CHAPTER 162. TELEPHONE COOPERATIVE CORPORATIONS

Statutes > Texas Statutes > UTILITIES CODE > TITLE 4. DELIVERY OF UTILITY SERVICES > CHAPTER 162. TELEPHONE COOPERATIVE CORPORATIONS

UTILITIES CODE

TITLE 4. DELIVERY OF UTILITY SERVICES

SUBTITLE A. UTILITY CORPORATIONS AND OTHER PROVIDERS

CHAPTER 162. TELEPHONE COOPERATIVE CORPORATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 162.001. SHORT TITLE. This chapter may be cited as the

Telephone Cooperative Act.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.002. PURPOSE. A cooperative, nonprofit corporation may

be organized under this chapter to furnish communication service

to the widest practicable number of users of that service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.003. DEFINITIONS. In this chapter:

(1) "Board" means the board of directors of a telephone

cooperative.

(2) "Communication service" means:

(A) the transmission or reception of information, signals, or

messages by any means, including by wire, radio, cellular radio,

microwave, or fiber optics; and

(B) the provision of lines, facilities, and systems used in the

transmission or reception described by Paragraph (A).

(3) "Member" means:

(A) an incorporator of a telephone cooperative; or

(B) a person admitted to membership in a telephone cooperative

as provided by Section 162.065.

(4) "Patron" means a member who is eligible to receive patronage

dividends or to earn capital credits as a result of purchasing

certain services from a telephone cooperative as provided by

Section 162.066.

(5) "Telephone cooperative" means a corporation that is

organized under this chapter or that becomes subject to this

chapter as provided by this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.004. CERTAIN CORPORATE NAMES PROHIBITED. A corporation

organized under the laws of this state or authorized to do

business in this state may not use the words "telephone

cooperative" in the corporation's name unless the corporation is

organized under this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.005. EFFECT OF RECORDING CERTAIN MORTGAGES EXECUTED BY

TELEPHONE COOPERATIVES. (a) An instrument executed by a

telephone cooperative or a foreign corporation doing business in

this state under this chapter that affects real and personal

property and that is recorded in the real property records of any

county in which the property is located or is to be located has

the same effect as if the instrument were also recorded as

provided by law in the proper office in that county as a mortgage

of personal property.

(b) All after-acquired property of a telephone cooperative or

foreign corporation doing business in this state under this

chapter described by or referred to as being pledged in an

instrument to which Subsection (a) applies becomes subject to the

lien described by the instrument immediately when the cooperative

or corporation acquires the property, without regard to whether

the property existed at the time the instrument was executed. The

execution of the instrument constitutes notice and otherwise has

the same effect with respect to after-acquired property to which

this subsection applies as it has under the laws relating to

recordation with respect to property that is owned by the

cooperative or foreign corporation at the time the instrument is

executed and that is described in the instrument as being pledged

by the instrument.

which Subsection (a) applies is recorded, the lien continues in

existence and of record for the period specified in the

instrument without:

(1) the refiling of the instrument; or

(2) the filing of any renewal certificate, affidavit, or other

supplemental information required by a law relating to the

renewal, maintenance, or extension of a lien on personal

property.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.006. CONSTRUCTION STANDARDS. A telephone cooperative

that constructs communication lines or facilities must at a

minimum comply with the standards of the National Electrical

Safety Code in effect at the time of construction.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER B. CREATION AND OPERATION OF TELEPHONE COOPERATIVES

Sec. 162.051. INCORPORATORS. (a) Three or more individuals may

act as incorporators of a telephone cooperative by executing

articles of incorporation as provided by this chapter.

(b) An incorporator must:

(1) be at least 21 years of age; and

(2) reside in this state.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.052. DURATION OF CORPORATION. A telephone cooperative

may be created as a perpetual corporation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.053. NAME OF TELEPHONE COOPERATIVE. The name of a

telephone cooperative must:

(1) include the words "telephone" and "cooperative" and the

abbreviation "Inc."; and

(2) be distinct from the name of any other corporation organized

under the laws of or authorized to do business in this state.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.054. ARTICLES OF INCORPORATION. (a) The articles of

incorporation of a telephone cooperative must:

(1) state that the articles are executed under this chapter;

(2) be signed by each incorporator and acknowledged by at least

two incorporators; and

(3) state:

(A) the name of the cooperative;

(B) the purpose for which the cooperative is formed;

(D) the number of directors;

(E) the address of the cooperative's principal office and the

name and address of its agent on whom process may be served;

(F) the duration of the cooperative;

(G) the terms under which a person is admitted to membership and

retains membership in the cooperative, unless the articles

expressly state that the determination of membership matters is

reserved to the directors by the bylaws; and

(H) any provisions that the incorporators include for the

regulation of the business and the conduct of the affairs of the

cooperative.

(b) The articles of incorporation do not need to state any of

the corporate powers enumerated in this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.055. FILING AND RECORDING OF ARTICLES OF INCORPORATION.

(a) The secretary of state shall receive articles of

incorporation of a telephone cooperative if the incorporators of

the cooperative:

(1) apply for filing the articles;

(2) furnish satisfactory evidence of compliance with this

chapter to the secretary of state; and

(3) pay a fee of $25.

(b) The secretary of state shall:

(1) file the articles of incorporation in the secretary's

office;

(2) record the articles at length in a book to be kept for that

purpose;

(3) retain the original articles of incorporation on file in the

secretary's office; and

(4) issue a certificate showing the recording of the articles of

incorporation and the telephone cooperative's authority to do

business under the articles.

the articles, certified under the state seal, is evidence of the

creation of the telephone cooperative.

(d) The existence of the telephone cooperative dates from the

filing of the articles in the office of the secretary of state.

The certificate of the secretary of state is evidence of that

filing.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.056. REVIVAL OF ARTICLES OF INCORPORATION. (a) If the

articles of incorporation of a telephone cooperative expire by

limitation, the cooperative, with the consent of a majority of

its members, may revive the articles by filing:

(1) new articles of incorporation under this chapter; and

(2) a certified copy of the expired original articles.

(b) A telephone cooperative that revives its articles of

incorporation has all the privileges, immunities, and rights of

property exercised and held by the cooperative at the time the

original articles expired.

recite the privileges, immunities, and rights of property

exercised and held by the cooperative at the time the original

articles expired.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.057. ORGANIZATIONAL MEETING. (a) After the

certificate of incorporation is issued, the incorporators of a

telephone cooperative shall meet to adopt bylaws, elect officers,

and transact other business that properly comes before the

meeting.

(b) A majority of the incorporators shall call the

organizational meeting.

give at least three days' notice of the meeting by mail to each

incorporator. The notice must state the time and place of the

meeting. The notice may be waived in writing.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.058. PERFECTING DEFECTIVELY ORGANIZED CORPORATIONS.

(a) A telephone cooperative that files defective articles of

incorporation or fails to take an action necessary to perfect its

corporate organization may:

(1) file corrected articles of incorporation or amend the

original articles; and

(2) take any action necessary to correct the defect.

(b) An action taken under this section is valid and binding on

any person concerned.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.059. NONPROFIT OPERATION. (a) A telephone cooperative

shall be operated on a nonprofit basis for the mutual benefit of

its members and patrons.

(b) A cooperative's bylaws and its contracts with members and

patrons must contain appropriate provisions relating to the

disposition of revenues and receipts to establish and maintain

the cooperative's nonprofit and cooperative character.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.060. MEMBERS NOT LIABLE FOR DEBTS OF TELEPHONE

COOPERATIVE. A member is not liable for a debt of a telephone

cooperative, and the member's property is not subject to

execution for that debt.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.061. LICENSE FEE. Not later than July 1 of each year,

each telephone cooperative doing business in this state shall pay

to the secretary of state a fee of $10.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.062. EXEMPTION FROM EXCISE TAXES. A telephone

cooperative doing business in this state is exempt from all

excise taxes but is exempt from the franchise tax imposed by

Chapter 171, Tax Code, only if the cooperative is exempted by

that chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.063. EXEMPTION FROM APPLICATION OF SECURITIES ACT. The

Securities Act (Article 581-1 et seq., Vernon's Texas Civil

Statutes) does not apply to:

(1) a note, bond, or other evidence of indebtedness issued by a

telephone cooperative doing business in this state to the United

States;

(2) an instrument executed to secure a debt of a telephone

cooperative to the United States; or

(3) the issuance of a membership certificate by a telephone

cooperative or a foreign corporation doing business in this state

under this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.064. BYLAWS. (a) The board shall adopt the initial

bylaws of a telephone cooperative to be adopted following:

(1) an incorporation;

(2) a consolidation; or

(3) an amendment by an existing cooperative, corporation, or

association of its articles of incorporation as provided by

Section 162.082.

(b) After the initial bylaws are adopted, the members may adopt,

amend, or repeal the bylaws by the affirmative vote of a majority

of those members voting on the question at a meeting of the

members.

management of the affairs of the telephone cooperative that is

consistent with the articles of incorporation.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.065. MEMBERSHIP. (a) Each incorporator of a telephone

cooperative is a member of the cooperative. A person other than

an incorporator may become a member of a telephone cooperative

only if the person agrees to use communication service furnished

by the cooperative when that service is made available through

the cooperative's facilities. The bylaws may prescribe additional

qualifications and limitations with respect to membership.

(b) Membership in a telephone cooperative is evidenced by a

certificate of membership. A membership certificate must contain

the provisions, consistent with this chapter and the articles of

incorporation, that are prescribed by the cooperative's bylaws. A

certificate may be transferred only as provided by the bylaws.

telephone cooperative and may fully use the facilities and

services of that cooperative.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.066. PATRONS. (a) A member is a patron of a telephone

cooperative if the member purchases local telecommunications

service or toll telecommunications service or pays end user

access charges in the ordinary course of business of the

cooperative.

(b) The use of interexchange access, payment of interexchange

access fees or settlements, or purchase of equipment does not

qualify a member or other person as a patron.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.067. MEETINGS OF MEMBERS. (a) A telephone cooperative

shall hold an annual meeting of members at the time and place

provided by the bylaws. Failure to hold the annual meeting at the

designated time does not result in forfeiture or dissolution of

the cooperative.

(b) A special meeting of the members may be called by:

(1) the president;

(2) the board;

(3) any three directors; or

(4) the lesser of:

(A) 200 members; or

(B) 10 percent of all the members.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.068. NOTICE OF MEMBERS' MEETING. (a) Except as

otherwise provided by this chapter, written notice of each

meeting of the members shall be given to each member, either

personally or by mail, not earlier than the 25th day or later

than the 10th day before the date of the meeting.

(b) The notice must state the time and place of the meeting and,

in the case of a special meeting, each purpose for which the

meeting is called.

when the notice is deposited in the United States mail with

postage prepaid addressed to the member at the member's address

as it appears on the records of the telephone cooperative.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.069. WAIVER OF NOTICE. A person entitled to notice of

a meeting may waive notice in writing either before or after the

meeting. If a person entitled to notice of a meeting attends the

meeting, the person's attendance constitutes a waiver of notice

of the meeting, unless the person participates in the meeting

solely to object to the transaction of business because the

meeting is not legally called or convened.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.070. MEMBERS' MEETING: QUORUM AND VOTING. (a) Unless

the bylaws prescribe a greater percentage or number of members

for a quorum, a quorum at a meeting of the members of a telephone

cooperative is the personal presence of:

(1) 10 percent of all members, if the cooperative has 500 or

fewer members; or

(2) the greater of 50 members or two percent of all members, if

the cooperative has more than 500 members.

(b) If fewer than a quorum are present at a meeting, a majority

of the members present in person may adjourn the meeting from

time to time without further notice.

to one vote on each matter submitted to a vote at the meeting.

Voting must be in person unless the bylaws provide for voting by

mail.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.071. BOARD OF DIRECTORS. (a) A board of at least five

directors shall manage the business of a telephone cooperative.

Each director must be a member of the cooperative. The bylaws

must prescribe the number of directors and their qualifications

other than those prescribed by this chapter.

(b) The board may exercise any power of a telephone cooperative

not conferred on the members by this chapter or by the

cooperative's articles of incorporation or bylaws.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.072. ELECTION OF DIRECTORS; TERMS. (a) The

incorporators of a telephone cooperative named in the articles of

incorporation shall serve as directors and hold office until the

first annual meeting of the members and until their successors

are elected and qualify.

(b) At each annual meeting or, in the case of failure to hold

the annual meeting as specified in the bylaws, at a special

meeting called for that purpose, the members shall elect

directors to hold office until the next annual members' meeting,

except as otherwise provided by this chapter. Except as provided

by Subsection (e), each director holds office for the term for

which the person is elected and until the person's successor is

elected and qualifies.

may provide that the directors, other than those named in the

articles of incorporation to serve until the first annual meeting

of the members, are elected by the members for a term of two

years or three years. The terms must be set so that:

(1) one-half of the directors, as nearly as possible, are

elected annually, if a two-year term is provided; or

(2) one-third of the directors, as nearly as possible, are

elected annually, if a three-year term is provided.

(d) After the implementation of two-year or three-year terms for

directors, as directors' terms expire, the members shall elect

their successors to serve until the second or third succeeding

annual meeting after their election, as appropriate.

(e) The bylaws must prescribe the manner of electing a successor

to a director who resigns, dies, or otherwise becomes incapable

of acting. The bylaws may provide for the removal of a director

from office and for the election of the director's successor.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.073. COMPENSATION OF DIRECTORS. (a) A director may

not receive a salary for services as a director. Except in an

emergency, a director may not receive a salary for services in a

capacity other than director without the approval of the members.

(b) The bylaws may:

(1) prescribe a fixed fee for attendance at each board meeting,

committee meeting, industry-related conference approved by the

board, or training program; and

(2) provide for reimbursement of actual expenses of attendance

or a reasonable per diem.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.074. INSURANCE FOR DIRECTORS. A telephone cooperative

may provide liability, accident, life, and health insurance

coverage for a director who chooses to have that coverage.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.075. BOARD MEETINGS; QUORUM. (a) The bylaws shall

prescribe the manner of holding board meetings.

(b) A majority of the directors is a quorum.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.076. DISTRICTS. (a) The bylaws may provide for the

territory served or to be served by a telephone cooperative to be

divided into two or more districts for any purpose, including the

nomination and election of directors and the election and

functioning of district delegates.

(b) The bylaws must prescribe:

(1) the boundaries of each district or the manner of

establishing a district's boundaries;

(2) the manner of changing a district's boundaries; and

(3) the manner in which each district functions.

district delegate must be a member.

(d) A member may not vote by proxy or by mail at a district

meeting.

(e) A district delegate may not vote by proxy or by mail at any

meeting.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.077. OFFICERS, AGENTS, AND EMPLOYEES. (a) The board

of a telephone cooperative shall annually elect from the board's

membership a president, a vice president, a secretary, and a

treasurer.

(b) An officer who ceases to be a director ceases to hold

office.

treasurer.

(d) The board may also elect or appoint other officers, agents,

or employees as the board considers appropriate and shall

prescribe the powers and duties of those persons.

(e) An officer may be removed from office and a successor

elected in the manner prescribed by the bylaws.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.078. EXECUTIVE COMMITTEE. (a) The bylaws of a

telephone cooperative may authorize the board to elect an

executive committee from the board's membership.

(b) The board may delegate to the executive committee the

management of the current and ordinary business of the

cooperative and other duties as prescribed by the bylaws.

of authority to the committee does not relieve the board or any

director of a responsibility imposed on the board or the director

by this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.079. INDEMNIFICATION. Article 2.22A, Texas Non-Profit

Corporation Act (Article 1396-2.22A, Vernon's Texas Civil

Statutes), applies to a telephone cooperative in the same manner

as if the cooperative were formed under the Texas Non-Profit

Corporation Act.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.080. CHANGE OF LOCATION OF PRINCIPAL OFFICE. (a) A

telephone cooperative may, with the authorization of the board or

the members, change the location of its principal office by

filing a certificate reciting the change of principal office with

the secretary of state.

(b) The cooperative's president or vice president must execute

and acknowledge the certificate under the cooperative's seal as

attested by the secretary.

for filing a certificate of change of principal office.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.081. DIRECTOR, OFFICER, OR MEMBER ACTING AS NOTARY. A

person who is an officer, director, or member of a telephone

cooperative and who is authorized to take acknowledgments under

state law is not disqualified because of the person's association

with the cooperative from taking an acknowledgment of an

instrument executed in favor of the cooperative or to which the

cooperative is a party.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.082. APPLICABILITY TO CORPORATIONS ORGANIZED UNDER

OTHER LAW. A cooperative or nonprofit corporation or

association organized under any other law of this state for the

purpose of furnishing communication service may, by a majority

vote of the members present in person at a meeting called for

that purpose, amend its articles of incorporation to comply with

this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER C. POWERS OF TELEPHONE COOPERATIVE

Sec. 162.121. GENERAL POWERS. A telephone cooperative may:

(1) sue and be sued in its corporate name;

(2) adopt and alter a corporate seal and use the seal or a

facsimile of the seal as required by law;

(3) construct, acquire, lease, improve, install, equip,

maintain, and operate, and, subject to Sections 162.125 and

162.126, dispose of, lease, or encumber, communication lines,

facilities or systems, lands, structures, plants and equipment,

exchanges, and other property, considered appropriate to

accomplish the purpose for which the cooperative is organized;

(4) issue membership certificates as provided by this chapter;

(5) borrow money and otherwise contract indebtedness, issue or

guarantee notes, bonds, and other evidences of indebtedness, and

secure the payment of indebtedness by pledge or other encumbrance

on any or all of its property or revenue;

(6) conduct its business and exercise its powers inside or

outside this state;

(7) adopt, amend, and repeal bylaws;

(8) make any contracts appropriate for the full exercise of the

powers granted by this chapter; and

(9) perform any other acts and exercise any other power that may

be appropriate to accomplish the purpose for which the

cooperative is organized.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.122. POWERS RELATING TO PROVISION OF COMMUNICATION

SERVICE. (a) A telephone cooperative may:

(1) furnish and improve communication service to its members, to

governmental agencies and political subdivisions, to any number

of subscribers of other communication systems through

interconnection of facilities, and to any number of users through

pay stations;

(2) connect and interconnect its communication lines,

facilities, or systems with other communication lines,

facilities, or systems;

(3) make its facilities available to persons furnishing

communication service inside or outside this state; and

(4) construct, maintain, and operate a communication line along,

on, under, or across publicly owned land or a public

thoroughfare, subject to the same restrictions and obligations

that apply to an electric transmission cooperative under

Subchapter C, Chapter 181.

(b) A telephone cooperative that acquires communication

facilities may continue to furnish service to a person who is

already receiving service from those facilities without requiring

the person to become a member, but the person may become a member

on the terms prescribed by the bylaws.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.123. CONNECTION AND INTERCONNECTION OF FACILITIES. A

telephone cooperative doing business in this state may require a

person furnishing communication service to the public in this

state to interconnect that person's lines, facilities, or systems

with, or otherwise make available those lines, facilities, or

systems to, the cooperative's communication lines, facilities, or

systems to provide a continuous line of communication for the

cooperative's subscribers.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.124. EMINENT DOMAIN. A telephone cooperative may

exercise the power of eminent domain in the manner provided by

state law for the exercise of that power by other corporations

constructing or operating communication lines, facilities, or

systems.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.125. ENCUMBRANCE AND DISPOSITION OF PROPERTY WITHOUT

MEMBERS' AUTHORIZATION. (a) The board of a telephone

cooperative may, without authorization of the members, authorize

the execution and delivery of a mortgage or deed of trust of or

the encumbering of any property of the cooperative, including

property to be acquired and the revenues from property of the

cooperative, to secure any indebtedness of the cooperative to the

United States or any lending institution licensed by the United

States or a state.

(b) A mortgage or deed of trust described by Subsection (a) is

exempt from a tax for recording the instrument.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.126. ENCUMBRANCE, LEASE, AND DISPOSITION OF PROPERTY

WITH MEMBERS' AUTHORIZATION. (a) Except as provided by Section

162.125, a telephone cooperative may not dispose of, lease, or

encumber all or a major portion of its property unless the

disposition, lease, or encumbrance is authorized by the

affirmative vote of at least two-thirds of all the members of the

cooperative.

(b) The board may, on the authorization of two-thirds of all the

members of the cooperative at a members' meeting, dispose of or

lease all or a major portion of its property to:

(1) another telephone cooperative;

(2) a foreign corporation doing business in this state under

this chapter; or

(3) the holder of a note, bond, or other evidence of

indebtedness issued to the United States or to a lending

institution licensed by the United States or a state.

under Subsection (b) is to be considered must state the proposed

action.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER D. AMENDMENT OF ARTICLES OF INCORPORATION

Sec. 162.151. AMENDMENT OF ARTICLES OF INCORPORATION. A

telephone cooperative may amend its articles of incorporation in

accordance with this subchapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.152. PRESENTATION AND APPROVAL OF PROPOSED AMENDMENT.

(a) A proposed amendment to the articles of incorporation must

be presented to a meeting of the members. The notice of the

meeting must state the proposed amendment or must have the

proposed amendment attached to it.

(b) A proposed amendment, with any changes, may be approved only

on the affirmative vote of at least two-thirds of the members

voting on the question at the meeting.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.153. ARTICLES OF AMENDMENT. (a) The president or vice

president, on behalf of the telephone cooperative, shall execute

and acknowledge the approved articles of amendment. The

cooperative's seal must be affixed to the articles of amendment

and attested by its secretary.

(b) The articles of amendment must state:

(1) that the articles of amendment are executed under this

chapter;

(2) the name of the telephone cooperative;

(3) the address of the cooperative's principal office; and

(4) the amendment to the articles of incorporation.

amendment shall make and attach to the articles an affidavit

stating that the cooperative complied with this subchapter with

respect to the amendment set forth in the articles.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.154. FILING OF ARTICLES OF AMENDMENT. (a) Articles of

amendment shall be filed with the secretary of state in the same

manner as the original articles of incorporation.

(b) The secretary of state shall charge and collect a fee of $25

for filing articles of amendment.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER E. CONSOLIDATION OR MERGER OF TELEPHONE COOPERATIVES

Sec. 162.201. CONSOLIDATION. (a) Two or more telephone

cooperatives may enter into an agreement to consolidate the

cooperatives. The agreement must state:

(1) the terms of the consolidation;

(2) the name of the proposed consolidated cooperative;

(3) the number of directors of the proposed consolidated

cooperative;

(4) the time of the annual meeting and election; and

(5) the names of at least five persons to be directors until the

first annual meeting.

(b) A consolidation agreement may be approved only on the votes

of a majority of the members of each telephone cooperative at a

regular meeting or at a special meeting of its members called for

that purpose.

of duplicating the facilities of another communication company

where the other communication company is giving or is willing to

give reasonably adequate communication service.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.202. ARTICLES OF CONSOLIDATION. (a) The articles of

consolidation must:

(1) conform substantially to original articles of incorporation

of a telephone cooperative; and

(2) be executed, acknowledged, filed, and recorded in the same

manner as original articles of incorporation.

(b) The directors named in the consolidation agreement shall as

incorporators sign and acknowledge the articles of consolidation.

for filing articles of consolidation.

(d) When the secretary of state accepts the articles of

consolidation for filing and recording and issues a certificate

of consolidation, the proposed consolidated telephone cooperative

described in the articles under its designated name exists as a

body corporate, with all the powers of a telephone cooperative

originally organized under this chapter.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.203. MERGER. (a) One or more telephone cooperatives

may merge into another cooperative as provided by this section

and Section 162.204.

(b) The proposition for the merger and proposed articles of

merger must be submitted at a meeting of the members of each

merging cooperative and the surviving cooperative. A copy of the

proposed articles of merger must be attached to the notice of

each meeting.

amendments, may be approved only on the affirmative vote of at

least two-thirds of the members of each cooperative voting on the

proposed merger and articles.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.204. ARTICLES OF MERGER. (a) The president or vice

president of each telephone cooperative, on behalf of the

telephone cooperative, shall execute and acknowledge the approved

articles of merger. The cooperative's seal must be affixed to the

articles of merger and attested by its secretary.

(b) The articles of merger must state:

(1) that they are executed under this chapter;

(2) the name of each merging cooperative and the address of its

principal office;

(3) the name of the surviving cooperative and the address of its

principal office;

(4) that each merging cooperative and the surviving cooperative

agree to the merger;

(5) the name and address of each director of the surviving

cooperative;

(6) the terms of the merger and the manner in which the merger

will be carried out, including the manner in which members of the

merging cooperatives become or may become members of the

surviving cooperative;

(7) the duration of the surviving cooperative; and

(8) the purpose for which the surviving cooperative is formed.

with this chapter considered appropriate for the conduct of the

business of the surviving cooperative. The president or vice

president of each cooperative executing the articles of merger

shall make and attach to the articles an affidavit stating that

the cooperative complied with this subchapter with respect to the

articles.

(d) The original and a copy of the articles of merger shall be

delivered to the secretary of state. If the secretary of state

finds that the articles conform to law, the secretary of state,

on payment of a fee of $50, shall:

(1) file and record the articles of merger;

(2) issue a certificate of merger; and

(3) attach to the certificate of merger the copy of the articles

of merger and deliver the certificate and attached copy to the

surviving cooperative or its representative.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.205. EFFECT OF CONSOLIDATION OR MERGER. (a) In a

consolidation the existence of each telephone cooperative ceases

and the articles of consolidation are considered to be the

articles of incorporation of the new cooperative. In a merger the

separate existence of each merging telephone cooperative ceases

and the articles of incorporation of the surviving cooperative

are considered to be amended to the extent, if any, that

amendment is provided for in the articles of merger.

(b) All the rights, privileges, immunities, property, and

applications for membership of each of the consolidating or

merging cooperatives are transferred to and vested in the new or

surviving cooperative, except that this chapter does not relieve

a cooperative of the obligation to comply with the applicable

provisions of Title 2.

liabilities and obligations of the consolidating or merging

cooperatives. A claim existing or action or proceeding pending by

or against a consolidating or merging cooperative may be

prosecuted as if the consolidation or merger had not taken place,

and the new or surviving cooperative may be substituted in the

place of the consolidating or merging cooperative. The

consolidation or merger does not impair the rights of creditors

of or liens on the property of a consolidating or merging

cooperative.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER F. CONVERSION OF CORPORATION INTO TELEPHONE

COOPERATIVE

Sec. 162.251. CONVERSION OF CORPORATION INTO TELEPHONE

COOPERATIVE. (a) A corporation organized under the laws of this

state that furnishes or is authorized to furnish communication

service may be converted into a telephone cooperative in

accordance with this subchapter. On conversion, the corporation

is subject to this chapter as if it had been originally organized

under this chapter.

(b) The proposition for the conversion and proposed articles of

conversion must be submitted at a meeting of the members or

stockholders of the corporation or, in the case of a corporation

that does not have members or stockholders, at a meeting of the

incorporators of the corporation. A copy of the proposed articles

of conversion must be attached to the notice of the meeting.

with any amendments, may be approved only on the affirmative vote

of:

(1) at least two-thirds of the members of the corporation voting

on the proposed conversion and articles;

(2) the holders of at least two-thirds of the shares of the

capital stock of the corporation represented at the meeting and

voting on the proposition and articles, if the corporation is a

stock corporation; or

(3) at least two-thirds of the corporation's incorporators, if

the corporation does not have members or outstanding shares of

capital stock.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.252. ARTICLES OF CONVERSION. (a) The president or

vice president, on behalf of the corporation, shall execute and

acknowledge the approved articles of conversion. The

corporation's seal must be affixed to the articles and attested

by its secretary.

(b) The articles of conversion must state:

(1) that they are executed under this chapter;

(2) the name of the corporation and the address of its principal

office before its conversion into a telephone cooperative;

(3) the law under which the corporation was organized;

(4) that the corporation elects to become a cooperative,

nonprofit corporation subject to this chapter;

(5) the corporation's name as a cooperative;

(6) the address of the principal office of the cooperative;

(7) the name and address of each director of the cooperative;

(8) the manner in which a member, stockholder, or incorporator

of the corporation becomes or may become a member of the

cooperative;

(9) the duration of the cooperative; and

(10) the purpose for which the cooperative is formed.

consistent with this chapter considered appropriate for the

conduct of the business of the cooperative. The president or vice

president executing the articles of conversion shall make and

attach to the articles an affidavit stating that the corporation

complied with this section with respect to the articles. The

articles of conversion are considered to be the articles of

incorporation of the cooperative.

(d) The original and a copy of the articles of conversion shall

be delivered to the secretary of state. If the secretary of state

finds that the articles conform to law, the secretary of state,

on payment of a fee of $50, shall:

(1) file and record the articles of conversion;

(2) issue a certificate of conversion; and

(3) attach to the certificate of conversion the copy of the

articles of conversion and deliver the certificate and attached

copy to the cooperative or its representative.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.253. CONSOLIDATION AND CONVERSION OF CORPORATIONS INTO

TELEPHONE COOPERATIVE. (a) Two or more corporations organized

under the laws of this state that furnish or are authorized to

furnish communication service may, if otherwise permitted to

consolidate under state law, consolidate and convert into a

telephone cooperative in accordance with this subchapter. On

consolidation and conversion, the new cooperative is subject to

this chapter as if it had been originally organized under this

chapter.

(b) The proposition for the consolidation and conversion and the

proposed articles of consolidation and conversion, with any

amendments, must be approved by each corporation in accordance

with:

(1) the law under which it was organized; and

(2) Sections 162.251 and 162.252.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.254. ARTICLES OF CONSOLIDATION AND CONVERSION. (a)

The approved articles of consolidation and conversion:

(1) shall be executed, acknowledged, and sealed as prescribed by

Section 162.252 and by the law under which the consolidating and

converting corporations were organized;

(2) must:

(A) state that they are executed under this chapter and the law

under which the corporations were organized and that each

consolidating corporation elects that the new corporation be a

cooperative; and

(B) contain all other information required by the law under

which the corporations were organized; and

(3) may contain any provision consistent with this chapter

considered appropriate for the conduct of the business of the

cooperative.

(b) The president or vice president executing the articles of

consolidation and conversion shall make and attach to the

articles an affidavit stating that the corporations complied with

this section and Section 162.253 and with the applicable

provisions of the law under which the consolidating corporations

were organized with respect to the articles. The articles of

consolidation and conversion are considered to be the articles of

incorporation of the cooperative and shall be filed in accordance

with the provisions both of this chapter and of the law under

which the consolidating corporations were organized.

conversion shall be delivered to the secretary of state. If the

secretary of state finds that the articles conform to law, the

secretary of state, on payment of a fee of $50, shall:

(1) file and record the articles of consolidation and

conversion;

(2) issue a certificate of consolidation and conversion; and

(3) attach to the certificate the copy of the articles and

deliver the certificate and attached copy to the cooperative or

its representative.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER G. DISSOLUTION

Sec. 162.301. DISSOLUTION. (a) A telephone cooperative may be

dissolved by a two-thirds vote of all the members of the

cooperative. The vote must be taken at a regular meeting or at a

special meeting of its members called for that purpose. Votes

must be cast in person.

(b) A certificate of dissolution must be:

(1) signed by the president or vice president and attested by

the secretary, certifying to the dissolution and stating that the

officers have been authorized by a vote of the members under

Subsection (a) to execute and file the certificate; and

(2) executed, acknowledged, filed, and recorded in the same

manner as original articles of incorporation of a telephone

cooperative.

accepts the certificate of dissolution for filing and recording

and issues a certificate of dissolution.

(d) The secretary of state shall charge and collect:

(1) a fee of $5 for filing a certificate of election to

dissolve; and

(2) a fee of $5 for filing articles of dissolution.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.302. EXISTENCE FOLLOWING DISSOLUTION. (a) A dissolved

telephone cooperative continues to exist to:

(1) satisfy existing liabilities or obligations;

(2) collect or liquidate its assets; and

(3) take any other action required to adjust and wind up its

business and affairs.

(b) A dissolved telephone cooperative may sue and be sued in its

corporate name.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.303. DISTRIBUTION OF NET ASSETS ON DISSOLUTION. Assets

of a dissolved telephone cooperative that remain after all

liabilities or obligations of the cooperative have been satisfied

shall be distributed as follows:

(1) first, to patrons for the pro rata return of amounts

standing to their credit because of their patronage; and

(2) second, to members for the pro rata repayment of membership

fees.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

Sec. 162.304. DISSOLUTION OF DEFECTIVELY INCORPORATED TELEPHONE

COOPERATIVE. (a) A telephone cooperative that purports to have

been incorporated or reincorporated under this chapter but that

has not complied with a requirement for legal corporate existence

may file a certificate of dissolution in the same manner as a

validly incorporated telephone cooperative.

(b) The certificate of dissolution may be authorized by a

majority of the incorporators or directors at a meeting called by

an incorporator and held at the principal office of the

cooperative named in the articles of incorporation.

days' notice of the meeting by mail to the last known post office

address of each incorporator or director.

Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.

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Texas Codes and Statutes

CHAPTER 162. TELEPHONE COOPERATIVE CORPORATIONS