Law:Title 4. Agricultural Organizations (Texas)

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Contents

Chapter 51. Farmers' Cooperative Societies

Section  51.001.  Definition.

In this chapter, "society" means a farmers' cooperative society incorporated under this chapter.

Acts 1981, 67th Leg., p. 1097, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.002.  Application Of General Corporation Laws.

The general corporation laws of the state govern societies unless those laws conflict with this chapter.

Acts 1981, 67th Leg., p. 1097, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.003.  Purpose.

A society may be organized to enable its members to cooperate with each other for the purposes authorized by this chapter.

Acts 1981, 67th Leg., p. 1097, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.004.  Powers.

(a) A society may:

(1)  borrow money and discount notes, not to exceed a total amount equal to five times its working capital;

(2)  lend money to its members, on terms and with security as provided by its bylaws;

(3)  act as an agent for its members in selling the members' agricultural products and in purchasing machinery and supplies for its members, including fire, livestock, hail, cyclone, and storm insurance;

(4)  own and operate machinery and tools necessary to produce, harvest and prepare for market farm and ranch products;

(5)  exercise any of the powers granted to cooperative marketing associations under Section 52.013 of this code; and

(6)  deliver money to a scholarship fund for rural students.

(b)  To be eligible to purchase insurance for its members, a society must be appointed and licensed as an agent of the insurance company from which the insurance is to be purchased. Commissions received by the society from the purchase of insurance for its members are corporate funds.

(c)  A society may not lend money or act as an agent for any person other than a member of the society.

(d)  Societies may join to establish and maintain joint agencies to accomplish the purposes for which they were incorporated.

Acts 1981, 67th Leg., p. 1097, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1997, 75th Leg., ch. 904, Sec. 2, eff. Sept. 1, 1997.



Section  51.005.  Assets.

A society shall have cash, notes acceptable to its directors, or other property, the combined value of which is $500 or more.

Acts 1981, 67th Leg., p. 1098, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.006.  Area Of Operation.

A society shall confine its activities and business operation to the community in which it is located. Its activities and business operation may not extend beyond the territory surrounding the town, village, or city designated as the society's place of business.

Acts 1981, 67th Leg., p. 1098, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.007.  Nonprofit Corporation; Division Of Profits.

(a) A society is a cooperative and a nonprofit corporation.

(b)  A society, on approval of its directors in accordance with its bylaws, may:

(1)  transfer its profits to its surplus fund; or

(2)  divide its profits among its members, in proportion to each member's cash contribution to the society's working capital and patronage to the society.

Acts 1981, 67th Leg., p. 1098, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.008.  Incorporators.

To be eligible to incorporate under this chapter, a person must be engaged in agricultural pursuits.

Acts 1981, 67th Leg., p. 1098, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.009.  Articles Of Incorporation.

(a) The incorporators shall prepare articles of incorporation under the general corporation laws of the state and shall deliver the articles to the attorney general for approval.

(b)  After the attorney general has approved the articles, the incorporators shall file them with the secretary of state under the general corporation laws of the state.

(c)  The society shall file with the county clerk a certified copy of the articles in accordance with Section 51.011 of this code.

Acts 1981, 67th Leg., p. 1098, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.010.  Bylaws And Amendments To Articles Of Incorporation.

(a) Each member of a society shall sign the bylaws of the society.

(b)  A society shall obtain the approval of its bylaws and amendments to its articles of incorporation from the attorney general. After obtaining that approval, the society shall file the bylaws or amendments with the secretary of state.

Acts 1981, 67th Leg., p. 1099, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.011.  Copies Of Articles, Amendments, And Bylaws; Filing With County Clerk.

(a) After filing and recording the articles of incorporation, an amendment to the articles, or bylaws, the secretary of state shall issue to a society two certified copies of the instrument.

(b)  The society shall keep one certified copy of its articles, amendments to the articles, and bylaws in its files.

(c)  The society shall file with the county clerk of the county in which the society is located a certified copy of the articles, amendments to the articles, and bylaws. The county clerk shall keep those copies for inspection by interested persons but is not required to record them.

Acts 1981, 67th Leg., p. 1099, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.012.  Membership.

(a) Membership in a society is limited to persons in the community in which the society is located who are engaged in agricultural pursuits.

(b)  A person may become a member of a society only if the person is chosen to be a member by:

(1)  the incorporators at the time of incorporation; or

(2)  the board of directors under rules prescribed by the corporation's bylaws.

Acts 1981, 67th Leg., p. 1099, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.013.  Voting.

Each member of a society has one vote in the management of the society.

Acts 1981, 67th Leg., p. 1099, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.014.  Membership Certificates.

(a) If a subscriber for membership certificates gives notes for the certificates, a society may not issue the certificates until the notes have been paid in full.

(b)  A subscriber who has not paid for the certificates in full is entitled to vote in the management of the society and may borrow from the society in accordance with the society's bylaws.

(c)  A subscriber who has not paid for the certificates in full may not receive dividends from the society or share in a distribution of any of its assets.

(d)  Membership certificates may not be transferred.

Acts 1981, 67th Leg., p. 1099, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.015.  Notes As Subscription Contracts.

Notes given for membership certificates of a society are valid subscription contracts and are the property of the society.

Acts 1981, 67th Leg., p. 1099, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.016.  Liability Of Members.

(a) Except as provided by this section, a member of a society is not liable to the society or its creditors for an amount that exceeds the amount unpaid on the member's membership certificates. When the member pays for the certificates in full, the member's liability ceases.

(b)  A society, by clear provisions of its bylaws, may provide that:

(1)  each member is liable for an amount, in addition to that provided by Subsection (a) of this section, equal to the price paid for the membership certificates owned by the member and payable on assessment of the board of directors for payment of the society's obligations; or

(2)  each member may waive the right to claim personal property exempt from seizure for the member's obligations to the society.

Acts 1981, 67th Leg., p. 1099, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.017.  Withdrawal.

(a) A member of a society is entitled to withdraw from the society under rules prescribed by the society's bylaws.

(b)  If a member withdraws, the society may return to the member money in an amount equal to the value of the member's contribution to the society's working capital.

Acts 1981, 67th Leg., p. 1100, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.018.  Suspension; Expulsion.

(a) As prescribed by the society's bylaws, a society may suspend or expel a member for misconduct.

(b)  If a member is expelled, the society shall return to the member, at a time provided by its bylaws, money in an amount equal to the value of the member's contribution to the society's working capital.

Acts 1981, 67th Leg., p. 1100, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.019.  Contributors.

A person who is not engaged in agricultural pursuits may contribute to a society. The amount of the contribution may not exceed one-third of the outstanding working capital of the society.

Acts 1981, 67th Leg., p. 1100, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.020.  Forms.

(a) The attorney general shall prepare and file with the secretary of state forms for the following documents of a society:

(1)  articles of incorporation;

(2)  amendments of the articles;

(3)  bylaws;

(4)  rules of the society;

(5)  annual reports of the society to its members;

(6)  annual reports of the society to the secretary of state; and

(7)  any other forms necessary to make this chapter effective.

(b)  The secretary of state shall cause the forms and copies of this chapter to be published and distributed to citizens of the state who are interested.

Acts 1981, 67th Leg., p. 1100, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.021.  Restriction On Use Of Public Money For Incorporation.

Public money appropriated to a department of state government or a state institution may not be used in organizing a society.

Acts 1981, 67th Leg., p. 1100, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.022.  Name.

The name of a society must contain the words, "Farmers' Cooperative Society."

Acts 1981, 67th Leg., p. 1100, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.023.  Fees.

(a) The secretary of state shall charge fees for filing articles of incorporation or amendments in accordance with this section.

(b)  The fee for filing articles of incorporation is $10.

(c)  The fee for filing an amendment to the articles of incorporation is $25.

Acts 1981, 67th Leg., p. 1100, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 4283, ch. 682, Sec. 4, eff. Sept. 1, 1983.



Section  51.024.  Report.

(a) A society shall annually file with the secretary of state a report that shows the condition of its affairs.

(b)  The report shall be made on a form that is available to the society under Section 51.020 of this code.

Acts 1981, 67th Leg., p. 1101, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  51.025.  Exemption From Franchise Tax.

A society is not required to pay any annual franchise tax, except that a society is exempt from the franchise tax imposed by Chapter 171, Tax Code, only if exempted by that chapter.

Acts 1981, 67th Leg., p. 1101, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1981, 67th Leg., p. 2785, ch. 752, Sec. 15(a), eff. Jan. 1, 1982.

Chapter 52. Cooperative Marketing Associations

Subchapter A. General Provisions

Section  52.001.  Policy.

The purpose of this chapter is:

(1)  to promote and encourage intelligent and orderly production, cultivation, and care of citrus groves and marketing of agricultural products through cooperation;

(2)  to eliminate speculation and waste in the production and marketing of agricultural products;

(3)  to make production and distribution of agricultural products as direct as effectively possible between the producer and consumer; and

(4)  to stabilize the production and marketing of agricultural products.

Acts 1981, 67th Leg., p. 1102, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.002.  Definitions.

In this chapter:

(1)  "Agricultural products" includes horticultural, viticultural, forestry, dairy, livestock, poultry, and bee products and any farm and ranch product.

(2)  "Marketing association" means an association organized under this chapter.

(3)  "Member" includes a member of an association organized under this chapter without capital stock and a holder of common stock of an association organized under this chapter with capital stock.

Acts 1981, 67th Leg., p. 1103, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.003.  Nonprofit Organization.

Because a marketing association is organized not to make money for itself or for its members as individuals but only to make money for its members as producers, the association is considered to be a nonprofit organization.

Acts 1981, 67th Leg., p. 1103, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.004.  Application Of General Corporation Laws.

The general corporation laws of the state apply to marketing associations unless those laws conflict with this chapter.

Acts 1981, 67th Leg., p. 1103, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.005.  Associations Not In Restraint Of Trade.

(a) A marketing association is not a combination in restraint of trade or an illegal monopoly.

(b)  Organizing under this chapter is not an attempt to lessen competition or to fix prices arbitrarily.

(c)  Marketing contracts or agreements authorized by this chapter are not illegal or in restraint of trade.

Acts 1981, 67th Leg., p. 1103, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.006.  Duration Of Existence.

Each association incorporated and organized under this chapter after August 1, 1987, has perpetual existence unless a limited duration is provided for and stated in its charter or articles of incorporation or in an amendment to either of the documents. Each association incorporated and organized under this chapter that is in existence on August 1, 1987, has perpetual existence unless a limited duration is provided for and stated in an amendment to its charter or articles of incorporation.

Added by Acts 1987, 70th Leg., ch. 695, Sec. 1, eff. Aug. 31, 1987.



Subchapter B. Purpose And Powers

Section  52.011.  Purposes.

(a) A marketing association may be incorporated to engage in any activity connected with:

(1)  the production, cultivation, and care of citrus groves;

(2)  the harvesting, preserving, drying, processing, canning, storing, handling, shipping, marketing, selling, or use of agricultural products of its members;

(3)  the manufacturing or marketing of by-products of its members' agricultural products;

(4)  the manufacturing, selling, or supplying to its members of machinery, equipment, or supplies; or

(5)  the financing of any of the activities authorized by this section.

(b)  The activities authorized by Subsection (a) of this section may extend to nonmembers, to the production, cultivation, and care of lands owned or cultivated by nonmembers, and to products of nonmembers as limited by Section 52.012 of this code.

Acts 1981, 67th Leg., p. 1103, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.012.  Restrictions.

(a) A marketing association shall be operated for the mutual benefit of its members, as producers, and shall conform to one or both of the following requirements:

(1)  a member of the association may not have more than one vote based on the member's ownership of stock or membership capital in the association; or

(2)  the association may not pay dividends on stock or membership capital in excess of eight percent a year.

(b)  A marketing association may deal in the products and supplies of nonmembers. However, except as provided by Subsection (c) of this section, an association is restricted to an amount of nonmember products and supplies that is not greater than the value of the products that it handles for its members.

(c)  A marketing association that is organized primarily for the production, cultivation, and care of citrus groves or for the processing and marketing of citrus products and for which the principal offices are located in a county in which not less than 500 acres of land are planted in producing citrus groves may deal in the products and supplies of nonmembers to an amount that is greater than the value of the products that it handles for its members for the 10-year period immediately following a natural disaster, such as a severe freeze, during which the citrus crops of the association's membership are substantially reduced as a direct result of the disaster.

Acts 1981, 67th Leg., p. 1104, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1985, 69th Leg., ch. 575, Sec. 1, eff. June 12, 1985; Acts 1993, 73rd Leg., ch. 147, Sec. 1, eff. Aug. 30, 1993.



Section  52.013.  General Powers.

A marketing association may:

(1)  engage in any activity connected with:

(A)  the production, cultivation, and care of citrus groves;

(B)  the marketing, selling, harvesting, preserving, drying, processing, canning, packing, storing, handling, or use of any agricultural products produced or delivered to it by its members;

(C)  the production, manufacturing, or marketing of the by-products of those agricultural products;

(D)  the purchase, hiring, or use by its members of supplies, machinery, or equipment; and

(E)  the financing of an activity enumerated by Paragraphs (A) through (D) of this subdivision;

(2)  borrow money and make advances to its members;

(3)  act as an agent or representative of any member in an activity authorized by Subdivision (1) or (2) of this section;

(4)  acquire, hold, own, exercise all rights of ownership in, sell, transfer, or pledge shares of capital stocks or bonds of a corporation or association, including a bank for cooperatives organized under the Farm Credit Act of 1933, engaged in an activity related to that of the association incorporated under this chapter or engaged in the handling or marketing of a product handled by the association;

(5)  establish reserves and invest the money in those reserves in bonds or other property as provided by the association's bylaws;

(6)  buy, hold, and exercise all privileges of ownership over real or personal property that is determined by the association to be necessary or convenient for, or incidental to, conducting and operating its business;

(7)  perform, in or outside this state, acts that are necessary, suitable, or proper to accomplish the purposes and objectives permitted by this section or that are conducive to or expedient for the interest or benefit of the association, and may contract for the performance of those acts;

(8)  possess and exercise, in or outside this state, all powers, rights, and privileges necessary for or incidental to the purposes for which the association is organized or the activities in which it is engaged;

(9)  exercise the rights, powers, and privileges that are granted by the laws of the state to general corporations and that are not inconsistent with this chapter; and

(10)  deliver money to a scholarship fund for rural students.

Acts 1981, 67th Leg., p. 1104, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1997, 75th Leg., ch. 904, Sec. 3, eff. Sept. 1, 1997.



Section  52.014.  Interest In Other Corporations.

(a) A marketing association may organize, operate, own, control, have an interest in, own stock of, or be a member of any other corporation, organized with or without capital stock, that is engaged in preserving, drying, pressing, canning, packing, storing, handling, shipping, using, manufacturing, marketing, or selling agricultural products handled by the association or the by-products of those products.

(b)  If a corporation described by Subsection (a) of this section is a warehousing corporation, it may issue a legal warehouse receipt to the association or to any person. The receipt is adequate collateral limited to the current value of the commodity represented by the receipt. If a warehouse is licensed or licensed and bonded under the laws of this state or of the United States, its warehouse receipts may not be challenged or discriminated against because of the association's total or partial ownership or control of it.

Acts 1981, 67th Leg., p. 1105, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.015.  Contracts And Agreements With Other Associations.

(a) A marketing association, by resolution of its board of directors, may make all necessary stipulations, agreements, contracts, and arrangements with any other cooperative corporation or association formed in this or any other state for the cooperative and more economical conduct of its business or a part of its business.

(b)  Two or more marketing associations, jointly or separately, may use the same methods and agencies to conduct their respective businesses.

Acts 1981, 67th Leg., p. 1105, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.016.  Marketing Contract.

(a) A marketing association may execute a marketing contract with its members requiring the members to sell, for a period not exceeding 10 years, all or a specified part of their agricultural products or specified commodities exclusively to or through the association or any facilities to be created by the association.

(b)  The contract may provide that the association may:

(1)  sell or resell its members' products with or without taking title to the products; and

(2)  pay to its members the resale price less necessary expenses.

(c)  The expenses that may be deducted from the resale price under Subsection (b) of this section include:

(1)  sales, overhead, and other expenses;

(2)  interest on preferred stock, not exceeding eight percent a year;

(3)  interest on common stock, not exceeding eight percent a year; and

(4)  reserves, including reserves for redeeming any stock issued.

(d)  A marketing association's bylaws and marketing contract may:

(1)  fix as liquidated damages specific amounts to be paid by a member if the member breaches the marketing contract regarding the sale, delivery, or withholding of products; and

(2)  provide that the member will pay all costs, premiums for bonds, expenses, and fees if the association brings an action on the contract.

Acts 1981, 67th Leg., p. 1105, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Subchapter C. Incorporation

Section  52.031.  Incorporators.

Five or more persons who produce agricultural products or three or more marketing associations may form a marketing association under this chapter.

Acts 1981, 67th Leg., p. 1106, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.032.  Preliminary Investigation.

(a) Every group of persons considering the organization of a marketing association is urged to communicate with the department.

(b)  On request, the department shall inform the group of:

(1)  the results of a survey of the marketing conditions affecting the commodities to be handled by the proposed association; and

(2)  the probability of the association's success as determined from those results.

Acts 1981, 67th Leg., p. 1106, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.033.  Execution Of Articles Of Incorporation.

(a) Each marketing association shall prepare and file articles of incorporation signed by each incorporator.

(b)  One of the incorporators shall acknowledge the articles before an officer authorized by the laws of the state to take and certify acknowledgments of deeds and conveyances.

Acts 1981, 67th Leg., p. 1106, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.034.  Contents Of Articles Of Incorporation.

(a) The articles of incorporation must state:

(1)  the name of the association;

(2)  the term of existence, if it is limited;

(3)  the purpose for which the association is formed;

(4)  the location and street address of the association's principal place of business;

(5)  the number of directors; and

(6)  the term of office of each director.

(b)  If the association is organized without capital stock, the articles must state whether property rights and interests of each member are equal or unequal, and if unequal, the general rules applicable to all members by which the property rights and interests of each are determined and fixed.

(c)  If the association is organized with capital stock, the articles must state:

(1)  the amount of capital stock authorized;

(2)  the number of shares authorized;

(3)  the par value of the shares; and

(4)  if preferred stock is to be issued, the number of shares of common stock, the number of shares of preferred stock, the rights, preferences, and privileges granted, and the conditions under which the association may redeem the preferred stock.

Acts 1981, 67th Leg., p. 1106, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1981, 67th Leg., p. 2605, ch. 693, Sec. 24, eff. Aug. 31, 1981; Acts 1987, 70th Leg., ch. 695, Sec. 2, eff. Aug. 31, 1987.



Section  52.035.  Filing Of Articles Of Incorporation.

(a) The incorporators shall file the articles of incorporation in accordance with the general corporation laws of the state.

(b)  Repealed by Acts 2009, 81st Leg., R.S., Ch. 506, Sec. 5.35(5), eff. September 1, 2009.

(c)  If the association is formed with capital stock, the incorporators are not required to obtain subscriptions or payment for any part of the association's capital stock as a prerequisite of filing the articles.

Acts 1981, 67th Leg., p. 1106, ch. 388, Sec. 1, eff. Sept. 1, 1981.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 506, Sec. 5.35(5), eff. September 1, 2009.



Section  52.036.  Effect Of Filing Articles Of Incorporation.

When the articles of incorporation are filed with the secretary of state, all courts shall receive the articles or a certified copy of the articles as prima facie evidence of:

(1)  facts stated in the articles; and

(2)  compliance with requirements for incorporation under this chapter.

Acts 1981, 67th Leg., p. 1107, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.037.  Amendment Of Articles Of Incorporation.

(a) A marketing association may amend the articles of incorporation at any regular meeting of the association or at a special meeting for that purpose, at which at least 10 percent of the members are voting in person or by proxy or mail.

(b)  An amendment must first be approved by two-thirds of the directors and then, except as provided by Subsection (c) of this section, adopted by:

(1)  a simple majority vote when 50 percent or more of the members vote in person or by proxy or mail;

(2)  a two-thirds majority vote when less than 50 percent but 25 percent or more of the members vote in person or by proxy or mail; or

(3)  a three-fourths majority vote when less than 25 percent but 10 percent or more of the members vote in person or by proxy or mail.

(c)  An amendment of the rules required by Section 52.034(b) of this code for determining the property rights and interests of members of a marketing association formed without capital stock may be adopted by a vote or written consent of two-thirds of the members who are present at a meeting of the association at which a quorum is present or who are voting by proxy or mail as prescribed by an association bylaw.

(d)  After an amendment is adopted, the amendment shall be filed in accordance with the general corporation laws of the state.

Acts 1981, 67th Leg., p. 1107, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 1550, ch. 296, Sec. 1, eff. June 14, 1983.



Section 52.038.  Existing Corporations And Associations.

Any corporation or association organized under prior law before March 1, 1921, may elect, by a majority vote of its members or stockholders, to adopt this chapter and become subject to it by:

(1)  adopting the restrictions provided by this chapter; and

(2)  executing, in duplicate on forms supplied by the secretary of state, an instrument, signed and acknowledged by its directors, stating that the entity, by a majority vote of its members or stockholders, has decided to accept the benefits of and be bound by this chapter.

Acts 1981, 67th Leg., p. 1107, ch. 388, Sec. 1, eff. Sept. 1, 1981.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 506, Sec. 5.08, eff. September 1, 2009.



Subchapter D. Bylaws

Section  52.051.  Adoption.

(a) A marketing association shall adopt bylaws before the 31st day after the day on which the articles of incorporation are filed with the secretary of state.

(b)  The initial bylaws may be adopted by a two-thirds vote of the incorporating directors and then:

(1)  a simple majority vote when 50 percent or more of the members vote in person or by proxy or mail;

(2)  a two-thirds majority vote when less than 50 percent but 25 percent or more of the members vote in person or by proxy or mail; or

(3)  a three-fourths majority vote when less than 25 percent but 10 percent or more of the members vote in person or by proxy or mail.

Acts 1981, 67th Leg., p. 1107, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 1551, ch. 296, Sec. 2, eff. June 14, 1983.



Section  52.052.  Contents.

The bylaws may provide for one or more of the following:

(1)  the time, place, and manner of calling and conducting meetings of the association;

(2)  the number and qualifications of the members;

(3)  the number of members constituting a quorum;

(4)  the right of members to vote by proxy, mail, or both and the conditions, method, and effects of the vote;

(5)  the method by which a member that is an association may cast its vote;

(6)  the number of directors constituting a quorum;

(7)  the qualifications, compensation, duties, and terms of directors and officers;

(8)  the time of the election of directors and officers and the method of giving notice of the election;

(9)  the penalties for violations of the bylaws;

(10)  the amount of entrance, organization, and membership fees, if any, the method of collecting the fees, and the purposes for which the association must use the fees;

(11)  the amount, if any, that each member must pay for the association's cost of conducting business;

(12)  the amount that each member is required to pay for services rendered to the member by the association, the time of payment, and the method of collecting the payment;

(13)  the marketing contract between the association and its members;

(14)  the requirements for ownership of common stock;

(15)  the time and method by which a member may withdraw from the association or may assign or transfer common stock;

(16)  the method of assignment and transfer of a member's interest or shares of common stock;

(17)  the time and conditions on which membership ceases;

(18)  the automatic suspension of a member's rights if the member ceases to be eligible for membership;

(19)  the method and effect of expulsion of a member;

(20)  the purchase by the association of a member's interest on the death, withdrawal, or expulsion of the member, on forfeiture of a membership, or at the option of the association; and

(21)  the method by which the value of a member's interest is determined by conclusive appraisal by the board of directors.

Acts 1981, 67th Leg., p. 1108, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Subchapter E. Membership Certificates And Stock

Section  52.061.  Stock.

A marketing association may be organized with or without capital stock.

Acts 1981, 67th Leg., p. 1108, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.062.  Issuance Of Membership Certificates.

When a member of a marketing association organized without capital stock has paid the membership fee in full, the association shall issue to the member a certificate of membership.

Acts 1981, 67th Leg., p. 1108, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.063.  Issuance Of Shares.

(a) Subject to this section, a marketing association organized with capital stock may from time to time sell and issue shares of capital stock in the manner and under the terms prescribed by its bylaws.

(b)  A marketing association may issue common stock only to a person who satisfies the membership requirements prescribed by Section 52.081 of this code.

(c)  A marketing association may not sell and issue shares of preferred stock to a person who is not a member of the association unless the association first complies with The Securities Act, as amended (Article 581-1 et seq., Vernon's Texas Civil Statutes).

(d)  A marketing association may not issue shares of stock to a member until the member has fully paid for the shares.

(e)  A marketing association may accept promissory notes of members as full or partial payment for stock. The association shall hold the stock as security for payment of the note. The association's retention of the stock does not affect the member's right to vote.

Acts 1981, 67th Leg., p. 1109, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.064.  Common Stock.

(a) If a marketing association consists of fewer than 20 stockholders, a stockholder may not own more than one share of the marketing association's issued common stock. If the marketing association consists of 20 or more stockholders, a stockholder may not own more than one-twentieth of a marketing association's issued common stock. A marketing association with more than 20 stockholders, by its bylaws, may limit the amount of common stock that one stockholder may own to an amount less than one-twentieth of the issued common stock.

(b)  At any time, except when the association's debts exceed 50 percent of its assets, a marketing association may purchase its common stock at the book value conclusively determined by its board of directors and pay cash for the stock within one year thereafter.

(c)  A person may not transfer common stock of a marketing association to a person who does not produce agricultural products handled by the association. The association shall state this restriction in its bylaws and shall print the restriction on each common stock certificate.

Acts 1981, 67th Leg., p. 1109, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 1551, ch. 296, Sec. 3, eff. June 14, 1983.



Section  52.065.  Preferred Stock.

(a) A marketing association organized with capital stock may issue preferred stock with or without the right to vote.

(b)  The association may redeem preferred stock on conditions provided by the association's articles of incorporation and printed on the face of the stock certificates.

Acts 1981, 67th Leg., p. 1109, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.066.  Stock Issued On Purchase Of Property.

(a) If a marketing association organized with capital stock purchases stock, property, or an interest in property, it may discharge its obligations, in whole or part, by exchanging for its acquisition shares of preferred stock the par value of which equals the value of the purchased property as determined by the board of directors.

(b)  In the transaction described by Subsection (a) of this section, the transfer of the purchased property to the association is considered payment in cash for the issued shares of preferred stock.

Acts 1981, 67th Leg., p. 1109, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Subchapter F. Members

Section  52.081.  Membership.

(a) Membership of a marketing association is limited to persons who produce agricultural products handled by or through the association, including the lessees and tenants of land used to produce those products and any lessors and landlords who receive as rent part of the crop raised on the leased land. A marketing association may be a member of another marketing association.

(b)  A marketing association shall admit members under terms and conditions prescribed in its bylaws.

(c)  If a member of a marketing association organized without capital stock is not a natural person, the member may be represented by any individual, an associate officer, or one of its members, authorized in writing to act for it.

Acts 1981, 67th Leg., p. 1110, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.082.  New Members.

(a) A marketing association organized without capital stock may admit new members.

(b)  If the property rights of the association's members are unequal, a new member is entitled to share the property of the association with the old members in accordance with the general rules stated in the articles of incorporation.

Acts 1981, 67th Leg., p. 1110, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.083.  Meetings.

(a) As prescribed by its bylaws, a marketing association annually shall hold one or more regular meetings of its members.

(b)  The board of directors may call a special meeting of the association at any time.

(c)  If, at any time, 10 percent or more of the members file with the board of directors a petition demanding a special meeting of the association and stating the specific business to be considered at the meeting, the board shall call the meeting.

Acts 1981, 67th Leg., p. 1110, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.084.  Notice Of Meetings.

Not later than the 10th day before the day of a meeting of a marketing association, the association shall:

(1)  mail to each member notice of the meeting and a statement of the purpose of the meeting; or

(2)  if the bylaws so provide, publish notice of the meeting in a newspaper of general circulation in the area in which the association's principal place of business is located.

Acts 1981, 67th Leg., p. 1110, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.085.  Voting.

(a) Except as provided by Subsection (b) of this section, a member of a marketing association is entitled to one vote.

(b)  A marketing association may provide in its articles of incorporation or bylaws for a member association or group to have more than one vote if the association providing for the vote:

(1)  is organized primarily for the production, cultivation, and care of citrus groves or for processing and marketing citrus products and:

(A)  has its principal office in a county that has at least 500 acres of land planted in citrus groves; and

(B)  includes as members one or more associations or groups organized on a cooperative basis; or

(2)  is organized primarily for the harvesting, preserving, drying, processing, canning, storing, handling, shipping, marketing, selling, or use of grain or grain-related products.

(c)  A marketing association that provides for a member association or group to have more than one vote under Subsection (b) shall comply with Section 52.012(a)(2).

(d)  In accordance with a bylaw adopted under Section 52.052 of this code, a marketing association may provide for its members to vote by proxy or by mail.

Acts 1981, 67th Leg., p. 1110, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1995, 74th Leg., ch. 419, Sec. 1.11, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 339, Sec. 1, eff. May 29, 1999.



Section  52.086.  Termination Or Suspension Of Membership.

In accordance with its articles of incorporation or a bylaw adopted under Section 52.052 of this code, a marketing association may provide for the termination or suspension of membership in the association and for the purchase of a member's common or preferred stock, if any, and all other property interest in the association.

Acts 1981, 67th Leg., p. 1111, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 1551, ch. 296, Sec. 4, eff. June 14, 1983.



Section  52.087.  Liability Of Members.

Except for debts contracted with the association, a member of a marketing association is not liable for the debts of the association in an amount that exceeds the amount that is unpaid on the member's membership fee or subscription to capital stock, including any unpaid balance on promissory notes given in payment for the stock.

Acts 1981, 67th Leg., p. 1111, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Subchapter G. Administration

Section  52.101.  Board Of Directors.

(a) A board of directors shall manage a marketing association.

(b)  The board shall be composed of five or more directors who are elected by the members of the association.

(c)  Except as provided by Subsection (d) of this section, a person must be a member of the association to be eligible to serve as a director.

(d)  As prescribed by the bylaws of the association that is holding the meeting, a marketing association that is a member of the association may designate any of its members to vote on behalf of the member association or to serve as a director of the association holding the meeting.

Acts 1981, 67th Leg., p. 1111, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.102.  Officers.

(a) The directors shall elect:

(1)  a president or chairman;

(2)  one or more vice-presidents or vice-chairmen;

(3)  a secretary; and

(4)  a treasurer.

(b)  To be eligible to serve as president, chairman, vice-president, or vice-chairman, a person must be a director.

(c)  The directors may combine the offices of secretary and treasurer as secretary-treasurer.

(d)  A bank or depository may serve as treasurer but is not considered to be an officer. If a bank or depository serves as treasurer, the secretary shall perform the usual accounting duties of the treasurer except that the secretary may deposit money only as authorized by the board of directors.

Acts 1981, 67th Leg., p. 1111, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.103.  Removal Of Officer Or Director.

(a) Except as provided by Subsection (f) of this section, a member of a marketing association may initiate removal of an officer or director by filing in writing with the association's secretary:

(1)  the charges; and

(2)  a petition that is signed by 10 percent of the members and that requests the removal of the officer or director in question.

(b)  The members of the association shall vote on the removal at the next regular or special meeting of the association.

(c)  Before the meeting the association, in writing, shall inform the officer or director of the charges.

(d)  At the meeting the association shall give the officer or director and the person bringing the charges an opportunity to be heard in person or by counsel and to present witnesses.

(e)  The association, by a majority vote, may remove the officer or director and fill the vacancy.

(f)  If an association's bylaws provide for election of directors by districts with primary elections in each district, the petition for removal of a director must state the charges and must be signed by 20 percent of the members residing in the district from which the director was elected. The board of directors shall call a special meeting of the members residing in that district to consider removal of the director. The members in that district, by a majority vote, may remove the director.

Acts 1981, 67th Leg., p. 1112, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.104.  Bond.

(a) Each officer, employee, or agent who handles money or property of a marketing association or any money or property that is under the control or in possession of a marketing association shall execute and deliver to the association an indemnity bond that indemnifies the association and its members against any fraudulent, dishonest, or unlawful act by the bonded person and other acts as provided by the association's bylaws.

(b)  If the officers and directors of a marketing association fail to require a person to execute a bond as required by Subsection (a) of this section, each officer and director is personally liable for all losses that would have been recovered under the bond if the person had been bonded.

Acts 1981, 67th Leg., p. 1112, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.105.  Referendum.

(a) On demand of one-third of the board of directors, the board shall refer to the entire membership of a marketing association for decision at the next special or regular meeting any matter that has been approved or passed by the board.

(b)  The association may call a special meeting to consider the referred matter.

Acts 1981, 67th Leg., p. 1112, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Subchapter H. Foreign Cooperatives

Section  52.121.  Foreign Cooperative Considered Marketing Association.

For the purposes of this chapter, a corporation or association organized, with or without capital stock, under a cooperative marketing act of another state or of the United States is considered to be a marketing association if the corporation or association:

(1)  satisfies the requirements of Section 52.012 of this chapter; and

(2)  is composed of persons who, as farmers, planters, ranchers, dairymen, or nut or fruit growers, produce agricultural products and who act collectively to process, prepare, handle, and market, in interstate and foreign commerce, the members' products.

Acts 1981, 67th Leg., p. 1112, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.122.  Permits To Do Business.

(a) Any cooperative marketing association incorporated under the laws of another state may apply for and be granted a permit to do business in this state. The association shall pay as filing fee the amount required of domestic corporations organized for a similar purpose.

(b)  A marketing association is not required to have all or part of a paid-up capital to be entitled to a permit under Subsection (a) of this section.

Acts 1981, 67th Leg., p. 1113, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Subchapter I. Remedies

Section  52.131.  Breach Or Threatened Breach Of Marketing Contract.

(a) If a member breaches or threatens to breach a marketing contract, the marketing association may sue and, if successful, is entitled to:

(1)  an injunction to prevent further breach of the contract; and

(2)  a decree of specific performance of the contract.

(b)  Pending the adjudication of an action filed under Subsection (a) of this section, the association is entitled to a temporary restraining order and preliminary injunction against the member if the association files:

(1)  a verified complaint showing the breach or threatened breach; and

(2)  sufficient bond.

Acts 1981, 67th Leg., p. 1113, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Section  52.132.  Induced Breach Of Marketing Contract; False Reports.

In a civil suit for damages, a person is liable to a marketing association for an amount equal to three times the amount of actual damages proven for each offense if the person, or where the person is a corporation, if an officer or employee of the corporation:

(1)  knowingly induces or attempts to induce a member of the association to breach the member's marketing contract with the association; or

(2)  maliciously and knowingly spreads false reports concerning the finances or management of the association.

Acts 1981, 67th Leg., p. 1113, ch. 388, Sec. 1, eff. Sept. 1, 1981.



Subchapter J. Fees And Reports

Section 52.151.  Tax Exemptions.

A marketing association is exempt from all franchise or license taxes, except that a marketing association is exempt from the franchise tax imposed by Chapter 171, Tax Code, only if exempted by that chapter.

Acts 1981, 67th Leg., p. 1113, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1981, 67th Leg., p. 2785, ch. 752, Sec. 15(b), eff. Jan. 1, 1982; Acts 1995, 74th Leg., ch. 419, Sec. 2.20, eff. Sept. 1, 1995.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 506, Sec. 5.09, eff. September 1, 2009.


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