Tex. Agriculture Code § 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, Sec. 1, eff. Sept. 1, 1981.