The Richmond Virginian. (Richmond, Va.) 1910-1920, 1919-12-18

MANY requests having ncen made
of the state corpora ton commission
Tor information concerning tho pro-
Visions ~, ,e sassliritt,' or bite SKY
law ann now ttsis law acts as u nro~
friction a. lire nmbiic, II Is beiieTe5 that
the following brief resume may prove
10 be of general interest.
Tho corporation act adopted by the
Legislature Of 1898 was frankly de-
signed 10 attract corporations TO in
corporate in this state and to tncressa
the revenues of The state from tins
source. In this respect the act has
met all expectations and the revenues
derived from this source are very
large. hut an act pradicated upon such
a theory ~as naturally liberal in its
provisions and gave to corporations
large discretion as to the considera
lions In return tor which its stock
vas issued.
The interests Of prospective rur-
chasers of stock were theoretically
protected by requiring such corpora
tons. before issuing stock, to f1le with
the com ission statement showing
in detail the considsaa tons for which
such stock was proposed to be issued,
which statement Is omen to public In
'spoctton and is available To any per
son contemplating the purchase 1T
stock of Virginia corporation The
protection afforded to the public BY
This required publicity is, ho~ever,
largely theoretical. since the provisions
of the corporation act are urfamiiiar
TO many, and since tho provision
mentioned affords no protection in the
case of stock OF corporations char
tered in other states, but offered for
sale In this state.
To meet this condition and To fur
nish to the public a larger measure
of protection In the offer for sale Of
stocks appearing to be either frauiu-
lent or highly speculative in their
character, the legislature OF 1918
passed the act known as the blue
sky law. The purpose Of that act
as defined by the act itself is not to
prevent the sale OF speculative securt-
ties, but tn assure to prospective pur-
chasers adequate information. and an
honest application Of the proceeds OF
stock sales.
Heretofore. and particularly since
the discovery and exploitation of oil
In Texas and Oklahoma thousands Of
the people OF this commonwealth
have been made the innocent victims
of INSCRIPTIONS and designing men
who have taken advantage of native
honesty. credulity and unfamiliar ity
with financial matters. to dispose Of
worthless stocks and bonds. Through
the activities of persons thus engaged,
the savings OF years of labor have
been exchanged for absolutely worth
less paper. and the loss to the people
of this state has undoubtedly aggre-
gated very large SUM
Analysing the act itself. we find
enumerated certain classes of securi-
ties made subject to- the act and GER
tain other classes which are exempted
from its provisions. While 1t is not
always clear whether a proposition in
given case liz subject to the law
there are certain situate as TO which
there is no question. The most i'm
portaEt classes or stocks subject to
the act are:
I. Securities or oil and mining
propositions.
?. Securities In which speculative
clement, such as promotion. patents,
formulae, or good will largely figure
In other words. securities based on
Intangible" assets
3. Securities for which extraorGi-
nary claims are made III soliciting the
public, and nearly always
4. Securities personally peddiei
about by individuals
We find in section Of the act GER
tain securities mentioned which arr
act. They arc:
l. Securities of the United states.
or any foreign country: or any state
or territory: or amy taxing subdivision
OF any state or territory ot the United
States or any foreign country.
., Securities OF public service or
utilities corporations: or seeur ties 20
nior thereto. CAS- bonds OF the cot
porations)
J. Securities Of any national bank,
or any hank. trust company. or build
ing and loan association organized
under the laws OF Virginia
4. Securities not offered for sale 10
more than twenty FIVE persons in this
state.
6. Securities of domestic corpora
tions organized without capital stock
for religious or rharta BILE purposes.
g. Securities which do not come