stockholders to manage the ordinary affairs of the corporation, according to the charter, by-laws, rules and regulations.

10. They have not, unless the power is given them by statute.

11. A few things directors cannot do are these, they cannot issue accommodation paper, they cannot consent to the act of an officer in converting the funds of a corporation to his own use, they cannot delegate all their powers of management to an executive committee of their number, they cannot execute a lease which practically divests the corporation of all its property, etc.

12. Every director has a right to inspect the books and records of the corporation, in order to ascertain what the corporation is doing, a majority of the board cannot lawfully exclude a minority from this right.

13. The president of a corporation cannot revoke an act of the directors.

14. Yes.

15. Yes, but sometimes it is just as well not to do so. 16. No.

17.. A majority of all the directors is necessary, unless the charter, articles of incorporation, or a valid by-law confers that power upon a less number.

18. They are not void but voidable.

19. None whatever.

20. No.

21. The following acts are not of sufficient importance to require a vote of the directors: The making of ordinary contracts, the assignment of an account by its Secretary, the borrowing of money, and similar

acts.

The following acts do require the vote of the directors in order to make them valid. A mortgage of the corporate property, as security for a loan, an assignment of all the property of a corporation for the benefit of its creditors, etc.

22. The statutes do not only require it; but it is necessary for the government and management of the corporate affairs.

23. Nearly all statutes prescribe the directors elected, shall hold their offices for a stated period, and until their successors are elected and ratified.

24. No.

25. None whatever.

26. To be a director one musi be a bona fide shareholder, an Attorney in a suit against the corporation is not eligible as a director.

27. The assets of a corporation are a trust fund for its creditors, and its directors are the custodians and managers of that fund, they are in a sense trustees for such creditors, and in that character they have been held liable to creditors for breaches of trust.

28. Directors have no authority to give away its bonds as a bonus to its stockholders, nor give away its stock as a bonus to its bondholders, it has been done, however, and there are some unfortunate decisions upholding it, nevertheless it is against public policy.

29. They are not, such profits inure to the benefit of the corporation.

30. A director, even with the consent of the body of the corporation, cannot buy in shares of the company from one who is unable to pay for them, and then resell them at an advance and retain the profit.

31. If directors buy property for themselves and then resell it to the corporation at a profit they will be held to account to the corporation for that profit.

32. Not by any means.

33. It cannot be done with propriety, such action would be voidable at the instance of the company or shareholders.

34. Directors and officers of a corporation are not liable to creditors for mere mismanagement, unless they are made liable by the articles of incorporation or by statute.

35. They are.

36. No, not when acting in good faith.

37. Yes.

38. Yes.

39. In some States they would be liable to the corporation, in others they would be liable to creditors and in some others they would be liable to both. Dividends can be paid only out of profits.

40. They will be held liable to those who take the certificates in good faith and for value.

41. No.

42. Directors must act together as a board, at a board meeting.

43. In the regular course of business and for legitimate purposes they have.

44. Not in any way or by any means.

45. They have, unless the charter or governing statute enacts or implies the contrary.

46. Where the charter gives to the stockholders the power to elect the directors, the corporation cannot by a by-law, take away this power.

47. Directors have no power to accept a surrender of shares and release a shareholder, unless the power is expressly granted by statute or charter.

48. Good authority says it would not be a breach of trust to do so, if done in good faith.

49. In the absence of fraud, directors are not liable to shareholders for failing to declare a dividend. 50. No.

51. Yes.

52. No.

53. Yes, if they exercise their power corruptly.

Discount.

Questions.

1. Has a corporation power to sell its bonds at a discount?

2. Can a corporation issue its shares at a discount?

Discount.

Answers.

1. Yes, unless restrained from doing so by consti tutional provisions.

2. No.

Dissolution.
Questions.

1. How may a corporation become dissolved? 2. How may a partnership be dissolved?

3. Does an assignment for the benefit of creditors dissolve a corporation ?

4. Are preferred shareholders entitled to priority over creditors in dissolution?

5. Have preferred shareholders any priority over other shareholders in case of dissolution?

Dissolution.
Answers.

1. A corporation may be dissolved in four ways: 1. By an act of the legislature. 2. By the death of all the members. 3. By a forfeiture of its franchises. By a surrender of its charter.

4.

2. A partnership may be dissolved, 1. By the will of any partner. 2. The impossibility of going on. 3. The transfer of a partner's interest. 4. The occurence of some event which renders the partnership illegal. 5. Death. 6. Insolvency.

3. No.

4. No.

5. No.

Dividends.

Questions.

1. What is a dividend?

2. When does a dividend become a liability?

3. If a dividend has been declared, can a shareholder sue for it?

4. By whom is a dividend declared ?

5. Can a corporation appropriate an unpaid dividend?

6. If a dividend has been improperly declared, can it be reclaimed?

7. Can a corporation forfeit a dividend?

8. Can a corporation discriminate against its shareholders in respect to dividends?

9. Are directors liable to shareholders for failing to declare dividends?

10. Who bears the loss where a dividend is payable at a bank which fails?

11. Can dividends be declared and paid out of capital?

12. Are directors liable for improperly declaring dividends?

13. What are profits, to be divided?

14. Are stockholders liable to creditors for divi

dends fraudulently declared and paid?

15. Are stockholders liable to creditors for assets wrongfully withdrawn and divided?

16. Is a stock dividend legal?

17. Can a corporation issue bonds in lieu of cash dividends?

18. To whom do dividends belong?

19. Do undivided profits pass with the shares ? 20. Does a dividend declared, but not paid pass with a future transfer of shares?

21. Are preferred shareholders entitled to dividends if there are no profits to divide?

22. What are net earnings to be appropriated in dividends on preferred shares?

23. Do preferred shareholders participate with common shareholders in any surplus after receiving their preferred dividend?

24. When should a corporation not declare a dividend?

25. What is the liability for declaring dividends when the corporation is insolvent ?

26. Must a shareholder present his certificate in order to draw his dividend?

27. In case of transfers, who would be entitled to a stock dividend?

28. What scrip holders would be entitled to dividends, when there has been a successive ownership?

Dividends

Answers.

1. A dividend is a certain portion of the net profits and surplus funds of a corporation which has been actually set aside by a valid resolution of the board of directors, or by the stockholders at a corporate meeting, for distribution among the shareholders according to their respective interests.

2. A dividend becomes a liability of the corporation just as soon as it has been regularly declared.

3. As a dividend becomes a liability when declared, a shareholder may sue and recover the same at law. 4. In nearly all corporations this authority is given to the directors.

5. No.

6. A dividend paid out of the capital stock can be reclaimed by the creditors.

7. After a dividend has been lawfully declared, it cannot be forfeited or confiscated at the mere pleasure of the company.