A joint stock company has been defined as an association of individuals possessing corporate powers, enabling them to transact business as a single individual. Such companies may obtain incorporation in Canada in several ways:

1. By special act of either the Parliament of Canada or the provincial legislatures;

2. By letters patent issued under the General Companies Acts of the Dominion of Canada or of the provinces of New Brunswick, Prince Edward Island, Quebec, Ontario or Manitoba;

3. By memorandum of association in the provinces of Nova Scotia, Saskatchewan, Alberta and British Columbia.

As the powers conferred on companies under these several methods of incorporation vary, banks, as a rule, issue instructions to their branches in the different provinces regarding loans to joint stock companies; special forms for by-laws, etc., are also supplied.

When considering loans to companies incorporated by special acts, it is, of course, necessary to refer to the companies' charters in each instance.

In opening an account with a joint stock company, it is, therefore, necessary to ascertain the following:

1. Has the company power to borrow?

2. Have the directors authority to exercise that power without a by-law of the shareholders?

3. Is there a specified limit to the amount which can be borrowed, and has that limit been reached?

4. Have the directors power to secure the payment of moneys borrowed by giving security under Sections 86-90 of the Bank Act or by mortgage or other charge on all or any part of the assets of the company?

This information can be obtained from the charter and records of the company and from the statute under which the company is incorporated. These

Resolution passed by the Board of Directors of the..................

...................................................at a meeting duly called, held at the office of the Company in............................

on the....................day of............................, 191____

On motion it was resolved that..............................be and

........hereby is authorized on behalf of the Company to draw, accept, sign, make and agree to pay all or any Bills of Exchange, Promissory Notes, Checks and Orders for the payment of money; also to authorize any Manager or other officer of the..........................bank to accept all or any Drafts or Bills of Exchange on behalf of the Company; also to sign checks upon and to borrow money from the........

.................bank on behalf of the Company, either by overdrawing the account of the Company with the said Bank or otherwise.

Also that........................................be and...........

hereby is authorized on behalf of the Company to assign and transfer to the Bank all or any Stocks, Bonds, Warehouse Receipts, Bills of Lading, and other securities, and to give the Bank security under Section 88 of the Bank Act, and to sign a written promise or promises binding the Company to give any such securities as aforesaid.

Also that...........................................or any one of them, be and..........hereby is, authorized on behalf of the Company to negotiate with, deposit with, or transfer to the said Bank (but for credit of the Company's account only) all or any Bills of Exchange, Promissory Notes, Checks or Orders for the payment of money and other negotiable paper, and for the said purpose to indorse the same or any of them on behalf of the Company; also to arrange, settle, balance and certify all books and accounts between the Company and the Bank, and to receive all paid checks and vouchers, and to sign the Bank's form of settlement of balances and release.

CERTIFIED a true copy of the Resolution passed as above set forth and recorded in the Minute Book of the proceedings of the Board of Direr-tors of said Company.

Dated the....................day of......................, 191___

President Secretary

The President and Secretary will sign as above; the other officers as follows:

................................................Vice-President

L. S

Figure 45 questions being satisfactorily answered, it is customary for the directors of the company to pass a resolution outlining the powers of the signing officers, and specifying who they are to be. A certified copy of this is generally supplied to the bank on a form similar to that in Figure 45.

Where a by-law of the shareholders is necessary to confer borrowing powers on the directors, a certified copy of the by-law is supplied to the bank on a form similar to that in Figure 46, supplemented by the directors' resolution above referred to.

It may be seen from the above that care should be exercised by a bank, not only in opening an account with a company, but also in any subsequent transactions. It is well to remember that a corporation has no personal liability, that no director or officer of a company is identified with the business of the company as closely as he would be if it were his own undertaking, and that failure of a company can affect a director or shareholder only to the extent of the amount of his shares. In view of this limited liability it is customary among banks, when a company is a frequent applicant for loans, to require the personal guarantee of the directors. The logic of this is sound, and the refusal on the part of the directors to comply with this condition should be considered with extreme caution. If the men who are managing the company have not sufficient confidence in their own management to guarantee the loan, why should the bank take the risk?

BY-LAW of the.....................................................

Be it Enacted as a By-law of the Company as follows:

The Directors may borrow money on the credit of the Company from time to time and in such amounts as they may think proper, and may hypothecate, mortgage or pledge the personal property of the Company to secure any sum or sums borrowed for the purposes thereof.

The borrowings of money from time to time heretofore under the authority of the Directors from the............................bank and the giving of securities therefor under Section 88 of the Bank Act or otherwise are hereby ratified and confirmed.

In witness whereof the corporate seal of the Company has been hereto affixed, and this By-law duly countersigned the ..............day of..................191....

President

L. S

At a general meeting of the shareholders of the above-named Company duly called for considering the foregoing By-law, which was passed by the Directors on the..............day of..................

191...., and held on the..............day of.................191...., the same was duly sanctioned and confirmed by a vote of not less than two-thirds in value of the

(1) subscribed stock represented

............................................at such meeting.

(2) shareholders present in person or by proxy

Chairman Of The Meeting Secretary