Chapter 345. To amend the China Trade Act, 1922
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CHAP. 345.— An Act To amend the China Trade Act, 1922. February 26, 1925.[[H. R. 7190](/us/bill/68/hr/7190).][[Public, No. 484](/us/pl/68/484).] *Be, it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, * That subdivisionChina Trade Act.Three incorporators required.Vol. 42, p. 850, amended.
(a)of section 4 of the China Trade Act, 1922, is amended by striking out the word “ Five ” and inserting in lieu thereof the word “ Three. ” Sec. 2. That paragraph
(6)of subdivision
(b)of section 4 ofVol. 42, p. 850, amended. said Act is amended to read as follows: " “(6) The names and addresses of at least three individuals (aTemporary directors. majority of whom, at the time of designation and during their term of office, shall be citizens of the United States), to be designated by the incorporators, who shall serve as temporary directors; and ” " Sec. 3. That paragraph
(7)of subdivision
(b)of section 4 ofVol. 42, p. 850, amended. said Act is amended to read as follows: " “(7) The fact that an amount equal to 25 per centum of theStock subscribed for. amount of the authorized capital stock has been in good faith subscribed to.” " Sec. 4. That subdivision
(c)of section 4 of said Act is amendedVol. 42, p. 850, amended. to read as follows: " “(c) A China Trade Act corporation shall not engage in the businessBanking or insurance business forbidden. of discounting bills, notes, or other evidences of debt, of receiving deposits, of buying and selling bills of exchange, or of issuing bills, notes, or other evidences of debt, for circulation as money; nor engage in any other form of banking business; nor engage in any form of insurance business; nor engage in, nor be formed to engageInterest in shipping allowed if owned by citizens. in, the business of owning or operating any vessel, unless the controlling interest in such corporation is owned by citizens of the United States, within the meaning of section 2 of the Shipping Act, 1916,Vol. 39, p. 729; Vol. 40, p. 900. as amended.” " Sec. 5. That section 4 of said Act is amended by adding theretoNew matter.Vol. 42, p. 850, amended.Incorporation not complete until requisite amount paid in. the following new subdivision: " “(d) No certificate of incorporation shall be delivered to a China Trade Act corporation and no incorporation shall be complete until at least 25 per centum of its authorized capital stock has been paid in in cash, or, in accordance with the provisions of section 8, in realStatement of real or personal property. or personal property which has been placed in the custody of the directors, and such corporation has filed a statement to this effectVol. 42, p. 851. under oath with the registrar within six months after the issuance of its certificate of incorporation, except that the registrar may grant996Revocation on violation. additional time for the filing of such statement upon application made prior to the expiration of such six months. If any such corporation transacts business in violation of this subdivision or failsVol. 42, p. 853. to file such statement within six months, or within such time as the registrar prescribes upon such application, the registrar shall institute proceedings under section 14 for the revocation of the certificate.” " Sec. 6. Vol. 42, p. 851, amended. That subdivision
(b)of section 6 of said Act is amended to read as follows: " “(b) Corporate seal. Shall have a corporate seal and may, with the approval of the Secretary, alter it.” " Sec. 7. Vol. 42, p. 851, amended.Stock to be issued at not less than par.Full payment before issue. That section 7 of said Act is amended to read as follows: " “Sec. 7. Each share of the original or any subsequent issue of stock of a China Trade Act corporation shall be issued at not less than par value, and shall be paid for in cash, or in accordance with the provisions of section 8, in real or personal property which hasFull payment before issue. been placed in the custody of the directors. No such share shall be issued until the amount of the par value thereof has been paid the corporation; and when issued, each share shall be held to be full paidHolders liable for unpaid amounts. and nonassessable; except that if any share is, in violation of this section, issued without the amount of the par value thereof having been paid to the corporation, the holder of such share shall be liable in suits by creditors for the difference between the amount paid for such share and the par value thereof.” " Sec. 8. By-laws.Vol. 42, p. 852, amended. Subdivision
(b)of section 9 of such Act is amended to read as follows: " “(b) Directors. The number, qualifications, and manner of choosing and fixing the tenure of office and compensation of all directors; but the number of such directors shall be not less than three, and a majority of the directors, and the president and the treasurer, or each officer holding a corresponding office, shall, during their tenure of office, be citizens of the United States resident in China.” " Sec. 9. Meetings.Vol. 42, p. 852, amended. The third sentence of subdivision
(a)of section 10 of such Act is amended to read as follows: " Quorum.“The holders of two-thirds of the voting shares, represented in person or by proxy, shall constitute a quorum at such meetings authorized to transact business.” " Sec. 10. Suits against corporation.Vol. 42, p. 855, amended. That section 20 of said Act is amended by inserting “(a)” before the word “That,” and by adding thereto the following new subdivision: " “(b) Agent to be maintained in District of Columbia to answer in court. Every China Trade Act corporation shall maintain in the District of Columbia a person as its accredited agent upon whom legal process may be served, in any suit to be brought in the Supreme Court of the District of Columbia, and who is authorized to enter an appearance in its behalf. In the event of the death or inability to serve, or the resignation or removal, of such person, such corporation shall, within such time as the Secretary by regulation prescribes, appoint a successor. Such corporation shall file with the Secretary a certified copy of each power of attorney appointing a person under this subdivision, and a certified copy of the written consent of each person so appointed.” " Sec. 11. Income tax.*Ante*, p. 295, amended. That subdivisions
(a)and
(b)of section 263 of the Revenue Act of 1924 are amended to read as follows: " “Sec. 263. Credit for proportion of income from China sources bears to shares of China, United States, etc., owners.
(a)That for the purpose only of the tax imposed by section 230 there shall be allowed, in the case of a corporation organized under the China Trade Act, 1922, a credit of an amount equal to the proportion of the net income derived from sources within China (determined in a similar manner to that provided in section 217) which the par value of the shares of stock of the corporation owned on the last day of the taxable year by
(1)persons resident in997 China, the United States, or possessions of the United States, and
(2)individual citizens of the United States or China wherever resident, bears to the par value of the whole number of shares of stock of the corporation outstanding on such date: *Provided*, That*Proviso*.Limitation. in no case shall the amount by which the tax imposed by section 230 is diminished by reason of such credit exceed the amount of the special dividend certified under subdivision
(b)of this section. “(b) Such credit shall not be allowed unless the Secretary ofCredit subject to special dividends to residents in China, United States, etc. Commerce has certified to the Commissioner
(1)the amount which, during the year ending on the date fixed by law for filing the return, the corporation has distributed as a special dividend to or for the benefit of such persons as on the last day of the taxable year were resident in China, the United States, or possessions of the United States, or were individual citizens of the United States or China, and owned shares of stock of the corporation,
(2)that such specialAddition to other dividends. dividend was in addition to all other amounts, payable or to be payable to such persons or for their benefit, by reason of their interest in the corporation, and
(3)that such distribution has beenDistribution in proportion to stock owned. made to or for the benefit of such persons in proportion to the par value of the shares of stock of the corporation owned by each; except that if the corporation has more than one class of stock, the certificates shall contain a statement that the articles of incorporation provide a method for the apportionment of such special dividend among such persons, and that the amount certified has been distributed in accordance with the method so provided.” " Sec. 12. That paragraph
(13)of subdivision
(b)of section 213 ofGross income exemptions.*Ante*, p. 267, amended.China Trade Act corporation dividends to resident in China. the Revenue Act of 1924 is amended to read as follows: " “(13) In the case of a person, amounts distributed as dividends to or for his benefit by a corporation organized under the China Trade Act, 1922, if, at the time of such distribution, he is a resident of China and the equitable right to the income of the shares of stock of the corporation is in good faith vested in him.” " Sec. 13. That the China Trade Act, 1922, is amended by addingNew matter.Vol. 42, p. 856, amended.No corporation for business in China, except under China Trade Act. at the end thereof the following new section: " “Sec. 29. Hereafter no corporation for the purpose of engaging in business within China shall be created under any law of the United States other than the China Trade Act.” " Approved, February 26, 1925.