Bmrdoi Zmuxnce Coml44ioner4 Auetln, Toxw oeatlsmen: Attentionr Mr. D. B. B4rroir open 210.O-3015 : CWWmactionof Articlrr 4725 wd 4706, concrraing rli&iblo InYertmefltr for life in4~cr companies and Sira or caogalty inrumnce companies in Texap, rmpectively, iuvolving putici- Fatting ce*l?lcatcr or mutIJa1 invertwnt cowern.. Wo 4ckaowledg4 rmdlpt of your letter of J4nu4ry 2, 1941, repuert- iag 4n opl&n from t&l4 &partment upon quertionr propounded, your’lattbr belng 4, follows: “I am enclosing for your conelderation, in connectIon with the question.4 asked in thin letter, the following paperr: “‘Proapectm of the HamIlton Inve4tment Plan, Cowolida- tion of Trust Indenture ~,i the Hamilton Deposltore~Corporation audThe International Truet Companyas to EamlltonTrust Sham4 and %m.llton Trurt Shares Certificate.! “I am also enclosing 4 Prorpectus of the Ma4sachuaetts In- vestors Trust and 4 Proepectua of the Boeton Fund, Inc. The legality of investment of inlrurance companiesf funds in the Hamilton Trust, the Maseachueetta.Inve4tors Tru4t and the Bo4ton Fund, ha4 been queati-d and we, therefore reepec~iWJy reque4t an opinion from you cihout the matter. “In connection with the Hamilton Trust, your attentlon’is directed to the statement made on Page 4 of the Proapectum uh4re- in there Is stated ‘Thle is not an lnveetment in the stock of the Eam11ton.corporst ion, ’ and to the statements nmde on Pags 6 under the heading ‘Brief Sumwaryof the Hamilton Plan.’ In a letter received bythia Departwnt and signed by the President of the Hamilton Corporation, there is itated: ‘There la no essential difference, 48 far as vc can eee, between investing in our iuna and investing ip the individual stocks.’ Board of Ine-ce Cwncismiwerr, Page 2 (o-3015) “Your attention is alro directed to the fact that & the Maseachusetto InveBtorr Trust and the Boston Fund, Incorporztod, the imeeting company or individual doer 10 by purchsoa oharer of the trwt. Your opl!Um ir respectfully requested in connec- tion with this matter ae to the following quertionr: “1. May the fun& of a TezaB Life Inrurance Companybe in- vested with fho Hamilton Depositora Corporot.1~ for Eamlltm& Trust Sharer Certificatea and if no, mart the variour rtoc&r pur- chased by the Hamilton Doporltorr Corporation be rtockr of corn- pnniem which me eligible iammtmntr for the iundr of a Texw Life Iwuranc e Companyin rccordence with the provi#ionn of Set- tioq 3 of Artlcle 4725 of our insurance ntatuten? “2. May the fuuda of a Texan Fire or Cmuzlty Inmuroncs Companybe inveated with the Eemi~ton Deporitorr Corporation for Hamilton Tnmt Shares Certlficatee md if 10, mumtthe various stocka purchased by the Hamilton Depoaitorr Corporation be rtocko of companies eligible for investmontm by Texan Fire and Carualty Inmamnce Compeniea in accordance with the pr&rlonn of Article 4706, Section D of oux ino-ce etatutes? In thir counection, it should be noted that the above referred to Article provide8 in effect that the tide of a Texas Fire sqd Casualty Innurence Company may be @vented in the etock of a solvent dividend pky- ing corporation Incorporated under the lawn of a state in which the lnaursnce compzny 1~ duly authprized to conduct an inouremce bu8Meso. “3. May the fund4 of a Texas Life Inourance Companybe in- veoted in the Worachuoettr Invemtorr Tnmt Sharer or Booton Fund, Inc., and if 10, ie it neces&wy that all of the mtocl&n owned by the Trurt be hocka eligible for inrertint .by a Teur Life Insurance Companyin accdrdssce with Article 4725 of our insurance rtatuter? “4. May the fur&U of 6 Texar Fire or Canulty Inoursnce Companybe l+vorted ln Marrachurettr Involtorr Truot Sbareo or Booton !Und, Inc. Truot Sharer and if 10, munt the rtocka owned by the Truot be eligible inventtmantr for the i~umace compnny in accordance with the provisiona of Article 4706 of oy ins.w- ~4 atrtuttss, and eat the Texan Fire or Camaalty Ineuranc& Companybe authorized to tranoact buoinern Fn the State .of _ Maaeachueettsl” . gone of the certificates or &ares mentioned by you arc e.jiglble for lnveetzkent by the respective insuranc e compauiee mention& .., Life inmrance compaqies incorpore,ted under the lavs Ff,t-i$q State are authorized to invest their surplus, or zny part thereof, over.apd sboVe Board of Inaurauce Comimioners, Page 3 (o-3015) the aaount of their reaervel and capital stock, in the “capital stock, bonda, debenturea, b1U.r of exchange, or other comercial notes or bill, and mecurl- tiem of any aolveat dividend-paying corporation which han not defaulted in the paynmnt of any of itr obligationr for a period of five (5) year,, + * it". (Vernon’8 Civ. Stat. Anno. Art. k725(3). . . Corporationa other than life, health and accident lnauraace compaaier organized under the law.wrof Texar are authorized to invert their fundn over and above their paid-up capital ntock in: “* * * (d) the ntockr or boadm or other rvidencer of iadabteduass of any aolvrnt dividend-payiq corporation, incorporated under the lawa of thin State, or of the United Statea, or of my atate, country, or province lh which ruch compaay may be duly licenned to con- duct an iaaurancs bunlaeaa.” It w1l.l thur be reea a security to be eligible for either clam of theas Texam corporatlone muot be the direct obligation of the isruing corpora- tion. The statutory definition of eligible rccurltier excludem, therefore, etock or rharee evldenclng merely participating lntcrente by the holdem in the net profit0 if any of the imrulug concern. Such a plea 11 in the nature of a mutual invectaent compaay. Au examlaation of the Ilterature of the renpective illruing cwpaniem in the present .case dlsclorea that their share8 or certificatetv ‘do not repre- sent direct pecuniary obligations of the lsmlng companies, an contemplated by the statutes, but on the contrary, represent aerely psrticlpatiag interest6 in the net eamlnga (if any) of the issuing concera. For thin reason, such stock, shares, or cerbiflcates, by whatsoever name called, do not constitute ell.gible iuveatmeute for our inmrao ce companies. Moreover, with respect to the Massachuretta Investors’ Truot shares or Boston Fund, Inc., lt la not clear that such concern is a corporation, with- in the meaning of that word, a8 it la ueed in our etatutee, or understood gen- erally. On the contrary, there la evidence in the literature of that company lxdlcating it la a mere voluntary aseociation of ludividualn governed by true- teee and not by the board of directors contelnplated by the laws governing corpo- ratione generally. If thin be true, its securitier are not eligible, because It is not a corporation, e.8 required by the statutea above quoted. However that question may be, its certificatea or &ares fall within the condemoation first above diecussed. We tmat thin will be a sufficient aumer to your lnquiriea. AFTROVED JAIi 22, I.941 Very truly yours /s/ Grover Sellera Al7!ORNEfG- OF TEihS FIRSI ASSISTART By /s/ Ocie Speer ATl!oRi4RYoERERAG Ocie Spser Aaalatant OS-m-w APPROVRR OPIRIORCm RY /s/ B.W.B. CRAIRMAN