
Art. 2.12. Authorized Shares                                                  

A. Each corporation may issue the number of shares stated in its 
articles of incorporation.  Such shares may be divided into one or 
more classes, any or all of which classes may consist of shares with 
par value or shares without par value, as shall be stated in the 
articles of incorporation.  Any such class of shares may be divided 
into one or more series, as shall be stated in the articles of 
incorporation.  All shares of the same class shall be of the same 
par value or be without par value.  Unless the shares of a class have 
been divided into series, all shares of the same class shall be 
identical in all respects.  If the shares of a class have been 
divided into series, shares of the same class may vary between 
series, but all shares of the same series shall be identical in all 
respects.  Any such class or series of shares shall be so designated 
as to distinguish the shares of that class or series from the shares 
of all other classes and series.  Any such class or series shall 
have such designations, preferences, limitations, and relative 
rights, including voting rights, as shall be stated in the articles 
of incorporation.  The articles of incorporation may limit or deny 
the voting rights of, or provide special voting rights for, the 
shares of any class or series to the extent that such limitation, 
denial, or provision is not inconsistent with the provisions of 
this Act.  Any of the designations, preferences, limitations, and 
relative rights, including voting rights, of any class or series of 
shares may be made dependent upon facts ascertainable outside the 
articles of incorporation, which facts may include future acts of 
the corporation, provided that the manner in which such facts shall 
operate upon the designations, preferences, limitations, and 
relative rights, including voting rights, of such class or series 
of shares is clearly and expressly set forth in the articles of 
incorporation.

B. Without being limited to the authority herein contained, a 
corporation, when so provided in its articles of incorporation, may 
issue shares of one or more classes or series:

(1) Redeemable, subject to compliance by the corporation with 
Articles 2.38 and 4.08 of this Act, at the option of the 
corporation, the shareholder or another person or upon the 
occurrence of a designated event.

(2) Entitling the holders thereof to cumulative, noncumulative, or 
partially cumulative dividends.

(3) Having preference over any other class, classes or series of 
shares as to the payment of dividends.

(4) Having preference in the assets of the corporation over any 
other class, classes or series of shares upon the voluntary or 
involuntary liquidation of the corporation.

(5) Exchangeable, subject to compliance by the corporation with 
Article 2.38 of this Act, at the option of the corporation, the 
shareholder or another person or upon the occurrence of a 
designated event, for shares, obligations, indebtedness, evidence 
of ownership, rights to purchase securities or other securities of 
the corporation or one or more other domestic or foreign 
corporations or other entities or for other property or for any 
combination of the foregoing.

(6) Convertible at the option of the corporation, the shareholder 
or another person or upon the occurrence of a designated event, into 
shares of any other class or series, but shares without par value 
shall not be converted into shares with par value unless that part 
of the stated capital of the corporation represented by such shares 
without par value is, at the time of conversion, at least equal to 
the aggregate par value of the shares into which shares without par 
value are to be converted or the amount of any such deficiency is 
transferred from surplus to stated capital.

C. (1) The board of directors of a corporation registered as an 
open-end company under the Investment Company Act may:

(a) establish classes of shares and series of unissued shares of any 
class by fixing and determining the designations, preferences, 
limitations, and relative rights, including voting rights, of the 
shares of any class or series so established to the same extent that 
the designations, preferences, limitations, and relative rights 
could be stated if fully set forth in the articles of incorporation;  
and

(b) increase or decrease the aggregate number of shares or the 
number of shares of, or eliminate and remove from the articles of 
incorporation, a class or series of shares that the corporation has 
authority to issue, unless a provision has been included in the 
articles of incorporation of the corporation after September 1, 
1993, expressly prohibiting those actions by the board of 
directors.  The board of directors may not:

(i) decrease the number of shares within a class or series to less 
than the number of shares of that class or series that are then 
outstanding;  or

(ii) eliminate or remove from the articles of incorporation any 
reference to any class or series of which shares are then 
outstanding.

To establish a class or series, the board of directors shall adopt a 
resolution setting forth the designation of the class or series and 
fixing and determining the designations, preferences, limitations, 
and relative rights, including voting rights, of the class or 
series.  In order to increase or decrease the number of shares of, 
or eliminate and remove from the articles of incorporation any 
reference to, a class or series of shares, the board of directors 
shall adopt a resolution fixing and determining the new number of 
shares of each class or series in which the number of shares is 
increased or decreased or eliminating the class or series and 
removing references to the class or series from the articles of 
incorporation.  The shares of any eliminated series shall resume 
the status of authorized but unissued shares of the class of shares 
from which the series was established unless otherwise provided in 
the resolution or the articles of incorporation.

(2) Before the first issuance of any shares of a class or series 
established or increased or decreased by resolution adopted by the 
board of directors under Subsection (1) of this section, and in 
order to eliminate from the articles of incorporation a class or 
series of shares and all references to the class or series contained 
in the articles, the corporation shall file with the Secretary of 
State a statement setting forth:

(a) the name of the corporation;                                              

(b) if the statement relates to the establishment of a class or 
series of shares, a copy of the resolution establishing and 
designating the class or series and fixing and determining the 
preferences, limitations, and relative rights of the class or 
series;

(c) if the statement relates to an increase or decrease in the 
number of shares of any class or series, a copy of the resolution 
fixing and determining the new number of shares of each class or 
series in which the number of shares is increased or decreased;

(d) if the statement relates to the elimination of a class or series 
of shares and to the removal of all references to the class or 
series from the articles of incorporation, a copy of the resolution 
eliminating the class or series and removing all references to the 
class or series from the articles of incorporation;

(e) the date of adoption of the resolution;  and                              

(f) that the resolution was duly adopted by all necessary action on 
the part of the corporation.

(3) The statement shall be executed on behalf of the corporation by 
an officer.  The original and a copy of the statement shall be 
delivered to the Secretary of State.  If the Secretary of State 
finds that the statement conforms to law, when the appropriate 
filing fee is paid as provided by law, the Secretary of State shall:

(a) endorse on the original and the copy the word "Filed," and the 
month, day, and year of the filing of the statement;

(b) file the original in the Secretary of State's office;  and                

(c) return the copy to the corporation or its representative.                 

(4) On the filing of a statement by the Secretary of State, the 
resolution establishing and designating the class or series and 
fixing and determining the preferences, limitations, and relative 
rights of the class or series, the resolution fixing the new number 
of shares of each class or series in which the number of shares is 
increased or decreased, or the resolution eliminating a class or 
series and all references to the class or series from the articles 
of incorporation, as appropriate, becomes an amendment of the 
articles of incorporation.  An amendment of the articles of 
incorporation effected as provided by this Article is not subject 
to the procedure to amend the articles contained in Article 4.02 of 
this Act.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1973, 63rd Leg., p. 1488, ch. 545, Sec. 6, eff. Aug. 27, 1973;  
Acts 1985, 69th Leg., ch. 128, Sec. 3, eff. May 20, 1985;  Acts 1987, 
70th Leg., ch. 93, Sec. 5, eff. Aug. 31, 1987;  Acts 1989, 71st Leg., 
ch. 801, Sec. 3, eff. Aug. 28, 1989;  Acts 1991, 72nd Leg. ch. 901, 
Sec. 1, eff. Aug. 26, 1991;  Acts 1993, 73rd Leg., ch. 215, Sec. 
2.04, eff. Sept. 1, 1993.
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