Washington Law Review


The principals in a business corporation can make part of their investment in the corporation in the form of loans, and they can defer decision on this until after incorporation. They must, however, make some part of their investment in the form of an ownership or share interest, and they must provide for this in their articles of incorporation. For Washington corporations the choice of these provisions is needlessly complicated by the existing Business Corporation Act. And no improvement is in sight under the American Bar Association- American Law Institute Model Business Corporation Act (hereinafter, "Model Act") which is being proposed for enactment to replace the present act. One purpose of this article is to discuss the choice of an appropriate share structure under both the existing Washington statutes and the proposed Model Act, with a view toward minimizing filing and license fees, and possibly lawyers' fees. This involves a consideration of the classes (if any), kinds (par and no par) and number of shares to be authorized in the articles of incorporation, and the choice of that important amount which is now called "capital stock" and which the Model Act would call "stated capital." Another purpose of this article is to suggest improvements in the present business corporation statutes (and the Model Act, if it should be adopted) by abolishing the term par value and the confusing and useless provisions for "capital stock" and "paid-in capital," and by changing the method of fixing the state's filing and license fees.

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