The sun. (Wilmington, Del.) 1897-19??, 1900-02-20
LIBERAL INCORPORATION
LAWS OF THIS STATE

LAWS OF THIS STATE
From February edition of Bonds aud Mortgages
of Chicago.
In 1899 the State of Delaware, by a
general revision of its corporation laws
aligned itself with the State OF New Jer-
sey in announcing liberal policy TO-
ward corporations and its purpose 10
attract capital to the State. It's action In
this respect has caused much comment,
especially by corporations interested IN
attracting capital to New Jersey.
The facts are that for many years
Delaware has pursued stable policy
toward corporations and the recent laws
merely mould into final shape the sentl-
ment OF its people as expressed through
its law makers. Delaware is small State
securely controlled by few dominant
factors, chief among which is the
Grange, representing the farming COM
munity, and the new law has the hearty
sanction of practically the entire state,
so there is little likelihood OF material
change lor many years.
Taking n stand midway between the
"Wildcat States" such as Maine ana
West Virginia on the one hand, and the
nltra-conservative States such as New
York and Ohio on the other, New Jersey
has long enjoyed the confidence of heavy
investors and has protited greatly by the
location OF immense corporations within
its borders. The criticism of her cor
poration laws is 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 INSCRIPTIONS under any condl-
tions.
In the main the Delaware and New
Jersey laws are identical. Both provide
means for bringing and keeping their
corporations under the jurisdiction and
control of the state and require,
/. An office within the State. 2. A
director within the State. 5. An agent
to receive service of process within the
State. 4. Records within the State
showing the essential facts needed tc
maintain supervision. 5. The filing o.
proper reports. 6. The payment o
Franchise Tax. z. The payment Of An
nual.Tax. - &ta s-ttss
They differ in that the New Jersey
Franchise Tax is one-third greater thar
the annual tax Con 5000, 600 or less
double that of Delaware; that the formal
itY of stockholders' meetings within Cd,
State is required and that the origina
stock and transfer books must be KEEP
within the State. Delaware wisely
adopts the more practical course Of per
hitting stockholders as well as directors
to meet without the State and accepts
copies OF the stock and transfer book
in lieu Of TIE originals. In both casei
the end desired 10 attained at great saw
ing and convenience to the corporation
aud with no possible detrment to an,
interest.
In other respects the Delaware law i
as fair and liberal as that of New jersey
without undue latitude. The main OBJ
lection raised to the Delaware law b,
the New Jersey registration companies i
that the State Constitution provides tina
no corporation shall issue stock eXcep
for 'money paid, labor done or persona
property or real estate or lease thereo
actually acquired by such corporation
and neither labor or property shall b
received in payment OF stock at a create
fjfiGe than the actual value at the tim
raid labor was done or property deliyere'
or title acquired" They claim that thi
throws a cloud on the issuance OF stoc
for property, etc. On the contrary, it
q most salutary provision preventin
fraudulent over-issues of stock and mer,
" requiring the observance of good fait
and the exercise Of sound business judi
ment by the directors in the acquistio
of property, ETC., as a basis for the issr
of capital stock. This feature shou
commend the Delaware law to all VT
desire to rescue corporations from Il
suspicion that their stock ia issued for
Inadequate consideration and alreaC
the public is beginning to appreciate II
strength OF this feature of the Delawa
law.
On the whole, survey of the Del
ware law forces the conclusion that
may with profit and propriety be adopt
By corporations DESTROYS of escaping t
harsh exactions of New York and sor
of the Western States and yet unwilli
to lose caste by resort to the "WildC
States" The ease with which Delaws
corporations may be formed and Ct
Quoted; the moderate charges ond fir
dom from petty exactions at the han
OF the State; the settled stable policy
the law insuring permanence and
security accorded both to the stockho
ers and creditors of such corporations
indicate an early general adoption
Delaware as favorite situs for ma
large corporations.