Los Angeles herald., 1910-02-07
DRASTIC LAW
PROPOSED FOR
CORPORATIONS
Concerns Cannot Acquire
or Purchase Stock
in Others
PENALTIES SEVERE
Charters May Be Forfeited
if Companies Organize i.
Against Trade
ASSOCIATED Pressl

HT TASHINGTON, Feb. 6.-The long
w anticipated federal incorporation
" bill to embody the recommends
tions made in his special message by
President Taft will be introduced i'll
congress tomorrow, probably by SEN
ator Clark of wyoming and Repre-
sentative Parker of New Jersey, chair
men respectively of the senate and
house committees on judiciary.
The final draft, an outline of which
follows, differs materially from the
earlier drafts and represents several
months of study by the president and
his cabinet.
No corporation formed under the
terms of the proposed act will be per-
mitted to purchase, acquire or hold
stock in any other corporation; nor
could any corporation organized un-
der the act or the laws Of any state
or foreign country, for the purpose
of any like business, acquire or hold
the stock of a corporation formed un-
der this act, and no such corporation
would be permitted to have banking
powers. Forfeiture of charter may re-
suit if any corporation, organized un-
DIR the act, enters into any contract
or combination, or engages IN any
conspiracy against interstate or for
eign trade or commerce, or shall
monopolize. or attempt to monopolize
any part thereof, contrary to the Sher-
man act, or shall otherwise violate the
laws of the United States.
The charters of all corporations are
made subject to alteration, suspension
or repeal by congress.
Must File Annual Reports
Annual reports must be filed with
the bureau of corporations, and the
commissioner of the bureau may call
for special reports.
Ten days after the declaration OF
any dividend, a financial statement
showing the amount of net earnings
must be filed with the Commissioners
of corporations.
At least majority of the directors
of the corporations are required at al
times to be citizens of the united
States and bona fide residents therein.
stock may be paid for In cash or IN
property, but every certlncate OF sloe4
issued in payment for property must
contain a statement that 1t Is SO is
sued. and before any stock is so issued
q full tatement must be filed settlns
forth a full description of the property,
the number of shares to be issued IN
payment therefor, and Whether sucli
shares are to have a par value or not,
tbe names and addresses of the ven
doris of the property, the statement OIL
their connection with the company
The terms of any agreement with re-
snect TO the transfer of the property,
fuI details as to price, all amounts
paid or to be paid to each Venuor' an, anu
if the vendors are directors or tlle cor
noration or stockholders statemenG
Pf tha nrice Maid or agreed to be paid
bv them for the property to be SOFA
to the corporation.
where the stock to be issued for sucn
navment has a par value there mus %
he filed in the bureau of corporations
an ADVERTISEMENT of the value OF tile
property by two disinterested apprals-
ers approved in writing by the com
missioner. who may also appoint other
appraisers.
Commissioner Must Approve values
No stock with a par value may pe IS
sued in payment of property acquired
Inv +he CORPORATION to an amount IN par
,,o1,,a exceeding the value approved
nv the commissioners after such ap-
praisement.
provisions are made for the increase
or decrease of the capital stock OF a
corporation and for other amendments
to the articles of association by Npte
of two-thifds of the stockholders OF
+he CORPORATION. On similar vote, the
corporation may borrow money ISSUE
bonds and mortgage property or con-
fer 1lpon the holder of any bond or D.
1ioation the right to convert the prln-
oinal after five years from GATE Oh
the bonds into stock of the corporation
of a designated class.
THE approval of the commissioner OF
corporations must be secured before
+he capital stock can be increased TO
the amount necessary to provide fotr
s,,cb conversion, and this right shall
NOT be given unless the bonds are is
sued or sold at par, or upwards, or, IL
for less than par, then for not less than
their reasonable market value as ascef-
tanned by the commissioner.
whenever a corporation shall fail TO
nav any written obligation at maturity,
or if any execution against its prop
ertv shall be returned unsatisfied, the
commissioner of corporations snail ap-
noint a special agent to examine into
it's condition.
IF this agent reports that the corpor-
a+ion's condition is so unsound as to
make it's continuation in business con-
trary to public welfare, the commits
sioner may appoint receiver.
Within thirty days the corporation
NAV apply to the nearest federal court
TO enioin proceedings, and the court
may discharge the receiver and enjoin
the corporations interests from fur
ther proceedings
THE real and personal property of
corporations are to be subject to state,
county and municipal tax. Incorpora-
tion fees are to be paid, amounting
70 one-tenth of per cent of the total
capital up to $1OOOO,O 900; one-twentieth
of per cent from $1O,OOO,OO0 to s2O.-
100000, and $3.50 on every million dol
Iors In excess of 500 900, ,000