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A BILL TO BE ENTITLED
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AN ACT
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relating to arbitration of certain controversies involving members |
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of certain nonprofit entities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Chapter 173, Civil Practice and |
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Remedies Code, is amended to read as follows: |
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CHAPTER 173. ARBITRATION OF CERTAIN CONTROVERSIES INVOLVING |
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[BETWEEN] MEMBERS OF CERTAIN NONPROFIT ENTITIES |
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SECTION 2. Section 173.002, Civil Practice and Remedies |
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Code, is amended to read as follows: |
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Sec. 173.002. SCOPE OF CHAPTER. This chapter applies only |
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to the arbitration of a controversy between members of an |
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association or corporation or between a corporation and its members |
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if the association or corporation [that] is: |
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(1) exempt from the payment of federal income taxes |
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under Section 501(a) of the Internal Revenue Code of 1986 by being |
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listed as an exempt organization under Section 501(c) of the code; |
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or |
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(2) incorporated under: |
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(A) the Texas Non-Profit Corporation Act |
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(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes); or |
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(B) Subchapter C, Chapter 23, Business |
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Organizations Code. |
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SECTION 3. Section 173.003(c), Civil Practice and Remedies |
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Code, is amended to read as follows: |
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(c) A provision in the bylaws of a nonprofit corporation |
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incorporated under the Texas Non-Profit Corporation Act (Article |
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1396-1.01 et seq., Vernon's Texas Civil Statutes) or under |
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Subchapter C, Chapter 23, Business Organizations Code, that |
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requires a member of the corporation to arbitrate at common law a |
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controversy that subsequently arises between members or between the |
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corporation and its members is a valid, enforceable, and |
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irrevocable agreement by a member of the corporation to arbitrate |
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the controversy. |
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SECTION 4. The changes in law made by this Act apply only to |
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a controversy arising on or after the effective date of this Act. A |
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controversy arising before the effective date of this Act is |
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governed by the law in effect on the date the controversy arose, and |
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that law is continued in effect for that purpose. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2023. |