INCORPORATED UNDER THE LAWS OF THE STATE OF WYOMING THE EDISON ELECTRIC COMPANY 286 CORPORATIONS CERTIFICATE OF STOCK illiams & 318. Transfer of Stock. The certificate of stock represents the stockholder's holdings, and may be assigned to another in the usual way. without alteration or enlargementor any change whatever CERTIFICATE OF TRANSFER of the Capital Block represented by the within Certificate In Presence of 319. [From back of a Stock Certificate.] How Business Is Conducted. Since one of the objects of the corporation is to draw capital from a large number of investors and from various parts of the country, it is evident that it would be impossible for the stockholders to be directly interested in the active management of the enterprise. Therefore resort is had to a body of men selected from among the stockholders and known as directors. The board of directors organizes itself and elects from among its members certain officers, as president, secretary, treasurer, and such others as may be necessary. These officers and directors are directly responsible for the conduct of the business, and are known as the operating body of the corporation. 320. RECAPITULATION A corporation is an artificial, invisible, intangible being, existing only in contemplation of law. It is created under statute and enables a number of persons to engage in an enterprise with limited liability. One of the chief advantages of a corporation is its long life or continuous existence. Corporations are divided into two classes: sole and aggregate, the latter being subdivided into private, public, and quasi-public. A private corporation is an association of individuals for the purpose of carrying on a private business for profit. Insurance, manufacturing, and banking companies are examples of private corporations. The corporate powers are limited to those expressly granted, and powers incidental or necessary to corporate existence. All other powers are denied. A public or municipal corporation is one organized to carry on the operations of government. It is an agency of the state to administer local affairs. A quasi-public corporation is one organized by private enterprise, but which holds itself out to perform certain functions for the general public. A railroad is an example of a quasi-public corporation. It must handle the legitimate business brought to it. Corporations exist by prescription (in England only), by charter and by special statute. Creation by prescription arises when corporate powers have been exercised for so long a time that a corporate grant is presumed. A charter is the document of corporate organization issued under a general incorporation act. Corporate creation by legislative act is now rare. Congress, however, is disposed to create a few of a charitable character. The use of a corporate name is one of the chief privileges of a corporation. No two corporations, as a rule, may have the same name in the same state. The capital stock consists of the share interests issued to the stockholders. Stock is of two kinds, common and preferred. The difference is that preferred stock is entitled to a dividend before common stock. The term "watered" stock is frequently used to designate an inflation of capital stock. A subscriber for stock is liable for the face value of his shares, and, as a rule, for nothing more. In case of a deficiency of assets, individual property cannot be taken to pay debts as in a partnership. The holder of national bank stock in case of failure, however, is liable for twice the par value of his stock. Stock may be transferred by an assignment in the manner prescribed by the by-laws of the corporation. 321. QUESTIONS Define a corporation. Discuss the duration of corporate life. Give some illustrations of corporate franchises. Give the different classes of corporations. Define and illustrate a private corporation; a public corporation; a quasi-public. In what three ways may corporations come into existence? Describe corporate existence by prescription. Define a charter, and describe corporate organization thereunder. What can you tell about corporate organization by special statute? State requirements as to corporate name. Of what does capital stock consist? How is it paid for? Define subscriber; common stock; preferred stock; watered stock. Discuss the liabilities of stockholders; of the holder of national bank stock. How are shares of stock transferred? How is the business of a corporation conducted? Discuss the rights of stockholders: as to a certificate; to sell his stock; to vote; to inspect books. What difference is there in a stockholder's liability who is a subscriber and who receives his stock at a discount, and a subsequent holder who bought at a discount after stock had been issued fully paid? 322. Perpetual Succession. The principal advantage of incorporation is that the affairs of the concern can be definitely planned and carried out over a period of many years, notwithstanding the original members may die or transfer their interests. The life of a corporation is usually regulated by the legislative body granting the incorporative authority, and it has been very aptly compared to a river. "Although changes may take place along its shores, portions of the banks may be washed away, 1000 290 |