Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1917-02-08
COMMISSION WILL CURB
POWER or D|RECTORATEs
To Refuse Incorporation Where Char.
tcrs Deny Stockholders Right
to Inspect Books.
LIMIT BUSINESS OF DIRECTORS
Will Not Be Allowed to Have Inter.
csts That Would Make Minority
Shareholders Pnwns i'm Game of
Intcrlocking Boards.

ts contrary TO public policy and as
OUTSIDE the rights and privileges con-
ferred by the general law, the state
Corporation Commission will in the fu-
ture decline TO sanction any article Of
incorporation which will allow di-
rector OF tho concern applying for
charter 10 have business interests an
iasonistic 20 those Of share holders
for whom he is acting in the capacity
Of trustee.
Likewise. the commission will refuse
Ia charter any concern which reserves
in its articles Of incorporation the
right TO withhold from a stockholdcr
in the cnrporation its accounts and
books. holding that the right of stock-
holders To inspect the books OF a cor
poration rests upon the fact OF owner.
ship.
The opinion announcing tho future
policy Of tho commission was handed
down Yesterday by Chairman Christie
pher T. Garnett. who recited at length
the authorities for refusing to allow
provisions OF this character to be IN
coTporstcd in the charter Of the Su-
p"r;or steel Corporations
PROVISION WHICH LED
no Rt:JECTION OF CHARTER
The rejected provisions read as fol.
lows:
NO contract or other transaction OF
the corporation shall, in the ahSenee
Of fraud, he affected by the fact that
any OF the directors OF the corpora.
tion are in any way interested in or
connected with any other party to
such contract or transaction. or are
themselves parties to such contract
or transaction: provided, that at the
meeting OF the hoard OF directors au-
thorzinr or confirming such contract
or transaction there shall be present
a majority OF the board of directors
who are not so interested or connected
and am such contract or transaction
shall he approved by such majority.
ANY contract. transaction or act or
the corporation or Of the board OF di-
rcctors which shall he ratified by q
ma iority OF quorum OF the cock
holders at any annual meeting or at
any special meeting called for such
pUrpos, shall ne as valid and as bind
ing as though ratified by every stock
holder OF the corporation
The board of directors Shall from
time to time determine whether. and
10 what extent. and AT what times and
places. and what conditions and regu-
lations. the accounts and books OF the
corporation. or any of them. shall be
open to the inspection of the stock
holders. and no stockholder shall have
any right to inspect any book or ac-
count or document Of the corporation
except as conferred by law or au-
thoriZed by the hoard OF directors"
WOULD INVITE DIRECTORS
70 MANIPULATE TRIS7
In concluding his opinion. Mr.. Gar
nett says:
ITO allow the insertion Of the former
prov ision would invite the directors TO
deal with the trust property for their
own benefit. and To pocket the profits
arising from such contracts. upon the
false assumption that the stockholders
were estopped TO call such conduct into
question before the courts. TO allow
the insertion cf the latter provision
would empower the directors To prevent
the inspection OF the corporate books
and records for the discovery OF any
such doubtful transactions
ITO allow the insertion OF both
would, if il have any efficacy. give to
the corporations possessing such char
ter provisions rights and privileges
not only not conferred by the general
law. but directly in the teeth OF the
general law. and ultimately enable all