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-llch the 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 stookholders 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 Itookholderr ther need not be produoere. 

‘8inoe the pmjeot 16 the large63 one to be 6ubl ltted to thi6 Eecartaent under the Cooperative 

&rk6tlng bOt, we requeet an opinion rrom your Department 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 produotlon 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 non6took 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 authorised in wrItlng. (01 Any aeeooletion es derlned 

In Artlole 5738 (01 may beooao A member cr 6tockholder 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 statement 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 prlvllege6 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, oomaon rtook can be 166ued only to pereons enyased in the production 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 organIred under the 'Cooperative l.;ar'ketIng Aot* may Iscue preferred 

Stook, rlth or ulti-.Dut the 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 amendment 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,otJO Bharclr 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’herefore, 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 

Aullh 

Ardell Yilllams 

Asslatant