2

law by the Constitution of the State. Under the old law, the certificate, after having been executed, acknowledged and certified to, was first recorded with the clerk of the court of the city or county of its formation and a certified copy sent to the State Tax Commissioner. Under the new law, the certificate, after having been executed, acknowledged and certified to, is sent directly to the State Tax Commissioner, with double the fees for recording a document of similar length. Upon the receipt of the certificate with the recording fees, it is the duty of the State Tax Commissioner to endorse on the certificate the exact time of receipt; to at once record the certificate in his office, and to forthwith send the original or a certified copy to the clerk of the Circuit or Superior Court of the city or county where the principal office of the corporation is located, who shall again record the certificate in his office.2

1Art. 23, sec. 2. Art. 23, sec. 4.

§4. Formation (concluded).-There has been no change made by the new law in the bonus tax, which remains at one-eighth of one per cent. on the authorized capital, and one-eighth of one per cent on any increase. It is, therefore, necessary, simultaneously with the forwarding of the certificate and recording fees to the State Tax Commissioner, to remit to the State Treasurer the amount of the bonus tax.1 As soon as the certificate and recording fees are received by the State Tax Commissioner and the bonus tax is paid to the State Treasurer, the board of directors named in the certificate of incorporation may proceed to business.'. No provision is made for an annual franchise tax. The new law contains the provision that no certificate of incorporation shall be declared void for formal defects merely;2 and that where an effort has been made in good faith to form under the laws of this State a corporation formable thereunder, neither party to any transaction with it shall deny the legality of its corporation or organization in any suit or proceeding growing out of such transaction.2 But attention is called to the fact that this provision should be read in connection with the existing provisions relating to bonus tax, which provide in substance that a corporation shall

not be capable of performing any legal act until the bonus tax has been paid.

'Art. 81, sec. 98.

'Art. 23, sec. 6.

$5. General Powers-The new law gives all corporations formed under it the right of perpetual succession. Under the old law, no corporation could be formed for a period of over forty years. Attention is called to the provision of the new law that all provisions in the charter or certificate of any existing corporation, or imposed upon it by any Act in force at the time of its creation or formation, limiting its duration, are annulled and repealed. Under the new law, a corporation may transact its business and carry on its operations within or without the State and may exercise in any other State, Territory, District or possession of the United States, or in any foreign country, so far as the laws thereof permit, the powers granted to it. It may issue bonds and secure the same by a mortgage or deed of trust of its property, franchises and income. The old law made no provision for the mortgage of franchises. It is, however, especially provided by the new law that the bonds secured by mortgage must first be authorized at a special meeting of the stockholders.3

1Art. 23, sec. 7.

2Art. 23, sec. 75.

Art. 23, secs. 7, 15, 16.

§6. General Powers (continued).-Under the new law, corporations are authorized to own the shares, bonds and securities of other corporations situated in or out of this State which may be appropriate to enable them to carry on their operations or to fulfill the purposes named in the certificate of incorporation.1 The new law also provides that corporations may do every act or thing not inconsistent with law, which may be appropriate to promote and attain the objects and purposes for which the corporation is formed. Provision is made for the formation of an executive committee of two or more members and for the delegation to such committee of the management of the current and ordinary business of the corporation, and such other duties as the by-laws may prescribe.2

Corporations may provide by their by-laws for the division of the directors into classes, and prescribe the term of office of the several classes.3 Power to make, alter and repeal by-laws is given to the members and shareholders and not to the directors.1 A corporation may acknowledge any instrument required by law to be acknowledged, through its attorney, in the manner formerly provided, or such instrument may be acknowledged by the president or vice-president of such corporation." 1Art. 23, sec. 7.

Art. 23, sec. 10.

Art. 23, sec. 11.

'Art. 23, sec. 12. Art. 23, sec. 74.

§7. General Powers (concluded).—Provision is made for reorganization when property and franchises are sold under judicial proceedings. Under the existing law this right is given only to railroads. Any two or more corporations organized or to be organized under any law or laws of this State, which have been or shall be organized for the purpose of carrying on in whole or in part any kind of business of the same or a similar nature, may consolidate such corporations, and may by such consolidation form a new corporation. A two-thirds vote of the stock of each corporation is required in place of a majority, as required under the existing law, and ample provision is made for the condemnation of the stock of dissenting stockholders, for which no provision is made under the existing law. The Massachusetts provision for the sale, lease or exchange of corporate property and franchises, which was adopted by the State Corporation Commission, has been retained with some modifications, and will, it is believed, be found to be a convenient and valuable addition to the corporation laws of the State. Provision is also made for the consolidation of charitable and religious corporations and other corporations having no capital stock."

1Art. 23, sec. 78.

2Art. 23, sec. 29.

Art. 23, sec. 31.

'Art. 23, sec. 32.

"Art. 23, sec. 64.

§8. Stockholders and Directors.-Careful provisions are made for the calling of general and special meetings of stockholders. The provisions of the existing law upon this subject, in the absence of by-laws, are obscure and unsatisfactory. While directors may meet anywhere, in or out of the State,2 all meetings of shareholders or members must be held within the State. A majority in interest of all the stock outstanding and entitled to vote, or a majority in number of all the members (present in person or by proxy) shall constitute a quorum.3 Shareholders or members may vote either in person or by proxy, but no proxy which is dated more than three months before the meeting at which it is offered, shall be accepted, unless such proxy shall on its face name a longer period for which it is to remain good. Any corporation may provide, through cumulative voting, for minority representation in the election of directors." Notice of the time, place and purpose of any meeting may be dispensed with if every member or shareholder shall attend in person or by proxy, or, if absent, shall by writing filed with the records of said meeting, waive such notice."

'Art. 23, sec. 14, 15, 16.

2Art. 23, sec. 12.

Art. 23, sec. 17.

'Art. 23, sec. 19.

"Art. 23, sec. 20.

Art. 23, sec. 23.

$9. Stockholders and Directors (Continued).-Every corpora tion shall have a president and secretary and treasurer, and if the by-laws so provide, one or more vice-presidents, all of whom shall be chosen by the directors unless the by-laws otherwise provide. The president, and at least one of the vice-presidents, shall be chosen from among the directors;1 the treasurer and secretary need not be directors;1. and any two offices, except those of president and vice-president, may be filled by the same person. The right to demand statements and inspect books of the corporation is confined to any person or persons holding in the aggregate five per cent. of the outstanding stock or five per cent. of any class thereof, if two or more classes have been issued. The liability of directors for consenting to

a dividend of an insolvent corporation or of a corporation which would be made insolvent by the payment of such dividend, is limited to the amount of dividends improperly declared. In addition to the exceptions which are made under the existing law, a life insurance company is authorized to lend money on policies to any of its policy holders who may happen to be stockholders and directors.*

'Art. 23, sec. 9.

'Art. 23, sec. 47. Art. 23, sec. 48.

'Art. 23, sec. 50.

§10. Stockholders and Directors (concluded).-Liberal provisions are made for the issuance of preferred or common stock for services or for property of any description, including good will. Whenever any stock is issued in payment for servicesor property, a certificate showing such payment must be filed within thirty days in the office of the clerk of the Circuit or Superior Court.2 Provision is made that the valuation placed by stockholders upon such services or property and the propriety of their action in accepting the same and issuing the agreed number of shares therefor, shall, in the absence of actual fraud, be conclusive against creditors. Except in the case of banking corporations and those classes of corporations for which special provision is made, no stockholder of any corporation in this State shall be liable to creditors for the debts thereof, but the liability of the stockholder to the corporation or its receiver for any unpaid part of his subscription is carefully preserved. Liberal and clear provisions are made for the creation of different classes of stock, with such preferences, voting powers, restrictions and qualifications as may be desired." The existing law, providing for a preferred stock which is a lien upon the property of the corporation is repealed, and the rights. of creditors are preferred to all classes of stock."

3

'Art. 23, secs. 35, 36.

2Art. 23, sec.36.

Art. 23, sec. 40.

'Art. 23, sec. 41.

'Art. 23, sec. 34.

§11. Foreign Corporations.-Every foreign corporation which has a usual office or place of business in this State, except