Honorable Zollie Steakley Opinion No. WW -669
Secretary of State
State Capitol Re: Authority of the Secretary
Austin, Texas of State to accept and file
Articles of Incorporation
which include in part a
purpose clause to engage
in the business of dealing
~Dear Mr. Steakley: in annuities.
You have asked our opinion as to whether your office may
accept and file articles of incorporation which include in part the fol-
lowing purpose clause:
“To establish and carry on a business dealing
in all types of ,annuities and in connection therewith
to buy, sell, hold, issue, pledge, assign and deal in
annuities of all kinds, including deferred annuities,
group annuities, variable annuities, term annuities,
refund annuities, cash annuities, and installment an-
nuities, but without banking, discounting or insurance
privileges.”
It is our opinion that you may not accept and file such articles
of incorporation.
Prior to the enactment of the Business Corporation Act private
corporations could only be created with purposes specifically authorized
by law. (These purposes were primarily set forth in Article 1302, R.S.
1925.) Prior to the enactment of the Business Corporation Act there were
no provisions which permitted the formation of a corporation with the
power to sell annuities other than those provisions in the Texas Insurance
Code relating to life insurance companies. With the passage of the Busi-
ness Corporation Act private corporations could be created “for any law-
ful purpose or purposes” with certain stated exceptions D Article 2 .O 1,
Business Corporation Act. Article 2.01 provides in part:
“No corporation may adopt this Act or be or-
ganized under this Act or obtain authority to transact
business in this State under this Act:
Honorable Zollie Steakley, page 2 (~~-669)
I
. . .
“(4) If any one or more of its purposes is to
operate any’of the following: . . . (d) insurance com-
panies of every type and character that operate under
the insurance laws of this State. . .”
Additionally, Article 9.14 provides in part:
“This Act does not apply to corporations or-
ganized for the purpose of operating. , . insurance
companies of every type or character that operate
under the insurance laws of this State. . .”
Article 3.01 of the Texas Insurance Code defines a life insurance
company in the following terms:
“A life insurance company shall be deemed
to be a corporation doing business under any char-
ter involving the payment of money or other thing
of value, conditioned on the continuance or cessa-
tion of human Me. or involving an insurance, guar-
anty. contract or pledge for the payment of endow-
ments or annuities.”
Thus, any corporation with the power under its charter to issue an annuity
contract would. by definition, be an insurance company. Therefore, the
purpose clause in question is one prohibited to private corporations at-
tempting to organize under the Business Corporation Act.
The question of whether or not an annuity contract is a “contract
of insurance” or is a “security ” is immaterial to this opinion.
SUMMARY
The Secretary of State may not issue
a charter to a corporation which has
as one of its purposes ‘the engaging
in the business of dealing in annuities.
Very truly yours,
WILL WILSON
Attorney General of Texas
By T;liucp& &!A*
FBW:jg Fred B. Werkenthin
Assistant
, -
Honorable Zollie Steakley, page 3 (WW-669)
APPROVED:
OPINION COMMITTEE:
Geo. P. Blackburn. Chairman
B. H. Timmins, Jr.
Joe Allen Osborn
Wm. R. Hemphill
Leonard Passmore
REVIEWED FOR THE ATTORNEY GENERAL
BY:
W. V. Ceppert