§ 2. Incorporation.-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 corporation laws, or an educational institution or corporation which may be incorporated as provided in the university 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 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.

If meetings of the board of directors are to be held only within the state the certificate or by-laws must so provide. The certificate may contain any other pro

†This sentence was added by amendment in 1904.

vision for the regulation of the business and conduct of the affairs of the corporation and any limitation upon its powers, and upon the powers of its directors and stockholders which does not exempt them from any obligation or from the performance of any duty imposed by law.

Compare L. 1811, c. 67, §§ 1, 2; L. 1815, c. 47, § 1; L. 1816, c. 58, §§ 1, 2; L. 1817, c. 223; L. 1818, c. 67; L. 1819, c. 102; L. 1821, c. 14; L. 1848, c. 40, §§ 1, 2; L. 1851, c. 14; L. 1853, c. 117; L. 1853, c. 333, § 1; L. 1855, c. 301; L. 1857, c. 29; §§ 1, 3; L. 1857, c. 262; L. 1863, c. 63; L. 1864, c. 337; L. 1865, c. 234; L. 1865, c. 307; L. 1866, c. 371; L. 1866, c. 799, § 1; L. 1866, c. 838; L. 1867, c. 509; L. 1868, c. 781; L. 1869, c. 605; L. 1870, c. 773; L. 1871, c. 535, § 1; L. 1871, c. 657, § 1; L. 1872, c. 248; L. 1872, c. 426; L. 1872, c. 609; L. 1872, c. 820; L. 1873, c. 616; L. 1873, c. 814; L. 1874, c. 143; L. 1874, c. 149; L. 1875, c. 113; L. 1875, c. 365; L. 1875, c. 611, §§ 1, 3; L. 1877, c. 374, § 1; L. 1879, c. 290; L. 1880, c. 85; L. 1880, c. 241, § 1; L. 1881, c. 58, 232, and 589; L. 1881, c. 351; L. 1881, c. 650, L. 1882, c. 273; L. 1882, c. 309; L. 1883, c. 238; L. 1883, c. 240; L. 1884, c. 267; L. 1885, c. 84; L. 1885, c. 535; L. 1888, c. 313; L. 1890, c. 23; L. 1890, c. 119; L. 1890, c. 508; L. 1890, c. 567, § 2; L. 1892, c. 691, § 2; L. 1895, c. 671; L. 1896, c. 369, and c. 460; L. 1901, c. 520; L. 1903, c. 525; L. 1904, c. 446; L. 1907, c. 646.

See 46 App. Div. 20.

Two-thirds of the incorporators must be citizens of the United States, and at least one of them a resident of the State of New York. All must be natural persons of full age. See § 4, General Corporation Law, post, page 78.

Subd. 1. The name of a corporation must not be that of another existing domestic corporation, or one so nearly resembling it as to be calculated to deceive. See post, page 79. A change of name of a corporation may be afterward made in accordance with § 2411 et seq. of the Code of Civil Procedure. See post, page 160.

Subd. 2. The purpose or purposes of a business corporation may be any lawful one or ones (32 Misc. 273), which may afterwards be altered. See post, page 44. See 33 Misc. 200. For the classification of corporations, see post, page 75.

not limited by law, See post, page 55.

Subd. 3. The amount of the capital stock is and may be increased or reduced at any time. One or more classes of preferred stock may be issued originally if the certificate so provide, or afterward by consent of the "holders

of record of two-thirds of the capital stock, given at a meeting called for that purpose." If the certificate provide for preferred stock, the amount thereof, and the amount of the different classes of preferred stock, and their priority, character, etc., should be clearly set forth. Preferred stock may be exchanged for common stock by a two-thirds vote of the directors upon the written request of the "holders of any preferred stock," provided the total amount of capital stock be not thereby increased. See post, page 57.

A tax of one-twentieth of one per cent. must be paid upon the amount of the capital stock, and on any subsequent increase thereof. But the tax cannot be less than one dollar. See post, page 126. A receipt for the tax is required by the office of the secretary of state to be obtained from the State Treasurer before the certificate will be entertained. The tax should therefore be remitted directly to the State Treasurer at the same time the certificate is forwarded to the Secretary of State with his fees. In practice, the State Treasurer transmits the receipt to the latter official, and sends a duplicate receipt to the person paying the tax.

Subd. 4. The certificate must state the number of shares and the par value of each share (which must not be less than five nor more than one hundred dollars), and the amount of capital with which the corporation will begin business. A corporation is forbidden to incur any debt until this amount is paid either in money or property. See post, page 6.

Subd. 5. A corporation is taxed where its principal business office is located. This place may be changed at any time. See post, page 70. For definition, see § 3, subd. 9, General Corporation Law, post, page 77. 87 Hun, 341, aff'd in 147 N. Y. 715; 91 Hun, 594; 20 App. Div. 166; and see also 46 App. Div. 20, 623.

Subd. 6. The duration of a corporation, formerly restricted to fifty years, is now unlimited, but the period chosen should be specified, for if it is not stated, the life of the corporation is deemed to be perpetual. See § 11, subd. 1, General Corporation Law, post, page 82. At any time prior to its expiration the life of a corporation may be extended. Formerly such action was required to be taken within three years prior thereto. See post, page 98. The life of a consolidated corporation, however, is restricted to fifty years. See § 8, Business Corporations Law, post, page 9.

Subd. 7. By L. 1901, c. 520, the number of directors must be "not less than three." The maximum limitation of thirteen is thus stricken out. The number of directors may be changed at any time. See post, page 35. Only one of the directors is now required to be a resident of the State of New York. See post, page 97. Directors

must be stockholders unless the certificate of incorporation or a stockholders' by-law otherwise provides. See post, page 33, note. At least one-fourth of the directors of a stock corporation must be chosen annually. Seepost, pages 33-34. Vacancies in the board of directors are filled as may be prescribed in the by-laws. Idem. Each director holds over until his successor is elected. See post, pages 93-94.

Subd. 8. The directors for the first year need not be subscribers to the certificate. It has been held that they need not even be stockholders (163 N. Y. 423); but § 20 of the Stock Corporation Law seems to require all directors to be stockholders unless otherwise provided for in the certificate or in a by-law adopted by a stockholders' meeting. See post, page 33.

Subd. 9. L. 1901, c. 520, provides that in addition to the names and post-office addresses of the subscribers the certificate must state the number of shares each subscriber agrees to take. There is no provision specifying the number of shares to be subscribed for or to be mentioned in the certificate.

The second paragraph enables a business corporation to regulate its affairs and to place limitations upon its powers and those of its directors and stockholders which do not exempt them from any legal obligation or duty. Hereunder cumulative voting for directors may be provided for (see post, page 90), and the right reserved to hold and dispose of the stock, bonds, etc., of any other domestic or foreign corporation (see post, page 49), to issue different classes of preferred stock (see post, page 57), and to issue partly paid stock. Seepost, page 73, § 62, Stock Corporation Law.

For form of certificate of incorporation, see form I, page 177.

Filing and recording certificate.—Except in certain cases specified in § 5 of the General Corporation Law, the certificate and amended certificate of incorporation must be filed and recorded in the office of the Secretary of State, and a certified copy of such certificate, or a duplicate original, must be filed and recorded in the office of the clerk of the county in which the principal office is to be located. (General Corporation Law, § 5, p. 78.) The fees of the Secretary of State are ten dollars for filing and fifteen cents a folio for recording (see post, page 175), and of the county clerk, ten cents a folio for recording and six cents for filing (idem).

Amended and supplemental certificates. For manner of amending and correcting certificates of incorporation, see § 7, General Corporation Law, post, page 80.

of record of two-thirds of the capital stock, given at a meeting called for that purpose." If the certificate provide for preferred stock, the amount thereof, and the amount of the different classes of preferred stock, and their priority, character, etc., should be clearly set forth. Preferred stock may be exchanged for common stock by a two-thirds vote of the directors upon the written request of the "holders of any preferred stock," provided the total amount of capital stock be not thereby increased. See post, page 57.

A tax of one-twentieth of one per cent. must be paid upon the amount of the capital stock, and on any subsequent increase thereof. But the tax cannot be less than one dollar. See post, page 126. A receipt for the tax is required by the office of the secretary of state to be obtained from the State Treasurer before the certificate will be entertained. The tax should therefore be remitted directly to the State Treasurer at the same time the certificate is forwarded to the Secretary of State with his fees. In practice, the State Treasurer transmits the receipt to the latter official, and sends a duplicate receipt to the person paying the tax.

Subd. 4. The certificate must state the number of shares and the par value of each share (which must not be less than five nor more than one hundred dollars), and the amount of capital with which the corporation will begin business. A corporation is forbidden to incur any debt until this amount is paid either in money or property. See post, page 6.

Subd. 5. A corporation is taxed where its principal business office is located. This place may be changed at any time. See post, page 70. For definition, see § 3, subd. 9, General Corporation Law, post, page 77. 87 Hun, 341, aff'd in 147 N. Y. 715; 91 Hun, 594; 20 App. Div. 166; and see also 46 App. Div. 20, 623.

Subd. 6. The duration of a corporation, formerly restricted to fifty years, is now unlimited, but the period chosen should be specified, for if it is not stated, the life of the corporation is deemed to be perpetual. See § 11, subd. 1, General Corporation Law, post, page 82. At any time prior to its expiration the life of a corporation may be extended. Formerly such action was required to be taken within three years prior thereto. See post, page 98. The life of a consolidated corporation, however, is restricted to fifty years. See § 8, Business Corporations Law, post, page 9.

Subd. 7. By L. 1901, c. 520, the number of directors must be "not less than three." The maximum limitation of thirteen is thus stricken out. The number of directors may be changed at any time. See post, page 35. Only one of the directors is now required to be a resident of the State of New York. See post, page 97. Directors