4. Powers of direetors..—As we have seen, matters which affect the entire property of the company at one time or that are provided for in the certificate of in corporation cannot be settled without the direct con sent of the stockholders. All other questions usually can be decided by the board, tho even here the direc tors frequently protect themselves by referring portant matters to the stockholders. It is an almost universal custom for the stockholders to ratify at their annual meeting the actions of the directors dur ing the preceding year. During the course of the stockholders' meeting and while the ballots for the election of directors are being counted, the minutes of the directors' meetings are sometimes opened for the inspection of the stockholders for a reasonable time before the motion to ratify is made.
Directors usually are given power to pass by-laws that do not in any -way affect by-laws already enacted by the stockholders.
It may be added that, by the various Canadian letters patent acts, power is expressly given to the directors to pass by-laws for certain purposes, and this has been held in effect to take away from the gen eral body of shareholders the right to originate by laws respecting those matters. The acts lay .down that the affairs of a company are to be managed by a board of directors; hence no division of power be tween shareholders and directors is contemplated. Shareholders therefore cannot interfere in matters of internal management by initiating by-laws without the consent of the board. They must wait to pass upon by-laws submitted by the directors. On the other hand there is no express provision in the acts that shareholders are not to initiate by-laws; tho that limi tation flows naturally from what has been just said hs to the power of the directors. It has been held that the recourse of shareholders who object to a by-law which the directors persist in retaining is to wait for an annual general meeting and elect a new and more pliable board. At common law, it may be remarked, that is, in the absence of a contrary provision in the general act or the company's charter, the right to make by-laws for the management of the company is vested in the whole body of the shareholders. Under the English act, however, this common law right is preserved to the shareholders in that a majority of three-fourths of the shareholders may at any time alter the company's articles which are virtually by laws, or oust an unwelcome board of directors.
5. Committees.—The same purpose that is some times accomplished by requiring only a small num ber of directors to constitute a quorum is achieved in large corporations by provision for committees. The executive committee usually possesses all the powers of' the board during the intervals between meetings. In the United States Steel Corporation the executive committee is called the Finance Committee, whose constitution and powers are thus described in the by laws: P'inance Committec.—The Board of Directors shall elect from the directors a Finance Committee, and shall desig nate for such committee a chairman, who shall continue to be chairman of the committee during the pleasure of the Board of Directors.
Vacancies, Haw Filled.—The Board of Directors shall fill vacancies in the Finance Committee by election from the di rectors; and at all times it shall he the ditty of the Board of Directors to keep the membership of such committee full.
with due regard to the qualifications for such membership in dicated in this Article of the By-Laws.
Action of Committee to Be Reported to ac tion by the Finance Committee shall be reported to the Board of Directors at the meeting next succeeding such ac tion, and shall be subject to revision or alteration by the Board of Directors ; provided, that no rights or acts of third parties shall be affected by any such revision or alter ation.
Rules of Finance Committee shall fix its own rules of proceeding, and shall meet where and as provided by such rules, or by resolution of the Board of Directors, but in every case the presence of at least four members shall be necessary to constitute a quorum.
In every case the affirmative vote of a majority of all of the members present at the meeting, shall be necessary to its adoption of any resolution.
Finance Committee shall consist of eight members, besides th.e chairman of the Board, who, by virtue of his office, shall be a member of the Finance Com mittee. So far as practicable, each of the eight elected members of the Finance Committee shall be a person of ex perience in matters of finance. Unless otherwise ordered by the Board of Directors, each elected member of the Finance Committee shall continue to be a member thereof until the expiration of his term of office as a director.