Court Opinion

ID: 4136618
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:15:41.942819+00
Date Added: 2024-06-11T14:49:41.277335
License: Public Domain

TIXE:ATTORNEY                 GENERAL
                          OFTEXA~

HonorableWilliamA. Harrison       OpinionNO. ~41-361,
Cormnietlioner
            of Insurance
InternationalLife Building        Re:   Whether   .an insurance   company
Austin~lk,Texas                         that dividesand hurar,rll
                                        of its capitalstook ona ng
                                        par basis may have different
Dear Sir:                               classe4,ofno par atock.

          You have asked,the opinionof this office whetheran insnr-
ante companymay have differentclassesof no par stock. Article3.02a
added to the InsuranceCode in 1955, providesthat a life inrurance
companymay divide its sharesof stock,ona no par basic. It further
provides,“if dividedorconverted Into sharesof no par value, every'
Such 6hare shall be,equalin all respectsto every other share,"
           ..;
          A similar provisionis containedin Article 2.07 of the Texas
InsuranceCode, which now r&late6 the issuanceof no par stock by
insurancecorporatiorwotherthan life.

          The first provisionin the Texas law permitt- a cnmoration
of any type to iesue no par stock was enacted in 1925. (Acts 1925,
39th Leg., p. 236, and set forth as Articles 1538a-A538m,V.A.C.S.)
Expresslyexcludedfrom the provisionsof the Act were insurancecar-
porations. It was not until 1935 that Insurancecanpanleswere first
enabledto issue no par stock,and this by virtue of the 'parrageof
Acts 1935,44th Leg., p. 492, amendingArticle 4794 of'theAtvised
Civil Statutes. The 1935Act 60 far es is here mrterialcontainedsub-
stantiallythe same languageds that now in Anicles 3.02a and 2.07.

          It is to be noted that in contrastto the provisionsof Arti-
clea 2.07, 3:02a and the 1935Act, the provisione of Article 1538ad
,theywere originallyenacted in 1925 and were In effect at the time
of the passage of the insuranceno par provisicnwwergand are as fol-,,
lows:

         "Every such shareshall be equal in all respectsto
    every other share,except that the charteror any amend-
    ment thereofmay providethat much shams should be di-
    vided into differentclasses.the~shueo of each class
    to have preferences,deei@atioas, rights,prlvilegee,
    and powers and be eubjCct,to,euchnemtricti~us,limita-
    tions, and qualificationsas shall be stated in the
    charteror any amendmentthereof."
RonorableWilliamA. Harrison,pagd 2 (h-j61)

          We believethat but one conclusioncan be drawn from the len-
guege in Articles3.02a and 2.07 previouslyreferredto above in view
of the omissionof the provisoexpresslypermittingdifferentclasses
underlinedabove, found in Article 1538a, applicableto corporations
generally. That interpretation is that if an insurance~companyissues
no par stock,all sharesof its-nopar stock must be equal in all re-
spectsand that there cannbtbe differentclassesof no par stock,and
you are so advised.

                                company may not have
                    ‘An insurance
                    differentclassesof no par stock.

                                             Your6 very truly,

                                             WILL WILSON
                                             AttorneyGeneralof Texas

                                             BY 7dEU!&
                                               Fred B. Werkenthin
                                               Assistant

OPINIONCOMMITTEE:

Ceo. P. Blackburn,Chairman

Morgan Nesbitt
John H. Minton,Jr.   '
WaylandC. Rivers,Jr.

REVIEWEDFOR~THEATTORNEYGENERAL
BY:
    W. V. Geppert