tribute a portion of the company's capital among the shareholders in the form of dividends, etc. existing creditors would have a right to follow the funds so distributed; they would also be entitled to recover compensation from the directors who were guilty of the diversion of capital. 7. If the shareholders should make a distribution of capital among themselves in the form of a dividend, with the intention of continuing the corporate business, they would be liable in equity, to future as well as existing creditors, to restore the amount of capital abstracted, if necessary to pay their claims in full. 8. Creditors can only insist on contribution of the capital provided by the charter. 9. Yes. 10. In some cases it is, in others it is not. If the shares are fully paid and the transfer bona fide, it would discharge the transferror, usually the liability follows the shares, however, it all depends upon the statutes which differ in the different states. 11. Sometimes the liability imposed is a general one for all the company's debts, as the statutes of the different states vary so much, reference must be made to each, on this point. 12. No. Depreciation. 1. What is depreciation ? 2. Do you advise merchants, manufacturers, etc. to write off a depreciation at regular intervals? 3. Should every business write off the same rate of depreciation ? 4. What rate per cent should be written off each year for depreciation? 5. Do not investors frequently demand that a suitable depreciation be written off the assets in making investigations? Depreciation. Answers. 1. Depreciation is the actual loss upon assets which are diminishing in value, or it is an estimated sum charged against gross revenue, which amount is con sidered sufficient to replace the capital used up or reduced by wear and tear. 2. I do. Every well regulated establishment should write off a depreciation every year. As a matter of fact, the investing public expect to find such deductions in the financial statements of all large concerns, especially those whose stocks are listed on the Exchange. 3. No. In some lines, a very small depreciation will suffice, but in case of large manufacturing plants where a great deal of machinery is used, the case is far different. In one case, goods may be slightly soiled by being handled, in the other it might be almost worthless by wear and tear. 4. Many different views prevail as to the best way of dealing with this question, and owing to trades and processes of manufacture varying so widely, it is impossible to lay down invariable rules. This should be left to the judgment of those most intimately acquainted with the business. The main thing is that something be written off each year, so as not to show full value. Let us suppose the life of a machine is ten years, then ten per cent should be written off each year, so that at the end of ten years, the whole value of the machine will not be charged as a loss in the last year. 5. Many do, and when they find that none has been made, they go no further. Whatever your business may be (if it is one in which anything depreciates) I would advise you to make as close calculation as possible for depreciation, and write such amount off each year. This subject if fully treated with methods of calculation in "Keister's Corporation Accounting and Auditing." Directors. 1. Have the directors power to increase or reduce the capital stock of the company? 2. Can the directors make, alter or annul by-laws without special authority? 3. May the directors assign corporate assets for the benefit of its creditors? اما 4. Is a corporation bound by the declarations of individual directors? 5. Have directors power to release subscribers to corporate shares? 6. Can the directors cancel a valid forfeiture of shares? 7. Have directors power to fix a price of shares at less than par value? 8. Have directors power to make assessments? 9. Are directors agents for the corporation, or for the shareholders? 10. Have directors power to surrender franchises without authority of the stockholders? 11. Please mention a few things directors can not do? 12. Have directors the right to inspect the books and records of the company? 13. Can the president revoke an act of the directors? 14. May a director or officer of a corporation be a trustee in a corporate mortgage? 15. May a director be appointed receiver? 16. Can directors vote at board meetings by proxy? 17. Is a majority of all the directors necessary to a quorum? 18. Are the acts at a board meeting without a quorum void? 19. Have directors power to exclude any of the board? 20. Is an assessment made by less than a quorum of directors void? 21. What acts do, and what do not require a vote of the directors? 22. What is the necessity of electing a board of directors? 23. Do directors serve until successors are chosen? 24. Have directors power to fill vacancies in the board? 25. Have directors power to remove members of the board? 26. What are the qualifications for the office of director? 27. How do directors stand as to the creditors of the company? 28. Have directors power to give away corporate bonds as a bonus? 29. Are directors allowed to make profits out of their trust? 30. Can directors buy shares from the company and resell them at a profit? 31. Can directors buy property for themselves and resell it to the company at a profit? 32. Can directors buy claims against the company at a discount and prove them for the full amount? 33. Can directors vote upon questions affecting their private interests? 34. Are directors liable to creditors for mere mismanagement? 35. Are directors liable for loss through negligence and inattention? 36. Are directors liable for mistakes of law and judgment? 37. Are directors personally liable for acts in excess of their authority? 38. Are directors liable for fraudulent over-issue of shares? 39. What is the liability of directors for paying dividends when the corporation is insolvent? 40. What is the liability of directors for issuing fraudulent share certificates? 41. Is the separate assent of a majority of the directors binding? 42. In what way must the directors act? 43. Have directors power to mortgage the corporate property? 44. Can directors give away the corporate assets? 45. Have directors the power to make an assignment for the benefit of creditors without the authority of the stockholders? 46. Can a by-law take away the power of stockholders to elect directors? 47. Can the directors accept a surrender of shares? 48. Can the directors of a corporation engage in a business in rivalry with that of the corporation? 49. Are directors liable to shareholders for failing to declare a dividend? 50. Can a director who is also a creditor of the corporation secure an advantage for himself over other shareholders? 51. Are the directors responsible for subscribing in the name of the corporation for shares of another corporation? 52. Are the directors liable to the company for damages for publishing false balance sheets? 53. Are directors personally liable for improperly approving a transfer of shares?' Directors. Answers. 1. The capital stock of a corporation cannot be increased or decreased by the directors unless authorized by statute. 2. Without statutory authority directors, trustees or managers cannot make, alter or annul by-laws, this can only be done by a majority of its members. 3. There is a great deal of authority claiming the right of directors of an insolvent corporation to make an assignment in good faith of all its assets to a trustee for the payment of its creditors, without the consent of its stockholders. As an assignment usually ends the corporation, this right of the directors is denied by some courts. The directors have no such power where the statute prescribes a different mode of winding up corporate affairs and liquidating its debts. 4. The declarations of a single director will not bind the corporation unless he is holding some office or exercising some agency under the corporation, in addition to his office as a director. The directors must act as a board. 5. They have not. 6. They cannot. 7. The directors of a corporation have no power whatsoever to fix the price of a stock differently from the manner in which it is fixed by its charter or articles of association; or to sell it for less than its par value. This would be a fraud on such of the stockholders as have paid in full for their shares. 8. They have. 9. The directors or trustees, by whatever name called, of a corporation are the agents selected by the |