Untitled Texas Attorney General Opinion

The Attorney General of Texas
March 10, 1983
JIM MATTOX
Attorney General
Mr. Edward 0. Coultas Opinion No. JM-7
Supreme Court Building Executive Director
P. 0. BOX 12546 State Bar of Texas Be: Whether District of
Austin. TX. 76711. 2546
P. 0. Box 12487. Capitol Station Columbia professional corpora-
512/475-2501
Telex 910/674-1367
Austin, Texas 78711 tion needs a certificate of
Telecopier 5121475.0266 authority to transact business
in Texas
1607 Mam St.. Suite 14W Dear Mr. Coultas:
Dallas. TX. 752014703
2141742.6944
You ask whether an Individual who practices law in the District
of Columbia and Is not licensed to practice in the state of Texas, yet
4624 Alberta Ave.. Suite 164 who is a partner in a general partnership organized under the laws of
El Paso. TX. 79905.2793
the state of Texas, may Incorporate a professional corporation under
9)433-3464
the laws of the District of Columbia and substitute it for himself as
a partner In the Texas partnership. If so. you then ask whether the
1220 cum be.. we 202 foreign professional corporation is deemed to be transacting business
HOUS~O”.TX. 77002.6966 in the state of Texas and is thus required to obtain a certificate of
7 131650-0666
authority from the secretary of state.
606 Broadway. Suite 312 In our opinion, any corporation acting as a general partner of a
Lubbock. TX. 79401.3479 Texas partnership transacting business in Texas is itself transacting
0061747-5236 business in Texas. See Attorney General Opinion WW-191 (1958). A
partnership under theTexas Uniform Partnership Act is defined as “an
4309 N. Tenth. Suite e
association of two or more persons to carry on as co-owners a business
McAllen. TX. 76501-1665 for profit.” V.T.C.S. art. 6132b. 16. The term “persons” includes
5121662-4547 corporations. V.T.C.S. art. 6132b, 56-A. This definition also
pertains to professional corporations by virtue of article 1528e.
section 5. V.T.C.S.. which provides that “professional corporations
200 MaIn Plaza. SUlW 4w
San Ank,“,o. TX~ 76205.2797
shall enjoy the powers and privileges and be subject to the duties,
512,2254191 restrictions and liabilities of other business corporations except
insofar as the same may be limited or enlarged by this Act.” If the
partnership business is carried on in Texas, each partner is also
transacting business in this state. because every partner is an agent
of the partnership for the purpose of partnership business, and every
partner has an equal right in the management and conduct of the
business. V.T.C.S. art. 6132b. $09. 18. See Scott Company of
California v. Enco Construction Company, 264 So. 2d 409 (Hiss. 1972);
17 W. Fletcher, Cyclopedia of the Law of Private Corporations, P8464
(1977). Cf. Williams v. Freeport Sulphur Company, 40 S.W.Zd 817. 824
(Tex. Civ.pp. - Galveston 1931, writ ref’d).
p. 27
Mr. Edward 0. Coultns - Page 2 (JM-7)
Thus, in order for the professional corporation/partner to
transact business in this state, it would be necessary for the
corporation to be authorized to do business in Texas. The Texas
Professional Corporation Act, article 15281~. V.T.C.S., does not
provide for the registration of foreign professional corporations In
Texas. Such authority may not be obtained by registration as a
foreign corporation under the Texas Business Corporation Act. Section
5 of the Texas Professional Corporation Act provides that the Texas
Business Corporation Act shall be applicable to professional
corporations except to the extent that the provisions of the Texas
Business Corporation Act conflict with the provisions of the Texas
Professional Corporation Act. The failure of the Texas Professional
Corporation Act to provide for the registration of foreign
professional corporations indicates the legislature’s intent that such
corporations not be authorized to do business in the state of Texas.
Use of the provisions of the Texas Business Corporation Act to supply
such authority would constitute a conflict with the Texas Professional
Corporation Act. Although the Texas Professional Corporation Act has
not been construed by a court in this regard, at least one other
jurisdiction has found that the failure of its professional
corporation act to provide for the registration of s foreign
nrofessional cornoration orohibits a foreien nrofessional cornoration
from doing business in the state. Dalton, Dalton, Little, ‘Inc. v. A
Mirandi. 41’2 F. Supp. 1001 (D. N.J. 1976). Accord, Ariz. Op. Att’y
Gen. 71-38 (Oct. 27, 1971); N.C. Op. Att’y Gen. (Aug. 26, 1970); Minn.
Op. Att’y Gen. 92b-18 (Apr. 6, 1965). in our opinion, in order for
the professional corporation which Is the subject of your request to
be able to transact business in this state as a partner in the
practice of law. that corporation will have to comply with the
provisions of the Texas Professional Corporation Act. That is. it
will have to become a domestic professional corporation in the state
of Texas.
SUMMARY
A foreign corporation that is a partner in a
general partnership organized under the laws of
the state of Texas is deemed to be transacting
business In the state and, thus, is required to
obtain a certificate of authority from the
secretary of state. The same rule would apply to
a foreign professional corporation, except that
the secretary has no authority to grant the
certificate to a foreign professional, rather than
business, corporation. The absence of any
licensing provision for a foreign corporation to
do business in the state of Texas Indicates that
the legislature did not wish to allow a foreign
professional corporation to carry on any
p. 28
Mr. Edward 0. Coultas - Page 3 (JM-7)
activities that amount to transacting business in
this state. Thus, because being a partner would
amount to transacting business In this state, and
the foreign professional corporation could not be
licensed under the usual corporation licensing
provisions, the foreign professional corporation
may not participate ss a partner in a partnership
organized under the laws of the state of Texas.
J Ai&
Very truly you
LA
JIM MATTOX
Attorney General of Texas
TOM GREEN
First Assistant Attorney General
DAVID R. RICHARDS
Executive Assistant Attorney General
Prepared by Catherine B. Fryer
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Catherine B. Fryer
Rick Gilpin
Jim Moellinger
p. 29