BUSINESS CORPORATIONS LAW CHAPTER 4 OF THE CONSOLIDATED LAWS Article 1. Short title (§ 1). 2. General provisions (§§ 2-16). 3. Co-operative corporations (§§ 25-38). 4. Laws repealed; when to take effect (§§ 50-51). Article 3 is new, being inserted by L. 1913, ch. 454. The former article 3 was renumbered article 4 by the same chapter. ARTICLE 1 SHORT TITLE Section 1. Short title. § 1. Short title. This chapter shall be known as the "Busi ness Corporations Law." Scope of act.-"In the revision of the corporation laws it appears to have been the purpose to include in the General Corporation Law provisions which would apply to corporations generally; in the Stock Corporation Law, provisions that relate to or affect all stock corporations; and in the Business Corporations Law, particular provisions that would affect that class of corporations." Adams v. Wallace, (1903) 82 App. Div. 117, 123, 81 N. Y. S. 848. Relation to other corporation laws.— Though this chapter of the Consolidated Laws contains all the statutory provisions pertaining to business corporations as a class, it is not complete in the sense that it embraces every legislative enactment the provisions of which are applicable to corporations of that character. For such additional measures which govern business and other corporations alike, reference must be had to the General Corporation Law and the Stock Corporation Law. Adams v. Wallace, (1903) 82 App. Div. 117, 81 N. Y. S. 848. "The General Corporation Law, the Stock Corporation Law, and the Business Corporations Law were all passed at one time, and were a part of a single scheme of legislation, and must be read and construed together." People v. James, (1896) 5 App. Div. 412, 421, 39 N. Y. S. 313. See also Bank of Metropolis v. Faber, (1896) 1 App. Div. 341, 37 N. Y. S 423, affirmed 150 N. Y. 200, 44 N. E. 779. So the provisions of this chapter relating to matters embraced in either the General Corporation Law or the Stock Corporation Law are to be construed as supplemental to, and equally applicable with, the provisions contained in those acts, provided they are not in conflict therewith. General Corporation Law, § 321. Where there is a conflict with any of the provisions of the General Corporation Law or the Stock Corporation Law, those acts shall not be deemed to apply. General Corporation Law, § 321. The original Business Corporations Law was chapter 41 of the “General Laws," being L. 1890, ch. 567, amended by L. 1892, ch. 691. [9] 2-a. Incorporating for the purpose of conducting law 8. Restrictions upon commencement of business. 5. Payment of capital stock. 6. 7. 8. 9. Full liability corporations. Consolidation of corporations. Submission of consolidation agreement to stockholders. Powers of consolidated corporations. 10. Transfer of property of old corporations to consolidated corporations. 11. Rights of creditors of old corporations. 12. District steam corporations. 13. Examination of meters by agent of district steam corporations. 14. Entry by agent of district steam corporation to cut off steam. 15. Water companies. 16. Improvement corporations; right of condemnation. § 2. Incorporation. Except as provided in section two-a of this chapter, three or more persons may become a stock corporation for any lawful business purpose or purposes other than a moneyed corporation, or a corporation provided for by the banking, the insurance, the railroad and the transportation corporations laws, or an educational institution or corporation which may be incorporated as provided in the education law, by making, signing, acknowledging and filing a certificate which shall contain: 1. The name of the proposed corporation. 2. The purpose or purposes for which it is to be formed. 3. The amount of the capital stock, and if any portion be preferred stock, the preferences thereof. 4. The number of shares of which the capital stock shall consist, each of which shall not be less than five nor more than L. 1909, ch. 12 Incorporation $2 one hundred dollars, and the amount of capital not less than five hundred dollars, with which said corporation will begin business. 5. The city, village or town in which its principal business office is to be located. If it is to be located in the city of New York, the borough therein in which it is to be located. 6. Its duration. 7. The number of its directors, not less than three. 8. The names and post-office addresses of the directors for the first year. 9. The names and post-office addresses of the subscribers to the certificate, and a statement of the number of shares of stock which each agrees to take in the corporation. Any certificate of incorporation filed, prior to April twentysecond, eighteen hundred and ninety-six, under the provisions of the business corporations law theretofore in force which shall contain the names and post-office addresses, either of the subscribers to the stock or of the subscribers to the certificate, and a statement of the number of shares of stock which each agrees to take in the corporation, shall be deemed to have complied with the requirements of section two, subdivision nine of said law. If meetings of the board of directors are to be held only within the state the certificate or by-laws must so provide. Amended by L. 1909, ch. 484. The amendment was inserted in the opening paragraph, beginning with " except" and ending with "chapter." The next to the last sentence of this section was taken from L. 1896, ch. 369, § 2. "That act," declared the consolidators, "construed L. 1890, ch. 567, § 2, subd. 9, as amended by L. 1892, ch. 691, § 2, subd. 9, by making it certain that subscribers to the certificate were referred to. Under the subdivision as theretofore existing it was uncertain whether subscribers to certificate or to stock were intended. The matter inserted was intended to cure defects occasioned by the uncertainty mentioned and it was deemed wise to consolidate this curative matter in the general law to which it relates rather than have it exist as an independent act. Matter has been rewritten without change in substance or effect. Last sentence omitted from section because provided for in General Corporation Law, § 10." Consolidators' Report 326. The last sentence of this section was added from the Business Corporations Law of 1890, as amended by L. 1904, ch. 446, § 1; L. 1907, ch. 646, § 1. It was first inserted in this section by L. 1904, ch. 446, § 1, and has since been carried through the various amendments, together with a provision (added by L. 1895, ch. 671) authorizing the statement in the certificate of incorporation of additional matters concerning the management of the corporation and the limitation of its powers, this provision being omitted from the Business Corporations Law on the recommendation of the consolidators, and included 'n section 10 of the General Corporation Law, $2 Incorporation L. 1909, ch. 12 1. Oreation of business corporations: 1. Incorporators. 2. Purposes for which business corporations may be formed. 8. Formal requisites of certificate: a. Making, signing, and acknowledgment. b. Filing of certificate. 4. Contents of certificate: b. Name of corporation. c. Purposes of incorporation. d. Statement as to stock. e. Location of principal business office and duration of corporate existence. 1. Statement as to directors, incorporators and stock subscriptions. g. Additional matters. II. Name, domicile, directorate, and duration. III. Stock. IV. Business: 1. In general. 2. Insurance. 3. Banking. V. Promoters: 1. Definition and nature. 2. Sale of property to corporation. 3. Liability of promoters for their contracts and representa tions. 4. Compensation of promoters. 5. Rights and liabilities of corporations on contracts of promoters. 6. Adoption and ratification of contracts. 7. Rights and liabilities of promoters inter se. L. CREATION OF BUSINESS CORPORATIONS 1. Incorporators General qualifications.— As to the qualifications required of those who propose to become the incorporators of a business corporation, see GENERAL CORPORATION LAW, § 4. Need not all be directors.-"It is not necessary that an incorporator be a director, for there may be three or more incorporators, but not less than three directors." People v. McDonough, (1899) 28 Misc. 652, 60 N. Y. S. 45, 47. 2. Purposes for Which Business Corporations May Be Formed Generally. The question as to what constitutes legitimate business or dealings for a corporation organized under section 2 of the Business Corporations Law is distinct from the question as to the purposes for which a business corporation may be formed, but the one is so closely related to the other that the rulings on both should be consulted in determining either. See infra, this note, IV, Business. As to what constitutes a moneyed corporation " under the laws of other states, as distinguished from the meaning of that term under the laws of this state, see 20 Ann. Cas. 136. Under this section a corporation may be formed for the purpose of engaging in any legitimate business enterprise, excepting, however, the pursuits of moneyed corporations, and those purposes for the prosecution of which corporations may be organized under the provisions of the Banking, Education, Insurance, Railroad and Transportation Laws. Jacobs v. Monaton Realty Investing Corp., (1913) 160 App. Div. 449, 145 N. Y. S. 611, affirming 80 Misc. 649, 141 N. Y. S. 1033; Ernst v. Terminal Clearing House Ass'n, (1914) 86 Misc. 295, 149 N. Y. S. 181; Wilson v. Tennent, (1901) 61 App. Div. 100, 70 N. Y. S. 2, affirmed 32 Misc. 273, 65 N. Y. S. 852; Op. Atty.Gen. (1907) 566. The Business Corporations Law marked the liberal policy of the state with regard to granting the privilege of incorporation and removed practically all restrictions that previously may have attached to the organization of corporations for otherwise legitimate purposes. Lancaster v. Amsterdam Imp. Co., (1894) 140 N. Y. 576, 35 N. E. 964; Ripen v. United States Woven Label Co., (1912) 205 N. Y. 442, 98 N. E. 855. Banking, loans, and dealing in bonds and mortgages.- Banking corporations cannot be incorporated under this section. Op. Atty.-Gen. (1892) 431; Op. Atty. Gen. (1914) 57. The prohibition against incorporation under the Business Corporations Law for the purposes of a moneyed corporation or a corporation authorized by the Banking Law includes receiving moneys or other property for safe-keeping, Op. Atty.-Gen. (1910) 419; storing goods and borrowing and lending money, Op. Atty.-Gen. (1893) 193; the business of a mortgage, loan, and investment company, Op. Atty.-Gen. (1893) 182; buying and selling stocks and bonds and guaranteeing the payment of interest and dividends thereon, Op. Atty.-Gen. (1893) 187; buying and selling bonds or notes secured by mortgages on real estate and lending money on real estate, Op. Atty. Gen. (1892) 155. A company cannot be organized under this law when it appears that, although the general purpose of the company is to do a commission business, it will also be authorized under its proposed charter to act as commission agent for the purchase and sale of bonds in the manner provided under the provisions of the Banking Law. Op. Atty.-Gen. (1898) 297. Indemnity, guaranty, and insurance.- Corporations to indemnify physicians and surgeons against liability for damages for malpractice may be organized under this law. Op. Atty.-Gen. (1904) 436. But a credit guaranty company is a moneyed corporation and cannot be incorporated under this law. Op. Atty.-Gen. (1893) 308. Nor can an elevator company be incorporated thereunder where it proposes to hold stock in other corporations, to manage and control them, and to guarantee their liabilities. Op. Atty.-Gen. (1907) 288. When the business which the corporation proposes to do is provided for by the Insurance Law, incorporation as a business corporation is unauthorized. Op. Atty.-Gen. (1914) 183. A corporation cannot be organized under this law where its business is the keeping in good repair the plate glass of persons with whom it contracts, but it must incorporate under the Insurance Law. Op. Atty.-Gen. (1913) 638; Op. Atty.-Gen. (1914) 183. And the prohibition by the legislature against the incorporation of companies for the purpose of guaranteeing the payment of insurance policies extends to all classes of corporations. Op. Atty.-Gen. (1894) 65. Guaranty of credit reports.- Mercantile reporting companies, formed under this section for the purpose of issuing to merchants reports as to the financial responsibility of customers at the dates of the reports, may insert in their certificate of incorporation a provision authorizing them to guarantee the accuracy of such reports and to provide the measure of damages in the event of their inaccuracy, and not otherwise, the said damages not to exceed in any event the amount of credit extended by the client to the customer on whom the corporation has reported and not to exceed the amount of loss actually sustained by the client. Such a provision does not contemplate an insurance business so as to bring the corporation within the operation of the Insurance Law, § 170, subd. 2, because it merely authorizes agreements |