On the whole, my opinion is, that in the long run it will always be found better to incorporate in the state where the greater part of the property of the company is situated and its most important. business conducted, unless the laws of that state present some very definite objection to some im portant provision in the plan of organization.
9. Favored incorporating states.—Business men, in incorporating, have shown a preference for certain states because they have the most favorable laws. In some states, like Delaware, Arizona, South Dakota, Maine and Virginia, an important attraction has been the low cost of incorporation. In some cases—in Delaware, Maine and' Virginia—the attraction lies partly in the fact that both the incorporators and the directors may be non-residents. Moreover, these three states require only small annual franchise taxes of their corporations.
While, for example, in New York the annual tax. for a company incorporated for $5,000,000 is $7,500 and in 1N-ew Jersey, $4,000, it is $150 in Delaware, $600 in Virginia and $2,525 in Maine. Nearly all the states that are popular with those who incorporate, allow an organization to pay for capital stock in prop erty, services or labor as well as cash. This makes promotion easy. New Jersey is favored because it first permitted holding companies, and because its proximity to New York City makes executive con trol easy. Many of the largest corporations in the United States have large executive offices in New York City and maintain nominally their principal offices just across the Hudson River, in New Jersey. There is one office building in Jersey City which is the legal home of thousands of absentee corporations. The greatest number of companies are formed in New York State, since more business enterprises are situ ated there than in any other state. Its corporation laws are fair and have acquired a very definite mean ing as a result of litigation in the courts.
In most of the so-called incorporating states, includ ing all those mentioned, there are attorneys or cor porations who make a specialty of obtaining charters. They advertise regularly where their announcements can be seen by business men and investors, and thus attract a great many undertakings to their states. Frequently these specialists publish pamphlets setting forth at length and in great detail the advantages that their states hold for corporations.
10. Voluntary dissolution of corporations.—Private corporations are ordinarily permitted to dissolve at any time, provided they comply with the provisions of the corporation laws relating to dissolution. Public service corporations may not dissolve without first , obtaining special consent from the state, since they are under obligation to carry out the purposes for which they are incorporated. The dissolution of public service corporations is generally controlled by public utility commissions.
In the voluntary dissolution of corporations the usual procedure begins with a resolution by the direc tors stating that dissolution 'is expedient and calling upon the stocldiolders to pass on the question. A special meeting of the stockholders is then convened, and if two-thirds of the stockholders in interest vote in favor of the dissolution, certificates are drawn up and filed in designated public offices.' Usually no tices must be published in newspapers for a certain length of time in order to notify the public of the iinpending dissolution.
The effect of dissolution is usually to make directors trustees for the benefit of creditors and stockholders. The New York law on this point is typical.
Upon the dissolution of any corporation, its directors, unless other persons shall be appointed by the legislature, or by some court of competent jurisdiction, shall be the trustees of its creditors, stockholders or members, and shall have full power to settle its affairs, collect and pay out standing debts, and divide among the persons entitled thereto the money and other property remaining after pay ment of debts and necessary expenses.
Such trustees shall have authority to sue for and recover the debts and property of the corporation, by their.name as such trustees, and shall jointly and severally be personally liable to its creditors, stockholders or members, to the ex tent of its property- and effects that shall come into their hands.' 11. Involuntary dissolution of corporations.—Cor poration's may ordinarily be dissolved by the state when they have not been properly incorporated, or when they have committed any act which exceeds their lawful powers (ultra vires). It was on this latter ground that the North River Sugar Refining Com pany was dissolved in 1890 by the State of New York.