April 21, 1960 

Hon. Zollie Steakley 

Secretary of State 

Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Capitol Station 

Austin, Texas 

Opinion No. W-826 

Rer The joint responsibility of the. Secretary of 

State and the Comptroller of Public Accounts 

on the administrative procedure of forfeiting 

a corporation’s right to do business. 

Dears,* .K Steakley and Kr . Calvert : 

You have requested that in the light of Attorney General’s Opinion No. W-806 you be advised concerning the following : 

“The joint or separate responsibility, duty 

< ‘ :: and authority of the Secretary of State and the 

Comptroller of Public Accounts to take the necessary administrative action and to establish the 

administrative procedure for: 

“1. The forfeiture of the right to do business of a corporation which is delinquent in the 

filing of its franchise tax report and the payment 

of franchise taxes. 

“2., The forfeiture .without .judiclal :ascertainment of the charter of a corporation whose right 

to do business has beenpreviously forfeited,.and 

which has falled and refused. to have~!itsright to do 

business revived prior to the first day of January 

next ~succeeding the date’ of forfeiture of its right 

to do business.’ 

Attorney General’s Opinion No., W-806 to which you refer in your request isin part as follows: 

“It is the opinion of this office that the powers and duties transferred to the Comptroller by this 
Hon. Zollie Steakley 

Eon. Robert S. Calvert, page 2 (NW-820) 

Act were limited to those incident to the collection of the franchise tax and that it was not 

the intent of the legislature to take away from 

the Secretary of State the authority and duty to 

administratively forfeit a corporation's right 

to do business. Therefore, the Secretary of State 

has the authority to administer the procedure for 

the forfeiture of the right to do business of a 

corporation which is delinquent in the filing of 

its franchise tax report and is delinquent in the 

payment of franchise taxes." 

We will first consider 'ch;: necessary administrative action and procedure in connection With the forfeiture of the right 

to do business of a corporation which is delinquent in the filing 

of its franchise report or the payment of franchise taxes. The 

applicable sLatutory provision relating to the forfeiture of the 

right to do business is Article 12.14 of Chapter 12, Title LXX, 

Revised Civil Statutes of Texas, which is in part as follows: 

"Any corporation, either domestic or foreign 

which shall fail to pay any franchise tax provided 

for in this Chapter when the same shall become due 

and payable under the provisions of this Chapter, 

shall thereupon become liable to a penalty of ten 

per cent (10%) of the amount of such franchise tax 

due by such corporation. If the reports required 

by Articles 12.08 and 12.09 be not filed in accordance with the provisions of this Chapter, or if the 

amount of such tax and penalties be not paid in full 

on or before the thirtieth day after notice of delinquency is mailed to such corporation, such corporation shall for such default forfeit its right to 

do business in this State; which forfeiture shall be 

consummated without judicial ascertainment by the 

Secretary of State entering upon the margin of the 

record kept in his office relating to such corporation the words, 'right to do business forfeited' and 

the date of such forfeiture.tl 

The charters of all corparations required to pay franchise taxes under the provisions of Chapter 12, Title 122A, are 

filed in the office of the Secretary of State in accordance with 

the applicable statutory provisions. Xe are informed tnczt the 

Secretary of State also keeps a permanent card index record of 

all such corporations upon which all status changes concerning 

each individual corucration have been noted heretofore. The records reflecting the filing of franchise tax reports and payment 
Hon. Zollie Steakley 

Hon. Robert S. Calvert, page 3 (W-826) 

of franchise taxes which heretofore were kept in the office of 

the Secretary of State have been transferred to the office of the 

State Comptroller of Public Accounts under the provisions of Article 12.22. 

Since this office has held in Attorney General's Opinion 

No. W-806 that the Secretary of State alone has the authority to 

forfeit the right to do business of a corporation under the provisions of Article 12.14, it is clear that the State Comptroller of 

Public Accounts is without such authority. However, such forfeiture can only result from the failure of the corporation to file 

the required franchise tax reports or pay the franchise taxes when 

the same become due and payable, which reports must be filed with 

and taxes paid to the Comptroller of Public Accounts in whose office the records reflecting the filing of the reports and payment 

of taxes are kept, and which are not available in the office of the 

Secretary of State. 

Article 12.15 provides for the administrative procedure 

in the office of the Secretary of State governing the forfeiture 

by a corporation of its right to do business in this State. By 

substituting the words Tomptroller of Public Accounts" for the 

words "Secretary of State I1 in those parts of Article 12.15 which 

pertain to the administrative powers and duties incident to the 

collection and administration of the franchise tax, Article 12.15 

would read as follows: 

The Comptroller of Public Accounts shall 

notify each domestic and foreign corporation 

which may be or become subject to a franchise 

tax under the laws of this State, which has 

failed to file such report or pay franchise tax 

on or before the first day of May, that unless 

such overdue report is filed or such overdue tax 

together with said penalties thereon shall be 

paid within thirty (30) days of the mailing of 

such notice, the right of such corporation to do 

business in this State will be forfeited without 

judicial ascertainment, Such notice may be either 

written or printed and shall be verified by the 

seal of the office of the Comptroller of Public 

Accounts, and shall be addressed to such corporation and mailed to the post office named in its 

articles of incorporation as its principal place 

of business, or to any other known place of business of such corporation. A record of the date 

of mailing such notice shall be kept in the office of the Comptroller of Public Accounts, and 

such notice and record thereof shall constitute 
,- 

Hon. Zollie Steakley 

Hon. Robert 6. Calvert, page 4 (W-826) 

legal and sufficient notice thereof for all 

purposes of this Chapter. . . .” 

Upon a determination by the Comptroller of Public Accounts from his records that the reports required by Articles 

12.08 and 12.09 were not filed as required by law, or that the 

franchise tax due by a corporation, together with the penalties, 

has not been paid within the time prescribed, the Comptroller of 

Public Accounts should certify such facts to the Secretary of 

State advising him that the corporation, by its failure to file 

the reports or pay the delinquent taxes is subject to forfeiture 

of Its right to do business in this State under the provisions 

of Article 12.14. Upon receipt of such certification the Secretary of State should enter upon the margin of the record kept in 

his office relating to the corporation the words “right to do 

business forfeited,” and the date of such forfel .i ure. The Secretary of State may choose whether to make such endorsement upon 

the folder containing the charter of the corporation or on the 

permanent card index relating to the corporation since both are 

permanent records in his office. The Secretary of State should 

advise the Comptroller of Public Accounts as to the date upon 

which the entry was made upon the record. 

Article 12.15 then provides as follows: 

II Any corporation whose right to do 

busineis’miy have been forfeited as provided in 

this Chapter, shall be relieved from such forfeiture by paying to the Comptroller of Public Accounts at any time prior to the forfeiture of the 

charter or permit of such corporation as hereinafter provided, the full amount of the franchise 

taxes and penalties due by it, together with an 

additional amount of five per cent (5%) of such 

taxes for each month, or fractional part of a 

month, which shall elapse after such forfeiture 

as a revival fee; provided, that such amount shall 

in no case be less than Five Dollars ($5). . . . ‘I 

When the taxes and penalties and revival fee have been 

paid to the Comptroller of Public Accounts, he should certify 

such fact to the Secretary of State who thereupon shall revive 

the right of the corporation to do business within this State by 

cancelling the words “right to do business forfeited” upon his 

record and endorsing thereon the word ffrevived,ff and the date of 

such revival. The Secretary of State should then advise the Comptroller of Public Accounts as to the date of such entry upon his 

records. 

Article 12.15 further provides: 
Hon. Zollie Steakley 

Hon. Robert S. Calvert, page 5 OdtJ-826) 

“. . . If any domestic corporation or foreign 

corporation, whose right to do business within this 

State shall hereafter be forfeited under the provisions of this Chapter, shall fail to pay the Comptroller of Public Accounts within one hundred and 

twenty (120) days after such forfeiture, the amount 

necessary to entitle it to have its rights to do 

business revived under the provisions of this Chapter, such failure shall constitute sufficient ground 

for the forfeiture, by judgment of any court of competent jurisdiction, of the charter of such domestic 

corporation, or of the permit of such foreign corporation. It shall be the duty of the Comptroller of 

Public Accounts, after such one hundred and twenty 

(120) days next following such forfeiture, to certify 

to the Attorney General the names of all corporations, 

domestic and foreign, whose right to do business within this State shall have been forfeited as hereinbefore provided, and upon receiving such certificate the 

Attorney General shall forthwith institute suit against 

such corporations under the provisions of Article 12.16 

of this Chapter." 

Under the foregoing part of Article 12.15 it would be 

the duty of the Comptroller of Public Accounts to supply to the 

Attorney General the factual situation concerning the failure to 

pay the amounts necessary to entitle the corporation to have its 

right to do business revived, thereby authorizing the Attorney 

General to institute suit against the corporation under the provisions of Article 12.16. 

Your second request concerns the responsibility, duty, 

and authority of the Secretary of State and the Comptroller of 

Public Accounts to take the necessary administrative action and to 

establish the administrative procedure for the forfeiture of the 

charter of a corporation whose right to do business has been previously forfeited and which has failed and refused to have its right 

to do business revived prior to the first day of January next succeeding the date of forfeiture of its right to do business. You 

then request advice as to whether the Secretary of State has the 

sole responsibility, duty, and authority to forfeit the charter of 

a corporation without judicial ascertainment and what information 

should be furnished or certified to the Secretary of State by the 

Comptroller or the Attorney General in order that the corporate 

charter may be forfeited without judicial ascertainment. 

The applicable provisions of Article 12.07 which authorize the forfeiture of the charter of a corporation without judicial ascertainment are as follows: 
Ron. Zollie Steakley 

Hon. Robert S. Calvert, page 6 (WW-826) 

'TIpon determination by the Secretary of 

State that any domestic corporation whose right 

to do business has been previously forfeited by 

that officer, and which corporation has failed 

and refused to have its right to do business revived pursuant to the provisions of this Chapter, 

and which corporation fails to revive its right 

to do business prior to the first day of January 

next succeeding the date of forfeiture of its 

right to do business, and which corporation has 

no assets from which a judgment for the franchise 

tax, penalties, and court costs may be satisfied, 

and approval of such determination by the Attorney General, the charter of any such corporation 

may be forfeited, which forfeiture shall be consummated without judicial ascertainment by the 

Secretary of State entering upon the charter of 

such corporation filed in his office, the words, 

'Charter forfeited,' giving the date thereof and 

citing this Act as authority therefor." 

Only the Secretary of State is charged with the responsibility, duty, and authority to forfeit the charter of a corporation without judicial ascertainment for the reasons given in 

Attorney General's Opinion No. W-406, and in answer to your first 

question, sunra. 

However, since all of the records reflecting the failure 

or refusal of a corporation which had its right to do business 

previously forfeited to revive its right to do business prior to 

the first day of January next succeeding the date of such forfeiture are in the possession and under the control of the Comptroller 

of Public Accounts and are not reflected by the records in the 

office of the Secretary of State, it is the duty and responsibility 

of the Comptroller of Public Accounts to certify such information 

to the Secretary of State, together with a determination that the 

corporation has no assets from which a judgment for the franchise 

tax, penalties and court costs may be satisfied, after apprwal of 

such determina i. Ion by the Attorney General, for forfeiture of the 

charter of the corporation by the Secretary of State in the manner 

provided in Article 12.17. The action of the Secretary of State 

in thus forfeiting the charter of the corporation &thout judicial 

ascertainment would be purely ministerial and based upon the certification by the Comptroller of Public Accounts of the necessary 

factual requisites set forth in Article 12.07. 

The Comptroller of Public Accounts has the duty and responsibility of making the determination that the corporation has 

no assets from which a judgment for the franchise tax, penalties, 
Hon. Zollie Steakley 

Hon. Robert S. Calvert, page 7 (Ww-826) 

and court costs may be satisfied, since the corporation's franchise tax report is in the possession of the Comptroller of 

Public Accounts and, in addition, he has the authority to examine 

the books and records of the corporation under the provisions of 

Article 1.04, Chapter 1, Title 112A, R.C.3. 

SUMMARY 

The responsibility, duty, and authority of the 

Secretary of State and the Comptroller of Public 

Accounts to take administrative action and establish 

administrative procedure for the forfeiture of the 

right of a corporation to do business in the State 

of Texas under the provisions of Article 12.14, Title 

122A, R.C.S., and for the forfeiture without judicial 

ascertainment of a charter of a corporation under the 

provisions of Article 12.17, Title 122A, R.C.S. 

CKRrwb 

APPROVED: 

OPINION COMMITTEE 

Very truly yours, 

WILL WILSON 

Attorney General of Texas 

M. V. Geppert, Chairman 

Richard Wells 

Leon F. Pesek 

Marvin Brown 

RFXIEMED FOR THE ATTORNEY GENERAL 

BY: Leonard Passmore 

C. K. Richards 

Assistant