ART. 44. The general meeting shall have the power

First. To examine and approve the operations of the bank and the account of expenses, as appears from the balances, books, and documents which prove it.

Second. To resolve on the creation of each branch, and the basis on which it must be conducted, and to decide finally concerning the closing of the branches, as resolved by the council of government.

Third. To resolve on the increase which may be necessary to make of the capital stock up to the amount specified in article 1.

Fourth. To reform the by-laws whenever it may be deemed necessary, always in accord with the existing legislation, the government having the right, after hearing the council of state, to give final approval.

For the reform of the by-laws, a resolution of the general meeting by a majority of two-thirds of the votes there present shall be necessary, and in the call for the meeting it shall be necessary to state the articles which shall be the object of the reform.

Fifth. To approve the drafts of regulations and their reforms proposed by the council of government, preceding the final approval. Sixth. To resolve on the ternary which is to be sent to the government for the appointment of deputy governor.

Seventh. To elect the members of the council of government. Eighth. To decide on the propositions presented by the council to the stockholders concerning the improvement of the service and of the prosperity of the institution, in conformity with its by-laws.

IX. The earnings and their distribution.

ART. 45. The corporate year shall begin on the 1st of January and terminate on the 31st of December.

On the 30th of June the council shall make a balance of the situation, declaring a provisional active dividend. On the 31st of December, after a previous inventory has been made, the annual balance shall be drawn and shall be submitted to the general meeting.

ART. 46. If the net earnings do not exceed 8 per cent of the capital per annum, they shall be entirely distributed among the stockholders. If they should exceed this amount, the surplus shall be devoted onehalf to the formation of a reserve fund and the other half for distribution among the stockholders.

When the reserve fund reaches 15 per cent of the capital stock, the entire net profits shall be distributed among the stockholders. When the earnings do not reach the 8 per cent fixed, the amount which is lacking may be taken from the reserve fund, which, whenever it is reduced, shall be replaced in the manner stated in its constitution.

On the proposal of the council of government, and after the approval of the general meeting, the reserve fund may be finally constituted or completed.

X. The liquidation and dissolution of the bank.

ART. 47. If before the expiration of the term of the concession of the bank its capital should be reduced to one-half, the government shall decide the new conditions under which it shall continue.

ART. 48. It may also be dissolved on the proposition of the council or of the stockholders who represent a fifth part of the capital, if the bank should lose two-thirds of its capital.

In this case the liquidation and dissolution shall be resolved on by a majority of the votes at the general meeting, justifying the resolution at another meeting, which shall be called on one month's notice, explaining in the call the object of the meeting.

ART. 49. In all cases of dissolution a liquidating committee shall be named, composed of a president and two members with as many alternates, who shall be given a salary or a fixed amount by way of compensation.

This committee shall report every six months to the stockholders concerning the state of the liquidation; and as soon as the collection permits a dividend of 5 per cent on the capital stock of the bank, the corresponding distribution and payment thereof shall be made to the stockholders.

XI. Final provision.

ART. 50. In case a representative of the bank should have to be named in Madrid, he shall be elected by the board of governors, reporting the fact to the colonial department and to a general meeting of stockholders.

Approved by Her Majesty.
MADRID, May 5, 1888.

The minister of the colonies.
VICTOR BALAGUER.

APPENDIX I.

ROYAL DECREE OF MARCH 23, 1887.

In conformity with the proposal of the minister of the colonies, and in accordance with the council of ministers and with the consultation of the full council of state, by virtue of the powers vested in me by article 13 of the budget law of Puerto Rico of the 5th of August last, in the name of my august son the King Don Alfonso XIII, and as Queen Regent of the realm, I hereby decree as follows:

ARTICLE 1. The creation in the island of Porto Rico of a bank of issue and discount is authorized, with exclusive privilege of issue.

ART. 2. For this purpose only the maximum period of ninety days established by article 178 of the code of commerce in force in that island by virtue of the decree of January 28, 1886, is extended for the period of one hundred and twenty days, and there shall be suspended for the time that this privilege is in force the right to issue notes to bearer established by article 172 of the same code. ART. 3. The concession shall be made by the Government, subject to the rules established by the decree law of August 16, 1878, with the modification of amplifying the authority granted by article 16, for the purpose of devoting the reserve funds to mortgage loans up to 20 per cent of the actual capital of the bank, and of establishing a single office of temporary deputy governor, as the business of the operations does not demand the two determined on by article 21. ART. 4. Within the period of three months, counting from the publication of this decree in the Gaceta de Madrid, the persons who desire to establish the bank may petition for the concession; and they shall, upon doing so, present a draft of by-laws in accordance with the provisions of the said royal decree, and shall show that they have previously deposited, as provided by article 4, the amount equivalent to 2 per cent of the cash capital with which it is proposed to establish the institution.

ART. 5. The Government reserves the right of granting the concession to the person or persons whose proposal it may think gives the greater guaranty to the interests of the island, as well as to disregard any of those presented, if from investigation which is made there should appear to be sufficient for the purpose which is the object of the privilege which is to be granted.

ART. 6. The present decree shall be submitted to the Cortes of the realm at the proper time.

Given at the palace the 23d of March, 1887.

The minister of the colonies,

VICTOR BALAGUER,

MARIA CRISTINA.

APPENDIX II.

ROYAL DECREE OF AUGUST 16, 1878.

FORMATION OF CORPORATIONS IN THE COLONIES.

SIR: Under the influence of a certain economic school, the legislation concerning institutions of credit has run in our country, since the decree of October 28, 1868, until that of March 19, 1874, over the entire ground lying between absolute liberty and exclusive privilege. Only the first of said provisions was applied to the colonies by another decree of September 17, 1869; and, as a fact, while in the Peninsula experience has proceeded to temper the severity of certain principles, they have preserved all their inflexibility in the legislation for the colonial provinces.

Such a situation should not be prolonged; the public administration can not be deprived of the power to defend the general interests against the exaggerations of credit there, where, by reason of the distance from the metropolis, economic crises must necessarily be graver and full of greater perils. Perhaps these inconveniences might have been avoided by the application to the colonies, with certain modifications, of the law of October 19, 1869; but the greater part of the reports, which with this object were asked for from these provinces coincided in requesting the promulgation of a law more openly protecting general interests.

The royal cedula concerning corporations, of November 29, 1853, was of this character, and this was the result of the legislation established in the Peninsula by the law of January 28, 1848, and the regulations of February 17 of the same year. Its reestablishment would have resulted in undoubted advantages: but the minister who subscribes this has considered that he should not propose to Your Majesty the rehabilitation of that system without previously introducing into the same, in a liberal and expansive spirit, some important reforms.

Of course, he has decided to give up the establishment of the corps of inspectors of corporations, which have been as burdensome on the corporations as they were futile for the defense of the interests of the shareholders. From the conditions necessary for companies to obtain the approval of the Government he has eliminated those which extend the criticism to points which should be left to the care of these very same mercantile bodies. He has given them, taking this concession from the law of October 19, 1869, the power of making loans and issuing obligations, which was not given them by the said royal cedula, and which contributes so much to the success of the companies. He has incorporated, finally, in the regulations the last partial resolution which modified them, and has made express mention of the royal decrees which granted to the companies which had the concession of public works, franchises, and rights which it is necessary to sustain in order to facilitate the execution of these works, which contribute so much to the progress and prosperity of the country.

Such are the reasons which move the subscribing minister to propose to Your Majesty, in accord with the council of ministers and with the report of the full council of state, the annexed draft of decree.

Sir: At the royal feet of Your Majesty.

MADRID, August 16, 1878.

JOSE ELDUAYEN.

ROYAL DECREE.

Taking into consideration the reasons exposed by the minister of the colonies, in accord with the council of ministers and with the report of the full council of State, I hereby decree as follows:

ARTICLE 1. Corporations shall be governed in the colonies by the regulations approved on this date.

ART. 2. The decree of September 17, 1869, referring to this class of associations, and paragraph 1, article 43 of the royal decree of August 6, 1875, concerning railroads in the Philippines, are hereby repealed.

ART. 3. The companies and institutions, which are the concessionaires of public works in the colonies, shall follow in their constitution and proceedings the said regulations, the royal decrees of December 10, 1858, February 6, 1865, August 5, 1866, and the other instructions complementing such provisions. ART. 4. The Government shall report this decree to the Cortes, in compliance with article 89 of the constitution.

Given at the Palace, August 16, 1878.
The minister of the colonies.

JOSE ELDUAYEN.

ALFONSO.

REGULATIONS FOR THE FORMATION OF CORPORATIONS IN THE COLONIES.

CHAPTER I.-Corporations and the formalities with which they have to be constituted.

ARTICLE 1. Those associations shall be called corporations in which a fund for a determined amount of stock is created, devoted to one or more objects, the administration of which is charged to agents who may not be removed. These companies, as a consequence, shall not have any personality, nor shall they be designated by the names of those constituting them, but only by the object or objects to which they may be devoted.

ART. 2. These corporations shall be constituted by means of public instruments, which must be approved, as well as their regulations, by the competent authority and in the manner hereafter stated.

ART. 3. The necessary condition of every corporation shall be, that it is constituted for one or more objects permitted by the laws.

ART. 4. Mercantile stock companies, constituted in accordance with the provisions of these regulations, and which have paid in their capital in cash, may contract loans in the form authorized by the code for merchants and mercantile bodies, providing always that their by-laws permit this kind of operations and that they are carried out within the terms and through the proceedings which are therein prescribed.

These loans may be made in the form of issue of obligations in favor of a person, or to order, with the conditions which may be deemed convenient, each issue being made known to the public as well as to the Government through the Governor-General within a period of forty days, counting from the date of the resolution.

They must also state in their balances the number of obligations which they have issued, their par or redeemable value, the proceeds which have come into the Treasury, the date of the issue, of the redemption, and the other conditions of the contract, for the information of the public.

ART. 5. In corporations the obligations contracted by the administration shall only be paid with the capital and the earnings in the manner provided by the regulations. The shareholders are not bound for any greater sum than the amount of their stock, and those who enter into contracts with the corporation may only make claims against the capital paid in or offered to the corporation. ART. 6. The articles of incorporation of these associations must necessarily contain:

First. The names, surnames, and residences of the incorporators.
Second. The residence of the company.

Third. The object or the branch of industry or of commerce to which it shall be dedicated.

Fourth. The name of the same.

Fifth. The fixed time of the life of the company, whenever by reason of the character of the association this may be determined.

Sixth. The capital stock.

Seventh. The number of shares into which the capital shall be divided and the amount of each.

Eighth. The manner and times in which the stockholders shall have to pay the amount of their stock.

Ninth. The administrative rules of the company.

Tenth. The powers of its administration.

Eleventh. The powers which are reserved to the general meeting of stockholders and the time of its call, which must be held at least once every year. Twelfth. The formation of a reserve fund with such part as is annually set aside for that purpose and which shall be at least 10 per cent of the capital stock of the companies which have pending risks, and 5 per cent in all others companies.

Thirteenth. The part of the capital the loss of which may bring on the dissolution of the company.

Fourteenth. The times in which inventories and balances shall be made (which shall at least be done each year) and the formalities with which they may be revised and approved by the stockholders' meeting.

Fifteenth. The maner and time in which the distribution of dividends by the general meeting of stockholders shall be decided on, in accordance with the present regulations.

Sixteenth. The designation of the persons who are to have the representation of the company during a determined period of time, and the manner and time in which these shall be replaced by the general meeting of stockholders.

ART. 7. Economic corporations shall carry absolutely the following books: First. Minute book.

Second. Book of correspondence.

Third. Daybook, in which there shall be the inventories.

Fourth. Book of accounts current.

Fifth. Book of inscription and general register of stock.

Sixth. Book of inscription and general register of obligations.

All these books shall be kept with the formalities prescribed by articles 40 and 41 of the Code of Commerce.

ART. 8. The stock of the corporations may be represented for the purposes of circulation in commerce by certificates of credit drawn with the formalities established by these regulations.

ART. 9. Such certificates may not be issued for amounts promised, nor until the company is legally constituted.

ART. 10. The property in the stock, whether only inscribed, or whether represented by certificates of credit, shall be established by a record number in the register of inscriptions.

ART. 11. The transfer of stock shall appear in the same book, signed by the interested party, the intervening broker, and the manager or director of the company. When the full value of the stock shall not have been paid, it shall appear in the memorandum of its transfer that the grantee remains subsidiarily responsible for the payment of the amounts necessary to pay the full value of the stock, as prescribed by article 283 of the Code of Commerce.

In the general register shall appear the operations concerning the stock which may take place, whether by their owners or in consequence of judicial decision.

ART. 12. The transfer of stock which is made in contravention of the preceding articles shall be of no avail, so far as the company is concerned, saving the rights of the holder to hold his grantor responsible.

ART. 13. Two copies of the inventories and balances which mercantile corporations are obliged annually to make, in accordance with the provisions of article 36 of the Code of Commerce, after being examined and approved by the general meeting of stockholders shall be sent by the management of the company to the governor-general of the province, accompanied by certificates of the → resolution of approval.

Within a period of thirty days, counting from the holding of the general meeting of stockholders, a copy of the said documents shall be sent by the said authority to the colonial department. Within the same time the companies must publish the said balances in the official gaceta of the territory where they may be domiciled; without prejudice to publishing them also in the newspapers and in the manner which they may deem convenient for the information of the public and of the stockholders.

ART. 14. The companies shall be charged with showing in the balances the number of the obligations which they may have issued, the redeemable value,