1-1 By: Brimer (Senate Sponsor - Harris of Dallas) H.B. No. 1239
1-2 (In the Senate - Received from the House April 20, 1993;
1-3 April 21, 1993, read first time and referred to Committee on
1-4 Jurisprudence; May 4, 1993, reported favorably by the following
1-5 vote: Yeas 6, Nays 0; May 4, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Henderson x
1-9 Harris of Tarrant x
1-10 Brown x
1-11 Harris of Dallas x
1-12 Luna x
1-13 Parker x
1-14 West x
1-15 A BILL TO BE ENTITLED
1-16 AN ACT
1-17 relating to the organization and operation of certain business
1-18 organizations that provide for limited liability; providing
1-19 penalties.
1-20 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-21 ARTICLE 1. LIMITED LIABILITY COMPANIES
1-22 SECTION 1.01. Section A, Article 1.02, Texas Limited
1-23 Liability Company Act (Article 1528n, Vernon's Texas Civil
1-24 Statutes), is amended by amending Subsection (9) and adding
1-25 Subsection (10) to read as follows:
1-26 (9) "Foreign Limited Liability Company" means an
1-27 entity formed under the laws of a jurisdiction other than this
1-28 state (a) that is characterized as a limited liability company by
1-29 such laws or (b) although not so characterized by such laws, that
1-30 elects to procure a certificate of authority pursuant to Article
1-31 7.01 of this act, that is formed under laws which provide
1-32 <provides> that some or all of the persons entitled to receive a
1-33 distribution of the assets thereof upon the entity's dissolution or
1-34 otherwise or to exercise voting rights with respect to an interest
1-35 in the entity shall not be liable for the debts, obligations or
1-36 liabilities of the entity and which is not eligible to become
1-37 authorized to <qualify to> do business in this state under any
1-38 other statute.
1-39 (10) "Merger" means (a) the division of a domestic
1-40 limited liability company into two or more new domestic limited
1-41 liability companies or into a surviving limited liability company
1-42 and one or more new domestic or foreign limited liability companies
1-43 or other entities, or (b) the combination of one or more domestic
1-44 limited liability companies with one or more domestic or foreign
1-45 limited liability companies or other entities resulting in (i) one
1-46 or more surviving domestic or foreign limited liability companies
1-47 or other entities, (ii) the creation of one or more new domestic or
1-48 foreign limited liability companies or other entities, or (iii) one
1-49 or more surviving domestic or foreign limited liability companies
1-50 or other entities and the creation of one or more new domestic or
1-51 foreign limited liability companies or other entities.
1-52 SECTION 1.02. Section A, Article 2.03, Texas Limited
1-53 Liability Company Act (Article 1528n, Vernon's Texas Civil
1-54 Statutes), is amended to read as follows:
1-55 A. The limited liability company name shall conform to the
1-56 following requirements:
1-57 (1) It shall either contain the words <word> "Limited
1-58 Liability Company" or "Limited Company" or the abbreviations
1-59 <abbreviation "Ltd." or> "L.L.C.," "LLC," "LC," or "L.C." and shall
1-60 contain such additional words as may be required by law. The word
1-61 "Limited" may be abbreviated as "Ltd." or "LTD" and the word
1-62 "Company" may be abbreviated as "Co." However, a limited liability
1-63 company formed before September 1, 1993, that complied with this
1-64 Section on the date of formation, but does not comply with this
1-65 Section as revised, is not required to change its name.
1-66 (2) It shall not contain any word or phrase which
1-67 indicates or implies that it is organized for any purpose other
1-68 than one or more of the purposes contained in its articles of
2-1 organization.
2-2 (3) It shall not be the same as, or deceptively
2-3 similar to, the name of any domestic limited liability company,
2-4 corporation or limited partnership existing under the laws of this
2-5 state, or the name of any foreign limited liability company,
2-6 corporation or limited partnership authorized to transact business
2-7 in this state, or a name the exclusive right to which is, at the
2-8 time, reserved in the manner provided in this Act or any other
2-9 statute providing for reservation of names by a corporation or
2-10 limited partnership, or the name of a limited liability company,
2-11 corporation or limited partnership which has in effect a
2-12 registration of its company name as provided in this act or any
2-13 other applicable law provided that a name may be similar if written
2-14 consent is obtained from the existing limited liability company,
2-15 corporation or limited partnership having the name deemed to be
2-16 similar or the person for whom the name deemed to be similar is
2-17 reserved in the office of the Secretary of State.
2-18 SECTION 1.03. Section A, Article 2.08, Texas Limited
2-19 Liability Company Act (Article 1528n, Vernon's Texas Civil
2-20 Statutes), is amended to read as follows:
2-21 A. The managers, if any, and the registered agent shall be
2-22 agents of a limited liability company or foreign limited liability
2-23 company upon whom any process, notice, or demand required or
2-24 permitted by law to be served upon the limited liability company or
2-25 foreign limited liability company may be served.
2-26 SECTION 1.04. Article 2.09, Texas Limited Liability Company
2-27 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
2-28 read as follows:
2-29 Art. 2.09. Regulations of limited liability company.
2-30 A. The power to adopt, alter, amend, or repeal the regulations of
2-31 a limited liability company shall be vested in the members of the
2-32 company unless vested in whole or part in the manager or managers
2-33 of the company by the articles of organization or regulations.
2-34 Regulations adopted by the members or by the managers may be
2-35 repealed or altered; new regulations may be adopted by the members;
2-36 and regulations may provide that they may not, in whole or
2-37 specified part, be altered, amended, or repealed by the managers.
2-38 The regulations may contain any provisions for the regulation and
2-39 management of the affairs of the limited liability company not
2-40 inconsistent with law or the articles of organization. Unless
2-41 otherwise provided in the articles of organization, the <The>
2-42 initial regulations of the limited liability company shall be
2-43 adopted by the manager or managers named in the articles of
2-44 organization, if any, or by the member or members named in the
2-45 articles of organization, if any. Any provision of this Act
2-46 subject to variation or modification by the regulations of a
2-47 limited liability company is also subject to variation or
2-48 modification by the articles of organization of the limited
2-49 liability company.
2-50 SECTION 1.05. Article 2.11, Texas Limited Liability Company
2-51 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
2-52 read as follows:
2-53 Art. 2.11. Limited liability company property. A. Real or
2-54 personal property owned or purchased by a limited liability company
2-55 may <shall> be held and owned, and conveyance may <shall> be made,
2-56 in the name of the limited liability company. Instruments and
2-57 documents providing for the acquisition, mortgage, or disposition
2-58 of the property of the limited liability company shall be valid and
2-59 binding upon the company, if they are executed by one or more
2-60 persons as provided in Article 2.21 of this Act <the preceding
2-61 Article>.
2-62 SECTION 1.06. Article 2.12, Texas Limited Liability Company
2-63 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
2-64 read as follows:
2-65 Art. 2.12. Managers. A. Except and to the extent the
2-66 articles of organization or the regulations shall reserve
2-67 management of the limited liability company <the same> to the
2-68 members in whole or in part, and subject to provisions in the
2-69 articles of organization, the regulations, or this Act restricting
2-70 or enlarging the powers, rights, and duties of any manager or group
3-1 or class of managers, the powers of a limited liability company
3-2 shall be exercised by or under the authority of, and the business
3-3 and affairs of a limited liability company shall be managed under
3-4 the direction of, the manager or managers of the limited liability
3-5 company. If management of the limited liability company is fully
3-6 reserved to the members, the limited liability company need not
3-7 have managers. Managers need not be residents of this State or
3-8 members of the limited liability company unless the regulations so
3-9 require. The regulations may prescribe other qualifications for
3-10 managers. If the management of the limited liability company is
3-11 reserved in whole or in part to the members, Articles 2.17, 2.18,
3-12 2.19, and 2.20 of this Act apply to the members who manage the
3-13 limited liability company to the same extent as those articles
3-14 would otherwise apply to managers of a limited liability company.
3-15 SECTION 1.07. Article 2.13, Texas Limited Liability Company
3-16 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
3-17 read as follows:
3-18 Art. 2.13. Number and election of managers. A. The
3-19 managers of a limited liability company, if any, shall consist of
3-20 one or more persons. The number of managers shall be fixed by, or
3-21 in the manner provided in, the regulations, except as to the number
3-22 constituting the initial managers, which number shall be fixed by
3-23 the articles of organization. The number of managers may be
3-24 increased or decreased from time to time by amendment to, or in the
3-25 manner provided in, the regulations, but no decrease shall have the
3-26 effect of shortening the term of any incumbent manager. In the
3-27 absence of a regulation fixing the number of managers or providing
3-28 for the manner in which the number of managers shall be fixed, the
3-29 number of managers shall be the same as the number constituting the
3-30 initial managers. The names and addresses of the initial managers,
3-31 if any, shall be stated in the articles of organization. Unless
3-32 otherwise provided in the regulations or in any resolution of the
3-33 managers or members appointing that manager in accordance with
3-34 <removed in accordance with the provisions of> the regulations or
3-35 articles of organization, each manager <such persons> shall hold
3-36 office for the term for which elected, if any term is specified,
3-37 and until that manager's successor has been elected, or until that
3-38 manager's earlier death, resignation, or removal. The regulations
3-39 may provide for the time or times at which the members entitled to
3-40 vote in the election of managers shall elect managers and the term
3-41 for which the managers shall hold office <until the first annual
3-42 meeting of members, and until their successors shall have been
3-43 elected and qualified. At the first annual meeting of members and
3-44 at each annual meeting thereafter, the holders of membership
3-45 interests entitled to vote in the election of managers shall elect
3-46 managers to hold office until the next succeeding annual meeting,
3-47 except in case of the classification of managers as permitted by
3-48 this Act>. The regulations may provide that <the holders of> any
3-49 class or group of members <series of membership interests> shall be
3-50 entitled to elect one or more managers, who shall hold office for
3-51 such terms as shall be stated in the regulations. <Unless removed
3-52 in accordance with provisions of the regulations, each manager
3-53 shall hold office for the term for which elected and until a
3-54 successor shall have been duly elected and qualified.> The
3-55 regulations may provide that at any meeting of members called
3-56 expressly for that purpose any managers may be removed, with or
3-57 without cause, as provided therein; however, if<. Whenever the
3-58 holders of> any class or group <series> of members is <shares are>
3-59 entitled to elect one or more managers by the provisions of the
3-60 regulations, only the members <holders of membership interests> of
3-61 that class or group <series> shall be entitled to vote for or
3-62 against the removal of any managers elected by the members
3-63 <holders> of that class or group <series>.
3-64 SECTION 1.08. Article 2.14, Texas Limited Liability Company
3-65 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
3-66 read as follows:
3-67 Art. 2.14. Classification of managers. A. The regulations
3-68 may provide that the managers shall be divided into more than one
3-69 class <either two or three classes>, each class to be the number
3-70 specified in the regulations <as nearly equal in number as
4-1 possible>, the terms <of office> of managers of each <the first>
4-2 class to expire in the order provided in the regulations and at the
4-3 meetings of the members at which the regulations provide that
4-4 managers are to be elected <at the first annual meeting of members
4-5 after their election, that of the second class to expire at the
4-6 second annual meeting after their election, and that of the third
4-7 class, if any, to expire at the third annual meeting after their
4-8 election>. If the regulations provide for the classification of
4-9 managers, (1) the whole number of managers of the limited liability
4-10 company need not be elected annually or at any regularly scheduled
4-11 meeting of the members, and (2) <at each annual meeting> after such
4-12 classification, at each meeting at which the regulations provide
4-13 that managers are to be elected, the number of managers equal to
4-14 the number of the class whose term expires at the time of such
4-15 meeting shall be elected to hold office until the next succeeding
4-16 meeting at which the regulations provide that the successors to the
4-17 managers are to be elected. A classification of managers adopted
4-18 after the last meeting of members at which managers were elected
4-19 may not be effective before the next meeting of members at which
4-20 managers are elected unless the classification is effected by an
4-21 amendment to the regulations adopted by the members <the second
4-22 succeeding annual meeting, if there be two classes, or until the
4-23 third succeeding annual meeting, if there be three classes>.
4-24 SECTION 1.09. Section A, Article 2.18, Texas Limited
4-25 Liability Company Act (Article 1528n, Vernon's Texas Civil
4-26 Statutes), is amended to read as follows:
4-27 A. If the regulations so provide, the managers, by
4-28 resolution, may designate from among the managers one or more
4-29 committees, each of which shall be comprised of one or more of the
4-30 managers, and may designate one or more of the managers as
4-31 alternate members of any committee, who may, subject to any
4-32 limitations imposed by the managers, replace absent or disqualified
4-33 managers at any meeting of that committee. Any such committee, to
4-34 the extent provided in such resolution or in the regulations, shall
4-35 have and may exercise all of the authority of the managers, subject
4-36 to the limitations set forth in Sections B and C of this Article.
4-37 Unless the resolution designating a particular committee, the
4-38 articles of organization, or the regulations expressly so provides,
4-39 a committee of the managers does not have the authority to
4-40 authorize or make a distribution of limited liability company cash
4-41 or property to the members or to authorize the issuance of
4-42 interests in the limited liability company.
4-43 SECTION 1.10. Article 2.21, Texas Limited Liability Company
4-44 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
4-45 read as follows:
4-46 Art. 2.21. DESIGNATION OF OFFICERS; AUTHORITY AND APPARENT
4-47 AUTHORITY OF OFFICERS, AGENTS, MANAGERS, AND MEMBERS <POWERS OF
4-48 MANAGERS AND OFFICERS>. A. One or more persons, who may or may
4-49 not be managers or members, may be designated as officers of the
4-50 limited liability company by the manager or managers, if management
4-51 is vested in one or more managers, or by the member or members, if
4-52 management of the limited liability company is reserved to the
4-53 members <The managers may designate one or more persons as officers
4-54 of the limited liability company who are not managers. Every
4-55 manager and officer is an agent of the limited liability company
4-56 for the purpose of its business and the act of a manager or
4-57 officer, including the execution in the name of the limited
4-58 liability company of any instrument for apparently carrying on in
4-59 the usual way the business of the limited liability company, binds
4-60 the limited liability company unless the manager or officer so
4-61 acting otherwise lacks the authority to act for the limited
4-62 liability company and the person with whom the manager or officer
4-63 is dealing has knowledge of the fact that the manager or officer
4-64 has no such authority>.
4-65 B. All officers, agents, managers, and members of the
4-66 limited liability company, as among themselves and the limited
4-67 liability company, have authority and perform duties in the
4-68 management of the limited liability company as may be provided in
4-69 the regulations or as may be determined by resolution of the
4-70 manager or managers, if management is vested in one or more
5-1 managers, or of the member or members, if management is reserved to
5-2 the members, in each case not inconsistent with the regulations or
5-3 the articles of organization.
5-4 C. Except as otherwise provided in this Article, the
5-5 following are agents of a limited liability company for the purpose
5-6 of its business:
5-7 (1) any one or more officers or other agents of a
5-8 limited liability company who are vested with actual or apparent
5-9 authority;
5-10 (2) each manager, to the extent that management of the
5-11 limited liability company is vested in that manager; and
5-12 (3) each member, to the extent that management of the
5-13 limited liability company has been reserved to that member.
5-14 D. An act, including the execution in the name of the
5-15 limited liability company of any instrument, for the purpose of
5-16 apparently carrying on in the usual way the business of the limited
5-17 liability company by any of the persons described in Section C of
5-18 this Article binds the limited liability company unless:
5-19 (1) the officer, agent, manager, or member so acting
5-20 otherwise lacks the authority to act for the limited liability
5-21 company; and
5-22 (2) the person with whom the officer, agent, manager,
5-23 or member is dealing has knowledge of the fact that the officer,
5-24 agent, manager, or member does not have that authority.
5-25 SECTION 1.11. Part Two, Texas Limited Liability Company Act
5-26 (Article 1528n, Vernon's Texas Civil Statutes), is amended by
5-27 adding Article 2.23 to read as follows:
5-28 Art. 2.23. VOTING, QUORUM, AND ACTION. A. Except as
5-29 otherwise provided in this Article, in the articles of
5-30 organization, or in the regulations, a majority of the members,
5-31 managers, or members of any committee constitutes a quorum for the
5-32 transaction of business at any meeting of the members, the
5-33 managers, or the committee. An act of a majority of the members
5-34 entitled to vote, the managers, or the members of a committee, who
5-35 are present at a meeting of the members, the managers, or the
5-36 committee at which a quorum is present is the act of the members,
5-37 the managers, or the committee.
5-38 B. (1) Unless otherwise provided by the articles of
5-39 organization or the regulations, any act required or permitted to
5-40 be taken at any meeting of the members, the managers, or any
5-41 committee may be taken without a meeting, without prior notice, and
5-42 without a vote if a consent or consents in writing, setting forth
5-43 the action so taken, is signed by the members, managers, or
5-44 committee members, as the case may be, having not fewer than the
5-45 minimum number of votes that would be necessary to take the action
5-46 at a meeting at which all members, managers, or committee members,
5-47 as the case may be, entitled to vote on the action were present and
5-48 voted.
5-49 (2) Unless otherwise provided in the regulations, a
5-50 telegram, telex, cablegram, or similar transmission by a person, or
5-51 a photographic, photostatic, facsimile, or similar reproduction of
5-52 a writing signed by a person, shall be regarded as signed by that
5-53 person for the purposes of this Article.
5-54 C. Subject to the provisions required or permitted by this
5-55 Act, unless otherwise provided in the articles of organization or
5-56 the regulations, members, managers, or members of any committee may
5-57 participate in and hold a meeting of the members, managers, or
5-58 committee by means of conference telephone or similar
5-59 communications equipment by means of which all persons
5-60 participating in the meeting may hear each other. Participation in
5-61 a meeting pursuant to this Section constitutes presence in person
5-62 at the meeting except where a person participates in the meeting
5-63 for the express purpose of objecting to the transaction of any
5-64 business on the ground that the meeting is not lawfully called or
5-65 convened.
5-66 D. Except as provided in the articles of organization or the
5-67 regulations, the affirmative vote, approval, or consent of a
5-68 majority of all the members is required to:
5-69 (1) amend the articles of organization or regulations;
5-70 (2) change the status of the limited liability company
6-1 from one in which management is reserved to the members to one in
6-2 which management is vested in one or more managers, or vice versa;
6-3 (3) issue any additional membership interests in the
6-4 limited liability company subsequent to the issuance of membership
6-5 interests to the initial members of the limited liability company;
6-6 (4) approve any merger, consolidation, share or
6-7 interest exchange, or other transaction authorized by or subject to
6-8 the provisions of Part Ten of this Act;
6-9 (5) voluntarily cause the dissolution of the limited
6-10 liability company;
6-11 (6) authorize any transaction, agreement, or action on
6-12 behalf of the limited liability company that is unrelated to its
6-13 purpose as set forth in the regulations or articles of organization
6-14 or that otherwise contravenes the regulations; or
6-15 (7) authorize any act that would make it impossible to
6-16 carry on the ordinary business of the limited liability company.
6-17 E. Except as provided in the regulations, the affirmative
6-18 vote, approval, or consent of a majority of all of the managers, if
6-19 management of the limited liability company is vested in one or
6-20 more managers, or of the members, if management of the limited
6-21 liability company is reserved to the members, is required to take
6-22 any action, other than an action listed in Section D of this
6-23 Article, that is not apparently for the carrying on of the business
6-24 of the limited liability company in the usual way.
6-25 F. Except as otherwise provided in the articles of
6-26 organization or the regulations, for purposes of this Act, a
6-27 "majority" of the members, managers, or any committee of the
6-28 managers means more than one-half, by number, of all the members,
6-29 managers, or members of the committee, as the case may be.
6-30 SECTION 1.12. Section A, Article 3.02, Texas Limited
6-31 Liability Company Act (Article 1528n, Vernon's Texas Civil
6-32 Statutes), is amended to read as follows:
6-33 A. The initial Articles of Organization shall set forth:
6-34 (1) The name of the limited liability company;
6-35 (2) The period of duration, which may be perpetual
6-36 <not exceed 30 years from the date of filing with the Secretary of
6-37 State>;
6-38 (3) The purpose for which the limited liability
6-39 company is organized which may be stated to be, or to include, the
6-40 transaction of any or all lawful business for which limited
6-41 liability companies may be organized under this Act;
6-42 (4) The address of its initial registered office
6-43 <principal place of business in the state> and the name <and
6-44 address> of its initial registered agent at that address <in the
6-45 state>;
6-46 (5) If the limited liability company is to have <be
6-47 managed by> a manager or managers, a statement to that effect <that
6-48 the company is to be managed by a manager or managers> and the
6-49 names and addresses of the initial manager or <such> managers <who
6-50 are to serve as managers until the first annual meeting of members
6-51 or until their successors are duly elected>. If the <management of
6-52 a> limited liability company will not have managers, a statement to
6-53 that effect and <is reserved to the members,> the name and
6-54 addresses of the initial members;<.>
6-55 (6) The name and address of each organizer;
6-56 (7) Any provision required by Part Eleven of this Act,
6-57 if the limited liability company is a professional limited
6-58 liability company; and
6-59 (8) Any other provisions, not inconsistent with law,
6-60 which the members elect to set out in the articles of organization
6-61 for the regulation of the internal affairs of the limited liability
6-62 company, including any provisions which under this Act are
6-63 <required or> permitted to be set out in the regulations of the
6-64 limited liability company.
6-65 SECTION 1.13. Section B, Article 3.06, Texas Limited
6-66 Liability Company Act (Article 1528n, Vernon's Texas Civil
6-67 Statutes), is amended to read as follows:
6-68 B. The articles of amendment shall set forth:
6-69 (1) The name of the limited liability company.
6-70 (2) If the amendment alters any provision of the
7-1 original or amended articles of organization an identification by
7-2 reference or description of the altered provision and a statement
7-3 of its text as it is amended to read. If the amendment is an
7-4 addition to the original or amended articles of organization a
7-5 statement of that fact and the text of each provision added.
7-6 (3) A statement that the amendment was approved in
7-7 accordance with Section D of Article 2.23 of this Act or as
7-8 otherwise provided in the articles of organization or regulations
7-9 and the date of the approval.
7-10 SECTION 1.14. Part Three, Texas Limited Liability Company
7-11 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
7-12 adding Article 3.09 to read as follows:
7-13 Art. 3.09. RESTATED ARTICLES OF ORGANIZATION. A. By
7-14 following the procedure to amend the articles of organization
7-15 provided by this Act, a limited liability company may authorize,
7-16 execute, and file restated articles of organization that restate
7-17 the entire text of the articles of organization, as amended or
7-18 supplemented by:
7-19 (1) all certificates of amendment previously issued by
7-20 the Secretary of State; or
7-21 (2) all certificates of amendment previously issued by
7-22 the Secretary of State and by further amendments included in the
7-23 restated articles of organization.
7-24 Unless otherwise provided by the articles of organization or
7-25 the regulations, member approval is not required if further
7-26 amendment is not made by the restated articles of organization.
7-27 B. Restated articles of organization that restate the entire
7-28 articles of organization as amended and supplemented by all
7-29 certificates of amendment previously issued by the Secretary of
7-30 State, without making a further amendment, must contain an
7-31 introductory paragraph stating that the instrument accurately
7-32 copies the articles of organization and all amendments to the
7-33 articles of organization that are in effect to date and that the
7-34 instrument does not contain any other change in a provision of the
7-35 articles of organization or a previous amendment, other than:
7-36 (1) the insertion of the current number of managers,
7-37 if any, and the names and addresses of the persons then serving as
7-38 managers, if any, in lieu of similar information concerning the
7-39 initial managers; and
7-40 (2) the omission of the name and address of each
7-41 organizer.
7-42 C. An instrument containing restated articles of
7-43 organization that restate the entire articles of organization as
7-44 amended and supplemented by all certificates of amendment
7-45 previously issued by the Secretary of State and as further amended
7-46 by the restated articles of organization must:
7-47 (1) state that each amendment made by the restated
7-48 articles of organization has been effected in conformity with this
7-49 Act;
7-50 (2) include the statements required by this Act to be
7-51 contained in articles of amendment; and
7-52 (3) state that the instrument accurately copies the
7-53 articles of organization and all amendments that are in effect to
7-54 date and as further amended by the restated articles of
7-55 organization and that the instrument does not contain any other
7-56 change in a provision of the articles of organization or the
7-57 previous amendments, other than:
7-58 (a) the insertion of the current number of
7-59 managers, if any, and the names and addresses of the persons then
7-60 serving as managers, if any, in lieu of similar information
7-61 concerning the initial managers; and
7-62 (b) the omission of the name and address of each
7-63 organizer.
7-64 D. Restated articles of organization must be executed on
7-65 behalf of the limited liability company by an authorized manager or
7-66 member unless capital has not been paid into the limited liability
7-67 company and the restated articles of organization have been adopted
7-68 by the organizer, in which case the restated articles of
7-69 organization may be executed on behalf of the limited liability
7-70 company by the organizer. The original and a copy of the restated
8-1 articles of organization shall be delivered to the Secretary of
8-2 State. If the Secretary of State finds that the restated articles
8-3 of organization conform to law, and the appropriate filing fee is
8-4 paid as required by law, the Secretary of State shall:
8-5 (1) endorse on the original and the copy the word
8-6 "Filed" and the month, day, and year of filing;
8-7 (2) file the original in the Secretary of State's
8-8 office; and
8-9 (3) issue a restated certificate of organization and
8-10 affix the copy to the restated certificate of organization.
8-11 E. The restated certificate of organization, together with
8-12 the copy of the restated articles of organization affixed to the
8-13 restated certificate of organization by the Secretary of State,
8-14 shall be delivered to the limited liability company or its
8-15 representative.
8-16 F. On issuance of a restated certificate of organization by
8-17 the Secretary of State, the original articles of organization and
8-18 all amendments to the original articles are superseded, and the
8-19 restated articles of organization are the articles of organization
8-20 of the limited liability company.
8-21 SECTION 1.15. Section A, Article 4.01, Texas Limited
8-22 Liability Company Act (Article 1528n, Vernon's Texas Civil
8-23 Statutes), is amended to read as follows:
8-24 A. A limited liability company may have one or more members.
8-25 In connection with the formation of a limited liability company, a
8-26 person acquiring an interest as a member becomes a member on the
8-27 latter of:
8-28 (1) the date of formation of the limited liability
8-29 company; or
8-30 (2) the date stated in the records of the limited
8-31 liability company as the date that the person becomes a member or,
8-32 if no date is stated in those records, on the date that the
8-33 person's admission is first reflected in the records of the limited
8-34 liability company.
8-35 SECTION 1.16. Article 4.05, Texas Limited Liability Company
8-36 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
8-37 amending Section A and adding Section C to read as follows:
8-38 A. Unless otherwise provided by the regulations:
8-39 (1) a membership interest is assignable in whole or in
8-40 part;
8-41 (2) an assignment of a membership interest does not of
8-42 itself dissolve the limited liability company or entitle the
8-43 assignee to participate in the management and affairs of the
8-44 limited liability company or to become<,> or <to> exercise any
8-45 rights <or powers> of<,> a member;
8-46 (3) an assignment entitles the assignee to be
8-47 allocated income, gain, loss, deduction, credit, or similar items,
8-48 and to receive distributions, to which the assignor was entitled,
8-49 to the extent those items are assigned, and, for any proper
8-50 purpose, to require reasonable information or account of
8-51 transactions of the limited liability company and to make
8-52 reasonable inspection of the books and records of the limited
8-53 liability company; and
8-54 (4) until the assignee becomes a member, the assignor
8-55 member continues to be a member and to have the power to exercise
8-56 any rights or powers of a member, except to the extent those rights
8-57 or powers are assigned.
8-58 C. Until an assignee of the interest of a member in a
8-59 limited liability company is admitted as a member, the assignee
8-60 does not have liability as a member solely as a result of the
8-61 assignment.
8-62 SECTION 1.17. Section B, Article 5.02, Texas Limited
8-63 Liability Company Act (Article 1528n, Vernon's Texas Civil
8-64 Statutes), is amended to read as follows:
8-65 B. Except as otherwise provided by the articles of
8-66 organization or regulations, a member or the member's legal
8-67 representative or successor is obligated to the limited liability
8-68 company to perform an enforceable promise to make a contribution to
8-69 or otherwise pay cash or transfer property to a limited liability
8-70 company, notwithstanding the member's death, disability, or other
9-1 change in circumstances. If a member or a member's legal
9-2 representative or successor does not make a contribution or other
9-3 payment of cash or transfer of property required by the enforceable
9-4 promise, whether as a contribution or with respect to a
9-5 contribution previously made, that member or the member's legal
9-6 representative or successor is obligated, at the option of the
9-7 limited liability company, to pay to the limited liability company
9-8 an amount of cash equal to that portion of the agreed value, as
9-9 stated in the regulations or in the limited liability company
9-10 records required to be kept under Article 2.22 of this Act <act>,
9-11 of the contribution represented by the amount of cash that has not
9-12 been paid or the value of the property that has not been
9-13 transferred.
9-14 SECTION 1.18. Part Five, Texas Limited Liability Company Act
9-15 (Article 1528n, Vernon's Texas Civil Statutes), is amended by
9-16 adding Article 5.02-1 to read as follows:
9-17 Art. 5.02-1. ALLOCATION OF PROFITS AND LOSSES. A. The
9-18 profits and losses of a limited liability company shall be
9-19 allocated among the members and among classes of members in the
9-20 manner provided in the regulations. If the regulations do not
9-21 otherwise provide, the profits and losses shall be allocated in
9-22 accordance with the then current percentage or other interest in
9-23 the limited liability company of the members stated in limited
9-24 liability company records of the kind described in Section A of
9-25 Article 2.22 of this Act.
9-26 SECTION 1.19. Article 5.05, Texas Limited Liability Company
9-27 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
9-28 read as follows:
9-29 Art. 5.05. WITHDRAWAL OR EXPULSION <RESIGNATION> OF MEMBER.
9-30 A. A member may withdraw or be expelled from a limited liability
9-31 company at the time or on the occurrence of events specified in the
9-32 regulations.
9-33 SECTION 1.20. Article 6.01, Texas Limited Liability Company
9-34 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
9-35 read as follows:
9-36 Art. 6.01. DISSOLUTION. A. Except as provided by Section B
9-37 of this Article, a <A> limited liability company shall be dissolved
9-38 on the first of the following to occur:
9-39 (1) <When> the period fixed for the duration of the
9-40 limited liability company expires;<.>
9-41 (2) <On> the occurrence of events specified in the
9-42 articles of organization or regulations to cause dissolution;<.>
9-43 (3) the action of the members to dissolve the limited
9-44 liability company; <Written consent of all members to dissolution.>
9-45 (4) if no capital has been paid into the limited
9-46 liability company, the act of the organizer or the managers of the
9-47 limited company to dissolve the limited liability company;
9-48 (5) except <Except> as otherwise provided in the
9-49 regulations, upon the death, <retirement, resignation,> expulsion,
9-50 withdrawal pursuant to or as provided in the articles of
9-51 organization or regulations, bankruptcy, or dissolution of a member
9-52 or the occurrence of any other event which terminates the continued
9-53 membership of a member in the limited liability company<, unless
9-54 there is at least one remaining member and the business of the
9-55 limited liability company is continued by the consent of the number
9-56 of members or class thereof stated in the articles of organization
9-57 or regulations of the limited liability company or if not so
9-58 stated, by all remaining members.>; or
9-59 (6) entry <(5) Entry> of a decree of judicial
9-60 dissolution under Section 6.02 of this Act.
9-61 B. A limited liability company is not dissolved if an event
9-62 of dissolution described by Subsection (1), (2), or (5) of Section
9-63 A of this Article occurs, there is at least one remaining member,
9-64 and the business of the limited liability company is continued by
9-65 the vote of the members or class as stated in the articles of
9-66 organization or regulations of the limited liability company, or if
9-67 not so stated, by all remaining members. Unless otherwise provided
9-68 in the articles of organization or in the regulations, an election
9-69 to continue the business of the limited liability company must be
9-70 made within 90 days after the date of the occurrence of the event
10-1 of dissolution. If an election to continue the business of the
10-2 limited liability company is made following the termination of the
10-3 period fixed for the duration of the limited liability company or
10-4 the occurrence of events specified in the articles of organization
10-5 to cause dissolution, the election is not effective unless an
10-6 appropriate amendment is made by the limited liability company to
10-7 its articles of organization during the three-year period following
10-8 the date of the event of dissolution, extending the period fixed
10-9 for the duration of the limited liability company or deleting the
10-10 event specified in the articles of organization that caused the
10-11 dissolution, as applicable.
10-12 SECTION 1.21. Article 6.03, Texas Limited Liability Company
10-13 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
10-14 read as follows:
10-15 Art. 6.03. WINDING UP. A. On the dissolution of a limited
10-16 liability company, the limited liability company's affairs shall be
10-17 wound up as soon as reasonably practicable. The winding up shall
10-18 be accomplished by the managers or members or by any other person
10-19 or persons designated by the articles of organization, by the
10-20 regulations, or by resolution of the managers or members. In
10-21 addition, a court of competent jurisdiction, on cause shown, may
10-22 wind up the limited liability company's affairs on application of
10-23 any member or the member's legal representative or assignee and, in
10-24 connection with the winding up, may appoint a person to carry out
10-25 the liquidation and may make all other orders, directions, and
10-26 inquiries that the circumstances require.
10-27 SECTION 1.22. Article 6.05, Texas Limited Liability Company
10-28 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
10-29 read as follows:
10-30 Art. 6.05. Procedure before filing articles of dissolution.
10-31 A. Before filing articles of dissolution:
10-32 (1) The limited liability company shall cease to carry
10-33 on its business, except insofar as may be necessary for the winding
10-34 up thereof.
10-35 (2) The limited liability company shall cause written
10-36 notice by registered or certified mail of its intention to dissolve
10-37 to be mailed to each known creditor of and claimant against the
10-38 limited liability company.
10-39 (3) The limited liability company shall proceed to
10-40 collect its assets, convey and dispose of such of its properties as
10-41 are not to be distributed in kind to its members, pay, satisfy or
10-42 discharge its liabilities and obligations, or make adequate
10-43 provisions for payment and discharge thereof, and do all other acts
10-44 required to liquidate its business and affairs; in case its
10-45 property and assets are not sufficient to satisfy or discharge all
10-46 the limited liability company's liabilities and obligations, the
10-47 limited liability company shall apply them so far as they will go
10-48 to the just and equitable payment of the liabilities and
10-49 obligations. After paying or discharging all of its obligations,
10-50 or making adequate provisions for payment and discharge thereof,
10-51 the limited liability company shall then distribute the remainder
10-52 of its assets, either in cash or in kind, among its members
10-53 <shareholders> according to their respective rights and interest.
10-54 (4) The limited liability company, at any time during
10-55 the liquidation of its business and affairs, may make application
10-56 to any district court of this state in the county in which the
10-57 registered office of the limited liability company is situated to
10-58 have the liquidation continued under the supervision of such court
10-59 as provided in this Act.
10-60 SECTION 1.23. Article 6.07, Texas Limited Liability Company
10-61 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
10-62 read as follows:
10-63 Art. 6.07. Articles of dissolution. A. If voluntary
10-64 dissolution proceedings have not been revoked, then, when all
10-65 liabilities and obligations of the limited liability company have
10-66 been paid or discharged, or adequate provision has been made
10-67 therefor <thereof>, or in case its property and assets are not
10-68 sufficient to satisfy and discharge all the limited liability
10-69 company's liabilities and obligations, then when all the property
10-70 and assets have been applied so far as they will go to the just and
11-1 equitable payment of the limited liability company's liabilities
11-2 and obligations, and all of the remaining property and assets of
11-3 the limited liability have been distributed to its members
11-4 according to their respective rights and interest, articles of
11-5 dissolution shall be executed on behalf of the limited liability
11-6 company by a manager or authorized member, or in the case of a
11-7 dissolution by action of the organizer of the limited liability
11-8 company, by the organizer, which shall set forth:
11-9 (1) The name of the limited liability company.
11-10 (2) The names and respective addresses of its
11-11 managers, if any.
11-12 (3) That all debts, obligations, and liabilities of
11-13 the limited liability company have been paid or discharged or that
11-14 adequate provision has been made therefor, or, in case the limited
11-15 liability company's property and assets were not sufficient to
11-16 satisfy and discharge all its debts, liabilities, and obligations,
11-17 that all property and assets have been applied so far as they will
11-18 go to the payment thereof in a just and equitable manner and that
11-19 no property or assets remain available for distribution among its
11-20 members, or, that the limited liability company has not acquired
11-21 any debts, obligations, or liabilities.
11-22 (4) That all remaining property and assets of the
11-23 limited liability company have been distributed among its members
11-24 in accordance with their respective rights and interest or that no
11-25 property remained for distribution to members after applying it as
11-26 far as it would go to the just and equitable payment of the debts,
11-27 liabilities, and obligations of the limited liability company, or
11-28 that the limited liability company has not acquired any property or
11-29 assets and therefore distributions to members were not required.
11-30 (5) If capital has not been paid into the limited
11-31 liability company, a copy of the resolution to dissolve, together
11-32 with a statement that the resolution was adopted by the act of the
11-33 organizer or the managers of the limited liability company and of
11-34 the date of adoption <There are no suits pending against the
11-35 limited liability company in any court, or that adequate provisions
11-36 have been made for satisfaction of any judgment, order, or decree
11-37 which may be entered against it in any pending suit>.
11-38 (6) If the limited liability company elected to
11-39 dissolve by action <written consent> of its <all> members, a<:>
11-40 <(a) A> copy of the resolution <written consent>
11-41 to dissolve, together with <and> a statement that the resolution
11-42 was adopted in accordance with Section D, Article 2.23, of this Act
11-43 or as otherwise provided in the articles of incorporation or the
11-44 regulations and the date of adoption <such written consent has been
11-45 signed by all members of the limited liability company or signed in
11-46 their names by their attorneys thereunto duly authorized>.
11-47 SECTION 1.24. Article 7.03, Texas Limited Liability Company
11-48 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
11-49 read as follows:
11-50 Art. 7.03. Limited Liability Company Name of Foreign Limited
11-51 Liability Company. A. No certificate of authority shall be issued
11-52 to a foreign limited liability company unless the limited liability
11-53 company name of such limited liability company:
11-54 (1) Shall contain the word "Limited Liability Company"
11-55 or "Limited Company" or the abbreviations "L.L.C.," "LLC," "LC,"
11-56 <"Ltd."> or "L.C." and shall contain such additional words as may
11-57 be required by law. The word "Limited" may be abbreviated as
11-58 "Ltd." or "LTD" and the word "Company" may be abbreviated as "Co."
11-59 However, a foreign limited liability company that procured a
11-60 certificate of authority to transact business in this state before
11-61 September 1, 1993, and that complied with this Section on the date
11-62 of procuring the certificate, but does not comply with this Section
11-63 as revised, is not required to change its name.
11-64 (2) Shall not contain any word or phrase which
11-65 indicates or implies that it is organized for any purpose other
11-66 than one or more of the purposes contained in its articles of
11-67 organization.
11-68 (3) Shall not be the same as, or deceptively similar
11-69 to, the name of any domestic limited liability company, corporation
11-70 or limited partnership existing under the laws of this state or of
12-1 any foreign limited liability company, corporation or limited
12-2 partnership authorized to transact business in this state, or a
12-3 name the exclusive right to which is, at the time, reserved or
12-4 registered in the manner provided in this Act or any other statute
12-5 relating to corporations, partnerships, or other business entities;
12-6 provided that a name may be similar if written consent is obtained
12-7 from the existing limited liability company, corporation or limited
12-8 partnership having the name deemed to be similar or the person, or
12-9 limited liability company, for whom the name deemed to be similar
12-10 is reserved or registered in the office of the Secretary of State.
12-11 A certificate of authority shall be issued as provided in this Act
12-12 to any foreign limited liability company having a name the same as,
12-13 deceptively similar to, or, if no consent is given, similar to the
12-14 name of any limited liability company existing under the laws of
12-15 this state or of any foreign limited liability company authorized
12-16 to transact business in this state, or a name the exclusive right
12-17 to which is, at the time, reserved or registered, provided such
12-18 foreign limited liability company qualifies and does business under
12-19 a name that meets the requirements of this article. The foreign
12-20 limited liability company shall set forth in the application for a
12-21 certificate of authority the name under which it is qualifying and
12-22 shall file an assumed name certificate as required by law.
12-23 SECTION 1.25. Article 8.12, Texas Limited Liability Company
12-24 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
12-25 read as follows:
12-26 Art. 8.12. Applicability of other statutes. A. Subject to
12-27 Section C of this Article, Articles 2.07, 4.14, and 5.14 and Part
12-28 Seven of the TBCA apply to a limited liability company and its
12-29 members, managers, and officers.
12-30 B. Subject to Section C of this Article, Articles 2.03
12-31 through 2.06, 2.09, 2.09A, 3.01, and 7.01 through 7.07, Texas
12-32 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
12-33 Vernon's Texas Civil Statutes), as amended, apply to a limited
12-34 liability company and its members, managers, and officers.
12-35 C. For purposes of the application of the articles of the
12-36 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
12-37 by Sections A and B of this Article, as context requires:
12-38 (1) a reference to a corporation includes a limited
12-39 liability company;
12-40 (2) a reference to a share includes a membership
12-41 interest;
12-42 (3) a reference to a shareholder includes a member;
12-43 (4) a reference to a director includes a manager;
12-44 (5) a reference to articles of incorporation includes
12-45 articles of organization; and
12-46 (6) a reference to bylaws includes regulations. <To
12-47 the extent this Act contains no provision with respect to one of
12-48 the matters provided for in the TBCA or the Texas Miscellaneous
12-49 Corporation Laws Act as such acts shall be amended from time to
12-50 time, the provisions of the TBCA and the Texas Miscellaneous
12-51 Corporation Laws Act shall supplement the provisions of this Act to
12-52 the extent they are not inconsistent with the provisions of this
12-53 Act. Without limiting the generality of the foregoing, Article 5
12-54 of the TBCA shall supplement the provisions of this Act and a
12-55 limited liability company shall be an "other entity" as that term
12-56 is defined in the TBCA and Article 7.06 of the Texas Miscellaneous
12-57 Corporation Laws Act shall be applicable to limited liability
12-58 company managers to the same extent as to directors.>
12-59 SECTION 1.26. Section A, Article 9.01, Texas Limited
12-60 Liability Company Act (Article 1528n, Vernon's Texas Civil
12-61 Statutes), is amended to read as follows:
12-62 A. The Secretary of State is authorized and required to
12-63 collect for the use of the State the following fees:
12-64 (1) Filing articles of organization of a domestic
12-65 limited liability company and issuing the certificate of
12-66 organization, Two Hundred Dollars ($200.00).
12-67 (2) Filing articles of amendment of a domestic limited
12-68 liability company and issuing the certificate of amendment, One
12-69 Hundred Dollars ($100.00).
12-70 (3) Filing articles of merger involving one or more
13-1 <a> domestic or foreign limited liability companies: <company,>
13-2 (a) Two Hundred Dollars ($200.00), if another
13-3 type of domestic entity is not a party to the merger; or
13-4 (b) the greater of Two Hundred Dollars ($200.00)
13-5 or the highest filing fee for articles of merger under the
13-6 applicable Texas statute under which the other domestic entity or
13-7 entities are incorporated or organized, if another type of domestic
13-8 entity is party to the merger.
13-9 (4) Filing an application of a foreign limited
13-10 liability company for certificate of authority to transact business
13-11 in this state and issuing such a certificate of authority, Five
13-12 Hundred Dollars ($500.00).
13-13 (5) Filing an application of a foreign limited
13-14 liability company for an amended certificate of authority to
13-15 transact business in this state and issuing such an amended
13-16 certificate of authority, One Hundred Dollars ($100.00).
13-17 (6) Filing restated articles of organization of a
13-18 domestic limited liability company, Two Hundred Dollars ($200.00).
13-19 (7) Filing application for reservations of a limited
13-20 liability company name and issuing certificate thereof, Twenty-Five
13-21 Dollars ($25.00).
13-22 (8) Filing notice of transfer of reserved limited
13-23 liability company name and issuing a certificate therefor, Ten
13-24 Dollars ($10.00).
13-25 (9) Filing statement of change of registered office or
13-26 registered agent, or both, Ten Dollars ($10.00).
13-27 (10) Filing statement of change of address of
13-28 registered agent, Ten Dollars ($10.00); provided, however, that the
13-29 maximum fee for simultaneous filings by a registered agent for more
13-30 than one limited liability company shall not exceed Five Hundred
13-31 Dollars ($500.00).
13-32 (11) Filing articles of dissolution and issuing
13-33 certificate therefor, Twenty-Five Dollars ($25.00).
13-34 (12) Filing application for withdrawal and issuing
13-35 certificate therefor, Ten Dollars ($10.00).
13-36 (13) Filing certificate from home state that foreign
13-37 limited liability company is no longer existent in said state, Ten
13-38 Dollars ($10.00).
13-39 (14) Maintaining the record of service of any process,
13-40 notice or demand upon the Secretary of State as agent for foreign
13-41 and domestic limited liability companies, Twenty-Five Dollars
13-42 ($25.00).
13-43 (15) Filing any instrument pursuant to this act not
13-44 expressly provided for above, Ten Dollars ($10.00).
13-45 SECTION 1.27. Part Nine, Texas Limited Liability Company Act
13-46 (Article 1528n, Vernon's Texas Civil Statutes), is amended by
13-47 adding Article 9.03 to read as follows:
13-48 Art. 9.03. DELAYED EFFECTIVENESS OF CERTAIN FILINGS. A.
13-49 (1) For purposes of this Article, "permitted act" means a filing
13-50 with the Secretary of State under this Act for:
13-51 (a) the articles of organization of a limited
13-52 liability company under this Act;
13-53 (b) an amendment to or restatement of the
13-54 articles of organization;
13-55 (c) a merger;
13-56 (d) the application of a foreign limited
13-57 liability company to procure a certificate of authority to transact
13-58 business in this state or to withdraw from doing business in this
13-59 state;
13-60 (e) an amendment to the certificate of authority
13-61 of a foreign limited liability company to transact business in this
13-62 state;
13-63 (f) a change in registered office or registered
13-64 agent;
13-65 (g) a change of address of a registered agent;
13-66 or
13-67 (h) a voluntary dissolution.
13-68 (2) A permitted act may be made effective as of a time
13-69 and date after the time and date otherwise provided in this Act or
13-70 may be made effective on the occurrence of events or facts that may
14-1 occur in the future. Those events or facts may include future acts
14-2 of any person if the articles of organization, articles of
14-3 amendment or restatement, articles of merger, application, or other
14-4 document required by this Act to be filed with the Secretary of
14-5 State to make the permitted act effective clearly and expressly
14-6 states, in addition to any other statement or information required:
14-7 (a) a time and date certain on which the
14-8 permitted act is to become effective; or
14-9 (b) if the permitted act is to become effective
14-10 on the occurrence of events or facts that may occur in the future:
14-11 (i) the manner in which the events or
14-12 facts cause the permitted act to become effective; and
14-13 (ii) the date of the 90th day after the
14-14 date of the filing of the articles of organization, articles of
14-15 amendment or restatement, articles of merger, application, or other
14-16 document.
14-17 (3) A permitted act becoming effective as of a time or
14-18 date certain that is after the time and date otherwise provided in
14-19 this Act must specify a subsequent effective time and date that is
14-20 not more than 90 days after the date of the filing of the articles
14-21 of organization, articles of amendment or restatement, articles of
14-22 merger, application, or other document required by this Act. The
14-23 time certain on which the permitted act is to become effective may
14-24 not be midnight or 12 p.m.
14-25 (4) Within 90 days after the date of filing of the
14-26 articles of organization, articles of amendment or restatement,
14-27 articles of merger, application, or other document for a permitted
14-28 act becoming effective on the occurrence of events or facts that
14-29 may occur in the future, other than the mere passage of time, a
14-30 statement must be filed with the Secretary of State confirming that
14-31 all the events or facts on which the effectiveness of the permitted
14-32 act is conditioned have been satisfied or waived and the date on
14-33 which the condition was satisfied or waived.
14-34 B. A statement required by Section A of this Article must be
14-35 executed on behalf of each domestic or foreign limited liability
14-36 company or other person required to execute the articles of
14-37 organization, articles of amendment or restatement, articles of
14-38 merger, application, or other document required by this Act to be
14-39 filed with the Secretary of State to make the permitted act
14-40 effective by a member, manager, officer, or other duly authorized
14-41 representative, including a member, manager, officer, or duly
14-42 authorized representative of any successor domestic or foreign
14-43 limited liability company or other entity. An original and a copy
14-44 of the statement must be filed with the Secretary of State.
14-45 C. Notwithstanding any other provision of this Act to the
14-46 contrary, a permitted act that is to become effective as of a time
14-47 or date after the time and date otherwise provided in this Act, to
14-48 the extent permitted by this Article, shall become effective as of
14-49 the subsequent time and date. Any certificate issued by the
14-50 Secretary of State on the filing of the articles of organization,
14-51 articles of amendment or restatement, articles of merger,
14-52 application, or other document otherwise required by this Act for
14-53 the permitted act to become effective shall expressly set forth the
14-54 time and date on which the permitted act is to become effective.
14-55 D. (1) A permitted act to be made effective on the
14-56 occurrence of events or facts that may occur in the future, other
14-57 than the mere passage of time, and for which the statement required
14-58 by Subsection (4) of Section A of this Article is filed with the
14-59 Secretary of State within the prescribed time becomes effective as
14-60 of the time and date on which the latest specified event or fact
14-61 occurred or the time and date on which the condition is otherwise
14-62 satisfied or waived. Any certificate issued or notation,
14-63 acknowledgment, or other statement made by the Secretary of State
14-64 on the filing of the articles of organization, articles of
14-65 amendment or restatement, articles of merger, application, or other
14-66 document otherwise required by this Act for the permitted act to
14-67 become effective must:
14-68 (a) state that "The effectiveness of the action
14-69 to which this instrument relates is conditioned on the occurrence
14-70 of certain facts or events described in the filing to which this
15-1 instrument relates"; or
15-2 (b) make reference in any manner approved by the
15-3 Secretary of State to the fact that the effectiveness of the action
15-4 is so conditioned.
15-5 (2) The time and date on which a condition to the
15-6 effectiveness of a permitted act is satisfied or waived as set
15-7 forth in a statement filed with the Secretary of State pursuant to
15-8 Subsection (4) of Section A of this Article shall be conclusively
15-9 regarded as the time and date on which the condition was satisfied
15-10 or waived for purposes of this section.
15-11 E. If the effectiveness of any permitted act is conditioned
15-12 on the occurrence of events or facts that may occur in the future,
15-13 other than the mere passage of time, and the statement required by
15-14 Subsection (4) of Section A of this Article is not filed with the
15-15 Secretary of State within the prescribed time, the permitted act
15-16 does not become effective unless there is subsequently filed with
15-17 the Secretary of State the articles of organization, articles of
15-18 amendment or restatement, articles of merger, application, or other
15-19 document required by this Act to be filed with the Secretary of
15-20 State to make the permitted act effective.
15-21 F. If articles of organization, articles of amendment or
15-22 restatement, articles of merger, an application, or any other
15-23 document permitted to be filed pursuant to this Act with the
15-24 Secretary of State have been filed but the event or transaction
15-25 evidenced by the filing has not become effective, the filing may be
15-26 abandoned in accordance with the agreement of the parties to the
15-27 filing by filing a certificate of abandonment with the Secretary of
15-28 State before the effectiveness of the event or transaction in
15-29 accordance with the terms of the document so filed. The
15-30 certificate of abandonment must be signed on behalf of each
15-31 domestic or foreign limited liability company or other entity that
15-32 is a party to the event or transaction by a member, manager,
15-33 officer, or other authorized representative and must state the
15-34 nature of the filing to be abandoned, the date of the filing to be
15-35 abandoned, the parties to the filing to be abandoned, and that the
15-36 event or transaction has been abandoned in accordance with the
15-37 agreement of the parties. On the filing of the statement of
15-38 abandonment with the Secretary of State, the event or transaction
15-39 evidenced by the original filing shall be considered abandoned and
15-40 may not become effective.
15-41 SECTION 1.28. The Texas Limited Liability Company Act
15-42 (Article 1528n, Vernon's Texas Civil Statutes) is amended by adding
15-43 Parts Ten and Eleven to read as follows:
15-44 PART TEN
15-45 Art. 10.01. MERGER. A. A domestic limited liability
15-46 company may adopt a plan of merger and one or more domestic limited
15-47 liability companies may merge with one or more domestic or foreign
15-48 limited liability companies or other entities if:
15-49 (1) each constituent entity enters into a written plan
15-50 of merger containing the provisions set forth in Article 10.02 of
15-51 this Act for which:
15-52 (a) approval exists by all domestic limited
15-53 liability companies by the vote of a majority of their respective
15-54 members, unless the respective regulations or articles of
15-55 organization of each limited liability company provide otherwise;
15-56 and
15-57 (b) if one or more foreign limited liability
15-58 companies or other entities is a party to the merger or is to be
15-59 created by the terms of the plan of merger:
15-60 (i) the merger is permitted by the laws
15-61 under which each foreign limited liability company and each other
15-62 entity that is a party to the merger is formed or organized or by
15-63 the organizational documents or other constituent documents of the
15-64 foreign limited liability company or other entity that are not
15-65 inconsistent with those laws; and
15-66 (ii) each foreign limited liability
15-67 company or other entity that is a party to the merger complies with
15-68 those laws or documents in effecting the merger; and
15-69 (2) a member of a domestic limited liability company
15-70 that is a party to the merger, as a result of the merger, will not
16-1 become personally liable for the liabilities or obligations of any
16-2 other person unless the member consents to becoming personally
16-3 liable by action taken in connection with the specific plan of
16-4 merger approved by the domestic limited liability company.
16-5 Art. 10.02. PLAN OF MERGER. A. A plan of merger must
16-6 include:
16-7 (1) the name and state of domicile of each domestic or
16-8 foreign limited liability company or other entity that is a party
16-9 to the merger;
16-10 (2) the name of each domestic or foreign limited
16-11 liability company or other entity, if any, that will survive the
16-12 merger, which may be one or more of the domestic or foreign limited
16-13 companies or other entities party to the merger;
16-14 (3) the name and state of domicile of each new
16-15 domestic or foreign limited liability company or other entity, if
16-16 any, that may be created by the terms of the plan of merger;
16-17 (4) the terms and conditions of the merger, including,
16-18 if more than one domestic or foreign limited liability company or
16-19 other entity is to survive or to be created by the terms of the
16-20 plan of merger, the manner and basis of allocating and vesting:
16-21 (a) real estate and other property of each
16-22 domestic or foreign limited liability company and of each other
16-23 entity that is a party to the merger among one or more of the
16-24 surviving or new domestic or foreign limited liability companies
16-25 and other entities; and
16-26 (b) all liabilities and obligations of each
16-27 domestic or foreign limited liability company and other entity that
16-28 is a party to the merger among one or more of the surviving or new
16-29 domestic or foreign limited liability companies and other entities
16-30 or making adequate provision for the payment and discharge of the
16-31 liabilities and obligations;
16-32 (5) the manner and basis of converting any of the
16-33 limited liability company interests or other evidences of ownership
16-34 of each domestic or foreign limited liability company or other
16-35 entity that is a party to the merger into:
16-36 (a) limited liability company interests, shares,
16-37 obligations, evidences of ownership, rights to purchase securities,
16-38 or other securities of one or more of the surviving or new domestic
16-39 or foreign limited liability company or other entities;
16-40 (b) cash or other property, including shares,
16-41 obligations, evidences of ownership, rights to purchase securities,
16-42 or other securities of any other person or entity; or
16-43 (c) any combination of the items described in
16-44 Subdivisions (a) and (b) of this Subsection;
16-45 (6) the articles of organization of any new domestic
16-46 limited liability company to be created by the terms of the plan of
16-47 merger; and
16-48 (7) the articles of organization or other
16-49 organizational documents of each other entity that is a party to
16-50 the merger and that is to be created by the terms of the plan of
16-51 merger.
16-52 B. The plan of merger may include:
16-53 (1) any amendments to the articles of organization or
16-54 regulations of any surviving domestic limited liability company or
16-55 to the organizational documents or other constituent documents of
16-56 any other surviving entity; and
16-57 (2) any other provision relating to the merger.
16-58 Art. 10.03. ARTICLES OF MERGER. A. After a plan of merger
16-59 has been approved by each of the limited liability companies or
16-60 other entities that is a party to the plan of merger, articles of
16-61 merger shall be executed on behalf of each domestic limited
16-62 liability company that is a party to the plan of merger by at least
16-63 one member, manager, officer, or other agent or representative of
16-64 the limited liability company who is authorized to execute articles
16-65 of merger by the articles of organization or regulations or shall
16-66 be approved by authorizing resolutions adopted by the act of the
16-67 members. At least one authorized representative of each other
16-68 foreign limited liability company or other entity that is a party
16-69 to the plan of merger shall also execute the articles of merger.
16-70 The articles of merger must include:
17-1 (1) the plan of merger; and
17-2 (2) as to each domestic or foreign limited liability
17-3 company or other entity that is a party to the plan of merger, a
17-4 statement that the plan of merger was authorized by all action
17-5 required by the laws under which it was formed or organized or by
17-6 its constituent documents.
17-7 B. The original of the articles of merger and a number of
17-8 copies equal to the number of surviving and new domestic or foreign
17-9 limited liability companies and other entities that are a party to
17-10 the plan of merger or that will be created by its terms shall be
17-11 delivered to the Secretary of State. Unless the Secretary of State
17-12 finds that the articles of merger do not conform to law, on receipt
17-13 of all applicable filing fees and franchise taxes, if any, required
17-14 by law, the Secretary of State shall:
17-15 (1) certify that the articles of merger have been
17-16 filed in the Secretary of State's office by endorsing on the
17-17 original the word "Filed" and the date of the filing;
17-18 (2) file and index the endorsed articles of merger;
17-19 and
17-20 (3) issue a certificate of merger, together with a
17-21 copy of the articles affixed to the certificate, to each surviving
17-22 or new domestic or foreign limited liability company or other
17-23 entity that is a party to the plan of merger or that is created by
17-24 the merger, or to its respective representatives.
17-25 C. Except as provided by Article 9.03 of this Act, the
17-26 merger is effective on the issuance of the certificate of merger by
17-27 the Secretary of State.
17-28 Art. 10.04. EFFECT OF MERGER. A. When a merger takes
17-29 effect:
17-30 (1) the separate existence of every domestic or
17-31 foreign limited liability company or other entity that is a party
17-32 to the merger, except any surviving or new domestic or foreign
17-33 limited liability company or other entity, ceases;
17-34 (2) all rights, title, and interests to all real
17-35 estate and other property owned by each domestic or foreign limited
17-36 liability company and by each other entity that is a party to the
17-37 merger shall be allocated to and vested in one or more of the
17-38 surviving or resulting entities as provided in the plan of merger
17-39 without reversion or impairment, without further act or deed, and
17-40 without any transfer or assignment having occurred, but subject to
17-41 any existing liens or other encumbrances on the property;
17-42 (3) all liabilities and obligations of each domestic
17-43 or foreign limited liability company and each other entity that is
17-44 a party to the merger shall be allocated to one or more of the
17-45 surviving or new domestic or foreign limited liability companies
17-46 and other entities in the manner provided by the plan of merger,
17-47 and each surviving or new domestic or foreign limited liability
17-48 company or other entity to which a liability or obligation has been
17-49 allocated under the plan of merger becomes the primary obligor for
17-50 the liability or obligation, and, except as otherwise provided by
17-51 the plan of merger, law, or contract, a party to the merger other
17-52 than a surviving domestic or foreign limited liability company or
17-53 other entity liable at the time of the merger or another new
17-54 domestic or foreign limited liability company or other entity
17-55 created is not liable for the liability or obligation;
17-56 (4) a proceeding pending by or against a domestic or
17-57 foreign limited liability company or another entity that is a party
17-58 to the merger may be continued as if the merger did not occur, or
17-59 the surviving or new domestic or foreign limited liability company
17-60 or limited liability companies or the surviving or new other entity
17-61 or other entities the liability, obligation, asset, or right
17-62 associated with the proceeding is allocated to and vested in under
17-63 the plan of merger may be substituted in the proceeding;
17-64 (5) the articles of organization and regulations of
17-65 each surviving domestic limited liability company and the
17-66 organizational documents and other constituent documents of each
17-67 surviving foreign limited liability company and other entity shall
17-68 be amended to the extent provided in the plan of merger;
17-69 (6) each new domestic limited liability company, the
17-70 articles of organization of which are included in the plan of
18-1 merger under Article 10.02 of this Act, shall be formed as a
18-2 limited liability company under this Act, and each other entity to
18-3 be formed or organized under the laws of this state, the
18-4 organizational documents of which are included in the plan of
18-5 merger, on an executed copy of the certificate of merger being
18-6 delivered to or filed with any required governmental entity with
18-7 which organizational documents of the other entity are required to
18-8 be delivered or filed and on meeting additional requirements, if
18-9 any, of law for its formation or organization, shall be formed or
18-10 organized as provided in the plan of merger;
18-11 (7) the limited liability company interests of each
18-12 domestic or foreign limited liability company and the interests,
18-13 shares, or evidences of ownership in each other entity that is a
18-14 party to the merger that are to be converted or exchanged, in whole
18-15 or in part, into limited liability company interests, shares,
18-16 obligations, evidences of ownership, rights to purchase securities,
18-17 or other securities of one or more of the surviving or new domestic
18-18 or foreign limited liability companies or other entities, into cash
18-19 or other property, including shares, obligations, evidences of
18-20 ownership, rights to purchase securities, or other securities of
18-21 any other person or entity, or into a combination of those items,
18-22 shall be so converted and exchanged, and the former members of each
18-23 domestic limited liability company that is a party to the merger
18-24 shall be entitled only to the rights provided in the plan of
18-25 merger; and
18-26 (8) if the plan of merger does not provide for the
18-27 allocation and vesting of the right, title, and interest in a
18-28 particular item of real estate or other property or for the
18-29 allocation of a liability or obligation of a party to the merger,
18-30 the item of real estate or other property shall be owned in
18-31 undivided interests by, or the liability or obligation shall be a
18-32 joint and several liability and obligation of, each of the
18-33 surviving and new domestic and foreign limited liability companies
18-34 and other entities, pro rata to the total number of surviving and
18-35 new domestic and foreign limited liability companies and other
18-36 entities resulting from the merger.
18-37 Art. 10.05. MERGER INVOLVING SUBSIDIARY ENTITIES.
18-38 A. (1) This article applies to a merger if:
18-39 (a) at least 90 per cent of the outstanding
18-40 membership interests, shares of stock, or other ownership interests
18-41 of one or more domestic or foreign limited liability companies or
18-42 other entities is owned by another domestic or foreign limited
18-43 liability company or other entity;
18-44 (b) at least one of the parent or subsidiary
18-45 entities is a domestic limited liability company; and
18-46 (c) for each parent or subsidiary entity that is
18-47 not a domestic limited liability company:
18-48 (i) the merger of the entity with or into
18-49 a domestic limited liability company is permitted by the laws under
18-50 which that entity is formed or organized or by the organizational
18-51 documents or other constituent documents of the entity that are not
18-52 inconsistent with those laws; and
18-53 (ii) the entity complies with those laws
18-54 or documents in effectuating the merger.
18-55 (2) A parent entity described in Subsection (1) of
18-56 this Section having at least 90 percent ownership may:
18-57 (a) merge the other entity or entities into
18-58 itself;
18-59 (b) merge itself into the other entity or
18-60 entities; or
18-61 (c) merge any one or more of the entities,
18-62 including itself, into one or more of the other entities.
18-63 (3) If the parent entity having at least 90 percent
18-64 ownership is a surviving entity in the merger, the parent entity
18-65 must execute and file articles of merger as provided by Section B
18-66 of this Article. If the parent entity having at least 90 percent
18-67 ownership is not a surviving entity in the merger, the parent
18-68 entity must:
18-69 (a) adopt a plan of merger in the manner
18-70 required by Article 10.01 of this Act, except that an action under
19-1 Article 10.01 is not required by the entity or entities whose
19-2 membership interests, shares of stock, or other ownership interests
19-3 are so owned; and
19-4 (b) execute and file articles of merger as
19-5 provided by Section B of this Article.
19-6 B. The articles of merger must be signed on behalf of the
19-7 parent entity by a member, manager, officer, or other agent or
19-8 representative authorized by (i) the organizational or other
19-9 constituent documents of the parent entity, or (ii) resolutions
19-10 adopted by the parent entity in accordance with the laws of its
19-11 jurisdiction of organization or formation and the documents. The
19-12 articles of merger must include:
19-13 (1) the name of the parent entity and the name of each
19-14 respective subsidiary entity;
19-15 (2) for each entity listed in Subsection (1) of this
19-16 Section, the type of entity and the respective jurisdiction under
19-17 which the entity is formed or organized;
19-18 (3) the total number or percentage of membership
19-19 interests, shares, or other ownership interests in each subsidiary
19-20 entity, identified by class, series, or group, and the number or
19-21 percentage of membership interests, shares, or other ownership
19-22 interests in each class, series, or group owned by the parent
19-23 entity;
19-24 (4) a copy of the resolution of merger adopted by the
19-25 parent entity in accordance with the laws of its jurisdiction of
19-26 organization or formation and its organizational or other
19-27 constituent documents, together with a statement that the
19-28 resolution was so adopted and the date of adoption;
19-29 (5) if the parent entity does not own all of the
19-30 outstanding membership interest, shares, or other ownership
19-31 interests of each subsidiary entity party to the merger, the
19-32 resolution described in Subsection (4) of this Section must state
19-33 the terms and conditions of the merger, including the securities,
19-34 cash, or other property to be used, paid, or delivered by the
19-35 surviving corporation on surrender of each membership interest,
19-36 share, or other ownership interest of the subsidiary entity or
19-37 entities not owned by the parent entity;
19-38 (6) if the surviving entity is a foreign limited
19-39 liability company or other entity, the address, including street
19-40 number, if any, of its registered or principal office in the
19-41 jurisdiction under whose laws it is governed; and
19-42 (7) if a plan of merger is required by Section A of
19-43 this Article to be adopted in the manner required by Article 10.01
19-44 of this Act, the information required by Section A of Article 10.03
19-45 of this Act.
19-46 C. The articles of merger shall be filed as provided by
19-47 Section B of Article 10.03 of this Act, become effective as
19-48 provided by Section C of Article 10.03 of this Act, and have the
19-49 effect stated in Article 10.04 of this Act.
19-50 Art. 10.06. INTEREST EXCHANGE. A. One or more domestic or
19-51 foreign limited liability companies or other entities may adopt a
19-52 plan of exchange by which an entity acquires all of the outstanding
19-53 limited liability company interests of one or more domestic limited
19-54 liability companies or all of the outstanding interests, stock,
19-55 partnership interests, or other ownership interests in one or more
19-56 other entities in exchange for cash or securities of the acquiring
19-57 entity if:
19-58 (1) each domestic limited liability company, the
19-59 interests of which are to be acquired under the plan of exchange,
19-60 approves the plan of exchange by majority vote or consent of its
19-61 members or in a manner prescribed in its regulations; and
19-62 (2) each acquiring domestic or foreign limited
19-63 liability company or other entity takes all action that may be
19-64 required by the laws of the state or country under which it was
19-65 formed and as required by its constituent documents to effect the
19-66 exchange.
19-67 B. A filing with the Secretary of State is not necessary to
19-68 evidence or effect the interest exchange with respect to a domestic
19-69 limited liability company that is a party to the interest exchange.
19-70 When an interest exchange takes effect as provided in the plan of
20-1 exchange:
20-2 (1) the limited liability company interests of each
20-3 domestic limited liability company that are to be acquired under
20-4 the plan of exchange are considered exchanged as provided in the
20-5 plan of exchange;
20-6 (2) the former holders of the limited liability
20-7 company interests exchanged under the plan of exchange are entitled
20-8 only to the exchange rights provided in the plan of exchange; and
20-9 (3) the acquiring domestic or foreign limited
20-10 liability company or other entity or entities are entitled to all
20-11 rights, title, and interests with respect to the interests so
20-12 acquired and exchanged, subject to the provisions in the plan of
20-13 exchange.
20-14 Art. 10.07. DEFINITION OF "OTHER ENTITY." A. For purposes
20-15 of this Part, "other entity" means any entity, whether organized
20-16 for profit or not, that is a corporation, limited partnership,
20-17 general partnership, joint venture, joint stock company,
20-18 cooperative, association, bank, insurance company, or other legal
20-19 entity organized under the laws of this state or any other state or
20-20 country to the extent the laws or the constituent documents of that
20-21 entity, not inconsistent with law, permit that entity to enter into
20-22 a merger or interest exchange as permitted by this Part.
20-23 PART ELEVEN
20-24 Art. 11.01. PROFESSIONAL LIMITED LIABILITY COMPANIES
20-25 AUTHORIZED; DEFINITIONS. A. (1) One or more persons may organize
20-26 a professional limited liability company by filing articles of
20-27 organization with the Secretary of State in accordance with Part
20-28 Three of this Act. In addition to other provisions required or
20-29 permitted by law, the articles of organization of a professional
20-30 limited liability company must include a statement:
20-31 (a) that the limited liability company is a
20-32 professional limited liability company; and
20-33 (b) describing the one specific kind of
20-34 professional service to be rendered by the limited liability
20-35 company.
20-36 (2) A professional limited liability company may be
20-37 organized under this Act only for the purpose of rendering one
20-38 specific type of professional service and ancillary services. A
20-39 professional limited liability company organized under this Act may
20-40 not render more than one kind of professional service.
20-41 B. In this Act:
20-42 (1) "Professional service" means any type of personal
20-43 service that requires as a condition precedent to the rendering of
20-44 the service the obtaining of a license, permit, certificate of
20-45 registration, or other legal authorization, including the personal
20-46 service rendered by an architect, attorney-at-law, certified public
20-47 accountant, dentist, doctor, physician, public accountant, surgeon,
20-48 or veterinarian.
20-49 (2) "Professional limited liability company" means a
20-50 limited liability company that is organized under this Act for the
20-51 sole and specific purpose of rendering professional service and
20-52 that has as its members only individuals licensed or otherwise
20-53 authorized within this state to render the same professional
20-54 service as the limited liability company.
20-55 Art. 11.02. NAME. A. A professional limited liability
20-56 company may adopt a name not contrary to the law or ethics
20-57 regulating the practice of the professional service rendered
20-58 through the professional limited liability company. The name of
20-59 the limited liability company must contain the words "Professional
20-60 Limited Liability Company" or the abbreviations "P.L.L.C." or
20-61 "PLLC" and must contain other words as may be required by law. A
20-62 limited liability company formed before September 1, 1993, that
20-63 complied with Section A of Article 2.03 of this Act or with Section
20-64 A of Article 7.03 of this Act on the date of formation, but does
20-65 not comply with this Article, is not required to change its name.
20-66 Art. 11.03. RESTRICTIONS ON MEMBERS, MANAGERS, AND OFFICERS.
20-67 A. A person who is not licensed or otherwise authorized to render
20-68 the professional service of the professional limited liability
20-69 company may not be a member, manager, or officer of the
20-70 professional limited liability company. A membership interest in
21-1 the professional limited liability company may not be transferred
21-2 to a person who is not licensed or otherwise authorized to render
21-3 the professional service of the professional limited liability
21-4 company.
21-5 B. If a member, manager, or officer of a professional
21-6 limited liability company, or an agent or employee of the company
21-7 who has been rendering professional service for or with the company
21-8 of the same type for which the professional limited liability
21-9 company was organized to render, becomes legally disqualified to
21-10 render the professional service, the person shall sever all
21-11 employment with the professional limited liability company and
21-12 immediately terminate all financial interest in the company. The
21-13 professional limited liability company shall purchase or cause to
21-14 be purchased from the person all membership interests owned by the
21-15 person in the professional limited liability company, at a price
21-16 and on terms as may be provided in the articles of organization,
21-17 the regulations, or any applicable agreement among the members and
21-18 the professional limited liability company. If the person is the
21-19 sole member of the professional limited liability company, the
21-20 person may continue to act as member, manager, or officer only for
21-21 the purposes of winding up the affairs of the professional limited
21-22 liability company and effecting its dissolution, including selling
21-23 the assets of or outstanding membership interests in the
21-24 professional limited liability company, but not including rendering
21-25 professional service.
21-26 C. If a person who is not licensed or authorized to render
21-27 the professional service that a professional limited liability
21-28 company was organized to render succeeds to the interest of a
21-29 member of the professional limited liability company, the person
21-30 holding the interest shall immediately terminate all financial
21-31 interest in the professional limited liability company, and the
21-32 professional limited liability company shall purchase or cause to
21-33 be purchased from the person all membership interests owned by the
21-34 person in the professional limited liability company, at a price
21-35 and on terms as may be provided in the articles of organization,
21-36 the regulations, or any applicable agreement among the members and
21-37 the professional limited liability company. If the person
21-38 succeeded to all of the membership interests in the professional
21-39 limited liability company, the person may continue to act as
21-40 member, manager, or officer only for the purposes of winding up the
21-41 affairs of the professional limited liability company and effecting
21-42 its dissolution, including selling the assets of or the outstanding
21-43 membership interests in the professional limited liability company,
21-44 but not including rendering professional service.
21-45 Art. 11.04. RENDERING OF PROFESSIONAL SERVICES. A. A
21-46 professional limited liability company may render professional
21-47 service in this state only through:
21-48 (1) an individual member, manager, officer, employee,
21-49 or agent who is licensed to render the professional service in this
21-50 state; or
21-51 (2) an agent of the professional limited liability
21-52 company that is a professional limited liability company,
21-53 professional corporation, or professional association that is
21-54 authorized in this state to render the professional service of the
21-55 professional limited liability company and that renders the
21-56 professional service only through a licensed individual member,
21-57 manager, officer, or employee.
21-58 B. This Article does not prohibit employment by a
21-59 professional limited liability company of clerks, secretaries,
21-60 bookkeepers, technicians, nurses, assistants, and other individuals
21-61 who are not usually and ordinarily considered by custom and
21-62 practice to be rendering professional service for which a license
21-63 or other legal authorization is required. A person may not, under
21-64 the guise of employment, practice a profession in this state unless
21-65 licensed or otherwise legally authorized to practice that
21-66 profession under the laws of this state.
21-67 Art. 11.05. PROFESSIONAL RELATIONSHIPS NOT AFFECTED. A.
21-68 Notwithstanding anything contained in Article 4.03 of this Act to
21-69 the contrary, this Act does not alter or affect the professional
21-70 relationship between a person rendering professional service and a
22-1 person receiving the service, and a confidential relationship
22-2 enjoyed in this state between those persons remains unchanged.
22-3 This Act does not remove or diminish any rights at law that a
22-4 person receiving professional service has against a person
22-5 rendering the service for an error, an omission, negligence,
22-6 incompetence, or malfeasance. A limited liability company, but not
22-7 the other individual members, managers, or officers, is jointly and
22-8 severally liable with a member, manager, officer, employee, or
22-9 agent rendering professional service for an error, omission,
22-10 negligence, incompetence, or malfeasance on the part of the member,
22-11 manager, officer, employee, or agent when the member, manager,
22-12 officer, employee, or agent is rendering professional service in
22-13 the course of employment for the limited liability company.
22-14 Art. 11.06. EXEMPTION FROM SECURITIES LAWS. A. The sale,
22-15 issuance, or offering of membership interests of a professional
22-16 limited liability company to persons permitted by this Part to own
22-17 the membership interests is exempt from all laws of this state,
22-18 other than this Act, that provide for supervision, registration, or
22-19 regulation in connection with the sale, issuance, or offering of
22-20 securities. The sale, issuance, or offering of membership
22-21 interests to those persons is legal without any action or approval
22-22 on the part of any official or state regulatory agency authorized
22-23 to license, regulate, or supervise the sale, issuance, or offering
22-24 of securities.
22-25 Art. 11.07. FOREIGN PROFESSIONAL LIMITED LIABILITY
22-26 COMPANIES. A. A foreign professional limited liability company
22-27 may apply for a certificate of authority to perform professional
22-28 service in this state by filing an application in accordance with
22-29 Part Seven of this Act. The Secretary of State may not issue the
22-30 certificate unless the name of the limited liability company or the
22-31 name the limited liability company elects in this state meets the
22-32 requirements of Article 11.02 of this Act. A member, manager,
22-33 officer, employee, or agent of the limited liability company who
22-34 renders professional service in this state on behalf of the limited
22-35 liability company must be licensed or otherwise authorized to
22-36 render that professional service in this state.
22-37 B. A certificate may not be issued to a limited liability
22-38 company under this Article unless the application for the
22-39 certificate includes a statement that the jurisdiction in which the
22-40 limited liability company is organized would permit reciprocal
22-41 admission of the limited liability company if it were organized in
22-42 this state.
22-43 SECTION 1.29. Section 36.02, Business & Commerce Code, is
22-44 amended to read as follows:
22-45 Sec. 36.02. DEFINITIONS. In this chapter, unless the
22-46 context otherwise requires:
22-47 (1) "Partnership" means a joint venture or<,> general
22-48 partnership other than a limited partnership or a registered
22-49 limited liability<, or limited> partnership.
22-50 (2) "Company" means a real estate investment trust,
22-51 joint-stock company, or any other business, professional, or other
22-52 association or legal entity that is not incorporated other than a
22-53 partnership, limited partnership, limited liability company, or
22-54 registered limited liability partnership.
22-55 (3) "Corporation" means a domestic or foreign
22-56 corporation, professional corporation, professional association,
22-57 other corporation, or any other business, professional, or other
22-58 association or legal entity that is incorporated.
22-59 (4) "Person" includes an individual, partnership,
22-60 limited partnership, limited liability company, registered limited
22-61 liability partnership, company, or corporation.
22-62 (5) "Representative" means a trustee, administrator,
22-63 executor, independent executor, guardian, conservator, trustee in
22-64 bankruptcy, receiver, or any other person appointed by a court or
22-65 by trust or will to have custody of, take possession of, have title
22-66 to, or otherwise be empowered to control the person or property of
22-67 any person.
22-68 (6) "Estate" means the property of any person which is
22-69 administered by a representative.
22-70 (7) "Assumed name" means:
23-1 (A) in the case of an individual, a name that
23-2 does not include the surname of the individual;
23-3 (B) in the case of a <joint venture or general>
23-4 partnership, a name that does not include the surname or other
23-5 legal name of each joint venturer or general partner;
23-6 (C) in the case of an individual<, joint
23-7 venture,> or a <general> partnership, a name, including a surname,
23-8 that suggests the existence of additional owners by including words
23-9 such as "Company," "& Company," "& Son," "& Sons," "& Associates,"
23-10 "Brothers," and the like, but not words that merely describe the
23-11 business or professional service being conducted or rendered;
23-12 (D) in the case of a limited partnership, any
23-13 name other than the name stated in its certificate of limited
23-14 partnership;
23-15 (E) in the case of a company, any name used by
23-16 the company; <and>
23-17 (F) in the case of a corporation, any name other
23-18 than the name stated in its articles of incorporation or
23-19 association or comparable document;
23-20 (G) in the case of a registered limited
23-21 liability partnership, any name other than the name stated in its
23-22 application filed with the office of the Secretary of State or
23-23 comparable document; and
23-24 (H) in the case of a limited liability company,
23-25 any name other than the name stated in its articles of organization
23-26 or comparable document.
23-27 (8) "Registrant" means any person that has filed, or
23-28 on whose behalf there has been filed, an assumed name certificate
23-29 under the provisions of this chapter or other law.
23-30 (9) "Office" means, in the case of any person that is
23-31 not an individual or that is a corporation which is not required to
23-32 or does not maintain a registered office in this state, the
23-33 principal office of such person and also its principal place of
23-34 business if not the same as its principal office. In the case of a
23-35 corporation, limited partnership, registered limited liability
23-36 partnership, or limited liability company which is required to
23-37 maintain a registered office in this state, "office" means the
23-38 registered office and also its principal office if not the same as
23-39 its registered office.
23-40 (10) "Address" means a post office address and also
23-41 the street address if not the same as the post office address.
23-42 SECTION 1.30. Section 36.10, Business & Commerce Code, is
23-43 amended by amending the section heading and Subsection (a) to read
23-44 as follows:
23-45 Sec. 36.10. FOR UNINCORPORATED BUSINESS OR PROFESSION OTHER
23-46 THAN A LIMITED PARTNERSHIP, REGISTERED LIMITED LIABILITY
23-47 PARTNERSHIP, OR LIMITED LIABILITY COMPANY. (a) Any person who
23-48 regularly conducts business or renders professional services other
23-49 than as a corporation, limited partnership, registered limited
23-50 liability partnership, or limited liability company in this state
23-51 under an assumed name shall file in the office of the county clerk
23-52 in each county in which such person has or will maintain business
23-53 or professional premises or, if no business or professional
23-54 premises are or will be maintained in any county, in each county
23-55 where such person conducts business or renders a professional
23-56 service, a certificate setting forth:
23-57 (1) the assumed name under which such business or
23-58 professional service is or is to be conducted or rendered;
23-59 (2) if the registrant is:
23-60 (A) an individual, his full name and residence
23-61 address;
23-62 (B) a partnership, (i) the venture or
23-63 partnership name, (ii) the venture or partnership office address,
23-64 and (iii) the full name of each joint venturer or general partner
23-65 and his residence address if he is an individual or its office
23-66 address if not an individual;
23-67 (C) an estate, (i) the name of the estate, (ii)
23-68 the estate's office address, if any, and (iii) the full name of
23-69 each representative of the estate and his residence address if he
23-70 is an individual or its office address if not an individual;
24-1 (D) a real estate investment trust, (i) the name
24-2 of the trust, (ii) the address of the trust, (iii) the full name of
24-3 each trustee manager and his residence address if he is an
24-4 individual and its office address if not an individual; or
24-5 (E) a company other than a real estate
24-6 investment trust, or a corporation, (i) the name of the company or
24-7 corporation, (ii) the state, country, or other jurisdiction under
24-8 the laws of which it was organized, incorporated, or associated,
24-9 and (iii) its office address;
24-10 (3) the period, not to exceed 10 years, during which
24-11 the assumed name will be used; and
24-12 (4) a statement specifying that the business or
24-13 professional service that is or is to be conducted or rendered in
24-14 the county under such assumed name is being or will be conducted or
24-15 rendered as a proprietorship, sole practitioner, <joint venture,
24-16 general> partnership, <limited partnership,> real estate investment
24-17 trust, joint-stock company, or some other form of unincorporated
24-18 business or professional association or entity, other than a
24-19 limited partnership, limited liability company, or registered
24-20 limited liability partnership, as the case may be.
24-21 SECTION 1.31. Section 36.11, Business & Commerce Code, is
24-22 amended to read as follows:
24-23 Sec. 36.11. FOR INCORPORATED BUSINESS OR PROFESSION, LIMITED
24-24 PARTNERSHIP, REGISTERED LIMITED LIABILITY PARTNERSHIP, OR LIMITED
24-25 LIABILITY COMPANY. (a) Any corporation, limited partnership,
24-26 registered limited liability partnership, or limited liability
24-27 company which regularly conducts business or renders professional
24-28 services in this state under an assumed name, or which may be
24-29 required by law to use an assumed name in this state to conduct
24-30 such business or render such services, shall file in the office of
24-31 the Secretary of State and, (1) if such corporation, limited
24-32 partnership, registered limited liability partnership, or limited
24-33 liability company is required to maintain a registered office in
24-34 this state, in the office of the county clerk of the county in
24-35 which such registered office is located and of the county in which
24-36 its principal office is located if within this state and not the
24-37 same county where the registered office is located; or (2) if such
24-38 corporation, limited partnership, registered limited liability
24-39 partnership, or limited liability company is not required to or
24-40 does not maintain a registered office in this state, in the office
24-41 of the county clerk of the county in which its office within this
24-42 state is located or if the corporation, limited partnership,
24-43 registered limited liability partnership, or limited liability
24-44 company is not incorporated, organized, or associated under the
24-45 laws of this state, in the office of the county clerk of the county
24-46 in which its principal place of business in this state is located
24-47 if not the same as its office, a certificate setting forth:
24-48 (1) the assumed name under which such business or
24-49 professional service is or is to be conducted or rendered;
24-50 (2) the name of the corporation, limited partnership,
24-51 registered limited liability partnership, or limited liability
24-52 company as stated in its articles of incorporation, <or>
24-53 association, or organization or in its certificate of limited
24-54 partnership or application filed with the office of the Secretary
24-55 of State, or other comparable document;
24-56 (3) the state, country, or other jurisdiction under
24-57 the laws of which it was incorporated, organized, or associated and
24-58 address of its registered or similar office in that state, country,
24-59 or jurisdiction;
24-60 (4) the period, not to exceed 10 years, during which
24-61 the assumed name will be used;
24-62 (5) a statement specifying that the entity
24-63 <corporation> is a business corporation, nonprofit corporation,
24-64 professional corporation, professional association, or other type
24-65 of corporation, limited partnership, registered limited liability
24-66 partnership, limited liability company, or some other type of
24-67 incorporated business, professional or other association, or legal
24-68 entity;
24-69 (6) if the corporation, limited partnership,
24-70 registered limited liability partnership, or limited liability
25-1 company is required to maintain a registered office in this state,
25-2 (A) the address of such registered office and the name of its
25-3 registered agent at such address, and (B) the address of its
25-4 principal office if not the same as that of its registered office
25-5 in this state;
25-6 (7) if the corporation, limited partnership,
25-7 registered limited liability partnership, or limited liability
25-8 company is not required to or does not maintain a registered office
25-9 in this state, its office address in this state and if the
25-10 corporation, limited partnership, registered limited liability
25-11 partnership, or limited liability company is not incorporated,
25-12 organized, or associated under the laws of this state, the address
25-13 of its place of business in this state and its office address
25-14 elsewhere, if any; and
25-15 (8) the county or counties within the state where
25-16 business or professional services are being or are to be conducted
25-17 or rendered under such assumed name.
25-18 (b) A certificate filed under Subsection (a) of this section
25-19 shall be executed and duly acknowledged by an officer, general
25-20 partner, member, manager, representative, or attorney in fact for
25-21 the corporation, limited partnership, registered limited liability
25-22 partnership, or limited liability company. A certificate executed
25-23 and acknowledged by an attorney in fact shall include a statement
25-24 that the attorney in fact has been duly authorized in writing by
25-25 his principal to execute and acknowledge the same.
25-26 (c) Nothing in this chapter shall require a corporation,
25-27 limited partnership, registered limited liability partnership, or
25-28 limited liability company or its shareholders, associates,
25-29 partners, or members to file an assumed business or professional
25-30 name certificate in order to conduct business or render a
25-31 professional service within this state under the name of the
25-32 corporation, limited partnership, registered limited liability
25-33 partnership, or limited liability company as stated in its articles
25-34 of incorporation, association, or organization, certificate of
25-35 limited partnership, application filed with the office of the
25-36 Secretary of State, or other comparable document.
25-37 (d) Notwithstanding Subsections (a)-(c) of this section, a
25-38 limited partnership, registered limited liability partnership, or
25-39 limited liability company that filed a certificate in compliance
25-40 with Section 36.10 of this chapter before September 1, 1993, is not
25-41 required to file a new certificate that complies with this section
25-42 until the earlier of:
25-43 (1) the expiration of the period specified in the
25-44 existing certificate during which the assumed name will be used; or
25-45 (2) a material change occurs in the information set
25-46 forth in the existing certificate.
25-47 SECTION 1.32. The following articles or sections of the
25-48 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
25-49 Civil Statutes) are repealed:
25-50 (1) Article 2.10;
25-51 (2) Article 2.16; and
25-52 (3) Sections B, C, and D, Article 4.02.
25-53 ARTICLE 2. BUSINESS CORPORATIONS; PROFESSIONAL ASSOCIATIONS
25-54 SECTION 2.01. Article 1.02, Texas Business Corporation Act,
25-55 is amended by amending Section A and adding Section C to read as
25-56 follows:
25-57 A. As used in this Act, unless the context otherwise
25-58 requires, the term:
25-59 (1) "Articles of incorporation" means the original or
25-60 restated articles of incorporation and all amendments thereto.
25-61 (2) "Authorized shares" means the shares of all
25-62 classes which the corporation is authorized to issue.
25-63 (3) "Cancel" means to restore issued shares to the
25-64 status of authorized but unissued shares.
25-65 (4) "Certificated shares" means shares represented by
25-66 instruments in bearer or registered form.
25-67 (5) "Conspicuous" or "conspicuously," when prescribed
25-68 for information appearing on a certificate for shares or other
25-69 securities, means the location of such information or use of type
25-70 of sufficient size, color, or character that a reasonable person
26-1 against whom such information may operate should notice it. For
26-2 example, a printed or typed statement in capitals, or boldface or
26-3 underlined type, or in type that is larger than or that contrasts
26-4 in color with that used for other statements on the same
26-5 certificate, is "conspicuous."
26-6 (6) "Consuming assets corporation" means a corporation
26-7 which is engaged in the business of exploiting assets subject to
26-8 depletion or amortization and which elects to state in its articles
26-9 of incorporation that it is a consuming assets corporation and
26-10 includes as a part of its official corporate name the phrase "a
26-11 consuming assets corporation," giving such phrase equal prominence
26-12 with the rest of the corporate name on its financial statements and
26-13 certificates representing shares. All its certificates
26-14 representing shares shall also contain a further sentence: "This
26-15 corporation is permitted by law to pay dividends out of reserves
26-16 which may impair its stated capital."
26-17 (7) "Corporation" or "domestic corporation" means a
26-18 corporation for profit subject to the provisions of this Act,
26-19 except a foreign corporation.
26-20 (8) "Distribution" means a transfer of money or other
26-21 property (except its own shares or rights to acquire its own
26-22 shares), or issuance of indebtedness, by a corporation to its
26-23 shareholders in the form of:
26-24 (a) a dividend on any class or series of the
26-25 corporation's outstanding shares;
26-26 (b) a purchase, <or> redemption, or other
26-27 acquisition by the corporation, directly or indirectly, of any of
26-28 its own shares; or
26-29 (c) a payment by the corporation in liquidation
26-30 of all or a portion of its assets.
26-31 (9) "Foreign corporation" means a corporation for
26-32 profit organized under laws other than the laws of this State.
26-33 (10) "Insolvency" means inability of a corporation to
26-34 pay its debts as they become due in the usual course of its
26-35 business.
26-36 (11) "Investment Company Act" means the Investment
26-37 Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.);
26-38 (12) "Merger" means (a) the division of a domestic
26-39 corporation into two or more new domestic corporations or into a
26-40 surviving corporation and one or more new domestic or foreign
26-41 corporations or other entities, or (b) the combination of one or
26-42 more domestic corporations with one or more domestic or foreign
26-43 corporations or other entities resulting in (i) one or more
26-44 surviving domestic or foreign corporations or other entities, (ii)
26-45 the creation of one or more new domestic or foreign corporations or
26-46 other entities, or (iii) one or more surviving domestic or foreign
26-47 corporations or other entities and the creation of one or more new
26-48 domestic or foreign corporations or other entities.
26-49 (13) <(12)> "Net assets" means the amount by which the
26-50 total assets of a corporation exceed the total debts of the
26-51 corporation.
26-52 (14) <(13)> "Other entity" means any entity, whether
26-53 organized for profit or not, that is a corporation (other than a
26-54 domestic or foreign corporation), limited or general partnership,
26-55 joint venture, joint stock company, cooperative, association, bank,
26-56 insurance company or other legal entity organized pursuant to the
26-57 laws of this state or any other state or country to the extent such
26-58 laws or the constituent documents of that entity, not inconsistent
26-59 with such laws, permit that entity to enter into a merger or share
26-60 exchange as permitted by Article 5.03 of this Act.
26-61 (15) <(14)> "Share dividend" means a dividend by a
26-62 corporation that is payable in its own authorized but unissued
26-63 shares or in treasury shares.
26-64 (16) <(15)> "Shareholder" or "holder of shares" means
26-65 the person in whose name shares issued by a corporation are
26-66 registered at the relevant time in the share transfer records
26-67 maintained by the corporation pursuant to Article 2.44 of this Act.
26-68 (17) <(16)> "Shares" means the units into which the
26-69 proprietary interests in a corporation are divided, whether
26-70 certificated or uncertificated shares.
27-1 (18) <(17)> "Stated capital" means, at any particular
27-2 time, the sum of:
27-3 (a) the par value of all shares of the
27-4 corporation having a par value that have been issued;
27-5 (b) the consideration fixed by the corporation
27-6 in the manner provided by Article 2.15 of this Act for all shares
27-7 of the corporation without par value that have been issued, except
27-8 such part of the consideration that is actually received therefor
27-9 (which part must be less than all of that consideration) that the
27-10 board by resolution adopted no later than sixty (60) days after the
27-11 issuance of those shares may have allocated to surplus; and
27-12 (c) such amounts not included in paragraphs (a)
27-13 and (b) of this subsection as have been transferred to stated
27-14 capital of the corporation, whether upon the payment of a share
27-15 dividend or upon adoption by the board of directors of a resolution
27-16 directing that all or part of surplus be transferred to stated
27-17 capital, minus all reductions from such sum as have been effected
27-18 in a manner permitted by law.
27-19 (19) <(18)> "Subscriber" means the offeror in a
27-20 subscription.
27-21 (20) <(19)> "Subscription" means a memorandum in
27-22 writing, executed before or after incorporation, wherein an offer
27-23 is made to purchase and pay for a specified number of theretofore
27-24 unissued shares of a corporation.
27-25 (21) <(20)> "Surplus" means the excess of the net
27-26 assets of a corporation over its stated capital.
27-27 (22) <(21)> "Treasury shares" means shares of a
27-28 corporation which have been issued, have been subsequently acquired
27-29 by and belong to the corporation, and have not been canceled and
27-30 restored to the status of authorized but unissued shares. Treasury
27-31 shares shall be deemed to be "issued" shares but not "outstanding"
27-32 shares, and shall not be included in the total assets of a
27-33 corporation for purposes of determining its "net assets."
27-34 (23) <(22)> "Uncertificated shares" means shares not
27-35 represented by instruments and the transfers of which are
27-36 registered upon books maintained for that purpose by or on behalf
27-37 of the issuing corporation.
27-38 C. A reference in this Act to another statute is a reference
27-39 to that statute as amended.
27-40 SECTION 2.02. Section A, Article 2.02, Texas Business
27-41 Corporation Act, is amended to read as follows:
27-42 A. Subject to the provisions of Sections B and C of this
27-43 Article, each corporation shall have power:
27-44 (1) To have perpetual succession by its corporate name
27-45 unless a limited period of duration is stated in its articles of
27-46 incorporation. Notwithstanding the articles of incorporation, the
27-47 period of duration for any corporation incorporated before
27-48 September 6, 1955, is perpetual if all fees and franchise taxes
27-49 have been paid as provided by law.
27-50 (2) To sue and be sued, complain and defend, in its
27-51 corporate name.
27-52 (3) To have a corporate seal which may be altered at
27-53 pleasure, and to use the same by causing it, or a facsimile
27-54 thereof, to be impressed on, affixed to, or in any manner
27-55 reproduced upon, instruments of any nature required to be executed
27-56 by its proper officers.
27-57 (4) To purchase, receive, lease, or otherwise acquire,
27-58 own, hold, improve, use and otherwise deal in and with, real or
27-59 personal property, or any interest therein, wherever situated, as
27-60 the purposes of the corporation shall require.
27-61 (5) To sell, convey, mortgage, pledge, lease,
27-62 exchange, transfer and otherwise dispose of all or any part of its
27-63 property and assets.
27-64 (6) To lend money to, and otherwise assist, its
27-65 employees, officers, and directors if such a loan or assistance
27-66 reasonably may be expected to benefit, directly or indirectly, the
27-67 lending or assisting corporation.
27-68 (7) To purchase, receive, subscribe for, or otherwise
27-69 acquire, own, hold, vote, use, employ, mortgage, lend, pledge, sell
27-70 or otherwise dispose of, and otherwise use and deal in and with,
28-1 shares or other interests in, or obligations of, other domestic or
28-2 foreign corporations, associations, partnerships, or individuals,
28-3 or direct or indirect obligations of the United States or of any
28-4 other government, state, territory, government district, or
28-5 municipality, or of any instrumentality thereof.
28-6 (8) To purchase or otherwise acquire its own bonds,
28-7 debentures, or other evidences of its indebtedness or obligations;
28-8 to purchase or otherwise acquire its own unredeemable shares and
28-9 hold those acquired shares as treasury shares or cancel or
28-10 otherwise dispose of those acquired shares; and to redeem or
28-11 purchase shares made redeemable by the provisions of its articles
28-12 of incorporation.
28-13 (9) To make contracts and incur liabilities, borrow
28-14 money at such rates of interest as the corporation may determine,
28-15 issue its notes, bonds, and other obligations, and secure any of
28-16 its obligations by mortgage or pledge of all or any of its
28-17 property, franchises, and income.
28-18 (10) To lend money for its corporate purposes, invest
28-19 and reinvest its funds, and take and hold real and personal
28-20 property as security for the payment of funds so loaned or
28-21 invested.
28-22 (11) To conduct its business, carry on its operations,
28-23 and have offices and exercise the powers granted by this Act,
28-24 within or without this State.
28-25 (12) To elect or appoint officers and agents of the
28-26 corporation for such period of time as the corporation may
28-27 determine, and define their duties and fix their compensation.
28-28 (13) To make and alter bylaws, not inconsistent with
28-29 its articles of incorporation or with the laws of this State, for
28-30 the administration and regulation of the affairs of the
28-31 corporation.
28-32 (14) To make donations for the public welfare or for
28-33 charitable, scientific, or educational purposes.
28-34 (15) To transact any lawful business which the board
28-35 of directors shall find will be in aid of government policy.
28-36 (16) To indemnify directors, officers, employees, and
28-37 agents of the corporation and to purchase and maintain liability
28-38 insurance for those persons.
28-39 (17) To pay pensions and establish pension plans,
28-40 pension trusts, profit sharing plans, stock bonus plans, and other
28-41 incentive plans for any or all of, or any class<,> or classes of,
28-42 <its officers and employees, or> its directors, officers, or <its>
28-43 employees.
28-44 (18) To be an organizer, partner, member, associate,
28-45 or manager of any partnership, joint venture, or other enterprise,
28-46 and to the extent permitted in any other jurisdiction to be an
28-47 incorporator of any other corporation of any type or kind.
28-48 (19) To cease its corporate activities and terminate
28-49 its existence by voluntary dissolution.
28-50 (20) Whether included in the foregoing or not, to have
28-51 and exercise all powers necessary or appropriate to effect any or
28-52 all of the purposes for which the corporation is organized.
28-53 SECTION 2.03. Section B, Article 2.05, Texas Business
28-54 Corporation Act, is amended to read as follows:
28-55 B. Any domestic or foreign corporation having authority to
28-56 transact business in this State<,> may do so under an assumed
28-57 name<,> by filing an assumed name certificate in the manner
28-58 prescribed by law. The assumed name may, but is not required to,
28-59 comply with the requirements of Section A(1) of this Article.
28-60 SECTION 2.04. Article 2.12, Texas Business Corporation Act,
28-61 is amended by amending Section A and adding Section C to read as
28-62 follows:
28-63 A. Each corporation may issue the number of shares stated in
28-64 its articles of incorporation. Such shares may be divided into one
28-65 or more classes, any or all of which classes may consist of shares
28-66 with par value or shares without par value, as shall be stated in
28-67 the articles of incorporation. Any such class of shares may be
28-68 divided into one or more series, as shall be stated in the articles
28-69 of incorporation. All shares of the same class shall be of the
28-70 same par value or be without par value. Unless the shares of a
29-1 class have been divided into series, all shares of the same class
29-2 shall be identical in all respects. If the shares of a class have
29-3 been divided into series, shares of the same class may vary between
29-4 series, but all shares of the same series shall be identical in all
29-5 respects. Any such class or series of shares shall be so
29-6 designated as to distinguish the shares of that class or series
29-7 from the shares of all other classes and series. Any such class or
29-8 series shall have such designations, preferences, limitations, and
29-9 relative rights, including voting rights, as shall be stated in the
29-10 articles of incorporation. The articles of incorporation may limit
29-11 or deny the voting rights of, or provide special voting rights for,
29-12 the shares of any class or series to the extent that such
29-13 limitation, denial, or provision is not inconsistent with the
29-14 provisions of this Act. Any of the designations, preferences,
29-15 limitations, and <or> relative rights, including voting rights, of
29-16 any class or series of shares may be made dependent upon facts
29-17 ascertainable outside the articles of incorporation, which facts
29-18 may include future acts of the corporation, provided that the
29-19 manner in which such facts shall operate upon the designations,
29-20 preferences, limitations, and relative rights, including voting
29-21 rights, of such class or series of shares is clearly and expressly
29-22 set forth in the articles of incorporation.
29-23 C. (1) The board of directors of a corporation registered
29-24 as an open-end company under the Investment Company Act may:
29-25 (a) establish classes of shares and series of
29-26 unissued shares of any class by fixing and determining the
29-27 designations, preferences, limitations, and relative rights,
29-28 including voting rights, of the shares of any class or series so
29-29 established to the same extent that the designations, preferences,
29-30 limitations, and relative rights could be stated if fully set forth
29-31 in the articles of incorporation; and
29-32 (b) increase or decrease the aggregate number of
29-33 shares or the number of shares of, or eliminate and remove from the
29-34 articles of incorporation, a class or series of shares that the
29-35 corporation has authority to issue, unless a provision has been
29-36 included in the articles of incorporation of the corporation after
29-37 September 1, 1993, expressly prohibiting those actions by the board
29-38 of directors. The board of directors may not:
29-39 (i) decrease the number of shares within a
29-40 class or series to less than the number of shares of that class or
29-41 series that are then outstanding; or
29-42 (ii) eliminate or remove from the articles
29-43 of incorporation any reference to any class or series of which
29-44 shares are then outstanding.
29-45 To establish a class or series, the board of directors shall
29-46 adopt a resolution setting forth the designation of the class or
29-47 series and fixing and determining the designations, preferences,
29-48 limitations, and relative rights, including voting rights, of the
29-49 class or series. In order to increase or decrease the number of
29-50 shares of, or eliminate and remove from the articles of
29-51 incorporation any reference to, a class or series of shares, the
29-52 board of directors shall adopt a resolution fixing and determining
29-53 the new number of shares of each class or series in which the
29-54 number of shares is increased or decreased or eliminating the class
29-55 or series and removing references to the class or series from the
29-56 articles of incorporation. The shares of any eliminated series
29-57 shall resume the status of authorized but unissued shares of the
29-58 class of shares from which the series was established unless
29-59 otherwise provided in the resolution or the articles of
29-60 incorporation.
29-61 (2) Before the first issuance of any shares of a class
29-62 or series established or increased or decreased by resolution
29-63 adopted by the board of directors under Subsection (1) of this
29-64 section, and in order to eliminate from the articles of
29-65 incorporation a class or series of shares and all references to the
29-66 class or series contained in the articles, the corporation shall
29-67 file with the Secretary of State a statement setting forth:
29-68 (a) the name of the corporation;
29-69 (b) if the statement relates to the
29-70 establishment of a class or series of shares, a copy of the
30-1 resolution establishing and designating the class or series and
30-2 fixing and determining the preferences, limitations, and relative
30-3 rights of the class or series;
30-4 (c) if the statement relates to an increase or
30-5 decrease in the number of shares of any class or series, a copy of
30-6 the resolution fixing and determining the new number of shares of
30-7 each class or series in which the number of shares is increased or
30-8 decreased;
30-9 (d) if the statement relates to the elimination
30-10 of a class or series of shares and to the removal of all references
30-11 to the class or series from the articles of incorporation, a copy
30-12 of the resolution eliminating the class or series and removing all
30-13 references to the class or series from the articles of
30-14 incorporation;
30-15 (e) the date of adoption of the resolution; and
30-16 (f) that the resolution was duly adopted by all
30-17 necessary action on the part of the corporation.
30-18 (3) The statement shall be executed on behalf of the
30-19 corporation by an officer. The original and a copy of the
30-20 statement shall be delivered to the Secretary of State. If the
30-21 Secretary of State finds that the statement conforms to law, when
30-22 the appropriate filing fee is paid as provided by law, the
30-23 Secretary of State shall:
30-24 (a) endorse on the original and the copy the
30-25 word "Filed," and the month, day, and year of the filing of the
30-26 statement;
30-27 (b) file the original in the Secretary of
30-28 State's office; and
30-29 (c) return the copy to the corporation or its
30-30 representative.
30-31 (4) On the filing of a statement by the Secretary of
30-32 State, the resolution establishing and designating the class or
30-33 series and fixing and determining the preferences, limitations, and
30-34 relative rights of the class or series, the resolution fixing the
30-35 new number of shares of each class or series in which the number of
30-36 shares is increased or decreased, or the resolution eliminating a
30-37 class or series and all references to the class or series from the
30-38 articles of incorporation, as appropriate, becomes an amendment of
30-39 the articles of incorporation. An amendment of the articles of
30-40 incorporation effected as provided by this Article is not subject
30-41 to the procedure to amend the articles contained in Article 4.02 of
30-42 this Act.
30-43 SECTION 2.05. Sections A and B, Article 2.21, Texas Business
30-44 Corporation Act, are amended to read as follows:
30-45 A. A holder of shares, an owner of any beneficial interest
30-46 in shares, or a subscriber for shares whose subscription has been
30-47 accepted shall be under no obligation to the corporation or to its
30-48 obligees with respect to:
30-49 (1) such shares other than the obligation to pay to
30-50 the corporation the full amount of the consideration, fixed in
30-51 compliance with Article 2.15 of this Act, for which such shares
30-52 were or are to be issued;
30-53 (2) any contractual obligation of the corporation on
30-54 the basis that the holder, owner, or subscriber is or was the alter
30-55 ego of the corporation, or on the basis of actual fraud or
30-56 constructive fraud, <or> a sham to perpetrate a fraud, or other
30-57 similar theory, unless the obligee demonstrates that the holder,
30-58 owner, or subscriber caused the corporation to be used for the
30-59 purpose of perpetrating and did perpetrate an actual fraud on the
30-60 obligee primarily for the direct personal benefit of the holder,
30-61 owner, or subscriber; or
30-62 (3) any contractual obligation of the corporation on
30-63 the basis of the failure of the corporation to observe any
30-64 corporate formality, including without limitation: (a) the failure
30-65 to comply with any requirement of this Act or of the articles of
30-66 incorporation or bylaws of the corporation; or (b) the failure to
30-67 observe any requirement prescribed by this Act or by the articles
30-68 of incorporation or bylaws for acts to be taken by the corporation,
30-69 its board of directors, or its shareholders.
30-70 B. The liability of a holder, owner, or subscriber of shares
31-1 of a corporation for an obligation that is limited by Section A of
31-2 this article is exclusive and preempts any other liability imposed
31-3 on a holder, owner, or subscriber of shares of a corporation for
31-4 that obligation under common law or otherwise, except that nothing
31-5 <Nothing> contained in this article shall limit the obligation of a
31-6 holder, owner, or subscriber to an obligee of the corporation when:
31-7 (1) the holder, owner, or subscriber has expressly
31-8 assumed, guaranteed, or agreed to be personally liable to the
31-9 obligee for the obligation; or
31-10 (2) the holder, owner, or subscriber is otherwise
31-11 liable to the obligee for the obligation under this Act or another
31-12 applicable statute.
31-13 SECTION 2.06. Article 2.24, Texas Business Corporation Act,
31-14 is amended by adding Section D to read as follows:
31-15 D. If the articles of incorporation or bylaws of a
31-16 corporation registered under the Investment Company Act so provide,
31-17 the corporation is not required to hold an annual meeting of
31-18 shareholders or elect directors in any year that the election of
31-19 directors is not required to be acted on under the Investment
31-20 Company Act. If the corporation is required by the Investment
31-21 Company Act to hold a meeting of shareholders to elect directors,
31-22 the meeting shall be designated as the annual meeting of
31-23 shareholders for that year.
31-24 SECTION 2.07. Sections A and C, Article 2.27, Texas Business
31-25 Corporation Act, are amended to read as follows:
31-26 A. The officer or agent having charge of the share <stock>
31-27 transfer records <books> for shares of a corporation shall make, at
31-28 least ten (10) days before each meeting of shareholders, a complete
31-29 list of the shareholders entitled to vote at such meeting or any
31-30 adjournment thereof, arranged in alphabetical order, with the
31-31 address of and the number of shares held by each, which list, for a
31-32 period of ten (10) days prior to such meeting, shall be kept on
31-33 file at the registered office or principal place of business of the
31-34 corporation and shall be subject to inspection by any shareholder
31-35 at any time during usual business hours. Such list shall also be
31-36 produced and kept open at the time and place of the meeting and
31-37 shall be subject to the inspection of any shareholder during the
31-38 whole time of the meeting. The original share <stock> transfer
31-39 records <books> shall be prima-facie evidence as to who are the
31-40 shareholders entitled to examine such list or transfer records
31-41 <books> or to vote at any meeting of shareholders.
31-42 C. An officer or agent having charge of the share <stock>
31-43 transfer records <books> who shall fail to prepare the list of
31-44 shareholders or keep the same on file for a period of ten (10)
31-45 days, or produce and keep it open for inspection at the meeting, as
31-46 provided in this Article, shall be liable to any shareholder
31-47 suffering damage on account of such failure, to the extent of such
31-48 damage. In the event that such officer or agent does not receive
31-49 notice of a meeting of shareholders sufficiently in advance of the
31-50 date of such meeting reasonably to enable him to comply with the
31-51 duties prescribed by this Article, the corporation, but not such
31-52 officer or agent, shall be liable to any shareholder suffering
31-53 damage on account of such failure, to the extent of such damage.
31-54 SECTION 2.08. Article 2.32, Texas Business Corporation Act,
31-55 is amended by adding Section B to read as follows:
31-56 B. Notwithstanding Section A of this Article, a director of
31-57 a corporation registered under the Investment Company Act, unless
31-58 removed in accordance with the provisions of the articles of
31-59 incorporation or bylaws, holds office for the term for which the
31-60 director is elected and until the director's successor has been
31-61 elected and qualified.
31-62 SECTION 2.09. Article 2.34, Texas Business Corporation Act,
31-63 is amended to read as follows:
31-64 Art. 2.34. Vacancies. A. Any vacancy occurring in the
31-65 initial board of directors before the issuance of shares may be
31-66 filled by the affirmative vote or written consent of a majority of
31-67 the incorporators or by the affirmative vote of a majority of the
31-68 remaining directors though less than a quorum of the board of
31-69 directors. A director elected to fill a vacancy shall be elected
31-70 for the unexpired term of the director's predecessor in office.
32-1 B. Any vacancy occurring in the board of directors after the
32-2 issuance of shares may be filled in accordance with Section D <C>
32-3 of this article or may be filled by the affirmative vote of a
32-4 majority of the remaining directors though less than a quorum of
32-5 the board of directors. A director elected to fill a vacancy shall
32-6 be elected for the unexpired term of his predecessor in office.
32-7 C <B>. A directorship to be filled by reason of an increase
32-8 in the number of directors may be filled in accordance with Section
32-9 D <C> of this article or may be filled by the board of directors
32-10 for a term of office continuing only until the next election of one
32-11 or more directors by the shareholders; provided that the board of
32-12 directors may not fill more than two such directorships during the
32-13 period between any two successive annual meetings of shareholders.
32-14 D <C>. Any vacancy occurring in the board of directors or
32-15 any directorship to be filled by reason of an increase in the
32-16 number of directors may be filled by election at an annual or
32-17 special meeting of shareholders called for that purpose.
32-18 E <D>. Notwithstanding Sections <A,> B, <and> C, and D of
32-19 this article, whenever the holders of any class or series of shares
32-20 or group of classes or series of shares are entitled to elect one
32-21 or more directors by the provisions of the articles of
32-22 incorporation, any vacancies in such directorships and any newly
32-23 created directorships of such class or series to be filled by
32-24 reason of an increase in the number of such directors may be filled
32-25 by the affirmative vote of a majority of the directors elected by
32-26 such class or series, or by such group, then in office, or by a
32-27 sole remaining director so elected, or by the vote of the holders
32-28 of the outstanding shares of such class or series or of such group,
32-29 and such directorships shall not in any case be filled by the vote
32-30 of the remaining directors or the holders of the outstanding shares
32-31 as a whole unless otherwise provided in the articles of
32-32 incorporation.
32-33 SECTION 2.10. Section C, Article 2.41, Texas Business
32-34 Corporation Act, is amended to read as follows:
32-35 C. A director shall not be liable under Subsection (1) of
32-36 Section A of this Article if, in voting for or assenting to the
32-37 distribution, the director:
32-38 (1) relied in good faith and with ordinary care upon
32-39 the statements, valuations, or information referred to in Article
32-40 2.38-3 of this Act, or upon other information, opinions, reports,
32-41 or statements, including financial statements and other financial
32-42 data, concerning the corporation or another person, that were
32-43 prepared or presented by:
32-44 (a) one or more officers or employees of the
32-45 corporation;
32-46 (b) legal counsel, public accountants,
32-47 investment bankers, or other persons as to matters the director
32-48 reasonably believes are within the person's professional or expert
32-49 competence; or
32-50 (c) a committee of the board of directors of
32-51 which the director is not a member;
32-52 (2) acting in good faith and with ordinary care,
32-53 considered the assets of the corporation to be at least of their
32-54 book value; or
32-55 (3) in determining whether the corporation made
32-56 adequate provision for payment, satisfaction or discharge of all of
32-57 its liabilities and obligations as provided in Articles <Article>
32-58 6.04 and 7.12 of this Act, relied in good faith and with ordinary
32-59 care upon financial statements of, or other information concerning,
32-60 any person who was or became contractually obligated to pay,
32-61 satisfy, or discharge some or all of those liabilities or
32-62 obligations.
32-63 SECTION 2.11. Sections B-F, Article 2.44, Texas Business
32-64 Corporation Act, are amended to read as follows:
32-65 B. A director may examine the corporation's books and
32-66 records of account, share transfer records, corporate minutes and
32-67 any other corporate books and records for any purpose reasonably
32-68 related to the director's service as a director. A court of
32-69 competent jurisdiction may compel a corporation to open its books
32-70 and records of account, share transfer records, corporate minutes
33-1 or any other corporate books and records to permit the director to
33-2 inspect the books or records and make copies or extracts from the
33-3 books or records on a showing by a director that:
33-4 (1) he is a director;
33-5 (2) he demanded to inspect the corporate books and
33-6 records;
33-7 (3) his purpose for inspecting the corporate books and
33-8 records was reasonably related to his service as a director; and
33-9 (4) his right of access to the books and records was
33-10 refused by the corporation.
33-11 The court may also award the director attorneys' fees and any other
33-12 relief that the court deems just and proper.
33-13 C. Any person who shall have been a shareholder for at least
33-14 six (6) months immediately preceding his demand, or shall be the
33-15 holder of at least five per cent (5%) of all the outstanding shares
33-16 of a corporation, upon written demand stating the purpose thereof,
33-17 shall have the right to examine, in person or by agent, accountant,
33-18 or attorney, at any reasonable time or times, for any proper
33-19 purpose, its relevant books and records of account, minutes, and
33-20 share transfer records, and to make extracts therefrom.
33-21 D <C>. Any corporation which shall refuse to allow any such
33-22 shareholder or his agent, accountant or attorney, so to examine and
33-23 make extracts from its books and records of account, minutes, and
33-24 share transfer records, for any proper purpose, shall be liable to
33-25 such shareholder for all costs and expenses, including attorneys'
33-26 fees, incurred in enforcing his rights under this Article in
33-27 addition to any other damages or remedy afforded him by law. It
33-28 shall be a defense to any action for penalties under this section
33-29 that the person suing therefor has within two (2) years sold or
33-30 offered for sale any list of shareholders or of holders of voting
33-31 trust certificates for shares of such corporation or any other
33-32 corporation or has aided or abetted any person in procuring any
33-33 list of shareholders or of holders of voting trust certificates for
33-34 any such purpose, or has improperly used any information secured
33-35 through any prior examination of the books and records of account,
33-36 minutes, or share transfer records of such corporation or any other
33-37 corporation, or was not acting in good faith or for a proper
33-38 purpose in making his demand.
33-39 E <D>. Nothing herein contained shall impair the power of
33-40 any court of competent jurisdiction, upon proof of proper purpose
33-41 by a beneficial or record holder of shares, irrespective of the
33-42 period of time during which such holder shall have been a
33-43 beneficial or record holder and irrespective of the number of
33-44 shares held by him, to compel the production for examination by
33-45 such holder of the books and records of account, minutes, and share
33-46 transfer records of a corporation.
33-47 F <E>. Upon the written request of any shareholder of a
33-48 corporation, the corporation shall mail to such shareholder its
33-49 annual statements for its last fiscal year showing in reasonable
33-50 detail its assets and liabilities and the results of its operations
33-51 and the most recent interim statements, if any, which have been
33-52 filed in a public record or otherwise published. The corporation
33-53 shall be allowed a reasonable time to prepare such annual
33-54 statements.
33-55 G <F>. A holder of a beneficial interest in a voting trust
33-56 entered into pursuant to Article 2.30 of this Act shall be regarded
33-57 as a holder of the shares represented by such beneficial interest
33-58 for the purposes of this Article.
33-59 SECTION 2.12. Article 4.14, Texas Business Corporation Act,
33-60 is amended to read as follows:
33-61 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE <Amendment
33-62 of Articles, Merger, Share Exchange, and Dissolution Pursuant to
33-63 Federal Reorganization Proceedings>. A. Authorization.
33-64 Notwithstanding any other provision of this Act to the contrary, a
33-65 trustee appointed for a corporation being reorganized under a
33-66 federal statute, the designated officers of the corporation, or any
33-67 other individual or individuals designated by the court to act on
33-68 behalf of the corporation <a corporation being reorganized under a
33-69 federal statute> may do any of the following without action by or
33-70 notice to its board of directors or shareholders in order to carry
34-1 out a plan of reorganization ordered or decreed by a court of
34-2 competent jurisdiction under the federal statute:
34-3 (1) amend or restate its articles of incorporation if
34-4 the articles after amendment or restatement contain only provisions
34-5 required or permitted in articles;
34-6 (2) merge or engage in a share exchange with one or
34-7 more domestic or foreign corporations or other entities pursuant to
34-8 a plan of merger or exchange having such terms and provisions as
34-9 required or permitted by Articles <Article> 5.01 and 5.02 of this
34-10 Act;
34-11 (3) change the location of its registered office,
34-12 change its registered agent, and remove or appoint any agent to
34-13 receive service of process;
34-14 (4) alter, amend, or repeal its bylaws;
34-15 (5) constitute or reconstitute and classify or
34-16 reclassify its board of directors, and name, constitute, or appoint
34-17 directors and officers in place of or in addition to all or some of
34-18 the officers or directors then in place;
34-19 (6) sell, lease, exchange or otherwise dispose of all,
34-20 or substantially all, of its property and assets; <or>
34-21 (7) authorize and fix the terms, manner, and
34-22 conditions of the issuance of bonds, debentures, or other
34-23 obligations, whether or not convertible into shares of any class or
34-24 bearing warrants or other evidences of optional rights to purchase
34-25 or subscribe for any shares of any class; or
34-26 (8) <(4)> dissolve.
34-27 Actions taken under Subsection (4) or (5) of this section are
34-28 effective on entry of the order or decree approving the plan of
34-29 reorganization or on another effective date as may be specified,
34-30 without further action of the corporation, as and to the extent set
34-31 forth in the plan of reorganization or the order or decree
34-32 approving the plan of reorganization.
34-33 B. Authority to Sign Documents. A trustee appointed for a
34-34 corporation being reorganized under a federal statute, the
34-35 designated officers of the corporation, or any other <The>
34-36 individual or individuals designated by the court may sign on
34-37 behalf of a corporation that is being reorganized:
34-38 (1) articles of amendment or restated articles of
34-39 incorporation setting forth:
34-40 (a) the name of the corporation;
34-41 (b) the text of each amendment or the
34-42 restatement approved by the court;
34-43 (c) the date of the court's order or decree
34-44 approving the articles of amendment or restatement;
34-45 (d) the court, file name, and case number of the
34-46 reorganization case <proceeding> in which the order or decree was
34-47 entered; and
34-48 (e) a statement that the court had jurisdiction
34-49 of the case <proceeding> under federal statute; or
34-50 (2) articles of merger or exchange setting forth:
34-51 (a) the name of the corporation;
34-52 (b) the text of the part of the plan of
34-53 reorganization that contains the plan of merger or exchange
34-54 approved by the court, which shall include the information required
34-55 by Article 5.04A or 5.16B of this Act, as applicable, but need not
34-56 include the resolution of the board of directors referred to in
34-57 Article 5.16B(3) of this Act;
34-58 (c) the date of the court's order or decree
34-59 approving the plan of merger or consolidation;
34-60 (d) the court, file name, and case number of the
34-61 reorganization case <proceeding> in which the order or decree was
34-62 entered; and
34-63 (e) a statement that the court had jurisdiction
34-64 of the case <proceeding> under federal statute; or
34-65 (3) articles of dissolution setting forth:
34-66 (a) the name of the corporation;
34-67 (b) the information required by Articles
34-68 <Article> 6.06A(1)(2) and (3) of this Act;
34-69 (c) the date of the court's order or decree
34-70 approving the articles of dissolution;
35-1 (d) that the debts, obligations and liabilities
35-2 of the corporation have been paid or discharged as provided in the
35-3 plan of reorganization and that the remaining property and assets
35-4 of the corporation have been distributed as provided in the plan of
35-5 reorganization;
35-6 (e) the court, file name, and case number of the
35-7 reorganization case <proceeding> in which the order or decree was
35-8 entered; and
35-9 (f) a statement that the court had jurisdiction
35-10 of the case <proceeding> under federal statute; or
35-11 (4) a statement of change of registered office or
35-12 registered agent, or both, setting forth:
35-13 (a) the name of the corporation;
35-14 (b) the information required by Article 2.10A of
35-15 this Act, as applicable, but not the information included in the
35-16 statement referred to in Article 2.10A(7) of this Act;
35-17 (c) the date of the court's order or decree
35-18 approving the statement of change of registered office or
35-19 registered agent, or both;
35-20 (d) the court, file name, and case number of the
35-21 reorganization case in which the order or decree was entered; and
35-22 (e) a statement that the court had jurisdiction
35-23 of the case under federal statute.
35-24 C. Procedure for Merger or Share Exchange. When a domestic
35-25 or foreign corporation or other entity that is not being
35-26 reorganized merges or engages in a share exchange with a
35-27 corporation that is being reorganized pursuant to a plan of
35-28 reorganization:
35-29 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
35-30 this Act shall apply to the domestic or foreign corporation or
35-31 other entity that is not being reorganized to the same extent they
35-32 would apply if it were merging or engaging in a share exchange with
35-33 a corporation that is not being reorganized;
35-34 (2) Article 5.06 of this Act shall apply to the
35-35 domestic or foreign corporation or other entity that is not being
35-36 reorganized to the same extent it would apply if that domestic or
35-37 foreign corporation or other entity were merging or engaging in a
35-38 share exchange with a corporation that is not being reorganized,
35-39 except as otherwise provided in the plan of reorganization ordered
35-40 or decreed by a court of competent jurisdiction under the federal
35-41 statute;
35-42 (3) Article 5.16E of this Act shall apply to a
35-43 subsidiary corporation that is not being reorganized to the same
35-44 extent it would apply if that corporation were merging with a
35-45 parent corporation that is not being reorganized;
35-46 (4) Upon the receipt of all required authorization for
35-47 all action required by this Act for each corporation that is a
35-48 party to the plan of merger or exchange that is not being
35-49 reorganized and all action by each corporation, foreign
35-50 corporation, or other entity that is a party to the plan of merger
35-51 or exchange required by the laws under which it is incorporated or
35-52 organized and its constituent documents, articles of merger or
35-53 exchange shall be signed by each domestic or foreign corporation or
35-54 other entity that is a party to the merger or exchange other than
35-55 the corporation that is being reorganized as provided in Article
35-56 5.04 of this Act and on behalf of the corporation that is being
35-57 reorganized by the persons specified in Section B of this Article;
35-58 <and>
35-59 (5) The articles of merger or exchange shall set forth
35-60 the information required in Section B(2) of this Article;<.>
35-61 (6) <D. Filing.> The articles of merger or exchange
35-62 shall be filed with the Secretary of State in the manner and with
35-63 such number of copies as is provided in Article 5.04B of this Act;
35-64 and<.>
35-65 (7) <E. Effect.> Upon the issuance of the certificate
35-66 of merger or share exchange by the Secretary of State as provided
35-67 in Article 5.04 of this Act, the merger or share exchange shall
35-68 become effective with the same effect as if it had been adopted by
35-69 unanimous action of the directors and shareholders of the
35-70 corporation being reorganized. The effectiveness of the merger or
36-1 share exchange shall be determined as provided in Article 5.05 of
36-2 this Act.
36-3 D <F>. Dissenters' Rights. Shareholders of a corporation
36-4 being reorganized under a federal statute do not have a right to
36-5 dissent under Article 5.11 or 5.16E of this Act, except as the plan
36-6 of reorganization may provide.
36-7 E <G>. When Applicable. This Article shall not apply after
36-8 the entry of a final decree in the reorganization case <proceeding>
36-9 even though the court may retain jurisdiction of the case
36-10 <proceeding> for limited purposes unrelated to consummation of the
36-11 plan of reorganization.
36-12 F <H>. Nonexclusivity. This Article shall not preclude
36-13 other changes in a corporation or its securities by a plan of
36-14 reorganization ordered or decreed by a court of competent
36-15 jurisdiction under federal statute.
36-16 SECTION 2.13. Sections A, B, and G, Article 5.03, Texas
36-17 Business Corporation Act, are amended to read as follows:
36-18 A. Except as provided by Section G of this Article, after
36-19 <After> acting on a plan of merger or exchange in the manner
36-20 prescribed by Subsection (1) of Section B of this Article, the
36-21 board of directors of each domestic corporation that is a party to
36-22 the merger, and the board of directors of each domestic corporation
36-23 whose shares are to be acquired in the share exchange, shall submit
36-24 the plan of merger <(except as provided in Section G of this
36-25 Article)> or exchange for approval by its shareholders.
36-26 B. Except as provided by Section G of this Article, for
36-27 <For> a plan of merger or exchange to be approved:
36-28 (1) the board of directors of the corporation may
36-29 adopt a resolution recommending that the plan of merger or exchange
36-30 be approved by the shareholders of the corporation, unless the
36-31 board of directors determines that for any reason it should not
36-32 make that recommendation, in which case the board of directors may
36-33 adopt a resolution directing that the plan of merger or exchange be
36-34 submitted to shareholders for approval without recommendation and,
36-35 in connection with the submission, communicate the basis for its
36-36 determination that the plan be submitted to shareholders without
36-37 any recommendation; and
36-38 (2) <except as provided in Section G of this Article,>
36-39 the shareholders entitled to vote on the plan of merger or exchange
36-40 must approve the plan.
36-41 G. Unless the articles of incorporation otherwise require,
36-42 approval by the shareholders of a corporation on a plan of merger
36-43 shall not be required and the provisions of Sections A, B, C, D, E,
36-44 and F of this Article do not apply if:
36-45 (1) the corporation is the sole surviving corporation
36-46 in the merger;
36-47 (2) the articles of incorporation of the corporation
36-48 will not differ from its articles of incorporation before the
36-49 merger;
36-50 (3) each shareholder of the corporation whose shares
36-51 were outstanding immediately before the effective date of the
36-52 merger will hold the same number of shares, with identical
36-53 designations, preferences, limitations, and relative rights,
36-54 immediately after the effective date of the merger;
36-55 (4) the voting power of the number of voting shares
36-56 outstanding immediately after the merger, plus the voting power of
36-57 the number of voting shares issuable as a result of the merger
36-58 (either by the conversion of securities issued pursuant to the
36-59 merger or the exercise of rights to purchase securities issued
36-60 pursuant to the merger), will not exceed by more than 20 percent
36-61 the voting power of the total number of voting shares of the
36-62 corporation outstanding immediately before the merger;
36-63 (5) the number of participating shares outstanding
36-64 immediately after the merger, plus the number of participating
36-65 shares issuable as a result of the merger (either by the conversion
36-66 of securities issued pursuant to the merger or the exercise of
36-67 rights to purchase securities issued pursuant to the merger), will
36-68 not exceed by more than 20 percent the total number of
36-69 participating shares of the corporation outstanding immediately
36-70 before the merger; and
37-1 (6) the board of directors of the corporation adopts a
37-2 resolution approving the plan of merger.
37-3 SECTION 2.14. Section B, Article 5.09, Texas Business
37-4 Corporation Act, is amended to read as follows:
37-5 B. A transaction referred to in this Article and in Article
37-6 5.10 of this Act shall be in the usual and regular course of
37-7 business if the corporation shall, directly or indirectly, either
37-8 continue to engage in one or more businesses or apply a portion of
37-9 the consideration received in connection with the transaction to
37-10 the conduct of a business in which it engages following the
37-11 transaction.
37-12 SECTION 2.15. Section A, Article 5.10, Texas Business
37-13 Corporation Act, is amended to read as follows:
37-14 A. A sale, lease, exchange, or other disposition (not
37-15 including any pledge, mortgage, deed of trust or trust indenture
37-16 unless otherwise provided in the articles of incorporation) of all,
37-17 or substantially all, the property and assets, with or without the
37-18 good will of a corporation, if not made in the usual and regular
37-19 course of its business, may be made upon such terms and conditions
37-20 and for such consideration, which may consist in whole or in part
37-21 of money or property, real or personal, including shares of any
37-22 corporation, domestic or foreign, as may be authorized in the
37-23 following manner:
37-24 (1) The board of directors may adopt a resolution
37-25 recommending that such sale, lease, exchange, or other disposition
37-26 be approved by shareholders of the corporation, unless the board of
37-27 directors determines that for any reason it should not make the
37-28 recommendation in which case the board of directors may adopt a
37-29 resolution directing that such sale, lease, exchange, or other
37-30 disposition be submitted to shareholders without recommendation
37-31 and, in connection with the submission, communicate the basis for
37-32 its determination that the sale, lease, exchange or other
37-33 disposition be submitted without recommendation.
37-34 (2) The board of directors may submit the proposed
37-35 sale, lease, exchange or other disposition for authorization by the
37-36 corporation's shareholders at a meeting of shareholders, which may
37-37 be either an annual or a special meeting.
37-38 (3) Written or printed notice shall be given to each
37-39 shareholder of record entitled to vote at such meeting within the
37-40 time and in the manner provided for in this Act for the giving of
37-41 notice of meetings of shareholders, and, whether the meeting be an
37-42 annual or a special meeting shall state that the purpose, or one of
37-43 the purposes, of such meeting is to consider the proposed sale,
37-44 lease, exchange, or other disposition.
37-45 (4) At such meeting, the shareholders may authorize
37-46 such sale, lease, exchange or other disposition and may fix, or may
37-47 authorize the board of directors to fix, any or all of the terms
37-48 and conditions thereof and the consideration to be received by the
37-49 corporation therefor. Such authorization shall require the
37-50 affirmative vote of the holders of at least two-thirds of the
37-51 outstanding shares of the corporation entitled to vote thereon,
37-52 unless any class or series of shares of the corporation is entitled
37-53 to vote as a class thereon, in which event the vote required for
37-54 authorization by the shareholders shall be the affirmative vote of
37-55 the holders of at least two-thirds of the outstanding shares within
37-56 each such class or series entitled to vote thereon as a class and
37-57 at least two-thirds of the outstanding shares otherwise entitled to
37-58 vote thereon. Shares entitled to vote as a class shall be entitled
37-59 to vote only as a class unless otherwise entitled to vote on each
37-60 matter submitted to the shareholders generally or provided in the
37-61 articles of incorporation.
37-62 (5) After such authorization by vote of shareholders,
37-63 the board of directors, nevertheless, in its discretion, may
37-64 abandon such sale, lease, exchange or other disposition of assets,
37-65 subject to the rights of third parties under any contracts relating
37-66 thereto, without further action or approval by shareholders.
37-67 SECTION 2.16. Sections A and D, Article 5.12, Texas Business
37-68 Corporation Act, are amended to read as follows:
37-69 A. Any shareholder of any domestic corporation who has the
37-70 right to dissent from any of the corporate actions referred to in
38-1 Article 5.11 of this Act may exercise that right to dissent only by
38-2 complying with the following procedures:
38-3 (1)(a) With respect to proposed corporate action that
38-4 is submitted to a vote of shareholders at a meeting, the
38-5 shareholder shall file with the corporation, prior to the meeting,
38-6 a written objection to the action, setting out that the
38-7 shareholder's right to dissent will be exercised if the action is
38-8 effective and giving the shareholder's address, to which notice
38-9 thereof shall be delivered or mailed in that event. If the action
38-10 is effected and the shareholder shall not have voted in favor of
38-11 the action, the corporation, in the case of action other than a
38-12 merger, or the surviving or new corporation (foreign or domestic)
38-13 or other entity that is liable to discharge the shareholder's right
38-14 of dissent, in the case of a merger, shall, within ten (10) days
38-15 after the action is effected, deliver or mail to the shareholder
38-16 written notice that the action has been effected, and the
38-17 shareholder may, within ten (10) days from the delivery or mailing
38-18 of the notice, make written demand on the existing, surviving, or
38-19 new corporation (foreign or domestic) or other entity, as the case
38-20 may be, for payment of the fair value of the shareholder's shares.
38-21 The fair value of the shares shall be the value thereof as of the
38-22 day immediately preceding the meeting, excluding any appreciation
38-23 or depreciation in anticipation of the proposed action. The demand
38-24 shall state the number and class of the shares owned by the
38-25 shareholder and the fair value of the shares as estimated by the
38-26 shareholder. Any shareholder failing to make demand within the ten
38-27 (10) day period shall be bound by the action.
38-28 (b) With respect to proposed corporate action
38-29 that is approved pursuant to Section A of Article 9.10 of this Act,
38-30 the corporation, in the case of action other than a merger, and the
38-31 surviving or new corporation (foreign or domestic) or other entity
38-32 that is liable to discharge the shareholder's right of dissent, in
38-33 the case of a merger, shall, within ten (10) days after the date
38-34 the action is effected, mail to each shareholder of record as of
38-35 the effective date of the action notice of the fact and date of the
38-36 action and that the shareholder may exercise the shareholder's
38-37 right to dissent from the action. The notice shall be accompanied
38-38 by a copy of this Article and any articles or documents filed by
38-39 the corporation with the Secretary of State to effect the action.
38-40 If the shareholder shall not have consented to the taking of the
38-41 action, the shareholder may, within twenty (20) days after the
38-42 mailing of the notice, make written demand on the existing,
38-43 surviving, or new corporation (foreign or domestic) or other
38-44 entity, as the case may be, for payment of the fair value of the
38-45 shareholder's shares. The fair value of the shares shall be the
38-46 value thereof as of the date the written consent authorizing the
38-47 action was delivered to the corporation pursuant to Section A of
38-48 Article 9.10 of this Act, excluding any appreciation or
38-49 depreciation in anticipation of the <proposed> action. The demand
38-50 shall state the number and class of shares owned by the dissenting
38-51 shareholder and the fair value of the shares as estimated by the
38-52 shareholder. Any shareholder failing to make demand within the
38-53 twenty (20) day period shall be bound by the action.
38-54 (2) Within twenty (20) days after receipt by the
38-55 existing, surviving, or new corporation (foreign or domestic) or
38-56 other entity, as the case may be, of a demand for payment made by a
38-57 dissenting shareholder in accordance with Subsection (1) of this
38-58 Section, the corporation (foreign or domestic) or other entity
38-59 shall deliver or mail to the shareholder a written notice that
38-60 shall either set out that the corporation (foreign or domestic) or
38-61 other entity accepts the amount claimed in the demand and agrees to
38-62 pay that amount within ninety (90) days after the date on which the
38-63 action was effected, and, in the case of shares represented by
38-64 certificates, upon the surrender of the certificates duly endorsed,
38-65 or shall contain an estimate by the corporation (foreign or
38-66 domestic) or other entity of the fair value of the shares, together
38-67 with an offer to pay the amount of that estimate within ninety (90)
38-68 days after the date on which the action was effected, upon receipt
38-69 of notice within sixty (60) days after that date from the
38-70 shareholder that the shareholder agrees to accept that amount and,
39-1 in the case of shares represented by certificates, upon the
39-2 surrender of the certificates duly endorsed.
39-3 (3) If, within sixty (60) days after the date on which
39-4 the corporate action was effected, the value of the shares is
39-5 agreed upon between the shareholder and the existing, surviving, or
39-6 new corporation (foreign or domestic) or other entity, as the case
39-7 may be, payment for the shares shall be made within ninety (90)
39-8 days after the date on which the action was effected and, in the
39-9 case of shares represented by certificates, upon surrender of the
39-10 certificates duly endorsed. Upon payment of the agreed value, the
39-11 shareholder shall cease to have any interest in the shares or in
39-12 the corporation.
39-13 D. The appraisers shall determine the fair value of the
39-14 shares of the shareholders adjudged by the court to be entitled to
39-15 payment for their shares and shall file their report of that value
39-16 in the office of the clerk of the court. Notice of the filing of
39-17 the report shall be given by the clerk to the parties in interest.
39-18 The report shall be subject to exceptions to be heard before the
39-19 court both upon the law and the facts. The court shall by its
39-20 judgment determine the fair value of the shares of the shareholders
39-21 entitled to payment for their shares and shall direct the payment
39-22 of that value by the existing, surviving, or new corporation
39-23 (foreign or domestic) or other entity, together with interest
39-24 thereon, beginning 91 days after the date on which the applicable
39-25 corporate action from which the shareholder elected to dissent was
39-26 effected to the date of such judgment, to the shareholders entitled
39-27 to payment. The judgment shall be payable to the holders of
39-28 uncertificated shares immediately but to the holders of shares
39-29 represented by certificates only upon, and simultaneously with, the
39-30 surrender to the existing, surviving, or new corporation (foreign
39-31 or domestic) or other entity, as the case may be, of duly endorsed
39-32 certificates for those shares. Upon payment of the judgment, the
39-33 dissenting shareholders shall cease to have any interest in those
39-34 shares or in the corporation. The court shall allow the appraisers
39-35 a reasonable fee as court costs, and all court costs shall be
39-36 allotted between the parties in the manner that the court
39-37 determines to be fair and equitable.
39-38 SECTION 2.17. Article 5.13, Texas Business Corporation Act,
39-39 is amended to read as follows:
39-40 Art. 5.13. Provisions Affecting Remedies of Dissenting
39-41 Shareholders. A. Any shareholder who has demanded payment for his
39-42 shares in accordance with either Article 5.12 or 5.16 of this Act
39-43 shall not thereafter be entitled to vote or exercise any other
39-44 rights of a shareholder except the right to receive payment for his
39-45 shares pursuant to the provisions of those articles <said Article
39-46 5.12> and the right to maintain an appropriate action to obtain
39-47 relief on the ground that the corporate action would be or was
39-48 fraudulent, and the respective shares for which payment has been
39-49 demanded shall not thereafter be considered outstanding for the
39-50 purposes of any subsequent vote of shareholders.
39-51 B. Upon receiving a demand for payment from any dissenting
39-52 shareholder, the corporation shall make an appropriate notation
39-53 thereof in its shareholder records. Within twenty (20) days after
39-54 demanding payment for his shares in accordance with either Article
39-55 5.12 or 5.16 of this Act, each holder of certificates representing
39-56 shares so demanding payment shall submit such certificates to the
39-57 corporation for notation thereon that such demand has been made.
39-58 The failure of holders of certificated shares to do so shall, at
39-59 the option of the corporation, terminate such shareholder's rights
39-60 under Articles <Article> 5.12 and 5.16 of this Act unless a court
39-61 of competent jurisdiction for good and sufficient cause shown shall
39-62 otherwise direct. If uncertificated shares for which payment has
39-63 been demanded or shares represented by a certificate on which
39-64 notation has been so made shall be transferred, any new certificate
39-65 issued therefor shall bear similar notation together with the name
39-66 of the original dissenting holder of such shares and a transferee
39-67 of such shares shall acquire by such transfer no rights in the
39-68 corporation other than those which the original dissenting
39-69 shareholder had after making demand for payment of the fair value
39-70 thereof.
40-1 C. Any shareholder who has demanded payment for his shares
40-2 in accordance with either Article 5.12 or 5.16 of this Act may
40-3 withdraw such demand at any time before payment for his shares or
40-4 before any petition has been filed pursuant to Article 5.12 or 5.16
40-5 of this Act asking for a finding and determination of the fair
40-6 value of such shares, but no such demand may be withdrawn after
40-7 such payment has been made or, unless the corporation shall consent
40-8 thereto, after any such petition has been filed. If, however, such
40-9 demand shall be withdrawn as hereinbefore provided, or if pursuant
40-10 to Section B of this Article the corporation shall terminate the
40-11 shareholder's rights under Article 5.12 or 5.16 of this Act, as the
40-12 case may be, or if no petition asking for a finding and
40-13 determination of fair value of such shares by a court shall have
40-14 been filed within the time provided in Article 5.12 or 5.16 of this
40-15 Act, as the case may be, or if after the hearing of a petition
40-16 filed pursuant to Article 5.12 or 5.16, the court shall determine
40-17 that such shareholder is not entitled to the relief provided by
40-18 those articles <Article 5.12>, then, in any such case, such
40-19 shareholder and all persons claiming under him shall be
40-20 conclusively presumed to have approved and ratified the corporate
40-21 action from which he dissented and shall be bound thereby, the
40-22 right of such shareholder to be paid the fair value of his shares
40-23 shall cease, and his status as a shareholder shall be restored
40-24 without prejudice to any corporate proceedings which may have been
40-25 taken during the interim, and such shareholder shall be entitled to
40-26 receive any dividends or other distributions made to shareholders
40-27 in the interim.
40-28 SECTION 2.18. Sections B, E, and F, Article 5.16, Texas
40-29 Business Corporation Act, are amended to read as follows:
40-30 B. Signature of articles; contents. The articles of merger
40-31 shall be signed on behalf of the parent corporation by an officer
40-32 and shall set forth:
40-33 (1) The name of the parent corporation, and the name
40-34 or names of the subsidiary corporations and the respective
40-35 jurisdiction under which each such corporation is organized.
40-36 (2) The number of outstanding shares of each class of
40-37 each subsidiary corporation and the number of such shares of each
40-38 class owned by the parent corporation.
40-39 (3) A copy of the resolution adopted by the board of
40-40 directors of the parent corporation to so merge and the date of the
40-41 adoption thereof. If the parent corporation does not own all the
40-42 outstanding shares of each class of each subsidiary corporation
40-43 that is a party to the merger, the resolution shall state the terms
40-44 and conditions of the merger, including the <securities,> cash or
40-45 other property, including shares, obligations, evidences of
40-46 ownership, rights to purchase securities, or other securities of
40-47 any person or entity or any combination of the shares, obligations,
40-48 evidences of ownership, rights, or other securities, to be used,
40-49 paid or delivered by the surviving corporation upon surrender of
40-50 each share of the subsidiary corporation or corporations not owned
40-51 by the parent corporation.
40-52 (4) If the surviving corporation is a foreign
40-53 corporation, the address, including street number if any, of its
40-54 registered or principal office in the jurisdiction under whose laws
40-55 it is governed. If the surviving corporation is a foreign
40-56 corporation, on the merger taking effect the surviving foreign
40-57 corporation is deemed to (a) appoint the Secretary of State of this
40-58 state as its agent for service of process to enforce an obligation
40-59 or the rights of dissenting shareholders of each domestic
40-60 corporation that is a party to the merger, and (b) agree that it
40-61 will promptly pay to the dissenting shareholders of each domestic
40-62 corporation that is a party to the merger the amount, if any, to
40-63 which they are entitled under this Article <It shall comply also
40-64 with the provisions of Section D of Article 5.01 of this Act>.
40-65 (5) If a plan of merger is required by Section A of
40-66 this Article to be adopted in the manner required by Article 5.03
40-67 of this Act, the information required by Section A of Article 5.04
40-68 of this Act.
40-69 E. Remedy of minority shareholders. In the event all of the
40-70 shares of a subsidiary domestic corporation that is a party to a
41-1 merger effected under this Article are not owned by the parent
41-2 corporation immediately prior to the merger, the surviving
41-3 corporation (foreign or domestic) shall, within ten (10) days after
41-4 the effective date of the merger, mail to each shareholder of
41-5 record of each subsidiary domestic corporation a copy of the
41-6 articles of merger and notify the shareholder <him> that the merger
41-7 has become effective. Any <In case any> such shareholder who holds
41-8 shares of a class or series that would have been entitled to vote
41-9 on the merger if it had been effected pursuant to Article 5.03 of
41-10 this Act shall have the right <and who elects> to dissent from the
41-11 merger and demand payment of the fair value for his shares in lieu
41-12 of the <securities,> cash or other property to be used, paid or
41-13 delivered to such shareholder upon the surrender of such
41-14 shareholder's shares pursuant to the terms and conditions of the
41-15 merger, with the following procedure <shall be followed>:
41-16 (1) Such shareholder shall within twenty (20) days
41-17 after the mailing of the notice and copy of the articles of merger
41-18 make written demand on the surviving corporation, domestic or
41-19 foreign, for payment of the fair value of his shares. The fair
41-20 value of the <such> shares shall be the value thereof as of the day
41-21 before the effective date of the merger, excluding any appreciation
41-22 or depreciation in anticipation of such <proposed> act. The <Such>
41-23 demand shall state the number and class of the shares owned by the
41-24 dissenting shareholder and the fair value of such shares as
41-25 estimated by him. Any shareholder failing to make demand within
41-26 the twenty (20) day period shall be bound by the <such> corporate
41-27 action.
41-28 (2) Within ten (10) days after receipt by the
41-29 surviving corporation of a demand for payment by the dissenting
41-30 shareholder of the fair value of his shares <made by such
41-31 dissenting shareholder> in accordance with Subsection (1) of this
41-32 section, the <hereof, such> corporation (foreign or domestic) shall
41-33 deliver or mail to the <such> dissenting shareholder a written
41-34 notice which shall either set out that the corporation (foreign or
41-35 domestic) accepts the amount claimed in the <such> demand and
41-36 agrees to pay such amount within ninety (90) days after the date on
41-37 which the <such> corporate action was effected and, in the case of
41-38 shares represented by certificates, upon the surrender of the
41-39 shares certificates duly endorsed, or shall contain an estimate by
41-40 the corporation of the fair value of such shares, together with an
41-41 offer to pay the amount of that <such> estimate within ninety (90)
41-42 days after the date on which such corporate <corporation> action
41-43 was effected, upon receipt of notice within sixty (60) days after
41-44 that <such> date from the <such> shareholder that the shareholder
41-45 <he> agrees to accept that <such> amount and, in the case of shares
41-46 represented by certificates, upon the surrender of the shares
41-47 certificates duly endorsed.
41-48 (3) If, within sixty (60) days after the date on which
41-49 the <such> corporate action was effected, the value of the <such>
41-50 shares is agreed upon between the dissenting shareholder and the
41-51 surviving corporation (foreign or domestic), payment for the shares
41-52 <therefor> shall be made within ninety (90) days after the date on
41-53 which the <such> corporate action was effected and, in the case of
41-54 shares represented by certificates, upon surrender of his
41-55 certificate or certificates representing such shares. Upon payment
41-56 of the agreed value, the dissenting shareholder shall cease to have
41-57 any interest in such shares or in the corporation.
41-58 (4) If, within <such period of> sixty (60) days after
41-59 the date on which such corporate action was effected, the
41-60 shareholder and the surviving corporation (foreign or domestic) do
41-61 not so agree, then the dissenting shareholder or the corporation
41-62 (foreign or domestic) may, within sixty (60) days after the
41-63 expiration of the sixty (60) day period, file a petition in any
41-64 court of competent jurisdiction in the county in which the
41-65 principal office of the corporation is located, asking for a
41-66 finding and determination of the fair value of the shareholder's
41-67 <such> shares as provided in Section B of Article 5.12 of this Act
41-68 and thereupon the parties shall have the rights and duties and
41-69 follow the procedure set forth in Sections B to D inclusive of
41-70 Article 5.12 <and set forth in Article 5.13>.
42-1 (5) In the absence of fraud in the transaction, the
42-2 remedy provided by this Article to a shareholder objecting to the
42-3 <such> corporate action is the exclusive remedy for the recovery of
42-4 the value of his shares or money damages to the <such> shareholder
42-5 with respect to the <such> corporate action. If<; and if> the
42-6 surviving corporation (foreign or domestic) complies with the
42-7 requirements of this Article, any such shareholder who fails to
42-8 comply with the requirements of this Article shall not be entitled
42-9 to bring suit for the recovery of the value of his shares or money
42-10 damages to such shareholder with respect to such corporate action.
42-11 F. Dissenting shareholders. If a plan of merger is required
42-12 by Section A of this Article to be adopted in the manner required
42-13 by Article 5.03 of this Act, the provisions of Articles 5.11 and<,>
42-14 5.12<, and 5.13> of this Act shall apply to the rights of the
42-15 shareholders of the parent corporation to dissent from such merger.
42-16 Except as otherwise provided in this Article, the provisions of
42-17 Articles 5.11 and<,> 5.12 <and 5.13> of this Act shall not be
42-18 applicable to a merger effected under the provisions of this
42-19 Article. The provisions of Article 5.13 of this Act shall be
42-20 applicable to any merger effected under the provisions of this
42-21 Article to the extent provided in Article 5.13 of this Act.
42-22 SECTION 2.19. Sections D and F, Article 7.12, Texas Business
42-23 Corporation Act, are amended to read as follows:
42-24 D. A dissolved corporation may give written notice to a
42-25 person having or asserting an existing claim against the dissolved
42-26 corporation to present such existing claim to the dissolved
42-27 corporation in accordance with the notice. The notice shall be
42-28 sent by registered or certified mail, return receipt requested, to
42-29 the person having or asserting the existing claim at such person's
42-30 last known address, and the notice shall:
42-31 (1) state that such person's <such> claim against the
42-32 dissolved corporation must be presented in writing to the dissolved
42-33 corporation on or before the date stated in the notice, which shall
42-34 be not earlier than 120 days after the date the notice is sent to
42-35 such person;
42-36 (2) state that the written presentation of the claim
42-37 must describe such claim in sufficient detail to reasonably inform
42-38 the dissolved corporation of the identity of such person and of the
42-39 nature and amount of the claim;
42-40 (3) state a mailing address where the written
42-41 presentation of the person's claim against the dissolved
42-42 corporation is to be sent; <and>
42-43 (4) state that if the written presentation of the
42-44 claim is not received at such address on or before the date stated
42-45 in the notice, the claim will be extinguished; and
42-46 (5) be accompanied by a copy of this Section D.
42-47 If a written presentation of such person's claim against the
42-48 dissolved corporation that meets the requirements of this section
42-49 is received at the address of the dissolved corporation stated in
42-50 the notice on or before the date stated in the notice, the
42-51 dissolved corporation may thereafter give written notice to such
42-52 person that such claim is rejected by the dissolved corporation.
42-53 The notice shall be sent by registered or certified mail, return
42-54 receipt requested, addressed to such person at such person's last
42-55 known address, and the notice shall state:
42-56 (1) that such claim is rejected by the dissolved
42-57 corporation;
42-58 (2) that such claim will be extinguished unless
42-59 an action or proceeding on such claim is brought within 180 days
42-60 after the date such notice of rejection was sent to such person and
42-61 before the expiration of the three-year period following the date
42-62 of dissolution; and
42-63 (3) the date such notice of rejection was sent
42-64 and the date of dissolution.
42-65 Such person's claim against the dissolved corporation shall
42-66 be extinguished if (a) a written presentation of that claim meeting
42-67 the requirements of this section is not received at the address of
42-68 the dissolved corporation stated in the notice to such person on or
42-69 before the date stated in the notice or (b) an action or proceeding
42-70 on such claim is not brought within 180 days after the date a
43-1 notice of rejection was sent to such person and before the
43-2 expiration of the three-year period following the date of
43-3 dissolution.
43-4 F. In this Article:
43-5 (1) The term "dissolved corporation" means a
43-6 corporation (a) that was voluntarily dissolved by the issuance of a
43-7 certificate of dissolution by the Secretary of State and was not
43-8 issued a certificate of revocation of dissolution pursuant to
43-9 Section C of Article 6.05 of this Act, (b) that was involuntarily
43-10 dissolved by the Secretary of State and was not reinstated pursuant
43-11 to Section E of Article 7.01 of this Act, (c) that was dissolved by
43-12 decree of a court when the court has not liquidated all the assets
43-13 and business of the corporation as provided in this Act, <or> (d)
43-14 that was dissolved by the expiration of its period of duration and
43-15 has not revived its existence as provided in this Act, or (e) whose
43-16 charter was forfeited pursuant to the Tax Code, unless the
43-17 forfeiture has been set aside.
43-18 (2) The term "claim" means a right to payment,
43-19 damages, or property, whether liquidated or unliquidated, accrued
43-20 or contingent, matured or unmatured.
43-21 (3) The term "existing claim" means a claim that
43-22 existed before dissolution and is not otherwise barred by
43-23 limitations or a contractual obligation incurred after dissolution.
43-24 SECTION 2.20. Section A, Article 8.14, Texas Business
43-25 Corporation Act, is amended to read as follows:
43-26 A. A foreign corporation authorized to transact business in
43-27 this state may withdraw from this state upon procuring from the
43-28 Secretary of State a certificate of withdrawal. In order to
43-29 procure such certificate of withdrawal, such foreign corporation
43-30 shall deliver to the Secretary of State an application for
43-31 withdrawal, which shall set forth:
43-32 (1) The name of the corporation and the state or
43-33 country under the laws of which it is incorporated;
43-34 (2) That the corporation is not transacting business
43-35 in this state;
43-36 (3) That the corporation surrenders its authority to
43-37 transact business in this state;
43-38 (4) That the corporation revokes the authority of its
43-39 registered agent in this state to accept service of process and
43-40 consents that service of process in any action, suit, or proceeding
43-41 based upon any cause of action arising in this state during the
43-42 time the corporation was authorized to transact business in this
43-43 state may thereafter be made on such corporation by service thereof
43-44 on the Secretary of State;
43-45 (5) A post office address to which the Secretary of
43-46 State may mail a copy of any process against the corporation that
43-47 may be served on him;
43-48 (6) A statement that all sums due, or accrued, to this
43-49 state have been paid, or that adequate provision has been made for
43-50 the payment thereof; and
43-51 (7) A statement that all known creditors or claimants
43-52 have been paid or provided for <and that the corporation is not
43-53 involved in or threatened with litigation in any court in this
43-54 state>.
43-55 SECTION 2.21. Section A, Article 10.03, Texas Business
43-56 Corporation Act, is amended to read as follows:
43-57 A. The effectiveness of (i) the incorporation of a
43-58 corporation under this Act, (ii) an amendment to a corporation's
43-59 articles of incorporation, including an amendment effected pursuant
43-60 to a statement of resolution establishing a series of shares, (iii)
43-61 the restatement of articles of incorporation of a corporation, (iv)
43-62 a merger or share exchange, (v) a cancellation of redeemable or
43-63 reacquired shares or a reduction in stated capital, (vi) a
43-64 voluntary dissolution, (vii) the authorization or withdrawal of a
43-65 foreign corporation to transact business in this State, (viii) an
43-66 amendment to the certificate of authority of a foreign corporation,
43-67 (ix) a bylaw or agreement restricting the transfer of shares or
43-68 securities of a corporation pursuant to this Act, (x) a change in
43-69 registered office or registered agent, or (xi) a change of address
43-70 of a registered agent (each such act or document being a "Permitted
44-1 Act") may be made effective as of a time and date after the time
44-2 and date otherwise provided in this Act or may be made effective
44-3 upon the occurrence of events or facts that may occur in the
44-4 future, which events or facts may include future acts of any person
44-5 or entity, if:
44-6 (1) the articles, statement, application, <(i)> or
44-7 other filing that is required by this Act to be filed with the
44-8 Secretary of State to make effective such Permitted Act clearly and
44-9 expressly set forth, in addition to any other statement or
44-10 information required to be set forth therein, (i) the time and date
44-11 on which such Permitted Act is to become effective or (ii) if such
44-12 Permitted Act is to become effective upon the occurrence of events
44-13 or facts that may occur in the future, (a) the manner in which such
44-14 events or facts shall operate to cause such Permitted Act to become
44-15 effective and (b) the date of the 90th day after the date of the
44-16 filing of such articles, statement, application or other filing;
44-17 (2) in the case of a Permitted Act that is to become
44-18 effective as of a time or date after the time and date otherwise
44-19 provided in this Act, (i) such subsequent time and date is not more
44-20 than 90 days after the date of the filing of the articles,
44-21 statement, application, or other filing that is otherwise required
44-22 by this Act to be filed with the Secretary of State to make
44-23 effective such Permitted Act and (ii) the time on which the
44-24 Permitted Act is to become effective is not midnight or 12:00 p.m.;
44-25 and
44-26 (3) in the case of a Permitted Act that is to be made
44-27 effective upon the occurrence of events or facts that may occur in
44-28 the future, other than the mere passage of time, a statement that
44-29 all such events or facts upon which the effectiveness of such
44-30 Permitted Act is conditioned have been satisfied or waived, and of
44-31 the date on which such condition was satisfied or waived, is filed
44-32 with the Secretary of State within 90 days of the date of the
44-33 filing of the articles, statement, application or other filing that
44-34 is otherwise required by this Act for such Permitted Act to become
44-35 effective.
44-36 SECTION 2.22. Section 8(E), Texas Professional Association
44-37 Act (Article 1528f, Vernon's Texas Civil Statutes), is amended to
44-38 read as follows:
44-39 (E) Execution. The articles of association shall be signed
44-40 <and verified> by each of the members.
44-41 SECTION 2.23. Section 15, Texas Professional Association Act
44-42 (Article 1528f, Vernon's Texas Civil Statutes), is amended to read
44-43 as follows:
44-44 Sec. 15. Articles of Amendment. The articles <Articles> of
44-45 amendment shall be executed on behalf of <by> the association by an
44-46 officer <by its president or a vice-president and by its secretary
44-47 or an assistant secretary, and certified by one of the officers
44-48 signing such articles,> and shall set forth:
44-49 (1) The name and address of the association;
44-50 (2) If the amendment alters any provision of the
44-51 original or amended articles of association, an identification by
44-52 reference or description of the altered provision and a statement
44-53 of its text as it is amended to read. If the amendment is an
44-54 addition to the original or amended articles of association, a
44-55 statement of that fact and the full text of each provision added;
44-56 (3) The date of the adoption of the amendment; and
44-57 (4) A statement that the amendment was adopted in
44-58 accordance with the procedure for amendment stated in the articles
44-59 of association, or, if none is stated therein, a statement that the
44-60 amendment was adopted by two-thirds vote of its members.
44-61 SECTION 2.24. Section 18, Texas Professional Association Act
44-62 (Article 1528f, Vernon's Texas Civil Statutes), is amended to read
44-63 as follows:
44-64 Sec. 18. Articles of Dissolution. The articles of
44-65 dissolution shall be executed on behalf of <by> the association by
44-66 an officer <its president or a vice-president and by its secretary
44-67 or an assistant secretary, and verified by one of the officers
44-68 signing such articles>. If there are no living officers of the
44-69 association, the articles shall be executed by the legal
44-70 representative of the last surviving officer. The articles of
45-1 dissolution shall set forth:
45-2 (1) The name and address of the association;
45-3 (2) The names and respective addresses of its
45-4 officers;
45-5 (3) The names and respective addresses of the members
45-6 of its Board of Directors or Executive Committee; and
45-7 (4) A statement that the association is dissolving in
45-8 accordance with its articles of association or, if there is no
45-9 dissolution provision in the articles, by two-thirds vote of its
45-10 members.
45-11 SECTION 2.25. The Texas Professional Association Act
45-12 (Article 1528f, Vernon's Texas Civil Statutes) is amended by adding
45-13 Section 26 to read as follows:
45-14 Sec. 26. PENALTY FOR SIGNING FALSE DOCUMENT. (A) A person
45-15 commits an offense if the person signs a document the person knows
45-16 is false in any material respect with intent that the document be
45-17 delivered on behalf of a professional association to the Secretary
45-18 of State for filing.
45-19 (B) An offense under this section is a Class A misdemeanor.
45-20 SECTION 2.26. The change in law made by Section 2.05 of this
45-21 Act, amending Sections A and B, Article 2.21, Texas Business
45-22 Corporation Act, applies to the liability of a shareholder,
45-23 beneficial interest owner, or subscriber for a contractual
45-24 obligation of a corporation entered into before, on, or after the
45-25 effective date of this Act unless the liability has been finally
45-26 adjudicated by a court of competent jurisdiction before the
45-27 effective date of this Act.
45-28 SECTION 2.27. Section 21, Texas Professional Association Act
45-29 (Article 1528f, Vernon's Texas Civil Statutes), is amended to read
45-30 as follows:
45-31 Sec. 21. ANNUAL STATEMENT. A professional association shall
45-32 in June of each year file with the Secretary of State a statement
45-33 showing the name and address of the association; the names and
45-34 addresses of all members of the association, and all officers and
45-35 all members of the Board of Directors or Executive Committee; and
45-36 shall state <certify> that all members are licensed to perform the
45-37 type of professional service for which the association is formed.
45-38 The statement shall be on such form as the Secretary of State shall
45-39 prescribe and furnish. It shall be executed on behalf of the
45-40 association by an officer <signed by the president or a
45-41 vice-president and by the secretary or an assistant secretary of
45-42 the association, and verified by one of the officers signing the
45-43 statement>.
45-44 ARTICLE 3. EFFECTIVE DATE; EMERGENCY
45-45 SECTION 3.01. This Act takes effect September 1, 1993.
45-46 SECTION 3.02. The importance of this legislation and the
45-47 crowded condition of the calendars in both houses create an
45-48 emergency and an imperative public necessity that the
45-49 constitutional rule requiring bills to be read on three several
45-50 days in each house be suspended, and this rule is hereby suspended.
45-51 * * * * *
45-52 Austin,
45-53 Texas
45-54 May 4, 1993
45-55 Hon. Bob Bullock
45-56 President of the Senate
45-57 Sir:
45-58 We, your Committee on Jurisprudence to which was referred H.B.
45-59 No. 1239, have had the same under consideration, and I am
45-60 instructed to report it back to the Senate with the recommendation
45-61 that it do pass and be printed.
45-62 Henderson,
45-63 Chairman
45-64 * * * * *
45-65 WITNESSES
45-66 No witnesses appeared on H.B. No. 1239.