Los Angeles herald., 1910-10-09

generally or privately, to the stock
holders or other persons dealing VIII
such corporation or its stock, any un
true or willfully and fraudulently ex
aggerated report, prospectus, account
statement of operations, values, busl
ness, profits, expenditures or pros
poets, or other paper or document In
tended to produce or give, or having g
tendency to produce or give to the
shares of stock in such corporation a
greater or less apparent or marker
value than they really possess, or WIFI
the intention of defrauding any par
ticular person or persons, or the pup
lie, or persons generally, snail De
deemed guilty of a felony, and on con-
viction thereof, shall be punished by
Imprisonment in state prison, or a
corntv iail not exceeding two years, OF
by fine not exceeding $4,000, or both.
".section 2. All acts and parts OF
acts in conflict with this act are here
by repealed
"The minority stockholder, however
small his holdings in the corporation
is under the law of California secure
in his rights, certain of relief If
wrong be done or attempted by the
majority, and protected in his invest
ment, provided he knows these laws
and will defend his interests by avail
ing himself of his privileges.
SMALL STOCKHOLDERS PROTECTED
"The owner of one share is entitled
to the same intimate knowledge OF
conditions and affairs and the enjoy
ment of identical privileges and rights
as the largest holder of the corpora
tons stock.
"All corporations for profit are re-
ouired to keep a record of all business
transactions embracing a complete &C
count of receipts and expenditures and
every matter pertinent to the transac"
ton and conduct of the corporation
business; journal of all meetings OF
directors and stockholders, which lat
ter record shall embrace every act
done or ordered to be done by either
directors or stockholders in meeting
assembl
"AIl records must be open to the in
spection of any stockholder during
business hours Of any business day..
"It is. therefore, evident that the
stockholder has but to assert his
rights under the statute to be as fully
informed of the conditions and con-
duct of the corporation in which he is
interested as though that business
were conducted by himself individually.
To the lack of understanding of the
rights of q stockholder or negl1gently
sleeping on these rights may be attrlo-
uted the perpetration of acts fraudu-
lent or ultra wires by the majority in
interest or directors to the injury and
oppression of the minority.
"The stockholder of corporation
has the power, which he should eXer-
else, to protect his investment through
a scrutiny Of the corporations affairs
and the acts of its directors and its
management, and by careful exam
ination into receipts and disburse-
ments
This scrutiny should be as close as
would be the rule of any prudent en-
ployer in his dealing with an employe
in a position of trust.
DIRECTORS ARE SERVANTS
"While the directors of corporation
are elected by the majority and hold
the 'reins of administration OF the cor
poration's business and affairs, YET
nevertheless they are the servants OF
the corporation-the stockholders.
$50 long as the corporations atfairs
are conducted within the limitations OF
the charter and the law and no actual
or threatened abuse of power mani
tested the minority stockholder has no
complaint. BY availing himself OF his
rights Of examination, either person
ally or through a competent represen-
tative, he can at all times check any
act of mismanagement, ana II mis-
rights are not respected he may claim
and secure the protection OF the courts
either in Jaw or equity, which latter
will not sanction an act wherein an
unfair advantage is taken, notwith-
standing that technically every re-