Arkansas Constitution Article 12 - Municipal and Private Corporations
Arkansas Constitution – Article 12: Municipal and Private Corporations
Overview:
Article 12 of the Arkansas Constitution governs the formation, regulation, and powers of municipal and private corporations, including cities, towns, and private business entities such as railroads, banks, and other companies operating within the state.
Key Sections and Provisions:
Section 1 – General laws for corporate formation
The General Assembly must pass general laws for the formation and regulation of private corporations.
Special acts creating or regulating corporations are prohibited.
Section 2 – Power of corporations
Corporations have only the powers expressly conferred by law or those necessary to carry out those powers.
Section 3 – Revocation of charters
The state may alter, revoke, or annul corporate charters when necessary for the public good.
Section 4 – Liability of stockholders
Stockholders are individually liable for the corporation’s debts to the extent of their unpaid stock.
Section 5 – Restrictions on banking corporations
Corporations engaged in banking cannot issue paper money intended to circulate as currency.
Section 6 – Municipal corporate powers
Cities and towns may be created or altered only under general laws.
Municipalities can frame their own charters and exercise powers granted by the constitution or by law.
Section 7 – Restrictions on municipal credit
Municipal corporations cannot:
Lend their credit
Subscribe to or become shareholders in private corporations or companies
Assume or pay the debts of private corporations
Section 8 – Debts for public improvements
Municipalities may contract debts for public improvements with the approval of voters.
Section 9 – Railroad and transportation companies
Railroad companies and other carriers are regulated by general laws.
They are common carriers and must offer reasonable and nondiscriminatory rates.
Purpose and Significance:
Article 12 ensures:
A clear legal structure for corporations.
Public oversight over corporate powers.
Limits on municipalities engaging in private financial ventures.
Protection of taxpayers and public funds from risky corporate entanglements.
Transparency and fairness in transportation services.
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