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The 1898 amendment of Section 8 of the Revision providing for the contents of the certificate of incorporation must not be passed over without mention. The power given to incorporators in the certificate of incorporation to insert any provision, creating, defining, limiting and regulating the powers of the corporation, the directors and stockholders, is important. (See Notes, pp. 8, 21, 22.)
Taken as a whole the scheme of organization as contained in the certificate of incorporation is largely left to the incorporators. Within certain clearly defined limits parties may by their certificate of incorporation obtain what is practically equivalent to a special act of the Legislature. With the choice of powers, objects and purposes invested in the incorporators, the certificate of incorporation is no longer the mere record proof of incorporation, it is the foundation of the corporate structure.
All corporations do not possess equal powers because incorporated under the same act. The extent of their powers and privileges is largely dependent upon the certificate of incorporation.
The by-laws are under the statute a collection of semi-private rules intended to provide for the conduct of the business of the company according to the general system agreed to by the stockholders, as manifested by the certificate of incorporation.
Stockholders are thus permitted to delegate and determine and qualify the powers of the directors and officers elected to carry on the business of the company.
The liability of officers and directors is clearly defined and can result only from the making of a statement known to them to be false at the time it was made.
The law of the State of New Jersey is singularly free from pitfalls and ambiguities leading to personal liability of stockholders, officers and directors, and stockholders and officers obtain in the fullest sense limited liability.
With respect to the issuance of stock for property purchased, New Jersey has avoided the danger which the laws of many other states have created for holders of such stock. It has eliminated the question of the value of property for which stock is issued, standing by itself, and with the single exception of cases in which there is absolute fraud on the part of the directors there is no liability upon the holders of stock issued for property purchased.
As it is a simple and easy process to incorporate, so, equal facility is given the stockholders to dissolve the corporation without recourse to the cumbersome and expensive process of judicial procedure so common to other states. As a corporation is created by the filing of a voluntary certificate with the Secretary of State so it may be dissolved by the filing in the Secretary of State's office of a certificate signed by all of the stockholders.
Finally, with regard to the following pages, there has been no attempt to display learning or erudition, but to give in a concise and practical form information as to the organization and subsequent management of private companies under the Laws of New Jersey.
The writer has attempted to answer in a practical way some of the many questions which have come before him during some years of active practice in relation to such companies.
The reported cases affecting private companies have been collated and arranged under appropriate headings.
The derivation of each section of the law is sought to be traced, the purpose being to show the origin and evolution of each section to the end that many matters otherwise in doubt might become clear.
The writer is under many obligations to the Hon. George Wurts, the Secretary of State of New Jersey, to the AssistantSecretary of State of New Jersey, Hon. A. H. Rickey, and as well to the chief Corporation Clerk, John W. Brooke, Esq.
In the analysis and compilation of authorities he has had the assistance of Mr. John S. Parker, of the New York Bar.
Notwithstanding the care bestowed upon the work and the desire to make it acceptable and useful to the profession, it is not assumed that error has always been avoided, or that the work is free from fault.
JAMES B. Dill. May 1, 1898.
4. Charters subject to repeal.
II.- Formation, Constitution, Alteration, Dissolution.
26a.* Incorporators may amend certificate of incorporation before pay-
ment of capital.
and name of agent.
* For convenience of reference, certain supplementary acts have been given arbitrary
section numbers and inserted at appropriate places in the body of the Act Concerning
Corporations." These sections are Nos. 26a, 28a, 43a and 87a. Arbitrary section num-
bers have in like manner been given to the act relating to the reorganization of corpora-
tions (Sec 150 et seq., p. 1), to the acts relating to franchise taxes (Sec. 200 et seq., p. 114).
and to certain miscellaneous acts (Sec. 230 et seq., P. 126).
52. False certificate; penalty for making.