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 DWsuant 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 provisions 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1951, is hereby repealed,” 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 corporation, however created, may amend its charter 

in compliance herewith, or a foreign corporati,on 

may obtafn a certificate of authority to do business in Texas for the following purpose: 
Han, Zollie Steakley, page 2 (WW-23i) 

“ITo act as trustee, executor, administrator, 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 account of any individual; to act as attorney-infact 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 exercise the general powers conferred by their charters. Hunt v, 

Atkinson, 

196 

12 S.W.2d 142, 145 (Comm.App. 1929); 18 C.J.S, Par. 

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 corporation, however created, may amend its charter so as to become a trust company for the purposes set forth in Section 2 

cf the Act, it was manifestly the legislative.intent to peamit corporations organized under the provisions of Article 

7.01 of the Insurance Code to amend their charters in accordance 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 provisions of Article 7.01 could continue their corporate existence ‘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?,mporaneously with the cessation of the corporate existence, 

guestion No. 2: Is a corporation seeking to amend 

its charter In compliance with Senate Bill 165 required 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 Buslness 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 

vide:; * .;at 

Article 7.15A of the Rusiness c,orycra:i.on Act proing co,‘:! 

, with certain exceptions not hnre pertinent, existorations shall continue to b’e governed by the laws 

heret::,l‘-sre applicable thereto. 

vides 

Article 7.1&B of the Business Cc-~;*pora~:ion Act prohat 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 provisions of the Business Corporation Act. 

However, any,corporation which was originally incorporated 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 ? crporation 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’rporations created under the provisions of Chapter 7 of the lnsurante 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, inciusive, 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 purpose* 

Corporations which were created under the provisions 

of Title 32, Revised Civil Statutes of Texas, and for the purposes named therein, must adopt the provisions of the Business 

Corporation Act since, although such corporations were organized for purposes mentioned in Title 32, nevertheless amendments 

so as to change the purpose of such corporations under the provisions 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 craated, desiring to amend its charter under the provisions of Section 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 charter 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 Restated 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.Cl4.05, inclusive7 

Article 4.07A(2) of the Business Corporation Act provides 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 articles 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>Y Sectlon 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~oration 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 effective 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 effective 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 

e 

I A, 

Rv 

CKR:wb 

APPROVED: 

OPINION COMMITTEE 

E. Grady Chandler, Chairman 

W. V, Geppert 

John Reeves 

James N. Ludlum 

-*c. K. Richards 

Assistant 

REVIEWED FOR THE ATTORNEY GENERAL 

BY: Geo. P. Blackburn