Los Angeles herald., 1910-01-14
INCORPORATION
ACT IMPOTENT
TAFT'S PROPOSED LAW HAS
LITTLE BACKBONE
CONGRESS AGREES AMENDMENTS
ARE NECESSARY
Only Tremendous Influence, Say the
soIons, Can Cause Bill to Be
Enacted-Forfeiture Clause
Is Overlooked
Associated Press1


WASHINGTON, jan. 1S.-Now that
the main features of the bill to be rec
commended by the president prov Niding
for a federal incorporation act have
become known there is a disposition on
the part of many members OF congress
to insist not only upon full discussion
of the measures, but upon amendments
which will in their judgment be neces-
sarv to make 1t effective in dealing
with great corporations. Indeed. it is
believed that nothing short of tremen-
dous administration influence VIII
enact it into law.
The need of forfeiture clause by
which a corporation persistently Violat-
ing the. law can have its charter re-
voked, is declared to be alb olutely
necessary if corporations are to be et-
fectively controlled.
Many congressional lawyers advocate
compulsory instead of voluntary fed
eral incorporation. They cite as sound
the general principle that If congress
has constitutional power to grant vol
untary charters to corporations doing
an interstate business, it has power to
require corporations doing such bust-
ness to take federal Incorporation
Just as it has power to require them
to comply with its laws regulating in
terstate commerce.
Among the questions that will come
up for consideration is that relating
to the effect of federal incorporation
upon the right of states to control and
to tax the property of such enter
prises
Some members of congress will wish
to have the rights of the states clearly
defined in respect to such matters as
regulations for sanitation and factory
improvement. They also will wish to
reserve to the states their rights to
tax such property after the corpora
tion has assumed its federal character.
Some of them will wish, if possible,
to separate the state from the inter-
state business so that the states may
still have power to control in respect
to business conducted by the corpor-
ations within the state.
In twenty-one sections Attorney Gen
eral Wickersham has embodied the
idea of President Taft and his cabinet
regarding a system of federal incorpo-
rations of business enterprises. The bill
probably will be laid before congress
next week.
The principal feature will be the Gre
alton of form of holding company
under the national charter which may
control business of subordinate compa-
nies organized under state laws
Proper limitations will be provided
against the embarkation of any such
corporations in the business of dis
counting bills, receiving deposits and
issuing notes.
There will be no compulsory provis-
ion in the BILL it is said. The corpora
tions will not be required to take out
national charter if they see fit to do
business under the state laws instead.
All charters will be subject to the ap-
proval of the commissioner of corpora
tions.
Any corporation that has more than
one kind of stock will be authorized to
confer the right to choose the directors
of any class to the exclusion of 9TH
ers.
No preferred stock, by the terms, may
be issued except as specified in the
original articles of association save
with the consent of the holders of two
thirds of each class of outstanding
stock. Stock books are to be open to
inspection of all stockholders, judg-
ment creditors and law officers.
An important provision will be one
requiring every subscriber to pay to
the treasurer of a corporation 10 Fer
cent of the amount of his subscription
in cash, and directors will be author
ized to assess stock not exceeding the
whole par value thereof.
A corporation will be permitted to
purchase property necessary for its
business and issue stock for the same
with the approval of the bureau of
corporations.