3. The whole of the share capital must be allotted and 25%, at least, must be paid up in coin or legal tender notes;
4. Reports on the formation of the company must be made by certain persons; and
5. Certain documents must be filed in the registry.
In all cases where shares are issued for any consideration, not being payment in full in cash, or in which contracts for the purchase of property have been entered into, the promoters must sign a declaration in which they must state on what grounds the prices agreed to be given for such property appear to be justified. In the great majority of cases shares are issued in certificates to bearer. The amount of such a share—to bearer—must as a general rule be not less than £50, but registered shares of £10 may be issued. Balance sheets have to be published periodically.
Partnerships with limited liability may be formed by two or more members. The articles of partnership must be signed by all the members, and must contain particulars as to the amount of the capital and of the individual shares. Limited partnerships. If the liability on any shares is not to be satisfied in cash this also must be stated. The capital of a limited partnership must amount to £1000. Shares must be registered. Insolvent companies in Germany are subject to the bankruptcy law in the same manner as natural persons.
For further information see a memorandum on German companies printed in the appendix to the Report of Lord Davey’s Committee on the Amendment of Company Law, pp. 13-26.
Italy.—Commercial companies in Italy are of three kinds:—(1) General partnerships, in which the members are liable for all debts incurred; (2) companies in accomodita, in which some members are liable to an unlimited extent and others within certain limits; (3) joint stock companies, in which the liability is limited to the capital of the company and no member is liable beyond the amount of his holding. None of these companies needs authority from the government for its constitution; all that is needed is a written agreement brought before the public in the ways indicated in the code (Art. 90 et seq.). In joint stock companies the trustees (directors) must give security. They are appointed by a general meeting for a period not exceeding four years (Art. 124). The company is not constituted until the whole of its capital is subscribed, and until three-tenths of the capital at least has been actually paid up. When a company’s capital is diminished by one-third, the trustees must call the members together and consult as to what is to be done.
An ordinary meeting is held once at least every year. Shares may not be made payable “to bearer” until fully paid up (Art. 166). A company may issue debentures if this is agreed to by a certain majority (Art. 172). One-twentieth, at least, of the dividends of the company must be added to the reserve fund, until this has become equal to one-fifth of the company’s capital (Art. 182). Three or five assessors—members or non-members—keep watch over the way in which the company is carried on.
United States.—In the United States the right to create corporations is a sovereign right, and as such is exercisable by the several states of the Union. The law of private corporations must therefore be sought in some fifty collections or groups of statutory and case-made rules. These collections or groups of rules differ in many cases essentially from each other. The acts regulating business corporations generally provide that the persons proposing to form a corporation shall sign and acknowledge an instrument called the articles of association, setting forth the name of the corporation, the object for which it is to be formed, the principal place of business, the amount of its capital stock, and the number of shares into which it is to be divided, and the duration of its corporate existence. These articles are filed in the office of the secretary of state or in designated courts of record, and a certificate is then issued reciting that the provisions of the act have been complied with, and thereupon the incorporators are vested with corporate existence and the general powers incident thereto. This certificate is the charter of the corporation. The power to make bylaws is usually vested in the stockholders, but it may be conferred by the certificate on the directors. Stockholders remain liable until their subscriptions are fully paid. Nothing but money is considered payment of capital stock except where property is purchased. Directors must usually be stockholders.
The right of a state to forfeit a corporation’s charter for misuser or non-user of its franchises is an implied term of the grant of incorporation. Corporations are liable for every wrong they commit, and in such cases cannot set up by way of protection the doctrine of ultra vires.