The HonorableMartin Dies, Jr. Opinion No. M- 600

Secretary of State State Capitol Building Re: What statutes control Austin, Texas the Secretary of State In his administrative Forfeitureof charters and certificatesof authority of corporations For Failure to timely pay Franchise taxes; and what statutes apply to his reinstatement

OF such Dear Mr. Mes: charters and certificates?

Your opinion request presents the FoIlowIngquestions:

"1

. Article 12.17(2), Taxation-General, Vernon's Civil Statutes, Article 7.01B(l), Texas Business CorporationAct, and Article [1396-j 7.01B(l),Texas Non-Profit CorporationAct all provide For admlnlstratlve ForFeltureby the Secretary of State For+FalIure to pay Franchise tax. Under which of the above statutes should the Secretary of State Forfeit the charter of domestic corporationsand Certificateof Authority of foreign corporationsfor Failure to pay franchise tax in the time prescribedby law?

2. Does the $50.00 reinstatement Filing Fee and the twelvemonth limitation In Article 7.01E. Texas Business CorporationAct and Article [:396-l 7.01E, Texas Non-Profit CorporationAct apply to reinstatement provisions of Article 12.17 3(b) Taxation-General, Vernon's Civil Statutes?"

In answer to your First question, it,ls the opinion of this office that the Secretaryof State may Forfeit the charter or certlflcateof authority of a business corporationFor Failure to pay Franchise taxes under authority of Article 7.01B(l),

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Hon. Martin Dies, Jr., page 2 (M- 600)

Texas Business CorporationAct and Article 8.16B(l) of the
same Act, respectively, or under the authority of Article 12.17, Title 122A, Taxation-GenEal, Vernon's Civil Statutes. Likewise, the Secretary of State may forfeit the charter or certificate of authority of a non-profit corporationunder authority of Article 1396-7.OlB(l),, Texas Non-Profit CorporationAct and Article 8.15B(l), of the same Act respectivelyz under the authority of Article 12.17, supra.

1969. These statuteswere passed by the 61st LegislatureIn The language of Articles 7.01 and 8.16, Texas Business CorporationAct and Articles 7.01 and 8.15, Texas Non-Profit CorporationAct are Identical In so far as they prescribe a procedure by which the Secretary of State may Forfeit charters and certificatesof authority of the respectivecorporations and thereafterreinstate such charters and certificates where the requirementsFor reinstatement,set out In those statutes,
are met.

Article 12.17, supra, as amended In 1969, Is a relnactment of the procedures theretoforegiven under Article 12.17 and provides additionalprocedureswhereby chartersof domestic corporationsand certificatesof authority of Foreign corporatlan~,admlniatratlvely Forfeited as provided by that Title, may be rbvlved by the Secretaryof State when the requirements For reinstatementset out In the statute, are met.

The grounds For Forfeiture under 12.17, supra, are fallure to pay the Franchise tax, or File Franchise tax reports. The grounds For forfeitureunder the provisionsof the Texas Business Corporationand Texas Non-Profit CorporationActs, also Include Failure to pay the Franchise tax or File Franchise tax reports.
Article 12.17, supra, and the other provisionsof the Texas Business CorporationAct and Texas Non-ProfitCorporation Act, provide differentprocedures For the Forfeitureand revival of charters and certificates of authority by the Secretary of State. Articles 7.01 and 8.16, Texas Business Corporat.lon Act and Articles 7.01 and 8.15, Texas Non-Profit CorporationAct, were passed on the same day and are the last expressionof the Legislature. In so Far as there Is any conflictbetween Article 12.17 and these later statutes In the Texas Business Corporation and Texas Non-ProfitCorooratlonActs. the latest exoresslon of the Legislature

would co&rol. De Jei~s de ia 0, In-Fe 154 Crlm.Rep. 326, 227 S.W.2d 212 (1950).

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We do not regard the statutes as conflicting. We observe at the outset Section 9, of Senate Bill No, 603, which includes the amendments to Articles 7.01 and 8.15, of the Texas NonProfit CorporationAct, and S.B. No. 604, which Include the amendments to Articles 7.01 and 8.16, of the Texas Business CorporationAct. These two sections read as Follows:

"Nothing In this Act shall Invalidateany of the procedureshereby changed by this Act which have been Initiatedprior to the effectivedate of this Act, and under such circumstances &ing the Secretary of State and any other state agency affected Is authorized to proceed under the appropriateprocedures authorizedprior to this Act or as changed by this Act." (The word "and!' In bracketswas lneluded In Sec. 9, of the Texas Non-ProfitCotiporatlon, Act only.)

said: In 14 Tex.Jur.2d 642, Corporations,Section 544, it Is

"Althoughdissolutionor Forfeiture of a charter terminatesthe existence of a corporation,
our constitutionand statutespreserve a distinction between Forfeitureof a charter and dissolution. Statutoryprovisionsrelating to Forfeituresof charters are found in portions of the Revised Statutes deemed to remain effective after enactment of the Business CorporationAct. With one exception,provisionsrelating to involuntary dissolutionsare Found In the Business Corporation Act."
Keeping In mind the above distinction In the statutes, dealing with different subjectmatter, we conclude that the statutes concerned are not amendatory of one another,. and they do not present any conflict. Under Article 12.17, supra, dealing with Franchise taxes only, the Secretary of State is required to determine that the corporationtaxpayerhas 'no assets From which a Franchise tax judgment could be pafd. Under the other cited statutes,dealing with corporationsgenerally,no such requirement is provided therein. Our courts will adopt a construction of the statutes which avoids any conflictwherever possible.

The statutes clearly demonstratethe Intent of the Legis-

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Hon. Martin Dies, Jr., page 4 (M- 600)

lature to provide the Secretaryof State with both the Forfeiture and reinstatement procedures set out In Article 12.17, and the forfeiture and reinstatement procedures set out In the Texas Business CorporationAct and the Texas Non-ProfitCorporation Act. The Secretary of State thereforemay Forfeit and reinstate charters and certificatesof authority under either of the procedures provided, and the choice of remedieswould be dictated by the Facts of each case.

In answer to your second question, It Is the opinion of this office that the reinstatement Filing Fees and the twelve month limitation in Article 7.OlE, Texas Business Corporation Act, and Article 7.01E, Texas Non-Profit Corporatlon'Act, do not apply to relnstatementaor Forfeituresunder the provisionsof Article 12.17, supra. These First two Articles are identical, except For the amount of the relnstatement~Flllng Fee, and provide, In part, as Follows:

"E. Any corporation dissolved by the Secretary of-State under the provlslo& of Section B of this Articlemay be remd by the Secretary of State at any time within a-period of tweive months From the date of such dissolution,

. . . ReinstatementFiling Fee of $50.00 L$25.Og shall accom any the applicationFor reinstatement." (925.00 For Non-Profit Corporations.) (Pmphaslsours.)
This statutory language expressly limits the refnstatement requirements

mentioned above to corporationsdissolvedby the Secretary of State under the provisions of Section 3 of Article 7.01 of the Texas Business CorporationAct and Section 9 of Article 7.01 of the Texas Non-Profit CorporationAct.

SUMMARY

The Secretary of State may administratively Forfeit charters and certificatesof authority of corporationsFor Failure to pay Franchise taxes under authority of Articles 7.01 and 8.15, Texas Business CorporationAct, For business corporations,
or under Articles 7.01 and 8.16, Texas Non-Profit CorporationsAct, For Non-Profit Corporations. The Secretary of State may alSo Forfeit charters and certificatesof authorityunder the authcrityof Article 12.17, Title 122A, Taxation-General, V.C.S.,

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Hon. Martin Dies, Jr., page 5 (M- 6001

where that statute Is applicable.

The reinstatementFiling Fees and the twelve month llmltatlon provided For relnstatlng charters Forfeited under Section B of Article 7.01, of the Texas Business Corporation Act or under Section B of Article 7.01, of the Texas Non-Profit CorporationAct, do not apply to forfeituresmade under authorityof Article 12.17, supra.

s very truly,

Preparedby Wardlow Lane AssistantAttorney General

APPROVED:

OPINION CCMMITTEE

Kerns Taylor, Chairman Bill Allen, Acting Co4halrman Thomas F. Sedberry Robert Davis William J, Craig Ed Esquivel

MEADE F. GRIFFIN Staff Legal Assistant

ALFRED WALKER ExecutiveAssistant

NOLA WHITE Ffrst Assistant

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