Untitled Texas Attorney General Opinion ( 1948 )

August 27, 1940. Hon. J. M. Falkner Opinion No. V-673. Banking Commissioner Austin, Texas, Re: The necessity for a Texas corporation to Attention: " maintain complete Mr. H. L. Bengtson, books and records at Deputy Commissioner its HomeOffice rath- er than at the office . .’ of its parent company in another state. Dear Sir: Your letter requesting an opinion by this of- fice on the above titled subject matter is as follows: "Re: Community Finance and Thrift Corporation Dallas, Texas "Dear Sir: '"The above ,captionedcorporation is a Loan and Brokerage Company, organized un- der the laws of this State with Article 1303b, Revrsed Civil Statutes of ,Texas,as amended, as its purpose clause: Its char- ter defines the City of Dallas, Dallas Coun- ty, Texas, as its principal place of busi- ness. The capital stock of said corpora- tion is $50,000.00, all of which has been paid in. Subject corporation enjoys the pri- vilege of issuing and selling single payment and installment payment certificates under the provisions of Section 7, particle 1524a, Revised Civil Statutes of Texas, as amended by Acts of 1945, 49th Legislature, H.B. 430. Collateralization of certificates issued in compliance with the amended portion of Sec- tion 7 of Article 1524a seemingly does not apply to corporations having a minimum capi- tal of $50,000.00 where such sales are made to debtors who are at the time indebted to the issuer, but does obligate the Banking Hon. J. M. Falkner - Page 2 (V-673) Commissioner of Texas to make examination to the same extent as if collateral were required. "As a matter of further explanation, the subject corporation is reported to be .awholly-owned subsidiary of the Family Fi- nance Corporation, a Delaware corporation, which corporation owns all of the stock of its subsidiary units and controls their operations through Security Bankers Manage- ment Corporation, Wilmington, Delaware. "Subject corporation has also estab- lished approximately seven branch offices in Texas and, from a supervisory rtandpoint as related to the examining responsibility of this Department, it is the considered opinion of this office that the corporation at its principal place of business, as de- fined in its charter, namely, Dallas, Texas, should maintain a system of record controls as it affects itself and branch offices, which will enable the Banking Commissioner of Texas to determine from an examination > of such record controls the financial con- dition of the corporation, The fact is that all records of the Dallas office, as well as those of its branah offiaes, are maintained at the office of the Family Fi- nance Corporation ,atWilmington, Delaware, the result of which makes it wholly impos- sible to determine from an examination the solvency of the domestic corporation with- out consulting the records at Wilmington, Delaware. "Therefore, the question we desire to submit to you for an opinion is: "As a Domestic Corporation, would it not be compelled to keep and maintain all books and record controls at its defined place of business rather than at the of- fice of the so-called parent company in a foreign State?" ,- 18 Bon. j. M. Falkner - Page s (V-673)~ .., .,, ,.’ . , We are of the opinion,~ your question should be answered in the affirmati~v'e. Arti’clb 1358'~of,'. &he:Rev!i,sed, Civ.il'&at,utes, governing private corporations,'declaresi;::,+.:~, .,, "Each corporati'onor joint -stock'com- pany'~ofevery description, whether organ- ized and acting under a,special charter or '3 general law,,,of 'thi.s~,state, shall keep its principal office within this state." NC& the w&d. "office" as used here does not mean me,rely the building and furniture. It means the place of transacting,i.tscorporate business in the or- dinary way thatcorporate affairs are transacted, and includes all pr,operand necessary books, records, files, and the like. One of thereasons for this requirement, if reasons for.the statute.were required, has been stated by you. The corporation IP subject to visitation and supervFsion~,.Py. theBanking, Commissioner, who transacts his official-bus:inessWithin the territorial limits of the State, except in those instances where,he is spe- cially authorized to go beyond. A further and similaP reason is found in Article 1366 of the Revised Civil Statutes, declaring: "Every corporation, domestic or foreign, doing business in Texas shall permit the At- torney General or any of his authorized as- sistants or representatives to make examina- tion of all the books, accounts, records, ,min- ' utes, letters, memoranda, documents, checks, vouchers, telegrams, constitution and by- laws, and every record of said corporation as oft&n as he may deem hecessary." This contemplates that such examination may be done within the State of Texas where the corporation has its principal place of business and not in some oth- er State in the office and possession of some other cor- ,porationnot under the supervision, or subject to the examination of the Attorney General. -. - Mon. J. M. Falkrier- Page 4 (V-673) A corporation organized and doing busi- ness under the lawn o$ the State of Texas is required to keep its books and records at its principal office in the State. Ycurs very truly, ATTOlU?EXGElTEFtALOFTEXAS 0S:wb Assistant