is no capital stock, then from the members of such corporations; except that corporations formed or to be formed for the purpose of erecting and managing halls and buildings for the meetings and accommodation of several lodges or societies of any benevolent or charitable order or organization, and in connection therewith, the leasing of stores and offices in such building or buildings for other purposes, the corporate powers, business, and property thereof may be conducted, exercised, and controlled by a board not less than three or more than fifty directors, to be chosen from among the stockholders of such corporation or from among the members of such order or organization. A majority of the directors must be in all cases residents of this state. Directors of corporations for profit must be holders of stock therein to an amount to be fixed by the by-laws of the corporation. Directors of all other corporations must be members thereof. Unless a quorum is present and acting no business performed or act done is valid as against the corporation. Whenever a vacancy occurs in the office of director, unless the by-laws of the corporation otherwise provide, such vacancy must be filled by an appointee of the board. Amended March 20, 1905; stats. 1905, p. 503. 78 Cal. 632; 81 Cal. 234; 93 Cal. 36; 94 Cal. 549; 111 Cal. 116; 118 Cal. 138; 121 Cal. 208; 126 Cal. 417; 127 Cal. 267, 637; 130 Cal. 349, 351; 132 Cal. 652; 146 Cal. 222; 5 Cal. App. 108; 7 Cal. App. 671. Organization of board: Civ. C. § 308. Directors must be elected and by-laws adopted at first meeting. [Repealed.] § 306. Directors must be elected and by-laws adopted at first meeting. [Repealed March 19, 1889; stats. 1889, p. 365.] Elections, how conducted. § 307. All elections must be by ballot, and every stockholder shall have the right to vote in person or by proxy the number of shares standing in his name, as provided in section three hundred and twelve of this code, for as many persons as there are directors to be elected, or to cumulate said shares and give one candidate as many votes as the number of directors multiplied by the number of his shares of stock shall equal, or to distribute them on the same principle among as many candidates as he shall think fit. The provisions of this section, so far as it relates to cumulative voting, shall apply to all corporations and associations doing business in this state, having a capital stock or shares of stock, and electing directors by a meeting of stockholders held in this state, whether such corporations or associations are organized under the laws of this state or not; and no election for directors of any corporation or association, doing business in this state, and electing directors in this state, shall be valid, if the right of a stockholder to cumulate his shares as herein provided shall be denied. In corporations having no capital stock, each member of the corporation may cast as many votes for one director as there are directors to be elected, or may distribute the same among any or all the candidates. In any case the director receiving the highest number of votes shall be declared elected. The provisions of this section, so far as it relates to cumulative voting, shall not apply to literary, religious, scientific, social or benevolent societies, having no capital stock or shares, unless it shall be so provided in their by-laws or rules. Amended March 20, 1903; stats. 1903, p. 253. 93 Cal. 36; 103 Cal. 363; 109 Cal. 589; 115 Cal. 590; 127 Cal. 683. Conduct of elections: Civ. C. §§ 312, 315; Constitution of California, art. XII, § 12. Organization of board of directors, etc. § 308. Immediately after their election, the directors must organize by the election of a president, who must be one of their number, a secretary, and treasurer. They must perform the duties enjoined on them by law and the by-laws of the corporation. A majority of the directors is a sufficient number to form a board for the transaction of business, and every decision of a majority of the directors forming such board made when duly assembled, is valid as a corporate act. Enacted March 21, 1872. 78 Cal. 292, 632; 93 Cal. 38; 94 Cal. 549; 96 Cal. 82; 103 Cal. 363; 121 Cal. 208; 127 Cal. 267, 637; 130 Cal. 348; 145 Cal. 364; 1 Cal. App. 670. Quorum necessary: $305 Civ. C. Dividends to be made from surplus profits; increase and reduction of capital stock. § 309. The directors of corporations must not make dividends, except from the surplus profits arising from the business thereof; nor must they create any debts beyond their subscribed capital stock; nor must they divide, withdraw, or pay to the stockholders, or any of them, any part of the capital stock, except as hereinafter provided, nor reduce or increase the capital stock, except as herein specially provided. For a violation of the provisions of this section, the directors under whose administration the same may have happened (except those who may have caused their dissent therefrom to be entered at large on the minutes of the directors at the time, or were not present when the same did happen) are, in their individual or private capacity, jointly and severally liable to the corporation, and to the creditors thereof, to the full amount of the capital stock so divided, withdrawn. paid out, or reduced, or debt contracted; and no statute of limitation is a bar to any suit against such directors for any sums for which they are liable by this section; provided, however, that where a corporation has been heretofore or may hereafter be formed for the purpose, among other things, of acquiring, holding, and selling real estate, water, and water rights, the directors of such corporation may, with the consent of stockholders representing two thirds of the capital stock thereof, given at a meeting called for that purpose, divide among the stockholders the land, water, or water rights so by such corporation held, in the proportions to which their holdings of such stock at the time of such division entitle them. All conveyances made by the corporation in pursuance of this section must be made and received subject to the debts of such corporation existing at the date of the conveyance thereof. Nothing herein prohibits a division and distribution of the capital stock of any corporation which remains after the payment of all its debts, upon its dissolution, or the expiration of its term of existence. Amended March 21, 1905; stats. 1905, p. 558. 57 Cal. 602; 81 Cal. 384; 90 Cal. 135; 93 Cal. 309; 109 NOTE. § 309. The change consists in the omission of the words "nor must they divide, withdraw, or pay to the stockholders, or any of them, any part of the capital stock," where those words first occurred, and in the omission of the words "in the event of its dissolution," after "thereof." The reason for the omission of the words first above alluded to is that by some clerical error they occurred twice in the section. The words "in the event of its dissolution" are omitted because their presence made it impossible to enforce the liability against the directors unless the corporation is first dissolved, which could not have been the intention of the legislature. For increase or reduction of capital stock: Civ. C. § 359. Directors, removal from office of, etc. § 310. The board of directors may be removed from office by a vote of two thirds of the members, or of stockholders holding two thirds of the capital stock, at a general meeting held after previous notice of the time and place, and of the intention to propose such removal. Meetings of stockholders for this purpose may be called by the president, or by a majority of the directors, or by members or stockholders holding at least one half of the votes. Such calls must be in writing, and addressed to the secretary, who must thereupon give notice of the time, place, and object of the meeting, and by whose order it is called. If the secretary refuses to give the notice, or if there is none, the call may be addressed directly to the members or stockholders, and be served as a notice, in which case it must specify the time and place of meeting. The notice must be given in the manner provided in section three hundred and one of this title, unless other express provision has been made therefor in the by-laws. In case the board of directors is so removed, a new board may be elected at the same meeting. Amended March 21, 1905; stats. 1905, p. 558. 97 Cal. 630; VII Cal. App. Dec. 254. NOTE.- 310. The amendment, while it authorizes the removal of the whole board of directors by a two-thirds vote of the members or stockholders, denies the power to remove less than the whole number by such vote. The reason for this is that by the system of cumulative voting sanctioned by section 307, a minority may obtain representation in the board of directors; if so, a director elected to represent a minority of one third ought not to be removed by the subsequent vote of the other two thirds, and the system of cumulative voting and minority representation thus made ineffective. The first sentence only is changed. Justice of the peace may order meeting, when. § 311. Whenever, from any cause, there is no person authorized to call or to preside at a meeting of a corporation, any justice of the peace of the county where such corporation is established may, on written application of three or more of the stockholders or of the members thereof, issue a warrant to one of the stockholders or members, directing him to call a meeting of the corporation, by giving the notice required, and the justice may, in the same warrant, direct such person to preside at such meeting until a clerk is chosen and qualified, if there is no other officer present legally authorized to preside thereat. The application of a number of stockholders less than three, but holding a majority of the capital stock, has the same effect as an application by three or more stockholders or members. Amended March 21, 1905; stats. 1905, p. 559. NOTE. 311. By the amendment the holders of a majority of the stock, though their number is less than three, are authorized to apply to the justice to issue a warrant for an election. The change consists in the addition of the last sentence. Elections, how stock must be represented. § 312. At all elections or votes had for any purpose in corporations formed for profit there must be a majority of the subscribed capital stock or of the members represented, either in person or by proxy in writing; provided, that in all instances of corporations formed for purposes other than profit the by-laws shall provide the number of members or stockholders that shall constitute a quorum for the transaction of business. Every person acting therein, in person or by proxy or representative, must be a member thereof or a stockholder, having stock in his own name on the stock books of the corporation at least ten days prior to the election. Any vote or election had other than in accordance with the provisions of this article is voidable at the instance of absent or any stockholders or members, and may be set aside by petition to the superior court of the county where the same is held. Any regular or called meeting of the stockholders or members may adjourn from day to day, or from time to time, if for any reason there is not present a majority of the subscribed stock or members, or no election had, such adjourn |