as practicable in accordance with the provisions of section 11 of the Business Corpora- tion Law (see No., 5, Third Step). At the time of filing such papers it shall pay to the treasurer and receiver-general of the commonwealth a fee of twenty-five dollars. Such certificate shall be subscribed and sworn to by its president, treasurer and by a majority of its directors or officers having the powers usually exercised by directors (B. C. L., § 60). Such foreign corporations are also required to file annual certi- ficates of condition in the same manner as required of domestic corporations (see No. 14 above). In the case of a foreign corporation, however, the assets and liabilities shall be stated as of a date not more than ninety days prior to the annual meeting (B. C. L., § 66). At the time of filing such certificate it shall pay a fee of $5 to the secretary of the commonwealth (B. C. L., § 91). Such certificate shall be accompanied by a written statement, under oath by an auditor, as provided in the case of domestic corporation (see No. 14 above) except that said auditor shall in all cases be chosen by the board of directors. Before it is filed, it shall be submitted to the commissioner of corporations who shall examine said certificate and shall, as tax commissioner, assess upon the corporation an excise tax, in accordance with the provisions of section 75 (see No. 48 below). If he finds that the certificate is in compliance with the requirements of this act, he shall endorse his approval thereon; but no certificate shall be filed until he has endorsed his approval thereon and until the excise tax required by section 75 has been paid to the treasurer and receiver- general (B. C. L., § 67, as amended by L. 1908, c. 300). 43. FOREIGN CORPORATIONS; PENALTY FOR DOING BUSINESS WITHOUT AUTHORITY. Every officer of a foreign corporation which falls to comply with the above requirements and every agent thereof who transacts business as such in this commonwealth, shall, for such failure, be liable to a fine of not more than five hundred dollars (B. C. L., § 60). Such failure shall not affect the validity of any contract with such corpora- tion, but no action shall be maintained or recovery had in any of the courts of this commonwealth by any such foreign corporation so long as it fails to comply with such requirements (B. C. L., § 60). 44. FOREIGN CORPORATIONS; APPOINTMENT OF STATU- TORY RESIDENT AGENT OR ATTORNEY. See No. 42 above. 97 Massachusetts 45. FOREIGN CORPORATIONS; BOOKS TO BE KEPT IN THE STATE. No statutory provision. 46. FOREIGN CORPORATIONS; PENALTY FOR NEGLECT OR REFUSAL TO KEEP OR EXHIBIT BOOKS. No statutory provision. 47. FOREIGN CORPORATIONS; LIABILITY TO ATTACH- MENT. Foreign corporations which have property in this commonwealth shall be liable to be sued and have their property attached in the same manner and to the same extent as natural persons who are residents of other states and who have property in this commonwealth (B. C. L., § 62). 48. FRANCHISE TAXES OR LICENSE FEES PAYABLE BY DOMESTIC AND FOREIGN CORPORATIONS. TAXATION OF CORPORATE FRANCHISES OF DOJWESTIC CORPORATIONS. Definitions. The term "domestic business corporation" as used in this act shall mean every corporation of the classes enumerated in section one of chapter four hundred and thirty-seven of the acts of the year nine- teen hundred and three; the term "foreign corporation" shall mean every corporation, association or organization of the classes enumerated in section fifty-eight of said chapter (L. 1909, c. 490, Part III, § 39). Annual Return by Domestic Business Corporation. Every [domestic business] corporation .... shall annually, between the first and tenth days of April, malce a return to the tax commissioner, under oath of its treasurer, stating the name of the corporation, its place of business, and setting forth as of the first day of April of the year in which the return is made: — First, The total authorized amount of the capital stock of the corporation; the amount issued and outstanding and the amount then paid thereon; the classes, if any, into which it is divided; the par value and number of its shares; the market value of the shares of its stock, or of each class of its stock, if there are two or more classes. Second, A statement in such detail as the tax commissioner may require of the works, structures, real estate, machinery, poles, underground conduits, wires and pipes, and of the merchandise and other assets belonging to the corporation, with the value thereof, and of the liabili- ties of the corporation; and in the case of domestic business corpora- tions a statement of such assets as are without the commonwealth. Third, And a complete list of the shareholders of the corporation, their residences, and the amount and class of stock, if more than one, belonging to each. If stock is held as collateral security, the list shall state the name and residence of the pledgor and of the pledgee. . . . Such domestic companies may annually, between the first and tenth days of April, make a return to the tax commissioner, signed and sworn to by their president, treasurer and clerk, specifying the amount and market value of all stocks in other corporations held by them upon which a tax has been assessed and actually paid either in this or in any other state for the year preceding the date of said return; and the books, accounts and papers of such corporations shall be examined by the tax commissioner so far as may be necessary for the verification of said return. . . . Such return shall be filed with the tax commissioner. 98 Massachusetts In the case of domestic business corporations tlie whole of said return .... shall be open only to the inspection of the tax commissioner, his deputy, clerks and assistants, and such other officers of the common- wealth as may have occasion to inspect it for the purpose of assessing or collecting taxes (L. 1909, c. 490, Part III, § 40 as amended by L. 1914, c. 198). Valuation and Assessment. The tax commissioner shall ascertain from the returns or otherwise the true market value of the shares of each corporation subject to the requirements of the preceding section, and shall estimate therefrom the fair cash value of all of said shares constituting its capital stock on the preceding first day of April, which, . . . . shall, for the purposes of this part, be taken as the true value of its corporate franchise. From such value there shall be deducted: .... Third, in case of a domestic business corporation, the value of the works, structures, real estate, machinery, poles, underground conduits, wires and pipes owned by it within the commonwealth, subject to local taxation, and of securities which if owned by a natural person resident in this commonwealth would not be liable to taxation; also the value of its property situated in another state or country and subject to taxation therein. There shall not be deducted the value of securities which if owned by a natural person resident in this commonwealth would be liable to taxation; nor shall there be deducted the value of any shares of stock of the corporation itself owned directly or indirectly by it or for its benefit; and the tax commissioner in determining for the purposes of taxation the value of the corporate franchise of any such corporation shall not take into consideration any debts of such corporation unless the returns required from it contain a statement duly signed and sworn to, setting forth that no part of such debts was incurred for the purpose of reducing the amount of taxes to be paid by it. Fourth, .... the value, as found by the tax commissioner, of their works, structures, real estate, machinery, poles, underground conduits, wires and pipes, subject to local taxation wherever situated. For the purposes of this section the tax commissioner may take the value at which such works, structures, real estate, machinery, poles, underground conduits, wires and pipes are assessed at the place where they are located as the true value, but such local assessment shall not be conclusive of the true value thereof (L. 1909, c. 490, Part III, § 41, as amended by L. 1914, c. 198). Rate of Tax. Every corporation subject to the provisions of section forty shall annually pay a tax upon its corporate franchise, after making the deductions provided for in section forty-one, at a rate equal to the average of the annual rates for three years preceding that in which such assessment is laid, the annual rate to be determined by an apportionment of the whole amount of money to be raised by taxation upon property in the commonwealth during the same year, as returned by the assessors of the several cities and towns under the provisions of section fifty-nine of Part I, after deducting therefrom the amount of tax assessed upon polls for the preceding year, as certi- fied to the tax commissioner, upon the aggregate valuation of all cities and towns for the preceding year, as returned under sections fifty-nine and sixty of Part I; but the said tax upon the value of the corporate franchise of a domestic business corporation, after making the deduc- tions provided for in section forty-one, shall not exceed a tax levied at the rate aforesaid upon an amount, less said deductions, twenty per cent, in excess of the value, as found by the tax commissioner, of the works, structures, real estate, machinery, poles, underground conduits, wires and pipes, and merchandise, and of securities which if owned by a natural person resident in this commonwealth would be liable to tax- ation; and the total amount of tax to be paid by such corporation in any year upon its property locally taxed in this commonwealth and 99 Massachusetts upon the value of its corporate franchise shall amount to not less than one-tenth of one per cent, of the market value of its capital stock at the time of said assessment as found by the tax commissioner. (Id., § 43, as amended by Acts of 1914, c. 198). Notice of Tax. The tax commisioner shall annually, as soon as may be after the first Monday of August, give notice to the treasurer of every [domestic business] corporation .... of the amount thereof; that it will be due and payable to the treasurer and receiver general within thirty days after the date of such notice, but not before the twentieth day of October; and that within ten days after the date of such notice the corporation may apply for a correction of said tax, and be heard thereon by the board of appeal (Id., § 57). ANNUAL EXCISE PAYABLE BY FOREIGN CORPORATIONS. Annual Certificate of Condition. Every foreign corporation shall annually, within thirty days after the date fixed for its annual meeting, or within thirty days after the final adjournment of said meeting, but not more than three months after the date so fixed for said meeting, prepare and file in the office of the secretary of the commonwealth, upon payment of the fee [$5] provided in section ninety- one of chapter four hundred and thirty-seven of the acts of the year nineteen hundred and three, a certificate signed and sworn to by its president, treasurer, and by a majority of its board of directors, show- ing the amount of its authorized capital stock, and its assets and liabilities as of a date not more than ninety days prior to said annual meeting, in such form as is required of domestic business corporations under the provisions of section forty-five of said chapter, and the change or changes, if any, in the other particulars included in the certificate required by section sixty of said chapter, made since the filing of said certificate or of the last annual report (Id., § 54). Auditor's Statement. A certificate which is required to be filed by the preceding section shall be accompanied by a written statement under oath by an auditor, as provided in section forty-seven of chapter four hundred and thirty-seven of the acts of the year nineteen hundred and three, except that such auditor shall in all cases be chosen by the board of directors. Before it is filed it shall be submitted to the com- missioner of corporations, who shall examine said certificate and shall as tax commissioner assess upon the corporation an excise tax in accordance with the provisions of the following section. If he finds that the certificate is in compliance with the requirements of the preced- ing section, he shall indorse his approval thereon; but no certificate shall be filed until he has indorsed his approval thereon, and until the excise tax required by the following section has been paid to the treasurer and receiver general (Id., § 55). Amount of Excise Tax Payable by Foreign Corporations. Every foreign corporation shall, in each year, at the time of filing its annual certificate of condition, pay to the treasurer and receiver general, for the use of the commonwealth, an excise tax to be assessed by the tax commissioner of one-fiftieth of one per cent, of the par value of its authorized capital stock as stated in its annual certificate of condition; but the amount of such excise tax shall not in any one year exceed the sum of two thousand dollars (Id., § 56; B. C. L., § 75). Every foreign corporation subject to the tax imposed by section fifty-six of Part III of chapter four hundred and ninety of the acts of the year nineteen hundred and nine shall in each year, at the time of filing its annual certificate of condition, pay to the treasurer and receiver general for the use of the commonwealth, in addition to the tax imposed by said section fifty-six, an excise tax to be assessed by the tax commissioner of one one hundredth of one per cent of the par value of its authorized capital stock in excess of ten million dollars as stated in its annual certificate of condition. (Acts of 1914, c. 724, § 1). 100 Massachusetts All laws now or hereafter in force relating to the assessment and collection of the tax imposed by said section fifty-six and all laws providing for appeal from any assessment made under said section flfty-six or for tlie recovery of any tax assessed thereunder shall, except so far as they are inconsistent with the provisions of this act, apply to the tax imposed by this act (Id., § 2). PENALTIES. If a domestic business corporation fails to file its tax return before the tenth day of April of each year, or if a foreign corporation omits to file the certificate as required in section fifty-four, the tax commis- sioner shall give notice by mail, postage prepaid, to the corporation of its default, directed, in the case of a foreign corporation, to the resident manager, if any, in the United States, or to any other person designated by the corporation, by written notice filed in the office of the commissioner, as provided in section fifty-nine of chapter four hundred and thirty-seven of the acts of the year nineteen hundred and three for notice of the service of legal process, which notice to said foreign corporation shall contain a copy of this section and of sections sixty-five to sixty-eight inclusive of said chapter. If such business or foreign corporation fails to file such return or certificate within thirty days after such notice of default has been given or mailed, it shall forfeit to the commonwealth not less than five nor more than ten dollars for each day for fifteen days after the expiration of the said thirty days, and not less than ten nor more than two hundred dollars for each day thereafter during which such default continues, or any other sum, not greater than the maximum penalty or forfeiture, which the court may deem just and equitable, which, in the case of a foreign corporation, shall be recovered as herein provided (Id., § 58). 49. TAXATION OF PROPERTY OF DOMESTIC AND FOREIGN CORPORATIONS. Every corporation which is organized or created under the laws of this commonwealth and which is subject to the provisions of this act shall be subject to taxation upon all real estate and machinery owned by it and situated in this commonwealth by the city or town in which said real estate or machinery is situated, and every foreign corporation which is subject to the provisions of this act shall be subject to taxation upon all real estate, machinery and merchandise owned by it and situ- ated in this commonwealth by the city or town in which such property is situated (B. C. L., § 71). A foreign corporation is subject to taxation upon all real estate, machinery and merchandise owned by it and situated in this common- wealth by the city or town in which such property is situated (B. C. L., § 71). See also Acts of 1909, c. 516. 50. TAXATION OF SHARES OF STOCK, (a) Generally. No taxes shall be assessed in a city or town for state, county or town purposes upon the shares in the capital stock of corporations, companies or associations taxable under the provisions of sections .... forty-three .... for any year for which they pay to the treasurer and receiver-general a tax on the value of their corporate franchises. .... (Laws of 1909, c. 490, Part III, § 64, as amended by Acts of 1914,' c. 198). Shares of foreign corporations held by residents are subject to assessment by the local assessor for state and local purposes. Stock- holders in foreign manufacturing corporations taxed within the common- wealth on real estate and machinery, are entitled to a proportionate reduction for the value of real estate and machinery thus taxed (R. L., c. 12, § 23, par. 2). 101 Massachusett s (b) Tax on Transfers. Amount of Tax; How Paid. There is liereby imposed and there shall immediately accrue and be collected an excise as herein provided on all sales or agreements to sell or memoranda of sales or deliveries or transfers of shares or certificates of stock in any domestic or foreign corporation made after the first day of December, nineteen hundred and fourteen, whether made upon or shown by the books of the corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale, whether or not entitling the holder in any manner to the benefit of such stock or to secure the future payment of money or the future transfer of any stock, on each one hundred dollars of face value or fraction thereof, two cents. It is not intended by this act to impose an excise upon an agreement evidencing the deposit of stock certificates as collateral security for money loaned thereon, which stock certificates are not actually sold, nor upon such stock certificates so deposited; nor upon the transfer of stock certificates of a deceased person to his executor or administrator; nor upon the transfer of stock certificates by a trustee to his successor or co-trustee under the same trust. The payment of the said excise shall be denoted by an adhesive stamp or stamps affixed as follows: in case of sale where the evidence of transfer is shown only by the books of the company, the stamp shall be placed upon the said books; and where the change of ownership is by transfer of a certificate the stamp shall be placed upon the certificate; and in cases of an agreement to sell, or where the transfer is by delivery of the certificate assigned in blank, there shall be made and delivered by the seller to the buyer a bill or memorandum of sale, to which the stamp provided for by this act shall be affixed; and every such bill or memorandum of sale or agreement to sell shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers, and no further excise is hereby imposed upon the delivery of the certificate of stock, or upon the actual issue of a new certificate when the original certificate of stock is accompanied by the duly stamped memorandum of sale as herein provided. (Acts of 1914, c. 770, § 1), Re-Use of Stamps. If any such stamp shall be affixed to any memorandum of sale with the intention of paying an excise, but delivery pursuant to the sale shall not be made in conformity with the mem- orandum, then such stamp may be removed from the memorandum and subse3uently used on some other memorandum of sale: provided, that when ' so used there shall be attached to the memorandum, to which said stamp shall so be affixed, a written statement signed by the vendor or the agent making the sale, setting forth in detail the facts justifying such re-use (Id., § 6). Record of Sales and Transfers. Every person, firm, association or corporation making a sale, agreement to sell, d&livery, or transfer of shares or certificates of stock, or conducting or transacting a brokerage business, shall keep or cause to be kept a true book of account wherein shall be recorded, plainly and legibly, the date of making every sale, agreement to sell, delivery or transfer of shares or certificates of stock, and every transaction in relation to any stock; the number of shares, the total amount covered by every such sale, agreement to sell, delivery, transfer or transaction, and the name of the other party thereto ; and such book shall at all times be subject to the inspection of the tax commissioner or of any of his representatives between the hours of ten o'clock in the forenoon and three o'clock in the afternoon, except on Saturdays, Sundays and legal holidays. The tax commissioner may, at any time after a transfer of stock which by the provisions of this act is subject to an excise, inquire into and ascertain whether the excise imposed by the provisions of this act was paid. For this purpose, the tax commissioner shall have the right, and it shall be his duty to examine the books and papers of any person, firm, association or corporation: 102 Massachusetts provided, that no bill or memorandum of sale as provided for in section one of this act need be preserved for the inspection of the lax com- missioner for a longer period than ninety days after the date thereof. The tax commissioner may enforce his right to examine the books and papers of any person, firm, association or corporation by mandamus. Every person, firm, association or corporation refusing to permit the tax commissioner, or any of his representatives, to inspect such books or papers or any memoranda or record relating to any such sale, agreement to sell, delivery or transfer, or transaction at any time as above provided, or failing to keep the said book of account, or failing to preserve for ninety days from the date thereof all bills and memoranda of sales, shall be deemed guilty of a misdemeanor, and shall, for each offence, be punished by a fine of not less than five hundred dollars nor more than five thousand dollars, or by imprisonment for not less than three months or more than two years, or by both such fine and imprisonment, at the discretion of the court (Id., § 7). E£Eect of Failure to Pay Tax. No transfer of stock made after the first day of December in the year nineteen hundred and fourteen on which an excise is imposed by this act, which excise is not paid at the time of such transfer, shall be made the basis of any action or legal proceeding, nor shall proof thereof be offered or received in evidence in any court in this commonwealth: provided, however, that nothing contained in this section shall apply to proceedings authorized by this act (Id., § 9). Refund of Tax Erroneously Paid. If any stamps shall have been affixed erroneously to any book, certificate of stock or bill or memorandum of sale, the tax commissioner, upon presentation of a claim for the amount of such stamps, and upon the production of evidence satisfactory to him that such stamps were affixed erroneously so as to cause loss to the persons making the claim by the said amount, or such part thereof as he may allow, shall certify to the auditor the amount so erroneously paid, and the treasurer and receiver general shall pay said amount without any further act or resolve making appropriation therefor. Such claims shall be presented to the tax commissioner in writing duly verified, and shall state the full name and address of the claimant, the date of the erroneous afBxing, the face value of the stamps, and shall describe the instrument to which the stamps were affixed, and shall contain such evidence as may be available upon which the demand for the repayment is based. Such claims shall be presented within ninety days after the alleged erroneous afBxing. If the tax commissioner rejects a claim or any part thereof, the claimant may within thirty days after the date of the rejection, apply to the board of appeal established by section sixty-eight of Part III of chapter four hundred and ninety of the acts of the year nineteen hundred and nine. Said board of appeal shall thereupon review the facts in the case, and shall forthwith give a decision in writing to the claimant and to the tax commissioner; and if the board grants any repayment to the claimant the amount of the repayment shall be certified and paid as is herein provided (Id., § 11). (c) Inheritance and Succession Taxes. There is now both a direct and collateral inheritance tax in this commonwealth. For provisions thereof see Laws of 1909, c. 490, part IV, § 1; Acts of 1911, c. 502; Acts of 1912, c. 678; Acts of 1914, cc. 462, 563. See also No. 23 above. The tax is imposed in respect to shares of stock of both domestic and foreign corporations held by a resident decedent and in respect to shares of domestic corporations held by a non-resident decedent, but allowance is made for tax levied in other jurisdictions having a reciprocal law similar to that of Massachusetts. 103 Massachusett s APPENDIX. THE UNIFORM STOCK TRANSFER ACT. AUTHOR'S NOTE. — This act was drafted under the supervision of the Conference of Commissioners on Uniform Laws. The notes are those prepared by the Commissioners. The text here given is that of the statute as enacted in Massachusetts {An act to make uniform the law of transfer of shares of stock in corporations ; Acts of 1910, c. 171). The act has also been passed, with some slight variations of text, in New York and Pennsylvania (see page 110 below). It has also been enacted in Alaska, Louisiana, Maryland, Michigan, Ohio, Rhode Island and Wisconsin. TRANSFER OF TITLE. Section 1. How title to certificates and shares may be trans- ferred. Title to a certificate and to the shares represented thereby shall be transferred only, (a) By delivery of the certificate indorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby, or (b) By delivery of the certificate and a separate document con- taining a written assignment of the certificate or a power of attorney to sell, assign, or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person. The provisions of this section shall be applicable although the charter or articles of incorporation or code of regulations or by-laws of the corporation issuing the certificate and the certificate itself, provide that the shares represented thereby shall be transferable only on the books of the corporation or shall be registered by a registrar or trans- ferred by a transfer agent. Note. — The provisions of this section are in accordance with the existing law {see Cook on Corporations, § 373 et seq.), except that the transfer of the certificate is here made to operate as a transfer of the shares, whereas at common law it is the registry on the books of the company which makes the complete transfer. The reason for the change is in order that the certificate may, to the fullest extent possible, be the representative of the shares. This is the funda- mental purpose of the whole act, and is in accordance with the mercantile usage. The transfer on the books of the corporation becomes thus like the record of a deed of real estate under a registry system. Section 2. Powers of those lacking full legal capacity and of FIDUCIARIES NOT ENLARGED. Nothing in this act shall be construed as enlarging the powers of an infant or other person lacking full legal capacity, or of a trustee, executor or administrator, or other fiduciary, to make a valid indorsement assignment or power of attorney. Note. — This section is inserted for the sake of avoiding any pos- sible Question as to the matter to which it relates. Section 3. Corporation not forbidden to treat registered HOLDER AS OWNER. Nothing in this act shall be construed as forbidding a corporation, (a) To recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, or (b) To hold liable for calls and assessments a person registered on its books as the owner of shares. Note. — This provision is necessary for the protection of the cor- poration. 104 Massachusetts Section 4. Title derived from certificate extinguishes title DERIVED FROM A SEPARATE DOCUMENT. The title of a transferee of a certificate under a power of attorney or assignment not written upon the certificate, and the title of any person claiming under such trans- feree, shall cease and determine if, at any time prior to the surrender of the certificate to the corporation issuing it, another person, for value in good faith, and without notice of the prior transfer, shall purchase and obtain delivery of such certificate with the indorsement of the person appearing by the certificate to be the owner thereof, or shall purchase and obtain delivery of such certificate and the written assign- ment or power of attorney of such person, though contained in a sepa- rate document. Note. — The case here contemplated arises where a transferee ob- tains a certificate with a separate assignment or power of attorney. If the certificate is not delivered, and a mere assignment is made, title to the certificate will not pass under section 1. There will be, in effect, merely a contract to transfer under section 10. Even though the certificate is delivered, and therefore the transferee obtains title by the separate assignment, it seems proper that the transferee should, at his peril, keep the certificate from deceiving purchasers who may by any chance thereafter obtain it duly in- dorsed or assigned by the person appearing on the face of it to be the owner. As the first purchaser can immediately get a certificate in his own name, he has an easy way to protect himself from mischance. Section 5. Who may deliver a certificate. The delivery of a certificate to transfer title in accordance with the provisions of section one shall be effectual, except as provided in section seven, though made by one having no right of possession and having no authority from the owner of the certificate or from the person purporting to transfer the title. Note. — This section gives full negotiability to certificates of stock. In so doing it goes beyond the existing law but is in accordance with mercantile custom. In many cases a similar result has been reached on the theory of estoppel if the real owner's negligence contributed to the theft or unauthorized dealing with an indorsed certificate. See Cook on Corporations, Chap. XXI; also § 437. Section 6. Indorsement effectual in spite of fraud, duress. MISTAKE, revocation, DEATH, INCAPACITY OR LACK OF CONSIDERATION OR authority. The indorsement of a certificate by the person appearing by the certificate to be the owner of the shares represented thereby shall be effectual, except as provided in section seven, though the in- dorser or transferror, (a) Was induced by fraud, duress or mistake to make the indorse- ment or delivery, or (b) Has revoked the delivery of the certificate, or the authority given by the indorsement or delivery of the certificate, or (c) Has died or become legally incapacitated after the indorsement, whether before or after the delivery of the certificate, or (d) Has received no consideration. Note. — By the previous section, if the certificate is properly in- dorsed, the delivery may be made by any one; by the present section the indorsement, if genuine, is sufficient, in spite of the circum- stances enumerated. So far as subsection (a) is concerned, this section states the existing law. Cook on Corporations, §§ 349, 438. So far as sub- sections (b) and (c) are concerned, there is a dearth of authority. Doubtless a revocation by death, or otherwise, subsequent to the creation of an interest for value in the stock, would be generally held ineffectual. Lowell on the Transfer of Stock, §§ 44, 42: Dick- inson V. Central Bank, 129 Mass. 279; Hess v. Rau, 95 N. Y. 359. Probably, too, if the possession of an indorsed certificate of stock 105 Massachusetts were intrusted to another for the purpose of sale, subsequent revo- cation of the power to sell, or even death of the owner would not invalidate the title of a purchaser from the person so intrusted. The doctrine of estoppel would probably be invoked. The case may be supposed, however, of a certificate indorsed during the lifetime but not delivered until after the death of the owner. It is probable that the existing law would hold such an indorsement ineffectual, yet a purchaser without notice should, it seems, be protected. RESCISSION OF TRANSFER. Section 7. Rescission of transfer. If the indorsement or de- livery of a certificate, (a) Was procured by fraud or duress, or (b) Was made under sucli mistake as to make the indorsement or delivery inequitable; or If the delivery of a certificate was made (c) Without authority from the owner, or (d) After the owner's death or legal incapacity, the possession of the certificate may be reclaimed and the transfer thereof rescinded, unless: ■ ^1. The certificate has been transferred to a purchaser for value in good faith without notice of any facts making the transfer wrongful, or, 2. The injured person has elected to waive the injury, or has been guilty of laches in endeavoring to enforce his rights. Any court of appropriate jurisdiction may enforce specifically such right to reclaim the possession of the certificate or to rescind the transfer thereof and, pending litigation, may enjoin the further transfer of the certificate or impound it. * Note. — Though a purchaser for value gets title under the circum- stances detailed in section 6, no title should be valid against the original owner unless a purchaser for value has acquired the certi- ficate. See Cook, § 356. Section 8. Rescission of transfer of certificate does not in- validate subsequent transfer by transferee in possession. Although the transfer of a certificate or of shares represented thereby has been recinded or set aside, nevertheless, if the transferee has possession of the certificate or of a new certificate representing part or the whole of the same shares of stock, a subsequent transfer of such certificate by the transferee, mediately or immediately, to a purchaser for value in good faith, without notice of any facts making the transfer wrongful, shall give such purchaser an indefeasible right to the certificate and the shares represented thereby. Note. — This section is based on the same reasoning as section 4. Section 4, indeed, would perhaps cover the case provided for in section 8 if no new certificates had been taken out. INCOMPLETE TRANSFER. Section 9. Delivery of unindorsed certificate imposes obliga- tion to indorse. The delivery of a certificate by the person appearing by the certificate to be the owner thereof without the indorsement requisite for the transfer of the certificate and the shares represented thereby, but with intent to transfer such certificate or shares shall impose an obligation, in the absence of an agreement to the contrary, upon the person so delivering, to complete the transfer by making the necessary indorsement. The transfer shall take effect as of the time when the indorsement is actually made. This obligation may be speci- fically enforced. Note. — This section follows the rule established as to negotiable instruments by section 79, Negotiable Instruments Law, and in 106 Massachusetts regard to warehouse receipts by section 43 of the Warehouse Re- ceipts Act. It probably expresses the existing taw. See Cook, § 465. Section 10. Ineffectual attempt to transfer amounts to a PROMISE TO transfer. Ati attempted transfer of title to a certificate or to the shares represented thereby without delivery of the certificate shall have the effect of a promise to transfer and the obligation, if any, imposed by such promise shall be determined by the law governing the formation and performance of contracts. Note. — It is a general principle of the Law of Sales that when a seller undertakes to sell property to which for any reason he cannot transfer title immediately, the attempted sale implies an obligation on the part of the seller to transfer title thereafter. Lunn v. Thorn- ton, 1 C. B. 379; Bates v. Smith, 83 Mich. 347; Sales Act § 5 (3). WARRANTIES. Section 11. Warranties on sale of certificate. A person who for value transfers a certificate, including one who assigns for value a claim secured by a certificate, unless a contrary intention appears, warrants — (a) That the certificate is genuine, (b) That he has a legal right to transfer it, and (c) That he has no knowledge of any fact which would impair the validity of the certificate. In the case of an assignment of a claim secured by a certificate, the liability of the assignor upon such warranty shall not exceed the amount of the claim. Note. — This section follows section 44 of the Warehouse Receipts Act and section 35 of the Bills of Lading Act, which were adopted from the Negotiable Instruments Law. There seems no reason why the implied warranties in case of a sale of certificates of stock should not be the same as in the case of negotiable paper. This perhaps goes beyond the existing law but seems to conform to the tendency of the law of implied warranty. See Cook, § 296. Section 12. No warranty implied from accepting payment of a debt, a mortgagee, pledgee, or other holder for security of a cer- tificate who in good faith demands or receives payment of the debt for which such certificate is security, whether from a party to a draft drawn for such debt, or from any other person, shall not by so doing be deemed to represent or to warrant the genuineness of such certificate, or the value of the shares represented thereby. Note. — The point covered by this section has not been raised in litigation on certificates of stock. Jt has been, however, frequently raised when bills of lading have been used as security. For this reason a section similar to that here presented has been inserted both in the Draft Act on Bills of Lading and the Act on Warehouse Receipts. As the same question may arise in regard to certificates of stock it was thought best to cover the point. ATTACHMENT. Section 13. No attachment or levy upon shares unless certifi- cate surrendered or transfer enjoined. No attachment or levy upon shares of stock for which a certificate is outstanding shall be valid until such certificate be actually seized by the officer making the attachment or levy, or be surrendered to the corporation which issued it, or its transfer by the holder be enjoined. Except where a certificate is lost or destroyed, such corporation shall not be compelled to issue a new cer- tificate for the stock until the old certificate is surrendered to it. Note. — This section like the similar provision in the Warehouse Receipts Act and the Sales Act, is an advance upon existing law. It is an advance which seems even more necessary in regard to the 107 Massachusetts certificates of stock than in the case of bills of lading or warehouse receipts. Common law does not universally protect the purchaser of a stock certificate against attachment on the books of the com- pany, even though the transfer of the certificate preceded the attach- ment. Cook, § 487 et seq. By statute, in Massachusetts one who attaches stock on the books of a corporation prior to a sale of the certificate is postponed to even a subsequent purchaser. .Clews v. Friedman, 180 Mass. 556. There is obviously chance for the great- est fraud if this is not so. Yet if the subsequent purchaser is preferred, it is clearly improper ever to allow an attachment of stock unless some method is adopted to prevent a subsequent transfer of the certificate. Otherwise it is impossible to realize on the attached property since there would always be a possibility of a subsequent transfer of the original certificate. Section 14. Creditor's remedies to reach certificate. A creditor whose debtor is the owner of a certificate shall be entitled to such aid from courts of appropriate jurisdiction, by injunction and otherwise, in attaching such certificate or in satisfying the claim by means thereof as is allowed at law or in equity, in regard to property which cannot readily be attached or levied upon by ordinary legal process. Note. — As in the Sales Act and Warehouse Receipts Act, it seems essential to provide creditors with the fullest possible means of reaching the negotiable documents which their debtor has, since the creditor is deprived of other methods of realizing on the property represented by the document. LIENS. Section 15. There shall be no lien or restriction unless indi- cated ON certificate. There shall be no lien in favor of a corporation upon the shares represented by a certificate issued by such corporation and there shall be no restriction upon the transfer of shares so repre- sented by virtue of any by-law of such corporation, or otherwise, unless the right of the corporation to such lien or the restriction is stated upon the certificate. Note. — This is in pursuance of the general policy of this act to make certificates of stock so far as possible the sole representatives of the shares which they represent. ALTERATION AND LOSS OF CERTIFICATES. Section 16. Alteration of certificate does not divest title to SHARES. The alteration of a certificate, whether fraudulent or not and by whomsoever made, shall not deprive the owner of his title to the certificate and the shares originally represented thereby, and the transfer of such a certificate shall convey to the transferee a good title to such certificate and to the shares originally represented thereby. Note. — Where the law makes title to shares of stock depend upon the registry in the books of the company, alteration of the certifi- cate obviously cannot destroy title. But if the certificate is itself to be the muniment of title, a provision seems necessary. Even for fraudulent alteration, forfeiture of the stock represented by the certificate seems too severe a penalty. Section 17. Lost or destroyed certificate. Where a certificate has been lost or destroyed, a court of competent jurisdiction may order the issue of a new certificate therefor on service of process upon the corporation and on reasonable notice by publication, and in any other way which the court may direct, to all persons interested, and upon satisfactory proof of such loss or destruction and upon the giving of a bond with sufficient surety to be approved by the court to protect the corporation or any person injured by the issue of the new certificate from any liability or expense, which it or they may incur by reason of the original certificate remaining oiitstanding. The court may also in its discretion order the payment of the corporation's reasonable costs 108 Massachusetts and counsel fees. The issue of a new certificate under an order of the court as provided in this section shall not relieve the corporation from liability in damages to a person to whom the original certificate has been or shall be transferred for value without notice of the proceedings or of the issuance of the new certificate. Note. — This section represents the prevailing rule. Cook, §§ 359, 403. GENERAL PROVISIONS Section 18. Rule for cases not provided for by this act. In any case not provided for by this act, the rules of law and equity, including the law merchant, and in particular the rules relating to the law of principal and agent, executors, administrators and trustees, and to the effect of fraud, misrepresentation, duress or coercion, mistake, bankruptcy, or other invalidating cause, shall govern. Note. — A similar provision is commonly inserted when an attempt is made to reduce to statutory form a topic of the law, as in the Negotiable Instruments Act, the Sales Act and the Warehouse Re- ceipts Act. Section 19. Interpretation shall give effect to purpose of uni- formity. This act shall be interpreted and construed in such manner as to effectuate its general purpose to make uniform the law of those states which enact it. NotJ. — This section is contained in the Sales Act and Warehouse Receipt Act in order to induce courts, so far as possible, to con- sider the object of uniformity. Although the Negotiable Instru- ments Act does not contain this section, yet the courts of last resort have rightly applied this rule. See Brannan on Negotiable Instru- ments Law 1908, p. 1, note 2, and cases there cited. Section 20. Definition of indorsement. A certificate shall be deemed to be Indorsed when an assignment or a power of attorney to sell, assign, or transfer the certificate or the shares represented thereby is written on the certificate and signed by the person appearing by the certificate. to be the owner of the shares represented thereby, or when the signature of such person is Vritten without more upon the back of the certificate. In either of such cases a certificate shall be deemed to be indorsed though it has not been delivered. Section 21. Definition of person appearing to be the owner of certificate. The person to whom a certificate was originally issued shall be deemed to be the person appearing by the certificate to be the owner thereof, and of the shares represented thereby, until and unless he indorses the certificate to another specified person, and thereupon such other specified person shall be deemed to be the person appearing by the certificate to be the owner thereof until and unless he also in- dorses the certificate to another specified person. Subsequent special indorsements may be made with like effect. DEFINITIONS. Section 22. Other definitions. 1. In this act, unless the con- text or subject matter otherwise requires — "Certificate" means a certificate of stock in a corporation organ- ized under the laws of this state or of another state whose laws are consistent with this act. "Delivery" means voluntary transfer of possession from one person to another. , . "Person" includes a corporation or partnership or two or more persons having a joint or common interest. To "purchase" includes to take as mortgagee or as pledgee. "Purchaser" includes mortgagee and pledgee. "Shares" means a share or shares of stock in a corporation organized under the laws of this state or of another state whose laws are consistent with this act. 109 Massachusetts "State" includes state, territory, district and insular possession of the United States. "Transfer" means transfer of legal title. "Title" means legal title and does not include a merely equitable or beneficial ownership or interest. "Value" is any consideration sufficient to support a simple con- tract. An antecedent or pre-existing obligation, whether for money or not, constitutes value where a certificate is taken either in satis- faction thereof or as security therefor. 2. A thing is done "in good faith" within the meaning of this act, when it is in fact done honestly, whether it be done negligently or not. Note. — A few only of these definitions require comment. As to the definition of a certificate and of a share, it should be said that it seems impossible for a state to make effectual enactment as to the nature and effect of certificates for shares, issued by corpora- tions chartered in other states, unless such states have a similar act. The definitions of "value" and "good faith" follow the definitions which have been made in previous laws recommended by the Conference of Commissioners on Uniform Laws. The same reasons that recommended the definitions on previous enactments are applicable here also. Section 23. Act does not apply to existing certificates. The provisions of this act shall apply only to certificates issued after the act takes effect. Note. — Unlike bills and notes, warehouse receipts and bills of lading, certificates of stock not only may be but frequently are held for many years without transfer. It might, therefore, be desirable to make the act apply to existing certificates; but this would probably be unconstitutional. The date of the certificate will give the purchaser evidence of the applicability of this act. Section 24. Inconsistent legislation repealed. All acts or parts of acts inconsistent herewith are hereby repealed. Section 25. Name of act. This act may be cited as the uniform stock transfer act. Section 26. This act shall take effect upon its passage. Approved March 5, 1910. NEW YORK. — The title of the act is "An act to amend the personal property law relative to transfers of shares of stock in corporations," being Chapter .600 of the Laws of 1913, in effect September 1, 1913. The act constitutes Article 6 of the Personal Property Law (Chap. 41 of the Consolidated Laws), sections 162-185 inclusive. PENNSYLVANIA.— The title of the act is "An act to make uniform the law of transfer of shares of stock in corporations," being pages 126 et seq. of the Laws of 1911, in effect January 1, 1912. The section numbers are 1-26 inclusive. 110 NEW JERSEY. 1. STATUTES UNDER WHICH BUSINESS COMPANIES ARE INCORPORATED AND REGULATED. Business corporations are organized under "An Act concerning Cor- porations (Revision of 1896)," being chapter 185 of tlie laws of 1896. Tliis act (cited herein as Corp. Act.), with the several supplements and amendments enacted since 1896 and certain independent acts, contains the provisions of law regulating business corporations. Such corpora- tions are required to pay an annual license fee or franchise tax to the State under the provisions of "An Act to provide for the imposition of state taxes upon certain corporations and for the collection thereof" (cited herein as Tax Act), being Chapter 159, Laws of 1884. Several sup- plements and amendments to the Tax Act have been enacted since 1884, and in particular Chapter 19 of the laws of 1906, which prescribes the rate of taxation of business corporations. 2. PURPOSES FOR WHICH BUSINESS COMPANIES MAY BE FORMED. A corporation may be formed under the Corporation Act for any lawful purpose or purposes whatever other than a savings bank, a build- ing and loan association, an insurance company, a surety company, a railroad company, a telegraph company, a telephone company, a canal company, a turnpike company or other company which shall need to possess the right of taking and condemning lands in this state, or other than a corporation provided for by the banking, trust company and safe deposit company acts. It is lawful to form a company under the Corpo- ration Act for the purpose of constructing, maintaining and operating railroads, telephone or telegraph lines outside of New Jersey. A corpo- ration formed for cremation purposes must file a certified copy of its certificate of incorporation and obtain a license from the state board of health i(Corp. Act, § 6, as amended by P. L, 1907, c. 12). A corporation is not limited to one object or purpose, but may be formed to carry on as many difi'erent kinds of business as are set forth in the certificate of incorporation. Any person or persons, who shall organize, or incorporate, or procure to be organized, or incorporated, any corporation or body politic, under the laws of this state, with intent thereby to further, promote or conduct any object which is fraudulent or unlawful under the laws of the state, or which is intended to be used in restraint of trade or in acquiring a mo- nopoly, when such corporation or body politic engages in interstate or in-- trastate commerce shall be guilty of a misdemeanor. (P. L. 1905, c. 257, § 1, as amended by L. 1913, c. 16.) 3. INCORPORATORS. Three or more persons may form a corporation under the corpora- tion Act (Corp. Act, § 6). There is no statutory provision as to resi- dence or citizenship of incorporators, and certificates of incorporation are frequently filed where all incorporators are residents and citizens of other states or foreign countries. It is implied that incorporators shall be natural persons of full age. Each incorporator must subscribe for at least one share of stock. Ill New Jersey 4. ORGANIZATION TAX, OFFICIAL FEES AND INCIDENTAL EXPENSES. A state fee of one-flftieth of one per cent, (twenty cents per $1,000) of the total authorized capital stock stated in the certificate of incorpora- tion (minimum fee, $25) and a recording fee of ten cents per folio of one hundred words' (minimum fee, $1.00) must be paid to the secretary of state at the time of filing the certificate of incorporation (Corp. Act, § 114; P. L., 1904, c 148). The fee for a certified copy of the certificate of incorporation is $1.00, if the copy is furnished. The fee of the county clerk for recording the certificate of incorpora- tion is ten cents a folio, and is usually about $5.00 (G. S., p. 1,451). Within thirty days after the first election a report must be filed in the office of the secretary of state; filing fee, $1.00. 5. METHOD OF INCORPORATION. First Step. Preparation, execution and acknowledgment of cer- tificate of incorporation. Prepare and have signed, sealed and acknowledged by the incorpora- tors one original certificate of incorporation. The signatures should be attested by a subscribing witness. Two complete copies of the certificate of incorporation (making three in all) should be prepared to be used as explained later. The certificate of incorporation should set forth the following matters (Corp. Act, § 8) : (1) The name of the corporation; no name shall be assumed al- ready in use by another existing corporation of the state, or so nearly similar thereto as to lead to uncertainty or confusion. As to this inquiry by letter to the secretary of state, Trenton, N. J., will receive prompt reply. The name must be in the English language (P. L., 1903, c. 149). The words "insurance," "safe deposit," "trust company" or "bank" cannot form part of the name (P. L., 1897, c. 155). (2) The location (town or city, street and number, if number there be) of its principal office in the state; and the name of the agent therein and in charge thereof, and upon whom process against the corporation may be served (P. L., 1898, c. 173). (3) The object or objects for which the corporation is formed. (4) The amount of the total authorized capital stock of the cor- poration, which shall not be less than two thousand dollars, the number of shares into which the same is divided and the par value of each share ; the amount of capital stock with which it will commence business, which shall not be less than one thousand dollars; and if there be more than one class of stock created by the certificate of incorporation a description of the different classes with the terms of which the respective classes of stock are created (see further as to preferred stock No. 21 below). (5) The names and post-offlce addresses of the incorporators and the number of shares subscribed for by each; the aggregate of such sub- scriptions shall be the amount of capital stock with which the company will commence business, and shall be at least one thousand dollars. The post-office address of the registered or principal office as stated in the certificate of incorporation may be given as the post-office address of each incorporator (P. L., 1898, c. 173). (6) The period, if any, limited for the duration of the Company. (7) The certificate of incorporation may also contain any provision which the incorporators may choose to insert, for the regulation of the business and for the conduct of the affairs of the corporation, and any provision creating, defining, limiting and regulating the powers of the corporation, the directors and the stockholders, or any class or classes of stockholders; provided, such provision be not inconsistent with this act. 112 New Jersey Clauses may be inserted giving the directors power to make and alter by-laws (Corp. Act, § 11); giving directors power to fix amount of profits to be reserved as working capital (Corp. Act, § 47) ; providing for classification for directors (Corp. Act, § 12; providing for quorum at meetings of stockholders and directors (Corp. Act, § 17), and at annual elections (Corp. Act, § 34) ; providing for cumulative voting (P. L. 1900, c. 172) ; providing for voting qualifications of stockholders (Corp. Act, § 17) ; providing that any action requiring the consent of holders of two- thirds of stock at any meeting after notice to them or requiring their consent in writing to be filed, may be taken upon the consent of and the consent given and filed by the holders of two-thirds of the stock of each class represented at such meeting in person or by proxy (Corp. Act, § 17; P. L., 1901, c. 119). The certificate of incorporation must be signed and sealed in person (not by attorney) by all the subscribers to the capital stock named therein (Corp. Act, § 8). They must be natural persons, twenty-one years of age or over, three or more in number, and it is customary for at least one incorporator to be a resident of New Jersey. It will be noted that in New Jersey the directors of the first year are not named in the certificate of incorporation. The certificate of incorporation must be acknowledged by the incor- porators or proved by a subscribing witness. The acknowledgment of a married woman to a certificate of incorporation need not be taken on private examination as is required in the case of a deed of real estate. If executed in New Jersey, the acknowledgment may be taken by a master in chancery, an attorney at law, commissioner of deeds or other officer authorized by law to take the acknowledgment and proof of deeds, but may not be taken by a notary public. If executed out of New Jersey the acknowledgment may be taken by a master of chancery, a New Jersey attorney at law, a foreign com- missioner of deeds for New Jersey or by a notary public or other officer authorized to take the acknowledgment and proof of deeds in such state. If not taken by a master in chancery, attorney at law, or foreign com- missioner a certificate of a clerk of a court of record under the seal of such court must be attached, certifying to the officer's authority and to the genuineness of his signature. Second Step. Recording certificate of incorporation in the office of the County Clerk of the county in which the principal or registered office is to be located. The original and one copy of the certificate of incorporation should be taken to the office of the County Clerk and upon comparing the copy with the original, the County Clerk will stamp the original as recorded and return the same and make his record from the copy. The fee of the County Clerk for recording is ten cents a folio. Third Step. Filing the original certificate of incorporation in the office of the secretary of state. The original certificate of incorporation, with a copy, should be sent to the secretary of state at Trenton, New Jersey, with a check for the organization fee at the rate of twenty cents per thousand dollars (minimum fee $25.00), the recording fee of ten cents per folio and $1.00 to cover fee for certifying the copy. If after examination the secretary of state finds the certificate to be drawn, executed and acknowledged in conformity with the law he will file the same and return the copy certified by him to the sender. Such certified copy shall be evidence in all courts and places (Corp. Act, § 9). Fourth Step. Completing the organization. The certificate of incorporation having been properly filed the act provides that the persons so associating, their successors and assigns, shall from the date of such filing, be and constitute a body corporate (Corip. Act, § 10). 113 New Jersey A meeting of the incorporators should be held either on two weeks' notice by publication or two days' personal notice to all the incor- porators, or a meeting may be held without such notice or publication if all the incorporators in writing waive notice and fix a time and place of meeting (Corp. Act. § 16). The meeting should be held at the place designated in the certificate of incorporation as the principal office. At this meeting by-laws should be adopted, directors for the first year should be elected, and resolutions may be adopted authorizing the issue of the capital stock of the company either for cash or in payment of property purchased. Where the stock is to be issued for property, it is customary for the incorporators to adopt a resolution specifically authorizing the directors to make such purchase. A meeting of the directors should now be held on such notice as provided in the by-laws or pursuant to a written waiver of notice signed by all directors. At this meeting officers are appointed for the first year, their salaries are fixed, bond of treasurer provided for, and resolutions are adopted providing for the issue of the capital stock either for cash or in payment of property purchased. Where stock is issued for property purchased the resolution should be carefully framed to show that the directors have appraised such property and adjudged the value thereof to be the amount at par of the capital stock issued in payment thereof. At this meeting resolutions should be passed appointing a bank or trust company as depository of the funds of the company, and providing how checks shall be signed, providing for the payment of organization expenses, adopting forms of certificate of stock, providing for the appointment of the registered agent of the company in New Jersey, providing for the establishment of the office out of the state, and for the transaction of such other matters as may be necessary in completing the organization of the company. 6. COMMENCEMENT AND DURATION OF CORPORATE EXISTENCE. The corporate existence commences on the filing of the certificate of incorporation in the secretary of state's office (Corp. Act, § 10), and the duration may be perpetual or for a term of years. If no period is specified in the certificate of incorporation, the duration is perpetual (Corp. Act, §§ 1,8). 7. EXTENSION OF CORPORATE EXISTENCE. See No. 8 below. 8. AMENDMENT OF ARTICLES OF INCORPORATION. Before the payment of any part of the capital the incorporators may amend the certificate of incorporation, in whole or in part, such amended certificate to be executed, acknowledged, recorded and filed in the same manner as the original certificate of incorporation (P. L., 1898, p. 407). If any part of the capital has been paid in, the corporation may change the nature of its business, change its name, increase its capital stock, decrease its capital stock, change the par value of the shares of its capital stock, change the location of its principal office in this state, extend its corporate existence, change its common stock into one or more classes of preferred stock, create one or more classes of preferred stock, and make such other amendment, change or alteration as may be desired in manner following (Corp. Act, 8 27, as amended by P. L., 1908, p. 127) : (1.) The board of directors shall pass a resolution declaring that such change or alteration is advisable and calling a meeting of the stock- holders to take action thereon. 114 New Jersey (2.) The stockholders' meeting shall be held upon such notice as the by-laws provide, and in the absence of such provision, upon ten days' notice, given personally or by mail. (3.) If two-thirds in interest of each class of stockholders having voting powers shall vote in favor of such amendment, change or altera- tion, a certificate thereof shall be signed by the president and secretary under the corporate seal, acknowledged or proved as in the case of deeds of real estate, and such certificate, together with the written assent, in person or by proxy, of two-thirds in interest of each class of such stockholders shall be filed in the office of the secretary of state. Upon the filing of the same the certificate of incorporation shall be deemed to be amended accordingly. No provision can be Inserted by way of amendment which could not be lawfully inserted in an original certificate of incorporation made at the time of such amendment. The certificate of the secretary of state that such certificate and assent have been filed in his office shall be taken and accepted as evidence of such change or alteration in all courts and places. 9. CORPORATE NAME. As to original selection of name see No. 5 above, and as to change of name see No. 8 above; see also No. 10 below. 10. PRINCIPAL OFFICE. Every corporation shall maintain a principal office in this state, and have an agent in charge thereof, wherein shall be kept the stock and transfer books for the inspection of all who are authorized to see the same, and for the transfer of stock (Corp. Act, §' 44). The agent in charge must be a natural person or a domestic corporation authorized by its charter to act as agent. The location of the principal or registered office, as it is commonly called, must be set forth in the certificate of incorporation and in every certificate, report or statement required by law to be made to any officer or public department, or to be published, filed or recorded (P. L., 1898, p. 410). The name of the corporation must be conspicuously displayed at the entrance of its registered office (Corp. Act, § 45). The registered office may be changed by a resolution of the directors adopted by the vote of at least two-thirds of the members of the board. If the office is changed to another town, township or city, a copy of the resolution signed by the president and secretary and sealed with the corporate seal must be filed in the office of the secretary of state (P. L., 1897, p. 175). 11. STATUTORY RESIDENT AGENT OR ATTORNEY. See No. 10 above. 12. BY-LAWS. The first by-laws are usually adopted by the incorporators at their first meeting. The power to make and alter by-laws shall be in the stockholders, but any corporation may, in the certificate of incorporation, confer that power upon the directors; by-laws made by the directors under power so conferred may be altered or repealed by the stockholders (Corp. Act, § 11). The by-laws should provide for the manner of calling and conducting meetings of the stockholders; fix the quorum for the stockholders' meetings and at the annual election (unless fixed by the certificate of incorporation) ; fix the time and notice to be given of the annual election; fix the number of directors and provide for altering such number; provide for classification of directors if authorized by the certifi- cate of incorporation; provide for an executive committee; provide whether officers shall be elected by the stockholders or by the directors; prescribe the duties of the president, secretary and other officers, if any; 115 New Jersey provide for giving of bond by treasurer; prescribe the manner of filling vacancies among the directors and officers; prescribe the manner of election or appointment and tenure of other officers, agents, etc., prescribe the manner of transferring stock on the company's books and regulations as to transfers; specify voting qualifications of stockholders (unless provided for by the certificate of incorporation) ; provide for ofBces out of the state and authorize the directors to meet and keep corporate books out of the state; provide for the date of declaration and payment of dividends (unless specified in the certificate of incorporation) ; give the directors power to fix amount of profits to be reserved as working capital; and should contain such other provisions for the management of the corporation's property, and the regulation and government of its affairs as may be appropriate. 13. CORPORATE BOOKS AND RECORDS. Every corporation shall keep at its registered office the transfer books in which the transfer of stock shall be registered, and the stock books, which shall contain the names and addresses of the stockholders, the number of shares held by them respectively, and at least ten days before every election an alphabetical list of stockholders entitled to vote at the election must be prepared and filed in the registered office (Corp. Act, § 33). If the by-laws or certificate of incorporation so provide the directors may keep the books of the corporation, other than the stock and transfer books, outside of the state (Corp. Act, § 44). 14. ANNUAL REPORTS. Within thirty days after the time appointed for holding each annual election of directors a report must be filed by every domestic and foreign corporation in the office of the secretary of state, stating: (1) The name of the corporation; (2.) The location (town or city, street and number, if number there be), of its registered office in this state, and the name of the agent upon whom process against the corporation may be served ; (3.) The character of its business; (4.) The amount of its authorized capital stock, and the amount actually issued and outstanding; (5.) The names and addresses of all the directors and officers of the company and when the term of office of each expires. The address of the principal office may be given as the address of any director or stockholder (P. L., 1898, p. 410) ; I (6.) The date appointed for the next annual meeting of the stock- holders for the election of directors; (7.) Whether the name of such corporation has been at all times displayed at the entrance of its registered office in this state, and whether such corporation has kept at this registered office in this state a transfer book in which the transfers of stock are made, and a stock book containing the names and addresses of the stockholders and the number of shares held by them respectively, open at all times to the examination of the stockholders as required by law. (This subdivision does not apply to foreign corporations). This report must be signed by the president and one other officer or by any two directors. For failure to file report the corporation is subject to a penalty to the state of $200, and "all of the directors of any such domestic corporation who shall willfully refuse to comply with the provisions hereof and who shall be in office during the default shall at the time appointed for the next election, and for a period of one year thereafter, be thereby rendered ineligible for election or appointment to any office in the company as directors or otherwise" (Corp. Act, § 43; P. L., 1900, c. 124). 116 New Jersey On or before the first Tuesday of May in each year a tax report must be filed with the State Board of Assessors (P. L., 1906, c. 19). IS. CAPITAL STOCK. There is no maximum limit; minimum, $2,000 (Corp. Act, § 8). Within ten days after the payment of each installment of capital stock, a certificate of such payment signed and sworn to by the presi- dent and secretary, or treasurer, is required to be filed in the office of the secretary of state (Corp. Act, § 25). If any of the said officers neglect or refuse to file a certificate of payment for thirty days after written request so to do by a creditor or stockholder, they shall be jointly and severally, liable for all corporate debts contracted before the filing of such certificate (Corp. Act, § 26). As a matter of practice such certificate is usually not filed until the whole authorized capital stock has been paid in, and many corporations then file it only after request as above provided. 16. MINIMUM AMOUNT OF CAPITAL WITH WHICH A COMPANY MAY BEGIN BUSINESS. One thousand dollars, which may be paid in money or property (Corp. Act, §§ 8, 48, 49). 17. ISSUE OF STOCK; CONSIDERATION FOR ISSUE. Nothing but money shall be considered as payment of any part of the capital stock of any corporation organized under this act, except as hereinafter provided in case of the purchase of property (Corp. Act, § 48). ( 1 ) Any corporation formed under this act may purchase property, real and personal, and the stock of any corporation, necessary for its business, and issue stock to the amount of the value thereof in pay- ment therefor, subject to the provisions hereinafter set forth, and the stock so issued shall be full paid stock, and not liable to any further call; and said corporation may also issue stock for the amount it actu- ally pays for labor performed. Provided, that when property is purchased the purchasing corpora- tion must receive in property or stock what the same is reasonably worth in money at a fair, bona fide valuation; and provided further, that no fictitious stock shall be issued; that no stock shall be issued for profits not yet earned, but only anticipated; and provided further, that when stock is issued on the basis of the stock of any other corporation it may purchase, no stock shall be issued thereon for an amount greater than the sum it actually pays for such stock in cash or its equivalent; and provided further, that the property purchased or the property owned by the corporation whose stock is purchased shall be cognate in char- acter and use to the property used or contemplated to be used by the purchasing corporation in the direct conduct of its own proper business; and in all cases when stock is to be issued for property purchased, or for the stock of other corporations purchased, a statement in writing, signed by the directors of the purchasing company or by a majority of them, shall be filed in the office of the secretary of state, showing what property has been purchased, and what stock of any other corporation has been purchased, and the amount actually paid therefor. (2) If any certificate made in pursuance of this act be false in any material representation, all the officers who sign the same, know- ing it to be false, shall be guilty of misdemeanor, and the directors, officers and agents of the corporation, who wilfully participate in mak- ing it, shall be guilty of misdemeanor. And provided further, that any corporation which shall purchase the stock of any other corporation, or any property, for the purpose of restraining trade or commerce, or 117 New Jersey acquiring a monopoly, and the directors thereof participating therein, shall be guilty of a misdemeanor. (Corp. Act, § 49, as amended by L. 1913, c. 14.) 18. PAR VALUE OF SHARES. Shares may be any amount. 19. INCREASE OF CAPITAL STOCK. As to the manner of increasing the capital stock see No. 8 above. Where the capital stock is increased the stockholders at the time of such increase have the right to subscribe pro rata for the increased stock (Way v. American Grease Co., 60 N. J., Eq. 263), unless the new stock is issued for property, in which case tne directors have full power to issue stock without first offering it for subscription to the stockholders (JWeredith v. New Jersey Zinc and Iron Co., 55 N. J., Eq. 211). 20. DECREASE OF CAPITAL STOCK. As to the manner of decreasing the amount of the authorized capital stock (see No. 8 above). The decrease of capital stock may be effected by retiring or reduc- ing any class of the stock, or by drawing the necessary number of shares by lot for retirement, or by the surrender by every shareholder of his shares, and the issue to him in lieu thereof of a decreased num- ber of shares, or by the purchase at not above par of certain shares for retirement, or by retiring shares owned by the corporation or by reduc- ing the par value of shares; and when any corporation shall decrease the amount of its capital stock hereinbefore provided, the certificate decreasing the same shall be published for three weeks successively, at least once in each week, in a newspaper published in the county in which the principal office of the corporation is located; the first publi- cation to be made within fifteen days after the filing of such certificate, and in default thereof the directors of the corporation shall be jointly and severally liable for all debts of the corporation contracted before the filing of the said certificate, and the stockholders shall also be liable for such sums as they may respectively receive of the amount so re- duced; provided, no such decrease of capital stock shall release the liability of any stockholder, whose shares have not been fully paid, for debts of the corporation theretofore contracted, nor effect any reduction of the taxes that may be required to be paid by the charters of corpora- tions incorporated by special acts (Corp. Act, § 29). 21. PREFERRED STOCK AND OTHER CLASSES OF STOCK. Every corporation organized under this act shall have power to create two or more kinds of stock, of such classes, with such designa- tions, preferences and voting powers or restrictions or qualifications thereof as shall be stated and expressed in the certificate of incorpora- tion or in any certificate of amendment thereof; and the power to increase or decrease the stock as in this act elsewhere provided shall apply to all or any of the classes of stock; but at no time shall the total amount of the preferred stocks issued and outstanding exceed two-thirds of the capital stock paid for in cash or property, and such preferred stocks may, if desired, be made subject to redemption at any time after three years from the issue thereof, at a price not less than par, and the holders thereof' shall be entitled to receive, and the corpora- tion shall be bound to pay thereon, dividends at such rates and on such conditions as shall be stated in the original or amended certificate of incorporation, not exceeding eight per centum per annum, payable quar- terly, half yearly or yearly; and such dividends may be made payable before any dividends shall be set apart or paid on the common stock, 118 New Jersey and such dividends may be made cumulative; provided, the corporation shall set apart or pay the said dividends to the holders of non-cumula- tive preferred stock before any dividend shall be paid on the common stock; and in no event shall a holder of preferred stock be personally liable for the debts of the corporation; but in case of insolvency its debts or other liabilities shall be paid in preference to the preferred stock; the terms "general stock" and "common stock" are synonymous (Corp. Act, § 18; P. L., 1901, c. 110). Preferred stock may be converted into bonds (P. L., 1902, c. 58). 22. CERTIFICATES OF STOCK. Every stockholder shall have a certificate, signed by the president or a vice-president, and either the treasurer or an assistant treasurer, or the secretary or an assistant secretary, certifying the number of shares owned by him in such corporation. All certificates heretofore issued, which are signed as aforesaid, shall be as valid and effectual for all purposes as if signed by the president and treasurer of the corporation. (C. A., § 19, as amended by P. L., 1911, c. 53, p. 79.) 23. TRANSFER OF SHARES. The shares of stock in every corporation shall be personal property, and shall be transferable on the books of the corporation in such manner and under such regulations as the by-laws provide, and whenever any transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer (Corp. Act, § 20). This provision for transfer on the books is held to be for the protection of the company only, and as between the parties a transfer by delivery of the certificate of stock accompanied by a blank power of attorney is effectual to pass the title. To make an attachment effectual it is neces- sary, therefore, to actually attach the certificates of stock before delivery (Broadway Bank v. McElrath, 13 N. J., Eq. 24). Stock held by a decedent, whether resident or non-resident, can only be transferred after notice to the state comptroller of the treasury at Trenton (see P. L., 1914, c. 151, p. 267). 24. MEETINGS OF STOCKHOLDERS. All meetings of stockholders must be held at the registered office in New Jersey (Corp. Act, § 44). The certificate of incorporation or by-laws may determine the man- ner of calling and conducting all meetings of stockholders (Corp. Act, § 17). The statute requires twenty days' notice of a meeting of stock- holders to act upon an agreement providing for consolidation or merger (Corp. Act, § 105). Notice of a meeting of stockholders to act upon a resolution of the board of directors declaring it advisable to dissolve must be published once a week for four weeks successively (Corp. Act, § 31). Whenever under any of the provisions of the Corporation Act or any amendment thereto a corporation is authorized to take any action after notice to its members or stockholders, or after the lapse of a pre- scribed period of time, such action may be taken without notice and without the lapse of any period of time if such action be authorized or approved and such requirements be waived in writing by every member or stockholder of such corporation or by his attorney thereunto author- ized (Corp. Act, § 16; P. L., 1902, c. 58). 119 New Jersey 25. CORPORATE ACTS WHICH MUST BE DONE OR SANC- TIONED BY THE STOCKHOLDERS. Annual election of directors; unless otherwise provided in the cer- tificate of incorporation or by-laws approved at a stockholders' meeting, a majority in interest of all the stockholders must be present in person or by proxy to constitute a quorum (Corp. Act, § 34). Change of nature of business; change of name; increase of capital stock; decrease of capital stock; change of par value of shares of capi- tal stock; extension of corporate existence; creation of one or more classes of preferred stock, where not provided for in the original certi- ficate of incorporation, or other amendment, change or alteration of the certificate of incorporation; afBrmative vote of two-thirds in interest of eacli class of stockholders having voting powers at a special meeting called for the purpose and also the assent in writing of such stockholders (Corp. Act, § 27; see No. 8 above). Conversion of preferred stock into bonds; consent of two-thirds in interest of each class of stockholders present in person or by proxy at a meeting called in the manner provided in section 27 of the Corpora- tion Act (see No. 8 above), (P. L., 1902, c. 58). Merger or consolidation with other corporation or corporations; af- firmative vote of the holders of two-thirds of all the capital stock at a meeting called for the purpose (Corp. Act, § 104). Lease of property and franchises to other corporation; assent of two-thirds in interest of the stockholders (P. L., 1899, c. 150). Dissolution; consent of two-thirds in interest of all the stockholders must be given by vote at a meeting called for the purpose and also in writing (Corp. Act, § 31). 26. VOTING BY STOCKHOLDERS. Unless otherwise provided in the certificate of incorporation or by- laws, at every election each stockholder is entitled to one vote for each share of stock held by him, but no share of stock can be voted on at an election which has been transferred on the books within twenty days next preceding such election (Corp. Act, § 36). The by-laws should prescribe the number of shares to entitle the stockholders to one or more votes at all meetings of the stockholders (Corp. Act, § 17). At all meetings of stockholders and elections stockholders may vote by proxy (Corp. Act, §§ 17, 36). At an election no proxy shall be voted on after three years from its date (Corp. Act, § 36). Unless otherwise provided in the by-laws, at meetings of stock- holders other than elections, stockholders are entitled to vote on all shares held at the time of the meeting. 27. CUMULATIVE VOTING. Cumulative voting may be provided for in the certificate of incorporation, original or amended (P. L., 1900, p. 418). 28. VOTING TRUSTS. There is no statutory provision for voting trusts. Such voting pools or trusts may be created, however, where they are to continue for a limited period and are entered into for the purpose of carrying out a definite plan of conducting and managing the affairs of the corporation. Each case, however, must be decided on its own merits (see Chapman V. Bates, 61 N. J., Eq., 658; see also Warren v. Pirn, 66 N. J. Law, 353). 120 New Jersey 29. RIGHT OF STOCKHOLDERS TO INSPECT CORPORATE BOOKS. The corporation act provides that the transfer boolc and stock book required to be kept at the registered ofBce shall at all times during the usual hours for business be open to the examination of every stock- holder (Corp. Act, § 33). The Supreme Court has held, however, that the purpose of the stockholder in seeking an examination under this statute must have reference to an election of directors or otherwise be germane to his status as a stockholder, and that such right is not abso- lute (O'Hara v. National Biscuit Co., 54 Atl. Rep., 241). The common law right of a stockholder to examine the books and records of the corporation is recognized by the courts and such right will be enforced by mandamus where its exercise is sought in good faith and for a specific purpose, but in all cases the allowance of the writ is within the discretion of the court upon the facts presented in each par- ticular case (State ex rel. Bruning v. Hoboken Printing & Publishing Co., 50 Atl. Rep., 906). 30. LIABILITY OF STOCKHOLDERS. Where the whole capital of a corporation shall not have been paid in, and the capital paid shall be insufficient to satisfy its debts and obli- gations, each stockholder shall be bound to pay on each share held by him the sum necessary to complete the amount of such share, as fixed by the charter of the corporation, or such proportion of that sum as shall be required to satisfy such debts and obligations (Corp. Act, § 21). Such liability cannot be enforced by creditors until all remedies against the corporation have been exhausted and then only in a pro- ceeding in equity (Bickley v. Schlag, 46 N. J., Eq., 533), or in bank- ruptcy (Matter of Remington Automobile & JWotor Co., 153 Fed., 345). A bona-flde transfer of stock recorded on the books of the company releases the transferor from all liability on account of such shares (Hood V. McNaughton, 54 N. J. Law, 425). Stockholders are also liable to repay the amount of dividends re- ceived when such dividends are declared out of capital (Williams v. Boice, 38 N. J., Eq. 364). 31. DIRECTORS. There must be at least three directors (Corp. Act, § 12). By so providing in the certificate of incorporation the directors may be classified in respect to the time for which they shall severally hold office, the several classes to be elected for different terms, provided, however, that no class shall be elected for a shorter period than one year or for a longer period than five years, and that the term of office of at least one class shall expire in each year. The certificate of incor- poration may provide that the directors of any class shall be elected by the stockholders of any class or classes to the exclusion of the others At least one of the directors shall be an actual resident of this state (Corp. Act, § 12). . ,. u c^ . ,, At the time of his election a director must be a bona-hde stock- holder (Corp. Act, § 39). 32. CHANGE OF NUMBER OF DIRECTORS. The number of directors may be increased or decreased in the man- ner provided in the by-laws. It is not necessary to file any papers con- cerning such change. 121 New Jersey 33. STATUTORY POWERS AND FUNCTIONS OF DIRECTORS. ■ The business of every corporation shall be managed by its directors (Corp. Act, § 12). Except where the statute or the certificate of incor- poration of the company requires the assent or vote of the stockholders to be taken the directors may do any act within the powers of the cor- poration (Plaquemines Tropical Fruit Co. v. Buck, 52 N. J., Eq. 219; Ellerman v. Chicago, &c., Co., 49 N. J., Eq. 217). The courts will not interfere with the corporate acts of directors if the same are within the powers of the corporation, and in furtherance of its purposes if the same were done in good faith and in the exercise of an honest judgment (Berger v. United States Steel Corporation, 53 Atl. Rep., 68). See also Nos. 8, 10, 12, 17, 36, 39 and 40. 34. DIRECTORS' MEETINGS. The manner of calling and conducting meetings may be provided for in the certificate of incorporation or the by-laws. If the by-laws or certificate of incorporation so provide the direc- tors may hold their meetings and have an office and keep the books of the corporation (except the stock and transfer books) outside of the state (Corp. Act, § 44). 35. EXECUTIVE COMMITTEE. There is no statutory authority for the delegation of powers of directors to committees and the question has not been directly decided by the courts. Under sub-division Vll of § 8, of the Corporation Act, provision may without doubt be made in the certificate of incorporation for executive and other committees. iVlost of the important charters filed contain such provisions. 36. OFFICERS OTHER THAN DIRECTORS. Every corporation organized under this act shall have a president, secretary and treasurer, who shall be chosen either by the directors or stockholders, as the by-laws may direct, and shall hold their offices until others are chosen and qualified in their stead; the president shall be chosen from among the directors; the secretary shall be sworn to the faithful discharge of his duty, and shall record all the votes of the corporation and directors in a book to be kept for that purpose, and perform such other duties as shall be assigned to him; the treasurer shall give bond in such sum, and with such surety or sureties, as shall be required by the by-laws, for the faithful discharge of his duty (Corp. Act, § 13). The corporation may have such other officers, agents and factors, who shall be chosen in such manner and hold their office for such terms as may be prescribed in the by-laws (Corp. Act, § 14). 37. STATUTORY LIABILITIES OF DIRECTORS AND OFFICERS. Directors are liable for making unauthorized dividends or reduc- tions of capital, for failing to publish certificate of decrease of capital stock, for making loans to stockholders, for making false reports, for failing to display sign at principal office, or for breach of trust and acts of misconduct. Officers are liable for refusing to exhibit the stock book, transfer book and alphabetical list of stockholders, for making false 122 New Jersey reports or for failing to file a certificate of payment of capital stock after request so to do by a stockholder or creditor and for acts of mis- conduct. Any person, or persons, being ofBcers, directors, managers or em- ployees of any corporation or body politic, incorporated under the laws of this state, who shall wilfully use, operate or control said corporation or body politic, or suffer the same to be used for the furtherance or promotion of any object fraudulent or unlawful under the laws of this state, or who shall use the same directly or indirectly in restraint of trade or in acquiring a monopoly, when such corporation or body politic engages in interstate or intrastate commerce, shall be guilty of a mis- demeanor. (P. L. 1905, c. 257, § 2, as amended by L. 1913, c. 16.) 38. POWERS OF CORPORATIONS, (a) In General. Every corporation shall have power: (1.) To have succession; by its corporate name, for the period limited in its charter or certificate of incorporation, and when no period is limited perpetually; (2.) To sue and be sued in any court of law or equity; (3.) To make and use a common seal, and alter the same at pleasure ; (4.) To hold, purchase and convey such real and personal estate as the purposes of the corporation shall require, and all other real estate which shall have been bona-fide conveyed or mortgaged to the said cor- poration by way of security, or in satisfaction of debts, or purchased at sales upon judgment or decree obtained for such debts; and to mortgage any such real or personal estate with its franchises; the power to hold real and personal estate shall include the power to take the same by devise or bequest; (5.) To appoint such ofBcers and agents as the business of the corporation shall require, and to allow them suitable compensation; (6.) To make by-laws, fixing and altering the number of its direc- tors, and providing for the management of its property, the regulation and government of its affairs, and the transfer of its stock, with penal- ties for the breach thereof not exceeding twenty dollars; (7.) To wind up and dissolve itself, or be wound up and dissolved in manner hereafter mentioned (Corp. Act, § 1). In addition to the powers enumerated in the first section of this act and the powers specified in its charter or in the act or certificate under which it was incorporated, every corporation, its olHcers, direc- tors and stockholders, shall possess and exercise all the powers and privileges contained in this act, so far as the same are necessary or convenient to the attainment of the objects set forth in such charter or certificate of incorporation; and shall be governed by the provi- sions and be subject to the restrictions and liabilities in this act cfon- tained, so far as the same are appropriate to and not inconsistent with such charter or the act under which such corporation was formed; and no corporation shall possess or exercise any other corporate powers, except such incidental powers as shall be necessary to the exercise of the powers so given (Corp. Act, § 2). (b) Power to Borrow Money and Incur Debts; Corporate Bonds and Mortgages; Limitation of Amount of Indebtedness. Corporations have implied power to borrow money and to give security for its repayment and to make negotiable notes (Lucas v. Pit- ney, 27 N. J., Law, 221 ; Fifth Ward Sav. Bank v. First Nat. Bank, 48 N. J. Law, 513). 123 New Jersey A corporation may mortgage any of its real or personal estate with its franchises (Corp. Act, § 1). There is no statutory requirement as to the assent of stockholders to the making of corporate mortgages, and in the absence of restrictive provisions in the certificate of incorporation the directors have full power to mortgage all or any of the corporate property (Hackensack Water Co. v. DeKay, 36 N. J., Eq., 548). There is no statutory limitation as to the amount of indebtedness that may be contracted by a business corporation. (c) Power to Hold Stocks and Bonds. No corporation heretofore organized or hereafter to be organized under the provisions of this act to which this is an amendment, or the amendments thereof or supplements thereto, except as otherwise pro- vided therein or thereby, shall hereafter purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of the shares of the corporate stock of any other corporation or corporations of this or any other state, or of any bonds, securities or other evidences of indebted- ness created by any other corporation or corporations of this or any other state, nor as owner of such stock exercise any of the rights, powers and privileges of ownership, including the right to vote thereon. Provided, that nothing herein contained shall operate to prevent any corporation or corporations from acquiring the bonds, securities or other evidences of indebtedness created by any non-competing corporation in payment of any debt or debts due from any such non-competing cor- poration; nor to prevent any corporation or corporations created under the laws of this state from purchasing as a temporary investment out of its surplus earnings, reserved under the provisions of this act, as a working capital, bonds, securities or evidences of indebtedness created by any non-competing corporation or corporations of this or any other state, or from investing in like securities any funds held by it for the benefit of its employees or any funds held for insurance, rebuilding or depreciating purposes; nor to prevent any corporation or corporations created under the laws of this state from purchasing the bonds, secur- ities or other evidences of indebtedness created by any corporation the stock of which may lawfully be purchased under the authority given by section forty-nine (see No. 17 above) of the act entitled "An act concerning corporations (Revision of 1896) ;" provided, also, that nothing herein contained shall be held to affect or impair any right heretofore acquired in pursuance of the section hereby amended, by any corporation created under the laws of this state. (Corp. Act, § 51, as amended by L. 1913, c. 18.) No public utility as herein defined incorporated under the laws of this state shall sell, nor shall any such public utility make or permit to be made upon its books any transfer of any share or shares of its capital stock to any other public utility as herein defined unless author- ized to do so by the board. Nor shall any public utility as herein defined incorporated under the laws of this state sell any share or shares of its capital stock or make or permit any transfer thereof to be made upon its books, to any corporation, domestic or foreign, result of which sale or transfer in itself or in connection with other previous sales or trans- fers shall be to vest in such corporation a majority in interest of the outstanding capital stock of such public utility corporation unless auth- orized to do so by the board. Every assignment, transfer, contract or agreement for assignment or transfer by or through any person or corporation to any corporation in violation of any of the provisions hereof shall be void and of no effect, and no such transfer shall be made on the books of any public utility corporation. Nothing herein contained shall be construed to prevent the holding of stock heretofore lawfully acquired. (Public Utility Commission Act, P. L. 1911, c. 195, p. 374.) 124 New Jersey A corporation may acquire and hold its own shares, but such shares may not be voted upon directly or indirectly (Corp. Act, §§ 29, 38; Chapman v. Ironclad Rheostat Co., 62 N. J. Law, 407). (d) Power to Carry on Business Without the State. Any corporation of this state may conduct business, have one or more offices, and hold, purchase, mortgage and convey real and personal property outside of this state in any of the several states, territories, possessions and dependencies of the United States, the District of Columbia, and in foreign countries, provided such powers are included within the objects set forth in its certificate of incorporation (Corp. Act, § 7; P. L., 1905, c. 263). 39. CONSOLIDATION AND MERGER WITH OTHER COR- PORATIONS. Any two or more corporations organized for the purpose of carry- ing on any kind of business of the same or a similar nature may merge or consolidate into a single corporation, which may be either one of said merging or consolidating corporations or a new corporation to be formed by means of such merger and consolidation (Corp. Act, § 104). The directors of the consolidating corporations may enter into a joint agreement under the corporate seals of the respective corporations, providing for the terms and conditions of such consolidation; such agreement must be submitted to the stockholders of each of the cor- porations separately at a meeting thereof called for the purpose of taking the same into consideration. Twenty days' notice of the time, place and object of such meeting must be mailed to the last known post- office address of each stockholder. If the votes of the holders of two- thirds of all the capital stock of each of the corporations shall be for the adoption of said agreement that fact shall be certified thereon by the secretary of each of the respective corporations under the seal thereof, and the agreement so adopted and so certified must be filed in the office of the secretary of state (Corp. Act, § 105). Dissenting stockholders may petition the court to have their stock appraised, and such appraisement has the effect of a judgment against the consolidated corporation (P. L., 1902, p. 700). A merger of corporations made under the provisions of the act to which this act is a supplement, shall not in any manner impair the rights of any creditor of either of the merged corporations. (L. 1913, c. 19, § 1.) Before any merger of corporations can be made, the approval there- of in writing by the Board of Public Utility Commissioners of this state shall be obtained by said corporations and filed in the office of the secretary of state, with the names of the directors of each of said corporations which assent to the merger. (Id., § 2.) Every corporation, and the directors thereof, procuring or assenting to such merger without complying with the provisions hereinbefore con- tained, shall be guilty of a misdemeanor and punishable accordingly. (Id., § 3.) When two or more corporations are merged or consolidated the consolidated corporation shall have power and authority to issue bonds or other obligations, negotiable or otherwise, and with or without coupons or interest certificates thereto attached, to an amount sufficient with its capital stock to provide for all the payments it will be required to make or obligations it will be required to assume, in order to effect such merger or consolidation; to secure the payment of which bonds or obligations it shall be lawful to mortgage its corporate franchises, rights, privileges and property, real, personal and mixed; provided, such bonds shall not bear a greater rate of interest than six per centum per annum ; the consolidated corporation may issue capital stock, either common or 125 New Jersey preferred, or both, to such an amount as may be necessary, to the stock- holders of such merging or consolidating corporations in exchange or payment for their original shares, in the manner and on the terms speci- fied in the agreement of merger or consolidation; which may fix the amount and provide for the issue of preferred stock based on the prop- erty or stock of the merging or consolidating corporations conveyed to the consolidated corporations, as well as upon money capital paid in. (C. A., § 109, as amended by L. 1913, c. 17.) 40. DISSOLUTION AND SURRENDER OF FRANCHISE. Whenever in the judgment of the board of directors, it shall be deemed advisable and most for the benefit of such corporation that it should be dissolved, the board, within ten days after the adoption of a resolution to that effect by a majority of the whole board at any meet- ing called for that purpose, of which meeting every director shall have received at least three days' notice, shall cause notice of the adoption of such resolution to be mailed to each stockholder residing in the United States, and also beginning within said ten days cause a like notice to be published in a newspaper pubhshed in the county wherein the corporation shall have its principal office, at least four weeks succes- sively, once a week, next preceding the time appointed for the same, of a meeting of the stockholders to be held at the ofBce of the corpora- tion, to take action upon the resolution so adopted by the board of directors, which meeting shall be held between the hours of ten o'clock in the forenoon and three o'clock in the afternoon of the day so named, and which meeting may, on the day so appointed, by consent of a majority in interest of the stockholders present be adjourned from time to time for not less than eight days at any one time, of which adjourned meeting notice by advertisement in said newspaper shall be given; and if at any such meeting two-thirds in interest of all the stockholders shall consent that a dissolution shall take place and signify their consent in writing, such consent, together with a list of the names and residences of the directors and officers, certified by the president and the secretary or treasurer, shall be filed in the office of the secretary of state, who, upon being satisfied by due proof that the requirements aforesaid have been complied with, shall issue a certificate that such consent has been filed, and the board of directors shall cause such certificate to be pub- lished for four weeks successively, at least once a week, in a newspaper published in said county; and upon the filing in the office of the sec- retary of state of an affidavit that said certificate has been so published, the corporation shall be dissolved and the board shall proceed to settle up and adjust its business and affairs; whenever all the stockholders shall consent in writing to a dissolution, no meeting or notice thereof shall be necessary, but on filing said consent in the office of the secre- tary of state he shall forthwith issue a certificate of dissolution, which shall be published as above provided (Corp. Act, § 31). The incorporators named in any certificate of incorporation, before the payment of any part of the capital, and before beginning the busi- ness for which the corporation was created, may surrender all their corporate rights and franchises by filing in the office of the secretary of state a certificate, verified by oath, that no part of the capital has been paid and such business has not been begun, and surrendering all rights and franchises, and thereupon the said corporation shall be dis- solved (Corp. Act, § 32). Hereafter no corporation organized under any law of this state shall be dissolved by its stockholders until all taxes levied upon or assessed against such corporation by the state of New Jersey in accor- dance with the provisions of an act entitled "An act to provide for the imposition of state taxes upon certain corporations and for the collection thereof," approved April eighteenth, one thousand eight hundred and eighty-four, and all acts amendatory thereof or supplementary thereto, 126 New Jersey shall have been fully paid, and a certificate to that effect, signed by the comptroller of the treasury, shall have been annexed to and filed with the certificate of dissolution. (P. L., 1900, p. 316.) 41. FORFEITURE OF CHARTER. If a corporation fails to bring its books into the state, after being ordered so to do by the Court of Chancery or the Supreme Court its charter may be declared forfeited by the court making such order (Corp. Act, § 44). The charter of any corporation neglecting or refusing for two con- secutive years to pay state taxes may be declared void by proclamation of the Governor (P. L., 1896, p. 319; P. L., 1905, c. 259). Where a corporation exercises powers not authorized by its charter the attorney general may take proceedings against the corporation to compel it to cease from exercising such powers or to revoke the charter (Camden and Atlantic R. R. Co. v. iWays Landing, etc., R. R. Co., 48 N. J. Law, 530). See also Anti-trust law of 1913 (P. L., 1913, c. 13). 42. FOREIGN CORPORATIONS; HOW AUTHORIZED TO DO BUSINESS. Foreign corporations are permitted to carry on business in this state upon complying with the following requirements: A copy of the charter or certificate of incorporation of the corpora- tion attested by the president and secretary, under the corporate seal, and a statement attested in like manner of the amount of capital stock authorized and the amount actually issued, the character of the business which it is to transact in this state, and designating its principal ofBce in this state and an agent who shall be a domestic corporation or a natural person of full age actually resident in this state, together with his place of abode, upon which agent process against such corporation may be served, must be filed in the office of the secretary of the state, together with a statement or report in the same form as the annual report required to be made by domestic corporations (see No. 14 above) (Corp. Act, § 97). Upon filing the above papers and paying the fees as hereinafter provided the secretary of state will issue to such corporation a certifi- cate that it is authorized to transact business in this state (Corp. Act, § 97). The fees of the secretary of state for filing the above papers are $1.0Cr for the report, a recording fee of ten cents per folio, and a fee equal in amount to the fee or tax which a New Jersey corporation having the same authorized capital stock would be required to pay in the state where such foreign corporation was incorporated for the privilege of doing business in that state (see No. 48 below). The minimum fee is $10.00 (Corp. Act, § 114). Annually thereafter within thirty days after the time fixed for holding the annual meeting of the stockholders of the company a report must be filed (see No. 14 above). 43. FOREIGN CORPORATIONS; PENALTY FOR DOING BUSINESS WITHOUT AUTHORITY. Until such corporation so transacting business in this state shall have obtained a certificate of the secretary of state it shall not maintain any action in this state upon any contract made by it in this state (Corp. Act, § 98). Such corporation is also subject to a penalty of $200 for each offense for transacting business without authority (Corp. Act, § 100). 127 New Jersey 44. FOREIGN CORPORATIONS; APPOINTMENT OF STATU- TORY RESIDENT AGENT OR ATTORNEY. See No. 42 above. 45. FOREIGN CORPORATIONS; BOOKS TO BE KEPT IN THE STATE. No statutory reauirement. 46. FOREIGN CORPORATIONS; PENALTY FOR NEGLECT OR REFUSAL TO KEEP OR EXHIBIT BOOKS. No statutory requirement. 47. FOREIGN CORPORATIONS; LIABILITY TO ATTACH- MENT. Foreign corporations which have obtained authority to do business in the state are not subject to attachment merely because they are for- eign corporations. Foreign corporations which have not obtained auth- ority are subject to attachment at all times (P. L., 1901, p. 158). 48. FRANCHISE TAXES OR LICENSE FEES PAYABLE BY DOMESTIC AND FOREIGN CORPORATIONS; EXEMPTIONS. An annual state tax is imposed on the issued and outstanding cap- ital stock of domestic business corporations as follows (P. L., 1906, c. 19) : On all amounts up to and including $3,000,000, one-tenth of one per cent. Over $3,000,000 but not over $5,000,000, one-twentieth of one per cent. For each additional $1,000,000 the sum of $50. A report must be filed with the State Board of Assessors, Trenton, New Jersey, on or before the first Tuesday of May in each year, stating the amount of capital stock issued and outstanding on the first day of January preceding the making of such report, together with such other information as may be required by the Board (P. L., 1906, c. 19). The amount of the tax must be paid to the State Comptroller on or before the first day of July, interest at the rate of one per cent, a month be- ginning to run from that date (Tax Act, § 5). The statute exempts the following corporations from payment of the annual franchise tax: Manufacturing or mining corporations at least fifty per cent, of whose capital stock issued and outstanding is invested in mining or manufacturing carried on within this state, and which mining or manu- facturing corporations shall have stated in the annual return to the State Board of Assessors where the mine or manufacturing establish- ment of such corporation or corporations is or are located, the character of the ores mined or the goods manufactured, the total amount of its capital stock embarked in the business of mining or manufacturing and the amount of capital stock actually employed in New Jersey in carrying on such mining or manufacturing business (P. L., 1906, c. 19). Such corporations having less than fifty per cent, of their capital stock so invested are entitled to a deduction from the amount of their assessable capital stock of the assessed value of their real and personal estate used in manufacturing or mining in the state (P. L., 1906, c. 19). As to foreign corporations the only statutory provision as to annual license fees is the following: 128 New Jersey When, by the laws of any other state or nation, any other or greater taxes, fines, penalties, licenses, fees or other obligations or requirements are imposed upon corporations of this state doing business in such other state or nation, or upon their agents therein, than the laws of this state impose upon their corporations or agents doing busi- ness in this state, so long as such laws continue in force in such foreign state or nation, the same taxes, fines, penalties, licenses, fees, obligations and requirements of whatever kind shall be imposed upon all corpora- tions of such other state or nation doing business within this state and upon their agents here; provided, that nothing herein shall be held to repeal any duty, condition or requirement now imposed by law upon such corporations of other states or nations transacting business in this state (Corp. Act, § 101). This law is not enforced so far as annual state taxes are concerned, and no such taxes are collected from foreign business corporations. This provision of the statute is applied, however, when a foreign cor- poration files papers in the office of the secretary of state to authorize it to do business in New Jersey, and it is required to pay the same fee as would be payable by a New Jersey corporation in the state where such foreign corporation was incorporated. 49. TAXATION OF PROPERTY OF DOMESTIC AND FOR- EIGN CORPORATIONS. All real and personal property of a corporation is taxed the same as the real and personal property of an individual (Corp. Act, § 110). Tangible personal property is assessed and taxed in the tax district where such property is found. Other personal property where the prin- cipal office is located (P. L., 1903, c. 394, § 11). Real estate is assessed where situated (P. L., 1903, c. 394, § 6). Foreign corporations regularly doing business in this state are as- sessed for the amount of capital usually employed in this state in the doing of such business, and not otherwise taxed as real property or tangible personal property, in the tax district where such business is most usually carried on and transacted (P. L., 1903, c. 394, § 16). Real estate is taxed where located (Id., § 6). Tangible personal property is assessed in the tax district where found (Id., § II). JVlortgages owned by corporations are exempt from taxation (Id., § 16). All property is assessed as of the 20th day of May in each year (Id., § 5), and taxes must be paid before the 20th day of December following (Id., § 42). 50. TAXATION OF SHARES OF STOCK, (a) Generally. The following property shall be exempt from taxation under the Revised Tax Act of 1903, namely: (5) The shares of stock of any corporation of this state, which by contract with the state is expressly exempted from taxation, and the shares of stock of any corporation of this state the capital or property whereof is made taxable to and against said corporation. (P. L., 1903, c. 208, Art. 1, § 3.) The stock of a foreign corporation is exempt from taxation in the hands of a, resident holder when taxes have been assessed and paid on the corporation's property in the state of its domicile within twelve months. (Trenton v. Standard Fire Insurance Co., 77 N. J. Law, 757; 73 Atl. 606.) 129 New Jersey (b) Tax on Transfers. No tax is imposed on transfers of shares, (c) Inheritance and Succession Taxes on Shares of Stock. There is now both a direct and collateral transfer inheritance tax. Estates of resident decedents are taxable in respect to shares of domestic and foreign corporations. Estates of non-resident decedents are taxable in respect to shares of domestic corporations. (P. L., 1914, c. 151, amending P. L., 1909, c. 228.) No safe deposit company, trust company, corporation, bank or other institution, person or persons having in possession or under control securities, deposits or other assets belonging to or standing in the name of a decedent who was a resident, or belonging to or standing in the joint names of such a resident decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other insti- tution making the delivery or transfer herein provided, or shares of stock of corporations of this state or of national banking associations located in this state belonging to or standing in the name of a non-resident decedent or in the joint names of such non-resident decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer herein provided, shall deliver or transfer the same to the executors, administrators or legal representatives of said decedent, or to the survivor or survivors when held in the joint names of a decedent and one or more persons, or upon their order or request, unless notice of the time and place of such intended delivery or transfer be served upon the comptroller of the treasury of this state at least ten days prior to said delivery or transfer; nor shall any such safe deposit company, trust company, corporation, bank or other institution, person or persons deliver or trans- fer any securities, deposits or other assets belonging to or standing in the name of a resident decedent, or belonging to or standing in the joint names of a resident decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, or of shares of stock of corporations of this state or of national banking associations located in this state belonging to or standing in the name of a non-resident decedent or in the joint names of such non-resident decedent and one or more persons, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other institution making the delivery or transfer, without retaining a sufficient portion or amount thereof to pay any tax and interest which may thereafter be assessed on account of the delivery or transfer of such securities, deposits, shares of stock, or other assets, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corpora- tion, bank or other institution, making the delivery or transfer, under the provisions of this act, unless the comptroller of the treasury consents thereto in writing. And it shall be lawful for the said comptroller of the treasury, either personally or by representative, to examine said securi- ties, deposits or assets of a resident decedent, and the shares of stock aforesaid of a non-resident decedent, at the time of such delivery or transfer. Failure to serve such notice or failure to allow such examina- tion, or failure to retain a sufficient portion or amount to pay such tax and interest as herein provided shall render said safe deposit company, trust company, corporation, bank or other institution, person or persons liable to the payment of the amount of the tax and interest due or thereafter to be- come due upon said securities, deposits, shares, of stock, or other assets, including the shares of the capital stock of, or other interests in, the safe deposit company, trust company, corporation, bank or other insti- tution making the delivery or transfer, and in addition thereto a penalty 130 New Jersey of one thousand dollars; which liability for such tax and interest, or the penalty above prescribed, or both, shall be enforced in an action of debt in the name of the State of New Jersey, and the same, when recovered, shall be paid into the treasury of the State of New Jersey, for the use of the State. (P. L., 1914, c. 151, § 12.) APPENDIX. TAXES AND FEES PAYABLE ON FILING AND RECORDING CERTIFICATES RELATIVE TO CORPORATIONS IN THE DEPARTMENT OF STATE. Original Certificates of Organization and Certificate of Extension of Corporate Existence. If capital stock authorized does not exceed $125,000 $25.00 If capital stock exceeds $125,000, 20 cents for each $1,000 of the total amount of capital stock authorized. Recording fee, 10 cents per folio of 100 words. Increase of Capital Stock. If increase does not exceed $100,000 $20.00 If exceeding $100,000, 20 cents for each $1,000 of the total increase authorized. Recording fee, 10 cents per folio of 100 words. Consolidation and Merger of Companies. Twenty cents for each $1,000 of capital authorized beyond the total authorized capital of the companies merged or consoli- dated ; but in no case less than $20.00 Recording fee, 10 cents per folio of 100 words. Certificates of Dissolution, Change of Name, Change of Nature of Business, Amended Certificates of Organization (other than those au- thorizing increase of capital stock). Decrease of Capital Stock, Increase or Decrease of Par Value or of Number of Shares $20.00 Recording fee, 10 cents per folio of 100 words. Report of Officers and Directors $1.00 No recording fee required. All Other Certificates $5.00 Recording fee, 10 cents per folio of 100 words. Certified Copies Certified Copy of Certificates will be from $2.00 to $3.00, but if copy accompanies original it will be compared, certified and returned by first mail, at a charge of $1.00. Remittances, All remittances must be by cash, draft or certified check. 131 NEW YORK. 1. STATUTES UNDER WHICH BUSINESS COMPANIES ARE INCORPORATED AND REGULATED. Business corporations are organized under tlie Business Corporations Law (cited iierein as B. C. L.), being Chapter 4 of the Consohdated Laws of 1909. Such corporations are also subject to the provisions of the General Corporation Law (cited herein as G. C. L.), being Chapter 23 of the Consolidated Laws of 1909, and of the Stock Corporation Law (cited herein as S. C. L.), being Chapter 59 of the Consolidated Laws of 1909. Such corporations are taxed according to the provisions of the Tax Law (cited herein as Tax L.), being Chapter 60 of the Consoli- dated Laws of 1909. 2. PURPOSES FOR WHICH BUSINESS COMPANIES MAY BE FORMED. Any lawful business purpose or purposes other than banking, insur- ance, railroad or other transportation business, or an educational institu- tion or corporation which may be incorporated as provided in the educa- tion law (B. C. L., § 2). Co-operative corporations are formed under article 3 of the Business Corporations Law, added by L. 1913, c. 454. No corporation shall be organized for the purpose of practicing law (B. C. L, § 2a, added by L. 1909, c. 484). A business corporation is not limited to one object or purpose, but may be formed to carry on as many different kinds of business as are set forth in the certificate of incorporation, and in order to attain its legitimate objects may deal, precisely as an individual may who seeks to accomplish the same ends. 3. INCORPORATORS. Three or more natural persons of full age, at least two-thirds of whom must be citizens of the United States, and at least one a resident of the state of New York may form a business corporation (G. C. L., § 4). Each incorporator must subscribe for at least one share of stock (B. C. L, § 2). 4. ORGANIZATION TAX, OFFICIAL FEES AND INCIDENTAL EXPENSES. An organization tax of one-twentieth of one per cent, or fifty cents per $1,000 of the total authorized capital stock stated in the certificate of incorporation (minimum tax, $5) must be paid to the state treasurer (Tax L., § 180, as amended by L. 1910, c. 472). The secretary of state's fee for filing the certificate of incorporation is $10, and for recording 15 cents per folio of one hundred words. The fee of the county clerk for filing the certificate is 6 cents and for recording 10 cents per folio. 5. METHOD OF INCORPORATION. First Step. Preparation, execution, acknowledgment and authen- tication of certificate of incorporation. Prepare and have signed and acknowledged by the incorporators duplicate original certificates of incorporation and prepare an additional 133 New York copy (making three in all) completed as to signatures and dates. By executing the certificate in duplicate the expense of a certified copy for filing with the county clerk is saved, as explained later. Before filing carefully compare the duplicate originals and see that they are identical in every respect. The certificate of incorporation shall contain (B. C. L., § 2) : (1.) The name of the proposed corporation. The name must indi- cate that It is a corporation (see No. 9 below) and must not conflict with the name of any existing domestic corporation or of any foreign corpora- tion authorized to do business in this state (G. C. L., § 6). As to this, inquiry by letter to Secretary of State, Albany, N. Y., will receive prompt reply. The words "trust," "bank," "banking," "insurance," "assur- ance," "indemnity," "guarantee," "guaranty," "title," "savings," invest- ment," "loan," or "benefit" cannot be included in the name (G. C. L., §6). (2.) The purpose or purposes for which it is to be formed. (3.) The amount of the capital stock, and if any portion be pre- ferred stock the preferences thereof (see No. 21 below). (4.) The number of shares of which the capital stock shall consist, each of which shall not be less than five nor more than one hundred dol- lars, and the amount of capital not less than five hundred dollars, with which said corporation will begin business. (See also Appendix A below as to providing for shares without nominal or par value.) (5.) The city, village or town in which its principal business office is to be located. If it is to be located in the City of New York, the bor- ough therein in which it is to be located. (6.) Its duration (see No. 6 below). (7.) The number of its directors, not less than three. (8.) The names and post-office addresses of the directors for the first year (see No. 31 below). (9.) The names and post-ofHce addresses of the subscribers to the certificate, and a statement of the number of shares of stock which each agrees to take in the corporation. If meetings of the directors are to be held only within the state the certificate or by-laws must so provide. The certificate may contain any other provision for the regulation of the business and conduct of the affairs of the corporation and any limitation upon its powers, and upon the powers of its directors and stockholders which does not exempt them from any obligation or from the performance of any duty imposed by law (G. C. L., § 10, subd. 2). Clauses may be inserted giving the corporation power to hold stock in other corporations (S. C. L., § 52); providing for cumulative voting (G. C. L., § 23) ; providing that directors need not be stockholders (S. C. L., § 25); limiting the voting power of stockholders (G. C. L., § 10). The certificate of incorporation may also provide, if the duration of the corporation is limited, that the consent of stockholders owning a greater percentage than two-thirds of the capital stock shall be requisite to effect an extension of corporate existence (G. C. L., § 37). Each of the duplicate originals must be signed by at least three sub- scribers to stock, who must be natural persons twenty-one years of age or over, two-thirds of whom must be citizens of the United States and at least one a resident of the state of New York (B. C. L., § 2; G. C. L., § 4). The same persons may be subscribers to the certificate and directors for the first year. It is not necessary, however, that the directors named shall also be incorporators or subscribers for stock (Hamilton Trust Co. V. Clemes, 163 N. Y., 423). The subscribers must acknowledge the making, signing and execution of each duplicate original before a notary public or other officer author- ized by law to take the acknowledgment of deeds (see Real Property Law, § 298, et seq.), 134 New York Where an acknowledgment is taken in one county and the duplicate original certificate is to be filed in the office of the clerk of another county, it is necessary to attach a certificate of the clerk of the county in which the acknowledgment is taken authenticating the signature of the notary or other officer taking ,the acknowledgment (Real Property Law, § 310). A county clerk's certificate is not required to be attached to the original filed with the secretary of state. If executed out of the state, the acknowledgment may be taken by a commissioner of deeds for New York in the state where taken, or before ^ officer authorized by the laws of such state to take the acknowledg- ment of deeds therein. Where an acknowledgment is taken out of the state it is necessary to attach to the certificate of the acknowledgment a certificate under the seal of a court of record authenticating the signature of the officer taking the acknowledgment (Real Property Law, §§'311,312). Second Step. Payment of organization tax to state treasurer and filing the certificate of incorporation in the office of the secretary of state. One of the duplicate originals is sent to the Secretary of State at Albany, N. Y. (G. C. L., §5), with a check or money order for the exact amount of his filing and recording fees, viz: Filing fee, $10 in every case. Recording fee, 15 cents per folio of one hundred words contained in the certificate (Executive Law, § 26). At the same time send check (check must be certified) or money order for the organization tax at the rate of 50 cents per $1,000 of authorized capital stock (minimum tax $5) to the State Treasurer, Albany, N. Y. (Tax L., § 180). Do not send check for organization tax to the secretary of state. If the certificate of incorporation is in proper form the secretary of state notifies the state treasurer, who issues duplicate receipts for the tax, delivers one to the secretary of state, and forwards the other to the person who paid the tax. The secretary of state attaches the duplicate tax receipt to the certificate of incorporation in his possession, stamps thereon the amount and date of payment of the tax, files and records the certificate of incorporation, and notifies the person from whom he re- ceived it of such filing. The secretary of state prefers that all papers filed in his office be written or typewritten on legal size paper, the files being arranged for papers of that size. Third Step. Filing the duplicate original certificate of incorpora- tion in the office of the county clerk. The other duplicate original may now be filed in the office of the clerk of the county in which the principal office as stated in the cer- tificate of incorporation is located. The dupHcate receipt of the state treasurer must be attached — the certificate will not be filed without it (G. C. L., § 5). The county clerk's fees are: Filing fee, 6 cents. Recording fee, 10 cents per folio of one hundred words contained in the certificate (Code C. P., § 3304). Fourth Step. Completing the organization. The incorporation of the company is now complete. In order that the company may at all times have at hand the legal proof of its in- corporation (Code C. P., § 933), the copy of the certificate of incorpora- tion provided for in the First Step above should be forwarded to the secretary of state either at the time of sending the original, or later, with the request that he certify and return it. The fees for certification are 15 cents for each 100 words and one dollar for affixing the seal. This copy should also be certified by the county clerk in whose office the other duplicate original is filed. In lieu of the duplicate original it is permissible to file in the county clerk's office with the duplicate tax receipt a copy of the certificate of 135 New York incorporation certified by the secretary of state. It is less expensive, however, to file a duplicate original. There is no statutory provision for a meeting of the incorporators. It is customary, however, to hold a meeting of the subscribers to the certificate of incorporation and the other subscribers for stock, if any. At this meeting by-laws are adopted, and resolutions are passed authorizing the issue of the shares of stock, either for cash or for the purchase of property, or both. A meeting of the directors named in the certificate of incorporation is then held and the by-laws adopted by the subscribers are approved and re-adopted, officers for the first year are appointed (S. C. L., § 30), their salaries are fixed, bond of treasurer and other officers if required provided for (S. C. L., § 30), resolutions adopted authorizing the issue of the shares of stock, for cash or for the purchase of property,, or both (S. C. L., §' 55), appointing a bank or trust company as depository of the funds of the company and providing how checks shall be signed, providing for the payment of organization expenses, adopting forms of certificates of stock ,(S. C. L., § 55), and appointing at least two inspectors of election (S. C. L., § 31), to act at the first annual election of directors and at stockholders' meetings to be held during the first year. When shares of stock are issued for property purchased by the corporation, the resolutions of the directors relating to such purchase should be carefully framed, and if any of the directors or promoters of the company are interested in such sale, such interest should be dis- closed and recorded in the minutes. Any other matters requiring the action of the directors may be attended to at this meeting. 6. COMMENCEMENT AND DURATION OF CORPORATE EXISTENCE. The corporate existence begins at the time of filing and recording the certificate of incorporation. The duration must be specified in the certificate of incorporation and may be perpetual or for a term of years (G. C. L., §> 11). 7. EXTENSION OF CORPORATE EXISTENCE. The corporate existence may be extended with the consent of two- thirds in interest of the stockholders, expressed in writing or by vote at a meeting called for the purpose. A certificate that such consent was given must be made by the president or a vice-president and the secre- tary or an assistant secretary, sealed with the corporate seal, acknowl- edged and filed in the same manner as the original certificate of incor- poration (see G. C. L., §' 37 as amended by L. 1913, c. 306). 8. AMENDMENT OF ARTICLES OF INCORPORATION. Any stock corporation heretofore or hereafter organized unSer any general or special law of this state may alter its certificate of incorpora- tion so as to include therein any purposes, powers or provisions which at the time of such alteration may apply to corporations engaged in a business of the same general character, or which might be included in the certificate of incorporation of a corporation organized under any general law of this state for a business of the same general character, by filing in the manner provided for the original certificate of incorporation an amended certificate, executed by the president and secretary, stating the alteration proposed and that the same has been duly authorized by a vote of a majority of the directors and also by a vote of stockholders representing at least three-fifths of the capital stock, at a meeting of the stockholders called for the purpose in the manner provided in section sixty-three of this chapter (see No. 19 below), and a copy of the pro- 136 New York ceedings of such meeting, verified by the affidavit of one of the directors present thereat, shall be filed with such amended certificate (S. C. L., §' 18). As to amendments to cure defects and correct informalities, see G. C. L., § 7. See also Nos. 9, 10, 18, 19, 20, 21 and 32 below. 9. CORPORATE NAME. No certificate of incorporation of a proposed corporation having the same name as a corporation authorized to do business under the laws of this state, or a name so nearly resembling it as to be calculated to deceive, shall be filed or recorded in any office for the purpose of effect- itig its incorporation, or of authorizing it to do business in this state; nor shall any corporation except a religious, charitable or benevolent corporation be authorized to do business in this state unless its name has such word or words, abbreviation, affix or prefix, therein or thereto, as will clearly indicate that it is a corporation as distinguished from^ a natural person, firm or copartnership; or unless such corporation uses with its corporate name, in this state, such an affix or prefix. A corpora- tion formed by the reincorporation, reorganization, or consolidation of other corporations or upon the sale of the property or franchises of a corporation, or a corporation acquiring or becoming possessed of all the estate, property, rights, privileges or franchises of any other corporation or corporations by merger, may have the same name as the corporation or one of the corporations to whose franchises it has succeeded. No corporation shall be hereafter organized under the laws of this state with the word trust, bank, banking, insurance, assurance, indemnity, guarantee, guaranty, title, casualty, surety, fidelity, savings, investment, loan, or benefit as part of its name, except a corporation formed under the banking law or the insurance law.. . . (G. C. L., §' 6, as amended by L. 1911, c. 638, L. 1912, c. 2, and L. 1913, c. 24.) The name must contain either the word "corporation" or "incorporated," or an abbrevia- tion thereof. The name may be changed only by special act of the legislature or by a special proceeding for the purpose in the supreme court. 10. PRINCIPAL OFFICE. The name of the city, town or village in which the principal office is to be located must be specified in the certificate of incorporation (B. C. L., §' 2). There is no statutory requirement for specifying the street and number address of the corporation in papers filed. If the principal office is changed to another city, town or village a certificate of such change authorized by the stockholders at a special meeting called for the purpose must be filed in the office of the secretary of state and dupli- cates in the offices of the clerks of the counties to and from which the removal is made. Such change may also be effected by unanimous con- sent in writing of the stockholders (S. C. L., §' 13). The place so desig- nated as the principal office fixes the residence of the corporation for the purposes of taxation, and the corporation is taxed on its personal prop- erty only at such place, although it may actually be located elsewhere (Tax L., §■ 11). 11. STATUTORY RESIDENT AGENT OR ATTORNEY. No statutory provision on this subject. 12. BY-LAWS. The by-laws may be adopted by the stockholders and subject to the by-laws, if any, adopted by the stockholders, the directors may make necessary by-laws. By-laws adopted by the stockholders control the action of the directors (G. C. L., § 11). The statute requires by-laws 137 New York made by the directors which regulate elections of the directors to be published at least once a week for two successive weeks in a newspaper in the county where such election is to be held at least thirty days be- fore such election (G. C. L., §' 11). For this reason the by-laws are usually adopted by the incorporators and subscribers for stock at their first meeting (see No. 5 above). When the directors of any corporation for the first year of its cor- porate existence shall hold over and continue to be directors after the first year, because of their neglect or refusal to adopt the by-laws re- quired to enable the stockholders to hold the annual election for direc- tors, all their acts and proceedings while so holding over, done for and in the name of the corporation, designed to charge upon it any liability or obligation for the services of any such director, or any officer or attorney or counsel appointed by them, and every such liability or obliga- tion shall be held to be fraudulent and void (S. C. L., § 27). Every corporation has power as such to make by-laws not incon- sistent with any existing law, for the management of its property, the regulation of its affairs, and the transfer of its stock, if it has any, and the calling of meetings of its members. Such by-laws may also fix the amount of stock, which must be represented at meetings of the stock- holders in ofder to constitute a quorum, unless otherwise provided by law (G. C. L., §■ 11, sub. 5). The by-laws may also prescribe the manner of appointing inspectors of election (S. C. L., § 31) ; may require directors' meetings to be held within the state (B. C. L., § 2) ; may prescribe the duties of the officers. By-laws for the following purposes may be made by the stockholders only: Fixing the number of directors necessary to constitute a quorum at less than a majority, but not less than one-third (G. C. L., § 34). Providing that directors need not be stockholders (S. C. L., §' 25). Prescribing a period, not exceeding forty days, before a meeting, during which transfers of stock shall not be made (G. C. L., §' 23). 13. CORPORATE BOOKS AND RECORDS. Every stock corporation shall keep at its office correct books of account of all its business and transactions, and a book to be known as the stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. The stock book of every such corporation shall be open daily, during at least three business hours, for the inspection of its stockholders and judgment creditors, who may make extracts there- from. No transfer of stock shall be valid as against the corporation, its stockholders and creditors for any purpose, except to render the trans- feree liable for the debts of the corporation to the extent provided for in this chapter, until it shall have been entered in such book as required by this section, by an entry showing from and to whom transferred. The stock book of every such corporation and the books of account of every bank shall be presumptive evidence of the facts therein so stated in favor of the plaintiff in any action or proceeding against such cor- poration or any of its officers, directors, or stockholders (8. C. L., § 32). Every corporation that shall neglect or refuse to keep or cause to be kept such books, or to keep any book open for inspection, as herein required, shall forfeit to the people the sum of fifty dollars for every day it shall so neglect or refuse. If any officer or agent of any such cor- poration shall wilfully neglect or refuse to make any proper entry in such book or books, or shall neglect or refuse to exhibit the same, or to allow them to be inspected and extracts taken therefrom, as provided in this section, the corporation and such officer or agent shall each forfeit 138 New York and pay to the party injured a penalty of fifty dollars for every such neglect or refusal, and all damages resulting to him therefrom (S. C. L., § 32). See also provision of Stock Transfer Tax law as to keeping records of transfers, Appendix B below. 14. ANNUAL REPORTS. Every domestic stock corporation and every foreign stock corpora- tion doing business within this state, except moneyed and railroad corporations, shall annually, during the month of January, or, if doing business without the United States, before the first day of "May, may make a report as of the first day of January, which will state: (1.) The amount of its capital stock and the proportion actually issued (see No. 17 below as to reporting stock issued for property pur- chased). (2.) The amount of its debts or an amount which they do not exceed. (3.) The amount of its assets or an amount which its assets at least equal. ,(4.) The names and addresses of all the directors and officers of the company, and in the case of a foreign corporation, the name also of the person designated in the manner prescribed by the code of civil procedure, as a person upon whom process against the corporation may be served within this state. Such report shall be made by the president or a vice-president or the treasurer or a secretary of the corporation, and shall be filed in the office of the secretary of state. If such report be not so made and filed, any such officer who shall thereafter neglect or refuse to make and to file such report, within ten days after the written request so to do shall have been made by a creditor or by a stockholder of the corporation, shall forfeit to the people the sum of fifty dollars for every day he shall so neglect or refuse (S. C. L., § 34). After each annual election of directors, a certificate of the inspectors showing the result of the election must be filed with the oath of the inspectors in the office of the clerk of the county in which the election is held (S. C. L., § 31). 15. CAPITAL STOCK. There is no maximum limit; minimum, five hundred dollars (B. C. L., §2). At least one-half of the capital stock must be paid in within one year from incorporation, and within thirty days after such payment a certificate signed and acknowledged by a majority of the directors and verified by the president or vice-president and the secretary or treasurer must be filed in the office of the secretary of state and in the office of the clerk of the county in which the principal office is located. There is no penalty for failing to file certificate of payment. If one-half of the capital is not paid in within one year the corpor^ation may be dissolved at the suit of the attorney general (B. C. L., § 5). 16. MINIMUM AMOUNT OF CAPITAL WITH WHICH A COMPANY MAY BEGIN BUSINESS. Five hundred dollars, which may be paid in money or property (B. C. L., § 2). No debts shall be incurred until this amount has been paid (B. C. L., § 3). 17. ISSUE OF STOCK; CONSIDERATION FOR ISSUE. No corporation shall issue either stock or bonds except for money, labor done or property actually received for the use and lawful purposes of such corporation. 139 New York Any corporation may purchase any property authorized by its cer- tificate of incorporation, or necessary for the use and lawful purposes of such corporation, and may issue stock to the amount of the value thereof in payment therefor, and the stock so issued shall be full-paid stock, and not liable to any further call, neither shall the holder thereof be liable for any further payment under any of the provisions of this act; and in the absence of fraud in the transaction, the judgment of the directors as to the value of the property purchased shall be conclusive; and in all statements and reports of the corporation, by law required to be published or filed, this stock shall not be stated or reported as being issued for cash paid to the corporation, but shall be reported as issued for property purchased (S. C. L., § 55). 18. PAR VALUE OF SHARES. Shares may not be less than five dollars, nor more than one hundred dollars each (B. C. L., § 2). The number of shares may be increased or decreased, without in- creasing or decreasing the amount of capital, in the same manner as is provided by statute in the case of an increase of capital stock (see No. 19 below), but a two-thirds vote of all stock duly represented at the meet- ing is required (S. C. L., § 65). See also Appendix A below as to issue of shares without par value. 19. INCREASE OF CAPITAL STOCK. Any domestic corporation may increase or reduce its capital stock in the manner herein provided, but not above the maximum or below the minimum, if any, prescribed by general law governing corporations formed for similar purposes. If increased, the holders of the additional stock issued shall be sul)ject to the same liabilities with respect thereto as are provided by law in relation to the original capital; if reduced, the amount of its debts and liabilities shall not exceed the amount of its reduced capital. The owner of any stock shall not be relieved from any liability existing prior to the reduction of the capital stock of any stock corporation (S. C. L., § 62). Every such increase or reduction must be authorized either by the unanimous consent of the stockholders expressed in writing and filed in the office of the secretary of state and in the office of the clerk of the county in which the principal business office of the corporation is located, or by a vote of the stockholders owning at least a majority of the stock of the corporation, taken at a meeting of the stockholders specially called for that purpose in the manner provided by- law or by the by-laws. Notice of the meeting, stating the time, place and object, and the amount of the increase or reduction proposed, signed by the president or a vice- president and the secretary, shall be published once a week, for at least two successive weeks, in a newspaper in the county where its principal business office is located, if any is published therein, and a copy of such notice shall be duly mailed to each stockholder or member at his last known post-office address at least two weeks before the meeting, or shall be personally served on him at least five days before the meeting (S. C. L., § 63). If, at the time and place specified in the notice, the stockholders shall appear in person or by proxy in numbers representing at least a majority of all the shares of stock, they shall organize by choosing from their number a chairman and secretary, and take a vote of those present in person or by proxy, and if a sufficient number of votes shall be given in favor of such increase or reduction, or if the same shall have been authorized by the unanimous consent of stockholders expressed in writing, signed by them or their duly authorized proxies, a certificate of the proceedings showing a compliance with the provisions of this chapter, the amount of capital theretofore authorized, and the propor- 140 New York tion thereof actually issued, and the amount of the Increased or reduced capital stock, and in case of the reduction of capital stock the whole amount of the ascertained debts and liabilities of the corporation shall be made, signed, verified and acknowledged by the chairman and secre- tary of the meeting, and filed in the ofBce of the clerk of the county where its principal place of business shall be located, a duplicate there- of in the ofSce of the secretary of state, .... In case of a reduction of the capital stock, except of a railroad corporation or a moneyed corporation, such certificate or consent hereinafter provided for shall have endorsed thereon the approval of the comptroller, to the effect that the reduced capital is sufficient for the proper purposes of the corporation and is in excess of its ascertained debts and liabilities, .... when the certificate herein provided for, or the unanimous consent of stockholders in writing, signed by them or their duly authorized proxies, approved as aforesaid, has been filed, the capital stock of such corporation shall be increased or reduced, as the case may be, to the amount specified in such certificate or consent. The proceedings of the meeting at which such increase or reduction is voted, or, if such increase or reduction shall have been authorized by unanimous consent without a meeting, then a copy of such consent shall be entered upon the minutes of the corporation. If the capital stock is reduced, the amount of capital over and above the amount of the reduced capital shall, if the meeting or consents so determine or provide, be returned to the stockholders pro rata, at such times and in such manner as the directors shall determine (S. C. L., § 64, as amended by L. 1913, c. 305). As to increase of shares of corporation having shares of stock without nominal or par value, see Appendix A. As to the rights of stockholders to subscribe for increased stock, see Stokes V. Continental Trust Co., 186 N. Y., 285. On filing the certificate of increase of capital stock, the organization tax must be paid on the increased stock (see No. 4 above). Section 180 of the Tax Law provides that "in case of a decrease of capital stock, upon which the tax required by law has been paid, and a subsequent increase thereof, a tax shall be paid only upon so much of such increase as exceeds the amount of capital stock upon which a tax has been before paid." 20. DECREASE OF CAPITAL STOCK. See No. 19 above. 21. PREFERRED STOCK AND OTHER CLASSES OF STOCK. Every domestic stock corporation may issue preferred stock and common stock and different classes of preferred stock if the certificate of incorporation so provides, or by the consent of the holders of record of two-thirds of the capital stock, given at a meeting called for that purpose upon notice such as is required for the annual meeting of the corporation (see No. 24 below). A certificate of the proceedings of such meeting, signed and sworn to by the president or a vice-president, and by the secretary or assistant secretary, of the corporation, shall be filed and recorded in the offices where the original certificate of incor- poration of such corporation was filed and recorded; and the corporation may, upon the written request of the holders of any preferred stock, by a two-thirds vote of its directors, exchange the same for common stock, and issue certificates for common stock therefor, upon such valuation as may have been agreed upon in the certificate of organization of such corporation, or the issue of such preferred stock, or share for share, but the total amount of such capital stock shall not be increased thereby (S. C.L.,§61). 141 New York 22. CERTIFICATES OF STOCK. The stock of every stock corporation shall be represented by cer- tificates prepared by the directors and signed by the president or vice- president and secretary or treasurer, and sealed with the seal of the corporation (S. C. L., § 50). See also provisions of the Uniform Stock Transfer Act, p. 104 above. 23. TRANSFER OF SHARES. The statute requires transfers to be made on the books of the cor- poration (see No. 13 above), but this requirement is for the benefit of the corporation, its stockholders and creditors, and as between the transferor and transferee the whole title passes by delivery of the cer- tificate of stock with a blank power of attorney endorsed thereon signed by the owner named in the certificate (Knox v. Eden Musee, 148 N. Y., 441). Attachments against stockholders are ineffectual, therefore, un- less the certificate itself is attached before delivery (Smith v.' American Coal Co., 7 Lans., 317). No share shall be transferable until all previous calls thereon shall have been fully paid in (S. C. L., § 50). Transfers made in contemplation of insolvency are void (S. C. L., §66). The Uniform Stock Transfer Act is now in force in this state (see p. 104 above). See also Appendix B below. 24. MEETINGS OF STOCKHOLDERS. There is no statutory authority for holding stockholders' meetings outside of this state, and on general principles of law, in the absence of such provision, meetings held without the state are invalid (see Ormsby V. Vermont Copper Mining Co., 56 N. Y., 623). The place of holding stockholders' meetings should be designated in the by-laws. There should be an annual meeting of stockholders for the election of directors. Notice of the time and place of holding the annual election of directors must be given by publication once in each week for two weeks immediately preceding sucli election in a newspaper published in the county where said election is to be held, and in such other manner as prescribed in the by-laws (S. C. L., § 25). A meeting of stockholders for the purpose of authorizing the creation of preferred stock must be held on the same notice as above provided for the annual election (S. C. L., § 61). A meeting of stockholders called to assent to a mortgage must be held upon the same notice as that required for the annual election of directors (S. C. L., § 6). Notice of a meeting to sell the entire property to another cor- poration must be given in the same manner as notice of an annual elec- tion of directors (S. C. L., § 16). Notice of a stockholders' meeting to extend the corporate existence must be given in the same manner as notice of the annual election of directors (G. C. L., § 37). Notice of a meeting of stockholders to increase or reduce capital stock or to increase or decrease the number of shares of the capital stock must be published once a week for at least two successive weeks in a newspaper in the county where the principal business office is located, and a copy of such notice must be mailed to each stockholder at least two weeks before the meeting or be personally served on him at least five days before the meeting (S. C. L., § 63). Notice of a meeting to alter the certificate of Incorporation must be given in the same manner as for the increase or reduction of the capital stock (S. C. L., § 18). 142 New York Notice of meetings of stockholders to consolidate two or more cor- porations must be mailed to all stockholders at least two weeks before the meeting, and such notice must be published for at least two suc- cessive weeks in one newspaper in each county in which such corpora- tions have their respective principal places of business (B. C. L., § 8). Notice of meeting called to dissolve a corporation must be published in one or more newspapers in the county where the principal office is located at least once a week for three weeks successively next preceding the time appointed for holding such meeting, and on or before the day of the first publication a copy of the notice must be served personally on each stockholder or mailed to his last known post-office address (G. C. L., §221). Notice of other special meetings of stockholders must be given in such manner as required by the by-laws. If no provision for special meetings is contained in the by-laws, the same may be called in the manner provided for the annual meeting of stockholders (G. C. L., § 43). "Whenever under the provisions of any of the corporate laws a cor- poration is authorized to take any action after notice to its members or after the lapse of a prescribed period of time such action may be taken without notice and without the lapse of any period of time, if such action be authorized or approved, and such requirements be waived in writing by every member of such corporation or by his attorney there- unto authorized (G. C. L., § 42). 25. CORPORATE ACTS WHICH MUST BE DONE OR SANC- TIONED BY THE STOCKHOLDERS. Annual election of directors; any number of stockholders who attend constitute a quorum, and plurality vote elects (S. C. L., § 25; Matter of Rapid Transit Ferry Co., 15 App. Div., 530). Creation of preferred stock subsequent to organization; consent of holders of two-thirds of capital stock (S. C. L., § 61). Execution of mortgage on corporate property; vote or consent in writing of holders of two-thirds of capital stock (S. C. L., § 6). Change of number of directors; affirmative vote of holders of ma- jority of the stock or by unanimous consent without a meeting (S. C. L., § 26). Making by-laws closing transfer books prior to meetings of stock- holders; majority vote at annual meeting or special meeting called for the purpose (G. C. L., § 23). Increase or reduction of capital stock; affirmative vote of holders of majority of stock (S. C. L., §§ 62, 63). May be done by unanimous consent in writing without meeting. Increase or decrease of number of shares; affirmative vote of holders of two-thirds of stock represented at meeting (S. C. L., § 65). Alteration of the certificate of incorporation; affirmative vote of holders of three-flfths of capital stock (S. C. L., § 18). Sale of entire property to other domestic corporation; consent of holders of two-thirds of capital stock (S. C. L., §§ 16, 17). Guarantee of bonds of other domestic corporations engaged in same general line of business; unanimous vote of stockholders voting at special meeting called for the purpose; if the guarantor corporation owns all the stock of the corporation whose bonds are to be guaranteed, vote of the holders of two-thirds of the stock voting at special meeting called for the purpose (S. C. L., § 8). Consolidation with other corporation or corporations; approval of holders of two-thirds of capital stock (B. C. L., §§ 7, 8). Extension of corporate existence; consent of holders of two-thirds of capital ^stock (G. C. L., § 37). Dissolution ; affirmative vote of holders of two-thirds of capital stock outstanding (G. C. L., § 221). 143 New York Adoption of by-laws making less than majority a quorum at direc- tors' meetings; afHrmative vote of holders of majority stock (G. C. L., § 34). 26. VOTING BY STOCKHOLDERS. Unless otherwise provided in the certificate of incorporation every stockholder of record is entitled at every meeting of the corporation to one vote for each share of stock standing in his name on the books of the corporation (G. C. L., § 23 ). Stockholders may vote at any meeting by proxy in writing. Proxy must specify time it is to run; otherwise it is not valid after eleven months from date of execution (G. C. L"., § 26). Transfer books may be closed for a period not exceeding forty days prior to meetings of stockholders, if provision therefor is contained in a Jiy-law made by the stockholders (G. C. L., § 23). 27. CUMULATIVE VOTING. The certificate of incorporation may provide that at all elections of directors of such corporations, each stockholder shall be entitled to as many votes as shall equal the number of his shares of stock, multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director, or may distribute them among the num- ber to be voted for, or any two or more of them as he may see fit, which right, when exercised, shall be termed cumulative voting (G. C. L., § 23). 28. VOTING TRUSTS. A stockholder may, by agreement in writing, transfer his stock to any person or persons for the purpose of vesting in him or them the right to vote thereon for a time not exceeding five years upon terms and conditions stated, pursuant to which such person or persons shall act; every other stockholder, upon his request therefor, may, by a like agree- ment in writing, also transfer his stock to the same person, or persons, and thereupon may participate in the terms, conditions and privileges of such agreement; the certificates of stock so transferred shall be sur- rendered and canceled, and certificates therefor issued to such trans- feree or transferees in which it shall appear that they are issued pursuant to such agreement, and in the entry of such transferee or transferees as owners of such stock in the proper books of said corporation, that fact shall also be noted, and thereupon he or they may vote upon the stock so transferred during the time in such agreement specified; a duplicate of every such agreement shall be filed in the office of the corporation where its principal business is transacted, and be open to the inspection of any stockholder daily, duringf business hours (G. C. L., § 25). 29. RIGHT OF STOCKHOLDERS TO INSPECT CORPORATE BOOKS. See No. 13 above as to inspection of stock book. A stockholder has no statutory right to examine the books of ac- count, but has the right at common law in a proceeding in the Supreme Court to examine the same, subject to the discretion of the court. The stockholder must show that the examination is desired for a proper pur- pose (Matter of Steinway, 159 N. Y., 250). Stockholders owning five per cent, of the capital stock (three per cent, where the capital stock exceeds $100,000) may make a written request to the treasurer or chief fiscal officer for a sworn statement of the affairs of the corporation "embracing a particular account of all its assets and liabilities." Such statement must be given within thirty days after request, and a copy must be kept on file for examination of stockholders for twelve months. For neglect or refusal the treasurer or 144 New York chief fiscal officer is subject to a penalty to the person making the request of fifty dollars apd ten dollars for each additional period of twenty-four hours (S. C. L., § 69). 30. LIABILITY OF STOCKHOLDERS. A holder of stock is personally liable to creditors of the corpora- tion to an amount equal to the amount unpaid on his stock, for debts of the corporation contracted while such stock was held by him. Such liability cannot be enforced until judgment for the debt has been recov- ered against the corporation, and execution has been returned unsatisfied, in whole or in part, and the amount due on such execution is the amount recoverable with costs against the stockholder. Stockholders are not personally liable for any debt of the corporation, not payable within two years from the time it is contracted, nor unless an action for its collection shall be brought against the corporation within two years after the debt becomes due. No action shall be brought against a stock- holder after two years from the time he ceased to be a stockholder. All stockholders are personally liable for debts owing to laborers, servants or employees of the corporation, if properly served with notice by any such person seeking to enforce the liability (see S. C. L., §§ 56, 59). A transfer of stock of a corporation made by a stockholder in con- templation of its insolvency is void as to the persons injured thereby, but in the absence of fraud it is good as between the parties and as against the corporation, if it assents to the transfer (S. C. L., § 66, Sinclair v. Dwight, 9 App. Div., 297). No transfer of stock shall be valid as against the corporation, its stockholders and creditors for any purpose, except to render the trans- feree liable for the debts of the coiTporation until it shall have been en- tered in the stock book (S. C. L., § 32). The liability of stockholders to creditors is to be distinguished fromi the liability of the stockholder to the corporation itself, its receiver or assignee. Such liability rests on contract exclusively, and stockholders may be liable to the creditors where they would not be liable to the cor- poration. If a receiver of the assets of a corporation has been appointed, all unpaid subscriptions to the stock shall be paid at such times, in such installments, as the receiver or the court may direct (S. C. L., § 54). 31. DIRECTORS. There must be at least three directors, and the directors for the first year must be named in the certificate of incorporation (B. C. L., § 2). At least one-fourth in number of the directors must be elected annu- ally (S. C. L., § 25). Subject to this provision the board may be divided into classes. At least one of the directors must be a resident of the state of New York (G. C. L., § 34). Each director, unless named in the certificate of incorporation, must be a stockholder unless it is provided in the certificate of incorporation or in a by-law adopted by a stockholders' meeting that directors need not be stockholders (S. C. L., § 25). 32. CHANGE OF NUMBER OF DIRECTORS. The number of directors may be increased or decreased by the vote of a majority in interest of the stockholders at a special meeting of stockholders called for the purpose, on two weeks' notice, personally or by mail; verified transcript of the proceedings must be filed in the office of the secretary of state and in the office of the clerk of the county in which the principal office is located. 145 New York The number of directors may be increased or reduced without a meeting, by unanimous consent in writing of the stockholders, signed by the stockholders, in person or by proxy. Such consent, accompanied by the affidavit of the custodian of the stock book that the signers are the holders of entire stock issued and outstanding, must be filed in the office of the secretary of state and of the clerk of the county in which the principal office is located. If the number of directors be increased, the additional directors authorized by such increase shall be elected by the vote of a majority of the directors in office at the time of the increase. If the original or an amended certificate of incorporation of the corporation shall provide that the directors shall be divided into two or more classes, whose terms of office shall respectively expire at different times, the additional directors shall be divided among such classes as nearly as practicable in proportion to the respective numbers of directors constituting each class prior to such increase (S. C- L., § 26). 33. STATUTORY POWERS AND FUNCTIONS OF DIRECTORS. The affairs of every corporation shall be managed by its board of directors (G. C. L., § 34). Except where the statute requires action to be taken by the stockholders all corporate powers may be exercised by the directors. Courts will not interfere with the control of a corporation by its directors, unless the acts of the directors are a breach of trust or are fraudulent (Beveridge v. N. Y. E. R. R. Co., 112 N. Y., 1; Bosworth v. Allen, 168 N. Y., 157). See also Nos. 12, 17, 22, 36, 38, 39 and 40. 34. DIRECTORS' MEETINGS. Unless otherwise provided, a majority of the board of directors of a corporation at a meeting duly assembled, shall be necessary to constitute a quorum for the transaction of business, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. The members of a corporation may, in by-laws, fix the number of directors necessary to constitute a quorum at a number less than a majority of the board, but at least equal to one-third of its number. Subject to the by-laws, if any, adopted by members of a corporation, the directors may make necessary by-laws of the corporation (G. C. L., § 34). Whenever, under the provisions of any of the corporate laws, a cor- poration is authorized to take any action, by the agreement or action of its directors, managers or trustees, such agrsement or action may be taken by such directors, regularly convened as a board, and acting by a majority of a quorum, except when otherwise expressly required by law or the by-laws of the corporation, and any such agreement shall be executed in behalf of the corporation by such officers as shall be desig- nated by the board of directors, managers or trustees. At any meeting at which every member of the board of directors shall be present, though held without notice, any business may be transacted which might have been transacted if the meeting had been duly called (G. C. L., § 43). The holding of directors' meetings without the state is impliedly authorized by the statute, which provides that, if meetings of the board of directors are to be held only within the state, the certificate or by- laws must so provide (B. C. L., § 2). 35. EXECUTIVE COMMITTEE. There is no statutory authority for the delegation of powers of directors to committees. It is a common practice, however, and the 146 New York acts of such committees have been sustained in the courts (Olcott v. Tioga R. R. Co., 27 N. Y., 558; Sheridan Elec. Light Co. v. C. N. Bank, 127 N. Y., 522). 36. OFFICERS OTHER THAN DIRECTORS. The directors of a stock corporation may appoint from their number a president, and may appoint a secretary, treasurer and other officers, agents and employees, who shall respectively have such powers and perform such duties in the management of the property and affairs of the corporation, subject to the control of the directors, as may be pre- scribed by them or in the by-laws. The directors may require such officer, agent or employee to give security for the faithful performance of his duties, and may remove him at pleasure (S. C. L., § 30). 37. STATUTORY LIABILITIES OF DIRECTORS AND OFFICERS. There is no liability on the part of the directors, except for making unauthorized dividends, for making loans to stockholders, for making false reports, for transferring property when the corporation is insolv- ent, for breach of trust,' or for acts of misconduct. Officers are not liable except for refusing to exhibit the stock book, for making false reports, for failure to make an annual report, or for acts of misconduct. 38. POWERS OF CORPORATIONS, (a) In General. Every corporation as such has power, though not specified in the law under which it is incorporated: (1.) To have succession for the period specified in its certificate of incorporation or by law, and perpetually when no period is specified. (2.) To have a common seal, and alter the same at pleasure. (3.) To acquire by grant, gift, purchase, devise or bequest, to hold and to dispose of such property as the purposes of the corporation shall require, subject to such limitations as may be prescribed by law. (4.) To appoint such officers and agents as its business shall re- quire, and to fix their compensation, and (5.) To make by-laws, not inconsistent with any existing law, for the management of its property, the regulation of its affairs and the transfer of its stock, if it has any, and the calling of meetings of its members. Such by-laws may also fix the amount of stock, which must be represented at meetings of the stockholders in order to constitute a quorum, unless otherwise provided by law. By-laws duly adopted at a meeting of the members of the corporation shall control the action of its directors. No by-law adopted by the board of directors regulating the election of directors or officers shall be valid unless published for at least once a week for two successive weeks, in a newspaper in the county where the election is to be held, and at least thirty days before such election (G. C. L., § 11). (b) Power to Borrow Money and Incur Debts; Corporate Bonds and Mortgages; Limitation of Amount of Indebtedness. Every stock corporation shall have the power to borrow money and contract debts, when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, or for any other lawful purpo^ of its incorporation; and it may issue and dispose of its obligation for any amount so borrowed and may mortgage its properties and franchises to secure the payment of such obligations, or of any debt contracted for said purposes. Mortgages 147 New York other than purchase money mortgages must be consented to by the holders of not less than two-thirds of the capital stock of the corpora- tion given either in writing or by vote at a special meeting of the stockholders called for that purpose. A certificate that such consent was given must be filed in the office of the clerk or register of the county in which the principal place of business is located (S. C. L., § 6). A recital to that effect in the mortgage is presumptive evidence that the execution of such mortgage has been duly consented to, and after the mortgage has been publicly recorded one year and the cor- poration has received value for the bonds actually issued and interest has been paid on any of such bonds, according to the terms thereof, such recital is conclusive. The certificate above mentioned is conclusive evidence of the truth thereof in favor of bona-fide purchasers of bonds while such certificate remains of record and uncancelled (S. C. L., § 7). Section 6 of the Stock Corporation Law provides for the issuance of bonds convertible into stock, and authorizes the directors to increase the capital stock in order to carry out such conversion. Formerly corporations were prohibited from contracting indebted- ness in excess of the amount of capital stock. This restriction was re- moved in 1901, and there is now no limitation (S. C. L., § 6). (c) Power to Hold Stocks and Bonds. A business corporation may purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corpora- tion, domestic or foreign, and may issue in exchange therefor its stock, bonds or other obligations, if authorized to do so by a provision in the certificate of incorporation, original or amended, or if the corporation whose stock is so purchased or acquired is engaged in a business similar to that of the holding corporation, or engaged in the manufacture, use or sale of property, or in the construction or operation of works neces- sary or useful in the business of such holding corporation, or in which or in connection with which the manufactured articles, product or prop- erty, of such holding corporation are or may be used, or is a corpora- tion with which such holding corporation is or may be authorized to consolidate (see S. C. L., § 52). Business corporations are prohibited from holding more than ten per centum of the total stock issued by any gas corporation, electrical corporation, railroad corporation, street railroad corporation or other common carrier organized or existing under or by virtue of the laws of this state (Public Service Commissions Law; L. 1911, c. 788). Where one corporation holds the stock of another, the president and other officers are eligible to the ofRce of director of such latter corporation without being stockholders individually (S. C. L., § 52). There is no statutory authority for the acquisition by a corpora- tion of shares of its own stock, except where the same are accepted in complete or partial settlement of a debt owing to the corporation, which shall be deemed by the board of directors to be bad or doubt- ful (S. C. L., § 28). It has been held that a corporation may acquire its own shares provided it acts in good faith and without prejudice to the rights of creditors (City Bank of Columbus v. Bruce, 17 N. Y., 507). The power of a corporation to take its own stock by gift was assumed in Lake Superior Iron Co. v. Drexel, 90 N. Y., 87. (d) Power to Carry on Business Without the State. There is no statutory power given to business corporations to con- duct business in other states and countries, except by implication; the General Corporation Law (§ 14) providing that any domestic corpora- tion transacting business in other states or foreign countries may acquire and dispose of such property as shall be requisite for such cor- poration in the convenient transaction of its business. It is customary to 148 New York provide for the transaction of business without the state in the certificate of incorporation. "A corporate charter is in the nature of a commission of the state to its citizens, and their successors in interest, whether at home or abroad. Each government in the exercise of its own discretion, de- termines the conditions of its grant. It is free to impose or omit terri- torial restrictions. It cannot enlarge its own jurisdiction, but it can confer general powers, to be exercised within its bounds, or beyond them, wherever the comity of nations is respected" (Merrick v. Van Santvoord, 34 N. Y., 208, 215). 39. CONSOLIDATION AND MERGER WITH OTHER CORPORATIONS. Any two or more corporations organized for the purpose of car- rying on any kind of business of the same similar nature which a corporation organized under the Business Corporations Law might carry on may consolidate into a single corporation (B. C. L., § 7). Any corporation lawfully owning all of the stock of any other corporation organized for or engaged in business similar or incidental to that of the possessor corporation may merge such other corporation with it and be possessed of all the estate, property, rights, privileges and franchises of such other corporation (S. C. L., § 15). 40. DISSOLUTION AND SURRENDER OF FRANCHISE. The voluntary dissolution of a corporation may be effected in two ways: (1.) By vote of directors declaring such dissolution to be for the best interest of the corporation and calling a meeting of the stock- holders, followed by the vote of the holders of two-thirds of the capital stock. Statutory provisions must be strictly followed (G. C. L., § 221). (2.) By a proceeding in the Supreme Court which may be insti- tuted by the directors (G. C. L., § 170, et seq.). The incorporators named in any certificate of incorporation filed for the purpose of creating a domestic stock corporation, other than a moneyed or transportation corporation, may, before the payment of any part of the capital, and before beginning business surrender all corporate rights and franchises, by signing, verifying, and filing in the office of the secretary of state and the clerk of the county where the certificate of incorporation is filed a certificate setting forth that no part of the capital has been paid, that there are no liabilities, that such business has not been begun, and surrendering all rights and franchises; and proof of the facts set forth in such certificate to the satisfaction of the secretary of state; and thereupon the said corporation shall be dis- solved and its corporate existence and powers shall cease (G. C. L., § 220). 41. FORFEITURE OF CHARTER. If one-half of the capital stock is not paid i;i within one year from its incorporation, a corporation may be dissolved at the suit of the attorney general (B. C. L., § 5). The attorney general may also bring an action to forfeit the charter of a corporation if it fails to organize and commence business within two years (G. C. L., § 36), or if it of- fends against any provisions of law applicable to it, or if it exercises privileges or franchises not conferred upon it by law. If a corporation fails to pay its annual state tax witliin one year from the time a statement of the tax is sent to it, and the comptroller is satisfied that such failure is intentional, the attorney general is required to bring an action to forfeit the charter (Tax L., § 203). 149 New York 42. FOREIGN CORPORATIONS; HOW AUTHORIZED TO DO BUSINESS. No foreign corporation, other than a moneyed or insurance cor- poration, having the word "trust," "bank," "banking," "insurance," "assurance," "indemnity," "guarantee," "guaranty," "title,'' "savings," "investment," "loan," or "benefit," as part of its name is permitted to do business in the state. Violation of this prohibition is a misdemeanor (G. C. L., § 15; Penal Law, §§ 663, 666). No foreign corporation is permitted to carry on in the state the business of a trust company, as defined in the banking law (Banking Law, §§ 185, 223). Foreign corporations are permitted to carry on business in the state upon complying with the following requirements: (1.) A sworn copy of the charter or certificate of incorporation must be filed in the ofRce of the secretary of state accompanied by a statement under the corporate seal particularly setting forth the business or objects of the corporation, which it is engaged in carrying on or which it proposes to carry on within the state, and a place within the state which is to be its principal place of business, and designating a person having an office or place of business at such place, upon whom process against the corporation may be served. Such statement must be signed by the president, vice-president or other acting head of the corporation, and must be acknowledged. Upon filing the above papers the secretary of state issues a certificate of authority to do business in the state. Such certificate of authority will not be issued to a foreign corporation whose name is the same as, or so closely resembles as to be calculated to deceive, the name of an existing domestic corporation (G. C. L., §§ 15, 16; Code C. P., § 432). The fees of the secretary of state for filing the above papers and issuing the certificate of authority are $11.00. (2.) The corporation must pay to the state treasurer a license fee of one-eighth of one per cent, of the amount of capital stock employed by it in the state during the first year of carrying on business here. If the amount of capital stock employed in the state is afterwards increased, the corporation must pay a license fee at the same rate on such additional capital stock. The measure of the amount of capital stock employed in this state shall be such a portion of the issued capital stock as the gross assets employed in any business within this state bear to the gross assets wherever employed in business. For purposes of taxation, the capital of a corporation invested in the stock of another corporation shall be deemed to be assets located where the physical property represented by such stock is located (Tax L., § 181, as amended by L. 1910, c. 340). Foreign corporations created by a state or country which by its laws confers similar privileges on corporations created by the state of New York, may acquire and hold real estate (G. C. L., § 20, as amended by L. 1910, c. 68). 43. FOREIGN CORPORATIONS; PENALTY FOR DOING BUSINESS WITHOUT AUTHORITY. If a foreign corporation fails to procure a certificate of authority from the secretary of state, it cannot maintain any action in this state on any contract made by it in this state prior to obtaining such certificate (G. C. L., § 15). The persons carrying on business in the state as agent of such foreign corporation are also probably liable to prosecution criminally under Sec. 440 of the Penal Law, for carrying on business under an assumed name, which provides that persons violating such section are guilty of a misdemeanor. No action shall be maintained or recovery had in any of the courts in this state by such foreign corporation, after thirteen months from the 150 New York time of beginning such business within the state, without obtaining a receipt from the comptroller for the payment of the license fee upon the capital stock employed by it within this state during the first year of carrying on its business in this state (Tax L., § 181, as amended by L. 1910, c. 340). Having complied with such provisions, a foreign corporation is per- mitted to do business here on substantially the same terms as a domestic corporation, with the same right to sue in the state courts (Code C. P., § 1779), with the important exception that its property is always subject to attachment here, even though it is entirely solvent (Code C. P., § 636). 44. FOREIGN CORPORATIONS; APPOINTMENT OF STAT- UTORY RESIDENT AGENT OR ATTORNEY. See No. 42 above. 45. FOREIGN CORPORATIONS; BOOKS TO BE KEPT IN THE STATE. Every foreign business corporation having an office for the trans- action of business in this state is required to keep at such office a stock book, containing the names, alphabetically arranged, of all stockholders of the company, showing tile places of residence, the number of shares held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. Such books must be kept open daily, during business hours, for the inspection of its stockholders and judgment creditors, and any officer of tlie state authorized to in- vestigate the affairs of such corporation. If the corporation has a trans- fer agent in this state, the stock book may be kept at the office of such agent (S. C. L., § 33). 46. FOREIGN CORPORATIONS; PENALTY FOR NEGLECT OR REFUSAL TO KEEP OR EXHIBIT BOOKS. For any refusal to allow such books to be inspected, such corpora- tion and the officer or agents so refusing shall each forfeit the sum of two hundred and fifty dollars to be recovered by the person to whom such refusal was made (S. C. L., § 33). "In a recent case Judge Leventritt held that a foreign corporation must keep a record in the stock book in this state of all the stock of the corporation, not merely of such shares as are transferred at the office of the transfer agent in this state (People ex rel. JWiles v. Montreal & Boston Copper Co., 40 Misc., 282). Penalties do not accumulate for successive refusals; one penalty only can be recovered in the same transaction against each officer and agent refusing and against the co*-poration (Cox v. Paul, 175 N. Y., 328). The statute gives an absolute right to the stockholder to examine the stock book. If refused a mandamus will be granted (Henry v. Bab- cock & Wilcox Co., 196 N. Y., 302). The courts have rigidly enforced this provision of the statute, and no transfer agent or other officer of a foreign corporation coming within the provisions of the act can safely refuse to permit the examination to be made. 47. FOREIGN CORPORATIONS; LIABILITY TO ATTACHMENT. The property of a foreign corporation in the state may be attached, however solvent it may be, in any action for breach of contract, express or implied, or for wrongful conversion of personal property, or for an 151 New York injury to person or property in consequence of negligence, fraud or other wrongful act, which legally may be instituted against it in this state (Code C. P. §§ 635, 636). 48. FRANCHISE TAXES OR LICENSE FEES PAYABLE BY DOMESTIC AND FOREIGN CORPORATIONS; EXEMPTIONS. For the privilege of doing business or exercising its corporate fran- chises in this state every corporation, joint-stock company or association, doing business in this state, shall pay to the state treasurer annually, in advance, an annual tax to be computed upon the basis of the amount of its capital stock, employed during the preceding year within this state, and upon each dollar of such amount. The measure of the amount of capital stock employed in this state shall be such a portion of the issued capital stock as the gross assets employed in any business within this state bear to the gross assets wherever employed in business. For purposes of taxation, the capital of a corporation invested in the stock of another corporation shall be deemed to be assets located where the physical property represented by such stock is located (Tax L., § 182). "What the legislature intended by the enactment in question as to the corporation mentioned, was to impose not a property tax, but to assess all such, for the benefit of the state treasury, for the right of exercising the privileges which the state grants to them. So long as the corporation in fact exercises its franchises and does business, the state exacts from it the payment of a tax for the privilege of doing so." (People ex rel. A. C. & D. Co. v. Wemple, 129 N. Y., 550, 564). Not being a tax on property the amount of the tax may be com- puted upon the value of property which is itself exempt from taxation as property, as for example, good-will, patents and patent rights, copy- rights, imported goods in original packages, shares of stock of domestic corporations. Government bonds, etc. (People ex rel. Weibusch & Hilger Co. v. Roberts, 154 N. Y., 101; People ex rel. United States Aluminum Printing Plate Co. v. Knight, 174 N. Y., 475; People ex rel. Matheson Co. v Roberts, 158 N. Y., 162; People ex rel. Edison Co. v. Campbell, 138 N. Y., 543; People v. Home Ins. Co., 92 N. Y., 328. The tax is properly assessed on the basis of the whole capital stock outstanding at the close (October 31) of the year. (People ex rel. N. Y. C. & H. R. R. R. Co. v. Gaus, 200 N. Y., 328.) ' The term "capital stock" as used in the act, and which is made the basis of the tax, is held to mean the assets of the corporation represent- ing the capital paid in or contributed by the stockholders. In ascertaining the amount ot such capital stock employed in the state it is proper to consider the value of the real and personal property, including stock in trade, average monthly bank balance, average amount of accounts and bills receivable aid the value of the goodwill in the state. The value of any patents and copyrights owned by the corpora- tion and used by it in this state may also be considered. As to when capital is employed In business and therefore subject- ing corporation to payment of franchise tax, see People ex rel. Coney Island Jockey Club v. Sohmer, 155 App. Div. (1903) 842 and People ex rel. Tetragon Company v. Sohmer,\ 162 App. Div. (1914) 433. In the case of foreign corporations\ the tax is not on the 'franchise of the corporation but on the privilege (|f doing business in the state of New York. \ A corporation organized under the| laws of one state, cannot do business in other states excejit subject to -the restrictions and require- ments prescribed by the laws of such sifates. This is the general rule, the exceptions being where the business lis exclusively that of interstate or foreign commerce or the business is ojf a federal nature. If any part of the business of a corporation in the istate is local in its nature, the 152 , New York permission of the state is necessary to enable the corporation lawfully to carry on business in the state, and the fact that it may also be engaged in interstate or foreign commerce or federal business will not exempt it from the payment of taxes or from compliance with the other provisions of law. In order that a foreign corporation may be legally subject to this tax two conditions of fact must exist: First, that it is doing business in the state; and secondly, that it has capital stock employed in the transaction of its ordinary business in the state. Unless both of these conditions exist no tax can be assessed; if the corporation is not doing business in the state there is no jurisdiction under the act to tax the corporation, and if no capital is employed in the state there is nothing upon which a tax can be based. There are Instances, therefore, where a corporation may be doing business in the state and not be subject to taxation because no part of its capital stock is employed in the state. And a corporation may have capital invested in the state and yet not be subject to taxation because it is not doing business in the state within the meaning of the Tax Law. (a) Rate of tax vyhere the dividends upon the capital stock amount to six or more than six per cent, per annum. If the dividends upon the capital stock amount to six,»or more than six per centum upon the par value of the capital stock, during any year ending with the thirty-first day of October, the tax shall be at the rate of one-quarter of a mill for each one per centum of dividends made pr declared upon the par value of the capital stock during said year (Tax L., § 182). If the entire business of the corporation is in the state of New York and all of its capital stock is employed in the state of New York, and dividends have been paid at the rate of six per cent, per annum, or more, the corporation is assessed on the amount of its capital stock at par, without regard to the value of the property of the corporation; that is to say, the amount of the assessment is the aggregate par value of the shares of stock issued and outstanding. The rate of taxation in such a case is a quarter of a mdll for each one per cent, of dividends declared on each dollar of such capital stock; thus, if the dividend is at the rate of six per cent., the tax is fifteen cents on each $100 of the capital stock issued and outstanding. If the corporation is doing business both within and without the state, and a part of its capital stock is employed out of the state and part within the state, then the tax is computed upon the basis of the amount of such capital stock at par employed in the state measured as above provided (see first paragraph under No. 48 above). The distribution of profits realized upon a sale of assets will be held to be a dividend and not a depletion of capital although the capital stock has been reduced as provided by statute (People ex rel. IVlercan- tile S. D. Co. V. Sohmer (1913) 158 App. Div. 110). (b) Rate of tax -where no dividend is declared. Three-fourths of one mill (75c. per $1,000) on each one dollar of the amount of capital stock employed in this state, determined, as here- inbefore mentioned (see first paragraph under No. 48 above), except that in cases where the assets do not exceed the liabilities, exclusive of capital stock, or where the stock has not been sold within the year at an average price equal to or exceeding the par value, the capital stock must be appraised for taxation at its actual value in the manner described in paragraph (j) below. (People ex rel. Fifth Ave. Building Co. v. ■Williams, 198 N. Y., 238; People ex rel, N. Y. JVl. & N. T. Co. v. Gaus, 198 N. Y., 250.) 153 New York (c) Rate of tax where the dividends amount to less than six per cent, per annum and the cissets do not exceed the liabilities, exclusive of capital stock, or the average price at which such stock sold during the year did not equal or exceed its par value. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, and (1.) The assets do not exceed the liabilities, exclusive of capital stock, or (2.) The average price at which such stock sold during said year, did not equal or exceed its par value. ****** Then each dollar of the amount of capital stock employed in this state determined as hereinbefore provided, shall be taxed at the rate of three-fourths of one mill (Tax L., § 182). In these cases the capital stock must be appraised for taxation at its actual value, in the manner described in paragraph (j) below. The average price at which stock sold is not governed by the amount of stock sold. (People ex rel. American Bank Note Co. v. Sohmer (1913) 157 App. Div., 1, aff'd. 210 N. Y., 621. (d) Rate of tax where the dividends amount to less than six per cent, per annum, and the assets exceed the liabilities, exclusive of capital stock, by an amount equal to or greater than the par value of the capital stock, or the average price at which such stock sold during the year is equal to or greater than the par value. If such dividend or dividends amount to less than six per centum of the par value of the capital stock, and (1.) The assets exceed the liabilities, exclusive of capital stock, by an amount equal to or greater than the par value of the capital stock, or (2.) The average price at which said stock sold during said year is equal to or greater than the par value. Then the amount of capital stock, determined as hereinbefore pro- vided to be employed, in this state shall be taxed at the rate of one and one-half mills on each dollar of the valuation of the capital stock em- ployed in this state, but such valuation shall not be less than (1.) The par value of such stock, (2.) The difference between the assets and liabilities, exclusive of capital stock, (3.) The average price at which such stock sold during said year (Tax L., § 182). According to the case of People ex rel. American Bank Note Co. V. Sohmer, supra, it would seem that the rate of tax is three quarters of a mill, notwithstanding the assets may exceed the liabilities by an amount equal to or greater than the outstanding capital. (e) Rate of tax where the dividends amount to less than six per cent, per annum, and the assets exceed the liabilities, exclusive of capital stock, but not by an amount equal to or greater than the par value of the capital stock. In the amendment of 1906 no provision was made for the taxa- tion of companies falling within the description of this heading. The following clause, inserted by the amendment of 1907, was passed to cure such defect in the law: All corporations not taxable under the preceding paragraphs of this section shall be taxed in an amount not less than would be produced by an assessment of one and one-half mills on each dollar of the actual 154 New York value of Its capital stock, determined to be employed in this state as hereinbefore provided, or one and one-half mills upon each dollar of such capital stock at the average price at which said stock sold during the said year (Tax Law, § 182). Construing a similar provision in the old law, the court said: "We think that the statute practically defines the manner of de- termining the basis for the tax in this case. It in effect declares that the capital stock shall be appraised at its actual value in cash, and that is made the basis upon which the tax is to be assessed. We are of the opinion that the actual value of the capital stock of such cor- poration is the value of its assets, after deducting its liabilities, and adding to the sum then remaining the value of the goodwill of the business, including its right to conduct it under its franchise" (People ex rel. Wiebusch & Hilger Co. v. Roberts, 154 N. Y., 101, 108). (f) Rates of Tax Where There is More Than One Class of Stock. If such corporation, joint-stock company or association shall have more than one kind of capital stock, and upon one of such kinds of stock a dividend or dividends amounting to six, or more than six per centxmi upon the par value thereof, has been made or declared, and upon the other no dividend has been made or declared, or the divi- dend or dividends made or declared thereon, amount to less than six per centum upon the par value thereof, then the tax shall be at the rate of . one-quarter of a mill for each one per centum of dividends made or declared upon the capital stock upon the par value of which the dividend or dividends made or declared amount to six or more than six per centum, and in addition thereto a tax shall be charged upon the capital stock (1.) Upon which no dividend was made or declared, or (2.) Upon which the dividend or dividends made or declared did not amount to six per centum upon the par value, At the rate as hereinbefore provided for the taxation of capital stock upon which no dividend was made or declared, or upon which the divi- dend or dividends made or declared did not amount to six per centum on the par value (Tax L., § 182). (g) Rate of Tax for Corporations with Shares of Capital Stock Without Nominal or Par Value. The franchise tax upon any corporation issuing such shares of stock payable under section one hundred and eighty-two of the tax law shall be determined by the amount of the gross assets of such corporation employed in any business within this state, less such proportion of its liabilities as shall represent the rato of its gross assets employed in any business within this state to its entire gross assets wherever employed in business, and the rate of such franchise tax shall be fixed in the manner provided in said section one hundred and eighty-two of the tax law. For this purpose the rate of dividends shall be computed by dividing the total amount of dividends which have been paid during the year of the amount of assets of the corporation upon the first day of such year. (S. C. L., § 21, added by L. 1912, c. 351.) (h) Exemptions. Laundrying corporations, manufacturing corporations to the extent only of the capital actually employed in this state in manufacturing, and in the sale of the product of such manufacturing, mining corpora- tions wholly engaged in mining ores within this state, agricultural and horticultural societies or associations, and corporations, joint-stock com- panies or associations owning or operating elevated railroads or surface railroads not operated by steam, or formed for supplying water or gas for electric or steam heating, lighting or power purposes, and liable 155 New York to a tax under sections 185 and 186 of this ctiapter, shall be exempt from the payment of the taxes prescribed by section 182 of this chapter. But such a laundrying, manufacturing or mining corporation shall not be exempted from the payment of such tax, unless at least forty per centum of the capital stock of such corporation is invested in property in this state and used by it in its laundrying, manufacturing or mining business in this state (Tax L., § 183). The term "manufacturing" has been defined as follows: "The application of labor and skill to materials that exist in a natural state, gives to them a new quality or characteristic and adapts them to new uses, and the process by which this result is brought about is called manufacturing, whether the change is accomplished by manual labor or by means of machinery (People ex rel. B. E. M. Co. v. Wemple, 129 N. Y., 543, 552.) "The words of a statute are to be given their natural, plain, obvious and ordinary signification" (155 N. Y., 408, 411). A corporation which is a holding company of the stock of a manu- facturing company cannot claim, the exemption from a franchise tax allowed to manufacturing corporations (People ex rel. American Bank Note Co. v. Sohmer, 157 App. Div., 1). (i) Report to State Comptroller. Every corporation, association or joint-stock company liable to pay a tax under section 182 of this chapter shall, on or before November • fifteenth in each year, make a written report to the comptroller of its condition at the close of its business on October thirty-first preceding, stating the amount of its authorized capital stock, the amount of stock paid in, the date and rate per centum of each dividend declared by it during the year ending with such day, the entire amount of the capital of such corporation and the capital employed by it in this state during such year (Tax L., § 192, subd.-l). (j) Appraisement of Capital Stock in Certain Cases. If the dividend or dividends amount to less than six per centum on the par value of the capital stock, or no dividend is declared, the president, treasurer or secretary of the company liable to pay a tax under the provisions of section 182 of this chapter, shall, under oath, between the first and fifteenth day of November in each year estimate and appraise the capital stock of such company, at its actual value, and shall forward the same to the comptroller with the report provided for in the last section. If the comptroller is not satisfied with the valuation so made and returned he is authorized and empowered to make a valuation thereof, and settle an account upon the valuation so made by him, and the taxes, penalties and interest to be paid the state (Tax L., § 193). (k) Form and Verification of Report. EVery report required by this article shall have annexed thereto, the affidavit of the president, vice-president, secretary or treasurer of the corporation, .... to the effect that the statements contained therein are true. Such reports shall contain any other data, information or matter which the comptroller may require to be included therein, and he may prescribe the form in which such reports shall be made and the form of oath thereto. When so prescribed such form shall be used in making the reports. The comptroller may require at any time a further or supplemental report under this article, which shall contain information and data upon such matters as the comptroller may specify (Tax L., § 194). 156 New York (1) Powers of Comptroller in Case Report is Unsatisfactory. In case any report required by any of the preceding sections of this article shall be unsatisfactory to the comptroller, or if any such report is not made as herein required, the comptroller is authorized to make an estimate of the dividends paid by such corporation and the value of the capital stock employed by it, from any such report or from any other data, and to order and state an account according to the estimate and value so made by him for the taxes, percentage and interest due the state from such corporation, association, joint-stock company, person, or partnership. The comptroller shall also have power to examine or cause to be examined, in case of a failure to report, or in case the report is unsatisfactory to him, the books and records of any such corporation, joint-stock association, company, for- eign banker, person, or partnership, and may hear testimony and take proofs material for his information either personally, or he may appoint a commissioner by a written appointment under his hand and ofBcial seal for that purpose. Every commissioner so appointed shall be authorized to make such examination and take such testimony and hear such proofs and report the proofs and testimony so taken and the result of his examination so made and the facts found by him to the comptroller. The comptroller shall, therefrom, or from any other data which shall be satisfactory to him, order and state an ac- count for the tax due the state, together with the expenses of such examination and the taking of such testimony and proofs. Such ex- penses shall be fixed and adjusted by the comptroller (Tax Law, § 195). (m) Notice of Assessment. Upon auditing and stating every account for taxes or other charges under this article, the comptroller shall forthwith send notice thereof in writing to the person, partnership, company, association or corpora- tion against whom the same is made, which notice may be mailed to the post office address of such person, partnership, association, company or corporation. All accounts so audited and stated shall bear interest upon the total amount found due thereon to the state, for taxes, per- centage, interest and other charges, from the expiration of thirty days after sending such notice»until payment thereof shall be made (Tax L., § 196). (n) Payment of Tax; Penalties. A tax imposed by section 182 is due and payable into the state treasury on or before the fifteenth day of January in each year (Tax L., § 197). If such tax in any case is not paid within the thirty days after the same becomes due, or if the report of any such corporation is not made within the time required by this article, the corporation, as- sociation, joint-stock company, person or partnership, liable to pay the tax shall pay into the state treasury, in addition to the amount of such tax, a sum equal to five per centum thereof, and one per centum additional for each month the tax remains unpaid, which sum shall be added to the tax and paid or collected therewith. Every corporation, association, joint-stock company, person or partnership, failing to make the annual report required by this article, or failing to make any special report required by the comptroller, within any reasonable time to be specified by him, shall forfeit to the people of the state the sum of one hundred dollars for every such failure, and the additional sum of ten dollars for each day that such failure continues (Tax L, § 197). 157 New York Such tax shall be a lien upon and bind all the real and personal property of the corporation, joint-stock company or association liable to pay the same from the time when it is payable until the same is paid in full (Tax L., § 197). Tax continues during receivership and becomes a lien on the property, (New York Terminal Co. v. Gaus (1912), 204 N. Y. 512.) (o) Revision of Assessment. If an application be filed with the comptroller by the party against whom the account is stated or by the attorney general within one year from the time any such account shall have been audited and stated, the comptroller may at any time, upon notice thereof sent to the person, partnership, company, association or corporation against whom it is stated, revise and readjust such account and if it shall be made to appear upon any such application by evidence submitted to him or otherwise, that any such account included taxes or other charges which could not have been lawfully demanded, or that payment has been legally made or exacted of any such account, he shall resettle the same according to law and the facts, and charge or credit, as the case may require, the difference, if any, resulting from such revision or re- settlement upon the accounts for taxes of or against any such person, partnership, company, association or corporation. Such credit, whether allowed before or after the passage of this act, may be, by the person, partnership, company, association or corporation in whose favor it is allowed, assigned to a person, partnership, company, association or corporation liable to pay taxes under article nine of this act and the assignee of the whole or any part of such credit on filing with the comptroller such assignment shall thereupon be entitled to credit on the books of the comptroller for the amount thereof on the current account for taxes of such assignee in the same way and with the same effect as though the credit had originally been allowed in favor of such assignee. The comptroller shall forthwith send written notice of his determination upon such application to the applicant, and to the attorney general, which notice may be sent by mail to his post-office address (Tax L., § 198). The comptroller cannot increase the amount of the tax upon an application for readjustment (51 App. Div., 152). He is not bound, however, by the determination of a former comptroller exempting a corporation from taxation on the ground that ft was carrying on manu- facturing within the state (155 N. Y., 408), but may assess the corpora- tion if he finds that during the years in question it was not actually engaged in manufacturing. 49. TAXATION OF PROPERTY OF DOMESTIC AND FOREIGN CORPORATIONS. Taxation of Real Estate. The real estate of all incorporated companies liable to taxation shall be assessed in the tax district in which the same shall lie, in the same manner as the real estate of individuals (Tax L., § 11). Taxation of Personal Property. (A) Domestic Corporations. In addition to the annual franchise tax to the state domestic corporations are liable to taxation for local purposes on their property within the state under the following pro- visions of the tax law: "The capital stock of every company liable to taxation, except such part of it as shall have been excepted in the assessment roll or shall be exempt by law, together with its surplus profits or reserve 158 N ev York funds exceeding ten per centum of its capital, after deducting the assessed value of its real estate, and all shares of stock in other cor- porations actually owned by such company which are taxable upon their capital stock under the laws of this state, shall be assessed at its actual value" (Tax Law, § 12). In the above section the term capital stock is held to mean ''not the share stock, but the capital owned by the corporation; the fund required to be paid in and kept intact as the basis of the business enterprise, and the chief factor in its safety. * * * The capital stock of a company is one thing, that of the shareholders is another and a dilferent thing. That of the company is simply its capital, ex- isting in money or property, or both; while that of the shareholders is representative, not merely of that existing and tangible capital, but also of surplus, of dividend earning power of franchise and the good- will of an established and prosperous business. * * * "While the nominal or par value of the capital stock and of the share stock are the same, the actual value is often widely different. The capital stock of the company may be wholly in cash or in property, or both, which may be counted and valued. It may have in addition a surplus, consisting of some accumulated and reserve fund, or of un- divided profits, or both, but that surplus is no part of the company's capital stock, and, therefore, is not itself capital stock" (People ex rel. Union Trust Company v. Coleman, 126 N. Y., 433, 437 ,439). Section 3 of the tax law provides that "all real property within this state and all personal property situated or owned within this state is taxable unless exempt from taxation by law," and section 2 of the tax law provides that the term "personal property" shall in- clude chattels, money, things in action, debts due from solvent debtors, whether on account, contract, note, bond or mortgage, debts and obligations for the payment of money due or owing to persons residing within this state, however secured, or wherever such securi- ties shall be held; debts due by inhabitants of this state to persons not residing within the United States for the purchase of any real estate; public stocks, stocks in moneyed corporations, and such portion of the capital of incorporated companies, liable to taxation on their capital, as shall not be invested in real ejtate." Domestic corporations are thus taxed on their real estate and on their personal property within the state. (b) Foreign Corporations. Foreign corporations are required to pay a local personal property tax under the following provision of section 7 of the tax law: "Non-residents of the state doing business in the state, either as principals or partners, shall be taxed on the capital invested in such ■business, as personal property, at the place where such business is carried on, to the same extent as if they were residents of the state." To render a foreign corporation liable to this tax, it must be en- gaged in a permanent and continuous business in this , state. Thus where a foreign corporation had a depot in this state and an agent and sent its goods here for sale, its only business in the state consist- ing of the making of such sales, the proceeds of which were remitted to the home office in another state, and where such sales were made on credit, the securities were sent to the home office for collection, it was held to be not liable for the local tax on its goods in this state (Parker JVIills v. Commissioners, 23 N. Y., 242; see also People ex rel. Sherwin Co. v. Barker, 5 App. Div., 246, affirmed 149 N. Y., 623; People ex rel. The Armstrong Cork Co. v. Barker, 157 N. Y., 159). In addition to the above mentioned tax on their capital, foreign corporations are liable to taxation on their personal property under the so-called Saxe Law, which adds a new subdivision to section 7 of the tax law, as follows: Subdivision 2. The personal property of non-residents of the state having an actual situs in the state, and not forming a part of 159 New Yqrk capital invested in business in the state, shall be assessed in the name of the owner thereof for the purpose of identification and taxed in the tax district where such property is situated, unless exempt by law. This subdivision shall not apply to money, or negotiable collateral securities, deposited by, or debts owing to, such non-residents, nor shall it be construed as in any manner modifying or changing the law imposing a tax on real estate mortgage securities. Subdivision 2 seems to affect only tangible personal property not employed in business. It is not likely that many foreign corporations are affected at all by this amendment. Exemptions. In addition to the property specifically excepted at the end of the subdivision, the tax law expressly exempts the following: "A bond, mortgage, note, contract, account or other demand be- longing to any person not a resident of this state, sent to or deposited in this state for collection; "The products of another state owned by a non-resident of this state and consigned to his agent in this state for sale on commission for the benefit of the owner; "iVloneys of a non-resident of this state, under the control or in the possession of his agent in this state, when transmitted to such agent for the purposes of investment or otherwise" (Tax Law, § 4, subd. 13). Since the decision of the Court of Appeals in 1902 in city of New York v. McLean (170 N. Y., 374), the city has been unable to enforce payment of any tax by non-residents (whether individuals or foreign corporatiohs) assessed under section 7. Place of Assessment. Domestic corporations are assessed on their real estate where the same is situated, and on their capital in the tax district where the prin- cipal office or place of business is situated, without regard to the actual situs of the personal property in the state (Tax L., § 11). The statement of the principal office or place of business in the certificate of incorporation is conclusive upon the assessors and the corporation must be taxed at that place although its business may be actually carried on and its property may be actually located at another place (Western Transportation Co. v. Scheu, 19 N. Y., 408; Union Steam- boat Co. V. Buffalo, 82 N. Y., 351). Foreign corporations are assessed on their real estate where the same is situated (Tax L., § 11). Foreign corporations are taxable in the tax district where the principal place of business is situated, on all capital invested in the state and subject to taxation, without regard to the actual location of its personal property in the state (see Bay State Co. v. IWcLean, 80 N. Y., 254). Assessment and Taxation in the City of New York. Domestic and foreign corporations whose principal offices are located in the city of New York are assessed on their capital as it exists on the first day of October in each year. The assessment books are kept at the office of the commissioners of taxes and assessments in the Borough of Manhattan. Between the first day of October and the thirtieth day of November, the corporation may make written application to the commissioners of taxes and assessments, at their main office in the Borough of Manhattan, for the correction of the assessment, accompanying such application with a sworn statement setting forth in detail the assets and liabilities of the corporation. 160 New York The commissioners of taxes and assessments may during the months of December and January in any year act upon applications, examine applicants under oath and take other testimony thereon for the reduction of assessments upon either real or personal property and cause the amount of the assessment as corrected by the board of taxes and assessments to be entered upon the assessment rolls. The completed assessment rolls are required to be delivered by the board of taxes and assessments to the board of aldermen on the first day of March of each year, and thereafter the amount of tax for the year as levied by the board of aldermen payable by each person or corporation assessed, is entered. While the books are in the custody of the board of aldermen they may be examined by permission of the president of the board. On or before the 28th day of March the assess- ment books are required to be delivered to the receiver of taxes with proper warrants for the collection of the taxes. The receiver of taxes is then required to give notice that, all taxes upon personal property and one-half of all taxes upon real estate shall be due and payable on the first day of May. If the personal tax is not paid on the first day of June, interest is charged upon the amount a:t the rate of 7 per cent, per annum, calculated from the first Monday of May to the date of payment (Greater New York Charter). 50. TAXATION OF SHARES OF STOCK, (a) In General. Shares of stock of corporations, created by the laws of this state or other states, liable to taxation on their capital, are exempt from taxation in the hands of the holders (People ex rel. Keppler & Schwarz- mann v. Barker, 22 App. Div., 120; affirmed, 155 N. Y., 661; People ex rel. Trowbridge v. Commissioners, 4 Hun, 595; affirmed, 62 N. Y., 630). (b) Tax on Transfers. A stamp tax of two cents on each one hundred dollars of face value or fraction thereof is imposed on all sales, or agreements to sell, or memoranda of sales or deliveries or transfers of shares or certifi- cates of stock in any domestic or foreign association, company or cor- poration. ((See Appendix B below.) (c) Inheritance and Succession Taxes. Shares of stock owned by a deceased resident stockholder in a domestic or foreign corporation are subject to a direct and collateral inheritance and succession tax (called in this state a transfer tax) (Tax L., § 220 et seq, as amended by L. 1911, c. 732). There is no such tax in the case of a non-resident decedent. APPENDIX A. CORPORATIONS WITH SHARES OF CAPITAL STOCK WITHOUT NOMINAL OR PAR VALUE. Chapter 351 of the Laws of 1912 (which amends the Stock Corporation Law by adding five new sections, 19-23, thereto) authorizes the formation of corporations having shares of capital stock without nominal or par value, as follows: § 19. Issuance of shares of stock without nominal or par value. Upon the formation or the reorganization of any stock corporation, other than a moneyed corporation, and other than a corporation under the jurisdiction of any public service commission, the certificate of 161 New York incorporation may provide for the issuance of the shares of stock of such corporation, other than preferred stock having a preference as to principal, without any nominal or par value by stating in such certificate: (1) The number of shares that may be issued by the corporation and if any of such shares be preferred stock, the preferences thereof. If such preferred stock or any part thereof shall have a preference as to principal, the certificate shall state the amount of such preferred stock having such preference, the particular character of such prefer- ences, and the amount of each share thereof, which shall be five dollars or some multiple of five dollars, but not more than one hundred dol- lars. (2) The amount of capital with which the corporation will carry on business, which amount shall be not less than the amount of preferred stock (if any) authorized to be issued with a preference as to principal, and in addition, thereto a sum equivalent to five dollars or to some multiple of five dollars for every share authorized to be issued other than such preferred stock; but in no event shall the amount of such capital be less than five hundred dollars. Such statements in the certificate shall be in lieu of any statements prescribed by the law under which the corporation shall have been formed or reorganized as to the amount or the maximum amount of its capital stock or the number of shares into which the same shall be divided, or of the amount or the par value of such shares. Each share of such stock without nominal or par value shall be equal to every other share of such stock, subject to the preferences given to the preferred stock if any authorized to be issued. Every certificate for such shares without nominal or par value shall have plainly written or printed upon its face the number of such shares which it represents and the number of such shares which the corporation is authorized to issue, and no such certificate shall express any nominal or par value of such shares. The certificates for preferred shares hav- ing a preference as to principal shall state briefly the amount which the holders of each of such preferred shares shall be entitled to receive on account of principal from the surplus assets of the corporation in preference to the holders of other shares, and shall state briefly any other rights or preferences given to the holders of such shares. Such corporation may issue and may sell its authorized shares, from time to time, for suchi consideration as may be prescribed in the certificate of incorporation, or as from time to time may be fixed by the board of directors pursuant to authority conferred in such certifi- cate, or if such certificate shall not so provide, then by the consent of the holders of two-thirds of each class of shares then outstanding given at a meeting called for that purpose in such manner as shall be pre- scribed by the by-laws. Any and all shares issued as permitted by this section shall be deemed fully paid and non-assessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereof. § 20. Commencement of Business; Authorized Debts; Liability of Directors; Dividends. No corporation formed pursuant to section nineteen hereof shall begin to carry on business or shall incur any debts until the amount of capital stated in its certificate of incorporation shall have been fully paid in money, or in property taken at its actual value. In case the amount of capital stated in its certificate of incorporation shall be increased as herein provided, such corporation shall not increase the amount of its indebtedness then existing until it shall have received in money or property the amount of such increase of its stated capital. The directors of the corporation assenting to the creation of any debt in violation of this section shall be liable jointly and severally for such debt; but no action'shall be brought under the foregoing pro- 162 New York vision of tiiis seetion unless within one year after tlie debt shall have been incurred the creditor shall have served upon the director written notice of intention to hold him personally liable for such debt. Any director who; because of any such liability under this section, shall pay any debt of the corporation, shall be subrogated to all rights of the creditor in respect thereof against the corporation and its property and also shall be entitled to contribution from all other directors of the corporation similarly liable for the same debt and the personal repre- sentative of any such director who shall have died before making such contribution. No such corporation shall declare any dividend which shall reduce the amount of its capital below the amount stated in the certificate as the amount of capital with which the corporation will carry on business. In case any such dividend shall be declared, the directors in whose administration the same shall have been declared, except those who may have caused their dissent therefrom to be entered upon the minutes of such directors at the time or who were not present when such action was taken, shall be liable jointly and severally to such corpora- tion and to the creditors thereof to the full amount of any loss sustained by such corporation or by its creditors respectively by reason of such dividend. § 21. Taxation. The organization tax payable under section one hundred and eighty of the tax law by any corporation issuing such shares without desig- nated monetary value shall be at the rate of five cents on each such share which the corporation is authorized to issue, and a like tax upon any subsequent increase thereof. The tax payable under section two hundred and seventy of the tax law in respect of any sale or agreement of sale or any memorandum of sale or delivery or transfers of shares or certificates of any share without designated monetary value hereafter issued by any such corporation issuing such shares shall be at the rate of two cents for each and every share of such stock so transferred. The franchise tax upon any corporation issuing such shares of stock payable under section one hundred and eighty-two of the tax law shall be determined by the amount of the gross assets of such corporation employed in any business within this state, less such proportion of its liabilities as shall represent the ratio of its gross assets employed in any business within this state to its entire gross assets wherever employed in business, and the rate of such franchise tax shall be fixed in the manner provided in said section one hundred and eighty-two of the tax law. For this purpose the rate of dividends shall be computed by dividing the total amount of dividends which have been paid during the year by the amount of assets of the corporation upon the first day of such year. § 22. Increase or Reduction of Shares or Capital. Any corporation formed or reorganized pursuant to section nineteen may amend its certificate of incorporation so as to increase or to reduce the number of shares which it may issue, or so as to increase or to reduce the amount of its stated capital, by filing, in the manner provided for the original certificate of incorporation, a certificate of amendment under seal executed by its president or a vice-president and by its secretary or its treasurer, stating the amendment proposed and that the same has been duly authorized by a vote of a majority of the directors and also by the vote of the holders of at least three-fifths of the outstanding shares of each class issued by the corporation, at a meeting of the stockholders called for the purpose in the manner provided in section sixty-three hereof, and by filing with such certificate of amendment a copy of the proceedings of such meeting, made, signed, verified and acknowledged by the president or a vice-president and by 163 New York the secretary or the treasurer of the corporation; but an amendment cannot be made under this section unless as so amended the certificate of incorporation could lawfully have been filed under section nineteen of this chapter. In case of a reduction of the amount of capital of a corporation, a certificate setting forth the whole amount of the ascer- tained debts and liabilities of the corporation shall be made, signed, verified and acknowledged by the president or a vice-president and by the secretary or the treasurer of the corporation and shall be filed with the certificate of amendment; and such certificate of amendment shall have endorsed thereon the approval of the comptroller to the effect that as so stated the reduced amount of capital is sufficient for the proper purposes of the corporation and is in excess of its ascertained debts and liabilities. § 23. Amount of Capital Stock and of Shares Within Meaning of Other Laws. For the purpose of any rule of law or of any statutory provision (other than the foregoing sections nineteen, twenty, twenty-one and twenty- two) relating to the amount of the capital stock of a corporation or the amount or par value of its shares, the aggregate amount of the capital stock of any such corporation formed pursuant to section nine- teen hereof shall be deemed to be the aggregate amount specified in the certificate or amended certificate of incorporation or of reorgani- zation as the amount of capital with which the corporation will carry on business; the amount or the par value of each share of preferred stock having a preference as to principal shall be deemed to be the amount thereof so specified in such certificate or such amended cer- tificate; and the amount or the par value of each other share shall be deemed to be an aliquot part of the aggregate capital so specified in such certificate or in such amended certificate in excess of the specified amount (if any) of the preferred stock therein authorized to be issued with a preference as to principal. APPENDIX B. PROVISIONS OF THE STOCK TRANSFER TAX LAW. § 270. Amount of Tax. There is hereby imposed and shall immediately accrue and be col- lected a tax, as herein provided, on all sales, or agreements to sell, or memoranda of sales of stock, and upon any and all deliveries or trans- fers of shares or certificates of stock, in any domestic or foreign association, company or corporation, made after the first day of June, nineteen hundred and five, whether made upon or shown by the books of the association, company or corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of sale or transfer, whether intermediate or final, and whether investing the holder with the beneficial interest in or legal title to Said stock, or merely with the possession or use thereof for any pur- pose, or to secure the future payment of money, or the future transfer of any stock, on each hundred dollars of face value or fraction thereof, two cents, except in cases where the shares or certificates of stock are issued without designated monetary value, in which cases the tax shall be at the rate of two cents for each and every share of such stock. It shall be the duty of the person or persons making or effectuating the sale or transfer to procure, affix and cancel the stamps and pay the tax provided by this article. It is not intended by this act to impose a tax upon an agreement evidencing the deposit of stock certificates as col- lateral security for money loaned thereon, which stock certificates are 164 New York not actually sold, nor upon such stock certificates so deposited, nor upon mere loans of stock or the return thereof. The payment of such tax shall be denoted by an adhesive stamp or stamps affixed as follows: In the case of a sale or transfer, where the evidence of the transaction is shown only by the books of the association, company or corporation, the stamp shall be placed upon such books, and it shall be the duty of the person making or effectuating such sale or transfer to procure and furnish to the association, company or corporation the requisite stamps, and of such association, company or corporation to affix and cancel the same. Where the transaction is effected by the delivery or transfer of a certificate, the stamp shall be placed upon the surrendered certificate and canceled; and in cases of an agreement to sell, or where the sale is effected by delivery of the certificate assigned in blank, there shall be made and delivered by the seller to the buyer, a bill or memorandum of such sale to which the stamp provided for by this article shall be affixed and canceled. Every such bill or memorandum of sale or agree- ment to sell shall show the date of the transaction which it evidences, the name of the seller, the stock to which it relates, and the number of shares thereof. All such bills or memoranda of sale shall bear a number upon the face thereof and no more than one such bill or memor- andum of sale made by the seller on any given day shall bear the same number. The aforesaid identification number of the bill or memorandum of sale shall in all cases be entered and recorded in the book of account required to be kept by section two hundred and seventy-six of this chapter; and no further tax is hereby imposed upon the delivery of the certificate of stock, or upon the actual issue of a new certificate when the original certificate of stock is accompanied by the duly stamped memorandum of sale as herein provided. (Tax Law, Art. 12, § 270; thus amended by L. 1913, chap. 779, in effect July 1, 1913.) § 273. Canceling Stamps; Penalty for Failure. In every case where anj adhesive stamp shall be used to denote the payment of the tax provided by this article, the person using or affixing the same shall write or stamp thereupon the initials of his name and the date upon which the same shall be attached or used, and shall cut or per- forate the stamp in a substantial manner, so that such stamp cannot be again used; and if any person makes use of an adhesive stamp to denote the payment of the tax imposed by this article, without so effectually canceling the same, such person shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not less than two hundred nor more than five hundred dollars or be imprisoned for not less than six months, or both, in the discretion of the court. (Thus amended by L. 1911, chap. 352, in effect June 15, 1911.-) § 275 a. Registration; Penalty for Failure. Every person, firm, company, association or corporation engaged in whole or in part in the making or negotiating of sales, agreements to sell, deliveries or transfers of shares or certificates of stock, or con- ducting or transacting a stock brokerage business, and every stock association, company or corporation which shall maintain a principal office or place of business within the state or which shall keep or cause to be kept within the state of New York a place for the sale, transfer or delivery of its stock, shall within ten days after the amendment to this section shall take effect if such certificate shall not have been thereto- fore filed, or if at the time this act shall take effect, not engaged in such business or maintaining such principal office or place of business or such a place for the sale or transfer of its stock, within ten days after engaging in such business or after establishing such principal office or place of business or such place for the sale or transfer of its stock as the case may be, file in the office of the comptroller a certifi- 165 New York cate setting forth the name under which such business is, or is to be, conducted or transacted, and the true or real full name or names of the person or persons conducting or transacting the same, with the post-office address or address of said person or persons, unless the party so certifying be a corporation, in which event it shall set forth its said principal office or place of business and when and where incor- porated. Said certificate shall be executed and duly acknowledged by the person or persons so conducting or intending to conduct said busi- ness or by the president or secretary of the corporation as the case may be. In the event of a change in the persons composing such firm, com- pany or association or of the address of any such person, firm, company, association or corporation, or termination of such business or relation- ship, a like certificate setting forth the facts with respect to such change or termination shall within ten days thereafter be filed in the ofBce of the comptroller. Any such person, firm, company, association or corporation who shall fail to comply with the provisions of this section shall be guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not less than one hundred dollars nor more than five hundred dollars or be imprisoned for not more than six months or by both such fine and imprisonment, in the discretion of the court. {Thus amended by L. 1914, Chapter 206, in effect April 7, 1914.) § 276. Books and Records to be Kept by Corporations and Others; Penalties; Powrers of State Comptroller. Every person, firm, company, association or corporation, engaged in whole or in part in the making or negotiating of sales, agreements to sell, deliveries or transfers of shares or certificates of stock, or con- ducting or transacting a brokerage business, shall keep or cause to be kept at some accessible place within the state of New York, a just and true book of account, in such form as may be prescribed by the comp- troller, wherein shall be plainly and legibly recorded in separate columns, the date of making every sale, agreement to sell, delivery or transfer of shares or certificates of stock, the name of the stock and the number of shares thereof, the face value of the stock, the name of the seller or transferrer, the name of the purchaser or transferee and the number and face value of the adhesive stamps affixed and the identifying number of the bill or memorandum of sale as provided for by section two hundred and seventy of this chapter. Every association, company, or corporation shall keep or cause to be kept at some accessible place within the state of New York, a stock certificate book and a just and true book of account, transfer ledger or register, in such form as may be prescribed by the comptroller, wherein shall be plainly and legibly recorded in separate columns the date of making every transfer of stock, the name of the stock and the number of shares thereof, the serial number of each surrendered certificate, the name of the party surrendering such certificate, the serial number of the certificate issued in exchange therefor, the number of shares covered by said certificate, the name of the party to whom said certificate was issued and evidence of the payment of the tax provided for by section two hundred and seventy of this chapter, which evidence, however, shall be provided in one of the following manners and not otherwise, to wit: (a) By attaching to the stock certificate surrendered for transfer, the stamps required for such transfer, or (b) If the stamps are not attached to the certificate, but are at- tached to the bill or memorandum of sale effecting or evidencing the 166 New York transfer of such certificate, by attaching to said certificate the said bill or memorandum of sale with stamps; attached, or (c) If the stamps covering the transfer are attached to a bill or memorandum, effecting a transfer of one or more certificates or to one or more certificates included in said transfer, a notation must be made upon such certificates, bill or memorandum, as the case may be, clearly specifying and identifying the certificate or certificates of stock to the sale or transfer of which the said stamps apply, or (d) If the bill or memorandum bearing such stamps is not at- tached to the surrendered certificate or certificates to which it applies, a notation must be made upon such bill or memorandum stating the serial number or numbers of the certificates to which said bill or memo- randum applies, as provided by section two hundred and seventy of this chapter. It shall also retain and keep all surrendered or canceled shares or certificates of its stock and all memoranda relating to the sale or transfer of any thereof. All such books of account, transfer ledgers, registers and stock certificate books, shall be retained and kept as afore- said for a period of at least two years subsequent to the date of the last entry made therein as herein required; and all such surrendered or canceled shares or certificates of stock and memoranda relating to the sale or transfer of stock, shallbe retained and kept for a period of at least two years from the date of the delivery thereof. For the pur- pose of ascertaining whether the tax imposed by this article has been paid, all such books of account, transfer ledgers, registers, stock certifi- cate books, surrendered or canceled shares or certificates of stock and memoranda relating to the sale or transfer thereof, shall at all times between the hours of ten o'clock in the forenoon and three o'clock in the afternoon, except Saturdays, Sundays and legal holidays, be open to examination by the comptroller or his duly authorized representative. The comptroller may enforce his right to examine such books of account and bills or memoranda of sale or transfer; and such transfer ledger, register and stock certificate books and surrendered or canceled shares or certificates of stock by mandamus. If the comptroller ascer- tains that the tax provided for in this article has not been paid, he shall bring an action in his name as such comptroller, in any court of com- petent jurisdiction for the recovery of such tax and for any penalty incurred by any person under the provisions of this article. Every person, firm, company, association or corporation who shall fail to keep such book of account or bills or memoranda of sale or transfer, or transfer ledger, register or stock certificate book or sur- rendered or canceled shares or certificates of stock as herein required, or who alters, cancels, obliterates or destroys any part of said records or makes any false entry therein, or who shall refuse to permit the comptroller or any of his authorized representatives freely to examine any of said books, records or papers at any of the times herein pro- vided, or who shall in any other respect violate any of the provisions of this section shall be deemed guilty of a misdemeanor and on conviction thereof shall for each and every such offense pay a fine of not less than five hundred dollars nor more than five thousand dollars, or be imprisoned not less than three months nor more than two years, or both in the discretion of the court. (Thus amended by L. 1913, chap. 779, in effect July 1, 1913.) § 278. Effect of Failure to Pay Tax. No transfer of stock made after June first, nineteen hundred and five, on which a tax is imposed by this article, and which tax is not paid at the time of such transfer, shall be made the basis of any action or legal proceedings, nor shall proof thereof be offered in evidence in any court in this state. 167 New York RULINGS OF THE STATE COMPTROLLER GOVERNING THE COLLECTION OF TAXES ON TRANSFERS OF STOCK. For the information of the public the Comptroller issues the following brief statement of the more general rules and regulations governing the imposition and collection, of stock transfer taxes, prepared pur- suant to the rulings made by the Attorney-General. 1. The application and scope of the Stock Transfer Tax Law has been considerably broadened by the amendments thereto, effected by chapter 352 of the Laws of 1911, chapter 292 of the Laws of 1912, chapter 779 of the Laws of 1913, and chapter 206 of the Laws of 1914, with the result that the rulings heretofore made asserting exemp- tions from the tax are not now as a rule controlling. 2. By the statute as amended, a tax is imposed upon all sales or agreements to sell and upon all deliveries or transfers of shares or certificates of stock of any and all associations, companies and cor- porations, whether domestic or foreign ^at the rate of two cents on each hundred dollars of face value or fraction thereof, except where shares or certificates of stock are issued ■oration, signed by the President or Vice-President and the Treasurer, certifying the number of shares owned by him in the company. Section 2. Transfer of Shares^ — The shares of stock of the company shall be transferable only upon' its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certi- ficates shall be surrendered to the company by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer, and a duplicate thereof mailed to the Delaware office, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed' in the entry of the transfer. Section 3. Dividends. -^ Ihe directors may declare dividends from the surplus or net profits arising from the business of the corporation as and when they deem expedient. Before declaring any dividend there may be reserved out of the accumu- lated profits such sum or suras as the directors from time to time in their discretion think proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends, or for any such otiber purpose as the directors shall think con- ducive to the interests of the company. The directors may close the transfer books for not exceeding days next preceding the day appointed for the payment of any dividend. ARTICLE VIL miscellaneous provisions Section 1. Fiscal Year. — The fiscal year of the company shall be the calendar year. Section 2. Principal OfUce. — The principal office shall be established and maintained at No Street, in the City of in the County of , in the State of Delaware, and shall be the resident agent of the corporation in charge thereof. A duplicate stock ledger shall be kept at such office. Section 3. Notice and Waiver of Notice. — Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given, by depositing the same in a post-office box in a sealed post-paid wrapper, addressed to the person entitled thereto at his last known) post-office address, and such notice shall be deemed to have been given on the day oif such mailing. Any notice required' to be given under these By-Laws may be waived by the person entitled thereto. Section 4. Interpretation. — In these By-Laws, unless there shall be something in the subject or context inconsistent therewith: "Stockholder" means the registered owner of a share or shares of the capital stock. In provisions relating to meetings of stockholders, "majority" meansi a majority in interest and "present" means present in person or represented by proxy. "Board," "Board of Directors" and "Directors" mean the directors of the com- pany for the time being duly convened in a regular or special meeting. The word "meeting" includes the annual election of directors. Words importing the singular number include the plural and vice versa; words importing males include females; and words importing natural persons include cor- porations. 198 Forms and Precedents ARTICLE VIII. AMENDMENTS. Section 1. Amendments of By-Laws. — The stockholders, hy the affirmative vote of the holders o£ a majority of the stock issued and outstanding, or thei directors, by the affirmative vote of a majority of the directors, may at any: meeting, provided the substance of the proposed amendment shall have been stated in the notice of the meeting, amend or alter any of these By-Laws. A copy of such amended By-Law shall be sent to each stockholder within ten days after the adoption of the same. MAINE. Form 5.— ARTICLES OF ASSOCIATION. We, the undersigned, in accordance with the provisions of chapter 47 of the Revised Statutes of the State of Maine, and all acts amendatory thereof or addi- tional thereto, in behalf of ourselves, our associates, successors and assigns, hereby associate ourselves together by these written articles for the purpose of forming a corporation under the laws of the State of Maine to be called Company, to carry on the following lawful business, to wit; Said corporation shall be located at in the county of and State of Maine, and shall have its principal office in the State of Maine at said city of And we hereby waive notice of the time, place and purpose of the first meeting of the undersigned associates, and fix the day of a. d. 19 at o'clock m, as the time, and the office of in the city of and the State of Maine, as the place of said first meeting, and we do hereby consent to the transaction of such business as may come before said meeting or any adjourn- ment thereof. Dated at Maine, this day of a. d. 19 Names. Residences. Form 6.— MINUTES OF THE FIRST MEETING OF SIGNERS OF ARTICLES OF ASSOCIATION. ]MiNUTES OF THE FiRST MEETING of the Signers of the articles of association of Company, held pursuant to waiver and consent embodied in such agreement, on , 19 , at o'clock, m., at the office of in the city of , Maine. Present ; being all of the signers of the articles of agreement. On motion, duly seconded and carried, was unanimously chosen chairman of the meeting and as clerk thereof. The clerk presented and read the articles of association. On motion, duly seconded and carried, the same were ordered to be inserted in the minute book at the end of the minutes of this meeting. On motion, duly seconded and unanimously carried, the following resolutions were adopted: Resolved, that the name of the proposed corporation be Company; that the nurposes thereof be as set forth in the articles of association; that the amount of capital ^ stock be * dollars ($ ), divided into ( ) shares of the par value of dollars each; Further Resolved, that the directors of the corporation shall be (..) in number, and that the following named gentlemen shall be the directors to serve until the next annual meeting of the corporation, viz. : Further Resolved, that be and hereby is elected president of the corporation; clerk thereof; and treasurer thereof. The clerk of the meeting presented a form of proposed by-laws, and the same were, on motion duly seconded and carried, taken up and considered, section by section, and each section was, on like motion, agreed upon and adopted. Where- upon,' it was, on like motion, Resolved, that the by-laws heretofore considered and adopted, section by section, be now adopted as a whole, and that the same be inserted in the minute book of this corporation at the end of the minutes of this meeting. 199 Forms and Precedents On motion, duly seconded and carried, the president, treasurer and a majority of the directors were instructed to prepare and execute a proper certificate, as pro- vid«3 by law, setting forth the name and purposes of the corporation, the amount and classification of the capital stock, the amount already paid in, the par value of the shares, the names and residences of the signers, the name of the county where it is located, the number and names of the directors, and the name and residence of the clerk, and cause such certificate to be properly examined, registered, recorded and filed. On motion, duly seconded and carried, it was Resolved, that the officers of this company be and they hereby are authorized and instructed to pay all taxes required by law to complete the organization of this company, and do all other acts and deeds necessary to that end. There being no further business, the meeting adjourned. A true record. ' Attest: Clerk. CLERK'S OATH. State of Maine, County of ss.: I, do solemnly promise and swear that I will faithfully discharge the duties of clerk of the first meeting of the incorporators of Company, a corporation of the State of Maine, according to the best of my ability. Sworn to before me, at the city of , Maine, this day of 19 (L. S.) Notary Public. Form 7.— MINUTES OF FIRST MEETING OF THE BOARD OF DIRECTORS. The First Meeting of the board of directors of the Company was held at on the day of 19 , at o'clock m., pursuant to notice duly given in accordance with the by-laws. The following directors were present: constituting a majority [or all} of the members of said board. Mr called the meeting to order, and upon motion therefor, duly made and seconded, the following gentlemen were unanimously elected to the offices set before their names respectively; President Vice-President Secretary The secretary was thereupon duly sworn as follows: State of County of ss. : This day of a. d. 19 personally appeared and made oath that he would faithfully and impartially perform the duties devolving upon him as secretary of . ; Before me, The secretary presented and read a waiver of notice of this meeting, signed by all the directors, and it was Ordered, that the same be placed on file. The president presented the certificate of organization of this corporation, pre- pared in accordance with the resolutions adopted at the meeting of the signers of the articles of agreement thereof, and bearing the certificate of approval of the attorney general of Maine and the certificate of record of the register of deeds of County, Maine, and of the secretary of state of Maine, and the same was ordered placed on file. Upon motion, duly made and seconded, it was Resolved, that the seal, an impression whereof is hereto attached, be adopted as the corporate seal of this corporation. _ Upon motion, duly made and seconded, it was Resolved, that the form of stock certificate now presented at this meeting be approved and adopted. It was ordered that the treasurer give a bond in the sum of dollars, with one surety, in the form presented at this meeting, and submit the same to the board for approval as to the sufficiency of his surety. The treasurer thereupon presented his bond, signed by himself as principal and by as surety, and the same was approved and ordered to be filed. 200 Forms and Precedents upon motion, duly made and seconded, it was Resolved, that the treasurer's action in paying all fees and expenses incident and necessary to the organization of the corporation be, and it hereby is approved, and further, that the treasurer be authorized and directed to procure and pay for a corporate seal and the proper corporate books. Upon motion, duly made and seconded, it was Resolved, that the treasurer be, and he hereby is authorized to open a bank account in behalf of the corporation with Further Resolved, that until otherwise ordered, said be, and it hereby is authorized to make payments from the funds of this corporation on deposit with it, upon and according to the check of this corporation signed by its and counter- signed by its Upon motion, duly made ajad seconded, it was Resolved, that the clerk of this corporation may apply to and act upon the instructions of ^ , Esq., the counsel of this corpora- tion, in respect of any legal questions arising in connection with his duties as such clerk. Upon motion, duly made and seconded, it was Resolved, that an office of this corporation be established and maintained at i in the city state of and that meetings of the board of directors be held either at the principal office of the corporation in Maine, or at such office in the city of , or elsewhere, as the board of directors shall from time to time order. Upon motion, duly made and seconded, the following preambles and resolutions were unanimously adopted: Whereas, has offered to sell to this corporation property as follows: in consideration of thd issue of stock of this corporation to the amount of ' dollars, and Whereas, it appears to the board that such property is necessary for the busi- ness of this corporation. Now Therefore be it Resolved, that this corporation accept the offer of said to sell to this corporation the property hereinabove described, which said property the board of directors hereby adjudge and declare to be of the fair value of dollars. Further Resolved, that the proposed agreement for the sale of said property presented' at this meeting, be, and the same hereby is approved as to form and the president and of the corporation be, and they hereby are authorized and directed to execute said agreement in the namd and on behalf of this corporation and to affix its corporate seal thereto, and that when so executed the same be placed on file. Upon motion, duly made and seconded, the following preamble and resolutions were unanimously adopted: Whereas, it has been agreed between each of the signers of the articles of agreement and original subscribers to the stock, and the aforesaid that the stock to be issued in payment for the property authorized to be purchased by the resolution hereinbefore set forth, shall include the stock subscribed by said signers and subscribers, as evidenced by their original subscription on file. Now Therefore be it Resolved, that the said property be accepted in full pay- ment of the subscriptions for stock of the said signers and subscribers and that full paid stock be issued to them or their assigns to the amounts of their respective subscriptions, but only upon the delivery of said property. Further Resolved, that the president and treasurer be, and they hereby are authorized and directed to issue to the order of said certificates of full paid capital stock of this corporation to the aggregate amount of ^ dollars par value as provided by the agreement between said and this corporation above referred to, upon his delivering the property agreed to be transferred. Upon motion, duly made and seconded, it was Resolved, that an assessment of one hundred per cent, be levied upon the shares of stock already subscribed, as evidenced by the original subscriptions on file. Further Resolve©, that this corporation accept in full payment of said assess- ment, the property agreed to be sold to the corporation, as set forth in the preced- ing resolutions, the said stock to be issued upon delivery of said property. Upon motion, duly made and' seconded, it was Resolved, that the proper officers of this corporation be, and they hereby are authorized and directed in behalf of the corporation and under its corporate seal, or otherwise, to make and file such certificate or report as may be required by law to be filed in any state, or in any territory or dependency of the! United States, or in any foreign country, in which said officers shall find it necessary to file the same to authorize the corporation to transact business in such state, territory, depend- ency or foreign country. 201 Forms and Precedents upon motion, duly made and seconded, it was OrdereDj that a copy of each of the following papers be entered in the minute book for purposes of reference: 1. Waiver of Notice of the Meeting. 2. Certificate of Organization. 3. Form of Stock Certificate. 4. Treasurer's Bond. 5. Agreement for the Sale of Property. No other business being presented, on motion, the meeting thereupon adjourned. A true record. Attest : Secretary. Form 8.— CERTIFICATE OF ORGANIZATION. The undersigned, officers of a corpocation organized at at a meeting of the signers of the articles of agreement therefor, duly called and held at in the of on ; the day of a. d. 19 hereby certify as follows: The name of said corporation is The purposes of said corporation are The amount of capital stock is The amount of common stock is The amount of preferred stock is The amount of capital stock already paid in is The par value of the shares is The names and residences of the owners of said shares are as follows: No. OF Shares. Names. Residences. Common Preferred. Said corporation is located at in the " county of The number of directors is and their names are The name of the clerk is and his residence is The undersigned, is president ; the undersigned, is treasurer ; and the undersigned are a majority of the directors of said corporation. Witness our hands this day of. a. d. 19 .Pr«sident. .Treasurer. Directors, .a. d. 19 Then personally appeared. and severally made oath to the foregoing certificate, that the same is true. Before me, Justice of the Peace. 202 Forms and Prhcedents State of Maine. ATTORNEY GENERAL'S OFFICE. .A. D.. 19. I hereby certify that I have examined the foregoing certificate, and the same is properly drawn and signed, arid is conformable to the constitution and laws of the state. Attorney General. ss. : „ . , Registry of Deeds. Received 19 , at h M. Recorded in vol page Attest: . Register. State of Maine. Office of Secretary of State. Augusta, 19 A copy of the record of the within certificate of organization duly certified by the register of deeds of county, has this day been received and filed in this office. Recorded in vol page of records of cor- porations. Attest : Secretary of State. Form 9.— MINUTES OF FIRST ANNUAL MEETING OF STOCKHOLDERS. The First Annual Meeting of the stockholders of Company, having been duly convened, was held at the principal ofiice of the cor- poration. No Street , Maine, on the day of ..'. , 19 , at o'clock in the noon. The following stockholders owning the number of shares set opposite their respective names, were present in person: Names No. of Shares of Stock The following stockholders were represented by , attorney in fact and proxy: Names No. of Shares of Stock being all of the stockholders of the corporation. called the meeting to order, and on motion, duly seconded and carried, was chosen chairman. The folloiwing transfers of subscriptions were presented, approved and on motion duly seconded and carried, ordered filed: to , .... share. to , .... share. to , . • ■ . share. The proxies of the above-named transferees of subscriptions, , as their attorney, were likewise presented, and on like motion, approved and ordered filed. The record of the meeting of the signers of the articles of association of this corporation, heldi at the office of , Maine, on the day of , 19 , were read and upon motion duly made and seconded, and by the unanimous vote of all present, were ratified and approved. The clerk presented the certificate of organization of this corporation, prepared in accordance with the resolutionj adopted at a meeting of the signers of the articles of association, and bearing the certificate of approval of the attorney general of Maine and the certificate o? record of the register of deeds of County, Maine, and the secretary of state of Maine, and it was on motion duly seconded and unanimously carried, ordered that the same be placed on file in the minute book at the end of the minutes of this meeting. On motion duly made, seconded and unanimously carried, it was Resolved, that the meeting proceed ta the election of a board of directors and a clerk for the ensuing year. Thereupon, the nominations having been duly made and seconded, and a ballot having been had in each case, the chairman declared the following gentlemen had been unanimously elected to the offices set before their names, respectively: Directors. Clerk : 203 Forms and Precedents No further business being presented, on motion duly made, seconded and car- ried, the meeting adjourned. A true copy. Attest: Clerk. We, the undersigned, being all the members of , now present in person or represented by proxy at the first annual meeting of stockholders of said corporation, the record whereof is above written, hereby consent to said meeting and to the proceedings thereof, as above recorded. Dated , Maine, , 19 , by His Attorney. by His Attorney. .., by His Attorney. Subscription Agreement. We, the undersigned, hereby severally agree, each, with the other and with the corporation hereinafter named, in consideration of the mutual agreements herein contained, to take the number of shares of capital stock of , a corporation to be organized under the laws of the State of Maine, set opposite our respective signatures hereto: Names. Residences. No. of Shares. Clerk's Oath. State of Maine, County of , ss. : I, , do solemnly promise and swear that I will faithfully discharge the duties of clerk of , a corporation of the State of Maine, according to the best of my ability. Sworn to before me this day of , 19 , at the city of , Maine. Notary Public. Form 10.— BY-LAWS. ARTICLE I. STOCKHOLDERS. Section 1. Place of Holding Meetings. — All meetings of the stockholders shall be held at the principal office. Section 2. Voting. — Stockholders shall be entitled to vote at meetings either in person or by proxy appointed by instrument in. writing subscribed by the stock- holder or by his duly authorized attorney, and granted not more than thirty days before the meeting, which shall be named therein. Each common stockholder shall be entitled to one vote for each share of stock registered in his namet on the books of the Company at the time of the meeting. Section 3. Quorum. — Any number of common stockholders together holding at least one-half of the stock issued and outstanding, who shall be present in per- son! or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of business. Section 4. Adjournment of Meetings. — If less than a quorum shall be in attendance at the time for which the meeting shall have been called, the meeting may, after the lapse of at least half an hour, be adjourned from time to time by a majority vote of the stockholders present, for a period of not exceeding one month at any one time, without any notice other than by announcement at the meeting, until a quorum shall attend. Any meeting at which a quorum is present may also be adjourned, in like manner, for such time, or upon such, call as may be determined by vote. At any adjourned meeting at which a quorum shall attend any business may be transacted which might have been transacted at the original meeting. Section 5. Annual Election of Directors. — The first annual meeting of stock- holders for the election of directors and a clerk and the transaction of other busi- ness shall be held without fiirther notice than herein contained on the day of in the year 191 , at .M., and thereafter the stock- holders shall meet annually on the day of in each year, at o'clock M., and the Secretary shall give notice thereof as 204 Forms and Precedents hereinafter prescribed. At each, annual meeting the stockholders shall, by plurality vote, by ballot, elect the directors and the Oerk, and they may transact any other corporate business. Section 6. Special Meetings; How Called. — Special meetings of the stock- holders may - be called by the President, and shall be called upon requisition in writing therefor, stating the purpose or purposes thereof, delivered to the Presi- dent or Secretary, signed by. two directors or by stockholders owning at least one-half of the common stock issued and outstanding. Section 7. Notice of Stockholders' Meetings. — Written notice, stating the place and time of the meeting, and, in case of a special meeting, the general nature of the business to be considered, shall be given by the Secretary to each stockholder at his last known post-office address, at least ten days before each meeting. ARTICLE II. DIRECTORS. Section 1. First Meeting. — The newly-elected directors may hold their first meeting for the purpose of organization and the transaction of business, upon the call of any two of their number, at the usual place of meeting of the directors, or the time and place of such meeting may be fixed by consent in writing of the directors. Section 2, Election of Officers. — At such' meeting the directors shall elect a President and Vice-President from their own number, and a Treasurer and Secre- tary, who need not be directors. Such officers shall hold office until the next annual election of officers and until their successors are elected and qualify. In case such officers shall not? be elected at such first meeting, they may be chosen at any subsequent meeting of directors called for the purpose. Section 3. Regular Meetings. — Regular meetings of the directors may be held without notice at such place and times as shall be determined from time to time by) resolution of the directors. Section 4. Special Meetings; How Called; Notice. — Special meetings of the board may be called by the President or any two directors on two-days' notice to each director, given either personally or by letter or telegram. Section 5. Quorum. — ■ A quorum for the transaction of business at meetings of the board shall consist of directors. Section 6. Place of Meeting. — The directors may hold their meetings and have one or more offices, and keep the books of the Company except such books as are required by law to be kept in Maine, outside the' State of Maine, at any oiffice or offices of the Company, or at any such other place as they may from time to time determine. Section 7. Qualification. — Directors shall be and remain stockholders. Section 8. General Powers of Directors. — The board of directors shall have the management and control of the business and property of the Comijany, and, subject to the restrictions imposed by law or by these By-laws, may exercise all the powers of the corporation. Section 9. Specific Powers of Directors. — Without prejudice toi the general powers conferred by statute or by the last section, and the other powers conferred by these by-laws, it is hereby expressly declared that the directors shall have the following powers, to wit: (1) To adopt and alter a common seal of the corporation. (2) To make and change regulations not inconsistent with these by-laws, for the management o£ the Company's business and affairs. (3) To purchase or otherwise acquire for the Company any property, rights or privileges which the Company is authorized to acquire, (4) To pay ■ for any property purchased for the Company, either wholly or partly in money, stock, bonds, debentures or other securities of the Company. (5) To borrow money and to make and issue mortgages, bonds, deeds of trust, trust agreements and negotiable or transferable instnunents and securities, secured by mortgage or otherwise, and to do every other act and thing necessary to effectuate the same. (6) To remove any officer other than the President for cause or summarily without cause and in their discretion, from time to time, to devolve the powers and duties of any officer upon any other person for the time being. (7) To appoint and remove or suspend such subordinate officers, agents or servants, as they think fit, and to determine their duties,_ and fix, and from time to time change their salaries or emoluments, and to require security as and when they think fit. (8) To confer upon any officer of the company the power to appoint, remove and suspend subordinate officers, agents and servants. (9) To appoint any person or corporation to accept and hold in trust for the company any property owned by the company, or in which it is interested, or for any other purpose, and to execute and do all such deeds and things as may be requisite in relation to any such trust. (10) To determine who shall be authorized on the company's behalf to sign bills, notes, acceptances, endorsements, checks, releases, receipts, contracts and docu- ments. (11) To determine who shall be entitled to vote in the name and behalf of the company upon any shares of stock, bonds or other securities of other corporations held by the Company. 205 Forms and Precedents (12) To delegate any of the powers of the Board) in relation to the ordinary business of the company to any standing or special committee, or to any officer or agent, (with power to sub-delegate), upon such terms as they think fit, (13) To call special meetings of the stockholders for any purpose or pur- poses. Section 10. Compensation of Directors. — Directors shall not receive any stated salary for their services as directors, but by resolution of the Board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the Com- pany in any other capacity as an officer or otherwise, and receiving compensation therefor. ARTICLE III. EXECUTIVE COMMITTEE. Section 1. How Appointed. — The directors may appoint an executive commit- tee from their number. The executive committee may make its own rules of pro- cedure and shall meet where and as provided by such rules, or by a resolution of the directors. A majority shall constitute a quorum, and in every case the affirma- tive vote of a majority of all the members of the committee shall be necessary to the adoption of any resolution. Section 2. Powers. — During the intervals between the meetings of the direc- tors, the executive committee may exercise all the powers of the directors in the management and direction of the business of the company, in such manner as such committee shall deem best for tiie interests of the Company, in all cases in which specific directions shall not have been given by the directors. ARTICLE IV. OFFICERS. Section 1. The officers of the Company in addition to the Directors shall be a President, Vice-President, Clerk, Secretary and Treasurer. One person may hold more than one office. Section 2. President. — The President shall when present preside at all meet- ings of the directors, and stockholders; and he shall have power to call meetings of the stockholders and directors in accordance with thesd by-laws, appoint and remove, subject to the approval of the directors, servants, agents and employees of the Com- pany and fix their compensation, make and sign contracts and agreements in the name and behalf of the Company, and while the directors are not in session he shall have general management and control of the business of the company; he shall see that the books, reports, statements and certificates required by the statute under which this company is organized or any other laws applicable thereto are properly kept, made and filed according to law; and he shall generally do and perform all acts incident to the office of President, or which are authorized or required by law. Section 3. Vice-President. — The Vice-President shall be vested with all the powers and shall perform all the duties of the President in the absence or disability of the latter. He shall have such other powers and perform such other duties as shall be prescribed by the directors. Section 4. Clerk. — The Clerk shall be a resident of Augusta, Maine. He shall be sworn to the faithful performance of his duties. He shall keep a record of the proceedings of all stockholders' meetings, and shall have the custody of all books and papers belonging to the Company* which are kept at the principal office. In the absence of the Clerk, a clerk pro tempore may be chosen. Section 5. Secretary. — The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by law or by these By-laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the Presid'ent, or by any two directors or stockholders upon, whose requisition the meeting is called as provided in these By-laws. He shall keep a record of the proceedings of all meetings of the directors, and perform such other duties as may be prescribed by the directors or the President. He shall be sworn to the faithful performance of his duties. Section 6. Treasurer. — ■ The Treasurer shall have the custody of all funds, securities, evidences of indebtedness and other valuable documents of the Company; he shall receive and give or cause to be given receipts and acquittances for moneys paid in on account of the' Company, and shall pay, out o£ the funds on hand, all just debts of the Company of whatever nature, upon maturity ofi the same; he shall enter or cause to be entered in books of the Company to be kept for that purpose, full and accurate accounts of all moneys received and paid out on account of the Company, and, whenever required by the President or the Board, he shall render a statement of his cash accounts) and he shall keep such other books as will show a true record of the expenses, losses, gains, assets and liabilities of the Company; he shall have charge of the stock bonds, transfer books and ledgers; and he shall per- form all of the other duties incident to the office of Treasurer. He shall give the company a bond for the faithful discharge of his duties, in such amount and with such surety as the Board shall prescribe. ARTICLE V. RESIGNATIONS. Section 1. Resignations. — Any director, member of a committee or other offi- cer, except the Clerl^ may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time is speci- 206 Forms and Precedents fied, at the time of its receipt by the President, Secretary or Clerk. The acceptance of a resignation shall not be necessary ~ to make it effective. The transfer by a director of all his stock shall operate ipso facto as a resignation and create a vacancy in his office. The Clerk' may resign by filing his resignation with the Register of Deeds in Kennebec County, Maine; said resignation shall take effect from and after the time of its receipt by such Register of Deeds. Section 2. Filling of Vacancies. — If the office of any director, member of committee or other officer becomes vacant, the remaining directors, although less than a quorum, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term, and until his successor shall be duly chosen. ARTICLE VI. CAPITAL STOCK. Section 1. Classification of Stock.- — The capital stock shall be divided into ten thousand shares of special preferred stock, thirty thousand shares of non- cumulative preferred stock, and ten thousand shares of common stock. The rights following shall be attached to the shares aforesaid inter se, subject as hereinafter provided, that is to say: — The holders of the special preferred stock shall be entitled to receive, when and as declared by the directors, from the surplus or net profits, a fixed cumulative preferential dividend at the ratei of, but never exceeding, six per centum per annum, before any dividend on the other classes of stock shall be paid or set apart. The holders of the non-cumulative preferred stock shall be entitled to receive, when and as declared, out of the net profits of each year, a. fixed non-cumulative dividend for such year at the rate of, but never exceeding, six per centum per annum, before any dividend on the common stock shall be paid or set apart. Whenever all dividends on the special preferred stock and non-cumulative pre- ferred stock shall have been declared and paid or set apart as hereinabove provided, the board of directors may declare a dividend or dividends on the common stock of the whole or any portion of the remaining surplus or net profits,* The holders c^ common stock alone shall be entitled to vote at meetings of the stockholders, including elections of directors. Section 2. Issue and Transfer of Stock. — The President shall cause to be issued to each stockholder one or more certificates representing the number of shares owned by him in the Company, signed by the President or Vice-President and attested by the Treasurer, and bearing the corporate seal. Neither the President, Vice-President nor Treasurer shall sign blanks and leave them for use by the other, nor sign them without knowledge of the apparent title of the person to whom they are issued. In case of the absence or disability of either of said officers, the signature of a majority of the directors in his stead shall be sufficient. Section 3. Transfer of Shares. • — The shares of stock of the Company shall be transferable only upon its books by the holders thereof in person or by their legal representatives, and upon such transfer the old certificates shall be surrendered to the Company by the delivery thereof to the person in charge of the stock and trans- fer books and ledgers, or to such other person as the directors may designate, by whom they shall be canceled, and new certificates shall thereupon be issued. A record shall be made of each transfer, and if any of such shares shall be transferred as collateral security and not absolutely, the fact shall be so expressed in the entry of said transfer. The transfer books may be closed by order of the directors for a period not exceeding ten days prior to any meeting of ' the stockholders and until after the final adjournment thereof. Section 4. Loss of Certificates, — Any person claiming a certificate of stock to be lost or destroyed shall, in order to obtain a new certificate, make an affidavit or affirmation of that fact and advertise the same in such manner as the directors may require, and shall give the Company a bond of indemnity in form and with one or more sureties satisfactory to the directors, in at least double the fair value of the shares represented by such certificate, whereupon the President and the Treas- urer may causd to be issued a new certificate of the same tenor with the one alleged to be lost or destroyed, but always subject to the approval of the directors. Section 5. Dividends. — Subject to the provisions of Settion 1 of this Article the directors may declare and fix the times of payment of dividends whenever they deem expedient. Before declaring any dividends there may be set aside out of the net profits of the Company such sum or sums as the directors from time to time in their discretion think proper for working capital, or as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any prop- erty of the Company, or for any such other purpose as the directors shall think conducive to the interests of the Company. The directors may close the transfer books for not exceeding ten days next preceeding the day appointed for the pay- ment of any dividend. ARTICLE VII. miscellaneous provisions. Section 1. Fiscal Year. — Tlie fiscal year of the Company shall be the calendar ' Section 2. Notice and Waiver of Notice. — Whenever any notice is required by these By-laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing the same in a post-office box in a sealed post-paid wrapper, addressed to the person entitled thereto at his last known post-office address, and such notice shall be 207 Forms and Precedents deemed to have been, given on the day of such mailing. Any notice required to be given under these By-laws may be waived by the person entitled 'thereto. Section 3. Interpretation. — In these By-laws, unless there shall be something in the subject or context inconsistent therewith: • "Office" and "Principal office" mean the principal office in the City of Augusta. "Stockholder" means the registered owner of a share or shares of the capital stock, and includes a subscriber for stock at the first meeting of the corporators and in relation to voting means such an owner o£ common' stock. In provisions relating to meetings of stockholders "majority" means a majority in interest and "present" means present in person or represented by proxy. "Board," "Board of Directors" and "Directors" mean the directors of the com- pany for the time being duly convened in a regular or special meeting^ and includes the Executive Committee. The word "meeting" includes the annual election of Directors. Words importing the singular number include the plural, and vice versa; words importing males include females ; and words importing natural persons include cor- porations. ARTICLE VIII. AMENDMENTS. Section 1. Amendments of By-Laws. — The stockholders, by the affirmative vote of the holders of a majority of the stock issued and outstanding, may at any annual meeting, or upon notice at any special meeting, amend, alter or repeal any of these By-laws in any manner not contrary to law: provided, however, that no contract rights shall thereby be impaired. MASSACHUSETTS. Form 11.— AGREEMENT OF ASSOCIATION. We whose names are hereto subscribed, do by this agreement, associate our- selves with the intention of forming a corporation according to th^ provisions of chapter 437 of the Acts of the year 1903, of the Commonwealth of Massachusetts, and the acts in amendment thereof and in addition thereto. The name by which the corporation shall be known is The location of the principal office of the corporation within the commonwealth is the of and outside the commonwealth the of state of The purposes for which the corporation is formed and the nature of the busi- ness to be transacted by it are as follows: The total amount of its capital stock to be authorized is .• dollars. The par value of its shares is Preferred dollars. Common dollars. Thel number of its shares is Preferred Common {Note. — State the restrictions, if any, imposed upon the transfer of stock, and if there are to be two or more classes of stock, a description of the different classes and a statement of the terms on which they are to he created and the method of voting thereon"]. [Note. — State any other provisions not inconsistent with law for the conduct and regulation of ^ the business of the corporation, for its voluntary dissolution^ or for limiting, defining or regulating the powers of the corporation, or of its directors or stockholders, or any class of stockholders'] . (If seven days' notice is given, use the following form). The first meeting shall be called by , of (If notice is waived use the following form). We hereby waive all requirements of the statutes of Massachusetts for notice of the first meeting for organization, and appoint the day of , 191..., at o'clock M., ^* as the time and place of holding said first meeting. The names and residences of the incorporators and the amount of stock sub- scribed for by each are as follows: — Name. Residence. Amount Subscribed for. Preferred. Common. In Witness Whereof, we have hereunto set our hands, this day of in the year nineteen hundred and Proper iirst name should be written in full. Initials and abbreviations are not sufficient. 208 Forms and Precedents Form 12.— MINUTES OF FIRST MEETING OF INCORPORATORS. Minutes of the First Meeting of the incorporators of the Company, held at the office of " . . . . in the city of , Massachusetts, on the day of , 19 , at o'clock in the noon, pursuant to a waiver of notice signed by all of the subscribers to the agreement of association of said company. There were present being all of the incorporators. _Mr called the meeting to order and, upon motion duly seconded, was duly chosen to be chairman of the meeting. Upon motion duly made and seconded, Mr was duly appointed temporary clerk and he proceeded to act as such, having first been duly sworn as follows: Commonwealth of Massachusetts, ss. : 19 Then personally appeared the above named and made oath that he would faithfully discharge the duties of his office as tem- porary clerk at the first meeting of incorporators of the Company. Before me, .' * Justice of the Peace. The clerk presented a form of proposed by-laws and the sam^ were, on motion duly seconded and carried, taken up and considered, section by section, and each section was on like motion agreed upon and adopted. Thereupon it was on like motion Voted, that the by-laws heretofore considered and adopted, section by section, be now adopted as a whole and that the same be inserted in the minute book at the end of the minutes of this meeting. Upon motion, duly made and seconded, it was Voteiv, that the meeting elect a board of directors by ballot. Thereupon a ballot was duly taken and the chairman declared that the following persons had been unanimously elected directors: Upon motion duly made and seconded, it was Voted, that the meeting elect a treasurer by ballot. Thereupon a ballot was duly taken and the chairman declared that the following person had been unanimously elected treasurer: Upon motion duly made and seconded, it was Voted, that the meeting elect a clerk by ballot. Thereupon a ballot was duly taken and the chairman declared that the following person had been unanimously elected clerk: The clerk thereupon entered upon the discharge of his duties, having first been duly sworn as follows: Commonwealth of Massachusetts, ss. : 19 Then, personally appeared the above named and made oath that he would faithfully discharge the duties of his office as clerk of the Company. Before me, Justice of the Peace. There being no further business, the meeting adjourned. A true record. Attest : Clerk. Form 13.— MINUTES OF FIRST MEETING OF DIRECTORS. Minutes of the First Meeting of the directors of the Company, held at the office of iri the city of , Massachusetts, on the day o-f , 19 , at o'clock in the noon, pur- suant to a waiver of notice signed by all of the directors of said company. There were present being all [or a majority] of the directors. The clerk presented and read a waiver of notice of the meeting signed by all of the directors and the same was ordered to be filed. 209 Forms and Precedents Mr called the meeting to order and upon motion was chosen chairman of the meeting. Upon motion duly made and seconded, it was Voted, that the directors proceed to the election of a president and vice-president to hold office for the ensuing year. Thereupon nominations having been made and a ballot having been duly taken, the chairman declared that the following persons had been duly elected to the offices set opposite their respective names: President, Vice-President, Hr then accepted the office of president and took the chair. Upon motion duly made and seconded, it was Voted, that the treasurer be and he hereby is instructed to open an account in the name of this company with the Banfe and to deposit therein all the funds of the company that may come intoi his custody, and that the clerk of the company shall immediately deliver to the cashier of said bank a certified copy of this vote. Upon motion duly made and seconded, it was unanimously Voted, that the treasurer be and he hereby is directed to furnish a bond in the sum of $ , with two sureties. The treasurer thereupon presented his bond in said amount, signed by himself as principal and by and as sureties, and the same was duly approved and placed in the custody of the president. Upon motion duly made and seconded, it was Voted, that the salary of the president be and the same hereby is fixed at the sum of $ per annum, payable in monthly instalments. While said vote was being considered the president retired from the room and remained therefrom until after the vote had been duly carried; during his absence the vice-president being in the chair. (Provide in same manner for other salaries of officers, if any). Upon motion duly made and seconded, it was Voted, that the certificates of shares of stock of this company be in. the form now submitted to and read at this meeting, a copy of the same being annexed to the minutes hereof. On motion duly made and seconded, it was unanimously Voted, that the following subscriptions to the capital stock of this company be and the same hereby are accepted, and that the par amount of such subscriptions be paid by said subscribers to the treasurer at once and that certificates be issued to them therefor. The president then read the following communication: (Here insert proposition to sell property to the corporation in consideration of the issue of stock). On motion duly made and seconded, it was unanimously Voted, that the proposition now submitted to this meeting in writing by , to sell, assign and deliver to this company the property therein described, in exchange for full paid shares of the capital stock of this company to the amount at par of $ , be and the same hereby is accepted and the directors of this company do hereby adjudge and declare that saidi property is reasonably worth the sum of $ and is necessary for the purposes of the company, and that said property be accepted in full payment for the stock of this company, in accordance with the terms of said proposition; and the president of this company is hereby authorized and directed to receive the duly executed deeds, bill of sale, assignments, etc., of the property stated in said proposition, and to cause to be issued in* exchange therefor certificates of full paid and non-assessable stock of this company to the amount at par of $ On motion duly made and seconded, it was unanimously Voted, that Messrs and , being a majority of the board of directors, be and they hereby are authorized and directed to make, sign and swear to articles of organization in the form now submitted to and read at this meeting, and to pay the required fees and file the same in the office of the secretary of the common- wealth after the endorsement thereon of the approval of the commissioner of corporations. On motion duly made and seconded, it was unanimously Voted, that the clerk of this company be and he is hereby charged with the duty of seeing that the agreement of association, an attested copy of the articles of organization and the by-laws, with a reference on the margin of the copy of the by-laws to all amendments thereof hereafter made, and a true record of all meetings of stockholders, be kept by the company at its principal office for the inspection of stockholders; and it was also unanimously Voted, that the stock and transfer books, containing a complete list of all the stockholders, their residences and the amount of stock held by each, be kept at the principal office of the company for the inspection of the stockholders. Upon motion duly made and seconded, it was Voted, to adjourn. Clerk. " " 210 Forms and Precedents Form 14.— ARTICLES OF ORGANIZATION. We being a majority o-f the directors of the. elected at its first meeting in compliance with the requirements of section 11 of chapter 437 of the Acts of 1903, do hereby certify that the following i& a true copy of the agreement of association to form said corporation, with the names of the subscribers thereto : (Here insert full copy of agreement of association, including signatures). That the first meeting of the subscribers to said agreement was held on the ■ : V* *; ; ^^y °* — ^^ ^^^ year nineteen hundred and That the amount of capital stock now to be issued is shares of preferred stock, shares of common stock, to be paid for as follows: — Amount and Class of Stock Issued. Shares Preferred. Shares Common. In Cash: In full, By instalments, Amount of instalments to be paid before commencing business, In Property: ■Real estate: Location Area, Personal Property: Machinery, Merchandise, Bills receivable, Stock and securities, Patent rights, Trade marks, Copyrights, Good-will, Services, Expenses, (Note. — State clearly the nature of such services or expenses and the amount of stock to be issued therefor). The name, residence and post-office address of each of the officers are as follows : — Name of Office. Name. Residence. Post Office Address. President, Treasurer, Clerk, Directors, In Witness Whereof, we have hereunto signed our names, this day of in the year nineteen hundred and The Commonwealth of Massachusetts, ss. : Then personally appeared the above-named. and severally made oath that the foregoing certificate, by them subscribed, is true to the best of their knowledge and belief. Before me, Justice of the Peace. Form 15.— BY-LAWS. ARTICLE I. PLACE OF BUSINESS AND SEAL. 1. Principal Office. The principal place of business of the corporation shall be at No Street, in the City of , Massachusetts. 2. Seal. The company shall havei a seal consisting of a circular flat-faced die with the name of of the corporation, the year of its organization, and the name of the place in which the principal office of the company is located so engraved on its face that it can be embossed on paper by pressure. ARTICLE II. MEETINGS OF STOCKHOLDERS. 3. Place and Time of Annual Meeting. The annual meeting of the stockholders, shall be convened on the of in each year at ten o'clock in the forenoon. The fiscal year of the company shall terminate on the 31st day of December of each year. 211 Forms and Precedents 4. Order of Business. The order of business at annual meetings or adjournments thereof shall be as follows: — 1. Calling of roll and determination of quorum. 2. Proof of due notice of meeting. 3. Reading and disposal of minutes of preceding meeting. 4. Reports of officers and committees. 5. Election of directors and other officers, the president first naming tellers. 6. Selection of committee of three stockholders to employ auditor. 7. Unfinished business. 8. New business. 9. Adjournment. 5. Special Meetings of Stockholders. Special meetings of stockholders may be called by, thel president or by a majority of the directors, and shall be called by the clerk upon written application of three or more stockholders who are entitled to vote and who hold at least one-tenth part in interest of the capital' stock, stating the time, place, and purpose of the meeting. 6. Order of Business at Special Meetings of Stockholders. The order of business at special meetings or adjournments thereof shall be as follows: — 1. Calling of roll and determination of quorum. 2. Proof of due notice of meeting. 3. Reading and disposal of minutes of preceding meeting. 4. Unfinished business. 5. New business. 6. Adjournment. 7. Place of Meeting. All meetings of the stockholders shall be held at the principal place of business of the company in the Commonwealth. 8. Notice of Meeting. A written or printed notice of each meeting stating the place, day, hour and purposes thereof, shall be given by the clerk at least seven days before such meeting to each stockholder by leaving such notice with him or at his residence or usual place of business, or by mailing it, postage prepaid, and addressed to each stockholder at his address as it appears upon the books of the company, 9. Waiver of Notice. No notice of the time, place or purpose of any regular or special meeting shall be required if every stodcholder or his attorney thereunto authorized, by a writing which is filed with the records of the meeting, waives such notice. 10. Adjournment of Stockholders' Meeting. Any meeting of the stockholders, annual or special, whether or not a quorum be present, may be adjourned to another day and hour, and the clerk shall thereupon give notice of the same by mail to all stockholders. - 11. Voting by Stockholders. Stockholders who are entitled to vote shall have one vote for each share of stock owned by them. Capital stock shall not be voted upon if any instalment of the subscription therefor which has been duly demanded under the provisions of § 16 of the Business Corporation Law is overdue and unpaid. Stockholders may vote either in person or by proocy. No proxy which ife dated more than six months before the meeting named therein shall be accepted, and no such proxy shall be valid after the final adjournment of such meeting. 12. Quorum. A majority in interest of all stock issued and outstanding and entitled to vote shall constitute a quorum at any meeting. 13. Voting to be by Ballot. All votes, at a meeting duly called for the purpose, to authorize an increase or a reduction of the capital stock, a change of the location of the principal office or place of business, a change of the par value of the shares, proceedings for dissolution, a change of the corporate name, the nature of the business, the classes 'of the capital stock subsequently to be issued and their voting power, any other lawful amendment or alteration in the agreement of association or articles of organization or a sale, lease, or exchange of its proi>erty and assets, etc., as provided by statute, shall be cast by ballot. Upon the request of any stockholder the vote upon any question shall be cast by ballot. ARTICLE in. OFFICERS. 14. Directors and Other Officers. The officers of the company shall be a board of directors, who shall be stockholders of the company, a president, a vice-president, a treasurer, and a clerk. The same person may be a director, treasurer, and clerk. All of the above officers shall 'be chosen by ballot at the annual meeting, with the exception of the president and the vice-president, who shall be chosen by and from the directors by ballot at a meeting of the boatd to be held at noon, after the adjournment of the annual meeting. All officers shall hold office for one year and until their successors are chosen and qualified. At all elections the president shall appoint three tellers, who shall receive and count the ballots cast for all officers, and shall report the result. ARTICLE IV. DIRECTORS. 15. Regular Meetings of Directors. There shall be a meeting of the board of directors on the of each month at noon, in the principal office of the company, notice of which shall be given by the clerk by delivering the same in hand, or depositing the same in the mail addressed to each director, at least two days before said of each month. 212 Forms and Precedents 16. special Meetings of Directors. Special meetings of thei board, which may be held within or without the Commonwealth, may be called at any time by a written agreement signed by all the members of the board, or they may be called by the president of the company, or by any two members of the board by written notice signed by him or them, and served upon all the members of the board personally, o^ left at their usual places of business at least forty-eight hours before the time named for such special meeting. 17. iVaiver of Notice of Meetings of Directors. Any meeting of the board of pr-ectors shall be a legal meeting without notice, if each director, by a writing which IS filed with the records of the meeting, waives such notice. 18. Quorum. Three directors or more shall constitute a quorum at any meeting of the board. 19. Clerk of Meeting; Minutes. The clerk of the corporation shall be clerk of the board of directors. He shall keep accurate minutes of all its proceedings; and, in his absence, ai clerk pro tempore shall be elected, who shall be sworn, and 'shall serve as clerk during the meeting at and for which he is elected. 20. ^ Powers of Directors. The board may exercise all of the powers of the corporation, except such as are conferred by law, or by the by-laws of the corporation upon the stockholders; and they are empowered to fill all vacancies in its own number or in any other office of the company. ARTICLE V. PRESIDENT AND VICE-PRESIDENT. 21. The President. The president shall preside. at all meetings of the stock- holders and directors. He shaJl, with the treasurer, sign all certificates of stock, and he shall have a general care and direction of the affairs, of the company. He shall be the custodian of the bonds of the treasurer and of the assistant treasurer. He shall present to the stockholders at their annual meeting an accurate a, The secretary presented and read a waiver of notice of the meeting signedi by all the directors, which was ordered spread upon ther minutes. Upon motion, duly made and seconded, the following officers were unanimously elected to hold office as provided in the by-laws: President Vice-President, Treasurer It was Ordered, that the secretary take the oath of office and subscribe the written oath in the form submitted to this meeting. Upon motion, duly made and seconded, it was _ _ , , . , Resolved, that the seal, an impression ot which is affixed in the margin hereof, be adopted as the corporate seal of the company. A form of stock certificate was presented and on motion duly made and sec- onded, was approved. . t j • ^u £ It was Ordered, that the treasurer give a bond m the sum ot ... , with one surety, in the form presented at this meeting,"and' submit the same to the directors for approval as to the sufficiency of the surety. j j ... Upon motion duly made and seconded, it was , ,. , , . , Resolved that the treasurer be authorized and directed to procure such bocks as are necessary or proper for the transaction of the business of the company. Upon motion duly made and seconded, it was 215 Forms and Precedents Resolved, that the be and he hereby is authorized to open a bank account in behalf of the company with the • of Further Resolved, that, until otherwise ordered said bank be and hereby is authorized to make payments from the funds of this company on deposit with it, upon and according to the check of this company signed by its and countersigned by its Further Resolved, that checks, notes, drafts, bills of exchange and orders for the payment of money may be endorsed for collection or deposit for the company by or under the direction of the treasurer, and that a rubber stamp may be used for such purpose. Upon motion duly made and seconded, it was Resolved, that of New Jersey, be and hereby is appointed the agent of this company in charge of the registered office, and upon whom process against this company may be served in accordance with the laws of New Jersey, and transfer agent of the shares of stock of this company. Further Resolved, that the secretary be and hereby is authorized to sign, and seal with the company's seal, a certificate of authorization to said agent in the form submitted to this meeting. Upon motion duly made and seconded, it was Resolved, that and be designated and appointed members of the executive committee for the ensuing year, with all the powers of the board of directors, as provided in the by-laws. Upon motion duly made and seconded, it was Resolved, that the president and secretary be and they hereby are authorized and directed to execute and file such statements and certificates as may be required to enable this company to transact business in the State of New Jersey or elsewhere as they shall deem necessary. Upon motion duly made and' seconded, the president and secretary were directed to make and file forthwith in the office of the secretary of state of New Jersey, the report of officers, directors, etc., required by law. The secretary presented the draft of an agreement between ._. and this company, providing for the sale and transfer to this company of certain property of the said _. and, upon motion duly made and seconded, the following resolutions were adopted: Resolved, that the draft of an agreement between and this company, bearing date ._., 19 , submitted and read at this meeting (a copy of which is affixed to the minutes here- of), be approved, and that the president be and he hereby is authorized to execute the engrossment of said draft in the name and behalf of the company, and that the secretary affix the seal of the company thereto and attest the same; Further Resolved, that the property described in said agreement is necessary for the business of this company, and the directors do hereby adjudge and declare that said property is of the value of dollars; Further Resolved, that certificates of stock be issued as provided in said agree- ment. There being no further business, on motion, the meeting adjourned. Secretary. Form 19.— BY-LAWS. ARTICLE I. STOCKHOLDERS. Section 1. Annual Meeting; Date of Meeting. — The annual meeting of the stockholders of the company shall be held annually at the principal office of the company in the State of New Jersey, at o'clock in the noon, on the of in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding not a legal holiday, for the purpose of electing directors, and for the transaction of such other business as may be brought before the meeting. Section 2. Notice of Meeting. — It shall be the duty of the secretary to cause notice of each annual meeting to be mailed to each stockholder at least days prior to the date of the meeting. Nevertheless, a failure to mail such notice, or any irregularity irt such notice, shall not affect the validity of any annual meeting, or of any proceedings at any such meeting. Section 3. Special Meetings. — Special meetings of the stockholders may be held at the principal office of the company in the State of New Jersey whenever called in writing, or by vote, by a majority of the board of directors, or whenever called by the president in writing. Upon the request in writing, delivered to the presfdent or secretary, of the holders of of all the shares outstanding and entitled to vote, it shall be the duty of such president or secretary to call forthwith a special meeting of the stockholders. Such request shall state the object or objects of the meeting, and notice thereof shall be given as re- quired by the next succeeding section. Section 4. Notice of Special* Meetings. — Notice of each special meeting, indi- cating briefly the object or objects thereof, shall by the secretary be mailed to each stockholder at least days prior to the date of the meeting. 216 Forms and Precedents Section S. Quorum. — At any meeting of the stockholders the holders of .■■■■•■•■■; of all of the shares of the capital stock of the company issued and outstanding, present in person or represented by proxy, shall constitute a quorum of the stockholders for all purposes, unless, the representation of a larger numcier shall be required by law, and, in that case, the representation of the number so required, shall constitute a quorum. Section 6. Adjournment of Meetings. — If the holders of the amount of stock necessary to constitute a quorum shall fail to attend in person or by proxy at the time and jjlace fixed by these by-laws for an annual meeting, or fixed by notice as above provided for a special meeting, a majority in interest of the stockholders present in person or by proxy may adjourn, from time) to time, without notice other than by announcement at the meeting, until holders of the amount of stock requisite to con- stitute a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as onginall^r notified. Section 7. Organization; Chairman. — The president of the company, and in his absence the vice-president, shall call meetings of the stockholders to order, and shall act as chairman of such meetings. In the absence of the president and of the vice- president, a chairman shall be chosen by the stockholders present. Section 8. Secretary. — The secretary of the company shall act as secretary at all meetings of the stockholders; but in the absence of the secretary at any meeting of the stockholders the presiding officer may appoint any person to act as secretary of the meeting. Section 9. Voting, — At each meeting of the stockholders, every stockholder shall be entitled to vote in person, or by proxy appointed by instrument in writing, subscribed by such stockholder or by his duly authorized attorney, and delivered to the inspectors or the secretary at the meeting; and he shall have one vote for each share of stock standing registered in his name at the time of the closing of the trans- fer books for said meeting; provided, howeverv that no share of stock shall be voted on at any election which has been transferred on the books of the company within twenty days next preceding such election. Only the person in whose names shares of stock stand on the books of the company at the time of the closing of the transfer books for such meeting, shall be entitled to vote in person or by proxy on the shares so standing in their names. The votes for directors, and upon demand of any stock- holder the votes upon any question before the meeting, shall be by ballot. Section 10. List of Stockholders. — At each election of directors, a full, true and complete list, in alphabetical order, of all of the stockholders entitled to vote at such election, with the residence of each, and the number of shares held by each, certified by the secretary or by the treasurer, shall be furnished. Section 11. Inspectors of Election. ^Ax each election of directors, the polls shall be opened and closed, the proxies and ballots shall be received and be taken in charge, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection, of votes, shall be decided by two inspectors. Such mspectors shall be appointed by the presiding officer at the meeting. Section 12. Polls Open One Hour. — At all elections of the directors, the polls shall remain open for at least one hour, unless every registered owner of shares has sooner voted in person or by proxy, or in writing has waived the statutory provision. ARTICLE II. BOARD OF DIRECTORS. Section 1. Management. — The business and the property of the company shall be managed and controlled by the board of directors. Section 2. Number of Directors. — The number of directors shall be but the number of directors may be altered from time to time by the alteration of these by-laws. In case of any increase of the number of directors, the additional directors shall be elected by the directors then in office. Section 3. Directors Must Be Stockholders ; Term of OfUce. ■ — Every director shall be a holder of at least one share of the capital stock of the company. Each director shall serve for the term for which he shall have been elected, and until his successor shall have been duly chosen. Section 4. Vacancies. — In case of any vacancy in^ the directors through death, resignation, disqualification or other cause, ,the remaining directors, by affirmative vote of a majority thereof, may elect a successor to hold office for the unexpired portion of the term of the director whose place shall be vacant, and until the elec- tion of his successor. Section S. Place of Meeting, Etc. — The directors may hold their meetings, and may have an office and keep the books of the company (except as otherwise may be provided for by law) in such place or places in the State of New Jersey or outside of the State of New Jersey, as the board from time to time may determine. Section 6. Regular Meetings. — Regular meetings of the board of directors shall be held on the ., . . . ; in each year. No notice shall be required for any such regu- lar meeting of the board. Section 7. Special Meetings. — Special meetings of the board of directors shall be held whenever called by direction of the president, or of one-third of the direc- tors for the time being in office. Section 8. Notice Required. — The secretary shall give notice of each special meeting by mailing the same at least days before the meeting, or by telegraphing the same at least days before the meeting, to each 217 Forms and Priecedents director. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. At any meeting at which every director shall be present, even though without any notice, any business may be transacted. Section 9. Quorum. — 'A majority of the directors shall constitute a quorum for the transaction of business; but if at any meeting of the board there be lees than a quorum present, a majority of those present may adjourn the meeting from time to time. Section 10. Order of Business, — At meetings of the board of directors busi- ness shall be transacted in such order as, from time to time, the board! may deter- mine by resolution. Section 11. Presiding Officer. — At all meetings of the board of directors, the president, or in his absence, the vice-president, shall preside. Section 12. Ratification by Stockholders of Acts or Contracts. — The board of directors in its discretion may submit any contract or act for approval or ratifica- tion at any annual meeting of the stockholders, or at any meeting of the stock- holders called for the purpose of considering any such act or contract; and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the capital stock of the company which is represented in person or by proxy at such meeting (provided, that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the corporation. Section 13. Compensation of Directors. — For his attendance at any meeting of the board of directors, or of any committee, every director shall receive an allow- ance of dollars for attendance at each meeting. Section 14. Election of OMcers and Committees. — At the first meeting of the board of directors in each year (at which a quorum shall be present) held next after the annual meeting, the board -of directors shall proceed to the election of the executive officers of the company. ARTICLE III. executive committee. Section 1. Executive Committe. — The board of directors may elect from the directors an executive committee, and shall designate for such committee a chair- man, who shall continue to be chairman of the committee during the pleasure of the board of directors. Section 2. Vacancies; How Filled. — The board of directors shall fill vacancies in the executive committed by election from the directors; and at all times it shall be the duty of the board of directors to keep the membership of such committee full, with due regard to the qualifications for such membership indicated in this article of the by-laws. Section 3. Action of Committee to be Reported to Board. — All action by the executive committee shall be reported to the board of directors at its meeting next succeeding such action, and shall be subject to revision or alteration by the board of directors; provided, that no rights or acts of third parties shall be affected by any such revision or alterationl Section 4. Rules of Procedure. — The executive committee shall fix its own rules of procedure, and shall meet where and as provided by such rules, or by reso- lution of the board of directors, but in every case the presence of a majority of the members shall be necessary to constitute a quorum. In every case the affirmative vote of a majority of all of the members of the committee present at the meeting shall be necessary to its adoption of any resolution. Section 5. Membership. — The executive committee shall consist of members, besides the president, who, by virtue of his office, shall be a member of the committee. Unless otherwise ordered by the board of directors, each elected member of the committee shall continue to be a member thereof until the expira- tion of his term o^ office as a director. Section 6. Powers and Duties. — During the intervals between the meetings of the board of directors, the executive committee shall possess, and may exercise, all the powers of the board of directors in the management of all of the affairs of the company, and the execution of legal instruments with or without the corporate seal, in -such manner as said committee shall deem to be best for the interests of the company, in all cases in which specific directions shall not have given by the board of directors. ARTICLE IV. ADVISORY committee. The board of directors may elect from the directors an advisory committee. The committee shall consist of members, besides the president of the cor- poration, who by virtue of his office shall be a member and chairman of the com- mittee. This committee, from time to time, shall consider and make recommendations concerning such questions relating to the business and affairs of the company as may be submitted to the committee by the president. ARTICLE V. OFFICERS. Section 1. Executive Officers.- — The executive officers of the company shall be a president, a vice-president, or more than one vice-president, a treasurer and a secretary, all of whom shall be elected by the board of directors. 218 Forms and Precedents -Section 2. Other Officers, — .The board of directors may appoint such other otticers as they shall deem necessary, who shall have such authority and shall per- form such duties as from time to time may be prescribed by the board of directors. Section 3. — One person may hold more than one office. Section 4. Term of Office. — All officers and agents shall be subject to removal ^^ ^"y time by the affirmative vote of a majority of the whole board of directors. All officers, agents and employees, other than officers appointed by the board of directors, shall hold office at the discretion of the committee or of the officer ap- pointing them. Section 5. Removal. — The executive committee shall have power to remove all officers, agents and employees of the company, except officers elected or appointed by the board of directors. Section 6. Powers and Duties of the President. — The President shall preside at all meetings of the stockholders and of the board of directors. By virtue of his office he shall be a member of the executive committee. Subject to the board of directors and the executive committee, he shall have general charge of the business of the corporation. He shall keep the board of dirctors and the executive committee fully inf ooTned, and shall freely consult them concerning the business of the cor- poration. _ He may sign and execute all authorized bonds, contracts, checks or other obligations in the name of the corporation, and with the treasurer or an assist- ant treasurer may sign all certificates of the shares in the capital stock of the corporation. He shall do and perform such other duties as from time to time may be assigned to him by the board of directors. Section 7. Vice-Presidents. — The board of directors may appoint a vice-presi- dent or more than one vice-president. Each vice-president shall have such powers, andi shall perform such duties, as may be assigned to him by the board of directors. Section 8. Powers and Duties of Treasurer. — The treasurer shall have custody of all the funds and securities of the company which may have come into his hands; when necessary or proper he shall endorse on behalf of the company, for collection, checks, notes and other obligations, and shall deposit the same to the credit of the company in such bank or banks or depositary as the boaxd of directors or the executive committee may designate; he shall sign all receipts and vouches for pay- ments made to the company; jointly with such other officer as may be designated by the board of directors or the executive committee, he shall sign all checks made by the company, and shall pay out and dispose of the same under the directioto of the board or of the executive committee; he shall sign with the president, or such ^ other person or persons as may be designated for the purpose by the board of directors or the executive committeei, all bills of exchange and promissory notes of the coanpany; he may sign, with the president or a vice-president all certificates of shares in the capital stock; whenever required by the board of directors or by the executive committee, he shall render a statement of his cash account; he shall enter regularly, in books of the company to be kept for the purpose, full and accurate accounts of all moneys received and paid by him on account of the company; he shall, at all reasonable times, exhibit his books and accounts to any director of the company upon application at the office of the company during business hours; and he shall perform all acts incident to the' position of treasurer, subject to the control of the board of directors, the executive committee and the president. He shall give a bond for the faithful discharge of his duties in such sum as the board of directors or the executive committee may require. Section 9. Assistant Treasurers. — The board of directors or the executive com- mittee may appoint an assistant treasurer or more than one assistant treasurer. Each assistant treasurer shall have such powers and shall perfornij such duties as may be assigned to him by the board of directors, or by the executive committee. Section 10. Powers and Duties of Secretary. —The secretary shall keep the minutes of all meetings of the board of directors, and the minutes of all meetings of the stockholders, and also (unless otherwise directed by the executive committee) the minutes of all committees, in books provided for that purpose; he shall attend to the giving and serving of all notices of the company; he may sign with the presi- dent, in the name of the company, all contracts authorized by the board o£ directors or by the executive committee^ and, when so ordered by the board of directors or by the executive committee, he shall affix the seal of the company thereto; he shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the board of directors or the executive committee may direct, all of which shall, at all reasonable times, be open to the examination of any direc- tor upon application at the office of the company during business hours; and he shall in general perform all the duties incident to the office of secretary, subject to the control of the board of directors and of the executive committee. The offices of secretary and of treasifrer may be held by one and the same person. Section 11. Assistant Secretaries. — The board of directors or the executive committee may appoint one assistant secretary or more than one assistant secretary. Each assistant secretary shall have such powers and shall perform such duties as may be assigned to him by the board of directors or by the executive committee. Section 12. Voting Upon Stock Owned in Other Companies. — Unless other- wise ordered by the board of directors or by the executive committee, the president shall have full powef and authority in behalf of the company to attend and to act and to vote at any meetings of stockholders of any corporation in which the com- pany may hold stock, and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such stock, and which, as the owner thereof, the company might have possessed and ^ exercised if present. The board of directors or the executive committee, by resolution, from time to time, may confer like powers upon any other person or persons. 219 Forms and Precedents article vi. CAPITAL stock; SEAL. Section 1. Certificates of Shares, — The certificates for shares of the capital stock of the company shall be in such form, not inconsistent with the_ certificate of incorporation, as shall be prepared of be approved by the board of directors. The certificates shall be signed by the president or a vice-president and also by the treasurer or an assistant treasurer. All certificates shall be consecutively numbered. The name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the company's books. No certificate shall be valid unless it iS signed by the president or a vice-presi- dent, and by the treasurer or an assistant treasurer or secretary or assistant secre- tary. All certificates surrendered to the company shall be Canceled and no new certi- ficate shall be issued until the former certificate for the same number of shares shall have been surrendered and canceled. Section 2. Transfer of Shares. — Shares in the capital stock of the company shall be transferred only on the books of the company by the holder thereof in person, or by his attorney, upon surrender and cancellation of certificates for a like number of shares. Section 3. Regulations. — The board of directors and the executive committee also shall have power and authority to make all such rules and regulations as, respectively, they may deem expedient, concerning the issue, transfer and registration of certificates for shares of the capital stock of the company. Section 4. Transfer Agent; Registrar. — The board of directors or the execu- tive committee may appoint a transfer agent and a registrar of transfers, and _ may require all stock certificates to bear the signature of such transfer agent or registrar of transfers, or the signatures of both. Section 5. Closing of Transfer Books. — -The stock transfer books may be closed for the meetings of the stockholders, and for the pajrment of dividends, during such periods as fromi time to time may be fixed by the board of directors or by^ the executive committee, and during such periods no stock shall be transferable. Section 6. Dividends. — The board of directors may declare dividends from the surplus or from the net profits of the company. The date for the declaration of dividends shall be the day fixed for the regular meeting of the board of directors in in each year, on which day the board of direc- tors in its discretion shall declare what, if any, dividends shall be declared. The dividends, if declared, shall be payable upon the day of in each year. If the date herein appointed for the payment of any dividend shall in any year fall upon a legal holiday, then the dividend payable on such date shall be paid on the next day not a legal holiday. \ Section 7. Working Capital. — The directors shall not be required in January in each year, after reserving over and above its capital stock paid in, as, a working capital for said corporation, such sum, if any, as shall have been fixed by the stock- holders, to declare a dividend among its stockholders of the whole of its accumulated profita exceeding the amount so reserved, and pay the same to such stockholders on demand; but the board of directors may fix a sum which may be set aside or reserved, over and above the company's capital paid in, as a working capital for the company, and from time to time they may increase, diminish and vary the same in their* absolute judgment and discretion. Section 8. Corporate Seal. — The board of directors shall provide a suitable seal, containing the name of the company, which, seal shall be in charge of the secretary. ARTICLE VII. miscellaneous provisions. Section 1. Fiscal Year.' — The fiscal year of the company shall be the calendar year. Section 2. Principal Office. — The principal office shall be established and maintained at No i Street, in the of in the County of , in the State of New Jersey. Section 3. Notice and Waiver of Notice. — Whenever any notice is required by these by-laws to be given, personal notice is not meant unltss expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing the same in a post-office box in a sealed post-paid wrapper, addressed to the person entitled thereto at his last known post-office address, and such notice shall be deemed to have been given on the day of such mailing. Notice of the time, place and pur- pose of any stockholders' meeting may be dispensed with if every stockholder shall either attend in person or by proxy, or, if absent^ shall by writing, filed with the records of this meeting, waive such notice. Notice of any directors' meeting may be in like manner waived by any director. Any notice required to be given under these by-laws may be waived by the person entitled thereto. Section 4. Interpretation. ■ — In these by-laws, unless there shall be something in the subject or context inconsistent therewith: ** Stockholder^* means the registered owner of a share or shares of the ca stock. 220 Forms and Precedents • . ■'" provisions relating to meetings of stockholders "majority" means a maiority '"•n^^^*', S"?, ' f '■"«"*" means present in person or represented by proxy. Board "board of directors" and "directors" means the directors of the com- Tu"" ' *™^ being duly convened in a regular or special meeting. Mr y'°''A "meeting" includes the annual election of directors. Words irnporting the singular number include the plural, and vice versa; words importing males include females; and words importing natural persons include cor- porations. ARTICLE VIII. AMENDMENTS. Section 1. Power of Directors to Amend, Etc. — The board of directors shall have power to make, amend and repeal the by-laws of the company, by vote of a majority of all of the directors, at any regular or special meeting of the board. Section 2. Power of Stockholders to Amend, Etc. — The stockholders may make, alter, amend and repeal the by-laws of the company, at the annual meeting or at a special meeting called for the purpose, and all by-laws made by the directors may be altered or repealed by the stockholders. NEW YORK. Form 20.— CERTIFICATE OF INCORPORATION. We, the undersigned, all being of full age, all of us being citizens of the United States and at least one of us being a resident of the state of New York, desiring to form a corporation pursuant to the Business Corporations Law of the state of New York, do hereby certify, that First. — The name of the proposed corporation is Second. — The purposes for which it is formed are Third. — The amount of the capital stock is dollars. Fourth. — The capital stock shall be divided into shares of tlie par value of dollars each. The amount of capital with which said corporation will begin business is dollars. ilf any part of the capital stock is to he preferred stock, here insert provisions therefor} , Fifth. — The location of the principal business office is to be in the borough of city of New York, state of New York. Sixth. — The duration of the corporation is to be perpetual. Seventh. ■ — The number of its directors shall be Eighth. — The names and post-office addresses of the directors for the first year are as follows: Names. Post-office Addresses. Ninth. — The names and post-office addresses of the subscribers and the number of shares of stock which each agrees to take in the corporation are as follows: Names - Post-officb Addresses. No. of Shares. In Witness Whereof we have made and signed this certificate, in duplicate, this day of 19 In presence of: a. s.) 1 (L. S.) (L. S.) St>te of New York, County of , ss. :\ On this .' day of , 19 , before me) personally came ; , to me personally/ known and known to me to be the individuals described in and who executed the/ foregoing instrument, and severally acknowledged that they executed the same for the uses and purposes therein mentioned. _. Form 21. — PRECEDENT OF A CERTIFICATE OF INCORPORATION PROVIDING FOR SHARES OF STOCK WITHOUT PAR VALUE. We, The Undersigned, all being persons of full age and at least two-thirds being citizens of the United States of America and at least one of us a resident of the State of New York, desiring to form a stock corporation pursuant to the provisions of the Business Corporations Law of the State of New York, do hereby make, sign and acknowledge this certificate for that purpose, as follows: First. ITie name of the proposed corporation is Second, The purposes for which it is to be formed are as follows: 221 Forms and Priecedents To buy or otherwise acquire, so far as may be permitted to a corporation organized under the Business Corporations Law, the business, good-will, franchises, rights and property of the firm of of • •_ , or of any other person, firm, association or corporation engaged in a similar business, and to pay therefor in cash, property, the stock or bonds of this Company, or otherwise, and to hold or in any manner dispose of the whole or any part of the property so acquired; to conduct, carry on, operate, _ manage, control, improve or develop the whole or any part of the business so acquired, so far as such business is one that may be carried on by a corporation organized under the Business Corporations Law. To acquire by purchase, subscription or otherwise invest in, hold for investment or otherwise and to sell, exchange, mortgage, pledge, or otherwise dispose of, and deal in, all stocks, bonds and other evidences of indebtedness of any corporation, public, quasi-public, or private, domestic or foreign, and all trust or other certificates of, or receipts evidencing, interest in any such securities; to issue in exchange therefor its own stocks, bonds or other obligation^ and while owner of any such stocks, bonds and other evidences of indebtedness or interest therein, to exercise all the rights, powers andi privileges of ownership, including the right to vote thereon for any and all purposes. To make advances or loans, upon the pledge o-f securities to be bought, sold or otherwise dealt in, or without security, so far as may be permitted by law. To aid by loan, subsidy, guaranty, or in any other manner whatsoever, any corporation whose stocks, bonds, securities or other obligations are in any manner held or guaranteed, and to do any and all other acts or things toward the preservation, protection, improvement or enhancement in value, of any such stocks, bonds, securities or other obligations, and to do all and any such acts or things designed to accomplish any such puri)ose, as far as may be permitted to corporations organized under the Business Corporations Law. To acquire, hold, own and dispose of grants, concessions, and franchises, or • interests therein; to cause to be formed, merged or reorganized, and to promote and aid in any way permitted by law the foimation, merger or reorganization of any corporation, domestic or foreign, to enter into contracts of underwriting of the securities of any other corporation, domestic or foreign, and to buy, sell and deal in the same, or any interest therein,' and to act as manager of such underwriting agreements, aU so far as the same may be permitted to corporations organized under the Business Corporations Law. Td act as financial or business agent, general or special for domestic and foreign corporations, individuals, partnerships, associations, states, governments or other bodies. To borrow^ or raise money for the purposes of the corporation, to secure the same and any interest thereon, and for that purpose or any other purpose permitted by law, and subject to the restrictions and conditions thereby imposed to mortgage and charge all or any part of the present or after-acquired property, rights and franchises of the corporation, iand to issue, sell, pledge, or otherwise dispose of its notes, bonds, debentures and other evidences of indebtedness. So far as may be permitted by law, to buy or otherwise acquire, hold, lease, sell, exchange, mortgage, pledge^ or otherwise dispose of, any property, real or personal, rights, franchises or good-will which the purposes of the corporation shall require, subject to such limitations as may be prescribed by law. In general to do any and all things and to exercise any and all powers necessary or advisable to accomplish one or more of the purposes of the corporation, or which shall at any time appear to be conducive to, or for the benefit of, said corporation in connection therewith which may now or hereafter be lawful for the corporation to do or exercise under and in pursuance of the Business Corporations Law of the State of New York, or of any other law that may be now or hereafter applicable to the corporation. To conduct its business in any or all of its branches, so flar as permitted by law, in the State of New York, and in any other State of the United Statesi of America, and in any territory, dependency, colony, or possejssion thereof and in the District of Columbia, and in any foreign country, and in^ connection therewith, to hold, possess, purchase, mortgage^ and cotivey real and personal property, and to maintain offices and agencies, either within or anywhere without the State of New York. Third. The number of shares of capital stock that may be issued by the corporation is one hundred and fifty-five thousand (155,000) of which fifty-five thousand (55,000) of tl\e amount or par value of one hundred dollars ($100) each, are to be preferred stock having a preference as to principal, and one hundred thousand (100,000) are to be common stock without nominal or par value. Fourth. Until, at the close of any fiscal year of the corporation, surplus earnings of the corporation shall have accumulated to an amount at least equal, after payment of all accrued dividends upon the preferred stock of both classes, to dividends in full upon said stock for a period of two and one*half (2^^) years, and until such fact shall have been determined and certified in accordance with the provisions of the last paragraph of this article, thirty thousand (30,000) shares of the preferred stock shall be distinguished and designated as "First Preferred,'* and twenty-five thousand (25,000) shares as "Second Preferred," with the respective privileges, priorities and limitations hereinafter set forth, and each preferred stock certificate issued during the said period shall distinctly indicate the class to which the shares which it evidences belong. The holders of the first preferred stock shall be entitled to receive cumulative dividends thereon at the rate of seven dollars ($7) per share or seven per centum 222 Forms and Precedents of the amount or par value of such stock for each and every fiscal year of the life of the corporation, and no more, which shall, subject to the discretion of the Board of Directors, be paid out of surplus profits, quarterly, upon the last days of March, June, September and December of each year. Until such dividends shall have been paid in full to date and provisions made therefor for the remainder of the current fiscal year, no dividends shall be declared or paid upon, or set aparf for, the second preferred or common stock of the corporation. Said dividends on the first preferred stock shall be cumulative from January 1st, 1913, so that if the corporation shall fail upon any quarter day to pay such dividends on all of^ the issued and outstanding first preferred stock, such deficiency shall be fully paid, but without interest, aJid provision made for the full dividends thereon for the remainder of the current fiscal year, before any dividends shall be declared or paid upon, or set apart for, the second preferred stock or the common stock. Ex- cept as hereinabove provided, said first preferred stock shall not be entitled to participate in any earnings or profits of the corporation. Subject to the foregoing preferences in favor of the first preferred stock, the holders of the second preferred stock shall be entitled to receive cumulative dividends thereon at the rate of seven dollars ($7) per share or seven per centum of the amount or par value of such stock for each and every fiscal year of the life of the corporation, and no more, which shall, subject to the discretion of the Board of Directors, be paid out of surplus profits, (remaining after payment and provision for payment of dividends upon the first preferred stock as aforesaid), quarterly, half-yearly, or^ (yearly as the Board of Directors may from time to time determine. Until such dividends upon the second preferred stock shall have been paid in full to date and provision made therefor for the remainder of the current fiscal year, no dividends shall be declared or paid upon, or set apart for, the common stock of the corporation. Said dividends on the second preferred stock shall be cumulative from January 1st, 1913, so that i^ the corporation shall fail to pay the full dividends on all of the issued and outstanding second preferred stock in any fiscal year or years, such deficiency shall be fully paid, but without interest, and provision made for full dividends on said stock for the remainder of the current fiscal year, before any dividends shall be declared or paid upon, or set apart for, the common stock. Except as hereinabove provided, the second preferred stock shall not be entitled to participate in any earnings or profits of the corporation. The Board of Directors may, in their discretion declare and pay dividends on the common stock concurrently with dividends on the preferred stock of either class, for any dividend period of any fiscal year when there are surplus profits applicable to dividends upon the common stock; provided that all accumulated dividends on the preferred stock of both classes for all previous dividend periods shall have been paid in full, and provision shall have been made for such dividends in full for the remainder of the current fiscal year. In the event of the dissolution or liquidation of the corporation or a sale of * all its assets (whether voluntary or involuntary), or in the event of its insolvency, or upon any distribution of its capital, there shall first be paid to the holders of the first preferred stock the par value thereof, to-wit, one hundred dollars ($100) per share, and the amount of all unpaid accrued dividends thereon, before any sum shall be paid to, or any assets distributed' among, the holders of the second pre- ferred stock, or of the common stock, and after the payment to the holders of the first preferred stock of its par value, apd the unpaid accrued dividends thereon, there shall be paid to the holders of the second preferred stock, the par value thereof, to-wit, one hundred dollars ($100) per share, and the amount of all unpaid accrued dividends thereon, before any sura shall be paid to, or any assets distributed among, the holders of the common stock, and after the payment to the holders of the first and second preferred stock of its par value, and the unpaid accrued divi- dends thereon, the remaining a^ets and funds of the corporation shall be divided among, and paid to, the holders of the common stock letably according to their respective shares. Whenever, and so long as, any part of the quarterly dividends required to be paid, as hereinabove provided, upon the first preferred stock, or any part thereof, shall be in default, each bolder of preferred stock of either class shall be entitled to one vote at any' meeting of the corporation! for each share of such stock held by him. Whenever, and so long as, any part of the dividends required to be paid, as hereinabove provided, upon the second preferred stock, or any part thereof, shall be in default, each holder of second preferred stock jshall be entitled to one vote, at any meeting of the corporation for each share of such stock held by him. Ex- cept as otherwise provided by anyi law of this State now in force, no holder of the first preferred stock shall be entitled to vote thereon at any meeting of the corporation, except when dividends thereon, or gome part thereof, shall be so in default- and no holder of the second preferred stock shall be entitled to vote thereon at any 'meeting of the corporation, except when dividends, or some part thereof, shall be so in default^ on the preferred stock of both classes or of either class; nor shall any holder of said preferred stock of either class be at any time entitled to any right or privilege other than as is herein or by existing statute expressly granted, and each certificate evidencing any share or shares of preferred stock shall contain a stipulation that the acceptance thereof shall constitute an express waiver of all such rights The holders of the common stock shall have and enjoy to the exclu- sion pf the preferred stock of both classes every right, advantage, benefit and privilege and every interest and participation, in profits, property distribution and management save such as are now herein or by statute expressly reserved to the . holders of the preferred stock. 223 Forms and Precedents An audit of the assets and liabilities of the corporation shall be made annually as of the last day of the fiscal year of the corporation by a firm of Certified Public Accountants doing business in the City of New York, and shall be certified to the annual meeting of the stockholders. When, after payment of dividends in full upon the preferred stock of both classes, such audit shall disclose an accumulation •of surplus earnings to an amount at least equal to full dividends upon all said preferred stock for a period of two and one-half (2J4) years, the distinction between the two classes of preferred stock, and all preference of one class over the other, shall cease to exist for any purpose, and thereafter the second preferred stock shall, in respect to dividends and in any distribution of capital or assets, share ratably and on equal terms with the first preferred stock, and shall, in all respects, have equal rights therewith, and be subject to the same limitations. All preferred stock certificates thereafter issued shall designate the shares which they evidence as "first preferred." Fifth. The amount of capital with which the corporation will carry on busi- ness is six million dollars ($6,000,000). Sixth. From time to time the preferred stock (meaning thereby only the first preferred while the distinction between the two classes exists) and the common stock may be increased according to law. The corporation may issue and sell its shares, whether now or hereafter authorized, from time to time in such amounts and proportions and for such consideration as may from time to time be fixed by the Board of Directors, and the consideration so fixed for the shares of the pre- ferred stock may be either greater or less than their par value. Seventh. The principal business office of the corporation is to be located in the Borough of Manhattan, City, County and St'ate of New York. Eighth. The duration of the corporation shall be perpetual. Ninth. The number of Directors of the corporation shall be seventeen (17), no one of whom need be a stockholder of the corporation. At the first election of Directors, six shall be elected to serve for three years, six to serve for two years, and five to serve for one year. At each annual election thereafter the successors of the class of Directors whose terms shall expire in that year shall be elected to serve for three years, so that the term of office of one class of Directors shall expire in each year. Tenth. The names and post office addresses of the Directors of said corpora- tion for the first year are as follows: (Names and addresses omitted.) Eleventh. The names and post office addresses of the subscribers to this certi- ficate, and the number of shares of stock which each agrees to take in the corpora- tion are as follows: (Names, addresses and number of shares omitted.) Twelfth, The Board of Directors may appoint an Executive Committee from 1 among their number, which Committee, to the extent and in the manner . provided in the By-Laws of the Corporation, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the cor- poration during the intervals between the meetings of the Board of Directors, so far as may be permitted by law. Thirteenth. No stockholder, preferred or common shall be entitled as of right to subscribe for on receive any part of new or additional issue of stock pre- ferred or common, or of bonds, debentures or other securities convertible into stock, but all such additional issues of stock or of other securities convertible into stock may be issued and disposed of by the Board of Directors to such persons and on such terms as in their absolute discretion they may deem advisable. In Witness Whereof, wc have made, signed and acknowledged this certificate in duplicate. Dated New York, December 23rd, 1912. (Siinatures and acknowledgment omitted.) Form 22.— MINUTES OF MEETING OF INCORPORATORS. The First Meeting of the incorporators and subscribers to the capital stock of .^ was held at the office of , on the day of 19 There were present , being all of the incorporators and subscribers to the capital stock. one of the subscribers to the certificate of incorporation, called the meeting to order and upon motion was duly chosen chairman thereof, ami was afipointed secretary of the meeting. X The secretary presented and read a waiver of notice of the meeting signed by all of the incorporators and subscribers, and it was ordered that the same be affixed to the minutes of this meeting. The secretary presented a copy of the certificate of incorporation of the com- pany, and it was ordered that a copy of the same, together with a copy of the receipt of the state treasurer for the organization tax, and the certificate of the county clerk of the filing of the duplicate original lor certified copy} of the certi- ficate of incorporation, be recorded in the minutCj. book. The secretary presented a draft code of by-laws for the regulation of the busi- . ness and affairs of the ^ company, and the same was unanimously adopted, and it was ordered that the original by-laws be affixed toi the minutes of this meeting. 224 Forms and Precedents No further business being presented, on motion, 4uly made and seconded, the meeting adjourned. Secretary of the Meeting. Form 23.— MINUTES OF FIRST MEETING OF DIRECTORS. The First Meeting of directors of the was held at , on the day of , 19 , at '..m. The following directors were present: Upon motion, duly made and seconded, was chosen chairman of the meeting and. .' was appointed secretary of ^e meeting. The secretary presented and read a waiver of notice of the meeting signed by all the directors, and the same was ordered tq be filed. ^-- The chairman presented a draft code of by-laws for the regulation of the busi- ness and affairs of the company and the same were read, and, upon motion duly made and seconded, were unanimously adopted as the by-laws of this company, and it was ordered that the same be entered in the minute book. "*-- The directors then proceeded to the election of officers for the ensuing year /and nominations having been duly made and seconded, the following officers were ^unanimously elected to hold office until the next annual meeting of the board and suntil their successors are elected and qualify: 1 President, \ First Vice-President, Second Vice-President, Treasurer Secretary, It was ordered that the secretary take the oath of office in the form submitted at this meeting. Thereupon the secretary took the oath and subscriljed the written oath and it was ordered that the same be filed. Upon motion, duly made and seconded, the secretary was directed to procure a stock certificate book, minute book, stock record book, and such other booira as may be necessary for the transaction of the company's business. It was Resolved, that , of , be appointed banker of the company, and be requested to open an account in the name of the company, and to honor checks drawn on such account signed by the , or by the of this company. It was Resolved, that said bank be furnished with specimens of the signatures of said officers. Resolved, that the seal, an impression of which is affixed in the margin hereof, be adopted as the corporate seal of the company. Upon motion, duly made and seconded, it was Resolved, that the certificates of stock of this company be in the form now sub- mitted at this meeting (a copy of which is affixed to the minutes hereof.) Upon motion, duly made and seconded, it was Resolved, that and be appointed in- spectors of election to act at the next election of directors and at all previous meet- ings of stockholders. It was Resolved, that the salaries of the officers of the company for the ensuing year be fixed as follows: There being no further business, upon motion, duly seconded, the meeting ad- journed. Secretary. Form 24.— BY-LAWS. ARTICXE I. STOCKHOLDERS. Section 1. Annual Meeting; Date of Meeting. — The annual meeting of the stockholders of the company shall be held annually at the principal office of the company in the State of New York, at /.Q o'clock in the . . j^-^rrxji...^ noon, on the , • oi .....l^^^ ■■ . . in each year, if not a legal holiday, and if a legal holiday, then onWhe next succeeding . . rZA-^-»<-».e not a legal holiday, for the purpose of electing directors, and for the transaction of such other busmess as may be brought before the meeting. ly Section 2. Notice of Meeting. — It shall be the duty of the secretary to cause notice of each annual meeting to be mailed to each stockholder at least. . .Zi?.. .... . days prior to the date of the meeting and to be published as required by law. 225 Forms and Precedents Nevertheless, a failure to mail such notice, or any irregularity in such notice, shall not affect the validity of anV annual meeting, or of any proceedings at any such meeting. ^Sections. Special Meetings. — Special meetings of the stockholders may be held at the principal office of the company in the State of New York whenever called in writing or by vote, by a majority of the board of directors, or whenever called by the president in writing. Upon the request in writing, delivered to the president or secretary of the holders of ■., >, of all the ^ares outstanding and entitled ■ to vote, it shall be the duty of such president or secretary to call forthwith a special meeting of the stockholders. Such request shall state the object or objects of the meeting, and notice thereof shall be given as required by the next succeeding section. U^Section 4. Notice of Special Meetings. — Notice of each special meeting, indi- cating briefly" the object or objects thereof, shall by the secretary be mailed to each stockholder at least 'L,^ days prior to the date of the meeting, \y Section 5. Quorum. — ■ At -any meeting held for the purpose of electing directors, any number of stockholders present at such meeting may, by plurality vote, elect directors. At any other meeting of the stockholders and Jor all purposes other than the election of directors the holders of . .^<. . .iw-<>v.t'.*.'>.SXi> of all of the shares of the capital stock of the company issued andj outst^ding, present in person or repre- sented by proxy, shall constitute a quorum of me stockholders for all purposes, unless the representation of a larger proportionate interest shall be required by law, and, in that case, the representation of the proportion so required, shall constitute a quorum. \y Section 6. Adjournment of Meetings. — ■ If the holders of the amount of stock necessary to constitute! a quorum shall fail to attend, in person or by proxy at the time and place fixed by notice as above provided for a special meeting, a majority in interest of the stockholders present in person or by proxy may adjourn, from time to time, without notice other than by announcement at the meeting, until holders of the amount of stock requisite to constitute a quorum shall attend. At any such adjourned meeting at which a quorum- shall be present, any business may be trans- acted which might have been transacted at the meeting as originally notified. \ ' Section 7. Organization ; Chair-man. — The president of the company, and in his absence the vice-president, shall call meetings of the stockholders to order, and shall act as chairman of such meetings. In the absence of the president and of the vice- president, a chairman shall be chosen by the stockholders present. Section 8. Secretary. — The secretary of the company shall act as secretary at all meetings of the stockholders; but in the absence of the secretary from any meeting of the stockholders the presiding officer may appoint any person to act as secretary of the meeting. Section 9. Voting. -^ At each meeting of the stockholders, every stockholder shall be entitled to vote in person, or by proxy appointed by instrument in writing, subscribed by such stockholder or by his duly authorized attorney, and delivered to the inspectors or the secretary at the meeting; and he shall have one vote for each share of stock standing registered in his name at the time of the closing of the transfer books for said meeting. Only the persons in whose names shares of 'stock stan4 on the books of the company at the time of the closingi, of the transfer books for such meeting, shall be entitled to vote in person or* by proxy ' on the sharesi so standing in their names. The votes for directofs, and, upon demand of any stock- holder, the votes upon any t[uestion before the meeting, shall be by ballot. Section 10. List of Stockholders. — At eachl election,. of directors, a full, true and complete list, in alphaljetieal order, of all of the stockholders entitled to vote at such election, with, the residence of each, and the number of shares held by each, certified by the secretary or by the treasurer, shall be furnished. \ Section 11. Inspectors of Election.- — At each election of directors, the polls -■ shdfl be opened and closed, the proxies and ballots shall be received and be taken in charge, and all questions touching the qualification of voters and the validity of / prt)xies and the acceptance or rejection of votes, shall be decided by two inspectors. Such inspectors shall be appointed by the presiding officer at the meeting. Section 12. Foils Open One Hour. — At all election^ of the director^, the polls shall remain open for at least one hour, unless every registered owner of shares has sooner voted in person or by proxy. ARTICLE II. BOARD OF DIRECTORS. '^ Section 1.. Management. — The business, property and affairs of the company igjjall be managed and controlled by the board of directors. » V Sectjojj 2. Number of Directors. — The number of directors shall be...W ; but the number of directors may be altered from time to time as provided by law. Section 3. Qualification of Directors; Term of Office. — Every director shall be v'a holder of at| least one share o^ the capital stock of the company. At least one of the directors shall be a resident of the State of New York. Each director shall serve for the term for which he shall have been elected, and until his successor V^hall have been chosen. Section 4. Vacancies. — In case of any vacancy in the directors through death, ■, resignation, disqualification or other cause, the remaining directors, by affirmative vote of a majority thereof, may elect a successor to hold office for the unexpired portion of the term of the director whose place shall be vacant, and until the election of his successor. 226 Forms and Precedent s "^ Section 5. Place of Meeting, Etc. — The directors may hold their meetings, and may have an office and keep the books of the co;npany (except as otherwise may be provided fftr by law) m such place or places in the State of New York or outside ot the btate of New York, as the board from time to time, may determine u .Section 6, Regular Meetings. — Regular meetings of the board of directors shall be held. .1.'..;. .■...../. on the in each year. No notice shall be required for any such regular meeting of the board. W .Section 7. Special Meetings. — Special meetings of the board of directors shall be held whenever called by direction of the president, or of one-third of the directors for the time being in office. ^ Sectioi^ 8. Notice Required. — The secretary shall give notice of each special meeting by mailing the same at least.., days before the meeting, or by telegraphing the same at least days before 'the meeting, to each director. Unless otherwise indicated in the notice thereof, any and all business ™ay be transacted at a special meeting. At any meeting at which every director shall be present, even though without any notice, any business may be transacted. -^ Section 9. Quorum. — A majority of the directors shall constitute a quorum for the transaction of business; but if at any meeting of the board there be less than a quorum present, a majority of those present may adjourn the meeting from time to time. L^- ' Section 10. Order of Business. — At meetings of the board of directors business shall be transacted in such order as, from time to time, the board may determine by resolution. -^ Section 11. Presiding Officer. — At all meetings of the board of directors, the president, or in his absence, the vice-president shall preside. Section 12. RatiUcation by Stockholders of Acts or Contracts. — The board of directors in its discretion may submit any contract or act for approval or ratifica- tion at any annual meeting of the stockholders, or at any meeting of the stockholders called for the purpose of considering any such act or contract; and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the capital stock of the company which is represented in person or by proxy at such meeting (provided, that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the corporation. Section 13. Compensation of Directors. — For his attendance at any meeting of the board of directors, or of any committee, every director' shall receive an allowance of ■ dollars for attendance at each meeting. x' Section 14. Election of Officers and Committees. — At the first meeting of the board of directors in each year (at which a quorum shall be present) held next after the annual meeting, the board of directors shalli proceed to the election of the execu- tive officers of the company. ARTICLE III. executive committee. Section 1. Executive Committee. — The board of directors may elect from the directors an executive committee, and shall designate for such committee a chairman, who shall continue to be chairman of the committee during the pleasure of the board of directors. Section 2. Vacancies; How Filled. — The board of directors shall fill vacancies in the executive committee by election from the directors; and at all times it shall be the duty of the board of directors to keep the membership of such committee full, with due regard to the qualifications for such membership indicated in this article of the by-laws. Section 3. Action of Committee to be Reported to* Board. — All action by the executive committee shall be reported to the board of directors sX its meeting next succeeding such action, and shall be subject to revision or alteration by the board of directors; provided, that no rights or acts of third parties shall be affected by any such revision or alteration. Section 4. Rules of Procedure. — The executive committee shall fix its own rules of procedure, and shall meet where and as provided by such rules, or by reso- lution of the board of directors, but in every case the presence of a majority of the members shall be necessary to constitute a quorum. In every case the affirmative vote of a majority of all of the members of the committee present at the meeting shall be necessary to its adoption of any resolution. Section 5. Membership. — The executive committee shall consist of members, besides the president, who, by virtue of his office, shall be a member of the committee. Unless otherwise ordered by the board of directors, each elected member of the committee shall continue to be a member thereof until the expiration of his term of office as a director. Section 6. Powers and Duties. — During the intervals between the meetings of the board of directors, the executive committee shall possess, and may exercise, all the powers of the board of directors in the management of all of the aflfairs of the company, and the execution _ of legal instruments with or without the corporate seal, in such manner as said committee shall deem to be best for the interests of the company, in all cases in which specific directions shall not have been given by the board of directors. 227 Forms and Precedents ARTICLE IV. ADVISORY COMMITTEE. The board of directors may elect from the directors an advisory committee. The committee shall consist of....T^ members, besides the pr^ident of the corporation, who by virtue of his "office shall be a member and chairman of the committee. This committee, from time to time, shall consider and make recom- mendations concerning such questions relating to the business and affairs of the company as may be submitted to the committee by the president. ARTICLE V. OFFICERS. Section 1. Executive Officers. — ^^The executive officers of the company shall be a president, a vice-president, or more than one vice-president, a treasurer and a secretary, all of whom shall be elected by the board of directors. Section 2. Other Officers. — The board of directors may appoint such other officers as they shall deem necessary, who shall have such authority and shall perform such duties as from time to time may be prescribed by the board of directors. Section 3, — One person may hold more than one office. Section 4. Term of Office. — All officers and agents shall be subject to removal at any time by the affirmative vote of a majority of the whole board of directors. All officers, agents and employees, other than officers appointed by the board of directors, shall hold office at the discretion of the committee or of the officer appointing them. Section 5. Removal. — The executive committee shall have power to remove all officers, agents and employees of tl^e company, except officers elected or appointed by the board of directors. Section 6. Powers and duties of the President. — The president shall preside at all meetings of the stockholders and of the board of directors. By virtue of his office he shall be a member of the executive committee. Subject to the board of directors and the executive committee, he shall have general charge of the business of the corporation. He shall keep the board of directors and the executive committee fully informed, and shall freely consult them concerning the business of the corporation. He may sign and execute all authorized bonds, contracts, checks or other obligations in the name of the corporation, and with the treasurer or an assistant treasurer or the secretary or an assistant secretary may sign all certificates of the shares in the capital stock of the corporation. He shall do and perform such, other duties as from time to time may be assigned to him by the board of directors. Section 7. Vice-Presidents. — The board of directors may appoint a vice-president or more than one vice-president. Each vice-president shall have such powers, and shall perform such duties, as may be assigned to him by the board of directors. Section 8, Powers and Duties of Treasurer. — The treasurer shall have custody of all funds and securities of the company which may have come into his hands; when necessary or proper he shall endorse on behalf of the company, for collection, checks, notes and other obligations, and shall deposit the same to the credit of the company in such bank ci; banks or depositary as the board of directors (or the executive committed may designate; he shall siga all receipts and vouchers for payments made to the company^ jointly with such other officer as may be designated by the board of directors or the executive committee^ he shall sign all checks made by the company, and shall pay out and dispose of the same under the direction of the board or of the executive committee; he shall sign with the president, or such other person or persons as may be designated for the purpose by the board of directors or the ttcecutive commiftee, all bills of exchange and promisory notes of the company; he may sign, with the president or a vice-president certificates of shares in the capital stock; whenever required by the board of directors or by the executive committee, he shall render a statement of his cash account; he shall enter regularly, in books of the company to be kept for the purpose, full and accurate accoynts of all moneys received and paid by him on account of the company; he shall, at all reasonable times, exhibit his books and accounts to any director of the company upon application at the office of the company during business hours; he shall make and deliver to stockholders such statements as are required by law; and he shall perform all acts incident to the position of treasurer, subject to the control of the board of directors, the executive committee and the president. He shall give a bond for the faithful discharge of his duties in such sum as the board of directors or the executive committee may require. Section 9. Assistant Treasurers. — The board of directors or the executive committee may appoint an assistant treasurer or more than one assistant treasurer. Each assistant treasurer shall have such powers and shall perform such duties as may be assigned to him by the board of directors, or by the executive committee. Section 10. Powers and Duties of Secretary. — The secretary shall keep the minutes of all meetings of the board of directors, and' the minutes of all meetings of the stockholders, and also (unless otherwise directed by t^ie executive committee) che minutes of all committees, in books provided for that purpose; he shall attend to the giving and serving of all notices of the company; he may sign with the president, in the name of the company, all contracts authorized by the board of directors or by the executive committee, and, when so ordered by the board of 228 Forms and Precedents directors or by the executive committee, he shall affix the seal of the company thereto; he may sign, with the president or vice-president, certificates of shares in the capital stock; he shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the board of directors or the executive committee may direct, all of which shall, at all reasonable times, be open to the examination of any director upon application at the office of the company during business hours ; and he shall in general perform all the duties incident to the oflfice of secretary, subject to the control of the board of directors and of the executive committee. The offices of secretary and of treasurer may be held by one and the same person. Section 11. Assistant Secretaries. — The board of directors or the executive ■» committee may appoint one ass^|*ta||^tary or more than one assistant secretary. Each assistant secretary 5halM|^^^^^h powers and shall perform such duties as may be assigned to him ^V^t^^^^^m^ directors or by the executive committee. Section 12. Voting Upon Sw^l^f^ed in Other Companies. — Unless otherwise ordered by the board of directors or by the executive committee, the president shall have full power and authority in behalf of the company to attend and to act and to vote at any meetings of stockholders of any corporation in which the company may hold stock, and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such stock, and which, as the owner thereof, the company might have possessed and exercised if present. The board of directors or the executive committee, by resolution, from time to time, may confer like powers upon any other person or persons. ARTICLE VI. CAPITAL stock; SEAL. Section 1. Certi^cates of Shares. — The certificates for shares of the capital stock of the company shall be in such form, not inconsistent with the certificate of incorporation, as shall be prepared or be approved by the board of directors. The certificates shall be signed by the president or a vice-president and also by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. All certificates shall be consecutively numbered. The name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be v entered on the company's books. All certificates surrendered to the company shall be canceled, and no new certificate shall be issued until the former certificate for the same number of shares shall have been surrendered and canceled. Section 2. Transfer of Shares. — Shares in the capital stock of the company shall be transferred only on the books of the company by the holder thereof in person, or by his attorney, upon surrender and cancellation of certificates for a like number of shares. Section 3. Regulations. — The board of directors and the executive committee also shall have power and authority to make all such rules and regulations as, respectively, they may deem expedient, concerning the issue, transfer and registra- tion of certificates for shares of the capital stock of the company. Section 4. Transfer Agent; Registrar. — The board of directors of the exec^itive committee may appoint a transfer agent and a registrar of transfers, and may require all stock certificates to bear the signature of such transfer agent or registrar of transfers, or the signatures of both. Section 5. Closing of Transfer Books. — During a period of — .,...; days prior to each meeting of stockholders no transfer of stock shall be made in the books of the company. The stock transfer books may also be closed for the payment of dividends, during such periods as from time to time may be fixed by the board of directors or by the executive committee, and during such periods no stock shall be transferable. Section 6. Dividends. — The board of directors may at any regular meeting or at any special meeting declare and fix the time of payment of dividends from the surplus profits arising from the business of the company. Section 7. Working Capital, — The directors may fix a sum which may be set aside or reserved, over and above the company's capital paid in, as a working capital for the company, and from time to time they may increase, diminish and , vary the same in their absolute judgment and discretion. P Section 8. Corporate Seal. — The board of directors shall provide a suitable seal, containing the name of the company, which seal shall be in charge of the secretary. ' ARTICLE VII. miscellaneous provisions. Section 1. Fiscal Year. — The fiscal year of the company shall be the calendar year. Section 2. Principal OMce. — The principal office shall be established-— ajid maintained at No '. . . Street, in the of , in the County of in the State of New York. Section 3. Notice and Waiver of Notice. — Whenever any notice is required by these by-laws to be given, personal notice is not meant unless expressly so stated; and any notice so required, except when notice is required to be published in a newspaper, shall be deemed to be sufficient if given by depositing the same in 229 Forms and Precedents a post-office box in a sealed post-paid wrapper, addressed to the person entitled thereto at his last known post-office address, and such notice shall be deemed to have been given on the day of such mailing. Notice of the time, place and purpose of any stockholders' meeting may be dispensed with if every stockholder shall either attend in person or by proxy, or, if absent, shall by writing, filed with the records of this meeting, waive such notice. Notice of any directors' meeting may be in like manner waived by any director. Any notice required to be given under these by-laws may be waived by the person entitled thereto. Section 4. Interpretation. — In these by-laws, unless there shall be something in the subject or context inconsistent therewith: "Stockholder" means the registered owner of a share or shares of the capital stock. _ In provisions relating to meetings of sto^ioldersf "majority" means a majority in interest, and "present" means present ir^^^feftor represented by proxy. "Board/* *'board of directors" and " dirMB^f^means the directors of the company for the time being duly convened in a regular" or special meeting. The word "meeting" includes the annual election of directors. Words importing the singular number include the plural, and vice versa; ^ words importing males include females; and words importing natural persons include corporations. ARTICLE VIII. ^ AMENDMENTS. Section 1. Power of Directors to Amend, Etc. — The board of directors shall have power to make, amend and repeal the by-laws of the company, by vote of a majority of all of the directors, at any regular or special meeting of the board. Section 2. Power of Stockholders to Amend, Etc. — The stockholders may make, alter, amend and repeal the by-laws of the company, at the annual meeting or at a special meeting called for the purpose, and all by-laws made by the directors may be altered or repealed by the stockholders. PENNSYLVANIA. Form 25.— NOTICE OF APPLICATION FOR CHARTER. Notice is hereby given that an application will be made by and , to the Governor of Pennsylvania on , the day of , 19 , at o'clock m., under the provisions of an act of Assembly, entitled "An act to provide for the incorpora- tion and regulation of certain corporations," approved April 29, a. d, 1874, and the supplements thereto, for a charter for an intended corporation, to- be called the character and object of which is to carry on the business of ■ •% and for -these purposes to have, possess and enjoy all the rights, benefits and privi- leges by said act of Assembly and the supplements thereto conferred. Dated , 19 Applicants. Form 26.— AFFIDAVIT OF PUBLICATION. Attach copy of notice here. Attach copy of notice here. State of Pennsylvania, County of , ss.: being duly sworn, doth depose and say: that he is one of the corporators of the That a notice of which the above "are copies, was published in the. both newspapers of general circulation, printed and published in the county of state of Pennsylvania. The said notice was published, to wit: In the on the days of 191 In the on the days of 191 Sworn and subscribed before me, this day of 19 [Seal] Form 27.— APPLICATION FOR CHARTER. To THE Governor of the Commonwealth of Pennsylvania: Sir:— In compliance with the requirements of an Act of the General Assembly of the Commonwealth of Pennsylvania, entitled "An act to provide for the incorporation and regulation of certain corporations," approved the 29th da.y of April, a. d., 1874, 230 Forms and Precedent s and the several supplements thereto, the undersigned, of whom are citizens of Pennsylvania, having associated themselves together for the purpose hereinafter specified, and desiring that they may be incorporated, and that, letters patent may be issued to them and their successors according to law, do hereby certify : First. — The name of the proposed corporation is Seconu. ■ — Said corporation is formed for the purpose of. Third. — The business of said corporation is to be transacted in. Fourth. — Said corporation is to exist * Fifth. — The names and residences of the subscribers and the number of shares subscribed by each, are as follows: Name. Residence. No. of Sh.\res Sixth. — The number of directors of said corporation is fixed at and the names and residences of the directors who are chosen directors for the first year are as follows: Name, Residence. Seventh. — The amount of the capital stock of said corporation is $ divided into shares of the par value of $ and $ , being ten per centum of the capital stock, has been paid in cash to the treasurer of said corporation, whose name and residence are: • [Seal! [Seal] [Seal] [Seal] [Seal] State of Pennsylvania, County of ; , ss. : Before me, in and for the county aforesaid, personally came th-e above named who in due form of law acknowledged the forego-ing- instrument to be their act and deed for the purposes therein specified. Witness my" hand and seal of office, the day of a. d. 19 [Seal] State of Pennsylvania, County of. , ss. : Personally appeared before me, this day of a. d. 19 who being duly sworn, according to law, depose and say that the statements con- tained in the foregoing instrument are true. S'worn and subscribed before me, the day and year aforesaid. [Seal] Executive Chamber. Harrisbu-rg, , 19 To THE Secretary of the Commonwealth: Having examined the within application and found it to be in proper form, and within the purposes of the class of corporations specified in section two, of the act, entitled "An act to provide for the incorporation and regulation of certain corporations," approved April 29th, a. d. 1874, and the several supplements thereto, I hereby approve the same, and direct that letters patent issue according to law. Governor. 231 Forms and Precedents Secretary's Office. Pennsylvania, ss,: Enrolled in charter book No , page . Witness my hand and seal of office, at Harrisburg, this day of a. d. 19 Secretary of the Commonwealth. T3rpewritten List of Signatures. The letters patent fee on this application is $30.00. The bonus is one-third of one per cent, of the authorized capital stock. A typewritten list of all signatures must be placed in blank space above. Form 28.— MINUTES OF FIRST MEETING OF THE CORPORATION. Th e First Meeting of the a corporation of the state of Pennsylvania, was held on the day of , 19 , at m., at the office of , Pennsylvania, pursuant to a written waiver of notice signed by all the incorporators, fixing said time and place. , one of the incorporators was present in per- son, being the holder of shares of stock. The following incorporators were represented by proxy: Name. Name of Proxy. Number of Shares. being all the incorporators of the company. ^ On motion, Mr was elected chairman, and Mr was appointed secretary of the meeting. The chairman reported that the application for the charter of the company had been approved by the Governor of the Commonwealth on the day of 19 and that letters patent were duly issued on the same day, andl that said application with the approval of the Governor attached thereto had been recorded in the office of the recorder of deeds of county, on the day of 19 , and upon motion, it was Resolved, that the articles of incorporation and letters patent be accepted and that copies be spread upon the minutes. The secretary presented and read the waiver of notice of the meeting. The proxies above mentiomed were ordered to be filed. The chairman presented a draft of by-laws for the regulation of the affairsi of the company, which were read, article by article, and, upon motion, duly seconded, the said by-laws were unanimously adopted, and it was ordered that an engross- ment thereof be affijced to the minutes of this meeting. Upon motion, duly made and seconded, and by the affirmative vote of all pres- ent/ it was Resolved, that the board of directors be and they hereby are authorized to issue the unsubscribed capital stock of this company to the aggregate amount of dollars, in such amounts and proportions as from time to time shall be determined by the board and as may be permitted by law, and to accept in full or part payment thereof such property as the board may determine shall bq necessary for the business of the company. Upon motion, duly seconded, it was unanimously Resolved, that the number of directors of this company be increased from to , and that , of , ber and he hereby 'is elected a director to fill the vacancy caused by such increase. Upon motion, duly made and seconded, it was Resolved, that the seal, an impression of which is herewith affixed, be adopted as the corporate seal of the company. The meeting then adjourned. Secretary of the Meeting. 232 Forms and Precedents Form 29.— MINUTES OF FIRST MEETING OF DIRECTORS. The First Meeting of the board of directors of the was held at the office of the t Pennsylvania, on thet day of 19 , at m. Present: Messrs and being a majority of the directors, Mr was chosen temporary chairman and Mr was appointed temporary secretary of the meeting. The secretary presented and read a waiver of notice of the meeting, signed by all the directors, and the same was ordered filed. The minutes of the first meeting of the corporation were read. The following gentlemen were unanimously chosen officers of the company to serve until the next annual election of officers and until their successors are chosen and qualify : President, Vice-President, Secretary Treasurer, It was ordered that the treasurer give a bond iit the sum of dollars, substantially in the form presented at this Dieeting, which was approved by the board, and submit said bond to the board for approval as to the sufficiency of the surety. Upon motion, duly made and seconded, it was Resolved, that the treasurer be and he hereby is authorized to open a bank account in behalf of the company and that checks upon such bank may be signed by or {Here follow resolutions, accepting subscriptions^ purchasing business, authorizing bank account, etc.) There being no further business, the meeting adjourned. Secretary, Form 30.— BY-LAWS. ARTICLE I. MEETINGS OP STOCKHOLDERS. Section 1. The annual meeting of the stockholders of the company for the election of directors and for general business, shall be held at the office of the company, in the City of State of Pennsylvania, on the of in each and every year at Section 2. Stockholders shall be entitled in person ot by proxy to one vote for each share of stock held by them; but no proxy shall be voted or allowed for more than two months from its date, and no share of stock shall be voted on at any election which shall have been transferred on the books of the company within twenty days preceding such election. Section 3, Special meetings of the stockholders may be called at any time by the President or shall be called by the President upon the written request of two of the directors, or shall be called by him upon the request in writing by the stockholders, representing a majority of the shares of stock of the company, provided the request specifies the object. Written or printed notices of special meetings specifying the object thereof, shall be given by the Secretary and mailed to the last known post office address of _ the stockholder. At such meetings, no business shall be transacted other than that specified in the call. Section 4. Notice of the annual or any special meeting of the stockholders shall be given by mailing said notice to the last known post office address of the stockholder at least ten days prior to the date of such meeting in the case* of an annual meeting and five days in the case of a special meeting, exclusive of the day of mailing. Section S. Special meetings of the stockholders may be held without notice by the attendance in person or by proxy of all the stockholders. Section 6. At all meetingsi of the stockholders, a quorum shall consist of those representing a majority of the shares of stock of the company, and if a majority oi the stock shall not be represented, no business shall be transacted except to adjourn to a future time. , , , , , « , Section 7. If a majority of the stock be represented, the stockholders shall have power to adjourn a meeting to any subsequent day or days and no notice of the adjourned meeting need be given to stockholders absent or otherwise. ^ Section 8. At all meetings of the stockholders, the following order of business shall be substantially observed, so far as consistent with the purpose of the meeting, viz: 1. Roll Call. A quorum being present, 2. Reading of Minutes of preceding meeting and action thereon, 3. Report of the President, 4. Report of the Treasurer, 5. Report of the Secretary, 6. Report of Committees, 7. Election of Directors, 8. Unfinished business, 9. New business. 233 Forms and Precedents article ii. OFFICERS. Section 1. The officers of th€ company shall be a President, a Secretary and a Treasurer, There shall be Directors. All of said officers shall serve for one year, and until their successors are duly elected and qualify. Section 2. The Board of Directors shall be elected by the stockholders at their annual meeting. The officers of the company shall be elected by the Board of Directors, ARTICLE III. DIRECTORS, Section 1. The business and property of the company shall be managed by the Board of Directors, who shall be stockholders of the company. On the registration upon the books of the company of the sale, transfer or assignment of all of his holdings of stock by any person, who ha& theretofore been elected a Director of this company, the office of such person as a Director shall immediately become vacant, and at the next meeting of the Board thereafter, the remaining Directors shall elect his successor. Section 2. The Directors shall be elected annually by the stockholders of the company as provided in Article I of these by-laws. Section 3. Immediately after such election if all of the Board of Directors be present, and if not, then at their first meeting when there shall be a quorum, said Board shall elect, by ballot, a President, a Secretary and a Treasurer, who shall hold their offices for one year, and until their successors are duly elected and qualify, ARTICLE IV. directors' meetings. Section 1. The Board of Directors shall hold regular meetings at the office of the company in the City of or elsewhere, by the order of said Board on the day and at the hour fixed by the Board. Section 2. Special meetings of the Board may be called at any time by the President, or shall be called by the President upon written request of two directors on one day's written notice to each Director, stating the time and object of such meeting. Section 3. In case the President shall at any time neglect or refuse to call a special meeting of the Board of Directors when requested so to do by two Directors, then and in such case, such special meeting may be called by the two Directors desiring such special meeting, upon notice as provided by these by-laws. Section 4. A majority of the Directors shall be necessary for a quorum to transact business at any time. Section 5. The order of business of the Board shall be substantially as follows: 1. The president shall call the Board to order. 2. Reading of Minutes of last meeting and action thereon. 3. Reports of Officers. 4. Reports of Committees. 5. Unfinished Business. 6. Election of Officers. 7. New Business. ARTICLE V. powers of directors. Section 1. The board of directors shall have management of the business of I he company, and in addition to the powers and authorities by these by-laws conferred upon them, may exercise all such powers and do all such acts and things as are usually done by the board of directors of a corporation, but subject, nevertheless, toi any regulations from time to time made by the stockholders. Section 2. The board of directors may elect, appoint, and at its discretion, remove or suspend such officers, subordinate, assistant or otherwise, and clerks, agents and servants permanently or temporarily as the board may deem necessary, and determine their duties and fix, and from time to time change their salaries or emoluments and require security in such instances, and in such amounts as it may deem proper. Section 3. The board of directors shall have power to fill all vacancies. A vacancy in the Board of Directors shall be filled by a vote of the majority of the remaining members of the board. Section 4. In case of the absence of an officer or for any other reason which may seem sufficient to the Board of Directors, the Board may delegate his powers and duties for the time being to any other officer or any other director. ARTICLE VI. duties of officers. Section 1. President. — ■ The President shall be the chief executive officer and head of the company, and in the recess of the board of directors shall have the general control and management of its business and affairs, subject, however, to the regulations of the board of directors. 234 Forms and Precedents Section 2. He shall preside at all meetings of the stockholders and of the board of directors, and shall be a member ex-ofBcio of all standing committees. Section 3. The President shall call all special or other meetings of the stockholders and board of directors. In case the President, shall, at any time, neglect or refuse to call a special meeting of the stockholders when required so to do by two directors or by the stockholders representing a majority of the stock of the company, then and in such case, such special meeting may be called by the two directors or the majority of stockholders desiring such special meeting, as the case may be, upon notice as hereinbefore provided. Section 4. The President shall make annual reports showing the condition of the affairs of the company, and make such recommendations as he thinks proper, and submit the same to the board of directors at the meeting next preceding the annual meeting of the stockholders, and he shall from time to time bring before the Board of Directors such information touching the business and property of the company as may be required. Section S. Secretary. — ' The Secretary shall be ex-officio clerk of the board of directors. He shall attend all meetings of the stockholders and of the board of directors, and shall record all the proceedings thereof in a book to be kept for that purpose; and shall be the custodian of the records of the corporation. Section 6. He shall see that due and proper notice is given of the meetings of the stockholders, and of the board of directors. Section 7. He shall perform such other duties as may from time to time be fixed and required by the board of directors. Section 8. Treasurer. — The Treasurer shall keep full and accurate account of the receipts and expenditures, in books belonging to the company, and shall deposit all TaonGys and valuable effects in the name and to the credit of the company, and in such depositories as may be designated by the board of directors, and shall give bond with at least one surety in such amount as may be required by the boa,rd of directors for the faithful performance of his duties. Section 9. He shall disburse the funds of the company as may be ordered by the board of directors, taking proper vouchers for the disbursements, and shall render to the President and board of directors at the regular meeting of the board, or whenever they may require it, an account of all his transactions ^ as Treasurer and of the financial condition of the company, and at the last meeting of the board, preceding the annual meeting of the stockholders, make a full report for the preceding year, and present the same to the annual meeting of the stockholders. ARTICLE VII. checks, drafts, notes, etc. Section 1. All checks shall be signed by the Section 2. Unless the board of directors shall otherwise direct, all notes, drafts and acceptances and other obligations of the company shall be signed by the President and countersigned by the Treasurer. ARTICLE VIII. certificates of stock. Section 1. Certificates of stock shall be issued under the seal of the company, and shall be signed by the President and Treasurer. The certificates shall be in such form as the stockholders shall direct. Section 2. Shares of stock of the company shall be "transferable only on the books of the company by the holder thereof, in person or by attorney duly authorized thereto in writing, and upon the surrender and cancellation o'f the certificate thereof duly endorsed. Section 3. The Board of Directors may direct the President and Treasurer to issue new certificates of stock in lieu of others which may have been lost or destroyed upon the following conditions, viz : The person requesting a new certificate to be issued in place of one alleged to be lost or destroyed, shall advertise the loss or destruction of such certificate once a week for two weeks in a daily newspaper of general circulation published in the County of , indicating in such advertisement the number of the certificate, ntim.ber of shares it represents, name in which issued, date, etc. He shall make affidavit of the loss or destruction of such certificate, and if required, give this company a bond of indemnity with sufficient surety against all loss or damage in the premises. Upon the filing with the board of directors of proof of publication of such advertisement and affidavit of the applicant, and of a bond, if any be required, in such amount and in such surety as is acceptable to the board, then the President and Treasurer, may with the approval of the board, at the expiration of thirty days after the last advertisement, issue a new certificate in lieu of the one lost op destroyed. ARTICLE IX. DIVIDENDS. Section 1. Dividends upon the capital stock of the company may be declared by the board of directors at their discretion. ARTICLE X. SEAL. Section 1. The seal of the company shall be round, with the name of the company and the numerals "191 " arranged in the form of a circle on the outer edge and the words CORPORATE SEAL arranged acrosis the inside of the circle. 235 Forms and Precedents article xi. AMENDMENTS. Section 1. These by-laws may be amended, altered, modified or added to by the vote of the stockholders owning at least a majority of the stock of the company, and present in person or by proxy at any annual or special meeting o-f the stockholders, provided that the propotsed amendment is fiUd with the Secretary three weeks before such annxial or special meeting and a copy thereof mailed to each stockholder with the notice of such annual or special meeting. B. PRECEDENTS OF CLAUSES TO BE INSERTED IN ARTICLES OF INCORPORATION. Form 31.— THE SPECIAL OBJECT CLAUSE. AUTOMOBILES AND MOTOR BOATS. (a) To buy, sell and deal in automobiles of all kinds, engines, motors, ma- chinery, equipment and supplies of all kinds, used or capable of being used in connection therewith ; (b) To buy, sell and deal in boats of all' kinds; (c) To repair, store and furnish power to automobiles and vehicles of every sort and kind, and to buy, sell and deal in supplies for automobiles and other vehicles and articles of all kinds used in. connection therewith; (d) To manufacture, buy, sell and deal in automobiles and other vehicles, machinery, boats, equipment, tools and supplies of all kinds used in connection with automobiles, vehicles and boats. BROKERAGE AND COMMISSION. To carry on a general brokerage and commission business, and in connection therewith to buy, sell, trade and deal in metals of all kinds, cotton, grain and other produce, stocks, bonds and securities, and commodities of all kinds. COAL. (a) To acquire, own, lease, occupy, use or develop any lands c&ntaining coal or other ores or minerals, and any wood lands or other lands for any purpose of the company; (b) To extract or remove coal or other minerals and timber from any lands owned, acquired, leased or occupied by the company; (c) To manufacture lumber and other materials, and all or any articles con- sisting or partly consisting of coal, wood or other materials, and any a^d all products thereof; (d) To buy, sell, or otherwise deal or traffic in coal, coke, ores, wood, lumber and other materials, and any of the products thereof, and any articles consisting or partly consisting thereof. CONTRACTORS. (a) To cajry on the business of general contractors; (b) To build, construct, execute, carry out, equip, improve, repair, work, develop, administer, manage or control public and private works and conveniences of all kinds, which expression in this certificate includes railroads, railways, tram- ways, roads, viaducts, bridges, tunnels, subways, harbors, docks, slips, piers, wharves, canaJs, aqueducts, reservoirs, embankments and sewage, drainage, sanitary, water, gas, electric light, telephonic, telegraphic and power supply works, and hotels, ware- houses, markets and public buildings, and all other works or conveniences of public utility; provided, however, that the company shall not maintain or operate any rail- road or canal in the State of , nor engage in any busi'ness hereunder which shall require the exercise of the right of eminent domain within the State of ; (c) To enter into, apply for, purchase or otherwise acquire, any contracts and concessions for or in relation to the construction, execution, carrying out, equipment, improvement, administration, management or control of works and conveniences, and to undertake, execute, carry out, sublet, dispose of or otherwise turn to account the same; (d) To manufacture, buy, lease or otherwise acquire, and to sell, lease or otherwise dispose of and deal in machinery, apparatus, appliances and tools of all kinds used or capable of being used in or about the construction and equipment of any such works and conveniences. ELECTRICAL. (a) To construct, manufacture, buy, sell, install, lease or otherwise dispose of and deal in and trade in works, machinery, appliances, instruments, devices, supplies, materials and articles of every nature and description used or capable of being 236 Forms and Precedents used in the production, generation, accumulation, transmission, distribution, control, measurement or other application or use in any manner whatsoever of electricity or any other power now known or which may hereafter be discovered or invented; (b) To carry on the business of electrical and mechanical engineers in all the several branches thereof; (c) To enter into and make or otherwise acquire any contracts, for or in relation to the construction, erection, equipment, alteration and improvement of public or private works, conveniences or buildings, and to undertake, execute, carry out, sublet, assign or otherwise dispose of or turn to account the same. ENGINEERING. To carry on the business of mechanical engineers and dealers in and manufac- turers of plants, engines and other machineryi and the business of tool makers, brass founders, metal workers, boiler makers, millwrights, machinists, iron and steel con- verters, smiths, builders, metallurgists, electrical, civil and water supply engineers; to buy, sell, manufacture, repair, convert, alter, let or hire and de^ in machines, implements, rolling stock, electrical appliances and hardware of all kinds; to design, build, construct,, repair or otherwise engage in any work upon railroads, water, gas and electrical works, foundations, mines, shafts, tunnels,^ bridges, waterworks, via- ducts, canals, hotels, wharves, piers, light-houses, or any like work of internal im- provement, public use or utility, in all parts of the world, and to make, execute and take or receive any contracts or assignments of contracts therefor, or relating thereto, or connected therewith. EXPLORATION. See MINING. FINANCIAL. See Form 21 above. HOLDING COMPANY. See Form 21 above. HOTEL. (a) To acquire by purchase, exchange, lease or otherwise, and to own, operate, manage, sell, lease or otherwise dispose of hotels, apartment houses, restaurants and cafes, and to transact and carry on any business usually ijarried on by proprietors or keepers of hotels, inns, taverns, apartment houses, restaurants or cafes; (b) To purchase on otherwise acquire, and toi sell, trade and deal in any and all kinds of provisions, foods, distilled or rectified spirits, wines, fermented and malt liquors, beverages of all kinds, mineral waters, 'cigars, cigarettes and tobacco, and goods, wares and merchandise of all kinds which may conveniently be used or dealt in in connection with the foregoing business. INSURANCE AGENCY. (a) To conduct a general insurance agency and insurance brokerage and adjust- ment busin-ess, consisting of and in connection with fire, casuality, life, marine, accident, health, fidelity, debt, burglary, physician's defense, plate glass, elevator, steam boiler, tornado and wind storm, sprinkler leakage, guaranty, indemnity, em- ployer's liability, and any other form or forms of insurance which now are or which may hereafter become lawful; (b) To state adjustments of general average and of partial and total losses and of salvage losses and any other kind of adjustment or statement in respect of any class of marine, fire or other insurance, for or on behalf of either policy holders or insurance companies and to settle claims of any and all kinds against insurance companies, either for or on behalf of such companies or policyholders; (c) To carry on t3he business of a salvage corporation or association in all its branches and operations of every nature in any way connected with salvage, and to act as agents or managers of any salvage corporation or association or of any branch thereof. INVESTMENT COMPANY. See Foxm 21 above. LAND IMPROVEMENT. See REALTY. 237 Forms and Precedents MINING. (a) To carry on the business of mining, milling, concentrating, converting, smelting, treating, preparing for market, manufacturing, buying, selling, exchanging and otherwise producing, dealing in or turning to account gold, silver, copper, lead, zinc, brass, iron, graphite and all kinds of ^ ores, metals and minerals, and the pro- ducts and by-products thereof, of every kind and description, and by whatsoever process the same can or may hereafter be produced; and generally and without limit as to the amount, to buy, sell, exchange, lease,, acquire and deal in lands, mines and ■ minerals, rights and claims, and in the above specified products, and conduct all business appurtenant thereto ; (b) To acquire, own, enter or lease mines and mineral lands of every kind, nature and description; also to acquire, own, enter or lease mill sites, water rights and terminal facilities; to work, prospect or develop mines and mineral lands of every nature or description, either for itself or other companies, corporations or individuals, upon such terms and for such remuneration as it shall deem fit and proper, and to accept, take and hold mineral lands and claims of every kind and nature, either as an entirety or any portion thereof, and to buy, sell, own or control stock of other corporations, as it may deem proper; (c) To do everything that may be necessary or proper in the conduct of its business in the way of developing, prospecting, locating, acquiring, buying and sell- ing mineral lands and mining claims of every kind, nature and description, and working such mines, and the production of ores and minerals therefrom and in reducing such ores and minerals to the most profitable merchantable value; (d) To contract for, build, buy, sell, own and operate all necessary mills, smelters, machinery, roads, railroads, tramways, ditches, flumes, pumps, pumpinjg plants of any kind or kinds whatsoever, and such other property as shall be fit and necessary in carrying out the objects herein stated; (e) To buy, sell, or lease mines and 'mining property of aJl kinds and prop- erty of every kind, nature and description, useful or necessary in operating or main- taining the same, in reducing the ores and in refining the minerals taken therefrom upon commission, whether such commissio'n is in money or otherwise; (f) To acquire, hold, improve, lease sell or otherwise turn to account or dis- pose of timber, farming, grazing, mineral and other lands, or the products thereof; to build, construct, maintain and operate plants and works! for the development of such lands, and for the handling and preparing of the various products thereof, and renderingi the same commercially available; (g) To purchase or otherwise acquire, breed, raise or otherwise deal in or dispose of cattle and. live stock of all kinds, and to carry on a general cattle and agricultural business; (h) To produce, purchase, sell and deal in all manner of farm and dairy pro- ducts, and in anywise to turn the same to account, or deal in or dispose of the various materials entering into or used in the productions thereof; (i) To erect buildings, operate saw mills and engage in trade of every kind, both in stores and provisions, steam and sail transportations, road building and engineering, freighting and carrying; (j) To acquire by .purchase or otherwise, own, hcJd, buy, sell, convey, lease, mortgage or encumber real estate or other property, personal or mixed; (k) To survey, subdivide, plat, improve and develop lands for purposes of sale or otherwise, and to do and perform all things needful and lawful for the development and improvement of same for residence, trade and business; (1) To furnish electricity for power and lighting purposes and all appliances incident or necessary thereto; (m) To buy, sell and generally trade in, store, carry and transport all kinds of goods, wares, merchandise, provisions and supplies. MOTION PICTURE FILMS. To carry on the business of manufacturing, developing, purchasing, acquiring, selling^, repairing, renting, leasing, operating and exchanging any and all kinds of theatrical films, motion picture films, lantern slides, stereopticons and stereopticon views, cameras, motion picture cameras and motion picture projecting machines, and other projecting apparatus, and the separate parts of lanterns, stereopticons, cameras and motion picture projecting machines, and other projecting machines for use in all branches of the motion picture and) theatrical businesses, and mechanical devices of any and every kind for use in any branch of the theatrical stage producing and motion picture businesses. MOTION PICTURE THEATRE. To construct, purchase, lease or otherwise acquire, and to lease, sell, exchange, transfer, or in any manner whatever dispose of, theatres, photoplay theatres, motion picture theatres, concert halls and amusement places of all kinds and description, also to carry on the business of theatrical proprietors; also to manage theatricalj con- cert hall, motion picture and photoplay performances and vaudeville companies of all kinds, classes and descriptions. Also to engage and employ actors and artists of all kinds. Also to purchase, own, produce and present and to license others to produce and present theatrical plays, operas, motion picture films and records, photoplay films, records and exhibitions of various kinds. 238 Forms and Precedents NAVIGATION COMPANY. (a) The carriage of passengers or freight, or both, upon the high seas, or from a port or ports in the State of to a foreign port or ports, or to a port or ports in any other states, or the carriage of freight or passengers, or both, upon any waters where this corporation may navigate; (b) To construct, repair, own, buy, hire, sell, let, charter and, generally, in any and all lawful ways whatsoever, to deal in and with ships, vessels and boats of all kinds and classes, and mechanical and electrical apparatus, appliances, devices! and appurtenances requisite, necessary or advantageous in connection with' the aforesaid purposes of the company; (c) To establish and maintain lines or regular services of steamboats, ships and vessels of any and all kinds and classes; (d) To enter into contracts for the carriage of mails, goods and merchandise by any means, either by its own vessels and conveyances, or by the vessels and conveyances of others; (e) To construct, purchase, own, take on lease or otherwise acquire and work, and in anywise to sell or dispose of, in whole or in part, any wharf, pier, dock, buildings or works capable of being advantageously used in connection with the busi- ness of the company as a ship-building, ship-operating or manufacturing company; and in connection with any <^ the objects aforesaid to carry on the business of ship-builders, engineers, manufacturers of machinery and car builders. OIL. (a) To produce, transport, store, refine or otherwise prepare for market, buy, sell, import, export, trade, deal with and deal in petroleum and natural gas; (b) To manufacture or otherwise produce, import, export buy, sell, use, prepare, traffic in and in every way deal in and with, either as principal or agent, or otherwise, all or any of the products and by-products of petroleum and natural gas; (c) To acquire by purchase, exchange, lease or otherwise, or acquire options in respect to, and to own, hold, occupy, use and develop, or to sell, exchange, lease or otherwise dispose of any lands containing or supposed to contain petroleum or natural gas, and oil and gas mining leases and to drill and develop oil and gas wells and to operate oil and gas wells; (d) To construct or acquire by purchase, lease or otherwise, and to maintain and operate, pipe lines for the conveyance of oil and natural gas; (e) To construct or acquire by purchase, lease or otherwise, and ta maintain and operate, oil storage tanks and reservoirs and tank cars of all kinds; (f) To acquire, own, maintain and operate boats, tank boats, tanU steamers and other boats, ships and vessels! for the transportation of crude or refined petroleum and all products and by-products thereof, and to construct or acquire by purchase, lease or otherwise, maintain and operate wharves and docks. (g) To manufacture, buy, sell, lease, let and hire machinery, equipment, tools, implements and appliances, useful or available in prosp^ting for or in producing, transporting, storing, refining or preparing for market petroleum and natural gas and their products and by-products, and all or any articles and materials in any way relating thereto or connected therewith; , „ , , (h) To purchase, lease, construct or otherwise acquire, exchange, sell, let or otherwise dispose of, own, maintain, develop and improve plants, refineries, factories, warehouses, stores and buildings of all kinds useful in connection with the business of the corporation. PUBLISHING AND BOOKSELLING. To conduct and carry on a general publishing and bookselling business, includ- ing the printing,, binding, publishing, buying or selling of any and all books, pam- ohlets periodicals, or other printed matter, the buying and selling of the machinery, oaoer parchment, cloth, leather and other material used in such printing, binding or Dublishine and the buying and selling of any manuscripts ir copyrights, and the transaction of all such business either on its own account or as agent for other persons and corporations. RAILROAD. (a) To construct, purchase, take or lease or otherwise acquire, work, maintain, improve and operate a railroad or railroads in. .and elsewhere without the State of together with such other transportation facilities as may be required in connection therewith. , .„..,. (b) To purchase, lease, exchange, hire or otherwise acquire any and all rights, m-ivileges pemits or franchises, subject to legislative and governmental control when and where necessary, suitable or convenient for any of the purposes of its business; and to own, construct, execute, carry out, equip, improve, work, buy, _ sell, lease, develoo administer, manage, operate, maintain or control, public and private works and conveniences of all kinds, by the uses of steam, air, electric, horse or other oower, tramways, docks, harbors, piers, femes, wharves, bridges, canals, water-works, conduits gas-works, reservoirs, embankments, irrigations, reclamations, improvements, sewerage, drainage, sanitary, water, gas, electric light, telephone, telegraph and heat, light and power supply works, and also hotels, warehouses, markets, private and 239 Forms and Precedents public buildings, and all other works and conveniences or institutions of public or private utility or use, and to manufacture, sell, lease, hire, exchange or otherwise dispose of any and all materials, machinery and implements which may be necessary or convenient for any of the purposes described in these articles. REALTY. To acquire by purchase or otherwise, hold, own, develop, improve, sell, convey, exchange, mortgage, lease and otherwise deal or trade in and dispose of real property and any estate, interest or rights therein; to lend money on bonds secured by mortgage on real or personal property or otherwise; to erect, construct, alter, maintain and improve houses and buildings of every description on any lands of the corporation or upon, any other lands, and to rebuild, alter and improve existing houses and buildings thereon; and to carry on the general business of a real estate agent and broker. REALTY— ANOTHER FORM. To take, acquire, buy, hold, sell, exchange, lease, mortgage, improve, cultivate and otherwise deal in and dispose of and make contracts with reference to real estate; to lay out and maintain parks, and parkways, sewers, gas mains and water mains, and to open, build and pave streets and highways, and to lay side- walks, and maintain the* same; to take, acquire, buy, hold, own, hire, lease, mortgalge, pledge and Oftherwise deal in and dispose of all lands of personal, property, chattels real and patents for inventions; to purchase, take, acquire, buy, hold, sell, lease, m.ortgage and otherwise deal in and dispose of all kinds of mines and quarries; to take,) acquire, buy, hold, own, lease, mortgage and otherwise deal in and dispose of water and rights to water and riparian rights; to purchase, construct, sell, lease, mortgage and otherwise dispose of viaducts, ferries, wharves, chutes, piers, canals and ditches for draining, agricultural, mining and navigation and other purposes; to take, acquire, purchase, 'sell, lease, mortgage, construct, erect, hold, maintain and conduct hotels, lodging houses, dwelling houses, business and office buildings, factories and other buildings, and do all business incident thereto and connected therewith; to eng^e in, conduct and carry on manufacturing, mining, mercantile and commercial business in all their branches; to guarantee the title of land, or to any estate or interest in lands sold by it; to borrow money in aid of the purposes of the corporation upon any real property, interest in real property, securities, houses or buildings, which may belong to said company; to issue debenture bonds or bomds secured by mortgage or mortgages upon the property and franchises of the said company, or otherwise, and to sell the same for the purpose of raising money with which to enlarge or carry o« the business of the said company or any part thereof, and for the purchase of any real or personal property therefor, or for any other lawful purposes ; to loan money on land or buildings and_ to do all things requisite or necessary and which are done in ordinary course in the transaction or carrying on of a general real estate business. TAXICAB COMPANY. (a) To purchase, lease or otherwise acquire, own and operate motor cars of all kinds, and to carry on a general cab, carriage and hacking business; (b) To carry on a general transfer and express business; (c) To purchase, build, construct, operate and deal in motor vehicles of every kind and description, and agencies, machinery and equipments in connection with the manufacture or operation of vehicles, including all apparatus, machinery, tools OT property tiseful in connection therewith ; THEATRICAL. (a) To purchase, own, produce, and present, and to license others to pro- duce and present, theatrical plays and operas, and to acquire and hold, sell, assign and transfer, copyrighted and uncopyrighted plays and operas; (b) To carry on the business of theatrical proprietors, music hall proprietors, caterers for public entertainments, concerts and exhibitions; to provide, engage and employ actors, dancers, singers, variety performers, athletes, and theatrical and musical artists, and to produce and present to the publiiC opera, stage plays, operettas, burlesques, vaudevilles, ballets, pantomimes, spectacular pieces, concerts, and all sorts of shows, exhibitions and amusements which are or may be produced at a theatre or music hall, TOBACCO. (a) To carry on the general business of tobacconists and manufacturers of and dealers in tobacco, cigars and cigarettes ; (b) To import, export, manufacture, buy, sell and deal in, both at wholesale and retail, any and all kinds of tobacco, cigars, cigarettes and smoikers* articles of all kinds; and to purchase, establish, maintain and operate factories, agencies and depots for the manufacture, sale and distribution of any or all of such articles. 240 Forms and Precedents Form 32.— GENERAL OBJECT CLAUSES. Power to Hold, Etc., Real Estate. To take, purchase, exchange, hire, lease or otherwise acquire, and to own and hold unlimitedly within and without the State of and in any part of the world, to occupy, control, maintain, manage, sell, convey, exchange, lease, subleas-e pr otherwise alienate or dispose of, and to mortgage, or otherwise encumber, and to otherwise deal in ireal estate, either improved or unimproved, and any interest or right therein. Power to Improve, Etc., Real Estate. To erect or cause to be erected, construct, or cause to be constructed, to maintain, improve, rebuild, enlarge, alter, repair, raise and remove, and to buy, sell, own, use, occupy, manage, lease and control, any and all kinds of buildings, houses, stores, lofts, offices, warehouses, mills, shops, factories, hotels, restaurants, apartments, tenements, machinery, plants, edifices, works and structures of every kind, nature and description. Power to Borrow Money. To borrow or raise money for the purposes of the company, to secure the same and any interest thcr-ein, and for that purpose or any other purpose, subject to the provisions and restrictions hereinafter set forth, to mortgage and charge all or any part of the present or after-acquired property, rights and franchises of the company, and to issue notes, bonds, debentures and other evidences of indebted- ness. Power to Guarantee Bonds, Etc. To guarantee the payment of principal or interest on any notes, debentures, bonds or other obligations of any corporation or corporations, so far as the same may be permitted by corporations organized under the act under which this com- pany is incorporated. ^ Power to Subscribe For, Hold, Etc., Stock. To subscribe for, or cause to be subscribed for, to purchase, invest in, acquire, hold, own, sell, assign, transfer, mortgage, pledge, exchange, distribute, or otherwise dispose of, the whole or any part of the shares of stock, bonds, mortgages, deben- tures, notes, coupons, and other securities, obligations, contracts and evidences of indebtedness of any corporation, domestic or foreign, and to issue and exchange therefor its shares of stock, bonds or other obligations, and to exercise in respect to any such shares of stock, bonds or other securities, any and all rights, powers and privileges of individual owners or holders, including the right to vote thereon, and to aid in any manner permitted by law, any corporation or association of which any bonds or other securities, or evidences of indebtedness or stock, are held by this corporation, and to do any acts or things designed! to protect, preserve, improve or enhance the value of any such stock, bonds or other securities, or evidences of indebtedness, and to organize or promote or facilitate the organization of subsidiary companies. Power to Act as Agent. To act as agent or representative of corporations, firms and individuals, and as such to develop and extend the business interests of firms, corporations and in- dividuals. Power to Undertake Financial Transactions. To undertake or aid any enterprise and to carry out any transactions whatever which may be lawfully undertaken and carried out by capitalists so far as the same may be carried on by corporations organized under the act under which this company is incorporated. Power to Acquire Businesses, Etc. To buy, lease or otherwise acquire, the good-will, franchises, rights and prop- erty of any person, firm, association, and to pay for" the same in cash, property, the stock or bonds of this company, or otherwise; and to, hold or in any manner dispose of, the whole or any part of the property so acquired; ta conduct, carry on, operate, manage, control, improve and develop, the whole or any part of any business or property so acquired, either in the name of such other person or persons, firm, association or corporation, or in the name of this corporation, provided that such business is one that may be carried on byi a corporation organized under the act under which this company is incorporated, and to exercise all the powers neces- sary or convenient in and about the conduct and management of such business. 241 Forms and Precedents Power to Sell Company's Property and Undertaking. To sell or exchange all or any part of the property, assets, good-will, and under- taking of the company^ and to accept in payment or exchange therefor, the stocks, bonds, or other securities of any other corporation, either domestic or foreign. Power to Purchase Own Shares. To use the surplus profits of said corporation for the purcha-se of any of the shares of its capital stock, preferred or common, provided, however, that any preferred shares so purchased shall not be reissued, and provided further, that the capital stock shall not be reduced except in accordance with the requirements of the statute. Power to Acquire and Hold Patents, Etc. To apply for, obtain, register, purchase, lease, or otherwise acquire, to hold, use, own, operate and introduce, and to sell, assign, or otherwise dispose of, any and all trade marks, formulae, secret processes, trade names and distinctive marks, patents, inventions, improvements and processes used in connection with, or secured under, letters patent, or similar rights granted by the United States or by any other country or government, or otherwise, and to use, exercise and develop, grant licenses in respect of the same, or any interest therein, and otherwise turn the same to account, and to carry on any business which the corporation may deem advantage- ous to effectuate the use, exercise or development thereof, in so far as the same is not inconsistent with the Laws of the State of Auxiliary Powers. To do all and everything necessary, suitable, useful or proper for the accom- plishment of any of the purposes or the attainment of any of the objects, or the furtherance of any of the powers hereinbefore set forth, as principal or agent, either alone or in association with other corporations, firms or individuals, and to do every other act or acts, thing or things incidental or appurtenant to, or growing out of, or connected with, any of the aforesaid purposes, objects or powers, or any part or parts thereof, and to do any such acts or things to the »ame eactent and as fully as natural persons might or could do in any part of the world. Power to do Business out of State. To conduct and transact its business in any or all of its branches in any of the states, territories, colonies or dependencies of the United States, in the District of Columbia and in any and all foreign countries; to have one or more offices therein; to hold, purchase, mortgage and convey, real and personal property without limit, as to amount, in any such state, territory, colony, dependency, district or foreign country, but always subject to the laws thereof. Objects and Powers to be Construed Independently. The objects and powers specified in any clause contained in this Article shall, except where otherwise expresseii, be in no wise limited or restricted by reference to or inference from the terms of any other clause of this Article or any other Article of this certificate; but the objects and powers specified in each of the clauses of this Article shall be regarded as independent objects, purposes and powers. Enumeration of Specific Powers not to Limit General Powers of Company. The foregoing enumeration of specific powers shall not be held to limit or restrict in any manner, the general powers of the company, and the enjoyment thereof, as conferred by the laws of the State of upon corpora- tions organized under the provisions of the act under which this company is incor- porated. Form 33.— CLAUSES PROVIDING FOR CLASSES OF STOCK, (a) Non-Cumulative Preferred Stock and Common Stock. The holders of said preferred stock sliall be entitled to receive in each year, out of the accumulated profits of the corporation, in excess of such sura, if any, as shall have been fixed and reserved as a working capital, a non-cumulative divi- dend of seven per cent., payable quarterly, half-yearly or yearly, as the directors may from time to time determine, before any dividend shall be set apart or paid on the general or common stock of the corporation. If the accumulated profits in excess of the sum fixed and reserved as a working capital shall not be sufficient to pay, in any year, a dividend of seven per cent, on said preferred stock, then 242 Forms and Precedents such dividend shall be paid thereon as such excess of accumulated proifits will suf- fice to pay; but the dividends thereon shall not be cumulative, but shall be payable for each year only out of the accumulated profits in excess of the sum fixed and reserved as a working capital, and not out of accumulated profits of any subsequent year or years. Upon the dissolution of the corporation, or upon final distribution of its assets, and after the payment of its debts, the preferred stock shall be redeemed at par if the assets of the corporation, including surplus and accumulated profits, are sufficient. If the assets are not sufficient to redeem said stock at par, then all said assets, or their proceeds, shall be distributed ratably among the holders of such preferred stock. If the assets are more than sufficient to redeem the preferred stock at par, all assets or funds remaining after such redemption shall be divided ratably among the holders of the general or common stock of the corportition. (b) Cumulative Preferred Stock eind Common Stock. The holders of the preferred stock shall be entitled to receive or to have set apart, out of the surplus or net _ profits of the corporation, as and when declared by the board of directors, a dividend at the rate of, but never exceeding, seven per centum per annum, cumulative, on all such preferred stock outstanding at the time, which dividend shall be payable yearly, half-yearly or quarterly as the board of directors may, from time to time fix and determine, and before any dividend shall be set apart for or paid on the common stock. Provided^ however, that if the preferred stock shall hereafter be increased, the rate of dividend upon such increase shall be at such rate, not exceeding seven per centum per annum, as shall be fixed by the resolution of the stockholders of the corporation authorizing such increase. Whenever a, dividend is declared or paid on the preferred stock and all prior dividends on the outstanding shares of such stock shall have been paid o 19 In Witness Whereof, we have the day and year first above written set our hands and seals. ^ .^ „ Name Address, No. of Shares. ; (L. s.) CL. S.) (L. S.) : : : : (l. s.) 245 Forms and Precedents Form 35.— AGREEMENT FOR THE SALE OF PROPERTY IN EXCHANGE FOR STOCK AND BONDS. An Agreement made this day of , 19 by and between and : , both of the city of (hereinafter called the "vendors"), parties of the first part, and, , a corporation of the state of (hereinafter called the "Company"), party of the second part. Whereas, the vendors are now carrying on the business of (here state hrieHy the nature of the business) , at Nos street, in the city of as co-partners, under the firm name and style of and are the owners of said business and of the property and rights hereinafter described; and Whereas the company has been duly organized with an authorized capital stock of dollars ($ ), divided into • ( ) shares of preferred stock and ( ) shares of common stock, each of the par value of dollars ($ ); and Whereas, the company has duly authorized the issue of its year per cent bonds in the aggregate amount of dollars ($ ) ; and Whereas the directors of the company have ascertained, adjudged and de- clared that the good-will, business and property of the vendors,^ hereafter more particularly described, subject to the payment of debts and obligations of the ven- dors in relation to the said business, to be assumed by the company, are of the fair value of dollars ($ ), and that the purchase thereof by the company is necessary to enable it to carry out its objects and purposes, as set forth in its certificate of incorporation. Now, Therefore, This Agreement Witnesseth: I. That the vendors have sold, assigned, transferred and set over, and do hereby sell, assign, transfer and set over unto the company, its successors and assigns, all the right, title and interest in andl to the following described property: First. — The good-will of the said business, and all the trade-marks and' trade- names used in connection with said business. Second. — (a) All moneys, bills, notes and negotiable instruments and securities for money, book and other debts and choses in action, leases, insurance policies, contracts and agreements to which the vendors are entitled in relation to the said business; (b) all books of account, papers and documents; (c) all merchandise, stock in trade, manufactured product, raw materials, materials, supplies, designs, patterns, machinery, fixtures, apparatus, office furniture; (d) all formulas, patents and patent rights, and all other property and effects of every nature and description owned and used by the vendors in relation to the said business and wheresoever situated. Third. — The vendors further agree to convey to the company by a sufficient deed, the real estate and buildings and improvements thereon known as Nos. city of , now owned by the vendors and used by them as a factory. II. In part consideration of such sale, the company hereby agrees to pay, satisfy, and discharge all the lawful debts and liabilities of the vendors in relation to the said business and to indemnify the vendors and their several heirs, executors, administrators, estates and effects against all actions, claims and demands in respect thereof. III. As further consideration for the sale of the property above-mentioned, the company agrees to issue to the vendors and their nominees as hereinafter speci- fied, their legal representatives or assigns, certificates of full paid stock of the company to the aggregate amount of shares of the preferred stock and shares of the common stock, aggregating a par value of dollars ($ ) and IV. As the residue of the consideration for the sale of the property above- mentioned the company further agrees to issue and deliver to the said vendors or their nominees, the year per cent bonds of the company to the aggregate amount of dollars ($ ). V. Said shares of stock shall be deemed to be and are hereby declared to be full paid shares and not liable to any further assessment or call, and the holders of such stock shall not be liable to any further payment thereon. VI. Such shares of stock shall be allotted and certificates therefor shall be issued and delivered as follows: Preferred. Common. Such bonds shall be issued and delivered as follows: VII. The delivery of the certificates for such shares and said bonds to the above named parties and their respective receipts for the same shall be a full dis- charge of each of the parties hereto to the extent thereof, 246 Forms and Precedents It is understood and agreed that the shares subscribed by the incorporators, as evidenced by the certificate of incorporation, are included in the shares provided for in the preceding paragraph. VIII. The vendors jointly and severally covenant and agree with the company that they are the lawful owners of the property hereby agreed to be sold; that the same is free from all incumbrances; that they have good right to sell the same and that they will warrant and defend the same against the lawful claims and de- mands of all persons. ■11 ^?' '^^ vendors further jointly and severally covenant and agree that they will, from time to time, at the request and cost of the company, execute and do all such further instruments, assurances and things as shall reasonably be required by the company for vesting in it the property hereby agreed to be sold, and giving to It the full benefit of this agreement. X. Such sales shall take effect on the day of , 19 , whereupon the possession of the tangible property above mentioned shall be delivered to the company, and on or after which day certificates of stock and bonds shall be issued as hereinabove provided. The co-partnership heretofore existing between the vendors is hereby dissolved. In Witness Whereof, the vendors have hereunto set their hands and seal* and the company has caused this instrument to be signed in its behalf by its presi- dent and its corporate seal to be hereunto affixed and attested by its secretary, the day and year first above written. In presence of: CL. s:) (L. S.) Attest : Company, By President. Secretary. Form 36.— FIRST MORTGAGE COUPON BOND. UNITED STATES OF AMERICA. State of No $ Co. Per Cent. First Mortgage Gold Bond. The Co., a corporation organized and existing under the laws of the State of , hereinafter called the Company, for value received, promises to pay to the bearer of this bond, or in case this bond be registered then to the registered owner hereof Dollars ($ ) in gold coin of the United States of America of the present standard of weight and fineness on the day of 19 at the office of the Trust Company in the city of , State of , and to pay interest thereon at the rate of per centum per annum payable semi-annually in like gold coin on the fi,rst day of and in each year at the office of said Trust Company upon presentation and surrender of the respec- tive coupons hereto annexed as they severally become due, until said principal sum shall be paid. Both principal and interest of this bond are payable without deduction for any United States, state, county, municipal or other tax or taxes not otherwise prohibited by law which the company may be required to pay, deduct or retain therefrom under or by reason of any present or future law and the company hereby agrees unless otherwise prohibited by law, to pay such tax or taxes without cost or charge to the holder or the trustee. This bond is one of a series of bonds of like date, tenor and effect, numbered from to , both inclusive, issued and to be issued to the aggregate principal sum of $ under the provision of, and equally secured by the mortgage dated the first day of , 19 , made by the company to the Trust Company of the City of a corporation organized and existing under the laws of the State of as trustee, to which mortgage reference is hereby made for descriptions of the property, rights and franchises mortgaged and the nature and extent of the security, the rights of the holders of the bonds secured thereby and the terms and con- ditions under which said bonds are issued and secured. If default shall be made in the payment of the interest of this bond or in the provisions of certain covenants and agreements in said mortgage then the principal of this bond may become due and payable on the conditions and in the manner and at the times provided iii said mortgage. This bond may at the option of the company be redeemed at any time by the payment of the principal thereof and in addition five per cent, premium thereon together with all interest accrued on the same and unpaid, at the time fixed for such redemption, due notice of 'the call therefor having first been given as provided in said mortgage or deed of trust. This bond shall pass by delivery unless registered in the name of the owner on the books of the company, such registration being noted on the bond as pro- vided in said mortgage. After such registration no transfer shall be valid unless made on said books by the registered owner in person, or by attorney duly author- ized, and similarly noted on the bond. But the same may be discharged from registry by being in like manner transferred to bearer and thereupon transferability 247 Forms and Precedents by delivery shall be restored, but this bond may again and from time to time be registered or transferred to bearer as before; such registration, however, shall not affect the negotiability of the coupons but the same shall continue to be transfer- able by delivery notwithstanding the registration of the bond. This bond shall not be valid or obligatory for any purpose until it shall have been authenticated by the certificate of the said trustee or its successors in said trust, endorsed thereon. The company and all its property subject always to the limitations and provi- sions of said mortgage are liable to pay this bond but it is expressly agreed by and between the said company and each person or corporation who is or may at any time become the holder of this bond or of any of the coui>ons hereof, that neither the stockholders nor directors nor officers of the said company shall be indi- vidually liable thereon or in respect thereof for any cause or purpose whatsoever. In Witness Whereof the company has caused this bond to be signed by its president or vice-president and its corporate seal to be hereto affixed, attested by its secretary and said interest coupons to be executed with the lithographed signa- ture of its treasurer and this bond to be dated the first day of , 19 Co. By Attest: Secretary. Coupon. No $ On , 191 Co. will pay to bearer at the office of the Trust Company in the City of dollars in gold coin of the United States of America being six months* interest then due on its — per cent. First Mortgage Gold Bond No. Treasurer. Trustee's Certificate. It is hereby certified, that this bond is one of a series of bonds mentioned and described in the mortgage or deed of trust within referred to. Trust Company, Trustee, By Registration Form on Back of Bond. Notice. — No writing on this bond except by an officer of the company. Date of registry In whose name registered Transfer agent Form 37.— CERTIFICATE OF STOCK (Common Form). This is to Certify, that is the owner of shares of the capital stock of Company, transferable only on the books of the company by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. Witness the seal of the company and the signatures of its duly authorized officers affixed this day of , 19 Secretary [Treasurer] . President. Form of Assignment Printed on Back. For Value Received, hereby sell, assign and transfer unto shares of the capital stock represented by the within certificate and do hereby irrevocably constitute and appoint attorney, to transfer the said stock on the books of the within named corporation, with full power of substitution in the premises. Dated 19 In presence of Notice. — The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever. Form 38.— CERTIFICATE OF PREFERRED STOCK. (Short Form). This is to Certify, that is the owner of shares of the preferred [or common, as the case may be] capital stock of Company, transferable only on the books of the com- 248 Forms and Precedents pany by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. The holders of the preferred stock are entitled to preferential cumulative [or non-cumulative] dividends at the rate of, but never exceeding per centum per annum, and are further entitled to preference in case of dissolution 9^ finding up, as set forth in the certificate of incorporation, to which reference IS hereby made for a statement of the rights of the holders of preferred and common stock, respectively. Witness the seal of the company and the signatures of its duly authorized offi- cers affixed this day of 19 Form 39.— CERTIFICATE OF PREFERRED STOCK. (Full Form). This is to Certify, that is the owner of shares of the preferred [or common, as the case may be] capital stock of } transferable only on the books of the company by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. / {Here set forth at length the provisions of the articles of incorporation or by- laws relating to the respective rights of the holders of the preferred and common stock.) Witness the seal of the ''company and the signatures of its duly authorized offi- cers affixed this day of 19 Secretary [Treasurer] , President. Form 40.— DEBENTURE. UNITED STATES OF AMERICA. No State of ? ^ Company. Know all Men by These Presents, that the Company, a corporation of the State of , having its principal office in the City of for value received promises to pay to the bearer hereof, or, if registered, to the registered holder hereof, at its office in the City of ■ dollars in gold coin of the United States of the present standard of weight and fineness, or its equivalent, on the first day of , 19 , on the surrender hereof, with interest thereon at the rate of per cent, per annum, payable in like gold coin, or its equivalent, at the office aforesaid, semi-annually on the first days of and in each year until this bond shall be fully paid, upon the presentation and surrender of the proper interest coupons as they severally mature, each of which is for six months' interest on this debenture bond. Both the interest and principal of this debenture bond are payable without de- duction for any United States, state, municipal or other tax or taxes which said Company may be required to pay, or deduct therefrom, under or by a reason o£ any present or future law, the said company hereby agreeing to pay such tax or taxes. This debenture bond is one of a series of debenture bonds of like date and tenor numbered consecutively from to , both inclusive, of which are for the sum of dollars each, and of which are for the sum of dollars each, amounting in the aggregate to the sum of dollars. This debenture bond until registered shall pass by delivery; it may be regis- tered as to principal in books to be kept for that purpose at the office of the Company in the City of and if so registered will thereafter be transferable only upon said books at the office of said Company by the owner in person or his legal representative, unless the last preceding transfer shall have been to bearer and the tranferability to bearer by delivery thereby restored, and it shall continue to be susceptible of successive registrations and transfers to bearer, at the option of the holder; but such registration as to principal shall not affect the negotiability of the coupons. The said Company, however, reserves the right to purchase for cancellation any or all of said bonds at per centum of the principal thereof in addition to the interest then due upon the due date of any coupon maturing years or more after the date of said debenture bonds, and any debenture bonds selected for pur- chase shall cease to bear interest after the date fixed for the purchase thereof, provided notice to that effect shall have been published at least j in some newspaper in the City of , having a general circulation, at least days before such date. If default be made in the payment of any interest on any of said bonds and such default continue for days after such interest shall become due and payable and shall have been demanded, the principal hereof and of all of said bonds at the option of the respective holders shall become due and payable immediately. The said Company may make and negotiate from time to time its promissory notes, acceptances and other instruments for the 249 Forms and Precedents payment of money in the usual course of business, but it hereby agrees that no debenture or other bonds, other than thofee of the present series, shall at any time be executed, issued, assumed or guaranteed by it save with the consent in writing of the holders of two-thirds in amount of the debenture bonds of the present series which may be outstanding at the time, unless said bonds shall be given as the whole or part of the purchase price of additional property thereby acquired by the said Company, the value of which additional property shall not be less than the par value of the bonds so issued. In Witness Whereof, the said Company has caused its seal to be hereunto affixed and attested by its secretary and has caused these presents to be signed by its president and has hereto attached coupons duly numbered and authenticated by a fac-simile signature of its treasurer there- upon, all at the City of this day of , 19 Company. By President. Attest Secretary. Coupon. $ No On the first day of , 19 , Company will pay the bearer on surrender hereof, at the office of the • Company, in the City of , dollars in gold coin of the United States, or its equivalent, being six months' interest, if, according to said bond, -such interest shall then be due, on its six per cent, gold bond No Treasurer. Form 41.— DEBENTURE. No $500. UNITED STATES OF AMERICA. State of New York. . Company. Fifteen-year Six Per Cent. Sinking Fund Gold Debenture. Company, hereinafter called the company, is indebted and for value received, promises to pay to bearer at its office in the Borough of Manhattan, in the City of New York, on , 19 , as herein and in the trust agreement hereinbelow mentioned provided, $500 in gold coin of the United States, of or equal to the present standard, and to pay interest thereon in like gold coin, from the date hereof until paid, at the rate of six per centum (6%) per annum, payable semi-annually on the day of and the. ....day of in each year at said office, without deduction from either principal or interest for any tax or taxes which the company or the trustee may be required to pay or to retain therefrom under or by reason of any present or future law of the United States or of any state, county or municipality therein. This debenture is one of a series of Fifteen-Year Six Per Cent. Sinking Fund Gold Debentures of the company, issued or to be issued in an aggregate face amount not exceeding $300,000, numbered from 1 to 600 inclusive, each for the principal amount of $500, and all issued under and secured by a trust agreement dated , 19 , between the company and Trust Company, as trustee, to which trust agreement reference is hereby made for the rights of the holders of said debenture.'; and the terms and conditions upon which the same are issued and secured. All of said debentures are entitled to the benefit of the sinking fund provided by said trust agreement for the purpose of accumulating a fund to be applied solely to the purchase from time to time of said debentures, at a price not exceed- ing 110 per cent, of their par value, together with accrued interest, or to the payment thereof at maturity. This debenture shall not become valid or obligatory for any purpose until it shall have been authenticated by the certificate hereon endorsed of said trust company, trustee. In Witness Whereof, the company has caused this debenture to be signed by its president or a vice-president and its corporate seal to be hereto affixed and attested by its_ secretary or an assistant secretary, and coupons for said interest, with the lithographed signature of its treasurer, to be hereunto attached as of the day of , a. d. 19 Company. By Attest: Secretary. 250 Forms and Precedents Coupon. No tj5 On the first day of 19 ' Company will pay to bearer at its office or agency in the City of New York) N. Y., on surrender of this coupon, $15, in gold coin, without deduction for taxes, being SIX months' interest then due on its Fifteen- Year Six Per Cent. Sinking Fund Gold Debenture No Form of Trustee's Certificate. This is to Certify that this debenture is one of the debentures described in the within-mentioned trust agreement. Trust Company, By Secretary. Form 42.— PROXY. Know all Men by these Presents: That I holder of '. shares of the capital stock of the a corporation of the State of do hereby appoint '. my true and lawful attorney [with full power of substitution and revocation], for me and in my name to vote as my proxy, at the meeting of the stockholders of said company, to be held on the ; day of : 191 and at any adjournment thereof; hereby ratifying and confirming all that said attorney [or substitute], may lawfully do in the premises. Witness my hand and seal, this day of 191 (L. S.) In presence of: Form 43.— SECRETARY'S OATH. State of , County of , ss. : I, do solemnly swear that I will faithfully discharge the duties of secretary of , a corporation of the State of , to the best of my skill and ability. Sworn to before me this day of , 191 Notary Public. Form 44.— SUBSCRIPTION AGREEMENT. We, the undersigned, hereby severally agree [each with the other and] with the corporation hereinafter named in consideration of our mutual agreements hereby made, severally and not jointly, ta take the number of shares of the capital stock of the , a corporation [to be] organized under the laws' of the State of , set opposite our respective signa- tures hereto. Names. Residences No. of Shares. Form 45.— TRANSFER OF SUBSCRIPTION. FoH Value Received, I, have sold, assigned and transferred, and by these presents do sell, assign and transfer unto , all my right, title and interest in and to share., of the capital stock of , a corporation of the State of , and I do hereby authorize and empower the treasurer or secretary of said corpora- tion to register this transfer on the books of the company. Witness my hand and seal, this day of , 191 (L. S.) In presence of: Transferee's address 251 Forms and Precedents Form 46.— TREASURER'S BOND. Know all Men by these Presents, that we, . . . . , of as principal, and , of as surety, are held and firmly bound unto , a corpora- tion of the State of its successors and assigns, in the sum of Dollars ($ ), lawful money of the United States, to be paid to said corporation, its successors or assigns, for which payment, well and truly to be made, we do bind ourselves, our heirs, executors and administrators, jointly and severally, firmly by these presents. Sealed with our seals. Dated this day of , 191 Whereas, the above bounden has been duly elected to the office of treasurer of said corporation. Now, Therefore, the condition of the above obligation Is such, that if the said shall well and faithfully, in all things, per- form his duties as such, treasurer, so long as he shall hold the said office or con- tinue therein during the term for which he has been or may hereafter be elected, appointed or hold over, and also if in case of his death, resignation, retirement, or removal from office, all books, papers, vouchers, money and other property of whatevei' kind, in his possession or under his control, belonging to the corporation, shall be restored to the corporation, then the above obligation to be void; other- wise to remain in full force and effect. In presence of: fL. S.) CL. S.) Form 47.— WAIVER OF NOTICE OF MEETING. We, the Undersigned, incorporators, stockholders or directors, as the case may be}, of the Company, a corpora- tion of the State of do hereby severally waive notice of the time, place and purpose of {the iirst, special or annual, as the case may be"} meeting of of said company, and consent that the same be held at on the day of , 191 , at m., and we do further consent to the transaction of any and all business that may come before the meeting, including [here state nature of business to be transacted'\ Dated 191 252 PART IV. COMPARATIVE TABLES OF ORGANIZATION TAXES AND FEES, AND ANNUAL FRANCHISE OR LICENSE TAXES. TABLE 1. OEGAlSriZATION TAXES AKD FEES. NOTE. — The amounts set opposite the various amounts of capital stock Include only the organization tax or fee payable to the State based on the amount of capi- ta] stock. Author- ized Capital New York New Jersey Maine Delaware Massa- chusetts Pennsyl- vania «1,000 ^5.00 ;?25.00 JSIO.OO ^10.00 m.oo ^3.34 2,000 5.00 25.00 10.00 10.00 25.00 6.67 3,000 5.00 25.00 10.00 10-00 25.00 10.00 4,000 5.00 25.00 10 00 10.00 25.00 13.34 5,000 5.00 25.00 10.00 10.00 25.00 16.67 6,000 5.00 25.00 10.00 10.00 25.00 20.00 7,000 5.00 25.00 10.00 10.90 25.00 23.34 8,000 5.00 25.00 10.00 10.00 25.00 26.67 9,000 5.00 25.00 10.00 10.00 25.00 30.00 10,000 5.00 25.00 10.00 10.00 25.00 33.34 15,000 7.50 25.00 50.00 10.00 25.00 50.00 20,000 10.00 25.00 50.00 10.00 25.00 66.67 25,000 12.50 25.00 50.00 10.00 25.00 83.34 30,000 15.00 25.00 50.00 10.00 25.00 100.00 35,000 17.50 25.00 50.00 10.00 25.00 116.67 40,000 20.00 25.00 50.00 10.00 25.00 133.34 45,000 22.50 25.00 50.00 10.00 25.00 150.00 50,000 25.00 25.00 50.00 10.00 25.00 166.67 55,000 27.50 25.00 50 00 10.00 27.50 183.34 60,000 30.00 25.00 50.00 10.00 30.00 200.00 65,000 32.50 25.00 50.00 10.00 32.50 216.67 70,000 35.00 25.00 50.00 10.00 35.00 233.34 75,000 37.50 25.00 50.00 10.00 37.50 250.00 80,000 40.00 25.00 50.00 10.00 40.00 266.67 85,000 42.50 25.00 50.00 10.00 42.50 283.34 90,000 45.00 25.00 50.00 10.00 45 00 300.00 95,000 47.50 25.00 50.00 10.00 47.50 316.67 100,000 50.00 25.00 50 00 10.00 50.00 333.34 125,000 62.50 25.00 50.00 12.50 62.50 416.67 150,000 75.00 30.00 50.00 15.00 75.00 500.00 175,000 87.50 35.00 50.00 17.50 87.50 583.34 200,000 100.00 40.00 50.00 20.00 100.00 666.67 250,000 125.00 50.00 50.00 25.00 125.00 833.34 300,000 150.00 60.00 50.00 30.00 150.00 1,000.00 350,000 175.00 70 00 50.00 35.00 175.00 1,167.67 400,000 200.00 80.00 50.00 40.00 200.00 1,833.34 450,000 225.00 90.00 50.00 45.00 225.00 1,500.00 500,000 250.00 100.00 50.00 50.00 250.00 1,666.67 1,000,000 500.00 200.00 100.00 100.00 500.00 3,333.34 2,000,000 1,000.00 400.00 200.00 200.00 1,000.00 6,666.67 3,000,000 1,500.00 600.00 300.00 250.00 1,500.00 10,000.00 4,000,000 2,000.00 800.00 400.00 300.00 2,000.00 13,333.34 5,000,000 2,.500.00 1,000.00 500.00 360.00 2,500.00 16,666.67 10,000,000 5,000.00 2,000. 00 1,000.00 600.00 5,000.00 .33,333.34 In addition to the organization tax or fee as given in the above table, there are certain other filing' and recording fees, etc., which must be paid at the time of in corporal ion. For the different items of such charges see paragraph No. 4 under each State in Part 11 of this book. 255 TABLE 2. AlsriSrUAL FRANCHISE OR LICElSrSE TAXES. NOTE.— NEW YORK. MASSACHUSETTS and PENNSYLVANIA are omitted from this table for the reason that the tax In those States beins based upon the amount of capital-stock employed In the State, or upon the value of the corporate franchise, and, In New York, the rate varying according to amount of dividends declared, there is no practicable method of comparison. Capital Stock New Jersey* Maine t Delaware t $1,000 W.oo «5.00 |!5 00 2,000 2.00 5.00 5.00 3,000 3.00 5.00 5.00 4,000 4.00 5.00 5.00 5,000 6.00 5.00 5.00 6,000 6.00 5.00 5.00 7,000 7.00 5.00 5.00 8,000 8.00 6.00 5.00 9,000 9.00 5.00 5.00 10,000 10.00 5.00 5.00 15,000 15.00 5.00 5.00 20,000 20.00 5.00 5.00 25,000 25.00 5.00 5.00 30,000 30.00 5.00 10.00 35,000 35.00 5.00 10.00 40,000 40.00 5.00 10.00 45,000 45.00 5.00 10.00 50,000 50.00 5.00 10.00 55,000 55.00 10.00 10.00 60,000 60.00 10.00 10.00 65,000 65.00 10.00 10 00 70,000 70.00 10 00 10.00 75,000 75.00 10.00 10.00 80,000 80.00 10.00 10.00 85,000 85.00 10.00 10.00 90,000 90.00 10.00 10.00 95,000 95.00 10.00 10. 00 100,000 100.00 10 00 10.00 125,000 125.00 10.00 20.00 150,000 150.00 10.00 20.00 175,000 175.00 10.00 20.00 200,000 200.00 10.00 20.00 250,000 250.00 50.00 20.00 300,000 300.00 50.00 20.00 350,000 350.00 60.00 25.00 400,000 400.00 50.00 25.00 450,000 450.00 50.00 26.00 500,000 500.00 50.00 26.00 1,000,000 1,000.00 76.00 50.00 2,000,000 2,000.00 126.00 75.00 3,000,000 3,000.00 176.00 100.00 4,000,000 3,500.00 225.00 125.00 5,000,000 4,000.00 275.00 150.00 10,00,0000 4,250.00 525.00 275.00 When Payable Julyl September 1 Mayl * Tax based on amount of Capital Stock issued and outstanding. t Tax based on amount of authorized Capital Stock. 256 INDEX TO FORMS. AGREEMENT for the sale of property in exchange for stocks and bonds, p. 246. to form a corporation, p. 245. ' subscription, p. 251. ARTICLES OF INCORPORATION: Delaware, p. 193. Maine, p. 199. Massachusetts, p. 208. New Jersey, p. 214. New York, p. 221. Pennsylvania, p. 230. BOND, first mortgage coupon, p. 247. debenture, pp. 249, 250. treasurer's, p. 252. BY-LAWS: Delaware, p. 195. Maine, p. 204. Massachusetts, p. 211. New Jersey, p. 216. New York, p. 225. Pennsylvania, p. 233. CERTIFICATE OF INCORPORATION: see ARTICLES OF INCORPORATION. CERTIFICATES' OF STOCK: common form, p. 248. preferred stock, pp. 248, 249. CHARTER: see CERTIFICATE OF INCORPORATION. DEBENTURES, pp. 249, 250. DELAWARE: by-laws, p. 195. certificate of incorporation, p. 193. minutes of incorporators' meeting, p. 193. minutes of first meeting of directors, p. 194. MAINE: articles of association, p. 199. by-laws, p. 204. certificate of organization, p. 202. minutes of first annual meeting df stockholders, p. 203. minutes of first meeting of incorporators, p. 199. minutes of first meeting of directors, p. 200. MASSACHUSETTS: agreement of association, p. 208. articles of organization, p. 211. by-laws, p. 211. certificate of incorporation, p. 83, minutes of first meeting of incorporators, p. 209. minutes of first meeting of directors, p. 209. NEW JERSEY: by-laws, p. 216. certificate'of incorporation, p. 214. minutes of first meeting of incorporators, p. 21 5. minutes of first meeting of directors, p. 215. 257 INDEX TO FORMS. NEW YORK: by-laws, p. 225. certificate of incorporation, p. 221, certificate oi incorporation of company having shares without par value, p. 221. minutes of first meeting of incorporators, p. 224. minutes of first meeting of directors, p. 225. OBJECT CLAUSES: general, p. 241. special, p. 236. PENNSYLVANIA: application for charter, p. 230. by-laws, p. 233. afiidavit of publication of application, p. 230. minutes of first meeting of incorporators, p. 232. minutes of first meeting of directors, p. 233. PREFERRED STOCK: certificates of, pp. 248, 249. charter clauses for, p. 242. PROXY, p. 251. SECRETARY'S OATH, p. 251. STOCK: see CERTIFICATES' OF STOCK. SUBSCRIPTION AGREEMENT, p. 251. transfer of, p. 251. TRANSFER of stock, pp. 29, 248. subscription, p. 251. TREASURER'S BOND, p. 252. WAIVER OF NOTICE of meeting, p. 252. 258 GENERAL INDEX. [In this index the references are to pages, except as to the matter contained in Part II, being the comparative digest of the corporation laws of the several states, which is indexed according to the numbers of the subject headings.] ACCOUNTING, corporation, p. 36. ACTIONS by and againjst corporations, each state No. 38. foreign corporations, each state Nos. 42, 47. ADVANTAGES of incorporation, p. 13. AGENT, statutory resident, each state No. 11. designation of, by foreign corporation, each state No. 44, AGENTS appointed of, each state No. 38. AMENDMENT of by-laws, each state No. 12. articles of incorporation, each state No. 8. ANNUAL franchise tax, each state No. 48. comparative table of, p. 256. reports, each state No. 14. ARTICLES' OF INCORPORATION, amendment of, each state No. 8. matters to be contained in, each state No. 5. ATTACHMENTS against foreign corporations, each state No. 47. BONDS, power of corporation to hold, each state No. 38. issue, each state No. 38. issue of, p. 38. BOOKS and records, pp. 34, 36, each state No. 13. BY-LAWS, p. 15, each state No. 12. CALL of meeting, p. 16, each state Nos. 24, 34. CAPITAL, amount of, to be paid in money, each state No. 15. with which corporation may commence business, each state No. 16. distinguished from capital stock, p. 25. illegal reductions of, each state No. 20. CAPITAL STOCK, p. 25, each state No. 15. amount of, each state No, 15. certificate of payment, each state No. 15. decrease of, each state No. 20. increase of, each state No. 19. ». payment of, each state No. 15. preferred, p. 25. when to be paid in, each state No, IS. CERTIFICATE OF PAYMENT OF CAPITAL STOCK, each state No. 15. CERTIFICATE OF INCORPORATION, p. 15, each state No. 5 CERTIFICATES' OF STOCK, p. 28, each state No. 22. issue of, p. 30. lost, pp. 31, 108. See also Uniform Stock Transfer Act, p. 104. CHARTER, application for in Pennsylvania, and matters to be contained in, p. 172. granting states, leading, p. 13. issue of, by secretary of state, each state No. 5. nature of, p. 15. CITIZENSHIP of directors, each state No. 31. incorporators, each state No. 3. 259 GENERAL INDEX. CXASSES' o£ directors, each state No. 31. stock, p. 26, each state No. 21. COMMENCEMENT of business corporate existence, each state Nos. 5, 6, 16. C0MM;ITTEES, p. 21, each state No. 35. CONSENT of stockholders, matters requiring, each state No. 25. CONSOLIDATION OF CORPORATIONS, each state No. 39. CONTRACTS, power of corporation to make, each state No. 38. mode of execution of, p. 24. CONVEYANCES, power of corporation to make, each state No. 38. CORPORATE acts requiring consent of stockholders, each state No. 25. bonds and mortgages, each state No. 38. books, each state No. 13. debts, liability of stockholders for, each state No. 30. existence, beginning of, each state No. 6. duration of, each state No. 6. extension of, each state No. 7. name, each state No. 9. records, each state No. 13. seal, p. 25, each state No. 38. CORPORATIONS, classes of, p. 11. creation of, p. 12. historical sketch of, p. 11. legal characteristics of, p. 12. method of forming, each state No. 5. CUMULATIVE VOTING, p. 18, each state No. 27. DECREASE of capital stock, each state No. 20. DELAWARE, digest of corporation laws of, pp. 43-61. schedule of fees and taxes in, p. 59. DELEGATION OF POWERS of directors to committees, each state No. 35. DIRECTORS, change of number of, each state No. 32. citizenship of, each state No. 31. classes of, each state No. 31. duties and liabilities of, each state Nos. 33, 37. election of, each state No. 24. meetings of, p. 20, each state No. 34. mode of action by, p. 19. number of, each state No. 31. powers of, pp. 20, 21, each state No. 33. qualifications of, each state No. 31. residence of, each state No. 31. DISSOLUTION of corporation, each state No. 40. DIVIDENDS, accounts of, p. 38. definition of, p. 33. how declared, p. 33. payment of, p. 33. stock, p. 33. stockholders rights as to, p. 33. DURATION of corporate existence, each state No. 6. ELECTION of directors, each state Nos. 24, 25, 31. EXECUTIVE COMMITTEE, p. 21, each state No. 35. EXISTENCE, commencement and duration of corporate, each state No. 6. extension or renewal of corporate, each state No. 7. EXTENSION of corporate existence, each state No. 7. FEES, filing and recording, each state No. 4. comparative table of, p. 255. 260 GENERAL INDEX. FOREIGN CORPORATIONS, attachments against, each state No. 47. authorization of, to do business, each state No. 42. books to be kept in state by, each state Nos. 45, 46. designation or appointment of agent by, each state No. 44. fees, filing and recording, each state No. 42. license tax, each state No. 48. location of principal office in state, each state No. 42. papers to be filed by, each state No. 42. penalties for doing business without authority, each state No. 43. powers of, each state No. 42. status of, p. 39. validity of contracts of, each state No. 43. FORFEITURE of charter, each state No. 41. franchise, each state No. 41. FORMATION of corporations, each state No. 5. FORMS AND PRECEjDENTS, see INDEX TO FORMS, p. 257. FRANCHISE TAXES, each state No. 48. comparative tables of, p. 256. GOOD-WILL, as consideration for issue of stock, p. 27. HOW to incorporate a business company, each state No. 5 INCIDENTAL powers of corporations, each state No. 38. INCORPORATION, historical sketch of, p. 11. method of, each state No. 5 certificate of, each state No. 5, p. 15. advantages of, p. 13. , INCORPORATORS', meeting of, each state No. 5. number and qualifications of, each state No. 3. INCREASE of capital stock, p. 27, each state No. 19. INDEBTEDNESS, power of corporation to contract, each state No. 38. INFANTS, as incorporators, each state No. 3. transfer of stock of, p. 35. INHERITANCE TAX on shares, each state No. 50. INSPECTION of corporate books, each state Nos. 13, 29. ISSUE of stock, p. 27. bonds, p. 38, each state No. 38. new certificates, p. 30, each state No. 22. LEDGER, general, p. 36. stock, p. 34. LIABILITY of directors and officers, each state No. 37. stockholders, each state No. 30. LICENSE TAXES, each state No. 48. LOCATION, of principal office, each state No. 10. LOST CERTIFICATES, pp. 31, 108, each state No. 22. MAINE, digest of corporation laws of, pp. 63-79. schedule of organization taxes and duties in, pp. 63, 78. MAJORITY, powers of, p. 16. MANAGEMENT of corporation, p. 20. MASSACHUSETTS, digest of corporation laws of, pp. 81-103. uniform stock transfer act, p. 104. MEETINGS of directors, p. 20, each state No. 34. incorporators, each state No. 5. stockholders, p. 16, each state Nos. 24, 25. MERGER, each state No. 39. MINORITY STOCKHOLDERS, rights of, p. 16. 261 GENERAL INDEX. MINUTE BOOK, p. 24, each state No. 13. MINUTES, p. 24. MORTGAGE, power of corporation to make, each state No. 38. NAME, corporate, each state No. 9. NEGOTIABILITY of stock certificates, pp. 31, 104. NEW JERSEY, digest of corporation laws of, pp. 111-131. schedule of filing and recording fees, p. 131. NEW YORK, digest of corporation laws of, pp. 133-170. shares without par value, p. 161. stock transfer tax act, p. 164. uniform stock transfer act, p. 104. NOTICE of meetings, p. 16, each state Nos. 24, 25, 34. OBJECTS' for which corporations may be formed, each state No. 2. OFFICE, principal, each state No. 10. OFFICERS, appointment of, p. 21, each state No. 36. duties and liabilities of, p. 22, each state No. 37. liability of, each state No. 37, powers of, p. 22, each state No. 36. OPENING entries foi^ corporate books, p. 36. ORGANIZATION, p. 14, each state No. S. meetings, each state No. 5. tax, each state No. 4. taxes, comparative tables'of, p. 25S. PAR VALUE of shares, each state No. 18. corporations having no. New York, p. 161. PARTNERSHIP distinguished from corporation, p. 12. PENNSYLVANIA, digest of corporation laws of, pp. 171-190. unifoffm stock transfer law, p. 104. PLACE of corporation meetings, each state Nos. 24, 34, POWERS OF CORPORATIONS, each state No. 38. PREFERRED STOCK, p. 26, each state No. 21. PRESIDENT, each state No. 36. PRINCIPAL OFFICE, each state No. 10. PROOF OF INCORPORATION, each state No. 5. PROXIES, p. 17, each state No. 26. PURPOSES for which corporations may be formed, each state No. 2. QUORUM at directors' meetings, each state No. 34. stockholders' meetings, p. 17, each state No. 24. REAL ESTATE, power of corporation to hold, each state No. 38. tax, each state No. 49. RECORDING AND FILING FEES, each state No. 4. RECORDS, corporate, each state No. 13. REDUCTION OF CAPITAL STOCK, each state No. 20. REGISTER, stock, p. 34. REMOVAL of directors and officers, p. 21, each state Nos. 31, 36, RENEWAL of corporate existence, each state No. 7. REPORTS, annual, each state No. 14. tax, each state No. 48. RESIDENCE of directors, each state No. 31. incorporators, each state No. 3. RESIDENT AGENT, each state No. 11. 262 GENERAL INDEX. RESIGNATION of directors and officers, each state Nos. 31, 36. RULES for transferring stock, p. 35. SALES and transfers of shares, p. 29, each state No. 23. tax on, Massachusetts, p. 102. New York, p. 164. SEAL, corporate, p. 25, each state No. 38. SECRETARY, each state No. 36. SHARES, see "STOCK." SHAREHOLDERS, see "STOCKHOLDERS." STOCKHOLDERS, consent of, matters requiring, each state No. 25. liability of, each state No. 30. meetings of, p. 16, each state Nos. 24, 25. powers and functions of, p. 15, each state No. 25. rights of, p. IS, each state Nos. 19, 22, 23, 26, 21, 28, 29. rights of minority, p. 16. quorum at meetings of, p. 17, each state Nos. 24, 25. voting by, p. 17, each state Nos. 26, 27, 28. STOCK, accounts of capital, in books, p. 36, cap^ital, p. 25, each state No. IS, certificate book, p. 28. certificates of, pp. 28, 31, 104, each state No. 22. classes of, p. 26, each state No. 21. definition of, p. 26. dividends, p. 33. increase of capital, each state No. 19. issue o(f, p. 21 f each state No. 17. certificates, p. 30, each state No. 22. ledger, p. 34, each state No. 13. lost certificates of, pp. 31, 108, each state No. 22. preferred, p. 26, each state No. 21. register oif, p. 34. subscription for, each state No. 17. taxation of, each state No. 50. transfer act, uniform, p. 104. book, p. 34, each state No. 13. transfer of shares of, pp. 29, 34, 35, each state No: 23. tax on, each state No. 50. treasury, pp. 32, 37. underwriting subscriptions for, p. 31. SUBSCRIPTION for stock, each state No. 17. SUCCESSION TAX on shares, each state No. 50. SURPLUS accounts, p. 38. definition of, p. 38. SURRENDER O'F CHARTER, each state No. 40. TAXES, f ramchise and license, each state No. 48. comparative table of, p. 256. inheritance, each state No. 50. property, each state No. 49. stock transfer, Massachusetts and New York, p. 104. organization, each state No. 4. TRANSFER book, p. 34, each state Nos. 13, 23. of shares, p. 35. TREASURER, each state No. 36. TREASURY stock, p. 32. accounts, p. 37. 263 GENERAL INDEX. TRUSTS, voting, each state No. 28. UNDERWRITING subscriptions for stock, p. 31. UNIFORM STOCK TRANSFER ACT, p. 104. VACANCIES, filling of, each state Nos. 31, 36. VICE-PRESIDENT, each state No. 36. VOTING, cumulative, p. 18, eaph state No. 27. rights of stockholders, each state No. 26. trusts, each state No. 28. WAIVER of notice, p. 20, each state Nos. 24, 25, 34. statutory requirements, each state No. 24. WHERE TO INCORPORATE, p. 14. 264 Wi)t I3raun-6rjem Campang specialists in Bonds and Stock Certificates and Outfits y^r Corporations W The LARGEST LINE IN the COUNTRY The MOST VARIED AND the BEST The standing of a corporation may be indicated by the style and quality of the securities it puts forth 48 John Street, New York City July, 1914. The Broun-Green Company TIME REQUIRED TO FILL ORDERS We are prepared to fill most orders for ordinary stock certificates within 24 hours after receipt or after return of proof when proof is required ; we prefer to take a little longer time when it can be allowed, as more satisfactory results are obtained without rush. But when rush is imperative we hurry matters. The better grades of certificates require 24 to 48 hours more time for completion. Time required for bond orders depends upon quantity, number of coupons, etc. TERMS Our terms are cash with order or C. 0. D., except when references (and time for investigation) are given. When C. 0. D. shipment is desired, a deposit of half the charge sliould be made in advance. We cannot manufacture goods for strangers without rererence or a deposit. Goods may be examined before C. 0. D. payment. We do not prepay express or parcel postage or pay return charges on money. Customers may safely remit in advance. We are well known in New York, our bank is the Hanover National Bank, and we guarantee our goods to be as represented. The Broun-Green Company No. 48 John St., N. Y. SALESMEN CALL ON BEQUEST IN NEW YORK CITY I 6110 \ Telephones < gjjl > JOHN G113 48 John Street, New York CORPORATION REQUIREMENTS STOCK CERTIFICATES A Book of 100 certificates is usually sufScient. The standing of a_ corporation is often indicated by the style and quality of its certificates, and the sale of stock or its acceptance as collateral may he affected by these considerations. See pages 4, 5 and 7. BOOK OF ACCOUNT IN COMBINATION: W^ITH STOCK BOOK AND STOCK LEDGER ( 3 BOOKS IN ONE ) New York Transfer Tax Law requires of all corporations DoiNO Business in the State, and transfer agents, a Book of Account showing every transfer of stock etc. Book to be open for examination by Comptroller between 10 A. M. and 3 P. M., except Saturdays, Sundays and legal holidays. Neglect to keep this book imposes as penalty a fine not less than $500, nor more than $^,000, or imprisonment not less than 3 months nor more than 2 years, or both. New York Law also requires New York Corporations and Foreign Corporations Doing Business in the State to keep a Stock Book. Every corporation requires a Stock Ledger. We combine these three in one, each page ruled for all entries required for the three books, thus simplifying accounting; see page 8. A STOCK LEDGER New Jersey, Delaware, Maine, Massachusetts and Pennsyl- vania, by law, require corporations to keep a Stock Ledger. It really is essential for every corporation. Stock Ledgers may be obtained separately, or in combination. See page 8. A STOCK TRANSFER BOOK New Jersey, Massachusetts and South Dakota, by law, re- quire corporations to keep a Stock Transfer Book. A Stock Transfer Book may be obtained separately or in same cover with Stock Ledger. See page 8. A MINUTE BOOK It is essential to record proceedings of either stockholders' or Directors' meetings. The Broun-Green Company publishes a Minute Book with Printed Forks for New York corporations, and a like Minute Book for New Jersey corporations. Each contains printed forms for guidance in the organization and maintenance of new corporations. They insure accuracy of procedure. Forms for by-laws are given. They are further described on pages 10 and 11. For other Minute Books see page 9. A CORPORATE SEAL See price list on page 14. CORPORATION BLANKS The Broun-Green Company carries a supply of corporation blanks for use of New York and New Jersey companies. See price list on pages 12 and 13. 3 The Broun-Green Company CONCERNING STOCK CERTIFICATES "!/ a man can write a better book, preach a better sermon, or viake a better mouse trap tha7t his neighbor, though he build his house in the woods, the world will inake a beaten path to his door.^^ — Emekson. Beside orders which come to us from VilE ARE KNOWN regular customers and from those who respond to some adyertisement, or from those who are recommended to us, we are continually favored with other orders from all sections of the country, sent by people from whom we have never heard before; and we have no Itnowledge of the source of these orders. We believe that the superior qualities of our Stoclc Certificate and Bond forms and our husiness methods ; the care we give to orders ; the accuracy and promptness with which our customers are served ; that all these advertise us continually, and are the occasion of " a beaten path leading to our door." We make and carry borders and forms OUR FORMS for producing Stock: Certificates by printing the company's name, etc. thereon from special types, which so closely resemble engraved letters that the finished Certif- icates might readily be talien as specially engraved. These borders and forms are our par- QUALITY, VARIETY ticular specialty. They are designed PRICE exclusively for us. They cannot be purchased elsewhere. They are pro- ^=;;=;=^:=:^;^;=^=^ duced with great care upon our own water-marlfed paper, and are far superior in every detail to the borders and forms sold by stationers generally. We have the largest variety of styles and a wide range of prices. We do NOT supply our goods at cheaper rates than others charge, but we DO give larger value. nn luwi iii-iini- '"'^^ ^^"^ ^^^^ a given certificate is A GOOD INFLUENCE the very best obtainable for style, quality and general appearance, and ^^~^~'~~~^^^~^~^~" practically is in the same class as the securities of the leading corporations of the country, can- not fail to give prestige to any new company, and to exert a favorable influence upon prospective purchasers of stock. There is good reason surely why EVERYTHING FOR A our store has become headquarters CORPORATION'S RE- ^°^ nearly everything required for a niiinrMMi-n-rn Corporation's organization or its QUIREMENTS maintenance. Not only for Stock ^^———^^^-——^—^^^ Certificates, Temporary Certificates, _ Treasurers' Receipts, etc.. Bonds, Time Notes, but books of record of all sorts and all the et csetera described upon succeeding pages. We do printing of every sort also. ' John Street, New York GENERAL LINE of STOCK CERTIFICATES The Largest Line in the Country ; The Most Varied Assortment; Adapted to Every Requirement. The best obtainable ; the best that experience and skill applied to the best materials can produce. A larger variety than found elsewhere. Prices quoted are for book of 100 Certificates complete, numbered, perforated and bound, cover lettered in gold. Prepared with greatest care and in best possible manner and at moderate cost. Not readily distinguished from specially engraved Certificates. BEST GRADES have steel engraved borders printed directly from steel plates, in combination with lithography or types, thas securing results scarcely second to specially engraved steel plate work, at a price of ^15 for our best style. The next grades have borders from steel plate designs transferred to stone and cost $\h, $12, $W, or ^9 for a book or 100, according to the elaboration of the Certificates. FOLLOWING GRADES are sold at «8, $y, $6, $s, and $4 for a book of 100 Certificates. All are prepared in the best manner on bond paper of finest quality, made especially for this purpose. A COMBINATION OUTFIT AT LOW PRICE To meet a demand from certain close corporations requiring only a few Certificates of Stock, anticipating only occasional transfers, we supply complete Outfit consisting of one book of 50 Certificates, bound in usual manner, a Seal, a Stock Ledger (or for New York State a Combination Book of Account, Stock Book and Stock Ledger) and a Minute Book. The whole, complete, for $1. SPECIAL DESIGNS FOR CORPORATIONS ENGAGED IN FOLLOWING LINES OF BUSINESS AMERICAN ENTERPRISES DRUG OIL PRODUCING AMUSEMENT ELECTRICAL PHARMACEUTICAL ART PRODUCTIONS FARM PRODUCTS QUARRY AUTOMOBILE INDUSTRIAL REAL ESTATE BUILDING LAND IMPROVEMENT REFINING CHEMICAL LUMBER SMELTING COAL MACHINERY STAMPING COMMERCE MANUFACTURING THEATRICAL CONSTRUCTION MINING TOOLS BUILDING AND LOAN ASSOCIATIONS MOVING PICTURES TRANSPORTAl AND STYLES BEARING STATE SEAL FOR NEW YORK DELAWARE PENNSYLVANIA NEW JERSEY MAINE SAMPLES ON REQUEST. When sending for such please state under what laws incorporated ; nature of business ; amount of capital- ization; grade of Certificate wanted; giving any suggestions which may aid us in making a suitable selection. STEEL PROCESS CERTIFICATES. Engraved to order upon steel plate borders. General appearance equal to steel plate Certificates. ^50 for 250 Certificates. LITHOGRAPHED CERTIFICATES. Engraved to order on stone with border designs transferred from steel plate designs, approxi- mately ^40 for 250 Certificates. : SKETCHES OINJ REQUEST := We are in touch with the best designers in this country and will be pleased to submit sketches to any who desire special Certificates. The Broun-Grien Company PIIINTEJ3 BOKDS "BEAVER BONDS" V^'^^^^^ from engraved types upon lithographed blanks and supplied with any number of coupons, or without coupons. Bonds of fine appearance and good quality, at much lower price than those specially engraved. Bonds made by us are the very best in every particular that can be produced, and our prices are reasonable for work of this character. Our Bonds will not discredit any enterprise. Color of Borders. Either green, brown, orange, or steel plate. Samples a,nd Prices on AppIica,tion. SPECIAL P>OXDS Experience and care are required in the preparation of a Bond. We make only the best grade. Nothing better. We use paper made especially for this work, employ the best designers, engravers and pressmen. All border designs are from steel. We supply Bonds engraved to order on steel and printed from steel plates, Steel Process Bonds, Special Lithographed Bonds, in addition to Bonds for general use, on which the title, body of Bond and endorsements are printed from engraved types upon lithographed forms. Any number of coupons, or without coupons for Registered Bonds. Sketches Submitted Ulten Desired. VOTE. — Prices depend upon quantity, number of denominations, number of coupons on each Bond, the nature and amount of the special engraving required. Where illustrations of machinery, buildings or the like are reproduced, the expense is greater than when designs of general adaptability are used, and before making a price we must have a photograph or sketch of the design to be reproduced. We own many designs of ge?ieral adaptability which we employ for our customers without extra charge. Color of Borders: Any color used as desired. Coupons bound at ihe fop of the Bond. This method is almost universally employed by large corporations for their steel plate Bonds, and by its adoption we furnish a Bond much the same in appearance as the very expensive Bonds which are printed from steel. As our lithographed designs are originally engraved on steel, and have been printed with the greatest care, they closely resemble steel plate work. Samples and Prices on Application. When ordering send signature to be reproduced on coupons, written in black ink on white, unruled paper. 4S John Street, New York STEEL mOCESS STOCK CERTIFICATES AND BONDS To meet a widespread demand for Stock Certificates and for Bonds that shall nearly equal the heet steel plate work hut shall also he produced in much less time and at less expense, we have added STEEL PROCESS blanks to our already extensive lines. We engrave the colored borders and the hacks of bonds on STEEL and print from STEEL PLATES. We engrave the text also. The finished product resembles ALL STEEL /"i/I r£ work most closely , so that experts only can distinguish a difference. We furnish an exact estimate for any given issue when precise requirements are ascertained. No charge for sketches if prices are accepted. Prices range for Certificates from $55 upwards and for Bonds from $90 upwards. STEEL PROCESS Certificates and Bond Forms may also be printed from types when a very low price or very quick work is necessary. They cost for Certificates from $15 for book of 100, and for Bonds from $25 for 50 bonds upward, according to quantity. SAMPIiES OlSr REQUEST Our customers receive the advantage of obtaining their Stock Certificates and Bonds from a long established and reputable house where such work is properly performed with all the safe- guards that insure the necessary care, protection and accuracy that suish work demands and all the prestige obtained from the recognized standard for security work. The Broun-Green Company COKPOBATIOK BOOKS BOOK or ACCOUNT IN COMBINATION WITH STOCK BOOK AND STOCK LEDGER. (3 Books in One.) Required by N. Y. Law for domestic and foreign corporations and for transfer agents. Form approved by State Comptroller Linen Ledger paper, printed headings, 150 pages, indexed through, linen tabs, Russia back and fronts $2.50 Loose Leaf, 280 pages and index 6.00 No. 2 Combined Book, Superfine writing paper, printed headings, 100 pages, indexed through 1.25 New York Law requires all corporations, domestic and foreign, doing business in the State, and transfer agents, to keep a Book of Account which shall show every transfer of stock, etc. New York Law also requires New York corporations and foreign corporations doing business in the State to keep a Stock Book. There are heavy penalties for neglect to keep both these books. We provide a combination book answering the requirements of these Laws (form approved by State Comptroller), which serves requirements for Stock Ledger also. 3 books in one, greatly simplifying accounting. BEAVER STOCK LEDGER, Linen Ledger paper, 100 pages. Russia back and fronts, printed headings, indexed. . $2.00 Loose Leaf, 280 pages and index 6.00 No. 2 Stock Ledger, Superfine writing paper, 100 pages, printed headings, indexed 1.00 Note. — llie Laws of Delaware, Maine, Massachusetts, New Jersey and Pennsyl- vania require a Stock Ledger to be kept. BE AVER STOCK TRANSFER BOOK, Linen Ledger paper, 100 pages, Russia back and fronts, printed headings. With name of Company printed on each page $3.50 Same without name of Company printed 2.00 Loose Leaf, 300 pages. With name of Company printed on each page 7.?S Same without name of Company printed 5.25 No. 2 Stock Transfer Book, Superfine writing paper, 200 trans- fers, name of Company printed on each transfer 3.00 No. 2 without name of Company printed 1 .50 No. 2 for 100 Transfers 1.00 Note. — The Laws of Massachusetts, New Jersey and South Dakota require a Stock Transfer Book to be kept. BEAYER STOCK TRANSFER BOOK and BEAVER STOCK LEDGER, together in one binding, 75 pages of each, 150 pages in all, printed headings, but without name of Company printed on headings $3.50 NOTE. — Each book abore described may be had loose leaf in other sizes and with more leaves. Estimates furnished. 8 ' John Street, New York MINUTE BOOKS WITH PRINTED FORMS For New York, yi Russia $3.50 For New Jersey, " " 3.50 LOOSE-LEAF MINUTE BOOK WITH PRINTED FORMS New York only, 400 pages, including extra sheets. . . $3.00 to $6.00 For use when typewritten minutes are made. See pages lo and ii for full description. These Minute Books give forms and are a complete guide for and record of corporations from inception. When these forms are followed nothing need be overlooked that should receive attention. MINUTE BOOKS. RECORD RULED 200 pages with Corporate Calendar (N. Y. or N. J.) $1.00 200 " without a " " 1.00 300 " Linen paper, % Russia, spring back 3.50 300 " " " full " " " 9x10% 4.00 300 " " " " " " " 9>^xl5>i 6.00 TJTfLITY MINUTE BOOK 8^ xt4. Ledger paper, each leaf perforated for removal. After being typewritten it may be returned to its place by pasting it upon a stub left in the binding for that purpose. Leaves cannot be readily removed thereafter. 200 pages, expanding back, indexed, Russia back and comers $3.00 LABOR SAYINGS MINUTE BOOK Expanding back ; typewritten sheets may be pasted on pages, or minutes inscribed thereon in long hand, either or both. Superfine writing paper, record ruled, 200 pages, indexed, Russia back and fronts, 9X X \i.yi $2.00 9xll>^ 2.00 NEW SAFETY MUVUTE BOOK Leaves may be removed for typewriting and replaced. Each leaf bears an identification mark. Tlie absence of any leaf leaves a vacancy impossible to conceal. Leaves cannot be duplicated. Wires may be broken after book is completed so that no leaves may there- after be removed. Stronger than ordinary bound books, this Minute Book possesses unusual advantages for convenience in use and is safeguarded in such a way that every leaf must be accounted for or discrepancy noticed. SJ^xll. 300 pages. >^ Russia $4.20 Full Russia 6.20 ^Yz X 14. 800 pages. }4 Russia 6.50 Full Russia 10.50 LOOSE-LEAF MINUTE BOOKS 8 x lOyi in. Binding on 10>^ edge. 1 in. back. Capacity 150 sheets. Russia back and comers. Price, including 100 sheets, loose leaves, punched $3.75 B.-G. RING-BINDER MINUTE BOOKS 8}4 X 11 in. Russia back and corners. Price, including 80 reinforced sheets, loose leaves, punched $2.00 Syi X 14 in. Russia back and corners. Price, including 80 reinforced sheets, loose leaves, punched 2.50 9 The Broun-Green Company MINUTE BOOKS WITH piii:n^ted FOBMS COMPLETUfG Alf ORGANIZATION After obtaining a Certificate of Incorporation the organiza- tion of a company may be perfected, by-laws adopted, officers chosen and stock issued. Attorneys undertaking this work will find in these Minute Books, that various required forms are drawn, providing for Subscription Agreements, Certificate of Incorporation, Proxies, Waivers, By-Laws, Minutes of Incorporators' and Stockholders' Meetings, First Meeting of Directors, Treasurer's Bond, various resolutions, adoptions of forms for Stock Certificates and endorse- ments thereon, Authentications, and also forms for Minutes of the Annual Meetings of Directors and Stockholders, Treasurer's Reports, together with full instructions concerning organizing, conducting meetings and drawing every paper necessary, includ- ing Oaths and CertiScations, and concerning Reports imposed by Laws and Regulations relative to Tax on Incomes of Corporations. Our printed Minute Books are great labor-savers, and they also insure accuracy of procedure. Every lawyer knows the importance of preserving accurate minutes of all corporate meetings, and that such minutes should be drawn as carefully as if they were to be put in evidence upon trial. The cost of such Minute Books is no measure of their value. Leaving out of consideration the amount of time required for any lawyer to draw these forms for himself, the mere expense of typewriting such forms would exceed the cost of the Minute Book wherein all these forms are contained. But it is of the first importance that before adopting such a Minute Book for use, that there be a guarantee for its 10 4^ John Street, New York accuracy. The Minute Books for New York and for New Jersey sold by The Broun-Green Company are edited by Charles F. Bostwick, Esq., of the New York Bar. Mr. Bostwick's reputation is a guarantee for the value of these works. They are used by many leading New York Corporation Lawyers whenever a new corporation is to be organized. THE CORPORATE CALENDAR which is a part of each Minute Book is especially valuable to Corporation Officers. Reminders are given for making returns for local, State and Federal taxes, for paying taxes in season to obtain rebate, or to escape penalty, for sending out notices of meetings, for publication of such notices, etc., etc., so that these important matters, which occur in regular order, may not be overlooked. This is an exceedingly important feature. MINTJTE BOOKS WITH PRINTED FORMS FOR STATE OF XEW YORK (Typewriter Type) Loose Leaf, with best binder, 200 leaves, including 50 blank leaves. Leaves printed one side only . $6.00 Same, with ring binder 4.50 Same, without binder of any sort . . . 3.00 Bound, half Russia, cloth sides 3.50 FOR STATE OF KEAV .JERSEY (Roman Type) Bound, half Russia, cloth sides $3.50 Published and sold exclusively by THE BKOUI^-GIIEEN COMPANY 48 JOHN STREET, New York 11 The Broun-Green Company BEAYER BOND REGISTER Numbered through, ruled to record names, transfers, denominations and dates, Russia back and fronts. For 600 bonds or less S3.50 " 1000 " •' 5.00 STOCK REGISTER Size %% X 14, 150 Pages. Russia back and comers $4.00 Size 17 X 14. 150 Pages. Russia back and comers S.OO CORPOBATIOy BLANKS , Certificate OF Incorpokation. N. Y. or N. J 10 Certificate of Tncobporation, No Par Value, N. Y '. 10 Chrtificath of Incorporation, Membership, N. Y 10 StJBscRiPTiON Agreement, N. Y. or N. J 10 Book of 100 Subscription Agreements 50 Treasurer's Report, N. Y. or N. J 10 Inspector's Oath and Certificate, N. Y. orN. J. 10 Certificate of Payment % Capital Stock, N. Y 10 Certificate Increase of Capital Stock, N. Y. or N. J 10 Proxv — Incorporators* and Subscribers' First Meeting, N. Y, or N. J 03 Proxy— Stockholders' Annual Meeting, N. Y. or N. J 03 Proxy— Stockholders' Other Meetings, N. Y. or N. J 03 Waiver of Notice — Incorporators and Subscribers, N. Y. or N. J 03 Waiver of Notice— First Directors' Meeting, N. Y. orN. J 03 Waiver of Notice— Other Directors' Meetmgs, N. Y. or N. J 03 Waiver of Notice — Stockholders' Meetings, Special, N. Y. or N . J 03 Treasurer's Bond, N. Y. orN. J 05 Notice, Directors' Meeting, N. Y. or N. J 02 Notice, Special Meeting, Stockholders, N. Y. or N. J 02 Certificate for Filing with Comptroller, N.Y. Sec. 275-3 Tax Law OS Certificate of Designation, N. Y 10 Annual Report, N. J 10 Certified List Stockholders entitled to vote, N. J 05 Waiver of Notice — Assessment, N. J 05 Secretary's Oath, N. J OS Certificate of Payment of Capital Stock, N. J 10 •^dd /2 cents to cover* postage and registration if eve are to send Blanks hg ntaiL BY-LAWS FOR NEW YORK CORPORATIONS (copyrighted) TYPEWRITER TYPE (12 sheets, SJ^xll) Drafted by John S. Parker, Esq., of N. Y. Bar With important explanatory reference notes directing attention to New York Statute requirements, carefully drawn by an autliority on Corporation Law. May be punched for loose leaf Binder. May be included with typewritten minutes prepared for a Corporation. Spaced to permit insertion ot Special Sections. PRICE, 50 CENTS SAME in pamphlet form, reman type 50 BY-LAWS FOR NEW JERSEY CORPORATIONS PAMPHLET FORM (only), roman type SO 12 48 John Street, New York COMBIl^ATION SETS NEW YORK: Price $1. 3 Certificates of Incorporatioii 1 Subscription Agreement 2 Inspector's Oath and Certificate 1 Certificate of Yi Payment Capital Stoclt 3 Proxies First Meeting of Incorporators and Subscribers 3 Waivers of Notice Meeting of Incorporators and Subs- 3 Waivers of Notice First Meeting of Directors 1 Treasurer's Bond 3 Notices Directors Meeting NEW JERSEY: Price $1.25 3 Certificates of Incorporation 1 Subscription Agreement 2 Inspector's Oatli and Certificate 1 Certificate of Payment of Capital Stocic 3 Proxies First Meeting of Incorporators and Subscribers 3 Waivers of Notice Meeting of Incorporators and Subs. 3 Waivers of Notice First Meeting of Directors X Treasurer's Bond 3 Notices Directors Meeting 1 Certificate of Designation 1 Certified List of Stocldiolders Entitled to Vote 1 Secretary's Oatli Each Wank singly, or in greater quantity than given for the make-up of a set, at prices quoted on opposite page. EVERY LAWYER when organizing a Corporation will find our Corporation Blanks a saving of labor and a convenience. See hlanks needed for Annual or Special meetings, Blanks for Treasurer's Reports, also Membership Certificates of Incor- poration on opposite page. EVERY LAWYER should have a copy of "WHERE & HOW," a Corporation Hand Book and Comparative Digest of the Laws, of the States of New York, New Jersey, Delaware, Maine, Massachusetts and Pennsylvania ; edited by John S. Parker, Esq. See page 15. EVERY LAWYER should take pride in the Minute Book he prepares for a client as it is one of the most important examples of his work. We carry in stock ten different styles of Minute Books to meet the most exacting requirement. We have them bound, loose leaf, and in forms suitable for pasting typewritten sheets therein ; with blank pages, with ruled pages and with Printed Minute Pages prepared by C. F. Bostwick, Esq. See pages 8, 9, 10 and 11. 13 The Broun- Green Company SEAL PRESSES The B-Q No. 2 The B-G $2.50 Oxidized \yi in. Seal Weight ^i ll5s. Throat 2 in. No. 2 $1.50 Lacquered 1 ^ in. Seal Weight 4>2 lbs. Nos. 10 & 22 POCKET SEAL A Smaller Seal Press No. 10 OXIDIZED $2.00 ll'z in. Seal Weight 24 oz. Throat ] '-4 in. No. 22 OXIDIZED $2.50 \y% in. Seal Weight 2|^ lbs. Throat 1>^ in. POCKET SEAL Neither warranted nor recommended but as good as any Pocket Seal. ALUMINUM $2.50 1^^ in. Seal Weight 10 oz. MODEL EMBOSSER Heavy Steel, nickel-plated. \% in. Seal. Weight 10 oz $1.50 14 ' John Street, A^ew York New Long Reach Seal Press Seal 1% inches "Weight 8 lbs. Throat capacity 8 to 14 in. Patented 1913 by J. A. Ryan We offer a new invention which pos- sesses the special advantage in that it provides an opening that permits a paper to be inserted to a distance of 8", thus permitting the impression of the seal to be applied at an unusual distance from the margin. By rolling the paper an extreme depth of 14" may be accomp- lished. This Seal is furnished with an indicator upon its face which affords ready method of identification. This novel feature will instantly commend itself to those who are custodians for a consid- erable number of Seal Presses and enables the instant selection of any desired Seal. Price, complete, $3.00. FIFTH EDITION REVISED 1914 WHERE AND HOW A HANDBOOK OF INCORPORATION By JOHN S. PARKER, of New York Bar IVAere to Jncorponate and ■^loiv to *j ncopponate A digest of laws pertaining to the incorporating and organizing of cor- porations for general business purposes with information upon legal and practical points to enable counsel to determine where advisable to apply for Charters and how to form corporations in the States of Delaware, Maine, Massachusetts, New York, New Jersey and Pennsylvania. The information is arranged by states and by numbered paragraphs dealing with the same subject under the same number for each state, with- an introductory chapter treating on the formation and management of business corporations, giving forms of Articles of Incorporation, forms of Minutes of Organization Meetings, By-Laws, Certificates of Stock, Bonds of various classes and Miscellaneous Forms. Giving comparative tables showing Organization Taxes and Fees, Annual Franchise or License Taxes. An authoritative publication invaluable as a practical aid to the busy attorney. Price, Paper, 60 cents. Cloth, $1.00. 15 A SHORT TALK to the Users of our Oji-poration Outfits in re : GENERAL PRINTING "^ We know you have found our Stock Certificates or Bonds all we claimed for them as to quality, appearance, careful execution and prompt delivery. •^ Pride perhaps, but pardonable, we believe, since we maintain our standards 365 days of every year and do so as consistently as it is within the range of human endeavor. ■^ NOW, besides being Girporation Specialists we specialize in General Printing in which we also excel. "^ We have complete and modem facilities for the exe- cuting of Printing in the tliree most-used Graphic Arts : LETTER PRESS WORK (Type Printing) Commercial Stationery of every description. Catalogs, Leaflets, Folders, Fine Color Work, also designing of Catalog Covers, Title Pages, Trade Marks, etc. LITHOGRAPHY (Stone Printing) Producing by this method Business Stationery of Superior Qualityi Checks, Drafts, Labels, etc., as well as Posters, Show^ Cards, etc., executed in one or more colors. COPPER AND STEEL PLATE PRINTING Cards, Noteheads, Letterheads, Commercial and Social Announcemeats, Crests, Monograms, etc., etc. "* Will you permit us, therefore, if our corporation service and goods have impressed you to submit samples and prices when you need General Printing. «^ They can be had for the asking, cheerfully and promptly. "^ You will find them reasonable in price and high in quality. ■^ Our salesmen call in New York and suburbs. «5* A complete Library of Samples is at your service in our establishment and will be gladly placed at your disposal whether you buy or not. "^ Telephone John 61 10. THE BROUN-GREEN COMPANY 48 JOHN STREET, NEW YORK