in the by-laws; in the absence of such provision such vacancies shall be filled by the board of directors.

P. L. 1846, p. 66; P. L. 1849, p. 302; Act of 1875, § 20.

If the number of directors is increased the directorships thus created are not vacancies within the meaning of this section. (In re A. A. Griffing Iron Co., 63 N. J. Law, 168.)

The validity of a provision in the certificate of incorporation that newly created directorships shall be construed as vacancies and filled by the directors has yet to be established by authority. Compare Section 12, which provides that directors shall be chosen annually by the stockholders. It is better to have the stockholders elect such additional directors.

As to the power to fill vacancies at common law see Kearney v. Andrews, 10 N. J. Eq., 70.

16. The first meeting of every corporation shall be called by a notice, signed by a majority of the incorporators, designating the time, place and purpose of the meeting, which notice shall be published at least two weeks before the meeting in some newspaper of the county where the corporation is established; or said first meeting may be called without publication if two days' notice be personally served on all the incorporators; or if all the incorporators shall in writing waive notice and fix a time and place of meeting, no notice or publication shall be required.

P. L. 1846, p. 66; P. L. 1849, p. 302; Act of 1875, § 22; P. L. 1891, p. 113.

Generally the incorporators sign a written waiver of notice of meeting. Where all the incorporators but one were present at the first meeting, and he afterwards assented to what was done, the incorporation was held to be valid, although no notice was given. (Babbitt v. East Jersey Iron Co., 1 Stew. Dig., p. 209, § 13, not otherwise officially reported.)

The meeting must be held at the place designated in the certificate of incorporation as the principal office (§ 44).

17. Absent stockholders may vote at all meetings by proxy in writing; and every corporation may determine by its certificate of incorporation or by-laws the manner of calling and conducting all meetings, what number of shares shall entitle the stockholders to one or more votes, what number of stockholders shall attend, either in person or by proxy, or what number of shares or amount of interest shall be represented at any meeting in order to constitute a quorum; and may by its original or amended certificate of incorporation provide that any action which now requires the consent of the holders of two-thirds of

§ 16-17

§17 the stock at any meeting after notice to them given, or requires their consent in writing to be filed, may be taken upon the consent of and the consent given and filed by the holders of twothirds of the stock of each class represented at such meeting in person or by proxy; provided, in no case shall more than a majority of shares or amount of interest be required to be represented at any meeting in order to constitute a quorum; if the quorum shall not be so determined by the corporation, a majority in interest of the stockholders, represented either in person or by proxy, shall constitute a quorum.

(As amended by Chap. 119, Laws of 1901; P. L. 1901, p. 260.)

P. L. 1846, p. 65; R. S. (Ed. of 1846), p. 139, § 3; P. L. 1849, p. 302; Act of 1875, § 21; P. L. 1891, p. 113.

The matter in bold faced type is new, and is intended to enable corporations to provide against the contingency that the shares may become so widely scattered in small holdings as to render it physically impossible to get two-thirds in interest of each class of the stock issued and outstanding to attend a meeting, and to sign the written assent, as required by statute in certain cases.

It has been found in practice that many stockholders, either from lack of interest or else assuming that sufficient shares will be represented without them, refrain both from attending meetings and from sending their proxies.

The effect of this act is to permit any corporation to adopt, by appropriate provision therefor in its original or amended certificate of incorporation, a different rule from that prescribed by the Corporation Act with respect to the amount in interest necessary to be represented at a stockholders' meeting in order to amend the charter, increase or decrease the capital stock, dissolve, merge or consolidate with another company, or take any other action which now requires the consent of the holders of two-thirds of each class of the stock issued and outstanding.

Proxy. The power of attorney need not be in any prescribed form, nor be executed with any particular formality. It is sufficient if it appear on its face to confer the requisite authority, and that it be free from all reasonable grounds of suspicion of its genuineness and authenticity. (In re Election of St. Lawrence Steamboat Co., 44 N. J. Law, 529.)

A stockholder may revoke any proxy by appearing at the meeting in person, as the statute only authorizes proxies in the case of absent stockholders. (Chapman v. Bates, 47 Atl. Rep., 638.)

Voting. In the absence of any provision in the certificate of incorporation to the contrary, this section secures to each shareholder one vote for each share of stock held by him and standing on the books of the company. (Camden & Atlantic R. R. Co. v. Elkins, 37 N. J. Eq., 273.)

Provision may, it seems, be made in the certificate of incorporation or by-laws requiring each shareholder to hold a certain number of shares

to entitle him to one or more votes. (Loewenthal v. Rubber Reclaiming § 18 Co., 52 N. J. Eq., 440.)

Such a provision should be made in the original certificate or by-laws, or, if by amended certificate or by-laws, the unanimous consent of the stockholders is essential to its validity.

For the statutory provisions regulating elections of directors, see S$ 34 et seq.

Annual meeting of stockholders. It will be noted that the statute makes no provision for an annual meeting of the stockholders, except so far as it contemplates an annual election of directors by the stockholders. It is important, therefore, that the by-laws should be explicit as to the business which may be transacted at the annual meeting.

Notice of meetings.-The general rule is that extraordinary matters and such as cannot be fairly embraced in the transaction of business provided for by the charter itself, cannot be taken at a meeting unless notice is given. (Schwarzwalder v. Tegen, 58 N. J. Eq., 319, at p. 326, citing People Ins. Co. v. Westcott, 14 Gray, 440; Morawetz Corp., § 483 ; Ang. & Ames (10 Ed.) § 489.)

Adjournment of meetings.-Where a quorum assemble at a stockholders' meeting it is competent for them to adjourn the meeting to a later day, and it is not necessary to send notice of the adjournment to the stockholders. (Cook on Corporations, § 601, and cases cited). It is frequently provided in the by-laws that those who assemble at the time and place fixed for the meeting, although less than a quorum, may adjourn until a later day. But in such cases it is the better practice to provide that notice of such adjournment be sent to the stockholders.

18. Preferred stocks.-Every corporation organized under this act shall have power to create two or more kinds of stock, of such classes, with such designations, preferences and voting powers or restrictions or qualifications thereof as shall be stated and expressed in the certificate of incorporation or in any certificate of amendment thereof; and the power to increase or decrease the stock as in this act elsewhere provided shall apply to all or any of the classes of stock; but at no time shall the total amount of the preferred stocks issued and outstanding exceed two-thirds of the capital stock paid for in cash or property, and such preferred stocks may, if desired, be made subject to redemption at any time after three years from the issue. thereof, at a price not less than par, and the holders thereof shall be entitled to receive, and the corporation shall be bound to pay thereon, dividends at such rates and on such conditions as shall be stated in the original or amended certificate of incorporation, not exceeding eight per centum per annum, payable

§ 18 quarterly, half yearly or yearly; and such dividends may be made payable before any dividends shall be set apart or paid on the common stock, and such dividends may be made cumulative; provided the corporation shall set apart or pay the said dividends to the holders of non-cumulative preferred stock before any dividend shall be paid on the common stock; and in no event shall a holder of preferred stock be personally liable for the debts of the corporation; but in case of insolvency its debts or other liabilities shall be paid in preference to the preferred stock; the terms "general stock" and "common stock" are synonymous.

(As amended by Chap. 110, Laws of 1901, P. L. 1901, p. 245.)

P. L. 1860, p. 603; Act of 1875, § 25; P. L. 1882, p. 252; P. L. 1889, p. 412; P. L. 1889, p. 415; P. L. 1893, p. 445, § 5.

This section was amended in 1901 in the following particulars:

(1) The power to create preferred stocks under this provision is now limited to corporations organized under the Corporation Act.

(2) Preferred stock may be made subject to redemption at any time after three years; the limitation that such stock can only be redeemed at a fixed time and price to be expressed in the certificate of stock is re moved.

(3) The rates of dividends and other conditions as to the issue of preferred stock must be set forth in the original or amended certificate of incorporation.

(4) If the original or amended certificate of incorporation so provides, dividends on common stock may be paid concurrently with dividends on the preferred stock.

Classes of stock.-Under the Act of 1875 only two kinds of stock were specifically authorized, common and preferred stock. By the supplement of May 9, 1889 (P. L. 1889, p. 415), a third form of stock, called guaranteed stock, was authorized to be issued for the purchase of property. The present act is broad and authorizes the creation of a number of kinds of stock and classes "with such designation, preferences and voting powers, or re"strictions or qualifications thereof, as shall be stated and expressed in "the certificate of incorporation," the only restriction being that the total amount of preferred stock issued at any time shall not exceed two-thirds of the paid up capital stock. (See Section 8, subdivisions IV and VII, p. 16, ante.)

Stock may be preferred as to dividends, as to capital (either or both) or otherwise. Such stock may have a restriction or qualification of voting powers. The power to vote may be wholly taken from any class of stock. (Miller v. Ratterman, 24 N. E. Rep., 496 [Ohio, 1890].)

Stock with preferences may have any name and designation that the stockholders see fit to give it.