Section 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.Tex. Agric. Code § 54.005
Acts 1981, 67th Leg., p. 1120, ch. 388, Sec. 1, eff. 9/1/1981.