August 19, 1957
Hon. Zol,lie Steakley Opinion No. ww-234
Secretary of State
Capftol Ftati.on ‘Re: Whether a corporation o?i:;!r5z.ed
Austin, Texas pursuant to Chapter :j of l,!.p
Insurance Code cJntj,nues in .li:gal
existence after Ihe effe,:bt.i,y:e
date of S.B. lC*:-. and r&ail:-,:I
Dear MrO S teakley : questl,ons.
You have requested the opinion of Chl,s office ,u: the
const.r;ction of Sections 2 and 7 of Senate Ri.l.1 165,’ coll:f.l?,d
;a5hapte;l~~89 Vernon’s Texas Session Law Service, 55th L-g.,
) ‘2. . You have submitted five questi.ons which relate
to js!ir duties as Secretary of State in the f:ilfng of ,zmenjments
to their charters by existing corporations thereunde,r.
&?ts~t;,‘
on
i No. 1: Does a corporation organized DW-
suant to Chapter 7 of the Insu~rance Code cont!r:ii?
fn 16gal existence after the effective date of
Senate Bill 1651
Question No. 2: If your answer is affirmati~ve ti:
the foregoing, is such a corporation required to
amend its charter immediately upon th,:n effective
date of Senate Bill 165, or d,o such’corporations
have the right to avail themselves of bhe provi-
sions of the Act at any time after it?; t:ffective
date ?
Section 1 of the Act provides:
“Chapter 7 of the Insurance Code, as enacted
by Chapter 491 of the Acts of the 52nd Legislature,
1951, is hereby repealed,”
Section 2 of the Act provides:
“Trust companies may be created, and any cor-
poration, however created, may amend its charter
in compliance herewith, or a foreign corporati,on
may obtafn a certificate of authority to do busi-
ness in Texas for the following purpose:
Han, Zollie Steakley, page 2 (WW-23i)
“ITo act as trustee, executor, administra-
tor, or guardian when designated by any person,
corporation, or court to do so, and as agent for
the performance of any lawful act, including the
right to receive deposits made by agencies of the
United States of America for the authorized ac-
count of any individual; to act as attorney-in-
fact for reciprocal or ,interinsurance exchange. I!@
Senate Bill 165 will become effective on August 22,
19!V9 at which time all corporations heretofore created under
the provisions of Article 7.01 of the Insurance Code or whose
charters contain any of the purpose clauses therein named,
will cease to be corporations de lure and may no longer exer-
cise the general powers conferred by their charters. Hunt v,
Atkinson, 12 S.W.2d 142, 145 (Comm.App. 1929); 18 C.J.S, Par.
196
9 pe 502; . Senate Bill 165 contains no savings clause or
“grandfather clause” preserving the corporate existence of
corporations created thereunder.
However, since the Act which repeals the purpose
clause authorized by Article 7.01 also provides that any cor-
poration, however created, may amend its charter so as to be-
come a trust company for the purposes set forth in Section 2
cf the Act, it was manifestly the legislative.intent to pea-
mit corporations organized under the provisions of Article
7.01 of the Insurance Code to amend their charters in accord-
ance with the provisions of Section 2 of the Act so as to
continue their corporate existence.
Since the Legislature did not provide for a definite
period of time during which corporations created under the pro-
visions of Article 7.01 could continue their corporate exist-
ence ‘to permit their charters to be amended under the provisions
of Section 2 of the Act, and since upon the effective date of
the Act such corporations will cease to be corporations de JUE,
ariy corporation desiring to amend its charter pursuant to the
pravlsions of Seation 2 of the Act must submit its charter
amendment so that the Secretary of State may file it cont?,mpor-
aneously with the cessation of the corporate existence,
guestion No. 2: Is a corporation seeking to amend
its charter In compliance with Senate Bill 165 re-
quired to first adopt the provisions of the Texas
Business Corporation Act?’
guestion No. 4: If your answer to the foregoing is
negative, will charter. amendments. filed .pursuant to
Section 2 of Senate Bill 165 be governed by the
Hon. Zolli,e Steakley, page 3 (W-234)
general corporation laws or by the Texas Busl-
ness Corporation Act?
Section 7 of the Act provides in part as follows:
“The genera!. laws for incorporation and
governing of corporations, and the provisions
of Article 1513, Revised Civil Statutes of
Texas, and the provisions of the Texas Business
;:-zpora.tPon Act shall. supplement ,the provisions
? ‘2hi.s Act and shall a.r>i.:; to such t?1:st, c:>m..
:z::ies to the extent that they are non;; .;~nc:.:ri-
tent i?c.:rewl‘1 ; I:rovi.ded, the ppy;j .;) ;;>ns of
,~.
’i.cle ?,OlA ~ermit~~ting a coryior:i:i.,,;~. 7.c ,‘,,i*,~,:’
.L‘tli+i one ;~,urpo:;z:shall no!, aI>;:;,J, i I *‘I
Article 7.15A of the Rusiness c,orycra:i.on Act pro-
vide:; *.;at , with certain exceptions not hnre pertinent, exist-
ing co,‘:! orations shall continue to b’e governed by the laws
heret::,l‘-sre applicable thereto.
Article 7.1&B of the Business Cc-~;*pora~:ionAct pro-
vides hat for a period of five years aft;,?r t!:? effective da,te
of th;a Act, it shall not be applicable to any domes tic co,rpcra-.
tion duly chartered and existing on said effect:l~~ve da!e u:~:lt;.r
such corporation shall, during the five-year periad, 1 o:Lantar-,
ily elect to adopt the provisions of the Business Cor;.orati.or;
Act in the manner provided by Article 7.1&C. It woui~c: ;hczr: ~.
fore appear that any existing corporation which has not adopted
the provisions of the Business Cor oration Act could amend its
charter as provided in Article 131 c 9 Revised Civil Stat,utes of
Texas, as amended, without the necessity of adopting the provi-
sions of the Business Corporation Act.
However, any,corporation which was originally incor-
porated under the provisions of Chapter 7 of the Insurance Code
could not amend under the provisions of Article 1314 for t:rie
reason that the latter article provides that any privar ? crpor-
ation organized for any purpose mentioned in Title 32 ~1:y ;;ml~
amend or change to another purpose mentioned in Title : 1, The
purpose for which a private corporation was created ur-12~~1~A:-=-
title 7.01 of the Insurance Code is not contained in Title 32,
nor is the purpose authorized under the provisions of Section
2 of Senate Bill 165 contained in Title 32, Hence 9 co’rpora-
tions created under the provisions of Chapter 7 of the lnsur-
ante Code may only amend their charters by first adopting the
provisions of the Business Corporation Act and amending their
charters in the manner provided in Articles 4.01 to 4.05, inciu-
sive, subject to the limitation on Article 2.01A provided in
Hon. Zollie Steakley, page 4 (WW-234)
Section 7 of the Act, which limits the corporation to one pur-
pose*
Corporations which were created under the provisions
of Title 32, Revised Civil Statutes of Texas, and for the pur-
poses named therein, must adopt the provisions of the Business
Corporation Act since, although such corporations were organ-
ized for purposes mentioned in Title 32, nevertheless amendments
so as to change the purpose of such corporations under the pro-
visions of Article 1314 are confined to purposes mentioned in
Title 32. In enacting Senate Bill 165 the Legislature did not
provide for its inclusion as a part of Title 32, Re,vised Ci,vil
Statutes of Texas, or as an amendment to any article contained
therein. Therefore, the purpose mentioned in Section 2 of the
Act is not a purpose mentioned in Title 32.
It will be necessary for any corporation, however cra-
ated, desiring to amend its charter under the provisions of Sec-
tion 2 of the Act, to first adopt the provisions of the Texas
Business Corporation Act and thereafter amend its charter in the
manner therein provided.
Question No. 5: If you hold thatthe filing of char-
ter amendments~oursuant to Section 2 of Senate %.:~I.
165 is governed-by the Texas Business Corporation Act,
is this office authorized to file and approve Re-
stated Articles of Incorporation in the form prescribed
by Article 4.07, or must the instruments filed pu,rsuant
to Section 2 of Senate Bill 165 be in the form of an
amendment to the charter and governed by Art!cles: L.Cl-
4.05, inclusive7
Article 4.07A(2) of the Business Corporation Act pro-
vides that a corporation may, by following the procedure to
amend the articles of incorporation provided by Articles 4.01
to 4.05, inclusive, authorize, execute, and file restated arti-
cles of incorporation which may restate the entire tex,t of the
articles of incorporation as amended or supplemented t;;; all
certificates of amendment previously issued by the Se::r.~?-;iry of
State, and as further amended by such restated art.Xle,:_,,:~-
corporation. 'Inasmuch as it is a condition precedent i,:<.: :jny/
corporation, however created, to adopt the Business C~yr;-ratl.Jn
Act in order to amend its charter under the provisions c>YSec-
tlon 2 ,of the Act, the provisions of Article 4.O7A(2) ,prvtde
an spti:Jnal method of amending the charter of the co:rp:a.ration.
It 1~s the opinion of this office that the Secretary~ cf State is
autho:ri,Zed to file and approve restated articles of in:~r~ora-
tion as authorized by the provisions of Article 407Aj2) of the
Business Corporation Act as an alternative to fiing tn.- c~barter
Hon. Zollie Steakley, page 5 (WW-234)
amendment as provided in Articles 4.01 to 4-05 of the Business
Corporation Act.
SUMMARY
A corporation created under the provisions of
Article 7.01 of the Insurance Code ceases to be a
corporation de lure on August 22, 1957, the effect-
ive date of Senate Bill 165. If such corporation
desires to amend its charter under the provisions
of Section 2, Senate Bill 165, it must submit its
proposed charter amendment to the Secretary of
State for filing contemporaneously with the effect-
ive date of the repeal of Chapter '7 of the Insurance
Code.
All corporations, however created, desiring to
amend their charters under the provisions of Section
2 Senate Bill 165, must first adopt the provfsions
of! the Business Corporation Act and thereafter file
such charter amendment under the provisions of the
Business Corporation Act.
Yours very truly,
WILL WILSON
Attorney General of Te:cas
I A,
Rv e
-*c. K. Richards
CKR:wb Assistant
APPROVED:
OPINIONCOMMITTEE
E. Grady Chandler, Chairman
W. V, Geppert
John Reeves
James N. Ludlum
REVIEWED
FOR THE ATTORNEY
GENERAL
BY: Geo. P. Blackburn