of the concern, generally known as by-laws. These must be fair and reasonable, treat all alike and not conflict with the charter.

The majority may, if permitted by charter or statute, make important changes in the business of the concern.

44. How many members must be present at a meeting to do business?

Generally the owners of more than half of the stock are a quorum.

If there is no law or by-law providing for the above plan, any number of the stockholders who attend a regularly convened meeting may do business. A majority means in proportion to shares, not number of persons.

45. What peculiar method of voting is sometimes used in electing directors?

Multiply each member's shares by the number of directors there are to be chosen, the product is the number of votes that a particular member may cast. This is not permitted in all

states.

46. How may an absent member vote?

By appointing a proxy, that is, a person to attend the meeting and vote for the absent member. The proxy is appointed usually by an instrument in writing.

47. What is the test of a member's right to vote? Generally the ownership of registered shares of stock and such shares of course may be voted by a legal representative. 48. Where are the members of a corporation to hold meetings?

Within the state where incorporated.

49. Who has a right to call a meeting?

The board of directors.

50. What remedy, if any, has a stockholder if the officers of the corporation whose duty it is to call meetings refuse to do so?

They may be compelled to do so by mandamus at the instance of a stockholder who is injured by reason of such failure.

51. In what manner is a meeting called?

There is generally a fixed time and place for regular meet

ings and no notice to members is necessary unless something out of the usual order is to be done. If a special meeting is held all members must be notified, the notice containing full particulars as to time, place and purpose.

52. What are the essentials of a notice of a meeting?

There generally are three: (1) the precise time, (2) the place and (3) the business proposed to be transacted. It must be served a reasonable time before the meeting is to be held.

53. What is required to render one eligible to the office of director?

Usually the ownership of stock but in New York the certificate of incorporation or the by-laws may provide otherwise.

54. How long do the directors remain in office?

Until a successor qualifies. The expiration of their term, if no one has yet been chosen to succeed them, does not release them from the performance of the duties of director.

55. How many directors are necessary to constitute a quorum?

Usually a majority and they must act in person, not being permitted to delegate their authority to another.

Directors must have due notice of meetings.

When the meeting is properly called and a majority attend, that majority may proceed to transact business. If a majority are present, a majority of that majority bind the board and the corporation, although they are a minority of the whole board.

56. What authority has the board of directors?

In a general way to direct the business affairs of the corporation but radical or important changes must be made by the shareholders.

57. Who are the officers of a corporation?

The president, who presides over the board of directors, the secretary, who has charge of the records, and the treasurer, who, under proper warrant, takes charge of and disburses the funds of the corporation, and such other officers as may be deemed necessary for the conduct of the business.

58. What property may a corporation own and hold? Such real or personal property as is necessary for its busiress purposes.

In a general way a corporation is restricted to the terms of its charter in acquiring and holding property. Should it exceed this the state may interfere.

This is equally true of its contracting power and should it exceed its authority as long as the contract is executory either party may avoid it.

59. Who shall answer for contracts beyond the authority of the corporation?

The board of directors may be sued by a stockholder or stockholders for damage resulting from such contracts, while the state may even annul the charter of a corporation for such acts.

60. Can a corporation do business outside of the state in which it was incorporated?

Yes, but in general it must conform to the laws of both states.

61. How may a corporation contract?

While it is called an artificial person it may contract usually the same as a natural person. In making sealed instruments it is permitted to adopt and use whatever form of seal it may choose.

The execution of the contract can only be lawfully done by some officer of the corporation who has been authorized to do so by a resolution previously adopted by its board of directors. The acknowledgment to be valid is required to be in a particular form.

62. What is the liability of a shareholder for corporate debts?

The rule cannot be strictly stated as this varies with the statutes of different states. In some for only the paid up par value of the shares, in others for the entire debts of the company, in still others for an assessment equal to the paid up par value of the shares and yet in others for only a certain class of claim as the claim of a laborer. A shareholder may be individually liable where he has not paid in his subscription or where the stock was paid in and he has been a party to some fraud whereby the capital was impaired to the detriment of creditors.

In some states, as in New York, no action can be brought against a stockholder for any debt of the corporation until judgment therefor has been recovered against the corporation

and an execution thereon has been returned unsatisfied, in whole or in part, and the amount due on such execution shall be the amount recoverable with costs against the stockholder. And no stockholder shall be personally liable for any debt of the corporation not payable within two years from the time it is contracted, nor unless an action for its collection shall be brought against the corporation within two years after the debt becomes due; and no action shall be brought against a stockholder after he shall have ceased to be a stockholder for any debt of the corporation, unless brought within two years from the time he shall have ceased to be a stockholder.

63. What dividends may a corporation declare?

Such dividends as may arise from actual profits but it could not under the guise of profits distribute among the stockholders all or any of its capital stock.

64. Who has a right to declare a dividend?

That power generally belongs exclusively to the board of directors.

65. What choice has the board of directors in disposing of the profits of the corporation?

They may, if acting in good faith, declare a dividend or accumulate the profits for a fund with which to pay debts or use the same to extend the business of the corporation.

66. Under what circumstances will the courts interfere with the action of the directors in declaring or in refusing to declare a dividend?

Only when they are guilty of a wilful abuse of their discretionary powers, of bad faith or of a neglect of duty.

67. What shareholders are first entitled to a dividend? Those who own preferred stock, that is, not shares of common stock but stock that has been issued at a time when the company is in a financial crisis and the purchasers were offered an inducement in this kind of stock.

68. How may a dividend be made payable?

Either in cash or due at some future time and if necessary may be sued for by the shareholder after it has been declared.

69. When may the refunding of a paid dividend be compelled?

When there have been no profits and a dividend was de

clared with the intention of defrauding creditors and such dividend is necessary for the payment of company debts.

70. What is a stock dividend?

It is a placing of the profits in the issue of new shares of stock. It gives to a stockholder more shares but the total value of his shares remains the same.

71. When is a stock dividend lawful?

When an amount of money or property equivalent in value to the full par value of the stock distributed as a dividend has been accumulated and is permanently added to the capital stock of the corporation.

72. What are the circumstances under which stock dividends are declared?

Usually when improvements of the corporate property or extension of the business have been made out of the profits earned. It is also sometimes done when the corporate plant has increased in value and it appears better to issue new stock to represent the excess of value than to sell the increase and declare a cash dividend.

73. What is meant by a scrip dividend?

It is a dividend of certificates giving the holder certain rights which are specified in the certificate itself.

74. When are such dividends usually declared? When the company has profits which are not in the shape of money, but are in other forms of property, and the company wishes to anticipate the time when the property may be sold for cash and the cash distributed by a money dividend.

75. When may a corporation lawfully pay a dividend to a person who is not the owner of stock therein and be protected in such payment?

When the stock is registered in the name of the person to whom the dividend is paid and the corporation has no notice of the transfer of the stock to the person who in fact is the owner of it.

76. Can the corporation apply the dividend in liquidation of an indebtedness of the stockholder to it?

It can. If the corporation is sued by the stockholder for his dividend the former may set up the debt by way of set-off or counterclaim.