holders, is the owner of the property of the company. The rights of the general assembly of shareholders can not be equaled to the rights of the owners of the enterprise; on the contrary, the actions and limits of power of the shareholders of the general assembly of shareholders are defined in the statutes.

(2) The administrative board of a stock company-the judicial representative-is the instrument through which the company declares its civil rights, expresses its desire, within the limits and in the manner defined in the statutes; consequently, if the statutes of the company require that the decision of the administration should be effected by the majority of voices of their representatives the directors-then only such decisions receive a judicial force for the company; a decision according to a majority of voices only takes effect when not less than 3 members are present.

(5) The whole company and not only the members of the administration are responsible for the affairs of the company.

(6) The members of the administrative board of an association are responsible among themselves for the losses caused to the association through the action or neglect of the administrators. At the same time, according to the general rules, joint responsibilities-if not especially determined-give the creditors the right to receive from the other members of administration any portion of debt unpaid by any one member of the administration.

(7) Not only are the members of administration but also persons employed by the administration held responsible to the company.

(8) The directors or members of administration have the right to issue full powers in the name of the company, to represent the affairs of the company, at the courts of justice.

(9) The members of the administration of the company may be represented at the court to take the defense or to prosecute in the name of the company, only through a person furnished with a special procuration for this purpose.

SEC. 2182. In cases when it is necessary to have the general consent of the shareholders, as, for instance, to determine the reserve fund, to examine accounts, to determine dividends, to elect new directors or members of administration, to present to the Government changes which it is necessary to make in the statutes of the company, likewise concerning the question of winding up the company, or to extend the existence of the company after the expiration of the term for which it was formed, or such like matters, must, in accordance with the company's statutes, be examined and decided at a general assembly of shareholders. The date the general assembly is to take place and the subject for which it is convoked must be duly announced in the newspapers.

SEC. 2183. All the affairs at a general assembly pass not otherwise than through the intermediary of the administration of the company; consequently, should any shareholder desire to make any proposal which would benefit the company, he must make such proposal to the administration, and the latter, after examining it, proposes it to the general assembly of shareholders, if it is found worthy of consideration.

SEC. 2184. The resolutions arrived at by the general assembly of shareholders obtain obligatory force when they have been arrived at by a majority of threefourths of the members present at the general assembly of shareholders, calculating their voices according to the number of shares they represent, based upon paragraph 2171, which must be defined in the company's statutes.

Remark.-In the cases when the general assembly of shareholders does not take place, because the number of shareholders required by the company's statutes were not present at the assembly, or when the majority of votes required by the statutes was not obtained, the board of directors calls for a second assembly of shareholders, which is considered legal independently of the number of shareholders present at the assembly. The subjects under examination are in this case decided upon the simple majority of voices.

(1) This paragraph simply determines the required number of votes to obtain a majority at general assemblies, but does not indicate written forms of giving votes, nor the manner in which the journal is to be kept nor the protocols of the assemblies are to be drawn up.

E.-Accounts.

SEC. 2185. The board of directors presents its accounts to the general assembly of shareholders at fixed dates. These dates are determined in the company's general statutes. The report, together with the journals, books, accounts, and other papers pertaining thereto, are presented in due time by the administration, before the general assembly takes place, for the preliminary inspection of the shareholders. The

general assembly has to confirm the accounts, and appoints a commission from among the shareholders to examine the accounts. This is generally done when the enterprise of the company consists in the manufacture of artistic articles.

(1) Shareholders have the right, before the accounts have been presented to the general assembly, to demand that the accounts be shown to them for their preliminary examination, and the administration of the company is bound to satisfy their demand at the time named; that is to say, prior to the presentation of the accounts to the general assembly; but this demand may only be made when the accounts are already made up and before they are presented to the general assembly.

(2) The claim of a shareholder to examine the books, journals, and documents of a company, at other times besides that mentioned in the foregoing clause, is not satisfied unless accompanied by a writ from the court of justice.

(3) The rules for the presentation and examination of the books, journals, and other documents relating to the accounts of a company are established according to the statutes of the Russian bank for foreign trade, namely, through the instrumentality of a council and a specially chosen committee from among the shareholders. The balance of the shareholders have not the right to demand that the books and other documents of accounts be opened to their inspection.

(4) If the report of accounts of the administration includes the balance of the capital belonging to the company and the participants of shares at the general assembly elected special deputies to examine the accounts of the administration the said deputies must also verify the capital indicated in the accounts.

SEC. 2186. The report of accounts must be signed by all the members of the administration and must consist of:

(1) A statement of the company's capital;

(2) A general statement of receipts and expenditures during the period for which the accounts are rendered;

(3) A detailed statement of expenses incurred for the maintenance of the administration;

(4) An account of net profits;

(5) A statement of the reserve fund, when such a fund exists; and,

(6) A special account of articles manufactured, if the company is engaged in the

manufacture of articles of art.

SEC. 2187. Has been changed, and is included in section 2138.

SEC. 2188. Should the company liquidate its affairs, the administration begins by settling the affairs it may have with commercial firms, and announces the liquidation of the company through the newspapers, to the shareholders and to all persons who may have an interest in the affairs of the company. No shareholder is allowed to receive from the company any part of capital which may be due to him until the company shall have paid in to the Imperial Bank a capital amounting to the sums due by the company. These obligations being once freed, the administration commences by settling the shareholders in proportion to the amount they paid in to the company and according to the means of the company.

PART III.—THE MANNER OF PRESENTING PETITIONS FOR THE ORGANIZATION OF COMPANIES AND THE MANNER IN WHICH THEY ARE GRANTED.

SEC. 2189. Petitions for the establishment of stock companies are presented for examination to that ministry or chief department to which the article to be manufactured has reference. Members from other departments are invited to be present at the examination of the applications made. This depends, however, upon the kind of enterprise.

Remark.-If, according to the kind of enterprise, the minister and the members of the chief department find points of doubt in the statutes of the company which is petitioning the statutes are sent to the committee of ministers for their decision.

SEC. 2190. The petition must be accompanied by a project of the company signed by the founders; and if the company is formed in order to develop some new invention besides the project there must also be presented, first, the patent issued for said invention, and, second, the act by which the inventor has ceded it to the company which has filed the petition.

SEC. 2191. The project of statutes must contain:

The substance and object of the enterprise and the profits expected therefrom. (2) The name under which the company is to be formed and the town or place where the administration will be situated (sec. 2148).

(3) The amount of capital and the number and price of the shares (sec. 2160). (4) The manner of forming the capital, namely, whether the shares are to be paid up at once or payments are to be made by instalments (secs. 2161--2164). (5) The manner of disposing of the shares, namely, designating the number of

shares to be allowed to the founders (sec. 2165) and the number of shares which may be possessed by one shareholder (sec. 2166).

(6) The manner of delivering the shares and the manner of keeping the money paid for or on account of the shares (sec. 2166).

The advantages of the company, if it has any.

(8) The term for which an exclusive privilege or special advantage is applied for, as well as the term of existence of the company itself, if such is determined in advance (sec. 2146).

(9) When the company applies for privileges or for special advantages it must determine the time during which it will bring the enterprise into full operation (sec. 2159).

(10) The obligations, rights, and responsibilities of the company and its shareholders (secs. 2171-2173).

(11) The kind of trading patent it will secure, if the article to be manufactured is an article of trade or one relating to the industry of factories or works (sec. 2149). (12) The manner of keeping accounts (secs. 2185 and 2186).

(13) The manner of distributing the shares and the formation of the reserve fund (secs. 2169 and 2170).

(14) The manner of administering the affairs of the company, the organization, designs, and degree of power of the direction and of the general assembly of shareholders (secs. 2171 and 2184) and the degree of remuneration, if such is to be allowed to the directors for their trouble.

(15) The manner of examining misunderstandings (sec. 2138).

(16) The manner of winding up the affairs and liquidating the company (sec. 2188). (17) All other conditions which according to the nature of the enterprise may be necessary (sec. 2158).

SEC. 2192. The project must be accompanied by drawings and plans when the project can not be made sufficiently clear without them.

SEC. 2193. The ministry takes into consideration when examining the projects: Whether they answer legally all the requirements.

Whether all those who desire to participate in the enterprise are sufficiently

guaranteed.

(3) Whether the special conditions of the project do not infringe the legal right of a third party.

SEC. 2194. Furthermore, if the founders make application for special advantages for the company, or some exclusive privilege, the ministry takes into consideration the importance of the enterprise, and the benefit which the Government may reap through its existence, as well as the importance of the capital invested to attain the object of the enterprise, and in consideration of the foregoing it is decided to what degree and for what length of time the privileges asked for may be granted. In the same manner it is decided whether the company may be exempted from paying the trading certificates, and if, on account of the nature of the enterprise, the company may be allowed to dispose of the shares on instalments or whether their whole value must be paid up when purchased.

SEC. 2195. If it should happen that several applications are presented for the same object by various parties who desire to form companies for the same enterprise, and if the founders ask special advantages or exclusive rights, upon examining their projects, the ministry favors that one which promises the most public benefit; but if there exists no difference between the projects that one which was presented first is granted.

SEC. 2196. The project of the company's statutes, when examined and corrected at the ministry, which is in communication with the founders, is presented together with the ministry's conclusion either to the committee of ministers when the simple permission to organize the company is applied for, or to the council of state when apart from the permission to form the company special advantages or exclusive rights are applied for. In the latter case the minister, upon presenting the application, accompanies his conclusion with a copy of the clause of the statutes which contains in itself the privilege of the company, in order that this privilege may receive imperial

sanction.

SEC. 2197. Upon having received the permission of the committee of ministers or of the council of state, and imperial sanction, the statutes of the company in the form in which they have received imperial confirmation, upon being signed by the founders, are put into force and are published in the newspapers through the existing

senate.

SEC. 2198. Projects which can not be put into effect because of the reason expressed in section 2151 are returned to the applicants directly by the ministry without further permission being given them to make application. In the same manner projects are returned in which the founders refuse to make the corrections required of them by law, unless their argument is found to be satisfactory.

PROVISIONS OF COMMERCIAL LAWS RELATIVE TO COMMERCIAL ASSOCIATIONS.1

CHAPTER I.-GENERAL CONDITIONS.

For the three kinds of companies named in the law (full partnership companies, companies with silent partners and stock companies) written forms of agreement are absolutely necessary and only written agreements are recognized as conditions of the existence of such associations, such as contain mutual rights and obligations of the associates, which compose this "united" object-the association. But, apart from the three kinds of associations recognized by the law, other kinds of associations are foreseen, when two or several persons unite to operate an enterprise in common, which like the others, do not contain anything illegal, their operations being subject to the law in case of dissension among the partners. The law does not determine definitely these kinds of associaions. They are tolerated under the common laws, upon the understanding that such associations may exist without written agreements and that their recognition may take effect just like any other operation or enterprise which can be legally proved. In the absence of written agreements, however, the existence of silent partners is not recognized.

SEC. 63. The companies recognized by the Russian law are: (1) Full companies or "liability companies"; (2) companies without dormant partners, and (3) stock share-holding companies and full partnerships.

(1) The agreement of a trading company or partnership must be recognized as such when its object and the article of sale is included in trade and intended for trade; therefore, breweries, and companies organized for trade, must be considered as trading companies, but trading companies organized for a period of 12 months with a capital of 900 rubles can not be comprised among trading companies.

(2) The laws relating to trading companies can not be applied to companies, the object of which does not include a trade, but the manufacture of goods; inasmuch as for this class of association the law does not establish any special form of conditions, therefore the silence of the agreement of the partners, in which their object and intentions can not be doubted, may have the effect of an agreement and may serve as the basis upon which one partner may claim from another a statement of account. In the same manner an understanding relating to a determined participation in the sale of goods, upon which certain losses are borne or on which certain profits are received, may, although it does not come under any fixed denomination, be admitted as a partnership; on the contrary, if such a partnership contains nothing illegal such an agreement may be considered as a special kind of agreement, quite valid and legal, and which must be examined according to its special contents.

(3) In the case of a general trading enterprise of several persons organized without written agreement, a partner in such an enterprise is not deprived of the right to claim from the other partners in the association that right which belongs to him on the ground of the very fact that the enterprise belongs to them in common, and in the absence of basis leading to the conclusion that the parts of the associates are unequal, the parts of the enterprise are considered as being equal.

(4) When the enterprise or manufacture of a certain object is undertaken conjointly by two or more persons on their own account, while these persons have, at the same time, undertaken some other enterprise of quite a different character, the operations of the company are distributed among them; and in view of the fact that the action of one of the parties, executed in the general interest of the company, may be unknown to the remainder of the partners, it is necessary that an agreement be concluded among them by which it is required that the partners should render an account of their acts.

(5) If the agreement drawn up by the partners does not contain a joint responsibility of the partners with regard to the execution of the obligations they have undertaken, the responsibilities must be divided among the partners according to the interest of each one of them in the business.

SEC. 65. Companies or partnerships organized for publishing books or other scientific products are classed as trading companies, and must as such, for the division of the profits among them, observe the general provisions of the law.

SEC. 66. Stock companies organized for navigation purposes on the Black Sea, as well as firms trading on the rights of full (liability) companies, or companies with silent partners, must consist solely of Russian subjects.

SEC. 67. Persons establishing a trading firm on the rights of a full (liability) company, or of a company with silent partners, are obliged to present to the city hall (or some other responsible city corporation), and in the cities of St. Petersburg,

1 Vol. XI, sec. 2 of the statutes of commercial laws.

Moscow, and Odessa to the merchants' corporation, a statement of the statutes regulating their company, and must at the same time issue circular letters to the merchants in the cities announcing their establishment.

The provisions prescribed in this and other paragraphs of the commercial statutes relative to companies informing the merchants and the merchants' corporation is necessary in all cases when changes in the partnership of a company with silent partners or in the amount of capital of the company are to be effected; and before such information has been made public, the company has not the right to surrender to the silent partner or partners the capital they had placed with the company.

SEC. 68. The statement mentioned in section 67 must describe

(1) The nature or kind of company, whether a full (liability) company or a company with silent partners.

(2) The name, surname, titles, and residence of all the partners, as well as of those dormant partners who may desire it.

(3) The signature and seals of those partners who are empowered to manage the affairs of the company.

(4) The amount of capital formed by the partners and the amount placed in the enterprise by silent partners.

SEC. 69. If a trading firm is established without observing the provisions observed in paragraphs 67 and 68, the person to blame for the omission is prosecuted according to the law.

Remark.-Merchants who do business under the name of a trading firm or a company when presenting to the local administration the trading certificates they have secured, must give their signature, in that, apart from the persons named in said trading certificates, no other persons participate in their trading firm or company. SEC. 70. The municipal authorities, and in St. Petersburg, Moscow, and Odessa the merchants' corporation, present, not later than in January of the following year, to the department of trade and manufacture, a full statement of all companies existing according to the declarations which have been made to them.

CHAPTER II.-RELATING TO FULL (LIABILITY) COMPANIES.

SEC. 71. A full company consists of two or many partners who have placed upon one person the right to trade in the name of all. This is called a trading firm under their names.

SEC. 72. Full companies (liability companies) are organized upon a written agreement drawn up with the mutual consent of all the partners, based upon the rules relating to agreements and to companies especially, prescribed in the civil code.

SEC. 73. In order to better insure various kinds of trading enterprises against disorders which may occur through the death of the chief manager of the company or a partner thereof placed at the head of the company, it is the duty of all persons entering a company for the production of general trade with a joint capital when making the agreement with a full (liability) company to appoint persons who are to continue to direct the business of the company until the affairs of such a company are liquidated owing to the death of the actual manager.

SEC. 74. Persons who are doing business under merchant certificates, and who have the right to cooperate in companies, are bound to make agreements and to publish the same in the manner prescribed for partners trading with joint capital, and must also appoint a person to continue the management of the business in case of their death, as prescribed in paragraph 73.

SEC. 75. In both kinds of partnerships described in the foregoing paragraph (74), the appointment of a successor to manage the business does not need to be announced publicly, but may be written and kept under sealed envelope, which is not opened until the death of the partner in question. If this appointment is not made, the law follows the procedure prescribed in the civil laws (sec. 1238, remark 1, relating to rights of inheritance).

SEC. 76. Agreements concluded between partners on a fixed basis are accepted by the law if they contain nothing illegal.

SEC. 77. Partners of a trading firm (a liability company) are responsible in common and each one individually for all the debts of the firm with all their property. SEC. 78. The partner in one trading firm can not at the same time be a partner in another trading firm (liability company).

SEC. 79. The mutual obligations between the partners, their obligations toward private parties made in the name of the firm as well as the term, whether limited or unlimited, for which the company is organized, depend upon the mutual agreement. SEC. 80. Trading firms are not allowed to begin their operations nor do they receive civil or commercial cognizance (sec. 71) until they have informed the public in general, by means of a circular letter, and have presented to the proper authorities a statement of their mutual agreement.