AGRICULTURE CODE
CHAPTER 54. MUTUAL LOAN CORPORATIONS
§ 54.001. PURPOSE. A corporation may be formed under
this chapter to aid shareholders of its common stock in:
(1) producing, or producing and marketing, staple
agricultural products; or
(2) acquiring, raising, breeding, fattening, or
marketing livestock.
Acts 1981, 67th Leg., p. 1119, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.002. POWERS. (a) A corporation formed under this
chapter may make loans to shareholders of its common stock for:
(1) the production, or production and marketing, of
staple agricultural products;
(2) the acquisition, raising, breeding, fattening, or
marketing of livestock; or
(3) the purchase of capital stock of the corporation.
(b) To obtain money for loans, the corporation may purchase,
sell, endorse, or discount notes of the shareholders of its common
stock if the notes are secured by:
(1) warehouse receipts or shipping documents for the
shareholder's agricultural products;
(2) chattel mortgages on the livestock or crops of the
shareholder; or
(3) other acceptable security.
(c) By endorsing a note under Subsection (b) of this
section, a corporation becomes liable as a principal maker of the
note.
Acts 1981, 67th Leg., p. 1119, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.003. INCORPORATORS. Ten or more persons, five of
whom are citizens of this state, may form a corporation under this
chapter.
Acts 1981, 67th Leg., p. 1119, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.004. CAPITAL STOCK REQUIREMENT FOR
INCORPORATION. At the time of filing the articles of
incorporation, a corporation formed under this chapter must have
fully paid-up capital stock of $10,000 or more.
Acts 1981, 67th Leg., p. 1119, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.005. CAPITAL STOCK. (a) The incorporators or the
board of directors of a corporation formed under this chapter may
divide the corporation's capital stock into preferred and common
stock.
(b) If preferred stock is to be issued, the articles of
incorporation must state:
(1) the amount of preferred stock that the corporation
may issue;
(2) the conditions and procedure for the payment of
dividends on preferred stock;
(3) the rate at which preferred stock dividends are
paid; and
(4) the conditions and procedure for the retirement of
preferred and common stock.
(c) A corporation may not pay dividends on its common stock
until it has fully paid dividends on its preferred stock at the rate
provided by its articles of incorporation.
Acts 1981, 67th Leg., p. 1120, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.006. INVESTMENT BY OTHER CORPORATIONS. After
obtaining the approval of the banking commissioner, any corporation
organized under the laws of this state other than a savings bank may
invest any part of its money in the preferred stock of a corporation
formed under this chapter.
Acts 1981, 67th Leg., p. 1120, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.007. INVESTMENT OF CAPITAL. At all times, a
corporation formed under this chapter shall have $10,000 or more of
its capital invested in securities approved by law for investment
by savings banks.
Acts 1981, 67th Leg., p. 1120, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.008. RATIO OF CAPITAL TO LOANS. (a) A corporation
formed under this chapter shall automatically increase its capital
stock at the rate of five percent of the amount of loans made by the
corporation to shareholders of its common stock.
(b) The corporation's articles of incorporation and bylaws
must state the requirement of Subsection (a) of this section.
Acts 1981, 67th Leg., p. 1120, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.009. LOANS AND DISCOUNTS. (a) Except as provided
by this subsection, each applicant for a loan or discount by a
corporation formed under this chapter shall become a subscriber of
the corporation's common stock in an amount equal to or greater than
five percent of the amount of the loan or discount for which the
person has applied. The board of directors may waive this
requirement if the applicant owns a sufficient amount of stock at
the time of application.
(b) An applicant shall pay for the stock required to be
purchased under Subsection (a) of this section at or before the time
that the loan is closed or the discount is granted.
(c) The requirements of Subsections (a) and (b) of this
section must be stated in the articles of incorporation of a
corporation formed under this chapter.
(d) A corporation formed under this chapter may not make
loans in excess of an amount equal to 20 times its unimpaired
capital stock represented by the part of its capital stock that is
increased in accordance with Section 54.008 of this code.
(e) A corporation formed under this chapter may not charge a
shareholder of its common stock interest on a loan at a rate that is
greater than the rate of discount set by the Farm Credit
Administration for discounts made by the federal intermediate
credit banks plus three percent a year.
Acts 1981, 67th Leg., p. 1120, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.010. LIABILITY OF SHAREHOLDER. (a) Except for
debts contracted between a corporation formed under this chapter
and a shareholder, a shareholder of common or preferred stock is not
liable for the debts, contracts, or engagements of the corporation
in an amount greater than the par value of the stock owned by the
shareholder.
(b) Both common and preferred stock are nonassessable.
Acts 1981, 67th Leg., p. 1121, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.011. REPURCHASE OF STOCK. (a) A corporation
formed under this chapter may purchase, out of its available funds,
any of its outstanding stock.
(b) The corporation shall pay book value for stock purchased
under this section, as conclusively determined by the corporation's
directors.
(c) A corporation formed under this chapter shall state the
provisions of Subsections (a) and (b) of this section in its
articles of incorporation.
Acts 1981, 67th Leg., p. 1121, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.012. REPORTS. Before January 11 and July 11 of
each year, a corporation formed under this chapter shall file with
the secretary of state a report showing:
(1) its financial condition on January 1 and July 1,
respectively; and
(2) the amount of outstanding preferred and common
stock.
Acts 1981, 67th Leg., p. 1121, ch. 388, § 1, eff. Sept. 1, 1981.
§ 54.013. EXEMPTION FROM FRANCHISE TAX. Corporations
formed under this chapter are not required to pay franchise taxes.
Acts 1981, 67th Leg., p. 1121, ch. 388, § 1, eff. Sept. 1, 1981.
