Honorable Zollie Steakley

Secretary ofState State Capitol Austin, Texas

~Dear Mr. Steakley: Opinion No. WW-669 Re: Authority ofthe Secretary of State to accept and file Articles of Incorporation which include inpart a purpose clause to engage in the business ofdealing in annuities. You have asked **our** opinion as towhether your office may accept and file articles ofincorporation which include in part the following purpose clause: “To establish and carry ona business dealing in all types of,annuities and in connection therewith tobuy, sell, hold, issue, pledge, assign and deal in annuities ofall kinds, including deferred annuities, group annuities, variable annuities, term annuities, refund annuities, cash annuities, and installment annuities, butwithout banking, discounting or insurance privileges.” Itis our opinion that you may not accept and file such articles of incorporation.

Prior tothe enactment ofthe 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 tothe enactment ofthe Business Corporation Act there were no provisions which permitted the formation of a corporation with the power to sell annuities other than those provisions inthe Texas Insurance Code relating to life insurance companies. With the passage ofthe Business Corporation Act private corporations could be created “for any lawful purpose or purposes” with certain stated exceptions DArticle 2.O1, Business Corporation Act. Article 2.01 provides in part: “No corporation may adopt this Act or be organized under this Act or obtain authority to transact business in this State under this Act:Honorable Zollie Steakley, page 2 (~~-669)

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. . . “(4) Ifany one or more ofits purposes is to operate any’of the following:
. . . (d) insurance companies ofevery type and character that operate under the insurance laws ofthis State.
. .” Additionally, Article 9.14 provides inpart:

“This Act does not apply to corporations organized for the purpose of operating. , .insurance **companies** ofevery type or character that operate under the insurance laws ofthis State.
. .” Article 3.01 ofthe Texas Insurance Code defines a life insurance company inthe following **terms:** “A life insurance company shall be deemed tobe a corporation doing business under any charter involving the payment of money or other thing ofvalue, conditioned onthe continuance or cessation ofhuman Me. or involving an insurance, guaranty. contract or pledge for the payment ofendowments 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 toprivate corporations attempting to organize under the Business Corporation Act.

The question ofwhether or not an annuity contract is a “contract of insurance” or is a “security ”is immaterial tothis opinion.
SUMMARY The Secretary ofState may not issue a charter to a corporation which has as one ofits purposes ‘the

### engaging inthe business ofdealing in annuities. Very truly **yours,** WILL WILSON Attorney General ofTexas
FBW:jg By T;liucp& &!A* 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