**E** 

### NEY GENERAL EXAS

Hon. William A. Harrison, Commissioner Opinion No,,WW-906 State Board of Insurance International Life Builditrg Re: Whether or not the Texas BusiAustin, **Texas** ness Corporation Act is now or will become applicable to insurance companies subject **to Art.**  **2.18** 

### of the Texas Insurance Coda. in view ti H.B. 144, Dear Mr, Harrison: 56th Legislature, You have asked our opinion 0nseveral queetions 

### concorning the applicability of the Texas Business Corporation 

### Act (hsrefaafQr referred to 

### as thu “Act’*) to inrurknce companies governed by,Ardcfe 

### 2.18 of the hrurauca Coda. **Thir** Article provides as follows:



### “The 16~0 governing corporat$Qnr in general shall 

### apply to and govern insurance companies inciarporated in this State in so 

### far 0s the same or0 not inconoietent with any provision ofth# Code. None 0fthe provisions ofthis Chapter, 2 shall apply to insurance 

### companies organixed or operating under tbup~ovisioaa of Chapter 3 or Chapter 11 uf&his, CaBa, aml Ckrlptir~ fO, 12, 19, 

### or 14of

### this Cud0;” Your request is predicated on the 1959amondmont (H.B. 144)to~9.14A of thRA& which added the underlimrd &mrtlons~ to this 0cctlon now quo&$&asfollows: 4, m4. provided, however, thatif any of said excepted domiaatic curporations were heretofore or are 

### hereafter orSaniead under speciar?%tutes which contain 

### no pr~viui~ns in regard to some ofthe matters provided for in this Act, or any such excepted foreign corporations were heretofore or hereafter granted authority to transact business withrn TliEgq e under any special statute which contains dQprovimtin ih re ar < or an mi3;75ct in **respect of**  foreign corporations, or rfsuch special ~a*luteSspecfflcally provide that the general laws for incitrporatiunror for the granting of a certificate of auth transact blr$ine$s,, Jnthis F$ttite, al ,thecase may b supplemen?P&e pro

”v”fons of such statutes, then the Provisions of this Act shall apply to the extent thatthey are not inconsistent with the provisions of such special stautes.‘” The recent Attorney General’s Opinion WW-905 was concerned with the00 *ame questions in’regard to life insurance companies governed byHon. William A. HarKson, page 2 (WW-906)

Article 3.69 ofthe Insurance Code. Inthat Opinion we held that ‘*a literal reading ofthe 1959amendment to 9.14A evidence6 a clear legislative intent to bring all insurance companies, regardless ofwhen organized or admitted to Texas, under one set of corporate laws supplemental to the Code as of the effective date of such amendment,” and thatthe s@ions of 9.14po6tponing the effective date of theAct for existing general business corporation6 do not apply to life insurance companies, The 6ame principles apply with equal force to insurance companies incorporated under Chapter 2 ofthe Insurance Code andwe therefore hold that the Texas Business, Corporation **Act** aupplementa the provioions ofthe Texas Insurance Code pertaining to insurance campaaiea gaverned by 2.18 ofthe Code where not inconaiatent therewith, The remaining quertio~ in this request turn on the issue ofwhether the provision ofArticle 2.17B ofthe **Act** limiting the allochtion of capital funds to surplus to not more than 25% applies to those inourance companies governed by Article 2.18 ofthe insurance Code. As in the case **of** life insurance companies, the Insurance Coda permit6 compFnie6 incorporated under Chapter 2, issuing no-par value stock under Section 2 Of**Article** 2.07 to begin business with a $250,Q00.00 minimum. **Article** 2.02, Section 4, Set6 out the authorized minimum capital and minimum sutplu6 requirements as follows:

“4. The **amount** of its capital stock and it6 6urplus, which shall in no case be lesa than $100,000~00 capital and $50,000.00 surplus in the event the company is incorporated to engage in the bu6inesa offire insurance ahd its allied lines, or marine ineurance, or both, andwhich in no case.ehall be less than $lSO,Obd.OOcapital and $75,000,00 surplus if the company ie incorporated to engage in the carualty ln6urace businrse, including fidelity, guaranty, 8urety and trust busi&

.. ness, andwhich in 00case shall be leas **than** $~OO,OOO.OO capital and $100,000.00 ourplus in the event the company is incorporatid to enSage inthe burinere of fire insurance and it’f allied lines, or **morfna** ia6uraacer or **both** fire mad marine -! insurance, and the business of ca6ualty ia6uraace~*0

The application of 2,17B.ofthe Act to,fbsurance compnn~es dercrtbediin 1this Article would require a company to begin busines6 **with 8**  greate **amount** of capital thanpermitted in Article 2,02, Section 4, in ordcrr for the described minimum surplus amount6 to constitute not **more** than **25% of**  the proceeds from the sale ~of

no-par value stock as required by 2.17B.. Since theee 6ame points are discussed in detail by Attorney General’s Gpinion **WW-905,** they will not be extended here, We held in Attorney General”6 Qpinioa WW-905, :(dealiug with life inwarante compahies issuing no-par value 6tock) that “the restriction of 2.17B simply does not take into account or even **conbmplote** a required minimum surplus and hence is inconsistent with the Insurance Code,‘* The Dame is

,true i~r, Chrpttw 2 companies, andwe, therMore, hold that the restriction

on the percentage of capital funds allocable to surplus in Article 2.17B of the Texbs Business Corporation Act ie iqconoiatent with the provis,i,q of the Texas Insurance Code regulating companies governed by Article~~&lB thereof, and, therefore, is **not** applicable to such componier. SUMMARY 

### The TatxauBueinrar Corpolutim **Act** 

### suppXemants .tbr~roviotoua ofthe Texas **Iusur8nco** Coda, 

### deal&g with **Chapter 2**  eocnpanies, where not inconsistent therkwith. **However, the** restriction **m t&r** pmcentage **af**

### capftel funds allocable to surplus in Article 

### a.178 ofthe!Texar Busiuess Corporation **Act** is inconsistent witHthe sections & the &surance Code dealing 

### with componies issuing no*par value Mock governed 

### by 23 and, therefore, Sonut rppiicebb to ruck companfe6, Very truly yours, WILL WILsOhi Attorney 

### General ofTexas

* RAW/p 

# 3
Riahard A, Wells ,Asalrhnt Attorl~ry 

### Chnrrpl

APPROVED: OPINION COMMITTEE: C. K. Richards, Chairman Miltbn 

### Richards on S‘ohn Reeves Houghton Brownlee L Chas$es Cabaniss R~EVIEWEDFOR THE ATTORNEY bEN%RRL BY: Leonard **Passtiore** ,