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### L%%T(BIRNEY GENERAL lF%-ElXAS .-. ,.- .~... ^._~ _,._..,, _____ Aris~nv. TEXAS 78711 i

June5,1972

Honorable Byron Tunnel1 Chairman Opinion No. M-1143 Railroad Commission ofTexas Re: Whether a change from a Capitol Station, Drawer 12967 soleproprietorship status Austin, Texas 78711 to a corporation creates anew and separate legal entity, which requires the latter to obtain a-~ First Year License under the Liquefied Petroleum Gas Code, Section 9B(5), Dear Mr. Tunnell: Article 6066d, V.C.S.?

Section 9B(5), Article 6066d,Vernon's Civil Statutes, hereinafter referred to asLPG Code, reads as follows:

"(5) First Year License. A license shall be issued by the Commission to said applicant in the name under orbywhich he conducts or proposes to conduct his business as such a dealer. Such license shall run to the dealership to or in connection with which itwas issued and it shall confer no rights orprivileges separate and apart from such dealership." Section 9B(6) of the LPG Code reads as follows: "(6) Renewal License. Each license as an authorized dealer inLiquefied Petroleum Gas shall be renewable upon the timely payment or tender of the renewal license feeestablished and assessed therefor, and by furnishing the Commission with abond as required in Section 23of this Act, a certificate of insurance evidencing that the insurance required in Section 24 of thisAct is in full force and effect, and such other information and data asmay reasonablybe required by the Commission." Factually you state that the Commission is experiencing numerous situations where individual licensees (soleproprietorships) incorporate their liquefied petroleum gas business, but continue to
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operate the business as aqualified person under one or more of the categories set out in Section 6of the LPG Code. We, therefore, have the narrow question ofwhether the change from a soleproprietorship to a corporation, without more, requires that the corporation obtain a First Year License.

The thrust of the LPG Code is safety. A liquefied petroleum gas dealer (soleproprietorship or corporation) must qualify foreach of the separate categories listed in Section 6 in order toengage in any of the activities enumerated therein. Section 7. With respect to apartnership, firm, corporation, unincorporated association, or any other business entity, the individual who "shall be directly responsible forand actively supervising the operation of the dealership" shallmake "good and sufficient proof that he can andwill meet the safety requirements provided in thisAct." Section 9B(2). Further, the liquefied petroleum gas dealer (soleproprietorship or corporation) must furnish the Commission with the bond required by Section 23and the certificate of insurance required by Section 24 to obtain either a First Year License or aRenewal License. It is clearly the intent of the LPG Code that the dealer (beit individual, partnership, firm, corporation, unincorporated association or any other business entity) is the person thatmust satisfy the statutory requirements toqualify fora liquefied petroleum gas license in one ormore of the categories listed in Section 6,and it is that dealer or dealership that the Commission looks to for compliance with the statutory and regulatory safety standards.

The LPG Code does not address itself specifically to the issue athand. There isno statutory provision prohibiting a business entity from changing the legal formpursuant towhich it conducts its authorized liquefied petroleum gasbusiness. However, when a soleproprietorship is changed into a corporation, anew and separate business entity is created bearing no resemblance .toits predecessor. The corporation has not qualified as adealer fora liquefied petroleum gas license. Even if the former sole proprietor remains directly responsible for the operations or is aqualified employee under Section 10, transfer of the license formerly held by the sole proprietorship to the corporation does not, because of Section 9B(5), create anew dealership in the corporation. The new business entitymust submit an application foraFirst Year License. To hold otherwise would permit persons by change ofbusiness form to avoid the clear intent of the LPG Code, and create dealerships without Commission sanction.

Attorney General's Opinion No. V-638 (1948)reached the identical conclusion based on the same question presented here. However, the Opinion construed Article 6053,Vernon's Civil -5569-Honorable Byron Tunnel, page 3 (M-1143)

Statutes, which was, insofar as relevant, repealed in 1959 (Acts 56th Leg., p0 844, ch. 382). Further, the rationale in that opinion is incorrect, Therefore, to the extent only that the reasoning is inconsistent herewith, Opinion No.V-638 is modified **by** this Opinion.
SUMMARY

When a licensee sole proprietorship under Article 6066d,V,C,-S,,incorporates, the corporation isrequired to obtain the First Year License specified in theLiquefied Petroleum Gas Code, Section 9B(5), Article 6066d,V.C,S. Attorney General's Opinion No. V-638 9948) ismodified.

ney General of Texas Prepared by RexH.White, Jr. Assistant Attorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor, Chairman W. E.Allen, Co-Chairman W. Dyer Moore, Jr0 Ralph Rash Gordon Cass John Reeves SAMUEL D.MCDANIEL Staff Legal Assistant
ALFRED WALKER Executive Assistant
NOLA WHITE First Assistant

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