Third.—­The relation of the State to foreign corporations.

The committee has been guided upon this subject by the theory that the treatment of foreign corporations by the Commonwealth should, so far as practicable, be the same as of its own, particularly so far as concerns the liabilities of officers and stockholders, the statements filed with the State authorities for the information of stockholders or others as to their capitalization and the methods adopted of paying in their stock, and the annual reports of condition required for taxation purposes or otherwise.  On the same principle a nominal franchise tax is annually imposed corresponding to the tax imposed by the State on its own corporations and made approximately proportional in amount.

A few broad general principles are almost universal in American legislation on the subject.  Ordinary business corporations are now almost universally created under general law, and indeed by the constitutions of many States are forbidden to be created by special charter.[1] There is generally, however, no limitation by constitution on the size or capitalization, though the duration of corporations is frequently limited to twenty, thirty, or fifty years; and there is generally no limitation on the nature of the business that may be done, except, in a large number of States, banking and insurance, and except that there is in many States, as, notably, Massachusetts, a prejudice against land companies, so that they may not be created without a special charter.

[Footnote 1:  See Stimson’s “Federal and State Constitutions,” pp. 295, 315, 316.]

The liability of stockholders is commonly limited to the shares of stock actually held or such portion of them as may not have been paid up by the stockholder in cash or property value.  Massachusetts and the more conservative States attempt to provide that the stock shall be actually paid up in money or in property of the real value of money, at par.  New Jersey, New York, Maine, West Virginia, and the laxer States, practically allow their directors to issue stock for anything they choose—­labor, contracts, property, or a patent right—­and their judgment on the value of such property is held to be final in the absence of fraud.  Corporations are usually taxed, like individuals, on their tangible, visible property, real and personal, and in many States there is also a franchise tax on their shares.[1] There is a frequent limitation that the corporate indebtedness shall not exceed the amount of the capital stock.[2] No States, except Vermont and New Hampshire, seem now to have any limitation on the amount of the capital stock, or if there be a limitation, as of one million dollars at the time of formation, the corporation may subsequently increase its stock to any amount.[3] Michigan, however, had a limitation of five million dollars as to manufacturing or mercantile corporations, and two million five hundred thousand dollars as to