.
Hon. Jesse James Opinion No. W-489
State Treasurer
Austin, Texas Re: The applicability of Article
7.11, Texas Business Corpora-
tion Act, and Article 1395a,
V.C.S., to deposits with State
Treasurer of portions of as-
Dear Sir: sets of dissolved corporations.
You have requested an opinion as to whether or
not Article 1395a, Vernon's Civil Statutes, has been re-
pealed by Article 7.11 of the Texas Business Corporation
Act, passed by the Legislature in 1955. In the event that
it has not been so repealed you inquire as to which article
is applicable to corporations organized after the effective
date of the Texas Business Corporation Act and which article
to those organized prior to such date. Your ?ast question
concerns the power of the board of directors of a corporation
undergoing dissolution, organized prior to the enactment
of the Texas Business Corporation Act, to adopt its provisions
and thus be governed in certain of its actions by Article
7.11 rather than by 1395a.
Article 1395a and Article 7.11 both require the
deposit with the State Treasurer of that portion of the
assets of a dissolved corporation distributable to persons
unknown or who cannot be located. (Although there are
certain differences between the two articles, these differences
have no bearing on the proper answers to your questions and
will not, therefore, be noted further.)
laithregard to your first question, it is our opinion
that Artcle ,7
;.ll of the Texas Business Corporation Act was
not intendea to and did not repeal Article 1395a, V.C.S.
This is so for the reason that the Texas Business
Corporation Act itself provides for a five year "grace
period" after its effective date during which its provisions
will not apply to those corporations already in existence
in the absence of an affirmative acceptance on their part
of its provisions (Art. 9.14, Sec. B). During this period
. ,’
Hon. Jesse James, page 2 (MM-489)
these "existing corporations shall continue to be governed
by the laws heretofore applicable thereto". (Art. 9.15,
Sec. A) After the expiration of this five year period,
September 6, 1960, all corporations, with the exception
of those specifically exempt from the provisions of the
Act by Article 9.14, Section A, shall be deemed to
have adopted the provisions of the Texas Business Corporation
Act. For all practical purposes then, Article 1395a will
be repealed after such date. Therefore, any corporation
organized prior to the passage of the Texas Business
Corporation Act which does not voluntarily adopt its pro-
visions
r will be governed by Article 1395a until September
0, 1960. Any corporationorganized after the passage of
the Texas Business Corporation Act or any pre-existing
corporation which adopts its provisions will be governed
by Article 7.11. After September 6, 1960, all corporations
irillbe governed by the latter except those types of
corporations which are "p
@-ecifically exempt from the pro-
visions of sa-idAct. I@ do not pass upon the applicability
of Article 7.11 of the Texas Business Corporation Act to
such exempted corporations.
With regard to your third question, any corporation
prior i;o its dissolution can adopt the provisions of the
Texas Business Corporation Act by following the procedure
set out in Article g,IQ,Sec,tionC, and thereafter handle
'tk deposits with the State Treasurer in accordance with
Articie 7.11. Ho-we,Jer., in conference you have indicated
'ciixt the primary propcsition which you are interested in
is whether or not a corporation, after a distributive por-
tion has been depcsited with the State Treasurer under
Article 1395a, may adop'cthe Texas Business Corporation
Act by appropriate a&ion on the part of its board of
e:i:rec tors in order that %he deposit may thereafter be
go-Jernedby 7.11. As we irkerpret both Articles 7 .ll and
13y$, no deposit of this nature can be made with the
Treasurer until the corporation has been dissolved. A
corporation Is dissolved by: (1) The expiration of the
time limited in the charter; (2) a judgment of dissolution;
(3) an adjudication of insolvency; (4) vote or 4/5ths of
the stockholders at a stockholders' meeting followed by
issuance of certificate of dissolution by Secretary of
State; and (5) without a stockholders' meeting, when the
last stockholder signs a um~~:im.o~t~~ Igreement to dissolve
the corpo,ratlon. See Article .ljo'[, V.C.S., and 11-A Tex.
Jur. 94. As pointed out by 11-A Tex. Jur. 104, 'a dissolu-
tion has the effect of extinguishing and annulling the
corporate powers of transacting ordinary business and of
Hon. Jesse James, page 3 (W-489)
restricting the powers of the officers to those of liquidating
agents.". This being the case, it is our opinion that such
a vestigial corporation could no longer take advantage
of the adoptive procedure of Article 19.14, Section C.
Although Article 1389 provides in substance for the con-
tinued existence of a corporation for a period of three
years after dissolution for the limited purpose of en-
abling "those charged with the duty, to settle up its
affairs", this is the only power remaining in the corporation.
McBride v. Clayton, 166 s.w.2d 125 (comm. App.). To com-
pletely change the basic statutory provisions under which
the corporation has been acting by adopting the Texas
Business Corporation Act is not believed to be within the
scope of this provision.
SUMMARY
In handling deposits with the State Treas-
urer of portions of the assets of a dis-
solved corporation distributable to persons
unknovnor who cannot be located, any cor-
porations in existence prior to the effec-
tive date of the Texas Business Corporation
Act which do not adopt its provisions prior
to September.6, 1960, will be governed un-
til such date by Article 1395a, V.C.S.
Corporations organized after the effective
date of the~~TexasBusiness Corporation Act
will be governed by Article 7.11 thereof.
The board of directors of a corporation can
adopt the provisions of tk,Texas Business
Corporation Act prior to the-dissolution of
said corporation but cannot do so thereafter.
RVL:ph Very truly yours,
APPROVED: WILL WILSON
Attorney General of Texas
OPINION COMMITTEE:
Geo. P. Blackburn, Chairman B$?U?LMO&&
Fred B. Werkenthin
Lawrence Jones Assistant
J. Milton Richardson
J. Arthur Sandlln
REVIEWED FOR THE ATTORNEY GENERAL
BY: Assistant
W. V. Geppert