This section is from the book "Business Finance", by William Henry Lough. Also available from Amazon: Business Finance, A Practical Study of Financial Management in Private Business Concerns.
Special charters are still sometimes applied for and obtained, but they are not in high favor for several reasons. First, of all, it frequently requires political influence and pressure to secure them; second, unless there are some marked peculiarities of the law, there is ordinarily no reason to prefer a special charter over the ordinary charter obtained under a general enabling act; third, a special charter is always more or less an uncertain thing because it has not been given authoritative interpretation by the courts, whereas the charter obtained under a general act can be framed with an eye to previous decisions and can thus be cleared of unexpected legal pitfalls.
A feature of public utility corporations in Great Britain is the fact that each company is organized and governed by a special act. These acts, however, are to a considerable extent standardized through uniform clauses and model forms that have been adopted by the Board of Trade. In general, any company in Great Britain which exercises rights of eminent domain or other exceptional rights is likely to ask for a special charter. However, numerous small gas and water companies and other public utilities are operated without special parliamentary authority, and are chartered under the general enabling law known as the "Companies Consolidation Act" of 1908.
An ordinary charter in the United States is in the form of an application to the Secretary of State or other proper authority for permission to incorporate; as soon as a governmental official has received, approved, and filed this application, it becomes the charter - we might call it the constitution of the corporation. The information which it contains is usually the following:
1. The name of the corporation.
2. The purposes for which it is formed.
3. The amount and classes of corporate stock.
4. The location of the principal business office.
5. The period of existence of the corporation which is usually unlimited or perpetual.
6. The names and addresses of the incorporators.
It is provided in several states that the corporate name must include the word "Company" or must be followed by some such word as "Incorporated" or "Limited," the purpose being to show in the title itself that the enterprise is incorporated. It is in most states forbidden to take a name which has been already utilized by some previously existing corporation, or to take a name which is so close as to be misleading. Corporations which have acquired a great deal of good-will value in connection with their names, depend, however, chiefly upon the common or statutory laws against unfair competition to protect them against imitation or misuse of their names.
The purpose for which a corporation is formed should be fully and clearly stated; it is customary to add one or two paragraphs of a general nature which give the corporation power "to do any and all other acts and things and to exercise any and all other powers which a copartnership or natural person could do and exercise and which now or hereafter may be authorized by law." It is not always convenient, although there are usually no legal difficulties, to amend the statement of purposes in a charter; for this reason liberality and fulness in stating them in the first place are desirable. A great many useful forms for stating the purposes of corporations engaged in various lines of business are easily available through the standard legal manuals.
The statement as to the amount and nature of the various classes of stock is a section of the charter which is customarily amended from time to time in case changes in the company's capitalization are made. Sometimes the original statement is intended simply as a "blind." For instance, the certificate of incorporation of the United States Steel Corporation which was filed in the office of the Secretary of State of New Jersey on February 23, 1901, showed a capitalization of $3,000. On April 1, 1901 the certificate was amended and the capitalization was changed to $1,100,000,000 - one-half common and one-half preferred.
The principal business office is not necessarily the office at which most of the business of the corporation is transacted, but is the office at which legal papers may be served and certain legal business transacted. Many of the large corporations of the United States having their headquarters in New York, are incorporated in New Jersey, Delaware, or some other state. In that case their "principal business office" is likely to consist of a meeting place loaned to them from time to time in the office of some firm of lawyers or some trust company; the name of the company is usually posted somewhere so that no one may fail to find the company or its representative if he so desires. At the entrance to the office of the Corporation Trust Company in Jersey City, there is a directory of several hundred corporations all of which have their "principal business office" with the Corporation Trust Company.
It would not be advisable to enter here into other details as to the provisions of the charter and the methods of incorporating. The reader who desires more detailed information can easily obtain it by consulting the statutes of his own state or by referring his inquiries to a capable lawyer.