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To face p. 53, Dill on New Jersey Corporations, 3d cloth and 4th paper edition.

Amendment of 1902.

QUORUM AT ANNUAL ELECTIons of DirectORS.

Section 34 of AN ACT CONCERNING CORPORATIONS (REVISION OF 1896), was amended to read as follows:

34. All elections for directors shall be by ballot, unless otherwise expressly provided in the charter or certificate of incorporation; the poll at every such election shall be opened between the hours of nine o'clock in the morning and five o'clock in the afternoon, and shall close before nine o'clock in the evening; the same shall remain open at least one hour, unless all of the stockholders are present in person or by proxy and have sooner voted, or unless all the stockholders waive this provision in writing; the persons receiving the greatest number of votes shall be the directors; provided, however, that unless otherwise provided in the original or amended certificate of incorporation, or in the by-laws approved at a stockholders' meeting, in all corporations formed under the provisions of this act, a majority in interest of all the stockholders shall be present in person or by proxy to constitute a quorum. (Chap. 52, Laws of 1902, approved March 27, 1902, repealing inconsistent acts and taking effect immediately.)

The matter in bold-faced type is new and authorizes corporations to provide in their certificates of incorporation or by-laws that less than a majority in interest may constitute a quorum at annual elections.

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"the names of the stockholders " in the statute in force at that time (Rev. § 34 Stat. 139, Sec. 1), declared that 'It includes, therefore, not only the "books of original subscription, but the certificate book, and we incline "to think the stock ledger also." (Downing v. Potts, 23 N. J. Law, 66, 76.)

The amendment of the statute in 1898 rendered it clear what books were to be kept in the New Jersey registered office, and put the duty of complying with the statute upon the directors.

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In the same case it was held that the provision of the statute requiring a full, true and complete list, &c., to be made out ten days before the election, was directory merely, and that a failure to comply with it would not render the election invalid. "The design of the first section was to "afford to every corporator a knowledge of his co-corporators, and an opportunity of corresponding with them on the affairs of the institution, "of the necessity of expediency of a change in its direction, and thereby rescuing the election from the immediate control of the board or of "officers whose misconduct or incapacity may have rendered a change necessary. (Id., p. 72.) The list of stockholders does not operate as a registry of voters. The right of the stockholder to vote "does not depend upon his name being contained in the list; on the contrary, the statute expressly declares that the books of the corporation "shall be the only evidence who are the stockholders entitled to vote." (Id. p. 73.) (See also Matter of St. Lawrence Steamboat Co., 44 N. J. Law, 529, 539.) The Court held that the evidence of right to vote under the statute comprised the stock ledger, the certificate book and the transfer book, but that the ledger is evidence only subordinate to and as supported by the other books, and that in case of dispute the transfer book must control the rest. "It is no answer to say that the transfer book had not "been much used or that it did not truly represent the actual condition 66 of the stock. The fact that the books have been negligently or improp"erly kept cannot work a repeal of the statute or relieve against its operation." (Downing v. Potts, 23 N. J. Law, p. 77; In re Election of Cape May, &c., Co., 51 N. J. Law, 79, 81.)

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34. Directors, election of, etc.

All elections for directors shall be by ballot, unless otherwise expressly provided in the charter or certificate of incorporation; the poll at every such election shall be opened between the hours of nine o'clock in the morning and five o'clock in the afternoon, and shall close before nine o'clock in the evening; the same shall remain open at least one hour, unless all of the stockholders are present in person or by proxy and have sooner voted, or unless all the stockholders waive this provision in writing; the persons receiving the greatest number of votes. shall be the directors; provided, however, that in all corporations formed under the provisions of this act a majority in inter

35-35a est of all the stockholders shall be present in person or by proxy

to constitute a quorum.

(As amended by Chap. 120, Laws of 1899; P. L. 1899, p. 262.)

P. L. 1841, p. 116; R. S. (Ed. of 1846), p. 139, § 2; Act of 1875, § 37; P. L. 1898, p. 409.

The 1899 amendment of this section limits the application of the proviso to corporations organized under this act. The statute is different from the New York act, under which it was held in a recent case that the common law rule was in force and that any number of stockholders who attend a regularly called meeting, however small their holdings, can proceed to hold the election, and that a majority of those who vote can elect the board. (Matter of Rapid Transit Ferry Co., 15 App. Div., 530.)

Elections of directors: When irregularities will not invalidate. The stockholders of a corporation organized under the General Act may, at a special meeting duly called for the purpose, increase the number of directors of the company by an amendment to the by-laws taking immediate effect. In the absence of other provision in the by-laws it would then be the right and duty of the stockholders to elect the additional directors, but it seems that such election should be held at a meeting subsequently called with due regard to Sections 33 and 36 of the Act. In the case at bar, however, all of the stock was represented at the meeting and voted on. It was held, therefore, that, notwithstanding the informality of the meeting, its acts would not be disturbed. (In re A. A. Griffing Iron Co., 63 N. J. Law, 168.)

Corporation in hands of receiver may elect directors.-A corporation in the hands of a receiver can legally hold an election for directors, and the court may order such election. (Lehigh Coal & Navigation Co. v. Central R. R. of N. J., 5 N. J. L. J., 214.)

35. No person who is a candidate for the office of director shall act as judge, inspector or clerk of any election for directors; and if any candidate shall so act and be elected, his election shall be void, and the directors shall not appoint such person a director within twelve months next succeeding; this section shall not apply to the first election of directors.

P. L. 1825, p. 82; R. S. (Ed. of 1846), p. 139, § 5; P. L. 1870, p. 27; Act of 1875, § 42.

35a.* Cumulative voting.

The certificate of incorporation, original or amended, of any corporation now or hereafter organized under the laws of this state and thereunder issuing or authorized to issue shares of its capital stock, may provide that at all elections of directors, managers or trustees, each stockholder shall be entitled to as many

* Arbitrary number; section inserted here merely for convenience of reference.

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votes as shall equal the number of his shares of stock multiplied § 36 by the number of directors, managers or trustees to be elected, and that he may cast all of such votes for a single director, manager or trustee, or may distribute them among the number to be voted for, or any two or more of them, as he may see fit, which right, when exercised, shall be termed cumulative voting.

This act shall not be construed as affecting in anywise the determination of whether or not the right of cumulative voting has been heretofore granted by implication or the right of cumulative voting, if any, granted specifically by special charter or certificate of incorporation.

("An act to provide in terms for cumulative voting in corporations issuing or authorized to issue shares of capital stock." P. L. 1900, p. 418.) Cumulative voting is thus allowed on condition that suitable provision is made in the certificate of incorporation.

36. Regulations as to voting.

Unless otherwise provided in the charter, certificate or bylaws of the corporation, at every election each stockholder, whether resident or non-resident, shall be entitled to one vote in person or by proxy for each share of the capital stock held by him, but no proxy shall be voted on after three years from its date; nor shall any share of stock be voted on at any election which has been transferred on the books of the corporation within twenty days next preceding such election.

P. L. 1825, p. 83; P. L. 1841, p. 117; R. S. (Ed. of 1846), p. 139, § 3; Act of 1875, § 38.

At common law, unless the charter otherwise provided, a stockholder was entitled to but one vote, and that vote he was required to cast in person. Proxies were not permitted. (Taylor v. Griswold, 14 N. J. Law, 222.) This decision brought about the statute providing that each stockholder should be entitled to one vote for each share held by him, and authorizing the use of proxies, limiting them, however, to three years. (Cone v. Russell, 48 N. J. Eq., 208, 213.)

A stockholder is not entitled to vote unless he is registered on the books on the day the election is held. (Johnson v. Jones, 23 N. J. Eq., 216.) This section applies only to voting at elections. (Chapman v. Bates, 47 Atl. Rep., 638.)

Voting pools or trusts. Of late years there have come to the courts several cases involving the legality of voting pools or trusts. Briefly stated, the scheme is for several holders of shares to enter into an agreement to transfer their shares to a trustee, who has power to vote on them and to the extent of the shares so held by him, by the election of directors, dictate the policy and management of the company.

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