## HEATTORNEY GENERAL

OFTEXAS

Gerald C

.Mann AUSTIN II.TEXAS

Eouorable Sidney Letham Secretary of state Austin, Texas

Dear Sir: Opinion Ilo.O-5508 Re: Adoption of Cooperative Marketing Act (Chapter 8, Title 93, Revleed Civil Statutes) by corporstione organized underArticle 1302, subdivision 81; and payment of franchise taxes.

In your letterof llovember8, 1943, regarding the above captioned matter, you ask the following queetione:

1. "Should thie office under the provlaioua of Article 5760 approve and file amendments to charters of corporatloue organizedunder the provleloue of Title 32 of the Revised Civil Statutes changing the corporate structure of said corporations to come under the provialous of Chapter 8, Title 93 of the Revised Civil Statutes?

2. "Ifyour answer to the first question la in the afffrmatlve, should auoh a corporation after coming under the provlelons of Chapter 8, Title 93 continue to pay franciee taxes to this department?"

You handed ua in connection therewith the original charter of the Booker Rqulty Union Rxhange, a corporation createdMay 17, 1920, under theprovisions of Subdlvlslou 81, of Article 1302,Vernon's Annotated Civil Statutes, togetherwith two (2) amendments, filed September 10, 1940, and July 7, 1941.

Both amendmentswere approved and filed with the Secretary of State D The 1940 amendmentadopted the provisiona of the Cooperative Marketing Act (Chapter 8, Title 93,Revised Civil Statutea), and the 1941 amendment increasedthe capital stock of the association from $31,238.00 to $40,000.00.

The pertinent statutesare:Honorable Sidney Latham,Page 2, 0-5508

"To construct orpurchase, or purchase and maintain milla, gins, cotton compresses,grain elevators,wharves, and publicwarehouses for the storage of products and coamodltlesby grain elevatorand publicwarehouse companies; the loan of money by such elevator and publicwarehouse companies;and to act as general coamerclalbrokers and as custom brokers in the United States sod foreign countries." (Subdivision 81, Article l302,Revimed Civil Statutes)

"An associationmay be organized to engage in any activity in connectionwith the production, cultivation,and care of citrus groves or the markatiug or selling of agriculturalproducts and citrus fruits produced by andmarketed for itsmembers, or in the harvesting, preaervlng, drying, processing,canning, atorlug,handling, shipping, or utilization thereof, or themanufacturing
or marketing of the by-products thereof; or in connectionwith themanufacturing, selling, or supplying to itsmembers of machinery, equipment
or supplies;or in the financing of tho above enumeratedactivities;or in any one ormore of the activities specifiedherein. Provided, however, any such activitiesmay extend to non-members and to the production,cultivation,and care of lands owed or cultivatedby them and their products llmitedby Article 

## 5738 as heretofore amended." (Article 5740, CooperativeMarketingAct).

"Each association formed under this Act must prepare and file Articles of Incorporation, setting forth: (a) The name of the association. (b) The purposes for which it is formed. (c) The Place where its principal businesswill be transacted. (d) The term for vhlch it is to exist, not exceeding fifty (50)years. (e) The nmber of directors thereof,vhloh must not be less than five (5) and may be any number In excess thereof, and the term of office of such directors. (f~) If organizedwithout capital stock,whether the property rfghts and interest of eachmember shall be equal or unequal; and if unequal, theArticles shall set forth the general rule or rules applicable to all members by which the property rfghts and interests,respectively, of eachmember may and shall be determined and fixed; and the association shall havem.

.

Honorable Sidney Latham, Page 3, 0-5508

to power to admit newmembers who shall be entitled to share in the property of the assoclatlou with the oldmembers, in accordance with such general rule or rules. This provision of the Articles of Incorporationshall not be altered, amended or repealed except by the written consent or the vote of three-fourthsof themmbars. (g) If organizedwith capital stock, the amount of such capital stock and the number of shares intowhich it is divided and the par value thereof. The capital stockmay be divided into preferred and common stock. If so divided, the Articles of Incorporationmust contain a etatement of the number of shares of stock to which preference is granted and the number of shares of stock to vhlch no preference is granted and the nature and extent of the preferencesand privileges granted to each. The Articlesmust be subscribedby the incorporatorsand acknowledged by one of them before an officer authorized by the law of this State to take and certify acknowledgmentsof deeds and conveyances;and shall be filed in accordancewith the provisions of the general oorporatlon law of this State; and when 80 filed the said Articles of Incorporation, or certified copies thereof, shall be received in all courts of this State, and other places, a8 prima facie evidence of the facts coutalned therein,and of the due incorporationof such association, O *

. .' (Article 5744, CooperativeMarketingAct)
"Any corporation or aesooiation organized under previously existing statutes,may by a majority vote of its stockholdersormembers be brought under the provisions of this chapter by limitlog itsmembership and adopting the other restrictionsaa providedherein. It shallmake out in duplicatea statement signed and sworn to by ft.6 directors,upon forms supplied by the Secreta~ of State, to the effect that the corporation or associationhas by a maJorlty vote of its stockholdersor members decided to accept the benefits and be bound by the provisions of this chhpter. Articles of Incorporation shall be filed as required in the eighth article of this chapter, except that they ehall be signed by themembers of theHonorable Sidney Latham, Page 4, 0-5508

board of directore. The flllng fee shall be the
same as for filing an amendment to Articles of Incorporation." (Article 5760, Cooperative UarketlngAct)

Article 5760, last quoted above, provides that an Aseociation may adopt the provisions of the CooperativeMarketlug Act by: (1) Ita Directors filing a worn statementwith the Secretary of State to the effect that by a majority vote of its stockholders, it has decided to accept the benefits and be bound by the provisions of Chapter 8, of Title 93, of the Revised Civil Statutes,as amended; (2) Filing articles of lncorporatlon as required by Article 5744, Vernon'sAnnotated Civil Statutes, signed by themembers of the Board of Directors.

An examiuationof the instrumentssubmitted discloses that the Booker Bquity Union Exchange has compliedwith these requirements,and that the papere they submitted are in order except that when itwas decided to come under the provisions of Chapter 8, of Title 93, it filed what was denominatedau amendment of its charter rather than new articles of incorporation.

However, the ameudmeut filed In your office September 10, 1940, contains all that is requiredby Article 5744 for articles of lnoorporatlou, and is signed and acknovledgedby the directora. It was accompaniedby the statement required byArticle 5760.

Your first question is thereforeansvered in the affirmative; and this will apply to other corporationsdesiring to change their corporate structure to come under the provisiona of Chapter 8 of Title 93, when such an amendment contains all the informationrequiredby Articles 5744 and 5760, and is executedas there preacrlbed.

Article 5764, Vernon's AnnotatedCivil Statutes, is pertinent to your second question,and reads as followsz

"Each association organizedhereunder shall pay tc the Commlseloner an annual license fee of ten dollars but shall be exempt from all franchise
or license taxes. For ffllng articles of lncorporatfon, an association organizedhereunder shall pay ten dollars, and for filing an amendment thereto, two dollars and fifty cents."

You are advieed that, in our opinion,when a corporation changes its corporate structure In the manner provided in Article 5760, supra. it is entitled to the benefits of Article 5764 just as a corporation orignlally organizedunder the provisions of the CooperativeMarketingHonorable Sidney Latham, Page 5, 0-5508

Act, and le exempt from the payment of franchise taxes.

very trulyyours
AlTOFdIlETGElVXBALOF!FEfAS

BY Jama D. Smullen

A~alstant

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