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Incorporation Fees*
Amendment of Certificatet

Every corporation organized under this act may change the nature of its business, change its name, increase its capital stock, decrease its capital stock, change the par value of the shares of its capital stock, change the location of its registered office in this State, extend its corporate existence, create one or more classes of preferred stock, and make such other amendment, change, or alteration as may be desired, in the general manner provided in the New Jersey law, except that it is provided, that such certificate of amendment, change, or alteration shall contain only such provision as it would be lawful and proper to insert in an original certificate of incorporation made at the time of making such amendment; and provided further that in case the corporation by such amendment proposes to undertake business which is not of the same general character as that provided in the original certificate, or creates one or more new classes of stock, or gives to certain classes of stock or bonds new privileges, or increases the amount of the capital stock, a vote of fourfifths of each class shall be required, and any dissenting stockholder may declare his dissent in writing at the meeting called for the purpose of amendment, and may sell to the company and the company shall buy for cash his holdings of stock at a valuation appraised in the manner provided for dissenting stockholders in case of merger or consolidation of companies. If such dissent is declared in writing at the meeting, the subsequent proceedings for appraisement and

*These fees are placed at the rates now paid in New Jersey.

tWhile the interests of minority stockholders have been fully protected by requiring a four-fifths vote and the purchase for cash at an appraised valuation of the stock of dissenting stockholders, it is recognized that a few ought not to be permitted to block the plans of a large majority.

purchase may be enforced at the instance of either party.

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Reincorporation Under Act*

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Act Optional

All companies existing at the coming into force of this act, and all companies hereafter organized under the present business corporation laws, unless they elect to put themselves under the provisions of this act in the manner prescribed in the preceding sections, shall remain subject to the other corporation laws relating to them, as if this act had not been passed.

Directors

No by-laws adopted by the board of directors regulating the election of directors or officers shall be valid, unless a copy thereof shall be delivered or mailed to each stockholder of record at least thirty days before such election.

Every stockholder shall be entitled to receive, and every corporation by its officers and board of directors shall be bound to furnish, any stockholder upon request, at the expense of the corporation, a copy of the certificate of incorporation and of the by-laws.

Any corporation organized under this act may classify its directors in respect to the time for which they may hold office, the several classes, however, to be, as nearly as is numerically possible, equal in number and elected for different terms. Provided,

*The intention was to encourage foreign corporations, wishing to do a conservative business, and domestic corporations of like character, to reincorporate under this act. This section would make the process a very simple one.

†The act was to be an optional one. A radical revision of a general corporation act, without due warning, could not fail to work injustice in many cases. A good law which should encourage sound business would throw discredit upon unsound methods. Later, other acts might, with due warning, be repealed.

1. That no class shall be elected for a period shorter than one year except at the first election, for the first year, or for more than five years, and

That the term of office of at least one class shall expire each year.

2.

Any corporation which shall have more than one kind of stock, by making suitable provision in its certificate of incorporation, may confer the right to choose the directors upon the stockholders of any class or classes, or upon the bondholders, to the exclusion of others, subject, in case this power is granted by amendment, to the right of minority stockholders provided in the previous section regarding amendments to the certificate of incorporation.*

Duties of Directors Regarding Elections

The directors of every company organized under this act shall cause the registered agent, or other transfer agent designated by them as having charge of the said books, to make, at least ten days before every election after the first election, a full, true, and complete list, arranged in alphabetical order, of all the stockholders entitled to vote at the ensuing election, with the post-office addresses, not the registered office of the corporation, of each, and the number of shares of each kind of stock held by each, which list shall, at all times during the usual business hours, be kept at such registered office open to examination by any stockholder.

The board of directors shall produce at the time and place of every election of directors, such books and such list, there to remain during the election. A copy of such list shall be mailed to any stockholder within five days after his request is received, upon payment in advance of cost of copying at not more than ten cents per folio of one hundred words.

*Through the classification of directors, incorporators at times extend their power through a long series of years. These provisions, it is thought, would prevent many such abuses, while retaining the benefits of classification.

The neglect or failure of the said directors of a corporation with a capital stock of five hundred thousand dollars or upward to cause the said books so to be kept, or to cause the said list to be so made and filed, or to produce the said books or said list at the time of any election, shall render them ineligible to hold office as directors, or any other office in the company for the period of one year thereafter.*

In addition to the penalty above named for failure the sum of one hundred dollars each may be collected from any or all of the directors at the suit of any stockholder, for his own use. Delinquent directors of corporations with a capital stock of less than five hundred thousand dollars shall be subject to the last named penalty only.

Officers†

Besides the usual officers an auditor or auditors shall be chosen by ballot by the stockholders at their annual meeting, and no person or firm or corporation, a member, director, or officer of which is a director of the company to be audited shall be eligible. Corporations organized under this act with a capital stock of one hundred thousand dollars or upward, must select as auditor or auditors a person, firm, or corporation duly qualified and engaged in the practice of public accounting and auditing in this state. And the auditor or auditors selected by a corporation whose capital stock amounts in all to one million dollars or more must have his or their financial responsibility secured by a bond of fifty thousand dollars of some surety company authorized

*This penalty was introduced in 1900 into the Corporation Law of New Jersey, and has already proved very effective in preventing negligence in carrying out the provisions of that law.

†The provisions regarding auditors are intended to protect shareholders against misuse of power by directors. Every effort is made to identify the interests of auditors and shareholders. The provisions regarding bonds of auditors will make their responsibility a real one. The further provisions regarding officers are likewise needed to hold them responsible to shareholders.

to do business under the insurance laws of this state.

Corporations with five hundred thousand dollars capital stock or upward must appoint a general counsel, who shall be counted in the list of officers.

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Any stockholder shall be entitled upon payment of cost of copying at not more than ten cents a folio of one hundred words, to a statement at any time of all salaries paid to any officer or officers of the corporation, together with a statement of all contracts or agreements in which any officer of the corporation may be interested either as a contracting party with the corporation or as an officer or stockholder in any other corporation contracting with the company.

If any certificate made, or any public notice given by the officers or directors of any corporation in pursuance of the provisions of this act shall be false in any material representation, all the officers or directors who shall have signed the same, knowing it to be false, shall be jointly and severally liable for all the debts of the corporation contracted while they were directors or officers thereof, as a penalty enforceable in the courts of this state only.

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Meetings

The first meeting and the annual meetings of stockholders must be held at the registered office; directors' meetings may be held elsewhere.

At the regular annual meeting, for which provision must be made in the certificate of incorporation or in the by-laws, the shareholders' balance-sheet prepared and certified by the auditors as provided later must be presented to the shareholders. If the directors or other officers of any corporation organized under this act shall fail or neglect to call in the manner provided by law the annual stockholders' meeting at the time appointed in the certificate of incorporation or in the by-laws and shall not hold the same accordingly there

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