Untitled Texas Attorney General Opinion ( 1970 )

The Honorable Martin 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
Forfeiture of charters
and certificatesof
authority of corporations
For Failure to timely pay
Franchise taxes; and what
statutes apply to his
reinstatementOF such
Dear Mr. Mes: charters and certificates?
Your opinion request presents the FoIlowIng questions:
"1. Article 12.17(2), Taxation-General,
Vernon's Civil Statutes, Article 7.01B(l),
Texas Business Corporation Act, and Article [1396-j
7.01B(l), Texas Non-Profit CorporationAct all
provide For admlnlstratlveForFelture by 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 Author-
ity of foreign corporationsfor Failure to pay
franchise tax in the time prescribed by law?
2. Does the $50.00 reinstatementFiling
Fee and the twelve month limitation In Article
7.01E. Texas Business Corporation Act and Article
[:396-l 7.01E, Texas Non-Profit Corporation Act
apply to reinstatementprovisions 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 Secretary of State may Forfeit the charter or
certlflcateof authority of a business corporationFor Failure
to pay Franchise taxes under authority of Article 7.01B(l),
-286%
. .
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 corporation under 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.
These statutes were passed by the 61st LegislatureIn
1969. The language of Articles 7.01 and 8.16, Texas Business
Corporation Act and Articles 7.01 and 8.15, Texas Non-Profit
Corporation Act are Identical In so far as they prescribe a
procedure by which the Secretary of State may Forfeit charters
and certificatesof authority of the respective corporations
and thereafter reinstate such charters and certificateswhere
the requirementsFor reinstatement,set out In those statutes,
are met.
Article 12.17, supra, as amended In 1969, Is a relnact-
ment of the procedures theretofore given under Article 12.17 and
provides additionalprocedures whereby charters of domestic
corporationsand certificatesof authority of Foreign corpora-
tlan~,admlniatratlvelyForfeited as provided by that Title, may
be rbvlved by the Secretary of State when the requirementsFor
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 forfeiture under the provisions of the Texas Business
Corporationand Texas Non-Profit Corporation Acts, also Include
Failure to pay the Franchise tax or File Franchise tax reports.
Article 12.17, supra, and the other provisions of the
Texas Business CorporationAct and Texas Non-Profit Corporation
Act, provide different procedures For the Forfeiture and revival
of charters and certificatesof 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 conflict between Article
12.17 and these later statutes In the Texas Business Corporation
and Texas Non-Profit Corooratlon Acts. the latest exoresslon of
the Legislaturewould co&rol. De Jei~s de ia 0, In-Fe
154 Crlm.Rep. 326, 227 S.W.2d 212 (1950).
-2864-
Hon. Martin Dies, Jr., page 3 (M- 600)
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 Non-
Profit Corporation Act, and S.B. No. 604, which Include the
amendments to Articles 7.01 and 8.16, of the Texas Business
Corporation Act. These two sections read as Follows:
"Nothing In this Act shall Invalidateany
of the procedures hereby changed by this Act which
have been Initiated prior to the effective date of
this Act, and under such circumstances&ing the
Secretary of State and any other state agency affected
Is authorized to proceed under the appropriatepro-
cedures authorized prior to this Act or as changed
by this Act." (The word "and!'In brackets was ln-
eluded In Sec. 9, of the Texas Non-Profit Cotiporatlon,
Act only.)
In 14 Tex.Jur.2d 642, Corporations,Section 544, it Is
said:
"Althoughdissolutionor Forfeiture of a
charter terminates the existence of a corporation,
our constitutionand statutes preserve a distinction
between Forfeiture of a charter and dissolution.
Statutory provisions relating to Forfeitures of
charters are found in portions of the Revised
Statutes deemed to remain effective after enact-
ment of the Business Corporation Act. With one
exception, provisions relating to involuntary
dissolutions are Found In the Business Corporation
Act."
Keeping In mind the above distinction In the statutes,
dealing with different subject matter, we conclude that the
statutes concerned are not amendatory of one another,.and they
do not present any conflict. Under Article 12.17, supra, deal-
ing with Franchise taxes only, the Secretary of State is required
to determine that the corporation taxpayer has 'noassets 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 con-
struction of the statutes which avoids any conflict wherever
possible.
The statutes clearly demonstrate the Intent of the Legis-
-2865-
. I
Hon. Martin Dies, Jr., page 4 (M- 600)
lature to provide the Secretary of State with both the For-
feiture and reinstatementprocedures set out In Article 12.17,
and the forfeiture and reinstatementprocedures set out In the
Texas Business Corporation Act and the Texas Non-ProfitCorpora-
tion Act. The Secretary of State therefore may Forfeit and
reinstate charters and certificatesof authority under either of
the procedures provided, and the choice of remedies would be
dictated by the Facts of each case.
In answer to your second question, It Is the opinion of
this office that the reinstatementFiling 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 relnstatementaorForfeitures under the provisions of
Article 12.17, supra. These First two Articles are identical,
except For the amount of the relnstatement~FlllngFee, and pro-
vide, In part, as Follows:
"E. Any corporationdissolved by the
Secretary of-State under the provlslo& of
Section B of this Article may 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
application For reinstatement." (925.00 For
Non-Profit Corporations.) (Pmphasls ours.)
This statutory language expressly limits the refnstatement
requirementsmentioned above to corporationsdissolved by the
Secretary of State under the provisions of Section 3 of Article
7.01 of the Texas Business Corporation Act and Section 9 of
Article 7.01 of the Texas Non-Profit CorporationAct.
SUMMARY
The Secretary of State may administratively
Forfeit charters and certificates of authority
of corporationsFor Failure to pay Franchise taxes
under authority of Articles 7.01 and 8.15, Texas
Business Corporation Act, For business corporations,
or under Articles 7.01 and 8.16, Texas Non-Profit
Corporations Act, For Non-Profit Corporations. The
Secretary of State may alSo Forfeit charters and
certificatesof authority under the authcrity of
Article 12.17, Title 122A, Taxation-General,V.C.S.,
-2866-
.
Hon. Martin Dies, Jr., page 5 (M- 6001
where that statute Is applicable.
The reinstatement Filing Fees and the
twelve month llmltatlon provided For relnstat-
lng 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 Corporation Act, do not apply
to forfeitures made under authority of Article
12.17, supra.
s very truly,
Prepared by Wardlow Lane
Assistant Attorney 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
Executive Assistant
NOLA WHITE
Ffrst Assistant
-2867..