OFFICE OF THE AlTORNEYGENERAL OF TEXAS
AUSTIN
Hon. %I. J. Lavaon
Seoretary or State
hrtin, Texas
n Richardron
oducte berore
Dear Sir:
an e!nendmen~ inereaalng the authorized capital
stook to iS,OOO,OOO.OO for wh-llchthe correct g2.60
filing fee har been paid thie Department.
“Ths amendment anpears fc be in the pmper
form, but its rtook is divided into two olaeser
-- 100,000 ehsree of coszon etook and 25,000 eharen
or preferred ntook. noth oommon and preferred are
voting etook and both olagsea of stook reoeire
dirldendn not to exceed 8% per ennua, the only
,
811
Bon. Wm. J. tareon, Page 2
difterenoe between the ooimnon and preferred @took
Ir that the preferred may be redeemed or retired
upon EO days notloe end that It shall be prererred
an to 'amset and the dlrldendr oumuletlve'.
'Tha plan of operation is to eel1 the oommon
rtook to producers, but the preferred stock nay
be Bold to non-uroduoers. So far 86 we know, thlr
im the rlrst time the cucstlon hsr erlsen a6 to
preferred stock having the rlght to vote end being
rold to non-producerl.
'booordlng to Article 6743 of the Revised CIvIl
Statutes, xeabers of the oorporatlon or common stook-
holders must be prod~ucers. ~rtlole 5750, hoverer,
provide6 'any e6socIatIon oresnlced vlth stock under
thi6 law EAJI 16eue preferred stock with or wlthout
the rlght to vote'.
“The ouestton In this connection la whether,
when the preferred stock ha6 the right to vote, ltr
owner6 are therefore member6 of the corporation and
murt be prOdUOOr6, or whether being preferred Itook-
holderr ther need not be produoere.
‘8inoe the pmjeot 16 the large63 one to be 6ub-
lltted to thi6 Eecartaent under the Cooperative
&rk6tlng bOt, we requeet an opinion rrom your Depart-
ment on this point berore the charter mendsnent la
approved. The ChArter amendment 16 attached hereto
for your OOn6ideratlOn."
Article 5743, Vernon's Annotated civil Statute8 reeds
a@ ro11orr:
‘(A) Under the term6 and conditions WescrIbed
ill it6 by-laws, en aaeoclation may admit an members,
or is6ua aomaon 8took, only to persona engaged in
the production of the agricultural products to be
handled by or through the eesociatIon, lnoludlng
the lealeer and tenant6 of land U66d for the pro-
duotlon of 6Uch pmduots and any lessors end land
Ownere who receive a6 rent art of the croo raised
On the leared preaI6e6. (by xi a member of a non-
6took a68oolatlon b6 other than a natural pereon,
I
812
Hon. Wm. J. Lawson, Peg0 3
suoh member may be presented by any lndlvldual,
assoolate orrloer or member thereor, duly author-
ised in wrItlng. (01 Any aeeooletion es derlned
In Artlole 5738 (01 may beooao A member cr 6tock-
holder of any other .a66ociAtion or as6ooietlons
organized hereunder.'
Article 5744, Vernon's Annotated civil Statutes,
provldes In part as roilowrt
I . ff organized with cacltel stock the
amount'oi suoh oaoltal 6tock end the number'oi
rhare6 Into whloh'lt 16 divided end the par value
thereor. The capital 6took may be divided into
preferred And common #took. If 60 divided the
Artioles of Inoorporation must oontain a state-
ment of the number of shares of etock to whloh
preference Is granted and the number of 6hares
of stooli to whloh no preferenoe 18 granted and
nature and extent of the preferenoe und prlvl-
lege6 granted to eaoh. . .*
Artiole 6750, Vernon's Annotated Clvll Statutes
provides ln part:
0 . Any as6ooLation organized with stook,
under ih;s law, may 186U6 preferred stock, with
or without the right to vote...'
Article 6720, Vernon's Annotated Clvll Statutes
among other things provldesr
'(1) That no mdxber of the aesooletlon 16
tiloded more than one vote beoauee Of the amount
of 6t:ok or membership OapitAl he sey own ther6ln
. . .
It 16 apparent that under Article 6743, eupra, oom-
aon rtook can be 166ued only to pereons enyased in the pro-
duction of agrioulturel products to be hAndled by or through
the arsoulation, eto. ~onsldtrlne Articles5744 end 5750, muera,
together, it 1% evident that oomDanlt6 or acsooldtlsne organ-
Ired under the 'Cooperative l.;ar'ketIng
Aot* may Iscue preferred
Stook, rlth or ulti-.Dutthe rlght to vote. It will be noted
.
Bon. Urn. J. Lawon, P*gr 4 ,
that thr ?&operative ~brketing hot’ does nOti rcqulrs the
ouners of preferred stock in assoolatlone or convsnlelr
orgsnlsad under the aot to be produoers or enrage in the
produotlon of aqrioultural vroducte ta be handled by or
through the aeroaiatlon or company. At, as above etated
muah aesoolstlona or companlee may :seue Drererred 8took,
wlth or without the rlghf! to vote. The charter amend-
ment o? the I”smere and "On.9umcrs Con&any reads In part
am follows:
#Said rharea are to be dlvlded into two
(2) claeses, to-wit: Ccmson and iref erred,
of which l.gO,otJOBharclr shall be common and
25,000 &ares ahall be preferred. Lath holder
of oomson stock bnd each holder of preferred
stock #hall be allowed one vote regadlsse of
the amount of stock owned by such ehare
holder. . .”
In view of the foregolnp statute, the Farmers
and Concrumerr Comoany may lesue preferred etoak with or
without the right to vote, but It 1s act?arent from the
above quoted portion of the charter amendment that the
bolderr of the preferred stook are allowed to rote. l’here-
fore, the above stated question la respcatfully answered
in the negative.
Trusting that the foregoing fully anewere your
inquiry, we are
Yours very truly,
x1 / 1 ATTORNEY‘XHEFUL OF TFXAB
FIR ;T AS’SIS”ANT
ATTC)HMEY G%W.AL Ardell Yilllams
Asslatant
Aullh