tioned in the deed of formation, and in the case of transgression they are responsible toward third parties and to the company. As security during their term of management same shall make a deposit of shares usually in the hands of the company, with pledge in favor of latter, entry of which shall be made in the share book. Same shall give notice of their appointment to the clerk of the court and shall keep the company's book, commercial and otherwise.

All action against same for facts concerning their responsibility pertains, as a rule, to the general meeting, such right being exercised through the medium of the auditors even on a charge preferred to the latter by members under the forms and limitations prescribed in section 152, v. 153 of commercial code. In all cases provided for in the second of above sections-that is to say, whenever there are strong grounds for suspecting irregularity of a serious nature any members, provided they represent at least an eighth part of the share capital, may denounce the circumstances to the court which shall institute an official inquiry.

E. RESTRICTIONS UPON DIRECTORS DEALING IN STOCKS AND OTHERWISE.

Directors are not allowed to buy shares of the company, on account of the latter, except with authority of the general meeting and with moneys taken from actual profits, and only in the case of fully paid-up shares.

F.-REGULATIONS REGARDING THE PRICES OF PRODUCTS.

There are none, same being left to free competition for settlement.

G.-REGULATIONS IN REGARD TO PROFITS AND DIVIDENDS.

No dividends shall be paid to members except in the case of profits actually realized in accordance with duly approved balance sheet. Companies are not allowed to assign any interest to shares either in their deeds of formation or other documents. Such power to assign interest to be paid from the capital is given only to such industrial companies as require a certain time to carry out their object, and for a term of 3 years only, the rate of interest not to exceed 5 per cent. In such cases the amount to be paid for interest is to be entered as a preliminary expense to be accounted for in future balance sheets where a real dividend is shown. Members are not under obligation to refund paid dividends. Five per cent at least of the net profits shall be set aside every year as a reserve fund until it shall represent a fifth of the company's capital. Once completed any sums taken from such fund shall be restored in a like

manner.

H.-REGULATIONS REGARDING OWNERSHIP OF STOCK IN OTHER CORPORATIONS OR THE COMBINATION OF DIFFERENT CORPORATIONS.

There is no special enactment. The amalgamation of a number of companies is regulated like statutory changes in general, saving special provisions of sections 193, 194, and 195, and 189 of commercial code.

I.-REPORTS TO BE MADE TO THE GOVERNMENT.

Irrespectively of all publications mentioned above, the yearly balance sheet must be deposited in the office of the clerk of the court and publication thereof made in the official bulletin of share companies and in the list of judicial notices, and in the case of credit companies, the monthly statement of accounts likewise.

K.-REPORTS TO BE MADE TO THE STOCKHOLDERS.

Every year at one of the general meetings held ordinarily once at least in the 12 months, the annual balance sheet shall be submitted to the shareholders for discussion. Same shall not less than a month previously have been duly examined by the auditors, who, in a special report to be presented, shall embody such remarks and proposals as are suggested by the results of such balance sheet. Members have full right to personally examine the list of shareholders as well as the minute book of meetings and deliberations of the meetings. The duty of the auditors is to ascertain in a general way that the requirements of the law as well as those of the deed of formation and statute of the company have been fully complied with by the directors, even by frequent and unexpected inspections of cash account, examination of books, etc.

L.-PRIVILEGES OF STOCKHOLDERS REGARDING EXAMINATION OF BOOKS AND OVERSIGHT OF BUSINESS.

This query has been answered in foregoing paragraph K.

M.-METHODS OF TAXATION OF CORPORATIONS.1

N. SPECIAL METHODS OF CONTROL BY THE GOVERNMENT.

Exceptions made for publication referred to above there are none, the commercial code of 1883 having deprived the Government authority of all right to interfere in the concerns of trade companies. The due observance of the foregoing conditions is guaranteed by a system of penal measures contained in sections 246 to 250 of commercial code. It is to be noted, however, that special provisions have been made in respect to cooperative societies, foreign companies, insurance companies, and mutual insurance Jocieties.

O.-SPECIAL LAWS REGARDING MONOPOLIES.

In respect to monopolistic companies known in the United States under the name of "trusts," and elsewhere under that of kartelle, syndicates, and such like, no special provision has been made by Italian legislature, nor has any need for such been hitherto felt. Should any such syndicates be in existence and have resort to culpable practices, the managers thereof might eventually become amenable under the provisions of section 293 of penal code, wherein it is provided that, whosoever by spreading false intelligence or by other fraudulent means shall cause in the public market or stock exchange a rise or fall in the prices of wages, provisions, goods, or shares, whether negotiable in the public market or quoted on the stock exchange list, is punishable with confinement for a term of 3 to 30 months and a fine of 500 to 3,000 lire.

1 This query is within the competency of the minister of finance, general department of public domains and taxes, and the information was not sent.

CHAPTER IX.

SWITZERLAND.1

Article 64 of the Federal Constitution gives the confederation exclusive power over the law of trade and commerce. The Swiss law of corporations is found in the Commercial Code of June 14, 1881,2 passed in execution of this clause. All references herein are to the articles of that code.

A.-CAPITALIZATION AND METHODS OF PAYING IN CAPITAL.

The company can not be organized till all the capital is subscribed. The completion of the subscription, and the payment of at least 20 per cent on each share, must be verified by a resolution passed in view of proper documentary evidence in a general meeting of the shareholders, unless the fulfillment of these conditions is mentioned in the articles of association and the articles are signed by every shareholder. (Article 618.) The facts that the capital is all subscribed and at least 20 per cent has been paid in by each shareholder must be certified in the application for registration in the commercial register of the district. (Article 622.)

When a payment on account of capital is made otherwise than in cash, or when plants or other property are to be taken over by the projected company, the articles of association must show the exact price at which such property is taken, and, if shares are given in payment, the number of shares so given. Every particular advantage in favor of a shareholder or any other person who had to do with the founding of the company must be set forth in like manner in the articles of association.

Such transactions provided for in the articles of association must be approved by a majority vote in a general meeting called after the subscription of the capital. In such meeting, each subscriber present or duly represented has one vote and only one. The majority must comprise at least one-fourth of the shareholders, and must represent at least one-fourth of the shares. The shareholder whose subscription or particular advantage is in question can not vote. The vote must be recorded in a document, either legally verified or signed by all the affirmative voters. (Article 619.) Such document must be annexed to the application for record in the commercial register of the district. (Article 622.)

Shares may be issued "to bearer" or registered in the name of the owner. (Article 614.)

So long as shares are not fully paid, every certificate must show the amount actually paid; and every public document of the company, prospectus, circular, report, etc., in which the capital is referred to, must state clearly what proportion is actually paid (Article 638.)

in.

The company may regulate, through its articles of association, the voting power which holders of different numbers of shares shall have in general meetings, but no shareholder may in any case cast more votes than one-fifth of the whole number of shares represented at the meeting. (Article 640.)

B.-METHODS OF PROMOTING AND LIABILITY OF PROMOTERS.

Every person concerned in the organization of a company is liable for damages to the company and to each shareholder and creditor of the company

(1) If he has knowingly made or circulated false statements in any prospectus or circular.

1 Digest by Charles E. Edgerton.

2 Bundesgesetz über das Öbligationenrecht; Code fédéral des obligations.

(2) If he has knowingly helped to suppress or conceal, in the articles of association, any purchase or acceptance of property, or any advantage to any shareholder or other person, contrary to the first paragraph of article 619. (See above.)

(3) If he has knowingly helped to secure the recording of the company in the commercial register on the basis of any document which contains false statements. (Article 671.)

Persons concerned in the issue of new shares or obligations of an existing company are liable for damages in like manner if they make or circulate false statements in any prospectus or circular. (Article 672.)

C.-LIABILITY OF STOCKHOLDERS.

Shareholders are not liable beyond the amount of their shares. (Article 633.) On any call or installment which is not paid when due, interest is chargeable. Moreover, the articles of association may provide penalties for such delay, even to the forfeiture of all the shareholder's rights, and of any partial payments which he may have made. (Article 634.)

A shareholder's rights can not, however, be declared forfeited unless the call has been published at least three times in the public prints designated for the purpose, the last time at least four weeks before the end of the period allowed for payment. If the shares are issued to order, and transferable only on the books of the company, the call must be sent three times to each shareholder by registered letter. In that case publication is not necessary. (Article 635.)

For shares running to bearer no certificate of any kind can be issued till 50 per cent has been paid in. Till that time the original subscriber for such shares continues liable for his subscription, even though he has transferred his shares; and he continues liable after the 50 per cent is paid in, unless the articles of association provide otherwise. (Article 636.)

In the case of shares registered in the name of the owner the shareholder is not released from his obligation by transferring his shares till the company has accepted the transferee in his place and has released him; and even then the original subscriber is bound contingently for the whole amount of his subscription if the company goes into bankruptcy within a year after his release. (Article 637.)

D. DUTIES AND RESPONSIBILITIES OF DIRECTORS.

No body answering exactly to the board of directors is known to Swiss law. The commercial code says: "The necessary organs of a joint-stock company are:

"(1) The general meeting (Generalversammlung; assemblée générale) of the shareholders.

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(2) An administration (eine Verwaltung; une administration). "(3) Auditors (eine Kontrolstelle; des contrôleurs)."

The auditors, one or more, are chosen by the general meeting; at first for not more than a year, afterwards for not more than 5 years. They are not necessarily members of the company. Their office is to report to the general meeting on the balance sheet and the accounts of the administration. They have the right to examine all books and vouchers and to verify the cash. (Articles 659-663.)

In case of need they may summon a general meeting. (Article 644.)

The decisions of the annual general meeting as to dividends, the balance sheet, and the conduct of the business are void in the absence of a report from the auditors. (Article 644.)

The administration may consist of 1 man or more. The members of it must be shareholders. The articles of association may provide that the actual conduct of business shall be confided by the administration to one or more of its members, or to one or more other persons, not necessarily members of the company. (Articles 649, 650.)

Unless the articles of association provide otherwise the company can not be bound except by the act or the signature of all the members of the administration. (Articles 651, 652.)

The members of the administration and the auditors are jointly and severally liable to the company for any damage arising from their violation or neglect of their duties, and to shareholders and creditors of the company for any damage arising from intentional violation of them. (Articles 673, 674.)

E. RESTRICTIONS UPON DIRECTORS DEALING IN STOCKS, AND OTHERWISE. No provisions on this subject.