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39 Harv. L. Rev. 673 (1925-1926)
Non-Voting Stock and Bankers Control

handle is hein.journals/hlr39 and id is 719 raw text is: HARVARD LAW REVIEW VOL. XXXIX APRIL, 1926 No. 6 NON-VOTING STOCK AND BANKERS' CONTROL * VOLUTION of modem business structure has brought for- ward a new problem, that of corporations much of whose capital stock is disfranchised, and management of which is vested in a small class of voting shares. These shares are ordinarily called bankers' shares, but may be better termed manage- ment stock. It is submitted that under the law as it stands, the holders of CC management stock must exercise their power of control for the entire body of stockholders. This means, of course, that their control is by no means so complete or untrammelled as is ordinarily assumed. It is believed that, among other results of this rule, holders of such stock are required (i) so to arrange the capital structure that no class of stock appropriates to its benefit any of the capital contribution made by any other class; (2) to act disinterestedly, and to refrain from acting in any sit- uation in which they have an interest apart from that of the corporation; and (3) to bear liability jointly with the corporate directors for mismanagement of the corporate affairs unless they show dissent from the wrongful acts complained of. INTRODUCTION Control of American corporations by holders of a minority of the capital stock is no novelty to business men or lawyers. Means have been constantly sought to maintain such control. * I am indebted to Irving Mischkind of the New York Bar for many sug- gestions.

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