cable to corporations which have availed or may avail themselves of and are or may be governed by the provisions of sections two hundred ninety b, two hundred ninety c, two hundred ninety d, two hundred ninety e and two hundred ninety ƒ of the Civil Code shall be applied to the stated capital, the amount of such stated capital, and the shares of such corporations, respectively.

All provisions of law requiring that the par value of capital stock be stated in articles of incorporation or in amendments thereof or otherwise shall be deemed to be fully complied with in respect to shares without any nominal or par value if it be stated concerning such shares that they have no nominal or par value."

Other sections permit the number of shares without par value which a corporation may issue to be increased or diminished by amending its articles of incorporation, and permit any corporation having stock with par value to amend its articles so as to provide for such number of shares without par value as it may desire to issue and vice versa,3 and provide a method for fixing the fee prescribed by section 409 of the Political Code for filing articles of incorporation, where the stock of a corporation is without par value.

Civ. Code, § 403, as Amended by Stats. 1925, p. 428. All requirements of law relating to or based upon the capital stock of corporations or the amounts thereof or the shares into which such capital stock is or may be divided that are or may be applicable to corporations which have availed or may avail themselves of and are or may be governed by the provisions of sections two hundred ninety b, two hundred ninety c, two hundred ninety d, two hundred ninety e, and two hundred ninety ƒ of the Civil Code shall be construed to apply to the stated capital of such corporations, the amount of such stated capital, or the shares of such corporations, respectively. No provisions of law, special or otherwise, relating to or based upon the capital stock of corporations or the amount of such capital stock or the shares into which such capital stock is, or may be, divided, or requiring that all shares of such capital stock shall have the same par value, shall be construed to prevail over sections two hundred

3. See infra, § 263.

4. See infra, § 611.

ninety b, two hundred ninety c, two hundred ninety d, two hundred ninety e and two hundred ninety f of this code, but the aforesaid provisions shall be construed so as to give full effect to the above sections of this code, and so as not to limit or abridge the powers, authorities or privileges conferred or granted in and by said sections."

The provisions authorizing stock without par value do not violate sections three and twelve of Article XII of the Constitution where all of the stock to be issued is without nominal or par value. But the provision of section 403 as amended that no provisions of law that all shares of stock shall have the same par value shall be construed to prevail over sections 290b to 290f would seem to be invalid.

$263.

Amendment of Articles to Increase or Diminish Number of Shares or to Provide for Stock With or Without Par Value."

Civ. Code, § 290e, as Amended by Stats. 1927, Chap. 714, Approved May 23, 1927. "Any private corporation heretofore or hereafter formed under the laws of this state and having shares without nominal or par value, may increase or diminish the number of shares which may be issued by amending its articles of incorporation in accordance with section 362 of this code. The provision of section 362 of this code. prohibiting a corporation from increasing or diminishing its capital stock by amending its articles of incorporation shall not apply to an increase or diminution, in accordance with this section, of the number of shares which may be issued by a corporation having shares without nominal or par value, and such shares shall be considered as capital stock within the meaning of the provisions of section 362 prescribing the procedure for amending articles of incorporation."

Civ. Code, § 290f, as Amended by Stats. 1927, Chapter 714, Approved May 23, 1927. "Any private corporation heretofore or hereafter formed under the laws of this state and which is authorized to issue shares of capital stock having a par value may amend its articles of incorporation in the man

5. Land Development Co. v. Jordan, 198 Cal. 346, 245 Pac. 187.

6. See Del Monte Light & Power Co. v. Jordan, 196 Cal. 488, 238 Pac. 710; and § 261, supra; § 263, infra.

7. As to amendments generally, see supra, §§ 66-69.

ner prescribed by section 362 of this code, for the purpose of providing for such number of shares of stock without any nominal or par value as it may desire to issue, by stating in its amended articles of incorporation the matters and things required by section 290b of this code, excepting the amount of stated capital with which the corporation will begin busi

ness.

Any private corporation heretofore or hereafter formed under the laws of this state and which is authorized to issue shares without any nominal or par value may amend its articles of incorporation in the manner prescribed by section 362 of this code, for the purpose of providing for such number of shares of capital stock having a par value as it may desire to issue, by stating in its amended articles of incorporation the amount of its capital stock and the number of shares into which it is to be divided and the par value thereof.

In adopting amended articles, as authorized by this section, a corporation may also provide for any other amendments not contrary to law."

The provisions of the Civil Code relating to stock without par value, as they existed prior to the amendment of 1927, in so far as they permitted corporations to have both shares of a designated par value and shares of no par value, were held to be in conflict with sections 3 and 12 of Article XII of the Constitution, on the ground that such a stock structure would result in an inequality of interest and voting power and of liability to creditors on the part of stockholders. And it would seem that section 290f as amended is open to the same objection.

§ 264. In General.

c. Certificates of Stock

Civ. Code, § 323. "All corporations for profit must issue certificates for stock when fully paid up, signed by the president and secretary, and may provide, in their by-laws, for issuing certificates prior to full payment, under such restrictions and for such purposes as their by-laws may provide, but any certificate issued prior to full payment must show on its face what amount has been paid thereon. All

8. Del Monte Light & Power Co. v. Jordan, 196 Cal. 488, 238 Pac. 710. And see supra, § 261.

certificates of stock issued by corporations authorized by their articles of incorporation to issue stocks of different classes, shall express upon their face the character of stock represented by said certificates. The said certificates shall also state the number of shares of stock of each class which said corporation is authorized to issue, and the said certificates shall also contain a statement of the nature and extent of the preference granted to the preferred stock."

Civ. Code, § 290b. "Every certificate for . . . shares without nominal or par value shall have plainly written or printed upon its face the number of such shares which it represents, and no such certificate shall express any nominal or par value of such shares or express any rate of dividend in terms of percentage of any nominal or par value. The certificates for preferred shares shall state the amount, if any, which the holders of each of such preferred shares shall be entitled to receive on account of principal from the assets of the corporation in preference to the holders of other shares, and shall state briefly any other rights or preferences given to the holders of such shares."

A subscriber is not excused from paying for his shares because the certificate issued to him does not comply with the requirements of section 323.10 The signature of a de facto officer is sufficient.11

A transferable certificate issued before payment in full, showing his subscription and the payment of all installments due thereon, and the times when additional installments are payable, makes the person to whom it is issued the owner of the shares evidenced thereby, subject to the unpaid installments, and gives him as complete possession of such shares as would a certificate in the ordinary form issued for paid-up stock.1 12 Certificates of stock are to be distinguished from shares of stock, and are merely the evidence of the ownership of the stock which they represent.1

13

9. Section 290b, was amended by Stats. 1927, chap. 714, approved May 23, 1927, but the amendment made no change in this provision.

10. Ferrochem Co. v. Danziger, 23 Cal. App. 584, 138 Pac. 966.

11. Sherwood v. Wallin, 154 Cal. 735, 99 Pac. 191.

12. Lankershim Ranch etc. Co. v. Herberger, 82 Cal. 600, 23 Pac. 134. 13. See supra, § 252.

§ 265. Form of Certificate.-The following is a rather extended form of certificate of preferred stock where there are several classes of such stock:

Preferred Stock.

Series B 6%.

Shares, $25 Each.

Number

A. B. Company.

Shares

Incorporated Under the Laws of the State of California.

is the owner of

This certificate is transferable either in New York or Los Angeles. This is to certify that full paid shares of dollars each of the preferred series B 6% capital stock of A. B. Company, a corporation organized under the laws of the state of California, transferable on the books of said corporation upon surrender of this certificate duly indorsed. The present capital stock of said corporation authorized by its articles of incorporation is shares of shares of origishares of common

the par value of nal preferred,

dollars each, divided into shares of preferred, and

stock. The nature and extent of the preferences granted to the original preferred and preferred stock are as follows: The holders of the original preferred stock are entitled to receive, when and as declared from the surplus or net profits of the corporation, dividends at the rate of five per centum (5%) per annum. The dividends on said stocks are cumulative, and are payable before any dividends on the preferred stock or on the common stock are paid or set apart, so that if in any year dividends amounting to five per centum shall not have been paid thereon, the deficiency is payable before any dividends are paid upon or set apart for the preferred stock or the common stock. The preferred stock is divided into four classes as follows: Series A, shares; series B, shares. Whenever all

shares; series D,

shares; series C, cumulative dividends on the original preferred stock for all previous years shall have been paid, the holders of the preferred stock are entitled to receive, when and as declared from the remaining surplus or net profits of the corporation, after the payment of the cumulative dividends upon the original preferred stock, yearly dividends at the following rates: Holders of preferred stock, series A, seven per centum (7%) and no more; holders of preferred stock, series B, six per centum (6%), and no more; holders of preferred stock, series C, five and one-half per centum (5%) and no more; holders of preferred stock, series D, five per centum (5%) and no more. Except as to dividend rate, no distinction or preference exists among said four series of preferred stock or the owners thereof. The dividends on the preferred stock are also cumulative, and are payable before any dividends on the common stock are paid or set apart, so that if in any one year dividends amounting to seven per centum (7%) on the