B-24752, MARCH 24, 1942, 21 COMP. GEN. 892

B-24752: Mar 24, 1942

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE FUNDS APPROPRIATED FOR CARRYING ON THE AUTHORIZED ACTIVITIES OF THE OFFICE ARE AVAILABLE FOR THE PAYMENT OF ORGANIZATIONAL EXPENSES INCIDENT TO INCORPORATION. 1942: I HAVE YOUR LETTER OF MARCH 23. PROVISION IS MADE THAT MONEY SHALL BE AVAILABLE TO THE COORDINATOR FOR THE PURPOSE OF STRENGTHENING THE BONDS BETWEEN THE UNITED STATES AND THE OTHER AMERICAN REPUBLICS BY "* * * CAUSING CORPORATIONS TO BE CREATED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA. IN DECIDING UPON THE KIND OF CORPORATION WE HAVE FURTHER CONCLUDED THAT IT IS BETTER TO ORGANIZE A NON- STOCK OR MEMBERSHIP CORPORATION. WOULD IN OUR OPINION MEET WITH WIDER APPROVAL AMONG THE PEOPLE OF THE AMERICAN REPUBLICS IN WHICH THE CORPORATION IS EXPECTED TO TRANSACT ITS BUSINESS.

B-24752, MARCH 24, 1942, 21 COMP. GEN. 892

GOVERNMENT CORPORATIONS - EXPENSES INCIDENT TO INCORPORATION THE EXPRESS AUTHORITY GRANTED THE OFFICE OF THE COORDINATOR OF INTER AMERICAN AFFAIRS BY THE ACT OF DECEMBER 17, 1941, TO CREATE CORPORATIONS FOR THE EFFECTIVE AND EFFICIENT CARRYING OUT OF THE PROGRAM OF SAID OFFICE INCLUDES THE AUTHORITY, WITHIN AVAILABLE APPROPRIATIONS, TO EMPLOY SUCH MEANS AND TO MAKE SUCH EXPENDITURES AS MAY BE NECESSARY TO ACCOMPLISH THAT END, AND, THEREFORE, THE FUNDS APPROPRIATED FOR CARRYING ON THE AUTHORIZED ACTIVITIES OF THE OFFICE ARE AVAILABLE FOR THE PAYMENT OF ORGANIZATIONAL EXPENSES INCIDENT TO INCORPORATION, INCLUDING THE EXPENSE OF SERVICES OF RESIDENT AGENTS WHERE REQUIRED.

ASSISTANT COMPTROLLER GENERAL ELLIOTT TO THE COORDINATOR OF INTER AMERICAN AFFAIRS, MARCH 24, 1942:

I HAVE YOUR LETTER OF MARCH 23, 1942, AS FOLLOWS:

BY PUBLIC LAW 353, CHAPTER 591, 77TH CONGRESS, FIRST SESSION, APPROVED DECEMBER 17, 1941, PROVISION IS MADE THAT MONEY SHALL BE AVAILABLE TO THE COORDINATOR FOR THE PURPOSE OF STRENGTHENING THE BONDS BETWEEN THE UNITED STATES AND THE OTHER AMERICAN REPUBLICS BY "* * * CAUSING CORPORATIONS TO BE CREATED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA, ANY STATE OF THE UNITED STATES, OR ANY OF THE OTHER AMERICAN REPUBLICS TO ASSIST IN CARRYING OUT THE COORDINATOR'S PROGRAM AND CAPITALIZING SUCH CORPORATIONS.' TO CARRY OUT THE PROGRAM OF THIS OFFICE, AS DIRECTED BY THE PRESIDENT, WE FIND IT ADVISABLE, IN CERTAIN INSTANCES, TO OPERATE THROUGH THE MEDIUM OF A CORPORATION. IN DECIDING UPON THE KIND OF CORPORATION WE HAVE FURTHER CONCLUDED THAT IT IS BETTER TO ORGANIZE A NON- STOCK OR MEMBERSHIP CORPORATION. SUCH A CORPORATION, AS DISTINGUISHED FROM A REGULAR BUSINESS OR STOCK CORPORATION, WOULD IN OUR OPINION MEET WITH WIDER APPROVAL AMONG THE PEOPLE OF THE AMERICAN REPUBLICS IN WHICH THE CORPORATION IS EXPECTED TO TRANSACT ITS BUSINESS.

IN CHOOSING THE STATE OF INCORPORATION FOR SUCH A NON-STOCK CORPORATION, WE HAVE ALSO REACHED THE CONCLUSION THAT THE POWERS CONFERRED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA UPON NON-STOCK CORPORATIONS ARE NOT BROAD ENOUGH TO CARRY OUT THE ACTIVITIES WE CONTEMPLATE. THE SECTIONS OF THE CODE DEALING WITH CHARITABLE AND PHILANTHROPIC ORGANIZATIONS, I.E. TITLE 5, CHAPTER 5, OF THE CODE OF THE DISTRICT OF COLUMBIA AS AMENDED, IS SHORT (BEING ONLY SIX SECTIONS) AND VERY GENERAL, AND IT IS THEREFORE DOUBTFUL THAT THE CORPORATION COULD OPERATE WITH THE FREEDOM OF A BUSINESS CORPORATION WHICH WE BELIEVE IT SHOULD HAVE. AS A TYPICAL EXAMPLE, WE DOUBT WHETHER A DISTRICT OF COLUMBIA NON-STOCK CORPORATION CAN HOLD STOCKS IN OTHER COMPANIES FORMED UNDER THE LAWS OF THE OTHER AMERICAN REPUBLICS TO CARRY OUT THE SAME OBJECTIVES. THIS IS LIKEWISE TRUE WITH RESPECT TO THE NEW YORK MEMBERSHIP CORPORATION LAW.

UNDER THESE CIRCUMSTANCES WE HAVE CHOSEN THE STATE OF DELAWARE AS THE PROPER PLACE IN WHICH TO INCORPORATE BECAUSE THERE IT IS POSSIBLE TO ORGANIZE A NONPROFIT, OR MEMBERSHIP, COMPANY UNDER THE GENERAL CORPORATION LAWS OF THE STATE, THUS GIVING A MEMBERSHIP CORPORATION ALL THE FREEDOM TO WHICH A STOCK CORPORATION IS ENTITLED.

IN INCORPORATING IN ANY STATE OUTSIDE THE DISTRICT OF COLUMBIA IT WILL BE NECESSARY TO HAVE A RESIDENT AGENT, AND WE DEEM IT BOTH EXPEDIENT AND MOST ECONOMICAL TO HAVE THIS SERVICE PERFORMED BY THE CORPORATION TRUST COMPANY, WHICH HAS ITS OFFICE AT 100 WEST TENTH STREET, WILMINGTON, DELAWARE. I UNDERSTAND THEIR CHARGE IS $100.00 FOR THE FIRST YEAR AND $50.00 FOR EACH OF THE FOLLOWING YEARS. THERE WILL ALSO BE ADDITIONAL EXPENSES NORMALLY INCIDENT TO THE ORGANIZATION OF CORPORATIONS IN ANY STATE OR DISTRICT, I.E. A FILING FEE, INDEXING FEE, CERTIFYING AND RECORDING FEES, ETC. THE CORPORATION TRUST COMPANY HAS EXPRESSED ITS WILLINGNESS TO ACT AS RESIDENT AGENT IN THIS SITUATION, BUT ONLY IN THE EVENT THAT WE RECEIVE AN OPINION FROM YOUR OFFICE STATING THAT ITS CHARGES WILL BE APPROVED BY YOU. WE WOULD APPRECIATE YOUR OPINION ON THIS QUESTION AT YOUR EARLIEST CONVENIENCE.

SECTION 3678, REVISED STATUTES, PROVIDES THAT---

ALL SUMS APPROPRIATED FOR THE VARIOUS BRANCHES OF EXPENDITURE IN THE PUBLIC SERVICE SHALL BE APPLIED SOLELY TO THE OBJECTS FOR WHICH THEY ARE RESPECTIVELY MADE, AND FOR NO OTHERS.

BY VIRTUE THEREOF, THIS OFFICE, IN THE PERFORMANCE OF THE DUTIES IMPOSED UPON IT BY LAW, HAS REFUSED TO ALLOW CREDIT FOR EXPENDITURES INCIDENT TO THE CREATION OF CORPORATIONS BY GOVERNMENT AGENCIES IN THE ABSENCE OF EXPRESS STATUTORY AUTHORITY THEREFOR OR AUTHORITY NECESSARILY IMPLIED WHEN THE CREATION OF CORPORATIONS IS THE ONLY POSSIBLE MEANS OF CARRYING OUT A STATUTORY DUTY. IN THE PRESENT CASE, HOWEVER, THE APPROPRIATION MADE BY PUBLIC LAW 353, APPROVED DECEMBER 17, 1941, 55 STAT. 818, UNDER THE HEADING " OFFICE FOR EMERGENCY MANAGEMENT," BY REFERENCE IS EXPRESSLY MADE AVAILABLE FOR ALL NECESSARY EXPENSES TO ENABLE THE OFFICE FOR EMERGENCY MANAGEMENT, OF WHICH THE OFFICE OF THE COORDINATOR OF INTER-AMERICAN AFFAIRS IS A PART, TO CARRY OUT AUTHORIZED ACTIVITIES, AND THE FUNDS MADE AVAILABLE FROM THE SAID APPROPRIATION TO YOUR OFFICE SPECIFICALLY ARE STATED TO BE AVAILABLE FOR "STRENGTHENING THE BONDS BETWEEN THE UNITED STATES AND THE OTHER AMERICAN REPUBLICS BY * * * CAUSING CORPORATIONS TO BE CREATED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA, ANY STATE OF THE UNITED STATES, OR ANY OF THE OTHER AMERICAN REPUBLICS, TO ASSIST IN CARRYING OUT THE COORDINATOR'S PROGRAM, AND CAPITALIZING SUCH CORPORATIONS.'

THUS, THE CREATION OF CORPORATIONS FOR CARRYING OUT THE PROGRAM OF THE OFFICE OF THE COORDINATOR OF INTER-AMERICAN AFFAIRS EXPRESSLY IS AUTHORIZED BY STATUTE AND SINCE THE AUTHORIZATION EXTENDS TO THE CREATION OF CORPORATIONS IN ANY STATE OF THE UNITED STATES THE CREATION OF A CORPORATION IN THE STATE OF DELAWARE IS, OF COURSE, AUTHORIZED. AND THE STATUTORY AUTHORITY TO CREATE CORPORATIONS NECESSARILY INCLUDES THE AUTHORITY, WITHIN AVAILABLE APPROPRIATIONS, TO EMPLOY SUCH MEANS AND MAKE SUCH EXPENDITURES AS MAY BE NECESSARY TO ACCOMPLISH THAT END AND CARRY OUT THE AUTHORIZED ACTIVITIES. SINCE INCORPORATION NECESSARILY REQUIRES A RESIDENT AGENT AND ORGANIZATIONAL EXPENSES SUCH AS A FILING FEE, INDEXING FEE, CERTIFYING AND RECORDING FEES, ETC., THE STATUTORY AUTHORITY TO CREATE CORPORATIONS THEREFOR INCLUDES THE AUTHORITY, WITHIN THE LIMITS OF AVAILABLE APPROPRIATIONS, TO PAY SUCH EXPENSES.

UNDER THE CIRCUMSTANCES, IF IT BE DEEMED EXPEDIENT, ECONOMICAL, AND NECESSARY TO THE EFFECTIVE AND EFFICIENT CARRYING OUT OF THE PROGRAM OF THE OFFICE OF THE COORDINATOR OF INTER-AMERICAN AFFAIRS TO CREATE A CORPORATION OR CORPORATIONS IN THE STATE OF DELAWARE, AS OUTLINED IN YOUR LETTER, AND TO HAVE THE SERVICES OF A RESIDENT AGENT PERFORMED BY THE CORPORATION TRUST COMPANY, THE APPROPRIATION MADE BY PUBLIC LAW 353, SUPRA, IS AVAILABLE FOR PAYMENT FOR THE SERVICES OF SUCH RESIDENT AGENT, AS CONTEMPLATED, AND FOR FEES AND EXPENSES NECESSARILY INCIDENT TO INCORPORATION.