can corporation, which can obtain diplomatic protection in certain contingencies, enjoys a substantial privilege not available to a Cuban company.

In this connection Osgood Smith, an attorney residing in Cuba, reports that "under the treaty between Cuba and the United States the American Government has such rights that it is in a peculiarly advantageous position to intervene diplomatically for the protection of American capital and investments in Cuba whenever the proper occasion for such intervention arises. The American Government has never hesitated to intervene in this manner whenever it has been properly convinced that there was just reason for such action on its part. Moreover, a careful inquiry among Americans who have invested large amounts in Cuba will show that they have no fear of any serious damage to their property because of any disorder that may arise."

ORGANIZATION OF CUBAN COMPANIES

Partnerships and corporations do not, in Cuban jurisprudence. constitute separate branches of the law as they do in this country, but are regarded as two phases of the same branch of law, which we may call company law. A company, by the Cuban code of commerce, is considered merely the product or manifestation of a special kind of commercial contract-a contract where two or more persons obligate themselves to put into a common fund goods, money, or labor or other valuable commodity, for the purpose of obtaining and dividing between them the profits of industry or trade. The contract is "formal," that is, it must be drafted in a particular manner and must be distinguishable by its object and it must be registered in accordance with the dispositions of the code of commerce. Companies are known as sociedades or societies.

There are three kinds of companies recognized by law-the colectiva, the comanditaria, and the anónima-to each of which, in addition to the general rules of company law, special provisions are set forth in the code.

The Sociedad Colectiva.

Closely approximating the American partnership in purpose and function, the sociedad colectiva is, nevertheless, considered as a juridical person-an entity apart from the individual partners that compose it. Notwithstanding this, the characteristic that distinguishes the sociedad colectiva is the joint and several responsibility of the persons who compose it, so that the difference between the American partnership and the sociedad colectiva is one of form rather than of substance.

The name of the sociedad colectiva may contain the names of all the members or of only one or more of them; in the latter case, it must be followed by the words "y compañía," meaning " and company." If the name of an individual not a member should appear in the firm name, it would make such individual liable jointly with the members. Only such members as have been specifically authorized may use the firm name; unauthorized members are personally liable for its use.

The sociedad colectiva is instituted by the registration of a "public document" or formal contract containing the following essential requisites:

Name and address of each partner.

The firm name adopted.

Names of the members to whom is intrusted the direction of the business and the use of the firm name.

The amount of capital or capital goods contributed by each member and the value set on the latter.

Duration of the company.

Amounts allowed annually to partners for personal expenses.

Any other terms and conditions, such as the ratio of profit and loss to be borne by each partner.

The partners are permitted to trade privately for their personal profit as long as the kind of trade engaged in is not the same as that of the partnership and does not harm the partnership business. However, partners whose contribution consists only in personal services and not money or property may not exercise any business whatever apart from the partnership business.

The Sociedad Comanditaria.

This form of company is provided for the purpose of affording machinery for the investment of capital by persons who have no connection with the conduct of the enterprise of the company. If certain individuals desire to operate a business, but lack the necessary capital, they may organize a sociedad comanditaria, in which other individuals who have capital to invest may take an interest, contributing the capital and accepting the gain or loss, but not being liable for the obligations of the company beyond the amount contributed.

The comanditaria takes two forms the simple company and the company by shares. In the former, the capitalist may have some personal interest in the conduct of the company and is to be compared with the silent partner in our partnership law. In the latter, the interest is impersonal and is represented by shares, much in the manner of statutory joint stock companies in some of our States.

The active partners are all jointly and severally liable, and the company is instituted in the same way as an ordinary partnership, by the registration of the contract of association. The name of the firm is formed of the names of one or more members, as in the colectiva, but must have added to it in every case the words "Sociedad en Comandita," or the abbreviation "S. en C." Should the name of any silent partner be included, he will become fully responsible as an active partner.

The sociedad en comandita is an instrument of commerce that is sufficiently pliable and adaptible to permit its use in circumstances when the adoption of a partnership or corporation form of business would not be suitable or desirable, for it offers all the advantages of personal participation in the direction of the business by the investors, while providing them with limited liability. It is recommended to the consideration of those interested in industrial enterprises in Cuba requiring the investment of large sums of money.

The Sociedad Anónima.

The difference between a Cuban sociedad anónima (anonymous company) and an American corporation is rather theoretical than

practical; the rights and liabilities of the shareholders are the same. and the management of the company is similar.

A sociedad anónima is organized by the execution of a contract of association before a notary, the registration of this contract in the commercial register of the locality in which the company is to have its principal place of business, and the payment of the requisite fees and taxes. There is no mention in the law of the nationality or resi dence of the incorporators, from which commentators have deduced the proposition that the contract of association may be made outside Cuba and by foreigners. If this is true, and if the contract of association should be executed in the United States by Americans, it would probably be insufficient if acknowledged before an American notary; it might be acknowledged before a Cuban consul or authorized attaché of the embassy, or, failing this, it might be protocolized in Cuba before presentation at the commercial register.

The sociedad anónima is regulated fundamentally by the code of commerce, and in the report of the Spanish redactors of that code the following are given as the principles governing their treatment of this form of company: Full liberty of the associates to constitute the kind of company they deem convenient; complete absence of governmental intervention in the internal affairs of juridical persons; and publicity for the social acts that might interest third par ties, which publicity is a truer and more efficient guaranty than previous authorization of the government or the inspection exercised by delegates, now abolished in the principal commercial countries. Nevertheless, upon the establishment of the Republic, the doctrine was modified to some extent, and in the organic law of the executive power, the ministry of agriculture, commerce, and labor was intrusted with the supervision of mercantile companies.

For the regulation of this supervision a decree was published October 25, 1909, which, reciting the said organic law, and pointing out that even in countries where the liberty of contract was most jealously guarded a close supervision of corporations was considered a legitimate function of government, and that even in Spain, where the code of commerce was in force, a law of the previous year had instituted the inspection of anonymous companies, empowered the division of commerce and industry in the foregoing ministry to keep a register of all anonymous companies, obliging the local commercial registers to forward an abstract of the registration entered by each such company, and obliging the companies themselves, under pain of a fine of $30 to $60, to file certified copies of contracts of association and amendments. Inspectors are provided to see that! companies keep the books required by law, and information regard ing such companies is available to the public on application at the offices of the ministry. Annual reports of the condition of anonymous companies must be prepared by the director of the division. who may also put in motion the machinery to terminate the license of any company.

These regulations are not considered burdensome and are conducive to regularity in corporate enterprises, to the promotion of public confidence in corporations, and to the collection of accurate statistical information concerning the trend of corporate activity.

Requirements of the Contract of Association.

The following are the requirements of the contract of association (escritura social) which, signed before a notary, must be registered it the commercial register of the place where the principal office will be located, and a certified copy of which must be transmitted to the ninistry of agriculture, commerce, and labor:

Name and address of the incorporators.

Name of the company (which must be descriptive of the object of the company, must not be confused with that of any existing company, and must bear it the end of the designation "Sociedad Anónima," abbreviated “S. A.”). List of the persons charged with the administration of the company and the nanner of filling vacancies.

Amount of capital, with a designation of the value assigned to any contribuions of capital not consisting of actual money.

The number and kinds of shares emitted.

The time within which unpaid subscriptions must be paid in.
Duration of the company.

Objects or nature of business operations.

Regulations applicable to general or extraordinary meetings.
Any other agreements, including any by-laws to be published.

The law does not specify any form of administration of the company, it being customary, however, to adopt the ordinary form of board of directors. Most Latin-American countries require not only a board of directors, but another set of officials called síndicos, whose luty consists in maintaining a vigilance over the activities of the board. Cuba merely specifies, however, that whatever administrator is appointed shall have certain duties and liabilities and may not exceed limits of his delegated authority. The administrator is considered a general agent.

The company must publish a monthly balance in the official razette, and shareholders may inspect the books under the regulations agreed to.

Laws Concerning Shares of Stock.

Shares are either "nominative" or "bearer." Nominative shares are registered, and each transfer must be registered in the books of the company, while bearer shares may be transferred without restriction. Only shares which have been paid up to the extent of 50 per cent may be issued to bearer, others being issuable as nominative shares only. The amount paid up must be indicated on the face of the certificate. Detailed regulations are established for the payment of dividends and for the issue of new series of stock and for the purchase by the corporation of its own shares. A company can not lend money on the security of its own shares. It can not reduce its capital without complying with certain formalities under the supervision of the court.

A provision of interest to publicists the world over to-day is contained in article 169 of the code of commerce, which, with the object of inspiring confidence in foreign investors of capital, establishes that "funds belonging to foreigners existing in anonymous societies shall not be subject to reprisals in case of war."

Special Rules for Certain Kinds of Company.

Banks, financial companies in general, railroads, or other public or semipublic enterprises, and warehouse companies are governed by special regulations too detailed for inclusion in this monograph.

Cost of Incorporation.

The elements of cost which are to be considered in the organization of a sociedad anónima are of two kinds-cost of drafting the contract and fees and taxes. In the cost of drafting the instrument the attor ney's charge and the charge of the notary for protocolizing the document must be considered. It is, of course, impossible to say even in a general way how much an attorney will ask for his advice in organizing the company. Notarial fees for protocolization are based on the amount of authorized capital represented and are scaled about as follows:

Over $1,000,000 the fee is $100 for every additional million or fraction thereof.

Under the laws of July 31, 1917, and June 1, 1920, a stamp must be affixed to each page of the original and certified copies of the contract of association. For the original the stamp is 5 cents per page, but for copies the stamp is fixed on the first page only, in accordance with the following schedule:

Stamp tax

Before the contract of association can be presented for registration the government organization tax of one-quarter of 1 per cent on the paid-in capital or the value of stock issued as fully paid must be paid. This tax is thereafter payable on any stock issued from time to time.

The next important item is the registration fee, payable at the time of presentation of the contract of association to the commercial register of the locality where the company has its principal place of business. This fee is also based on the amount of authorized capital and is scaled as follows:

There is also a flat rate of 75 cents for each separate document filed with the register and a stamp tax of 5 cents for each page of the mercantile register upon which the document is transcribed.

(The foregoing information relating to cost of incorporation is based partly on a report of Dr. Alfredo Lombard, attorney, Habana.)