76 CORPORATION FINANCE
publicity of their frequency and quantity will tend to discourage too much
speculation. In addition to requiring monthly reports of changes in cor-
porate holdings, each officer and director who makes a profit from a purchase
and sale of his corporation's stock within a C months' period is subject to
having this profit taken from him and given to the corporation, Of course
it is still possible to use dummy accounts if they are cleverly disguised. By
removing temptation or making its use more difficult, some selfish directors
may be induced to give more consideration to the trust that they have
assumed in accepting election to office as directors.
Theory of Trusteeship.—Much has been written on tho subject, of the
responsibility of directors and officers to the stockholders whom they repre-
sent. E. M. Dodd, writing in Harvard Law Review, May, 1932, page-1146,
on the subject "For Whom Are Corporate Managers Trustees," says: 'The
directors and other agents are fiduciaries carrying on the business in the sole
interest of the stockholders."
A. A. Berle, Jr. says in an article on "Corporate Powers as Powers in
Trust," published in Harvard Law Review, May, 1931, page 1049:
All powers granted to a corporation or to the management of a corporation, or
to any group within the corporation, whether derived from statute or charter or
both, are necessarily and at all times excrcisable only for the ratable benefit of all
the shareholders as their interest appears.
At page 1050, he continues:
For years corporate papers and general corporation laws have multiplied powers
and made them increasingly absolute; . . . charters have to an increasing extent
included immunity clauses and waivers of "rights." It seems not to have occurred
to draftsmen that, through the very nature of the corporate entity, responsibility
goes with power.
Again, at page 1074, he says:
Whenever a corporate power is exercised, its existence must be ascertained and
the technical correctness of its use must be checked; but its uso must alao be judged
in relation to the existing facts with a view toward discovering whether under all
the circumstances the result fairly protects the interest of the shareholders.
Many of the apparently rigid rules protecting shareholders, as, for example, the
rule creating preemptive rights, are in reality not "rights" but equitable remedies,
to be used, molded, or discarded as the equities of the case may require.
New remedies may be worked out and applied by the courts in each case, depend-
ing on the circumstarices.... The powers of courts of equity in this regard are as
broad as may be necessary to adjust and maintain the relative participations of the
various classes of shareholders,
No form of words inserted in a corporate charter can deny or defeat this funda-
mental equitable control. To do so would be to defeat the very object and nature