Honorable Zollie Steakley 

Secretary of State 

State Capitol 

Austin, Texas 

~Dear Mr. Steakley: 

Opinion No. WW -669 

Re: Authority of the Secretary 

of State to accept and file 

Articles of Incorporation 

which include in part a 

purpose clause to engage 

in the business of dealing 

in annuities. 

You have asked our opinion as to whether your office may 

accept and file articles of incorporation which include in part the following 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 annuities, 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 Business Corporation Act private corporations could be created “for any lawful 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 organized 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 companies 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 organized 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 charter involving the payment of money or other thing 

of value, conditioned on the continuance or cessation of human Me. or involving an insurance, guaranty. contract or pledge for the payment of endowments 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 attempting 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 

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