BILL ANALYSIS

C.S.H.B. 3949

By: Raney

Judiciary & Civil Jurisprudence

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Currently the Civil Practice and Remedies Code does not directly stipulate or discuss arbitration over controversy within a nonprofit corporation or the potential invalidity of arbitration or deals made regarding a controversy that occurs at the member or individual level of such a corporation. C.S.H.B. 3949 seeks to further efficacy in regard to the timely and smooth arbitration of controversy that occurs at a member or individual level by providing a clear guideline for such arbitration and making any arbitration within a corporation valid, enforceable and binding in an effort to curb any controversy in the present and ensure that there is no controversy in the future.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 3949 amends the Civil Practice and Remedies Code to revise provisions regarding  the arbitration of certain controversies involving members of certain nonprofit entities as follows:

· includes in the associations and corporations subject to such provisions a corporation incorporated under Business Organizations Code provisions relating to grand lodges;

· includes in the controversies to which such provisions apply  a controversy between an applicable corporation and its members; and

· accordingly includes such a corporation and such a controversy in the scope of the statutory provision establishing that a provision in the bylaws of a nonprofit corporation that requires a member of the corporation to arbitrate at common law a controversy that subsequently arises is a valid, enforceable, and irrevocable agreement by a member of the corporation to arbitrate the controversy.

C.S.H.B. 3949 applies only to a controversy arising on or after the bill's effective date.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 3949 may differ from the introduced in minor or nonsubstantive ways, including by conforming to certain bill drafting conventions, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

While both the introduced and substitute provide for the bill's possible immediate effect, contingent on receiving the requisite constitutional vote, the substitute makes the bill effective or September 1, 2023, if it doesn't receive that vote, whereas the introduced made the bill effective on the 91st day after the last day of the legislative session if it doesn't receive that vote.