By Brimer H.B. No. 1425
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to business organizations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section A, Article 1.02, Texas Business
1-5 Corporation Act, is amended to read as follows:
1-6 A. As used in this Act, unless the context otherwise
1-7 requires, the term:
1-8 (1) "Articles of incorporation" means the original or
1-9 restated articles of incorporation and all amendments thereto.
1-10 (2) "Associate," when used to indicate a relationship
1-11 with a person, means:
1-12 (a) a domestic or foreign corporation or other
1-13 entity of which the person is an officer or partner or is the
1-14 beneficial owner of 10 percent or more of a class of voting shares
1-15 or similar securities of that corporation or other entity;
1-16 (b) a trust or other estate in which the person
1-17 has a substantial beneficial interest or as to which the person
1-18 serves as trustee or in a similar fiduciary capacity; or
1-19 (c) a spouse of the person or a relative of the
1-20 person, or of the person's spouse, who has the same home as the
1-21 person or who is a director or officer of such person or any of its
1-22 affiliates.
1-23 (3) <(2)> "Authorized shares" means the shares of all
1-24 classes which the corporation is authorized to issue.
2-1 (4) <(3)> "Cancel" means to restore issued shares to
2-2 the status of authorized but unissued shares.
2-3 (5) <(4)> "Certificated shares" means shares
2-4 represented by instruments in bearer or registered form.
2-5 (6) <(5)> "Conspicuous" or "conspicuously," when
2-6 prescribed for information appearing on a certificate for shares or
2-7 other securities, means the location of such information or use of
2-8 type of sufficient size, color, or character that a reasonable
2-9 person against whom such information may operate should notice it.
2-10 For example, a printed or typed statement in capitals, or boldface
2-11 or underlined type, or in type that is larger than or that
2-12 contrasts in color with that used for other statements on the same
2-13 certificate, is "conspicuous."
2-14 (7) <(6)> "Consuming assets corporation" means a
2-15 corporation which is engaged in the business of exploiting assets
2-16 subject to depletion or amortization and which elects to state in
2-17 its articles of incorporation that it is a consuming assets
2-18 corporation and includes as a part of its official corporate name
2-19 the phrase "a consuming assets corporation," giving such phrase
2-20 equal prominence with the rest of the corporate name on its
2-21 financial statements and certificates representing shares. All its
2-22 certificates representing shares shall also contain a further
2-23 sentence: "This corporation is permitted by law to pay dividends
2-24 out of reserves which may impair its stated capital."
2-25 (8) "Conversion" means:
2-26 (a) the continuance of a domestic corporation
2-27 as, and in the organizational form of, a foreign corporation or
3-1 other entity; or
3-2 (b) the continuance of a foreign corporation or
3-3 other entity as, and in the organizational form of, a domestic
3-4 corporation.
3-5 (9) "Converted entity" means any domestic or foreign
3-6 corporation or other entity to which a converting entity has
3-7 converted or intends to convert as permitted by Article 5.17 of
3-8 this Act.
3-9 (10) "Converting entity" means any domestic or foreign
3-10 corporation or other entity that has converted or intends to
3-11 convert as permitted by Article 5.17 of this Act.
3-12 (11) <(7)> "Corporation" or "domestic corporation"
3-13 means a corporation for profit subject to the provisions of this
3-14 Act, except a foreign corporation.
3-15 (12) "Disinterested," when used to indicate a director
3-16 or other person is disinterested in a contract, transaction, or
3-17 other matter for purposes of approval of a contract or transaction
3-18 under Article 2.35-1 of this Act and for purposes of considering
3-19 the disposition of a claim or challenge with respect to a
3-20 particular contract or transaction or to particular conduct means
3-21 the director or other person, or an associate of the director
3-22 (other than the corporation and its associates) or other person, is
3-23 not a party to the contract or transaction or is not materially
3-24 involved in the conduct that is subject to the claim or challenge,
3-25 and does not otherwise have a material financial interest in the
3-26 outcome of the contract or transaction or the disposition of the
3-27 claim or challenge. A director or other person is not to be
4-1 considered to be materially involved in conduct that is subject to
4-2 a claim or challenge or to otherwise have a material financial
4-3 interest in the outcome of a contract or transaction or the
4-4 disposition of the claim or challenge solely by reason of the
4-5 existence of one or more of the following circumstances:
4-6 (a) the person was nominated or elected as a
4-7 director by persons who are interested in the contract or
4-8 transaction or who are alleged to have engaged in the conduct that
4-9 is subject to the claim or challenge;
4-10 (b) the person receives normal director's fees
4-11 or similar customary compensation, expense reimbursement, and
4-12 benefits as a director of the corporation;
4-13 (c) the person has a direct or indirect equity
4-14 interest in the corporation;
4-15 (d) the corporation or its subsidiaries has an
4-16 interest in the contract or transaction or was affected by the
4-17 alleged conduct;
4-18 (e) the person or an associate or affiliate of
4-19 the person receives ordinary and reasonable compensation for
4-20 services rendered to review, make recommendations, or decide on the
4-21 disposition of the claim or challenge; or
4-22 (f) in the case of a review by the person of
4-23 alleged conduct that is the subject to a claim or challenge:
4-24 (i) the person is named as a defendant in
4-25 the derivative proceeding with respect to such matter or as a
4-26 person who engaged in the alleged conduct; or
4-27 (ii) the person approved of, voted for, or
5-1 acquiesced in, as a director, the act being challenged if the act
5-2 resulted in no material personal or financial benefit to the person
5-3 and the challenging party fails to allege with particularity facts
5-4 that, if true, raise a significant prospect that the director would
5-5 be adjudged liable to the corporation or its shareholders by reason
5-6 of that conduct.
5-7 (13) <(8)> "Distribution" means a transfer of money or
5-8 other property (except its own shares or rights to acquire its own
5-9 shares), or issuance of indebtedness, by a corporation to its
5-10 shareholders in the form of:
5-11 (a) a dividend on any class or series of the
5-12 corporation's outstanding shares;
5-13 (b) a purchase, redemption, or other acquisition
5-14 by the corporation, directly or indirectly, of any of its own
5-15 shares; or
5-16 (c) a payment by the corporation in liquidation
5-17 of all or a portion of its assets.
5-18 (14) <(9)> "Foreign corporation" means a corporation
5-19 for profit organized under laws other than the laws of this State.
5-20 (15) "Independent," when used to indicate a director
5-21 or other person is independent for purposes of considering the
5-22 disposition of a claim or challenge with respect to a particular
5-23 contract or transaction or to a particular conduct or alleged
5-24 conduct means:
5-25 (a) the director or other person is
5-26 disinterested;
5-27 (b) the director or other person is not an
6-1 associate (other than by reason of being a director of the
6-2 corporation or one more of its subsidiaries or associates) or
6-3 member of the immediate family of a party to the contract or
6-4 transaction that is the subject of the claim or challenge or that
6-5 is alleged to have engaged in the conduct that is subject to the
6-6 claim or challenge;
6-7 (c) the director or other person, or an
6-8 associate or member of the immediate family of the director or
6-9 other person, does not have a business, financial, or familial
6-10 relationship with a party to the contract or transaction that is
6-11 the subject of the claim or challenge or that is alleged to have
6-12 engaged in conduct that is subject to the claim or challenge,
6-13 which, in each case, could reasonably be expected to materially and
6-14 adversely affect the director's or other person's judgment with
6-15 respect to the consideration of the disposition of the matter
6-16 subject to the claim or challenge in the interests of the
6-17 corporation; and
6-18 (d) the director or other person is not
6-19 otherwise shown, by a preponderance of the evidence by the person
6-20 challenging the independence of the director or other person, to be
6-21 under the controlling influence of a party to the contract or
6-22 transaction that is the subject of the claim or challenge or that
6-23 is alleged to have engaged in conduct that is subject to the claim
6-24 or challenge.
6-25 A director or other person is not considered to have a
6-26 relationship that could be expected to materially and adversely
6-27 affect the director's or other person's judgment with respect to
7-1 the consideration of the disposition of a matter subject to a claim
7-2 or challenge or to otherwise be under the controlling influence of
7-3 a party to a contract or transaction that is the subject of the
7-4 claim or challenge or that is alleged to have engaged in conduct
7-5 that is subject to a claim or challenge solely by reason of the
7-6 existence of one or more of the following circumstances:
7-7 (a) the person has been nominated or elected as
7-8 a director by persons who are interested in the contract or
7-9 transaction or who are alleged to have engaged in the conduct that
7-10 is subject to the claim or challenge;
7-11 (b) the person receives normal director's fees
7-12 or similar customary compensation, expense reimbursement, and
7-13 benefits as a director of the corporation;
7-14 (c) the person has a direct or indirect equity
7-15 interest in the corporation;
7-16 (d) the corporation or its subsidiaries has an
7-17 interest in the contract or transaction, or was affected by the
7-18 alleged conduct;
7-19 (e) the person or an associate or affiliate of
7-20 such person receives ordinary and reasonable compensation for
7-21 services rendered to review, make recommendations, or decide on the
7-22 disposition of the claim or challenge; or
7-23 (f) the person or an associate (other than the
7-24 corporation and its associates), immediate family member or
7-25 affiliate of the person has an ongoing business relationship with
7-26 the corporation that is not material to that person, associate,
7-27 family member, or affiliate.
8-1 (16) <(10)> "Insolvency" means inability of a
8-2 corporation to pay its debts as they become due in the usual course
8-3 of its business.
8-4 (17) <(11)> "Investment Company Act" means the
8-5 Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.);
8-6 (18) <(12)> "Merger" means (a) the division of a
8-7 domestic corporation into two or more new domestic corporations or
8-8 into a surviving corporation and one or more new domestic or
8-9 foreign corporations or other entities, or (b) the combination of
8-10 one or more domestic corporations with one or more domestic or
8-11 foreign corporations or other entities resulting in (i) one or more
8-12 surviving domestic or foreign corporations or other entities, (ii)
8-13 the creation of one or more new domestic or foreign corporations or
8-14 other entities, or (iii) one or more surviving domestic or foreign
8-15 corporations or other entities and the creation of one or more new
8-16 domestic or foreign corporations or other entities.
8-17 (19) <(13)> "Net assets" means the amount by which the
8-18 total assets of a corporation exceed the total debts of the
8-19 corporation.
8-20 (20) <(14)> "Other entity" means any entity, whether
8-21 organized for profit or not, that is a corporation (other than a
8-22 domestic or foreign corporation), limited or general partnership,
8-23 limited liability company, real estate investment trust, joint
8-24 venture, joint stock company, cooperative, association, bank,
8-25 trust, insurance company or other legal entity organized pursuant
8-26 to the laws of this state or any other state or country <to the
8-27 extent such laws or the constituent documents of that entity, not
9-1 inconsistent with such laws, permit that entity to enter into a
9-2 merger or share exchange as permitted by Article 5.03 of this Act>.
9-3 (21) <(15)> "Share dividend" means a dividend by a
9-4 corporation that is payable in its own authorized but unissued
9-5 shares or in treasury shares. An amendment to a corporation's
9-6 articles of incorporation to change the shares of any class or
9-7 series, whether with or without par value, into the same or a
9-8 different number of shares, either with or without par value, of
9-9 the same class or series or another class or series does not
9-10 constitute a share dividend.
9-11 (22) <(16)> "Shareholder" or "holder of shares" means
9-12 the person in whose name shares issued by a corporation are
9-13 registered at the relevant time in the share transfer records
9-14 maintained by the corporation pursuant to Article 2.44 of this Act.
9-15 (23) <(17)> "Shares" means the units into which the
9-16 proprietary interests in a corporation are divided, whether
9-17 certificated or uncertificated shares.
9-18 (24) <(18)> "Stated capital" means, at any particular
9-19 time, the sum of:
9-20 (a) the par value of all shares of the
9-21 corporation having a par value that have been issued;
9-22 (b) the consideration fixed by the corporation
9-23 in the manner provided by Article 2.15 of this Act for all shares
9-24 of the corporation without par value that have been issued, except
9-25 such part of the consideration that is actually received therefor
9-26 (which part must be less than all of that consideration) that the
9-27 board by resolution adopted no later than sixty (60) days after the
10-1 issuance of those shares may have allocated to surplus; and
10-2 (c) such amounts not included in paragraphs (a)
10-3 and (b) of this subsection as have been transferred to stated
10-4 capital of the corporation, whether upon the payment of a share
10-5 dividend or upon adoption by the board of directors of a resolution
10-6 directing that all or part of surplus be transferred to stated
10-7 capital, minus all reductions from such sum as have been effected
10-8 in a manner permitted by law.
10-9 (25) <(19)> "Subscriber" means the offeror in a
10-10 subscription.
10-11 (26) <(20)> "Subscription" means a memorandum in
10-12 writing, executed before or after incorporation, wherein an offer
10-13 is made to purchase and pay for a specified number of theretofore
10-14 unissued shares of a corporation.
10-15 (27) <(21)> "Surplus" means the excess of the net
10-16 assets of a corporation over its stated capital.
10-17 (28) <(22)> "Treasury shares" means shares of a
10-18 corporation which have been issued, have been subsequently acquired
10-19 by and belong to the corporation, and have not been canceled and
10-20 restored to the status of authorized but unissued shares. Treasury
10-21 shares do not include shares held by a corporation, either directly
10-22 or through a trust or similar arrangement, in a fiduciary capacity.
10-23 Treasury shares shall be deemed to be "issued" shares but not
10-24 "outstanding" shares, and shall not be included in the total assets
10-25 of a corporation for purposes of determining its "net assets."
10-26 (29) <(23)> "Uncertificated shares" means shares not
10-27 represented by instruments and the transfers of which are
11-1 registered upon books maintained for that purpose by or on behalf
11-2 of the issuing corporation.
11-3 SECTION 2. Sections A, P, R, and T, Article 2.02-1, Texas
11-4 Business Corporation Act, are amended to read as follows:
11-5 A. In this article:
11-6 (1) "Corporation" includes any domestic or foreign
11-7 predecessor entity of the corporation in a merger, conversion
11-8 <consolidation>, or other transaction in which some or all of the
11-9 liabilities of the predecessor are transferred to the corporation
11-10 by operation of law and in any other transaction in which the
11-11 corporation assumes the liabilities of the predecessor but does not
11-12 specifically exclude liabilities that are the subject matter of
11-13 this article.
11-14 (2) "Director" means any person who is or was a
11-15 director of the corporation and any person who, while a director of
11-16 the corporation, is or was serving at the request of the
11-17 corporation as a director, officer, partner, venturer, proprietor,
11-18 trustee, employee, agent, or similar functionary of another foreign
11-19 or domestic corporation, <partnership, joint venture, sole
11-20 proprietorship, trust,> employee benefit plan, <or> other
11-21 enterprise, or other entity.
11-22 (3) "Expenses" include court costs and attorneys'
11-23 fees.
11-24 (4) "Official capacity" means
11-25 (a) when used with respect to a director, the
11-26 office of director in the corporation, and
11-27 (b) when used with respect to a person other
12-1 than a director, the elective or appointive office in the
12-2 corporation held by the officer or the employment or agency
12-3 relationship undertaken by the employee or agent in behalf of the
12-4 corporation, but
12-5 (c) in both Paragraphs (a) and (b) does not
12-6 include service for any other foreign or domestic corporation or
12-7 any <partnership, joint venture, sole proprietorship, trust,>
12-8 employee benefit plan, <or> other enterprise, or other entity.
12-9 (5) "Proceeding" means any threatened, pending, or
12-10 completed action, suit, or proceeding, whether civil, criminal,
12-11 administrative, arbitrative, or investigative, any appeal in such
12-12 an action, suit, or proceeding, and any inquiry or investigation
12-13 that could lead to such an action, suit, or proceeding.
12-14 P. A corporation may indemnify and advance expenses to
12-15 persons who are not or were not officers, employees, or agents of
12-16 the corporation but who are or were serving at the request of the
12-17 corporation as a director, officer, partner, venturer, proprietor,
12-18 trustee, employee, agent, or similar functionary of another foreign
12-19 or domestic corporation, <partnership, joint venture, sole
12-20 proprietorship, trust,> employee benefit plan, <or> other
12-21 enterprise, or other entity to the same extent that it may
12-22 indemnify and advance expenses to directors under this article.
12-23 R. A corporation may purchase and maintain insurance or
12-24 another arrangement on behalf of any person who is or was a
12-25 director, officer, employee, or agent of the corporation or who is
12-26 or was serving at the request of the corporation as a director,
12-27 officer, partner, venturer, proprietor, trustee, employee, agent,
13-1 or similar functionary of another foreign or domestic corporation,
13-2 <partnership, joint venture, sole proprietorship, trust,> employee
13-3 benefit plan, <or> other enterprise, or other entity, against any
13-4 liability asserted against him and incurred by him in such a
13-5 capacity or arising out of his status as such a person, whether or
13-6 not the corporation would have the power to indemnify him against
13-7 that liability under this article. If the insurance or other
13-8 arrangement is with a person or entity that is not regularly
13-9 engaged in the business of providing insurance coverage, the
13-10 insurance or arrangement may provide for payment of a liability
13-11 with respect to which the corporation would not have the power to
13-12 indemnify the person only if including coverage for the additional
13-13 liability has been approved by the shareholders of the corporation.
13-14 Without limiting the power of the corporation to procure or
13-15 maintain any kind of insurance or other arrangement, a corporation
13-16 may, for the benefit of persons indemnified by the corporation, (1)
13-17 create a trust fund; (2) establish any form of self-insurance; (3)
13-18 secure its indemnity obligation by grant of a security interest or
13-19 other lien on the assets of the corporation; or (4) establish a
13-20 letter of credit, guaranty, or surety arrangement. The insurance
13-21 or other arrangement may be procured, maintained, or established
13-22 within the corporation or with any insurer or other person deemed
13-23 appropriate by the board of directors regardless of whether all or
13-24 part of the stock or other securities of the insurer or other
13-25 person are owned in whole or part by the corporation. In the
13-26 absence of fraud, the judgment of the board of directors as to the
13-27 terms and conditions of the insurance or other arrangement and the
14-1 identity of the insurer or other person participating in an
14-2 arrangement shall be conclusive and the insurance or arrangement
14-3 shall not be voidable and shall not subject the directors approving
14-4 the insurance or arrangement to liability, on any ground,
14-5 regardless of whether directors participating in the approval are
14-6 beneficiaries of the insurance or arrangement.
14-7 T. For purposes of this article, the corporation is deemed
14-8 to have requested a director to serve as a trustee, employee,
14-9 agent, or similar functionary of an employee benefit plan whenever
14-10 the performance by him of his duties to the corporation also
14-11 imposes duties on or otherwise involves services by him to the plan
14-12 or participants or beneficiaries of the plan. Excise taxes
14-13 assessed on a director with respect to an employee benefit plan
14-14 pursuant to applicable law are deemed fines. Action taken or
14-15 omitted by a director <him> with respect to an employee benefit
14-16 plan in the performance of his duties for a purpose reasonably
14-17 believed by him to be in the interest of the participants and
14-18 beneficiaries of the plan is deemed to be for a purpose which is
14-19 not opposed to the best interests of the corporation.
14-20 SECTION 3. Sections A and B, Article 2.15, Texas Business
14-21 Corporation Act, are amended to read as follows:
14-22 A. Shares having a par value may be issued for such
14-23 consideration, <expressed in dollars,> not less than the par value
14-24 thereof, as shall be fixed from time to time by the board of
14-25 directors or, in the case of shares issued by a converted entity,
14-26 in the plan of conversion or, in the case of a corporation created
14-27 by a merger, in the plan of merger.
15-1 B. Shares without par value may be issued for such
15-2 consideration, <expressed in dollars,> as may be fixed:
15-3 (1) <from time to time> by the board of directors from
15-4 time to time, unless the articles of incorporation reserve to the
15-5 shareholders the right to fix the consideration; in which case,
15-6 prior to the issuance of such<. In the event that such right be
15-7 reserved as to any> shares, the shareholders shall<, prior to the
15-8 issuance of such shares,> fix the consideration to be received for
15-9 such shares, by a vote of the holders of a majority of all shares
15-10 entitled to vote thereon;
15-11 (2) by a plan of conversion, in the case of shares to
15-12 be issued pursuant to the plan of conversion by a corporation that
15-13 is a converted entity; or
15-14 (3) by a plan of merger, in the case of shares to be
15-15 issued pursuant to the plan of merger by a corporation created
15-16 pursuant to the plan of merger.
15-17 SECTION 4. Article 2.16, Texas Business Corporation Act, is
15-18 amended to read as follows:
15-19 Art. 2.16. Payment for Shares. A. The <Subject to any
15-20 provision of the Constitution of the State of Texas to the
15-21 contrary, the> board of directors (or, in the case of shares to be
15-22 issued pursuant to a plan of conversion by a corporation that is a
15-23 converted entity, the plan of conversion, or, in the case of shares
15-24 to be issued pursuant to a plan of merger by a corporation created
15-25 pursuant to the plan of merger, the plan of merger) may authorize
15-26 shares to be issued for consideration consisting of any tangible or
15-27 intangible benefit to the corporation or other property of any kind
16-1 or nature, including cash, promissory notes, services performed,
16-2 contracts for services to be performed, <or> other securities of
16-3 the corporation, or securities of any other corporation, domestic
16-4 or foreign, or other entity. In addition, shares may be issued
16-5 pursuant to a plan of conversion or plan of merger in the manner
16-6 and for such consideration as may be provided for in the plan of
16-7 conversion or plan of merger. Shares may not be issued until the
16-8 full amount of the consideration, fixed as provided by law, has
16-9 been paid or delivered as required in connection with the
16-10 authorization of the shares. When such consideration shall have
16-11 been so paid or delivered <to the corporation or to a corporation
16-12 of which all of the outstanding shares of each class are owned by
16-13 the corporation>, the shares shall be deemed to have been issued
16-14 and the subscriber or shareholder entitled to receive such issue
16-15 shall be a shareholder with respect to such shares, and the shares
16-16 shall be considered fully paid and non-assessable.
16-17 B. In the absence of fraud in the transaction, the judgment
16-18 of the board of directors or the shareholders or the party or
16-19 parties approving the plan of conversion or the plan of merger, as
16-20 the case may be, as to the value and sufficiency of the
16-21 consideration received for shares shall be conclusive.
16-22 SECTION 5. Sections A and B, Article 2.21, Texas Business
16-23 Corporation Act, are amended to read as follows:
16-24 A. A holder of shares, an owner of any beneficial interest
16-25 in shares, or a subscriber for shares whose subscription has been
16-26 accepted, or any affiliate thereof, shall be under no obligation to
16-27 the corporation or to its obligees with respect to:
17-1 (1) such shares other than the obligation to pay to
17-2 the corporation the full amount of the consideration, fixed in
17-3 compliance with Article 2.15 of this Act, for which such shares
17-4 were or are to be issued;
17-5 (2) any contractual obligation of the corporation on
17-6 the basis that the holder, owner, <or> subscriber, or affiliate is
17-7 or was the alter ego of the corporation, or on the basis of actual
17-8 fraud or constructive fraud, a sham to perpetrate a fraud, or other
17-9 similar theory, unless the obligee demonstrates that the holder,
17-10 owner, <or> subscriber, or affiliate caused the corporation to be
17-11 used for the purpose of perpetrating and did perpetrate an actual
17-12 fraud on the obligee primarily for the direct personal benefit of
17-13 the holder, owner, <or> subscriber, or affiliate; or
17-14 (3) any contractual obligation of the corporation on
17-15 the basis of the failure of the corporation to observe any
17-16 corporate formality, including without limitation: (a) the failure
17-17 to comply with any requirement of this Act or of the articles of
17-18 incorporation or bylaws of the corporation; or (b) the failure to
17-19 observe any requirement prescribed by this Act or by the articles
17-20 of incorporation or bylaws for acts to be taken by the corporation,
17-21 its board of directors, or its shareholders.
17-22 B. The liability of a holder, owner, or subscriber of shares
17-23 of a corporation or any affiliate thereof for an obligation that is
17-24 limited by Section A of this article is exclusive and preempts any
17-25 other liability imposed on a holder, owner, or subscriber of shares
17-26 of a corporation or any affiliate thereof for that obligation under
17-27 common law or otherwise, except that nothing contained in this
18-1 article shall limit the obligation of a holder, owner, <or>
18-2 subscriber, or affiliate to an obligee of the corporation when:
18-3 (1) the holder, owner, <or> subscriber, or affiliate
18-4 has expressly assumed, guaranteed, or agreed to be personally
18-5 liable to the obligee for the obligation; or
18-6 (2) the holder, owner, <or> subscriber, or affiliate
18-7 is otherwise liable to the obligee for the obligation under this
18-8 Act or another applicable statute.
18-9 SECTION 6. Article 2.28, Texas Business Corporation Act, is
18-10 amended by amending Sections A and B and adding Section E to read
18-11 as follows:
18-12 A. Quorum. With respect to any meeting of shareholders
18-13 <matter>, a quorum shall be present for any matter to be presented
18-14 at that meeting <at a meeting of shareholders> if the holders of a
18-15 majority of the shares entitled to vote at the meeting <on that
18-16 matter> are represented at the meeting in person or by proxy,
18-17 unless otherwise provided in the articles of incorporation in
18-18 accordance with this section. The articles of incorporation may
18-19 provide:
18-20 (1) That a quorum shall be present at a meeting of
18-21 shareholders only if the holders of a specified greater portion of
18-22 the shares entitled to vote are represented at the meeting in
18-23 person or by proxy; or
18-24 (2) That a quorum shall be present at a meeting of
18-25 shareholders if the holders of a specified lesser portion, but not
18-26 less than one-third (1/3), of the shares entitled to vote are
18-27 represented at the meeting in person or by proxy.
19-1 Unless otherwise provided in the articles of incorporation or
19-2 the bylaws, once a quorum is present at a meeting of shareholders,
19-3 the shareholders represented in person or by proxy at the meeting
19-4 may conduct such business as may be properly brought before the
19-5 meeting until it is adjourned, and the subsequent withdrawal from
19-6 the meeting of any shareholder or the refusal of any shareholder
19-7 represented in person or by proxy to vote shall not affect the
19-8 presence of a quorum at the meeting. Unless otherwise provided in
19-9 the articles of incorporation or the bylaws, the shareholders
19-10 represented in person or by proxy at a meeting of shareholders at
19-11 which a quorum is not present may adjourn the meeting until such
19-12 time and to such place as may be determined by a vote of the
19-13 holders of a majority of the shares represented in person or by
19-14 proxy at that meeting.
19-15 B. Voting on Matters Other Than the Election of Directors.
19-16 With respect to any matter, other than the election of directors or
19-17 a matter for which the affirmative vote of the holders of a
19-18 specified portion of the shares entitled to vote is required by
19-19 this Act, the affirmative vote of the holders of a majority of the
19-20 shares entitled to vote on, and that voted for or against or
19-21 expressly abstained with respect to, that matter <and represented
19-22 in person or by proxy> at a meeting of shareholders at which a
19-23 quorum is present shall be the act of the shareholders, unless
19-24 otherwise provided in the articles of incorporation or the bylaws
19-25 in accordance with this section. With respect to any matter, other
19-26 than the election of directors or a matter for which the
19-27 affirmative vote of the holders of a specified portion of the
20-1 shares entitled to vote is required by this Act, the articles of
20-2 incorporation or the bylaws may provide:
20-3 (1) That the act of the shareholders shall be the
20-4 affirmative vote of the holders of a specified portion, but not
20-5 less than a majority, of the shares entitled to vote on that
20-6 matter;
20-7 (2) That the act of the shareholders shall be the
20-8 affirmative vote of the holders of a specified portion, but not
20-9 less than a majority, of the shares entitled to vote on that matter
20-10 and represented in person or by proxy at a meeting of shareholders
20-11 at which a quorum is present; <or>
20-12 (3) That the act of the shareholders shall be the
20-13 affirmative vote of the holders of a specified portion, but not
20-14 less than a majority, of the shares entitled to vote on, and voted
20-15 for or against, that matter at a meeting of shareholders at which a
20-16 quorum is present; or
20-17 (4) That the act of the shareholders shall be the
20-18 affirmative vote of the holders of a specified portion, but not
20-19 less than a majority, of the shares entitled to vote on, and that
20-20 voted for or against or expressly abstained with respect to, that
20-21 matter at a meeting of shareholders at which a quorum is present.
20-22 E. A corporation may establish procedures in its bylaws, not
20-23 inconsistent with this Act, for determining the validity of proxies
20-24 and whether shares that are held of record by a bank, broker, or
20-25 other nominee are represented at a meeting of shareholders with
20-26 respect to any matter. The procedures may incorporate or look to
20-27 rules and determinations of self regulatory organizations
21-1 regulating that bank, broker, or other nominee.
21-2 SECTION 7. Section B, Article 2.29, Texas Business
21-3 Corporation Act, is amended to read as follows:
21-4 B. Shares <Treasury shares, shares> of its own stock owned
21-5 by a corporation or by another domestic or foreign corporation, if
21-6 a <the> majority of the voting stock of the other corporation
21-7 <which> is owned or controlled by the <it, and shares of its own
21-8 stock held by a> corporation, <in a fiduciary capacity> shall not
21-9 be voted, directly or indirectly, at any meeting, and shall not be
21-10 counted in determining the total number of outstanding shares at
21-11 any given time. Nothing in this section shall be construed as
21-12 limiting the right of any corporation to vote stock, including but
21-13 not limited to its own stock, held or controlled by it in a
21-14 fiduciary capacity, or with respect to which it otherwise exercises
21-15 voting power in a fiduciary capacity.
21-16 SECTION 8. Part Two, Texas Business Corporation Act, is
21-17 amended by adding Article 2.30-1 to read as follows:
21-18 Art. 2.30-1. SHAREHOLDER AGREEMENTS. A. Scope of
21-19 Agreement. An agreement among the shareholders of a corporation
21-20 that complies with this article is effective among the shareholders
21-21 and the corporation even though it is inconsistent with one or more
21-22 provisions of this Act in that it:
21-23 (1) restricts the discretion or powers of the board of
21-24 directors;
21-25 (2) eliminates the board of directors and permits
21-26 management of the business and affairs of the corporation by its
21-27 shareholders, or in whole or in part by one or more of its
22-1 shareholders, or by one or more persons not shareholders;
22-2 (3) establishes the natural persons who shall be the
22-3 directors or officers of the corporation, their term of office or
22-4 manner of selection or removal, or terms or conditions of
22-5 employment of any director, officer, or other employee of the
22-6 corporation, regardless of the length of employment;
22-7 (4) governs the authorization or making of
22-8 distributions whether in proportion to ownership of shares, subject
22-9 to the limitations in Article 2.38 of this Act, or determines the
22-10 manner in which profits and losses shall be apportioned;
22-11 (5) governs, in general or in regard to specific
22-12 matters, the exercise or division of voting power by and between
22-13 the shareholders, directors (if any), or other persons or by or
22-14 among any of them, including use of disproportionate voting rights
22-15 or director proxies;
22-16 (6) establishes the terms and conditions of any
22-17 agreement for the transfer or use of property or the provision of
22-18 services between the corporation and any shareholder, director,
22-19 officer, or employee of the corporation, or other person or among
22-20 any of them;
22-21 (7) authorizes arbitration or grants authority to any
22-22 shareholder or other person as to any issue about which there is a
22-23 deadlock among the directors, shareholders, or other person or
22-24 persons empowered to manage the corporation to resolve that issue;
22-25 (8) requires dissolution of the corporation at the
22-26 request of one or more of the shareholders or upon the occurrence
22-27 of a specified event or contingency in which case the dissolution
23-1 of the corporation shall proceed as if all the shareholders had
23-2 consented in writing to dissolution of the corporation as provided
23-3 in Article 6.02 of this Act; or
23-4 (9) otherwise governs the exercise of corporate
23-5 powers, the management of the business and affairs of the
23-6 corporation, or the relationship among the shareholders, the
23-7 directors, and the corporation, or among any of them, as if the
23-8 corporation were a partnership or in a manner that would otherwise
23-9 be appropriate only among partners, and is not contrary to public
23-10 policy.
23-11 B. Procedures Required. An agreement authorized by this
23-12 article shall be:
23-13 (1) set forth (a) in the articles of incorporation or
23-14 bylaws and approved by all persons who are shareholders at the time
23-15 of the agreement or (b) in a written agreement that is signed by
23-16 all the persons who are shareholders at the time of the agreement
23-17 and is made known to the corporation;
23-18 (2) subject to amendment only by all persons who are
23-19 shareholders at the time of the amendment, unless the agreement
23-20 provides otherwise; and
23-21 (3) valid for 10 years, unless the agreement provides
23-22 otherwise.
23-23 C. Notation of Existence. The existence of an agreement
23-24 authorized by this article shall be noted conspicuously on the
23-25 front or back of each certificate for outstanding shares or on the
23-26 information statement required for uncertificated shares by Article
23-27 2.19 of this Act and shall include the following: "These shares
24-1 are subject to the provisions of a shareholders' agreement that may
24-2 provide for management of the corporation in a manner different
24-3 than in other corporations and may subject a shareholder to certain
24-4 obligations or liabilities not otherwise imposed on shareholders in
24-5 other corporations". If at the time of the agreement the
24-6 corporation has shares outstanding represented by certificates, the
24-7 corporation shall recall the outstanding certificates and issue
24-8 substitute certificates that comply with this section. The failure
24-9 to note the existence of the agreement on the certificate or
24-10 information statement shall not affect the validity of the
24-11 agreement or any action taken pursuant to it.
24-12 D. Right of Rescission. Any purchaser of shares who, at the
24-13 time of purchase, did not have knowledge of the existence of an
24-14 agreement authorized by this article shall be entitled to
24-15 rescission of the purchase. A purchaser shall be deemed to have
24-16 knowledge of the existence of the agreement if its existence is
24-17 noted on the certificate or information statement for the shares in
24-18 compliance with Section C of this article and, if the shares are
24-19 not represented by a certificate, the information statement noting
24-20 existence of the agreement is delivered to the purchaser at or
24-21 prior to the time of purchase of the shares. An action to enforce
24-22 the right of rescission authorized by this section must be
24-23 commenced within the earlier of 90 days after discovery of the
24-24 existence of the agreement or two years after time of the purchase
24-25 of the shares.
24-26 E. Cessation. An agreement authorized by this article shall
24-27 cease to be effective when shares of the corporation are listed on
25-1 a national securities exchange, quoted on an interdealer quotation
25-2 system of a national securities association, or regularly traded in
25-3 a market maintained by one or more members of a national or
25-4 affiliated securities association. If the agreement ceases to be
25-5 effective for any reason and the corporation does not have a board
25-6 of directors, governance by a board of directors shall be
25-7 instituted or reinstated in the manner provided in Section C,
25-8 Article 12.23, of this Act. If the agreement is contained or
25-9 referred to in the corporation's articles of incorporation or
25-10 bylaws, the board of directors may adopt an amendment to the
25-11 articles of incorporation or bylaws, without shareholder action, to
25-12 delete the agreement and any references to it.
25-13 F. Managerial Liabilities. An agreement authorized by this
25-14 article that limits the discretion or powers of the board of
25-15 directors or supplants the board of directors shall relieve the
25-16 directors of, and impose upon the person or persons in whom such
25-17 discretion or powers or management of the business and affairs of
25-18 the corporation are vested, liability for action or omissions
25-19 imposed by this Act or other law on directors to the extent that
25-20 the discretion or powers of the directors are limited or supplanted
25-21 by the agreement.
25-22 G. Limitation of Liability. The existence or performance of
25-23 an agreement authorized by this article shall not be grounds for
25-24 imposing personal liability on any shareholder for the acts or
25-25 obligations of the corporation by disregarding the separate entity
25-26 of the corporation or otherwise, even if the agreement or its
25-27 performance:
26-1 (1) treats the corporation as if it were a partnership
26-2 or in a manner that otherwise is appropriate only among partners;
26-3 (2) results in the corporation being considered a
26-4 partnership for purposes of taxation; or
26-5 (3) results in failure to observe the corporate
26-6 formalities otherwise applicable to the matters governed by the
26-7 agreement.
26-8 H. If No Shares Issued. Incorporators or subscribers for
26-9 the shares may act as shareholders with respect to an agreement
26-10 authorized by this article if no shares have been issued when the
26-11 agreement is signed.
26-12 SECTION 9. Article 2.31, Texas Business Corporation Act, is
26-13 amended to read as follows:
26-14 Art. 2.31. Board of Directors. A. Except as provided by
26-15 Article 2.30-1 and Part Twelve of this Act, the <The> powers of a
26-16 corporation shall be exercised by or under the authority of, and
26-17 the business and affairs of a corporation shall be managed under
26-18 the direction of, the board of directors of the corporation.
26-19 Directors need not be residents of this State or shareholders of
26-20 the corporation unless the articles of incorporation or bylaws so
26-21 require. The articles of incorporation or bylaws may prescribe
26-22 other qualifications for directors.
26-23 SECTION 10. Section A, Article 2.35-1, Texas Business
26-24 Corporation Act, is amended to read as follows:
26-25 A. An otherwise valid <No> contract or transaction between a
26-26 corporation and one or more of its directors or officers, or
26-27 between a corporation and any other domestic or foreign
27-1 corporation<, partnership, association,> or other entity
27-2 <organization> in which one or more of its directors or officers
27-3 are directors or officers or have a financial interest, shall be
27-4 valid notwithstanding <void or voidable solely for this reason,
27-5 solely because> the director or officer is present at or
27-6 participates in the meeting of the board or committee thereof which
27-7 authorizes the contract or transaction, or solely because his or
27-8 their votes are counted for such purpose, if any one of the
27-9 following is satisfied:
27-10 (1) The material facts as to his relationship or
27-11 interest and as to the contract or transaction are disclosed or are
27-12 known to the board of directors or the committee, and the board or
27-13 committee in good faith authorizes the contract or transaction by
27-14 the affirmative vote of a majority of the disinterested directors,
27-15 even though the disinterested directors be less than a quorum; or
27-16 (2) The material facts as to his relationship or
27-17 interest and as to the contract or transaction are disclosed or are
27-18 known to the shareholders entitled to vote thereon, and the
27-19 contract or transaction is specifically approved in good faith by
27-20 vote of the shareholders; or
27-21 (3) The contract or transaction is fair as to the
27-22 corporation as of the time it is authorized, approved, or ratified
27-23 by the board of directors, a committee thereof, or the
27-24 shareholders.
27-25 SECTION 11. Section B, Article 2.36, Texas Business
27-26 Corporation Act, is amended to read as follows:
27-27 B. No committee of the board of directors shall have the
28-1 authority of the board of directors in reference to:
28-2 (1) amending the articles of incorporation, except
28-3 that a committee may, to the extent provided in the resolution
28-4 designating that committee or in the articles of incorporation or
28-5 the bylaws, exercise the authority of the board of directors vested
28-6 in it in accordance with Article 2.13 of this Act;
28-7 (2) proposing a reduction of the stated capital of the
28-8 corporation in the manner permitted by Article 4.12 of this Act;
28-9 (3) approving a plan of merger, <or> share exchange,
28-10 or conversion of the corporation;
28-11 (4) recommending to the shareholders the sale, lease,
28-12 or exchange of all or substantially all of the property and assets
28-13 of the corporation otherwise than in the usual and regular course
28-14 of its business;
28-15 (5) recommending to the shareholders a voluntary
28-16 dissolution of the corporation or a revocation thereof;
28-17 (6) amending, altering, or repealing the bylaws of the
28-18 corporation or adopting new bylaws of the corporation;
28-19 (7) filling vacancies in the board of directors;
28-20 (8) filling vacancies in or designating alternate
28-21 members of any such committee;
28-22 (9) filling any directorship to be filled by reason of
28-23 an increase in the number of directors;
28-24 (10) electing or removing officers of the corporation
28-25 or members or alternate members of any such committee;
28-26 (11) fixing the compensation of any member or
28-27 alternate members of such committee; or
29-1 (12) altering or repealing any resolution of the board
29-2 of directors that by its terms provides that it shall not be so
29-3 amendable or repealable.
29-4 SECTION 12. Section B, Article 2.38-4, Texas Business
29-5 Corporation Act, is amended to read as follows:
29-6 B. For the purposes of this Article, a distribution that
29-7 involves the incurrence by a corporation of any indebtedness or
29-8 deferred payment obligation or that involves a requirement in the
29-9 corporation's articles of incorporation or other contract by the
29-10 corporation to redeem, exchange, or otherwise acquire any of its
29-11 own shares is deemed to have been made on the date the indebtedness
29-12 or obligation is incurred or, in the case of a provision in the
29-13 articles of incorporation of a corporation or other contract to
29-14 purchase, redeem, exchange, or otherwise acquire shares, at the
29-15 option of the corporation, is deemed to have been made on either
29-16 the date the provision or other contract is made or takes effect or
29-17 the date on which the shares to be redeemed, exchanged, or acquired
29-18 are redeemed, exchanged, or acquired.
29-19 SECTION 13. Article 3.01, Texas Business Corporation Act, is
29-20 amended to read as follows:
29-21 Art. 3.01. Incorporators. A. Any natural person of the age
29-22 of eighteen (18) years or more, or any domestic or foreign
29-23 corporation, estate, or other entity <partnership, corporation,
29-24 association, trust, or estate (without regard to place of
29-25 residence, domicile, or organization)> may act as an incorporator
29-26 of a corporation by signing the articles of incorporation for such
29-27 corporation and by delivering the original and a copy of the
30-1 articles of incorporation to the Secretary of State.
30-2 SECTION 14. Section A, Article 3.02, Texas Business
30-3 Corporation Act, is amended to read as follows:
30-4 A. The articles of incorporation shall set forth:
30-5 (1) The name of the corporation;
30-6 (2) The period of duration, which may be perpetual;
30-7 (3) The purpose or purposes for which the corporation
30-8 is organized which may be stated to be, or to include, the
30-9 transaction of any or all lawful business for which corporations
30-10 may be incorporated under this Act;
30-11 (4) The aggregate number of shares which the
30-12 corporation shall have authority to issue; if such shares are to
30-13 consist of one class only, the par value of each of such shares, or
30-14 a statement that all of such shares are without par value; or, if
30-15 such shares are to be divided into classes, the number of shares of
30-16 each class, and a statement of the par value of the shares of each
30-17 class or that such shares are to be without par value;
30-18 (5) If the shares are to be divided into classes, the
30-19 designation of each class and statement of the preferences,
30-20 limitations, and relative rights in respect of the shares of each
30-21 class;
30-22 (6) If the corporation is to issue the shares of any
30-23 class in series, then the designation of each series and a
30-24 statement of the variations in the preferences, limitations and
30-25 relative rights as between series insofar as the same are to be
30-26 fixed in the articles of incorporation, and a statement of any
30-27 authority to be vested in the board of directors to establish
31-1 series and fix and determine the preferences, limitations and
31-2 relative rights of each series;
31-3 (7) A statement that the corporation will not commence
31-4 business until it has received for the issuance of shares
31-5 consideration of the value of a stated sum which shall be at least
31-6 One Thousand Dollars ($1,000.00)<, consisting of money, labor done,
31-7 or property actually received>;
31-8 (8) Any provision limiting or denying to shareholders
31-9 the preemptive right to acquire additional or treasury shares of
31-10 the corporation;
31-11 (9) If a corporation elects to become a close
31-12 corporation in conformance with Part Twelve of this Act, any
31-13 provision (a) required or permitted by this Act to be stated in the
31-14 articles of incorporation of a close corporation, but not in the
31-15 articles of incorporation of an ordinary corporation, (b) contained
31-16 or permitted to be contained in a shareholders' agreement in
31-17 conformance with Part Twelve of this Act which the incorporators
31-18 elect to set forth in articles of incorporation, or (c) that makes
31-19 a shareholders' agreement in conformance with Part Twelve of this
31-20 Act part of the articles of incorporation of a close corporation in
31-21 the manner prescribed in Section F, Article 2.22 of this Act, but
31-22 any such provision, other than the statement required by Section A,
31-23 Article 12.11 of this Act, shall be preceded by a statement that
31-24 the provision shall be subject to the corporation remaining a close
31-25 corporation in conformance with Part Twelve of this Act;
31-26 (10) Any provision, not inconsistent with law,
31-27 including any provision which under this Act is required or
32-1 permitted to be set forth in the bylaws, which the incorporators
32-2 elect to set forth in the articles of incorporation for the
32-3 regulation of the internal affairs of the corporation;
32-4 (11) The street address of its initial registered
32-5 office and the name of its initial registered agent at such
32-6 address;
32-7 (12) The number of directors constituting the initial
32-8 board of directors and the names and addresses of the person or
32-9 persons who are to serve as directors until the first annual
32-10 meeting of shareholders or until their successors be elected and
32-11 qualify, or, in the case of a close corporation that, in
32-12 conformance with Part Twelve of this Act, is to be managed in some
32-13 other manner pursuant to a shareholders' agreement by the
32-14 shareholders or by the persons empowered by the agreement to manage
32-15 its business and affairs, the names and addresses of the person or
32-16 persons who, pursuant to the shareholders' agreement, will perform
32-17 the functions of the initial board of directors provided for by
32-18 this Act;
32-19 (13) The name and address of each incorporator, unless
32-20 the corporation is being incorporated pursuant to a plan of
32-21 conversion or a plan of merger, in which case the articles need not
32-22 include such information; and
32-23 (14) If the corporation is being incorporated pursuant
32-24 to a plan of conversion or a plan of merger, a statement to that
32-25 effect, and in the case of a plan of conversion, the name, address,
32-26 and prior form of organization and jurisdiction of incorporation or
32-27 organization of the converting entity.
33-1 SECTION 15. Article 3.03, Texas Business Corporation Act, is
33-2 amended by amending Section A and adding Section C to read as
33-3 follows:
33-4 A. Except as provided by Section C of this Article, the
33-5 <The> original and a copy of the articles of incorporation shall be
33-6 delivered to the Secretary of State. If the Secretary of State
33-7 finds that the articles of incorporation conform to law, he shall,
33-8 when all fees have been paid as required by law:
33-9 (1) Endorse on the original and the copy the word
33-10 "Filed," and the month, day, and year of the filing thereof.
33-11 (2) File the original in his office.
33-12 (3) Issue a certificate of incorporation to which he
33-13 shall affix the copy.
33-14 C. In the case of a new domestic corporation being
33-15 incorporated pursuant to a plan of conversion or a plan of merger
33-16 pursuant to Part Five of this Act, the articles of incorporation of
33-17 the corporation shall be filed with the Secretary of State with the
33-18 articles of conversion or merger and need not be filed separately
33-19 pursuant to Section A of this Article. If the Secretary of State
33-20 finds that the articles of incorporation conform to the law, he
33-21 shall file the articles of incorporation in his office and issue a
33-22 certificate of incorporation, to which he shall affix a copy of the
33-23 articles of incorporation, and deliver the same to the party or
33-24 parties filing the articles of conversion or merger, or their
33-25 representatives, with the certificate of conversion or merger that
33-26 is issued in connection with the conversion or merger. In the case
33-27 of a conversion or a merger, the certificate of incorporation of a
34-1 domestic corporation that is a converted entity or that is to be
34-2 created pursuant to the plan of merger, shall become effective upon
34-3 the effectiveness of the conversion or the merger, as the case may
34-4 be.
34-5 SECTION 16. Article 3.04, Texas Business Corporation Act, is
34-6 amended to read as follows:
34-7 Art. 3.04. Effect of Issuance of Certificate of
34-8 Incorporation. A. Except as provided by Section B of this
34-9 Article, upon <Upon> the issuance of the certificate of
34-10 incorporation, the corporate existence of the corporation being
34-11 incorporated shall begin.
34-12 B. In the case of a new domestic corporation being
34-13 incorporated pursuant to a plan of conversion or a plan of merger
34-14 pursuant to Part Five of this Act, the corporate existence of the
34-15 corporation shall begin upon the effectiveness of the conversion or
34-16 the merger, as the case may be.
34-17 C. Upon effectiveness, the<, and such> certificate of
34-18 incorporation shall be conclusive evidence that all conditions
34-19 precedent required to be performed for the valid incorporation of
34-20 the corporation <by the incorporators> have been complied with and
34-21 that the corporation has been duly incorporated under this Act,
34-22 except as against the State in a proceeding for involuntary
34-23 dissolution.
34-24 SECTION 17. Article 3.05, Texas Business Corporation Act, is
34-25 amended to read as follows:
34-26 Art. 3.05. Requirement Before Commencing Business. A. A
34-27 corporation shall not transact any business or incur any
35-1 indebtedness, except such as shall be incidental to its
35-2 organization or to obtaining subscriptions to or payment for its
35-3 shares, until it has received for the issuance of shares
35-4 consideration of the value of at least One Thousand Dollars
35-5 ($1,000.00)<, consisting of money, labor done, or property actually
35-6 received>.
35-7 SECTION 18. Article 3.06, Texas Business Corporation Act, is
35-8 amended to read as follows:
35-9 Art. 3.06. Organization Meeting of Directors. A. Except as
35-10 provided by Section B of this Article, after <After> the issuance
35-11 of the certificate of incorporation, an organization meeting of the
35-12 initial board of directors named in the articles of incorporation
35-13 (or of the person or persons who, in conformance with Section
35-14 A(12), Article 3.02 of this Act, are named in the articles of
35-15 incorporation as the person or persons who will perform the
35-16 functions of the initial board of directors provided for by this
35-17 Act) shall be held, either within or without this State, at the
35-18 call of a majority of the directors named in the articles of
35-19 incorporation, for the purpose of adopting bylaws, electing
35-20 officers, and transacting such other business as may come before
35-21 the meeting. The directors calling the meeting shall give at least
35-22 three (3) days notice thereof by mail to each director so named,
35-23 stating the time and place of the meeting.
35-24 B. The provisions of Section A of this Article shall not
35-25 apply to a corporation that is a converted entity or a corporation
35-26 that is created pursuant to a plan of merger if the plan of
35-27 conversion or the plan of merger, as the case may be, sets forth
36-1 the bylaws and officers of the corporation.
36-2 SECTION 19. Section A, Article 4.03, Texas Business
36-3 Corporation Act, is amended to read as follows:
36-4 A. The holders of the outstanding shares of a class shall be
36-5 entitled to vote as a class upon a proposed amendment, and the
36-6 holders of the outstanding shares of a series shall be entitled to
36-7 vote as a class upon a proposed amendment, whether or not entitled
36-8 to vote thereon by the provisions of the articles of incorporation,
36-9 if the amendment would accomplish any of the following, unless the
36-10 amendment is undertaken pursuant to authority granted to the board
36-11 of directors in the articles of incorporation in accordance with
36-12 <Section B of> Article 2.13 of this Act:
36-13 (1) Increase or decrease the aggregate number of
36-14 authorized shares of such class or series.
36-15 (2) Increase or decrease the par value of the shares
36-16 of such class, including changing shares having a par value into
36-17 shares without par value, or shares without par value into shares
36-18 with par value.
36-19 (3) Effect an exchange, reclassification, or
36-20 cancellation of all or part of the shares of such class or series.
36-21 (4) Effect an exchange, or create a right of exchange,
36-22 of all or any part of the shares of another class into the shares
36-23 of such class or series.
36-24 (5) Change the designations, preferences, limitations,
36-25 or relative rights of the shares of such class or series.
36-26 (6) Change the shares of such class or series, whether
36-27 with or without par value, into the same or a different number of
37-1 shares, either with or without par value, of the same class or
37-2 series or another class or series.
37-3 (7) Create a new class or series of shares having
37-4 rights and preferences equal, prior, or superior to the shares of
37-5 such class or series, or increase the rights and preferences of any
37-6 class or series having rights and preferences equal, prior, or
37-7 superior to the shares of such class or series, or increase the
37-8 rights and preferences of any class or series having rights or
37-9 preferences later or inferior to the shares of such class or series
37-10 in such a manner as to become equal, prior, or superior to the
37-11 shares of such class or series.
37-12 (8) Divide the shares of such class into series and
37-13 fix and determine the designation of such series and the variations
37-14 in the relative rights and preferences between the shares of such
37-15 series.
37-16 (9) Limit or deny the existing preemptive rights of
37-17 the shares of such class or series.
37-18 (10) Cancel or otherwise affect dividends on the
37-19 shares of such class or series which had accrued but had not been
37-20 declared.
37-21 (11) Include in or delete from the articles of
37-22 incorporation any provisions required or permitted to be included
37-23 in the articles of incorporation of a close corporation in
37-24 conformance with Part Twelve of this Act.
37-25 SECTION 20. Article 4.14, Texas Business Corporation Act, is
37-26 amended to read as follows:
37-27 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE; AMENDMENT
38-1 OF ARTICLES, MERGER, SHARE EXCHANGE, CONVERSION, AND DISSOLUTION
38-2 PURSUANT TO FEDERAL REORGANIZATION PROCEEDINGS. A. Authorization.
38-3 Notwithstanding any other provision of this Act to the contrary, a
38-4 trustee appointed for a corporation being reorganized under a
38-5 federal statute, the designated officers of the corporation, or any
38-6 other individual or individuals designated by the court to act on
38-7 behalf of the corporation may do any of the following without
38-8 action by or notice to its board of directors or shareholders in
38-9 order to carry out a plan of reorganization ordered or decreed by a
38-10 court of competent jurisdiction under the federal statute:
38-11 (1) amend or restate its articles of incorporation if
38-12 the articles after amendment or restatement contain only provisions
38-13 required or permitted in articles;
38-14 (2) merge or engage in a share exchange with one or
38-15 more domestic or foreign corporations or other entities pursuant to
38-16 a plan of merger or exchange having such terms and provisions as
38-17 required or permitted by Articles 5.01 and 5.02 of this Act;
38-18 (3) change the location of its registered office,
38-19 change its registered agent, and remove or appoint any agent to
38-20 receive service of process;
38-21 (4) alter, amend, or repeal its bylaws;
38-22 (5) constitute or reconstitute and classify or
38-23 reclassify its board of directors, and name, constitute, or appoint
38-24 directors and officers in place of or in addition to all or some of
38-25 the officers or directors then in place;
38-26 (6) sell, lease, exchange or otherwise dispose of all,
38-27 or substantially all, of its property and assets;
39-1 (7) authorize and fix the terms, manner, and
39-2 conditions of the issuance of bonds, debentures, or other
39-3 obligations, whether or not convertible into shares of any class or
39-4 bearing warrants or other evidences of optional rights to purchase
39-5 or subscribe for any shares of any class; <or>
39-6 (8) dissolve; or
39-7 (9) effect a conversion.
39-8 Actions taken under Subsection (4) or (5) of this section are
39-9 effective on entry of the order or decree approving the plan of
39-10 reorganization or on another effective date as may be specified,
39-11 without further action of the corporation, as and to the extent set
39-12 forth in the plan of reorganization or the order or decree
39-13 approving the plan of reorganization.
39-14 B. Authority to Sign Documents. A trustee appointed for a
39-15 corporation being reorganized under a federal statute, the
39-16 designated officers of the corporation, or any other individual or
39-17 individuals designated by the court may sign on behalf of a
39-18 corporation that is being reorganized:
39-19 (1) articles of amendment or restated articles of
39-20 incorporation setting forth:
39-21 (a) the name of the corporation;
39-22 (b) the text of each amendment or the
39-23 restatement approved by the court;
39-24 (c) the date of the court's order or decree
39-25 approving the articles of amendment or restatement;
39-26 (d) the court, file name, and case number of the
39-27 reorganization case in which the order or decree was entered; and
40-1 (e) a statement that the court had jurisdiction
40-2 of the case under federal statute; or
40-3 (2) articles of merger or exchange setting forth:
40-4 (a) the name of the corporation;
40-5 (b) the text of the part of the plan of
40-6 reorganization that contains the plan of merger or exchange
40-7 approved by the court, which shall include the information required
40-8 by Article 5.04A or 5.16B of this Act, as applicable, but need not
40-9 include the resolution of the board of directors referred to in
40-10 Article 5.16B(3) of this Act;
40-11 (c) the date of the court's order or decree
40-12 approving the plan of merger or consolidation;
40-13 (d) the court, file name, and case number of the
40-14 reorganization case in which the order or decree was entered; and
40-15 (e) a statement that the court had jurisdiction
40-16 of the case under federal statute; or
40-17 (3) articles of dissolution setting forth:
40-18 (a) the name of the corporation;
40-19 (b) the information required by Articles
40-20 6.06A(1)(2) and (3) of this Act;
40-21 (c) the date of the court's order or decree
40-22 approving the articles of dissolution;
40-23 (d) that the debts, obligations and liabilities
40-24 of the corporation have been paid or discharged as provided in the
40-25 plan of reorganization and that the remaining property and assets
40-26 of the corporation have been distributed as provided in the plan of
40-27 reorganization;
41-1 (e) the court, file name, and case number of the
41-2 reorganization case in which the order or decree was entered; and
41-3 (f) a statement that the court had jurisdiction
41-4 of the case under federal statute; <or>
41-5 (4) a statement of change of registered office or
41-6 registered agent, or both, setting forth:
41-7 (a) the name of the corporation;
41-8 (b) the information required by Article 2.10A of
41-9 this Act, as applicable, but not the information included in the
41-10 statement referred to in Article 2.10A(7) of this Act;
41-11 (c) the date of the court's order or decree
41-12 approving the statement of change of registered office or
41-13 registered agent, or both;
41-14 (d) the court, file name, and case number of the
41-15 reorganization case in which the order or decree was entered; and
41-16 (e) a statement that the court had jurisdiction
41-17 of the case under federal statute; or
41-18 (5) articles of conversion setting forth:
41-19 (a) the name of the corporation;
41-20 (b) the text of the part of the plan of
41-21 reorganization that contains the plan of conversion approved by the
41-22 court, which shall include the information required by Article 5.18
41-23 of this Act;
41-24 (c) the date of the court's order or decree
41-25 approving the plan of conversion;
41-26 (d) the court, file name, and case number of the
41-27 reorganization case in which the order or decree was entered; and
42-1 (e) a statement that the court had jurisdiction
42-2 of the case under federal statute.
42-3 C. Procedure for Merger or Share Exchange. When a domestic
42-4 or foreign corporation or other entity that is not being
42-5 reorganized merges or engages in a share exchange with a
42-6 corporation that is being reorganized pursuant to a plan of
42-7 reorganization:
42-8 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
42-9 this Act shall apply to the domestic or foreign corporation or
42-10 other entity that is not being reorganized to the same extent they
42-11 would apply if it were merging or engaging in a share exchange with
42-12 a corporation that is not being reorganized;
42-13 (2) Article 5.06 of this Act shall apply to the
42-14 domestic or foreign corporation or other entity that is not being
42-15 reorganized to the same extent it would apply if that domestic or
42-16 foreign corporation or other entity were merging or engaging in a
42-17 share exchange with a corporation that is not being reorganized,
42-18 except as otherwise provided in the plan of reorganization ordered
42-19 or decreed by a court of competent jurisdiction under the federal
42-20 statute;
42-21 (3) Article 5.16E of this Act shall apply to a
42-22 subsidiary corporation that is not being reorganized to the same
42-23 extent it would apply if that corporation were merging with a
42-24 parent corporation that is not being reorganized;
42-25 (4) Upon the receipt of all required authorization for
42-26 all action required by this Act for each corporation that is a
42-27 party to the plan of merger or exchange that is not being
43-1 reorganized and all action by each corporation, foreign
43-2 corporation, or other entity that is a party to the plan of merger
43-3 or exchange required by the laws under which it is incorporated or
43-4 organized and its constituent documents, articles of merger or
43-5 exchange shall be signed by each domestic or foreign corporation or
43-6 other entity that is a party to the merger or exchange other than
43-7 the corporation that is being reorganized as provided in Article
43-8 5.04 of this Act and on behalf of the corporation that is being
43-9 reorganized by the persons specified in Section B of this Article;
43-10 (5) The articles of merger or exchange shall set forth
43-11 the information required in Section B(2) of this Article;
43-12 (6) The articles of merger or exchange shall be filed
43-13 with the Secretary of State in the manner and with such number of
43-14 copies as is provided in Article 5.04B of this Act; and
43-15 (7) Upon the issuance of the certificate of merger or
43-16 share exchange by the Secretary of State as provided in Article
43-17 5.04 of this Act, the merger or share exchange shall become
43-18 effective with the same effect as if it had been adopted by
43-19 unanimous action of the directors and shareholders of the
43-20 corporation being reorganized. The effectiveness of the merger or
43-21 share exchange shall be determined as provided in Article 5.05 of
43-22 this Act.
43-23 D. Dissenters' Rights. Shareholders of a corporation being
43-24 reorganized under a federal statute do not have a right to dissent
43-25 under Article 5.11, <or> 5.16E, or 5.20 of this Act, except as the
43-26 plan of reorganization may provide.
43-27 E. When Applicable. This Article shall not apply after the
44-1 entry of a final decree in the reorganization case even though the
44-2 court may retain jurisdiction of the case for limited purposes
44-3 unrelated to consummation of the plan of reorganization.
44-4 F. Nonexclusivity. This Article shall not preclude other
44-5 changes in a corporation or its securities by a plan of
44-6 reorganization ordered or decreed by a court of competent
44-7 jurisdiction under federal statute.
44-8 SECTION 21. Section B, Article 5.01, Texas Business
44-9 Corporation Act, is amended to read as follows:
44-10 B. A plan of merger shall set forth:
44-11 (1) the name of each domestic or foreign corporation
44-12 or other entity that is a party to the merger and the name of each
44-13 domestic or foreign corporation or other entity, if any, that shall
44-14 survive the merger, which may be one or more of the domestic or
44-15 foreign corporations or other entities party to the merger, and the
44-16 name of each new domestic or foreign corporation or other entity,
44-17 if any, that may be created by the terms of the plan of merger;
44-18 (2) the terms and conditions of the merger including,
44-19 if more than one domestic or foreign corporation or other entity is
44-20 to survive or to be created by the terms of the plan of merger, (a)
44-21 the manner and basis of allocating and vesting the real estate and
44-22 other property of each domestic or foreign corporation and of each
44-23 other entity that is a party to the merger among one or more of the
44-24 surviving or new domestic or foreign corporations and other
44-25 entities, (b) the name of the surviving or new domestic or foreign
44-26 corporation or other entity that is to be obligated for the payment
44-27 of the fair value of any shares held by a shareholder of any
45-1 domestic corporation that is a party to the merger who has complied
45-2 with the requirements of Article 5.12 of this Act for the recovery
45-3 of the fair value of his shares, and (c) the manner and basis of
45-4 allocating all other liabilities and obligations of each domestic
45-5 or foreign corporation and other entity that is a party to the
45-6 merger (or making adequate provision for the payment and discharge
45-7 thereof) among one or more of the surviving or new domestic or
45-8 foreign corporations and other entities;
45-9 (3) the manner and basis of converting any of the
45-10 shares or other evidences of ownership of each domestic or foreign
45-11 corporation and other entity that is a party to the merger into
45-12 shares, obligations, evidences of ownership, rights to purchase
45-13 securities or other securities of one or more of the surviving or
45-14 new domestic or foreign corporations or other entities, into cash
45-15 or other property, including shares, obligations, evidences of
45-16 ownership, rights to purchase securities or other securities of any
45-17 other person or entity, or into any combination of the foregoing;
45-18 (4) as an exhibit or attachment, the articles of
45-19 incorporation of any new domestic corporation to be created by the
45-20 terms of the plan of merger; and
45-21 (5) the articles of incorporation or other
45-22 organizational documents of each other entity that is a party to
45-23 the merger and that is to survive the merger or is to be created by
45-24 the terms of the plan of merger.
45-25 SECTION 22. Section A, Article 5.02, Texas Business
45-26 Corporation Act, is amended to read as follows:
45-27 A. One or more domestic or foreign corporations or other
46-1 entities may acquire all of the outstanding shares of one or more
46-2 classes or series of one or more domestic corporations if:
46-3 (1) the board of directors of each domestic
46-4 corporation that is a party to the plan of exchange acts on a plan
46-5 of exchange in the manner prescribed by Article 5.03 of this Act
46-6 and its shareholders (if required by Article 5.03 of this Act or
46-7 the laws under which it was incorporated or organized) approve the
46-8 plan of exchange;
46-9 (2) if one or more foreign corporations or other
46-10 entities is to issue shares or other interests as part of the plan
46-11 of exchange, the issuance of such shares or interests is either
46-12 permitted by the laws under which such foreign corporation or other
46-13 entity is incorporated, organized, or not inconsistent with such
46-14 laws; and
46-15 (3) each acquiring domestic or foreign corporation or
46-16 other entity takes all action that may be required by the laws of
46-17 the state or country under which it was incorporated or organized
46-18 and by its constituent documents to effect the exchange.
46-19 SECTION 23. Section I, Article 5.03, Texas Business
46-20 Corporation Act, is amended to read as follows:
46-21 I. After a merger or share exchange is approved, and at any
46-22 time before the merger or share exchange has become effective, the
46-23 plan of merger or share exchange may be abandoned (subject to any
46-24 contractual rights) by any of the corporations that are a party to
46-25 the merger, without shareholder action, in accordance with the
46-26 procedures set forth in the plan of merger or exchange or, if no
46-27 such procedures are set forth in the plan, in the manner determined
47-1 by the board of directors. If articles of merger or exchange have
47-2 been filed with the Secretary of State but the merger or share
47-3 exchange has not yet become effective, the merger or share exchange
47-4 may be abandoned <as provided in this Section I> if a statement,
47-5 executed on behalf of each domestic corporation and foreign
47-6 corporation or other entity that is a party to the merger or share
47-7 exchange by an officer or other duly authorized representative,
47-8 stating that the plan of merger or exchange has been abandoned in
47-9 accordance with applicable law <the plan and this Section> is filed
47-10 with the Secretary of State prior to the effectiveness of the
47-11 merger or share exchange. If the Secretary of State finds that
47-12 such statement conforms to law, he shall, when all fees have been
47-13 paid as required by law:
47-14 (1) Endorse on the original and each copy the word
47-15 "Filed" and the month, day, and year of the filing thereof.
47-16 (2) File the original in his office.
47-17 (3) Issue a certificate of abandonment to each
47-18 domestic or foreign corporation or other entity that is a party to
47-19 the plan of merger or exchange.
47-20 Upon the filing of such statement by the Secretary of State, the
47-21 merger or share exchange shall be deemed abandoned and shall not
47-22 become effective.
47-23 SECTION 24. Article 5.04, Texas Business Corporation Act, is
47-24 amended to read as follows:
47-25 Art. 5.04. Articles of Merger or Exchange. A. If a plan of
47-26 merger or exchange has been approved in accordance with Article
47-27 5.03 of this Act and has not been abandoned, or approved by the
48-1 board of directors if shareholder approval is not required under
48-2 that Article, articles of merger or exchange shall be executed on
48-3 behalf of each domestic or foreign corporation or other entity that
48-4 is a party to the plan of merger or exchange by an officer or other
48-5 duly authorized representative thereof and shall set forth:
48-6 (1) The plan of merger or exchange or statement
48-7 certifying the following:
48-8 (a) the name and state of incorporation or
48-9 organization of each domestic or foreign corporation or other
48-10 entity that is a party to the plan of merger or exchange or that is
48-11 to be created thereby;
48-12 (b) that a plan of merger or exchange has been
48-13 approved;
48-14 (c) in the case of a merger, such amendments or
48-15 changes in the articles of incorporation of each domestic surviving
48-16 corporation, or if no such amendments are desired to be effected by
48-17 the merger, a statement to that effect;
48-18 (d) that the articles of incorporation of each
48-19 new domestic corporation to be created pursuant to the terms of the
48-20 plan of merger are being filed with the Secretary of State with the
48-21 articles of merger or exchange;
48-22 (e) that an executed plan of merger or exchange
48-23 is on file at the principal place of business of each surviving,
48-24 acquiring, or new domestic or foreign corporation or other entity,
48-25 stating the address thereof; and
48-26 (f) that a copy of the plan of merger or
48-27 exchange will be furnished by each surviving, acquiring, or new
49-1 domestic or foreign corporation or other entity, on written request
49-2 and without cost, to any shareholder of each domestic corporation
49-3 that is a party to or created by the plan of merger or exchange
49-4 and, in the case of a merger with multiple surviving domestic or
49-5 foreign corporations or other entities, to any creditor or obligee
49-6 of the parties to the merger at the time of the merger if such
49-7 obligation is then outstanding.
49-8 (2) If shareholder approval is not required by Article
49-9 5.03 of this Act, a statement to that effect.
49-10 (3) As to each corporation the approval of whose
49-11 shareholders is required, the number of shares outstanding, and, if
49-12 the shares of any class or series are entitled to vote as a class,
49-13 the designation and number of outstanding shares of each such class
49-14 or series.
49-15 (4) As to each corporation the approval of whose
49-16 shareholders is required, the number of shares, not entitled to
49-17 vote only as a class, voted for and against the plan, respectively,
49-18 and, if the shares of any class or series are entitled to vote as a
49-19 class, the number of shares of each such class or series voted for
49-20 and against the plan, respectively.
49-21 (5) As to each acquiring domestic or foreign
49-22 corporation or other entity in a plan of exchange, a statement that
49-23 the plan and performance of its terms were duly authorized by all
49-24 action required by the laws under which it was incorporated or
49-25 organized and by its constituent documents.
49-26 (6) As to each foreign corporation or other entity
49-27 that is a party to the plan of merger, a statement that the
50-1 approval of the plan of merger was duly authorized by all action
50-2 required by the laws under which it was incorporated or organized
50-3 and by its constituent documents.
50-4 B. The original of the articles of merger or exchange, and
50-5 such number of copies of the articles equal to the number of
50-6 surviving, new, and acquiring domestic or foreign corporations and
50-7 other entities that are a party to the plan of merger or exchange
50-8 or that will be created by the terms thereof, shall be delivered to
50-9 the Secretary of State. An equal number of copies of the articles
50-10 of incorporation of each domestic corporation that is to be
50-11 incorporated pursuant to the plan of merger shall also be delivered
50-12 to the Secretary of State with the articles of merger.
50-13 C. If the Secretary of State finds that the articles of
50-14 merger or exchange conform to law, he shall, when all fees and
50-15 franchise taxes have been paid as required by law, or if the plan
50-16 of merger or exchange (or statement provided in lieu thereof)
50-17 provides that one or more of the surviving, new, or acquiring
50-18 domestic or foreign corporations or other entities will be
50-19 responsible for the payment of all such fees and franchise taxes
50-20 and that all of such surviving, new, or acquiring domestic or
50-21 foreign corporations and other entities will be obligated to pay
50-22 such fees and franchise taxes if the same are not timely paid:
50-23 (1) Endorse on the original and each copy the word
50-24 "Filed," and the month, day, and year of the filing thereof.
50-25 (2) File the original in his office.
50-26 (3) Issue a certificate of merger or exchange,
50-27 together with a copy of the articles affixed thereto, to each
51-1 surviving, new, and acquiring domestic or foreign corporation or
51-2 other entity that is a party to the plan of merger or exchange or
51-3 that is created thereby, or its or their respective
51-4 representatives.
51-5 SECTION 25. Section B, Article 5.10, Texas Business
51-6 Corporation Act, is amended to read as follows:
51-7 B. A disposition of any, all, or substantially all, of the
51-8 property and assets of a corporation, whether or not it requires
51-9 the special authorization of the shareholders of the corporation,
51-10 effected under Section A of this article or under Article 5.09 of
51-11 this Act or otherwise:
51-12 (1) is not considered to be a merger or conversion
51-13 pursuant to this Act or otherwise; and
51-14 (2) except as otherwise expressly provided by another
51-15 statute, does not make the acquiring corporation, foreign
51-16 corporation, or other entity responsible or liable for any
51-17 liability or obligation of the selling corporation that the
51-18 acquiring corporation, foreign corporation, or other entity did not
51-19 expressly assume.
51-20 SECTION 26. Article 5.11, Texas Business Corporation Act, is
51-21 amended to read as follows:
51-22 Art. 5.11. Rights of Dissenting Shareholders in the Event of
51-23 Certain Corporate Actions. A. Any shareholder of a domestic
51-24 corporation shall have the right to dissent from any of the
51-25 following corporate actions:
51-26 (1) Any plan of merger to which the corporation is a
51-27 party if shareholder approval is required by Article 5.03 or 5.16
52-1 of this Act and the shareholder holds shares of a class or series
52-2 that was entitled to vote thereon as a class or otherwise;
52-3 (2) Any sale, lease, exchange or other disposition
52-4 (not including any pledge, mortgage, deed of trust or trust
52-5 indenture unless otherwise provided in the articles of
52-6 incorporation) of all, or substantially all, the property and
52-7 assets, with or without good will, of a corporation if <requiring
52-8 the> special authorization of the shareholders is required by this
52-9 Act and the shareholders hold shares of a class or series that was
52-10 entitled to vote thereon as a class or otherwise <as provided by
52-11 this Act>;
52-12 (3) Any plan of exchange pursuant to Article 5.02 of
52-13 this Act in which the shares of the corporation of the class or
52-14 series held by the shareholder are to be acquired.
52-15 B. Notwithstanding the provisions of Section A of this
52-16 Article, a shareholder shall not have the right to dissent from any
52-17 plan of merger in which there is a single surviving or new domestic
52-18 or foreign corporation, or from any plan of exchange, if:
52-19 (1) the shares held by the shareholder are part of a
52-20 class or series, shares of which are <listed on a national
52-21 securities exchange, or are held of record by not less than 2,000
52-22 holders,> on the record date fixed to determine the shareholders
52-23 entitled to vote on the plan of merger or <the> plan of
52-24 exchange: <,>
52-25 (a) listed on a national securities exchange;
52-26 (b) designated as a national market security on
52-27 an interdealer quotation system by the National Association of
53-1 Securities Dealers, Inc., or successor entity; or
53-2 (c) held of record by not less than 2,000
53-3 holders; and
53-4 (2) the shareholder is not required by the terms of
53-5 the plan of merger or the plan of exchange to accept for his shares
53-6 any consideration other than:
53-7 (a) shares of a domestic or foreign corporation
53-8 that, immediately after the effective time of the merger or
53-9 exchange, will be part of a class or series, <of> shares of which
53-10 are:
53-11 (i) listed, or authorized for listing upon
53-12 official notice of issuance, on a national securities exchange;<,
53-13 or>
53-14 (ii) approved for quotation as a national
53-15 market security on an interdealer quotation system by the National
53-16 Association of Securities Dealers, Inc., or successor entity; or
53-17 (iii) held of record by not less than
53-18 2,000 holders;<, and>
53-19 (b) cash in lieu of fractional shares otherwise
53-20 entitled to be received; or
53-21 (c) any combination of the securities and cash
53-22 described in Subdivisions (a) and (b) of this subsection.
53-23 SECTION 27. Article 5.14, Texas Business Corporation Act, is
53-24 amended to read as follows:
53-25 Art. 5.14. DERIVATIVE PROCEEDINGS <SUITS>. A. Certain
53-26 Definitions. For purposes of this Article, (1) a "derivative
53-27 proceeding" means a civil suit in the right of a domestic
54-1 corporation or, to the extent provided in Section K of this
54-2 Article, in the right of a foreign corporation, and (2) a
54-3 "shareholder" includes a beneficial owner whose shares are held in
54-4 a voting trust or by a nominee on the beneficial owner's behalf.
54-5 B. Standing. A shareholder may not commence or maintain a
54-6 derivative proceeding unless the shareholder:
54-7 (1) was a shareholder of the corporation at the time
54-8 of the act or omission complained of or became a shareholder by
54-9 operation of law from a person that was a shareholder at that time;
54-10 and
54-11 (2) fairly and adequately represents the interests of
54-12 the corporation in enforcing the right of the corporation.
54-13 C. Demand. No shareholder may commence a derivative
54-14 proceeding until:
54-15 (1) a written demand is filed with the corporation
54-16 setting forth with particularity the act, omission, or other matter
54-17 that is the subject of the claim or challenge and requesting that
54-18 the corporation take suitable action; and
54-19 (2) 120 days have expired from the date the demand was
54-20 made, unless the shareholder has earlier been notified that the
54-21 demand has been rejected by the corporation or unless irreparable
54-22 injury to the corporation is being suffered or would result by
54-23 waiting for the expiration of the 120-day period.
54-24 D. Stay; Discovery. (1) If the domestic or foreign
54-25 corporation commences an inquiry into the allegations made in a
54-26 demand or petition and the person or group described in Section H
54-27 of this Article is conducting an active review of the allegations
55-1 in good faith, the court shall stay a derivative proceeding until
55-2 the review is completed and a determination is made by the person
55-3 or group as to what further action, if any, should be taken. To
55-4 obtain a stay, the domestic or foreign corporation must provide the
55-5 court with a written statement containing an undertaking to advise
55-6 the court and the shareholder making the demand of the
55-7 determination promptly upon the completion of the review of the
55-8 matter. A stay shall, upon motion, be reviewed as to its continued
55-9 necessity every 90 days thereafter. If the review and
55-10 determination by the person or group described in Section H of this
55-11 Article is not completed within 90 days, the stay may be renewed
55-12 for one or more additional 90-day periods upon the domestic or
55-13 foreign corporation providing the court and the shareholder making
55-14 the demand with a written statement of the status of the review and
55-15 the reasons a continued extension of the stay is necessary.
55-16 (2) If a domestic or foreign corporation proposes to
55-17 dismiss a derivative proceeding pursuant to Section F of this
55-18 Article, discovery by a shareholder following the filing of the
55-19 derivative proceeding in accordance with the provisions of this
55-20 Article shall be limited to facts relating to whether the person or
55-21 group described in Section H of this Article is independent and
55-22 disinterested, the good faith of the inquiry and review by such
55-23 person or group, and the reasonableness of the procedures followed
55-24 by such person or group in conducting its review and will not
55-25 extend to any facts or substantive matters with respect to the act,
55-26 omission, or other matter that is the subject matter of the action
55-27 in the derivative proceeding. The scope of discovery may be
56-1 expanded if the court determines after notice and hearing that a
56-2 good faith review of the allegations for purposes of Section F of
56-3 this Article has not been made by an independent and disinterested
56-4 person or group in accordance with Section F of this Article.
56-5 E. Tolling of the Statute of Limitations. A written demand
56-6 filed with the corporation under Section C of this Article tolls
56-7 the statute of limitations on the claim upon which demand is made
56-8 until the earlier of (1) 120 days or (2) 30 days after the
56-9 corporation advises the shareholder that the demand has been
56-10 rejected or the review has been completed.
56-11 F. Dismissal of Derivative Proceeding. A court shall
56-12 dismiss a derivative proceeding on a motion by the corporation if
56-13 the person or group described in Section H of this Article
56-14 determines in good faith, after conducting a reasonable inquiry and
56-15 based on the factors as the person or group deems appropriate under
56-16 the circumstances, that the continuation of the derivative
56-17 proceeding is not in the best interests of the corporation. In
56-18 determining whether the requirements of the previous sentence have
56-19 been met, the burden of proof shall be on:
56-20 (1) the plaintiff shareholder, if a majority of the
56-21 board of directors consists of independent and disinterested
56-22 directors at the time the determination is made, or if the
56-23 determination is made by a panel of one or more independent and
56-24 disinterested persons appointed under Section H(3) of this Article;
56-25 or
56-26 (2) the corporation, in all other circumstances;
56-27 provided that if the corporation presents prima facie evidence that
57-1 demonstrates that the directors appointed pursuant to Section H(2)
57-2 of this Article are independent and disinterested, the burden of
57-3 proof is on the plaintiff shareholder.
57-4 G. Commencement of Proceeding After Rejection of Demand. If
57-5 a derivative proceeding is commenced after a demand is rejected,
57-6 the petition must allege with particularity facts that establish
57-7 that the rejection was not made in accordance with the requirements
57-8 of Sections F and H of this Article.
57-9 H. Determination by Directors or Independent Persons. The
57-10 determination described in Section F of this Article must be made
57-11 by:
57-12 (1) a majority vote of independent and disinterested
57-13 directors present at a meeting of the board of directors at which
57-14 interested directors are not present (at the time of the vote) if
57-15 the independent and disinterested directors constitute a quorum of
57-16 the board of directors;
57-17 (2) a majority vote of a committee consisting of two
57-18 or more independent and disinterested directors appointed by a
57-19 majority vote of one or more independent and disinterested
57-20 directors present at a meeting of the board of directors, whether
57-21 or not the independent and disinterested directors so acting
57-22 constitute a quorum of the board of directors; or
57-23 (3) a panel of one or more independent and
57-24 disinterested persons appointed by the court upon a motion by the
57-25 corporation setting forth the names of the persons to be so
57-26 appointed together with a statement that to the best of its
57-27 knowledge the persons so proposed are disinterested persons and
58-1 qualified to make the determinations contemplated by Section F of
58-2 this Article. Such panel shall be appointed if the court finds
58-3 that such persons are independent and disinterested persons and are
58-4 otherwise qualified in regard to expertise, experience, independent
58-5 judgment, and other factors deemed appropriate by the court under
58-6 the circumstances to make such determinations. Persons appointed
58-7 by the court shall have no liability to the corporation or its
58-8 shareholders for any action or omission taken by them in that
58-9 capacity, absent fraud or willful misconduct.
58-10 I. Discontinuance or Settlement. A derivative proceeding
58-11 may not be discontinued or settled without the approval of the
58-12 court. If the court determines that a proposed discontinuance or
58-13 settlement may substantially affect the interest of other
58-14 shareholders, it shall direct that notice be given to the affected
58-15 shareholders.
58-16 J. Payment of Expenses. (1) On termination of a derivative
58-17 proceeding, the court may order:
58-18 (a) the domestic or foreign corporation to pay
58-19 the expenses of the plaintiff incurred in the proceeding if it
58-20 finds that the proceeding has resulted in a substantial benefit to
58-21 the domestic or foreign corporation;
58-22 (b) the plaintiff to pay the expenses of the
58-23 domestic or foreign corporation or any defendant incurred in
58-24 investigating and defending the proceeding if it finds that the
58-25 proceeding was commenced or maintained without reasonable cause or
58-26 for an improper purpose; or
58-27 (c) a party to pay the expenses incurred by
59-1 another party (including the domestic or foreign corporation)
59-2 because of the filing of a pleading, motion, or other paper, if it
59-3 finds that the pleading, motion, or other paper (i) was not
59-4 well-grounded in fact after reasonable inquiry, (ii) was not
59-5 warranted by existing law or a good faith argument for the
59-6 extension, modification, or reversal of existing law or (iii) was
59-7 interposed for an improper purpose, such as to harass or to cause
59-8 unnecessary delay or needless increase in the cost of litigation.
59-9 (2) For purposes of this Section, "expenses" mean
59-10 reasonable expenses incurred in the defense of a derivative
59-11 proceeding, including without limitation:
59-12 (a) attorney's fees;
59-13 (b) costs in pursuing an investigation of the
59-14 matter that was the subject of the derivative proceeding; and
59-15 (c) expenses for which the domestic or foreign
59-16 corporation or a corporate defendant may be required to indemnify
59-17 another person.
59-18 K. Application to Foreign Corporations. In any derivative
59-19 proceeding brought in the right of a foreign corporation, the
59-20 matters covered by this Article are governed by the laws of the
59-21 jurisdiction of incorporation of the foreign corporation, except
59-22 for Sections D, I, and J of this Article, which are procedural and
59-23 not matters relating to the internal affairs of the foreign
59-24 corporation. In the case of matters relating to a foreign
59-25 corporation under Section D of this Article, references to a person
59-26 or group described in Section H of this Article are to be deemed to
59-27 refer to a person or group entitled under the laws of the
60-1 jurisdiction of incorporation of the foreign corporation to review
60-2 and dispose of a derivative proceeding, and the standard of review
60-3 of a decision by the person or group to dismiss the derivative
60-4 proceeding is to be governed by the laws of the jurisdiction of
60-5 incorporation of the foreign corporation.
60-6 L. Closely Held Corporations. (1) The provisions of
60-7 Sections B through H of this Article are not applicable to a
60-8 closely held corporation. If justice requires:
60-9 (a) a derivative proceeding brought by a
60-10 shareholder of a closely held corporation may be treated by a court
60-11 as a direct action brought by the shareholder for his own benefit;
60-12 and
60-13 (b) a recovery in a direct or derivative
60-14 proceeding by a shareholder may be paid either directly to the
60-15 plaintiff or to the corporation if necessary to protect the
60-16 interests of creditors or other shareholders of the corporation.
60-17 (2) For purposes of this Section, a "closely held
60-18 corporation" means a corporation:
60-19 (a) with less than 35 shareholders; and
60-20 (b) that has no shares listed on a national
60-21 securities exchange or regularly quoted in an over-the-counter
60-22 market by one or more members of a national securities association
60-23 <A. Definitions. In this Article:>
60-24 <(1) A "derivative suit" is a suit brought in the
60-25 right of a domestic or foreign corporation.>
60-26 <(2) "Expenses" are reasonable expenses, incurred in
60-27 the defense of a derivative suit, including:>
61-1 <(a) Fees of attorneys, and>
61-2 <(b) Expenses for which a corporate defendant may be
61-3 required to indemnify another defendant.>
61-4 <B. Prerequisites. A derivative suit may be brought in this
61-5 State only if:>
61-6 <(1) The plaintiff was a record or beneficial owner of
61-7 shares, or of an interest in a voting trust for shares, at the time
61-8 of the transaction of which he complains, or his shares or interest
61-9 thereafter devolved upon him by operation of law from a person who
61-10 was such an owner at that time, and>
61-11 <(2) The initial pleading in the suit states:>
61-12 <(a) The ownership required by Subsection (1), and>
61-13 <(b) With particularity, the efforts of the plaintiff to
61-14 have suit brought for the corporation by the board of directors, or
61-15 the reasons for not making any such efforts.>
61-16 <C. Security for Expenses. The court having jurisdiction in
61-17 a derivative suit may, in its discretion, require the plaintiff or
61-18 plaintiffs to give security for the expenses incurred or expected
61-19 to be incurred by one or more of the defendants. The court may, in
61-20 its discretion, at any time increase or decrease the amount of the
61-21 security on a showing that the security provided is then inadequate
61-22 or excessive.>
61-23 <D. Inability to Give Security. If plaintiff is unable to
61-24 give security, he may file an affidavit in accordance with the
61-25 Texas Rules of Civil Procedure, and those rules shall control.>
61-26 <E. Failure to Give Security. If plaintiff fails to give
61-27 the security within a reasonable time set by the court, the court
62-1 shall (except as provided in Section D of this Article) dismiss the
62-2 suit without prejudice.>
62-3 <F. Judgment for Expenses. The court having jurisdiction in
62-4 a derivative suit may, upon final judgment for one or more
62-5 defendants and a finding that the suit was brought without
62-6 reasonable cause against such defendants, require the plaintiff to
62-7 pay expenses to such defendants, whether or not security has been
62-8 required>.
62-9 SECTION 28. Part Five, Texas Business Corporation Act, is
62-10 amended by adding Articles 5.17-5.20 to read as follows:
62-11 Art. 5.17. CONVERSION. A. A domestic corporation may adopt
62-12 a plan of conversion and convert to a foreign corporation or any
62-13 other entity if:
62-14 (1) the converting entity acts upon and its
62-15 shareholders approve a plan of conversion in the manner prescribed
62-16 by Article 5.03 of this Act as if the conversion were a merger to
62-17 which the converting entity were a party and not the survivor;
62-18 (2) the conversion (a) is permitted by, or not
62-19 inconsistent with, the laws of the state or country in which the
62-20 converted entity is to be incorporated, formed, or organized, and
62-21 (b) the incorporation, formation, or organization of the converted
62-22 entity is effected in compliance with such laws;
62-23 (3) at the time the conversion becomes effective, each
62-24 shareholder of the converting entity (other than those who receive
62-25 payment of their shares under Article 5.12 of this Act) will,
62-26 unless otherwise agreed to by that shareholder, own an equity
62-27 interest or other ownership or security interest in, and be a
63-1 shareholder, partner, member, owner, or other security holder of,
63-2 the converted entity;
63-3 (4) no shareholder of the domestic corporation will,
63-4 as a result of the conversion, become personally liable, without
63-5 the shareholder's consent, for the liabilities or obligations of
63-6 the converted entity; and
63-7 (5) the converted entity shall be incorporated,
63-8 formed, or organized as part of or pursuant to the plan of
63-9 conversion.
63-10 B. Any foreign corporation or other entity may adopt a plan
63-11 of conversion and convert to a domestic corporation if:
63-12 (1) the conversion is permitted by the laws of the
63-13 state or country in which the foreign corporation is incorporated,
63-14 if a foreign corporation is converting;
63-15 (2) the conversion is either permitted by the laws
63-16 under which the other entity is formed or organized or by the
63-17 constituent documents of the other entity that are not inconsistent
63-18 with the laws of the state or country in which the other entity is
63-19 formed or organized, if another entity is converting; and
63-20 (3) the converting entity takes all action that may be
63-21 required by the laws of the state or country under which it is
63-22 incorporated, formed, or organized and by its constituent documents
63-23 to effect the conversion.
63-24 C. A plan of conversion shall set forth:
63-25 (1) the name of the converting entity and the
63-26 converted entity;
63-27 (2) a statement that the converting entity is
64-1 continuing its existence in the organizational form of the
64-2 converted entity;
64-3 (3) a statement as to the type of entity that the
64-4 converted entity is to be and the state or country under the laws
64-5 of which the converted entity is to be incorporated, formed, or
64-6 organized;
64-7 (4) the manner and basis of converting the shares or
64-8 other evidences of ownership of the converting entity into shares
64-9 or other evidences of ownership or securities of the converted
64-10 entity, or any combination thereof;
64-11 (5) in an attachment or exhibit, the articles of
64-12 incorporation of the domestic corporation if the converted entity
64-13 is a domestic corporation; and
64-14 (6) in an attachment or exhibit, the articles of
64-15 incorporation or other organizational documents of the converted
64-16 entity if the converted entity is not a domestic corporation.
64-17 D. A plan of conversion may set forth such other provisions
64-18 relating to the conversion not inconsistent with law, including the
64-19 initial bylaws and officers of the converted entity.
64-20 E. After a conversion of a corporation is approved, and at
64-21 any time before the conversion has become effective, the plan of
64-22 conversion may be abandoned (subject to any contractual rights) by
64-23 the converting entity, without shareholder action, in accordance
64-24 with the procedures set forth in the plan of conversion or, if any
64-25 such procedures are not set forth in the plan, in the manner
64-26 determined by the board of directors. If articles of conversion
64-27 have been filed with the Secretary of State but the conversion has
65-1 not become effective, the conversion may be abandoned if a
65-2 statement, executed on behalf of the converting entity by an
65-3 officer or other duly authorized representative, stating that the
65-4 plan of conversion has been abandoned in accordance with applicable
65-5 law, is filed with the Secretary of State prior to the
65-6 effectiveness of the conversion. If the Secretary of State finds
65-7 that such statement conforms to law, he shall, when all fees have
65-8 been paid as required by law:
65-9 (1) endorse on the original and each copy the word
65-10 "Filed" and the month, day, and year of the filing thereof;
65-11 (2) file the original in his office; and
65-12 (3) issue a certificate of abandonment to the
65-13 converting entity or its representatives.
65-14 F. Upon the filing of the statement described by Section E
65-15 of this Article by the Secretary of State, the conversion shall be
65-16 deemed abandoned and shall not become effective.
65-17 Art. 5.18. ARTICLES OF CONVERSION. A. If a plan of
65-18 conversion has been approved in accordance with Article 5.17 of
65-19 this Act and has not been abandoned, articles of conversion shall
65-20 be executed by the converting entity by an officer or other duly
65-21 authorized representative thereof and shall set forth:
65-22 (1) the plan of conversion or a statement certifying
65-23 the following:
65-24 (a) the name, state of incorporation, formation,
65-25 or organization of the converting entity, and organizational form
65-26 of the converting entity;
65-27 (b) that a plan of conversion has been approved;
66-1 (c) that an executed plan of conversion is on
66-2 file at the principal place of business of the converting entity,
66-3 stating the address thereof, and that an executed plan of
66-4 conversion will be on file, from and after the conversion, at the
66-5 principal place of the converting entity, stating the address
66-6 thereof; and
66-7 (d) that a copy of the plan of conversion will
66-8 be furnished by the converting entity (prior to the conversion) or
66-9 the converted entity (after the conversion), on written request and
66-10 without cost, to any shareholder of the converting entity or the
66-11 converted entity;
66-12 (2) if the converting entity is a domestic
66-13 corporation, the number of shares outstanding and, if the shares of
66-14 any class or series are entitled to vote as a class, the
66-15 designation and number of outstanding shares of each such class or
66-16 series;
66-17 (3) if the converting entity is a domestic
66-18 corporation, the number of outstanding shares, not entitled to vote
66-19 only as a class, voted for and against the plan, respectively, and,
66-20 if the shares of any class or series are entitled to vote as a
66-21 class, the number of shares of each such class or series voted for
66-22 and against the plan, respectively; and
66-23 (4) if the converting entity is a foreign corporation
66-24 or other entity, a statement that the approval of the plan of
66-25 conversion was duly authorized by all action required by the laws
66-26 under which it was incorporated, formed, or organized and by its
66-27 constituent documents.
67-1 B. The original and one copy of the articles of conversion
67-2 shall be delivered to the Secretary of State. Two copies of the
67-3 articles of incorporation of the domestic corporation if the
67-4 converted entity is a domestic corporation shall also be delivered
67-5 to the Secretary of State with the articles of conversion.
67-6 C. If the Secretary of State finds that the articles of
67-7 conversion conform to law and has received all filings required to
67-8 be received and issued all certificates required to be issued in
67-9 connection with the incorporation, formation, or organization of
67-10 the converted entity, if any, he shall, when all fees and franchise
67-11 taxes have been paid as required by law or if the articles of
67-12 conversion provide that the converted entity will be liable for the
67-13 payment of all such fees and franchise taxes:
67-14 (1) endorse on the original and each copy the word
67-15 "Filed" and the month, day, and year of the filing thereof;
67-16 (2) file the original in his office; and
67-17 (3) issue a certificate of conversion, together with a
67-18 copy of the articles affixed thereto, to the converted entity or
67-19 its representatives.
67-20 Art. 5.19. EFFECTIVE DATE OF CONVERSION. Except as
67-21 otherwise provided by Article 10.03 of this Act, upon the issuance
67-22 of the certificate of conversion by the Secretary of State, the
67-23 conversion of a converting entity shall be effective.
67-24 Art. 5.20. EFFECT OF CONVERSION. A. When a conversion of a
67-25 converting entity takes effect:
67-26 (1) the converting entity shall continue to exist,
67-27 without interruption, but in the organizational form of the
68-1 converted entity rather than in its prior organizational form;
68-2 (2) all rights, title, and interests to all real
68-3 estate and other property owned by the converting entity shall
68-4 continue to be owned by the converted entity in its new
68-5 organizational form without reversion or impairment, without
68-6 further act or deed, and without any transfer or assignment having
68-7 occurred, but subject to any existing liens or other encumbrances
68-8 thereon;
68-9 (3) all liabilities and obligations of the converting
68-10 entity shall continue to be liabilities and obligations of the
68-11 converted entity in its new organizational form without impairment
68-12 or diminution by reason of the conversion;
68-13 (4) all rights of creditors or other parties with
68-14 respect to or against the prior interest holders or other owners of
68-15 the converting entity in their capacities as such in existence as
68-16 of the effective time of the conversion will continue in existence
68-17 as to those liabilities and obligations and may be pursued by such
68-18 creditors and obligees as if such conversion shall not have
68-19 occurred;
68-20 (5) a proceeding pending by or against the converting
68-21 entity or by or against any of the converting entity's interest
68-22 holders or owners in their capacities as such may be continued by
68-23 or against the converted entity in its new organizational form and
68-24 by or against the prior interest holders or owners, as the case may
68-25 be, without any need for substitution of parties;
68-26 (6) the shares and other evidences of ownership in the
68-27 converting entity that are to be converted into shares, evidences
69-1 of ownership or other securities in the converted entity as
69-2 provided in the plan of conversion shall be so converted, and if
69-3 the converting entity is a domestic corporation, the former holders
69-4 of shares in the domestic corporation shall be entitled only to the
69-5 rights provided in the plan of conversion or to their rights under
69-6 Article 5.11 of this Act;
69-7 (7) if, after the effectiveness of the conversion, a
69-8 shareholder, partner, member, or other owner of the converted
69-9 entity would be liable under applicable law, in such capacity, for
69-10 the debts or obligations of the converted entity, such shareholder,
69-11 partner, member, or other owner of the converted entity shall be
69-12 liable for the debts and obligations of the converting entity that
69-13 existed before the conversion takes effect only to the extent that
69-14 such shareholder, partner, member, or other owner: (a) agreed in
69-15 writing to be liable for such debts or obligations, (b) was liable
69-16 under applicable law, prior to the effectiveness of the conversion,
69-17 for such debts or obligations, or (c) by becoming a shareholder,
69-18 partner, member, or other owner of the converted entity, becomes
69-19 liable under applicable law for existing debts and obligations of
69-20 the converted entity;
69-21 (8) if the converted entity is a foreign corporation
69-22 or other entity, such converted entity shall be deemed to: (a)
69-23 appoint the Secretary of State in this State as its agent for
69-24 service of process in a proceeding to enforce any obligation or the
69-25 rights of dissenting shareholders of the converting domestic
69-26 corporation and (b) agree that it will promptly pay the dissenting
69-27 shareholders of the converting domestic corporation the amount, if
70-1 any, to which they are entitled under Article 5.11 of this Act; and
70-2 (9) if the converting corporation is a domestic
70-3 corporation, the provisions of Articles 5.11, 5.12, and 5.13 of
70-4 this Act shall apply as if the converted entity were the survivor
70-5 of a merger with the converting entity.
70-6 SECTION 29. Section A, Article 6.03, Texas Business
70-7 Corporation Act, is amended to read as follows:
70-8 A. A corporation may be dissolved by the act of the
70-9 corporation when authorized in the following manner:
70-10 (1) The board of directors shall adopt a resolution
70-11 recommending that the corporation be dissolved, and directing that
70-12 the question of such dissolution be submitted to a vote at a
70-13 meeting of shareholders, which may be either an annual or a special
70-14 meeting.
70-15 (2) Written or printed notice shall be given to each
70-16 shareholder of record entitled to vote at such meeting within the
70-17 time and in the manner provided in this Act for the giving of
70-18 notice of meetings of shareholders, and, whether the meeting be an
70-19 annual or special meeting, shall state that the purpose, or one of
70-20 the purposes, of such meeting is to consider the advisability of
70-21 dissolving the corporation.
70-22 (3) At such meeting a vote of shareholders entitled to
70-23 vote thereat shall be taken on a resolution to dissolve the
70-24 corporation. Such resolution shall be adopted upon receiving the
70-25 affirmative vote of the holders of at least two-thirds of the
70-26 outstanding shares <Each outstanding share> of the corporation
70-27 <shall be> entitled to vote thereon, <whether or not entitled to
71-1 vote thereon by the provisions of the articles of incorporation.
71-2 Such resolution shall be adopted upon receiving the affirmative
71-3 vote of the holders of at least two-thirds of the outstanding
71-4 shares of the corporation,> unless any class or series of shares is
71-5 entitled to vote as a class thereon, in which event the resolution
71-6 shall require for its adoption the affirmative vote of the holders
71-7 of at least two-thirds of the outstanding shares within <of> each
71-8 class or series of shares entitled to vote as a class thereon and
71-9 at least<, as well as the affirmative vote of> two-thirds of the
71-10 <total> outstanding shares otherwise entitled to vote thereon.
71-11 Shares entitled to vote as a class shall be entitled to vote only
71-12 as a class unless otherwise entitled to vote on each matter
71-13 generally or otherwise provided in the articles of incorporation.
71-14 SECTION 30. Sections A and B, Article 6.05, Texas Business
71-15 Corporation Act, are amended to read as follows:
71-16 A. At any time prior to the issuance of a certificate of
71-17 dissolution by the Secretary of State, or within 120 days
71-18 thereafter, a corporation may revoke voluntary dissolution
71-19 proceedings:
71-20 (1) By the written consent of all of its shareholders.
71-21 (2) By the act of the corporation in the following
71-22 manner:
71-23 (a) The board of directors shall adopt a
71-24 resolution recommending that the question of such revocation be
71-25 submitted to a vote at a special meeting of shareholders.
71-26 (b) Written or printed notice, stating that the
71-27 purpose or one of the purposes of such meeting is to consider the
72-1 advisability of revoking the voluntary dissolution proceedings,
72-2 shall be given to each shareholder of record entitled to vote at
72-3 such meeting within the time and in the manner provided in this Act
72-4 for the giving of notice of special meetings of shareholders.
72-5 (c) At such meeting a vote of the shareholders
72-6 entitled to vote thereat shall be taken on a resolution to revoke
72-7 the voluntary dissolution proceedings. <Each outstanding share of
72-8 the corporation shall be entitled to vote thereon, whether or not
72-9 entitled to vote thereon by the provisions of the articles of
72-10 incorporation.> Such resolution shall be adopted upon receiving
72-11 the affirmative vote of the holders of at least two-thirds of the
72-12 outstanding shares of the corporation entitled to vote thereon,
72-13 unless any class or series of shares is entitled to vote <thereon>
72-14 as a class thereon, in which event the resolution shall require for
72-15 its adoption the affirmative vote of the holders of at least
72-16 two-thirds of the outstanding shares within <of> each class or
72-17 series of shares entitled to vote as a class thereon and at least<,
72-18 as well as> two-thirds of the <total> outstanding shares otherwise
72-19 entitled to vote thereon. Shares entitled to vote as a class shall
72-20 be entitled to vote only as a class unless otherwise entitled to
72-21 vote on each matter generally as provided in the articles of
72-22 incorporation.
72-23 B. After revocation of voluntary dissolution is authorized
72-24 as provided in Section A of this Article, the corporation shall, if
72-25 a certificate of dissolution of the corporation has been issued by
72-26 the Secretary of State, deliver to the Secretary of State for
72-27 filing within 120 days after such issuance the original and a copy
73-1 of articles of revocation of dissolution executed on behalf of the
73-2 corporation by an officer, that set forth:
73-3 (1) the name of the corporation;
73-4 (2) the date that the revocation of dissolution was
73-5 authorized and, if the dissolution has become effective, the
73-6 effective date of the dissolution that was revoked; and
73-7 (3) if the corporation elected to revoke voluntary
73-8 dissolution proceedings by the written consent of all of its
73-9 shareholders, a copy of the consent, together with a statement that
73-10 the consent was signed by all shareholders of the corporation or
73-11 was signed in their names by their attorneys thereunto duly
73-12 authorized; or
73-13 (4) if the corporation elected to revoke voluntary
73-14 dissolution proceedings by act of the corporation:
73-15 (a) a copy of the resolution to revoke, together
73-16 with a statement that such resolution was adopted by the
73-17 shareholders of the corporation and of the date of the adoption
73-18 thereof;
73-19 (b) the number of shares outstanding and
73-20 entitled to vote on the resolution, and, if the shares of any class
73-21 or series were entitled to vote as a class, the designation and
73-22 number of outstanding shares of each such class or series; and
73-23 (c) the number of shares entitled to vote on the
73-24 resolution generally that voted for and against such resolution,
73-25 respectively, and if the shares of any class or series were
73-26 entitled to vote as a class, the number of shares of each such
73-27 class or series voted for and against such resolution,
74-1 respectively.
74-2 SECTION 31. Section A, Article 6.06, Texas Business
74-3 Corporation Act, is amended to read as follows:
74-4 A. If voluntary dissolution proceedings have been taken and
74-5 have not been revoked, then when all debts, liabilities, and
74-6 obligations of the corporation have been paid, satisfied, or
74-7 discharged or adequate provision has been made for payment,
74-8 satisfaction, or discharge thereof or, if the properties and assets
74-9 of the corporation are not sufficient to pay, satisfy, or discharge
74-10 all the corporation's debts, liabilities, and obligations, then
74-11 when all properties and assets of the corporation have been applied
74-12 so far as they will go to the just and equitable payment of the
74-13 corporation's debts, liabilities, and obligations or when adequate
74-14 provision has been made for such application, and the remainder of
74-15 its properties and assets have been distributed to its shareholders
74-16 according to their respective rights and interests, articles of
74-17 dissolution shall be executed on behalf of the corporation by an
74-18 officer, which shall set forth:
74-19 (1) The name of the corporation.
74-20 (2) The names and respective addresses of its
74-21 officers.
74-22 (3) The names and respective addresses of its
74-23 directors.
74-24 (4) That all debts, liabilities, and obligations of
74-25 the corporation have been paid, satisfied, or discharged or that
74-26 adequate provision has been made for payment, satisfaction, or
74-27 discharge thereof or, if the properties and assets of the
75-1 corporation were not sufficient to pay, satisfy, or discharge all
75-2 the corporation's debts, liabilities, and obligations, that all
75-3 properties and assets of the corporation have been applied so far
75-4 as they would go to the just and equitable payment of those debts,
75-5 liabilities, and obligations or that adequate provision has been
75-6 made for such application.
75-7 (5) That the remainder of the properties and assets of
75-8 the corporation have been distributed to its shareholders according
75-9 to their respective rights and interests or that no properties or
75-10 assets of the corporation remained for distribution to shareholders
75-11 after applying the properties and assets of the corporation so far
75-12 as they would go to the just and equitable payment of the debts,
75-13 liabilities, and obligations of the corporation or making adequate
75-14 provision for such application.
75-15 (6) If the corporation elected to dissolve by the
75-16 written consent of all of its shareholders, a copy of the consent,
75-17 together with a statement that the consent was signed by all
75-18 shareholders of the corporation or was signed in their names by
75-19 their attorneys thereunto duly authorized.
75-20 (7) If the corporation elected to dissolve by act of
75-21 the corporation:
75-22 (a) A copy of the resolution to dissolve,
75-23 together with a statement that such resolution was adopted by the
75-24 shareholders of the corporation and of the date of adoption.
75-25 (b) The number of shares outstanding and
75-26 entitled to vote on the resolution, and, if the shares of any class
75-27 or series were entitled to vote as a class, the designation and
76-1 number of outstanding shares of each such class or series.
76-2 (c) The number of shares entitled to vote on the
76-3 resolution generally that voted for and against such resolution,
76-4 respectively, and if the shares of any class or series were
76-5 entitled to vote as a class, the number of shares of each such
76-6 class or series voted for and against such resolution,
76-7 respectively.
76-8 SECTION 32. Sections A and C, Article 8.14, Texas Business
76-9 Corporation Act, are amended to read as follows:
76-10 A. A foreign corporation authorized to transact business in
76-11 this state may withdraw from this state upon procuring from the
76-12 Secretary of State a certificate of withdrawal. In order to
76-13 procure such certificate of withdrawal, such foreign corporation
76-14 shall deliver to the Secretary of State an application for
76-15 withdrawal, which shall set forth:
76-16 (1) The name of the corporation and the state or
76-17 country under the laws of which it is incorporated;
76-18 (2) That the corporation is not transacting business
76-19 in this state;
76-20 (3) That the corporation surrenders its authority to
76-21 transact business in this state;
76-22 (4) That the corporation revokes the authority of its
76-23 registered agent in this state to accept service of process and
76-24 consents that service of process in any action, suit, or proceeding
76-25 based upon any cause of action arising in this state during the
76-26 time the corporation was authorized to transact business in this
76-27 state may thereafter be made on such corporation by service thereof
77-1 on the Secretary of State;
77-2 (5) A post office address to which the Secretary of
77-3 State may mail a copy of any process against the corporation that
77-4 may be served on him; and
77-5 (6) A statement that all sums due, or accrued, to this
77-6 state have been paid, or that adequate provision has been made for
77-7 the payment thereof<; and>
77-8 <(7) A statement that all known creditors or claimants
77-9 have been paid or provided for>.
77-10 C. When the existence of a foreign corporation terminates
77-11 because of dissolution, merger, conversion, or otherwise, a
77-12 certificate from the proper officer in the jurisdiction of the
77-13 corporation's incorporation evidencing the termination shall be
77-14 filed with the Secretary of State.
77-15 SECTION 33. Section A, Article 9.04, Texas Business
77-16 Corporation Act, is amended to read as follows:
77-17 A. If the Secretary of State shall fail to approve any
77-18 articles of incorporation, application for certificate of authority
77-19 to transact business in this State, amendment, merger, share
77-20 exchange, conversion <consolidation>, or dissolution, or any other
77-21 document required by this Act to be approved by the Secretary of
77-22 State before the same shall be filed in his office, he shall,
77-23 within ten days after the delivery thereof to him, give written
77-24 notice of his disapproval to the person, <or> corporation, or other
77-25 entity, domestic or foreign, delivering the same, specifying in
77-26 such notice the reasons therefor. From such disapproval such
77-27 person, <or> corporation, or other entity may appeal to any
78-1 district court of Travis County by filing with the clerk of such
78-2 court a petition setting forth a copy of the articles or other
78-3 document sought to be filed and a copy of the written disapproval
78-4 thereof by the Secretary of State; whereupon the matter shall be
78-5 tried de novo by the court, and the court shall either sustain the
78-6 action of the Secretary of State or direct him to take such action
78-7 as the court may deem proper.
78-8 SECTION 34. Article 9.10, Texas Business Corporation Act, is
78-9 amended by adding Section D to read as follows:
78-10 D. If action is taken with respect to a particular matter by
78-11 the holders of shares of a class or series by means of a written
78-12 consent in compliance with Section A of this Article, any provision
78-13 of this Act that requires advance notice of a meeting or of the
78-14 proposed action will not apply as to that class or series for such
78-15 action.
78-16 SECTION 35. Section A, Article 10.01, Texas Business
78-17 Corporation Act, is amended to read as follows:
78-18 A. The Secretary of State is authorized and required to
78-19 collect for the use of the State the following fees:
78-20 (1) Filing articles of incorporation of a domestic
78-21 corporation and issuing a certificate of incorporation, Three
78-22 Hundred Dollars ($300.00).
78-23 (2) Filing articles of amendment of a domestic
78-24 corporation and issuing a certificate of amendment, One Hundred
78-25 Fifty Dollars ($150.00).
78-26 (3) Filing articles of merger <or consolidation>,
78-27 whether the surviving or new corporation be a domestic or foreign
79-1 corporation, or articles of exchange, Three Hundred Dollars
79-2 ($300.00).
79-3 (4) Filing an application of a foreign corporation for
79-4 a certificate of authority to transact business in this State and
79-5 issuing such a certificate of authority, Seven Hundred Fifty
79-6 Dollars ($750.00).
79-7 (5) Filing an application of a foreign corporation for
79-8 an amended certificate of authority to transact business in this
79-9 State and issuing such an amended certificate of authority, One
79-10 Hundred Fifty Dollars ($150.00).
79-11 (6) Filing restated articles of incorporation of a
79-12 domestic corporation, Three Hundred Dollars ($300.00).
79-13 (7) Filing application for reservation of corporate
79-14 name and issuing a certificate therefor, Forty Dollars ($40.00).
79-15 (8) Filing notice of transfer of reserved corporate
79-16 name and issuing a certificate therefor, Fifteen Dollars ($15.00).
79-17 (9) Filing application for registration of corporate
79-18 name and issuing a certificate therefor, Seventy-Five Dollars
79-19 ($75.00).
79-20 (10) Filing application for renewal of registration of
79-21 corporate name and issuing a certificate therefor, Seventy-Five
79-22 Dollars ($75.00).
79-23 (11) Filing statement of change of registered office
79-24 or registered agent, or both, Fifteen Dollars ($15.00).
79-25 (12) Filing statement of change of address of
79-26 registered agent, Fifteen Dollars ($15.00); provided, however, that
79-27 the maximum fee for simultaneous filings by a registered agent for
80-1 more than one corporation shall not exceed Seven Hundred Fifty
80-2 Dollars ($750.00).
80-3 (13) Filing statement of resolution establishing
80-4 series of shares, Fifteen Dollars ($15.00).
80-5 (14) Filing statement of cancellation of redeemable
80-6 shares, Fifteen Dollars ($15.00).
80-7 (15) Filing statement of cancellation of re-acquired
80-8 shares, Fifteen Dollars ($15.00).
80-9 (16) Filing statement of reduction of stated capital,
80-10 Fifteen Dollars ($15.00).
80-11 (17) Filing articles of dissolution and issuing
80-12 certificate therefor, Forty Dollars ($40.00).
80-13 (18) Filing application for withdrawal and issuing
80-14 certificate therefor, Fifteen Dollars ($15.00).
80-15 (19) Filing certificate from home state that foreign
80-16 corporation is no longer in existence in said state, Fifteen
80-17 Dollars ($15.00).
80-18 (20) Maintaining a record of service of any process,
80-19 notice or demand upon the Secretary of State as agent for foreign
80-20 and domestic corporations and for any foreign association, joint
80-21 stock company, partnership, or nonresident natural person, Forty
80-22 Dollars ($40.00).
80-23 (21) Filing a bylaw or agreement restricting transfer
80-24 of shares or securities other than as an amendment to the articles
80-25 of incorporation, Fifteen Dollars ($15.00).
80-26 (22) Filing any instrument pursuant to this Act not
80-27 expressly provided for above, Fifteen Dollars ($15.00).
81-1 (23) Filing application for reinstatement of corporate
81-2 charter or certificate of authority following forfeiture under the
81-3 Tax Code, Seventy-Five Dollars ($75.00).
81-4 (24) Filing articles of conversion and issuing a
81-5 certificate of conversion, Three Hundred Dollars ($300.00).
81-6 SECTION 36. Section A, Article 10.03, Texas Business
81-7 Corporation Act, is amended to read as follows:
81-8 A. The effectiveness of (i) the incorporation of a
81-9 corporation under this Act, (ii) an amendment to a corporation's
81-10 articles of incorporation, including an amendment effected pursuant
81-11 to a statement of resolution establishing a series of shares, (iii)
81-12 the restatement of articles of incorporation of a corporation, (iv)
81-13 a merger or share exchange, (v) a cancellation of redeemable or
81-14 reacquired shares or a reduction in stated capital, (vi) a
81-15 voluntary dissolution, (vii) the authorization or withdrawal of a
81-16 foreign corporation to transact business in this State, (viii) an
81-17 amendment to the certificate of authority of a foreign corporation,
81-18 (ix) a bylaw or agreement restricting the transfer of shares or
81-19 securities of a corporation pursuant to this Act, (x) a change in
81-20 registered office or registered agent, <or> (xi) a change of
81-21 address of a registered agent (each such act or document being a
81-22 "Permitted Act"), or (xii) a conversion may be made effective as of
81-23 a time and date after the time and date otherwise provided in this
81-24 Act or may be made effective upon the occurrence of events or facts
81-25 that may occur in the future, which events or facts may include
81-26 future acts of any person or entity, if:
81-27 (1) the articles, statement, application, or other
82-1 filing that is required by this Act to be filed with the Secretary
82-2 of State to make effective such Permitted Act clearly and expressly
82-3 set forth, in addition to any other statement or information
82-4 required to be set forth therein, (i) the time and date on which
82-5 such Permitted Act is to become effective or (ii) if such Permitted
82-6 Act is to become effective upon the occurrence of events or facts
82-7 that may occur in the future, (a) the manner in which such events
82-8 or facts shall operate to cause such Permitted Act to become
82-9 effective and (b) the date of the 90th day after the date of the
82-10 filing of such articles, statement, application or other filing;
82-11 (2) in the case of a Permitted Act that is to become
82-12 effective as of a time or date after the time and date otherwise
82-13 provided in this Act, (i) such subsequent time and date is not more
82-14 than 90 days after the date of the filing of the articles,
82-15 statement, application, or other filing that is otherwise required
82-16 by this Act to be filed with the Secretary of State to make
82-17 effective such Permitted Act and (ii) the time on which the
82-18 Permitted Act is to become effective is not midnight or 12:00 p.m.;
82-19 and
82-20 (3) in the case of a Permitted Act that is to be made
82-21 effective upon the occurrence of events or facts that may occur in
82-22 the future, other than the mere passage of time, a statement that
82-23 all such events or facts upon which the effectiveness of such
82-24 Permitted Act is conditioned have been satisfied or waived, and of
82-25 the date on which such condition was satisfied or waived, is filed
82-26 with the Secretary of State within 90 days of the date of the
82-27 filing of the articles, statement, application or other filing that
83-1 is otherwise required by this Act for such Permitted Act to become
83-2 effective.
83-3 SECTION 37. Section B, Article 12.13, Texas Business
83-4 Corporation Act, is amended to read as follows:
83-5 B. Through Merger, Conversion, or Share Exchange. A
83-6 surviving or new corporation resulting from a merger, a corporation
83-7 incorporated as part of a conversion, or a corporation that
83-8 acquires a corporation pursuant to a share exchange in conformance
83-9 with Part Five of this Act may become a close corporation if as
83-10 part of the plan of merger, conversion, or exchange its articles of
83-11 incorporation conform with Article 12.11 of this Act. Any plan of
83-12 merger, conversion, or exchange adopting close corporation status
83-13 must be approved by the affirmative vote of the holders of all the
83-14 outstanding shares, and of each class or series of shares, of each
83-15 corporation that is party to the merger, conversion, or share
83-16 exchange, whether or not entitled to vote on the plan by the
83-17 articles of incorporation of the corporation.
83-18 SECTION 38. Article 12.21, Texas Business Corporation Act,
83-19 is amended to read as follows:
83-20 Art. 12.21. Termination of Close Corporation Status. A. In
83-21 General. A close corporation terminates its status as a close
83-22 corporation:
83-23 (1) on filing a statement of termination in
83-24 conformance with Article 12.22 of this Act;
83-25 (2) by amending its articles of incorporation in
83-26 conformance with Part Four of this Act to delete from its articles
83-27 the statement that it is a close corporation;
84-1 (3) through a merger, conversion, or share exchange in
84-2 conformance with Part Five of this Act unless the plan of merger,
84-3 conversion, or exchange provides that the surviving or new
84-4 corporation will continue as or become a close corporation and the
84-5 plan has been approved by the affirmative vote or consent of the
84-6 holders of all the outstanding shares, and of each class and series
84-7 of shares, of the close corporation, whether or not entitled to
84-8 vote on the plan by the articles of incorporation; or
84-9 (4) when termination is decreed in a judicial
84-10 proceeding to enforce a close corporation provision providing for
84-11 the termination.
84-12 SECTION 39. The Texas Business Corporation Act is amended by
84-13 adding Part Thirteen to read as follows:
84-14 PART THIRTEEN
84-15 Art. 13.01. SHORT TITLE. This part may be cited as the
84-16 Business Combination Law.
84-17 Art. 13.02. DEFINITIONS. In this part:
84-18 (1) "Affiliate" means a person who directly or
84-19 indirectly through one or more intermediaries controls, is
84-20 controlled by, or is under common control with a specified person.
84-21 (2) "Affiliated shareholder" means a person, other
84-22 than the issuing public corporation or a wholly-owned subsidiary of
84-23 the issuing public corporation, that is the beneficial owner of 20
84-24 percent or more of the outstanding voting shares of the issuing
84-25 public corporation that, within the preceding three-year period,
84-26 was the beneficial owner of 20 percent or more of the then
84-27 outstanding voting shares of the issuing public corporation. For
85-1 the purpose of determining whether a person is an affiliated
85-2 shareholder, the number of voting shares of the issuing public
85-3 corporation considered outstanding includes shares considered
85-4 beneficially owned by that person under Subdivision (4) of this
85-5 article, but does not include other unissued voting shares of the
85-6 issuing public corporation that may be issuable pursuant to an
85-7 agreement, arrangement, or understanding, or upon exercise or
85-8 conversion rights, warrants, or options, or otherwise.
85-9 (3) "Beneficial owner" means a person who:
85-10 (a) individually, or with or through an
85-11 affiliate or associate, beneficially owns shares or similar
85-12 securities, directly or indirectly;
85-13 (b) individually, or with or through an
85-14 affiliate or associate, has the right to:
85-15 (i) acquire shares or similar securities,
85-16 whether the right may be exercised immediately or only after the
85-17 passage of time, pursuant to an agreement, arrangement, or
85-18 understanding, whether or not in writing, or upon the exercise of
85-19 conversion rights, exchange rights, warrants, or options, or
85-20 otherwise, except that a person is not considered the beneficial
85-21 owner of shares or similar securities (A) tendered pursuant to a
85-22 tender or exchange offer made by the person or an affiliate or
85-23 associate until the tendered shares or similar securities are
85-24 accepted for purchase or exchange, or (B) that may be subject to an
85-25 agreement, arrangement, or understanding that expressly conditions
85-26 the acquisition or purchase on the approval of the acquisition or
85-27 purchase pursuant to Article 13.03 of this Act as long as such
86-1 person has no direct or indirect rights of ownership or voting with
86-2 respect to such shares until such time that such approval is
86-3 obtained, at which time such person shall be considered the
86-4 beneficial owner of such shares; or
86-5 (ii) vote the shares or similar securities
86-6 pursuant to an agreement, arrangement, or understanding, whether or
86-7 not in writing, except that a person is not considered the
86-8 beneficial owner of shares or similar securities for purposes of
86-9 this subparagraph if the agreement, arrangement, or understanding
86-10 to vote the shares: (A) arises solely from an immediately
86-11 revocable proxy that authorizes the person named in the proxy to
86-12 vote at a meeting of shareholders that has been called when the
86-13 proxy is delivered or at any adjournment of the meeting, and (B) is
86-14 not then reportable on a Schedule 13D under the Securities Exchange
86-15 Act of 1934 or a comparable or successor report; or
86-16 (c) has an agreement, arrangement, or
86-17 understanding, whether or not in writing, to acquire, hold, or
86-18 dispose (except pursuant to an agreement, arrangement, or
86-19 understanding permitted by Subdivision (3)(b)(i) of this Article)
86-20 or to vote (except under an immediately revocable proxy under
86-21 Subdivision (3)(b)(ii) of this Article) shares or similar
86-22 securities with another person who beneficially owns, or whose
86-23 affiliate or associate beneficially owns, directly or indirectly,
86-24 the shares or similar securities.
86-25 (4) "Business combination" means:
86-26 (a) any merger, share exchange, or conversion of
86-27 an issuing public corporation or a subsidiary with:
87-1 (i) an affiliated shareholder;
87-2 (ii) a foreign or domestic corporation or
87-3 other entity that is, or after the merger, share exchange, or
87-4 conversion would be, an affiliate or associate of the affiliated
87-5 shareholder; or
87-6 (iii) another domestic or foreign
87-7 corporation or other entity, if the merger, share exchange, or
87-8 conversion is caused by an affiliated shareholder, or an affiliate
87-9 or associate of an affiliated shareholder, and as a result of the
87-10 merger, share exchange, or conversion this part does not apply to
87-11 the surviving corporation or other entity;
87-12 (b) a sale, lease, exchange, mortgage, pledge,
87-13 transfer, or other disposition, in one transaction or a series of
87-14 transactions, including an allocation of assets pursuant to a
87-15 merger, to or with the affiliated shareholder, or an affiliate or
87-16 associate of the affiliated shareholder, of assets of the issuing
87-17 public corporation or any subsidiary that:
87-18 (i) have an aggregate market value equal
87-19 to 10 percent or more of the aggregate market value of all the
87-20 assets, determined on a consolidated basis, of the issuing public
87-21 corporation;
87-22 (ii) have an aggregate market value equal
87-23 to 10 percent or more of the aggregate market value of all the
87-24 outstanding common stock of the issuing public corporation; or
87-25 (iii) represent 10 percent or more of the
87-26 earning power or net income, determined on a consolidated basis, of
87-27 the issuing public corporation;
88-1 (c) the issuance or transfer by an issuing
88-2 public corporation or a subsidiary to an affiliated shareholder or
88-3 an affiliate or associate of the affiliated shareholder, in one
88-4 transaction or a series of transactions, of shares of the issuing
88-5 public corporation or a subsidiary, except by the exercise of
88-6 warrants or rights to purchase shares of the issuing public
88-7 corporation offered, or a share dividend paid, pro rata to all
88-8 shareholders of the issuing public corporation after the affiliated
88-9 shareholder's share acquisition date;
88-10 (d) the adoption of a plan or proposal for the
88-11 liquidation or dissolution of an issuing public corporation
88-12 proposed by, or pursuant to any agreement, arrangement, or
88-13 understanding, whether or not in writing, with an affiliated
88-14 shareholder or an affiliate or associate of the affiliated
88-15 shareholder;
88-16 (e) a reclassification of securities, including
88-17 a reverse share split or a share split-up, share dividend, or other
88-18 distribution of shares, a recapitalization of the issuing public
88-19 corporation, a merger of the issuing public corporation with a
88-20 subsidiary or pursuant to which the assets and liabilities of the
88-21 issuing public corporation are allocated among two or more
88-22 surviving or new domestic or foreign corporations or other
88-23 entities, or any other transaction, whether or not with, into, or
88-24 otherwise involving the affiliated shareholder, proposed by, or
88-25 pursuant to an agreement, arrangement, or understanding, whether or
88-26 not in writing, with an affiliated shareholder or an affiliate or
88-27 associate of the affiliated shareholder that has the effect,
89-1 directly or indirectly, of increasing the proportionate ownership
89-2 percentage of the outstanding shares of a class or series of voting
89-3 shares or securities convertible into voting shares of the issuing
89-4 public corporation that is beneficially owned by the affiliated
89-5 shareholder or an affiliate or associate of the affiliated
89-6 shareholder, except as a result of immaterial changes due to
89-7 fractional share adjustments; or
89-8 (f) the direct or indirect receipt by an
89-9 affiliated shareholder or an affiliate or associate of the
89-10 affiliated shareholder of the benefit of a loan, advance,
89-11 guarantee, pledge, or other financial assistance or a tax credit or
89-12 other tax advantage provided by or through the issuing public
89-13 corporation, except proportionately as a shareholder of the issuing
89-14 public corporation.
89-15 (5) "Control" means the possession, directly or
89-16 indirectly, of the power to direct or cause the direction of the
89-17 management and policies of a person, whether through the ownership
89-18 of equity securities, by contract, or otherwise. A person's
89-19 beneficial ownership of 10 percent or more of a person's
89-20 outstanding voting shares or similar interests creates a
89-21 presumption that the person has control of such other person, but a
89-22 person is not considered to have control of another person if the
89-23 person holds such voting shares or similar interests in good faith
89-24 and not for the purpose of circumventing this part, as an agent,
89-25 bank, broker, nominee, custodian, or trustee for one or more
89-26 beneficial owners who do not individually or as a group have
89-27 control of the person.
90-1 (6) "Issuing public corporation" means a domestic
90-2 corporation that has: (a) 100 or more shareholders, (b) any class
90-3 or series of its voting shares registered under the Securities
90-4 Exchange Act of 1934, as amended, or similar or successor statute,
90-5 or (c) any class or series of its voting shares qualified for
90-6 trading in a national market system. For the purposes of this
90-7 definition of issuing public corporation, a shareholder is a
90-8 shareholder of record as shown by the share transfer records of the
90-9 corporation.
90-10 (7) "Person" means an individual, trust, domestic or
90-11 foreign corporation or other entity, or a government, or a
90-12 political subdivision, agency, or instrumentality of a government.
90-13 If two or more persons act as a partnership, limited partnership,
90-14 syndicate, or other group under an agreement, arrangement, or other
90-15 understanding, whether or not in writing, to acquire, hold, vote,
90-16 or dispose of shares of a corporation, all members of the
90-17 partnership, limited partnership, syndicate, or other group are
90-18 considered to be a person.
90-19 (8) "Share acquisition date" means the date that a
90-20 person first becomes an affiliated shareholder of an issuing public
90-21 corporation.
90-22 (9) "Subsidiary" means a domestic or foreign
90-23 corporation or other entity of which a majority of the outstanding
90-24 voting shares are owned, directly or indirectly, by an issuing
90-25 public corporation.
90-26 (10) "Voting share" means a share of capital stock of
90-27 a corporation entitled to vote generally in the election of
91-1 directors.
91-2 Art. 13.03. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
91-3 COMBINATIONS. An issuing public corporation shall not, directly or
91-4 indirectly, enter into or engage in a business combination with an
91-5 affiliated shareholder, or any affiliate or associate of the
91-6 affiliated shareholder, during the three-year period immediately
91-7 following the affiliated shareholder's share acquisition date
91-8 unless:
91-9 (1) the business combination or the purchase or
91-10 acquisition of shares made by the affiliated shareholder on the
91-11 affiliated shareholder's share acquisition date is approved by the
91-12 board of directors of the issuing public corporation before the
91-13 affiliated shareholder's share acquisition date; or
91-14 (2) the business combination is approved, by the
91-15 affirmative vote of the holders of at least two-thirds of the
91-16 outstanding voting shares of the issuing public corporation not
91-17 beneficially owned by the affiliated shareholder or an affiliate or
91-18 associate of the affiliated shareholder, at a meeting of
91-19 shareholders and not by written consent, duly called for that
91-20 purpose not less than six months after the affiliated shareholder's
91-21 share acquisition date.
91-22 Art. 13.04. APPLICATION. Article 13.03 of this Act does not
91-23 apply to:
91-24 (1) a business combination of an issuing public
91-25 corporation:
91-26 (a) the original articles of incorporation or
91-27 original bylaws of which contain a provision expressly electing not
92-1 to be governed by this part;
92-2 (b) that adopts an amendment to its articles of
92-3 incorporation or bylaws before December 31, 1995, expressly
92-4 electing not to be governed by this part; or
92-5 (c) that after December 31, 1995, adopts an
92-6 amendment to its articles of incorporation or bylaws, approved by
92-7 the affirmative vote of the shareholders, other than affiliated
92-8 shareholders and their affiliates and associates, of at least
92-9 two-thirds of the outstanding voting shares of the issuing public
92-10 corporation, expressly electing not to be governed by this part,
92-11 except that the amendment to the articles of incorporation or
92-12 bylaws takes effect 18 months after the date of the vote and does
92-13 not apply to a business combination of the issuing public
92-14 corporation with an affiliated shareholder whose share acquisition
92-15 date is on or before the effective date of the amendment;
92-16 (2) a business combination of an issuing public
92-17 corporation with an affiliated shareholder that became an
92-18 affiliated shareholder inadvertently, if the affiliated
92-19 shareholder:
92-20 (a) as soon as practicable divests itself of a
92-21 sufficient number of the voting shares of the issuing public
92-22 corporation so that it no longer is the beneficial owner, directly
92-23 or indirectly, of 20 percent or more of the outstanding voting
92-24 shares of the issuing public corporation; and
92-25 (b) would not at any time within the three-year
92-26 period preceding the announcement date of the business combination
92-27 have been an affiliated shareholder but for the inadvertent
93-1 acquisition;
93-2 (3) a business combination with an affiliated
93-3 shareholder that was the beneficial owner of 20 percent or more of
93-4 the outstanding voting shares of the issuing public corporation on
93-5 December 31, 1994, and continuously until the announcement date of
93-6 the business combination;
93-7 (4) a business combination with an affiliated
93-8 shareholder who became an affiliated shareholder through a transfer
93-9 of shares of the issuing public corporation by will or intestate
93-10 succession and continuously was such an affiliated shareholder
93-11 until the announcement date of the business combination; or
93-12 (5) a business combination of an issuing public
93-13 corporation with a domestic wholly-owned subsidiary if the domestic
93-14 subsidiary is not an affiliate or associate of the affiliated
93-15 shareholder other than by reason of the affiliated shareholder's
93-16 beneficial ownership of voting shares in the issuing public
93-17 corporation.
93-18 Art. 13.05. NO EFFECT ON OTHER ACTIONS. This part does not
93-19 affect, directly or indirectly, the validity of another action by
93-20 the board of directors of an issuing public corporation, nor does
93-21 it preclude the board of directors from taking other action in
93-22 accordance with law, nor does the board of directors incur
93-23 liability for elections made or not made under this part.
93-24 Art. 13.06. DUTIES OF DIRECTOR. In discharging the duties
93-25 of director under this Act or otherwise, a director, in considering
93-26 the best interests of the corporation, may consider the long-term
93-27 as well as the short-term interests of the corporation and its
94-1 shareholders, including the possibility that those interests may be
94-2 best served by the continued independence of the corporation.
94-3 Art. 13.07. RELATIONSHIP WITH OTHER PARTS OF ACT. A. If a
94-4 provision of this part conflicts with another provision of this
94-5 Act, the provision of this part controls.
94-6 B. The affirmative vote or concurrence of shareholders
94-7 required for approval of an action required or permitted to be
94-8 submitted for shareholder vote may be increased, but not decreased,
94-9 under Article 2.28 of this Act.
94-10 Art. 13.08. SEVERABILITY. If any provision or clause of
94-11 this part or application thereof to any person or circumstance is
94-12 held invalid, such invalidity shall not affect other provisions or
94-13 applications of this part that can be given effect without the
94-14 invalid provision or application and without being inconsistent
94-15 with the intent of this part, and to this end the provisions of
94-16 this part are declared to be severable.
94-17 SECTION 40. Article 2.06, Texas Miscellaneous Corporation
94-18 Laws Act (Article 1302-2.06, Vernon's Texas Civil Statutes), is
94-19 amended to read as follows:
94-20 Art. 2.06. Consideration for Indebtedness; Guaranties.
94-21 A. A corporation may incur indebtedness for such consideration as
94-22 it may deem appropriate, including, without limitation, cash, real
94-23 property, personal property, intangible property, contracts to
94-24 receive real, personal, or intangible property, debt and other
94-25 obligations of <No corporation shall create any indebtedness
94-26 whatever except for money paid, labor done, which is reasonably
94-27 worth at least the sum at which it was taken by> the corporation or
95-1 other corporations, persons, or other entities, services performed,
95-2 contracts for services to be performed, debt or equity securities
95-3 of <by a corporation of which all of the outstanding shares of each
95-4 class are owned by the corporation, or property actually received,
95-5 reasonably worth at least the sum at which it was taken by> the
95-6 corporation or of other corporations and entities, and any direct
95-7 or indirect benefit realized by the corporation. Such
95-8 consideration may be received either directly or indirectly,
95-9 including by direct or indirect wholly owned or partially owned
95-10 corporations, partnerships, or other entities. In addition, a
95-11 corporation may issue and incur indebtedness without the receipt of
95-12 any consideration by reason of the authorization or payment of a
95-13 distribution <by a corporation of which all of the outstanding
95-14 shares of each class are owned by the corporation, subject to the
95-15 provisions of Sections B, C, and D of this Article>. In the
95-16 absence of fraud in the transaction, the judgment of the Board of
95-17 Directors or the shareholders, as the case may be, as to the value,
95-18 type, and sufficiency of the consideration received for any such
95-19 indebtedness shall be conclusive.
95-20 B. Any <Notwithstanding Section A of this Article, any>
95-21 corporation shall have the power and authority to make a guaranty
95-22 if the guaranty reasonably may be expected to benefit, directly or
95-23 indirectly, the guarantor corporation. For purposes of this
95-24 section and Section C of this Article, "guaranty" means a guaranty,
95-25 mortgage, pledge, security agreement, or other agreement making the
95-26 guarantor corporation or its assets responsible respecting the
95-27 contracts, securities, or other obligations of any person
96-1 (including, but not limited to, any domestic or foreign
96-2 corporation, partnership, association, joint venture, trust, or any
96-3 officer, director, or employee of such guarantor corporation). The
96-4 decision of, or a decision made pursuant to authority granted by,
96-5 the Board of Directors that the guaranty may reasonably be expected
96-6 to benefit, directly or indirectly, the guarantor corporation shall
96-7 be binding upon the guarantor corporation, and no guaranty made by
96-8 a corporation in accordance with the provisions of this Section B
96-9 shall be invalid or unenforceable as against such corporation,
96-10 unless such guaranty is sought to be enforced by a person who
96-11 participated in a fraud on the guarantor corporation resulting in
96-12 the making of the guaranty or by a person who had notice of such
96-13 fraud before he acquired his rights under the guaranty. Nothing
96-14 herein contained shall prevent a suit (1) prior to the making of a
96-15 guaranty by a corporation, by a shareholder in a representative
96-16 suit against the guarantor corporation, to enjoin the making of
96-17 such guaranty on the ground that such guaranty could not reasonably
96-18 be expected to benefit, directly or indirectly, the guarantor
96-19 corporation, or (2) after the making of a guaranty by a
96-20 corporation, by the guarantor corporation, whether acting directly
96-21 or through a receiver, trustee, or other legal representative or
96-22 through a shareholder in a representative suit, against the
96-23 directors who voted for or assented to the making of such guaranty
96-24 for damages or other appropriate relief on the ground that such
96-25 guaranty could not reasonably have been expected to benefit,
96-26 directly or indirectly, the guarantor corporation, but such
96-27 directors shall be entitled to assert any defenses which they may
97-1 have under law.
97-2 C. In addition to the power and authority granted in Section
97-3 B of this Article, any corporation has the power and authority to
97-4 make a guaranty respecting any subsidiary, parent, or affiliated
97-5 corporation if the action is approved by, or pursuant to authority
97-6 granted by, the Board of Directors of the guarantor corporation.
97-7 For the purposes of this section only:
97-8 (1) "subsidiary corporation" means a corporation, 100
97-9 percent of whose outstanding shares are owned at the time of the
97-10 action:
97-11 (a) by the guarantor corporation itself;
97-12 (b) by one or more of the guarantor
97-13 corporation's subsidiary corporations; or
97-14 (c) by the guarantor corporation and one or more
97-15 of its subsidiary corporations;
97-16 (2) "parent corporation" means a corporation that at
97-17 the time of the action owns 100 percent of the outstanding shares
97-18 of the guarantor corporation:
97-19 (a) by itself;
97-20 (b) through one or more of its subsidiary
97-21 corporations; or
97-22 (c) with one or more of its subsidiary
97-23 corporations; and
97-24 (3) "affiliated corporation" means a corporation, 100
97-25 percent of whose outstanding shares are owned at the time of the
97-26 action:
97-27 (a) by the parent corporation of the guarantor
98-1 corporation;
98-2 (b) by one or more of the parent corporation's
98-3 subsidiary corporations; or
98-4 (c) by the parent corporation and one or more of
98-5 its subsidiary corporations.
98-6 D. <The limitations set forth in Section A of this Article
98-7 shall not apply to indebtedness of a corporation that is incurred
98-8 by reason of the authorization or payment of a dividend or other
98-9 distribution.>
98-10 <E.> Nothing contained in <Section B, C, or D of> this
98-11 Article is intended or shall be construed to limit or deny to any
98-12 corporation the right or power to do or perform any act which it is
98-13 or may be empowered or authorized to do or perform under any other
98-14 laws of the State of Texas now in force or hereafter enacted.
98-15 Provided, however, Sections B and<,> C<, and D> of this Article
98-16 shall not apply to nor enlarge the powers of any corporation that
98-17 does business pursuant to any provision of the Insurance Code of
98-18 Texas, whether licensed in Texas or not, nor shall those sections
98-19 allow or permit any corporation, not licensed under the Insurance
98-20 Code of Texas, to engage in any character, type, class, or kind of
98-21 fidelity, surety, or guaranty business or transaction subject to
98-22 regulation under the Insurance Code.
98-23 SECTION 41. Article 5.06, Texas Non-Profit Corporation Act
98-24 (Article 1396-5.06, Vernon's Texas Civil Statutes), is amended to
98-25 read as follows:
98-26 Art. 5.06. Effect of Merger or Consolidation of Domestic
98-27 Corporations. A. When a <such> merger or consolidation of a
99-1 domestic corporation under Article 5.01, 5.02, or 5.07 of this Act
99-2 has been made effective <corporations has been effected>:
99-3 (1) <The several corporations parties to the plan of
99-4 merger or consolidation shall be a single corporation, which, in
99-5 the case of a merger, shall be that corporation designated in the
99-6 plan of merger as the surviving corporation, and, in the case of
99-7 consolidation, shall be the new corporation provided for in the
99-8 plan of consolidation.>
99-9 <(2)> The separate existence of every domestic
99-10 corporation that is a party to the merger, except any surviving or
99-11 new domestic <all corporations parties to the plan of merger or
99-12 consolidation, except the surviving or new> corporation, shall
99-13 cease.
99-14 (2) All rights, title, and interest to all real estate
99-15 and other property owned by each corporation that is a party to the
99-16 merger shall be vested in the <(3) Such> surviving or new
99-17 corporation without revision or impairment, <shall have all the
99-18 rights, privileges, immunities and powers and shall be subject to
99-19 all the duties and liabilities of a corporation organized under
99-20 this Act.>
99-21 <(4) Such surviving or new corporation shall thereupon
99-22 and thereafter possess all the rights, privileges, immunities and
99-23 franchises, as well of a public as of a private nature, of each of
99-24 the merging or consolidating corporations; and all property, real,
99-25 personal and mixed, and all debts due on whatever account, and all
99-26 other choses in action, and all and every other interest, of or
99-27 belonging to or due to each of the corporations so merged or
100-1 consolidated, shall be taken and deemed to be transferred to and
100-2 vested in such single corporation> without further act or deed, and
100-3 without any transfer or assignment having occurred, but subject to
100-4 any existing liens or encumbrances thereon.
100-5 (3) All <(5) Such surviving or new corporation shall
100-6 thenceforth be responsible and liable for all the> liabilities and
100-7 obligations of each corporation shall become the liabilities and
100-8 obligations of the surviving or new corporation.
100-9 (4) A <of the corporations so merged or consolidated;
100-10 and any claim existing or action or> proceeding pending by or
100-11 against any corporation may be continued as if the merger did not
100-12 occur and the <of such corporations may be prosecuted as if such
100-13 merger or consolidation had not taken place, or such> surviving or
100-14 new corporation may be substituted in the proceeding <its place.
100-15 Neither the rights of creditors nor any liens upon the property of
100-16 any such corporations shall be impaired by such merger or
100-17 consolidation>.
100-18 (5) <(6)> In the case of a merger, the articles of
100-19 incorporation of the surviving corporation shall be deemed to be
100-20 amended to the extent, if any, that changes in its articles of
100-21 incorporation are stated in the plan of merger; and, in the case of
100-22 a consolidation, the statement <statements> set forth in the
100-23 articles of consolidation and which are required or are permitted
100-24 to be set forth in the articles of incorporation of corporations
100-25 organized under this Act shall be deemed to be the articles of
100-26 incorporation of the new corporation.
100-27 SECTION 42. The Texas Non-Profit Corporation Act (Article
101-1 1396-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
101-2 adding Article 5.10 to read as follows:
101-3 Art. 5.10. MERGERS WITH OTHER ENTITIES. A. In addition to
101-4 a merger or consolidation effected pursuant to Article 5.01, 5.02,
101-5 or 5.07 of this Act and subject to this article, a domestic
101-6 corporation may adopt a plan of merger and one or more domestic
101-7 corporations may merge with one or more domestic or foreign
101-8 corporations or other entities in accordance with Part Five of the
101-9 Texas Business Corporation Act; provided, however, that nothing in
101-10 this article shall be deemed to authorize the merger of a
101-11 charitable corporation into another entity if such charitable
101-12 corporation would thereby have its charitable status lost or
101-13 impaired; but a for-profit corporation or other entity may be
101-14 merged into one or more charitable corporations which shall
101-15 continue as the surviving entity or entities.
101-16 B. For purposes of this article, the term "merger" means:
101-17 (1) the division of a domestic corporation into two or
101-18 more domestic corporations or into a surviving corporation or one
101-19 or more domestic or foreign corporations or other entities; or
101-20 (2) the combination of one or more domestic
101-21 corporations with one or more domestic or foreign corporations or
101-22 other entities resulting in:
101-23 (a) one or more surviving domestic or foreign
101-24 corporations or other entities;
101-25 (b) the creation of one or more domestic or
101-26 foreign corporations or other entities; or
101-27 (c) one or more surviving domestic or foreign
102-1 corporations or other entities and the creation of one or more
102-2 domestic or foreign corporations or other entities.
102-3 C. For purposes of this article, the term "other entity"
102-4 means any entity, whether organized for profit or not, that is a
102-5 corporation (other than a domestic corporation or foreign
102-6 corporation), limited or general partnership, limited liability
102-7 company, real estate investment trust, joint venture, stock
102-8 company, cooperative, association, bank, trust, insurance company,
102-9 or other legal entity organized pursuant to the laws of this state
102-10 or any other state or country to the extent such laws or the
102-11 constituent documents of that entity, not inconsistent with such
102-12 laws, permit that entity to enter into a merger with a domestic
102-13 corporation as permitted by this article.
102-14 D. The procedures for approval of a merger set forth in
102-15 Article 5.03 of this Act shall also apply to any merger effected
102-16 pursuant to this article in lieu of Section A(1), Article 5.01, and
102-17 Article 5.03 of the Texas Business Corporation Act. The provisions
102-18 set forth in Article 5.04 of the Texas Business Corporation Act and
102-19 Article 5.04 of this Act with respect to articles of merger shall
102-20 both apply to any merger to the extent applicable. The effects of
102-21 any merger effected pursuant to this article shall be as set forth
102-22 in Article 5.06 of the Texas Business Corporation Act. All other
102-23 provisions of this part shall apply to a merger under this article
102-24 except to the extent the provisions of Part Five of the Texas
102-25 Business Corporation Act expressly apply to the merger and such
102-26 provisions are not in conflict with the provisions of this Act.
102-27 SECTION 43. Subsection (4), Section A, Article 1.02, Texas
103-1 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
103-2 Statutes), is amended to read as follows:
103-3 (4) "Person" includes an individual, corporation,
103-4 business trust, estate, trust, custodian, trustee, executor,
103-5 administrator, nominee, partnership, registered limited liability
103-6 partnership, limited partnership, association, limited liability
103-7 company, government, governmental subdivision, governmental agency,
103-8 governmental instrumentality, and any other legal or commercial
103-9 entity, in its own or representative capacity. Any of the
103-10 foregoing entities may be formed under the laws of this State or
103-11 any other jurisdiction <partnership, limited partnership, limited
103-12 liability company, foreign limited liability company, trust,
103-13 estate, corporation, custodian, trustee, executor, administrator,
103-14 nominee or entity in a representative capacity>.
103-15 SECTION 44. Article 1.02, Texas Limited Liability Company
103-16 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
103-17 adding Subsections (11), (12), and (13) to read as follows:
103-18 (11) "Conversion" means:
103-19 (a) the continuance of a domestic limited
103-20 liability company as, and in the organizational form of, a foreign
103-21 limited liability company or other entity; or
103-22 (b) the continuance of a foreign limited
103-23 liability company or other entity as, and in the organizational
103-24 form of, a domestic limited liability company.
103-25 (12) "Converted entity" means any domestic or foreign
103-26 limited liability company or other entity to which a converting
103-27 entity has converted or intends to convert as permitted by Article
104-1 10.08 of this Act.
104-2 (13) "Converting entity" means any domestic or foreign
104-3 limited liability company or other entity that has converted or
104-4 intends to convert as permitted by Article 10.08 of this Act.
104-5 SECTION 45. Article 2.09, Texas Limited Liability Company
104-6 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
104-7 read as follows:
104-8 Art. 2.09. Regulations of limited liability company.
104-9 A. The power to adopt, alter, amend, or repeal the regulations of
104-10 a limited liability company shall be vested in the members of the
104-11 company unless vested in whole or part in the manager or managers
104-12 of the company by the articles of organization or regulations.
104-13 Regulations adopted by the members or by the managers may be
104-14 repealed or altered; new regulations may be adopted by the members;
104-15 and regulations may provide that they may not, in whole or
104-16 specified part, be altered, amended, or repealed by the managers.
104-17 The regulations may contain any provisions for the regulation and
104-18 management of the affairs of the limited liability company not
104-19 inconsistent with law or the articles of organization. <Unless
104-20 otherwise provided in the articles of organization, the initial
104-21 regulations of the limited liability company shall be adopted by
104-22 the manager or managers named in the articles of organization, if
104-23 any, or by the member or members named in the articles of
104-24 organization, if any.> Any provision of this Act subject to
104-25 variation or modification by the regulations of a limited liability
104-26 company is also subject to variation or modification by the
104-27 articles of organization of the limited liability company.
105-1 SECTION 46. Article 2.13, Texas Limited Liability Company
105-2 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
105-3 read as follows:
105-4 Art. 2.13. Number and election of managers. A. The
105-5 managers of a limited liability company, if any, shall consist of
105-6 one or more persons. The number of managers shall be fixed by, or
105-7 in the manner provided in, the regulations, except as to the number
105-8 constituting the initial managers, which number shall be fixed by
105-9 the articles of organization. The number of managers may be
105-10 increased or decreased from time to time by amendment to, or in the
105-11 manner provided in, the regulations, but, unless provided otherwise
105-12 in the articles of organization or the regulations, no decrease
105-13 shall have the effect of shortening the term of any incumbent
105-14 manager. In the absence of a regulation fixing the number of
105-15 managers or providing for the manner in which the number of
105-16 managers shall be fixed, the number of managers shall be the same
105-17 as the number constituting the initial managers. The names and
105-18 addresses of the initial managers, if any, shall be stated in the
105-19 articles of organization. Unless otherwise provided in the
105-20 regulations or in any resolution of the managers or members
105-21 appointing that manager in accordance with the regulations or
105-22 articles of organization, each manager shall hold office for the
105-23 term for which elected, if any term is specified, and until that
105-24 manager's successor has been elected, or until that manager's
105-25 earlier death, resignation, or removal. The regulations may
105-26 provide for the time or times at which the members entitled to vote
105-27 in the election of managers shall elect managers and the term for
106-1 which the managers shall hold office. The regulations may provide
106-2 that any class or group of members shall be entitled to elect one
106-3 or more managers, who shall hold office for such terms as shall be
106-4 stated in the regulations. The regulations may provide that at any
106-5 meeting of members called expressly for that purpose any managers
106-6 may be removed, with or without cause, as provided therein;
106-7 however, if any class or group of members is entitled to elect one
106-8 or more managers by the provisions of the regulations, only the
106-9 members of that class or group shall be entitled to vote for or
106-10 against the removal of any managers elected by the members of that
106-11 class or group.
106-12 SECTION 47. Sections A and B, Article 2.15, Texas Limited
106-13 Liability Company Act (Article 1528n, Vernon's Texas Civil
106-14 Statutes), are amended to read as follows:
106-15 A. Unless otherwise provided in the articles of organization
106-16 or the regulations, any <Any> vacancy occurring in the managers may
106-17 be filled in accordance with Section B of this Article or may be
106-18 filled by the affirmative vote of a majority of the remaining
106-19 managers though less than a quorum of the managers. Unless
106-20 otherwise provided in the articles of organization or the
106-21 regulations, a <A> manager elected to fill a vacancy shall be
106-22 elected for the unexpired term of the predecessor in office.
106-23 B. Unless otherwise provided in the articles of organization
106-24 or the regulations, any <Any> vacancy occurring in the managers to
106-25 be filled by reason of an increase in the number of managers may be
106-26 filled by election at an annual or special meeting of members
106-27 called for that purpose.
107-1 SECTION 48. Article 2.17, Texas Limited Liability Company
107-2 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
107-3 read as follows:
107-4 Art. 2.17. Interested managers. A. Unless otherwise
107-5 provided in the regulations, no <No> contract or transaction
107-6 between a limited liability company and one or more of its managers
107-7 or officers, or between a limited liability company and any other
107-8 limited liability company, corporation, partnership, association,
107-9 or other organization in which one or more of its managers or
107-10 officers are managers, directors or officers or have a financial
107-11 interest, shall be void or voidable solely for this reason, solely
107-12 because the manager or officer is present at or participates in the
107-13 meeting of managers or of a committee of managers which authorizes
107-14 the contract or transaction, or solely because such manager's or
107-15 managers' votes are counted for such purpose, if:
107-16 (1) The material facts as to the relationship or
107-17 interest and as to the contract or transaction are disclosed or are
107-18 known to the managers or the committee, and the managers or
107-19 committee in good faith authorizes the contract or transaction by
107-20 the affirmative vote of a majority of the disinterested managers,
107-21 even though the disinterested managers be less than a quorum; or
107-22 (2) The material facts as to the relationship or
107-23 interest and as to the contract or transaction are disclosed or are
107-24 known to the members entitled to vote thereon, and the contract or
107-25 transaction is specifically approved in good faith by vote of the
107-26 members; or
107-27 (3) The contract or transaction is fair as to the
108-1 limited liability company as of the time it is authorized,
108-2 approved, or ratified by the managers, a committee thereof, or the
108-3 members.
108-4 B. Unless otherwise provided in the regulations, common
108-5 <Common> or interested managers may be counted in determining the
108-6 presence of a quorum at a meeting of the managers or of a committee
108-7 which authorizes the contract or transaction.
108-8 SECTION 49. Article 2.19, Texas Limited Liability Company
108-9 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
108-10 read as follows:
108-11 Art. 2.19. Place and notice of managers' meetings.
108-12 A. Except as otherwise provided in the articles of organization or
108-13 the regulations, regular or special meetings <Meetings> of the
108-14 members, managers, or any committee <regular or special,> may be
108-15 held either within or without this State.
108-16 B. Regular meetings of the managers or committees may be
108-17 held with or without notice as prescribed in the regulations.
108-18 Special meetings of the managers or committees shall be held upon
108-19 such notice as is prescribed in the regulations.
108-20 C. Except as otherwise provided in the articles of
108-21 organization or the regulations, if the limited liability company
108-22 is without managers, regular meetings of members may be held with
108-23 or without notice as prescribed in the regulations and special
108-24 meetings of members may be held with or without notice as
108-25 prescribed in the regulations, unless any such meeting is to
108-26 consider any of those matters set forth in Section D, Article 2.23,
108-27 of this Act. Except as otherwise provided in the articles of
109-1 organization or the regulations, for any meeting of the members at
109-2 which any of the matters set forth in Section D, Article 2.23, of
109-3 this Act are to be considered, written or printed notice stating
109-4 the place, day, and hour of the meeting and describing the purpose
109-5 or purposes of such meeting shall be delivered to the members not
109-6 less than ten (10) or more than sixty (60) days before the meeting,
109-7 either personally or by mail.
109-8 D. Except as otherwise provided in the articles of
109-9 organization or the regulations, if the limited liability company
109-10 has managers, meetings of members shall be held upon written or
109-11 printed notice, stating the place, day, and hour of the meeting
109-12 and, in the case of a special meeting, the purpose or purposes for
109-13 which the meeting is called, which notice shall be delivered to the
109-14 members not less than ten (10) or more than sixty (60) days before
109-15 the meeting, either personally or by mail.
109-16 E. If mailed, such notice to a member shall be deemed to be
109-17 delivered when deposited in the United States Mail addressed to the
109-18 member at the member's address that appears on the records of the
109-19 limited liability company, with postage prepaid.
109-20 F. Attendance of a member, manager, or committee member at a
109-21 meeting shall constitute a waiver of notice of such meeting, except
109-22 where that member, <a> manager or committee member attends a
109-23 meeting for the express purpose of objecting to the transaction of
109-24 any business on the ground that the meeting is not lawfully called
109-25 or convened.
109-26 G. The articles of organization and regulations may contain
109-27 provisions relating to giving notice of the time, place, or purpose
110-1 of a meeting at which a matter is to be voted on by any members or
110-2 managers, waiver of notice, action by consent without a meeting,
110-3 the establishment of a record date, quorum requirements, voting in
110-4 person or by proxy, or any other matter relating to the exercise of
110-5 the right to vote <Neither the business to be transacted at, nor
110-6 the purpose of, any regular or special meeting of the managers need
110-7 be specified in the notice or waiver of notice of such meeting,
110-8 unless required by the regulations>.
110-9 SECTION 50. Sections A and B, Article 2.22, Texas Limited
110-10 Liability Company Act (Article 1528n, Vernon's Texas Civil
110-11 Statutes), are amended to read as follows:
110-12 A. A domestic limited liability company shall keep and
110-13 maintain the following records in its principal office in the
110-14 United States or make them available in that office within five
110-15 days after the date of receipt of a written request under Section E
110-16 of this Article:
110-17 (1) a current list that states:
110-18 (a) the name and mailing address of each member;
110-19 (b) the percentage or other interest in the
110-20 limited liability company owned by each member; and
110-21 (c) if one or more classes or groups are
110-22 established in or under the articles of organization or
110-23 regulations, the names of the members who are members of each
110-24 specified class or group;
110-25 (2) copies of the federal, state, and local
110-26 information or income tax returns for each of the limited liability
110-27 company's six most recent tax years;
111-1 (3) a copy of the articles of organization and, if the
111-2 regulations of the limited liability company are in writing, a copy
111-3 of the regulations, copies of all amendments or restatements of the
111-4 articles of organization or regulations, executed copies of any
111-5 powers of attorney, and copies of any document that creates, in the
111-6 manner provided by the articles of organization or regulations,
111-7 classes or groups of members;
111-8 (4) unless contained in the articles of organization
111-9 or regulations, a written statement of:
111-10 (a) the amount of the cash contribution and a
111-11 description and statement of the agreed value of any other
111-12 contribution made by each member, and the amount of the cash
111-13 contribution and a description and statement of the agreed value of
111-14 any other contribution that the member has agreed to make in the
111-15 future as an additional contribution;
111-16 (b) the times at which additional contributions
111-17 are to be made or events requiring additional contributions to be
111-18 made;
111-19 (c) events requiring the limited liability
111-20 company to be dissolved and its affairs wound up; and
111-21 (d) the date on which each member in the limited
111-22 liability company became a member; and
111-23 (5) correct and complete books and records of account
111-24 of the limited liability company.
111-25 B. A limited liability company shall maintain such <its>
111-26 records in written form or in another form capable of conversion
111-27 into written form within a reasonable time.
112-1 SECTION 51. Section A, Article 2.23, Texas Limited Liability
112-2 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
112-3 amended to read as follows:
112-4 A. Except as otherwise provided in this Article, in the
112-5 articles of organization, or in the regulations, a majority of the
112-6 members, managers, or members of any committee constitutes a quorum
112-7 for the transaction of business at any meeting of the members, the
112-8 managers, or the committee. An act of a majority of the members
112-9 entitled to vote, the managers, or the members of a committee, who
112-10 are present at a meeting of the members, the managers, or the
112-11 committee at which a quorum is present is the act of the members,
112-12 the managers, or the committee. Except as otherwise provided in
112-13 the articles of organization or the regulations, any member may
112-14 vote either in person or by proxy executed in writing by the
112-15 member.
112-16 SECTION 52. Section A, Article 3.02, Texas Limited Liability
112-17 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
112-18 amended to read as follows:
112-19 A. The initial Articles of Organization shall set forth:
112-20 (1) The name of the limited liability company;
112-21 (2) The period of duration, which may be perpetual;
112-22 (3) The purpose for which the limited liability
112-23 company is organized which may be stated to be, or to include, the
112-24 transaction of any or all lawful business for which limited
112-25 liability companies may be organized under this Act;
112-26 (4) The address of its initial registered office and
112-27 the name of its initial registered agent at that address;
113-1 (5) If the limited liability company is to have a
113-2 manager or managers, a statement to that effect and the names and
113-3 the addresses of the initial manager or managers, or if<. If> the
113-4 limited liability company will not have managers, a statement to
113-5 that effect and the name and the addresses of the initial members;
113-6 (6) The name and the address of each organizer, unless
113-7 the limited liability company is being organized pursuant to a plan
113-8 of conversion or a plan of merger, in which case the articles need
113-9 not include such information;
113-10 (7) Any provision required by Part Eleven of this Act,
113-11 if the limited liability company is a professional limited
113-12 liability company; <and>
113-13 (8) If the limited liability company is being
113-14 incorporated pursuant to a plan of conversion or a plan of merger,
113-15 a statement to that effect, and in the case of a plan of
113-16 conversion, the name, address, and prior form of organization, date
113-17 of incorporation, or organization and jurisdiction of incorporation
113-18 or organization of the converting entity; and
113-19 (9) Any other provisions, not inconsistent with law,
113-20 that <which> the members elect to set out in the articles of
113-21 organization for the regulation of the internal affairs of the
113-22 limited liability company, including any provisions that <which>
113-23 under this Act are permitted to be set out in the regulations of
113-24 the limited liability company.
113-25 SECTION 53. Article 3.03, Texas Limited Liability Company
113-26 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
113-27 amending Section A and adding Section C to read as follows:
114-1 A. Except as provided by Section C of this Article, the
114-2 <The> original and a copy of the articles of organization shall be
114-3 delivered to the Secretary of State. If the Secretary of State
114-4 finds that the articles of organization conform to law, the
114-5 Secretary of State shall, when all fees have been paid as required
114-6 by law:
114-7 (1) Endorse on the original and the copy the word
114-8 "filed," and the month, day, and year of the filing thereof.
114-9 (2) File the original in the office of the Secretary
114-10 of State.
114-11 (3) Issue a certificate of organization to which shall
114-12 be affixed the copy.
114-13 C. In the case of a new domestic limited liability company
114-14 being organized pursuant to a plan of conversion or a plan of
114-15 merger pursuant to Part Ten of this Act, the articles of
114-16 organization of the limited liability company shall be filed with
114-17 the secretary of state with the articles of conversion or merger
114-18 and need not be filed separately pursuant to Section A of this
114-19 article. If the secretary of state finds that the articles of
114-20 organization conform to the law, the secretary of state shall file
114-21 the articles of organization in the office of the secretary of
114-22 state and issue a certificate of organization, to which the
114-23 secretary of state shall affix a copy of the articles of
114-24 organization, and deliver the same to the party or parties filing
114-25 the articles of conversion or merger or their representatives with
114-26 the certificate of conversion or merger that is issued in
114-27 connection with the conversion or merger. In the case of a
115-1 conversion or a merger, the certificate of organization of a
115-2 domestic limited liability company that is a converted entity or
115-3 that is to be created pursuant to the plan of merger shall become
115-4 effective upon the effectiveness of the conversion or the merger,
115-5 as the case may be.
115-6 SECTION 54. Article 3.04, Texas Limited Liability Company
115-7 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
115-8 read as follows:
115-9 Art. 3.04. Effect of the Issuance of Certificate of
115-10 Organization. A. Except as provided by Section B of this article,
115-11 upon <Upon> the issuance of the certificate of organization, the
115-12 limited liability company's <company> existence shall begin<, and
115-13 such certificate of organization shall be conclusive evidence that
115-14 all conditions precedents required to be performed by the
115-15 organizers have been complied with and that the limited liability
115-16 company has been organized under this Act, except as against the
115-17 state in proceedings for involuntary dissolution>.
115-18 B. In the case of a new domestic limited liability company
115-19 being organized pursuant to a plan of conversion or a plan of
115-20 merger pursuant to Part Ten of this Act, the existence of the
115-21 limited liability company as such shall begin upon the
115-22 effectiveness of the conversion or the merger, as the case may be.
115-23 C. Upon effectiveness, the certificate of organization shall
115-24 be conclusive evidence that all conditions precedent required to be
115-25 performed for the valid organization of the limited liability
115-26 company have been complied with and that the limited liability
115-27 company has been duly organized under this Act, except as against
116-1 the state in a proceeding for involuntary dissolution.
116-2 SECTION 55. Article 5.08, Texas Limited Liability Company
116-3 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
116-4 read as follows:
116-5 Art. 5.08. Right to Distribution. A. Subject to Articles
116-6 5.09 and 6.04 of this act, at the time that a member becomes
116-7 entitled to receive a distribution, with respect to the <a>
116-8 distribution, that member has the status of and is entitled to all
116-9 remedies available to a creditor of the limited liability company.
116-10 SECTION 56. Section A, Article 6.01, Texas Limited Liability
116-11 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
116-12 amended to read as follows:
116-13 A. Except as provided by Section B of this Article, a
116-14 limited liability company shall be dissolved on the first of the
116-15 following to occur:
116-16 (1) the period fixed for the duration of the limited
116-17 liability company expires;
116-18 (2) the occurrence of events specified in the articles
116-19 of organization or regulations to cause dissolution;
116-20 (3) the action of the members to dissolve the limited
116-21 liability company;
116-22 (4) if no capital has been paid into the limited
116-23 liability company, the act of the organizer or the managers <of the
116-24 limited company> to dissolve the limited liability company;
116-25 (5) except as otherwise provided in the regulations,
116-26 upon the death, expulsion, withdrawal pursuant to or as provided in
116-27 the articles of organization or regulations, bankruptcy, or
117-1 dissolution of a member or the occurrence of any other event which
117-2 terminates the continued membership of a member in the limited
117-3 liability company; or
117-4 (6) entry of a decree of judicial dissolution under
117-5 Section 6.02 of this Act.
117-6 SECTION 57. Section B, Article 7.13, Texas Limited Liability
117-7 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
117-8 amended to read as follows:
117-9 B. The failure of a foreign limited liability company to
117-10 obtain a certificate of authority to transact business in this
117-11 State shall not impair the validity of any contract or act of such
117-12 foreign limited liability company, shall not cause any member or
117-13 manager of such foreign limited liability company to become liable
117-14 for the debts, obligations, or liabilities of such foreign limited
117-15 liability company, and shall not prevent such foreign limited
117-16 liability company from defending any action, suit or proceeding in
117-17 any court of this State.
117-18 SECTION 58. Section C, Article 8.12, Texas Limited Liability
117-19 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
117-20 amended to read as follows:
117-21 C. For purposes of the application of the articles of the
117-22 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
117-23 by Sections A and B of this Article, as context requires:
117-24 (1) a reference to a corporation includes a limited
117-25 liability company;
117-26 (2) a reference to a share includes a membership
117-27 interest;
118-1 (3) a reference to a shareholder includes a member;
118-2 (4) a reference to a director includes a manager or,
118-3 to the extent that the management of the limited liability company
118-4 is reserved in whole or in part to the members, a member who
118-5 manages the limited liability company;
118-6 (5) a reference to articles of incorporation includes
118-7 articles of organization; provided, however, that the references to
118-8 articles of incorporation in Article 7.06, Texas Miscellaneous
118-9 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
118-10 Statutes), include either articles of organization or regulations;
118-11 and
118-12 (6) a reference to bylaws includes regulations.
118-13 SECTION 59. Section A, Article 9.01, Texas Limited Liability
118-14 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
118-15 amended to read as follows:
118-16 A. The Secretary of State is authorized and required to
118-17 collect for the use of the State the following fees:
118-18 (1) Filing articles of organization of a domestic
118-19 limited liability company and issuing the certificate of
118-20 organization, Two Hundred Dollars ($200.00).
118-21 (2) Filing articles of amendment of a domestic limited
118-22 liability company and issuing the certificate of amendment, One
118-23 Hundred Dollars ($100.00).
118-24 (3) Filing articles of merger or articles of
118-25 conversion involving one or more domestic or foreign limited
118-26 liability companies,<:>
118-27 <(a)> Two Hundred Dollars ($200.00), provided that any other
119-1 filing fee paid under the corporation or partnership statutes of
119-2 this state for the filing of articles of merger or articles of
119-3 conversion with respect to entities organized under those statutes
119-4 shall be credited against the filing fee provided by this
119-5 subsection <if another type of domestic entity is not a party to
119-6 the merger; or>
119-7 <(b) the greater of Two Hundred Dollars ($200.00) or the
119-8 highest filing fee for articles of merger under the applicable
119-9 Texas statute under which the other domestic entity or entities are
119-10 incorporated or organized, if another type of domestic entity is
119-11 party to the merger>.
119-12 (4) Filing an application of a foreign limited
119-13 liability company for certificate of authority to transact business
119-14 in this state and issuing such a certificate of authority, Five
119-15 Hundred Dollars ($500.00).
119-16 (5) Filing an application of a foreign limited
119-17 liability company for an amended certificate of authority to
119-18 transact business in this state and issuing such an amended
119-19 certificate of authority, One Hundred Dollars ($100.00).
119-20 (6) Filing restated articles of organization of a
119-21 domestic limited liability company, Two Hundred Dollars ($200.00).
119-22 (7) Filing application for reservations of a limited
119-23 liability company name and issuing certificate thereof, Twenty-Five
119-24 Dollars ($25.00).
119-25 (8) Filing notice of transfer of reserved limited
119-26 liability company name and issuing a certificate therefor, Ten
119-27 Dollars ($10.00).
120-1 (9) Filing statement of change of registered office or
120-2 registered agent, or both, Ten Dollars ($10.00).
120-3 (10) Filing statement of change of address of
120-4 registered agent, Ten Dollars ($10.00); provided, however, that the
120-5 maximum fee for simultaneous filings by a registered agent for more
120-6 than one limited liability company shall not exceed Five Hundred
120-7 Dollars ($500.00).
120-8 (11) Filing articles of dissolution and issuing
120-9 certificate therefor, Twenty-Five Dollars ($25.00).
120-10 (12) Filing application for withdrawal and issuing
120-11 certificate therefor, Ten Dollars ($10.00).
120-12 (13) Filing certificate from home state that foreign
120-13 limited liability company is no longer existent in said state, Ten
120-14 Dollars ($10.00).
120-15 (14) Maintaining the record of service of any process,
120-16 notice or demand upon the Secretary of State as agent for foreign
120-17 and domestic limited liability companies, Twenty-Five Dollars
120-18 ($25.00).
120-19 (15) Filing any instrument pursuant to this act not
120-20 expressly provided for above, Ten Dollars ($10.00).
120-21 SECTION 60. Subsection (1), Section A, Article 9.03, Texas
120-22 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
120-23 Statutes), is amended to read as follows:
120-24 (1) For purposes of this Article, "permitted act"
120-25 means a filing with the Secretary of State under this Act for:
120-26 (a) the articles of organization of a limited
120-27 liability company under this Act;
121-1 (b) an amendment to or restatement of the
121-2 articles of organization;
121-3 (c) a merger or conversion;
121-4 (d) the application of a foreign limited
121-5 liability company to procure a certificate of authority to transact
121-6 business in this state or to withdraw from doing business in this
121-7 state;
121-8 (e) an amendment to the certificate of authority
121-9 of a foreign limited liability company to transact business in this
121-10 state;
121-11 (f) a change in registered office or registered
121-12 agent;
121-13 (g) a change of address of a registered agent;
121-14 or
121-15 (h) a voluntary dissolution.
121-16 SECTION 61. Section F, Article 9.03, Texas Limited Liability
121-17 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
121-18 amended to read as follows:
121-19 F. If articles of organization, articles of amendment or
121-20 restatement, articles of merger, articles of conversion, an
121-21 application, or any other document permitted to be filed pursuant
121-22 to this Act with the Secretary of State have been filed but the
121-23 event or transaction evidenced by the filing has not become
121-24 effective, the filing may be abandoned in accordance with the
121-25 agreement of the parties to the filing by filing a certificate of
121-26 abandonment with the Secretary of State before the effectiveness of
121-27 the event or transaction in accordance with the terms of the
122-1 document so filed. The certificate of abandonment must be signed
122-2 on behalf of each domestic or foreign limited liability company or
122-3 other entity that is a party to the event or transaction by a
122-4 member, manager, officer, or other authorized representative and
122-5 must state the nature of the filing to be abandoned, the date of
122-6 the filing to be abandoned, the parties to the filing to be
122-7 abandoned, and that the event or transaction has been abandoned in
122-8 accordance with the agreement of the parties. On the filing of the
122-9 certificate <statement> of abandonment with the Secretary of State,
122-10 the event or transaction evidenced by the original filing shall be
122-11 considered abandoned and may not become effective.
122-12 SECTION 62. Section B, Article 10.03, Texas Limited
122-13 Liability Company Act (Article 1528n, Vernon's Texas Civil
122-14 Statutes), is amended to read as follows:
122-15 B. The original of the articles of merger and a number of
122-16 copies equal to the number of surviving and new domestic or foreign
122-17 limited liability companies and other entities that are a party to
122-18 the plan of merger or that will be created by its terms shall be
122-19 delivered to the Secretary of State. Unless the Secretary of State
122-20 finds that the articles of merger do not conform to law, on receipt
122-21 of all applicable filing fees and franchise taxes, if any, required
122-22 by law or if the plan of merger provides that one or more of the
122-23 surviving, new, or acquiring domestic or foreign limited liability
122-24 companies or other entities will be responsible for the payment of
122-25 all of such fees and franchise taxes and that all of such
122-26 surviving, new, or acquiring domestic or foreign limited liability
122-27 companies and other entities will be obligated to pay such fees and
123-1 franchise taxes if the same are not timely paid, the Secretary of
123-2 State shall:
123-3 (1) certify that the articles of merger have been
123-4 filed in the Secretary of State's office by endorsing on the
123-5 original the word "Filed" and the date of the filing;
123-6 (2) file and index the endorsed articles of merger;
123-7 and
123-8 (3) issue a certificate of merger, together with a
123-9 copy of the articles affixed to the certificate, to each surviving
123-10 or new domestic or foreign limited liability company or other
123-11 entity that is a party to the plan of merger or that is created by
123-12 the merger, or to its respective representatives.
123-13 SECTION 63. Part Ten, Texas Limited Liability Act (Article
123-14 1528n, Vernon's Texas Civil Statutes), is amended by adding
123-15 Articles 10.08-10.11 to read as follows:
123-16 Art. 10.08. CONVERSION. A. A domestic limited liability
123-17 company may adopt a plan of conversion and convert to a foreign
123-18 limited liability company or any other entity if:
123-19 (1) the converting entity acts upon and its members
123-20 approve a plan of conversion in the manner prescribed by Article
123-21 10.01 of this Act as if the conversion were a merger to which the
123-22 converting entity were a party and not the survivor;
123-23 (2) the conversion is permitted by, or not
123-24 inconsistent with, the laws of the state or country in which the
123-25 converted entity is to be incorporated, formed, or organized, and
123-26 the incorporation, formation, or organization of the converted
123-27 entity is effected in compliance with such laws;
124-1 (3) at the time the conversion becomes effective, each
124-2 member of the converting entity will, unless otherwise agreed to by
124-3 that member, own an equity interest or other ownership or security
124-4 interest in, and be a shareholder, partner, member, owner, or other
124-5 security holder of, the converted entity;
124-6 (4) no member of the domestic limited liability
124-7 company will, as a result of the conversion, become personally
124-8 liable, without the member's consent, for the liabilities or
124-9 obligations of the converted entity; and
124-10 (5) the converted entity shall be incorporated,
124-11 formed, or organized as part of or pursuant to the plan of
124-12 conversion.
124-13 B. Any foreign limited liability company or other entity may
124-14 adopt a plan of conversion and convert to a domestic limited
124-15 liability company if:
124-16 (1) the conversion is permitted by the laws of the
124-17 state or country in which the foreign limited liability company is
124-18 incorporated, if a foreign limited liability company is converting;
124-19 (2) the conversion is either permitted by the laws
124-20 under which the other entity is formed or organized or by the
124-21 constituent documents of the other entity that are not inconsistent
124-22 with the laws of the state or country in which the other entity is
124-23 formed or organized, if another entity is converting; and
124-24 (3) the converting entity takes all action that may be
124-25 required by the laws of the state or country under which it is
124-26 incorporated, formed, or organized and by its constituent documents
124-27 to effect the conversion.
125-1 C. A plan of conversion shall set forth:
125-2 (1) the name of the converting entity and the
125-3 converted entity;
125-4 (2) a statement that the converting entity is
125-5 continuing its existence in the organizational form of the
125-6 converted entity;
125-7 (3) a statement as to the type of entity that the
125-8 converted entity is to be and the state or country under the laws
125-9 of which the converted entity is to be incorporated, formed, or
125-10 organized;
125-11 (4) the manner and basis of converting the membership
125-12 interests or other evidences of ownership of the converting entity
125-13 into membership interests or other evidences of ownership or
125-14 securities of the converted entity, or any combination thereof;
125-15 (5) in an attachment or exhibit, the articles of
125-16 organization of the domestic limited liability company if the
125-17 converted entity is a domestic limited liability company; and
125-18 (6) in an attachment or exhibit, the articles of
125-19 organization or other organizational documents of the converted
125-20 entity if the converted entity is not a domestic limited liability
125-21 company.
125-22 D. A plan of conversion may set forth such other provisions
125-23 relating to the conversion not inconsistent with law, including the
125-24 initial regulations of the converted entity.
125-25 Art. 10.09. ARTICLES OF CONVERSION. A. If a plan of
125-26 conversion has been approved in accordance with Article 10.08 of
125-27 this Act and has not been abandoned, articles of conversion shall
126-1 be executed by the converting entity by a manager or other duly
126-2 authorized representative thereof and shall set forth:
126-3 (1) the plan of conversion or a statement certifying
126-4 the following:
126-5 (a) the name, the state of incorporation,
126-6 formation, or organization of the converting entity, and the
126-7 organizational form of the converting entity;
126-8 (b) that a plan of conversion has been approved;
126-9 (c) that an executed plan of conversion is on
126-10 file at the principal place of business of the converting entity,
126-11 stating the address thereof, and that an executed plan of
126-12 conversion will be on file, from and after the conversion, at the
126-13 principal place of business of the converting entity, stating the
126-14 address thereof; and
126-15 (d) that a copy of the plan of conversion will
126-16 be furnished by the converting entity (prior to the conversion) or
126-17 the converted entity (after the conversion), on written request and
126-18 without cost, to any member of the converting entity or the
126-19 converted entity; and
126-20 (2) a statement that the approval of the plan of
126-21 conversion was duly authorized by all action required by the laws
126-22 under which the converting entity was incorporated, formed, or
126-23 organized and by its constituent documents.
126-24 B. The original and one copy of the articles of conversion
126-25 shall be delivered to the secretary of state. Two copies of the
126-26 articles of organization of the domestic limited liability company
126-27 if the converted entity is a domestic limited liability company
127-1 shall also be delivered to the secretary of state with the articles
127-2 of conversion.
127-3 C. If the secretary of state finds that the articles of
127-4 conversion conform to law, has received all filings required to be
127-5 received, and issued all certificates required to be issued in
127-6 connection with the incorporation, formation, or organization of
127-7 the converted entity, if any, the secretary of state shall, when
127-8 all fees and franchise taxes have been paid as required by law or
127-9 if the articles of conversion provide that the converted entity
127-10 will be liable for the payment of all such fees and franchise
127-11 taxes:
127-12 (1) Endorse on the original and each copy the word
127-13 "Filed" and the month, day, and year of the filing thereof.
127-14 (2) File the original in the office of the secretary
127-15 of state.
127-16 (3) Issue a certificate of conversion, together with a
127-17 copy of the articles affixed thereto, to the converted entity or
127-18 its representatives.
127-19 Art. 10.10. EFFECTIVE DATE OF CONVERSION. Except as
127-20 otherwise provided by Article 9.03 of this Act, upon the issuance
127-21 of the certificate of conversion by the secretary of state, the
127-22 conversion of a converting entity shall be effective.
127-23 Art. 10.11. EFFECT OF CONVERSION. When a conversion of a
127-24 converting entity takes effect:
127-25 (1) the converting entity shall continue to exist,
127-26 without interruption, but in the organizational form of the
127-27 converted entity rather than in its prior organizational form;
128-1 (2) all rights, title, and interests to all real
128-2 estate and other property owned by the converting entity shall
128-3 continue to be owned by the converted entity in its new
128-4 organizational form without reversion or impairment, without
128-5 further act or deed, and without any transfer or assignment having
128-6 occurred, but subject to any existing liens or other encumbrances
128-7 thereon;
128-8 (3) all liabilities and obligations of the converting
128-9 entity shall continue to be liabilities and obligations of the
128-10 converted entity in its new organizational form without impairment
128-11 or diminution by reason of the conversion;
128-12 (4) all rights of creditors or other parties with
128-13 respect to or against the prior interest holders or other owners of
128-14 the converting entity in their capacities as such in existence as
128-15 of the effective time of the conversion will continue in existence
128-16 as to those liabilities and obligations and may be pursued by such
128-17 creditors and obligees as if such conversion shall not have
128-18 occurred;
128-19 (5) a proceeding pending by or against the converting
128-20 entity or by or against any of the converting entity's interest
128-21 holders or owners in their capacities as such may be continued by
128-22 or against the converted entity in its new organizational form and
128-23 by or against the prior interest holders or owners, as the case may
128-24 be, without any need for substitution of parties;
128-25 (6) the membership interests and other evidences of
128-26 ownership in the converting entity that are to be converted into
128-27 membership interests, evidences of ownership, or other securities
129-1 in the converted entity as provided in the plan of conversion shall
129-2 be so converted, and if the converting entity is a domestic limited
129-3 liability company, the former holders of membership interests in
129-4 the domestic limited liability company shall be entitled only to
129-5 the rights provided in the plan of conversion;
129-6 (7) if, after the effectiveness of the conversion, a
129-7 shareholder, partner, member, or other owner of the converted
129-8 entity would be liable under applicable law, in such capacity, for
129-9 the debts or obligations of the converted entity, such shareholder,
129-10 partner, member, or other owner of the converted entity shall be
129-11 liable for the debts and obligations of the converting entity that
129-12 existed before the conversion takes effect only to the extent that
129-13 such shareholder, partner, member, or other owner:
129-14 (a) agreed in writing to be liable for such
129-15 debts or obligations;
129-16 (b) was liable under applicable law, prior to
129-17 the effectiveness of the conversion, for such debts or obligations;
129-18 or
129-19 (c) by becoming a shareholder, partner, member,
129-20 or other owner of the converted entity, becomes liable under
129-21 applicable law for existing debts and obligations of the converted
129-22 entity; and
129-23 (8) if the converted entity is a foreign limited
129-24 liability company or other entity, such converted entity shall be
129-25 deemed to appoint the secretary of state in this state as its agent
129-26 for service of process in a proceeding to enforce any obligation or
129-27 the rights of dissenting members of the converting domestic limited
130-1 liability company.
130-2 SECTION 64. Section B, Article 11.01, Texas Limited
130-3 Liability Company Act (Article 1528n, Vernon's Texas Civil
130-4 Statutes), is amended by amending Subsection (2) and adding
130-5 Subsections (3) and (4) to read as follows:
130-6 (2) "Professional limited liability company" means a
130-7 limited liability company that is organized under this Act for the
130-8 sole and specific purpose of rendering professional service and
130-9 that has as its members only professional individuals or
130-10 professional entities <individuals licensed or otherwise authorized
130-11 within this state to render the same professional service as the
130-12 limited liability company>.
130-13 (3) "Professional individual," with respect to any
130-14 professional limited liability company, means an individual who is
130-15 licensed or otherwise authorized to render the same professional
130-16 service as such professional limited liability company, either
130-17 within this state or in any other jurisdiction.
130-18 (4) "Professional entity," with respect to any
130-19 professional limited liability company, means a person (other than
130-20 an individual) that renders the same professional service as such
130-21 professional limited liability company only through partners,
130-22 members, shareholders, managers, directors, associates, officers,
130-23 employees, or agents who are professional individuals or
130-24 professional entities.
130-25 SECTION 65. Article 11.03, Texas Limited Liability Company
130-26 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
130-27 read as follows:
131-1 Art. 11.03. Restrictions on members, managers, and officers.
131-2 A. A person who is not a professional individual or professional
131-3 entity <licensed or otherwise authorized to render the professional
131-4 service of the professional limited liability company> may not be a
131-5 member, manager, or officer of the professional limited liability
131-6 company. A membership interest in the professional limited
131-7 liability company may not be transferred to a person who is not a
131-8 professional individual or professional entity <licensed or
131-9 otherwise authorized to render the professional service of the
131-10 professional limited liability company>.
131-11 B. If a member, manager, or officer of a professional
131-12 limited liability company ceases to be a professional individual or
131-13 professional entity, <or an agent or employee of the company who
131-14 has been rendering professional service for or with the company of
131-15 the same type for which the professional limited liability company
131-16 was organized to render, becomes legally disqualified to render the
131-17 professional service,> the person shall sever all employment with
131-18 the professional limited liability company and immediately
131-19 terminate all financial interest in the company. The professional
131-20 limited liability company shall purchase or cause to be purchased
131-21 from the person all membership interests owned by the person in the
131-22 professional limited liability company, at a price and on terms as
131-23 may be provided in the articles of organization, the regulations,
131-24 or any applicable agreement among the members and the professional
131-25 limited liability company. If the person is the sole member of the
131-26 professional limited liability company, the person may continue to
131-27 act as member, manager, or officer only for the purposes of winding
132-1 up the affairs of the professional limited liability company and
132-2 effecting its dissolution, including selling the assets of or
132-3 outstanding membership interests in the professional limited
132-4 liability company, but not including rendering professional
132-5 service.
132-6 C. If a person who is not a professional individual or a
132-7 professional entity <licensed or authorized to render the
132-8 professional service that a professional limited liability company
132-9 was organized to render> succeeds to the interest of a member of
132-10 the professional limited liability company, the person holding the
132-11 interest shall immediately terminate all financial interest in the
132-12 professional limited liability company, and the professional
132-13 limited liability company shall purchase or cause to be purchased
132-14 from the person all membership interests owned by the person in the
132-15 professional limited liability company, at a price and on terms as
132-16 may be provided in the articles of organization, the regulations,
132-17 or any applicable agreement among the members and the professional
132-18 limited liability company. If the person succeeded to all of the
132-19 membership interests in the professional limited liability company,
132-20 the person may continue to act as member, manager, or officer only
132-21 for the purposes of winding up the affairs of the professional
132-22 limited liability company and effecting its dissolution, including
132-23 selling the assets of or the outstanding membership interests in
132-24 the professional limited liability company, but not including
132-25 rendering professional service.
132-26 SECTION 66. Section A, Article 11.04, Texas Limited
132-27 Liability Company Act (Article 1528n, Vernon's Texas Civil
133-1 Statutes), is amended to read as follows:
133-2 A. A professional limited liability company may render
133-3 professional service in this state only through a<:>
133-4 <(1) an individual> member, manager, officer,
133-5 employee, or agent who is:
133-6 (1) a professional individual licensed or otherwise
133-7 authorized to render the professional service in this state; or
133-8 (2) a professional entity that renders the
133-9 professional service in this state only through partners, members,
133-10 shareholders, managers, directors, associates, officers, employees,
133-11 or agents who are professional individuals or professional entities
133-12 licensed or otherwise authorized to render the professional service
133-13 in this state<; or>
133-14 <(2) an agent of the professional limited liability
133-15 company that is a professional limited liability company,
133-16 professional corporation, or professional association that is
133-17 authorized in this state to render the professional service of the
133-18 professional limited liability company and that renders the
133-19 professional service only through a licensed individual member,
133-20 manager, officer, or employee>.
133-21 SECTION 67. Section A, Article 11.05, Texas Limited
133-22 Liability Company Act (Article 1528n, Vernon's Texas Civil
133-23 Statutes), is amended to read as follows:
133-24 A. Notwithstanding anything contained in Article 4.03 of
133-25 this Act to the contrary, this Act does not alter or affect the
133-26 professional relationship between a person rendering professional
133-27 service and a person receiving the service, and a confidential
134-1 relationship enjoyed in this state between those persons remains
134-2 unchanged. This Act does not remove or diminish any rights at law
134-3 that a person receiving professional service has against a person
134-4 rendering the service for an error, an omission, negligence,
134-5 incompetence, or malfeasance. A professional limited liability
134-6 company, but not the other <individual> members, managers, <or>
134-7 officers, employees, or agents of such professional limited
134-8 liability company (or their respective members, managers, officers,
134-9 employees, or agents), is jointly and severally liable with a
134-10 member, manager, officer, employee, or agent rendering professional
134-11 service for an error, omission, negligence, incompetence, or
134-12 malfeasance on the part of the member, manager, officer, employee,
134-13 or agent when the member, manager, officer, employee, or agent is
134-14 rendering professional service in the course of employment for the
134-15 professional limited liability company. If the member, manager,
134-16 officer, employee, or agent rendering such professional service in
134-17 such circumstances is itself a professional entity, then the
134-18 professional limited liability company and such professional entity
134-19 are jointly and severally liable with the partner, member,
134-20 shareholder, manager, director, associate, officer, employee, or
134-21 agent of such professional entity through which such professional
134-22 entity renders such professional service for an error, omission,
134-23 negligence, incompetence, or malfeasance on the part of such
134-24 partner, member, shareholder, manager, director, associate,
134-25 officer, employee, or agent of such professional entity.
134-26 SECTION 68. Section A, Article 11.07, Texas Limited
134-27 Liability Company Act (Article 1528n, Vernon's Texas Civil
135-1 Statutes), is amended to read as follows:
135-2 A. A foreign professional limited liability company may
135-3 apply for a certificate of authority to perform professional
135-4 service in this state by filing an application in accordance with
135-5 Part Seven of this Act. The Secretary of State may not issue the
135-6 certificate unless the name of the foreign professional limited
135-7 liability company or the name it <the limited liability company>
135-8 elects in this state meets the requirements of Article 11.02 of
135-9 this Act. A foreign professional limited liability company may
135-10 render professional service in this state only through a member,
135-11 manager, officer, employee, or agent described in Section A of
135-12 Article 11.04 of this Act. <A member, manager, officer, employee,
135-13 or agent of the limited liability company who renders professional
135-14 service in this state on behalf of the limited liability company
135-15 must be licensed or otherwise authorized to render that
135-16 professional service in this state.>
135-17 SECTION 69. Section 2.01, Texas Revised Limited Partnership
135-18 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
135-19 read as follows:
135-20 Sec. 2.01. Certificate of limited partnership. (a) To form
135-21 a limited partnership, the partners must enter into a partnership
135-22 agreement (which, in the case of a limited partnership formed under
135-23 a plan of merger or a plan of conversion under Section 2.11 or 2.15
135-24 of this Act, may be included in the plan of merger or plan of
135-25 conversion) and one or more partners, including all of the general
135-26 partners, must execute a certificate of limited partnership. The
135-27 filing fee and the certificate shall be filed with the secretary of
136-1 state. The certificate must contain:
136-2 (1) the name of the limited partnership;
136-3 (2) the address of the registered office and the name
136-4 and address of the registered agent for service of process required
136-5 to be maintained by Section 1.06 of this Act;
136-6 (3) the address of the principal office in the United
136-7 States where records are to be kept or made available under Section
136-8 1.07 of this Act;
136-9 (4) the name, the mailing address, and the street
136-10 address of the business or residence of each general partner; <and>
136-11 (5) if the limited partnership is being formed
136-12 pursuant to a plan of merger or a plan of conversion under Section
136-13 2.11 or 2.15 of this Act, a statement to that effect;
136-14 (6) if the limited partnership is being formed
136-15 pursuant to a plan of conversion under Section 2.15 of this Act,
136-16 the name, the address, and the prior form of organization and
136-17 jurisdiction of incorporation or organization of the converting
136-18 entity; and
136-19 (7) other matters that the general partners determine
136-20 to include.
136-21 (b) Except in the case of a limited partnership formed under
136-22 a plan of merger or a plan of conversion under Section 2.11 or 2.15
136-23 of this Act, a <A> limited partnership is formed at the time of
136-24 the filing of the initial certificate of limited partnership with
136-25 the secretary of state or at a later date or time specified in the
136-26 certificate if there has been substantial compliance with the
136-27 requirements of this section. In the case of a limited
137-1 partnership being formed under a plan or merger or a plan of
137-2 conversion under Section 2.11 or 2.15 of this Act, the existence of
137-3 the limited partnership as a limited partnership shall begin on the
137-4 effectiveness of the merger or the conversion, as the case may be,
137-5 and the persons to be partners shall become general or limited
137-6 partners, as applicable, as of that time.
137-7 SECTION 70. Sections 2.03(a) and (c), Texas Revised Limited
137-8 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
137-9 are amended to read as follows:
137-10 (a) A certificate of limited partnership shall be canceled
137-11 by paying the filing fee and filing a certificate of cancellation
137-12 with the secretary of state:
137-13 (1) on the completion of the winding up of the
137-14 partnership;
137-15 (2) when there are no limited partners; or
137-16 (3) subject to Subsection (c) of this section, on a
137-17 merger or conversion <consolidation> as provided by Subsection (b)
137-18 of Section 2.11 of this Act or Subsection (c) of Section 2.15 of
137-19 this Act.
137-20 (c) If, in the case of merger or conversion <consolidation>,
137-21 one or more limited partnerships formed <or registered> under this
137-22 Act are not the surviving or resulting domestic limited partnership
137-23 or partnerships or other entity or entities, the certificate of
137-24 merger or conversion filed under Subsection (d) <(b)> of Section
137-25 2.11 or Subsection (e) of Section 2.15 of this Act is sufficient,
137-26 without a filing under this section, to cancel the certificate of
137-27 limited partnership of those nonsurviving limited partnerships.
138-1 SECTION 71. Section 2.04(a), Texas Revised Limited
138-2 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
138-3 is amended to read as follows:
138-4 (a) Each certificate required by this article to be filed
138-5 with the secretary of state shall be executed in the following
138-6 manner:
138-7 (1) an initial certificate of limited partnership or a
138-8 certificate of conversion must be signed by all general partners,
138-9 except for an initial certificate of limited partnership <unless>
138-10 signed and filed by a person under Subdivision (1) of Subsection
138-11 (a) of Section 3.04 of this Act;
138-12 (2) a certificate of amendment or restated certificate
138-13 must be signed by at least one general partner and by each other
138-14 general partner designated in the certificate of amendment as a new
138-15 general partner, unless signed and filed by a person under
138-16 Subsection (f) of Section 2.02 of this Act or under Subdivision (1)
138-17 of Subsection (a) of Section 3.04 of this Act, but the certificate
138-18 of amendment need not be signed by a withdrawing general partner;
138-19 (3) a certificate of cancellation must be signed by
138-20 all general partners participating in the winding up of the limited
138-21 partnership's affairs or, if no general partners are winding up the
138-22 limited partnership's affairs, then by all non-partner liquidators,
138-23 or, if the limited partners are winding up the limited
138-24 partnership's affairs, by a majority in interest of the limited
138-25 partners;
138-26 (4) a certificate of merger filed on behalf of a
138-27 domestic limited partnership must be signed as provided in
139-1 Subsection (d), Section 2.11 of this Act;
139-2 (5) a certificate filed under Section 2.06 of this Act
139-3 must be signed by the person designated by the court; and
139-4 (6) a certificate of correction must be signed by at
139-5 least one general partner.
139-6 SECTION 72. Sections 2.06(a)-(d), Texas Revised Limited
139-7 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
139-8 are amended to read as follows:
139-9 (a) Notwithstanding any other provisions of this Act to the
139-10 contrary, to carry out a plan of reorganization ordered or decreed
139-11 by a court of competent jurisdiction under federal statute, a
139-12 domestic limited partnership being reorganized under a federal
139-13 statute may without action by or notice to its partners:
139-14 (1) amend or restate its certificate if the
139-15 certificate after amendment or restatement contains only provisions
139-16 of the type required or permitted in the certificate;
139-17 (2) merge or engage in a conversion or an interest
139-18 exchange with one or more other domestic or foreign limited
139-19 partnerships or other entities pursuant to this Act;
139-20 (3) sell, lease, exchange or otherwise dispose of all
139-21 or substantially all, of its property and assets; or
139-22 (4) cancel its certificate on completion of winding up
139-23 of the limited partnership.
139-24 (b) The individual or individuals designated by the court,
139-25 on behalf of a limited partnership that is being reorganized, may
139-26 execute:
139-27 (1) an amendment or restatement of the certificate
140-1 containing:
140-2 (A) the name of the limited partnership;
140-3 (B) the text of each amendment or restatement
140-4 approved by the court;
140-5 (C) the date of the court's order or decree
140-6 approving the amendment or restatement; <and>
140-7 (D) the court, file name, and case number of the
140-8 reorganization case <proceeding> in which the order or decree was
140-9 entered; and
140-10 (E) a statement that the court had jurisdiction
140-11 of the case under a federal statute; <or>
140-12 (2) a certificate of merger containing:
140-13 (A) the name of the limited partnership;
140-14 (B) the information required by Subsection (b)
140-15 of Section 2.11 of this Act;
140-16 (C) the date of the court's order or decree
140-17 approving the merger; <and>
140-18 (D) the court, file name, and case number of the
140-19 reorganization case <proceeding> in which the order or decree was
140-20 entered; and
140-21 (E) a statement that the court had jurisdiction
140-22 of the case under a federal statute; <or>
140-23 (3) a certificate of cancellation containing:
140-24 (A) the name of the limited partnership;
140-25 (B) the information required by Section 2.03 of
140-26 this Act and any other information permitted by Section 2.03 that
140-27 the court's order requires or permits to be included;
141-1 (C) the date of the court's order or decree
141-2 approving the certificate of cancellation; <and>
141-3 (D) the court, file name, and case number of the
141-4 reorganization case <proceeding> in which the order or decree was
141-5 entered; and
141-6 (E) a statement that the court had jurisdiction
141-7 of the case under a federal statute; or
141-8 (4) a certificate of conversion containing:
141-9 (A) the name of the limited partnership;
141-10 (B) the information required by Subsection (c)
141-11 of Section 2.15 of this Act;
141-12 (C) the date of the court's order or decree
141-13 approving the conversion;
141-14 (D) the court, file name, and case number of the
141-15 reorganization case in which the order or decree was entered; and
141-16 (E) a statement that the court had jurisdiction
141-17 of the case under a federal statute.
141-18 (c) If a domestic or foreign limited partnership that is not
141-19 being reorganized merges or engages in a conversion or an interest
141-20 exchange pursuant to a plan of reorganization with a domestic or
141-21 foreign limited partnership or other entity that is being
141-22 reorganized, Section 2.11 or 2.15 of this Act applies to the
141-23 domestic or foreign limited partnership or other entity that is not
141-24 being reorganized to the same extent that that section would apply
141-25 if the domestic or foreign limited partnership were merging with a
141-26 limited partnership that is not being reorganized except as
141-27 otherwise provided in the plan of reorganization ordered or decreed
142-1 by a court of competent jurisdiction under federal statute.
142-2 Subject to satisfaction of the requirements <the requirement> of
142-3 Section 2.11 or 2.15 of this Act and any other requirements of the
142-4 plan of merger, a certificate of merger or conversion shall be
142-5 signed on behalf of the entities that <which> are parties to the
142-6 merger or conversion and shall be filed with the secretary of state
142-7 <Secretary of State> as required by Section 2.11 or 2.15 of this
142-8 Act.
142-9 (d) On endorsement of the certificate by the secretary of
142-10 state under Section 2.07 of this Act, the certificate of amendment,
142-11 merger, conversion, or cancellation or restated certificate becomes
142-12 effective and has the same effect as if it had been adopted by
142-13 unanimous action of the general and the limited partners of the
142-14 limited partnership being reorganized except as otherwise provided
142-15 by this section or by the plan of reorganization ordered or decreed
142-16 by a court of competent jurisdiction under federal statute.
142-17 SECTION 73. Sections 2.11(b), (d), (e), (g), and (h), Texas
142-18 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
142-19 Civil Statutes), are amended to read as follows:
142-20 (b) A plan of merger must set forth:
142-21 (1) the name and state of domicile of each domestic or
142-22 foreign limited partnership or other entity that is a party to the
142-23 merger and the name of each domestic or foreign limited partnership
142-24 or other entity, if any, that shall survive the merger, which may
142-25 be one or more of the domestic or foreign limited partnerships or
142-26 other entities party to the merger, and the name and state of
142-27 domicile of each new domestic or foreign limited partnership or
143-1 other entity, if any, that may be created by the terms of the plan
143-2 of merger;
143-3 (2) the terms and conditions of the merger including,
143-4 if more than one domestic or foreign limited partnership or other
143-5 entity is to survive or to be created by the terms of the plan of
143-6 merger, (i) the manner and basis of allocating and vesting the real
143-7 estate and other property of each domestic or foreign limited
143-8 partnership and of each other entity that is a party to the merger
143-9 among one or more of the surviving or new domestic or foreign
143-10 limited partnerships and other entities, and (ii) the manner and
143-11 basis of allocating all liabilities and obligations of each
143-12 domestic or foreign limited partnership and other entity that is a
143-13 party to the merger (or making adequate provision for the payment
143-14 and discharge thereof) among one or more of the surviving or new
143-15 domestic or foreign limited partnerships and other entities;
143-16 (3) the manner and basis of converting any of the
143-17 partnership interests or other evidences of ownership of each
143-18 domestic or foreign limited partnership and other entity that is a
143-19 party to the merger into partnership interests, shares,
143-20 obligations, evidences of ownership, rights to purchase securities
143-21 or other securities of one or more of the surviving or new domestic
143-22 or foreign limited partnerships or other entities, into cash or
143-23 other property including shares, obligations, evidences of
143-24 ownership, rights to purchase securities or other securities of any
143-25 other person or entity or into any combination of the foregoing;
143-26 (4) as an exhibit or attachment, the certificate of
143-27 limited partnership of any new domestic limited partnership to be
144-1 created by the terms of the plan of merger; and
144-2 (5) the certificate of limited partnership or other
144-3 organizational documents of each other entity that is a party to
144-4 the merger and that is to be created by the terms of the plan of
144-5 merger.
144-6 (d) After a plan of merger has been approved by each of the
144-7 limited partnerships or other entities that is a party to the plan
144-8 of merger, a certificate of merger shall be executed on behalf of
144-9 each limited partnership or other entity by at least one general
144-10 partner of each domestic limited partnership that is a party to the
144-11 plan of merger and by a general partner, officer, agent or other
144-12 authorized representative of each other limited partnership or
144-13 other entity that is a party to the plan of merger and shall set
144-14 forth:
144-15 (1) the plan of merger or a statement certifying the
144-16 following:
144-17 (A) the name, the state of incorporation,
144-18 formation, or organization of each of the parties to the merger,
144-19 and the organizational form of each new or surviving limited
144-20 partnership or other entity;
144-21 (B) that a plan of merger has been approved;
144-22 (C) any amendments or changes in the certificate
144-23 of limited partnership of each surviving domestic limited
144-24 partnership, or if no such amendments are desired to be effected by
144-25 the merger, a statement to that effect;
144-26 (D) the certificate of limited partnership of
144-27 each new domestic limited partnership to be formed under the plan
145-1 of merger;
145-2 (E) that an executed plan of merger is on file
145-3 at the principal place of business of each surviving or new
145-4 domestic or foreign limited partnership or other entity, stating
145-5 the address thereof;
145-6 (F) that a copy or summary of the plan of merger
145-7 has been or is being furnished to each partner in each domestic
145-8 limited partnership that is a party to the merger at least 20 days
145-9 before the merger is effective, unless waived by that partner, or
145-10 that the domestic limited partnership has complied with the
145-11 provisions of its partnership agreement regarding furnishing
145-12 partners copies or summaries of the plan of merger or notices
145-13 regarding the merger; and
145-14 (G) in the case of a merger with multiple
145-15 surviving domestic or foreign limited partnerships or other
145-16 entities, that a copy of the plan of merger will be furnished by
145-17 each new or surviving domestic or foreign limited partnership or
145-18 other entity, on written request and without cost, to any creditor
145-19 or obligee of the parties to the merger at the time of the merger
145-20 if the obligation is then outstanding; and
145-21 (2) as to each domestic or foreign limited partnership
145-22 or other entity that is a party to the plan of merger, a statement
145-23 that the plan of merger was duly authorized by all action required
145-24 by the laws under which it was formed or organized and by its
145-25 constituent documents.
145-26 (e) The original of the certificate of merger and such
145-27 number of copies of the certificate equal to the number of
146-1 surviving and new domestic or foreign limited partnerships and
146-2 other entities that are a party to the plan of merger or that will
146-3 be created by the terms thereof, shall be delivered to the
146-4 secretary of state. An equal number of copies of the certificate
146-5 of limited partnership of each domestic limited partnership that is
146-6 to be formed pursuant to the plan of merger shall also be delivered
146-7 to the secretary of state with the articles of merger. Unless the
146-8 secretary of state finds that a certificate of merger does not
146-9 conform to law, on receipt of all applicable filing fees and
146-10 franchise taxes, if any, required by law, or if the plan of merger
146-11 (or a statement provided in lieu thereof) provides that one or more
146-12 of the surviving or new domestic or foreign limited partnerships or
146-13 other entities will be responsible for the payment of all fees and
146-14 franchise taxes and that all of the surviving or new domestic or
146-15 foreign limited partnerships and other entities will be obligated
146-16 to pay the fees and franchise taxes if they are not timely paid,
146-17 the secretary of state shall certify that the certificate of merger
146-18 has been filed in the secretary of state's office by endorsing on
146-19 the original the word "Filed" and the date of the filing, file and
146-20 index the endorsed certificate of merger, and return the copy,
146-21 similarly endorsed, to each surviving or new domestic or foreign
146-22 limited partnership or other entity that is a party to the plan of
146-23 merger or that is created thereby, or its or their respective
146-24 representatives.
146-25 (g) When a merger takes effect:
146-26 (1) the separate existence of every domestic limited
146-27 partnership that is a party to the merger, except any surviving or
147-1 new domestic limited partnership, shall cease;
147-2 (2) all rights, title, and interests to all real
147-3 estate and other property owned by each domestic or foreign limited
147-4 partnership and by each other entity that is a party to the merger
147-5 shall be allocated to and vested in one or more of the surviving or
147-6 resulting entities as provided in the plan of merger without
147-7 reversion or impairment, without further act or deed, and without
147-8 any transfer or assignment having occurred, but subject to any
147-9 existing liens or other encumbrances thereon;
147-10 (3) all liabilities and obligations of each domestic
147-11 or foreign limited partnership and other entity that is a party to
147-12 the merger shall be allocated to one or more of the surviving or
147-13 new domestic or foreign limited partnerships and other entities in
147-14 the manner set forth in the plan of merger, and each surviving or
147-15 new domestic foreign limited partnership, and each surviving or new
147-16 other entity to which a liability or obligation shall have been
147-17 allocated pursuant to the plan of merger, shall be the primary
147-18 obligor therefor and, except as otherwise set forth in the plan of
147-19 merger or as otherwise provided by law or contract, no other party
147-20 to the merger, other than a surviving domestic or foreign limited
147-21 partnership or other entity liable thereon at the time of the
147-22 merger and no other new domestic or foreign limited partnership or
147-23 other entity created thereby, shall be liable therefor;
147-24 (4) a proceeding pending by or against any domestic or
147-25 foreign limited partnership or by or against any other entity that
147-26 is a party to the merger may be continued as if the merger did not
147-27 occur, or the surviving or new domestic or foreign limited
148-1 partnership or limited partnerships or the surviving or new other
148-2 entity or other entities to which the liability, obligation, asset
148-3 or right associated with such proceeding is allocated to and vested
148-4 in pursuant to the plan of merger may be substituted in the
148-5 proceeding;
148-6 (5) the certificate of limited partnership of each
148-7 surviving domestic limited partnership shall be amended to the
148-8 extent provided in the plan of merger;
148-9 (6) each new domestic limited partnership, the
148-10 certificate of limited partnership of which is set forth in the
148-11 plan of merger under Subdivision (4) of Subsection (b) of this
148-12 section, shall be formed as a limited partnership under this Act;
148-13 and each other entity to be formed or organized under the laws of
148-14 this State, the organizational documents of which are set forth in
148-15 the plan of merger, shall, upon an executed copy of the certificate
148-16 of merger being delivered to or filed with any required
148-17 governmental entity with which organizational documents of such
148-18 another entity are required to be delivered or filed, and upon
148-19 meeting such additional requirements, if any, of law for its
148-20 formation or organization, shall be formed or organized as provided
148-21 in the plan of merger; <and>
148-22 (7) the partnership interests of each domestic or
148-23 foreign limited partnership and the partnership interests, shares
148-24 or evidences of ownership in each other entity that is a party to
148-25 the merger that are to be converted or exchanged, in whole or in
148-26 part, into partnership interests, shares, obligations, evidences of
148-27 ownership, rights to purchase securities or other securities of one
149-1 or more of the surviving or new domestic or foreign limited
149-2 partnerships or other entities, into cash or other property,
149-3 including shares, obligations, evidences of ownership, rights to
149-4 purchase securities or other securities of any other person or
149-5 entity, or into any combination of the foregoing, shall be so
149-6 converted and exchanged and the former partners of each domestic
149-7 limited partnership that is a party to the merger shall be entitled
149-8 only to the rights provided in the plan of merger; <and>
149-9 (8) if the plan of merger shall fail to provide for
149-10 the allocation and vesting of the right, title, and interest in any
149-11 particular item of real estate or other property or for the
149-12 allocation of any liability or obligation of any party to the
149-13 merger, such item of real estate or other property shall be owned
149-14 in undivided interest by, or such liability or obligation shall be
149-15 a joint and several liability and obligation of, each of the
149-16 surviving and new domestic and foreign limited partnerships and
149-17 other entities, pro rata to the total number of surviving and new
149-18 domestic and foreign limited partnerships and other entities
149-19 resulting from the merger; and
149-20 (9) a partner of a domestic or foreign limited
149-21 partnership that is a party to a merger does not become personally
149-22 liable as a result of the merger for a liability or obligation of
149-23 another person that is a party to the merger unless the party
149-24 consents to becoming personally liable by action taken in
149-25 connection with the specific plan of merger approved by the
149-26 partner; and for purposes of determining the liability of partners
149-27 in a domestic limited partnership that is a party to the merger for
150-1 the debts and obligations of other parties to the merger in which
150-2 that partner otherwise was not or is not a partner or other owner
150-3 of an interest:
150-4 (a) a partner who remains in or enters a
150-5 domestic or foreign limited partnership or other entity that
150-6 survives a merger or that enters a domestic or foreign limited
150-7 partnership or other entity created by the terms of the plan of
150-8 merger shall be treated as an incoming partner in the new or
150-9 surviving partnership as of the effective date of the merger; and
150-10 (b) a partner in a domestic partnership that is
150-11 a party to the merger but that does not survive shall be treated as
150-12 a partner who withdrew from the nonsurviving domestic partnership
150-13 as of the effective date of the merger.
150-14 (h) One or more domestic or foreign limited partnerships or
150-15 other entities may adopt a plan of exchange by which a domestic or
150-16 foreign limited partnership or other <an> entity acquires all of
150-17 the outstanding partnership interests of one or more domestic
150-18 limited partnerships in exchange for cash, <and/or> securities, or
150-19 other property of the acquiring domestic or foreign limited
150-20 partnership or other entity, if:
150-21 (1) the partnership agreement of each domestic limited
150-22 partnership the partnership interests of which are to be acquired
150-23 pursuant to the plan of exchange contains provisions that authorize
150-24 the partnership interest exchange provided for in the plan of
150-25 exchange adopted by the limited partnership, and if one or more
150-26 foreign limited partnerships or other entities are to issue shares
150-27 or other interests as part of the plan of exchange, the issuance of
151-1 those shares or other interests is either permitted by the laws
151-2 under which that foreign limited partnership or other entity is
151-3 formed or not inconsistent with those laws;
151-4 (2) each domestic limited partnership the partnership
151-5 interests of which are to be acquired pursuant to the plan of
151-6 exchange approves the plan of exchange in the manner prescribed in
151-7 its partnership agreement; and
151-8 (3) each acquiring domestic or foreign limited
151-9 partnership or other entity takes all action that may be required
151-10 by the laws of the state or country under which it was formed or
151-11 incorporated and as required by its partnership agreement or other
151-12 constituent documents in order to effect the exchange.
151-13 No filing with the secretary of state shall be necessary in
151-14 order to evidence or effect such interest exchange with respect to
151-15 a domestic limited partnership that is a party to such interest
151-16 exchange. When an interest exchange takes effect as provided in
151-17 the plan of exchange, the partnership interests of each domestic
151-18 limited partnership that are to be acquired pursuant to the plan of
151-19 exchange shall be deemed to have been exchanged as provided in the
151-20 plan of exchange and the former holders of the partnership
151-21 interests exchanged pursuant to the plan of exchange shall be
151-22 entitled only to the exchange rights provided in the plan of
151-23 exchange and the acquiring domestic or foreign limited partnership
151-24 or other entity or entities shall be entitled to all rights, title,
151-25 and interests with respect to the partnership interests so acquired
151-26 and exchanged subject to the provisions in the plan of exchange.
151-27 SECTION 74. Subsections A and F, Section 2.12, Texas Revised
152-1 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
152-2 Statutes), are amended to read as follows:
152-3 A. The effectiveness of (i) the certificate of limited
152-4 partnership of a limited partnership under this Act, (ii) an
152-5 amendment to a certificate of limited partnership, (iii) the
152-6 restatement of a certificate of limited partnership, (iv) a merger,
152-7 (v) a certificate of cancellation, (vi) the registration or
152-8 cancellation of registration of a foreign limited partnership to
152-9 transact business in this State, (vii) an amendment to the
152-10 registration of a foreign limited partnership, (viii) a change in
152-11 registered office or registered agent, <and> (ix) a change of
152-12 address of a registered agent (each such act or document being a
152-13 "Permitted Act"), and (x) a conversion may be made effective as of
152-14 a time and date after the time and date otherwise provided in this
152-15 Act or may be made effective upon the occurrence of events or facts
152-16 that may occur in the future, which events or facts may include
152-17 future acts of any person or entity, if:
152-18 (1) the certificate, statement, application, or other
152-19 filing that is required by this Act to be filed with the Secretary
152-20 of State to make effective such Permitted Act clearly and expressly
152-21 sets forth, in addition to any other statement or information
152-22 required to be set forth therein, (i) the time and date on which
152-23 such Permitted Act is to become effective or (ii) if such Permitted
152-24 Act is to become effective upon the occurrence of events or facts
152-25 that may occur in the future, (a) the manner in which such events
152-26 or facts shall operate to cause such Permitted Act to become
152-27 effective and (b) the date of the 90th day after the date of the
153-1 filing of such certificate, statement, application or other filing;
153-2 and either
153-3 (2) If in the case of a Permitted Act that is to
153-4 become effective as of a time or date after the time and date
153-5 otherwise provided in this Act, such subsequent time and date is
153-6 not more than 90 days after the date of the filing of the
153-7 certificate, statement, application, or other filing that is
153-8 otherwise required by this Act to be filed with the Secretary of
153-9 State to make effective such Permitted Act and (iii) the time on
153-10 which the Permitted Act is to become effective is not midnight or
153-11 12:00 p.m.; and
153-12 (3) Permitted Act that is to be made effective upon
153-13 the occurrence of events or facts that may occur in the future,
153-14 other than the mere passage of time, a statement that all such
153-15 events or facts upon which the effectiveness of such Permitted Act
153-16 is conditioned have been satisfied or waived, and of the date on
153-17 which such condition was satisfied or waived is filed with the
153-18 Secretary of State within 90 days of the date of the filing of the
153-19 certificate, statement, application or other filing that is
153-20 otherwise required by this Act for such Permitted Act to become
153-21 effective.
153-22 F. If a certificate of limited partnership, a certificate of
153-23 amendment or cancellation, a judicial decree of amendment or
153-24 cancellation, a certificate of merger, a certificate of conversion,
153-25 a restated certificate or any other document permitted to be filed
153-26 pursuant to this Act with the Secretary of State has been filed but
153-27 the event or transaction evidenced thereby has not become
154-1 effective, such filing may be abandoned in accordance with the
154-2 agreement of the parties thereto and, if so abandoned, a
154-3 certificate of abandonment, signed on behalf of each domestic and
154-4 foreign limited partnership or other entity that is a party to the
154-5 event or transaction by any general partner, an officer or other
154-6 duly authorized representative, stating the nature, date of filing
154-7 and parties to the filing to be abandoned and that the event or
154-8 transaction has been abandoned in accordance with the agreement of
154-9 the parties, is filed with the Secretary of State prior to the
154-10 effectiveness of the event or transaction in accordance with the
154-11 terms of the document so filed. Upon the filing of such statement
154-12 by the Secretary of State, the event or transaction evidenced by
154-13 the original filing shall be deemed abandoned and shall not become
154-14 effective.
154-15 SECTION 75. Article 2, Texas Revised Limited Partnership Act
154-16 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
154-17 adding Section 2.15 to read as follows:
154-18 Sec. 2.15. CONVERSION. (a) A domestic limited partnership
154-19 may adopt a plan of conversion and convert to a foreign limited
154-20 partnership or any other entity if:
154-21 (1) the converting entity acts upon and its partners
154-22 approve a plan of conversion in the manner prescribed by Section
154-23 2.11 of this Act as if the conversion were a merger to which the
154-24 converting entity were a party and not the survivor;
154-25 (2) the conversion is permitted by, or not
154-26 inconsistent with, the laws of the state or country in which the
154-27 converted entity is to be incorporated, formed, or organized, and
155-1 the incorporation, formation, or organization of the converted
155-2 entity is effected in compliance with such laws;
155-3 (3) at the time the conversion becomes effective, each
155-4 partner of the converting entity will, unless otherwise agreed to
155-5 by that partner, own an equity interest or other ownership or
155-6 security interest in, and be a shareholder, partner, member, owner
155-7 or other security holder of, the converted entity;
155-8 (4) no limited partner of the domestic limited
155-9 partnership will, as a result of the conversion, become personally
155-10 liable, without the limited partner's consent, for the liabilities
155-11 or obligations of the converted entity; and
155-12 (5) the converted entity shall be incorporated,
155-13 formed, or organized as part of or pursuant to the plan of
155-14 conversion.
155-15 (b) Any foreign limited partnership or other entity may
155-16 adopt a plan of conversion and convert to a domestic limited
155-17 partnership if:
155-18 (1) the conversion is permitted by the laws of the
155-19 state or country in which the foreign limited partnership is
155-20 incorporated, if a foreign limited partnership is converting;
155-21 (2) the conversion is either permitted by the laws
155-22 under which the other entity is formed or organized or by the
155-23 constituent documents of the other entity that are not inconsistent
155-24 with the laws of the state or country in which the other entity is
155-25 formed or organized, if another entity is converting; and
155-26 (3) the converting entity takes all action that may be
155-27 required by the laws of the state or country under which it is
156-1 incorporated, formed, or organized and by its constituent documents
156-2 to effect the conversion.
156-3 (c) A plan of conversion shall set forth:
156-4 (1) the name of the converting entity and the
156-5 converted entity;
156-6 (2) a statement that the converting entity is
156-7 continuing its existence in the organizational form of the
156-8 converted entity;
156-9 (3) a statement as to the type of entity that the
156-10 converted entity is to be and the state or country under the laws
156-11 of which the converted entity is to be incorporated, formed, or
156-12 organized;
156-13 (4) the manner and basis of converting the partnership
156-14 interests, shares, or other evidences of ownership of the
156-15 converting entity into partnership interests, shares, or other
156-16 evidences of ownership or securities of the converted entity, or
156-17 any combination thereof;
156-18 (5) in an attachment or exhibit, the certificate of
156-19 limited partnership of the domestic limited partnership if the
156-20 converted entity is a domestic limited partnership; and
156-21 (6) in an attachment or exhibit, the certificate of
156-22 limited partnership, articles of incorporation, or other
156-23 organizational documents of the converted entity if the converted
156-24 entity is not a domestic limited partnership.
156-25 (d) A plan of conversion may set forth such other provisions
156-26 relating to the conversion not inconsistent with law, including the
156-27 initial partnership agreement of the converted entity if the
157-1 converted entity is a partnership.
157-2 (e) If a plan of conversion has been approved in accordance
157-3 with the preceding provisions of this section and has not been
157-4 abandoned, articles of conversion shall be executed by the
157-5 converting entity by a partner, officer, or other duly authorized
157-6 representative thereof and shall set forth:
157-7 (1) the plan of conversion or a statement certifying
157-8 the following:
157-9 (A) the name, the state of incorporation,
157-10 formation, or organization of the converting entity, and the
157-11 organizational form of the converting entity;
157-12 (B) that a plan of conversion has been approved;
157-13 (C) that an executed plan of conversion is on
157-14 file at the principal place of business of the converting entity,
157-15 stating the address thereof, and that an executed plan of
157-16 conversion will be on file, from and after the conversion, at the
157-17 principal place of business of the converting entity, stating the
157-18 address thereof; and
157-19 (D) that a copy of the plan of conversion will
157-20 be furnished by the converting entity (prior to the conversion) or
157-21 the converted entity (after the conversion), on written request and
157-22 without cost, to any member of the converting entity or the
157-23 converted entity; and
157-24 (2) a statement that the approval of the plan of
157-25 conversion was duly authorized by all action required by the laws
157-26 under which the converting entity was incorporated, formed, or
157-27 organized and by its constituent documents.
158-1 (f) Except as otherwise provided by Section 2.14 of this
158-2 Act, upon the issuance of the certificate of conversion by the
158-3 secretary of state, the conversion of a converting entity shall be
158-4 effective.
158-5 (g) When a conversion of a converting entity takes effect:
158-6 (1) the converting entity shall continue to exist,
158-7 without interruption, but in the organizational form of the
158-8 converted entity rather than in its prior organizational form;
158-9 (2) all rights, title, and interests to all real
158-10 estate and other property owned by the converting entity shall
158-11 continue to be owned by the converted entity in its new
158-12 organizational form without reversion or impairment, without
158-13 further act or deed, and without any transfer or assignment having
158-14 occurred, but subject to any existing liens or other encumbrances
158-15 thereon;
158-16 (3) all liabilities and obligations of the converting
158-17 entity shall continue to be liabilities and obligations of the
158-18 converted entity in its new organizational form without impairment
158-19 or diminution by reason of the conversion;
158-20 (4) all rights of creditors or other parties with
158-21 respect to or against the prior interest holders or other owners of
158-22 the converting entity in their capacities as such in existence as
158-23 of the effective time of the conversion will continue in existence
158-24 as to those liabilities and obligations and may be pursued by such
158-25 creditors and obligees as if such conversion shall not have
158-26 occurred;
158-27 (5) a proceeding pending by or against the converting
159-1 entity or by or against any of the converting entity's interest
159-2 holders or owners in their capacities as such may be continued by
159-3 or against the converted entity in its new organizational form and
159-4 by or against the prior interest holders or owners, as the case may
159-5 be, without any need for substitution of parties;
159-6 (6) the partnership interests, shares, and other
159-7 evidences of ownership in the converting entity that are to be
159-8 converted into partnership interests, shares, evidences of
159-9 ownership, or other securities in the converted entity as provided
159-10 in the plan of conversion shall be so converted, and if the
159-11 converting entity is a domestic limited partnership, the former
159-12 holders of shares in the domestic limited partnership shall be
159-13 entitled only to the rights provided in the plan of conversion;
159-14 (7) if, after the effectiveness of the conversion, a
159-15 shareholder, partner, member, or other owner of the converted
159-16 entity would be liable under applicable law in such capacity for
159-17 the debts or obligations of the converted entity, such shareholder,
159-18 partner, member, or other owner of the converted entity shall be
159-19 liable for the debts and obligations of the converting entity that
159-20 existed before the conversion takes effect only to the extent that
159-21 such shareholder, partner, member, or other owner:
159-22 (A) agreed in writing to be liable for such
159-23 debts or obligations;
159-24 (B) was liable under applicable law, prior to
159-25 the effectiveness of the conversion, for such debts or obligations;
159-26 or
159-27 (C) by becoming a shareholder, partner, member,
160-1 or other owner of the converted entity, becomes liable under
160-2 applicable law for existing debts and obligations of the converted
160-3 entity;
160-4 (8) if the converted entity is a foreign limited
160-5 partnership or other entity, such converted entity shall be deemed
160-6 to appoint the secretary of state as its agent for service of
160-7 process in a proceeding to enforce any obligation or the rights of
160-8 dissenting members of the converting domestic limited partnership;
160-9 and
160-10 (9) if the converting limited partnership is a
160-11 domestic limited partnership, the provisions of Section 2.11 of
160-12 this Act shall apply as if the converted entity were the survivor
160-13 of a merger with the converting entity.
160-14 (h) For purposes of this section:
160-15 (1) "Conversion" means the continuance of:
160-16 (A) a domestic limited partnership as, and in
160-17 the organizational form of, a foreign limited partnership or other
160-18 entity; or
160-19 (B) a foreign limited partnership or other
160-20 entity as, and in the organizational form of, a domestic limited
160-21 partnership.
160-22 (2) "Converted entity" means any domestic or foreign
160-23 limited partnership or other entity to which a converting entity
160-24 has converted or intends to convert as permitted by this section.
160-25 (3) "Converting entity" means any domestic or foreign
160-26 limited partnership or other entity that has converted or intends
160-27 to convert as permitted by this section.
161-1 (4) "Other entity" means any entity, whether organized
161-2 for profit or not, that is a corporation, partnership (other than a
161-3 limited partnership or a general partnership governed by the Texas
161-4 Revised Partnership Act (Article 6132b-1.01 et seq., Vernon's Texas
161-5 Civil Statutes)), joint venture, limited liability company, joint
161-6 stock company, cooperative, association, bank, insurance company,
161-7 or other legal entity organized pursuant to the laws of this state
161-8 or any other state or country.
161-9 SECTION 76. Section 3.03(b), Texas Revised Limited
161-10 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
161-11 is amended to read as follows:
161-12 (b) For the purposes of this section, a limited partner does
161-13 not participate in the control of the business by virtue of the
161-14 limited partner's having or acting in one or more of the following
161-15 capacities or possessing or exercising one or more of the following
161-16 powers:
161-17 (1) acting as a contractor for or an agent or employee
161-18 of the limited partnership or of a general partner, an officer,
161-19 director, or stockholder of a corporate general partner, <or> a
161-20 partner of a partnership that is a general partner of the limited
161-21 partnership, a member or manager of a limited liability company
161-22 that is a general partner of the limited partnership, or in a
161-23 similar capacity with any other person that is a general partner;
161-24 (2) consulting with or advising a general partner on
161-25 any matter, including the business of the limited partnership;
161-26 (3) acting as surety, guarantor, or endorser for the
161-27 limited partnership, to guarantee or assume one or more specific
162-1 obligations of the limited partnership, or to provide collateral
162-2 for borrowings of the limited partnership;
162-3 (4) calling, requesting, attending, or participating
162-4 in a meeting of the partners or the limited partners;
162-5 (5) winding up a limited partnership under Section
162-6 8.04 of this Act;
162-7 (6) taking any action required or permitted by law to
162-8 bring, or pursue, or settle or otherwise terminate a derivative
162-9 action in the right of the limited partnership;
162-10 (7) serving on a committee of the limited partnership
162-11 or the limited partners; or
162-12 (8) proposing, approving, or disapproving, by vote or
162-13 otherwise, one or more of the following matters:
162-14 (A) the dissolution and winding up of the
162-15 limited partnership or an election to reconstitute the limited
162-16 partnership or an election to continue the business of the limited
162-17 partnership;
162-18 (B) the sale, exchange, lease, mortgage,
162-19 assignment, pledge, or other transfer of, or granting of a security
162-20 interest in, an asset or assets of the limited partnership;
162-21 (C) the incurring, renewal, refinancing, or
162-22 payment or other discharge of indebtedness by the limited
162-23 partnership;
162-24 (D) a change in the nature of the business of
162-25 the limited partnership;
162-26 (E) the admission, removal, or retention of a
162-27 general partner;
163-1 (F) the admission, removal, or retention of a
163-2 limited partner;
163-3 (G) a transaction or other matter involving an
163-4 actual or potential conflict of interest;
163-5 (H) an amendment to the partnership agreement or
163-6 certificate of limited partnership;
163-7 (I) if the limited partnership is qualified as
163-8 an investment company under the federal Investment Company Act of
163-9 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter
163-10 required by the Investment Company Act of 1940, as amended, or the
163-11 rules and regulations of the Securities and Exchange Commission
163-12 thereunder, to be approved by the holders of beneficial interests
163-13 in an investment company including:
163-14 (i) electing directors or trustees of the
163-15 investment company;
163-16 (ii) approving or terminating investment
163-17 advisory or underwriting contracts;
163-18 (iii) approving auditors; and
163-19 (iv) acting on any other matters that the
163-20 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.)
163-21 requires to be approved by the holders of beneficial interests in
163-22 the investment company;
163-23 (J) indemnification of a general partner under
163-24 Article 11 of this Act;
163-25 (K) any other matter stated in the partnership
163-26 agreement;
163-27 (L) exercising a right or power granted or
164-1 permitted to limited partners under this Act and not specifically
164-2 enumerated in this subsection; or
164-3 (M) the merger of a limited partnership.
164-4 SECTION 77. Section 6.03, Texas Revised Limited Partnership
164-5 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
164-6 read as follows:
164-7 Sec. 6.03. Withdrawal of limited partner. A limited partner
164-8 may withdraw from a limited partnership only at the time or on the
164-9 occurrence of events specified in a <written> partnership agreement
164-10 and in accordance with that <written> partnership agreement. <If
164-11 the partnership agreement does not specify such a time or event or
164-12 a definite time for the dissolution and winding up of the limited
164-13 partnership, a limited partner may withdraw on giving written
164-14 notice not less than six months before the date of withdrawal to
164-15 each general partner at that general partner's address as set forth
164-16 in the certificate of limited partnership.>
164-17 SECTION 78. Section 8.01, Texas Revised Limited Partnership
164-18 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
164-19 read as follows:
164-20 Sec. 8.01. Dissolution. A limited partnership is dissolved
164-21 and its affairs shall be wound up only on the first of the
164-22 following to occur:
164-23 (1) <on> the occurrence of events specified in the
164-24 partnership agreement to cause dissolution unless within 90 days
164-25 after the event causing the dissolution, all remaining partners (or
164-26 such other group or percentage of partners as the partnership
164-27 agreement may provide) agree in writing to continue the business of
165-1 the limited partnership;
165-2 (2) written consent of all partners to dissolution;
165-3 (3) an event of withdrawal of a general partner,
165-4 unless:
165-5 (A) there remains at least one general partner
165-6 and the partnership agreement permits the business of the limited
165-7 partnership to be carried on by the remaining general partner or
165-8 general partners, and that general partner or those general
165-9 partners do so; or
165-10 (B) within 90 days after the event of
165-11 withdrawal, all remaining partners (or such other group or
165-12 percentage of partners as the partnership agreement may provide)
165-13 agree in writing to continue the business of the limited
165-14 partnership and to the extent that they desire or if there are no
165-15 remaining general partners, agree to the appointment, effective as
165-16 of the date of withdrawal, of one or more new general partners; or
165-17 (4) entry of a decree of judicial dissolution under
165-18 Section 8.02 of this Act.
165-19 SECTION 79. Section 8.04(a), Texas Revised Limited
165-20 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
165-21 is amended to read as follows:
165-22 (a) Except as provided in the partnership agreement, on <On>
165-23 the dissolution of a limited partnership, <unless it is
165-24 reconstituted in accordance with Section 8.03 of this Act,> the
165-25 partnership's affairs shall be wound up as soon as reasonably
165-26 practicable, and the<. The> winding up shall be accomplished by
165-27 the general partners who have not wrongfully dissolved a limited
166-1 partnership or, if there are none who have not wrongfully dissolved
166-2 the partnership, by the limited partners or a person chosen by the
166-3 limited partners. In addition, a court of competent jurisdiction,
166-4 on cause shown, may wind up the limited partnership's affairs on
166-5 application of any partner or the partner's legal representative or
166-6 assignee and, in connection with the winding up, may appoint a
166-7 person to carry out the liquidation and may make all other orders,
166-8 directions, and inquiries that the circumstances require.
166-9 SECTION 80. Section 12.01, Texas Revised Limited Partnership
166-10 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
166-11 read as follows:
166-12 Sec. 12.01. Fees. The secretary of state shall collect for
166-13 the use of the state:
166-14 (1) for filing a certificate of limited partnership
166-15 under Section 2.01 of this Act, or an application for registration
166-16 as a foreign limited partnership under Section 9.02 of this Act, a
166-17 fee of $750;
166-18 (2) for filing a certificate of amendment under
166-19 Section 2.02 of this Act, a certificate of cancellation under
166-20 Section 2.03 of this Act, a restated certificate of limited
166-21 partnership under Section 2.10 of this Act, a certificate of merger
166-22 under Section 2.11 of this Act, a certificate of correction under
166-23 Section 2.12 of this Act, a certificate of conversion under Section
166-24 2.15 of this Act, a certificate under Section 9.05 of this Act, or
166-25 a certificate of cancellation under Section 9.06 of this Act<, or
166-26 an election to adopt this Act, whether by the filing of a
166-27 certificate of limited partnership, an application for registration
167-1 as a foreign limited partnership or a certificate of amendment,
167-2 under Section 13.02 of this Act>, a fee of $200;
167-3 (3) for filing an application for reservation of name,
167-4 an application for renewal of reservation, a notice of transfer of
167-5 reservation under Subsection (b) of Section 1.04 of this Act, or an
167-6 application for registration of name or an application for renewal
167-7 of registration of name under Section 1.05 of this Act, a fee of
167-8 $75;
167-9 (4) for filing a statement for change of registered
167-10 office, registered agent, or both, under Subsection (b) of Section
167-11 1.06 of this Act, or a statement for change of location of
167-12 registered office under Subsection (h) of Section 1.06 of this Act,
167-13 a fee of $50, except that the maximum fee for simultaneous filings
167-14 by a registered agent for more than one limited partnership may not
167-15 exceed $2,500;
167-16 (5) for preclearance of any document for filing, a fee
167-17 of $50; and
167-18 (6) for filing any instrument under this Act not
167-19 expressly provided for above, a fee of $25.
167-20 SECTION 81. Section 1.01(4), Texas Revised Partnership Act
167-21 (Article 6132b-1.01, Vernon's Texas Civil Statutes), is amended to
167-22 read as follows:
167-23 (4) "Debtor in bankruptcy" means a person who is the
167-24 subject of:
167-25 (A) an order for relief under Title 11 of the
167-26 United States Code or a comparable order under a successor statute
167-27 of general application; or
168-1 (B) a comparable order under federal, <or>
168-2 state, or foreign law governing insolvency.
168-3 SECTION 82. Section 1.03(b), Texas Revised Partnership Act
168-4 (Article 6132b-1.03, Vernon's Texas Civil Statutes), is amended to
168-5 read as follows:
168-6 (b) Statutory Provisions that may not be Varied by
168-7 Agreement. A partnership agreement or the partners may not:
168-8 (1) unreasonably restrict a partner's right of access
168-9 to books and records under Section 4.03(b);
168-10 (2) eliminate the duty of loyalty under Section
168-11 4.04(b), but the partners may by agreement identify specific types
168-12 or categories of activities that do not violate the duty of
168-13 loyalty, if not manifestly unreasonable;
168-14 (3) eliminate the duty of care under Section 4.04(c),
168-15 but the partners may by agreement determine the standards by which
168-16 the performance of the obligation is to be measured, if the
168-17 standards are not manifestly unreasonable;
168-18 (4) eliminate the obligation of good faith under
168-19 Section 4.04(d), but the partners may by agreement determine the
168-20 standards by which the performance of the obligation is to be
168-21 measured, if the standards are not manifestly unreasonable;
168-22 (5) vary the power to withdraw as a partner under
168-23 Section 6.01(b)(1), (7), or (8), except to require the notice to be
168-24 in writing;
168-25 (6) vary the right to expel a partner by a court in
168-26 the events specified by Section 6.01(b)(5);
168-27 (7) vary the requirement to wind up the partnership
169-1 business in the events specified by Section 8.01(c), (d), or (e);
169-2 (8) restrict rights of third parties under this Act,
169-3 except for limitations on individual partners' liability in a
169-4 registered limited liability partnership as provided or permitted
169-5 by Section 3.08; or
169-6 (9) select a governing law not permitted under Section
169-7 1.05(a)(1).
169-8 SECTION 83. Section 1.05(a), Texas Revised Partnership Act
169-9 (Article 6132b-1.05, Vernon's Texas Civil Statutes), is amended to
169-10 read as follows:
169-11 (a) Internal Affairs. The determination whether a
169-12 partnership has been formed, a <A> partnership's internal affairs,
169-13 and the relations of the partners to one another are governed by:
169-14 (1) the law of the state chosen by the partners to
169-15 govern if that state bears a reasonable relation to the partners or
169-16 to the partnership business and affairs under principles that apply
169-17 to a contract among the partners other than the partnership
169-18 agreement; or
169-19 (2) if the partners do not choose a governing law
169-20 under Subdivision (1), the law of the state in which the
169-21 partnership has its chief executive office.
169-22 SECTION 84. Section 2.02, Texas Revised Partnership Act
169-23 (Article 6132b-2.02, Vernon's Texas Civil Statutes), is amended by
169-24 adding Subsection (d) to read as follows:
169-25 (d) Partnership Resulting from Merger or Conversion. In
169-26 the case of a new partnership being formed pursuant to a plan of
169-27 merger or a plan of conversion under Article IX of this Act, the
170-1 existence of the partnership as a partnership shall begin on the
170-2 effectiveness of the merger or the conversion, as the case may be,
170-3 and the persons to be partners shall become partners as of that
170-4 time.
170-5 SECTION 85. Sections 3.02(a) and (b), Texas Revised
170-6 Partnership Act (Article 6132b-3.02, Vernon's Texas Civil
170-7 Statutes), are amended to read as follows:
170-8 (a) Partner Agent of Partnership as to Partnership Business.
170-9 Each partner is an agent of the partnership for the purpose of its
170-10 business. Unless the partner does not have authority to act for
170-11 the partnership in the particular matter and the person with whom
170-12 the partner is dealing knows that the partner lacks authority, an
170-13 act of a partner, including the execution of an instrument in the
170-14 partnership name, binds the partnership if the act is for
170-15 apparently carrying on in the ordinary course <usual way>:
170-16 (1) the partnership business; or
170-17 (2) business of the kind carried on by the
170-18 partnership.
170-19 (b) Act Outside Scope of Business. An act of a partner
170-20 binds <does not bind> the partnership only if <unless> authorized
170-21 by the other partners if the act is not apparently for carrying on
170-22 in the ordinary course <usual way>:
170-23 (1) the partnership business; or
170-24 (2) business of the kind carried on by the
170-25 partnership.
170-26 SECTION 86. Section 3.04, Texas Revised Partnership Act
170-27 (Article 6132b-3.04, Vernon's Texas Civil Statutes), is amended to
171-1 read as follows:
171-2 Sec. 3.04. <NATURE OF> PARTNER'S LIABILITY <PARTNERSHIP>.
171-3 Except as provided by Section 3.07 or 3.08(a) <for a registered
171-4 limited liability partnership>, all partners are liable jointly and
171-5 severally for all debts and obligations of the partnership unless
171-6 otherwise agreed by the claimant or provided by law.
171-7 SECTION 87. Section 3.05, Texas Revised Partnership Act
171-8 (Article 6132b-3.05, Vernon's Texas Civil Statutes), is amended by
171-9 adding Subsection (f) to read as follows:
171-10 (f) Registered Limited Liability Partnership. The
171-11 provisions of this section do not limit the provisions of Section
171-12 3.08(a) in the case of a registered limited liability partnership.
171-13 SECTION 88. Section 3.08(a), Texas Revised Partnership Act
171-14 (Article 6132b-3.08, Vernon's Texas Civil Statutes), is amended by
171-15 amending Subdivision (1) and adding Subdivision (4) to read as
171-16 follows:
171-17 (1) A partner in a registered limited liability
171-18 partnership is not individually liable, directly or indirectly, by
171-19 contribution, indemnity, or otherwise, for debts and obligations of
171-20 the partnership arising from errors, omissions, negligence,
171-21 incompetence, or malfeasance committed while the partnership is a
171-22 registered limited liability partnership and in the course of the
171-23 partnership business by another partner or a representative of the
171-24 partnership not working under the supervision or direction of the
171-25 first partner unless the first partner:
171-26 (A) was directly involved in the specific
171-27 activity in which the errors, omissions, negligence, incompetence,
172-1 or malfeasance were committed by the other partner or
172-2 representative; or
172-3 (B) had notice or knowledge of the errors,
172-4 omissions, negligence, incompetence, or malfeasance by the other
172-5 partner or representative at the time of occurrence and then failed
172-6 to take reasonable steps to prevent or cure the errors, omissions,
172-7 negligence, incompetence, or malfeasance.
172-8 (4) The provisions of this subsection prevail, in the
172-9 case of a registered limited liability partnership, over the other
172-10 provisions of this Act regarding the liability of partners, their
172-11 chargeability for the debts and obligations of the partnership, and
172-12 their obligations regarding contributions and indemnity.
172-13 SECTION 89. Sections 4.01(b) and (c), Texas Revised
172-14 Partnership Act (Article 6132b-4.01, Vernon's Texas Civil
172-15 Statutes), are amended to read as follows:
172-16 (b) Profits and Losses. Each partner is entitled to be
172-17 credited with an equal share of the partnership's profits <of a
172-18 partnership. Each partner> and is chargeable <charged> with a
172-19 share of the partnership's losses, whether capital or operating,
172-20 <of the partnership> in proportion to the partner's share of the
172-21 profits.
172-22 (c) Disproportionate Payment or Advance. A partner who, in
172-23 the proper conduct of the business of the partnership or for the
172-24 preservation of its business or property, reasonably makes a
172-25 payment or advance beyond the amount the partner agreed to
172-26 contribute, or who reasonably incurs a liability, is entitled to be
172-27 repaid by the partnership and to receive interest from the
173-1 partnership from the date of the payment or advance or the
173-2 incurrence of the liability.
173-3 SECTION 90. Section 4.06(b), Texas Revised Partnership Act
173-4 (Article 6132b-4.06, Vernon's Texas Civil Statutes), is amended to
173-5 read as follows:
173-6 (b) Action by partner. A partner may maintain an action
173-7 against the partnership or another partner for legal or equitable
173-8 relief, with or without <including> an accounting as to partnership
173-9 business, to:
173-10 (1) enforce a right under the partnership agreement;
173-11 (2) enforce a right under this Act, including:
173-12 (A) the partner's rights under Sections 4.01,
173-13 4.03, and 4.04;
173-14 (B) the partner's right on withdrawal to have
173-15 the partner's interest in the partnership redeemed under Section
173-16 7.01 or enforce any other right under Article 6 or 7; and
173-17 (C) the partner's rights under Article 8; or
173-18 (3) enforce the rights and otherwise protect the
173-19 interests of the partner, including rights and interests arising
173-20 independently of the partnership relationship.
173-21 SECTION 91. Section 6.02(b), Texas Revised Partnership Act
173-22 (Article 6132b-6.02, Vernon's Texas Civil Statutes), is amended to
173-23 read as follows:
173-24 (b) Wrongful Withdrawal. A partner's withdrawal is wrongful
173-25 only if:
173-26 (1) it is in breach of an express provision of the
173-27 partnership agreement;
174-1 (2) in the case of a partnership for a definite term
174-2 or particular undertaking or for which the partnership agreement
174-3 provides for winding up on a specified event, before the expiration
174-4 of the term, the completion of the undertaking, or the occurrence
174-5 of the event:
174-6 (A) the partner withdraws by express will;
174-7 (B) the partner withdraws by becoming a debtor
174-8 in bankruptcy; or
174-9 (C) <(B)> in the case of a partner that is not
174-10 an individual, a trust other than a business trust, or an estate,
174-11 the partner is expelled or otherwise withdraws because the partner
174-12 wilfully dissolved or terminated; or
174-13 (3) the partner is expelled by judicial decree under
174-14 Section 6.01(b)(5).
174-15 SECTION 92. Section 8.06(a), Texas Revised Partnership Act
174-16 (Article 6132b-8.06, Vernon's Texas Civil Statutes), is amended to
174-17 read as follows:
174-18 (a) Application of Property to Obligations. In winding up
174-19 the partnership business, the property of the partnership,
174-20 including the contributions of the partners required by this
174-21 section, must be applied to discharge its obligations to creditors,
174-22 including, to the extent permitted by other applicable law,
174-23 partners who are creditors other than in their capacities as
174-24 partners. Any <A> surplus must be applied to pay in cash the net
174-25 amount distributable to partners in accordance with their right to
174-26 distributions under Subsection (b).
174-27 SECTION 93. Section 9.01(b), Texas Revised Partnership Act
175-1 (Article 6132b-9.01, Vernon's Texas Civil Statutes), is amended to
175-2 read as follows:
175-3 (b) Limited to General. A domestic or foreign limited
175-4 partnership may convert, on the affirmative vote of a
175-5 majority-in-interest of the partners, to a partnership that is not
175-6 a limited partnership by:
175-7 (1) cancelling its certificate of limited partnership
175-8 in the state of formation or otherwise complying with the
175-9 provisions for terminating the existence of the limited partnership
175-10 under <of> that state's law as of the date that partnership's
175-11 existence as a limited partnership is to cease <terminated>;
175-12 (2) amending its partnership agreement to reflect its
175-13 change in status and any change in name required to comply with
175-14 this Act; and
175-15 (3) stating the effective date of the conversion in
175-16 the partnership agreement if different from the date of the
175-17 cancellation of the limited partnership certificate.
175-18 If a limited partnership converts to a partnership that is
175-19 not a limited partnership, a partner who did not consent to the
175-20 conversion is considered to be a partner who has withdrawn from the
175-21 limited partnership effective immediately before the effective date
175-22 of the conversion unless, within 60 days after the later of the
175-23 effective date of the conversion or the date the partner receives
175-24 actual notice of the conversion, the partner notifies the
175-25 partnership in writing of the partner's desire not to withdraw. A
175-26 withdrawal under the described circumstances is not a wrongful
175-27 withdrawal.
176-1 SECTION 94. Section 9.02, Texas Revised Partnership Act
176-2 (Article 6132b-9.02, Vernon's Texas Civil Statutes), is amended to
176-3 read as follows:
176-4 Sec. 9.02. Mergers. (a) Adoption of Plan. A domestic
176-5 partnership may adopt a plan of merger and one or more domestic
176-6 partnerships may merge with one or more domestic or foreign
176-7 partnerships or other entities if:
176-8 (1) the partnership agreement of each domestic <or
176-9 foreign> partnership that is a party to the plan of merger contains
176-10 provisions that authorize the merger provided for in the plan of
176-11 merger adopted by the partnership;
176-12 (2) each domestic partnership that is a party to the
176-13 plan of merger approves the plan of merger in the manner prescribed
176-14 <for mergers> in its partnership agreement; and
176-15 (3) in the event <or constituent documents or by
176-16 applicable law. If> one or more foreign partnerships or other
176-17 entities is a party to the merger or is to be created by the terms
176-18 of the plan of merger:
176-19 (A) <(1)> the merger is <must be> permitted
176-20 either by<:>
176-21 <(A)> the laws under which each foreign
176-22 partnership and each other entity that is a party to the merger is
176-23 formed or organized<;> or by
176-24 <(B)> the partnership agreement or other
176-25 constituent documents of the foreign <partnership or other entity
176-26 not inconsistent with those laws; and>
176-27 <(2) each foreign> partnership or other entity that
177-1 are not inconsistent with such laws; and
177-2 (B) each foreign partnership or other entity
177-3 that is a party to the merger complies <must comply> with such
177-4 <the> laws or documents in effecting the merger.
177-5 (b) Contents of Plan <of Merger>. A <If a partnership
177-6 merges with one or more domestic or foreign limited partnerships or
177-7 other entities, other than another partnership that is not a
177-8 limited partnership, a> plan of merger must set forth <be adopted.
177-9 The plan must include>:
177-10 (1) the name and state of domicile or formation of
177-11 <organization of:>
177-12 <(A)> each domestic or foreign partnership or
177-13 other entity that is a party to the merger and the name of<;>
177-14 <(B)> each domestic or foreign partnership or
177-15 other entity, if any, that shall <will> survive the merger, which
177-16 may be one or more of the domestic or foreign partnerships or other
177-17 entities <who are a> party to the merger, and the name and state of
177-18 domicile or formation of<; and>
177-19 <(C)> each new domestic or foreign partnership
177-20 or other entity, if any, that may be created by the terms of the
177-21 plan of merger;
177-22 (2) the terms and conditions of the merger<,>
177-23 including, if more than one domestic or foreign partnership or
177-24 other entity is to survive or to be created by the terms of the
177-25 plan of merger:<,>
177-26 (A) the manner and basis of<:>
177-27 <(A)> allocating and vesting the real estate and
178-1 other property of each domestic or foreign partnership and of each
178-2 other entity that is a party to the merger among one or more of the
178-3 surviving or new domestic or foreign partnerships and <or> other
178-4 entities; and
178-5 (B) the manner and basis of allocating all
178-6 liabilities and obligations of each domestic or foreign partnership
178-7 and other entity that is a party to the merger<,> (or making
178-8 adequate provisions <provision> for the payment and discharge
178-9 thereof) <of the liabilities and obligations,> among one or more of
178-10 the surviving or new domestic or foreign partnerships and <or>
178-11 other entities;
178-12 (3) the manner and basis of converting any of the
178-13 partnership interests or other evidences of ownership of each
178-14 domestic or foreign partnership and other entity that is a party to
178-15 the merger into<:>
178-16 <(A)> partnership interests, shares,
178-17 obligations, evidences of ownership, rights to purchase securities,
178-18 or other securities of one or more of the surviving or new domestic
178-19 or foreign partnerships or other entities, into<;>
178-20 <(B)> cash<;> or
178-21 <(C)> other property<,> including shares,
178-22 obligations, evidences of ownership, rights to purchase securities,
178-23 or other securities of any other <another> person or entity<;> or
178-24 into
178-25 <(D)> any combination of the foregoing <those
178-26 items>; and
178-27 (4) as an exhibit or attachment, the <certificate of
179-1 limited partnership, articles of incorporation, articles of
179-2 organization, or other> organizational documents of each
179-3 partnership or other entity that is a party to the merger and that
179-4 is to be created <or will act as a surviving entity> by the terms
179-5 of the plan of merger<;>
179-6 <(5) the names of the principal officer of the
179-7 surviving entities and the registered office and registered agent
179-8 of the surviving entities if a registered office or agent is
179-9 required by the laws under which the surviving entities are formed;>
179-10 <(6) a statement describing whether the surviving
179-11 entity is a partnership, limited partnership, corporation, limited
179-12 liability company, or other entity; and>
179-13 <(7) other provisions relating to the merger>.
179-14 (c) Optional Provisions. The plan of merger may set forth:
179-15 (1) any amendments to the partnership agreement of any
179-16 surviving domestic partnership; and
179-17 (2) any other provisions relating to the merger.
179-18 (d) Certificate of Merger. After a plan of merger has been
179-19 approved by each of the partnerships or other entities that is a
179-20 party to the plan of merger, unless the only parties to the merger
179-21 are partnerships <and a partnership merges with one or more
179-22 domestic or foreign limited partnerships or other entities>, a
179-23 certificate of merger shall be executed on behalf of each
179-24 partnership or other entity by at least one <general> partner of
179-25 each domestic partnership that is a party to the plan of merger and
179-26 by a general partner, <an authorized> officer, agent<,> or other
179-27 authorized representative of each other partnership or other entity
180-1 that is a party to the plan of merger and shall set forth<. The
180-2 certificate must include>:
180-3 (1) the plan of merger; and
180-4 (2) as to <for> each domestic or foreign partnership
180-5 or other entity that is a party to the plan of merger, a statement
180-6 that the plan of merger was duly authorized by all action <actions>
180-7 required by the laws under which it was formed or organized and by
180-8 its constituent documents.
180-9 (e) <(d)> Filing. If a <The> certificate of merger must be
180-10 executed, the original of the certificate of merger and such number
180-11 of copies of the certificate equal to the number of <filed for
180-12 each> surviving and new domestic or foreign partnerships and other
180-13 entities that are <partnership or other entity and for each other
180-14 entity that is> a party to the plan of merger or that will be
180-15 created by the terms thereof, shall be<. The filing must be with
180-16 the secretary of state or other authority with which the entity
180-17 must file organizational or related documents and must comply with
180-18 that authority's filing requirements.>
180-19 <(e) Effective Date of Merger. If a certificate of merger
180-20 is> delivered to the secretary of state. Unless the secretary of
180-21 state finds that a<, the merger is effective on the date of the
180-22 issuance of the> certificate of merger does not conform to law, on
180-23 receipt of all applicable filing fees and franchise taxes, if any,
180-24 required by law, or if <by the secretary of state or on a later
180-25 date stated in the certificate of merger. If a certificate of
180-26 merger is not required to be filed with the secretary of state, the
180-27 merger is effective on the date agreed to by the parties to the
181-1 merger as set out in> the plan of merger (or a statement provided
181-2 in lieu thereof) provides that one or more of the surviving or new
181-3 domestic or foreign partnerships or other entities that will be
181-4 responsible for the payment of all the fees and franchise taxes and
181-5 that all of the surviving or new domestic or foreign partnerships
181-6 and other entities will be obligated to pay the fees and franchise
181-7 taxes if they are not timely paid, the secretary of state shall
181-8 certify that the certificate of merger has been filed in the
181-9 secretary of state's office by endorsing on the original the word
181-10 "Filed" and the date of the filing, file and index the endorsed
181-11 certificate of merger, and return the copy, similarly endorsed, to
181-12 each surviving or new domestic or foreign partnership or other
181-13 entity that is a party to the plan of merger or that is created
181-14 thereby, or its or their respective representatives <or as
181-15 otherwise agreed to by the parties>.
181-16 (f) Effective Date. Except as provided by Section 9.06, the
181-17 merger shall be effective upon the issuance of the certificate of
181-18 merger by the secretary of state or, if a certificate of merger
181-19 need not be executed, as provided in the plan of merger.
181-20 (g) Effect. When a merger takes effect:
181-21 (1) the <Effect of Merger. (1) A partner of a
181-22 partnership that is a party to a merger does not become personally
181-23 liable as a result of the merger for a liability or obligation of
181-24 another person that is a party to the merger unless the partner
181-25 consents to becoming personally liable by action taken in
181-26 connection with the specific plan of merger approved by the
181-27 partner. A partner who remains in or enters a domestic or foreign
182-1 partnership or other entity that survives a merger or that enters a
182-2 domestic or foreign partnership or other entity created by the
182-3 terms of the plan of merger shall be treated as an incoming partner
182-4 in the new or surviving partnership as of the effective date of the
182-5 merger for the purpose of determining the partner's liability for a
182-6 debt or obligation of the other partnerships or entities that are
182-7 parties to the merger and in which the partner was not associated.>
182-8 <(2) The> separate existence of every domestic
182-9 partnership <or other entity> that is a party to the <a> merger,
182-10 except any <a> surviving or new domestic partnership, shall cease;
182-11 (2) all <or other entity, ceases when a merger takes
182-12 effect.>
182-13 <(3) All> rights, title, and interests <interest> to
182-14 all real estate and other property owned by each domestic or
182-15 foreign partnership and by each other entity that is a party to the
182-16 merger shall be <are> allocated to and vested in one or more of the
182-17 surviving or resulting entities as provided in the <a> plan of
182-18 merger without reversion or impairment, without further act or
182-19 deed, and without any transfer or assignment having occurred, but
182-20 subject to any existing liens or other encumbrances thereon;
182-21 (3) <on the property, when a merger takes effect.>
182-22 <(4) When a merger takes effect,> all liabilities and
182-23 obligations of each domestic or foreign partnership and other
182-24 entity that is a party to the merger shall be <are> allocated to
182-25 one or more of the surviving or new domestic or foreign
182-26 partnerships and <or> other entities in the manner set forth in
182-27 <prescribed by> the plan of merger, and each surviving or new
183-1 domestic or foreign partnership, and each surviving or new other
183-2 entity to which a liability or obligation shall have been <is>
183-3 allocated pursuant to <under> the plan of merger, shall be
183-4 <becomes> the primary obligor therefor and, except <for the
183-5 liability or obligation. Except> as otherwise set forth in
183-6 <provided by> the plan of merger or as otherwise provided by law or
183-7 contract, no other <a> party to the merger, other than a surviving
183-8 domestic or foreign partnership or other entity liable thereon
183-9 <with liability> at the time of the merger and no other new <, or
183-10 another> domestic or foreign partnership or other entity created
183-11 thereby, shall be liable therefor;
183-12 (4) <by the merger does not become liable for the debt
183-13 or obligation.>
183-14 <(5) After a merger,> a proceeding pending by or
183-15 against any <a> domestic or foreign partnership or by or against
183-16 any other <another> entity that is a party to the merger may be
183-17 continued as if the merger did not occur <and the partnership or
183-18 other entity that has been allocated the liabilities, obligations,
183-19 asset, or rights associated with the proceeding under the terms of
183-20 the plan of merger remains the primary obligor>, or the surviving
183-21 or new domestic or foreign partnership or the surviving or new
183-22 other entity or other entities to which the liability, obligation,
183-23 asset<,> or right associated with such <the> proceeding is
183-24 allocated to and vested in pursuant to <under> the plan of merger
183-25 may be substituted in the proceeding;
183-26 (5) the<.>
183-27 <(6) The> partnership agreement of each surviving
184-1 domestic partnership shall be<, certificate of limited partnership,
184-2 and other constituent documents of each other entity that will act
184-3 as a surviving entity by the terms of a plan of merger is
184-4 considered> amended to the extent provided in the plan of merger;
184-5 (6) each <when the merger takes effect.>
184-6 <(7) Each> new domestic partnership to be formed under
184-7 the plan of merger shall be formed as a partnership under this Act,
184-8 <named in a plan of merger under Subsection (b)(1), each new
184-9 domestic limited partnership for which a certificate of limited
184-10 partnership is included in a plan of merger under Subsection
184-11 (b)(4),> and each other entity to be formed or organized under the
184-12 laws of this state, the <state for which> organizational documents
184-13 of which are set forth <are included in a plan of merger under
184-14 Subsection (b)(4) are formed or organized as provided> in the plan
184-15 of merger, upon <on:>
184-16 <(A) delivering> an executed copy of the
184-17 certificate of merger being delivered to or filed with any required
184-18 <to, or filing the certificate with, the> governmental entity with
184-19 which organizational documents of such another <the partnership or
184-20 other> entity are required to be delivered or filed, <if any;> and
184-21 upon
184-22 <(B)> meeting such additional requirements, if
184-23 any, of law for its formation or organization, shall be formed or
184-24 organized as provided in the plan of merger;
184-25 (7) the<.>
184-26 <(8) The> partnership interests <interest> of each
184-27 domestic or foreign partnership and the partnership interests
185-1 <interest>, shares, or evidences of ownership in each other entity
185-2 that is a party to the merger that are to be converted or
185-3 exchanged, in whole or in part, into <(i)> partnership interests,
185-4 shares, obligations, evidences of ownership, rights to purchase
185-5 securities, or other securities of one or more of the surviving or
185-6 new domestic or foreign partnerships or other entities, into <(ii)>
185-7 cash, or <(iii)> other property, including shares, obligations,
185-8 evidences of ownership, rights to purchase securities, or other
185-9 securities of any other person or entity, or into any combination
185-10 of the foregoing, shall be so <those items, are> converted and
185-11 exchanged and <when a merger takes effect. After the merger> the
185-12 former partners of each domestic partnership <and owners of shares
185-13 or evidences of ownership in each other domestic entity> that is a
185-14 party to the merger shall be <are> entitled <only> to the rights
185-15 provided in the plan of merger;
185-16 (8) if the<.>
185-17 <(9) If a> plan of merger shall fail <fails> to
185-18 provide for the allocation and vesting of the right, title, and
185-19 interest in any <a> particular item of real estate or other
185-20 property or for the allocation of any <a> liability or obligation
185-21 of any <a> party to the merger, such <when the merger takes effect
185-22 the> item of real estate or other property shall be owned in
185-23 undivided interest <interests> by, or such <the> liability or
185-24 obligation shall be a joint and several liability and obligation
185-25 of, each of the surviving and new domestic and foreign partnerships
185-26 and other entities, pro rata to the total number of surviving and
185-27 new domestic and foreign partnerships and other entities resulting
186-1 from the merger;
186-2 (9) a partner of a partnership that is a party to a
186-3 merger does not become personally liable as a result of the merger
186-4 for a liability or obligation of another person that is a party to
186-5 the merger unless the partner consents to becoming personally
186-6 liable by action taken in connection with the specific plan of
186-7 merger approved by the partner; and for purposes of determining the
186-8 liability of partners in a domestic partnership that is a party to
186-9 the merger for the debts and obligations of other parties to the
186-10 merger in which that partner otherwise was not or is not a partner
186-11 or other owner of an interest:
186-12 (A) a partner who remains in or enters a
186-13 domestic or foreign partnership or other entity that survives a
186-14 merger or that enters a domestic or foreign partnership or other
186-15 entity created by the terms of the plan of merger shall be treated
186-16 as an incoming partner in the new or surviving partnership as of
186-17 the effective date of the merger; and
186-18 (B) a partner in a domestic partnership that is
186-19 a party to the merger but that does not survive shall be treated as
186-20 a partner who withdrew from the nonsurviving domestic partnership
186-21 as of the effective date of the merger; and<.>
186-22 (10) if <If> a domestic or foreign partnership merges
186-23 with another domestic or foreign partnership or other entity and
186-24 through the merger process no longer exists, a person who becomes a
186-25 member of the surviving domestic or foreign partnership or other
186-26 entity, for a period of one year after the effective date of the
186-27 merger, may bind the surviving entity to a transaction for which it
187-1 no longer has authority to bind the entity if the transaction is
187-2 one in which the partner's actions would bind the foreign or
187-3 domestic partnership before the effective date of the merger and
187-4 the other party to the transaction:
187-5 (A) does not have notice of the merger;
187-6 (B) had done business with the partnership which
187-7 no longer exists within one year preceding the effective date of
187-8 the merger; and
187-9 (C) reasonably believes that the partner who was
187-10 previously a member of the partnership which was merged into the
187-11 surviving entity and is now a partner of the surviving entity was a
187-12 partner with authority to bind the partnership to the transaction
187-13 at the time of the transaction.
187-14 (h) Other Entity. <(g) Definition of "Other Entity."> For
187-15 purposes of this section, the term "other entity" means any entity,
187-16 whether organized for profit or not, that is a corporation, limited
187-17 partnership, limited liability company, joint venture, joint stock
187-18 company, cooperative, association, bank, insurance company, or
187-19 other legal entity organized pursuant to <under> the laws of this
187-20 state or any other <another> state or country to the extent such
187-21 <the> laws or the constituent documents of that entity, not
187-22 inconsistent with such laws <law>, permit that entity to enter into
187-23 a merger or partnership interest exchange as permitted by this
187-24 section.
187-25 SECTION 95. Section 9.03(a), Texas Revised Partnership Act
187-26 (Article 6132b-9.03, Vernon's Texas Civil Statutes), is amended to
187-27 read as follows:
188-1 (a) One or more domestic or foreign partnerships may adopt a
188-2 plan of exchange by which a domestic or foreign partnership or
188-3 other entity acquires all of the outstanding partnership interests
188-4 of one or more domestic partnerships in exchange for cash or
188-5 securities of the acquiring domestic or foreign partnership or
188-6 other entity, if:
188-7 (1) the partnership agreement of each domestic
188-8 partnership the partnership interests of which are to be acquired
188-9 pursuant to the plan of exchange contains provisions that authorize
188-10 the partnership interest exchange adopted by the partnership, and
188-11 if one or more foreign partnerships or other entities is to issue
188-12 shares or other interests as part of the plan of exchange, the
188-13 issuance of those shares or other interests is either permitted by
188-14 the laws under which that foreign partnership or other entity is
188-15 formed or not inconsistent with those laws;
188-16 (2) <(1)> each domestic or foreign partnership, the
188-17 partnership interests of which are to be acquired under the plan of
188-18 exchange, approves the plan of exchange in the manner prescribed in
188-19 its partnership agreement; and
188-20 (3) <(2)> each acquiring domestic or foreign
188-21 partnership or other entity takes all action that may be required
188-22 by the laws of the state under which it was formed or incorporated
188-23 and as required by its partnership agreement or other constituent
188-24 documents in order to effect the exchange.
188-25 SECTION 96. Article IX, Texas Revised Partnership Act
188-26 (Article 6132b-9.01 et seq., Vernon's Texas Civil Statutes), is
188-27 amended by adding Sections 9.05 and 9.06 to read as follows:
189-1 Sec. 9.05. CONVERSION. (a) A domestic partnership may
189-2 adopt a plan of conversion and convert to a foreign partnership or
189-3 any other entity if:
189-4 (1) the converting entity acts upon and its partners
189-5 approve a plan of conversion in the manner prescribed by Section
189-6 9.02 as if the conversion were a merger to which the converting
189-7 entity were a party and not the survivor;
189-8 (2) the conversion is permitted by, or not
189-9 inconsistent with, the laws of the state or country in which the
189-10 converted entity is to be incorporated, formed, or organized and
189-11 the incorporation, formation, or organization of the converted
189-12 entity is effected in compliance with such laws;
189-13 (3) at the time the conversion becomes effective, each
189-14 partner of the converting entity will, unless otherwise agreed to
189-15 by that partner, own an equity interest or other ownership or
189-16 security interest in, and be a shareholder, partner, member, owner
189-17 or other security holder of, the converted entity; and
189-18 (4) the converted entity shall be incorporated,
189-19 formed, or organized as part of or pursuant to the plan of
189-20 conversion.
189-21 (b) Any foreign partnership or other entity may adopt a plan
189-22 of conversion and convert to a domestic partnership if:
189-23 (1) the conversion is permitted by the laws of the
189-24 state or country in which the foreign partnership is incorporated,
189-25 if a foreign partnership is converting;
189-26 (2) the conversion is either permitted by the laws
189-27 under which the other entity is formed or organized or by the
190-1 constituent documents of the other entity that are not
190-2 inconsistent with the laws of the state or country in which the
190-3 other entity is formed or organized, if another entity is
190-4 converting; and
190-5 (3) the converting entity takes all action that may
190-6 be required by the laws of the state or country under which it is
190-7 incorporated, formed, or organized and by its constituent documents
190-8 to effect the conversion.
190-9 (c) A plan of conversion shall set forth:
190-10 (1) the name of the converting entity and the
190-11 converted entity;
190-12 (2) a statement that the converting entity is
190-13 continuing its existence in the organizational form of the
190-14 converted entity;
190-15 (3) a statement as to the type of entity that the
190-16 converted entity is to be and the state or country under the laws
190-17 of which the converted entity is to be incorporated, formed, or
190-18 organized;
190-19 (4) the manner and basis of converting the partnership
190-20 interests, shares, or other evidences of ownership of the
190-21 converting entity into partnership interests, shares, or other
190-22 evidences of ownership or securities of the converted entity, or
190-23 any combination thereof; and
190-24 (5) in an attachment or exhibit, the certificate of
190-25 limited partnership, articles of incorporation, or other
190-26 organizational documents of the converted entity if the converted
190-27 entity is not a domestic partnership.
191-1 (d) A plan of conversion may set forth such other provisions
191-2 relating to the conversion not inconsistent with law, including the
191-3 initial partnership agreement of the converted entity if the
191-4 converted entity is a partnership.
191-5 (e) If a plan of conversion has been approved in accordance
191-6 with the preceding provisions of this section and has not been
191-7 abandoned, unless the converted entity and the converting entities
191-8 are both partnerships:
191-9 (1) articles of conversion shall be executed by the
191-10 converting entity by a partner, officer, or other duly authorized
191-11 representative thereof and shall set forth:
191-12 (A) the plan of conversion or a statement
191-13 certifying the following:
191-14 (i) the name, the state of incorporation,
191-15 formation, or organization of the converting entity, and the
191-16 organizational form of the converting entity;
191-17 (ii) that a plan of conversion has been
191-18 approved;
191-19 (iii) that an executed plan of conversion
191-20 is on file at the principal place of business of the converting
191-21 entity, stating the address thereof, and that an executed plan of
191-22 conversion will be on file, from and after the conversion, at the
191-23 principal place of the converting entity, stating the address
191-24 thereof; and
191-25 (iv) that a copy of the plan of conversion
191-26 will be furnished by the converting entity (prior to the
191-27 conversion) or the converted entity (after the conversion), on
192-1 written request and without cost, to any member of the converting
192-2 entity or the converted entity; and
192-3 (B) a statement that the approval of the plan of
192-4 conversion was duly authorized by all action required by the laws
192-5 under which the converting entity was incorporated, formed, or
192-6 organized and by its constituent documents;
192-7 (2) the original and one copy of the articles of
192-8 conversion shall be delivered to the secretary of state; and
192-9 (3) two copies of the certificate of limited
192-10 partnership of the domestic limited partnership if the converted
192-11 entity is a domestic limited partnership shall also be delivered to
192-12 the secretary of state with the articles of conversion.
192-13 (f) If the secretary of state finds that the articles of
192-14 conversion conform to law and has received all filings required to
192-15 be received, and issued all certificates required to be issued in
192-16 connection with the incorporation, formation, or organization of
192-17 the converted entity, if any, he shall, when all fees and franchise
192-18 taxes have been paid as required by law or if the articles of
192-19 conversion provide that the converted entity will be liable for the
192-20 payment of all such fees and franchise taxes:
192-21 (1) endorse on the original and each copy the
192-22 word "Filed" and the month, day, and year of the filing thereof;
192-23 (2) file the original in his office; and
192-24 (3) issue a certificate of conversion, together
192-25 with a copy of the articles affixed thereto, to the converted
192-26 entity or its representatives.
192-27 (g) Except as otherwise provided by Section 9.06, upon the
193-1 issuance of the certificate of conversion by the secretary of state
193-2 (or if a certificate of conversion need not be executed, as
193-3 provided in the plan of merger), the conversion of a converting
193-4 entity shall be effective.
193-5 (h) When a conversion of a converting entity takes effect:
193-6 (1) the converting entity shall continue to exist,
193-7 without interruption, but in the organizational form of the
193-8 converted entity rather than in its prior organizational form;
193-9 (2) all rights, title, and interests to all real
193-10 estate and other property owned by the converting entity shall
193-11 continue to be owned by the converted entity in its new
193-12 organizational form without reversion or impairment, without
193-13 further act or deed, and without any transfer or assignment having
193-14 occurred, but subject to any existing liens or other encumbrances
193-15 thereon;
193-16 (3) all liabilities and obligations of the converting
193-17 entity shall continue to be liabilities and obligations of the
193-18 converted entity in its new organizational form without impairment
193-19 or diminution by reason of the conversion;
193-20 (4) all rights of creditors or other parties with
193-21 respect to or against the prior interest holders or other owners of
193-22 the converting entity in their capacities as such in existence as
193-23 of the effective time of the conversion will continue in existence
193-24 as to those liabilities and obligations and may be pursued by such
193-25 creditors and obligees as if such conversion shall not have
193-26 occurred;
193-27 (5) a proceeding pending by or against the converting
194-1 entity or by or against any of the converting entity's interest
194-2 holders or owners in their capacities as such may be continued by
194-3 or against the converted entity in its new organizational form and
194-4 by or against the prior interest holders or owners, as the case may
194-5 be, without any need for substitution of parties;
194-6 (6) the partnership interests, shares, and other
194-7 evidences of ownership in the converting entity that are to be
194-8 converted into partnership interests, shares, evidences of
194-9 ownership, or other securities in the converted entity as provided
194-10 in the plan of conversion shall be so converted, and if the
194-11 converting entity is a domestic partnership, the former holders of
194-12 shares in the domestic partnership shall be entitled only to the
194-13 rights provided in the plan of conversion;
194-14 (7) if, after the effectiveness of the conversion, a
194-15 shareholder, partner, member, or other owner of the converted
194-16 entity would be liable under applicable law in such capacity for
194-17 the debts or obligations of the converted entity, such shareholder,
194-18 partner, member, or other owner of the converted entity shall be
194-19 liable for the debts and obligations of the converting entity that
194-20 existed before the conversion takes effect only to the extent that
194-21 such shareholder, partner, member or other owner:
194-22 (A) agreed in writing to be liable for such
194-23 debts or obligations;
194-24 (B) was liable under applicable law, prior to
194-25 the effectiveness of the conversion, for such debts or obligations;
194-26 or
194-27 (C) by becoming a shareholder, partner, member,
195-1 or other owner of the converted entity, becomes liable under
195-2 applicable law for existing debts and obligations of the converted
195-3 entity;
195-4 (8) if the converted entity is a foreign partnership
195-5 or other entity, such converted entity shall be deemed to appoint
195-6 the secretary of state as its agent for service of process in a
195-7 proceeding to enforce any obligation or the rights of dissenting
195-8 shareholders of the converting domestic partnership; and
195-9 (9) if the converting partnership is a domestic
195-10 partnership, the provisions of Section 9.02 of this Act shall apply
195-11 as if the converted entity were the survivor of a merger with the
195-12 converting entity.
195-13 (i) For purposes of this section:
195-14 (1) "Conversion" means:
195-15 (A) the continuance of a domestic partnership
195-16 as, and in the organizational form of, a foreign partnership or
195-17 other entity; or
195-18 (B) the continuance of a foreign partnership or
195-19 other entity as, and in the organizational form of, a domestic
195-20 partnership.
195-21 (2) "Converted entity" means any domestic or foreign
195-22 partnership or other entity to which a converting entity has
195-23 converted or intends to convert as permitted by this section.
195-24 (3) "Converting entity" means any domestic or foreign
195-25 partnership or other entity that has converted or intends to
195-26 convert as permitted by this section.
195-27 (4) "Domestic partnership" means a partnership the
196-1 internal affairs of which are governed by this Act.
196-2 (5) "Foreign partnership" means a partnership, other
196-3 than a limited partnership, the internal affairs of which are
196-4 governed by the law of another state comparable to this Act or the
196-5 Texas Uniform Partnership Act (Article 6132b, Vernon's Texas Civil
196-6 Statutes).
196-7 (6) "Other entity" means any entity, whether organized
196-8 for profit or not, that is a corporation, limited partnership
196-9 (other than a limited partnership formed under the Texas Revised
196-10 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
196-11 Statutes)), joint venture, limited liability company, joint stock
196-12 company, cooperative, association, bank, insurance company, or
196-13 other legal entity organized pursuant to the laws of this state or
196-14 any other state or country.
196-15 Sec. 9.06. FILINGS AND FEES. Sections 2.12 and 12.01, Texas
196-16 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
196-17 Civil Statutes), apply to filings made with the secretary of state
196-18 under this article as if those filings related to limited
196-19 partnerships.
196-20 SECTION 97. Section 171.252, Tax Code, is amended to read as
196-21 follows:
196-22 Sec. 171.252. Effects of Forfeiture. If the corporate
196-23 privileges of a corporation are forfeited under this subchapter:
196-24 (1) the corporation shall be denied the right to sue
196-25 or defend in a court of this state; and
196-26 (2) each director or officer of the corporation is
196-27 liable for a tax, penalty, fee, or other amount owed to the state
197-1 by <debt of> the corporation as provided by Section 171.255 of this
197-2 code.
197-3 SECTION 98. Sections 171.255(a) and (c), Tax Code, are
197-4 amended to read as follows:
197-5 (a) If the corporate privileges of a corporation are
197-6 forfeited for the failure to file a report or pay a tax or penalty,
197-7 each director or officer of the corporation is liable for each tax,
197-8 penalty, fee, or other amount owed to the state by <debt of> the
197-9 corporation that is created or incurred in this state after the
197-10 date on which the report, tax, or penalty is due and before the
197-11 corporate privileges are revived. The liability includes liability
197-12 for any tax or penalty imposed by this chapter on the corporation
197-13 that becomes due and payable after the date of the forfeiture.
197-14 (c) A director or officer is not liable for a tax, penalty,
197-15 fee, or other amount owed to the state by <debt of> the corporation
197-16 if the director or officer shows that the failure to pay the tax,
197-17 penalty, fee, or other amount occurred <debt was created or
197-18 incurred>:
197-19 (1) over the director's or officer's objection; or
197-20 (2) without the director's or officer's knowledge and
197-21 that the exercise of reasonable diligence to become acquainted with
197-22 the affairs of the corporation would not have revealed the
197-23 intention to create the liability for the tax, penalty, fee, or
197-24 other amount <debt>.
197-25 SECTION 99. Section 8.03, Texas Revised Limited Partnership
197-26 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is repealed.
197-27 SECTION 100. (a) This Act takes effect September 1, 1995.
198-1 (b) The change to Section 6.03, Texas Revised Limited
198-2 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
198-3 made by this Act, applies only to domestic limited partnerships
198-4 formed on or after September 1, 1995. A domestic limited
198-5 partnership formed before that date is governed by Section 6.03,
198-6 Texas Revised Limited Partnership Act (Article 6132a-1, Vernon's
198-7 Texas Civil Statutes), as it existed before amendment by this Act,
198-8 and that provision remains in effect for that limited purpose.
198-9 (c) This Act shall not affect any action or proceeding
198-10 commenced before the effective date.
198-11 SECTION 101. The importance of this legislation and the
198-12 crowded condition of the calendars in both houses create an
198-13 emergency and an imperative public necessity that the
198-14 constitutional rule requiring bills to be read on three several
198-15 days in each house be suspended, and this rule is hereby suspended.