APPENDIX 
S77 
that it will furnish stockholders, upon request and without charge, with a 
printed copy of the preferences of all classes of stock. 
25. To furnish the New York Stock Exchange, on demand, such reason- 
able information concerning the company as may be required. 
By .. 
Report of the Special Committee on Stock Dividends 
New York Stock Exchange 
In the requirements for the listing of investment trusts recently promul- 
gated by the Stock Exchange, a provision was incorporated to the effect 
that investment trusts should not include stock dividends in their income 
accounts. In recent weeks, the wisdom of this ruling has been the subject 
of discussion between the Stock Exchange and representatives of many 
companies affected by its operation, and a special committee has been look- 
ing into the question of stock dividends from the point of view of the 
Exchange with a view to clarifying the issues involved. 
Based on the report of this committee to the Governing Committee, the 
following statement of position is made: The interest of the Stock Exchange 
in the method by which companies account for stock dividends arises out of 
its consistent policy of attempting to obtain, in connection with corporate 
returns, such a clear disclosure of the relevant facts as will enable the 
Investor to properly appraise the listed securities in which he is interested. 
The stock dividend has, in late years, become an important instrument in 
the financial policy of American corporations, and there can be little doubt 
that its use is still in the early stages of development. In particular is it of 
value to corporations in growing industries requiring the use of large addi- 
tional amounts of capital, as it permits them in some measure to obtain this 
capital in the simplest manner from their own stockholders, and, at the same 
time, permits these stockholders, if they are so inclined, to realize upon 
their share of current or past earnings so capitalized. 
Coincident with the development of the stock dividend, there has taken 
olace the development of the less than $100 par and of the no par value 
stock, together with the practice of having large capital or paid in surpluses; 
and these relatively new conceptions have led with increasing frequency to 
the corporate practice of partial or complete recapitalization through the 
form of so-called “split-ups.” 
As a matter of definition from the point of view of the Exchange, a 
true stock dividend represents the capitalization, in whole or in part, of 
past or current earnings; while a split-up has not of necessity any relation 
to earnings and may mean nothing more than a change in the form in which 
ownership in an existing situation is expressed. 
Accounting practice, in striving to adapt itself soundly to these important 
developments in corporate procedure, has not yet reached the point where a 
mere perusal of the year’s accounts will suffice to reveal to the average 
investor in what manner he has been affected by action taken during the 
year in the matter of stock dividends. On this account, it is felt that the 
Exchange is justified in seeking to obtain wherever possible for the benefit 
of the investor such supplementary information as may assist him to a 
correct understanding of the accounts themselves