In order to comply with law, a corporation must file a resolution that the common stock is to be reduced and preferred stock is to be issued. The Secretary of State may determine the correct fee to be charged as no public dealing is implicated in the transaction.

The statute does not require the state supervisor of oil inspec- tion to furnish a dealer in oils information, giving the gravity of oils received and sold by his competitors, or the flash and fire test of same. It is, therefore, my opinion that your record which yo'u keep for public inspection, showing the date of each inspection, the number of barrels inspected and the name of the person for whom inspected, is a compliance with the laws of this state. CORPOR.ATION-DECREASE OF COMMON STOCK; ISSU- ANCE OF PREFERRED STOCK; AND FEE TO BE CHARGED. January 21, 1907. lon. Fred A. Sims, Secretary of State. Dear Sir-Your communication of the 15th inst. has been re- ceived, with enclosures; from which it appears that the Indiana 21 atch Company, a corporation organized under the manufac- turing and mining companies' act of Indiana, has had a capitali- zation of $100,000 of common stock, but no preferred stock. At its annual stockholders' meeting, duly held on January 11, 1907, a resolution was made and adopted by a vote of all the stock- holders of the company, reading as follows: "Be it Resolved, That the capital stock of the Indiana Match Company shall hereafter consist of fifty thousand dollars ($50,000) of common stock, divided into one thou- sand (1,000) shares of fifty dollars ($50) each, and one hundred thousand dollafs ($100,000) of preferred stock, divided into two thousand (2,000) shares of fifty dollars ($50) each. Be it further Resolved, That in order to effect the equitable distribution of the stock hereby created and the exchange of the outstanding certificates of stock for the new certificates thereof, and to provide for the payment of the increased stock, that each stockholder now of record shall be entitled to exchan,,e one (1) share of the stock now held by hiin for one (1) share of said preferred stock, upon surrender of his present certificate properly indorsed for cancellation, and shall also be en/illed to subscribe for one (1) share of said coiimon stock for each two (2) shares of stock now held by him, upon the payment in cash of the face value of the common stock so by him subscribed for. Be it further Resolved, That said shares of preferred (stock shall be subject to redemiplion, at par at such time or times, and upon such terms and conditions as the board of directors may prescribe and set forth in the certificate thereof, and that said company shall be bound to pay on said preferred stock semi-annual dividends at the rate of seven per cent. per annum on the first days of July and January of each year from and after the month of Jan- nary, 1907, payable out of the surplus net earnings of the company in preference to and with priority over the com- mon stock and said dividends shall be cumulative." No other resolution relating to the stock of this corporation was introduced or acted upon at said meeting. Upon the foregoing facts you ask, /hrl, whether the company should file in your office a certificate clearly defining a prop osal for the reduction of its comnmon stock fron $100,000 to $50,000, and also file a certificate relating to the issuance of preferred stock. My opinion is that both of such certificates shall be filed. Section 5063, Burns' Annotated Indiana Statutes, Revision of 1901, provides: "Every such company may, by a vote of its.stockhold- ers, at any meeting called for that purpose, reduce the capi- tal stock of the same. In such case, a certified copy of the vote shall, within thirty days thereafter, be filed in the office of the clerk of the circuit court in which the original certificate was filed, and the same shall, in like manner, be recorded; and also a duplicate of the same in the office of the secretary of State; and in default thereof the directors of such company shall be jointly and severally liable for debts contracted after the said thirty days and before the record of such vote.'' Section 5058a, Burns' Annotated Indiana Statutes, Revision of 1905, provides: "That anv manufacturing or mining company hereto- fore, or hereafter organized under the laws of the state of Indiana, is authorized and empowered to increase its capi- tal stock at any other meeting at any other time than the annual meeting of the stockholders by calling a special meeting of the stockholders of the company for such pur- pose, and giving the stockliolders not less than ten days' notice of the purpose for which the special meeting was called. The president and secretary of any such company. in certifying to the secretary of state the increase of capi- tal stock voted at any such special meeting of the stock- holders, shall certify under oath that two-thirds of all the stock of the company issued and outstanding, voted ii favor of such increase at the special meeting." The primary purpose of the legislature in requiring the filing of a certificate of the vote upon a reduction of the capital stock, is to protect those of the public who deal with the corporation, as creditors, and who look to its authorized capital as a basis for its credit. The interests of employes may also be involved, since a reduction in the amount of stock might lead to a diminution in the number of stockholders; and this, in turn, would operate to reduce the security afforded to "laborers, servants, apprentices and employes," under see. 5077 Burns' Statutes 1901, which ren- ders stockholders liable for debts owing to such persons. The certificate presented to you does not accomplish the pur- poses above indicated, for the following reasons: (1) It is altogether uncertain whether any of the common stock, now outstanding., will be surrendered for the new preferred stock. If it is not surrendered and if this resolution must be given some effect, then the authorized capital of the company is $150,000 of common stock, and $100,000 of preferred. It is highly improbable that the stockholders intended such an outcome of their action as has just been indicated; but as this is a possible result, and as this resolution would occasion uncertainty upon the part of the public which dealt with the company, the interests of all would be best subserved by the filing of a distinct resolution, setting forth an actual reduction of the common stock. (2) The method outlined in the resolution is confusing. The $100,000 of common stock is to be surrendered; $50,000 of coin- mon stock is to be subscribed for de novo by the old stockholders: $100.000 of preferred stock is to be newly issued. While the net result of these transactions, if consummated, way place $50,000 of common stock in the hands of shareholders who formerly held $100,000, yet this $50,000 is new stock; to be subscribed for afresh and paid for in cash, par value. It is difficult to under- stand how capital stock niay properly be said to be reduced by a resolution authorizing the issuance of stock ohic/h ncr'er before I/as i existence. (3) If the plan adopted by this company were permitted, It would afford an easy method for withdrawing and refunding common stock to the stockholders, before payment of corporate debts; since the resolution provides for redemption of the pre- ferred stock "at such time and upon such terms and conditions as the board of directors may prescribe and set forth in the certificate thereof." This preferred stock is issued in lieu of an equal amount of common stock; and, under the terms of the above resolution, might be redeemed at an early day after issuance. Though no suggestion of such intention appears in the present case, it is undesirable that a precedent be established whiJh1 might, iiu other instances, lead to grave abuses.. I am, therefore,. of the opinion that in order to comply with sections 5063 and 5058, supra7 a specific resolution should be filed, showing upon its face that the common stock is to be reduced; and also a certificate concerning the issuance of preferred stock. Your second inquiry relates to the proper fee chargeable upon the preferred stock, under the facts submitted. While, as above stated, the result of this transaction may be to create a new body of preferred stock to the amount of $100,000 par value, yet if you are convinced that both the reduction of the common and the creation of the preferred stock constituted parts of one entire transaction, you will be justified in collectingc for the state a fee based upon an increase of only $50,000 in the stock of the com- pany. As no rights of the public, dealing with the company, are involved in the latter question, but the only parties involved are the state and the corporation, you may determine the fact whether there is an increase in stock, looking at the transaction as a whole; ascertain what increase has occurred, and charge a fee accord- ingly. 13ILLS-SENATE BILL NO. 31. January 28, 1907. To the Senate of the General Assembly of the State of Indiana: Gentlemen-In answer to your inquiry bearing date January 24, 1907, as to whether Senate Bill No. 31 can properly originate in the state senate, I beg to advise that in my opinion it can, and