74(R) HB 1425 Senate Committee Report

BILL ANALYSIS

H.B. 1425
By: Brimer (Sibley)
Economic Development
05-25-95
Senate Committee Report (Unamended)
BACKGROUND

A number of the proposed amendments in this bill are technical in
nature, or provide conforming changes to include definitions
contained elsewhere in the Texas Business Corporation Act. Other
proposed amendments address questions not previously addressed in
the statutes or reported by Texas cases. In addition, other
proposed amendments change existing statutes or add new statutes to
adopt concepts found in the Revised Model Business Corporation Act,
or in the corporation laws of other states that are viewed
desirable. The bill also includes various proposed amendments
relating to the introduction of a new corporate transaction known
as a conversion, which will permit corporations, limited liability
companies and partnerships an additional option in which to effect
a change in their organizational form. Finally, the bill contains
various conforming and clean-up changes to the Texas Revised
Limited Partnership Act and Texas Revised Partnership Act.

PURPOSE

As proposed, H.B. 1425 clarifies and updates Texas business
organizations laws.

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section A, Article 1.02, Texas Business
Corporation Act, to define "associate," "conversion," "converted
entity," "converting entity," "disinterested," and "independent."
Redefines "other entity," "share dividend," and "treasury shares."
Makes nonsubstantive and conforming changes.

SECTION 2. Amends Sections A, P, R, and T, Article 2.02-1, to
redefine "corporation" and "director." Deletes persons who are not
or were not officers, employees, or agents of the corporation but
who are or were serving at the request of the corporation as a
partnership, joint venture, sole proprietorship, and trust from the
entities a corporation may indemnify and advance expenses. Sets
forth provisions under which the corporation is deemed to have
requested a director to serve as a trustee, employee, agent, or
similar functionary of an employee benefit plan.

SECTION 3. Amends Sections A and B, Article 2.15, Texas Business
Corporation Act, as follows:

A. Authorizes shares having a par value to be issued for
consideration, not less than the par value thereof, as shall
be fixed by the board of directors or, in the case of shares
issued by a converted entity, in the plan of conversion or, in
the case of a corporation created by a merger, in the plan of
merger. Deletes the provision that shares be expressed in
dollars.

B. Authorizes shares without par value to be issued for
consideration, as may be fixed by the board of directors
unless the articles of incorporation reserve to the
shareholders the right to fix the consideration; in which
case, prior to the issuance of such shares, the shareholders
shall fix the consideration to be received for such shares, by
a vote of the holders of a majority of all shares entitled to
vote thereon; by a plan of conversion, in the case of shares
to be issued pursuant to the plan of conversion by a
corporation that is a converted entity; or by a plan of
merger, in the case of shares to be issued pursuant to the
plan of merger by a corporation created pursuant to the plan
of merger.

SECTION 4. Amends Article 2.16, Texas Business Corporation Act, as
follows:

Art. 2.16. PAYMENT FOR SHARES. A. Authorizes the board of
directors (or, in the case of shares to be issued pursuant to
a plan of conversion by a corporation that is a converted
entity, the plan of conversion, or, in the case of shares to
be issued pursuant to the plan of merger by a corporation
created pursuant to the plan of merger, the plan of merger) to
authorize shares to be issued for consideration consisting of
any tangible or intangible benefit to the corporation or other
property of any kind or nature, including securities of any
other corporation, domestic or foreign, or other entity.
Authorizes shares to be issued pursuant to a plan of
conversion or plan of merger in the manner and for such
consideration as may be provided for in the plan of conversion
or plan of merger. Provides that shares may not be issued
until the full amount of the consideration has been paid or
delivered as required in connection with the authorization of
the shares. Makes nonsubstantive and conforming changes.

B. Requires the judgment of the board of directors or the
shareholders or the party or parties approving the plan of
conversion or the plan of merger, as to the value and
sufficiency of the consideration received for shares to be
conclusive.

C. Amends Section A and B, Article 2.21, Texas Business
Corporation Act, to set forth provisions under which a
holder of shares, an owner of any beneficial interest in
shares, or a subscriber for shares whose subscription has
been accepted, or any affiliate thereof, shall be under no
obligation to the corporation or its obligees. Makes
conforming changes.

SECTION 5. Amends Sections A and B, Article 2.21, Texas Business
Corporation Act, to make conforming changes.

SECTION 6. Amends Article 2.28, Texas Business Corporation Act, by
amending Sections A and B and adding Section E, as follows:

A. Quorum. Makes nonsubstantive changes.

B. Voting on Matters other than the Election of Directors.
Authorizes the articles of incorporation or the bylaws to
provide that the act of the shareholders shall be the
affirmative vote of the holders of a specified portion, but
not less than a majority, of the shares entitled to vote on,
and that voted for or against or expressly abstained with
respect to, that matter at a meeting of shareholders at which
a quorum is present. Makes nonsubstantive changes.

E. Authorizes a corporation to establish procedures in its
bylaws, not inconsistent with this Act, for determining the
validity of proxies and whether shares that are held of record
by a bank, broker, or other nominee are represented at a
meeting of shareholders with respect to any matter. Authorizes
the procedures to incorporate or look to rules and
determinations of self regulatory organizations regulating
that bank, broker, or other nominee.
SECTION 7. Amends Section B, Article 2.29, Texas Business
Corporation Act, to provide that nothing in this section shall be
construed as limiting the right of any corporation to vote stock
held or controlled by it in a fiduciary capacity, or with respect
to which it otherwise exercises voting power in a fiduciary
capacity. Makes nonsubstantive and conforming changes.

SECTION 8. Amends Part Two, Texas Business Corporation Act, by
adding Article 2.30-1, as follows:

Art. 2.30-1. SHAREHOLDER AGREEMENTS. A. Scope of Agreement.
Sets forth provisions under which an agreement among the
shareholders of a corporation that complies with this article
is effective among the shareholders and the corporation even
though it is inconsistent with one or more provisions of this
Act.

B. Procedures Required. Sets forth requirements for an
agreement authorized by this article.

C. Notation of Existence. Requires the existence of an
agreement authorized by this article to be noted on each
certificate for outstanding shares or on the information
statement required for uncertificated shares by Article 2.19
of this Act in specific language. Requires the corporation,
if at the time of the agreement the corporation has shares
outstanding represented by certificates, to recall the
outstanding certificates and issue substitute certificates
that comply with this section. Prohibits the failure to note
the existence of the agreement on the certificate or
information statement from affecting the validity of the
agreement or any action taken pursuant to it.

D. Right of Rescission. Requires any purchaser of shares
who, at the time of purchase, did not have knowledge of the
existence of an agreement authorized by this article to be
entitled to rescission of the purchase. Requires a purchaser
to be deemed to have knowledge of the existence of the
agreement if its existence is noted on the certificate or
information statement for the shares in compliance with
Section C of this article and, if the shares are not
represented by a certificate, the information statement
noting existence of the agreement is delivered to the
purchaser at or prior to the time of purchase of the shares.
Requires an action to enforce the rights of rescission
authorized by this section to be commenced within the
earlier of 90 days after discovery of the existence of the
agreement or two years after time of the purchase of the
shares.

E. Cessation. Requires an agreement authorized by this
article to cease to be effective when shares of the
corporation are listed on a national securities exchange,
quoted on an interdealer quotation system of a national
securities association, or regularly traded in a market
maintained by one or more members of a national or
affiliated securities association. Requires governance by a
board of director, if the agreement ceases to be effective
for any reason and the corporation does not have a board of
directors, to be instituted or reinstated in the manner
provided in Section C, Article 12.23, of this Act.
Authorizes the board of directors, if the agreement is
contained or referred to in the corporation's articles of
incorporation or bylaws, without shareholder action, to
delete the agreement and any references to it.

F. Managerial Liabilities. Requires an agreement authorized
by this article that limits the discretion or powers of the
board of directors or supplants the board of directors to
relieve the directors of, and impose upon the person or
persons in whom such discretion or powers or management of
the business and affairs of the corporation are vested,
liability for action or omissions imposed by this Act or
other law on directors to the extent that the discretion or
powers of the directors are limited or supplanted by the
agreement.

G. Limitation of Liability. Prohibits the existence or
performance of an agreement authorized by this article from
being grounds for imposing personal liability on any
shareholder for the acts or obligations of the corporation
by disregarding the separate entity of the corporation or
otherwise.

H. If No Shares Issued. Authorizes incorporators or
subscribers for the shares to act as shareholders with
respect to an agreement authorized by this article if no
shares have been issued when the agreement is signed.

SECTION 9. Amends Article 2.31, Texas Business Corporation Act, to
make a conforming change.

SECTION 10. Amends Section A, Article 2.35-1, Texas Business
Corporation Act, to require an otherwise valid contract or
transaction between a corporation and its directors or officers
(officers), or between a corporation and any other corporation or
other entity in which its officers are officers or have a financial
interest, to be valid notwithstanding the officer is present at or
participates in the meeting of the board or committee thereof which
authorizes the contract or transaction. Makes nonsubstantive
changes.

SECTION 11. Amends Section B, Article 2.36, Texas Business
Corporation Act, to provide that no committee of the board of
directors shall have the authority of the board of directors in
reference to approving a plan of merger, share exchange, or
conversion of the corporation.

SECTION 12. Amends Section B, Article 2.38-4, Texas Business
Corporation Act, as follows:

B. Provides that a distribution that involves the incurrence
by a corporation of any indebtedness or deferred payment
obligation or that involves a requirement in the corporation's
articles of incorporation or other contract by the corporation
to acquire any of its own shares is deemed to have been made
on the date the indebtedness or obligation is incurred or, in
the case of a provision in the articles of incorporation of a
corporation or other contract to acquire shares at the option
of the corporation is deemed to have been made on either the
date the provision or other contract is made or takes effect
or the date on which the shares to be acquired are acquired.

SECTION 13. Amends Article 3.01, Texas Business Corporation Act,
to make conforming changes.

SECTION 14. Amends Section A, Article 3.01, Texas Business
Corporation Act, to add to the provisions the articles of
incorporation shall set forth: the name and address of each
incorporator, unless the corporation is being incorporated pursuant
to a plan of conversion or a plan of merger, in which case the
articles need not include such information; and if the corporation
is being incorporated pursuant to a plan of conversion or a plan of
merger, a statement to that effect, and in the case of a plan of
conversion, the name, address, and prior form of organization and
jurisdiction of incorporation or organization of the converting
entity. Makes a nonsubstantive change.

SECTION 15. Amends Article 3.02, Texas Business Corporation Act,
by amending Section A and adding Section C, to require the articles
of incorporation of the corporation, in the case of a new domestic
corporation being incorporated pursuant to a plan of conversion or
a plan of merger pursuant to Part Five of this Act, to be filed
with the secretary of state (secretary) with the articles of
conversion or merger and need not be filed separately pursuant to
Section A of this article. Requires the secretary, if the secretary
finds that the articles of incorporation conform to the law, to
file the articles of incorporation in the secretary's office and
issue a certificate of incorporation, to which the secretary shall
affix a copy of the articles of incorporation, and deliver the same
to the party or parties filing the articles of conversion or
merger, or their representatives, with the certificate of
conversion or merger that is issued in connection with the
conversion or merger. Requires the certificate of incorporation of
a domestic corporation that is a converted entity or that is to be
created pursuant to the plan of merger to become effective upon the
effectiveness of the conversion or the merger.

SECTION 16. Amends Article 3.04, Texas Business Corporation Act,
as follows:

A. Provides that, upon the issuance of the certificate of
incorporation, the corporate existence of the corporation
being incorporated shall begin.

B. Requires the corporate existence of the corporation, in the
case of a new domestic corporation being incorporated pursuant
to a plan of conversion or a plan of merger pursuant to Part
Five of this Act, to begin upon the effectiveness of the
conversion or the merger.

C. Requires the certificate of incorporation to be conclusive
evidence that all conditions precedent required to be
performed for the valid incorporation of the corporation have
been complied with and that the corporation has been duly
incorporated under this Act.

SECTION 17. Amends Article 3.05, Texas Business Corporation Act,
to make a conforming change.

SECTION 18. Amends Article 3.06, Texas Business Corporation Act,
as follows:

Art. 3.06. ORGANIZATION MEETING OF DIRECTORS. A. Requires an
organization meeting of the initial board of directors named
in the articles of incorporation (or of the person or persons
who, in conformance with Section A(12), Article 3.02 of this
Act, are named in the articles of incorporation as the person
or persons who will perform the functions of the initial board
of directors provided for by this Act) to be held after the
issuance of the certificate of incorporation.
B. Prohibits the provisions of Section A of this article
from applying to a corporation that is a converted entity or
a corporation that is created pursuant to a plan of merger
if the plan of conversion or the plan of merger sets forth
the bylaws and officers of the corporation.
SECTION 19. Amends Section A, Article 4.03, Texas Business
Corporation Act, to make a nonsubstantive change.

SECTION 20. Amends Article 4.14, Texas Business Corporation Act,
as follows:

Art. 4.14. New heading: REORGANIZATION UNDER A FEDERAL
STATUTE; AMENDMENT OF ARTICLES, MERGER, SHARE EXCHANGE,
CONVERSION, AND DISSOLUTION PURSUANT TO FEDERAL REORGANIZATION
PROCEEDINGS. Authorizes a trustee appointed for a corporation
being reorganized under a federal statute, the designated
officers of the corporation, or individuals designated by the
court to sign on behalf of a corporation that is being
reorganized, articles of conversion containing certain
provisions. Makes a nonsubstantive and conforming changes.

SECTION 21. Amends Section B, Article 5.01, Texas Business
Corporation Act, to add to the provisions a plan of merger shall
set forth, as an exhibit or attachment, the articles of
incorporation of any new domestic corporation to be created by the
terms of the plan of merger.

SECTION 22. Amends Section A, Article 5.02, Texas Business
Corporation Act, to add to the provisions under which corporations
or other entities may acquire all of the outstanding shares of one
or more classes or series of one or more domestic corporations if
one or more foreign corporations or other entities is to issue
shares or other interests as part of the plan of exchange, the
issuance of such shares or interests is either permitted by the
laws under which such foreign corporation or other entity is
incorporated, organized, or not inconsistent with such laws.

SECTION 23. Amends Section I, Article 5.03, Texas Business
Corporation Act, to make nonsubstantive and conforming changes.

SECTION 24. Amends Article 5.04, Texas Business Corporation Act,
as follows:

A. Requires articles of merger or exchange to be executed on
behalf of each entity that is party to the plan of merger or
exchange by an officer or representative thereof and to set
forth the plan of merger or exchange or statement certifying
certain provisions.

B. Requires an equal number of copies of the articles of
incorporation of each domestic corporation that is to be
incorporated pursuant to the plan of merger to also be
delivered to the secretary of state with the articles of
merger.

C. Sets forth requirements for the secretary, upon finding
that the articles of merger or exchange conform to law, or if
the plan of merger or exchange provides that one or more of
the surviving, new, or acquiring corporations or other
entities will be responsible for the payment of all such fees
and franchise taxes and that all of such corporations or other
entities will be responsible for the payment of all such fees
and franchise taxes and that all of such corporations and
other entities will be obligated to pay such fees and
franchise taxes if the same are not timely paid.

SECTION 25. Amends Section B, Article 5.10, Texas Business
Corporation Act, to make a conforming change.

SECTION 26. Amends Article 5.11, Texas Business Corporation Act,
as follows:

Art. 5.11. RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF
CERTAIN CORPORATE ACTIONS. A. Adds to the corporate actions
from which any shareholder of a domestic corporation shall
have the right to dissent, any disposition of all the property
and assets of a corporation if special authorization of the
shareholders is required by this Act and the shareholders hold
shares of a class or series that was entitled to vote thereon
as a class or otherwise. Makes nonsubstantive changes.

B. Prohibits a shareholder from having the right to dissent
from any plan of merger in which there is a single surviving
or new domestic or foreign corporation, or from any plan of
exchange if the shares held by the shareholder are part of
a class or series, shares of which are on the record date
fixed to determine the shareholders entitled to vote on the
plan of merger or plan of exchange listed on a national
securities exchange; designated as a national market
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., or successor
entity; or held of record by not less than 2,000 holders.
Makes nonsubstantive and conforming changes.

SECTION 27. Amends Article 5.14, Texas Business Corporation Act,
as follows:

Art. 5.14. New heading: DERIVATIVE PROCEEDINGS. A. Certain
Definitions. Defines "derivative proceeding" and
"shareholder."

B. Standing. Prohibits a shareholder from commencing or
maintaining a derivative proceeding unless certain
provisions apply.

C. Demand. Prohibits a shareholder from commencing a
derivative proceeding until certain conditions are met.

D. Stay; Discovery. (1) Requires the court, if the
corporation commences an inquiry into the allegations made
in a demand or petition and the person or group described in
Section H of this article is conducting an active review of
the allegations in good faith, to stay a derivative
proceeding until the review is completed and a determination
is made by the person or group as to what further action, if
any, should be taken. Requires a corporation, to obtain a
stay, to provide the court with a statement containing an
undertaking to advise the court and the shareholder making
the demand of the determination promptly upon the completion
of the review of the matter. Requires a stay, upon motion,
to be reviewed as to its continued necessity every 90 days
thereafter. Authorizes a stay, if the review and
determination by the person or group described in Section H
of this article is not completed within 90 days, to be
renewed for one or more additional 90-day periods upon the
corporations providing the court and the shareholder making
the demand with a statement of the status of the review and
the reasons a continued extension of the stay is necessary.

(2) Provides that if a domestic or foreign corporation
proposes to dismiss a derivative proceeding pursuant to
Section F of this article, discovery by a shareholder
following the filing of the derivative proceeding in
accordance with the provisions of this article shall be
limited to facts relating to whether the person or group
described in Section H of this article is independent and
disinterested, the good faith of the inquiry and review by
such person or group, and the reasonableness of the
procedures followed by such person or group in conducting
its review and will not extend to any facts or substantive
matters with respect to the act, omission, or other matter
that is the subject matter of the action in the derivative
proceeding. Authorizes the scope of discovery to be
expanded if the court determines after notice and hearing
that a good faith review of the allegations for purposes
of Section F of this article has not been made by an
independent and disinterested person or group in
accordance with Section F of this article.

E. Tolling of the Statute of Limitations. Provides that a
written demand filed with the corporation under Section C of
this article tolls the statue of limitation on the claim
upon which demand is made until the earlier of (1) 120 days
or (2) 30 days after the corporation advises the shareholder
that the demand has been rejected or the review has been
completed.

F. Requires a court to dismiss a derivative proceeding on a
motion by the corporation if the person or group described
in Section H of this article determines in good faith, after
conducting an inquiry and based on the factors as the person
or group deems appropriate under the circumstances, that the
continuation of the derivative proceeding is not in the best
interests of the corporation. Sets forth persons on whom the
burden of proof shall be in determining whether the
requirements of the previous sentence have been met.

G. Commencement of Proceeding After Rejection of Demand.
Requires the petition, if a derivative proceeding is
commenced after a demand is rejected, to allege with
particularity facts that establish that the rejection was
not made in accordance with the requirements of Section F
and H of this article.

H. Determination by Directors or Independent Persons. Sets
forth provisions by which the determination described in
Section F of this article must be made.

I. Discontinuance or Settlement. Prohibits a derivative
proceeding from being discontinued or settled without the
approval of the court. Requires the court, if it determines
that a proposed discontinuance or settlement may affect the
interest of other shareholders, to direct that notice to be
given to the affected shareholders.

J. Payment of Expenses. (1) Sets forth judgments the court
may order on termination of a derivative proceeding.

(2) Defines "expenses."

K. Application to Foreign Corporations. Provides that the
matters covered by this article, in any derivative
proceeding brought in the right of a foreign corporation,
are governed by the laws of the jurisdiction of
incorporation of the foreign corporation, except for
Sections D, I, and J of this article, which are procedural
and not matters relating to the internal affairs of the
foreign corporation. Provides that in the case of matters
relating to a foreign corporation under Section D of this
article, references to a person or group described in
Section H of this article are to be deemed to refer to a
person or group entitled under the laws of the jurisdiction
or incorporation of the foreign corporation to review and
dispose of a derivative proceeding, and the standard of
review of a decision by the person or group to dismiss the
derivative proceeding is to be governed by the laws of the
jurisdiction of incorporation of the foreign corporation.

L. Closely Held Corporations. (1) Provides that the
provisions of Sections B through H of this article are not
applicable to a closely held corporation. Provides that if
justice requires, a derivative proceeding brought by a
shareholder of a closely held corporation may be treated by
a court as a direct action brought by the shareholder for
his own benefit; and a recovery in a direct or derivative
proceeding by a shareholder may be paid either directly to
the plaintiff or to the corporation if necessary to protect
the interests of creditors or other shareholders of the
corporation.

(2) Defines "closely held corporation." Deletes existing
Article 5.14.

SECTION 28. Amends Part Five, Texas Business Corporation Act, by
adding Articles 5.17-5.20, as follows:

Art. 5.17. CONVERSION. A. Sets forth provisions under which a
domestic corporation may adopt a plan of conversion and
convert to a foreign corporation or any other entity.

B. Sets forth provisions under which any foreign corporation
or other entity may adopt a plan of conversion and convert
to a domestic corporation.

C. Sets forth provisions a plan of conversion shall set
forth.

D. Authorizes a plan of conversion to set forth such other
provisions relating to the conversion not inconsistent with
law, including the initial bylaws and officers of the
converted entity.

E. Authorizes the plan of conversion, after a conversion of
a corporation is approved, and at any time before the
conversion has become effective, to be abandoned by the
converting entity, without shareholder action, in accordance
with the procedures set forth in the plan of conversion or
in the manner determined by the board of directors.
Authorizes the conversion, if articles of conversion have
been filed with the secretary of state but the conversion
has not become effective, to be abandoned if a statement,
executed on behalf of the converting entity by an officer or
representative, stating that the plan of conversion has been
abandoned in accordance with applicable law, is filed with
the secretary of state prior to the effectiveness of the
conversion. Sets forth requirements for the secretary, when
the secretary finds that the statement conforms to law and
that all fees have been paid.

F. Provides that the conversion, upon the filing of the
statement described by Section E of this article by the
secretary, shall be deemed abandoned and shall not become
effective.

Art. 5.18. ARTICLES OF CONVERSION. A. Requires articles of
conversion to be executed by the converting entity by an
officer or other representative and to set forth certain
information.

B. Requires the original and one copy of the articles of
conversion to be delivered to the secretary of state.
Requires two copies of the articles of incorporation of the
domestic corporation if the converted entity is a domestic
corporation to be delivered to the secretary with the
articles of conversion.

C. Sets forth requirements for the secretary, if the
secretary finds that the articles of conversion conform to
law and has received all filings required to be received and
issued all certificates required to be issued in connection
with the incorporation, formation, or organization of the
converted entity, when all fees and franchise taxes have
been paid as required by law or if the articles of
conversion provide that the converted entity will be liable
for the payment of all such fees and franchise taxes.

Art. 5.19. EFFECTIVE DATE OF CONVERSION. Requires, upon the
issuance of the certificate of conversion by the secretary of
state, the conversion of a converting entity to be effective.

Art. 5.20. EFFECT OF CONVERSION. Sets forth provisions that
take place when a conversion of a converting entity takes
effect.

SECTION 29. Amends Section A, Article 6.03, Texas Business
Corporation Act, to require a resolution to be adopted upon
receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares of the corporation entitled to
vote thereon. Requires shares entitled to vote as a class to be
entitled to vote only as a class unless otherwise entitled to vote
on each matter generally or otherwise provided in the articles of
incorporation. Deletes the requirement that each outstanding share
of the corporation be entitled to vote thereon, whether or not
entitled to vote thereon by the provisions of the articles of
incorporation. Deletes the requirement that resolutions be adopted
upon receiving the affirmative vote of the holders of at least two
thirds of the outstanding shares of the corporation. Makes
nonsubstantive changes.

SECTION 30. Amends Sections A and B, Article 6.05, Texas
Business Corporation Act, to make nonsubstantive and conforming
changes.

SECTION 31. Amends Section A, Article 6.06, Texas Business
Corporation Act, to make conforming changes.

SECTION 32. Amends Sections A and C, Article 8.14, Texas
Business Corporation Act, to delete the requirement that an
application for withdrawal include a statement that all known
creditors or claimants have been paid or provided for. Makes
nonsubstantive and conforming changes.

SECTION 33. Amends Section A, Article 9.04, Texas Business
Corporation Act, to include any share exchange or conversion, and
delete consolidation, in the documents which, if the secretary
fails to approve, the secretary shall give a notice of disapproval
to the entity. Makes conforming changes.

SECTION 34. Amends Article 9.10, Texas Business Corporation Act,
by adding Section D, to provide that if action is taken with
respect to a particular matter by the holders of shares of a class
or series by means of a written consent in compliance with Section
A of this article, any provision of this Act that requires advance
notice of a meeting or of the proposed action will not apply as to
that class or series for such action.

SECTION 35. Amends Section A, Article 10.01, Texas Business
Corporation Act, to add to the fees the secretary is authorized and
required to collect for the use of the state, filing articles of
conversion and issuing a certificate of conversion ($300). Makes
conforming changes.

SECTION 36. Amends Section A, Article 10.03, Texas Business
Corporation Act, to make conforming changes.

SECTION 37. Amends Section B, Article 12.13, Texas Business
Corporation Act, to make conforming changes.

SECTION 38. Amends Article 12.21, Texas Business Corporation
Act, to make conforming changes.

SECTION 39. Amends Texas Business Corporation Act, by adding
Part Thirteen, as follows:

PART THIRTEEN

Art. 13.01. SHORT TITLE: Business Combination Law.

Art. 13.02. DEFINITIONS. Defines "affiliate," "affiliated
shareholder," " beneficial owner," "business combination,"
"control," "issuing public corporation," "person," "share
acquisition date," "subsidiary," and "voting share."

Art. 13.03. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
COMBINATIONS. Prohibits an issuing public corporation from
entering into or engaging in a business combination with an
affiliated shareholder, during the three-year period
immediately following the affiliated shareholder's share
acquisition date unless certain conditions apply.

Art. 13.04. APPLICATION. Sets forth provisions to which
Article 13.03 of this Act does not apply.

Art. 13.05. NO EFFECT ON OTHER ACTIONS. Provides that this
part does not affect the validity of another action by the
board of directors of an issuing public corporation, nor does
it preclude the board of directors from taking other action in
accordance with law, nor does the board of directors incur
liability for election made or not made under this part.

Art. 13.06. DUTIES OF DIRECTOR. Authorizes a director to
consider the long-term and short-term interests of the
corporation and its shareholders, including the possibility
that those interests may be best served by the continued
independence of the corporation.

Art. 13.07. RELATIONSHIP WITH OTHER PARTS OF ACT. A. Provides
that if a provision of this part conflicts with another
provision of this Act, the provision of this part controls.

B. Provides that the affirmative vote or concurrence or
shareholders required for approval of an action required or
permitted to submitted for shareholder vote may be
increased, but not decreased, under Article 2.28 of this
Act.

Art. 13.08. Severability clause.

SECTION 40. Amends Article 2.06, Article 1302-2.06, V.T.C.S.
(Texas Miscellaneous Corporation Laws Act), as follows:

Art. 2.06. CONSIDERATION FOR INDEBTEDNESS; GUARANTIES. A.
Authorizes a corporation to incur indebtedness for such
consideration as it may deem appropriate. Authorizes
consideration to be received. Authorizes a corporation to
issue and incur indebtedness without the receipt of any
consideration by reason of the authorization or payment of a
distribution. Provides that in the absence of fraud in the
transaction, the judgment of the board of directors or the
shareholders, as to the value, type, and sufficiency of the
consideration received for any such indebtedness shall be
conclusive. Deletes the provision that no corporation shall
create any indebtedness whatever except in certain instances.

B. Makes a nonsubstantive change.

C. Makes no change. Deletes existing Section D.

D. Redesignates existing Section E. Makes conforming changes.

SECTION 41. Amends Article 5.06, Article 1396-5.06, V.T.C.S.
(Texas Non-Profit Corporation Act), as follows:

A. Effect of Merger of Consolidation of Domestic Corporations.
Provides that when a merger or consolidation of a domestic
corporation under Article 5.01, 5.02, or 5.07 of this Act has
been made effective:

(1) the separate existence of every domestic corporation,
rather than all corporations, that is a party to the merger,
except any surviving or new domestic corporation, shall
cease. Deletes existing Subsection (1). Redesignates
existing Subsection (2);

(2) all rights, title, and interest to all real estate and
other property owned by each corporation that is a party to
the merger shall be vested in the surviving or new
corporation without revision or impairment without further
act or deed, and without any transfer or assignment having
occurred, but subject to any existing liens or encumbrances
thereon. Deletes existing Subsection (3) and (4);

(3) all liabilities and obligations of each corporation
shall become the liabilities and obligations of the
surviving or new corporation. Deletes existing Subsection
(5);

(4) a proceeding pending by or against any corporation may
be continued as if the merger did not occur and the
surviving or new corporation may be substituted in the
proceeding.

(5) Redesignates existing Subsection (6). Makes a conforming
change.
SECTION 42. Amends Article 1396-1.01 et seq., V.T.C.S., by
adding Article 5.10, as follows:

Art. 5.10. MERGERS WITH OTHER ENTITIES. A. Authorizes a
domestic corporation to adopt a plan of merger and one or more
domestic corporations to merge with one or more domestic or
foreign corporations or other entities in accordance with Part
Five of the Texas Business Corporation Act; provided, however,
that nothing in this article shall be deemed to authorize the
merger of a charitable corporation into another entity if such
charitable corporation would thereby have its charitable
status lost or impaired; but a for-profit corporation or other
entity may be merged into one or more charitable corporations
which shall continue as the surviving entity or entities.

B. Defines "merger."

C. Defines "other entity."

D. Requires the procedures for approval of a merger set
forth in Article 5.03 of this Act to apply to any merger
effected pursuant to this article in lieu of Section A(1),
Article 5.01, and Article 5.03 of the Texas Business
Corporation Act. Requires the provisions set forth in
Article 5.04 of the Texas Business Corporation Act and
Article 5.04 of this Act with respect to articles of merger
to apply to any merger to the extent applicable. Requires
the effects of any merger effected pursuant to this article
to be as set forth in Article 5.06 of the Texas Business
Corporation Act. Requires all other provisions of this part
to apply to a merger under this article except to the extent
the provisions of Part Five of the Texas Business
Corporation Act expressly apply to the merger and such
provisions are not in conflict with the provisions of this
Act.

SECTION 43. Amends Section A(4), Article 1.02, Article 1528n,
V.T.C.S. (Texas Limited Liability Company Act), to redefine
"person."

SECTION 44. Amends Article 1.02, Article 1528n, V.T.C.S., to
define "conversion," "converted entity," and "converting entity."

SECTION 45. Amends Article 2.09, Article 1528n, V.T.C.S., to
delete the provision that unless otherwise provided in the articles
of organization, the initial regulations of the limited liability
company shall be adopted by the managers named in the articles of
organization or by the members named in the articles of
organization.

SECTION 46. Amends Article 2.13, Article 1528n, V.T.C.S., to
make a conforming change.

SECTION 47. Amends Sections A and B, Article 2.15, Article
1528n, V.T.C.S., to make conforming changes.

SECTION 48. Amends Article 2.17, Article 1528n, V.T.C.S., to
make conforming changes.

SECTION 49. Amends Article 2.19, Article 1528n, V.T.C.S., as
follows:

A. Authorizes regular or special meetings of the members,
managers, or any committee, except as otherwise provided in
the articles of organization or the regulations, to be held
either within or without this state.

B. Makes conforming changes.

C. Authorizes regular and special meetings of members, if the
limited liability company is without managers, to be held with
or without notice as prescribed in the regulations, unless any
such meeting is to consider any of those matters set forth in
Section D, Article 2.23, of this Act. Provides that, except as
otherwise provided in the articles of organization or the
regulations, for any meeting of the members at which any of
the matters set forth in Section D, Article 2.23, of this Act
are to be considered, written or printed notice stating the
place, day, and hour of the meeting and describing the purpose
of such meeting shall be delivered to the members not less
than 10 or more than 60 days before the meeting.

D. Requires meetings of members, if the limited liability
company has managers, to be held upon notice. Makes conforming
changes.

E. Requires such notice, if mailed, to be deemed to be
delivered when deposited in the U.S. mail addressed to the
member at the member's address that appears on the records of
the limited liability company, with postage prepaid.

F. Makes conforming changes.

G. Authorizes the articles of organization and regulations to
contain provisions relating to giving notice of the time,
place, or purpose of a meeting at which a matter is to be
voted on by any members or managers, waiver of notice, action
by consent without a meeting, the establishment of a record
date, quorum requirements, voting in person or by proxy, or
any other matter relating to the exercise of the right to
vote. Deletes the provision that neither the business to be
transacted at, nor the purpose of, any regular or special
meeting of the managers need be specified in the notice or
waiver of notice of such meeting unless required by
regulations.

SECTION 50. Amends Sections A and B, Article 2.22, Article
1528n, V.T.C.S., to make conforming changes.

SECTION 51. Amends Section A, Article 2.23, Article 1528n,
V.T.C.S., to authorize any member to vote either in person or by
proxy executed in writing by the member.

SECTION 52. Amends Section A, Article 3.02, Article 1528n,
V.T.C.S., as follows:

A. Requires the initial articles of organization to set forth:

(1)-(4) Make no changes.

(5) Makes nonsubstantive changes.

(6) the name and the address of each organizer, unless the
limited liability company is being organized pursuant to a
plan of conversion or a plan or merger, in which case the
articles need not include such information;

(7) Makes a nonsubstantive change.

(8) if the limited liability company is being incorporated
pursuant to a plan of conversion or a plan of merger, a
statement to that effect, and in the case of a plan of
conversion, the name, address, and prior form of
organization, date of incorporation, or organization and
jurisdiction of incorporation or organization of the
converting entity; and

(9) Makes nonsubstantive changes.

SECTION 53. Amends Article 3.03, Article 1528n, V.T.C.S., by
amending Section A and adding Section C, to provide that the
articles of organization of the limited liability company, in the
case of a new domestic limited liability company being organized
pursuant to a plan of conversion or a plan of merger pursuant to
Part Ten of this Act, shall be filed with the secretary with the
articles of conversion or merger and need not be filed separately
pursuant to Section A of this article. Requires the secretary, if
the secretary finds that the articles of organization conform to
the law, to file the articles of organization in the office of the
secretary and issue a certificate of organization, to which the
secretary shall affix a copy of the articles of organization, and
deliver the same to the party or parties filing the articles of
conversion or merger or their representatives with the certificate
of conversion or merger that is issued in connection with the
conversion or merger. Requires, in the case of a conversion or a
merger, the certificate of organization of a domestic limited
liability company that is a converted entity or that is to be
created pursuant to the plan of merger to become effective upon the
effectiveness of the conversion or the merger.

SECTION 54. Amends Article 3.04, Article 1528n, V.T.C.S., as
follows:

Art. 3.04. EFFECT OF THE ISSUANCE OF CERTIFICATE OF
ORGANIZATION. A. Provides that upon the issuance of the
certificate of organization, the limited liability company's
existence shall begin. Deletes the provision that such
certificate of organization shall be conclusive evidence that
all conditions precedents required to be performed by the
organizers have been complied with and that the limited
liability company has been organized under this Act.

B. Provides that in the case of a new domestic limited
liability company being organized pursuant to a plan of
conversion or a plan of merger pursuant to Part Ten of this
Act, the existence of the limited liability company as such
shall begin upon the effectiveness of the conversion or the
merger.

C. Requires the certificate of organization to be conclusive
evidence that all conditions precedent required to be
performed for the valid organization of the limited
liability company have been complied with and that the
limited liability company has been duly organized under this
Act, except as against the state in a proceeding for
involuntary dissolution.

SECTION 55. Amends Article 5.08, Article 1528n, V.T.C.S., to
make a nonsubstantive change.

SECTION 56. Amends Section A, Article 6.01, Article 1528n,
V.T.C.S., to make a nonsubstantive change.

SECTION 57. Amends Section B, Article 7.13, Article 1528n,
V.T.C.S., to prohibit the failure of a foreign limited liability
company to obtain a certificate of authority to transact business
in this state from causing any member or manager of such foreign
limited liability company to become liable for the debts,
obligations, or liabilities of such foreign limited liability
company.

SECTION 58. Amends Section C, Article 8.12, Article 1528n, to
provide that for the purposes of the application of the articles of
the Texas Business Corporation Act and the Texas Miscellaneous
Corporation Laws Act as provided by Sections A and B of this
article, as context requires:

(1)-(3) Make no changes.

(4) a reference to a director includes a manager or to the
extent that the management of the limited liability company is
reserved in whole or in part to the members, a member who
manages the limited liability company;

(5) a reference to articles of incorporation includes articles
of organization; provided, however, that the references to
articles of incorporation in Article 7.06, Article 1302-7.06,
V.T.C.S., include either articles of organization or
regulations.

(6) Makes no change.

SECTION 59. Amends Section A, Article 9.01, Article 1528n,
V.T.C.S., to provide that the secretary is authorized and required
to collect for the use of the state filing articles of merger or
articles of conversion involving one or more domestic or foreign
limited liability companies ($200), provided that any other filing
fee paid under the corporation or partnership statutes of this
state for the filing of articles of merger or articles of
conversion with respect to entities organized under those statutes
shall be credited against the filing fee provided by this
subsection. Deletes existing Subdivisions (a) and (b). Makes
conforming changes.

SECTION 60. Amends Section A(1), Article 9.03, Article 1528n,
V.T.C.S., to make a conforming change.

SECTION 61. Amends Section F, Article 9.03, Article 1528n,
V.T.C.S., to make conforming changes.

SECTION 62. Amends Section B, Article 10.03, Article 1528n,
V.T.C.S., to set forth requirements for the secretary on receipt of
all applicable filing fees and franchise taxes, if the plan of
merger provides that one or more of the surviving, new, or
acquiring domestic or foreign limited liability companies or other
entities will be responsible for the payment of all of such fees
and franchise taxes and that all of such surviving, new, or
acquiring domestic or foreign limited liability companies and other
entities will be obligated to pay such fees and franchise taxes if
the same are not timely paid.

SECTION 63. Amends Part Ten, Article 1528n, V.T.C.S., by adding
Articles 10.08-10.11, as follows:

Art. 10.08. CONVERSION. A. Sets forth provisions under which
a domestic limited liability company may adopt a plan of
conversion and convert to a foreign limited liability company
or any other entity.

B. Sets forth provisions under which any foreign limited
liability company or other entity may adopt a plan of
conversion and convert to a domestic limited liability
company.

C. Sets forth information a plan of conversion shall
include.

D. Authorizes a plan of conversion to set forth other
provisions relating to the conversion not inconsistent with
law.

Art. 10.09. ARTICLES OF CONVERSION. A. Requires articles of
conversion, if a plan of conversion has been approved in
accordance with Article 10.08 of this Act and has not been
abandoned, to be executed by the converting entity by a
manager or other representative and shall set forth certain
information.

B. Requires the original and one copy of the articles of
conversion to be delivered to the secretary along with two
copies of the articles of organization of the domestic
limited liability company if the converted entity is a
domestic limited liability company.

C. Sets forth requirements for the secretary, when all fees
and franchise taxes have been paid as required by law or if
the articles of conversion provide that the converted entity
will be liable for the payment of all such fees and
franchise taxes.

Art. 10.10. EFFECTIVE DATE OF CONVERSION. Requires the
conversion of a converting entity to be effective upon the
issuance of the certificate of conversion by the secretary.

Art. 10.11. EFFECT OF CONVERSION. Sets forth provisions
enacted when a conversion of a converting entity takes effect.

SECTION 64. Amends Section B, Article 11.01, Article 1528n,
V.T.C.S., to redefine "professional limited liability company."
Defines "professional individual" and "professional entity."

SECTION 65. Amends Article 11.03, Article 1528n, to prohibit a
person who is not a professional individual or professional entity,
rather than licensed or otherwise authorized to render the
professional service of the professional limited liability company,
from being a member, manager, or officer of the professional
limited liability company. Makes conforming changes.

SECTION 66. Amends Section A, Article 11.04, Article 1528n,
V.T.C.S., to authorize a professional limited liability company to
render professional service in this state only through a member,
manager, officer, employee, or agent (associate) who is:

(1) a professional individual licensed or otherwise authorized
to render the professional service in this state; or

(2) a professional entity that renders the professional
service in this state only through partners, members,
shareholders, managers, directors, associates, officers,
employees, or agents who are professional individuals or
professional entities licensed or otherwise authorized to
render the professional service in this state. Deletes
existing Subsection (2).

SECTION 67. Amends Section A, Article 11.05, Article 1528n,
V.T.C.S., to provide that a professional limited liability company
, but not the other associates of such professional limited
liability company, is jointly and severally liable with an
associate rendering professional service for an error, omission,
negligence, incompetence, or malfeasance (error) on the part of the
associate when the associate is rendering professional service in
the course of employment for the professional limited liability
company. Provides that if the associate rendering such professional
service in such circumstances is itself a professional entity, then
the professional limited liability company and such professional
entity are jointly and severally liable with the partner, member,
shareholder, manager, director, associate, officer, employee, or
agent (partner) of such professional entity through which such
professional entity renders such professional service for an error
on the part of such partner of such professional entity.

SECTION 68. Amends Section A, Article 11.07, Article 1528n,
V.T.C.S., to prohibit the secretary of state from issuing the
certificate unless the name of the foreign professional limited
liability company or the name it elects in this state meets the
requirements of Article 11.02 of this Act. Authorizes a foreign
professional limited liability company to render professional
service in this state only through an associate described in
Section A of Article 11.04 of this Act. Makes conforming changes.

SECTION 69. Amends Section 2.01, Article 6132-1, V.T.C.S. (Texas
Revised Limited Partnership Act), as follows:

(a) Requires partners, to form a limited partnership, to enter
into a partnership agreement (which, in the case of a limited
partnership formed under a plan of merger or a plan of
conversion under Section 2.11 or 2.15 of this Act, may be
included in the plan of merger or plan of conversion) and one
or more partners must execute a certificate of limited
partnership. Adds to the provisions the certificate must
contain, a statement if the limited partnership is being
formed pursuant to a plan of merger or a plan of conversion
under Section 2.11 or 2.15 of this Act; and a statement if the
limited partnership is being formed pursuant to a plan of
conversion under Section 2.15 of this Act, the name, the
address, and the prior form of organization and jurisdiction
of incorporation or organization or the converting entity.

(b) Requires the existence of the limited partnership as a
limited partnership, in the case of a limited partnership
being formed under a plan or merger or a plan of conversion
under Section 2.11 or 2.15 of this Act, to begin on the
effectiveness of the merger or the conversion, and the persons
to be partners shall become general or limited partners as of
that time.

SECTION 70. Amends Sections 2.03(a) and (c), Article 6132a-1,
V.T.C.S., to make nonsubstantive and conforming changes.

SECTION 71. Amends Section 2.04(a), Article 6132a-1, V.T.C.S.,
to require an initial certificate of limited partnership or a
certificate of conversion to be signed by all general partners,
except for an initial certificate of limited partnership.

SECTION 72. Amends Sections 2.06(a)-(d), Article 6132a-1,
V.T.C.S., to add to the provisions individuals designated by the
court may execute on behalf of a limited partnership that is being
reorganized, an amendment or restatement of the certificate
containing a statement that the court has jurisdiction of the case
under a federal statute; a certificate of merger containing a
statement that the court had jurisdiction of the case under a
federal statute; a certificate of cancellation containing a
statement that the court had jurisdiction of the case under a
federal statute; or a certificate of conversion containing certain
provisions. Makes conforming changes.

SECTION 73. Amends Sections 2.11(b), (d), (e), (g), and (h),
Article 6132a-1, V.T.C.S., to add to the provisions a plan of
merger must set forth, the plan of merger or a statement certifying
certain information. Requires an equal number of copies of the
certificate of limited partnership of each domestic limited
partnership that is to be formed pursuant to the plan of merger to
be delivered to the secretary with the articles of merger. Adds to
the provisions that take place when a merger takes effect, a
partner of a limited partnership that is party to a merger does not
become personally liable as a result of the merger for a liability
or obligation of another person that is a party to the merger
unless the party consents to becoming personally liable by action
taken in connection with the specific plan of merger approved by
the partner. Set forth provisions for determining the liability of
partners in a domestic limited partnership that is party to the
merger for the debts and obligations of other parties to the merger
in which that partner otherwise was not or is not a partner or
other owner of an interest. Provides that if foreign limited
partnerships or other entities are to issue shares or other
interests as part of the plan of exchange, the issuance of those
shares or other interests is either permitted by the laws under
which that foreign limited partnership or other entity is formed or
not inconsistent with those laws. Makes nonsubstantive and
conforming changes.

SECTION 74. Amends Subsections A and F, Section 2.12, Article
6132a-1, V.T.C.S., to make conforming changes.

SECTION 75. Amends Article 2, Article 6132a-1, V.T.C.S., by
adding Section 2.15, as follows:

Sec. 2.15. CONVERSION. (a) Sets forth provisions under which
a domestic limited partnership may adopt a plan of conversion
and convert to a foreign limited partnership or any other
entity.

(b) Sets forth provisions under which any foreign limited
partnership or other entity may adopt a plan of conversion
and convert to a domestic limited partnership.

(d) Authorizes a plan of conversion to set forth other
provisions relating to the conversion not inconsistent with
law.

(e) Requires the articles of conversion, if a plan of
conversion has been approved in accordance with the
preceding provisions of this section and has not been
abandoned, to be executed by the converting entity by a
partner, officer, or other representative and to contain
certain provisions.

(f) Provides that upon the issuance of the certificate of
conversion by the secretary of state, the conversion of a
converting entity shall be effective.

(g) Sets forth provisions that take place when a conversion
of a converting entity takes effect.

(h) Defines "conversion," "converted entity," "converting
entity," and "other entity."

SECTION 76. Amends Section 3.03(b), Article 6132a-1, V.T.C.S.,
to provide that a limited partner does not participate in the
control of the business by virtue of the limited partner's
possessing or exercising the power of acting as a contractor for or
an agent or employee of the limited partnership or of a member or
manager of a limited liability company that is a general partner of
the limited partnership, or in a similar capacity with any other
person that is a general partner.

SECTION 77. Amends Section 6.03, Article 6132a-1, V.T.C.S., to
delete the authorization of a limited partner, if the partnership
agreement does not specify such a time or event or a definite time
for the dissolution and winding up of the limited partnership, to
withdraw on giving notice.

SECTION 78. Amends Section 8.01, Article 6132a-1, V.T.C.S., as
follows:

Sec. 8.01. DISSOLUTION. Provides that a limited partnership is
dissolved and its affairs shall be wound up only on the first
of the following to occur:

(1) the occurrence of events specified in the partnership
agreement to cause dissolution unless within 90 days after
the event causing the dissolution, all remaining partners
agree in writing to continue the business of the limited
partnership;

(2) Makes no change.

(3) an event of withdrawal of a general partner, unless
certain provisions apply.

SECTION 79. Amends Section 8.04(a), Article 6132a-1, V.T.C.S.,
to make conforming changes.

SECTION 80. Amends Section 12.01, Article 6132a-1, V.T.C.S., to
delete the requirement of the secretary to collect for the use of
this state for an election to adopt this Act, an application for
registration as a foreign limited partnership or a certificate of
amendment, under Section 13.02 of this Act, a fee of $200. Makes
conforming changes.

SECTION 81. Amends Section 1.01(4), Article 6132b-1.01,
V.T.C.S., to include an order under foreign law governing
insolvency in the definition of "debtor in bankruptcy."

SECTION 82. Amends Section 1.03(b), Article 6132b-1.03,
V.T.C.S., to add to the statutory provisions that may not be varied
by agreement, a provision prohibiting a partnership agreement or
the partners from restricting rights of third parties under this
Act, except for limitations on individual partners' liability in a
registered limited liability partnership as provided or permitted
by Section 3.08.

SECTION 83. Amends Section 1.05(a), Article 6132b-1.05,
V.T.C.S., to provide that the determination whether a partnership
has been formed is governed by the same provisions as a partner's
internal affairs, and the relations of the partners to one another.

SECTION 84. Amends Section 2.02, Article 6132b-2.02, V.T.C.S.,
by adding Subsection (d), as follows:

(d) Partnership Resulting from Merger or Conversion. Requires
the existence of the partnership as a partnership, in the case
of a new partnership being formed pursuant to a plan of merger
or a plan of conversion under Article IX of this Act, to begin
on the effectiveness of the merger or the conversion, and the
persons to be partners shall become partners as of that time.

SECTION 85. Amends Sections 3.02(a) and (b), Article 6132b-3.02,
V.T.C.S., to make nonsubstantive and conforming changes.

SECTION 86. Amends Section 3.04, Article 6132b-3.04, V.T.C.S.,
as follows:

Sec. 3.04. New heading: PARTNER'S LIABILITY. Makes conforming
changes.

SECTION 87. Amends Section 3.05, Article 6132b-3.05, V.T.C.S.,
by adding Subsection (f), as follows:

(f) Registered Limited Liability Partnership. Provides that
the provisions of this section do not limit the provisions of
Section 3.08(a) in the case of a registered limited liability
partnership.

SECTION 88. Amends Section 3.08(a), Article 6132b-3.08,
V.T.C.S., to provide that a partner in a registered limited
liability partnership is not individually liable, directly or
indirectly, by contribution, indemnity, or otherwise, for debts and
obligation of the partnership arising from errors committed while
the partnership is a registered limited liability partnership.
Provides that the provisions of this subsection prevail, in the
case of a registered limited liability partnership, over the other
provisions of this Act regarding the liability of partners, their
chargeability for the debts and obligations of the partnership, and
their obligations regarding contributions and indemnity.

SECTION 89. Amends Sections 4.01(b) and (c), Article 6132b-4.01,
V.T.C.S., to make nonsubstantive and conforming changes.

SECTION 90. Amends Section 4.06(b), Article 6132b-4.06,
V.T.C.S., to authorize a partner to maintain an action against the
partnership or another partner for legal or equitable relief, with
or without, rather than including, an accounting as to partnership
business for certain purposes.

SECTION 91. Amends Section 6.02(b), Article 6132b-6.02,
V.T.C.S., to add to the provisions under which a partner's
withdrawal is wrongful, in the case of a partnership for a definite
term or particular undertaking or for which the partnership
agreement provides for winding up on a specified event, before the
expiration of the term, the completion of the undertaking, or the
occurrence of the event the partner withdraws by becoming a debtor
in bankruptcy; and, in the case of a partner that is not an
individual, a trust other than a business trust, or an estate, the
partner is expelled or otherwise withdraws because the partner
wilfully dissolved or terminated.

SECTION 92. Amends Section 8.06(a), Article 6132b-8.06,
V.T.C.S., to make conforming changes.

SECTION 93. Amends Section 9.01(b), Article 6132b-9.01,
V.T.C.S., to make conforming changes.

SECTION 94. Amends Section 9.02, Article 6132b-9.02, V.T.C.S.,
as follows:

Sec. 9.02. MERGERS. (a) Adoption of Plan. Authorizes a
domestic partnership, rather than any partnership, to adopt a
plan of merger and one or more domestic partnerships to merge
with one or more domestic or foreign partnerships or other
entities if:

(1) the partnership agreement of each domestic, rather
than foreign, partnership that is a party to the plan of
merger contains provisions that authorize the merger
provided for in the plan of merger adopted by the
partnership;

(2) each domestic partnership that is a party to the plan
of merger approves the plan of merger in the manner
prescribed in its partnership agreement; and

(3) in the event foreign partnerships or other entities is
a party to the merger or is to be created by the terms of
the plan of merger the merger is permitted either by the
laws under which each foreign partnership and each other
entity that is a party to the merger is formed or
organized or by the partnership agreement or other
constituent documents of the foreign partnership or other
entity that are not inconsistent with such laws; and each
foreign partnership or other entity that is a party to the
merger complies with such laws or documents in effecting
the merger.
(b) Contents of Plan. Requires a plan of merger, rather than
a plan of merger if a partnership merger with one or more
domestic or foreign limited partnerships or other entities,
other than another partnership that is not a limited
partnership, to include certain provisions. Makes
nonsubstantive changes. Deletes existing Subdivisions (5)-(7).

(c) Optional Provisions. Authorizes the plan of merger to
set forth any amendments to the partnership agreement of any
surviving domestic partnership; and any other provisions
relating to the merger.

(d) Makes nonsubstantive and conforming changes.

(e) Filing. Provides that if a certificate of merger must be
executed, the original of the certificate of merger and such
number of copies of the certificate equal to the number of
partnerships and other entities that are a party to the plan
of merger or that will be created by the terms thereof,
shall be delivered to the secretary. Provides that unless
the secretary finds that a certificate of merger does not
conform to law, on receipt of all applicable filing fees and
franchise taxes required by law, or if the plan of merger
provides that the partnerships or other entities that will
be responsible for the payment of all the fees and franchise
taxes and that all of the partnerships and other entities
will be obligated to pay the fees and franchise taxes if
they are not timely paid, the secretary shall certify that
the certificate of merger has been appropriately filed in
the secretary's office. Deletes existing Subsections (d) and
(e).

(f) Effective date. Requires the merger to be effective upon
the issuance of the certificate of merger by the secretary,
or if a certificate of merger need not be executed, as
provided in the plan of merger.

(g) Effect. Redesignates existing Subsection (f). Provides
that when a merger takes effect:

(1) Deletes existing Subdivision (1). Redesignates
existing Subdivision (2). Makes nonsubstantive and
conforming changes.

(2) Redesignates existing Subdivision (3). Makes
nonsubstantive and conforming changes.

(3) Redesignates existing Subdivision (4). Makes
nonsubstantive and conforming changes.

(4) Redesignates existing Subdivision (5). Deletes the
provision that the partnership or other entity that has
been allocated the liabilities, obligations, asset, or
rights associated with the proceeding under the terms of
the plan of merger remains the primary obligor. Makes
nonsubstantive and conforming changes.

(5) Redesignates existing Subdivision (6). The partnership
agreement, rather than certificate of limited partnership,
and other constituent documents, of each surviving
domestic partnership shall be amended to the extent
provided in the plan of merger. Makes nonsubstantive and
conforming changes.

(6) Redesignates existing Subdivision (7). Makes
nonsubstantive and conforming changes.

(7) Deletes the provision that the owner of shares or
evidences of ownership in each domestic entity that is a
party to the merger shall be entitled to the rights
provided in the plan of merger. Makes nonsubstantive and
conforming changes.

(8) Redesignates existing Subdivision (9). Makes
nonsubstantive and conforming changes.

(9) A partner of a partnership that is party to a merger
does not become personally liable as a result of the
merger for a liability or obligation of another person
that is a party to the merger unless the partner consents
to becoming personally liable by action taken in
connection with the specific plan of merger approved by
the partner; sets forth provisions in determining the
liability of partners in a domestic partnership that is
party to the merger for the debts and obligations of other
parties to the merger in which that partner otherwise was
not or is not a partner or other owner of interest.

(10) Makes nonsubstantive changes.

(h) Makes nonsubstantive and conforming changes.

SECTION 95. Amends Section 9.03(a), Article 6132b-9.03,
V.T.C.S., to authorize a partnership to adopt a plan of exchange by
which a partnership acquires all of the outstanding partnership
interests of one or more domestic partnerships in exchange for cash
or securities of the acquiring partnership, if the partnership
agreement of each domestic partnership, the partnership interests
of which are to be acquired pursuant to the plan of exchange
contains provisions that authorize the partnership interest
exchange, and if one or more foreign partnerships is to issue
shares or other interests as part of the plan of exchange, the
issuance of those shares or other interests is either permitted by
the laws under which that foreign partnership is formed or not
inconsistent with those laws.

SECTION 96. Amends Article IX, Article 6132b-9.01 et seq.,
V.T.C.S., by adding Sections 9.05 and 9.06, as follows:

Sec. 9.05. CONVERSION. (a) Sets forth provisions under which
a domestic partnership may adopt a plan of conversion and
convert to a foreign partnership or any other entity.

(b) Sets forth provisions under which any foreign
partnership or other entity may adopt a plan of conversion
and convert to a domestic partnership.

(d) Authorizes a plan of conversion to set forth other
provisions relating to the conversion not inconsistent with
law.

(e) Set forth conditions if a plan of conversion has been
approved in accordance with the preceding provisions of this
section and has not been abandoned, unless the converted
entity and the converting entities are both partnerships.

(f) Sets forth requirements for the secretary, if the
secretary finds that the articles of conversion conform to
law and has received all filings required to be received,
and issued all certificates required to be issued in
connection with the incorporation, formation, or
organization of the converted entity, when all fees and
franchise taxes have been paid.

(g) Provides that upon the issuance of the certificate of
conversion by the secretary the conversion of a converting
entity shall be effective.

(h) Sets forth provisions that take place when a conversion
of a converting entity takes effect.

(i) Defines "conversion," "converted entity," "converting
entity," "domestic partnership," "foreign partnership," and
"other entity."

Sec. 9.06. FILINGS AND FEES. Provides that Sections 2.12 and
12.01, Article 6132a-1, V.T.C.S., apply to filings made with
the secretary under this article as if those filings related
to limited partnerships.

SECTION 97. Amends Section 171.252, Tax Code, to provide that
each director or officer of the corporation is liable for a tax,
penalty, fee, or other amount, rather than debt, owed to the state
by the corporation as provided by Section 171.255 of this code.

SECTION 98. Amends Sections 171.255(a) and (c), Tax Code, to
make conforming changes.

SECTION 99. Repealer: Section 8.03, Article 6132a-1, V.T.C.S.
(Continuation of business and reconstitution of partnership).

SECTION 100. (a) Effective date: September 1, 1995.

(b) Makes application of the change to Section 6.03, Article
6132a-1, V.T.C.S., made by this Act, prospective.

SECTION 101. Emergency clause.