of a temporary clerk and by the election by ballot of three or more directors who are subscribers for the stock, and shall adopt by-laws for the regulation of the affairs of the corporation.

Commencement of Business; Certificate of Organization. No such corporation shall commence business until at least fifty per cent. of its authorized capital stock has been subscribed for by bona fide subscribers; nor until at least twenty per cent. of such subscriptions has been paid in, which payments shall in every case aggregate at least one thousand dollars; nor until its directors and officers have been duly elected and its by-laws adopted; nor until a majority of its directors have caused to be filed a certificate of organization, setting forth: (1) the amount of the authorized capital stock, the number of shares into which it is divided, and the par value of such shares; (2) the amount of each class of stock subscribed for; (3) the amount paid thereon in cash; (4) the amount paid thereon in property other than cash, and the character of such property; (5) the amount paid on each share of stock which is not paid for in full; (6) the name, residence, and address of each of the original subscribers, with the number and class of shares subscribed for by each; (7) that the directors and officers of the corporation have been duly elected, and that its by-laws have been adopted; (8) the name, residence, and postoffice address of each of its officers and directors. A copy of such certificate, duly approved by the secretary of state and certified under his hand and the seal of the state, shall be prima facie evidence that such corporation has been duly organized and is duly authorized to exercise all of its corporate powers.

Directors; Term; Quorum; Report. The property and affairs of every such corporation shall be managed by three or more directors, who shall be stockholders, and shall be chosen annually by the stockholders, at such time and place as may be provided by the by-laws. The directors shall hold office for one year and until others are chosen and qualified in their stead, and may fill any vacancy in their board for the unexpired portion of the term. A majority of the directors shall constitute a quorum for the transaction of business. At least once in each year they shall make a full and detailed report of the financial condition of the corporation to its stockholders, which report shall be filed with the treasurer of the corporation and be subject to the inspection of the stockholders at all reasonable times.

Officers. The directors shall choose from among their own number a president and shall appoint a treasurer, a secretary and such other officers as the bylaws shall prescribe, who shall hold their respective offices until the next annual meeting and until others are chosen in their stead. The same person may fill the office of president and treasurer.

Corporation Organized. When the formalities above set forth have been complied with, the corporation is then organized and in possession of its charter. Corporations for educational, social, charitable purposes, in general require no capital stock, and the statutes provide that the certificate for these need make no mention of that feature. Special additional requirements are made for railroad, for insurance, for savings bank corporations, and the statutes governing each business must be critically examined and literally followed.

Massachusetts Statute. In Massachusetts the requirements in detail differ somewhat from those of Connecticut, and there is also an important

difference in the order of procedure, which the following extracts from the statutes illustrate:

SECTION 7. Three or more persons may associate themselves by a written agreement of association with the intention of forming a corporation under general laws for any lawful purpose which is not excluded by the provisions of section one to buy and sell real estate or to distil or manufacture intoxicating liquors. SECTION 8. The agreement of association shall state:

(a) That the subscribers thereto associate themselves with the intention of forming a corporation.

(b) The corporate name assumed.

(c) The location of the principal office of the corporation in the commonwealth, and elsewhere in the case of corporations organized to do business wholly outside the commonwealth.

(d) The purposes for which the corporation is formed and the nature of the business to be transacted.

(e) The total amount of the capital stock of the corporation, which shall not be less than one thousand dollars, to be authorized; the par value of the shares, which shall not be less than five dollars; the number of shares into which the capital stock is to be divided, and the restrictions, if any, imposed upon their transfer; and, if there are to be two or more classes of stock, a description of the different classes and a statement of the terms on which they are to be created and of the method of voting thereon.

(f) Any other provisions not inconsistent with law for the conduct and regulation of the business of the corporation, for its voluntary dissolution, or for limiting, defining or regulating the powers of the corporation, or of its directors or stockholders, or any class of stockholders.

(g) The subscriber or subscribers by whom the first meeting of the incorporators shall be called.

(h) The names and residences of the incorporators and the amount of the stock subscribed for by each.

SECTION 9. The first meeting of the incorporators of a corporation created by special law shall, unless such law otherwise provides, be called by a notice signed by a majority of the persons named in the act of incorporation; and the first meeting of the incorporators of a corporation organized under general laws shall be called by a notice signed either by such subscriber to the agreement of association as may be designated therein or by a majority of the subscribers to such agreement; and such notice shall state the time, place and purposes of the meeting. A copy of such notice shall, seven days at least before the day appointed for the meeting, be given to each incorporator or left at his residence or usual place of business, or deposited in the post office, postage prepaid, and addressed to him at his residence or usual place of business, and another copy thereof, and an affidavit of one of the signers that the notice has been duly served, shall be recorded with the records of the corporation. If all of the incorporators shall in writing, indorsed upon the agreement of association, or, in the case of a corporation created by special law, upon the charter or a certified copy thereof, waive such notice and fix the time and place of the meeting, no notice shall be required.

SECTION 10. At such first meeting, or at any adjournment thereof, the incorporators shall organize by the choice, by ballot, of a temporary clerk, who shall be sworn, by the adoption of by-laws and by the election in such manner as the

by-laws may determine of directors, of a treasurer, of a clerk and of such other officers as the by-laws may prescribe. The temporary clerk shall make and attest a record of the proceedings until the clerk has been chosen and sworn, including a record of such choice and qualification.

SECTION 11. A majority of the directors who are elected at such first meeting shall forthwith make, sign and make oath to articles setting forth:

(a) A true copy of the agreement of association and the name of the subscribers thereto, or of the act of incorporation, as the case may be.

(b) The date of the first meeting and of the successive adjournments thereof, if any.

(c) The amount of capital stock then to be issued; the amount thereof to be paid for in full in cash; the amount thereof to be paid for in cash by instalments and the instalment to be paid before the corporation commences business; and the amount thereof to be paid for in property. If such property consists in any part of real estate, its location, area and the amount of stock to be issued therefor shall be stated; if any part of such property is personal, it shall be described in such detail as the commissioner of corporations may require, and the amount of stock to be issued therefor stated. If any part of the capital stock is issued for services or expenses, the nature of such services or expenses and the amount of stock which is issued therefor shall be clearly stated.

(d) The name, residence and post office address of each of the officers of the corporation.

The directors who sign such articles shall be jointly and severally liable to any stockholder of the corporation for actual damages caused by any statement therein which is false and which they know to be false.

SECTION 12. The articles of organization and the record of the first meeting of the incorporators shall be submitted to the commissioner of corporations, who shall examine them and who may require such amendment thereof or such additional information as he may consider necessary. If he finds that the articles conform to the provisions of the preceding sections relative to the organization of the corporation, he shall so certify and indorse his approval thereon. Thereupon, the articles shall, upon payment of the fee hereinafter provided, be filed in the office of the secretary of the commonwealth, who shall cause them and the indorsement thereon to be recorded, and, except in the case of a corporation created by special law, shall thereupon issue a certificate of incorporation in the following form:

[which need not be stated here]

The secretary shall sign the certificate of incorporation and cause the great seal of the commonwealth to be thereto affixed, and such certificate shall have the force and effect of a special charter. The existence of every corporation which is not created by special law shall begin upon the filing of the articles of organization in the office of the secretary of the commonwealth. The secretary of the commonwealth shall also cause a record of the certificate of incorporation to be made, and such certificate, or such record, or a certified copy thereof, shall be conclusive evidence of the existence of such corporation.

SECTION 17. The business of every corporation shall be managed and conducted by a president, a board of not less than three directors, a clerk, a treasurer and such other officers and such agents as the corporation by its by-laws shall authorize.

SECTION 18. The directors, the treasurer, the clerk and such other officers as the by-laws may prescribe shall be elected annually by and from the board of directors. Every director, unless the by-laws otherwise provide, shall be a stockholder.

SECTION 19. The board of directors may exercise all of the powers of the corporation, except such as are conferred by law, or by the by-laws of the corporation, upon the stockholders. A corporation may, by its by-laws, provide for an executive committee to be elected from and by its board of directors. To such committee may be delegated the management of the current and ordinary business of the corporation, and such other duties as the by-laws may prescribe.

SECTION 20. There shall be an annual meeting of the stockholders and the time and place of holding it, and the manner of conducting it, shall be fixed by the by-laws.

First Meeting. In Massachusetts, the "first meeting" is held previous to filing the articles of incorporation, in Connecticut after such filing. The detail of procedure also is different. In other States, the procedure, while similar to one or the other examples shown above, will nevertheless differ enough so that a critical examination of the statutes is necessary for any State in which incorporation is to be effected.

The minutes of the "first meeting" and the records of all later meetings of the corporation whether regular or special should show all formal and necessary acts, and in a form which will be legally conclusive.

Advance Preparation for Meeting. It is desirable that all the business necessary to the first meeting, or any formal meetings necessary to incorporation, shall be prepared in advance, including the making of all motions that are essential. Not only is time thus saved but greater certainty of action is secured. The lawyer, if any, who is attending to other details should attend and direct the meeting.

It has been held in some States that one of the incorporators may not act as notary and take the acknowledgment of the others. In other States this has been done without objection from the State officials.

Ordinarily printed blanks can be had which much facilitate the framing of the formal documents.

By-Laws. The preparation of the by-laws is of great importance, and a book of forms and the by-laws of similar corporations will be of great value, but should be supplemented by careful and thoughtful consideration as to the requirements of the corporation to be formed.

Form of Charter. In some States a formal charter is issued under the great seal of the State; in others the articles of incorporation are presented, certified, and filed, and constitute the charter; a duly certified copy is then evidence of the existence of the corporation.

Objects. The objects of the corporation must be set forth in the articles of incorporation. In some cases it is required, and in general it is

desirable, to specify the statute under which organization is sought. Sometimes there is a choice as to the statute under which organization shall be effected, and careful deliberation may sometimes be well worth while. The objects stated should be sufficiently comprehensive so that some later desired action on the part of the corporation will not be found to lie outside the scope of corporate powers as defined by the objects specified.

Two Policies as to Objects. There are two policies practiced in setting forth the objects. One is to state them in very general but comprehensive terms; implied powers are then added by law. Another is to be very specific; the danger in this is that the specifying of a large number of objects may have the effect of precluding any not specified. When general terms are used, a clause like the following is sometimes added:

In furtherance of, and not in limitation of, the objects and purposes hereinabove stated, and the general powers conferred by law, it is hereby expressly provided that this corporation shall have the following powers; that is to say:

Powers. The powers of the corporation rest not only upon the articles of incorporation, but upon such parts of the State Constitution and such parts of the statutes as are applicable both as to extent and limitations, together with such powers as the Common Law adds as implied and necessary.

The powers are then: 1. Those expressly given. 2. Impliedly as incidental to express powers. 3. Impliedly as necessary to corporate existence.

Implied Powers. The implied powers added by law are not merely those necessary and indispensable, but also those appropriate, convenient, and suitable for the purposes set forth. The corporation has thus powers to contract, grant, receive, sue and be sued; to purchase, hold, lease, or sell lands; to have a seal; to make by-laws and amend them; to borrow money; to execute a bond or a note, also to compromise claims, and submit disputes to arbitration; to endorse for another for accommodation; to draw, endorse, or accept bills of exchange; to make by-laws; to maintain continuous succession during its period of existence; as well as other powers not mentioned here. There is a presumption that contracts of a corporation are within its powers; if this is questioned, the burden of proof is on him who objects.

Powers from Statute. The statute often specifies many powers which the Common Law had already recognized; but the statute often confers others which the corporation would not have unless expressly granted. The following powers of business corporations are definitely specified in the statutes of Massachusetts: