1-1 By: Harris of Dallas S.B. No. 732
1-2 (In the Senate - Filed March 9, 1993; March 10, 1993, read
1-3 first time and referred to Committee on Jurisprudence;
1-4 April 6, 1993, reported favorably, as amended, by the following
1-5 vote: Yeas 7, Nays 0; April 6, 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 COMMITTEE AMENDMENT NO. 1 By: Harris of Dallas
1-16 Amend S.B. No. 732 as follows:
1-17 (1) Amend the heading to SECTION 1.01 to read as follows:
1-18 SECTION 1.01. Section A, Article 1.02, Texas Limited
1-19 Liability Company Act (Article 1528n, Vernon's Texas Civil
1-20 Statutes), is amended by amending Subsection (9) and adding
1-21 Subsection (10) to read as follows:
1-22 (2) Insert Subsection (10) in SECTION 1.01 to read as
1-23 follows:
1-24 (10) "Merger" means (a) the division of a domestic
1-25 limited liability company into two or more new domestic limited
1-26 liability companies or into a surviving limited liability company
1-27 and one or more new domestic or foreign limited liability companies
1-28 or other entities, or (b) the combination of one or more domestic
1-29 limited liability companies with one or more domestic or foreign
1-30 limited liability companies or other entities resulting in: one or
1-31 more surviving domestic or foreign limited liability companies or
1-32 other entities; the creation of one or more new domestic or foreign
1-33 limited liability companies or other entities; or one or more
1-34 surviving domestic or foreign limited liability companies or other
1-35 entities and the creation of one or more new domestic or foreign
1-36 limited liability companies or other entities.
1-37 (3) In SECTION 1.25, Section B of Article 8.12, Texas
1-38 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
1-39 Statutes), amend line 17, page 13, to read as follows:
1-40 "through 2.06, 2.09, 2.09A, 3.01 and 7.01 through 7.07,
1-41 Texas".
1-42 (4) On page 14 amend SECTION 1.27, Subsection (1), Section A
1-43 of added Article 9.03, as follows:
1-44 (A) Amend line 43 on page 14 by deleting "partnership"
1-45 and inserting "liability company" before "to procure a
1-46 certificate";
1-47 (B) Amend line 48 on page 14 by deleting "or";
1-48 (C) Amend line 50 on page 14 by deleting the "." and
1-49 inserting "; and"; and
1-50 (D) Add new Paragraphs (g) and (h) between lines 51
1-51 and 52 to read as follows:
1-52 "(g) a change of address of a registered agent; or
1-53 "(h) a voluntary dissolution."
1-54 (5) Insert a new SECTION 2.26 to read as follows:
1-55 SECTION 2.26. Section 21, Texas Professional Association Act
1-56 (Article 1528f, Vernon's Texas Civil Statutes), is amended to read
1-57 as follows:
1-58 Sec. 21. ANNUAL STATEMENT. A professional association shall
1-59 in June of each year file with the Secretary of State a statement
1-60 showing the name and address of the association; the names and
1-61 addresses of all members of the association, and all officers and
1-62 all members of the Board of Directors or Executive Committee; and
1-63 shall state <certify> that all members are licensed to perform the
1-64 type of professional service for which the association is formed.
1-65 The statement shall be on such form as the Secretary of State shall
1-66 prescribe and furnish. It shall be executed on behalf of the
1-67 association by an officer <signed by the president or a
1-68 vice-president and by the secretary or an assistant secretary of
2-1 the association, and verified by one of the officers signing the
2-2 statement>.
2-3 (6) Renumber current SECTION 2.26 as SECTION 2.27.
2-4 COMMITTEE AMENDMENT NO. 2 By: Harris of Dallas
2-5 Amend S.B. No. 732 as follows:
2-6 (1) On page 6, line 17, after "committee", delete "of the
2-7 managers".
2-8 (2) On page 6, line 20, after "vote,", delete "of"; and
2-9 after "managers, or", delete "of".
2-10 (3) On page 6, line 21, add a comma after "committee".
2-11 A BILL TO BE ENTITLED
2-12 AN ACT
2-13 relating to the organization and operation of certain business
2-14 organizations that provide for limited liability; providing
2-15 penalties.
2-16 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
2-17 ARTICLE 1. LIMITED LIABILITY COMPANIES
2-18 SECTION 1.01. Subsection (9), Section A, Article 1.02, Texas
2-19 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
2-20 Statutes), is amended to read as follows:
2-21 (9) "Foreign Limited Liability Company" means an
2-22 entity formed under the laws of a jurisdiction other than this
2-23 state (a) that is characterized as a limited liability company by
2-24 such laws or (b) although not so characterized by such laws, that
2-25 elects to procure a certificate of authority pursuant to Article
2-26 7.01 of this act, that is formed under laws which provide
2-27 <provides> that some or all of the persons entitled to receive a
2-28 distribution of the assets thereof upon the entity's dissolution or
2-29 otherwise or to exercise voting rights with respect to an interest
2-30 in the entity shall not be liable for the debts, obligations or
2-31 liabilities of the entity and which is not eligible to become
2-32 authorized to <qualify to> do business in this state under any
2-33 other statute.
2-34 SECTION 1.02. Section A, Article 2.03, Texas Limited
2-35 Liability Company Act (Article 1528n, Vernon's Texas Civil
2-36 Statutes), is amended to read as follows:
2-37 A. The limited liability company name shall conform to the
2-38 following requirements:
2-39 (1) It shall either contain the words <word> "Limited
2-40 Liability Company" or "Limited Company" or the abbreviations
2-41 <abbreviation "Ltd." or> "L.L.C.," "LLC," "LC," or "L.C." and shall
2-42 contain such additional words as may be required by law. The word
2-43 "Limited" may be abbreviated as "Ltd." or "LTD" and the word
2-44 "Company" may be abbreviated as "Co." However, a limited liability
2-45 company formed before September 1, 1993, that complied with this
2-46 Section on the date of formation, but does not comply with this
2-47 Section as revised, is not required to change its name.
2-48 (2) It shall not contain any word or phrase which
2-49 indicates or implies that it is organized for any purpose other
2-50 than one or more of the purposes contained in its articles of
2-51 organization.
2-52 (3) It shall not be the same as, or deceptively
2-53 similar to, the name of any domestic limited liability company,
2-54 corporation or limited partnership existing under the laws of this
2-55 state, or the name of any foreign limited liability company,
2-56 corporation or limited partnership authorized to transact business
2-57 in this state, or a name the exclusive right to which is, at the
2-58 time, reserved in the manner provided in this Act or any other
2-59 statute providing for reservation of names by a corporation or
2-60 limited partnership, or the name of a limited liability company,
2-61 corporation or limited partnership which has in effect a
2-62 registration of its company name as provided in this act or any
2-63 other applicable law provided that a name may be similar if written
2-64 consent is obtained from the existing limited liability company,
2-65 corporation or limited partnership having the name deemed to be
2-66 similar or the person for whom the name deemed to be similar is
2-67 reserved in the office of the Secretary of State.
2-68 SECTION 1.03. Section A, Article 2.08, Texas Limited
2-69 Liability Company Act (Article 1528n, Vernon's Texas Civil
2-70 Statutes), is amended to read as follows:
3-1 A. The managers, if any, and the registered agent shall be
3-2 agents of a limited liability company or foreign limited liability
3-3 company upon whom any process, notice, or demand required or
3-4 permitted by law to be served upon the limited liability company or
3-5 foreign limited liability company may be served.
3-6 SECTION 1.04. Article 2.09, Texas Limited Liability Company
3-7 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
3-8 read as follows:
3-9 Art. 2.09. Regulations of limited liability company.
3-10 A. The power to adopt, alter, amend, or repeal the regulations of
3-11 a limited liability company shall be vested in the members of the
3-12 company unless vested in whole or part in the manager or managers
3-13 of the company by the articles of organization or regulations.
3-14 Regulations adopted by the members or by the managers may be
3-15 repealed or altered; new regulations may be adopted by the members;
3-16 and regulations may provide that they may not, in whole or
3-17 specified part, be altered, amended, or repealed by the managers.
3-18 The regulations may contain any provisions for the regulation and
3-19 management of the affairs of the limited liability company not
3-20 inconsistent with law or the articles of organization. Unless
3-21 otherwise provided in the articles of organization, the <The>
3-22 initial regulations of the limited liability company shall be
3-23 adopted by the manager or managers named in the articles of
3-24 organization, if any, or by the member or members named in the
3-25 articles of organization, if any. Any provision of this Act
3-26 subject to variation or modification by the regulations of a
3-27 limited liability company is also subject to variation or
3-28 modification by the articles of organization of the limited
3-29 liability company.
3-30 SECTION 1.05. Article 2.11, Texas Limited Liability Company
3-31 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
3-32 read as follows:
3-33 Art. 2.11. Limited liability company property. A. Real or
3-34 personal property owned or purchased by a limited liability company
3-35 may <shall> be held and owned, and conveyance may <shall> be made,
3-36 in the name of the limited liability company. Instruments and
3-37 documents providing for the acquisition, mortgage, or disposition
3-38 of the property of the limited liability company shall be valid and
3-39 binding upon the company, if they are executed by one or more
3-40 persons as provided in Article 2.21 of this Act <the preceding
3-41 Article>.
3-42 SECTION 1.06. Article 2.12, Texas Limited Liability Company
3-43 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
3-44 read as follows:
3-45 Art. 2.12. Managers. A. Except and to the extent the
3-46 articles of organization or the regulations shall reserve
3-47 management of the limited liability company <the same> to the
3-48 members in whole or in part, and subject to provisions in the
3-49 articles of organization, the regulations, or this Act restricting
3-50 or enlarging the powers, rights, and duties of any manager or group
3-51 or class of managers, the powers of a limited liability company
3-52 shall be exercised by or under the authority of, and the business
3-53 and affairs of a limited liability company shall be managed under
3-54 the direction of, the manager or managers of the limited liability
3-55 company. If management of the limited liability company is fully
3-56 reserved to the members, the limited liability company need not
3-57 have managers. Managers need not be residents of this State or
3-58 members of the limited liability company unless the regulations so
3-59 require. The regulations may prescribe other qualifications for
3-60 managers. If the management of the limited liability company is
3-61 reserved in whole or in part to the members, Articles 2.17, 2.18,
3-62 2.19, and 2.20 of this Act apply to the members who manage the
3-63 limited liability company to the same extent as those articles
3-64 would otherwise apply to managers of a limited liability company.
3-65 SECTION 1.07. Article 2.13, Texas Limited Liability Company
3-66 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
3-67 read as follows:
3-68 Art. 2.13. Number and election of managers. A. The
3-69 managers of a limited liability company, if any, shall consist of
3-70 one or more persons. The number of managers shall be fixed by, or
4-1 in the manner provided in, the regulations, except as to the number
4-2 constituting the initial managers, which number shall be fixed by
4-3 the articles of organization. The number of managers may be
4-4 increased or decreased from time to time by amendment to, or in the
4-5 manner provided in, the regulations, but no decrease shall have the
4-6 effect of shortening the term of any incumbent manager. In the
4-7 absence of a regulation fixing the number of managers or providing
4-8 for the manner in which the number of managers shall be fixed, the
4-9 number of managers shall be the same as the number constituting the
4-10 initial managers. The names and addresses of the initial managers,
4-11 if any, shall be stated in the articles of organization. Unless
4-12 otherwise provided in the regulations or in any resolution of the
4-13 managers or members appointing that manager in accordance with
4-14 <removed in accordance with the provisions of> the regulations or
4-15 articles of organization, each manager <such persons> shall hold
4-16 office for the term for which elected, if any term is specified,
4-17 and until that manager's successor has been elected, or until that
4-18 manager's earlier death, resignation, or removal. The regulations
4-19 may provide for the time or times at which the members entitled to
4-20 vote in the election of managers shall elect managers and the term
4-21 for which the managers shall hold office <until the first annual
4-22 meeting of members, and until their successors shall have been
4-23 elected and qualified. At the first annual meeting of members and
4-24 at each annual meeting thereafter, the holders of membership
4-25 interests entitled to vote in the election of managers shall elect
4-26 managers to hold office until the next succeeding annual meeting,
4-27 except in case of the classification of managers as permitted by
4-28 this Act>. The regulations may provide that <the holders of> any
4-29 class or group of members <series of membership interests> shall be
4-30 entitled to elect one or more managers, who shall hold office for
4-31 such terms as shall be stated in the regulations. <Unless removed
4-32 in accordance with provisions of the regulations, each manager
4-33 shall hold office for the term for which elected and until a
4-34 successor shall have been duly elected and qualified.> The
4-35 regulations may provide that at any meeting of members called
4-36 expressly for that purpose any managers may be removed, with or
4-37 without cause, as provided therein; however, if<. Whenever the
4-38 holders of> any class or group <series> of members is <shares are>
4-39 entitled to elect one or more managers by the provisions of the
4-40 regulations, only the members <holders of membership interests> of
4-41 that class or group <series> shall be entitled to vote for or
4-42 against the removal of any managers elected by the members
4-43 <holders> of that class or group <series>.
4-44 SECTION 1.08. Article 2.14, Texas Limited Liability Company
4-45 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
4-46 read as follows:
4-47 Art. 2.14. Classification of managers. A. The regulations
4-48 may provide that the managers shall be divided into more than one
4-49 class <either two or three classes>, each class to be the number
4-50 specified in the regulations <as nearly equal in number as
4-51 possible>, the terms <of office> of managers of each <the first>
4-52 class to expire in the order provided in the regulations and at the
4-53 meetings of the members at which the regulations provide that
4-54 managers are to be elected <at the first annual meeting of members
4-55 after their election, that of the second class to expire at the
4-56 second annual meeting after their election, and that of the third
4-57 class, if any, to expire at the third annual meeting after their
4-58 election>. If the regulations provide for the classification of
4-59 managers, (1) the whole number of managers of the limited liability
4-60 company need not be elected annually or at any regularly scheduled
4-61 meeting of the members, and (2) <at each annual meeting> after such
4-62 classification, at each meeting at which the regulations provide
4-63 that managers are to be elected, the number of managers equal to
4-64 the number of the class whose term expires at the time of such
4-65 meeting shall be elected to hold office until the next succeeding
4-66 meeting at which the regulations provide that the successors to the
4-67 managers are to be elected. A classification of managers adopted
4-68 after the last meeting of members at which managers were elected
4-69 may not be effective before the next meeting of members at which
4-70 managers are elected unless the classification is effected by an
5-1 amendment to the regulations adopted by the members <the second
5-2 succeeding annual meeting, if there be two classes, or until the
5-3 third succeeding annual meeting, if there be three classes>.
5-4 SECTION 1.09. Section A, Article 2.18, Texas Limited
5-5 Liability Company Act (Article 1528n, Vernon's Texas Civil
5-6 Statutes), is amended to read as follows:
5-7 A. If the regulations so provide, the managers, by
5-8 resolution, may designate from among the managers one or more
5-9 committees, each of which shall be comprised of one or more of the
5-10 managers, and may designate one or more of the managers as
5-11 alternate members of any committee, who may, subject to any
5-12 limitations imposed by the managers, replace absent or disqualified
5-13 managers at any meeting of that committee. Any such committee, to
5-14 the extent provided in such resolution or in the regulations, shall
5-15 have and may exercise all of the authority of the managers, subject
5-16 to the limitations set forth in Sections B and C of this Article.
5-17 Unless the resolution designating a particular committee, the
5-18 articles of organization, or the regulations expressly so provides,
5-19 a committee of the managers does not have the authority to
5-20 authorize or make a distribution of limited liability company cash
5-21 or property to the members or to authorize the issuance of
5-22 interests in the limited liability company.
5-23 SECTION 1.10. Article 2.21, Texas Limited Liability Company
5-24 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
5-25 read as follows:
5-26 Art. 2.21. DESIGNATION OF OFFICERS; AUTHORITY AND APPARENT
5-27 AUTHORITY OF OFFICERS, AGENTS, MANAGERS, AND MEMBERS <POWERS OF
5-28 MANAGERS AND OFFICERS>. A. One or more persons, who may or may
5-29 not be managers or members, may be designated as officers of the
5-30 limited liability company by the manager or managers, if management
5-31 is vested in one or more managers, or by the member or members, if
5-32 management of the limited liability company is reserved to the
5-33 members <The managers may designate one or more persons as officers
5-34 of the limited liability company who are not managers. Every
5-35 manager and officer is an agent of the limited liability company
5-36 for the purpose of its business and the act of a manager or
5-37 officer, including the execution in the name of the limited
5-38 liability company of any instrument for apparently carrying on in
5-39 the usual way the business of the limited liability company, binds
5-40 the limited liability company unless the manager or officer so
5-41 acting otherwise lacks the authority to act for the limited
5-42 liability company and the person with whom the manager or officer
5-43 is dealing has knowledge of the fact that the manager or officer
5-44 has no such authority>.
5-45 B. All officers, agents, managers, and members of the
5-46 limited liability company, as among themselves and the limited
5-47 liability company, have authority and perform duties in the
5-48 management of the limited liability company as may be provided in
5-49 the regulations or as may be determined by resolution of the
5-50 manager or managers, if management is vested in one or more
5-51 managers, or of the member or members, if management is reserved to
5-52 the members, in each case not inconsistent with the regulations or
5-53 the articles of organization.
5-54 C. Except as otherwise provided in this Article, the
5-55 following are agents of a limited liability company for the purpose
5-56 of its business:
5-57 (1) any one or more officers or other agents of a
5-58 limited liability company who are vested with actual or apparent
5-59 authority;
5-60 (2) each manager, to the extent that management of the
5-61 limited liability company is vested in that manager; and
5-62 (3) each member, to the extent that management of the
5-63 limited liability company has been reserved to that member.
5-64 D. An act, including the execution in the name of the
5-65 limited liability company of any instrument, for the purpose of
5-66 apparently carrying on in the usual way the business of the limited
5-67 liability company by any of the persons described in Section C of
5-68 this Article binds the limited liability company unless:
5-69 (1) the officer, agent, manager, or member so acting
5-70 otherwise lacks the authority to act for the limited liability
6-1 company; and
6-2 (2) the person with whom the officer, agent, manager,
6-3 or member is dealing has knowledge of the fact that the officer,
6-4 agent, manager, or member does not have that authority.
6-5 SECTION 1.11. Part Two, Texas Limited Liability Company Act
6-6 (Article 1528n, Vernon's Texas Civil Statutes), is amended by
6-7 adding Article 2.23 to read as follows:
6-8 Art. 2.23. VOTING, QUORUM, AND ACTION. A. Except as
6-9 otherwise provided in this Article, in the articles of
6-10 organization, or in the regulations, a majority of the members,
6-11 managers, or members of any committee of the managers constitutes a
6-12 quorum for the transaction of business at any meeting of the
6-13 members, the managers, or the committee. An act of a majority of
6-14 the members entitled to vote, of the managers, or of the members of
6-15 a committee who are present at a meeting of the members, the
6-16 managers, or the committee at which a quorum is present is the act
6-17 of the members, the managers, or the committee.
6-18 B. (1) Unless otherwise provided by the articles of
6-19 organization or the regulations, any act required or permitted to
6-20 be taken at any meeting of the members, the managers, or any
6-21 committee may be taken without a meeting, without prior notice, and
6-22 without a vote if a consent or consents in writing, setting forth
6-23 the action so taken, is signed by the members, managers, or
6-24 committee members, as the case may be, having not fewer than the
6-25 minimum number of votes that would be necessary to take the action
6-26 at a meeting at which all members, managers, or committee members,
6-27 as the case may be, entitled to vote on the action were present and
6-28 voted.
6-29 (2) Unless otherwise provided in the regulations, a
6-30 telegram, telex, cablegram, or similar transmission by a person, or
6-31 a photographic, photostatic, facsimile, or similar reproduction of
6-32 a writing signed by a person, shall be regarded as signed by that
6-33 person for the purposes of this Article.
6-34 C. Subject to the provisions required or permitted by this
6-35 Act, unless otherwise provided in the articles of organization or
6-36 the regulations, members, managers, or members of any committee may
6-37 participate in and hold a meeting of the members, managers, or
6-38 committee by means of conference telephone or similar
6-39 communications equipment by means of which all persons
6-40 participating in the meeting may hear each other. Participation in
6-41 a meeting pursuant to this Section constitutes presence in person
6-42 at the meeting except where a person participates in the meeting
6-43 for the express purpose of objecting to the transaction of any
6-44 business on the ground that the meeting is not lawfully called or
6-45 convened.
6-46 D. Except as provided in the articles of organization or the
6-47 regulations, the affirmative vote, approval, or consent of a
6-48 majority of all the members is required to:
6-49 (1) amend the articles of organization or regulations;
6-50 (2) change the status of the limited liability company
6-51 from one in which management is reserved to the members to one in
6-52 which management is vested in one or more managers, or vice versa;
6-53 (3) issue any additional membership interests in the
6-54 limited liability company subsequent to the issuance of membership
6-55 interests to the initial members of the limited liability company;
6-56 (4) approve any merger, consolidation, share or
6-57 interest exchange, or other transaction authorized by or subject to
6-58 the provisions of Part Ten of this Act;
6-59 (5) voluntarily cause the dissolution of the limited
6-60 liability company;
6-61 (6) authorize any transaction, agreement, or action on
6-62 behalf of the limited liability company that is unrelated to its
6-63 purpose as set forth in the regulations or articles of organization
6-64 or that otherwise contravenes the regulations; or
6-65 (7) authorize any act that would make it impossible to
6-66 carry on the ordinary business of the limited liability company.
6-67 E. Except as provided in the regulations, the affirmative
6-68 vote, approval, or consent of a majority of all of the managers, if
6-69 management of the limited liability company is vested in one or
6-70 more managers, or of the members, if management of the limited
7-1 liability company is reserved to the members, is required to take
7-2 any action, other than an action listed in Section D of this
7-3 Article, that is not apparently for the carrying on of the business
7-4 of the limited liability company in the usual way.
7-5 F. Except as otherwise provided in the articles of
7-6 organization or the regulations, for purposes of this Act, a
7-7 "majority" of the members, managers, or any committee of the
7-8 managers means more than one-half, by number, of all the members,
7-9 managers, or members of the committee, as the case may be.
7-10 SECTION 1.12. Section A, Article 3.02, Texas Limited
7-11 Liability Company Act (Article 1528n, Vernon's Texas Civil
7-12 Statutes), is amended to read as follows:
7-13 A. The initial Articles of Organization shall set forth:
7-14 (1) The name of the limited liability company;
7-15 (2) The period of duration, which may be perpetual
7-16 <not exceed 30 years from the date of filing with the Secretary of
7-17 State>;
7-18 (3) The purpose for which the limited liability
7-19 company is organized which may be stated to be, or to include, the
7-20 transaction of any or all lawful business for which limited
7-21 liability companies may be organized under this Act;
7-22 (4) The address of its initial registered office
7-23 <principal place of business in the state> and the name <and
7-24 address> of its initial registered agent at that address <in the
7-25 state>;
7-26 (5) If the limited liability company is to have <be
7-27 managed by> a manager or managers, a statement to that effect <that
7-28 the company is to be managed by a manager or managers> and the
7-29 names and addresses of the initial manager or <such> managers <who
7-30 are to serve as managers until the first annual meeting of members
7-31 or until their successors are duly elected>. If the <management of
7-32 a> limited liability company will not have managers, a statement to
7-33 that effect and <is reserved to the members,> the name and
7-34 addresses of the initial members;<.>
7-35 (6) The name and address of each organizer;
7-36 (7) Any provision required by Part Eleven of this Act,
7-37 if the limited liability company is a professional limited
7-38 liability company; and
7-39 (8) Any other provisions, not inconsistent with law,
7-40 which the members elect to set out in the articles of organization
7-41 for the regulation of the internal affairs of the limited liability
7-42 company, including any provisions which under this Act are
7-43 <required or> permitted to be set out in the regulations of the
7-44 limited liability company.
7-45 SECTION 1.13. Section B, Article 3.06, Texas Limited
7-46 Liability Company Act (Article 1528n, Vernon's Texas Civil
7-47 Statutes), is amended to read as follows:
7-48 B. The articles of amendment shall set forth:
7-49 (1) The name of the limited liability company.
7-50 (2) If the amendment alters any provision of the
7-51 original or amended articles of organization an identification by
7-52 reference or description of the altered provision and a statement
7-53 of its text as it is amended to read. If the amendment is an
7-54 addition to the original or amended articles of organization a
7-55 statement of that fact and the text of each provision added.
7-56 (3) A statement that the amendment was approved in
7-57 accordance with Section D of Article 2.23 of this Act or as
7-58 otherwise provided in the articles of organization or regulations
7-59 and the date of the approval.
7-60 SECTION 1.14. Part Three, Texas Limited Liability Company
7-61 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
7-62 adding Article 3.09 to read as follows:
7-63 Art. 3.09. RESTATED ARTICLES OF ORGANIZATION. A. By
7-64 following the procedure to amend the articles of organization
7-65 provided by this Act, a limited liability company may authorize,
7-66 execute, and file restated articles of organization that restate
7-67 the entire text of the articles of organization, as amended or
7-68 supplemented by:
7-69 (1) all certificates of amendment previously issued by
7-70 the Secretary of State; or
8-1 (2) all certificates of amendment previously issued by
8-2 the Secretary of State and by further amendments included in the
8-3 restated articles of organization.
8-4 Unless otherwise provided by the articles of organization or
8-5 the regulations, member approval is not required if further
8-6 amendment is not made by the restated articles of organization.
8-7 B. Restated articles of organization that restate the entire
8-8 articles of organization as amended and supplemented by all
8-9 certificates of amendment previously issued by the Secretary of
8-10 State, without making a further amendment, must contain an
8-11 introductory paragraph stating that the instrument accurately
8-12 copies the articles of organization and all amendments to the
8-13 articles of organization that are in effect to date and that the
8-14 instrument does not contain any other change in a provision of the
8-15 articles of organization or a previous amendment, other than:
8-16 (1) the insertion of the current number of managers,
8-17 if any, and the names and addresses of the persons then serving as
8-18 managers, if any, in lieu of similar information concerning the
8-19 initial managers; and
8-20 (2) the omission of the name and address of each
8-21 organizer.
8-22 C. An instrument containing restated articles of
8-23 organization that restate the entire articles of organization as
8-24 amended and supplemented by all certificates of amendment
8-25 previously issued by the Secretary of State and as further amended
8-26 by the restated articles of organization must:
8-27 (1) state that each amendment made by the restated
8-28 articles of organization has been effected in conformity with this
8-29 Act;
8-30 (2) include the statements required by this Act to be
8-31 contained in articles of amendment; and
8-32 (3) state that the instrument accurately copies the
8-33 articles of organization and all amendments that are in effect to
8-34 date and as further amended by the restated articles of
8-35 organization and that the instrument does not contain any other
8-36 change in a provision of the articles of organization or the
8-37 previous amendments, other than:
8-38 (a) the insertion of the current number of
8-39 managers, if any, and the names and addresses of the persons then
8-40 serving as managers, if any, in lieu of similar information
8-41 concerning the initial managers; and
8-42 (b) the omission of the name and address of each
8-43 organizer.
8-44 D. Restated articles of organization must be executed on
8-45 behalf of the limited liability company by an authorized manager or
8-46 member unless capital has not been paid into the limited liability
8-47 company and the restated articles of organization have been adopted
8-48 by the organizer, in which case the restated articles of
8-49 organization may be executed on behalf of the limited liability
8-50 company by the organizer. The original and a copy of the restated
8-51 articles of organization shall be delivered to the Secretary of
8-52 State. If the Secretary of State finds that the restated articles
8-53 of organization conform to law, and the appropriate filing fee is
8-54 paid as required by law, the Secretary of State shall:
8-55 (1) endorse on the original and the copy the word
8-56 "Filed" and the month, day, and year of filing;
8-57 (2) file the original in the Secretary of State's
8-58 office; and
8-59 (3) issue a restated certificate of organization and
8-60 affix the copy to the restated certificate of organization.
8-61 E. The restated certificate of organization, together with
8-62 the copy of the restated articles of organization affixed to the
8-63 restated certificate of organization by the Secretary of State,
8-64 shall be delivered to the limited liability company or its
8-65 representative.
8-66 F. On issuance of a restated certificate of organization by
8-67 the Secretary of State, the original articles of organization and
8-68 all amendments to the original articles are superseded, and the
8-69 restated articles of organization are the articles of organization
8-70 of the limited liability company.
9-1 SECTION 1.15. Section A, Article 4.01, Texas Limited
9-2 Liability Company Act (Article 1528n, Vernon's Texas Civil
9-3 Statutes), is amended to read as follows:
9-4 A. A limited liability company may have one or more members.
9-5 In connection with the formation of a limited liability company, a
9-6 person acquiring an interest as a member becomes a member on the
9-7 latter of:
9-8 (1) the date of formation of the limited liability
9-9 company; or
9-10 (2) the date stated in the records of the limited
9-11 liability company as the date that the person becomes a member or,
9-12 if no date is stated in those records, on the date that the
9-13 person's admission is first reflected in the records of the limited
9-14 liability company.
9-15 SECTION 1.16. Article 4.05, Texas Limited Liability Company
9-16 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
9-17 amending Section A and adding Section C to read as follows:
9-18 A. Unless otherwise provided by the regulations:
9-19 (1) a membership interest is assignable in whole or in
9-20 part;
9-21 (2) an assignment of a membership interest does not of
9-22 itself dissolve the limited liability company or entitle the
9-23 assignee to participate in the management and affairs of the
9-24 limited liability company or to become<,> or <to> exercise any
9-25 rights <or powers> of<,> a member;
9-26 (3) an assignment entitles the assignee to be
9-27 allocated income, gain, loss, deduction, credit, or similar items,
9-28 and to receive distributions, to which the assignor was entitled,
9-29 to the extent those items are assigned, and, for any proper
9-30 purpose, to require reasonable information or account of
9-31 transactions of the limited liability company and to make
9-32 reasonable inspection of the books and records of the limited
9-33 liability company; and
9-34 (4) until the assignee becomes a member, the assignor
9-35 member continues to be a member and to have the power to exercise
9-36 any rights or powers of a member, except to the extent those rights
9-37 or powers are assigned.
9-38 C. Until an assignee of the interest of a member in a
9-39 limited liability company is admitted as a member, the assignee
9-40 does not have liability as a member solely as a result of the
9-41 assignment.
9-42 SECTION 1.17. Section B, Article 5.02, Texas Limited
9-43 Liability Company Act (Article 1528n, Vernon's Texas Civil
9-44 Statutes), is amended to read as follows:
9-45 B. Except as otherwise provided by the articles of
9-46 organization or regulations, a member or the member's legal
9-47 representative or successor is obligated to the limited liability
9-48 company to perform an enforceable promise to make a contribution to
9-49 or otherwise pay cash or transfer property to a limited liability
9-50 company, notwithstanding the member's death, disability, or other
9-51 change in circumstances. If a member or a member's legal
9-52 representative or successor does not make a contribution or other
9-53 payment of cash or transfer of property required by the enforceable
9-54 promise, whether as a contribution or with respect to a
9-55 contribution previously made, that member or the member's legal
9-56 representative or successor is obligated, at the option of the
9-57 limited liability company, to pay to the limited liability company
9-58 an amount of cash equal to that portion of the agreed value, as
9-59 stated in the regulations or in the limited liability company
9-60 records required to be kept under Article 2.22 of this Act <act>,
9-61 of the contribution represented by the amount of cash that has not
9-62 been paid or the value of the property that has not been
9-63 transferred.
9-64 SECTION 1.18. Part Five, Texas Limited Liability Company Act
9-65 (Article 1528n, Vernon's Texas Civil Statutes), is amended by
9-66 adding Article 5.02-1 to read as follows:
9-67 Art. 5.02-1. ALLOCATION OF PROFITS AND LOSSES. A. The
9-68 profits and losses of a limited liability company shall be
9-69 allocated among the members and among classes of members in the
9-70 manner provided in the regulations. If the regulations do not
10-1 otherwise provide, the profits and losses shall be allocated in
10-2 accordance with the then current percentage or other interest in
10-3 the limited liability company of the members stated in limited
10-4 liability company records of the kind described in Section A of
10-5 Article 2.22 of this Act.
10-6 SECTION 1.19. Article 5.05, Texas Limited Liability Company
10-7 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
10-8 read as follows:
10-9 Art. 5.05. WITHDRAWAL OR EXPULSION <RESIGNATION> OF MEMBER.
10-10 A. A member may withdraw or be expelled from a limited liability
10-11 company at the time or on the occurrence of events specified in the
10-12 regulations.
10-13 SECTION 1.20. Article 6.01, Texas Limited Liability Company
10-14 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
10-15 read as follows:
10-16 Art. 6.01. DISSOLUTION. A. Except as provided by Section B
10-17 of this Article, a <A> limited liability company shall be dissolved
10-18 on the first of the following to occur:
10-19 (1) <When> the period fixed for the duration of the
10-20 limited liability company expires;<.>
10-21 (2) <On> the occurrence of events specified in the
10-22 articles of organization or regulations to cause dissolution;<.>
10-23 (3) the action of the members to dissolve the limited
10-24 liability company; <Written consent of all members to dissolution.>
10-25 (4) if no capital has been paid into the limited
10-26 liability company, the act of the organizer or the managers of the
10-27 limited company to dissolve the limited liability company;
10-28 (5) except <Except> as otherwise provided in the
10-29 regulations, upon the death, <retirement, resignation,> expulsion,
10-30 withdrawal pursuant to or as provided in the articles of
10-31 organization or regulations, bankruptcy, or dissolution of a member
10-32 or the occurrence of any other event which terminates the continued
10-33 membership of a member in the limited liability company<, unless
10-34 there is at least one remaining member and the business of the
10-35 limited liability company is continued by the consent of the number
10-36 of members or class thereof stated in the articles of organization
10-37 or regulations of the limited liability company or if not so
10-38 stated, by all remaining members.>; or
10-39 (6) entry <(5) Entry> of a decree of judicial
10-40 dissolution under Section 6.02 of this Act.
10-41 B. A limited liability company is not dissolved if an event
10-42 of dissolution described by Subsection (1), (2), or (5) of Section
10-43 A of this Article occurs, there is at least one remaining member,
10-44 and the business of the limited liability company is continued by
10-45 the vote of the members or class as stated in the articles of
10-46 organization or regulations of the limited liability company, or if
10-47 not so stated, by all remaining members. Unless otherwise provided
10-48 in the articles of organization or in the regulations, an election
10-49 to continue the business of the limited liability company must be
10-50 made within 90 days after the date of the occurrence of the event
10-51 of dissolution. If an election to continue the business of the
10-52 limited liability company is made following the termination of the
10-53 period fixed for the duration of the limited liability company or
10-54 the occurrence of events specified in the articles of organization
10-55 to cause dissolution, the election is not effective unless an
10-56 appropriate amendment is made by the limited liability company to
10-57 its articles of organization during the three-year period following
10-58 the date of the event of dissolution, extending the period fixed
10-59 for the duration of the limited liability company or deleting the
10-60 event specified in the articles of organization that caused the
10-61 dissolution, as applicable.
10-62 SECTION 1.21. Article 6.03, Texas Limited Liability Company
10-63 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
10-64 read as follows:
10-65 Art. 6.03. WINDING UP. A. On the dissolution of a limited
10-66 liability company, the limited liability company's affairs shall be
10-67 wound up as soon as reasonably practicable. The winding up shall
10-68 be accomplished by the managers or members or by any other person
10-69 or persons designated by the articles of organization, by the
10-70 regulations, or by resolution of the managers or members. In
11-1 addition, a court of competent jurisdiction, on cause shown, may
11-2 wind up the limited liability company's affairs on application of
11-3 any member or the member's legal representative or assignee and, in
11-4 connection with the winding up, may appoint a person to carry out
11-5 the liquidation and may make all other orders, directions, and
11-6 inquiries that the circumstances require.
11-7 SECTION 1.22. Article 6.05, Texas Limited Liability Company
11-8 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
11-9 read as follows:
11-10 Art. 6.05. Procedure before filing articles of dissolution.
11-11 A. Before filing articles of dissolution:
11-12 (1) The limited liability company shall cease to carry
11-13 on its business, except insofar as may be necessary for the winding
11-14 up thereof.
11-15 (2) The limited liability company shall cause written
11-16 notice by registered or certified mail of its intention to dissolve
11-17 to be mailed to each known creditor of and claimant against the
11-18 limited liability company.
11-19 (3) The limited liability company shall proceed to
11-20 collect its assets, convey and dispose of such of its properties as
11-21 are not to be distributed in kind to its members, pay, satisfy or
11-22 discharge its liabilities and obligations, or make adequate
11-23 provisions for payment and discharge thereof, and do all other acts
11-24 required to liquidate its business and affairs; in case its
11-25 property and assets are not sufficient to satisfy or discharge all
11-26 the limited liability company's liabilities and obligations, the
11-27 limited liability company shall apply them so far as they will go
11-28 to the just and equitable payment of the liabilities and
11-29 obligations. After paying or discharging all of its obligations,
11-30 or making adequate provisions for payment and discharge thereof,
11-31 the limited liability company shall then distribute the remainder
11-32 of its assets, either in cash or in kind, among its members
11-33 <shareholders> according to their respective rights and interest.
11-34 (4) The limited liability company, at any time during
11-35 the liquidation of its business and affairs, may make application
11-36 to any district court of this state in the county in which the
11-37 registered office of the limited liability company is situated to
11-38 have the liquidation continued under the supervision of such court
11-39 as provided in this Act.
11-40 SECTION 1.23. Article 6.07, Texas Limited Liability Company
11-41 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
11-42 read as follows:
11-43 Art. 6.07. Articles of dissolution. A. If voluntary
11-44 dissolution proceedings have not been revoked, then, when all
11-45 liabilities and obligations of the limited liability company have
11-46 been paid or discharged, or adequate provision has been made
11-47 therefor <thereof>, or in case its property and assets are not
11-48 sufficient to satisfy and discharge all the limited liability
11-49 company's liabilities and obligations, then when all the property
11-50 and assets have been applied so far as they will go to the just and
11-51 equitable payment of the limited liability company's liabilities
11-52 and obligations, and all of the remaining property and assets of
11-53 the limited liability have been distributed to its members
11-54 according to their respective rights and interest, articles of
11-55 dissolution shall be executed on behalf of the limited liability
11-56 company by a manager or authorized member, or in the case of a
11-57 dissolution by action of the organizer of the limited liability
11-58 company, by the organizer, which shall set forth:
11-59 (1) The name of the limited liability company.
11-60 (2) The names and respective addresses of its
11-61 managers, if any.
11-62 (3) That all debts, obligations, and liabilities of
11-63 the limited liability company have been paid or discharged or that
11-64 adequate provision has been made therefor, or, in case the limited
11-65 liability company's property and assets were not sufficient to
11-66 satisfy and discharge all its debts, liabilities, and obligations,
11-67 that all property and assets have been applied so far as they will
11-68 go to the payment thereof in a just and equitable manner and that
11-69 no property or assets remain available for distribution among its
11-70 members, or, that the limited liability company has not acquired
12-1 any debts, obligations, or liabilities.
12-2 (4) That all remaining property and assets of the
12-3 limited liability company have been distributed among its members
12-4 in accordance with their respective rights and interest or that no
12-5 property remained for distribution to members after applying it as
12-6 far as it would go to the just and equitable payment of the debts,
12-7 liabilities, and obligations of the limited liability company, or
12-8 that the limited liability company has not acquired any property or
12-9 assets and therefore distributions to members were not required.
12-10 (5) If capital has not been paid into the limited
12-11 liability company, a copy of the resolution to dissolve, together
12-12 with a statement that the resolution was adopted by the act of the
12-13 organizer or the managers of the limited liability company and of
12-14 the date of adoption <There are no suits pending against the
12-15 limited liability company in any court, or that adequate provisions
12-16 have been made for satisfaction of any judgment, order, or decree
12-17 which may be entered against it in any pending suit>.
12-18 (6) If the limited liability company elected to
12-19 dissolve by action <written consent> of its <all> members, a<:>
12-20 <(a) A> copy of the resolution <written consent>
12-21 to dissolve, together with <and> a statement that the resolution
12-22 was adopted in accordance with Section D, Article 2.23, of this Act
12-23 or as otherwise provided in the articles of incorporation or the
12-24 regulations and the date of adoption <such written consent has been
12-25 signed by all members of the limited liability company or signed in
12-26 their names by their attorneys thereunto duly authorized>.
12-27 SECTION 1.24. Article 7.03, Texas Limited Liability Company
12-28 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
12-29 read as follows:
12-30 Art. 7.03. Limited Liability Company Name of Foreign Limited
12-31 Liability Company. A. No certificate of authority shall be issued
12-32 to a foreign limited liability company unless the limited liability
12-33 company name of such limited liability company:
12-34 (1) Shall contain the word "Limited Liability Company"
12-35 or "Limited Company" or the abbreviations "L.L.C.," "LLC," "LC,"
12-36 <"Ltd."> or "L.C." and shall contain such additional words as may
12-37 be required by law. The word "Limited" may be abbreviated as
12-38 "Ltd." or "LTD" and the word "Company" may be abbreviated as "Co."
12-39 However, a foreign limited liability company that procured a
12-40 certificate of authority to transact business in this state before
12-41 September 1, 1993, and that complied with this Section on the date
12-42 of procuring the certificate, but does not comply with this Section
12-43 as revised, is not required to change its name.
12-44 (2) Shall not contain any word or phrase which
12-45 indicates or implies that it is organized for any purpose other
12-46 than one or more of the purposes contained in its articles of
12-47 organization.
12-48 (3) Shall not be the same as, or deceptively similar
12-49 to, the name of any domestic limited liability company, corporation
12-50 or limited partnership existing under the laws of this state or of
12-51 any foreign limited liability company, corporation or limited
12-52 partnership authorized to transact business in this state, or a
12-53 name the exclusive right to which is, at the time, reserved or
12-54 registered in the manner provided in this Act or any other statute
12-55 relating to corporations, partnerships, or other business entities;
12-56 provided that a name may be similar if written consent is obtained
12-57 from the existing limited liability company, corporation or limited
12-58 partnership having the name deemed to be similar or the person, or
12-59 limited liability company, for whom the name deemed to be similar
12-60 is reserved or registered in the office of the Secretary of State.
12-61 A certificate of authority shall be issued as provided in this Act
12-62 to any foreign limited liability company having a name the same as,
12-63 deceptively similar to, or, if no consent is given, similar to the
12-64 name of any limited liability company existing under the laws of
12-65 this state or of any foreign limited liability company authorized
12-66 to transact business in this state, or a name the exclusive right
12-67 to which is, at the time, reserved or registered, provided such
12-68 foreign limited liability company qualifies and does business under
12-69 a name that meets the requirements of this article. The foreign
12-70 limited liability company shall set forth in the application for a
13-1 certificate of authority the name under which it is qualifying and
13-2 shall file an assumed name certificate as required by law.
13-3 SECTION 1.25. Article 8.12, Texas Limited Liability Company
13-4 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
13-5 read as follows:
13-6 Art. 8.12. Applicability of other statutes. A. Subject to
13-7 Section C of this Article, Articles 2.07, 4.14, and 5.14 and Part
13-8 Seven of the TBCA apply to a limited liability company and its
13-9 members, managers, and officers.
13-10 B. Subject to Section C of this Article, Articles 2.03
13-11 through 2.06, 2.09, 2.09A, and 7.01 through 7.07, Texas
13-12 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
13-13 Vernon's Texas Civil Statutes), as amended, apply to a limited
13-14 liability company and its members, managers, and officers.
13-15 C. For purposes of the application of the articles of the
13-16 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
13-17 by Sections A and B of this Article, as context requires:
13-18 (1) a reference to a corporation includes a limited
13-19 liability company;
13-20 (2) a reference to a share includes a membership
13-21 interest;
13-22 (3) a reference to a shareholder includes a member;
13-23 (4) a reference to a director includes a manager;
13-24 (5) a reference to articles of incorporation includes
13-25 articles of organization; and
13-26 (6) a reference to bylaws includes regulations. <To
13-27 the extent this Act contains no provision with respect to one of
13-28 the matters provided for in the TBCA or the Texas Miscellaneous
13-29 Corporation Laws Act as such acts shall be amended from time to
13-30 time, the provisions of the TBCA and the Texas Miscellaneous
13-31 Corporation Laws Act shall supplement the provisions of this Act to
13-32 the extent they are not inconsistent with the provisions of this
13-33 Act. Without limiting the generality of the foregoing, Article 5
13-34 of the TBCA shall supplement the provisions of this Act and a
13-35 limited liability company shall be an "other entity" as that term
13-36 is defined in the TBCA and Article 7.06 of the Texas Miscellaneous
13-37 Corporation Laws Act shall be applicable to limited liability
13-38 company managers to the same extent as to directors.>
13-39 SECTION 1.26. Section A, Article 9.01, Texas Limited
13-40 Liability Company Act (Article 1528n, Vernon's Texas Civil
13-41 Statutes), is amended to read as follows:
13-42 A. The Secretary of State is authorized and required to
13-43 collect for the use of the State the following fees:
13-44 (1) Filing articles of organization of a domestic
13-45 limited liability company and issuing the certificate of
13-46 organization, Two Hundred Dollars ($200.00).
13-47 (2) Filing articles of amendment of a domestic limited
13-48 liability company and issuing the certificate of amendment, One
13-49 Hundred Dollars ($100.00).
13-50 (3) Filing articles of merger involving one or more
13-51 <a> domestic or foreign limited liability companies: <company,>
13-52 (a) Two Hundred Dollars ($200.00), if another
13-53 type of domestic entity is not a party to the merger; or
13-54 (b) the greater of Two Hundred Dollars ($200.00)
13-55 or the highest filing fee for articles of merger under the
13-56 applicable Texas statute under which the other domestic entity or
13-57 entities are incorporated or organized, if another type of domestic
13-58 entity is party to the merger.
13-59 (4) Filing an application of a foreign limited
13-60 liability company for certificate of authority to transact business
13-61 in this state and issuing such a certificate of authority, Five
13-62 Hundred Dollars ($500.00).
13-63 (5) Filing an application of a foreign limited
13-64 liability company for an amended certificate of authority to
13-65 transact business in this state and issuing such an amended
13-66 certificate of authority, One Hundred Dollars ($100.00).
13-67 (6) Filing restated articles of organization of a
13-68 domestic limited liability company, Two Hundred Dollars ($200.00).
13-69 (7) Filing application for reservations of a limited
13-70 liability company name and issuing certificate thereof, Twenty-Five
14-1 Dollars ($25.00).
14-2 (8) Filing notice of transfer of reserved limited
14-3 liability company name and issuing a certificate therefor, Ten
14-4 Dollars ($10.00).
14-5 (9) Filing statement of change of registered office or
14-6 registered agent, or both, Ten Dollars ($10.00).
14-7 (10) Filing statement of change of address of
14-8 registered agent, Ten Dollars ($10.00); provided, however, that the
14-9 maximum fee for simultaneous filings by a registered agent for more
14-10 than one limited liability company shall not exceed Five Hundred
14-11 Dollars ($500.00).
14-12 (11) Filing articles of dissolution and issuing
14-13 certificate therefor, Twenty-Five Dollars ($25.00).
14-14 (12) Filing application for withdrawal and issuing
14-15 certificate therefor, Ten Dollars ($10.00).
14-16 (13) Filing certificate from home state that foreign
14-17 limited liability company is no longer existent in said state, Ten
14-18 Dollars ($10.00).
14-19 (14) Maintaining the record of service of any process,
14-20 notice or demand upon the Secretary of State as agent for foreign
14-21 and domestic limited liability companies, Twenty-Five Dollars
14-22 ($25.00).
14-23 (15) Filing any instrument pursuant to this act not
14-24 expressly provided for above, Ten Dollars ($10.00).
14-25 SECTION 1.27. Part Nine, Texas Limited Liability Company Act
14-26 (Article 1528n, Vernon's Texas Civil Statutes), is amended by
14-27 adding Article 9.03 to read as follows:
14-28 Art. 9.03. DELAYED EFFECTIVENESS OF CERTAIN FILINGS.
14-29 A. (1) For purposes of this Article, "permitted act" means a
14-30 filing with the Secretary of State under this Act for:
14-31 (a) the articles of organization of a limited
14-32 liability company under this Act;
14-33 (b) an amendment to or restatement of the
14-34 articles of organization;
14-35 (c) a merger;
14-36 (d) the application of a foreign limited
14-37 partnership to procure a certificate of authority to transact
14-38 business in this state or to withdraw from doing business in this
14-39 state;
14-40 (e) an amendment to the certificate of authority
14-41 of a foreign limited liability company to transact business in this
14-42 state; or
14-43 (f) a change in registered office or registered
14-44 agent.
14-45 (2) A permitted act may be made effective as of a time
14-46 and date after the time and date otherwise provided in this Act or
14-47 may be made effective on the occurrence of events or facts that may
14-48 occur in the future. Those events or facts may include future acts
14-49 of any person if the articles of organization, articles of
14-50 amendment or restatement, articles of merger, application, or other
14-51 document required by this Act to be filed with the Secretary of
14-52 State to make the permitted act effective clearly and expressly
14-53 states, in addition to any other statement or information required:
14-54 (a) a time and date certain on which the
14-55 permitted act is to become effective; or
14-56 (b) if the permitted act is to become effective
14-57 on the occurrence of events or facts that may occur in the future:
14-58 (i) the manner in which the events or
14-59 facts cause the permitted act to become effective; and
14-60 (ii) the date of the 90th day after the
14-61 date of the filing of the articles of organization, articles of
14-62 amendment or restatement, articles of merger, application, or other
14-63 document.
14-64 (3) A permitted act becoming effective as of a time or
14-65 date certain that is after the time and date otherwise provided in
14-66 this Act must specify a subsequent effective time and date that is
14-67 not more than 90 days after the date of the filing of the articles
14-68 of organization, articles of amendment or restatement, articles of
14-69 merger, application, or other document required by this Act. The
14-70 time certain on which the permitted act is to become effective may
15-1 not be midnight or 12 p.m.
15-2 (4) Within 90 days after the date of filing of the
15-3 articles of organization, articles of amendment or restatement,
15-4 articles of merger, application, or other document for a permitted
15-5 act becoming effective on the occurrence of events or facts that
15-6 may occur in the future, other than the mere passage of time, a
15-7 statement must be filed with the Secretary of State confirming that
15-8 all the events or facts on which the effectiveness of the permitted
15-9 act is conditioned have been satisfied or waived and the date on
15-10 which the condition was satisfied or waived.
15-11 B. A statement required by Section A of this Article must be
15-12 executed on behalf of each domestic or foreign limited liability
15-13 company or other person required to execute the articles of
15-14 organization, articles of amendment or restatement, articles of
15-15 merger, application, or other document required by this Act to be
15-16 filed with the Secretary of State to make the permitted act
15-17 effective by a member, manager, officer, or other duly authorized
15-18 representative, including a member, manager, officer, or duly
15-19 authorized representative of any successor domestic or foreign
15-20 limited liability company or other entity. An original and a copy
15-21 of the statement must be filed with the Secretary of State.
15-22 C. Notwithstanding any other provision of this Act to the
15-23 contrary, a permitted act that is to become effective as of a time
15-24 or date after the time and date otherwise provided in this Act, to
15-25 the extent permitted by this Article, shall become effective as of
15-26 the subsequent time and date. Any certificate issued by the
15-27 Secretary of State on the filing of the articles of organization,
15-28 articles of amendment or restatement, articles of merger,
15-29 application, or other document otherwise required by this Act for
15-30 the permitted act to become effective shall expressly set forth the
15-31 time and date on which the permitted act is to become effective.
15-32 D. (1) A permitted act to be made effective on the
15-33 occurrence of events or facts that may occur in the future, other
15-34 than the mere passage of time, and for which the statement required
15-35 by Subsection (4) of Section A of this Article is filed with the
15-36 Secretary of State within the prescribed time becomes effective as
15-37 of the time and date on which the latest specified event or fact
15-38 occurred or the time and date on which the condition is otherwise
15-39 satisfied or waived. Any certificate issued or notation,
15-40 acknowledgment, or other statement made by the Secretary of State
15-41 on the filing of the articles of organization, articles of
15-42 amendment or restatement, articles of merger, application, or other
15-43 document otherwise required by this Act for the permitted act to
15-44 become effective must:
15-45 (a) state that "The effectiveness of the action
15-46 to which this instrument relates is conditioned on the occurrence
15-47 of certain facts or events described in the filing to which this
15-48 instrument relates"; or
15-49 (b) make reference in any manner approved by the
15-50 Secretary of State to the fact that the effectiveness of the action
15-51 is so conditioned.
15-52 (2) The time and date on which a condition to the
15-53 effectiveness of a permitted act is satisfied or waived as set
15-54 forth in a statement filed with the Secretary of State pursuant to
15-55 Subsection (4) of Section A of this Article shall be conclusively
15-56 regarded as the time and date on which the condition was satisfied
15-57 or waived for purposes of this section.
15-58 E. If the effectiveness of any permitted act is conditioned
15-59 on the occurrence of events or facts that may occur in the future,
15-60 other than the mere passage of time, and the statement required by
15-61 Subsection (4) of Section A of this Article is not filed with the
15-62 Secretary of State within the prescribed time, the permitted act
15-63 does not become effective unless there is subsequently filed with
15-64 the Secretary of State the articles of organization, articles of
15-65 amendment or restatement, articles of merger, application, or other
15-66 document required by this Act to be filed with the Secretary of
15-67 State to make the permitted act effective.
15-68 F. If articles of organization, articles of amendment or
15-69 restatement, articles of merger, an application, or any other
15-70 document permitted to be filed pursuant to this Act with the
16-1 Secretary of State have been filed but the event or transaction
16-2 evidenced by the filing has not become effective, the filing may be
16-3 abandoned in accordance with the agreement of the parties to the
16-4 filing by filing a certificate of abandonment with the Secretary of
16-5 State before the effectiveness of the event or transaction in
16-6 accordance with the terms of the document so filed. The
16-7 certificate of abandonment must be signed on behalf of each
16-8 domestic or foreign limited liability company or other entity that
16-9 is a party to the event or transaction by a member, manager,
16-10 officer, or other authorized representative and must state the
16-11 nature of the filing to be abandoned, the date of the filing to be
16-12 abandoned, the parties to the filing to be abandoned, and that the
16-13 event or transaction has been abandoned in accordance with the
16-14 agreement of the parties. On the filing of the statement of
16-15 abandonment with the Secretary of State, the event or transaction
16-16 evidenced by the original filing shall be considered abandoned and
16-17 may not become effective.
16-18 SECTION 1.28. The Texas Limited Liability Company Act
16-19 (Article 1528n, Vernon's Texas Civil Statutes) is amended by adding
16-20 Parts Ten and Eleven to read as follows:
16-21 PART TEN
16-22 Art. 10.01. MERGER. A. A domestic limited liability
16-23 company may adopt a plan of merger and one or more domestic limited
16-24 liability companies may merge with one or more domestic or foreign
16-25 limited liability companies or other entities if:
16-26 (1) each constituent entity enters into a written plan
16-27 of merger containing the provisions set forth in Article 10.02 of
16-28 this Act for which:
16-29 (a) approval exists by all domestic limited
16-30 liability companies by the vote of a majority of their respective
16-31 members, unless the respective regulations or articles of
16-32 organization of each limited liability company provide otherwise;
16-33 and
16-34 (b) if one or more foreign limited liability
16-35 companies or other entities is a party to the merger or is to be
16-36 created by the terms of the plan of merger:
16-37 (i) the merger is permitted by the laws
16-38 under which each foreign limited liability company and each other
16-39 entity that is a party to the merger is formed or organized or by
16-40 the organizational documents or other constituent documents of the
16-41 foreign limited liability company or other entity that are not
16-42 inconsistent with those laws; and
16-43 (ii) each foreign limited liability
16-44 company or other entity that is a party to the merger complies with
16-45 those laws or documents in effecting the merger; and
16-46 (2) a member of a domestic limited liability company
16-47 that is a party to the merger, as a result of the merger, will not
16-48 become personally liable for the liabilities or obligations of any
16-49 other person unless the member consents to becoming personally
16-50 liable by action taken in connection with the specific plan of
16-51 merger approved by the domestic limited liability company.
16-52 Art. 10.02. PLAN OF MERGER. A. A plan of merger must
16-53 include:
16-54 (1) the name and state of domicile of each domestic or
16-55 foreign limited liability company or other entity that is a party
16-56 to the merger;
16-57 (2) the name of each domestic or foreign limited
16-58 liability company or other entity, if any, that will survive the
16-59 merger, which may be one or more of the domestic or foreign limited
16-60 companies or other entities party to the merger;
16-61 (3) the name and state of domicile of each new
16-62 domestic or foreign limited liability company or other entity, if
16-63 any, that may be created by the terms of the plan of merger;
16-64 (4) the terms and conditions of the merger, including,
16-65 if more than one domestic or foreign limited liability company or
16-66 other entity is to survive or to be created by the terms of the
16-67 plan of merger, the manner and basis of allocating and vesting:
16-68 (a) real estate and other property of each
16-69 domestic or foreign limited liability company and of each other
16-70 entity that is a party to the merger among one or more of the
17-1 surviving or new domestic or foreign limited liability companies
17-2 and other entities; and
17-3 (b) all liabilities and obligations of each
17-4 domestic or foreign limited liability company and other entity that
17-5 is a party to the merger among one or more of the surviving or new
17-6 domestic or foreign limited liability companies and other entities
17-7 or making adequate provision for the payment and discharge of the
17-8 liabilities and obligations;
17-9 (5) the manner and basis of converting any of the
17-10 limited liability company interests or other evidences of ownership
17-11 of each domestic or foreign limited liability company or other
17-12 entity that is a party to the merger into:
17-13 (a) limited liability company interests, shares,
17-14 obligations, evidences of ownership, rights to purchase securities,
17-15 or other securities of one or more of the surviving or new domestic
17-16 or foreign limited liability company or other entities;
17-17 (b) cash or other property, including shares,
17-18 obligations, evidences of ownership, rights to purchase securities,
17-19 or other securities of any other person or entity; or
17-20 (c) any combination of the items described in
17-21 Subdivisions (a) and (b) of this Subsection;
17-22 (6) the articles of organization of any new domestic
17-23 limited liability company to be created by the terms of the plan of
17-24 merger; and
17-25 (7) the articles of organization or other
17-26 organizational documents of each other entity that is a party to
17-27 the merger and that is to be created by the terms of the plan of
17-28 merger.
17-29 B. The plan of merger may include:
17-30 (1) any amendments to the articles of organization or
17-31 regulations of any surviving domestic limited liability company or
17-32 to the organizational documents or other constituent documents of
17-33 any other surviving entity; and
17-34 (2) any other provision relating to the merger.
17-35 Art. 10.03. ARTICLES OF MERGER. A. After a plan of merger
17-36 has been approved by each of the limited liability companies or
17-37 other entities that is a party to the plan of merger, articles of
17-38 merger shall be executed on behalf of each domestic limited
17-39 liability company that is a party to the plan of merger by at least
17-40 one member, manager, officer, or other agent or representative of
17-41 the limited liability company who is authorized to execute articles
17-42 of merger by the articles of organization or regulations or shall
17-43 be approved by authorizing resolutions adopted by the act of the
17-44 members. At least one authorized representative of each other
17-45 foreign limited liability company or other entity that is a party
17-46 to the plan of merger shall also execute the articles of merger.
17-47 The articles of merger must include:
17-48 (1) the plan of merger; and
17-49 (2) as to each domestic or foreign limited liability
17-50 company or other entity that is a party to the plan of merger, a
17-51 statement that the plan of merger was authorized by all action
17-52 required by the laws under which it was formed or organized or by
17-53 its constituent documents.
17-54 B. The original of the articles of merger and a number of
17-55 copies equal to the number of surviving and new domestic or foreign
17-56 limited liability companies and other entities that are a party to
17-57 the plan of merger or that will be created by its terms shall be
17-58 delivered to the Secretary of State. Unless the Secretary of State
17-59 finds that the articles of merger do not conform to law, on receipt
17-60 of all applicable filing fees and franchise taxes, if any, required
17-61 by law, the Secretary of State shall:
17-62 (1) certify that the articles of merger have been
17-63 filed in the Secretary of State's office by endorsing on the
17-64 original the word "Filed" and the date of the filing;
17-65 (2) file and index the endorsed articles of merger;
17-66 and
17-67 (3) issue a certificate of merger, together with a
17-68 copy of the articles affixed to the certificate, to each surviving
17-69 or new domestic or foreign limited liability company or other
17-70 entity that is a party to the plan of merger or that is created by
18-1 the merger, or to its respective representatives.
18-2 C. Except as provided by Article 9.03 of this Act, the
18-3 merger is effective on the issuance of the certificate of merger by
18-4 the Secretary of State.
18-5 Art. 10.04. EFFECT OF MERGER. A. When a merger takes
18-6 effect:
18-7 (1) the separate existence of every domestic or
18-8 foreign limited liability company or other entity that is a party
18-9 to the merger, except any surviving or new domestic or foreign
18-10 limited liability company or other entity, ceases;
18-11 (2) all rights, title, and interests to all real
18-12 estate and other property owned by each domestic or foreign limited
18-13 liability company and by each other entity that is a party to the
18-14 merger shall be allocated to and vested in one or more of the
18-15 surviving or resulting entities as provided in the plan of merger
18-16 without reversion or impairment, without further act or deed, and
18-17 without any transfer or assignment having occurred, but subject to
18-18 any existing liens or other encumbrances on the property;
18-19 (3) all liabilities and obligations of each domestic
18-20 or foreign limited liability company and each other entity that is
18-21 a party to the merger shall be allocated to one or more of the
18-22 surviving or new domestic or foreign limited liability companies
18-23 and other entities in the manner provided by the plan of merger,
18-24 and each surviving or new domestic or foreign limited liability
18-25 company or other entity to which a liability or obligation has been
18-26 allocated under the plan of merger becomes the primary obligor for
18-27 the liability or obligation, and, except as otherwise provided by
18-28 the plan of merger, law, or contract, a party to the merger other
18-29 than a surviving domestic or foreign limited liability company or
18-30 other entity liable at the time of the merger or another new
18-31 domestic or foreign limited liability company or other entity
18-32 created is not liable for the liability or obligation;
18-33 (4) a proceeding pending by or against a domestic or
18-34 foreign limited liability company or another entity that is a party
18-35 to the merger may be continued as if the merger did not occur, or
18-36 the surviving or new domestic or foreign limited liability company
18-37 or limited liability companies or the surviving or new other entity
18-38 or other entities the liability, obligation, asset, or right
18-39 associated with the proceeding is allocated to and vested in under
18-40 the plan of merger may be substituted in the proceeding;
18-41 (5) the articles of organization and regulations of
18-42 each surviving domestic limited liability company and the
18-43 organizational documents and other constituent documents of each
18-44 surviving foreign limited liability company and other entity shall
18-45 be amended to the extent provided in the plan of merger;
18-46 (6) each new domestic limited liability company, the
18-47 articles of organization of which are included in the plan of
18-48 merger under Article 10.02 of this Act, shall be formed as a
18-49 limited liability company under this Act, and each other entity to
18-50 be formed or organized under the laws of this state, the
18-51 organizational documents of which are included in the plan of
18-52 merger, on an executed copy of the certificate of merger being
18-53 delivered to or filed with any required governmental entity with
18-54 which organizational documents of the other entity are required to
18-55 be delivered or filed and on meeting additional requirements, if
18-56 any, of law for its formation or organization, shall be formed or
18-57 organized as provided in the plan of merger;
18-58 (7) the limited liability company interests of each
18-59 domestic or foreign limited liability company and the interests,
18-60 shares, or evidences of ownership in each other entity that is a
18-61 party to the merger that are to be converted or exchanged, in whole
18-62 or in part, into limited liability company interests, shares,
18-63 obligations, evidences of ownership, rights to purchase securities,
18-64 or other securities of one or more of the surviving or new domestic
18-65 or foreign limited liability companies or other entities, into cash
18-66 or other property, including shares, obligations, evidences of
18-67 ownership, rights to purchase securities, or other securities of
18-68 any other person or entity, or into a combination of those items,
18-69 shall be so converted and exchanged, and the former members of each
18-70 domestic limited liability company that is a party to the merger
19-1 shall be entitled only to the rights provided in the plan of
19-2 merger; and
19-3 (8) if the plan of merger does not provide for the
19-4 allocation and vesting of the right, title, and interest in a
19-5 particular item of real estate or other property or for the
19-6 allocation of a liability or obligation of a party to the merger,
19-7 the item of real estate or other property shall be owned in
19-8 undivided interests by, or the liability or obligation shall be a
19-9 joint and several liability and obligation of, each of the
19-10 surviving and new domestic and foreign limited liability companies
19-11 and other entities, pro rata to the total number of surviving and
19-12 new domestic and foreign limited liability companies and other
19-13 entities resulting from the merger.
19-14 Art. 10.05. MERGER INVOLVING SUBSIDIARY ENTITIES.
19-15 A. (1) This article applies to a merger if:
19-16 (a) at least 90 percent of the outstanding
19-17 membership interests, shares of stock, or other ownership interests
19-18 of one or more domestic or foreign limited liability companies or
19-19 other entities is owned by another domestic or foreign limited
19-20 liability company or other entity;
19-21 (b) at least one of the parent or subsidiary
19-22 entities is a domestic limited liability company; and
19-23 (c) for each parent or subsidiary entity that is
19-24 not a domestic limited liability company:
19-25 (i) the merger of the entity with or into
19-26 a domestic limited liability company is permitted by the laws under
19-27 which that entity is formed or organized or by the organizational
19-28 documents or other constituent documents of the entity that are not
19-29 inconsistent with those laws; and
19-30 (ii) the entity complies with those laws
19-31 or documents in effectuating the merger.
19-32 (2) A parent entity described in Subsection (1) of
19-33 this Section having at least 90 percent ownership may:
19-34 (a) merge the other entity or entities into
19-35 itself;
19-36 (b) merge itself into the other entity or
19-37 entities; or
19-38 (c) merge any one or more of the entities,
19-39 including itself, into one or more of the other entities.
19-40 (3) If the parent entity having at least 90 percent
19-41 ownership is a surviving entity in the merger, the parent entity
19-42 must execute and file articles of merger as provided by Section B
19-43 of this Article. If the parent entity having at least 90 percent
19-44 ownership is not a surviving entity in the merger, the parent
19-45 entity must:
19-46 (a) adopt a plan of merger in the manner
19-47 required by Article 10.01 of this Act, except that an action under
19-48 Article 10.01 is not required by the entity or entities whose
19-49 membership interests, shares of stock, or other ownership interests
19-50 are so owned; and
19-51 (b) execute and file articles of merger as
19-52 provided by Section B of this Article.
19-53 B. The articles of merger must be signed on behalf of the
19-54 parent entity by a member, manager, officer, or other agent or
19-55 representative authorized by (i) the organizational or other
19-56 constituent documents of the parent entity, or (ii) resolutions
19-57 adopted by the parent entity in accordance with the laws of its
19-58 jurisdiction of organization or formation and the documents. The
19-59 articles of merger must include:
19-60 (1) the name of the parent entity and the name of each
19-61 respective subsidiary entity;
19-62 (2) for each entity listed in Subsection (1) of this
19-63 Section, the type of entity and the respective jurisdiction under
19-64 which the entity is formed or organized;
19-65 (3) the total number or percentage of membership
19-66 interests, shares, or other ownership interests in each subsidiary
19-67 entity, identified by class, series, or group, and the number or
19-68 percentage of membership interests, shares, or other ownership
19-69 interests in each class, series, or group owned by the parent
19-70 entity;
20-1 (4) a copy of the resolution of merger adopted by the
20-2 parent entity in accordance with the laws of its jurisdiction of
20-3 organization or formation and its organizational or other
20-4 constituent documents, together with a statement that the
20-5 resolution was so adopted and the date of adoption;
20-6 (5) if the parent entity does not own all of the
20-7 outstanding membership interest, shares, or other ownership
20-8 interests of each subsidiary entity party to the merger, the
20-9 resolution described in Subsection (4) of this Section must state
20-10 the terms and conditions of the merger, including the securities,
20-11 cash, or other property to be used, paid, or delivered by the
20-12 surviving corporation on surrender of each membership interest,
20-13 share, or other ownership interest of the subsidiary entity or
20-14 entities not owned by the parent entity;
20-15 (6) if the surviving entity is a foreign limited
20-16 liability company or other entity, the address, including street
20-17 number, if any, of its registered or principal office in the
20-18 jurisdiction under whose laws it is governed; and
20-19 (7) if a plan of merger is required by Section A of
20-20 this Article to be adopted in the manner required by Article 10.01
20-21 of this Act, the information required by Section A of Article 10.03
20-22 of this Act.
20-23 C. The articles of merger shall be filed as provided by
20-24 Section B of Article 10.03 of this Act, become effective as
20-25 provided by Section C of Article 10.03 of this Act, and have the
20-26 effect stated in Article 10.04 of this Act.
20-27 Art. 10.06. INTEREST EXCHANGE. A. One or more domestic or
20-28 foreign limited liability companies or other entities may adopt a
20-29 plan of exchange by which an entity acquires all of the outstanding
20-30 limited liability company interests of one or more domestic limited
20-31 liability companies or all of the outstanding interests, stock,
20-32 partnership interests, or other ownership interests in one or more
20-33 other entities in exchange for cash or securities of the acquiring
20-34 entity if:
20-35 (1) each domestic limited liability company, the
20-36 interests of which are to be acquired under the plan of exchange,
20-37 approves the plan of exchange by majority vote or consent of its
20-38 members or in a manner prescribed in its regulations; and
20-39 (2) each acquiring domestic or foreign limited
20-40 liability company or other entity takes all action that may be
20-41 required by the laws of the state or country under which it was
20-42 formed and as required by its constituent documents to effect the
20-43 exchange.
20-44 B. A filing with the Secretary of State is not necessary to
20-45 evidence or effect the interest exchange with respect to a domestic
20-46 limited liability company that is a party to the interest exchange.
20-47 When an interest exchange takes effect as provided in the plan of
20-48 exchange:
20-49 (1) the limited liability company interests of each
20-50 domestic limited liability company that are to be acquired under
20-51 the plan of exchange are considered exchanged as provided in the
20-52 plan of exchange;
20-53 (2) the former holders of the limited liability
20-54 company interests exchanged under the plan of exchange are entitled
20-55 only to the exchange rights provided in the plan of exchange; and
20-56 (3) the acquiring domestic or foreign limited
20-57 liability company or other entity or entities are entitled to all
20-58 rights, title, and interests with respect to the interests so
20-59 acquired and exchanged, subject to the provisions in the plan of
20-60 exchange.
20-61 Art. 10.07. DEFINITION OF "OTHER ENTITY." A. For purposes
20-62 of this Part, "other entity" means any entity, whether organized
20-63 for profit or not, that is a corporation, limited partnership,
20-64 general partnership, joint venture, joint stock company,
20-65 cooperative, association, bank, insurance company, or other legal
20-66 entity organized under the laws of this state or any other state or
20-67 country to the extent the laws or the constituent documents of that
20-68 entity, not inconsistent with law, permit that entity to enter into
20-69 a merger or interest exchange as permitted by this Part.
20-70 PART ELEVEN
21-1 Art. 11.01. PROFESSIONAL LIMITED LIABILITY COMPANIES
21-2 AUTHORIZED; DEFINITIONS. A. (1) One or more persons may organize
21-3 a professional limited liability company by filing articles of
21-4 organization with the Secretary of State in accordance with Part
21-5 Three of this Act. In addition to other provisions required or
21-6 permitted by law, the articles of organization of a professional
21-7 limited liability company must include a statement:
21-8 (a) that the limited liability company is a
21-9 professional limited liability company; and
21-10 (b) describing the one specific kind of
21-11 professional service to be rendered by the limited liability
21-12 company.
21-13 (2) A professional limited liability company may be
21-14 organized under this Act only for the purpose of rendering one
21-15 specific type of professional service and ancillary services. A
21-16 professional limited liability company organized under this Act may
21-17 not render more than one kind of professional service.
21-18 B. In this Act:
21-19 (1) "Professional service" means any type of personal
21-20 service that requires as a condition precedent to the rendering of
21-21 the service the obtaining of a license, permit, certificate of
21-22 registration, or other legal authorization, including the personal
21-23 service rendered by an architect, attorney-at-law, certified public
21-24 accountant, dentist, doctor, physician, public accountant, surgeon,
21-25 or veterinarian.
21-26 (2) "Professional limited liability company" means a
21-27 limited liability company that is organized under this Act for the
21-28 sole and specific purpose of rendering professional service and
21-29 that has as its members only individuals licensed or otherwise
21-30 authorized within this state to render the same professional
21-31 service as the limited liability company.
21-32 Art. 11.02. NAME. A. A professional limited liability
21-33 company may adopt a name not contrary to the law or ethics
21-34 regulating the practice of the professional service rendered
21-35 through the professional limited liability company. The name of
21-36 the limited liability company must contain the words "Professional
21-37 Limited Liability Company" or the abbreviations "P.L.L.C." or
21-38 "PLLC" and must contain other words as may be required by law. A
21-39 limited liability company formed before September 1, 1993, that
21-40 complied with Section A of Article 2.03 of this Act or with Section
21-41 A of Article 7.03 of this Act on the date of formation, but does
21-42 not comply with this Article, is not required to change its name.
21-43 Art. 11.03. RESTRICTIONS ON MEMBERS, MANAGERS, AND OFFICERS.
21-44 A. A person who is not licensed or otherwise authorized to render
21-45 the professional service of the professional limited liability
21-46 company may not be a member, manager, or officer of the
21-47 professional limited liability company. A membership interest in
21-48 the professional limited liability company may not be transferred
21-49 to a person who is not licensed or otherwise authorized to render
21-50 the professional service of the professional limited liability
21-51 company.
21-52 B. If a member, manager, or officer of a professional
21-53 limited liability company, or an agent or employee of the company
21-54 who has been rendering professional service for or with the company
21-55 of the same type for which the professional limited liability
21-56 company was organized to render, becomes legally disqualified to
21-57 render the professional service, the person shall sever all
21-58 employment with the professional limited liability company and
21-59 immediately terminate all financial interest in the company. The
21-60 professional limited liability company shall purchase or cause to
21-61 be purchased from the person all membership interests owned by the
21-62 person in the professional limited liability company, at a price
21-63 and on terms as may be provided in the articles of organization,
21-64 the regulations, or any applicable agreement among the members and
21-65 the professional limited liability company. If the person is the
21-66 sole member of the professional limited liability company, the
21-67 person may continue to act as member, manager, or officer only for
21-68 the purposes of winding up the affairs of the professional limited
21-69 liability company and effecting its dissolution, including selling
21-70 the assets of or outstanding membership interests in the
22-1 professional limited liability company, but not including rendering
22-2 professional service.
22-3 C. If a person who is not licensed or authorized to render
22-4 the professional service that a professional limited liability
22-5 company was organized to render succeeds to the interest of a
22-6 member of the professional limited liability company, the person
22-7 holding the interest shall immediately terminate all financial
22-8 interest in the professional limited liability company, and the
22-9 professional limited liability company shall purchase or cause to
22-10 be purchased from the person all membership interests owned by the
22-11 person in the professional limited liability company, at a price
22-12 and on terms as may be provided in the articles of organization,
22-13 the regulations, or any applicable agreement among the members and
22-14 the professional limited liability company. If the person
22-15 succeeded to all of the membership interests in the professional
22-16 limited liability company, the person may continue to act as
22-17 member, manager, or officer only for the purposes of winding up the
22-18 affairs of the professional limited liability company and effecting
22-19 its dissolution, including selling the assets of or the outstanding
22-20 membership interests in the professional limited liability company,
22-21 but not including rendering professional service.
22-22 Art. 11.04. RENDERING OF PROFESSIONAL SERVICES. A. A
22-23 professional limited liability company may render professional
22-24 service in this state only through:
22-25 (1) an individual member, manager, officer, employee,
22-26 or agent who is licensed to render the professional service in this
22-27 state; or
22-28 (2) an agent of the professional limited liability
22-29 company that is a professional limited liability company,
22-30 professional corporation, or professional association that is
22-31 authorized in this state to render the professional service of the
22-32 professional limited liability company and that renders the
22-33 professional service only through a licensed individual member,
22-34 manager, officer, or employee.
22-35 B. This Article does not prohibit employment by a
22-36 professional limited liability company of clerks, secretaries,
22-37 bookkeepers, technicians, nurses, assistants, and other individuals
22-38 who are not usually and ordinarily considered by custom and
22-39 practice to be rendering professional service for which a license
22-40 or other legal authorization is required. A person may not, under
22-41 the guise of employment, practice a profession in this state unless
22-42 licensed or otherwise legally authorized to practice that
22-43 profession under the laws of this state.
22-44 Art. 11.05. PROFESSIONAL RELATIONSHIPS NOT AFFECTED.
22-45 A. Notwithstanding anything contained in Article 4.03 of this Act
22-46 to the contrary, this Act does not alter or affect the professional
22-47 relationship between a person rendering professional service and a
22-48 person receiving the service, and a confidential relationship
22-49 enjoyed in this state between those persons remains unchanged.
22-50 This Act does not remove or diminish any rights at law that a
22-51 person receiving professional service has against a person
22-52 rendering the service for an error, an omission, negligence,
22-53 incompetence, or malfeasance. A limited liability company, but not
22-54 the other individual members, managers, or officers, is jointly and
22-55 severally liable with a member, manager, officer, employee, or
22-56 agent rendering professional service for an error, omission,
22-57 negligence, incompetence, or malfeasance on the part of the member,
22-58 manager, officer, employee, or agent when the member, manager,
22-59 officer, employee, or agent is rendering professional service in
22-60 the course of employment for the limited liability company.
22-61 Art. 11.06. EXEMPTION FROM SECURITIES LAWS. A. The sale,
22-62 issuance, or offering of membership interests of a professional
22-63 limited liability company to persons permitted by this Part to own
22-64 the membership interests is exempt from all laws of this state,
22-65 other than this Act, that provide for supervision, registration, or
22-66 regulation in connection with the sale, issuance, or offering of
22-67 securities. The sale, issuance, or offering of membership
22-68 interests to those persons is legal without any action or approval
22-69 on the part of any official or state regulatory agency authorized
22-70 to license, regulate, or supervise the sale, issuance, or offering
23-1 of securities.
23-2 Art. 11.07. FOREIGN PROFESSIONAL LIMITED LIABILITY
23-3 COMPANIES. A. A foreign professional limited liability company
23-4 may apply for a certificate of authority to perform professional
23-5 service in this state by filing an application in accordance with
23-6 Part Seven of this Act. The Secretary of State may not issue the
23-7 certificate unless the name of the limited liability company or the
23-8 name the limited liability company elects in this state meets the
23-9 requirements of Article 11.02 of this Act. A member, manager,
23-10 officer, employee, or agent of the limited liability company who
23-11 renders professional service in this state on behalf of the limited
23-12 liability company must be licensed or otherwise authorized to
23-13 render that professional service in this state.
23-14 B. A certificate may not be issued to a limited liability
23-15 company under this Article unless the application for the
23-16 certificate includes a statement that the jurisdiction in which the
23-17 limited liability company is organized would permit reciprocal
23-18 admission of the limited liability company if it were organized in
23-19 this state.
23-20 SECTION 1.29. Section 36.02, Business & Commerce Code, is
23-21 amended to read as follows:
23-22 Sec. 36.02. DEFINITIONS. In this chapter, unless the
23-23 context otherwise requires:
23-24 (1) "Partnership" means a joint venture or<,> general
23-25 partnership other than a limited partnership or a registered
23-26 limited liability<, or limited> partnership.
23-27 (2) "Company" means a real estate investment trust,
23-28 joint-stock company, or any other business, professional, or other
23-29 association or legal entity that is not incorporated other than a
23-30 partnership, limited partnership, limited liability company, or
23-31 registered limited liability partnership.
23-32 (3) "Corporation" means a domestic or foreign
23-33 corporation, professional corporation, professional association,
23-34 other corporation, or any other business, professional, or other
23-35 association or legal entity that is incorporated.
23-36 (4) "Person" includes an individual, partnership,
23-37 limited partnership, limited liability company, registered limited
23-38 liability partnership, company, or corporation.
23-39 (5) "Representative" means a trustee, administrator,
23-40 executor, independent executor, guardian, conservator, trustee in
23-41 bankruptcy, receiver, or any other person appointed by a court or
23-42 by trust or will to have custody of, take possession of, have title
23-43 to, or otherwise be empowered to control the person or property of
23-44 any person.
23-45 (6) "Estate" means the property of any person which is
23-46 administered by a representative.
23-47 (7) "Assumed name" means:
23-48 (A) in the case of an individual, a name that
23-49 does not include the surname of the individual;
23-50 (B) in the case of a <joint venture or general>
23-51 partnership, a name that does not include the surname or other
23-52 legal name of each joint venturer or general partner;
23-53 (C) in the case of an individual<, joint
23-54 venture,> or a <general> partnership, a name, including a surname,
23-55 that suggests the existence of additional owners by including words
23-56 such as "Company," "& Company," "& Son," "& Sons," "& Associates,"
23-57 "Brothers," and the like, but not words that merely describe the
23-58 business or professional service being conducted or rendered;
23-59 (D) in the case of a limited partnership, any
23-60 name other than the name stated in its certificate of limited
23-61 partnership;
23-62 (E) in the case of a company, any name used by
23-63 the company; <and>
23-64 (F) in the case of a corporation, any name other
23-65 than the name stated in its articles of incorporation or
23-66 association or comparable document;
23-67 (G) in the case of a registered limited
23-68 liability partnership, any name other than the name stated in its
23-69 application filed with the office of the Secretary of State or
23-70 comparable document; and
24-1 (H) in the case of a limited liability company,
24-2 any name other than the name stated in its articles of organization
24-3 or comparable document.
24-4 (8) "Registrant" means any person that has filed, or
24-5 on whose behalf there has been filed, an assumed name certificate
24-6 under the provisions of this chapter or other law.
24-7 (9) "Office" means, in the case of any person that is
24-8 not an individual or that is a corporation which is not required to
24-9 or does not maintain a registered office in this state, the
24-10 principal office of such person and also its principal place of
24-11 business if not the same as its principal office. In the case of a
24-12 corporation, limited partnership, registered limited liability
24-13 partnership, or limited liability company which is required to
24-14 maintain a registered office in this state, "office" means the
24-15 registered office and also its principal office if not the same as
24-16 its registered office.
24-17 (10) "Address" means a post office address and also
24-18 the street address if not the same as the post office address.
24-19 SECTION 1.30. Section 36.10, Business & Commerce Code, is
24-20 amended by amending the section heading and Subsection (a) to read
24-21 as follows:
24-22 Sec. 36.10. FOR UNINCORPORATED BUSINESS OR PROFESSION OTHER
24-23 THAN A LIMITED PARTNERSHIP, REGISTERED LIMITED LIABILITY
24-24 PARTNERSHIP, OR LIMITED LIABILITY COMPANY. (a) Any person who
24-25 regularly conducts business or renders professional services other
24-26 than as a corporation, limited partnership, registered limited
24-27 liability partnership, or limited liability company in this state
24-28 under an assumed name shall file in the office of the county clerk
24-29 in each county in which such person has or will maintain business
24-30 or professional premises or, if no business or professional
24-31 premises are or will be maintained in any county, in each county
24-32 where such person conducts business or renders a professional
24-33 service, a certificate setting forth:
24-34 (1) the assumed name under which such business or
24-35 professional service is or is to be conducted or rendered;
24-36 (2) if the registrant is:
24-37 (A) an individual, his full name and residence
24-38 address;
24-39 (B) a partnership, (i) the venture or
24-40 partnership name, (ii) the venture or partnership office address,
24-41 and (iii) the full name of each joint venturer or general partner
24-42 and his residence address if he is an individual or its office
24-43 address if not an individual;
24-44 (C) an estate, (i) the name of the estate, (ii)
24-45 the estate's office address, if any, and (iii) the full name of
24-46 each representative of the estate and his residence address if he
24-47 is an individual or its office address if not an individual;
24-48 (D) a real estate investment trust, (i) the name
24-49 of the trust, (ii) the address of the trust, (iii) the full name of
24-50 each trustee manager and his residence address if he is an
24-51 individual and its office address if not an individual; or
24-52 (E) a company other than a real estate
24-53 investment trust, or a corporation, (i) the name of the company or
24-54 corporation, (ii) the state, country, or other jurisdiction under
24-55 the laws of which it was organized, incorporated, or associated,
24-56 and (iii) its office address;
24-57 (3) the period, not to exceed 10 years, during which
24-58 the assumed name will be used; and
24-59 (4) a statement specifying that the business or
24-60 professional service that is or is to be conducted or rendered in
24-61 the county under such assumed name is being or will be conducted or
24-62 rendered as a proprietorship, sole practitioner, <joint venture,
24-63 general> partnership, <limited partnership,> real estate investment
24-64 trust, joint-stock company, or some other form of unincorporated
24-65 business or professional association or entity, other than a
24-66 limited partnership, limited liability company, or registered
24-67 limited liability partnership, as the case may be.
24-68 SECTION 1.31. Section 36.11, Business & Commerce Code, is
24-69 amended to read as follows:
24-70 Sec. 36.11. FOR INCORPORATED BUSINESS OR PROFESSION, LIMITED
25-1 PARTNERSHIP, REGISTERED LIMITED LIABILITY PARTNERSHIP, OR LIMITED
25-2 LIABILITY COMPANY. (a) Any corporation, limited partnership,
25-3 registered limited liability partnership, or limited liability
25-4 company which regularly conducts business or renders professional
25-5 services in this state under an assumed name, or which may be
25-6 required by law to use an assumed name in this state to conduct
25-7 such business or render such services, shall file in the office of
25-8 the Secretary of State and, (1) if such corporation, limited
25-9 partnership, registered limited liability partnership, or limited
25-10 liability company is required to maintain a registered office in
25-11 this state, in the office of the county clerk of the county in
25-12 which such registered office is located and of the county in which
25-13 its principal office is located if within this state and not the
25-14 same county where the registered office is located; or (2) if such
25-15 corporation, limited partnership, registered limited liability
25-16 partnership, or limited liability company is not required to or
25-17 does not maintain a registered office in this state, in the office
25-18 of the county clerk of the county in which its office within this
25-19 state is located or if the corporation, limited partnership,
25-20 registered limited liability partnership, or limited liability
25-21 company is not incorporated, organized, or associated under the
25-22 laws of this state, in the office of the county clerk of the county
25-23 in which its principal place of business in this state is located
25-24 if not the same as its office, a certificate setting forth:
25-25 (1) the assumed name under which such business or
25-26 professional service is or is to be conducted or rendered;
25-27 (2) the name of the corporation, limited partnership,
25-28 registered limited liability partnership, or limited liability
25-29 company as stated in its articles of incorporation, <or>
25-30 association, or organization or in its certificate of limited
25-31 partnership or application filed with the office of the Secretary
25-32 of State, or other comparable document;
25-33 (3) the state, country, or other jurisdiction under
25-34 the laws of which it was incorporated, organized, or associated and
25-35 address of its registered or similar office in that state, country,
25-36 or jurisdiction;
25-37 (4) the period, not to exceed 10 years, during which
25-38 the assumed name will be used;
25-39 (5) a statement specifying that the entity
25-40 <corporation> is a business corporation, nonprofit corporation,
25-41 professional corporation, professional association, or other type
25-42 of corporation, limited partnership, registered limited liability
25-43 partnership, limited liability company, or some other type of
25-44 incorporated business, professional or other association, or legal
25-45 entity;
25-46 (6) if the corporation, limited partnership,
25-47 registered limited liability partnership, or limited liability
25-48 company is required to maintain a registered office in this state,
25-49 (A) the address of such registered office and the name of its
25-50 registered agent at such address, and (B) the address of its
25-51 principal office if not the same as that of its registered office
25-52 in this state;
25-53 (7) if the corporation, limited partnership,
25-54 registered limited liability partnership, or limited liability
25-55 company is not required to or does not maintain a registered office
25-56 in this state, its office address in this state and if the
25-57 corporation, limited partnership, registered limited liability
25-58 partnership, or limited liability company is not incorporated,
25-59 organized, or associated under the laws of this state, the address
25-60 of its place of business in this state and its office address
25-61 elsewhere, if any; and
25-62 (8) the county or counties within the state where
25-63 business or professional services are being or are to be conducted
25-64 or rendered under such assumed name.
25-65 (b) A certificate filed under Subsection (a) of this section
25-66 shall be executed and duly acknowledged by an officer, general
25-67 partner, member, manager, representative, or attorney in fact for
25-68 the corporation, limited partnership, registered limited liability
25-69 partnership, or limited liability company. A certificate executed
25-70 and acknowledged by an attorney in fact shall include a statement
26-1 that the attorney in fact has been duly authorized in writing by
26-2 his principal to execute and acknowledge the same.
26-3 (c) Nothing in this chapter shall require a corporation,
26-4 limited partnership, registered limited liability partnership, or
26-5 limited liability company or its shareholders, associates,
26-6 partners, or members to file an assumed business or professional
26-7 name certificate in order to conduct business or render a
26-8 professional service within this state under the name of the
26-9 corporation, limited partnership, registered limited liability
26-10 partnership, or limited liability company as stated in its articles
26-11 of incorporation, association, or organization, certificate of
26-12 limited partnership, application filed with the office of the
26-13 Secretary of State, or other comparable document.
26-14 (d) Notwithstanding Subsections (a)-(c) of this section, a
26-15 limited partnership, registered limited liability partnership, or
26-16 limited liability company that filed a certificate in compliance
26-17 with Section 36.10 of this chapter before September 1, 1993, is not
26-18 required to file a new certificate that complies with this section
26-19 until the earlier of:
26-20 (1) the expiration of the period specified in the
26-21 existing certificate during which the assumed name will be used; or
26-22 (2) a material change occurs in the information set
26-23 forth in the existing certificate.
26-24 SECTION 1.32. The following articles or sections of the
26-25 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
26-26 Civil Statutes) are repealed:
26-27 (1) Article 2.10;
26-28 (2) Article 2.16; and
26-29 (3) Sections B, C, and D, Article 4.02.
26-30 ARTICLE 2. BUSINESS CORPORATIONS; PROFESSIONAL ASSOCIATIONS
26-31 SECTION 2.01. Article 1.02, Texas Business Corporation Act,
26-32 is amended by amending Section A and adding Section C to read as
26-33 follows:
26-34 A. As used in this Act, unless the context otherwise
26-35 requires, the term:
26-36 (1) "Articles of incorporation" means the original or
26-37 restated articles of incorporation and all amendments thereto.
26-38 (2) "Authorized shares" means the shares of all
26-39 classes which the corporation is authorized to issue.
26-40 (3) "Cancel" means to restore issued shares to the
26-41 status of authorized but unissued shares.
26-42 (4) "Certificated shares" means shares represented by
26-43 instruments in bearer or registered form.
26-44 (5) "Conspicuous" or "conspicuously," when prescribed
26-45 for information appearing on a certificate for shares or other
26-46 securities, means the location of such information or use of type
26-47 of sufficient size, color, or character that a reasonable person
26-48 against whom such information may operate should notice it. For
26-49 example, a printed or typed statement in capitals, or boldface or
26-50 underlined type, or in type that is larger than or that contrasts
26-51 in color with that used for other statements on the same
26-52 certificate, is "conspicuous."
26-53 (6) "Consuming assets corporation" means a corporation
26-54 which is engaged in the business of exploiting assets subject to
26-55 depletion or amortization and which elects to state in its articles
26-56 of incorporation that it is a consuming assets corporation and
26-57 includes as a part of its official corporate name the phrase "a
26-58 consuming assets corporation," giving such phrase equal prominence
26-59 with the rest of the corporate name on its financial statements and
26-60 certificates representing shares. All its certificates
26-61 representing shares shall also contain a further sentence: "This
26-62 corporation is permitted by law to pay dividends out of reserves
26-63 which may impair its stated capital."
26-64 (7) "Corporation" or "domestic corporation" means a
26-65 corporation for profit subject to the provisions of this Act,
26-66 except a foreign corporation.
26-67 (8) "Distribution" means a transfer of money or other
26-68 property (except its own shares or rights to acquire its own
26-69 shares), or issuance of indebtedness, by a corporation to its
26-70 shareholders in the form of:
27-1 (a) a dividend on any class or series of the
27-2 corporation's outstanding shares;
27-3 (b) a purchase, <or> redemption, or other
27-4 acquisition by the corporation, directly or indirectly, of any of
27-5 its own shares; or
27-6 (c) a payment by the corporation in liquidation
27-7 of all or a portion of its assets.
27-8 (9) "Foreign corporation" means a corporation for
27-9 profit organized under laws other than the laws of this State.
27-10 (10) "Insolvency" means inability of a corporation to
27-11 pay its debts as they become due in the usual course of its
27-12 business.
27-13 (11) "Investment Company Act" means the Investment
27-14 Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.);
27-15 (12) "Merger" means (a) the division of a domestic
27-16 corporation into two or more new domestic corporations or into a
27-17 surviving corporation and one or more new domestic or foreign
27-18 corporations or other entities, or (b) the combination of one or
27-19 more domestic corporations with one or more domestic or foreign
27-20 corporations or other entities resulting in (i) one or more
27-21 surviving domestic or foreign corporations or other entities, (ii)
27-22 the creation of one or more new domestic or foreign corporations or
27-23 other entities, or (iii) one or more surviving domestic or foreign
27-24 corporations or other entities and the creation of one or more new
27-25 domestic or foreign corporations or other entities.
27-26 (13) <(12)> "Net assets" means the amount by which the
27-27 total assets of a corporation exceed the total debts of the
27-28 corporation.
27-29 (14) <(13)> "Other entity" means any entity, whether
27-30 organized for profit or not, that is a corporation (other than a
27-31 domestic or foreign corporation), limited or general partnership,
27-32 joint venture, joint stock company, cooperative, association, bank,
27-33 insurance company or other legal entity organized pursuant to the
27-34 laws of this state or any other state or country to the extent such
27-35 laws or the constituent documents of that entity, not inconsistent
27-36 with such laws, permit that entity to enter into a merger or share
27-37 exchange as permitted by Article 5.03 of this Act.
27-38 (15) <(14)> "Share dividend" means a dividend by a
27-39 corporation that is payable in its own authorized but unissued
27-40 shares or in treasury shares.
27-41 (16) <(15)> "Shareholder" or "holder of shares" means
27-42 the person in whose name shares issued by a corporation are
27-43 registered at the relevant time in the share transfer records
27-44 maintained by the corporation pursuant to Article 2.44 of this Act.
27-45 (17) <(16)> "Shares" means the units into which the
27-46 proprietary interests in a corporation are divided, whether
27-47 certificated or uncertificated shares.
27-48 (18) <(17)> "Stated capital" means, at any particular
27-49 time, the sum of:
27-50 (a) the par value of all shares of the
27-51 corporation having a par value that have been issued;
27-52 (b) the consideration fixed by the corporation
27-53 in the manner provided by Article 2.15 of this Act for all shares
27-54 of the corporation without par value that have been issued, except
27-55 such part of the consideration that is actually received therefor
27-56 (which part must be less than all of that consideration) that the
27-57 board by resolution adopted no later than sixty (60) days after the
27-58 issuance of those shares may have allocated to surplus; and
27-59 (c) such amounts not included in paragraphs (a)
27-60 and (b) of this subsection as have been transferred to stated
27-61 capital of the corporation, whether upon the payment of a share
27-62 dividend or upon adoption by the board of directors of a resolution
27-63 directing that all or part of surplus be transferred to stated
27-64 capital, minus all reductions from such sum as have been effected
27-65 in a manner permitted by law.
27-66 (19) <(18)> "Subscriber" means the offeror in a
27-67 subscription.
27-68 (20) <(19)> "Subscription" means a memorandum in
27-69 writing, executed before or after incorporation, wherein an offer
27-70 is made to purchase and pay for a specified number of theretofore
28-1 unissued shares of a corporation.
28-2 (21) <(20)> "Surplus" means the excess of the net
28-3 assets of a corporation over its stated capital.
28-4 (22) <(21)> "Treasury shares" means shares of a
28-5 corporation which have been issued, have been subsequently acquired
28-6 by and belong to the corporation, and have not been canceled and
28-7 restored to the status of authorized but unissued shares. Treasury
28-8 shares shall be deemed to be "issued" shares but not "outstanding"
28-9 shares, and shall not be included in the total assets of a
28-10 corporation for purposes of determining its "net assets."
28-11 (23) <(22)> "Uncertificated shares" means shares not
28-12 represented by instruments and the transfers of which are
28-13 registered upon books maintained for that purpose by or on behalf
28-14 of the issuing corporation.
28-15 C. A reference in this Act to another statute is a reference
28-16 to that statute as amended.
28-17 SECTION 2.02. Section A, Article 2.02, Texas Business
28-18 Corporation Act, is amended to read as follows:
28-19 A. Subject to the provisions of Sections B and C of this
28-20 Article, each corporation shall have power:
28-21 (1) To have perpetual succession by its corporate name
28-22 unless a limited period of duration is stated in its articles of
28-23 incorporation. Notwithstanding the articles of incorporation, the
28-24 period of duration for any corporation incorporated before
28-25 September 6, 1955, is perpetual if all fees and franchise taxes
28-26 have been paid as provided by law.
28-27 (2) To sue and be sued, complain and defend, in its
28-28 corporate name.
28-29 (3) To have a corporate seal which may be altered at
28-30 pleasure, and to use the same by causing it, or a facsimile
28-31 thereof, to be impressed on, affixed to, or in any manner
28-32 reproduced upon, instruments of any nature required to be executed
28-33 by its proper officers.
28-34 (4) To purchase, receive, lease, or otherwise acquire,
28-35 own, hold, improve, use and otherwise deal in and with, real or
28-36 personal property, or any interest therein, wherever situated, as
28-37 the purposes of the corporation shall require.
28-38 (5) To sell, convey, mortgage, pledge, lease,
28-39 exchange, transfer and otherwise dispose of all or any part of its
28-40 property and assets.
28-41 (6) To lend money to, and otherwise assist, its
28-42 employees, officers, and directors if such a loan or assistance
28-43 reasonably may be expected to benefit, directly or indirectly, the
28-44 lending or assisting corporation.
28-45 (7) To purchase, receive, subscribe for, or otherwise
28-46 acquire, own, hold, vote, use, employ, mortgage, lend, pledge, sell
28-47 or otherwise dispose of, and otherwise use and deal in and with,
28-48 shares or other interests in, or obligations of, other domestic or
28-49 foreign corporations, associations, partnerships, or individuals,
28-50 or direct or indirect obligations of the United States or of any
28-51 other government, state, territory, government district, or
28-52 municipality, or of any instrumentality thereof.
28-53 (8) To purchase or otherwise acquire its own bonds,
28-54 debentures, or other evidences of its indebtedness or obligations;
28-55 to purchase or otherwise acquire its own unredeemable shares and
28-56 hold those acquired shares as treasury shares or cancel or
28-57 otherwise dispose of those acquired shares; and to redeem or
28-58 purchase shares made redeemable by the provisions of its articles
28-59 of incorporation.
28-60 (9) To make contracts and incur liabilities, borrow
28-61 money at such rates of interest as the corporation may determine,
28-62 issue its notes, bonds, and other obligations, and secure any of
28-63 its obligations by mortgage or pledge of all or any of its
28-64 property, franchises, and income.
28-65 (10) To lend money for its corporate purposes, invest
28-66 and reinvest its funds, and take and hold real and personal
28-67 property as security for the payment of funds so loaned or
28-68 invested.
28-69 (11) To conduct its business, carry on its operations,
28-70 and have offices and exercise the powers granted by this Act,
29-1 within or without this State.
29-2 (12) To elect or appoint officers and agents of the
29-3 corporation for such period of time as the corporation may
29-4 determine, and define their duties and fix their compensation.
29-5 (13) To make and alter bylaws, not inconsistent with
29-6 its articles of incorporation or with the laws of this State, for
29-7 the administration and regulation of the affairs of the
29-8 corporation.
29-9 (14) To make donations for the public welfare or for
29-10 charitable, scientific, or educational purposes.
29-11 (15) To transact any lawful business which the board
29-12 of directors shall find will be in aid of government policy.
29-13 (16) To indemnify directors, officers, employees, and
29-14 agents of the corporation and to purchase and maintain liability
29-15 insurance for those persons.
29-16 (17) To pay pensions and establish pension plans,
29-17 pension trusts, profit sharing plans, stock bonus plans, and other
29-18 incentive plans for any or all of, or any class<,> or classes of,
29-19 <its officers and employees, or> its directors, officers, or <its>
29-20 employees.
29-21 (18) To be an organizer, partner, member, associate,
29-22 or manager of any partnership, joint venture, or other enterprise,
29-23 and to the extent permitted in any other jurisdiction to be an
29-24 incorporator of any other corporation of any type or kind.
29-25 (19) To cease its corporate activities and terminate
29-26 its existence by voluntary dissolution.
29-27 (20) Whether included in the foregoing or not, to have
29-28 and exercise all powers necessary or appropriate to effect any or
29-29 all of the purposes for which the corporation is organized.
29-30 SECTION 2.03. Section B, Article 2.05, Texas Business
29-31 Corporation Act, is amended to read as follows:
29-32 B. Any domestic or foreign corporation having authority to
29-33 transact business in this State<,> may do so under an assumed
29-34 name<,> by filing an assumed name certificate in the manner
29-35 prescribed by law. The assumed name may, but is not required to,
29-36 comply with the requirements of Section A(1) of this Article.
29-37 SECTION 2.04. Article 2.12, Texas Business Corporation Act,
29-38 is amended by amending Section A and adding Section C to read as
29-39 follows:
29-40 A. Each corporation may issue the number of shares stated in
29-41 its articles of incorporation. Such shares may be divided into one
29-42 or more classes, any or all of which classes may consist of shares
29-43 with par value or shares without par value, as shall be stated in
29-44 the articles of incorporation. Any such class of shares may be
29-45 divided into one or more series, as shall be stated in the articles
29-46 of incorporation. All shares of the same class shall be of the
29-47 same par value or be without par value. Unless the shares of a
29-48 class have been divided into series, all shares of the same class
29-49 shall be identical in all respects. If the shares of a class have
29-50 been divided into series, shares of the same class may vary between
29-51 series, but all shares of the same series shall be identical in all
29-52 respects. Any such class or series of shares shall be so
29-53 designated as to distinguish the shares of that class or series
29-54 from the shares of all other classes and series. Any such class or
29-55 series shall have such designations, preferences, limitations, and
29-56 relative rights, including voting rights, as shall be stated in the
29-57 articles of incorporation. The articles of incorporation may limit
29-58 or deny the voting rights of, or provide special voting rights for,
29-59 the shares of any class or series to the extent that such
29-60 limitation, denial, or provision is not inconsistent with the
29-61 provisions of this Act. Any of the designations, preferences,
29-62 limitations, and <or> relative rights, including voting rights, of
29-63 any class or series of shares may be made dependent upon facts
29-64 ascertainable outside the articles of incorporation, which facts
29-65 may include future acts of the corporation, provided that the
29-66 manner in which such facts shall operate upon the designations,
29-67 preferences, limitations, and relative rights, including voting
29-68 rights, of such class or series of shares is clearly and expressly
29-69 set forth in the articles of incorporation.
29-70 C. (1) The board of directors of a corporation registered
30-1 as an open-end company under the Investment Company Act may:
30-2 (a) establish classes of shares and series of
30-3 unissued shares of any class by fixing and determining the
30-4 designations, preferences, limitations, and relative rights,
30-5 including voting rights, of the shares of any class or series so
30-6 established to the same extent that the designations, preferences,
30-7 limitations, and relative rights could be stated if fully set forth
30-8 in the articles of incorporation; and
30-9 (b) increase or decrease the aggregate number of
30-10 shares or the number of shares of, or eliminate and remove from the
30-11 articles of incorporation, a class or series of shares that the
30-12 corporation has authority to issue, unless a provision has been
30-13 included in the articles of incorporation of the corporation after
30-14 September 1, 1993, expressly prohibiting those actions by the board
30-15 of directors. The board of directors may not:
30-16 (i) decrease the number of shares within a
30-17 class or series to less than the number of shares of that class or
30-18 series that are then outstanding; or
30-19 (ii) eliminate or remove from the articles
30-20 of incorporation any reference to any class or series of which
30-21 shares are then outstanding.
30-22 To establish a class or series, the board of directors shall
30-23 adopt a resolution setting forth the designation of the class or
30-24 series and fixing and determining the designations, preferences,
30-25 limitations, and relative rights, including voting rights, of the
30-26 class or series. In order to increase or decrease the number of
30-27 shares of, or eliminate and remove from the articles of
30-28 incorporation any reference to, a class or series of shares, the
30-29 board of directors shall adopt a resolution fixing and determining
30-30 the new number of shares of each class or series in which the
30-31 number of shares is increased or decreased or eliminating the class
30-32 or series and removing references to the class or series from the
30-33 articles of incorporation. The shares of any eliminated series
30-34 shall resume the status of authorized but unissued shares of the
30-35 class of shares from which the series was established unless
30-36 otherwise provided in the resolution or the articles of
30-37 incorporation.
30-38 (2) Before the first issuance of any shares of a class
30-39 or series established or increased or decreased by resolution
30-40 adopted by the board of directors under Subsection (1) of this
30-41 section, and in order to eliminate from the articles of
30-42 incorporation a class or series of shares and all references to the
30-43 class or series contained in the articles, the corporation shall
30-44 file with the Secretary of State a statement setting forth:
30-45 (a) the name of the corporation;
30-46 (b) if the statement relates to the
30-47 establishment of a class or series of shares, a copy of the
30-48 resolution establishing and designating the class or series and
30-49 fixing and determining the preferences, limitations, and relative
30-50 rights of the class or series;
30-51 (c) if the statement relates to an increase or
30-52 decrease in the number of shares of any class or series, a copy of
30-53 the resolution fixing and determining the new number of shares of
30-54 each class or series in which the number of shares is increased or
30-55 decreased;
30-56 (d) if the statement relates to the elimination
30-57 of a class or series of shares and to the removal of all references
30-58 to the class or series from the articles of incorporation, a copy
30-59 of the resolution eliminating the class or series and removing all
30-60 references to the class or series from the articles of
30-61 incorporation;
30-62 (e) the date of adoption of the resolution; and
30-63 (f) that the resolution was duly adopted by all
30-64 necessary action on the part of the corporation.
30-65 (3) The statement shall be executed on behalf of the
30-66 corporation by an officer. The original and a copy of the
30-67 statement shall be delivered to the Secretary of State. If the
30-68 Secretary of State finds that the statement conforms to law, when
30-69 the appropriate filing fee is paid as provided by law, the
30-70 Secretary of State shall:
31-1 (a) endorse on the original and the copy the
31-2 word "Filed," and the month, day, and year of the filing of the
31-3 statement;
31-4 (b) file the original in the Secretary of
31-5 State's office; and
31-6 (c) return the copy to the corporation or its
31-7 representative.
31-8 (4) On the filing of a statement by the Secretary of
31-9 State, the resolution establishing and designating the class or
31-10 series and fixing and determining the preferences, limitations, and
31-11 relative rights of the class or series, the resolution fixing the
31-12 new number of shares of each class or series in which the number of
31-13 shares is increased or decreased, or the resolution eliminating a
31-14 class or series and all references to the class or series from the
31-15 articles of incorporation, as appropriate, becomes an amendment of
31-16 the articles of incorporation. An amendment of the articles of
31-17 incorporation effected as provided by this Article is not subject
31-18 to the procedure to amend the articles contained in Article 4.02 of
31-19 this Act.
31-20 SECTION 2.05. Sections A and B, Article 2.21, Texas Business
31-21 Corporation Act, are amended to read as follows:
31-22 A. A holder of shares, an owner of any beneficial interest
31-23 in shares, or a subscriber for shares whose subscription has been
31-24 accepted shall be under no obligation to the corporation or to its
31-25 obligees with respect to:
31-26 (1) such shares other than the obligation to pay to
31-27 the corporation the full amount of the consideration, fixed in
31-28 compliance with Article 2.15 of this Act, for which such shares
31-29 were or are to be issued;
31-30 (2) any contractual obligation of the corporation on
31-31 the basis that the holder, owner, or subscriber is or was the alter
31-32 ego of the corporation, or on the basis of actual fraud or
31-33 constructive fraud, <or> a sham to perpetrate a fraud, or other
31-34 similar theory, unless the obligee demonstrates that the holder,
31-35 owner, or subscriber caused the corporation to be used for the
31-36 purpose of perpetrating and did perpetrate an actual fraud on the
31-37 obligee primarily for the direct personal benefit of the holder,
31-38 owner, or subscriber; or
31-39 (3) any contractual obligation of the corporation on
31-40 the basis of the failure of the corporation to observe any
31-41 corporate formality, including without limitation: (a) the failure
31-42 to comply with any requirement of this Act or of the articles of
31-43 incorporation or bylaws of the corporation; or (b) the failure to
31-44 observe any requirement prescribed by this Act or by the articles
31-45 of incorporation or bylaws for acts to be taken by the corporation,
31-46 its board of directors, or its shareholders.
31-47 B. The liability of a holder, owner, or subscriber of shares
31-48 of a corporation for an obligation that is limited by Section A of
31-49 this article is exclusive and preempts any other liability imposed
31-50 on a holder, owner, or subscriber of shares of a corporation for
31-51 that obligation under common law or otherwise, except that nothing
31-52 <Nothing> contained in this article shall limit the obligation of a
31-53 holder, owner, or subscriber to an obligee of the corporation when:
31-54 (1) the holder, owner, or subscriber has expressly
31-55 assumed, guaranteed, or agreed to be personally liable to the
31-56 obligee for the obligation; or
31-57 (2) the holder, owner, or subscriber is otherwise
31-58 liable to the obligee for the obligation under this Act or another
31-59 applicable statute.
31-60 SECTION 2.06. Article 2.24, Texas Business Corporation Act,
31-61 is amended by adding Section D to read as follows:
31-62 D. If the articles of incorporation or bylaws of a
31-63 corporation registered under the Investment Company Act so provide,
31-64 the corporation is not required to hold an annual meeting of
31-65 shareholders or elect directors in any year that the election of
31-66 directors is not required to be acted on under the Investment
31-67 Company Act. If the corporation is required by the Investment
31-68 Company Act to hold a meeting of shareholders to elect directors,
31-69 the meeting shall be designated as the annual meeting of
31-70 shareholders for that year.
32-1 SECTION 2.07. Sections A and C, Article 2.27, Texas Business
32-2 Corporation Act, are amended to read as follows:
32-3 A. The officer or agent having charge of the share <stock>
32-4 transfer records <books> for shares of a corporation shall make, at
32-5 least ten (10) days before each meeting of shareholders, a complete
32-6 list of the shareholders entitled to vote at such meeting or any
32-7 adjournment thereof, arranged in alphabetical order, with the
32-8 address of and the number of shares held by each, which list, for a
32-9 period of ten (10) days prior to such meeting, shall be kept on
32-10 file at the registered office or principal place of business of the
32-11 corporation and shall be subject to inspection by any shareholder
32-12 at any time during usual business hours. Such list shall also be
32-13 produced and kept open at the time and place of the meeting and
32-14 shall be subject to the inspection of any shareholder during the
32-15 whole time of the meeting. The original share <stock> transfer
32-16 records <books> shall be prima-facie evidence as to who are the
32-17 shareholders entitled to examine such list or transfer records
32-18 <books> or to vote at any meeting of shareholders.
32-19 C. An officer or agent having charge of the share <stock>
32-20 transfer records <books> who shall fail to prepare the list of
32-21 shareholders or keep the same on file for a period of ten (10)
32-22 days, or produce and keep it open for inspection at the meeting, as
32-23 provided in this Article, shall be liable to any shareholder
32-24 suffering damage on account of such failure, to the extent of such
32-25 damage. In the event that such officer or agent does not receive
32-26 notice of a meeting of shareholders sufficiently in advance of the
32-27 date of such meeting reasonably to enable him to comply with the
32-28 duties prescribed by this Article, the corporation, but not such
32-29 officer or agent, shall be liable to any shareholder suffering
32-30 damage on account of such failure, to the extent of such damage.
32-31 SECTION 2.08. Article 2.32, Texas Business Corporation Act,
32-32 is amended by adding Section B to read as follows:
32-33 B. Notwithstanding Section A of this Article, a director of
32-34 a corporation registered under the Investment Company Act, unless
32-35 removed in accordance with the provisions of the articles of
32-36 incorporation or bylaws, holds office for the term for which the
32-37 director is elected and until the director's successor has been
32-38 elected and qualified.
32-39 SECTION 2.09. Article 2.34, Texas Business Corporation Act,
32-40 is amended to read as follows:
32-41 Art. 2.34. Vacancies. A. Any vacancy occurring in the
32-42 initial board of directors before the issuance of shares may be
32-43 filled by the affirmative vote or written consent of a majority of
32-44 the incorporators or by the affirmative vote of a majority of the
32-45 remaining directors though less than a quorum of the board of
32-46 directors. A director elected to fill a vacancy shall be elected
32-47 for the unexpired term of the director's predecessor in office.
32-48 B. Any vacancy occurring in the board of directors after the
32-49 issuance of shares may be filled in accordance with Section D <C>
32-50 of this article or may be filled by the affirmative vote of a
32-51 majority of the remaining directors though less than a quorum of
32-52 the board of directors. A director elected to fill a vacancy shall
32-53 be elected for the unexpired term of his predecessor in office.
32-54 C <B>. A directorship to be filled by reason of an increase
32-55 in the number of directors may be filled in accordance with Section
32-56 D <C> of this article or may be filled by the board of directors
32-57 for a term of office continuing only until the next election of one
32-58 or more directors by the shareholders; provided that the board of
32-59 directors may not fill more than two such directorships during the
32-60 period between any two successive annual meetings of shareholders.
32-61 D <C>. Any vacancy occurring in the board of directors or
32-62 any directorship to be filled by reason of an increase in the
32-63 number of directors may be filled by election at an annual or
32-64 special meeting of shareholders called for that purpose.
32-65 E <D>. Notwithstanding Sections <A,> B, <and> C, and D of
32-66 this article, whenever the holders of any class or series of shares
32-67 or group of classes or series of shares are entitled to elect one
32-68 or more directors by the provisions of the articles of
32-69 incorporation, any vacancies in such directorships and any newly
32-70 created directorships of such class or series to be filled by
33-1 reason of an increase in the number of such directors may be filled
33-2 by the affirmative vote of a majority of the directors elected by
33-3 such class or series, or by such group, then in office, or by a
33-4 sole remaining director so elected, or by the vote of the holders
33-5 of the outstanding shares of such class or series or of such group,
33-6 and such directorships shall not in any case be filled by the vote
33-7 of the remaining directors or the holders of the outstanding shares
33-8 as a whole unless otherwise provided in the articles of
33-9 incorporation.
33-10 SECTION 2.10. Section C, Article 2.41, Texas Business
33-11 Corporation Act, is amended to read as follows:
33-12 C. A director shall not be liable under Subsection (1) of
33-13 Section A of this Article if, in voting for or assenting to the
33-14 distribution, the director:
33-15 (1) relied in good faith and with ordinary care upon
33-16 the statements, valuations, or information referred to in Article
33-17 2.38-3 of this Act, or upon other information, opinions, reports,
33-18 or statements, including financial statements and other financial
33-19 data, concerning the corporation or another person, that were
33-20 prepared or presented by:
33-21 (a) one or more officers or employees of the
33-22 corporation;
33-23 (b) legal counsel, public accountants,
33-24 investment bankers, or other persons as to matters the director
33-25 reasonably believes are within the person's professional or expert
33-26 competence; or
33-27 (c) a committee of the board of directors of
33-28 which the director is not a member;
33-29 (2) acting in good faith and with ordinary care,
33-30 considered the assets of the corporation to be at least of their
33-31 book value; or
33-32 (3) in determining whether the corporation made
33-33 adequate provision for payment, satisfaction or discharge of all of
33-34 its liabilities and obligations as provided in Articles <Article>
33-35 6.04 and 7.12 of this Act, relied in good faith and with ordinary
33-36 care upon financial statements of, or other information concerning,
33-37 any person who was or became contractually obligated to pay,
33-38 satisfy, or discharge some or all of those liabilities or
33-39 obligations.
33-40 SECTION 2.11. Sections B-F, Article 2.44, Texas Business
33-41 Corporation Act, are amended to read as follows:
33-42 B. A director may examine the corporation's books and
33-43 records of account, share transfer records, corporate minutes and
33-44 any other corporate books and records for any purpose reasonably
33-45 related to the director's service as a director. A court of
33-46 competent jurisdiction may compel a corporation to open its books
33-47 and records of account, share transfer records, corporate minutes
33-48 or any other corporate books and records to permit the director to
33-49 inspect the books or records and make copies or extracts from the
33-50 books or records on a showing by a director that:
33-51 (1) he is a director;
33-52 (2) he demanded to inspect the corporate books and
33-53 records;
33-54 (3) his purpose for inspecting the corporate books and
33-55 records was reasonably related to his service as a director; and
33-56 (4) his right of access to the books and records was
33-57 refused by the corporation.
33-58 The court may also award the director attorneys' fees and any other
33-59 relief that the court deems just and proper.
33-60 C. Any person who shall have been a shareholder for at least
33-61 six (6) months immediately preceding his demand, or shall be the
33-62 holder of at least five per cent (5%) of all the outstanding shares
33-63 of a corporation, upon written demand stating the purpose thereof,
33-64 shall have the right to examine, in person or by agent, accountant,
33-65 or attorney, at any reasonable time or times, for any proper
33-66 purpose, its relevant books and records of account, minutes, and
33-67 share transfer records, and to make extracts therefrom.
33-68 D <C>. Any corporation which shall refuse to allow any such
33-69 shareholder or his agent, accountant or attorney, so to examine and
33-70 make extracts from its books and records of account, minutes, and
34-1 share transfer records, for any proper purpose, shall be liable to
34-2 such shareholder for all costs and expenses, including attorneys'
34-3 fees, incurred in enforcing his rights under this Article in
34-4 addition to any other damages or remedy afforded him by law. It
34-5 shall be a defense to any action for penalties under this section
34-6 that the person suing therefor has within two (2) years sold or
34-7 offered for sale any list of shareholders or of holders of voting
34-8 trust certificates for shares of such corporation or any other
34-9 corporation or has aided or abetted any person in procuring any
34-10 list of shareholders or of holders of voting trust certificates for
34-11 any such purpose, or has improperly used any information secured
34-12 through any prior examination of the books and records of account,
34-13 minutes, or share transfer records of such corporation or any other
34-14 corporation, or was not acting in good faith or for a proper
34-15 purpose in making his demand.
34-16 E <D>. Nothing herein contained shall impair the power of
34-17 any court of competent jurisdiction, upon proof of proper purpose
34-18 by a beneficial or record holder of shares, irrespective of the
34-19 period of time during which such holder shall have been a
34-20 beneficial or record holder and irrespective of the number of
34-21 shares held by him, to compel the production for examination by
34-22 such holder of the books and records of account, minutes, and share
34-23 transfer records of a corporation.
34-24 F <E>. Upon the written request of any shareholder of a
34-25 corporation, the corporation shall mail to such shareholder its
34-26 annual statements for its last fiscal year showing in reasonable
34-27 detail its assets and liabilities and the results of its operations
34-28 and the most recent interim statements, if any, which have been
34-29 filed in a public record or otherwise published. The corporation
34-30 shall be allowed a reasonable time to prepare such annual
34-31 statements.
34-32 G <F>. A holder of a beneficial interest in a voting trust
34-33 entered into pursuant to Article 2.30 of this Act shall be regarded
34-34 as a holder of the shares represented by such beneficial interest
34-35 for the purposes of this Article.
34-36 SECTION 2.12. Article 4.14, Texas Business Corporation Act,
34-37 is amended to read as follows:
34-38 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE <Amendment
34-39 of Articles, Merger, Share Exchange, and Dissolution Pursuant to
34-40 Federal Reorganization Proceedings>. A. Authorization.
34-41 Notwithstanding any other provision of this Act to the contrary, a
34-42 trustee appointed for a corporation being reorganized under a
34-43 federal statute, the designated officers of the corporation, or any
34-44 other individual or individuals designated by the court to act on
34-45 behalf of the corporation <a corporation being reorganized under a
34-46 federal statute> may do any of the following without action by or
34-47 notice to its board of directors or shareholders in order to carry
34-48 out a plan of reorganization ordered or decreed by a court of
34-49 competent jurisdiction under the federal statute:
34-50 (1) amend or restate its articles of incorporation if
34-51 the articles after amendment or restatement contain only provisions
34-52 required or permitted in articles;
34-53 (2) merge or engage in a share exchange with one or
34-54 more domestic or foreign corporations or other entities pursuant to
34-55 a plan of merger or exchange having such terms and provisions as
34-56 required or permitted by Articles <Article> 5.01 and 5.02 of this
34-57 Act;
34-58 (3) change the location of its registered office,
34-59 change its registered agent, and remove or appoint any agent to
34-60 receive service of process;
34-61 (4) alter, amend, or repeal its bylaws;
34-62 (5) constitute or reconstitute and classify or
34-63 reclassify its board of directors, and name, constitute, or appoint
34-64 directors and officers in place of or in addition to all or some of
34-65 the officers or directors then in place;
34-66 (6) sell, lease, exchange or otherwise dispose of all,
34-67 or substantially all, of its property and assets; <or>
34-68 (7) authorize and fix the terms, manner, and
34-69 conditions of the issuance of bonds, debentures, or other
34-70 obligations, whether or not convertible into shares of any class or
35-1 bearing warrants or other evidences of optional rights to purchase
35-2 or subscribe for any shares of any class; or
35-3 (8) <(4)> dissolve.
35-4 Actions taken under Subsection (4) or (5) of this section are
35-5 effective on entry of the order or decree approving the plan of
35-6 reorganization or on another effective date as may be specified,
35-7 without further action of the corporation, as and to the extent set
35-8 forth in the plan of reorganization or the order or decree
35-9 approving the plan of reorganization.
35-10 B. Authority to Sign Documents. A trustee appointed for a
35-11 corporation being reorganized under a federal statute, the
35-12 designated officers of the corporation, or any other <The>
35-13 individual or individuals designated by the court may sign on
35-14 behalf of a corporation that is being reorganized:
35-15 (1) articles of amendment or restated articles of
35-16 incorporation setting forth:
35-17 (a) the name of the corporation;
35-18 (b) the text of each amendment or the
35-19 restatement approved by the court;
35-20 (c) the date of the court's order or decree
35-21 approving the articles of amendment or restatement;
35-22 (d) the court, file name, and case number of the
35-23 reorganization case <proceeding> in which the order or decree was
35-24 entered; and
35-25 (e) a statement that the court had jurisdiction
35-26 of the case <proceeding> under federal statute; or
35-27 (2) articles of merger or exchange setting forth:
35-28 (a) the name of the corporation;
35-29 (b) the text of the part of the plan of
35-30 reorganization that contains the plan of merger or exchange
35-31 approved by the court, which shall include the information required
35-32 by Article 5.04A or 5.16B of this Act, as applicable, but need not
35-33 include the resolution of the board of directors referred to in
35-34 Article 5.16B(3) of this Act;
35-35 (c) the date of the court's order or decree
35-36 approving the plan of merger or consolidation;
35-37 (d) the court, file name, and case number of the
35-38 reorganization case <proceeding> in which the order or decree was
35-39 entered; and
35-40 (e) a statement that the court had jurisdiction
35-41 of the case <proceeding> under federal statute; or
35-42 (3) articles of dissolution setting forth:
35-43 (a) the name of the corporation;
35-44 (b) the information required by Articles
35-45 <Article> 6.06A(1)(2) and (3) of this Act;
35-46 (c) the date of the court's order or decree
35-47 approving the articles of dissolution;
35-48 (d) that the debts, obligations and liabilities
35-49 of the corporation have been paid or discharged as provided in the
35-50 plan of reorganization and that the remaining property and assets
35-51 of the corporation have been distributed as provided in the plan of
35-52 reorganization;
35-53 (e) the court, file name, and case number of the
35-54 reorganization case <proceeding> in which the order or decree was
35-55 entered; and
35-56 (f) a statement that the court had jurisdiction
35-57 of the case <proceeding> under federal statute; or
35-58 (4) a statement of change of registered office or
35-59 registered agent, or both, setting forth:
35-60 (a) the name of the corporation;
35-61 (b) the information required by Article 2.10A of
35-62 this Act, as applicable, but not the information included in the
35-63 statement referred to in Article 2.10A(7) of this Act;
35-64 (c) the date of the court's order or decree
35-65 approving the statement of change of registered office or
35-66 registered agent, or both;
35-67 (d) the court, file name, and case number of the
35-68 reorganization case in which the order or decree was entered; and
35-69 (e) a statement that the court had jurisdiction
35-70 of the case under federal statute.
36-1 C. Procedure for Merger or Share Exchange. When a domestic
36-2 or foreign corporation or other entity that is not being
36-3 reorganized merges or engages in a share exchange with a
36-4 corporation that is being reorganized pursuant to a plan of
36-5 reorganization:
36-6 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
36-7 this Act shall apply to the domestic or foreign corporation or
36-8 other entity that is not being reorganized to the same extent they
36-9 would apply if it were merging or engaging in a share exchange with
36-10 a corporation that is not being reorganized;
36-11 (2) Article 5.06 of this Act shall apply to the
36-12 domestic or foreign corporation or other entity that is not being
36-13 reorganized to the same extent it would apply if that domestic or
36-14 foreign corporation or other entity were merging or engaging in a
36-15 share exchange with a corporation that is not being reorganized,
36-16 except as otherwise provided in the plan of reorganization ordered
36-17 or decreed by a court of competent jurisdiction under the federal
36-18 statute;
36-19 (3) Article 5.16E of this Act shall apply to a
36-20 subsidiary corporation that is not being reorganized to the same
36-21 extent it would apply if that corporation were merging with a
36-22 parent corporation that is not being reorganized;
36-23 (4) Upon the receipt of all required authorization for
36-24 all action required by this Act for each corporation that is a
36-25 party to the plan of merger or exchange that is not being
36-26 reorganized and all action by each corporation, foreign
36-27 corporation, or other entity that is a party to the plan of merger
36-28 or exchange required by the laws under which it is incorporated or
36-29 organized and its constituent documents, articles of merger or
36-30 exchange shall be signed by each domestic or foreign corporation or
36-31 other entity that is a party to the merger or exchange other than
36-32 the corporation that is being reorganized as provided in Article
36-33 5.04 of this Act and on behalf of the corporation that is being
36-34 reorganized by the persons specified in Section B of this Article;
36-35 <and>
36-36 (5) The articles of merger or exchange shall set forth
36-37 the information required in Section B(2) of this Article;<.>
36-38 (6) <D. Filing.> The articles of merger or exchange
36-39 shall be filed with the Secretary of State in the manner and with
36-40 such number of copies as is provided in Article 5.04B of this Act;
36-41 and<.>
36-42 (7) <E. Effect.> Upon the issuance of the certificate
36-43 of merger or share exchange by the Secretary of State as provided
36-44 in Article 5.04 of this Act, the merger or share exchange shall
36-45 become effective with the same effect as if it had been adopted by
36-46 unanimous action of the directors and shareholders of the
36-47 corporation being reorganized. The effectiveness of the merger or
36-48 share exchange shall be determined as provided in Article 5.05 of
36-49 this Act.
36-50 D <F>. Dissenters' Rights. Shareholders of a corporation
36-51 being reorganized under a federal statute do not have a right to
36-52 dissent under Article 5.11 or 5.16E of this Act, except as the plan
36-53 of reorganization may provide.
36-54 E <G>. When Applicable. This Article shall not apply after
36-55 the entry of a final decree in the reorganization case <proceeding>
36-56 even though the court may retain jurisdiction of the case
36-57 <proceeding> for limited purposes unrelated to consummation of the
36-58 plan of reorganization.
36-59 F <H>. Nonexclusivity. This Article shall not preclude
36-60 other changes in a corporation or its securities by a plan of
36-61 reorganization ordered or decreed by a court of competent
36-62 jurisdiction under federal statute.
36-63 SECTION 2.13. Sections A, B, and G, Article 5.03, Texas
36-64 Business Corporation Act, are amended to read as follows:
36-65 A. Except as provided by Section G of this Article, after
36-66 <After> acting on a plan of merger or exchange in the manner
36-67 prescribed by Subsection (1) of Section B of this Article, the
36-68 board of directors of each domestic corporation that is a party to
36-69 the merger, and the board of directors of each domestic corporation
36-70 whose shares are to be acquired in the share exchange, shall submit
37-1 the plan of merger <(except as provided in Section G of this
37-2 Article)> or exchange for approval by its shareholders.
37-3 B. Except as provided by Section G of this Article, for
37-4 <For> a plan of merger or exchange to be approved:
37-5 (1) the board of directors of the corporation may
37-6 adopt a resolution recommending that the plan of merger or exchange
37-7 be approved by the shareholders of the corporation, unless the
37-8 board of directors determines that for any reason it should not
37-9 make that recommendation, in which case the board of directors may
37-10 adopt a resolution directing that the plan of merger or exchange be
37-11 submitted to shareholders for approval without recommendation and,
37-12 in connection with the submission, communicate the basis for its
37-13 determination that the plan be submitted to shareholders without
37-14 any recommendation; and
37-15 (2) <except as provided in Section G of this Article,>
37-16 the shareholders entitled to vote on the plan of merger or exchange
37-17 must approve the plan.
37-18 G. Unless the articles of incorporation otherwise require,
37-19 approval by the shareholders of a corporation on a plan of merger
37-20 shall not be required and the provisions of Sections A, B, C, D, E,
37-21 and F of this Article do not apply if:
37-22 (1) the corporation is the sole surviving corporation
37-23 in the merger;
37-24 (2) the articles of incorporation of the corporation
37-25 will not differ from its articles of incorporation before the
37-26 merger;
37-27 (3) each shareholder of the corporation whose shares
37-28 were outstanding immediately before the effective date of the
37-29 merger will hold the same number of shares, with identical
37-30 designations, preferences, limitations, and relative rights,
37-31 immediately after the effective date of the merger;
37-32 (4) the voting power of the number of voting shares
37-33 outstanding immediately after the merger, plus the voting power of
37-34 the number of voting shares issuable as a result of the merger
37-35 (either by the conversion of securities issued pursuant to the
37-36 merger or the exercise of rights to purchase securities issued
37-37 pursuant to the merger), will not exceed by more than 20 percent
37-38 the voting power of the total number of voting shares of the
37-39 corporation outstanding immediately before the merger;
37-40 (5) the number of participating shares outstanding
37-41 immediately after the merger, plus the number of participating
37-42 shares issuable as a result of the merger (either by the conversion
37-43 of securities issued pursuant to the merger or the exercise of
37-44 rights to purchase securities issued pursuant to the merger), will
37-45 not exceed by more than 20 percent the total number of
37-46 participating shares of the corporation outstanding immediately
37-47 before the merger; and
37-48 (6) the board of directors of the corporation adopts a
37-49 resolution approving the plan of merger.
37-50 SECTION 2.14. Section B, Article 5.09, Texas Business
37-51 Corporation Act, is amended to read as follows:
37-52 B. A transaction referred to in this Article and in Article
37-53 5.10 of this Act shall be in the usual and regular course of
37-54 business if the corporation shall, directly or indirectly, either
37-55 continue to engage in one or more businesses or apply a portion of
37-56 the consideration received in connection with the transaction to
37-57 the conduct of a business in which it engages following the
37-58 transaction.
37-59 SECTION 2.15. Section A, Article 5.10, Texas Business
37-60 Corporation Act, is amended to read as follows:
37-61 A. A sale, lease, exchange, or other disposition (not
37-62 including any pledge, mortgage, deed of trust or trust indenture
37-63 unless otherwise provided in the articles of incorporation) of all,
37-64 or substantially all, the property and assets, with or without the
37-65 good will of a corporation, if not made in the usual and regular
37-66 course of its business, may be made upon such terms and conditions
37-67 and for such consideration, which may consist in whole or in part
37-68 of money or property, real or personal, including shares of any
37-69 corporation, domestic or foreign, as may be authorized in the
37-70 following manner:
38-1 (1) The board of directors may adopt a resolution
38-2 recommending that such sale, lease, exchange, or other disposition
38-3 be approved by shareholders of the corporation, unless the board of
38-4 directors determines that for any reason it should not make the
38-5 recommendation in which case the board of directors may adopt a
38-6 resolution directing that such sale, lease, exchange, or other
38-7 disposition be submitted to shareholders without recommendation
38-8 and, in connection with the submission, communicate the basis for
38-9 its determination that the sale, lease, exchange or other
38-10 disposition be submitted without recommendation.
38-11 (2) The board of directors may submit the proposed
38-12 sale, lease, exchange or other disposition for authorization by the
38-13 corporation's shareholders at a meeting of shareholders, which may
38-14 be either an annual or a special meeting.
38-15 (3) Written or printed notice shall be given to each
38-16 shareholder of record entitled to vote at such meeting within the
38-17 time and in the manner provided for in this Act for the giving of
38-18 notice of meetings of shareholders, and, whether the meeting be an
38-19 annual or a special meeting shall state that the purpose, or one of
38-20 the purposes, of such meeting is to consider the proposed sale,
38-21 lease, exchange, or other disposition.
38-22 (4) At such meeting, the shareholders may authorize
38-23 such sale, lease, exchange or other disposition and may fix, or may
38-24 authorize the board of directors to fix, any or all of the terms
38-25 and conditions thereof and the consideration to be received by the
38-26 corporation therefor. Such authorization shall require the
38-27 affirmative vote of the holders of at least two-thirds of the
38-28 outstanding shares of the corporation entitled to vote thereon,
38-29 unless any class or series of shares of the corporation is entitled
38-30 to vote as a class thereon, in which event the vote required for
38-31 authorization by the shareholders shall be the affirmative vote of
38-32 the holders of at least two-thirds of the outstanding shares within
38-33 each such class or series entitled to vote thereon as a class and
38-34 at least two-thirds of the outstanding shares otherwise entitled to
38-35 vote thereon. Shares entitled to vote as a class shall be entitled
38-36 to vote only as a class unless otherwise entitled to vote on each
38-37 matter submitted to the shareholders generally or provided in the
38-38 articles of incorporation.
38-39 (5) After such authorization by vote of shareholders,
38-40 the board of directors, nevertheless, in its discretion, may
38-41 abandon such sale, lease, exchange or other disposition of assets,
38-42 subject to the rights of third parties under any contracts relating
38-43 thereto, without further action or approval by shareholders.
38-44 SECTION 2.16. Sections A and D, Article 5.12, Texas Business
38-45 Corporation Act, are amended to read as follows:
38-46 A. Any shareholder of any domestic corporation who has the
38-47 right to dissent from any of the corporate actions referred to in
38-48 Article 5.11 of this Act may exercise that right to dissent only by
38-49 complying with the following procedures:
38-50 (1)(a) With respect to proposed corporate action that
38-51 is submitted to a vote of shareholders at a meeting, the
38-52 shareholder shall file with the corporation, prior to the meeting,
38-53 a written objection to the action, setting out that the
38-54 shareholder's right to dissent will be exercised if the action is
38-55 effective and giving the shareholder's address, to which notice
38-56 thereof shall be delivered or mailed in that event. If the action
38-57 is effected and the shareholder shall not have voted in favor of
38-58 the action, the corporation, in the case of action other than a
38-59 merger, or the surviving or new corporation (foreign or domestic)
38-60 or other entity that is liable to discharge the shareholder's right
38-61 of dissent, in the case of a merger, shall, within ten (10) days
38-62 after the action is effected, deliver or mail to the shareholder
38-63 written notice that the action has been effected, and the
38-64 shareholder may, within ten (10) days from the delivery or mailing
38-65 of the notice, make written demand on the existing, surviving, or
38-66 new corporation (foreign or domestic) or other entity, as the case
38-67 may be, for payment of the fair value of the shareholder's shares.
38-68 The fair value of the shares shall be the value thereof as of the
38-69 day immediately preceding the meeting, excluding any appreciation
38-70 or depreciation in anticipation of the proposed action. The demand
39-1 shall state the number and class of the shares owned by the
39-2 shareholder and the fair value of the shares as estimated by the
39-3 shareholder. Any shareholder failing to make demand within the ten
39-4 (10) day period shall be bound by the action.
39-5 (b) With respect to proposed corporate action
39-6 that is approved pursuant to Section A of Article 9.10 of this Act,
39-7 the corporation, in the case of action other than a merger, and the
39-8 surviving or new corporation (foreign or domestic) or other entity
39-9 that is liable to discharge the shareholder's right of dissent, in
39-10 the case of a merger, shall, within ten (10) days after the date
39-11 the action is effected, mail to each shareholder of record as of
39-12 the effective date of the action notice of the fact and date of the
39-13 action and that the shareholder may exercise the shareholder's
39-14 right to dissent from the action. The notice shall be accompanied
39-15 by a copy of this Article and any articles or documents filed by
39-16 the corporation with the Secretary of State to effect the action.
39-17 If the shareholder shall not have consented to the taking of the
39-18 action, the shareholder may, within twenty (20) days after the
39-19 mailing of the notice, make written demand on the existing,
39-20 surviving, or new corporation (foreign or domestic) or other
39-21 entity, as the case may be, for payment of the fair value of the
39-22 shareholder's shares. The fair value of the shares shall be the
39-23 value thereof as of the date the written consent authorizing the
39-24 action was delivered to the corporation pursuant to Section A of
39-25 Article 9.10 of this Act, excluding any appreciation or
39-26 depreciation in anticipation of the <proposed> action. The demand
39-27 shall state the number and class of shares owned by the dissenting
39-28 shareholder and the fair value of the shares as estimated by the
39-29 shareholder. Any shareholder failing to make demand within the
39-30 twenty (20) day period shall be bound by the action.
39-31 (2) Within twenty (20) days after receipt by the
39-32 existing, surviving, or new corporation (foreign or domestic) or
39-33 other entity, as the case may be, of a demand for payment made by a
39-34 dissenting shareholder in accordance with Subsection (1) of this
39-35 Section, the corporation (foreign or domestic) or other entity
39-36 shall deliver or mail to the shareholder a written notice that
39-37 shall either set out that the corporation (foreign or domestic) or
39-38 other entity accepts the amount claimed in the demand and agrees to
39-39 pay that amount within ninety (90) days after the date on which the
39-40 action was effected, and, in the case of shares represented by
39-41 certificates, upon the surrender of the certificates duly endorsed,
39-42 or shall contain an estimate by the corporation (foreign or
39-43 domestic) or other entity of the fair value of the shares, together
39-44 with an offer to pay the amount of that estimate within ninety (90)
39-45 days after the date on which the action was effected, upon receipt
39-46 of notice within sixty (60) days after that date from the
39-47 shareholder that the shareholder agrees to accept that amount and,
39-48 in the case of shares represented by certificates, upon the
39-49 surrender of the certificates duly endorsed.
39-50 (3) If, within sixty (60) days after the date on which
39-51 the corporate action was effected, the value of the shares is
39-52 agreed upon between the shareholder and the existing, surviving, or
39-53 new corporation (foreign or domestic) or other entity, as the case
39-54 may be, payment for the shares shall be made within ninety (90)
39-55 days after the date on which the action was effected and, in the
39-56 case of shares represented by certificates, upon surrender of the
39-57 certificates duly endorsed. Upon payment of the agreed value, the
39-58 shareholder shall cease to have any interest in the shares or in
39-59 the corporation.
39-60 D. The appraisers shall determine the fair value of the
39-61 shares of the shareholders adjudged by the court to be entitled to
39-62 payment for their shares and shall file their report of that value
39-63 in the office of the clerk of the court. Notice of the filing of
39-64 the report shall be given by the clerk to the parties in interest.
39-65 The report shall be subject to exceptions to be heard before the
39-66 court both upon the law and the facts. The court shall by its
39-67 judgment determine the fair value of the shares of the shareholders
39-68 entitled to payment for their shares and shall direct the payment
39-69 of that value by the existing, surviving, or new corporation
39-70 (foreign or domestic) or other entity, together with interest
40-1 thereon, beginning 91 days after the date on which the applicable
40-2 corporate action from which the shareholder elected to dissent was
40-3 effected to the date of such judgment, to the shareholders entitled
40-4 to payment. The judgment shall be payable to the holders of
40-5 uncertificated shares immediately but to the holders of shares
40-6 represented by certificates only upon, and simultaneously with, the
40-7 surrender to the existing, surviving, or new corporation (foreign
40-8 or domestic) or other entity, as the case may be, of duly endorsed
40-9 certificates for those shares. Upon payment of the judgment, the
40-10 dissenting shareholders shall cease to have any interest in those
40-11 shares or in the corporation. The court shall allow the appraisers
40-12 a reasonable fee as court costs, and all court costs shall be
40-13 allotted between the parties in the manner that the court
40-14 determines to be fair and equitable.
40-15 SECTION 2.17. Article 5.13, Texas Business Corporation Act,
40-16 is amended to read as follows:
40-17 Art. 5.13. Provisions Affecting Remedies of Dissenting
40-18 Shareholders. A. Any shareholder who has demanded payment for his
40-19 shares in accordance with either Article 5.12 or 5.16 of this Act
40-20 shall not thereafter be entitled to vote or exercise any other
40-21 rights of a shareholder except the right to receive payment for his
40-22 shares pursuant to the provisions of those articles <said Article
40-23 5.12> and the right to maintain an appropriate action to obtain
40-24 relief on the ground that the corporate action would be or was
40-25 fraudulent, and the respective shares for which payment has been
40-26 demanded shall not thereafter be considered outstanding for the
40-27 purposes of any subsequent vote of shareholders.
40-28 B. Upon receiving a demand for payment from any dissenting
40-29 shareholder, the corporation shall make an appropriate notation
40-30 thereof in its shareholder records. Within twenty (20) days after
40-31 demanding payment for his shares in accordance with either Article
40-32 5.12 or 5.16 of this Act, each holder of certificates representing
40-33 shares so demanding payment shall submit such certificates to the
40-34 corporation for notation thereon that such demand has been made.
40-35 The failure of holders of certificated shares to do so shall, at
40-36 the option of the corporation, terminate such shareholder's rights
40-37 under Articles <Article> 5.12 and 5.16 of this Act unless a court
40-38 of competent jurisdiction for good and sufficient cause shown shall
40-39 otherwise direct. If uncertificated shares for which payment has
40-40 been demanded or shares represented by a certificate on which
40-41 notation has been so made shall be transferred, any new certificate
40-42 issued therefor shall bear similar notation together with the name
40-43 of the original dissenting holder of such shares and a transferee
40-44 of such shares shall acquire by such transfer no rights in the
40-45 corporation other than those which the original dissenting
40-46 shareholder had after making demand for payment of the fair value
40-47 thereof.
40-48 C. Any shareholder who has demanded payment for his shares
40-49 in accordance with either Article 5.12 or 5.16 of this Act may
40-50 withdraw such demand at any time before payment for his shares or
40-51 before any petition has been filed pursuant to Article 5.12 or 5.16
40-52 of this Act asking for a finding and determination of the fair
40-53 value of such shares, but no such demand may be withdrawn after
40-54 such payment has been made or, unless the corporation shall consent
40-55 thereto, after any such petition has been filed. If, however, such
40-56 demand shall be withdrawn as hereinbefore provided, or if pursuant
40-57 to Section B of this Article the corporation shall terminate the
40-58 shareholder's rights under Article 5.12 or 5.16 of this Act, as the
40-59 case may be, or if no petition asking for a finding and
40-60 determination of fair value of such shares by a court shall have
40-61 been filed within the time provided in Article 5.12 or 5.16 of this
40-62 Act, as the case may be, or if after the hearing of a petition
40-63 filed pursuant to Article 5.12 or 5.16, the court shall determine
40-64 that such shareholder is not entitled to the relief provided by
40-65 those articles <Article 5.12>, then, in any such case, such
40-66 shareholder and all persons claiming under him shall be
40-67 conclusively presumed to have approved and ratified the corporate
40-68 action from which he dissented and shall be bound thereby, the
40-69 right of such shareholder to be paid the fair value of his shares
40-70 shall cease, and his status as a shareholder shall be restored
41-1 without prejudice to any corporate proceedings which may have been
41-2 taken during the interim, and such shareholder shall be entitled to
41-3 receive any dividends or other distributions made to shareholders
41-4 in the interim.
41-5 SECTION 2.18. Sections B, E, and F, Article 5.16, Texas
41-6 Business Corporation Act, are amended to read as follows:
41-7 B. Signature of articles; contents. The articles of merger
41-8 shall be signed on behalf of the parent corporation by an officer
41-9 and shall set forth:
41-10 (1) The name of the parent corporation, and the name
41-11 or names of the subsidiary corporations and the respective
41-12 jurisdiction under which each such corporation is organized.
41-13 (2) The number of outstanding shares of each class of
41-14 each subsidiary corporation and the number of such shares of each
41-15 class owned by the parent corporation.
41-16 (3) A copy of the resolution adopted by the board of
41-17 directors of the parent corporation to so merge and the date of the
41-18 adoption thereof. If the parent corporation does not own all the
41-19 outstanding shares of each class of each subsidiary corporation
41-20 that is a party to the merger, the resolution shall state the terms
41-21 and conditions of the merger, including the <securities,> cash or
41-22 other property, including shares, obligations, evidences of
41-23 ownership, rights to purchase securities, or other securities of
41-24 any person or entity or any combination of the shares, obligations,
41-25 evidences of ownership, rights, or other securities, to be used,
41-26 paid or delivered by the surviving corporation upon surrender of
41-27 each share of the subsidiary corporation or corporations not owned
41-28 by the parent corporation.
41-29 (4) If the surviving corporation is a foreign
41-30 corporation, the address, including street number if any, of its
41-31 registered or principal office in the jurisdiction under whose laws
41-32 it is governed. If the surviving corporation is a foreign
41-33 corporation, on the merger taking effect the surviving foreign
41-34 corporation is deemed to (a) appoint the Secretary of State of this
41-35 state as its agent for service of process to enforce an obligation
41-36 or the rights of dissenting shareholders of each domestic
41-37 corporation that is a party to the merger, and (b) agree that it
41-38 will promptly pay to the dissenting shareholders of each domestic
41-39 corporation that is a party to the merger the amount, if any, to
41-40 which they are entitled under this Article <It shall comply also
41-41 with the provisions of Section D of Article 5.01 of this Act>.
41-42 (5) If a plan of merger is required by Section A of
41-43 this Article to be adopted in the manner required by Article 5.03
41-44 of this Act, the information required by Section A of Article 5.04
41-45 of this Act.
41-46 E. Remedy of minority shareholders. In the event all of the
41-47 shares of a subsidiary domestic corporation that is a party to a
41-48 merger effected under this Article are not owned by the parent
41-49 corporation immediately prior to the merger, the surviving
41-50 corporation (foreign or domestic) shall, within ten (10) days after
41-51 the effective date of the merger, mail to each shareholder of
41-52 record of each subsidiary domestic corporation a copy of the
41-53 articles of merger and notify the shareholder <him> that the merger
41-54 has become effective. Any <In case any> such shareholder who holds
41-55 shares of a class or series that would have been entitled to vote
41-56 on the merger if it had been effected pursuant to Article 5.03 of
41-57 this Act shall have the right <and who elects> to dissent from the
41-58 merger and demand payment of the fair value for his shares in lieu
41-59 of the <securities,> cash or other property to be used, paid or
41-60 delivered to such shareholder upon the surrender of such
41-61 shareholder's shares pursuant to the terms and conditions of the
41-62 merger, with the following procedure <shall be followed>:
41-63 (1) Such shareholder shall within twenty (20) days
41-64 after the mailing of the notice and copy of the articles of merger
41-65 make written demand on the surviving corporation, domestic or
41-66 foreign, for payment of the fair value of his shares. The fair
41-67 value of the <such> shares shall be the value thereof as of the day
41-68 before the effective date of the merger, excluding any appreciation
41-69 or depreciation in anticipation of such <proposed> act. The <Such>
41-70 demand shall state the number and class of the shares owned by the
42-1 dissenting shareholder and the fair value of such shares as
42-2 estimated by him. Any shareholder failing to make demand within
42-3 the twenty (20) day period shall be bound by the <such> corporate
42-4 action.
42-5 (2) Within ten (10) days after receipt by the
42-6 surviving corporation of a demand for payment by the dissenting
42-7 shareholder of the fair value of his shares <made by such
42-8 dissenting shareholder> in accordance with Subsection (1) of this
42-9 section, the <hereof, such> corporation (foreign or domestic) shall
42-10 deliver or mail to the <such> dissenting shareholder a written
42-11 notice which shall either set out that the corporation (foreign or
42-12 domestic) accepts the amount claimed in the <such> demand and
42-13 agrees to pay such amount within ninety (90) days after the date on
42-14 which the <such> corporate action was effected and, in the case of
42-15 shares represented by certificates, upon the surrender of the
42-16 shares certificates duly endorsed, or shall contain an estimate by
42-17 the corporation of the fair value of such shares, together with an
42-18 offer to pay the amount of that <such> estimate within ninety (90)
42-19 days after the date on which such corporate <corporation> action
42-20 was effected, upon receipt of notice within sixty (60) days after
42-21 that <such> date from the <such> shareholder that the shareholder
42-22 <he> agrees to accept that <such> amount and, in the case of shares
42-23 represented by certificates, upon the surrender of the shares
42-24 certificates duly endorsed.
42-25 (3) If, within sixty (60) days after the date on which
42-26 the <such> corporate action was effected, the value of the <such>
42-27 shares is agreed upon between the dissenting shareholder and the
42-28 surviving corporation (foreign or domestic), payment for the shares
42-29 <therefor> shall be made within ninety (90) days after the date on
42-30 which the <such> corporate action was effected and, in the case of
42-31 shares represented by certificates, upon surrender of his
42-32 certificate or certificates representing such shares. Upon payment
42-33 of the agreed value, the dissenting shareholder shall cease to have
42-34 any interest in such shares or in the corporation.
42-35 (4) If, within <such period of> sixty (60) days after
42-36 the date on which such corporate action was effected, the
42-37 shareholder and the surviving corporation (foreign or domestic) do
42-38 not so agree, then the dissenting shareholder or the corporation
42-39 (foreign or domestic) may, within sixty (60) days after the
42-40 expiration of the sixty (60) day period, file a petition in any
42-41 court of competent jurisdiction in the county in which the
42-42 principal office of the corporation is located, asking for a
42-43 finding and determination of the fair value of the shareholder's
42-44 <such> shares as provided in Section B of Article 5.12 of this Act
42-45 and thereupon the parties shall have the rights and duties and
42-46 follow the procedure set forth in Sections B to D inclusive of
42-47 Article 5.12 <and set forth in Article 5.13>.
42-48 (5) In the absence of fraud in the transaction, the
42-49 remedy provided by this Article to a shareholder objecting to the
42-50 <such> corporate action is the exclusive remedy for the recovery of
42-51 the value of his shares or money damages to the <such> shareholder
42-52 with respect to the <such> corporate action. If<; and if> the
42-53 surviving corporation (foreign or domestic) complies with the
42-54 requirements of this Article, any such shareholder who fails to
42-55 comply with the requirements of this Article shall not be entitled
42-56 to bring suit for the recovery of the value of his shares or money
42-57 damages to such shareholder with respect to such corporate action.
42-58 F. Dissenting shareholders. If a plan of merger is required
42-59 by Section A of this Article to be adopted in the manner required
42-60 by Article 5.03 of this Act, the provisions of Articles 5.11 and<,>
42-61 5.12<, and 5.13> of this Act shall apply to the rights of the
42-62 shareholders of the parent corporation to dissent from such merger.
42-63 Except as otherwise provided in this Article, the provisions of
42-64 Articles 5.11 and<,> 5.12 <and 5.13> of this Act shall not be
42-65 applicable to a merger effected under the provisions of this
42-66 Article. The provisions of Article 5.13 of this Act shall be
42-67 applicable to any merger effected under the provisions of this
42-68 Article to the extent provided in Article 5.13 of this Act.
42-69 SECTION 2.19. Sections D and F, Article 7.12, Texas Business
42-70 Corporation Act, are amended to read as follows:
43-1 D. A dissolved corporation may give written notice to a
43-2 person having or asserting an existing claim against the dissolved
43-3 corporation to present such existing claim to the dissolved
43-4 corporation in accordance with the notice. The notice shall be
43-5 sent by registered or certified mail, return receipt requested, to
43-6 the person having or asserting the existing claim at such person's
43-7 last known address, and the notice shall:
43-8 (1) state that such person's <such> claim against the
43-9 dissolved corporation must be presented in writing to the dissolved
43-10 corporation on or before the date stated in the notice, which shall
43-11 be not earlier than 120 days after the date the notice is sent to
43-12 such person;
43-13 (2) state that the written presentation of the claim
43-14 must describe such claim in sufficient detail to reasonably inform
43-15 the dissolved corporation of the identity of such person and of the
43-16 nature and amount of the claim;
43-17 (3) state a mailing address where the written
43-18 presentation of the person's claim against the dissolved
43-19 corporation is to be sent; <and>
43-20 (4) state that if the written presentation of the
43-21 claim is not received at such address on or before the date stated
43-22 in the notice, the claim will be extinguished; and
43-23 (5) be accompanied by a copy of this Section D.
43-24 If a written presentation of such person's claim against the
43-25 dissolved corporation that meets the requirements of this section
43-26 is received at the address of the dissolved corporation stated in
43-27 the notice on or before the date stated in the notice, the
43-28 dissolved corporation may thereafter give written notice to such
43-29 person that such claim is rejected by the dissolved corporation.
43-30 The notice shall be sent by registered or certified mail, return
43-31 receipt requested, addressed to such person at such person's last
43-32 known address, and the notice shall state:
43-33 (1) that such claim is rejected by the dissolved
43-34 corporation;
43-35 (2) that such claim will be extinguished unless
43-36 an action or proceeding on such claim is brought within 180 days
43-37 after the date such notice of rejection was sent to such person and
43-38 before the expiration of the three-year period following the date
43-39 of dissolution; and
43-40 (3) the date such notice of rejection was sent
43-41 and the date of dissolution.
43-42 Such person's claim against the dissolved corporation shall
43-43 be extinguished if (a) a written presentation of that claim
43-44 meeting the requirements of this section is not received at the
43-45 address of the dissolved corporation stated in the notice to such
43-46 person on or before the date stated in the notice or (b) an action
43-47 or proceeding on such claim is not brought within 180 days after
43-48 the date a notice of rejection was sent to such person and before
43-49 the expiration of the three-year period following the date of
43-50 dissolution.
43-51 F. In this Article:
43-52 (1) The term "dissolved corporation" means a
43-53 corporation (a) that was voluntarily dissolved by the issuance of
43-54 a certificate of dissolution by the Secretary of State and was not
43-55 issued a certificate of revocation of dissolution pursuant to
43-56 Section C of Article 6.05 of this Act, (b) that was involuntarily
43-57 dissolved by the Secretary of State and was not reinstated pursuant
43-58 to Section E of Article 7.01 of this Act, (c) that was dissolved
43-59 by decree of a court when the court has not liquidated all the
43-60 assets and business of the corporation as provided in this Act,
43-61 <or> (d) that was dissolved by the expiration of its period of
43-62 duration and has not revived its existence as provided in this Act,
43-63 or (e) whose charter was forfeited pursuant to the Tax Code,
43-64 unless the forfeiture has been set aside.
43-65 (2) The term "claim" means a right to payment,
43-66 damages, or property, whether liquidated or unliquidated, accrued
43-67 or contingent, matured or unmatured.
43-68 (3) The term "existing claim" means a claim that
43-69 existed before dissolution and is not otherwise barred by
43-70 limitations or a contractual obligation incurred after dissolution.
44-1 SECTION 2.20. Section A, Article 8.14, Texas Business
44-2 Corporation Act, is amended to read as follows:
44-3 A. A foreign corporation authorized to transact business in
44-4 this state may withdraw from this state upon procuring from the
44-5 Secretary of State a certificate of withdrawal. In order to
44-6 procure such certificate of withdrawal, such foreign corporation
44-7 shall deliver to the Secretary of State an application for
44-8 withdrawal, which shall set forth:
44-9 (1) The name of the corporation and the state or
44-10 country under the laws of which it is incorporated;
44-11 (2) That the corporation is not transacting business
44-12 in this state;
44-13 (3) That the corporation surrenders its authority to
44-14 transact business in this state;
44-15 (4) That the corporation revokes the authority of its
44-16 registered agent in this state to accept service of process and
44-17 consents that service of process in any action, suit, or proceeding
44-18 based upon any cause of action arising in this state during the
44-19 time the corporation was authorized to transact business in this
44-20 state may thereafter be made on such corporation by service thereof
44-21 on the Secretary of State;
44-22 (5) A post office address to which the Secretary of
44-23 State may mail a copy of any process against the corporation that
44-24 may be served on him;
44-25 (6) A statement that all sums due, or accrued, to this
44-26 state have been paid, or that adequate provision has been made for
44-27 the payment thereof; and
44-28 (7) A statement that all known creditors or claimants
44-29 have been paid or provided for <and that the corporation is not
44-30 involved in or threatened with litigation in any court in this
44-31 state>.
44-32 SECTION 2.21. Section A, Article 10.03, Texas Business
44-33 Corporation Act, is amended to read as follows:
44-34 A. The effectiveness of (i) the incorporation of a
44-35 corporation under this Act, (ii) an amendment to a corporation's
44-36 articles of incorporation, including an amendment effected pursuant
44-37 to a statement of resolution establishing a series of shares,
44-38 (iii) the restatement of articles of incorporation of a
44-39 corporation, (iv) a merger or share exchange, (v) a cancellation
44-40 of redeemable or reacquired shares or a reduction in stated
44-41 capital, (vi) a voluntary dissolution, (vii) the authorization or
44-42 withdrawal of a foreign corporation to transact business in this
44-43 State, (viii) an amendment to the certificate of authority of a
44-44 foreign corporation, (ix) a bylaw or agreement restricting the
44-45 transfer of shares or securities of a corporation pursuant to this
44-46 Act, (x) a change in registered office or registered agent, or
44-47 (xi) a change of address of a registered agent (each such act or
44-48 document being a "Permitted Act") may be made effective as of a
44-49 time and date after the time and date otherwise provided in this
44-50 Act or may be made effective upon the occurrence of events or facts
44-51 that may occur in the future, which events or facts may include
44-52 future acts of any person or entity, if:
44-53 (1) the articles, statement, application, <(i)> or
44-54 other filing that is required by this Act to be filed with the
44-55 Secretary of State to make effective such Permitted Act clearly and
44-56 expressly set forth, in addition to any other statement or
44-57 information required to be set forth therein, (i) the time and
44-58 date on which such Permitted Act is to become effective or (ii) if
44-59 such Permitted Act is to become effective upon the occurrence of
44-60 events or facts that may occur in the future, (a) the manner in
44-61 which such events or facts shall operate to cause such Permitted
44-62 Act to become effective and (b) the date of the 90th day after the
44-63 date of the filing of such articles, statement, application or
44-64 other filing;
44-65 (2) in the case of a Permitted Act that is to become
44-66 effective as of a time or date after the time and date otherwise
44-67 provided in this Act, (i) such subsequent time and date is not
44-68 more than 90 days after the date of the filing of the articles,
44-69 statement, application, or other filing that is otherwise required
44-70 by this Act to be filed with the Secretary of State to make
45-1 effective such Permitted Act and (ii) the time on which the
45-2 Permitted Act is to become effective is not midnight or 12:00 p.m.;
45-3 and
45-4 (3) in the case of a Permitted Act that is to be made
45-5 effective upon the occurrence of events or facts that may occur in
45-6 the future, other than the mere passage of time, a statement that
45-7 all such events or facts upon which the effectiveness of such
45-8 Permitted Act is conditioned have been satisfied or waived, and of
45-9 the date on which such condition was satisfied or waived, is filed
45-10 with the Secretary of State within 90 days of the date of the
45-11 filing of the articles, statement, application or other filing that
45-12 is otherwise required by this Act for such Permitted Act to become
45-13 effective.
45-14 SECTION 2.22. Section 8(E), Texas Professional Association
45-15 Act (Article 1528f, Vernon's Texas Civil Statutes), is amended to
45-16 read as follows:
45-17 (E) Execution. The articles of association shall be signed
45-18 <and verified> by each of the members.
45-19 SECTION 2.23. Section 15, Texas Professional Association Act
45-20 (Article 1528f, Vernon's Texas Civil Statutes), is amended to read
45-21 as follows:
45-22 Sec. 15. Articles of Amendment. The articles <Articles> of
45-23 amendment shall be executed on behalf of <by> the association by an
45-24 officer <by its president or a vice-president and by its secretary
45-25 or an assistant secretary, and certified by one of the officers
45-26 signing such articles,> and shall set forth:
45-27 (1) The name and address of the association;
45-28 (2) If the amendment alters any provision of the
45-29 original or amended articles of association, an identification by
45-30 reference or description of the altered provision and a statement
45-31 of its text as it is amended to read. If the amendment is an
45-32 addition to the original or amended articles of association, a
45-33 statement of that fact and the full text of each provision added;
45-34 (3) The date of the adoption of the amendment; and
45-35 (4) A statement that the amendment was adopted in
45-36 accordance with the procedure for amendment stated in the articles
45-37 of association, or, if none is stated therein, a statement that the
45-38 amendment was adopted by two-thirds vote of its members.
45-39 SECTION 2.24. Section 18, Texas Professional Association Act
45-40 (Article 1528f, Vernon's Texas Civil Statutes), is amended to read
45-41 as follows:
45-42 Sec. 18. Articles of Dissolution. The articles of
45-43 dissolution shall be executed on behalf of <by> the association by
45-44 an officer <its president or a vice-president and by its secretary
45-45 or an assistant secretary, and verified by one of the officers
45-46 signing such articles>. If there are no living officers of the
45-47 association, the articles shall be executed by the legal
45-48 representative of the last surviving officer. The articles of
45-49 dissolution shall set forth:
45-50 (1) The name and address of the association;
45-51 (2) The names and respective addresses of its
45-52 officers;
45-53 (3) The names and respective addresses of the members
45-54 of its Board of Directors or Executive Committee; and
45-55 (4) A statement that the association is dissolving in
45-56 accordance with its articles of association or, if there is no
45-57 dissolution provision in the articles, by two-thirds vote of its
45-58 members.
45-59 SECTION 2.25. The Texas Professional Association Act
45-60 (Article 1528f, Vernon's Texas Civil Statutes), is amended by
45-61 adding Section 26 to read as follows:
45-62 Sec. 26. PENALTY FOR SIGNING FALSE DOCUMENT. (A) A person
45-63 commits an offense if the person signs a document the person knows
45-64 is false in any material respect with intent that the document be
45-65 delivered on behalf of a professional association to the Secretary
45-66 of State for filing.
45-67 (B) An offense under this section is a Class A misdemeanor.
45-68 SECTION 2.26. The change in law made by Section 2.05 of this
45-69 Act, amending Sections A and B, Article 2.21, Texas Business
45-70 Corporation Act, applies to the liability of a shareholder,
46-1 beneficial interest owner, or subscriber for a contractual
46-2 obligation of a corporation entered into before, on, or after the
46-3 effective date of this Act unless the liability has been finally
46-4 adjudicated by a court of competent jurisdiction before the
46-5 effective date of this Act.
46-6 ARTICLE 3. EFFECTIVE DATE; EMERGENCY
46-7 SECTION 3.01. This Act takes effect September 1, 1993.
46-8 SECTION 3.02. The importance of this legislation and the
46-9 crowded condition of the calendars in both houses create an
46-10 emergency and an imperative public necessity that the
46-11 constitutional rule requiring bills to be read on three several
46-12 days in each house be suspended, and this rule is hereby suspended.
46-13 * * * * *
46-14 Austin,
46-15 Texas
46-16 April 6, 1993
46-17 Hon. Bob Bullock
46-18 President of the Senate
46-19 Sir:
46-20 We, your Committee on Jurisprudence to which was referred S.B. No.
46-21 732, have had the same under consideration, and I am instructed to
46-22 report it back to the Senate with the recommendation that it do
46-23 pass, as amended, and be printed.
46-24 Henderson,
46-25 Chairman
46-26 * * * * *
46-27 WITNESSES
46-28 FOR AGAINST ON
46-29 ___________________________________________________________________
46-30 Name: Alan M. Bromberg x
46-31 Representing: Tx Business Law Foundation
46-32 City: Dallas
46-33 -------------------------------------------------------------------
46-34 Name: George Coleman x
46-35 Representing: Tx Business Law Foundation
46-36 City: Dallas
46-37 -------------------------------------------------------------------
46-38 Name: Gayle Vickers x
46-39 Representing: Tx Bankers Assoc.
46-40 City: Austin
46-41 -------------------------------------------------------------------