Court Opinion

ID: 4140002
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:54:01.739022+00
Date Added: 2024-06-11T14:22:06.174859
License: Public Domain

Se&rotary of State
Austin, Texas
Attention: Mr. Horace B. Seasiona,
           Seaurities Commiasloner

Dear Sir:                  Opinion No. O-6311
                           He:   The Texas Seaurlties
                                 Act Is applicable to
                                 an employees retire-
                                 ment plan sponsored
                                 by a private aorp-
                                 oration.
          We have reoeived your recent request for an opinion,
and quote same as followa:
         "We have reoently received a request for an
    opinion oonoerningthe applioabilltyof the Texas
    Seourlties Aat to the solicitationof oontributions
    in an employee8 retirement plan.
          "The essential provisions of the retirement
     plan are:
          "(1) Eligibility of all employees with five
     or more years of servloe vlth the aorporationto
     a-e under the Plan.
          "(2) Participationin the Plan oPtIona with
     the employees, and to be evidenced by an enrollment
     form agreeing to the provisions of the Plan, author-
     izing salary deduationsand naming a beneficiary.
        “(3) Normal retirement at age 65, with earlier
    retFrement optional in certain instances.
         "(4) Emplogees~ contributionshould be 2$ of
     salary up to $3,000, and 4% of salary ln'excesa
     of $3,000.
                                                               .

Secretary of State, Page 2   (o-6311)

          “(5) Rmployee's deposit to be returned with
     2$ Interest In any event.
          “(6) Past service benefits for years prior
     to institution of Plan In excess of five, and
     aurrent servloe benefits after Institution of
     Plan, both to be paid in accordancewith formula
     set forth under the Plan.
          “(7) Action as to the manner of reoeiving
     the retirement lnaome provided from past and
     ourrent servFoe benefita, in aoaordanoe tith pro-
     visions of the Plan.
          “(8) Admlnistratlonof the Plan by a Retirement
     Plan Committee appointed by Board of Dlreators.
          "(9) Guarantee by employer to contributesuffl-
     oient funds to return employees' depoalts with 2%
     interest acmpoundedannually, but no guarantee by
     employer corporationIn exceaa of such amount.
          "(10) HodlfFcatFon or terminationof the Plan
     at wFl1 of corporatlon,exoept a8 to provlsion for
     repayment of the employees' contributionsplus @
     interest oompoundedannually.
          "The essential provisions of the +PruatAgreement
     under which the funds depoarltedunder the Plan are to
     be administeredare:
          "(1) Deposit with the Trustee at the dlreotion
     of thee.RetirementPlan Gemmlttea of the funds deposited
     by the employees apd the employer ourporation.
          "(2) Payments of the funda of the Plan to bene-
     fialarle6thereunder at the dLreation of the Retirement
     Plan Committee.
          “(3) Investment of the trust funds by the
     Trustee in seaurities which are at the time legal
     investmentsfor life insurance aompanies under the
     laws of the State of Rev York, except Apia
                                              othertise
     dlreoted by the,Board of Direatora of the corpoPatiOn.
          "(4) Hodifioation of the Trust Agreement In
     aooordanae with the provisions of the Retirement
     Plan at the will of the employer oorporation.
Secretary of State, Rage'3   (O-6311)

         "(5) Report by the Trustee to the oorporatlon
     annually oovering its investmehts,reoelptslanddls-
     bursements of the trust fund.
          'We have been unable to find any Texas oases or
    an opinion of,the Attorney General whioh would assist
    us In determiningwhether or not seourlties,iasuedunder
     suoh plan might be exempt under one of the speciflo ex-
    emptions contained in Seatlons 3 and twenty three of the
    Texas SeauritiesAct. It does not appear that any of
    ,the spealflc exemptions contemplatedan organizationof
    this oharaater,and slnoe Ft appears that there will be
    a number of plans of a sFmFlar nature organized and
     operated in Texas, we should appreciate an opinion from
    you concerning whether aontributlonsto suoh,a plan
    would require registration or whether such securFtSes
    might be exempt from the neoessity of registrationunder
    one of the exemptions provided by Section 3 and 23 of
    the Act.
         "We enclose herewith a copy of the proposed retire-
    ment plan and trust agreement under which the funds of
    the plan will be administeredfor your considerationIn
    oonneotionwith this request for an oplnton, and we
    should appreciatethe return of these Instrumentsafter
    you have finished with them."
          We understand from additional oommunicatlons~wlthyou,
that the corporationreferred to In your Inquiry is a private
oorporatlonoperating under a charter or permit in this State
for profit.
          Subsection (a), Se&ion 2, of Article 600a, V. A. C. S.,
(The SecuritiesAat) gives the following.deflnltlon:
          "The term 'security'or 'securities'shall in-
    clude any share, stock, treasury  stock, stock certif-
    ioate  under a voting trust agreement, collateral
    trust certlfloate,equipment trust oertiflcate,pre-
    organizationcertlfloateor receipt, subscriptionor
    reorganizationcertificate,note, bond, debenture,
    mortgage certificate or other evidence of Fndebted-
    ness, any form of commeroialpaper, oertifioateIn
    or under a proffFtsharing or participationagree-
    ment, certificateor any Instrumentrepresenting
    any interest in or under an oil, gas, or mining
Searetary of State, Page 4   (O-6311)                    ,

    lease, fee or title, or any oertlfioateor ln-
    strument representingor seoured by an interest
    in any or all of the aapital, property, assets,,'
    profits or earnings of any oompany, investment
    contract, or any other instrument commonly known
    as a seourlty, whether similarto those herein
    referred to or not."
          It Is apparent that the first question raised by
your query is whether or not the proposed rstFrement plan
oomes wlthin the definltlon of "security"or "securltLesH.
Inwol. 38, Words and pbraaem, on pages 470 and 471, the
following Is said;
         "@enorally,any form of instrumentused for
    purpose of financing and promoting eWterpPl.aesj
    whloh is designed for investment,Is a ‘security’
    within statute authorizinginvestigationsby
    Attorney Gieneralof apparent fraud In sale of
    securities." General Business Law, paragraph
    352, subd. 1. In re Waldstein, 291 hX3.       697,
    160 Miaa. 763.
         "The term 'seouritylhas no exactly defined
    legal definition. Qenerioally,the word has refer-
    enoe to written Instruments,usually for the pay-
    ment of money or bvldenoes of a debt, and being more
    than a mere promise of the debtor of a general lia-
    bility on his part, but having as collateralto it
    a pledge of property or some addFt$onal obligation.
    Blackstone speaks of a bill of exchange as a secur-
    ity, which he says was originallyInvented among
    merchants~In different countries for the more easy
    remlttanoe of money from one to the other. In
    aalling it a security,probably he bad in mind the
    fact that a bill of exohange may oonsist of several
    personal obllgatlons,which makes more certain or
    seaure the primary obligation. By common usage,'
    however, the term has acquired a much broader sig-
    nlfiaation. It is now generally used to refer to
    Instrumentsfor the payment of money, or evidencing
    title or equity, with or without some collateral
    obligation,and whioh are aemmeply dealt In for
    the purpose of flnanolng and investment. By modern
    business methods, those instrumentswhich are used
    to facilitatedealing in aommodities,suoh as
    short term notes, bills of lading, bills of ex-
    obange and all the other Inventions of the commercial
Seerotary of State, Page 5   (o-6311)

    banker, are not referred to as seooritiea,al-
    though.theymay be collaterallyscoured in some
    WY. Those lnstrnments,however, secured or
    unseoured,whioh are~used for the purpose of
    financing enterprisesand promoting a distrl-
    bution of rights in or obligationsof such en-
    terprises,and whloh are designed as a meana
    of investment,are termed seaurities. Thus,
    oertlfioatesof stock are now regarded as
    seourFtles,although they but represent a share
    of the ,oapltalstock of a corporation,the
    Interest of the owner in the management of the
    corporation,and his interest in its surplus
    assets upon Lts dissolution. In generaiL,, It
    may be said that any form of Instrumentused
    for the purpose of finanoing and prcmotFng
    enterprises,and which is designed for invest-
    ment, is a seaurltg acoording to the modern
    meaning of that ,term.'
           We believe the Issuance of said enrollment forms of
agreement to partialpateIn the Retirement Plan, constitutes
issuanae  of "seaurltles",as that term Is defined In The
SecuritiesAot. Surely they are "evidenceof indebtedness",
inasmuch as the terms of said Plan provide that in no case
shall a partialpantbe entitled to less than his deposits
    s interest thereon at two per cent per annum oompounded
   mally; ual h 1           d heth he with& aws his member-
ship voluntar?ly(l d~e~"~~~or~e!,itse~isbenefitsbefore maturity
of the Plan. In oase he participatesuntil maturity, he stands
to realj.zea substantialreturn on his investment,but thla
return Fs by no means certain. The prime purpose of the Plan
is to "aeaure"the participanta return or profit on his In-
vestment.
         Section 5 of said Artic,le6ooa provides, in part,
as follows:
          "Blodealer, agent or salesman shall sell or
    offoF for sale any securitiesissued after the
    passage of this Act; except those which come wlth-
    in the alasses,enumerated in Subdivisions (a) to
     (q), both inclusive, of Section 3 of this Act, or
    Subdivisions (a) to (F), both inclusive of Section
    23 of this Aat, until the issuer of such securities
    'shallhave been granted a permit by the Secretary
Secretary of State, page 6   (O-6311)

    of State, and no such permit shall be granted
    by the Searotary of State until the issuer of
    suoh aeaurities shall have filed with the
    Secretary of State a sworn statement verified
    under the oath of an executive officer of the
    Issuer and attested by the Secretary thereof,
    setting forth the following Information: . . ."
          Seation 3 of said Artlale 600a,   provides as follows:
          "Exempt transactiona. Except aa hereinafterin
     this Act speciflcallyprovided, the provl~ions of
     this Aot shall not apply to the sale of any security
     when made In any of the following transactionsand
     under any of the following conditions,and the
     company OF person engaged therein shall not be deemed
     a dealer within the meaning of this Aot; thatis to
     nay, the provisions of this Aot shall not apply to
     any aale, offer for sale, solicitation,subsorip-
     tion, dealing In or delivery of any seaurlty under
     any of the following transactionsOF oonditiona:
            "(a) At any judioial, exeoutaP'a,administrator's,
     guardian's OP oonservatcrlsnale, or any sale by a re-
     aelvesr OP truatee  in Insolvency or bankruptoy.
                 e sale by or for the account of a pledge
     holdet(z ZEPtgagee selling or offering for sale cr
     delivery in the ordinary course of business, to
     liquidate a bona fide debt, of a seourity pledged in
     good faith as seourity for such debt.
          "(c) Sales of securitiesmade by, or in behalf
     of a vendor In the ordinary couPpIeof bona fide
     personal investment of his personal holdings, or
     change of such investment,If such vendor ia not
     otherwiseengaged either permanentlyor temporarily
     in selling securities,provided, that In no event
     shall suoh sales or offeringsbe exempt from the
     provls$ons of this Act when made or intended,either
     directly or Fndireatly,for the benefit of any com-
     pany or aorporationwithin the purview of this Act.
          "(d) The distributionby a corporationof
     securities direct to its stockholdersaa a stook
     dividend or other distributionpaid out of earnings
     OP surplus.
Secretary of State, Page 7 .(p6311)

           "(e) The sale of,au increase of eapltal steak
     of a ,ooFporatlononl,yto its,sto,ckholders and wlth-
     out payment of any aoximissioa or expense to any
     officer, employee, broker or agents, and without
     incurring auy liablllty for any expenses whatsoever
     In aonneotlonwith such distribution.
          "I ~The issue'iu good faith of securitiesby
     a company to its seaurity holders, or creditors,In
     the process of a bona fide reorganizatFonof the
     company made In good faith, or the issue Fn good
     faith of securitiesby a company, organ$zed solely
     for the purpose of taking over the assets and con-
     tinuing the business of a predeoessorccaspany,to
     the seaurity holders OP creditors of suah predecessor
     company, prmvlded that in either such case such aecur-
     ities are issued in exahange for the securities~of
     such holders or claim of suah creditors, or both,
     and in either such aase such securFty holders OP
     creditors do not pay or give OP promise and are not
     obligated to pay or give any considerationfor the
     seourities so issued other than the securities of
     OP olaims against sald company OP its predecessor
     tben held OP owned by them.
          "(g) The transfer or exchange by, or on account
     of, one corporationto another or 'to its stockhold-
     ers of their or Its own securitiesin connectionwith
     a proposed consolidationOF merger of such corpora-
     tlon, or in oonnectlonwith the change of par value
     stock to non-par value stock or vice versa, OP the
     exahange of outstandingshares for a greater or
     smaller number of shares, provided that in such case
     such stockholdersdo not pay or give or promise and
     are not obligate'dto pay OP give any consideration
     for the securities so transferredor exchanged
     other than the securities of said aorporationthen
     held by them.
          "(h) The sale by a domestic corporationof Its
     stook forfeited for a delinquentassessment,acaord-
     lng to law.
          "(I) The sale'to any~bank, trust company~,loan
     and brokerage corporation,building and loan associ-
     ation insurance company, surety or guar,antyaompany,
     ~savingainstitution or to any registered dealer,
     provided such dealer is actually engaged in buying
     and selling securities.
Secretary of State, Page 8   (o-6311)

          "(j) The sale by any domestla corporationof
     its stoak or other seauritiesissued in good faith
     and not for the purposeiof avoiding the provisions
     of this Act, 80 long a8 the total number of stock-
     holders and seourity holders of said corporation
     does not and will not after such sale exceed
     twenty-five (25) and the securitiesare issued and
     disposed of without the use of advertisements,
     olraulars,agents, salesmen, sollcltors,or any
     form of publia solicitation.
          "(k) The sale of an interest In any partner-
     ship, pool, or other company, not a corporation,~
     the total membership of which does not and will
     not after such sale exaeed ten (lo), and the
     organizationexpenses of which do not or will not
     exceed two (2) per cent of the total invested
     capital of such company.
          "(1) Subscriptionsto aapital stock necessary
     to qualify for incorporationwhen subscribedby
     not more than fifteen (15) Fnaorporatorsin a pro-
     posed Texas oorporatlon.
         "(m) Wherein the seouritleadisposed of con-
    sist exclusively of note8 or bonds secured by
    mortgage or vendor's lien upon'real estate or
    tangible personal property, and the entire mortgage
    is sold or transferredwith all of the notes or
    bonds seoured thereby in a single transaatlon.
          "(n) Any security or membership issued by a
     oorporationorganizedexcluslveLyfor eduaational,
     benevolent,fraternal, oharitable,OP reformatory
     purposes and not for peaunlary profit, and no part
     of the net earning8 of whloh inures to the benefit
     of any atookholder,shareholder,or individual
     member, and where no commission or remunerationis
     paid OP given or is to be paid or given in con-
     neation with the dispositionthereof.
          "(0) The sale by the issuer, itself, of any
     securitiesthat are issued by a State or NatiQnal
     Bank, by a trust company, or building and loan
     association organizedand operatingunder the
     laws of the State of TOXaB and subjeat to the super-
     vlslon of the Commissionerof Banking of the State
     of Texas, OP Federal Loan and Savings Aasoaiation,
Seoretary of State, Page 9   (O-6311)

    or a oompany aubjeat to the supervisionof ~the
    Banking Commissionerunder Senate Bill No. 1.65,
    Forty-seaondLegislature. Provided, however,
    that all salesmen aoting for any bank, trust
    aampany, or oompany subjeat to the supervision
    of the Banking Commissionerunder Senate Bill
    Eo. 165, Forty-sbaondLegislature, in the sale
    of such seouritieswithin this State, shall be
    liaensed as provided in thLs Aot.
         "(p) The sale, by the issuer itself, of any
    seouritiesthat are issued by the United ,States,
    any political subdivision or agenay thereof, any
    territory or insular possession of the United
    States, the State of Texas, any State of the
    United States, the D$atriot of Columbia,,or by
    any aounty, oity, munioipal corporation,dlstriat
    or politiaal subdivisionof the State of Texas or
    any authorized agency of the State of Texas.
          "(q) The sale and laauanae of any seourities
     issued by any farmers1 oooperativeassoclatlon
     organized under Chapter 8 of Title 93, Artiales
     5737-5764, lnolusive,Revised Civil Statutes of
     Texas as amended; and the sale of any securities
     Issued by any farmers' cooperativesooletg organ-
     izdd under Chapter 5 of Title 46, Artiales 2514-
     2524, inalusive,Revised Civil Statutes  of Texas.
     Provided, however, this exemption ahall not~be
     applicableto agents and salesmen of any farmers'
     oooperatlveassoelation of farmers' cooperative
     sooiety when the sale of such aecurlties is made
     to non-members,OP when the sale of auah securities
     Is made either to members OP non-membersand a
     aanmlssionis paid 'orcontractedto be paid to the
     said agent or salesmen."
          Se&Ion 23 of said Artlale 6ooa, provides as followzr
          "Exaept with referenae to exempt transactions
     profided for in Section 3 of this Aat, it shall be
     unlawful for any dealer, agent 0~ salesman to sell
     any securities or to issue or publish withln this
     State any oiroular, advertisement,pamphlet, pros-
     peotus, program, or other matter in conneotlonthere-
     with, oonoerningany seourlty or seauritles  which
     suoh dealer handles or proposes to sell until suah
Searotary of State, Page 10   (O-6311)

    dealer shall have been registered or temporary
    permission obtained as in this Act providedj
    provided however, that any suoh airaular, ad-'
    vertisement,pamphlet, prospeotus,program, or
    other matter in aonnectinntherewithmay include
    the names of non-registereddealers who have
    partlalpatedwith registered dealer3 in the
    original purohaae or underwrItIngof suoh secur-
    ities without being deemed to be in violation of
    this'Act, but if the mines of non-registered
    dealers are lnoluded thereon, then suoh oircular,
    advertisement,pamphlet, program or other matter
    in oonneotiontherewith shall bear a legend tbere-
    on in plain and legible type, stating that such
    seouritiesare being offered within the State of
    Texas only by such persons whose names are sub-
    scribed thereon as are registered dealers withlri
    the State of Texas. Unless the same ha8 reference
    to an exempt transaotionprovided for in Section 3
    of this Aot, OP refers to any of the seaurltlea
    hereinafterexpressly exempted from this provision,
    It shall be unlawful for any dealer, agent or ~aales-
    man to Issue or publish within this State any
    oiroular,advertisement,pamphlet, prospectus, or
    other matter In oonneotiontherewith concerning
    any security or securitiesto be sold or offered
    for sale In this State unless the name of the
    dealer is subscribedthereto or rinted thereon
    and unless a true copy of such cfPcular, advertise-
    ment, pamphlet, prospectus or program, or other
    matter in connectiontherewith has first been filed
    in the office of the Secretary of State by the
    person or company about to Issue or publish the
    same OP baa been deposited In a United States
    Post Offioe, properly enclosed In an envelops
    addressed to the Secretary of State at Austin,
    Texas, with the postage duly prepaid thereof;
    provided, however, that In the Case of an ad-
    vertisementto be published In a newspaper OP
    other perlodioal,a oopy of 8uch advertisement
    taken from said publicationmay be mailed to the
    Searotary of State within twenty-four (241)hours
    after the first publiaationthereof; provided,
    further, that when offered for sale, or Bold,
    or dealt in by a registered salesman of a regis-
    tered dealer, this provision shall have no
    appllaationto any security Included within any
    of the following classes~
Seoretary of State, Page 11 (O-6311)

          "(a) Any seourity Issued or guaranteedby the
     United States or by any territory or insular pos-
     session thereof; or by the District of Columbia,
     or by any State or municipal corporationok poll-
     tiaal subdivlslonor agency thereof having the
     power of taxation or assessment.
          "(b) Any security issued or guaranteedby any
     foreign government with which the United State8 is
     atthe time of the sale, ok offer of sale thereof,
     maintaining diplomatiarelations, OP by any State,
     provlnae or political subdivlslonthereof having
     the power of taxation or assessment,which security
     is recognized at the time it Is offered for sale
     in this State as a valid obligationby such foreign
     government or by such State, province, or political
     subdivisionthereof Issuing the same, provided, how-
     ever, that such securitiesmust be on the list ap-
     proved by the Securities and Exchange Commission
     of the United States.
          "(0) Any seourlty Issued by and representing
     an interest In ok a direct obligationof a natlonal
     bank, or of a governmentalagency created or exist-
     ing by an Act of Congress of the United States other
     than corporationscreated or existing under the
     Code of Laws for the District of Columbia OP under
     the Code of Law3 for any territory or possession of
     the United States.
          "(d) Any security issued OF guaranteedeither
     a8 to prinalpal, interest, or dividend, by a torpor-
     ation owning or operating a railroad OP any other
     public service utility; provided, that such corpora-
     tion is subject to regulation or supervisioneither
     as to its rates and charges or as to the issue of
     its own securitiesby the Railroad Commisslon of
     Texas, OP by a public comml33lon,board of officers,
     having like powers, of the Government of the United
     States, or of any State, Territory, or insular
     possessionthereof, OP of the DistrFot of Columbia,
     or of the Damlnion of Canada, or any province thereof;
     also equlpnent trust certificate3or equipment notes
     or bonds based on chattel mortgages, lease3 or agree-
     ments for conditionalsale of cars, motlve power or
     other rolling stock mortgages, leased or sold t0 OP
     furnished for the use of OP upon a railroad or other
     public service utility corporation,provided that
     such corporationis subjeot to regulation or super-
Secretary of State, Page 12   (O-6311)

    vision as above;~or equFpment trust certificates,
    or equipment notes or bonds where the ownership
    or title of suoh equipment is pledged or retained
    in accordance with the provlsions of the laws of
    the United States, or of any State, Territory or
    Insular possession thereof, or of the District of
    Columbia, or the Dominion of Canada, or any prov-
    inoe thereof, to secure the payment of such equip-
    ment trust oertifloates,bonds or notes.
          “(e) Any security Issued and sold by a
     domestic corporationwithout capital stook and
     not organFzed and not engaged in business for
     profFt.
         “(f) Securities whioh at the time of sale have
    been fully listed upon the New York Stock Exchange,
    the Chioago Stock Exchange, the Boston Stock Exohange,
    or upon any other recognized and responsible stock
    exchange whioh has been previously approved by the
    Secretary of State as hereinafterin this Section
    provided, and also all securitiessenior to, or if
    of the same issues, upon a parity with any securities
    so listed or representedby subscrlptlonrFghts whloh
    have been so listed, or evidence of indebtedness
    guaranteed by any company any stock of which Is so
    listed, such securitiesto be exempt only so long as
    such listing shall remain in effect and only so long
    as the exchange upon which such securitiesare so
    listed remains approved under the provisions of thFs
    Section, applicationfor approval by the Secretary
    of State may be made by any organized stook exohange
    In suoh manner and upon such forms as may be pre-
    soribed by the Secretary of State, but no approval
    of any such exchange shall be gFven unless the
    facts and data supplled with the applicationshall
    be found to establish:
         “(1) That the requirement8for the 1Fstlng of
    securitiesupon the exchange so seeking approval are
    such as to effect substantiallythe reasonable pro-
    tection to the public now existing In the case of
    exchanges herein approved.
         “(2) That the governing constitution,by-laws,
    and/or regulations of suoh exohanges shall require:
8earetary   of State,   Page 1,3 (O-6311)

            "1st: An adequate examination into the affaairs
       of the timer of the ssouritles which are to be
       listed before permitting trading thorein.
           '2nd: That the issuer of such securities,80
      long as they be listed, shall periadicallyprepare,
      make public and furnish promptly to the exohange,
      appropriate fLnanala1, insame and profit and loss
      statements.
            "3rd: Securities listed and traded in on such
       exohange to be restrioted to those of ascertained,
       sound asset and/or inoornevalue.
            "4tht A reasonable surveillanoeof Its members,
       lnoludlng a requirement for periodical financial
       statements and a determinationof the financialre-
       sponsibilityof its members and the right and obli-
       gation in the governing body of suah exchange to
       suspend and/or expel any member found to be flnanoially
       embarrassed or irresponsibleor found to have been
       guilty of aisoondoot in his business dealings, or
       oonduot prejudiolalto the rights or Interests of his
       oust~s.
            'The approval of any such exchange by the
       Secretary of State shall be made only after a
       reasonable hearing and investigation,and shall
       be by an order of approval upon a finding of faot
       substantiallyin aooordanoe with the requirements
       hereinabove ovidbd. The Secretary of State,
       upon ten (10$ days' notice and hearing, shall
       have power at any time to withdraw approval there-
       tofore granted by him to any such stock exohange,
       and thereupon securitiesso listed upon suoh
       exchange shall be no longer entitled to the bane-'
       fit of such exemption exoept upon the further
       order of said Secretary of State again approving
       such exohange.
            "(g) Ang secmltg issued or guaranteedbyand/or
       representingan Interest  in or a direst obligationof
       a state bank or trust onmpany lnoorporatedunder the
       laws of and subject to the examination,8uperviaFon
       and control of any state or territory of the United
Secretary of State, Page 14 (o-6311)

    Statesorany insular possession*.therebf;- or
    issued or guaranteed by any building and loan
    associationor savings Institution or by any
    Fnsuranoe company under the supervisionor
    control of the Banking or InsuranceDepartment
    of this State.
             "(h) Negotiable promissorynotes or commercial
     paper Issued in good faith and in the usual course
     of carrylng on and conductingthe business of th.e
     issuer,    provided that such notes or commercial
     paper mature In not more than twelve (12) months
     from the date of issue.
         "(1) Notes, bonds, or other evidence of Fndebted-
    ness or certificatesof ownership which are equally
    and proportionatelysecured without reference or priority
    of one over another, and which, by the terms of ,the
    instrumentcreating the lien, shall continue to be so
    seoured by the deposit with a trustee of recognized
    responsibilityapproved by the Secretary of State of
    any of the seourltles specified in subsections (a)
    and (b), or of any of the securities,other than
    stock, specified in subseotlon (d) of this Section
    23, such deposited securities,if of the classes
    desoribed in subseotlons (a) and (b) hereof, having
    an a gre ate par value of not less than one hundred
    and &en y 110) percent of the par value of the securities
    thereby seoured, and If of the class specified in sub-
    section (d) hereof, having an aggregate par value of
    not less than one hundred and twenty-five (125) per
    cent of the par value of the securitiesthereby
    scoured."
            We have carefully examined the statutoryexemptions
above set out and are unable to find therein authority for
exempting the issuer of the securitiesinoident to the pro-
posed Retirement Plan from the requirementsof Section 5 of
Article 600a, supra, other than that expressed in subsection
(j) of said Section 3 of Art. 600a, wherein domestic oorpora-
tions are allowed to sell their stook or other securities
Issued in good faith and not for the purpose of avoiding the
provisions of the SecuritiesAct, so long as the total number
of stockholdersand security holders of said corporationdoes
not and will not after suoh sale exoeed twenty-five(25)
and the securltlesare issued and disposed of without the
use of ad9ertlsementscirculara,agents, salesmen, soll.cFtors,
or any form of publio solioitation~ This is the only one of
the statutory   exemptionsthat might apply to the Retirement
Plan in question.
Seoretary of State, Page 15 (0-6311)

         Trusting  the foregoing fully answera your inquiry,
we herewith retnrn the instrumentssubmitted by you.
                                  Yours very truly,
                             ATTORNEYGENERALOFTEXAS

                             BY    /s/Robert L. Lattimore,Jr.
                                      Robert L. Lattimore,Jr.
                                                    Assistant
RLL:rt:rpjs
Attach.
APPROVED FEB. 19, 1%
4%3~%%~2
ATTORNEYGENERAL
APPROVED OPINION COMMITTEE
BY /a/ JAR CHAIRMAN