a return which is false and which is
known to be false, they are liable to any one injured for actual
damages. If a full and honest description is made of property against
which stock is issued, a stockholder cannot complain because of his
failure to inform himself by personal examination or investigation of
the value of the property in which he is, or contemplates becoming, an
investor.

_Second_.--Duties of the State in regulating the relations between the
corporation and its officers and stockholders.

The second principle upon which the committee has acted in its
specific recommendations is this: that the State should permit the
utmost freedom of self-regulation if it provides quick and effective
machinery for the punishment of fraud, and gives to each stockholder
the right to obtain the fullest information in regard to his own
rights and privileges before and after he becomes the owner of stock.

Upon this theory the committee has recommended a law which permits the
corporation to determine the classes of its stock and the rights and
liabilities of its stockholders. The recommended law provides for
increasing or decreasing the amount of capital stock upon the
affirmative vote of a majority of its stockholders. For the protection
of a minority interest of stockholders it requires a two-thirds vote
to change the classes of capital stock or their voting power, to
change the corporate name or the nature of the business of the
corporation, or to authorize a sale, lease, or exchange of its
property or assets.

Directors are made liable, jointly and severally, for actual damages
caused by their fraudulent acts, but no director is made so liable
unless he concurs in the act and has knowledge of the fraud. The
liability of stockholders is limited to the payment of stock for
which they have subscribed, to debts to employees, and in cases of
a reduction of capital when they concur in the vote authorizing
a distribution of assets which results in the insolvency of the
corporation. An attempt has been made to give to the stockholder an
opportunity of securing for himself the fullest information on all
points touching his interest.

_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