Untitled Texas Attorney General Opinion ( 1958 )

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