3. Any amendments thereto, certified by the secretary of

state.

4. Copy of the by-laws, certified by the secretary of the corporation.

5. Copy of any amendments thereto, certified by the secretary of the corporation.

6. Copy of the minutes of the first meetings of the stockholders and directors, certified by the secretary of the

corporation.

7. Specimen copy of the stock certificates to be used, certified by the secretary of the corporation.

8. Formal signatures of the officers of the corporation authorized to sign the stock certificates.

9. Either a certified list of the stockholders of the corporation existing at the time the transfer agency is turned over to the bank or trust company, or stock ledgers and transfer records proved to the date of transferring the records to the bank or trust company. If the corporation is just being organized, of course, these latter items would not be in existence.

§ 530. Duties of the Transfer Agent

After all of the requirements above mentioned have been fulfilled, the bank or trust company is ready to begin its duties as transfer agent or registrar. The new stock certificate books, properly signed by the officers of the corporation, should be turned over to the transfer agent. The stock certificates should be examined and compared with the certified copy filed with the transfer agent to see that they are in all respects alike. The transfer agent then opens the following books: (1) the stock ledger, and (2) the transfer record.

If the corporation is a new one and has not issued any stock, the first duty of the transfer agent will be to receive subscriptions for stock and to issue certificates to those who have

subscribed. Where subscriptions are paid in instalments, temporary or interim receipts are issued to the subscriber until the final payment has been made.

It is customary for the corporation for whom the bank or trust company is acting, to establish a deposit account with the bank or trust company. If this is done the transfer division, which is usually conducted as a part of the trust department, will credit the account for the sums received as subscriptions to stock. If, however, the corporation does not make the bank its depositary, the transfer division will turn the money over to the corporation from time to time.

At this point it should be mentioned that in accordance with statutory requirements in most of the states, the trust department of a bank must not hold funds subject to a draft or check. In Michigan, no trust company is allowed to maintain any checking account on behalf of customers. In other states, however, there may be a commercial department of the trust company in which checking accounts are maintained. Therefore, the transfer division must be careful that it in no way violates the statutes of the state in which it is incorporated and its office is located, by directly or indirectly establishing an account with a corporation on which it can draw. If the corporation has not opened a deposit account with the bank or trust company, the proceeds of subscriptions should be turned over to the corporation directly and not by honoring its drafts.

§ 531. Entries in the Transfer Record

Upon issuing new certificates, a complete record is made in the transfer record of all stock certificates issued, the amount of stock represented by each certificate, and the name and address of each individual stockholder. The stock certificates are listed in numerical order in this transfer record. The transfer record, therefore, is really a book of original entry and

corresponds to a journal of an ordinary commercial accounting system.

The stock ledger is posted from these books. As in any other ledgers, accounts are kept with the individual stockholders. Ordinarily, they appear in the book in alphabetical order.

At the time when the stock is issued it should be remembered that the Federal Tax Law requires that revenue stamps (documentary) be attached to the stubs of the stock certificates, at the rate of 5 cents for each certificate of $100 par value or fractional part thereof. If, however, the stock is of no par value, the tax is at the rate of 5 cents for each share, unless the market value exceeds $100 per share, in which case the tax is based on the market price, so that stock of no par value, the market value of which is $150, would be taxed 15 cents for two shares. In New York there is no state tax on an original issue of stock.

As soon as the issue has been put out, transfers of the stock are likely to commence, depending upon the marketability of the issue and particularly upon its speculative features. The more speculative the stock may be, the more sales there will be and therefore the more transfers.

The actual method of the transfer has been explained. There are, however, certain rules for making good transfers, which must be observed and insisted upon by the transfer agent. Where stock is transferred from one living person to another, the transferor must sign the certificate at the foot of the assignment printed on the back of the certificate. His signature must be known to the transfer agent or if it is not known, as is generally the case, it must be guaranteed by another bank or trust company or, in New York City, by a member of the New York Stock Exchange. In other localities, the guaranty of a member of the board of trade or exchange which is similar to the New York Stock Exchange may be

accepted as sufficient guaranty. Most New York banks and trust companies will not accept the guaranty of a curb broker. The reason for the insistence upon a guaranty by a bank or trust company, or a member of a stock exchange firm, is that the guaranty should be by a corporation, firm, or individual whose reputation is known.

The transferor also must place on the certificate or on a memorandum sale of the stock, the transfer tax stamps required by statute. There is a provision of the Federal Tax Law providing that revenue stamps (stock transfer) at the rate of 2 cents per $100 par value be attached to the stock. If the stock, however, is of no par value, the same rule as in the case of original issue stock applies, except that the rate is 2 cents instead of 5 cents. In New York State there is a statute requiring that all transfers of stock shall be taxed at the rate of 2 cents per $100 par value, the same rate as provided by the federal law. This tax is also a stamp tax. In some other states there are stamp tax laws to be observed.

§ 532. Transfer of Stock Belonging to an Estate

The ordinary transfer of stock between living people is fairly simple. The real technicalities arise, however, where stock belonging to the estate of a decedent is transferred from the name of the decedent. Technicalities arise when the transfer is made from either the executor of the decedent to an individual or directly from the name of the decedent to an individual who may be a beneficiary of an estate or the next of kin of the decedent.

Proof of Death. It is quite obvious that, if the stock certificate is to be endorsed by someone other than the person in whose name the stock appears, there must be an explanation showing the authority of the person who endorses the certificate as personal representative. The form of proof most. universally recognized in the case of stock in the name of a

decedent is a certificate of the probate court showing that the person who has endorsed the certificate has been appointed executor or administrator. Sometimes a death certificate of the Bureau of Vital Statistics may be required.

Waiver of Notice from State Comptroller. In practically every state of the United States there are transfer tax laws also known as inheritance tax laws. These laws impose a tax on the property of decedents. In some of the states the laws do not affect direct descendants at all. In these cases the tax is imposed only against collateral relatives. In other states there is an exemption of varying sums to those who are direct descendants. In order to transfer stock of a decedent where there is any transfer tax law, it is necessary to obtain a waiver from the state comptroller or similar official. The effect of this waiver is to permit the transfer agent to make the transfer without giving further notice to the comptroller or similar official. In New York a transfer agent or any other person who makes a transfe. of any kind of property which belonged to a decedent without obtaining a waiver, is subject to a penalty of not less than $5,000 nor more than $25,000, in addition to a liability for the tax upon the property transferred.

Certified Copy of Will. If the owner of the stock died leaving a will, then the transfer agent should require that a certified copy of the will be filed with it. Sometimes a plain copy may be filed, but the certified copy then should be exhibited to the transfer agent and an opportunity given to compare the plain copy with the certified copy.

Proof of No Debt. If the transfer is made within a year from the date of the death of the decedent, an affidavit should be made by the executor and filed with the transfer agent, alleging that the debts of the decedent have all been paid or amply provided for.

Other Papers to Be Filed. The Federal Estate Tax Law, which of course covers the entire United States, provides that