Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1900-03-01
THE DELAWARE INCORPORATION LAW.


In 1899 the State of Delaware, ny
general revision of its corporation Jaws
aligned itself with the State OF new
j Jersey in announcing o liberal pohcy
towards corporations and ITS purpose ~
attract capital 10 the State; is aclion
in this respect has caused mnen com
ment, especially by corporations 'n,er.
.stsd in attracting capital 10 ne"
Jersey.
The facts are that for many years
Delaware has pursued y stable poilcs
towards corporations and the recent
laws merel, mould into final shape the
sentiment of its people az expressed
through its makers. Delaware Is
n small State, securely controlled by
few dominant factors, chief among
which is the Grange, representing the
farming community, and the new 'aw
has the hearty sanction OF rracticaiiy
the entire State, so there is little likeli-
hood of material change for Inany years.
Taking stand midway between the
wildcat States such as Maine and
West Virginia on the one hand and the
ultra conservative States such as New
York and Ohio on the other, New
Jersey has long enjoyed the confidence
of heavy investors and hos pronted
greatly by the location of immense cor
porations within its borders. The criti-
cism of her corporation laws IL mainly
due to lack of close analysis In fact,
they provide adequate safeguards to the
public, both creditors and investors,
| and their abuses are such only as are
possible at the hands Of the unscrupu-
lous under any conditions.
In the main the Delaware and New
Jersey laws are identical. Both pro-
vide means for bringing and keeping
their corporations under the jurisdic.
! tion and control of the State and re-
quire:
l. An office within the State.
.. A director within the State.
| 3. An agent to receive service OF pro.
cess within the State.
4. Records within the State showing
the essential facts needed to maintain
supervision.
3. The fling OF proper reports.
6. The payment of franchise tax.
Z. The payment of annual tax.
They differ in that the New Jersey
franchise tax is one-third greater, anc
the annual tax ION 1000, 600 or less
double that of Delaware; that the
formality of stockholders maetine.
within the State is required and tina
the original stock and transfer book:
must be kept within the State. Della
ware wisely adopts the more practica
course of permitting stockholders al
we'll as directors to meet without thu
State and accepts copies of the stool
and transfer books in lieu of the origi
mails. In both cases the end desired i
attained at great saving and conven
fence to the corporation and with n,
possible detIiment to any interest.
In other respects the Delaware law i
as fair and liberal as that of New Jer
sey without undue latitude. The mail
objection raised to the Delaware law b.
the New Jersey registration companie
is that the State Constitution provide
that no corporation shall issue stool
except for money paid, labor done o
personal property or real estate or leas
thereof actually acquired by such cor
Ioration and neither labor or propert
shall be received in payment OF stoc
at a greater price than the actual valu
at the time said labor was done O
property delivered or title acquired. ,
They claim that this throws cloud Of
the issuance of stock for property. &c
On the contrary, it is most salutar
provision preventing fraudulent over
issues of stock and merely requirin
the observance of good faith and tn
exercise of sound business iudgmen
by the directors in the acquisition {
property, &C.. as basis for the issu
! Of capital stock. This feature shout
commend the Delaware law to all VIII
desire to rescue corporations from th
, suspicion that their stock Is issued &c
an inadequate consideration and alrea,l
the public is beginning to appreclat
, , the strength of this feature of the Della
ware law.
, On the whole, survey OF the Della
, ware law forces the conclusion that
may with Profit and propriety |
adopted by corporations DESTROYS Of q
Gaping the harsh exactions Of Ne
!, York and some of the Western Stat,
and yet unwilling to lose caste BY +,
! sort to the Wildcat States" The ca.
with which Delaware corporations ma
be formed and conducted: the moo
crate charges and freedom from pett
n exactions at the hands of the State
the settled stable policy OF the law il
, surfing permanence and the security a
: corded both to the stockholders an
: creditors of such corporations all ind
= cate an early general adoption of Del
/. ware as favorite site for many lart
corcorations