By Brimer H.B. No. 1425
74R1891 CLG-F
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. Section A, Article 2.21, Texas Business
16-23 Corporation Act, is 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 SECTION 6. Article 2.28, Texas Business Corporation Act, is
17-23 amended by amending Sections A and B and adding Section E to read
17-24 as follows:
17-25 A. Quorum. With respect to any meeting of shareholders
17-26 <matter>, a quorum shall be present for any matter to be presented
17-27 at that meeting <at a meeting of shareholders> if the holders of a
18-1 majority of the shares entitled to vote at the meeting <on that
18-2 matter> are represented at the meeting in person or by proxy,
18-3 unless otherwise provided in the articles of incorporation in
18-4 accordance with this section. The articles of incorporation may
18-5 provide:
18-6 (1) That a quorum shall be present at a meeting of
18-7 shareholders only if the holders of a specified greater portion of
18-8 the shares entitled to vote are represented at the meeting in
18-9 person or by proxy; or
18-10 (2) That a quorum shall be present at a meeting of
18-11 shareholders if the holders of a specified lesser portion, but not
18-12 less than one-third (1/3), of the shares entitled to vote are
18-13 represented at the meeting in person or by proxy.
18-14 Unless otherwise provided in the articles of incorporation or
18-15 the bylaws, once a quorum is present at a meeting of shareholders,
18-16 the shareholders represented in person or by proxy at the meeting
18-17 may conduct such business as may be properly brought before the
18-18 meeting until it is adjourned, and the subsequent withdrawal from
18-19 the meeting of any shareholder or the refusal of any shareholder
18-20 represented in person or by proxy to vote shall not affect the
18-21 presence of a quorum at the meeting. Unless otherwise provided in
18-22 the articles of incorporation or the bylaws, the shareholders
18-23 represented in person or by proxy at a meeting of shareholders at
18-24 which a quorum is not present may adjourn the meeting until such
18-25 time and to such place as may be determined by a vote of the
18-26 holders of a majority of the shares represented in person or by
18-27 proxy at that meeting.
19-1 B. Voting on Matters Other Than the Election of Directors.
19-2 With respect to any matter, other than the election of directors or
19-3 a matter for which the affirmative vote of the holders of a
19-4 specified portion of the shares entitled to vote is required by
19-5 this Act, the affirmative vote of the holders of a majority of the
19-6 shares entitled to vote on, and that voted for or against or
19-7 expressly abstained with respect to, that matter <and represented
19-8 in person or by proxy> at a meeting of shareholders at which a
19-9 quorum is present shall be the act of the shareholders, unless
19-10 otherwise provided in the articles of incorporation or the bylaws
19-11 in accordance with this section. With respect to any matter, other
19-12 than the election of directors or a matter for which the
19-13 affirmative vote of the holders of a specified portion of the
19-14 shares entitled to vote is required by this Act, the articles of
19-15 incorporation or the bylaws may provide:
19-16 (1) That the act of the shareholders shall be the
19-17 affirmative vote of the holders of a specified portion, but not
19-18 less than a majority, of the shares entitled to vote on that
19-19 matter;
19-20 (2) That the act of the shareholders shall be the
19-21 affirmative vote of the holders of a specified portion, but not
19-22 less than a majority, of the shares entitled to vote on that matter
19-23 and represented in person or by proxy at a meeting of shareholders
19-24 at which a quorum is present; <or>
19-25 (3) That the act of the shareholders shall be the
19-26 affirmative vote of the holders of a specified portion, but not
19-27 less than a majority, of the shares entitled to vote on, and voted
20-1 for or against, that matter at a meeting of shareholders at which a
20-2 quorum is present; or
20-3 (4) 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, and that
20-6 voted for or against or expressly abstained with respect to, that
20-7 matter at a meeting of shareholders at which a quorum is present.
20-8 E. A corporation may establish procedures in its bylaws, not
20-9 inconsistent with this Act, for determining the validity of proxies
20-10 and whether shares that are held of record by a bank, broker, or
20-11 other nominee are represented at a meeting of shareholders with
20-12 respect to any matter. The procedures may incorporate or look to
20-13 rules and determinations of self regulatory organizations
20-14 regulating that bank, broker, or other nominee.
20-15 SECTION 7. Section B, Article 2.29, Texas Business
20-16 Corporation Act, is amended to read as follows:
20-17 B. Shares <Treasury shares, shares> of its own stock owned
20-18 by a corporation or by another domestic or foreign corporation, if
20-19 a <the> majority of the voting stock of the other corporation
20-20 <which> is owned or controlled by the <it, and shares of its own
20-21 stock held by a> corporation, <in a fiduciary capacity> shall not
20-22 be voted, directly or indirectly, at any meeting, and shall not be
20-23 counted in determining the total number of outstanding shares at
20-24 any given time. Nothing in this section shall be construed as
20-25 limiting the right of any corporation to vote stock, including but
20-26 not limited to its own stock, held or controlled by it in a
20-27 fiduciary capacity, or with respect to which it otherwise exercises
21-1 voting power in a fiduciary capacity.
21-2 SECTION 8. Part Two, Texas Business Corporation Act, is
21-3 amended by adding Article 2.30-1 to read as follows:
21-4 Art. 2.30-1. SHAREHOLDER AGREEMENTS. A. Scope of
21-5 Agreement. An agreement among the shareholders of a corporation
21-6 that complies with this article is effective among the shareholders
21-7 and the corporation even though it is inconsistent with one or more
21-8 provisions of this Act in that it:
21-9 (1) restricts the discretion or powers of the board of
21-10 directors;
21-11 (2) eliminates the board of directors and permits
21-12 management of the business and affairs of the corporation by its
21-13 shareholders, or in whole or in part by one or more of its
21-14 shareholders, or by one or more persons not shareholders;
21-15 (3) establishes the natural persons who shall be the
21-16 directors or officers of the corporation, their term of office or
21-17 manner of selection or removal, or terms or conditions of
21-18 employment of any director, officer, or other employee of the
21-19 corporation, regardless of the length of employment;
21-20 (4) governs the authorization or making of
21-21 distributions whether in proportion to ownership of shares, subject
21-22 to the limitations in Article 2.38 of this Act, or determines the
21-23 manner in which profits and losses shall be apportioned;
21-24 (5) governs, in general or in regard to specific
21-25 matters, the exercise or division of voting power by and between
21-26 the shareholders, directors (if any), or other persons or by or
21-27 among any of them, including use of disproportionate voting rights
22-1 or director proxies;
22-2 (6) establishes the terms and conditions of any
22-3 agreement for the transfer or use of property or the provision of
22-4 services between the corporation and any shareholder, director,
22-5 officer, or employee of the corporation, or other person or among
22-6 any of them;
22-7 (7) authorizes arbitration or grants authority to any
22-8 shareholder or other person as to any issue about which there is a
22-9 deadlock among the directors, shareholders, or other person or
22-10 persons empowered to manage the corporation to resolve that issue;
22-11 (8) requires dissolution of the corporation at the
22-12 request of one or more of the shareholders or upon the occurrence
22-13 of a specified event or contingency in which case the dissolution
22-14 of the corporation shall proceed as if all the shareholders had
22-15 consented in writing to dissolution of the corporation as provided
22-16 in Article 6.02 of this Act; or
22-17 (9) otherwise governs the exercise of corporate
22-18 powers, the management of the business and affairs of the
22-19 corporation, or the relationship among the shareholders, the
22-20 directors, and the corporation, or among any of them, as if the
22-21 corporation were a partnership or in a manner that would otherwise
22-22 be appropriate only among partners, and is not contrary to public
22-23 policy.
22-24 B. Procedures Required. An agreement authorized by this
22-25 article shall be:
22-26 (1) set forth (a) in the articles of incorporation or
22-27 bylaws and approved by all persons who are shareholders at the time
23-1 of the agreement or (b) in a written agreement that is signed by
23-2 all the persons who are shareholders at the time of the agreement
23-3 and is made known to the corporation;
23-4 (2) subject to amendment only by all persons who are
23-5 shareholders at the time of the amendment, unless the agreement
23-6 provides otherwise; and
23-7 (3) valid for 10 years, unless the agreement provides
23-8 otherwise.
23-9 C. Notation of Existence. The existence of an agreement
23-10 authorized by this article shall be noted conspicuously on the
23-11 front or back of each certificate for outstanding shares or on the
23-12 information statement required for uncertificated shares by Article
23-13 2.19 of this Act and shall include the following: "These shares
23-14 are subject to the provisions of a shareholders' agreement that may
23-15 provide for management of the corporation in a manner different
23-16 than in other corporations and may subject a shareholder to certain
23-17 obligations or liabilities not otherwise imposed on shareholders in
23-18 other corporations". If at the time of the agreement the
23-19 corporation has shares outstanding represented by certificates, the
23-20 corporation shall recall the outstanding certificates and issue
23-21 substitute certificates that comply with this section. The failure
23-22 to note the existence of the agreement on the certificate or
23-23 information statement shall not affect the validity of the
23-24 agreement or any action taken pursuant to it.
23-25 D. Right of Rescission. Any purchaser of shares who, at the
23-26 time of purchase, did not have knowledge of the existence of an
23-27 agreement authorized by this article shall be entitled to
24-1 rescission of the purchase. A purchaser shall be deemed to have
24-2 knowledge of the existence of the agreement if its existence is
24-3 noted on the certificate or information statement for the shares in
24-4 compliance with Section C of this article and, if the shares are
24-5 not represented by a certificate, the information statement noting
24-6 existence of the agreement is delivered to the purchaser at or
24-7 prior to the time of purchase of the shares. An action to enforce
24-8 the right of rescission authorized by this section must be
24-9 commenced within the earlier of 90 days after discovery of the
24-10 existence of the agreement or two years after time of the purchase
24-11 of the shares.
24-12 E. Cessation. An agreement authorized by this article shall
24-13 cease to be effective when shares of the corporation are listed on
24-14 a national securities exchange, quoted on an interdealer quotation
24-15 system of a national securities association, or regularly traded in
24-16 a market maintained by one or more members of a national or
24-17 affiliated securities association. If the agreement ceases to be
24-18 effective for any reason and the corporation does not have a board
24-19 of directors, governance by a board of directors shall be
24-20 instituted or reinstated in the manner provided in Section C,
24-21 Article 12.23, of this Act. If the agreement is contained or
24-22 referred to in the corporation's articles of incorporation or
24-23 bylaws, the board of directors may adopt an amendment to the
24-24 articles of incorporation or bylaws, without shareholder action, to
24-25 delete the agreement and any references to it.
24-26 F. Managerial Liabilities. An agreement authorized by this
24-27 article that limits the discretion or powers of the board of
25-1 directors or supplants the board of directors shall relieve the
25-2 directors of, and impose upon the person or persons in whom such
25-3 discretion or powers or management of the business and affairs of
25-4 the corporation are vested, liability for action or omissions
25-5 imposed by this Act or other law on directors to the extent that
25-6 the discretion or powers of the directors are limited or supplanted
25-7 by the agreement.
25-8 G. Limitation of Liability. The existence or performance of
25-9 an agreement authorized by this article shall not be grounds for
25-10 imposing personal liability on any shareholder for the acts or
25-11 obligations of the corporation by disregarding the separate entity
25-12 of the corporation or otherwise, even if the agreement or its
25-13 performance:
25-14 (1) treats the corporation as if it were a partnership
25-15 or in a manner that otherwise is appropriate only among partners;
25-16 (2) results in the corporation being considered a
25-17 partnership for purposes of taxation; or
25-18 (3) results in failure to observe the corporate
25-19 formalities otherwise applicable to the matters governed by the
25-20 agreement.
25-21 H. If No Shares Issued. Incorporators or subscribers for
25-22 the shares may act as shareholders with respect to an agreement
25-23 authorized by this article if no shares have been issued when the
25-24 agreement is signed.
25-25 SECTION 9. Article 2.31, Texas Business Corporation Act, is
25-26 amended to read as follows:
25-27 Art. 2.31. Board of Directors. A. Except as provided by
26-1 Article 2.30-1 and Part Twelve of this Act, the <The> powers of a
26-2 corporation shall be exercised by or under the authority of, and
26-3 the business and affairs of a corporation shall be managed under
26-4 the direction of, the board of directors of the corporation.
26-5 Directors need not be residents of this State or shareholders of
26-6 the corporation unless the articles of incorporation or bylaws so
26-7 require. The articles of incorporation or bylaws may prescribe
26-8 other qualifications for directors.
26-9 SECTION 10. Section A, Article 2.35-1, Texas Business
26-10 Corporation Act, is amended to read as follows:
26-11 A. An otherwise valid <No> contract or transaction between a
26-12 corporation and one or more of its directors or officers, or
26-13 between a corporation and any other domestic or foreign
26-14 corporation<, partnership, association,> or other entity
26-15 <organization> in which one or more of its directors or officers
26-16 are directors or officers or have a financial interest, shall be
26-17 valid notwithstanding <void or voidable solely for this reason,
26-18 solely because> the director or officer is present at or
26-19 participates in the meeting of the board or committee thereof which
26-20 authorizes the contract or transaction, or solely because his or
26-21 their votes are counted for such purpose, if any one of the
26-22 following is satisfied:
26-23 (1) The material facts as to his relationship or
26-24 interest and as to the contract or transaction are disclosed or are
26-25 known to the board of directors or the committee, and the board or
26-26 committee in good faith authorizes the contract or transaction by
26-27 the affirmative vote of a majority of the disinterested directors,
27-1 even though the disinterested directors be less than a quorum; or
27-2 (2) The material facts as to his relationship or
27-3 interest and as to the contract or transaction are disclosed or are
27-4 known to the shareholders entitled to vote thereon, and the
27-5 contract or transaction is specifically approved in good faith by
27-6 vote of the shareholders; or
27-7 (3) The contract or transaction is fair as to the
27-8 corporation as of the time it is authorized, approved, or ratified
27-9 by the board of directors, a committee thereof, or the
27-10 shareholders.
27-11 SECTION 11. Section B, Article 2.36, Texas Business
27-12 Corporation Act, is amended to read as follows:
27-13 B. No committee of the board of directors shall have the
27-14 authority of the board of directors in reference to:
27-15 (1) amending the articles of incorporation, except
27-16 that a committee may, to the extent provided in the resolution
27-17 designating that committee or in the articles of incorporation or
27-18 the bylaws, exercise the authority of the board of directors vested
27-19 in it in accordance with Article 2.13 of this Act;
27-20 (2) proposing a reduction of the stated capital of the
27-21 corporation in the manner permitted by Article 4.12 of this Act;
27-22 (3) approving a plan of merger, <or> share exchange,
27-23 or conversion of the corporation;
27-24 (4) recommending to the shareholders the sale, lease,
27-25 or exchange of all or substantially all of the property and assets
27-26 of the corporation otherwise than in the usual and regular course
27-27 of its business;
28-1 (5) recommending to the shareholders a voluntary
28-2 dissolution of the corporation or a revocation thereof;
28-3 (6) amending, altering, or repealing the bylaws of the
28-4 corporation or adopting new bylaws of the corporation;
28-5 (7) filling vacancies in the board of directors;
28-6 (8) filling vacancies in or designating alternate
28-7 members of any such committee;
28-8 (9) filling any directorship to be filled by reason of
28-9 an increase in the number of directors;
28-10 (10) electing or removing officers of the corporation
28-11 or members or alternate members of any such committee;
28-12 (11) fixing the compensation of any member or
28-13 alternate members of such committee; or
28-14 (12) altering or repealing any resolution of the board
28-15 of directors that by its terms provides that it shall not be so
28-16 amendable or repealable.
28-17 SECTION 12. Section B, Article 2.38-4, Texas Business
28-18 Corporation Act, is amended to read as follows:
28-19 B. For the purposes of this Article, a distribution that
28-20 involves the incurrence by a corporation of any indebtedness or
28-21 deferred payment obligation or that involves a requirement in the
28-22 corporation's articles of incorporation or other contract by the
28-23 corporation to redeem, exchange, or otherwise acquire any of its
28-24 own shares is deemed to have been made on the date the indebtedness
28-25 or obligation is incurred or, in the case of a provision in the
28-26 articles of incorporation of a corporation or other contract to
28-27 purchase, redeem, exchange, or otherwise acquire shares, at the
29-1 option of the corporation, is deemed to have been made on either
29-2 the date the provision or other contract is made or takes effect or
29-3 the date on which the shares to be redeemed, exchanged, or acquired
29-4 are redeemed, exchanged, or acquired.
29-5 SECTION 13. Article 3.01, Texas Business Corporation Act, is
29-6 amended to read as follows:
29-7 Art. 3.01. Incorporators. A. Any natural person of the age
29-8 of eighteen (18) years or more, or any domestic or foreign
29-9 corporation, estate, or other entity <partnership, corporation,
29-10 association, trust, or estate (without regard to place of
29-11 residence, domicile, or organization)> may act as an incorporator
29-12 of a corporation by signing the articles of incorporation for such
29-13 corporation and by delivering the original and a copy of the
29-14 articles of incorporation to the Secretary of State.
29-15 SECTION 14. Section A, Article 3.02, Texas Business
29-16 Corporation Act, is amended to read as follows:
29-17 A. The articles of incorporation shall set forth:
29-18 (1) The name of the corporation;
29-19 (2) The period of duration, which may be perpetual;
29-20 (3) The purpose or purposes for which the corporation
29-21 is organized which may be stated to be, or to include, the
29-22 transaction of any or all lawful business for which corporations
29-23 may be incorporated under this Act;
29-24 (4) The aggregate number of shares which the
29-25 corporation shall have authority to issue; if such shares are to
29-26 consist of one class only, the par value of each of such shares, or
29-27 a statement that all of such shares are without par value; or, if
30-1 such shares are to be divided into classes, the number of shares of
30-2 each class, and a statement of the par value of the shares of each
30-3 class or that such shares are to be without par value;
30-4 (5) If the shares are to be divided into classes, the
30-5 designation of each class and statement of the preferences,
30-6 limitations, and relative rights in respect of the shares of each
30-7 class;
30-8 (6) If the corporation is to issue the shares of any
30-9 class in series, then the designation of each series and a
30-10 statement of the variations in the preferences, limitations and
30-11 relative rights as between series insofar as the same are to be
30-12 fixed in the articles of incorporation, and a statement of any
30-13 authority to be vested in the board of directors to establish
30-14 series and fix and determine the preferences, limitations and
30-15 relative rights of each series;
30-16 (7) A statement that the corporation will not commence
30-17 business until it has received for the issuance of shares
30-18 consideration of the value of a stated sum which shall be at least
30-19 One Thousand Dollars ($1,000.00)<, consisting of money, labor done,
30-20 or property actually received>;
30-21 (8) Any provision limiting or denying to shareholders
30-22 the preemptive right to acquire additional or treasury shares of
30-23 the corporation;
30-24 (9) If a corporation elects to become a close
30-25 corporation in conformance with Part Twelve of this Act, any
30-26 provision (a) required or permitted by this Act to be stated in the
30-27 articles of incorporation of a close corporation, but not in the
31-1 articles of incorporation of an ordinary corporation, (b) contained
31-2 or permitted to be contained in a shareholders' agreement in
31-3 conformance with Part Twelve of this Act which the incorporators
31-4 elect to set forth in articles of incorporation, or (c) that makes
31-5 a shareholders' agreement in conformance with Part Twelve of this
31-6 Act part of the articles of incorporation of a close corporation in
31-7 the manner prescribed in Section F, Article 2.22 of this Act, but
31-8 any such provision, other than the statement required by Section A,
31-9 Article 12.11 of this Act, shall be preceded by a statement that
31-10 the provision shall be subject to the corporation remaining a close
31-11 corporation in conformance with Part Twelve of this Act;
31-12 (10) Any provision, not inconsistent with law,
31-13 including any provision which under this Act is required or
31-14 permitted to be set forth in the bylaws, which the incorporators
31-15 elect to set forth in the articles of incorporation for the
31-16 regulation of the internal affairs of the corporation;
31-17 (11) The street address of its initial registered
31-18 office and the name of its initial registered agent at such
31-19 address;
31-20 (12) The number of directors constituting the initial
31-21 board of directors and the names and addresses of the person or
31-22 persons who are to serve as directors until the first annual
31-23 meeting of shareholders or until their successors be elected and
31-24 qualify, or, in the case of a close corporation that, in
31-25 conformance with Part Twelve of this Act, is to be managed in some
31-26 other manner pursuant to a shareholders' agreement by the
31-27 shareholders or by the persons empowered by the agreement to manage
32-1 its business and affairs, the names and addresses of the person or
32-2 persons who, pursuant to the shareholders' agreement, will perform
32-3 the functions of the initial board of directors provided for by
32-4 this Act;
32-5 (13) The name and address of each incorporator, unless
32-6 the corporation is being incorporated pursuant to a plan of
32-7 conversion or a plan of merger, in which case the articles need not
32-8 include such information; and
32-9 (14) If the corporation is being incorporated pursuant
32-10 to a plan of conversion or a plan of merger, a statement to that
32-11 effect, and in the case of a plan of conversion, the name, address,
32-12 and prior form of organization and jurisdiction of incorporation or
32-13 organization of the converting entity.
32-14 SECTION 15. Article 3.03, Texas Business Corporation Act, is
32-15 amended by amending Section A and adding Section C to read as
32-16 follows:
32-17 A. Except as provided by Section C of this Article, the
32-18 <The> original and a copy of the articles of incorporation shall be
32-19 delivered to the Secretary of State. If the Secretary of State
32-20 finds that the articles of incorporation conform to law, he shall,
32-21 when all fees have been paid as required by law:
32-22 (1) Endorse on the original and the copy the word
32-23 "Filed," and the month, day, and year of the filing thereof.
32-24 (2) File the original in his office.
32-25 (3) Issue a certificate of incorporation to which he
32-26 shall affix the copy.
32-27 C. In the case of a new domestic corporation being
33-1 incorporated pursuant to a plan of conversion or a plan of merger
33-2 pursuant to Part Five of this Act, the articles of incorporation of
33-3 the corporation shall be filed with the Secretary of State with the
33-4 articles of conversion or merger and need not be filed separately
33-5 pursuant to Section A of this Article. If the Secretary of State
33-6 finds that the articles of incorporation conform to the law, he
33-7 shall file the articles of incorporation in his office and issue a
33-8 certificate of incorporation, to which he shall affix a copy of the
33-9 articles of incorporation, and deliver the same to the party or
33-10 parties filing the articles of conversion or merger, or their
33-11 representatives, with the certificate of conversion or merger that
33-12 is issued in connection with the conversion or merger. In the case
33-13 of a conversion or a merger, the certificate of incorporation of a
33-14 domestic corporation that is a converted entity or that is to be
33-15 created pursuant to the plan of merger, shall become effective upon
33-16 the effectiveness of the conversion or the merger, as the case may
33-17 be.
33-18 SECTION 16. Article 3.04, Texas Business Corporation Act, is
33-19 amended to read as follows:
33-20 Art. 3.04. Effect of Issuance of Certificate of
33-21 Incorporation. A. Except as provided by Section B of this
33-22 Article, upon <Upon> the issuance of the certificate of
33-23 incorporation, the corporate existence of the corporation being
33-24 incorporated shall begin
33-25 B. In the case of a new domestic corporation being
33-26 incorporated pursuant to a plan of conversion or a plan of merger
33-27 pursuant to Part Five of this Act, the corporate existence of the
34-1 corporation shall begin upon the effectiveness of the conversion or
34-2 the merger, as the case may be.
34-3 C. Upon effectiveness, the<, and such> certificate of
34-4 incorporation shall be conclusive evidence that all conditions
34-5 precedent required to be performed for the valid incorporation of
34-6 the corporation <by the incorporators> have been complied with and
34-7 that the corporation has been duly incorporated under this Act,
34-8 except as against the State in a proceeding for involuntary
34-9 dissolution.
34-10 SECTION 17. Article 3.05, Texas Business Corporation Act, is
34-11 amended to read as follows:
34-12 Art. 3.05. Requirement Before Commencing Business. A. A
34-13 corporation shall not transact any business or incur any
34-14 indebtedness, except such as shall be incidental to its
34-15 organization or to obtaining subscriptions to or payment for its
34-16 shares, until it has received for the issuance of shares
34-17 consideration of the value of at least One Thousand Dollars
34-18 ($1,000.00)<, consisting of money, labor done, or property actually
34-19 received>.
34-20 SECTION 18. Article 3.06, Texas Business Corporation Act, is
34-21 amended to read as follows:
34-22 Art. 3.06. Organization Meeting of Directors. A. Except as
34-23 provided by Section B of this Article, after <After> the issuance
34-24 of the certificate of incorporation, an organization meeting of the
34-25 initial board of directors named in the articles of incorporation
34-26 (or of the person or persons who, in conformance with Section
34-27 A(12), Article 3.02 of this Act, are named in the articles of
35-1 incorporation as the person or persons who will perform the
35-2 functions of the initial board of directors provided for by this
35-3 Act) shall be held, either within or without this State, at the
35-4 call of a majority of the directors named in the articles of
35-5 incorporation, for the purpose of adopting bylaws, electing
35-6 officers, and transacting such other business as may come before
35-7 the meeting. The directors calling the meeting shall give at least
35-8 three (3) days notice thereof by mail to each director so named,
35-9 stating the time and place of the meeting.
35-10 B. The provisions of Section A of this Article shall not
35-11 apply to a corporation that is a converted entity or a corporation
35-12 that is created pursuant to a plan of merger if the plan of
35-13 conversion or the plan of merger, as the case may be, sets forth
35-14 the bylaws and officers of the corporation.
35-15 SECTION 19. Section A, Article 4.03, Texas Business
35-16 Corporation Act, is amended to read as follows:
35-17 A. The holders of the outstanding shares of a class shall be
35-18 entitled to vote as a class upon a proposed amendment, and the
35-19 holders of the outstanding shares of a series shall be entitled to
35-20 vote as a class upon a proposed amendment, whether or not entitled
35-21 to vote thereon by the provisions of the articles of incorporation,
35-22 if the amendment would accomplish any of the following, unless the
35-23 amendment is undertaken pursuant to authority granted to the board
35-24 of directors in the articles of incorporation in accordance with
35-25 <Section B of> Article 2.13 of this Act:
35-26 (1) Increase or decrease the aggregate number of
35-27 authorized shares of such class or series.
36-1 (2) Increase or decrease the par value of the shares
36-2 of such class, including changing shares having a par value into
36-3 shares without par value, or shares without par value into shares
36-4 with par value.
36-5 (3) Effect an exchange, reclassification, or
36-6 cancellation of all or part of the shares of such class or series.
36-7 (4) Effect an exchange, or create a right of exchange,
36-8 of all or any part of the shares of another class into the shares
36-9 of such class or series.
36-10 (5) Change the designations, preferences, limitations,
36-11 or relative rights of the shares of such class or series.
36-12 (6) Change the shares of such class or series, whether
36-13 with or without par value, into the same or a different number of
36-14 shares, either with or without par value, of the same class or
36-15 series or another class or series.
36-16 (7) Create a new class or series of shares having
36-17 rights and preferences equal, prior, or superior to the shares of
36-18 such class or series, or increase the rights and preferences of any
36-19 class or series having rights and preferences equal, prior, or
36-20 superior to the shares of such class or series, or increase the
36-21 rights and preferences of any class or series having rights or
36-22 preferences later or inferior to the shares of such class or series
36-23 in such a manner as to become equal, prior, or superior to the
36-24 shares of such class or series.
36-25 (8) Divide the shares of such class into series and
36-26 fix and determine the designation of such series and the variations
36-27 in the relative rights and preferences between the shares of such
37-1 series.
37-2 (9) Limit or deny the existing preemptive rights of
37-3 the shares of such class or series.
37-4 (10) Cancel or otherwise affect dividends on the
37-5 shares of such class or series which had accrued but had not been
37-6 declared.
37-7 (11) Include in or delete from the articles of
37-8 incorporation any provisions required or permitted to be included
37-9 in the articles of incorporation of a close corporation in
37-10 conformance with Part Twelve of this Act.
37-11 SECTION 20. Article 4.14, Texas Business Corporation Act, is
37-12 amended to read as follows:
37-13 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE; AMENDMENT
37-14 OF ARTICLES, MERGER, SHARE EXCHANGE, CONVERSION, AND DISSOLUTION
37-15 PURSUANT TO FEDERAL REORGANIZATION PROCEEDINGS. A. Authorization.
37-16 Notwithstanding any other provision of this Act to the contrary, a
37-17 trustee appointed for a corporation being reorganized under a
37-18 federal statute, the designated officers of the corporation, or any
37-19 other individual or individuals designated by the court to act on
37-20 behalf of the corporation may do any of the following without
37-21 action by or notice to its board of directors or shareholders in
37-22 order to carry out a plan of reorganization ordered or decreed by a
37-23 court of competent jurisdiction under the federal statute:
37-24 (1) amend or restate its articles of incorporation if
37-25 the articles after amendment or restatement contain only provisions
37-26 required or permitted in articles;
37-27 (2) merge or engage in a share exchange with one or
38-1 more domestic or foreign corporations or other entities pursuant to
38-2 a plan of merger or exchange having such terms and provisions as
38-3 required or permitted by Articles 5.01 and 5.02 of this Act;
38-4 (3) change the location of its registered office,
38-5 change its registered agent, and remove or appoint any agent to
38-6 receive service of process;
38-7 (4) alter, amend, or repeal its bylaws;
38-8 (5) constitute or reconstitute and classify or
38-9 reclassify its board of directors, and name, constitute, or appoint
38-10 directors and officers in place of or in addition to all or some of
38-11 the officers or directors then in place;
38-12 (6) sell, lease, exchange or otherwise dispose of all,
38-13 or substantially all, of its property and assets;
38-14 (7) authorize and fix the terms, manner, and
38-15 conditions of the issuance of bonds, debentures, or other
38-16 obligations, whether or not convertible into shares of any class or
38-17 bearing warrants or other evidences of optional rights to purchase
38-18 or subscribe for any shares of any class; <or>
38-19 (8) dissolve; or
38-20 (9) effect a conversion.
38-21 Actions taken under Subsection (4) or (5) of this section are
38-22 effective on entry of the order or decree approving the plan of
38-23 reorganization or on another effective date as may be specified,
38-24 without further action of the corporation, as and to the extent set
38-25 forth in the plan of reorganization or the order or decree
38-26 approving the plan of reorganization.
38-27 B. Authority to Sign Documents. A trustee appointed for a
39-1 corporation being reorganized under a federal statute, the
39-2 designated officers of the corporation, or any other individual or
39-3 individuals designated by the court may sign on behalf of a
39-4 corporation that is being reorganized:
39-5 (1) articles of amendment or restated articles of
39-6 incorporation setting forth:
39-7 (a) the name of the corporation;
39-8 (b) the text of each amendment or the
39-9 restatement approved by the court;
39-10 (c) the date of the court's order or decree
39-11 approving the articles of amendment or restatement;
39-12 (d) the court, file name, and case number of the
39-13 reorganization case in which the order or decree was entered; and
39-14 (e) a statement that the court had jurisdiction
39-15 of the case under federal statute; or
39-16 (2) articles of merger or exchange setting forth:
39-17 (a) the name of the corporation;
39-18 (b) the text of the part of the plan of
39-19 reorganization that contains the plan of merger or exchange
39-20 approved by the court, which shall include the information required
39-21 by Article 5.04A or 5.16B of this Act, as applicable, but need not
39-22 include the resolution of the board of directors referred to in
39-23 Article 5.16B(3) of this Act;
39-24 (c) the date of the court's order or decree
39-25 approving the plan of merger or consolidation;
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 (3) articles of dissolution setting forth:
40-4 (a) the name of the corporation;
40-5 (b) the information required by Articles
40-6 6.06A(1)(2) and (3) of this Act;
40-7 (c) the date of the court's order or decree
40-8 approving the articles of dissolution;
40-9 (d) that the debts, obligations and liabilities
40-10 of the corporation have been paid or discharged as provided in the
40-11 plan of reorganization and that the remaining property and assets
40-12 of the corporation have been distributed as provided in the plan of
40-13 reorganization;
40-14 (e) the court, file name, and case number of the
40-15 reorganization case in which the order or decree was entered; and
40-16 (f) a statement that the court had jurisdiction
40-17 of the case under federal statute; <or>
40-18 (4) a statement of change of registered office or
40-19 registered agent, or both, setting forth:
40-20 (a) the name of the corporation;
40-21 (b) the information required by Article 2.10A of
40-22 this Act, as applicable, but not the information included in the
40-23 statement referred to in Article 2.10A(7) of this Act;
40-24 (c) the date of the court's order or decree
40-25 approving the statement of change of registered office or
40-26 registered agent, or both;
40-27 (d) the court, file name, and case number of the
41-1 reorganization case in which the order or decree was entered; and
41-2 (e) a statement that the court had jurisdiction
41-3 of the case under federal statute; or
41-4 (5) articles of conversion setting forth:
41-5 (a) the name of the corporation;
41-6 (b) the text of the part of the plan of
41-7 reorganization that contains the plan of conversion approved by the
41-8 court, which shall include the information required by Article 5.18
41-9 of this Act;
41-10 (c) the date of the court's order or decree
41-11 approving the plan of conversion;
41-12 (d) the court, file name, and case number of the
41-13 reorganization case in which the order or decree was entered; and
41-14 (e) a statement that the court had jurisdiction
41-15 of the case under federal statute.
41-16 C. Procedure for Merger or Share Exchange. When a domestic
41-17 or foreign corporation or other entity that is not being
41-18 reorganized merges or engages in a share exchange with a
41-19 corporation that is being reorganized pursuant to a plan of
41-20 reorganization:
41-21 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
41-22 this Act shall apply to the domestic or foreign corporation or
41-23 other entity that is not being reorganized to the same extent they
41-24 would apply if it were merging or engaging in a share exchange with
41-25 a corporation that is not being reorganized;
41-26 (2) Article 5.06 of this Act shall apply to the
41-27 domestic or foreign corporation or other entity that is not being
42-1 reorganized to the same extent it would apply if that domestic or
42-2 foreign corporation or other entity were merging or engaging in a
42-3 share exchange with a corporation that is not being reorganized,
42-4 except as otherwise provided in the plan of reorganization ordered
42-5 or decreed by a court of competent jurisdiction under the federal
42-6 statute;
42-7 (3) Article 5.16E of this Act shall apply to a
42-8 subsidiary corporation that is not being reorganized to the same
42-9 extent it would apply if that corporation were merging with a
42-10 parent corporation that is not being reorganized;
42-11 (4) Upon the receipt of all required authorization for
42-12 all action required by this Act for each corporation that is a
42-13 party to the plan of merger or exchange that is not being
42-14 reorganized and all action by each corporation, foreign
42-15 corporation, or other entity that is a party to the plan of merger
42-16 or exchange required by the laws under which it is incorporated or
42-17 organized and its constituent documents, articles of merger or
42-18 exchange shall be signed by each domestic or foreign corporation or
42-19 other entity that is a party to the merger or exchange other than
42-20 the corporation that is being reorganized as provided in Article
42-21 5.04 of this Act and on behalf of the corporation that is being
42-22 reorganized by the persons specified in Section B of this Article;
42-23 (5) The articles of merger or exchange shall set forth
42-24 the information required in Section B(2) of this Article;
42-25 (6) The articles of merger or exchange shall be filed
42-26 with the Secretary of State in the manner and with such number of
42-27 copies as is provided in Article 5.04B of this Act; and
43-1 (7) Upon the issuance of the certificate of merger or
43-2 share exchange by the Secretary of State as provided in Article
43-3 5.04 of this Act, the merger or share exchange shall become
43-4 effective with the same effect as if it had been adopted by
43-5 unanimous action of the directors and shareholders of the
43-6 corporation being reorganized. The effectiveness of the merger or
43-7 share exchange shall be determined as provided in Article 5.05 of
43-8 this Act.
43-9 D. Dissenters' Rights. Shareholders of a corporation being
43-10 reorganized under a federal statute do not have a right to dissent
43-11 under Article 5.11, <or> 5.16E, or 5.20 of this Act, except as the
43-12 plan of reorganization may provide.
43-13 E. When Applicable. This Article shall not apply after the
43-14 entry of a final decree in the reorganization case even though the
43-15 court may retain jurisdiction of the case for limited purposes
43-16 unrelated to consummation of the plan of reorganization.
43-17 F. Nonexclusivity. This Article shall not preclude other
43-18 changes in a corporation or its securities by a plan of
43-19 reorganization ordered or decreed by a court of competent
43-20 jurisdiction under federal statute.
43-21 SECTION 21. Section B, Article 5.01, Texas Business
43-22 Corporation Act, is amended to read as follows:
43-23 B. A plan of merger shall set forth:
43-24 (1) the name of each domestic or foreign corporation
43-25 or other entity that is a party to the merger and the name of each
43-26 domestic or foreign corporation or other entity, if any, that shall
43-27 survive the merger, which may be one or more of the domestic or
44-1 foreign corporations or other entities party to the merger, and the
44-2 name of each new domestic or foreign corporation or other entity,
44-3 if any, that may be created by the terms of the plan of merger;
44-4 (2) the terms and conditions of the merger including,
44-5 if more than one domestic or foreign corporation or other entity is
44-6 to survive or to be created by the terms of the plan of merger, (a)
44-7 the manner and basis of allocating and vesting the real estate and
44-8 other property of each domestic or foreign corporation and of each
44-9 other entity that is a party to the merger among one or more of the
44-10 surviving or new domestic or foreign corporations and other
44-11 entities, (b) the name of the surviving or new domestic or foreign
44-12 corporation or other entity that is to be obligated for the payment
44-13 of the fair value of any shares held by a shareholder of any
44-14 domestic corporation that is a party to the merger who has complied
44-15 with the requirements of Article 5.12 of this Act for the recovery
44-16 of the fair value of his shares, and (c) the manner and basis of
44-17 allocating all other liabilities and obligations of each domestic
44-18 or foreign corporation and other entity that is a party to the
44-19 merger (or making adequate provision for the payment and discharge
44-20 thereof) among one or more of the surviving or new domestic or
44-21 foreign corporations and other entities;
44-22 (3) the manner and basis of converting any of the
44-23 shares or other evidences of ownership of each domestic or foreign
44-24 corporation and other entity that is a party to the merger into
44-25 shares, obligations, evidences of ownership, rights to purchase
44-26 securities or other securities of one or more of the surviving or
44-27 new domestic or foreign corporations or other entities, into cash
45-1 or other property, including shares, obligations, evidences of
45-2 ownership, rights to purchase securities or other securities of any
45-3 other person or entity, or into any combination of the foregoing;
45-4 (4) as an exhibit or attachment, the articles of
45-5 incorporation of any new domestic corporation to be created by the
45-6 terms of the plan of merger; and
45-7 (5) the articles of incorporation or other
45-8 organizational documents of each other entity that is a party to
45-9 the merger and that is to survive the merger or is to be created by
45-10 the terms of the plan of merger.
45-11 SECTION 22. Section A, Article 5.02, Texas Business
45-12 Corporation Act, is amended to read as follows:
45-13 A. One or more domestic or foreign corporations or other
45-14 entities may acquire all of the outstanding shares of one or more
45-15 classes or series of one or more domestic corporations if:
45-16 (1) the board of directors of each domestic
45-17 corporation that is a party to the plan of exchange acts on a plan
45-18 of exchange in the manner prescribed by Article 5.03 of this Act
45-19 and its shareholders (if required by Article 5.03 of this Act or
45-20 the laws under which it was incorporated or organized) approve the
45-21 plan of exchange;
45-22 (2) if one or more foreign corporations or other
45-23 entities is to issue shares or other interests as part of the plan
45-24 of exchange, the issuance of such shares or interests is either
45-25 permitted by the laws under which such foreign corporation or other
45-26 entity is incorporated, organized, or not inconsistent with such
45-27 laws; and
46-1 (3) each acquiring domestic or foreign corporation or
46-2 other entity takes all action that may be required by the laws of
46-3 the state or country under which it was incorporated or organized
46-4 and by its constituent documents to effect the exchange.
46-5 SECTION 23. Section I, Article 5.03, Texas Business
46-6 Corporation Act, is amended to read as follows:
46-7 I. After a merger or share exchange is approved, and at any
46-8 time before the merger or share exchange has become effective, the
46-9 plan of merger or share exchange may be abandoned (subject to any
46-10 contractual rights) by any of the corporations that are a party to
46-11 the merger, without shareholder action, in accordance with the
46-12 procedures set forth in the plan of merger or exchange or, if no
46-13 such procedures are set forth in the plan, in the manner determined
46-14 by the board of directors. If articles of merger or exchange have
46-15 been filed with the Secretary of State but the merger or share
46-16 exchange has not yet become effective, the merger or share exchange
46-17 may be abandoned <as provided in this Section I> if a statement,
46-18 executed on behalf of each domestic corporation and foreign
46-19 corporation or other entity that is a party to the merger or share
46-20 exchange by an officer or other duly authorized representative,
46-21 stating that the plan of merger or exchange has been abandoned in
46-22 accordance with applicable law <the plan and this Section> is filed
46-23 with the Secretary of State prior to the effectiveness of the
46-24 merger or share exchange. If the Secretary of State finds that
46-25 such statement conforms to law, he shall, when all fees have been
46-26 paid as required by law:
46-27 (1) Endorse on the original and each copy the word
47-1 "Filed" and the month, day, and year of the filing thereof.
47-2 (2) File the original in his office.
47-3 (3) Issue a certificate of abandonment to each
47-4 domestic or foreign corporation or other entity that is a party to
47-5 the plan of merger or exchange.
47-6 Upon the filing of such statement by the Secretary of State, the
47-7 merger or share exchange shall be deemed abandoned and shall not
47-8 become effective.
47-9 SECTION 24. Article 5.04, Texas Business Corporation Act, is
47-10 amended to read as follows:
47-11 Art. 5.04. Articles of Merger or Exchange. A. If a plan of
47-12 merger or exchange has been approved in accordance with Article
47-13 5.03 of this Act and has not been abandoned, or approved by the
47-14 board of directors if shareholder approval is not required under
47-15 that Article, articles of merger or exchange shall be executed on
47-16 behalf of each domestic or foreign corporation or other entity that
47-17 is a party to the plan of merger or exchange by an officer or other
47-18 duly authorized representative thereof and shall set forth:
47-19 (1) The plan of merger or exchange or statement
47-20 certifying the following:
47-21 (a) the name and state of incorporation or
47-22 organization of each domestic or foreign corporation or other
47-23 entity that is a party to the plan of merger or exchange or that is
47-24 to be created thereby;
47-25 (b) that a plan of merger or exchange has been
47-26 approved;
47-27 (c) in the case of a merger, such amendments or
48-1 changes in the articles of incorporation of each domestic surviving
48-2 corporation, or if no such amendments are desired to be effected by
48-3 the merger, a statement to that effect;
48-4 (d) that the articles of incorporation of each
48-5 new domestic corporation to be created pursuant to the terms of the
48-6 plan of merger are being filed with the Secretary of State with the
48-7 articles of merger or exchange;
48-8 (e) that an executed plan of merger or exchange
48-9 is on file at the principal place of business of each surviving,
48-10 acquiring, or new domestic or foreign corporation or other entity,
48-11 stating the address thereof; and
48-12 (f) that a copy of the plan of merger or
48-13 exchange will be furnished by each surviving, acquiring, or new
48-14 domestic or foreign corporation or other entity, on written request
48-15 and without cost, to any shareholder of each domestic corporation
48-16 that is a party to or created by the plan of merger or exchange
48-17 and, in the case of a merger with multiple surviving domestic or
48-18 foreign corporations or other entities, to any creditor or obligee
48-19 of the parties to the merger at the time of the merger if such
48-20 obligation is then outstanding.
48-21 (2) If shareholder approval is not required by Article
48-22 5.03 of this Act, a statement to that effect.
48-23 (3) As to each corporation the approval of whose
48-24 shareholders is required, the number of shares outstanding, and, if
48-25 the shares of any class or series are entitled to vote as a class,
48-26 the designation and number of outstanding shares of each such class
48-27 or series.
49-1 (4) As to each corporation the approval of whose
49-2 shareholders is required, the number of shares, not entitled to
49-3 vote only as a class, voted for and against the plan, respectively,
49-4 and, if the shares of any class or series are entitled to vote as a
49-5 class, the number of shares of each such class or series voted for
49-6 and against the plan, respectively.
49-7 (5) As to each acquiring domestic or foreign
49-8 corporation or other entity in a plan of exchange, a statement that
49-9 the plan and performance of its terms were duly authorized by all
49-10 action required by the laws under which it was incorporated or
49-11 organized and by its constituent documents.
49-12 (6) As to each foreign corporation or other entity
49-13 that is a party to the plan of merger, a statement that the
49-14 approval of the plan of merger was duly authorized by all action
49-15 required by the laws under which it was incorporated or organized
49-16 and by its constituent documents.
49-17 B. The original of the articles of merger or exchange, and
49-18 such number of copies of the articles equal to the number of
49-19 surviving, new, and acquiring domestic or foreign corporations and
49-20 other entities that are a party to the plan of merger or exchange
49-21 or that will be created by the terms thereof, shall be delivered to
49-22 the Secretary of State. An equal number of copies of the articles
49-23 of incorporation of each domestic corporation that is to be
49-24 incorporated pursuant to the plan of merger shall also be delivered
49-25 to the Secretary of State with the articles of merger.
49-26 C. If the Secretary of State finds that the articles of
49-27 merger or exchange conform to law, he shall, when all fees and
50-1 franchise taxes have been paid as required by law, or if the plan
50-2 of merger or exchange (or statement provided in lieu thereof)
50-3 provides that one or more of the surviving, new, or acquiring
50-4 domestic or foreign corporations or other entities will be
50-5 responsible for the payment of all such fees and franchise taxes
50-6 and that all of such surviving, new, or acquiring domestic or
50-7 foreign corporations and other entities will be obligated to pay
50-8 such fees and franchise taxes if the same are not timely paid:
50-9 (1) Endorse on the original and each copy the word
50-10 "Filed," and the month, day, and year of the filing thereof.
50-11 (2) File the original in his office.
50-12 (3) Issue a certificate of merger or exchange,
50-13 together with a copy of the articles affixed thereto, to each
50-14 surviving, new, and acquiring domestic or foreign corporation or
50-15 other entity that is a party to the plan of merger or exchange or
50-16 that is created thereby, or its or their respective
50-17 representatives.
50-18 SECTION 25. Section B, Article 5.10, Texas Business
50-19 Corporation Act, is amended to read as follows:
50-20 B. A disposition of any, all, or substantially all, of the
50-21 property and assets of a corporation, whether or not it requires
50-22 the special authorization of the shareholders of the corporation,
50-23 effected under Section A of this article or under Article 5.09 of
50-24 this Act or otherwise:
50-25 (1) is not considered to be a merger or conversion
50-26 pursuant to this Act or otherwise; and
50-27 (2) except as otherwise expressly provided by another
51-1 statute, does not make the acquiring corporation, foreign
51-2 corporation, or other entity responsible or liable for any
51-3 liability or obligation of the selling corporation that the
51-4 acquiring corporation, foreign corporation, or other entity did not
51-5 expressly assume.
51-6 SECTION 26. Article 5.11, Texas Business Corporation Act, is
51-7 amended to read as follows:
51-8 Art. 5.11. Rights of Dissenting Shareholders in the Event of
51-9 Certain Corporate Actions. A. Any shareholder of a domestic
51-10 corporation shall have the right to dissent from any of the
51-11 following corporate actions:
51-12 (1) Any plan of merger to which the corporation is a
51-13 party if shareholder approval is required by Article 5.03 or 5.16
51-14 of this Act and the shareholder holds shares of a class or series
51-15 that was entitled to vote thereon as a class or otherwise;
51-16 (2) Any sale, lease, exchange or other disposition
51-17 (not including any pledge, mortgage, deed of trust or trust
51-18 indenture unless otherwise provided in the articles of
51-19 incorporation) of all, or substantially all, the property and
51-20 assets, with or without good will, of a corporation if <requiring
51-21 the> special authorization of the shareholders is required by this
51-22 Act and the shareholders hold shares of a class or series that was
51-23 entitled to vote thereon as a class or otherwise <as provided by
51-24 this Act>;
51-25 (3) Any plan of exchange pursuant to Article 5.02 of
51-26 this Act in which the shares of the corporation of the class or
51-27 series held by the shareholder are to be acquired.
52-1 B. Notwithstanding the provisions of Section A of this
52-2 Article, a shareholder shall not have the right to dissent from any
52-3 plan of merger in which there is a single surviving or new domestic
52-4 or foreign corporation, or from any plan of exchange, if:
52-5 (1) the shares held by the shareholder are part of a
52-6 class or series, shares of which are <listed on a national
52-7 securities exchange, or are held of record by not less than 2,000
52-8 holders,> on the record date fixed to determine the shareholders
52-9 entitled to vote on the plan of merger or <the> plan of
52-10 exchange: <,>
52-11 (a) listed on a national securities exchange;
52-12 (b) designated as a national market security on
52-13 an interdealer quotation system by the National Association of
52-14 Securities Dealers, Inc., or successor entity; or
52-15 (c) held of record by not less than 2,000
52-16 holders; and
52-17 (2) the shareholder is not required by the terms of
52-18 the plan of merger or the plan of exchange to accept for his shares
52-19 any consideration other than:
52-20 (a) shares of a domestic or foreign corporation
52-21 that, immediately after the effective time of the merger or
52-22 exchange, will be part of a class or series, <of> shares of which
52-23 are:
52-24 (i) listed, or authorized for listing upon
52-25 official notice of issuance, on a national securities exchange;<,
52-26 or>
52-27 (ii) approved for quotation as a national
53-1 market security on an interdealer quotation system by the National
53-2 Association of Securities Dealers, Inc., or successor entity; or
53-3 (iii) held of record by not less than
53-4 2,000 holders;<, and>
53-5 (b) cash in lieu of fractional shares otherwise
53-6 entitled to be received; or
53-7 (c) any combination of the securities and cash
53-8 described in Subdivisions (a) and (b) of this subsection.
53-9 SECTION 27. Article 5.14, Texas Business Corporation Act, is
53-10 amended to read as follows:
53-11 Art. 5.14. DERIVATIVE PROCEEDINGS <SUITS>. A. Certain
53-12 Definitions. For purposes of this Article, (1) a "derivative
53-13 proceeding" means a civil suit in the right of a domestic
53-14 corporation or, to the extent provided in Section K of this
53-15 Article, in the right of a foreign corporation, and (2) a
53-16 "shareholder" includes a beneficial owner whose shares are held in
53-17 a voting trust or by a nominee on the beneficial owner's behalf.
53-18 B. Standing. A shareholder may not commence or maintain a
53-19 derivative proceeding unless the shareholder:
53-20 (1) was a shareholder of the corporation at the time
53-21 of the act or omission complained of or became a shareholder by
53-22 operation of law from a person that was a shareholder at that time;
53-23 and
53-24 (2) fairly and adequately represents the interests of
53-25 the corporation in enforcing the right of the corporation.
53-26 C. Demand. No shareholder may commence a derivative
53-27 proceeding until:
54-1 (1) a written demand is filed with the corporation
54-2 setting forth with particularity the act, omission, or other matter
54-3 that is the subject of the claim or challenge and requesting that
54-4 the corporation take suitable action; and
54-5 (2) 120 days have expired from the date the demand was
54-6 made, unless the shareholder has earlier been notified that the
54-7 demand has been rejected by the corporation or unless irreparable
54-8 injury to the corporation is being suffered or would result by
54-9 waiting for the expiration of the 120-day period.
54-10 D. Stay; Discovery. (1) If the domestic or foreign
54-11 corporation commences an inquiry into the allegations made in a
54-12 demand or petition and the person or group described in Section H
54-13 of this Article is conducting an active review of the allegations
54-14 in good faith, the court shall stay a derivative proceeding until
54-15 the review is completed and a determination is made by the person
54-16 or group as to what further action, if any, should be taken. To
54-17 obtain a stay, the domestic or foreign corporation must provide the
54-18 court with a written statement containing an undertaking to advise
54-19 the court and the shareholder making the demand of the
54-20 determination promptly upon the completion of the review of the
54-21 matter. A stay shall, upon motion, be reviewed as to its continued
54-22 necessity every 90 days thereafter. If the review and
54-23 determination by the person or group described in Section H of this
54-24 Article is not completed within 90 days, the stay may be renewed
54-25 for one or more additional 90-day periods upon the domestic or
54-26 foreign corporation providing the court and the shareholder making
54-27 the demand with a written statement of the status of the review and
55-1 the reasons a continued extension of the stay is necessary.
55-2 (2) If a domestic or foreign corporation proposes to
55-3 dismiss a derivative proceeding pursuant to Section F of this
55-4 Article, discovery by a shareholder following the filing of the
55-5 derivative proceeding in accordance with the provisions of this
55-6 Article shall be limited to facts relating to whether the person or
55-7 group described in Section H of this Article is independent and
55-8 disinterested, the good faith of the inquiry and review by such
55-9 person or group, and the reasonableness of the procedures followed
55-10 by such person or group in conducting its review and will not
55-11 extend to any facts or substantive matters with respect to the act,
55-12 omission, or other matter that is the subject matter of the action
55-13 in the derivative proceeding. The scope of discovery may be
55-14 expanded if the court determines after notice and hearing that a
55-15 good faith review of the allegations for purposes of Section F of
55-16 this Article has not been made by an independent and disinterested
55-17 person or group in accordance with Section F of this Article.
55-18 E. Tolling of the Statute of Limitations. A written demand
55-19 filed with the corporation under Section C of this Article tolls
55-20 the statute of limitations on the claim upon which demand is made
55-21 until the earlier of (1) 120 days or (2) 30 days after the
55-22 corporation advises the shareholder that the demand has been
55-23 rejected or the review has been completed.
55-24 F. Dismissal of Derivative Proceeding. A court shall
55-25 dismiss a derivative proceeding on a motion by the corporation if
55-26 the person or group described in Section H of this Article
55-27 determines in good faith, after conducting a reasonable inquiry and
56-1 based on the factors as the person or group deems appropriate under
56-2 the circumstances, that the continuation of the derivative
56-3 proceeding is not in the best interests of the corporation. In
56-4 determining whether the requirements of the previous sentence have
56-5 been met, the burden of proof shall be on:
56-6 (1) the plaintiff shareholder, if a majority of the
56-7 board of directors consists of independent and disinterested
56-8 directors at the time the determination is made, or if the
56-9 determination is made by a panel of one or more independent and
56-10 disinterested persons appointed under Section H(3) of this Article;
56-11 or
56-12 (2) the corporation, in all other circumstances;
56-13 provided that if the corporation presents prima facie evidence that
56-14 demonstrates that the directors appointed pursuant to Section H(2)
56-15 of this Article are independent and disinterested, the burden of
56-16 proof is on the plaintiff shareholder.
56-17 G. Commencement of Proceeding After Rejection of Demand. If
56-18 a derivative proceeding is commenced after a demand is rejected,
56-19 the petition must allege with particularity facts that establish
56-20 that the rejection was not made in accordance with the requirements
56-21 of Sections F and H of this Article.
56-22 H. Determination by Directors or Independent Persons. The
56-23 determination described in Section F of this Article must be made
56-24 by:
56-25 (1) a majority vote of independent and disinterested
56-26 directors present at a meeting of the board of directors at which
56-27 interested directors are not present (at the time of the vote) if
57-1 the independent and disinterested directors constitute a quorum of
57-2 the board of directors;
57-3 (2) a majority vote of a committee consisting of two
57-4 or more independent and disinterested directors appointed by a
57-5 majority vote of one or more independent and disinterested
57-6 directors present at a meeting of the board of directors, whether
57-7 or not the independent and disinterested directors so acting
57-8 constitute a quorum of the board of directors; or
57-9 (3) a panel of one or more independent and
57-10 disinterested persons appointed by the court upon a motion by the
57-11 corporation setting forth the names of the persons to be so
57-12 appointed together with a statement that to the best of its
57-13 knowledge the persons so proposed are disinterested persons and
57-14 qualified to make the determinations contemplated by Section F of
57-15 this Article. Such panel shall be appointed if the court finds
57-16 that such persons are independent and disinterested persons and are
57-17 otherwise qualified in regard to expertise, experience, independent
57-18 judgment, and other factors deemed appropriate by the court under
57-19 the circumstances to make such determinations. Persons appointed
57-20 by the court shall have no liability to the corporation or its
57-21 shareholders for any action or omission taken by them in that
57-22 capacity, absent fraud or willful misconduct.
57-23 I. Discontinuance or Settlement. A derivative proceeding
57-24 may not be discontinued or settled without the approval of the
57-25 court. If the court determines that a proposed discontinuance or
57-26 settlement may substantially affect the interest of other
57-27 shareholders, it shall direct that notice be given to the affected
58-1 shareholders.
58-2 J. Payment of Expenses. (1) On termination of a derivative
58-3 proceeding, the court may order:
58-4 (a) the domestic or foreign corporation to pay
58-5 the expenses of the plaintiff incurred in the proceeding if it
58-6 finds that the proceeding has resulted in a substantial benefit to
58-7 the domestic or foreign corporation;
58-8 (b) the plaintiff to pay the expenses of the
58-9 domestic or foreign corporation or any defendant incurred in
58-10 investigating and defending the proceeding if it finds that the
58-11 proceeding was commenced or maintained without reasonable cause or
58-12 for an improper purpose; or
58-13 (c) a party to pay the expenses incurred by
58-14 another party (including the domestic or foreign corporation)
58-15 because of the filing of a pleading, motion, or other paper, if it
58-16 finds that the pleading, motion, or other paper (i) was not
58-17 well-grounded in fact after reasonable inquiry, (ii) was not
58-18 warranted by existing law or a good faith argument for the
58-19 extension, modification, or reversal of existing law or (iii) was
58-20 interposed for an improper purpose, such as to harass or to cause
58-21 unnecessary delay or needless increase in the cost of litigation.
58-22 (2) For purposes of this Section, "expenses" mean
58-23 reasonable expenses incurred in the defense of a derivative
58-24 proceeding, including without limitation:
58-25 (a) attorney's fees;
58-26 (b) costs in pursuing an investigation of the
58-27 matter that was the subject of the derivative proceeding; and
59-1 (c) expenses for which the domestic or foreign
59-2 corporation or a corporate defendant may be required to indemnify
59-3 another person.
59-4 K. Application to Foreign Corporations. In any derivative
59-5 proceeding brought in the right of a foreign corporation, the
59-6 matters covered by this Article are governed by the laws of the
59-7 jurisdiction of incorporation of the foreign corporation, except
59-8 for Sections D, I, and J of this Article, which are procedural and
59-9 not matters relating to the internal affairs of the foreign
59-10 corporation. In the case of matters relating to a foreign
59-11 corporation under Section D of this Article, references to a person
59-12 or group described in Section H of this Article are to be deemed to
59-13 refer to a person or group entitled under the laws of the
59-14 jurisdiction of incorporation of the foreign corporation to review
59-15 and dispose of a derivative proceeding, and the standard of review
59-16 of a decision by the person or group to dismiss the derivative
59-17 proceeding is to be governed by the laws of the jurisdiction of
59-18 incorporation of the foreign corporation.
59-19 L. Closely Held Corporations. (1) The provisions of
59-20 Sections B through H of this Article are not applicable to a
59-21 closely held corporation. If justice requires:
59-22 (a) a derivative proceeding brought by a
59-23 shareholder of a closely held corporation may be treated by a court
59-24 as a direct action brought by the shareholder for his own benefit;
59-25 and
59-26 (b) a recovery in a direct or derivative
59-27 proceeding by a shareholder may be paid either directly to the
60-1 plaintiff or to the corporation if necessary to protect the
60-2 interests of creditors or other shareholders of the corporation.
60-3 (2) For purposes of this Section, a "closely held
60-4 corporation" means a corporation:
60-5 (a) with less than 35 shareholders; and
60-6 (b) that has no shares listed on a national
60-7 securities exchange or regularly quoted in an over-the-counter
60-8 market by one or more members of a national securities association
60-9 <A. Definitions. In this Article:>
60-10 <(1) A "derivative suit" is a suit brought in the
60-11 right of a domestic or foreign corporation.>
60-12 <(2) "Expenses" are reasonable expenses, incurred in
60-13 the defense of a derivative suit, including:>
60-14 <(a) Fees of attorneys, and>
60-15 <(b) Expenses for which a corporate defendant may be
60-16 required to indemnify another defendant.>
60-17 <B. Prerequisites. A derivative suit may be brought in this
60-18 State only if:>
60-19 <(1) The plaintiff was a record or beneficial owner of
60-20 shares, or of an interest in a voting trust for shares, at the time
60-21 of the transaction of which he complains, or his shares or interest
60-22 thereafter devolved upon him by operation of law from a person who
60-23 was such an owner at that time, and>
60-24 <(2) The initial pleading in the suit states:>
60-25 <(a) The ownership required by Subsection (1), and>
60-26 <(b) With particularity, the efforts of the plaintiff to
60-27 have suit brought for the corporation by the board of directors, or
61-1 the reasons for not making any such efforts.>
61-2 <C. Security for Expenses. The court having jurisdiction in
61-3 a derivative suit may, in its discretion, require the plaintiff or
61-4 plaintiffs to give security for the expenses incurred or expected
61-5 to be incurred by one or more of the defendants. The court may, in
61-6 its discretion, at any time increase or decrease the amount of the
61-7 security on a showing that the security provided is then inadequate
61-8 or excessive.>
61-9 <D. Inability to Give Security. If plaintiff is unable to
61-10 give security, he may file an affidavit in accordance with the
61-11 Texas Rules of Civil Procedure, and those rules shall control.>
61-12 <E. Failure to Give Security. If plaintiff fails to give
61-13 the security within a reasonable time set by the court, the court
61-14 shall (except as provided in Section D of this Article) dismiss the
61-15 suit without prejudice.>
61-16 <F. Judgment for Expenses. The court having jurisdiction in
61-17 a derivative suit may, upon final judgment for one or more
61-18 defendants and a finding that the suit was brought without
61-19 reasonable cause against such defendants, require the plaintiff to
61-20 pay expenses to such defendants, whether or not security has been
61-21 required>.
61-22 SECTION 28. Part Five, Texas Business Corporation Act, is
61-23 amended by adding Articles 5.17-5.20 to read as follows:
61-24 Art. 5.17. CONVERSION. A. A domestic corporation may adopt
61-25 a plan of conversion and convert to a foreign corporation or any
61-26 other entity if:
61-27 (1) the converting entity acts upon and its
62-1 shareholders approve a plan of conversion in the manner prescribed
62-2 by Article 5.03 of this Act as if the conversion were a merger to
62-3 which the converting entity were a party and not the survivor;
62-4 (2) the conversion (a) is permitted by, or not
62-5 inconsistent with, the laws of the state or country in which the
62-6 converted entity is to be incorporated, formed, or organized, and
62-7 (b) the incorporation, formation, or organization of the converted
62-8 entity is effected in compliance with such laws;
62-9 (3) at the time the conversion becomes effective, each
62-10 shareholder of the converting entity (other than those who receive
62-11 payment of their shares under Article 5.12 of this Act) will,
62-12 unless otherwise agreed to by that shareholder, own an equity
62-13 interest or other ownership or security interest in, and be a
62-14 shareholder, partner, member, owner, or other security holder of,
62-15 the converted entity;
62-16 (4) no shareholder of the domestic corporation will,
62-17 as a result of the conversion, become personally liable, without
62-18 the shareholder's consent, for the liabilities or obligations of
62-19 the converted entity; and
62-20 (5) the converted entity shall be incorporated,
62-21 formed, or organized as part of or pursuant to the plan of
62-22 conversion.
62-23 B. Any foreign corporation or other entity may adopt a plan
62-24 of conversion and convert to a domestic corporation if:
62-25 (1) the conversion is permitted by the laws of the
62-26 state or country in which the foreign corporation is incorporated,
62-27 if a foreign corporation is converting;
63-1 (2) the conversion is either permitted by the laws
63-2 under which the other entity is formed or organized or by the
63-3 constituent documents of the other entity that are not inconsistent
63-4 with the laws of the state or country in which the other entity is
63-5 formed or organized, if another entity is converting; and
63-6 (3) the converting entity takes all action that may be
63-7 required by the laws of the state or country under which it is
63-8 incorporated, formed, or organized and by its constituent documents
63-9 to effect the conversion.
63-10 C. A plan of conversion shall set forth:
63-11 (1) the name of the converting entity and the
63-12 converted entity;
63-13 (2) a statement that the converting entity is
63-14 continuing its existence in the organizational form of the
63-15 converted entity;
63-16 (3) a statement as to the type of entity that the
63-17 converted entity is to be and the state or country under the laws
63-18 of which the converted entity is to be incorporated, formed, or
63-19 organized;
63-20 (4) the manner and basis of converting the shares or
63-21 other evidences of ownership of the converting entity into shares
63-22 or other evidences of ownership or securities of the converted
63-23 entity, or any combination thereof;
63-24 (5) in an attachment or exhibit, the articles of
63-25 incorporation of the domestic corporation if the converted entity
63-26 is a domestic corporation; and
63-27 (6) in an attachment or exhibit, the articles of
64-1 incorporation or other organizational documents of the converted
64-2 entity if the converted entity is not a domestic corporation.
64-3 D. A plan of conversion may set forth such other provisions
64-4 relating to the conversion not inconsistent with law, including the
64-5 initial bylaws and officers of the converted entity.
64-6 E. After a conversion of a corporation is approved, and at
64-7 any time before the conversion has become effective, the plan of
64-8 conversion may be abandoned (subject to any contractual rights) by
64-9 the converting entity, without shareholder action, in accordance
64-10 with the procedures set forth in the plan of conversion or, if any
64-11 such procedures are not set forth in the plan, in the manner
64-12 determined by the board of directors. If articles of conversion
64-13 have been filed with the Secretary of State but the conversion has
64-14 not become effective, the conversion may be abandoned if a
64-15 statement, executed on behalf of the converting entity by an
64-16 officer or other duly authorized representative, stating that the
64-17 plan of conversion has been abandoned in accordance with applicable
64-18 law, is filed with the Secretary of State prior to the
64-19 effectiveness of the conversion. If the Secretary of State finds
64-20 that such statement conforms to law, he shall, when all fees have
64-21 been paid as required by law:
64-22 (1) endorse on the original and each copy the word
64-23 "Filed" and the month, day, and year of the filing thereof;
64-24 (2) file the original in his office; and
64-25 (3) issue a certificate of abandonment to the
64-26 converting entity or its representatives.
64-27 F. Upon the filing of the statement described by Section E
65-1 of this Article by the Secretary of State, the conversion shall be
65-2 deemed abandoned and shall not become effective.
65-3 Art. 5.18. ARTICLES OF CONVERSION. A. If a plan of
65-4 conversion has been approved in accordance with Article 5.17 of
65-5 this Act and has not been abandoned, articles of conversion shall
65-6 be executed by the converting entity by an officer or other duly
65-7 authorized representative thereof and shall set forth:
65-8 (1) the plan of conversion or a statement certifying
65-9 the following:
65-10 (a) the name, state of incorporation, formation,
65-11 or organization of the converting entity, and organizational form
65-12 of the converting entity;
65-13 (b) that a plan of conversion has been approved;
65-14 (c) that an executed plan of conversion is on
65-15 file at the principal place of business of the converting entity,
65-16 stating the address thereof, and that an executed plan of
65-17 conversion will be on file, from and after the conversion, at the
65-18 principal place of the converting entity, stating the address
65-19 thereof; and
65-20 (d) that a copy of the plan of conversion will
65-21 be furnished by the converting entity (prior to the conversion) or
65-22 the converted entity (after the conversion), on written request and
65-23 without cost, to any shareholder of the converting entity or the
65-24 converted entity;
65-25 (2) if the converting entity is a domestic
65-26 corporation, the number of shares outstanding and, if the shares of
65-27 any class or series are entitled to vote as a class, the
66-1 designation and number of outstanding shares of each such class or
66-2 series;
66-3 (3) if the converting entity is a domestic
66-4 corporation, the number of outstanding shares, not entitled to vote
66-5 only as a class, voted for and against the plan, respectively, and,
66-6 if the shares of any class or series are entitled to vote as a
66-7 class, the number of shares of each such class or series voted for
66-8 and against the plan, respectively; and
66-9 (4) if the converting entity is a foreign corporation
66-10 or other entity, a statement that the approval of the plan of
66-11 conversion was duly authorized by all action required by the laws
66-12 under which it was incorporated, formed, or organized and by its
66-13 constituent documents.
66-14 B. The original and one copy of the articles of conversion
66-15 shall be delivered to the Secretary of State. Two copies of the
66-16 articles of incorporation of the domestic corporation if the
66-17 converted entity is a domestic corporation shall also be delivered
66-18 to the Secretary of State with the articles of conversion.
66-19 C. If the Secretary of State finds that the articles of
66-20 conversion conform to law and has received all filings required to
66-21 be received and issued all certificates required to be issued in
66-22 connection with the incorporation, formation, or organization of
66-23 the converted entity, if any, he shall, when all fees and franchise
66-24 taxes have been paid as required by law or if the articles of
66-25 conversion provide that the converted entity will be liable for the
66-26 payment of all such fees and franchise taxes:
66-27 (1) endorse on the original and each copy the word
67-1 "Filed" and the month, day, and year of the filing thereof;
67-2 (2) file the original in his office; and
67-3 (3) issue a certificate of conversion, together with a
67-4 copy of the articles affixed thereto, to the converted entity or
67-5 its representatives.
67-6 Art. 5.19. EFFECTIVE DATE OF CONVERSION. Except as
67-7 otherwise provided by Article 10.03 of this Act, upon the issuance
67-8 of the certificate of conversion by the Secretary of State, the
67-9 conversion of a converting entity shall be effective.
67-10 Art. 5.20. EFFECT OF CONVERSION. A. When a conversion of a
67-11 converting entity takes effect:
67-12 (1) the converting entity shall continue to exist,
67-13 without interruption, but in the organizational form of the
67-14 converted entity rather than in its prior organizational form;
67-15 (2) all rights, title, and interests to all real
67-16 estate and other property owned by the converting entity shall
67-17 continue to be owned by the converted entity in its new
67-18 organizational form without reversion or impairment, without
67-19 further act or deed, and without any transfer or assignment having
67-20 occurred, but subject to any existing liens or other encumbrances
67-21 thereon;
67-22 (3) all liabilities and obligations of the converting
67-23 entity shall continue to be liabilities and obligations of the
67-24 converted entity in its new organizational form without impairment
67-25 or diminution by reason of the conversion;
67-26 (4) all rights of creditors or other parties with
67-27 respect to or against the prior interest holders or other owners of
68-1 the converting entity in their capacities as such in existence as
68-2 of the effective time of the conversion will continue in existence
68-3 as to those liabilities and obligations and may be pursued by such
68-4 creditors and obligees as if such conversion shall not have
68-5 occurred;
68-6 (5) a proceeding pending by or against the converting
68-7 entity or by or against any of the converting entity's interest
68-8 holders or owners in their capacities as such may be continued by
68-9 or against the converted entity in its new organizational form and
68-10 by or against the prior interest holders or owners, as the case may
68-11 be, without any need for substitution of parties;
68-12 (6) the shares and other evidences of ownership in the
68-13 converting entity that are to be converted into shares, evidences
68-14 of ownership or other securities in the converted entity as
68-15 provided in the plan of conversion shall be so converted, and if
68-16 the converting entity is a domestic corporation, the former holders
68-17 of shares in the domestic corporation shall be entitled only to the
68-18 rights provided in the plan of conversion or to their rights under
68-19 Article 5.11 of this Act;
68-20 (7) if, after the effectiveness of the conversion, a
68-21 shareholder, partner, member, or other owner of the converted
68-22 entity would be liable under applicable law, in such capacity, for
68-23 the debts or obligations of the converted entity, such shareholder,
68-24 partner, member, or other owner of the converted entity shall be
68-25 liable for the debts and obligations of the converting entity that
68-26 existed before the conversion takes effect only to the extent that
68-27 such shareholder, partner, member, or other owner: (a) agreed in
69-1 writing to be liable for such debts or obligations, (b) was liable
69-2 under applicable law, prior to the effectiveness of the conversion,
69-3 for such debts or obligations, or (c) by becoming a shareholder,
69-4 partner, member, or other owner of the converted entity, becomes
69-5 liable under applicable law for existing debts and obligations of
69-6 the converted entity;
69-7 (8) if the converted entity is a foreign corporation
69-8 or other entity, such converted entity shall be deemed to: (a)
69-9 appoint the Secretary of State in this State as its agent for
69-10 service of process in a proceeding to enforce any obligation or the
69-11 rights of dissenting shareholders of the converting domestic
69-12 corporation and (b) agree that it will promptly pay the dissenting
69-13 shareholders of the converting domestic corporation the amount, if
69-14 any, to which they are entitled under Article 5.11 of this Act; and
69-15 (9) if the converting corporation is a domestic
69-16 corporation, the provisions of Articles 5.11, 5.12, and 5.13 of
69-17 this Act shall apply as if the converted entity were the survivor
69-18 of a merger with the converting entity.
69-19 SECTION 29. Section A, Article 6.03, Texas Business
69-20 Corporation Act, is amended to read as follows:
69-21 A. A corporation may be dissolved by the act of the
69-22 corporation when authorized in the following manner:
69-23 (1) The board of directors shall adopt a resolution
69-24 recommending that the corporation be dissolved, and directing that
69-25 the question of such dissolution be submitted to a vote at a
69-26 meeting of shareholders, which may be either an annual or a special
69-27 meeting.
70-1 (2) Written or printed notice shall be given to each
70-2 shareholder of record entitled to vote at such meeting within the
70-3 time and in the manner provided in this Act for the giving of
70-4 notice of meetings of shareholders, and, whether the meeting be an
70-5 annual or special meeting, shall state that the purpose, or one of
70-6 the purposes, of such meeting is to consider the advisability of
70-7 dissolving the corporation.
70-8 (3) At such meeting a vote of shareholders entitled to
70-9 vote thereat shall be taken on a resolution to dissolve the
70-10 corporation. Such resolution shall be adopted upon receiving the
70-11 affirmative vote of the holders of at least two-thirds of the
70-12 outstanding shares <Each outstanding share> of the corporation
70-13 <shall be> entitled to vote thereon, <whether or not entitled to
70-14 vote thereon by the provisions of the articles of incorporation.
70-15 Such resolution shall be adopted upon receiving the affirmative
70-16 vote of the holders of at least two-thirds of the outstanding
70-17 shares of the corporation,> unless any class or series of shares is
70-18 entitled to vote as a class thereon, in which event the resolution
70-19 shall require for its adoption the affirmative vote of the holders
70-20 of at least two-thirds of the outstanding shares within <of> each
70-21 class or series of shares entitled to vote as a class thereon and
70-22 at least<, as well as the affirmative vote of> two-thirds of the
70-23 <total> outstanding shares otherwise entitled to vote thereon.
70-24 Shares entitled to vote as a class shall be entitled to vote only
70-25 as a class unless otherwise entitled to vote on each matter
70-26 generally or otherwise provided in the articles of incorporation.
70-27 SECTION 30. Sections A and B, Article 6.05, Texas Business
71-1 Corporation Act, are amended to read as follows:
71-2 A. At any time prior to the issuance of a certificate of
71-3 dissolution by the Secretary of State, or within 120 days
71-4 thereafter, a corporation may revoke voluntary dissolution
71-5 proceedings:
71-6 (1) By the written consent of all of its shareholders.
71-7 (2) By the act of the corporation in the following
71-8 manner:
71-9 (a) The board of directors shall adopt a
71-10 resolution recommending that the question of such revocation be
71-11 submitted to a vote at a special meeting of shareholders.
71-12 (b) Written or printed notice, stating that the
71-13 purpose or one of the purposes of such meeting is to consider the
71-14 advisability of revoking the voluntary dissolution proceedings,
71-15 shall be given to each shareholder of record entitled to vote at
71-16 such meeting within the time and in the manner provided in this Act
71-17 for the giving of notice of special meetings of shareholders.
71-18 (c) At such meeting a vote of the shareholders
71-19 entitled to vote thereat shall be taken on a resolution to revoke
71-20 the voluntary dissolution proceedings. <Each outstanding share of
71-21 the corporation shall be entitled to vote thereon, whether or not
71-22 entitled to vote thereon by the provisions of the articles of
71-23 incorporation.> Such resolution shall be adopted upon receiving
71-24 the affirmative vote of the holders of at least two-thirds of the
71-25 outstanding shares of the corporation entitled to vote thereon,
71-26 unless any class or series of shares is entitled to vote <thereon>
71-27 as a class thereon, in which event the resolution shall require for
72-1 its adoption the affirmative vote of the holders of at least
72-2 two-thirds of the outstanding shares within <of> each class or
72-3 series of shares entitled to vote as a class thereon and at least<,
72-4 as well as> two-thirds of the <total> outstanding shares otherwise
72-5 entitled to vote thereon. Shares entitled to vote as a class shall
72-6 be entitled to vote only as a class unless otherwise entitled to
72-7 vote on each matter generally as provided in the articles of
72-8 incorporation.
72-9 B. After revocation of voluntary dissolution is authorized
72-10 as provided in Section A of this Article, the corporation shall, if
72-11 a certificate of dissolution of the corporation has been issued by
72-12 the Secretary of State, deliver to the Secretary of State for
72-13 filing within 120 days after such issuance the original and a copy
72-14 of articles of revocation of dissolution executed on behalf of the
72-15 corporation by an officer, that set forth:
72-16 (1) the name of the corporation;
72-17 (2) the date that the revocation of dissolution was
72-18 authorized and, if the dissolution has become effective, the
72-19 effective date of the dissolution that was revoked; and
72-20 (3) if the corporation elected to revoke voluntary
72-21 dissolution proceedings by the written consent of all of its
72-22 shareholders, a copy of the consent, together with a statement that
72-23 the consent was signed by all shareholders of the corporation or
72-24 was signed in their names by their attorneys thereunto duly
72-25 authorized; or
72-26 (4) if the corporation elected to revoke voluntary
72-27 dissolution proceedings by act of the corporation:
73-1 (a) a copy of the resolution to revoke, together
73-2 with a statement that such resolution was adopted by the
73-3 shareholders of the corporation and of the date of the adoption
73-4 thereof;
73-5 (b) the number of shares outstanding and
73-6 entitled to vote on the resolution, and, if the shares of any class
73-7 or series were entitled to vote as a class, the designation and
73-8 number of outstanding shares of each such class or series; and
73-9 (c) the number of shares entitled to vote on the
73-10 resolution generally that voted for and against such resolution,
73-11 respectively, and if the shares of any class or series were
73-12 entitled to vote as a class, the number of shares of each such
73-13 class or series voted for and against such resolution,
73-14 respectively.
73-15 SECTION 31. Section A, Article 6.06, Texas Business
73-16 Corporation Act, is amended to read as follows:
73-17 A. If voluntary dissolution proceedings have been taken and
73-18 have not been revoked, then when all debts, liabilities, and
73-19 obligations of the corporation have been paid, satisfied, or
73-20 discharged or adequate provision has been made for payment,
73-21 satisfaction, or discharge thereof or, if the properties and assets
73-22 of the corporation are not sufficient to pay, satisfy, or discharge
73-23 all the corporation's debts, liabilities, and obligations, then
73-24 when all properties and assets of the corporation have been applied
73-25 so far as they will go to the just and equitable payment of the
73-26 corporation's debts, liabilities, and obligations or when adequate
73-27 provision has been made for such application, and the remainder of
74-1 its properties and assets have been distributed to its shareholders
74-2 according to their respective rights and interests, articles of
74-3 dissolution shall be executed on behalf of the corporation by an
74-4 officer, which shall set forth:
74-5 (1) The name of the corporation.
74-6 (2) The names and respective addresses of its
74-7 officers.
74-8 (3) The names and respective addresses of its
74-9 directors.
74-10 (4) That all debts, liabilities, and obligations of
74-11 the corporation have been paid, satisfied, or discharged or that
74-12 adequate provision has been made for payment, satisfaction, or
74-13 discharge thereof or, if the properties and assets of the
74-14 corporation were not sufficient to pay, satisfy, or discharge all
74-15 the corporation's debts, liabilities, and obligations, that all
74-16 properties and assets of the corporation have been applied so far
74-17 as they would go to the just and equitable payment of those debts,
74-18 liabilities, and obligations or that adequate provision has been
74-19 made for such application.
74-20 (5) That the remainder of the properties and assets of
74-21 the corporation have been distributed to its shareholders according
74-22 to their respective rights and interests or that no properties or
74-23 assets of the corporation remained for distribution to shareholders
74-24 after applying the properties and assets of the corporation so far
74-25 as they would go to the just and equitable payment of the debts,
74-26 liabilities, and obligations of the corporation or making adequate
74-27 provision for such application.
75-1 (6) If the corporation elected to dissolve by the
75-2 written consent of all of its shareholders, a copy of the consent,
75-3 together with a statement that the consent was signed by all
75-4 shareholders of the corporation or was signed in their names by
75-5 their attorneys thereunto duly authorized.
75-6 (7) If the corporation elected to dissolve by act of
75-7 the corporation:
75-8 (a) A copy of the resolution to dissolve,
75-9 together with a statement that such resolution was adopted by the
75-10 shareholders of the corporation and of the date of adoption.
75-11 (b) The number of shares outstanding and
75-12 entitled to vote on the resolution, and, if the shares of any class
75-13 or series were entitled to vote as a class, the designation and
75-14 number of outstanding shares of each such class or series.
75-15 (c) The number of shares entitled to vote on the
75-16 resolution generally that voted for and against such resolution,
75-17 respectively, and if the shares of any class or series were
75-18 entitled to vote as a class, the number of shares of each such
75-19 class or series voted for and against such resolution,
75-20 respectively.
75-21 SECTION 32. Section A, Article 6.07, Texas Business
75-22 Corporation Act, is amended to read as follows:
75-23 A. The original and a copy of such articles of dissolution
75-24 shall be delivered to the Secretary of State, along with a
75-25 certificate from the Comptroller of Public Accounts that all taxes
75-26 administered by the Comptroller under Title 2, Tax Code, have been
75-27 paid or an arrangement for payment of such taxes acceptable to the
76-1 Comptroller of Public Accounts has been made. If the Secretary of
76-2 State finds that such articles of dissolution conform to law, he
76-3 shall, when the appropriate filing fee is paid as required by law:
76-4 (1) Endorse on the original and the copy the word
76-5 "Filed," and the month, day, and year of the filing thereof.
76-6 (2) File the original in his office.
76-7 (3) Issue a certificate of dissolution to which he
76-8 shall affix the copy.
76-9 SECTION 33. Sections A and C, Article 8.14, Texas Business
76-10 Corporation Act, are amended to read as follows:
76-11 A. A foreign corporation authorized to transact business in
76-12 this state may withdraw from this state upon procuring from the
76-13 Secretary of State a certificate of withdrawal. In order to
76-14 procure such certificate of withdrawal, such foreign corporation
76-15 shall deliver to the Secretary of State an application for
76-16 withdrawal, which shall set forth:
76-17 (1) The name of the corporation and the state or
76-18 country under the laws of which it is incorporated;
76-19 (2) That the corporation is not transacting business
76-20 in this state;
76-21 (3) That the corporation surrenders its authority to
76-22 transact business in this state;
76-23 (4) That the corporation revokes the authority of its
76-24 registered agent in this state to accept service of process and
76-25 consents that service of process in any action, suit, or proceeding
76-26 based upon any cause of action arising in this state during the
76-27 time the corporation was authorized to transact business in this
77-1 state may thereafter be made on such corporation by service thereof
77-2 on the Secretary of State;
77-3 (5) A post office address to which the Secretary of
77-4 State may mail a copy of any process against the corporation that
77-5 may be served on him; and
77-6 (6) A statement that all sums due, or accrued, to this
77-7 state have been paid, or that adequate provision has been made for
77-8 the payment thereof<; and>
77-9 <(7) A statement that all known creditors or claimants
77-10 have been paid or provided for>.
77-11 C. When the existence of a foreign corporation terminates
77-12 because of dissolution, merger, conversion, or otherwise, a
77-13 certificate from the proper officer in the jurisdiction of the
77-14 corporation's incorporation evidencing the termination shall be
77-15 filed with the Secretary of State.
77-16 SECTION 34. Section A, Article 9.04, Texas Business
77-17 Corporation Act, is amended to read as follows:
77-18 A. If the Secretary of State shall fail to approve any
77-19 articles of incorporation, application for certificate of authority
77-20 to transact business in this State, amendment, merger, share
77-21 exchange, conversion <consolidation>, or dissolution, or any other
77-22 document required by this Act to be approved by the Secretary of
77-23 State before the same shall be filed in his office, he shall,
77-24 within ten days after the delivery thereof to him, give written
77-25 notice of his disapproval to the person, <or> corporation, or other
77-26 entity, domestic or foreign, delivering the same, specifying in
77-27 such notice the reasons therefor. From such disapproval such
78-1 person, <or> corporation, or other entity may appeal to any
78-2 district court of Travis County by filing with the clerk of such
78-3 court a petition setting forth a copy of the articles or other
78-4 document sought to be filed and a copy of the written disapproval
78-5 thereof by the Secretary of State; whereupon the matter shall be
78-6 tried de novo by the court, and the court shall either sustain the
78-7 action of the Secretary of State or direct him to take such action
78-8 as the court may deem proper.
78-9 SECTION 35. Article 9.10, Texas Business Corporation Act, is
78-10 amended by adding Section D to read as follows:
78-11 D. If action is taken with respect to a particular matter by
78-12 the holders of shares of a class or series by means of a written
78-13 consent in compliance with Section A of this Article, any provision
78-14 of this Act that requires advance notice of a meeting or of the
78-15 proposed action will not apply as to that class or series for such
78-16 action.
78-17 SECTION 36. Section A, Article 10.01, Texas Business
78-18 Corporation Act, is amended to read as follows:
78-19 A. The Secretary of State is authorized and required to
78-20 collect for the use of the State the following fees:
78-21 (1) Filing articles of incorporation of a domestic
78-22 corporation and issuing a certificate of incorporation, Three
78-23 Hundred Dollars ($300.00).
78-24 (2) Filing articles of amendment of a domestic
78-25 corporation and issuing a certificate of amendment, One Hundred
78-26 Fifty Dollars ($150.00).
78-27 (3) Filing articles of merger <or consolidation>,
79-1 whether the surviving or new corporation be a domestic or foreign
79-2 corporation, or articles of exchange, Three Hundred Dollars
79-3 ($300.00).
79-4 (4) Filing an application of a foreign corporation for
79-5 a certificate of authority to transact business in this State and
79-6 issuing such a certificate of authority, Seven Hundred Fifty
79-7 Dollars ($750.00).
79-8 (5) Filing an application of a foreign corporation for
79-9 an amended certificate of authority to transact business in this
79-10 State and issuing such an amended certificate of authority, One
79-11 Hundred Fifty Dollars ($150.00).
79-12 (6) Filing restated articles of incorporation of a
79-13 domestic corporation, Three Hundred Dollars ($300.00).
79-14 (7) Filing application for reservation of corporate
79-15 name and issuing a certificate therefor, Forty Dollars ($40.00).
79-16 (8) Filing notice of transfer of reserved corporate
79-17 name and issuing a certificate therefor, Fifteen Dollars ($15.00).
79-18 (9) Filing application for registration of corporate
79-19 name and issuing a certificate therefor, Seventy-Five Dollars
79-20 ($75.00).
79-21 (10) Filing application for renewal of registration of
79-22 corporate name and issuing a certificate therefor, Seventy-Five
79-23 Dollars ($75.00).
79-24 (11) Filing statement of change of registered office
79-25 or registered agent, or both, Fifteen Dollars ($15.00).
79-26 (12) Filing statement of change of address of
79-27 registered agent, Fifteen Dollars ($15.00); provided, however, that
80-1 the maximum fee for simultaneous filings by a registered agent for
80-2 more than one corporation shall not exceed Seven Hundred Fifty
80-3 Dollars ($750.00).
80-4 (13) Filing statement of resolution establishing
80-5 series of shares, Fifteen Dollars ($15.00).
80-6 (14) Filing statement of cancellation of redeemable
80-7 shares, Fifteen Dollars ($15.00).
80-8 (15) Filing statement of cancellation of re-acquired
80-9 shares, Fifteen Dollars ($15.00).
80-10 (16) Filing statement of reduction of stated capital,
80-11 Fifteen Dollars ($15.00).
80-12 (17) Filing articles of dissolution and issuing
80-13 certificate therefor, Forty Dollars ($40.00).
80-14 (18) Filing application for withdrawal and issuing
80-15 certificate therefor, Fifteen Dollars ($15.00).
80-16 (19) Filing certificate from home state that foreign
80-17 corporation is no longer in existence in said state, Fifteen
80-18 Dollars ($15.00).
80-19 (20) Maintaining a record of service of any process,
80-20 notice or demand upon the Secretary of State as agent for foreign
80-21 and domestic corporations and for any foreign association, joint
80-22 stock company, partnership, or nonresident natural person, Forty
80-23 Dollars ($40.00).
80-24 (21) Filing a bylaw or agreement restricting transfer
80-25 of shares or securities other than as an amendment to the articles
80-26 of incorporation, Fifteen Dollars ($15.00).
80-27 (22) Filing any instrument pursuant to this Act not
81-1 expressly provided for above, Fifteen Dollars ($15.00).
81-2 (23) Filing application for reinstatement of corporate
81-3 charter or certificate of authority following forfeiture under the
81-4 Tax Code, Seventy-Five Dollars ($75.00).
81-5 (24) Filing articles of conversion and issuing a
81-6 certificate of conversion, Three Hundred Dollars ($300.00).
81-7 SECTION 37. Section A, Article 10.03, Texas Business
81-8 Corporation Act, is amended to read as follows:
81-9 A. The effectiveness of (i) the incorporation of a
81-10 corporation under this Act, (ii) an amendment to a corporation's
81-11 articles of incorporation, including an amendment effected pursuant
81-12 to a statement of resolution establishing a series of shares, (iii)
81-13 the restatement of articles of incorporation of a corporation, (iv)
81-14 a merger or share exchange, (v) a cancellation of redeemable or
81-15 reacquired shares or a reduction in stated capital, (vi) a
81-16 voluntary dissolution, (vii) the authorization or withdrawal of a
81-17 foreign corporation to transact business in this State, (viii) an
81-18 amendment to the certificate of authority of a foreign corporation,
81-19 (ix) a bylaw or agreement restricting the transfer of shares or
81-20 securities of a corporation pursuant to this Act, (x) a change in
81-21 registered office or registered agent, <or> (xi) a change of
81-22 address of a registered agent (each such act or document being a
81-23 "Permitted Act"), or (xii) a conversion may be made effective as of
81-24 a time and date after the time and date otherwise provided in this
81-25 Act or may be made effective upon the occurrence of events or facts
81-26 that may occur in the future, which events or facts may include
81-27 future acts of any person or entity, if:
82-1 (1) the articles, statement, application, or other
82-2 filing that is required by this Act to be filed with the Secretary
82-3 of State to make effective such Permitted Act clearly and expressly
82-4 set forth, in addition to any other statement or information
82-5 required to be set forth therein, (i) the time and date on which
82-6 such Permitted Act is to become effective or (ii) if such Permitted
82-7 Act is to become effective upon the occurrence of events or facts
82-8 that may occur in the future, (a) the manner in which such events
82-9 or facts shall operate to cause such Permitted Act to become
82-10 effective and (b) the date of the 90th day after the date of the
82-11 filing of such articles, statement, application or other filing;
82-12 (2) in the case of a Permitted Act that is to become
82-13 effective as of a time or date after the time and date otherwise
82-14 provided in this Act, (i) such subsequent time and date is not more
82-15 than 90 days after the date of the filing of the articles,
82-16 statement, application, or other filing that is otherwise required
82-17 by this Act to be filed with the Secretary of State to make
82-18 effective such Permitted Act and (ii) the time on which the
82-19 Permitted Act is to become effective is not midnight or 12:00 p.m.;
82-20 and
82-21 (3) in the case of a Permitted Act that is to be made
82-22 effective upon the occurrence of events or facts that may occur in
82-23 the future, other than the mere passage of time, a statement that
82-24 all such events or facts upon which the effectiveness of such
82-25 Permitted Act is conditioned have been satisfied or waived, and of
82-26 the date on which such condition was satisfied or waived, is filed
82-27 with the Secretary of State within 90 days of the date of the
83-1 filing of the articles, statement, application or other filing that
83-2 is otherwise required by this Act for such Permitted Act to become
83-3 effective.
83-4 SECTION 38. Section B, Article 12.13, Texas Business
83-5 Corporation Act, is amended to read as follows:
83-6 B. Through Merger, Conversion, or Share Exchange. A
83-7 surviving or new corporation resulting from a merger, a corporation
83-8 incorporated as part of a conversion, or a corporation that
83-9 acquires a corporation pursuant to a share exchange in conformance
83-10 with Part Five of this Act may become a close corporation if as
83-11 part of the plan of merger, conversion, or exchange its articles of
83-12 incorporation conform with Article 12.11 of this Act. Any plan of
83-13 merger, conversion, or exchange adopting close corporation status
83-14 must be approved by the affirmative vote of the holders of all the
83-15 outstanding shares, and of each class or series of shares, of each
83-16 corporation that is party to the merger, conversion, or share
83-17 exchange, whether or not entitled to vote on the plan by the
83-18 articles of incorporation of the corporation.
83-19 SECTION 39. Article 12.21, Texas Business Corporation Act,
83-20 is amended to read as follows:
83-21 Art. 12.21. Termination of Close Corporation Status. A. In
83-22 General. A close corporation terminates its status as a close
83-23 corporation:
83-24 (1) on filing a statement of termination in
83-25 conformance with Article 12.22 of this Act;
83-26 (2) by amending its articles of incorporation in
83-27 conformance with Part Four of this Act to delete from its articles
84-1 the statement that it is a close corporation;
84-2 (3) through a merger, conversion, or share exchange in
84-3 conformance with Part Five of this Act unless the plan of merger,
84-4 conversion, or exchange provides that the surviving or new
84-5 corporation will continue as or become a close corporation and the
84-6 plan has been approved by the affirmative vote or consent of the
84-7 holders of all the outstanding shares, and of each class and series
84-8 of shares, of the close corporation, whether or not entitled to
84-9 vote on the plan by the articles of incorporation; or
84-10 (4) when termination is decreed in a judicial
84-11 proceeding to enforce a close corporation provision providing for
84-12 the termination.
84-13 SECTION 40. The Texas Business Corporation Act is amended by
84-14 adding Part Thirteen to read as follows:
84-15 PART THIRTEEN
84-16 Art. 13.01. SHORT TITLE. This part may be cited as the
84-17 Business Combination Law.
84-18 Art. 13.02. DEFINITIONS. In this part:
84-19 (1) "Affiliate" means a person who directly or
84-20 indirectly through one or more intermediaries controls, is
84-21 controlled by, or is under common control with a specified person.
84-22 (2) "Affiliated shareholder" means a person, other
84-23 than the issuing public corporation or a wholly-owned subsidiary of
84-24 the issuing public corporation, that is the beneficial owner of 20
84-25 percent or more of the outstanding voting shares of the issuing
84-26 public corporation that, within the preceding three-year period,
84-27 was the beneficial owner of 20 percent or more of the then
85-1 outstanding voting shares of the issuing public corporation. For
85-2 the purpose of determining whether a person is an affiliated
85-3 shareholder, the number of voting shares of the issuing public
85-4 corporation considered outstanding includes shares considered
85-5 beneficially owned by that person under Subdivision (4) of this
85-6 article, but does not include other unissued voting shares of the
85-7 issuing public corporation that may be issuable pursuant to an
85-8 agreement, arrangement, or understanding, or upon exercise or
85-9 conversion rights, warrants, or options, or otherwise.
85-10 (3) "Beneficial owner" means a person who:
85-11 (a) individually, or with or through an
85-12 affiliate or associate, beneficially owns shares or similar
85-13 securities, directly or indirectly;
85-14 (b) individually, or with or through an
85-15 affiliate or associate, has the right to:
85-16 (i) acquire shares or similar securities,
85-17 whether the right may be exercised immediately or only after the
85-18 passage of time, pursuant to an agreement, arrangement, or
85-19 understanding, whether or not in writing, or upon the exercise of
85-20 conversion rights, exchange rights, warrants, or options, or
85-21 otherwise, except that a person is not considered the beneficial
85-22 owner of shares or similar securities (A) tendered pursuant to a
85-23 tender or exchange offer made by the person or an affiliate or
85-24 associate until the tendered shares or similar securities are
85-25 accepted for purchase or exchange, or (B) that may be subject to an
85-26 agreement, arrangement, or understanding that expressly conditions
85-27 the acquisition or purchase on the approval of the acquisition or
86-1 purchase pursuant to Article 13.03 of this Act as long as such
86-2 person has no direct or indirect rights of ownership or voting with
86-3 respect to such shares until such time that such approval is
86-4 obtained, at which time such person shall be considered the
86-5 beneficial owner of such shares; or
86-6 (ii) vote the shares or similar securities
86-7 pursuant to an agreement, arrangement, or understanding, whether or
86-8 not in writing, except that a person is not considered the
86-9 beneficial owner of shares or similar securities for purposes of
86-10 this subparagraph if the agreement, arrangement, or understanding
86-11 to vote the shares: (A) arises solely from an immediately
86-12 revocable proxy that authorizes the person named in the proxy to
86-13 vote at a meeting of shareholders that has been called when the
86-14 proxy is delivered or at any adjournment of the meeting, and (B) is
86-15 not then reportable on a Schedule 13D under the Securities Exchange
86-16 Act of 1934 or a comparable or successor report; or
86-17 (c) has an agreement, arrangement, or
86-18 understanding, whether or not in writing, to acquire, hold, or
86-19 dispose (except pursuant to an agreement, arrangement, or
86-20 understanding permitted by Subdivision (3)(b)(i) of this Article)
86-21 or to vote (except under an immediately revocable proxy under
86-22 Subdivision (3)(b)(ii) of this Article) shares or similar
86-23 securities with another person who beneficially owns, or whose
86-24 affiliate or associate beneficially owns, directly or indirectly,
86-25 the shares or similar securities.
86-26 (4) "Business combination" means:
86-27 (a) any merger, share exchange, or conversion of
87-1 an issuing public corporation or a subsidiary with:
87-2 (i) an affiliated shareholder;
87-3 (ii) a foreign or domestic corporation or
87-4 other entity that is, or after the merger, share exchange, or
87-5 conversion would be, an affiliate or associate of the affiliated
87-6 shareholder; or
87-7 (iii) another domestic or foreign
87-8 corporation or other entity, if the merger, share exchange, or
87-9 conversion is caused by an affiliated shareholder, or an affiliate
87-10 or associate of an affiliated shareholder, and as a result of the
87-11 merger, share exchange, or conversion this part does not apply to
87-12 the surviving corporation or other entity;
87-13 (b) a sale, lease, exchange, mortgage, pledge,
87-14 transfer, or other disposition, in one transaction or a series of
87-15 transactions, including an allocation of assets pursuant to a
87-16 merger, to or with the affiliated shareholder, or an affiliate or
87-17 associate of the affiliated shareholder, of assets of the issuing
87-18 public corporation or any subsidiary that:
87-19 (i) have an aggregate market value equal
87-20 to 10 percent or more of the aggregate market value of all the
87-21 assets, determined on a consolidated basis, of the issuing public
87-22 corporation;
87-23 (ii) have an aggregate market value equal
87-24 to 10 percent or more of the aggregate market value of all the
87-25 outstanding common stock of the issuing public corporation; or
87-26 (iii) represent 10 percent or more of the
87-27 earning power or net income, determined on a consolidated basis, of
88-1 the issuing public corporation;
88-2 (c) the issuance or transfer by an issuing
88-3 public corporation or a subsidiary to an affiliated shareholder or
88-4 an affiliate or associate of the affiliated shareholder, in one
88-5 transaction or a series of transactions, of shares of the issuing
88-6 public corporation or a subsidiary, except by the exercise of
88-7 warrants or rights to purchase shares of the issuing public
88-8 corporation offered, or a share dividend paid, pro rata to all
88-9 shareholders of the issuing public corporation after the affiliated
88-10 shareholder's share acquisition date;
88-11 (d) the adoption of a plan or proposal for the
88-12 liquidation or dissolution of an issuing public corporation
88-13 proposed by, or pursuant to any agreement, arrangement, or
88-14 understanding, whether or not in writing, with an affiliated
88-15 shareholder or an affiliate or associate of the affiliated
88-16 shareholder;
88-17 (e) a reclassification of securities, including
88-18 a reverse share split or a share split-up, share dividend, or other
88-19 distribution of shares, a recapitalization of the issuing public
88-20 corporation, a merger of the issuing public corporation with a
88-21 subsidiary or pursuant to which the assets and liabilities of the
88-22 issuing public corporation are allocated among two or more
88-23 surviving or new domestic or foreign corporations or other
88-24 entities, or any other transaction, whether or not with, into, or
88-25 otherwise involving the affiliated shareholder, proposed by, or
88-26 pursuant to an agreement, arrangement, or understanding, whether or
88-27 not in writing, with an affiliated shareholder or an affiliate or
89-1 associate of the affiliated shareholder that has the effect,
89-2 directly or indirectly, of increasing the proportionate ownership
89-3 percentage of the outstanding shares of a class or series of voting
89-4 shares or securities convertible into voting shares of the issuing
89-5 public corporation that is beneficially owned by the affiliated
89-6 shareholder or an affiliate or associate of the affiliated
89-7 shareholder, except as a result of immaterial changes due to
89-8 fractional share adjustments; or
89-9 (f) the direct or indirect receipt by an
89-10 affiliated shareholder or an affiliate or associate of the
89-11 affiliated shareholder of the benefit of a loan, advance,
89-12 guarantee, pledge, or other financial assistance or a tax credit or
89-13 other tax advantage provided by or through the issuing public
89-14 corporation, except proportionately as a shareholder of the issuing
89-15 public corporation.
89-16 (5) "Control" means the possession, directly or
89-17 indirectly, of the power to direct or cause the direction of the
89-18 management and policies of a person, whether through the ownership
89-19 of equity securities, by contract, or otherwise. A person's
89-20 beneficial ownership of 10 percent or more of a person's
89-21 outstanding voting shares or similar interests creates a
89-22 presumption that the person has control of such other person, but a
89-23 person is not considered to have control of another person if the
89-24 person holds such voting shares or similar interests in good faith
89-25 and not for the purpose of circumventing this part, as an agent,
89-26 bank, broker, nominee, custodian, or trustee for one or more
89-27 beneficial owners who do not individually or as a group have
90-1 control of the person.
90-2 (6) "Issuing public corporation" means a domestic
90-3 corporation that has: (a) 100 or more shareholders, (b) any class
90-4 or series of its voting shares registered under the Securities
90-5 Exchange Act of 1934, as amended, or similar or successor statute,
90-6 or (c) any class or series of its voting shares qualified for
90-7 trading in a national market system. For the purposes of this
90-8 definition of issuing public corporation, a shareholder is a
90-9 shareholder of record as shown by the share transfer records of the
90-10 corporation.
90-11 (7) "Person" means an individual, trust, domestic or
90-12 foreign corporation or other entity, or a government, or a
90-13 political subdivision, agency, or instrumentality of a government.
90-14 If two or more persons act as a partnership, limited partnership,
90-15 syndicate, or other group under an agreement, arrangement, or other
90-16 understanding, whether or not in writing, to acquire, hold, vote,
90-17 or dispose of shares of a corporation, all members of the
90-18 partnership, limited partnership, syndicate, or other group are
90-19 considered to be a person.
90-20 (8) "Share acquisition date" means the date that a
90-21 person first becomes an affiliated shareholder of an issuing public
90-22 corporation.
90-23 (9) "Subsidiary" means a domestic or foreign
90-24 corporation or other entity of which a majority of the outstanding
90-25 voting shares are owned, directly or indirectly, by an issuing
90-26 public corporation.
90-27 (10) "Voting share" means a share of capital stock of
91-1 a corporation entitled to vote generally in the election of
91-2 directors.
91-3 Art. 13.03. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
91-4 COMBINATIONS. An issuing public corporation shall not, directly or
91-5 indirectly, enter into or engage in a business combination with an
91-6 affiliated shareholder, or any affiliate or associate of the
91-7 affiliated shareholder, during the three-year period immediately
91-8 following the affiliated shareholder's share acquisition date
91-9 unless:
91-10 (1) the business combination or the purchase or
91-11 acquisition of shares made by the affiliated shareholder on the
91-12 affiliated shareholder's share acquisition date is approved by the
91-13 board of directors of the issuing public corporation before the
91-14 affiliated shareholder's share acquisition date; or
91-15 (2) the business combination is approved, by the
91-16 affirmative vote of the holders of at least two-thirds of the
91-17 outstanding voting shares of the issuing public corporation not
91-18 beneficially owned by the affiliated shareholder or an affiliate or
91-19 associate of the affiliated shareholder, at a meeting of
91-20 shareholders and not by written consent, duly called for that
91-21 purpose not less than six months after the affiliated shareholder's
91-22 share acquisition date.
91-23 Art. 13.04. APPLICATION. Article 13.03 of this Act does not
91-24 apply to:
91-25 (1) a business combination of an issuing public
91-26 corporation:
91-27 (a) the original articles of incorporation or
92-1 original bylaws of which contain a provision expressly electing not
92-2 to be governed by this part;
92-3 (b) that adopts an amendment to its articles of
92-4 incorporation or bylaws before December 31, 1995, expressly
92-5 electing not to be governed by this part; or
92-6 (c) that after December 31, 1995, adopts an
92-7 amendment to its articles of incorporation or bylaws, approved by
92-8 the affirmative vote of the shareholders, other than affiliated
92-9 shareholders and their affiliates and associates, of at least
92-10 two-thirds of the outstanding voting shares of the issuing public
92-11 corporation, expressly electing not to be governed by this part,
92-12 except that the amendment to the articles of incorporation or
92-13 bylaws takes effect 18 months after the date of the vote and does
92-14 not apply to a business combination of the issuing public
92-15 corporation with an affiliated shareholder whose share acquisition
92-16 date is on or before the effective date of the amendment;
92-17 (2) a business combination of an issuing public
92-18 corporation with an affiliated shareholder that became an
92-19 affiliated shareholder inadvertently, if the affiliated
92-20 shareholder:
92-21 (a) as soon as practicable divests itself of a
92-22 sufficient number of the voting shares of the issuing public
92-23 corporation so that it no longer is the beneficial owner, directly
92-24 or indirectly, of 20 percent or more of the outstanding voting
92-25 shares of the issuing public corporation; and
92-26 (b) would not at any time within the three-year
92-27 period preceding the announcement date of the business combination
93-1 have been an affiliated shareholder but for the inadvertent
93-2 acquisition;
93-3 (3) a business combination with an affiliated
93-4 shareholder that was the beneficial owner of 20 percent or more of
93-5 the outstanding voting shares of the issuing public corporation on
93-6 December 31, 1994, and continuously until the announcement date of
93-7 the business combination;
93-8 (4) a business combination with an affiliated
93-9 shareholder who became an affiliated shareholder through a transfer
93-10 of shares of the issuing public corporation by will or intestate
93-11 succession and continuously was such an affiliated shareholder
93-12 until the announcement date of the business combination; or
93-13 (5) a business combination of an issuing public
93-14 corporation with a domestic wholly-owned subsidiary if the domestic
93-15 subsidiary is not an affiliate or associate of the affiliated
93-16 shareholder other than by reason of the affiliated shareholder's
93-17 beneficial ownership of voting shares in the issuing public
93-18 corporation.
93-19 Art. 13.05. NO EFFECT ON OTHER ACTIONS. This part does not
93-20 affect, directly or indirectly, the validity of another action by
93-21 the board of directors of an issuing public corporation, nor does
93-22 it preclude the board of directors from taking other action in
93-23 accordance with law, nor does the board of directors incur
93-24 liability for elections made or not made under this part.
93-25 Art. 13.06. DUTIES OF DIRECTOR. In discharging the duties
93-26 of director under this Act or otherwise, a director, in considering
93-27 the best interests of the corporation, may consider the long-term
94-1 as well as the short-term interests of the corporation and its
94-2 shareholders, including the possibility that those interests may be
94-3 best served by the continued independence of the corporation.
94-4 Art. 13.07. RELATIONSHIP WITH OTHER PARTS OF ACT. A. If a
94-5 provision of this part conflicts with another provision of this
94-6 Act, the provision of this part controls.
94-7 B. The affirmative vote or concurrence of shareholders
94-8 required for approval of an action required or permitted to be
94-9 submitted for shareholder vote may be increased, but not decreased,
94-10 under Article 2.28 of this Act.
94-11 Art. 13.08. SEVERABILITY. If any provision or clause of
94-12 this part or application thereof to any person or circumstance is
94-13 held invalid, such invalidity shall not affect other provisions or
94-14 applications of this part that can be given effect without the
94-15 invalid provision or application and without being inconsistent
94-16 with the intent of this part, and to this end the provisions of
94-17 this part are declared to be severable.
94-18 SECTION 41. Article 2.06, Texas Miscellaneous Corporation
94-19 Laws Act (Article 1302-2.06, Vernon's Texas Civil Statutes), is
94-20 amended to read as follows:
94-21 Art. 2.06. Consideration for Indebtedness; Guaranties.
94-22 A. A corporation may incur indebtedness for such consideration as
94-23 it may deem appropriate, including, without limitation, cash, real
94-24 property, personal property, intangible property, contracts to
94-25 receive real, personal, or intangible property, debt and other
94-26 obligations of <No corporation shall create any indebtedness
94-27 whatever except for money paid, labor done, which is reasonably
95-1 worth at least the sum at which it was taken by> the corporation or
95-2 other corporations, persons, or other entities, services performed,
95-3 contracts for services to be performed, debt or equity securities
95-4 of <by a corporation of which all of the outstanding shares of each
95-5 class are owned by the corporation, or property actually received,
95-6 reasonably worth at least the sum at which it was taken by> the
95-7 corporation or of other corporations and entities, and any direct
95-8 or indirect benefit realized by the corporation. Such
95-9 consideration may be received either directly or indirectly,
95-10 including by direct or indirect wholly owned or partially owned
95-11 corporations, partnerships, or other entities. In addition, a
95-12 corporation may issue and incur indebtedness without the receipt of
95-13 any consideration by reason of the authorization or payment of a
95-14 distribution <by a corporation of which all of the outstanding
95-15 shares of each class are owned by the corporation, subject to the
95-16 provisions of Sections B, C, and D of this Article>. In the
95-17 absence of fraud in the transaction, the judgment of the Board of
95-18 Directors or the shareholders, as the case may be, as to the value,
95-19 type, and sufficiency of the consideration received for any such
95-20 indebtedness shall be conclusive.
95-21 B. Any <Notwithstanding Section A of this Article, any>
95-22 corporation shall have the power and authority to make a guaranty
95-23 if the guaranty reasonably may be expected to benefit, directly or
95-24 indirectly, the guarantor corporation. For purposes of this
95-25 section and Section C of this Article, "guaranty" means a guaranty,
95-26 mortgage, pledge, security agreement, or other agreement making the
95-27 guarantor corporation or its assets responsible respecting the
96-1 contracts, securities, or other obligations of any person
96-2 (including, but not limited to, any domestic or foreign
96-3 corporation, partnership, association, joint venture, trust, or any
96-4 officer, director, or employee of such guarantor corporation). The
96-5 decision of, or a decision made pursuant to authority granted by,
96-6 the Board of Directors that the guaranty may reasonably be expected
96-7 to benefit, directly or indirectly, the guarantor corporation shall
96-8 be binding upon the guarantor corporation, and no guaranty made by
96-9 a corporation in accordance with the provisions of this Section B
96-10 shall be invalid or unenforceable as against such corporation,
96-11 unless such guaranty is sought to be enforced by a person who
96-12 participated in a fraud on the guarantor corporation resulting in
96-13 the making of the guaranty or by a person who had notice of such
96-14 fraud before he acquired his rights under the guaranty. Nothing
96-15 herein contained shall prevent a suit (1) prior to the making of a
96-16 guaranty by a corporation, by a shareholder in a representative
96-17 suit against the guarantor corporation, to enjoin the making of
96-18 such guaranty on the ground that such guaranty could not reasonably
96-19 be expected to benefit, directly or indirectly, the guarantor
96-20 corporation, or (2) after the making of a guaranty by a
96-21 corporation, by the guarantor corporation, whether acting directly
96-22 or through a receiver, trustee, or other legal representative or
96-23 through a shareholder in a representative suit, against the
96-24 directors who voted for or assented to the making of such guaranty
96-25 for damages or other appropriate relief on the ground that such
96-26 guaranty could not reasonably have been expected to benefit,
96-27 directly or indirectly, the guarantor corporation, but such
97-1 directors shall be entitled to assert any defenses which they may
97-2 have under law.
97-3 C. In addition to the power and authority granted in Section
97-4 B of this Article, any corporation has the power and authority to
97-5 make a guaranty respecting any subsidiary, parent, or affiliated
97-6 corporation if the action is approved by, or pursuant to authority
97-7 granted by, the Board of Directors of the guarantor corporation.
97-8 For the purposes of this section only:
97-9 (1) "subsidiary corporation" means a corporation, 100
97-10 percent of whose outstanding shares are owned at the time of the
97-11 action:
97-12 (a) by the guarantor corporation itself;
97-13 (b) by one or more of the guarantor
97-14 corporation's subsidiary corporations; or
97-15 (c) by the guarantor corporation and one or more
97-16 of its subsidiary corporations;
97-17 (2) "parent corporation" means a corporation that at
97-18 the time of the action owns 100 percent of the outstanding shares
97-19 of the guarantor corporation:
97-20 (a) by itself;
97-21 (b) through one or more of its subsidiary
97-22 corporations; or
97-23 (c) with one or more of its subsidiary
97-24 corporations; and
97-25 (3) "affiliated corporation" means a corporation, 100
97-26 percent of whose outstanding shares are owned at the time of the
97-27 action:
98-1 (a) by the parent corporation of the guarantor
98-2 corporation;
98-3 (b) by one or more of the parent corporation's
98-4 subsidiary corporations; or
98-5 (c) by the parent corporation and one or more of
98-6 its subsidiary corporations.
98-7 D. <The limitations set forth in Section A of this Article
98-8 shall not apply to indebtedness of a corporation that is incurred
98-9 by reason of the authorization or payment of a dividend or other
98-10 distribution.>
98-11 <E.> Nothing contained in <Section B, C, or D of> this
98-12 Article is intended or shall be construed to limit or deny to any
98-13 corporation the right or power to do or perform any act which it is
98-14 or may be empowered or authorized to do or perform under any other
98-15 laws of the State of Texas now in force or hereafter enacted.
98-16 Provided, however, Sections B, and C<, and D> of this Article shall
98-17 not apply to nor enlarge the powers of any corporation that does
98-18 business pursuant to any provision of the Insurance Code of Texas,
98-19 whether licensed in Texas or not, nor shall those sections allow or
98-20 permit any corporation, not licensed under the Insurance Code of
98-21 Texas, to engage in any character, type, class, or kind of
98-22 fidelity, surety, or guaranty business or transaction subject to
98-23 regulation under the Insurance Code.
98-24 SECTION 42. Article 5.06, Texas Non-Profit Corporation Act
98-25 (Article 1396-5.06, Vernon's Texas Civil Statutes), is amended to
98-26 read as follows:
98-27 Art. 5.06. Effect of Merger or Consolidation of Domestic
99-1 Corporations. A. When a <such> merger or consolidation of a
99-2 domestic corporation under Article 5.01, 5.02, or 5.07 of this Act
99-3 has been made effective <corporations has been effected>:
99-4 (1) <The several corporations parties to the plan of
99-5 merger or consolidation shall be a single corporation, which, in
99-6 the case of a merger, shall be that corporation designated in the
99-7 plan of merger as the surviving corporation, and, in the case of
99-8 consolidation, shall be the new corporation provided for in the
99-9 plan of consolidation.>
99-10 <(2)> The separate existence of every domestic
99-11 corporation that is a party to the merger, except any surviving or
99-12 new domestic <all corporations parties to the plan of merger or
99-13 consolidation, except the surviving or new> corporation, shall
99-14 cease.
99-15 (2) All rights, title, and interest to all real estate
99-16 and other property owned by each corporation that is a party to the
99-17 merger shall be vested in the <(3) Such> surviving or new
99-18 corporation without revision or impairment, <shall have all the
99-19 rights, privileges, immunities and powers and shall be subject to
99-20 all the duties and liabilities of a corporation organized under
99-21 this Act.>
99-22 <(4) Such surviving or new corporation shall thereupon
99-23 and thereafter possess all the rights, privileges, immunities and
99-24 franchises, as well of a public as of a private nature, of each of
99-25 the merging or consolidating corporations; and all property, real,
99-26 personal and mixed, and all debts due on whatever account, and all
99-27 other choses in action, and all and every other interest, of or
100-1 belonging to or due to each of the corporations so merged or
100-2 consolidated, shall be taken and deemed to be transferred to and
100-3 vested in such single corporation> without further act or deed, and
100-4 without any transfer or assignment having occurred, but subject to
100-5 any existing liens or encumbrances thereon.
100-6 (3) All <(5) Such surviving or new corporation shall
100-7 thenceforth be responsible and liable for all the> liabilities and
100-8 obligations of each corporation shall become the liabilities and
100-9 obligations of the surviving or new corporation.
100-10 (4) A <of the corporations so merged or consolidated;
100-11 and any claim existing or action or> proceeding pending by or
100-12 against any corporation may be continued as if the merger did not
100-13 occur and the <of such corporations may be prosecuted as if such
100-14 merger or consolidation had not taken place, or such> surviving or
100-15 new corporation may be substituted in the proceeding <its place.
100-16 Neither the rights of creditors nor any liens upon the property of
100-17 any such corporations shall be impaired by such merger or
100-18 consolidation>.
100-19 (5) <(6)> In the case of a merger, the articles of
100-20 incorporation of the surviving corporation shall be deemed to be
100-21 amended to the extent, if any, that changes in its articles of
100-22 incorporation are stated in the plan of merger; and, in the case of
100-23 a consolidation, the statement <statements> set forth in the
100-24 articles of consolidation and which are required or are permitted
100-25 to be set forth in the articles of incorporation of corporations
100-26 organized under this Act shall be deemed to be the articles of
100-27 incorporation of the new corporation.
101-1 SECTION 43. The Texas Non-Profit Corporation Act (Article
101-2 1396-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
101-3 adding Article 5.10 to read as follows:
101-4 Art. 5.10. MERGERS WITH OTHER ENTITIES. A. In addition to
101-5 a merger or consolidation effected pursuant to Article 5.01, 5.02,
101-6 or 5.07 of this Act and subject to this article, a domestic
101-7 corporation may adopt a plan of merger and one or more domestic
101-8 corporations may merge with one or more domestic or foreign
101-9 corporations or other entities in accordance with Part Five of the
101-10 Texas Business Corporation Act; provided, however, that nothing in
101-11 this article shall be deemed to authorize the merger of a
101-12 charitable corporation into another entity if such charitable
101-13 corporation would thereby have its charitable status lost or
101-14 impaired; but a for-profit corporation or other entity may be
101-15 merged into one or more charitable corporations which shall
101-16 continue as the surviving entity or entities.
101-17 B. For purposes of this article, the term "merger" means:
101-18 (1) the division of a domestic corporation into two or
101-19 more domestic corporations or into a surviving corporation or one
101-20 or more domestic or foreign corporations or other entities; or
101-21 (2) the combination of one or more domestic
101-22 corporations with one or more domestic or foreign corporations or
101-23 other entities resulting in:
101-24 (a) one or more surviving domestic or foreign
101-25 corporations or other entities;
101-26 (b) the creation of one or more domestic or
101-27 foreign corporations or other entities; or
102-1 (c) one or more surviving domestic or foreign
102-2 corporations or other entities and the creation of one or more
102-3 domestic or foreign corporations or other entities.
102-4 C. For purposes of this article, the term "other entity"
102-5 means any entity, whether organized for profit or not, that is a
102-6 corporation (other than a domestic corporation or foreign
102-7 corporation), limited or general partnership, limited liability
102-8 company, real estate investment trust, joint venture, stock
102-9 company, cooperative, association, bank, trust, insurance company,
102-10 or other legal entity organized pursuant to the laws of this state
102-11 or any other state or country to the extent such laws or the
102-12 constituent documents of that entity, not inconsistent with such
102-13 laws, permit that entity to enter into a merger with a domestic
102-14 corporation as permitted by this article.
102-15 D. The procedures for approval of a merger set forth in
102-16 Article 5.03 of this Act shall also apply to any merger effected
102-17 pursuant to this article in lieu of Section A(1), Article 5.01, and
102-18 Article 5.03 of the Texas Business Corporation Act. The provisions
102-19 set forth in Article 5.04 of the Texas Business Corporation Act and
102-20 Article 5.04 of this Act with respect to articles of merger shall
102-21 both apply to any merger to the extent applicable. The effects of
102-22 any merger effected pursuant to this article shall be as set forth
102-23 in Article 5.06 of the Texas Business Corporation Act. All other
102-24 provisions of this part shall apply to a merger under this article
102-25 except to the extent the provisions of Part Five of the Texas
102-26 Business Corporation Act expressly apply to the merger and such
102-27 provisions are not in conflict with the provisions of this Act.
103-1 SECTION 44. Subsection (4), Section A, Article 1.02, Texas
103-2 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
103-3 Statutes), is amended to read as follows:
103-4 (4) "Person" includes an individual, corporation,
103-5 business trust, estate, trust, custodian, trustee, executor,
103-6 administrator, nominee, partnership, registered limited liability
103-7 partnership, limited partnership, association, limited liability
103-8 company, government, governmental subdivision, governmental agency,
103-9 governmental instrumentality, and any other legal or commercial
103-10 entity, in its own or representative capacity. Any of the
103-11 foregoing entities may be formed under the laws of this State or
103-12 any other jurisdiction <partnership, limited partnership, limited
103-13 liability company, foreign limited liability company, trust,
103-14 estate, corporation, custodian, trustee, executor, administrator,
103-15 nominee or entity in a representative capacity>.
103-16 SECTION 45. Article 1.02, Texas Limited Liability Company
103-17 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
103-18 adding Subsections (11), (12), and (13) to read as follows:
103-19 (11) "Conversion" means:
103-20 (a) the continuance of a domestic limited
103-21 liability company as, and in the organizational form of, a foreign
103-22 limited liability company or other entity; or
103-23 (b) the continuance of a foreign limited
103-24 liability company or other entity as, and in the organizational
103-25 form of, a domestic limited liability company.
103-26 (12) "Converted entity" means any domestic or foreign
103-27 limited liability company or other entity to which a converting
104-1 entity has converted or intends to convert as permitted by Article
104-2 10.08 of this Act.
104-3 (13) "Converting entity" means any domestic or foreign
104-4 limited liability company or other entity that has converted or
104-5 intends to convert as permitted by Article 10.08 of this Act.
104-6 SECTION 46. Article 2.09, Texas Limited Liability Company
104-7 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
104-8 read as follows:
104-9 Art. 2.09. Regulations of limited liability company.
104-10 A. The power to adopt, alter, amend, or repeal the regulations of
104-11 a limited liability company shall be vested in the members of the
104-12 company unless vested in whole or part in the manager or managers
104-13 of the company by the articles of organization or regulations.
104-14 Regulations adopted by the members or by the managers may be
104-15 repealed or altered; new regulations may be adopted by the members;
104-16 and regulations may provide that they may not, in whole or
104-17 specified part, be altered, amended, or repealed by the managers.
104-18 The regulations may contain any provisions for the regulation and
104-19 management of the affairs of the limited liability company not
104-20 inconsistent with law or the articles of organization. <Unless
104-21 otherwise provided in the articles of organization, the initial
104-22 regulations of the limited liability company shall be adopted by
104-23 the manager or managers named in the articles of organization, if
104-24 any, or by the member or members named in the articles of
104-25 organization, if any.> Any provision of this Act subject to
104-26 variation or modification by the regulations of a limited liability
104-27 company is also subject to variation or modification by the
105-1 articles of organization of the limited liability company.
105-2 SECTION 47. Article 2.13, Texas Limited Liability Company
105-3 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
105-4 read as follows:
105-5 Art. 2.13. Number and election of managers. A. The
105-6 managers of a limited liability company, if any, shall consist of
105-7 one or more persons. The number of managers shall be fixed by, or
105-8 in the manner provided in, the regulations, except as to the number
105-9 constituting the initial managers, which number shall be fixed by
105-10 the articles of organization. The number of managers may be
105-11 increased or decreased from time to time by amendment to, or in the
105-12 manner provided in, the regulations, but, unless provided otherwise
105-13 in the articles of organization or the regulations, no decrease
105-14 shall have the effect of shortening the term of any incumbent
105-15 manager. In the absence of a regulation fixing the number of
105-16 managers or providing for the manner in which the number of
105-17 managers shall be fixed, the number of managers shall be the same
105-18 as the number constituting the initial managers. The names and
105-19 addresses of the initial managers, if any, shall be stated in the
105-20 articles of organization. Unless otherwise provided in the
105-21 regulations or in any resolution of the managers or members
105-22 appointing that manager in accordance with the regulations or
105-23 articles of organization, each manager shall hold office for the
105-24 term for which elected, if any term is specified, and until that
105-25 manager's successor has been elected, or until that manager's
105-26 earlier death, resignation, or removal. The regulations may
105-27 provide for the time or times at which the members entitled to vote
106-1 in the election of managers shall elect managers and the term for
106-2 which the managers shall hold office. The regulations may provide
106-3 that any class or group of members shall be entitled to elect one
106-4 or more managers, who shall hold office for such terms as shall be
106-5 stated in the regulations. The regulations may provide that at any
106-6 meeting of members called expressly for that purpose any managers
106-7 may be removed, with or without cause, as provided therein;
106-8 however, if any class or group of members is entitled to elect one
106-9 or more managers by the provisions of the regulations, only the
106-10 members of that class or group shall be entitled to vote for or
106-11 against the removal of any managers elected by the members of that
106-12 class or group.
106-13 SECTION 48. Sections A and B, Article 2.15, Texas Limited
106-14 Liability Company Act (Article 1528n, Vernon's Texas Civil
106-15 Statutes), are amended to read as follows:
106-16 A. Unless otherwise provided in the articles of organization
106-17 or the regulations, any <Any> vacancy occurring in the managers may
106-18 be filled in accordance with Section B of this Article or may be
106-19 filled by the affirmative vote of a majority of the remaining
106-20 managers though less than a quorum of the managers. Unless
106-21 otherwise provided in the articles of organization or the
106-22 regulations, a <A> manager elected to fill a vacancy shall be
106-23 elected for the unexpired term of the predecessor in office.
106-24 B. Unless otherwise provided in the articles of organization
106-25 or the regulations, any <Any> vacancy occurring in the managers to
106-26 be filled by reason of an increase in the number of managers may be
106-27 filled by election at an annual or special meeting of members
107-1 called for that purpose.
107-2 SECTION 49. Article 2.17, Texas Limited Liability Company
107-3 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
107-4 read as follows:
107-5 Art. 2.17. Interested managers. A. Unless otherwise
107-6 provided in the regulations, no <No> contract or transaction
107-7 between a limited liability company and one or more of its managers
107-8 or officers, or between a limited liability company and any other
107-9 limited liability company, corporation, partnership, association,
107-10 or other organization in which one or more of its managers or
107-11 officers are managers, directors or officers or have a financial
107-12 interest, shall be void or voidable solely for this reason, solely
107-13 because the manager or officer is present at or participates in the
107-14 meeting of managers or of a committee of managers which authorizes
107-15 the contract or transaction, or solely because such manager's or
107-16 managers' votes are counted for such purpose, if:
107-17 (1) The material facts as to the relationship or
107-18 interest and as to the contract or transaction are disclosed or are
107-19 known to the managers or the committee, and the managers or
107-20 committee in good faith authorizes the contract or transaction by
107-21 the affirmative vote of a majority of the disinterested managers,
107-22 even though the disinterested managers be less than a quorum; or
107-23 (2) The material facts as to the relationship or
107-24 interest and as to the contract or transaction are disclosed or are
107-25 known to the members entitled to vote thereon, and the contract or
107-26 transaction is specifically approved in good faith by vote of the
107-27 members; or
108-1 (3) The contract or transaction is fair as to the
108-2 limited liability company as of the time it is authorized,
108-3 approved, or ratified by the managers, a committee thereof, or the
108-4 members.
108-5 B. Unless otherwise provided in the regulations, common
108-6 <Common> or interested managers may be counted in determining the
108-7 presence of a quorum at a meeting of the managers or of a committee
108-8 which authorizes the contract or transaction.
108-9 SECTION 50. Article 2.19, Texas Limited Liability Company
108-10 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
108-11 read as follows:
108-12 Art. 2.19. Place and notice of managers' meetings.
108-13 A. Except as otherwise provided in the articles of organization or
108-14 the regulations, regular or special meetings <Meetings> of the
108-15 members, managers, or any committee <regular or special,> may be
108-16 held either within or without this State.
108-17 B. Regular meetings of the managers or committees may be
108-18 held with or without notice as prescribed in the regulations.
108-19 Special meetings of the managers or committees shall be held upon
108-20 such notice as is prescribed in the regulations.
108-21 C. Except as otherwise provided in the articles of
108-22 organization or the regulations, if the limited liability company
108-23 is without managers, regular meetings of members may be held with
108-24 or without notice as prescribed in the regulations and special
108-25 meetings of members may be held with or without notice as
108-26 prescribed in the regulations, unless any such meeting is to
108-27 consider any of those matters set forth in Section D, Article 2.23,
109-1 of this Act. Except as otherwise provided in the articles of
109-2 organization or the regulations, for any meeting of the members at
109-3 which any of the matters set forth in Section D, Article 2.23, of
109-4 this Act are to be considered, written or printed notice stating
109-5 the place, day, and hour of the meeting and describing the purpose
109-6 or purposes of such meeting shall be delivered to the members not
109-7 less than ten (10) or more than sixty (60) days before the meeting,
109-8 either personally or by mail.
109-9 D. Except as otherwise provided in the articles of
109-10 organization or the regulations, if the limited liability company
109-11 has managers, meetings of members shall be held upon written or
109-12 printed notice, stating the place, day, and hour of the meeting
109-13 and, in the case of a special meeting, the purpose or purposes for
109-14 which the meeting is called, which notice shall be delivered to the
109-15 members not less than ten (10) or more than sixty (60) days before
109-16 the meeting, either personally or by mail.
109-17 E. If mailed, such notice to a member shall be deemed to be
109-18 delivered when deposited in the United States Mail addressed to the
109-19 member at the member's address that appears on the records of the
109-20 limited liability company, with postage prepaid.
109-21 F. Attendance of a member, manager, or committee member at a
109-22 meeting shall constitute a waiver of notice of such meeting, except
109-23 where that member, <a> manager or committee member attends a
109-24 meeting for the express purpose of objecting to the transaction of
109-25 any business on the ground that the meeting is not lawfully called
109-26 or convened.
109-27 G. The articles of organization and regulations may contain
110-1 provisions relating to giving notice of the time, place, or purpose
110-2 of a meeting at which a matter is to be voted on by any members or
110-3 managers, waiver of notice, action by consent without a meeting,
110-4 the establishment of a record date, quorum requirements, voting in
110-5 person or by proxy, or any other matter relating to the exercise of
110-6 the right to vote <Neither the business to be transacted at, nor
110-7 the purpose of, any regular or special meeting of the managers need
110-8 be specified in the notice or waiver of notice of such meeting,
110-9 unless required by the regulations>.
110-10 SECTION 51. Sections A and B, Article 2.22, Texas Limited
110-11 Liability Company Act (Article 1528n, Vernon's Texas Civil
110-12 Statutes), are amended to read as follows:
110-13 A. A domestic limited liability company shall keep and
110-14 maintain the following records in its principal office in the
110-15 United States or make them available in that office within five
110-16 days after the date of receipt of a written request under Section E
110-17 of this Article:
110-18 (1) a current list that states:
110-19 (a) the name and mailing address of each member;
110-20 (b) the percentage or other interest in the
110-21 limited liability company owned by each member; and
110-22 (c) if one or more classes or groups are
110-23 established in or under the articles of organization or
110-24 regulations, the names of the members who are members of each
110-25 specified class or group;
110-26 (2) copies of the federal, state, and local
110-27 information or income tax returns for each of the limited liability
111-1 company's six most recent tax years;
111-2 (3) a copy of the articles of organization and, if the
111-3 regulations of the limited liability company are in writing, a copy
111-4 of the regulations, copies of all amendments or restatements of the
111-5 articles of organization or regulations, executed copies of any
111-6 powers of attorney, and copies of any document that creates, in the
111-7 manner provided by the articles of organization or regulations,
111-8 classes or groups of members;
111-9 (4) unless contained in the articles of organization
111-10 or regulations, a written statement of:
111-11 (a) the amount of the cash contribution and a
111-12 description and statement of the agreed value of any other
111-13 contribution made by each member, and the amount of the cash
111-14 contribution and a description and statement of the agreed value of
111-15 any other contribution that the member has agreed to make in the
111-16 future as an additional contribution;
111-17 (b) the times at which additional contributions
111-18 are to be made or events requiring additional contributions to be
111-19 made;
111-20 (c) events requiring the limited liability
111-21 company to be dissolved and its affairs wound up; and
111-22 (d) the date on which each member in the limited
111-23 liability company became a member; and
111-24 (5) correct and complete books and records of account
111-25 of the limited liability company.
111-26 B. A limited liability company shall maintain such <its>
111-27 records in written form or in another form capable of conversion
112-1 into written form within a reasonable time.
112-2 SECTION 52. Section A, Article 2.23, Texas Limited Liability
112-3 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
112-4 amended to read as follows:
112-5 A. Except as otherwise provided in this Article, in the
112-6 articles of organization, or in the regulations, a majority of the
112-7 members, managers, or members of any committee constitutes a quorum
112-8 for the transaction of business at any meeting of the members, the
112-9 managers, or the committee. An act of a majority of the members
112-10 entitled to vote, the managers, or the members of a committee, who
112-11 are present at a meeting of the members, the managers, or the
112-12 committee at which a quorum is present is the act of the members,
112-13 the managers, or the committee. Except as otherwise provided in
112-14 the articles of organization or the regulations, any member may
112-15 vote either in person or by proxy executed in writing by the
112-16 member.
112-17 SECTION 53. Section A, Article 3.02, Texas Limited Liability
112-18 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
112-19 amended to read as follows:
112-20 A. The initial Articles of Organization shall set forth:
112-21 (1) The name of the limited liability company;
112-22 (2) The period of duration, which may be perpetual;
112-23 (3) The purpose for which the limited liability
112-24 company is organized which may be stated to be, or to include, the
112-25 transaction of any or all lawful business for which limited
112-26 liability companies may be organized under this Act;
112-27 (4) The address of its initial registered office and
113-1 the name of its initial registered agent at that address;
113-2 (5) If the limited liability company is to have a
113-3 manager or managers, a statement to that effect and the names and
113-4 the addresses of the initial manager or managers, or if<. If> the
113-5 limited liability company will not have managers, a statement to
113-6 that effect and the name and the addresses of the initial members;
113-7 (6) The name and the address of each organizer, unless
113-8 the limited liability company is being organized pursuant to a plan
113-9 of conversion or a plan of merger, in which case the articles need
113-10 not include such information;
113-11 (7) Any provision required by Part Eleven of this Act,
113-12 if the limited liability company is a professional limited
113-13 liability company; <and>
113-14 (8) If the limited liability company is being
113-15 incorporated pursuant to a plan of conversion or a plan of merger,
113-16 a statement to that effect, and in the case of a plan of
113-17 conversion, the name, address, and prior form of organization, date
113-18 of incorporation, or organization and jurisdiction of incorporation
113-19 or organization of the converting entity; and
113-20 (9) Any other provisions, not inconsistent with law,
113-21 that <which> the members elect to set out in the articles of
113-22 organization for the regulation of the internal affairs of the
113-23 limited liability company, including any provisions that <which>
113-24 under this Act are permitted to be set out in the regulations of
113-25 the limited liability company.
113-26 SECTION 54. Article 3.03, Texas Limited Liability Company
113-27 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
114-1 amending Section A and adding Section C to read as follows:
114-2 A. Except as provided by Section C of this Article, the
114-3 <The> original and a copy of the articles of organization shall be
114-4 delivered to the Secretary of State. If the Secretary of State
114-5 finds that the articles of organization conform to law, the
114-6 Secretary of State shall, when all fees have been paid as required
114-7 by law:
114-8 (1) Endorse on the original and the copy the word
114-9 "filed," and the month, day, and year of the filing thereof.
114-10 (2) File the original in the office of the Secretary
114-11 of State.
114-12 (3) Issue a certificate of organization to which shall
114-13 be affixed the copy.
114-14 C. In the case of a new domestic limited liability company
114-15 being organized pursuant to a plan of conversion or a plan of
114-16 merger pursuant to Part Ten of this Act, the articles of
114-17 organization of the limited liability company shall be filed with
114-18 the secretary of state with the articles of conversion or merger
114-19 and need not be filed separately pursuant to Section A of this
114-20 article. If the secretary of state finds that the articles of
114-21 organization conform to the law, the secretary of state shall file
114-22 the articles of organization in the office of the secretary of
114-23 state and issue a certificate of organization, to which the
114-24 secretary of state shall affix a copy of the articles of
114-25 organization, and deliver the same to the party or parties filing
114-26 the articles of conversion or merger or their representatives with
114-27 the certificate of conversion or merger that is issued in
115-1 connection with the conversion or merger. In the case of a
115-2 conversion or a merger, the certificate of organization of a
115-3 domestic limited liability company that is a converted entity or
115-4 that is to be created pursuant to the plan of merger shall become
115-5 effective upon the effectiveness of the conversion or the merger,
115-6 as the case may be.
115-7 SECTION 55. Article 3.04, Texas Limited Liability Company
115-8 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
115-9 read as follows:
115-10 Art. 3.04. Effect of the Issuance of Certificate of
115-11 Organization. A. Except as provided by Section B of this article,
115-12 upon <Upon> the issuance of the certificate of organization, the
115-13 limited liability company's <company> existence shall begin<, and
115-14 such certificate of organization shall be conclusive evidence that
115-15 all conditions precedents required to be performed by the
115-16 organizers have been complied with and that the limited liability
115-17 company has been organized under this Act, except as against the
115-18 state in proceedings for involuntary dissolution>.
115-19 B. In the case of a new domestic limited liability company
115-20 being organized pursuant to a plan of conversion or a plan of
115-21 merger pursuant to Part Ten of this Act, the existence of the
115-22 limited liability company as such shall begin upon the
115-23 effectiveness of the conversion or the merger, as the case may be.
115-24 C. Upon effectiveness, the certificate of organization shall
115-25 be conclusive evidence that all conditions precedent required to be
115-26 performed for the valid organization of the limited liability
115-27 company have been complied with and that the limited liability
116-1 company has been duly organized under this Act, except as against
116-2 the state in a proceeding for involuntary dissolution.
116-3 SECTION 56. Article 5.08, Texas Limited Liability Company
116-4 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
116-5 read as follows:
116-6 Art. 5.08. Right to Distribution. A. Subject to Articles
116-7 5.09 and 6.04 of this act, at the time that a member becomes
116-8 entitled to receive a distribution, with respect to the <a>
116-9 distribution, that member has the status of and is entitled to all
116-10 remedies available to a creditor of the limited liability company.
116-11 SECTION 57. Section A, Article 6.01, Texas Limited Liability
116-12 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
116-13 amended to read as follows:
116-14 A. Except as provided by Section B of this Article, a
116-15 limited liability company shall be dissolved on the first of the
116-16 following to occur:
116-17 (1) the period fixed for the duration of the limited
116-18 liability company expires;
116-19 (2) the occurrence of events specified in the articles
116-20 of organization or regulations to cause dissolution;
116-21 (3) the action of the members to dissolve the limited
116-22 liability company;
116-23 (4) if no capital has been paid into the limited
116-24 liability company, the act of the organizer or the managers <of the
116-25 limited company> to dissolve the limited liability company;
116-26 (5) except as otherwise provided in the regulations,
116-27 upon the death, expulsion, withdrawal pursuant to or as provided in
117-1 the articles of organization or regulations, bankruptcy, or
117-2 dissolution of a member or the occurrence of any other event which
117-3 terminates the continued membership of a member in the limited
117-4 liability company; or
117-5 (6) entry of a decree of judicial dissolution under
117-6 Section 6.02 of this Act.
117-7 SECTION 58. Section B, Article 7.13, Texas Limited Liability
117-8 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
117-9 amended to read as follows:
117-10 B. The failure of a foreign limited liability company to
117-11 obtain a certificate of authority to transact business in this
117-12 State shall not impair the validity of any contract or act of such
117-13 foreign limited liability company, shall not cause any member or
117-14 manager of such foreign limited liability company to become liable
117-15 for the debts, obligations, or liabilities of such foreign limited
117-16 liability company, and shall not prevent such foreign limited
117-17 liability company from defending any action, suit or proceeding in
117-18 any court of this State.
117-19 SECTION 59. Section C, Article 8.12, Texas Limited Liability
117-20 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
117-21 amended to read as follows:
117-22 C. For purposes of the application of the articles of the
117-23 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
117-24 by Sections A and B of this Article, as context requires:
117-25 (1) a reference to a corporation includes a limited
117-26 liability company;
117-27 (2) a reference to a share includes a membership
118-1 interest;
118-2 (3) a reference to a shareholder includes a member;
118-3 (4) a reference to a director includes a manager or,
118-4 to the extent that the management of the limited liability company
118-5 is reserved in whole or in part to the members, a member who
118-6 manages the limited liability company;
118-7 (5) a reference to articles of incorporation includes
118-8 articles of organization; provided, however, that the references to
118-9 articles of incorporation in Article 7.06, Texas Miscellaneous
118-10 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
118-11 Statutes), include either articles of organization or regulations;
118-12 and
118-13 (6) a reference to bylaws includes regulations.
118-14 SECTION 60. Section A, Article 9.01, Texas Limited Liability
118-15 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
118-16 amended to read as follows:
118-17 A. The Secretary of State is authorized and required to
118-18 collect for the use of the State the following fees:
118-19 (1) Filing articles of organization of a domestic
118-20 limited liability company and issuing the certificate of
118-21 organization, Two Hundred Dollars ($200.00).
118-22 (2) Filing articles of amendment of a domestic limited
118-23 liability company and issuing the certificate of amendment, One
118-24 Hundred Dollars ($100.00).
118-25 (3) Filing articles of merger or articles of
118-26 conversion involving one or more domestic or foreign limited
118-27 liability companies,<:>
119-1 <(a)> Two Hundred Dollars ($200.00), provided that any other
119-2 filing fee paid under the corporation or partnership statutes of
119-3 this state for the filing of articles of merger or articles of
119-4 conversion with respect to entities organized under those statutes
119-5 shall be credited against the filing fee provided by this
119-6 subsection <if another type of domestic entity is not a party to
119-7 the merger; or>
119-8 <(b) the greater of Two Hundred Dollars ($200.00) or the
119-9 highest filing fee for articles of merger under the applicable
119-10 Texas statute under which the other domestic entity or entities are
119-11 incorporated or organized, if another type of domestic entity is
119-12 party to the merger>.
119-13 (4) Filing an application of a foreign limited
119-14 liability company for certificate of authority to transact business
119-15 in this state and issuing such a certificate of authority, Five
119-16 Hundred Dollars ($500.00).
119-17 (5) Filing an application of a foreign limited
119-18 liability company for an amended certificate of authority to
119-19 transact business in this state and issuing such an amended
119-20 certificate of authority, One Hundred Dollars ($100.00).
119-21 (6) Filing restated articles of organization of a
119-22 domestic limited liability company, Two Hundred Dollars ($200.00).
119-23 (7) Filing application for reservations of a limited
119-24 liability company name and issuing certificate thereof, Twenty-Five
119-25 Dollars ($25.00).
119-26 (8) Filing notice of transfer of reserved limited
119-27 liability company name and issuing a certificate therefor, Ten
120-1 Dollars ($10.00).
120-2 (9) Filing statement of change of registered office or
120-3 registered agent, or both, Ten Dollars ($10.00).
120-4 (10) Filing statement of change of address of
120-5 registered agent, Ten Dollars ($10.00); provided, however, that the
120-6 maximum fee for simultaneous filings by a registered agent for more
120-7 than one limited liability company shall not exceed Five Hundred
120-8 Dollars ($500.00).
120-9 (11) Filing articles of dissolution and issuing
120-10 certificate therefor, Twenty-Five Dollars ($25.00).
120-11 (12) Filing application for withdrawal and issuing
120-12 certificate therefor, Ten Dollars ($10.00).
120-13 (13) Filing certificate from home state that foreign
120-14 limited liability company is no longer existent in said state, Ten
120-15 Dollars ($10.00).
120-16 (14) Maintaining the record of service of any process,
120-17 notice or demand upon the Secretary of State as agent for foreign
120-18 and domestic limited liability companies, Twenty-Five Dollars
120-19 ($25.00).
120-20 (15) Filing any instrument pursuant to this act not
120-21 expressly provided for above, Ten Dollars ($10.00).
120-22 SECTION 61. Subsection (1), Section A, Article 9.03, Texas
120-23 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
120-24 Statutes), is amended to read as follows:
120-25 (1) For purposes of this Article, "permitted act"
120-26 means a filing with the Secretary of State under this Act for:
120-27 (a) the articles of organization of a limited
121-1 liability company under this Act;
121-2 (b) an amendment to or restatement of the
121-3 articles of organization;
121-4 (c) a merger or conversion;
121-5 (d) the application of a foreign limited
121-6 liability company to procure a certificate of authority to transact
121-7 business in this state or to withdraw from doing business in this
121-8 state;
121-9 (e) an amendment to the certificate of authority
121-10 of a foreign limited liability company to transact business in this
121-11 state;
121-12 (f) a change in registered office or registered
121-13 agent;
121-14 (g) a change of address of a registered agent;
121-15 or
121-16 (h) a voluntary dissolution.
121-17 SECTION 62. Section F, Article 9.03, Texas Limited Liability
121-18 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
121-19 amended to read as follows:
121-20 F. If articles of organization, articles of amendment or
121-21 restatement, articles of merger, articles of conversion, an
121-22 application, or any other document permitted to be filed pursuant
121-23 to this Act with the Secretary of State have been filed but the
121-24 event or transaction evidenced by the filing has not become
121-25 effective, the filing may be abandoned in accordance with the
121-26 agreement of the parties to the filing by filing a certificate of
121-27 abandonment with the Secretary of State before the effectiveness of
122-1 the event or transaction in accordance with the terms of the
122-2 document so filed. The certificate of abandonment must be signed
122-3 on behalf of each domestic or foreign limited liability company or
122-4 other entity that is a party to the event or transaction by a
122-5 member, manager, officer, or other authorized representative and
122-6 must state the nature of the filing to be abandoned, the date of
122-7 the filing to be abandoned, the parties to the filing to be
122-8 abandoned, and that the event or transaction has been abandoned in
122-9 accordance with the agreement of the parties. On the filing of the
122-10 certificate <statement> of abandonment with the Secretary of State,
122-11 the event or transaction evidenced by the original filing shall be
122-12 considered abandoned and may not become effective.
122-13 SECTION 63. Section B, Article 10.03, Texas Limited
122-14 Liability Company Act (Article 1528n, Vernon's Texas Civil
122-15 Statutes), is amended to read as follows:
122-16 B. The original of the articles of merger and a number of
122-17 copies equal to the number of surviving and new domestic or foreign
122-18 limited liability companies and other entities that are a party to
122-19 the plan of merger or that will be created by its terms shall be
122-20 delivered to the Secretary of State. Unless the Secretary of State
122-21 finds that the articles of merger do not conform to law, on receipt
122-22 of all applicable filing fees and franchise taxes, if any, required
122-23 by law or if the plan of merger provides that one or more of the
122-24 surviving, new, or acquiring domestic or foreign limited liability
122-25 companies or other entities will be responsible for the payment of
122-26 all of such fees and franchise taxes and that all of such
122-27 surviving, new, or acquiring domestic or foreign limited liability
123-1 companies and other entities will be obligated to pay such fees and
123-2 franchise taxes if the same are not timely paid, the Secretary of
123-3 State shall:
123-4 (1) certify that the articles of merger have been
123-5 filed in the Secretary of State's office by endorsing on the
123-6 original the word "Filed" and the date of the filing;
123-7 (2) file and index the endorsed articles of merger;
123-8 and
123-9 (3) issue a certificate of merger, together with a
123-10 copy of the articles affixed to the certificate, to each surviving
123-11 or new domestic or foreign limited liability company or other
123-12 entity that is a party to the plan of merger or that is created by
123-13 the merger, or to its respective representatives.
123-14 SECTION 64. Part Ten, Texas Limited Liability Act (Article
123-15 1528n, Vernon's Texas Civil Statutes), is amended by adding
123-16 Articles 10.08-10.11 to read as follows:
123-17 Art. 10.08. CONVERSION. A. A domestic limited liability
123-18 company may adopt a plan of conversion and convert to a foreign
123-19 limited liability company or any other entity if:
123-20 (1) the converting entity acts upon and its members
123-21 approve a plan of conversion in the manner prescribed by Article
123-22 10.01 of this Act as if the conversion were a merger to which the
123-23 converting entity were a party and not the survivor;
123-24 (2) the conversion is permitted by, or not
123-25 inconsistent with, the laws of the state or country in which the
123-26 converted entity is to be incorporated, formed, or organized, and
123-27 the incorporation, formation, or organization of the converted
124-1 entity is effected in compliance with such laws;
124-2 (3) at the time the conversion becomes effective, each
124-3 member of the converting entity will, unless otherwise agreed to by
124-4 that member, own an equity interest or other ownership or security
124-5 interest in, and be a shareholder, partner, member, owner, or other
124-6 security holder of, the converted entity;
124-7 (4) no member of the domestic limited liability
124-8 company will, as a result of the conversion, become personally
124-9 liable, without the member's consent, for the liabilities or
124-10 obligations of the converted entity; and
124-11 (5) the converted entity shall be incorporated,
124-12 formed, or organized as part of or pursuant to the plan of
124-13 conversion.
124-14 B. Any foreign limited liability company or other entity may
124-15 adopt a plan of conversion and convert to a domestic limited
124-16 liability company if:
124-17 (1) the conversion is permitted by the laws of the
124-18 state or country in which the foreign limited liability company is
124-19 incorporated, if a foreign limited liability company is converting;
124-20 (2) the conversion is either permitted by the laws
124-21 under which the other entity is formed or organized or by the
124-22 constituent documents of the other entity that are not inconsistent
124-23 with the laws of the state or country in which the other entity is
124-24 formed or organized, if another entity is converting; and
124-25 (3) the converting entity takes all action that may be
124-26 required by the laws of the state or country under which it is
124-27 incorporated, formed, or organized and by its constituent documents
125-1 to effect the conversion.
125-2 C. A plan of conversion shall set forth:
125-3 (1) the name of the converting entity and the
125-4 converted entity;
125-5 (2) a statement that the converting entity is
125-6 continuing its existence in the organizational form of the
125-7 converted entity;
125-8 (3) a statement as to the type of entity that the
125-9 converted entity is to be and the state or country under the laws
125-10 of which the converted entity is to be incorporated, formed, or
125-11 organized;
125-12 (4) the manner and basis of converting the membership
125-13 interests or other evidences of ownership of the converting entity
125-14 into membership interests or other evidences of ownership or
125-15 securities of the converted entity, or any combination thereof;
125-16 (5) in an attachment or exhibit, the articles of
125-17 organization of the domestic limited liability company if the
125-18 converted entity is a domestic limited liability company; and
125-19 (6) in an attachment or exhibit, the articles of
125-20 organization or other organizational documents of the converted
125-21 entity if the converted entity is not a domestic limited liability
125-22 company.
125-23 D. A plan of conversion may set forth such other provisions
125-24 relating to the conversion not inconsistent with law, including the
125-25 initial regulations of the converted entity.
125-26 Art. 10.09. ARTICLES OF CONVERSION. A. If a plan of
125-27 conversion has been approved in accordance with Article 10.08 of
126-1 this Act and has not been abandoned, articles of conversion shall
126-2 be executed by the converting entity by a manager or other duly
126-3 authorized representative thereof and shall set forth:
126-4 (1) the plan of conversion or a statement certifying
126-5 the following:
126-6 (a) the name, the state of incorporation,
126-7 formation, or organization of the converting entity, and the
126-8 organizational form of the converting entity;
126-9 (b) that a plan of conversion has been approved;
126-10 (c) that an executed plan of conversion is on
126-11 file at the principal place of business of the converting entity,
126-12 stating the address thereof, and that an executed plan of
126-13 conversion will be on file, from and after the conversion, at the
126-14 principal place of business of the converting entity, stating the
126-15 address thereof; and
126-16 (d) that a copy of the plan of conversion will
126-17 be furnished by the converting entity (prior to the conversion) or
126-18 the converted entity (after the conversion), on written request and
126-19 without cost, to any member of the converting entity or the
126-20 converted entity; and
126-21 (2) a statement that the approval of the plan of
126-22 conversion was duly authorized by all action required by the laws
126-23 under which the converting entity was incorporated, formed, or
126-24 organized and by its constituent documents.
126-25 B. The original and one copy of the articles of conversion
126-26 shall be delivered to the secretary of state. Two copies of the
126-27 articles of organization of the domestic limited liability company
127-1 if the converted entity is a domestic limited liability company
127-2 shall also be delivered to the secretary of state with the articles
127-3 of conversion.
127-4 C. If the secretary of state finds that the articles of
127-5 conversion conform to law, has received all filings required to be
127-6 received, and issued all certificates required to be issued in
127-7 connection with the incorporation, formation, or organization of
127-8 the converted entity, if any, the secretary of state shall, when
127-9 all fees and franchise taxes have been paid as required by law or
127-10 if the articles of conversion provide that the converted entity
127-11 will be liable for the payment of all such fees and franchise
127-12 taxes:
127-13 (1) Endorse on the original and each copy the word
127-14 "Filed" and the month, day, and year of the filing thereof.
127-15 (2) File the original in the office of the secretary
127-16 of state.
127-17 (3) Issue a certificate of conversion, together with a
127-18 copy of the articles affixed thereto, to the converted entity or
127-19 its representatives.
127-20 Art. 10.10. EFFECTIVE DATE OF CONVERSION. Except as
127-21 otherwise provided by Article 9.03 of this Act, upon the issuance
127-22 of the certificate of conversion by the secretary of state, the
127-23 conversion of a converting entity shall be effective.
127-24 Art. 10.11. EFFECT OF CONVERSION. When a conversion of a
127-25 converting entity takes effect:
127-26 (1) the converting entity shall continue to exist,
127-27 without interruption, but in the organizational form of the
128-1 converted entity rather than in its prior organizational form;
128-2 (2) all rights, title, and interests to all real
128-3 estate and other property owned by the converting entity shall
128-4 continue to be owned by the converted entity in its new
128-5 organizational form without reversion or impairment, without
128-6 further act or deed, and without any transfer or assignment having
128-7 occurred, but subject to any existing liens or other encumbrances
128-8 thereon;
128-9 (3) all liabilities and obligations of the converting
128-10 entity shall continue to be liabilities and obligations of the
128-11 converted entity in its new organizational form without impairment
128-12 or diminution by reason of the conversion;
128-13 (4) all rights of creditors or other parties with
128-14 respect to or against the prior interest holders or other owners of
128-15 the converting entity in their capacities as such in existence as
128-16 of the effective time of the conversion will continue in existence
128-17 as to those liabilities and obligations and may be pursued by such
128-18 creditors and obligees as if such conversion shall not have
128-19 occurred;
128-20 (5) a proceeding pending by or against the converting
128-21 entity or by or against any of the converting entity's interest
128-22 holders or owners in their capacities as such may be continued by
128-23 or against the converted entity in its new organizational form and
128-24 by or against the prior interest holders or owners, as the case may
128-25 be, without any need for substitution of parties;
128-26 (6) the membership interests and other evidences of
128-27 ownership in the converting entity that are to be converted into
129-1 membership interests, evidences of ownership, or other securities
129-2 in the converted entity as provided in the plan of conversion shall
129-3 be so converted, and if the converting entity is a domestic limited
129-4 liability company, the former holders of membership interests in
129-5 the domestic limited liability company shall be entitled only to
129-6 the rights provided in the plan of conversion; and
129-7 (7) if, after the effectiveness of the conversion, a
129-8 shareholder, partner, member, or other owner of the converted
129-9 entity would be liable under applicable law, in such capacity, for
129-10 the debts or obligations of the converted entity, such shareholder,
129-11 partner, member, or other owner of the converted entity shall be
129-12 liable for the debts and obligations of the converting entity that
129-13 existed before the conversion takes effect only to the extent that
129-14 such shareholder, partner, member, or other owner:
129-15 (a) agreed in writing to be liable for such
129-16 debts or obligations;
129-17 (b) was liable under applicable law, prior to
129-18 the effectiveness of the conversion, for such debts or obligations;
129-19 or
129-20 (c) by becoming a shareholder, partner, member,
129-21 or other owner of the converted entity, becomes liable under
129-22 applicable law for existing debts and obligations of the converted
129-23 entity; and
129-24 (8) if the converted entity is a foreign limited
129-25 liability company or other entity, such converted entity shall be
129-26 deemed to appoint the secretary of state in this state as its agent
129-27 for service of process in a proceeding to enforce any obligation or
130-1 the rights of dissenting members of the converting domestic limited
130-2 liability company.
130-3 SECTION 65. Section B, Article 11.01, Texas Limited
130-4 Liability Company Act (Article 1528n, Vernon's Texas Civil
130-5 Statutes), is amended by amending Subsection (2) and adding
130-6 Subsections (3) and (4) to read as follows:
130-7 (2) "Professional limited liability company" means a
130-8 limited liability company that is organized under this Act for the
130-9 sole and specific purpose of rendering professional service and
130-10 that has as its members only professional individuals or
130-11 professional entities <individuals licensed or otherwise authorized
130-12 within this state to render the same professional service as the
130-13 limited liability company>.
130-14 (3) "Professional individual," with respect to any
130-15 professional limited liability company, means an individual who is
130-16 licensed or otherwise authorized to render the same professional
130-17 service as such professional limited liability company, either
130-18 within this state or in any other jurisdiction.
130-19 (4) "Professional entity," with respect to any
130-20 professional limited liability company, means a person (other than
130-21 an individual) that renders the same professional service as such
130-22 professional limited liability company only through partners,
130-23 members, shareholders, managers, directors, associates, officers,
130-24 employees, or agents who are professional individuals or
130-25 professional entities.
130-26 SECTION 66. Article 11.03, Texas Limited Liability Company
130-27 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
131-1 read as follows:
131-2 Art. 11.03. Restrictions on members, managers, and officers.
131-3 A. A person who is not a professional individual or professional
131-4 entity <licensed or otherwise authorized to render the professional
131-5 service of the professional limited liability company> may not be a
131-6 member, manager, or officer of the professional limited liability
131-7 company. A membership interest in the professional limited
131-8 liability company may not be transferred to a person who is not a
131-9 professional individual or professional entity <licensed or
131-10 otherwise authorized to render the professional service of the
131-11 professional limited liability company>.
131-12 B. If a member, manager, or officer of a professional
131-13 limited liability company ceases to be a professional individual or
131-14 professional entity, <or an agent or employee of the company who
131-15 has been rendering professional service for or with the company of
131-16 the same type for which the professional limited liability company
131-17 was organized to render, becomes legally disqualified to render the
131-18 professional service,> the person shall sever all employment with
131-19 the professional limited liability company and immediately
131-20 terminate all financial interest in the company. The professional
131-21 limited liability company shall purchase or cause to be purchased
131-22 from the person all membership interests owned by the person in the
131-23 professional limited liability company, at a price and on terms as
131-24 may be provided in the articles of organization, the regulations,
131-25 or any applicable agreement among the members and the professional
131-26 limited liability company. If the person is the sole member of the
131-27 professional limited liability company, the person may continue to
132-1 act as member, manager, or officer only for the purposes of winding
132-2 up the affairs of the professional limited liability company and
132-3 effecting its dissolution, including selling the assets of or
132-4 outstanding membership interests in the professional limited
132-5 liability company, but not including rendering professional
132-6 service.
132-7 C. If a person who is not a professional individual or a
132-8 professional entity <licensed or authorized to render the
132-9 professional service that a professional limited liability company
132-10 was organized to render> succeeds to the interest of a member of
132-11 the professional limited liability company, the person holding the
132-12 interest shall immediately terminate all financial interest in the
132-13 professional limited liability company, and the professional
132-14 limited liability company shall purchase or cause to be purchased
132-15 from the person all membership interests owned by the person in the
132-16 professional limited liability company, at a price and on terms as
132-17 may be provided in the articles of organization, the regulations,
132-18 or any applicable agreement among the members and the professional
132-19 limited liability company. If the person succeeded to all of the
132-20 membership interests in the professional limited liability company,
132-21 the person may continue to act as member, manager, or officer only
132-22 for the purposes of winding up the affairs of the professional
132-23 limited liability company and effecting its dissolution, including
132-24 selling the assets of or the outstanding membership interests in
132-25 the professional limited liability company, but not including
132-26 rendering professional service.
132-27 SECTION 67. Section A, Article 11.04, Texas Limited
133-1 Liability Company Act (Article 1528n, Vernon's Texas Civil
133-2 Statutes), is amended to read as follows:
133-3 A. A professional limited liability company may render
133-4 professional service in this state only through a<:>
133-5 <(1) an individual> member, manager, officer,
133-6 employee, or agent who is:
133-7 (1) a professional individual licensed or otherwise
133-8 authorized to render the professional service in this state; or
133-9 (2) a professional entity that renders the
133-10 professional service in this state only through partners, members,
133-11 shareholders, managers, directors, associates, officers, employees,
133-12 or agents who are professional individuals or professional entities
133-13 licensed or otherwise authorized to render the professional service
133-14 in this state<; or>
133-15 <(2) an agent of the professional limited liability
133-16 company that is a professional limited liability company,
133-17 professional corporation, or professional association that is
133-18 authorized in this state to render the professional service of the
133-19 professional limited liability company and that renders the
133-20 professional service only through a licensed individual member,
133-21 manager, officer, or employee>.
133-22 SECTION 68. Section A, Article 11.05, Texas Limited
133-23 Liability Company Act (Article 1528n, Vernon's Texas Civil
133-24 Statutes), is amended to read as follows:
133-25 A. Notwithstanding anything contained in Article 4.03 of
133-26 this Act to the contrary, this Act does not alter or affect the
133-27 professional relationship between a person rendering professional
134-1 service and a person receiving the service, and a confidential
134-2 relationship enjoyed in this state between those persons remains
134-3 unchanged. This Act does not remove or diminish any rights at law
134-4 that a person receiving professional service has against a person
134-5 rendering the service for an error, an omission, negligence,
134-6 incompetence, or malfeasance. A professional limited liability
134-7 company, but not the other <individual> members, managers, <or>
134-8 officers, employees, or agents of such professional limited
134-9 liability company (or their respective members, managers, officers,
134-10 employees, or agents), is jointly and severally liable with a
134-11 member, manager, officer, employee, or agent rendering professional
134-12 service for an error, omission, negligence, incompetence, or
134-13 malfeasance on the part of the member, manager, officer, employee,
134-14 or agent when the member, manager, officer, employee, or agent is
134-15 rendering professional service in the course of employment for the
134-16 professional limited liability company. If the member, manager,
134-17 officer, employee, or agent rendering such professional service in
134-18 such circumstances is itself a professional entity, then the
134-19 professional limited liability company and such professional entity
134-20 are jointly and severally liable with the partner, member,
134-21 shareholder, manager, director, associate, officer, employee, or
134-22 agent of such professional entity through which such professional
134-23 entity renders such professional service for an error, omission,
134-24 negligence, incompetence, or malfeasance on the part of such
134-25 partner, member, shareholder, manager, director, associate,
134-26 officer, employee, or agent of such professional entity.
134-27 SECTION 69. Section A, Article 11.07, Texas Limited
135-1 Liability Company Act (Article 1528n, Vernon's Texas Civil
135-2 Statutes), is amended to read as follows:
135-3 A. A foreign professional limited liability company may
135-4 apply for a certificate of authority to perform professional
135-5 service in this state by filing an application in accordance with
135-6 Part Seven of this Act. The Secretary of State may not issue the
135-7 certificate unless the name of the foreign professional limited
135-8 liability company or the name it <the limited liability company>
135-9 elects in this state meets the requirements of Article 11.02 of
135-10 this Act. A foreign professional limited liability company may
135-11 render professional service in this state only through a member,
135-12 manager, officer, employee, or agent described in Section A of
135-13 Article 11.04 of this Act. <A member, manager, officer, employee,
135-14 or agent of the limited liability company who renders professional
135-15 service in this state on behalf of the limited liability company
135-16 must be licensed or otherwise authorized to render that
135-17 professional service in this state.>
135-18 SECTION 70. Section 2.01, Texas Revised Limited Partnership
135-19 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
135-20 read as follows:
135-21 Sec. 2.01. Certificate of limited partnership. (a) To form
135-22 a limited partnership, the partners must enter into a partnership
135-23 agreement (which, in the case of a limited partnership formed under
135-24 a plan of merger or a plan of conversion under Section 2.11 or 2.15
135-25 of this Act, may be included in the plan of merger or plan of
135-26 conversion) and one or more partners, including all of the general
135-27 partners, must execute a certificate of limited partnership. The
136-1 filing fee and the certificate shall be filed with the secretary of
136-2 state. The certificate must contain:
136-3 (1) the name of the limited partnership;
136-4 (2) the address of the registered office and the name
136-5 and address of the registered agent for service of process required
136-6 to be maintained by Section 1.06 of this Act;
136-7 (3) the address of the principal office in the United
136-8 States where records are to be kept or made available under Section
136-9 1.07 of this Act;
136-10 (4) the name, the mailing address, and the street
136-11 address of the business or residence of each general partner; <and>
136-12 (5) if the limited partnership is being formed
136-13 pursuant to a plan of merger or a plan of conversion under Section
136-14 2.11 or 2.15 of this Act, a statement to that effect;
136-15 (6) if the limited partnership is being formed
136-16 pursuant to a plan of conversion under Section 2.15 of this Act,
136-17 the name, the address, and the prior form of organization and
136-18 jurisdiction of incorporation or organization of the converting
136-19 entity; and
136-20 (7) other matters that the general partners determine
136-21 to include.
136-22 (b) Except in the case of a limited partnership formed under
136-23 a plan of merger or a plan of conversion under Section 2.11 or 2.15
136-24 of this Act, a <A> limited partnership is formed at the time of
136-25 the filing of the initial certificate of limited partnership with
136-26 the secretary of state or at a later date or time specified in the
136-27 certificate if there has been substantial compliance with the
137-1 requirements of this section. In the case of a limited
137-2 partnership being formed under a plan or merger or a plan of
137-3 conversion under Section 2.11 or 2.15 of this Act, the existence of
137-4 the limited partnership as a limited partnership shall begin on the
137-5 effectiveness of the merger or the conversion, as the case may be,
137-6 and the persons to be partners shall become general or limited
137-7 partners, as applicable, as of that time.
137-8 SECTION 71. Sections 2.03(a) and (c), Texas Revised Limited
137-9 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
137-10 are amended to read as follows:
137-11 (a) A certificate of limited partnership shall be canceled
137-12 by paying the filing fee and filing a certificate of cancellation
137-13 with the secretary of state:
137-14 (1) on the completion of the winding up of the
137-15 partnership;
137-16 (2) when there are no limited partners; or
137-17 (3) subject to Subsection (c) of this section, on a
137-18 merger or conversion <consolidation> as provided by Subsection (b)
137-19 of Section 2.11 of this Act or Subsection (c) of Section 2.15 of
137-20 this Act.
137-21 (c) If, in the case of merger or conversion <consolidation>,
137-22 one or more limited partnerships formed <or registered> under this
137-23 Act are not the surviving or resulting domestic limited partnership
137-24 or partnerships or other entity or entities, the certificate of
137-25 merger or conversion filed under Subsection (d) <(b)> of Section
137-26 2.11 or Subsection (e) of Section 2.15 of this Act is sufficient,
137-27 without a filing under this section, to cancel the certificate of
138-1 limited partnership of those nonsurviving limited partnerships.
138-2 SECTION 72. Section 2.04(a), Texas Revised Limited
138-3 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
138-4 is amended to read as follows:
138-5 (a) Each certificate required by this article to be filed
138-6 with the secretary of state shall be executed in the following
138-7 manner:
138-8 (1) an initial certificate of limited partnership or a
138-9 certificate of conversion must be signed by all general partners,
138-10 except for an initial certificate of limited partnership <unless>
138-11 signed and filed by a person under Subdivision (1) of Subsection
138-12 (a) of Section 3.04 of this Act;
138-13 (2) a certificate of amendment or restated certificate
138-14 must be signed by at least one general partner and by each other
138-15 general partner designated in the certificate of amendment as a new
138-16 general partner, unless signed and filed by a person under
138-17 Subsection (f) of Section 2.02 of this Act or under Subdivision (1)
138-18 of Subsection (a) of Section 3.04 of this Act, but the certificate
138-19 of amendment need not be signed by a withdrawing general partner;
138-20 (3) a certificate of cancellation must be signed by
138-21 all general partners participating in the winding up of the limited
138-22 partnership's affairs or, if no general partners are winding up the
138-23 limited partnership's affairs, then by all non-partner liquidators,
138-24 or, if the limited partners are winding up the limited
138-25 partnership's affairs, by a majority in interest of the limited
138-26 partners;
138-27 (4) a certificate of merger filed on behalf of a
139-1 domestic limited partnership must be signed as provided in
139-2 Subsection (d), Section 2.11 of this Act;
139-3 (5) a certificate filed under Section 2.06 of this Act
139-4 must be signed by the person designated by the court; and
139-5 (6) a certificate of correction must be signed by at
139-6 least one general partner.
139-7 SECTION 73. Sections 2.06(a)-(d), Texas Revised Limited
139-8 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
139-9 are amended to read as follows:
139-10 (a) Notwithstanding any other provisions of this Act to the
139-11 contrary, to carry out a plan of reorganization ordered or decreed
139-12 by a court of competent jurisdiction under federal statute, a
139-13 domestic limited partnership being reorganized under a federal
139-14 statute may without action by or notice to its partners:
139-15 (1) amend or restate its certificate if the
139-16 certificate after amendment or restatement contains only provisions
139-17 of the type required or permitted in the certificate;
139-18 (2) merge or engage in a conversion or an interest
139-19 exchange with one or more other domestic or foreign limited
139-20 partnerships or other entities pursuant to this Act;
139-21 (3) sell, lease, exchange or otherwise dispose of all
139-22 or substantially all, of its property and assets; or
139-23 (4) cancel its certificate on completion of winding up
139-24 of the limited partnership.
139-25 (b) The individual or individuals designated by the court,
139-26 on behalf of a limited partnership that is being reorganized, may
139-27 execute:
140-1 (1) an amendment or restatement of the certificate
140-2 containing:
140-3 (A) the name of the limited partnership;
140-4 (B) the text of each amendment or restatement
140-5 approved by the court;
140-6 (C) the date of the court's order or decree
140-7 approving the amendment or restatement; <and>
140-8 (D) the court, file name, and case number of the
140-9 reorganization case <proceeding> in which the order or decree was
140-10 entered; and
140-11 (E) a statement that the court had jurisdiction
140-12 of the case under a federal statute; <or>
140-13 (2) a certificate of merger containing:
140-14 (A) the name of the limited partnership;
140-15 (B) the information required by Subsection (b)
140-16 of Section 2.11 of this Act;
140-17 (C) the date of the court's order or decree
140-18 approving the merger; and
140-19 (D) the court, file name, and case number of the
140-20 reorganization case <proceeding> in which the order or decree was
140-21 entered; and
140-22 (E) a statement that the court had jurisdiction
140-23 of the case under a federal statute; <or>
140-24 (3) a certificate of cancellation containing:
140-25 (A) the name of the limited partnership;
140-26 (B) the information required by Section 2.03 of
140-27 this Act and any other information permitted by Section 2.03 that
141-1 the court's order requires or permits to be included;
141-2 (C) the date of the court's order or decree
141-3 approving the certificate of cancellation; <and>
141-4 (D) the court, file name, and case number of the
141-5 reorganization case <proceeding> in which the order or decree was
141-6 entered; and
141-7 (E) a statement that the court had jurisdiction
141-8 of the case under a federal statute; or
141-9 (4) a certificate of conversion containing:
141-10 (A) the name of the limited partnership;
141-11 (B) the information required by Subsection (c)
141-12 of Section 2.15 of this Act;
141-13 (C) the date of the court's order or decree
141-14 approving the conversion;
141-15 (D) the court, file name, and case number of the
141-16 reorganization case in which the order or decree was entered; and
141-17 (E) a statement that the court had jurisdiction
141-18 of the case under a federal statute.
141-19 (c) If a domestic or foreign limited partnership that is not
141-20 being reorganized merges or engages in a conversion or an interest
141-21 exchange pursuant to a plan of reorganization with a domestic or
141-22 foreign limited partnership or other entity that is being
141-23 reorganized, Section 2.11 or 2.15 of this Act applies to the
141-24 domestic or foreign limited partnership or other entity that is not
141-25 being reorganized to the same extent that that section would apply
141-26 if the domestic or foreign limited partnership were merging with a
141-27 limited partnership that is not being reorganized except as
142-1 otherwise provided in the plan of reorganization ordered or decreed
142-2 by a court of competent jurisdiction under federal statute.
142-3 Subject to satisfaction of the requirements <the requirement> of
142-4 Section 2.11 or 2.15 of this Act and any other requirements of the
142-5 plan of merger, a certificate of merger or conversion shall be
142-6 signed on behalf of the entities that <which> are parties to the
142-7 merger or conversion and shall be filed with the secretary of state
142-8 <Secretary of State> as required by Section 2.11 or 2.15 of this
142-9 Act.
142-10 (d) On endorsement of the certificate by the secretary of
142-11 state under Section 2.07 of this Act, the certificate of amendment,
142-12 merger, conversion, or cancellation or restated certificate becomes
142-13 effective and has the same effect as if it had been adopted by
142-14 unanimous action of the general and the limited partners of the
142-15 limited partnership being reorganized except as otherwise provided
142-16 by this section or by the plan of reorganization ordered or decreed
142-17 by a court of competent jurisdiction under federal statute.
142-18 SECTION 74. Sections 2.11(b), (d), (e), (g), and (h), Texas
142-19 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
142-20 Civil Statutes), are amended to read as follows:
142-21 (b) A plan of merger must set forth:
142-22 (1) the name and state of domicile of each domestic or
142-23 foreign limited partnership or other entity that is a party to the
142-24 merger and the name of each domestic or foreign limited partnership
142-25 or other entity, if any, that shall survive the merger, which may
142-26 be one or more of the domestic or foreign limited partnerships or
142-27 other entities party to the merger, and the name and state of
143-1 domicile of each new domestic or foreign limited partnership or
143-2 other entity, if any, that may be created by the terms of the plan
143-3 of merger;
143-4 (2) the terms and conditions of the merger including,
143-5 if more than one domestic or foreign limited partnership or other
143-6 entity is to survive or to be created by the terms of the plan of
143-7 merger, (i) the manner and basis of allocating and vesting the real
143-8 estate and other property of each domestic or foreign limited
143-9 partnership and of each other entity that is a party to the merger
143-10 among one or more of the surviving or new domestic or foreign
143-11 limited partnerships and other entities, and (ii) the manner and
143-12 basis of allocating all liabilities and obligations of each
143-13 domestic or foreign limited partnership and other entity that is a
143-14 party to the merger (or making adequate provision for the payment
143-15 and discharge thereof) among one or more of the surviving or new
143-16 domestic or foreign limited partnerships and other entities;
143-17 (3) the manner and basis of converting any of the
143-18 partnership interests or other evidences of ownership of each
143-19 domestic or foreign limited partnership and other entity that is a
143-20 party to the merger into partnership interests, shares,
143-21 obligations, evidences of ownership, rights to purchase securities
143-22 or other securities of one or more of the surviving or new domestic
143-23 or foreign limited partnerships or other entities, into cash or
143-24 other property including shares, obligations, evidences of
143-25 ownership, rights to purchase securities or other securities of any
143-26 other person or entity or into any combination of the foregoing;
143-27 (4) as an exhibit or attachment, the certificate of
144-1 limited partnership of any new domestic limited partnership to be
144-2 created by the terms of the plan of merger; and
144-3 (5) the certificate of limited partnership or other
144-4 organizational documents of each other entity that is a party to
144-5 the merger and that is to be created by the terms of the plan of
144-6 merger.
144-7 (d) After a plan of merger has been approved by each of the
144-8 limited partnerships or other entities that is a party to the plan
144-9 of merger, a certificate of merger shall be executed on behalf of
144-10 each limited partnership or other entity by at least one general
144-11 partner of each domestic limited partnership that is a party to the
144-12 plan of merger and by a general partner, officer, agent or other
144-13 authorized representative of each other limited partnership or
144-14 other entity that is a party to the plan of merger and shall set
144-15 forth:
144-16 (1) the plan of merger or a statement certifying the
144-17 following:
144-18 (A) the name, the state of incorporation,
144-19 formation, or organization of each of the parties to the merger,
144-20 and the organizational form of each new or surviving limited
144-21 partnership or other entity;
144-22 (B) that a plan of merger has been approved;
144-23 (C) any amendments or changes in the certificate
144-24 of limited partnership of each surviving domestic limited
144-25 partnership, or if no such amendments are desired to be effected by
144-26 the merger, a statement to that effect;
144-27 (D) the certificate of limited partnership of
145-1 each new domestic limited partnership to be formed under the plan
145-2 of merger;
145-3 (E) that an executed plan of merger is on file
145-4 at the principal place of business of each surviving or new
145-5 domestic or foreign limited partnership or other entity, stating
145-6 the address thereof;
145-7 (F) that a copy or summary of the plan of merger
145-8 has been or is being furnished to each partner in each domestic
145-9 limited partnership that is a party to the merger at least 20 days
145-10 before the merger is effective, unless waived by that partner, or
145-11 that the domestic limited partnership has complied with the
145-12 provisions of its partnership agreement regarding furnishing
145-13 partners copies or summaries of the plan of merger or notices
145-14 regarding the merger; and
145-15 (G) in the case of a merger with multiple
145-16 surviving domestic or foreign limited partnerships or other
145-17 entities, that a copy of the plan of merger will be furnished by
145-18 each new or surviving domestic or foreign limited partnership or
145-19 other entity, on written request and without cost, to any creditor
145-20 or obligee of the parties to the merger at the time of the merger
145-21 if the obligation is then outstanding; and
145-22 (2) as to each domestic or foreign limited partnership
145-23 or other entity that is a party to the plan of merger, a statement
145-24 that the plan of merger was duly authorized by all action required
145-25 by the laws under which it was formed or organized and by its
145-26 constituent documents.
145-27 (e) The original of the certificate of merger and such
146-1 number of copies of the certificate equal to the number of
146-2 surviving and new domestic or foreign limited partnerships and
146-3 other entities that are a party to the plan of merger or that will
146-4 be created by the terms thereof, shall be delivered to the
146-5 secretary of state. An equal number of copies of the certificate
146-6 of limited partnership of each domestic limited partnership that is
146-7 to be formed pursuant to the plan of merger shall also be delivered
146-8 to the secretary of state with the articles of merger. Unless the
146-9 secretary of state finds that a certificate of merger does not
146-10 conform to law, on receipt of all applicable filing fees and
146-11 franchise taxes, if any, required by law, or if the plan of merger
146-12 (or a statement provided in lieu thereof) provides that one or more
146-13 of the surviving or new domestic or foreign limited partnerships or
146-14 other entities will be responsible for the payment of all fees and
146-15 franchise taxes and that all of the surviving or new domestic or
146-16 foreign limited partnerships and other entities will be obligated
146-17 to pay the fees and franchise taxes if they are not timely paid,
146-18 the secretary of state shall certify that the certificate of merger
146-19 has been filed in the secretary of state's office by endorsing on
146-20 the original the word "Filed" and the date of the filing, file and
146-21 index the endorsed certificate of merger, and return the copy,
146-22 similarly endorsed, to each surviving or new domestic or foreign
146-23 limited partnership or other entity that is a party to the plan of
146-24 merger or that is created thereby, or its or their respective
146-25 representatives.
146-26 (g) When a merger takes effect:
146-27 (1) the separate existence of every domestic limited
147-1 partnership that is a party to the merger, except any surviving or
147-2 new domestic limited partnership, shall cease;
147-3 (2) all rights, title, and interests to all real
147-4 estate and other property owned by each domestic or foreign limited
147-5 partnership and by each other entity that is a party to the merger
147-6 shall be allocated to and vested in one or more of the surviving or
147-7 resulting entities as provided in the plan of merger without
147-8 reversion or impairment, without further act or deed, and without
147-9 any transfer or assignment having occurred, but subject to any
147-10 existing liens or other encumbrances thereon;
147-11 (3) all liabilities and obligations of each domestic
147-12 or foreign limited partnership and other entity that is a party to
147-13 the merger shall be allocated to one or more of the surviving or
147-14 new domestic or foreign limited partnerships and other entities in
147-15 the manner set forth in the plan of merger, and each surviving or
147-16 new domestic foreign limited partnership, and each surviving or new
147-17 other entity to which a liability or obligation shall have been
147-18 allocated pursuant to the plan of merger, shall be the primary
147-19 obligor therefor and, except as otherwise set forth in the plan of
147-20 merger or as otherwise provided by law or contract, no other party
147-21 to the merger, other than a surviving domestic or foreign limited
147-22 partnership or other entity liable thereon at the time of the
147-23 merger and no other new domestic or foreign limited partnership or
147-24 other entity created thereby, shall be liable therefor;
147-25 (4) a proceeding pending by or against any domestic or
147-26 foreign limited partnership or by or against any other entity that
147-27 is a party to the merger may be continued as if the merger did not
148-1 occur, or the surviving or new domestic or foreign limited
148-2 partnership or limited partnerships or the surviving or new other
148-3 entity or other entities to which the liability, obligation, asset
148-4 or right associated with such proceeding is allocated to and vested
148-5 in pursuant to the plan of merger may be substituted in the
148-6 proceeding;
148-7 (5) the certificate of limited partnership of each
148-8 surviving domestic limited partnership shall be amended to the
148-9 extent provided in the plan of merger;
148-10 (6) each new domestic limited partnership, the
148-11 certificate of limited partnership of which is set forth in the
148-12 plan of merger under Subdivision (4) of Subsection (b) of this
148-13 section, shall be formed as a limited partnership under this Act;
148-14 and each other entity to be formed or organized under the laws of
148-15 this State, the organizational documents of which are set forth in
148-16 the plan of merger, shall, upon an executed copy of the certificate
148-17 of merger being delivered to or filed with any required
148-18 governmental entity with which organizational documents of such
148-19 another entity are required to be delivered or filed, and upon
148-20 meeting such additional requirements, if any, of law for its
148-21 formation or organization, shall be formed or organized as provided
148-22 in the plan of merger; <and>
148-23 (7) the partnership interests of each domestic or
148-24 foreign limited partnership and the partnership interests, shares
148-25 or evidences of ownership in each other entity that is a party to
148-26 the merger that are to be converted or exchanged, in whole or in
148-27 part, into partnership interests, shares, obligations, evidences of
149-1 ownership, rights to purchase securities or other securities of one
149-2 or more of the surviving or new domestic or foreign limited
149-3 partnerships or other entities, into cash or other property,
149-4 including shares, obligations, evidences of ownership, rights to
149-5 purchase securities or other securities of any other person or
149-6 entity, or into any combination of the foregoing, shall be so
149-7 converted and exchanged and the former partners of each domestic
149-8 limited partnership that is a party to the merger shall be entitled
149-9 only to the rights provided in the plan of merger; <and>
149-10 (8) if the plan of merger shall fail to provide for
149-11 the allocation and vesting of the right, title, and interest in any
149-12 particular item of real estate or other property or for the
149-13 allocation of any liability or obligation of any party to the
149-14 merger, such item of real estate or other property shall be owned
149-15 in undivided interest by, or such liability or obligation shall be
149-16 a joint and several liability and obligation of, each of the
149-17 surviving and new domestic and foreign limited partnerships and
149-18 other entities, pro rata to the total number of surviving and new
149-19 domestic and foreign limited partnerships and other entities
149-20 resulting from the merger; and
149-21 (9) a partner of a domestic or foreign limited
149-22 partnership that is a party to a merger does not become personally
149-23 liable as a result of the merger for a liability or obligation of
149-24 another person that is a party to the merger unless the party
149-25 consents to becoming personally liable by action taken in
149-26 connection with the specific plan of merger approved by the
149-27 partner; and for purposes of determining the liability of partners
150-1 in a domestic limited partnership that is a party to the merger for
150-2 the debts and obligations of other parties to the merger in which
150-3 that partner otherwise was not or is not a partner or other owner
150-4 of an interest:
150-5 (a) a partner who remains in or enters a
150-6 domestic or foreign limited partnership or other entity that
150-7 survives a merger or that enters a domestic or foreign limited
150-8 partnership or other entity created by the terms of the plan of
150-9 merger shall be treated as an incoming partner in the new or
150-10 surviving partnership as of the effective date of the merger; and
150-11 (b) a partner in a domestic partnership that is
150-12 a party to the merger but that does not survive shall be treated as
150-13 a partner who withdrew from the nonsurviving domestic partnership
150-14 as of the effective date of the merger.
150-15 (h) One or more domestic or foreign limited partnerships or
150-16 other entities may adopt a plan of exchange by which a domestic or
150-17 foreign limited partnership or other <an> entity acquires all of
150-18 the outstanding partnership interests of one or more domestic
150-19 limited partnerships in exchange for cash, <and/or> securities, or
150-20 other property of the acquiring domestic or foreign limited
150-21 partnership or other entity, if:
150-22 (1) the partnership agreement of each domestic limited
150-23 partnership the partnership interests of which are to be acquired
150-24 pursuant to the plan of exchange contains provisions that authorize
150-25 the partnership interest exchange provided for in the plan of
150-26 exchange adopted by the limited partnership, and if one or more
150-27 foreign limited partnerships or other entities are to issue shares
151-1 or other interests as part of the plan of exchange, the issuance of
151-2 those shares or other interests is either permitted by the laws
151-3 under which that foreign limited partnership or other entity is
151-4 formed or not inconsistent with those laws;
151-5 (2) each domestic limited partnership the partnership
151-6 interests of which are to be acquired pursuant to the plan of
151-7 exchange approves the plan of exchange in the manner prescribed in
151-8 its partnership agreement; and
151-9 (3) each acquiring domestic or foreign limited
151-10 partnership or other entity takes all action that may be required
151-11 by the laws of the state or country under which it was formed or
151-12 incorporated and as required by its partnership agreement or other
151-13 constituent documents in order to effect the exchange.
151-14 No filing with the secretary of state shall be necessary in
151-15 order to evidence or effect such interest exchange with respect to
151-16 a domestic limited partnership that is a party to such interest
151-17 exchange. When an interest exchange takes effect as provided in
151-18 the plan of exchange, the partnership interests of each domestic
151-19 limited partnership that are to be acquired pursuant to the plan of
151-20 exchange shall be deemed to have been exchanged as provided in the
151-21 plan of exchange and the former holders of the partnership
151-22 interests exchanged pursuant to the plan of exchange shall be
151-23 entitled only to the exchange rights provided in the plan of
151-24 exchange and the acquiring domestic or foreign limited partnership
151-25 or other entity or entities shall be entitled to all rights, title,
151-26 and interests with respect to the partnership interests so acquired
151-27 and exchanged subject to the provisions in the plan of exchange.
152-1 SECTION 75. Subsections A and F, Section 2.12, Texas Revised
152-2 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
152-3 Statutes), are amended to read as follows:
152-4 A. The effectiveness of (i) the certificate of limited
152-5 partnership of a limited partnership under this Act, (ii) an
152-6 amendment to a certificate of limited partnership, (iii) the
152-7 restatement of a certificate of limited partnership, (iv) a merger,
152-8 (v) a certificate of cancellation, (vi) the registration or
152-9 cancellation of registration of a foreign limited partnership to
152-10 transact business in this State, (vii) an amendment to the
152-11 registration of a foreign limited partnership, (viii) a change in
152-12 registered office or registered agent, <and> (ix) a change of
152-13 address of a registered agent (each such act or document being a
152-14 "Permitted Act"), and (x) a conversion may be made effective as of
152-15 a time and date after the time and date otherwise provided in this
152-16 Act or may be made effective upon the occurrence of events or facts
152-17 that may occur in the future, which events or facts may include
152-18 future acts of any person or entity, if:
152-19 (1) the certificate, statement, application, or other
152-20 filing that is required by this Act to be filed with the Secretary
152-21 of State to make effective such Permitted Act clearly and expressly
152-22 sets forth, in addition to any other statement or information
152-23 required to be set forth therein, (i) the time and date on which
152-24 such Permitted Act is to become effective or (ii) if such Permitted
152-25 Act is to become effective upon the occurrence of events or facts
152-26 that may occur in the future, (a) the manner in which such events
152-27 or facts shall operate to cause such Permitted Act to become
153-1 effective and (b) the date of the 90th day after the date of the
153-2 filing of such certificate, statement, application or other filing;
153-3 and either
153-4 (2) If in the case of a Permitted Act that is to
153-5 become effective as of a time or date after the time and date
153-6 otherwise provided in this Act, such subsequent time and date is
153-7 not more than 90 days after the date of the filing of the
153-8 certificate, statement, application, or other filing that is
153-9 otherwise required by this Act to be filed with the Secretary of
153-10 State to make effective such Permitted Act and (iii) the time on
153-11 which the Permitted Act is to become effective is not midnight or
153-12 12:00 p.m.; and
153-13 (3) Permitted Act that is to be made effective upon
153-14 the occurrence of events or facts that may occur in the future,
153-15 other than the mere passage of time, a statement that all such
153-16 events or facts upon which the effectiveness of such Permitted Act
153-17 is conditioned have been satisfied or waived, and of the date on
153-18 which such condition was satisfied or waived is filed with the
153-19 Secretary of State within 90 days of the date of the filing of the
153-20 certificate, statement, application or other filing that is
153-21 otherwise required by this Act for such Permitted Act to become
153-22 effective.
153-23 F. If a certificate of limited partnership, a certificate of
153-24 amendment or cancellation, a judicial decree of amendment or
153-25 cancellation, a certificate of merger, a certificate of conversion,
153-26 a restated certificate or any other document permitted to be filed
153-27 pursuant to this Act with the Secretary of State has been filed but
154-1 the event or transaction evidenced thereby has not become
154-2 effective, such filing may be abandoned in accordance with the
154-3 agreement of the parties thereto and, if so abandoned, a
154-4 certificate of abandonment, signed on behalf of each domestic and
154-5 foreign limited partnership or other entity that is a party to the
154-6 event or transaction by any general partner, an officer or other
154-7 duly authorized representative, stating the nature, date of filing
154-8 and parties to the filing to be abandoned and that the event or
154-9 transaction has been abandoned in accordance with the agreement of
154-10 the parties, is filed with the Secretary of State prior to the
154-11 effectiveness of the event or transaction in accordance with the
154-12 terms of the document so filed. Upon the filing of such statement
154-13 by the Secretary of State, the event or transaction evidenced by
154-14 the original filing shall be deemed abandoned and shall not become
154-15 effective.
154-16 SECTION 76. Article 2, Texas Revised Limited Partnership Act
154-17 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
154-18 adding Section 2.15 to read as follows:
154-19 Sec. 2.15. CONVERSION. (a) A domestic limited partnership
154-20 may adopt a plan of conversion and convert to a foreign limited
154-21 partnership or any other entity if:
154-22 (1) the converting entity acts upon and its partners
154-23 approve a plan of conversion in the manner prescribed by Section
154-24 2.11 of this Act as if the conversion were a merger to which the
154-25 converting entity were a party and not the survivor;
154-26 (2) the conversion is permitted by, or not
154-27 inconsistent with, the laws of the state or country in which the
155-1 converted entity is to be incorporated, formed, or organized, and
155-2 the incorporation, formation, or organization of the converted
155-3 entity is effected in compliance with such laws;
155-4 (3) at the time the conversion becomes effective, each
155-5 partner of the converting entity will, unless otherwise agreed to
155-6 by that partner, own an equity interest or other ownership or
155-7 security interest in, and be a shareholder, partner, member, owner
155-8 or other security holder of, the converted entity;
155-9 (4) no limited partner of the domestic limited
155-10 partnership will, as a result of the conversion, become personally
155-11 liable, without the limited partner's consent, for the liabilities
155-12 or obligations of the converted entity; and
155-13 (5) the converted entity shall be incorporated,
155-14 formed, or organized as part of or pursuant to the plan of
155-15 conversion.
155-16 (b) Any foreign limited partnership or other entity may
155-17 adopt a plan of conversion and convert to a domestic limited
155-18 partnership if:
155-19 (1) the conversion is permitted by the laws of the
155-20 state or country in which the foreign limited partnership is
155-21 incorporated, if a foreign limited partnership is converting;
155-22 (2) the conversion is either permitted by the laws
155-23 under which the other entity is formed or organized or by the
155-24 constituent documents of the other entity that are not inconsistent
155-25 with the laws of the state or country in which the other entity is
155-26 formed or organized, if another entity is converting; and
155-27 (3) the converting entity takes all action that may be
156-1 required by the laws of the state or country under which it is
156-2 incorporated, formed, or organized and by its constituent documents
156-3 to effect the conversion.
156-4 (c) A plan of conversion shall set forth:
156-5 (1) the name of the converting entity and the
156-6 converted entity;
156-7 (2) a statement that the converting entity is
156-8 continuing its existence in the organizational form of the
156-9 converted entity;
156-10 (3) a statement as to the type of entity that the
156-11 converted entity is to be and the state or country under the laws
156-12 of which the converted entity is to be incorporated, formed, or
156-13 organized;
156-14 (4) the manner and basis of converting the partnership
156-15 interests, shares, or other evidences of ownership of the
156-16 converting entity into partnership interests, shares, or other
156-17 evidences of ownership or securities of the converted entity, or
156-18 any combination thereof;
156-19 (5) in an attachment or exhibit, the certificate of
156-20 limited partnership of the domestic limited partnership if the
156-21 converted entity is a domestic limited partnership; and
156-22 (6) in an attachment or exhibit, the certificate of
156-23 limited partnership, articles of incorporation, or other
156-24 organizational documents of the converted entity if the converted
156-25 entity is not a domestic limited partnership.
156-26 (d) A plan of conversion may set forth such other provisions
156-27 relating to the conversion not inconsistent with law, including the
157-1 initial partnership agreement of the converted entity if the
157-2 converted entity is a partnership.
157-3 (e) If a plan of conversion has been approved in accordance
157-4 with the preceding provisions of this section and has not been
157-5 abandoned, articles of conversion shall be executed by the
157-6 converting entity by a partner, officer, or other duly authorized
157-7 representative thereof and shall set forth:
157-8 (1) the plan of conversion or a statement certifying
157-9 the following:
157-10 (A) the name, the state of incorporation,
157-11 formation, or organization of the converting entity, and the
157-12 organizational form of the converting entity;
157-13 (B) that a plan of conversion has been approved;
157-14 (C) that an executed plan of conversion is on
157-15 file at the principal place of business of the converting entity,
157-16 stating the address thereof, and that an executed plan of
157-17 conversion will be on file, from and after the conversion, at the
157-18 principal place of business of the converting entity, stating the
157-19 address thereof; and
157-20 (D) that a copy of the plan of conversion will
157-21 be furnished by the converting entity (prior to the conversion) or
157-22 the converted entity (after the conversion), on written request and
157-23 without cost, to any member of the converting entity or the
157-24 converted entity; and
157-25 (2) a statement that the approval of the plan of
157-26 conversion was duly authorized by all action required by the laws
157-27 under which the converting entity was incorporated, formed, or
158-1 organized and by its constituent documents.
158-2 (f) Except as otherwise provided by Section 2.14 of this
158-3 Act, upon the issuance of the certificate of conversion by the
158-4 secretary of state, the conversion of a converting entity shall be
158-5 effective.
158-6 (g) When a conversion of a converting entity takes effect:
158-7 (1) the converting entity shall continue to exist,
158-8 without interruption, but in the organizational form of the
158-9 converted entity rather than in its prior organizational form;
158-10 (2) all rights, title, and interests to all real
158-11 estate and other property owned by the converting entity shall
158-12 continue to be owned by the converted entity in its new
158-13 organizational form without reversion or impairment, without
158-14 further act or deed, and without any transfer or assignment having
158-15 occurred, but subject to any existing liens or other encumbrances
158-16 thereon;
158-17 (3) all liabilities and obligations of the converting
158-18 entity shall continue to be liabilities and obligations of the
158-19 converted entity in its new organizational form without impairment
158-20 or diminution by reason of the conversion;
158-21 (4) all rights of creditors or other parties with
158-22 respect to or against the prior interest holders or other owners of
158-23 the converting entity in their capacities as such in existence as
158-24 of the effective time of the conversion will continue in existence
158-25 as to those liabilities and obligations and may be pursued by such
158-26 creditors and obligees as if such conversion shall not have
158-27 occurred;
159-1 (5) a proceeding pending by or against the converting
159-2 entity or by or against any of the converting entity's interest
159-3 holders or owners in their capacities as such may be continued by
159-4 or against the converted entity in its new organizational form and
159-5 by or against the prior interest holders or owners, as the case may
159-6 be, without any need for substitution of parties;
159-7 (6) the partnership interests, shares, and other
159-8 evidences of ownership in the converting entity that are to be
159-9 converted into partnership interests, shares, evidences of
159-10 ownership, or other securities in the converted entity as provided
159-11 in the plan of conversion shall be so converted, and if the
159-12 converting entity is a domestic limited partnership, the former
159-13 holders of shares in the domestic limited partnership shall be
159-14 entitled only to the rights provided in the plan of conversion;
159-15 (7) if, after the effectiveness of the conversion, a
159-16 shareholder, partner, member, or other owner of the converted
159-17 entity would be liable under applicable law in such capacity for
159-18 the debts or obligations of the converted entity, such shareholder,
159-19 partner, member, or other owner of the converted entity shall be
159-20 liable for the debts and obligations of the converting entity that
159-21 existed before the conversion takes effect only to the extent that
159-22 such shareholder, partner, member, or other owner:
159-23 (A) agreed in writing to be liable for such
159-24 debts or obligations;
159-25 (B) was liable under applicable law, prior to
159-26 the effectiveness of the conversion, for such debts or obligations;
159-27 or
160-1 (C) by becoming a shareholder, partner, member,
160-2 or other owner of the converted entity, becomes liable under
160-3 applicable law for existing debts and obligations of the converted
160-4 entity;
160-5 (8) if the converted entity is a foreign limited
160-6 partnership or other entity, such converted entity shall be deemed
160-7 to appoint the secretary of state as its agent for service of
160-8 process in a proceeding to enforce any obligation or the rights of
160-9 dissenting members of the converting domestic limited partnership;
160-10 and
160-11 (9) if the converting limited partnership is a
160-12 domestic limited partnership, the provisions of Section 2.11 of
160-13 this Act shall apply as if the converted entity were the survivor
160-14 of a merger with the converting entity.
160-15 (h) For purposes of this section:
160-16 (1) "Conversion" means the continuance of:
160-17 (A) a domestic limited partnership as, and in
160-18 the organizational form of, a foreign limited partnership or other
160-19 entity; or
160-20 (B) a foreign limited partnership or other
160-21 entity as, and in the organizational form of, a domestic limited
160-22 partnership.
160-23 (2) "Converted entity" means any domestic or foreign
160-24 limited partnership or other entity to which a converting entity
160-25 has converted or intends to convert as permitted by this section.
160-26 (3) "Converting entity" means any domestic or foreign
160-27 limited partnership or other entity that has converted or intends
161-1 to convert as permitted by this section.
161-2 (4) "Other entity" means any entity, whether organized
161-3 for profit or not, that is a corporation, partnership (other than a
161-4 limited partnership or a general partnership governed by the Texas
161-5 Revised Partnership Act (Article 6132b-1.01 et seq., Vernon's Texas
161-6 Civil Statutes)), joint venture, limited liability company, joint
161-7 stock company, cooperative, association, bank, insurance company,
161-8 or other legal entity organized pursuant to the laws of this state
161-9 or any other state or country.
161-10 SECTION 77. Section 3.03(b), Texas Revised Limited
161-11 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
161-12 is amended to read as follows:
161-13 (b) For the purposes of this section, a limited partner does
161-14 not participate in the control of the business by virtue of the
161-15 limited partner's having or acting in one or more of the following
161-16 capacities or possessing or exercising one or more of the following
161-17 powers:
161-18 (1) acting as a contractor for or an agent or employee
161-19 of the limited partnership or of a general partner, an officer,
161-20 director, or stockholder of a corporate general partner, <or> a
161-21 partner of a partnership that is a general partner of the limited
161-22 partnership, a member or manager of a limited liability company
161-23 that is a general partner of the limited partnership, or in a
161-24 similar capacity with any other person that is a general partner;
161-25 (2) consulting with or advising a general partner on
161-26 any matter, including the business of the limited partnership;
161-27 (3) acting as surety, guarantor, or endorser for the
162-1 limited partnership, to guarantee or assume one or more specific
162-2 obligations of the limited partnership, or to provide collateral
162-3 for borrowings of the limited partnership;
162-4 (4) calling, requesting, attending, or participating
162-5 in a meeting of the partners or the limited partners;
162-6 (5) winding up a limited partnership under Section
162-7 8.04 of this Act;
162-8 (6) taking any action required or permitted by law to
162-9 bring, or pursue, or settle or otherwise terminate a derivative
162-10 action in the right of the limited partnership;
162-11 (7) serving on a committee of the limited partnership
162-12 or the limited partners; or
162-13 (8) proposing, approving, or disapproving, by vote or
162-14 otherwise, one or more of the following matters:
162-15 (A) the dissolution and winding up of the
162-16 limited partnership or an election to reconstitute the limited
162-17 partnership or an election to continue the business of the limited
162-18 partnership;
162-19 (B) the sale, exchange, lease, mortgage,
162-20 assignment, pledge, or other transfer of, or granting of a security
162-21 interest in, an asset or assets of the limited partnership;
162-22 (C) the incurring, renewal, refinancing, or
162-23 payment or other discharge of indebtedness by the limited
162-24 partnership;
162-25 (D) a change in the nature of the business of
162-26 the limited partnership;
162-27 (E) the admission, removal, or retention of a
163-1 general partner;
163-2 (F) the admission, removal, or retention of a
163-3 limited partner;
163-4 (G) a transaction or other matter involving an
163-5 actual or potential conflict of interest;
163-6 (H) an amendment to the partnership agreement or
163-7 certificate of limited partnership;
163-8 (I) if the limited partnership is qualified as
163-9 an investment company under the federal Investment Company Act of
163-10 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter
163-11 required by the Investment Company Act of 1940, as amended, or the
163-12 rules and regulations of the Securities and Exchange Commission
163-13 thereunder, to be approved by the holders of beneficial interests
163-14 in an investment company including:
163-15 (i) electing directors or trustees of the
163-16 investment company;
163-17 (ii) approving or terminating investment
163-18 advisory or underwriting contracts;
163-19 (iii) approving auditors; and
163-20 (iv) acting on any other matters that the
163-21 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.)
163-22 requires to be approved by the holders of beneficial interests in
163-23 the investment company;
163-24 (J) indemnification of a general partner under
163-25 Article 11 of this Act;
163-26 (K) any other matter stated in the partnership
163-27 agreement;
164-1 (L) exercising a right or power granted or
164-2 permitted to limited partners under this Act and not specifically
164-3 enumerated in this subsection; or
164-4 (M) the merger of a limited partnership.
164-5 SECTION 78. Section 6.03, Texas Revised Limited Partnership
164-6 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
164-7 read as follows:
164-8 Sec. 6.03. Withdrawal of limited partner. A limited partner
164-9 may withdraw from a limited partnership only at the time or on the
164-10 occurrence of events specified in a <written> partnership agreement
164-11 and in accordance with that <written> partnership agreement. <If
164-12 the partnership agreement does not specify such a time or event or
164-13 a definite time for the dissolution and winding up of the limited
164-14 partnership, a limited partner may withdraw on giving written
164-15 notice not less than six months before the date of withdrawal to
164-16 each general partner at that general partner's address as set forth
164-17 in the certificate of limited partnership.>
164-18 SECTION 79. Section 8.01, Texas Revised Limited Partnership
164-19 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
164-20 read as follows:
164-21 Sec. 8.01. Dissolution. A limited partnership is dissolved
164-22 and its affairs shall be wound up only on the first of the
164-23 following to occur:
164-24 (1) <on> the occurrence of events specified in the
164-25 partnership agreement to cause dissolution unless within 90 days
164-26 after the event causing the dissolution, all remaining partners (or
164-27 such other group or percentage of partners as the partnership
165-1 agreement may provide) agree in writing to continue the business of
165-2 the limited partnership;
165-3 (2) written consent of all partners to dissolution;
165-4 (3) an event of withdrawal of a general partner,
165-5 unless:
165-6 (A) there remains at least one general partner
165-7 and the partnership agreement permits the business of the limited
165-8 partnership to be carried on by the remaining general partner or
165-9 general partners, and that general partner or those general
165-10 partners do so; or
165-11 (B) within 90 days after the event of
165-12 withdrawal, all remaining partners (or such other group or
165-13 percentage of partners as the partnership agreement may provide)
165-14 agree in writing to continue the business of the limited
165-15 partnership and to the extent that they desire or if there are no
165-16 remaining general partners, agree to the appointment, effective as
165-17 of the date of withdrawal, of one or more new general partners; or
165-18 (4) entry of a decree of judicial dissolution under
165-19 Section 8.02 of this Act.
165-20 SECTION 80. Section 8.04(a), Texas Revised Limited
165-21 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
165-22 is amended to read as follows:
165-23 (a) Except as provided in the partnership agreement, on <On>
165-24 the dissolution of a limited partnership, <unless it is
165-25 reconstituted in accordance with Section 8.03 of this Act,> the
165-26 partnership's affairs shall be wound up as soon as reasonably
165-27 practicable, and the<. The> winding up shall be accomplished by
166-1 the general partners who have not wrongfully dissolved a limited
166-2 partnership or, if there are none who have not wrongfully dissolved
166-3 the partnership, by the limited partners or a person chosen by the
166-4 limited partners. In addition, a court of competent jurisdiction,
166-5 on cause shown, may wind up the limited partnership's affairs on
166-6 application of any partner or the partner's legal representative or
166-7 assignee and, in connection with the winding up, may appoint a
166-8 person to carry out the liquidation and may make all other orders,
166-9 directions, and inquiries that the circumstances require.
166-10 SECTION 81. Section 12.01, Texas Revised Limited Partnership
166-11 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
166-12 read as follows:
166-13 Sec. 12.01. Fees. The secretary of state shall collect for
166-14 the use of the state:
166-15 (1) for filing a certificate of limited partnership
166-16 under Section 2.01 of this Act, or an application for registration
166-17 as a foreign limited partnership under Section 9.02 of this Act, a
166-18 fee of $750;
166-19 (2) for filing a certificate of amendment under
166-20 Section 2.02 of this Act, a certificate of cancellation under
166-21 Section 2.03 of this Act, a restated certificate of limited
166-22 partnership under Section 2.10 of this Act, a certificate of merger
166-23 under Section 2.11 of this Act, a certificate of correction under
166-24 Section 2.12 of this Act, a certificate of conversion under Section
166-25 2.15 of this Act, a certificate under Section 9.05 of this Act, or
166-26 a certificate of cancellation under Section 9.06 of this Act<, or
166-27 an election to adopt this Act, whether by the filing of a
167-1 certificate of limited partnership, an application for registration
167-2 as a foreign limited partnership or a certificate of amendment,
167-3 under Section 13.02 of this Act>, a fee of $200;
167-4 (3) for filing an application for reservation of name,
167-5 an application for renewal of reservation, a notice of transfer of
167-6 reservation under Subsection (b) of Section 1.04 of this Act, or an
167-7 application for registration of name or an application for renewal
167-8 of registration of name under Section 1.05 of this Act, a fee of
167-9 $75;
167-10 (4) for filing a statement for change of registered
167-11 office, registered agent, or both, under Subsection (b) of Section
167-12 1.06 of this Act, or a statement for change of location of
167-13 registered office under Subsection (h) of Section 1.06 of this Act,
167-14 a fee of $50, except that the maximum fee for simultaneous filings
167-15 by a registered agent for more than one limited partnership may not
167-16 exceed $2,500;
167-17 (5) for preclearance of any document for filing, a fee
167-18 of $50; and
167-19 (6) for filing any instrument under this Act not
167-20 expressly provided for above, a fee of $25.
167-21 SECTION 82. Section 1.01(4), Texas Revised Partnership Act
167-22 (Article 6132b-1.01, Vernon's Texas Civil Statutes), is amended to
167-23 read as follows:
167-24 (4) "Debtor in bankruptcy" means a person who is the
167-25 subject of:
167-26 (A) an order for relief under Title 11 of the
167-27 United States Code or a comparable order under a successor statute
168-1 of general application; or
168-2 (B) a comparable order under federal, <or>
168-3 state, or foreign law governing insolvency.
168-4 SECTION 83. Section 1.03(b), Texas Revised Partnership Act
168-5 (Article 6132b-1.03, Vernon's Texas Civil Statutes), is amended to
168-6 read as follows:
168-7 (b) Statutory Provisions that may not be Varied by
168-8 Agreement. A partnership agreement or the partners may not:
168-9 (1) unreasonably restrict a partner's right of access
168-10 to books and records under Section 4.03(b);
168-11 (2) eliminate the duty of loyalty under Section
168-12 4.04(b), but the partners may by agreement identify specific types
168-13 or categories of activities that do not violate the duty of
168-14 loyalty, if not manifestly unreasonable;
168-15 (3) eliminate the duty of care under Section 4.04(c),
168-16 but the partners may by agreement determine the standards by which
168-17 the performance of the obligation is to be measured, if the
168-18 standards are not manifestly unreasonable;
168-19 (4) eliminate the obligation of good faith under
168-20 Section 4.04(d), but the partners may by agreement determine the
168-21 standards by which the performance of the obligation is to be
168-22 measured, if the standards are not manifestly unreasonable;
168-23 (5) vary the power to withdraw as a partner under
168-24 Section 6.01(b)(1), (7), or (8), except to require the notice to be
168-25 in writing;
168-26 (6) vary the right to expel a partner by a court in
168-27 the events specified by Section 6.01(b)(5);
169-1 (7) vary the requirement to wind up the partnership
169-2 business in the events specified by Section 8.01(c), (d), or (e);
169-3 (8) restrict rights of third parties under this Act,
169-4 except for limitations on individual partners' liability in a
169-5 registered limited liability partnership as provided or permitted
169-6 by Section 3.08; or
169-7 (9) select a governing law not permitted under Section
169-8 1.05(a)(1).
169-9 SECTION 84. Section 1.05(a), Texas Revised Partnership Act
169-10 (Article 6132b-1.05, Vernon's Texas Civil Statutes), is amended to
169-11 read as follows:
169-12 (a) Internal Affairs. The determination whether a
169-13 partnership has been formed, a <A> partnership's internal affairs,
169-14 and the relations of the partners to one another are governed by:
169-15 (1) the law of the state chosen by the partners to
169-16 govern if that state bears a reasonable relation to the partners or
169-17 to the partnership business and affairs under principles that apply
169-18 to a contract among the partners other than the partnership
169-19 agreement; or
169-20 (2) if the partners do not choose a governing law
169-21 under Subdivision (1), the law of the state in which the
169-22 partnership has its chief executive office.
169-23 SECTION 85. Section 2.02, Texas Revised Partnership Act
169-24 (Article 6132b-2.02, Vernon's Texas Civil Statutes), is amended by
169-25 adding Subsection (d) to read as follows:
169-26 (d) Partnership Resulting from Merger or Conversion. In
169-27 the case of a new partnership being formed pursuant to a plan of
170-1 merger or a plan of conversion under Article IX of this Act, the
170-2 existence of the partnership as a partnership shall begin on the
170-3 effectiveness of the merger or the conversion, as the case may be,
170-4 and the persons to be partners shall become partners as of that
170-5 time.
170-6 SECTION 86. Sections 3.02(a) and (b), Texas Revised
170-7 Partnership Act (Article 6132b-3.02, Vernon's Texas Civil
170-8 Statutes), are amended to read as follows:
170-9 (a) Partner Agent of Partnership as to Partnership Business.
170-10 Each partner is an agent of the partnership for the purpose of its
170-11 business. Unless the partner does not have authority to act for
170-12 the partnership in the particular matter and the person with whom
170-13 the partner is dealing knows that the partner lacks authority, an
170-14 act of a partner, including the execution of an instrument in the
170-15 partnership name, binds the partnership if the act is for
170-16 apparently carrying on in the ordinary course <usual way>:
170-17 (1) the partnership business; or
170-18 (2) business of the kind carried on by the
170-19 partnership.
170-20 (b) Act Outside Scope of Business. An act of a partner
170-21 binds <does not bind> the partnership only if <unless> authorized
170-22 by the other partners if the act is not apparently for carrying on
170-23 in the ordinary course <usual way>:
170-24 (1) the partnership business; or
170-25 (2) business of the kind carried on by the
170-26 partnership.
170-27 SECTION 87. Section 3.04, Texas Revised Partnership Act
171-1 (Article 6132b-3.04, Vernon's Texas Civil Statutes), is amended to
171-2 read as follows:
171-3 Sec. 3.04. <NATURE OF> PARTNER'S LIABILITY <PARTNERSHIP>.
171-4 Except as provided by Section 3.07 or 3.08(a) <for a registered
171-5 limited liability partnership>, all partners are liable jointly and
171-6 severally for all debts and obligations of the partnership unless
171-7 otherwise agreed by the claimant or provided by law.
171-8 SECTION 88. Section 3.05, Texas Revised Partnership Act
171-9 (Article 6132b-3.05, Vernon's Texas Civil Statutes), is amended by
171-10 adding Subsection (f) to read as follows:
171-11 (f) Registered Limited Liability Partnership. The
171-12 provisions of this section do not limit the provisions of Section
171-13 3.08(a) in the case of a registered limited liability partnership.
171-14 SECTION 89. Section 3.08(a), Texas Revised Partnership Act
171-15 (Article 6132b-3.08, Vernon's Texas Civil Statutes), is amended by
171-16 amending Subdivision (1) and adding Subdivision (4) to read as
171-17 follows:
171-18 (1) A partner in a registered limited liability
171-19 partnership is not individually liable, directly or indirectly, by
171-20 contribution, indemnity, or otherwise, for debts and obligations of
171-21 the partnership arising from errors, omissions, negligence,
171-22 incompetence, or malfeasance committed while the partnership is a
171-23 registered limited liability partnership and in the course of the
171-24 partnership business by another partner or a representative of the
171-25 partnership not working under the supervision or direction of the
171-26 first partner unless the first partner:
171-27 (A) was directly involved in the specific
172-1 activity in which the errors, omissions, negligence, incompetence,
172-2 or malfeasance were committed by the other partner or
172-3 representative; or
172-4 (B) had notice or knowledge of the errors,
172-5 omissions, negligence, incompetence, or malfeasance by the other
172-6 partner or representative at the time of occurrence and then failed
172-7 to take reasonable steps to prevent or cure the errors, omissions,
172-8 negligence, incompetence, or malfeasance.
172-9 (4) The provisions of this subsection prevail, in the
172-10 case of a registered limited liability partnership, over the other
172-11 provisions of this Act regarding the liability of partners, their
172-12 chargeability for the debts and obligations of the partnership, and
172-13 their obligations regarding contributions and indemnity.
172-14 SECTION 90. Sections 4.01(b) and (c), Texas Revised
172-15 Partnership Act (Article 6132b-4.01, Vernon's Texas Civil
172-16 Statutes), are amended to read as follows:
172-17 (b) Profits and Losses. Each partner is entitled to be
172-18 credited with an equal share of the partnership's profits <of a
172-19 partnership. Each partner> and is chargeable <charged> with a
172-20 share of the partnership's losses, whether capital or operating,
172-21 <of the partnership> in proportion to the partner's share of the
172-22 profits.
172-23 (c) Disproportionate Payment or Advance. A partner who, in
172-24 the proper conduct of the business of the partnership or for the
172-25 preservation of its business or property, reasonably makes a
172-26 payment or advance beyond the amount the partner agreed to
172-27 contribute, or who reasonably incurs a liability, is entitled to be
173-1 repaid by the partnership and to receive interest from the
173-2 partnership from the date of the payment or advance or the
173-3 incurrence of the liability.
173-4 SECTION 91. Section 4.06(b), Texas Revised Partnership Act
173-5 (Article 6132b-4.06, Vernon's Texas Civil Statutes), is amended to
173-6 read as follows:
173-7 (b) Action by partner. A partner may maintain an action
173-8 against the partnership or another partner for legal or equitable
173-9 relief, with or without <including> an accounting as to partnership
173-10 business, to:
173-11 (1) enforce a right under the partnership agreement;
173-12 (2) enforce a right under this Act, including:
173-13 (A) the partner's rights under Sections 4.01,
173-14 4.03, and 4.04;
173-15 (B) the partner's right on withdrawal to have
173-16 the partner's interest in the partnership redeemed under Section
173-17 7.01 or enforce any other right under Article 6 or 7; and
173-18 (C) the partner's rights under Article 8; or
173-19 (3) enforce the rights and otherwise protect the
173-20 interests of the partner, including rights and interests arising
173-21 independently of the partnership relationship.
173-22 SECTION 92. Section 6.02(b), Texas Revised Partnership Act
173-23 (Article 6132b-6.02, Vernon's Texas Civil Statutes), is amended to
173-24 read as follows:
173-25 (b) Wrongful Withdrawal. A partner's withdrawal is wrongful
173-26 only if:
173-27 (1) it is in breach of an express provision of the
174-1 partnership agreement;
174-2 (2) in the case of a partnership for a definite term
174-3 or particular undertaking or for which the partnership agreement
174-4 provides for winding up on a specified event, before the expiration
174-5 of the term, the completion of the undertaking, or the occurrence
174-6 of the event:
174-7 (A) the partner withdraws by express will;
174-8 (B) the partner withdraws by becoming a debtor
174-9 in bankruptcy; or
174-10 (C) <(B)> in the case of a partner that is not
174-11 an individual, a trust other than a business trust, or an estate,
174-12 the partner is expelled or otherwise withdraws because the partner
174-13 wilfully dissolved or terminated; or
174-14 (3) the partner is expelled by judicial decree under
174-15 Section 6.01(b)(5).
174-16 SECTION 93. Section 8.06(a), Texas Revised Partnership Act
174-17 (Article 6132b-8.06, Vernon's Texas Civil Statutes), is amended to
174-18 read as follows:
174-19 (a) Application of Property to Obligations. In winding up
174-20 the partnership business, the property of the partnership,
174-21 including the contributions of the partners required by this
174-22 section, must be applied to discharge its obligations to creditors,
174-23 including, to the extent permitted by other applicable law,
174-24 partners who are creditors other than in their capacities as
174-25 partners. Any <A> surplus must be applied to pay in cash the net
174-26 amount distributable to partners in accordance with their right to
174-27 distributions under Subsection (b).
175-1 SECTION 94. Section 9.01(b), Texas Revised Partnership Act
175-2 (Article 6132b-9.01, Vernon's Texas Civil Statutes), is amended to
175-3 read as follows:
175-4 (b) Limited to General. A domestic or foreign limited
175-5 partnership may convert, on the affirmative vote of a
175-6 majority-in-interest of the partners, to a partnership that is not
175-7 a limited partnership by:
175-8 (1) cancelling its certificate of limited partnership
175-9 in the state of formation or otherwise complying with the
175-10 provisions for terminating the existence of the limited partnership
175-11 under <of> that state's law as of the date that partnership's
175-12 existence as a limited partnership is to cease <terminated>;
175-13 (2) amending its partnership agreement to reflect its
175-14 change in status and any change in name required to comply with
175-15 this Act; and
175-16 (3) stating the effective date of the conversion in
175-17 the partnership agreement if different from the date of the
175-18 cancellation of the limited partnership certificate.
175-19 If a limited partnership converts to a partnership that is
175-20 not a limited partnership, a partner who did not consent to the
175-21 conversion is considered to be a partner who has withdrawn from the
175-22 limited partnership effective immediately before the effective date
175-23 of the conversion unless, within 60 days after the later of the
175-24 effective date of the conversion or the date the partner receives
175-25 actual notice of the conversion, the partner notifies the
175-26 partnership in writing of the partner's desire not to withdraw. A
175-27 withdrawal under the described circumstances is not a wrongful
176-1 withdrawal.
176-2 SECTION 95. Section 9.02, Texas Revised Partnership Act
176-3 (Article 6132b-9.02, Vernon's Texas Civil Statutes), is amended to
176-4 read as follows:
176-5 Art. 6132b-9.02. Mergers. (a) Adoption of Plan. A
176-6 domestic partnership may adopt a plan of merger and one or more
176-7 domestic partnerships may merge with one or more domestic or
176-8 foreign partnerships or other entities if:
176-9 (1) the partnership agreement of each domestic <or
176-10 foreign> partnership that is a party to the plan of merger contains
176-11 provisions that authorize the merger provided for in the plan of
176-12 merger adopted by the partnership;
176-13 (2) each domestic partnership that is a party to the
176-14 plan of merger approves the plan of merger in the manner prescribed
176-15 <for mergers> in its partnership agreement; and
176-16 (3) in the event <or constituent documents or by
176-17 applicable law. If> one or more foreign partnerships or other
176-18 entities is a party to the merger or is to be created by the terms
176-19 of the plan of merger:
176-20 (A) <(1)> the merger is <must be> permitted
176-21 either by<:>
176-22 <(A)> the laws under which each foreign
176-23 partnership and each other entity that is a party to the merger is
176-24 formed or organized<;> or by
176-25 <(B)> the partnership agreement or other
176-26 constituent documents of the foreign <partnership or other entity
176-27 not inconsistent with those laws; and>
177-1 <(2) each foreign> partnership or other entity that
177-2 are not inconsistent with such laws; and
177-3 (B) each foreign partnership or other entity
177-4 that is a party to the merger complies <must comply> with such
177-5 <the> laws or documents in effecting the merger.
177-6 (b) Contents of Plan <of Merger>. A <If a partnership
177-7 merges with one or more domestic or foreign limited partnerships or
177-8 other entities, other than another partnership that is not a
177-9 limited partnership, a> plan of merger must set forth <be adopted.
177-10 The plan must include>:
177-11 (1) the name and state of domicile or formation of
177-12 <organization of:>
177-13 <(A)> each domestic or foreign partnership or
177-14 other entity that is a party to the merger and the name of<;>
177-15 <(B)> each domestic or foreign partnership or
177-16 other entity, if any, that shall <will> survive the merger, which
177-17 may be one or more of the domestic or foreign partnerships or other
177-18 entities <who are a> party to the merger, and the name and state of
177-19 domicile or formation of<; and>
177-20 <(C)> each new domestic or foreign partnership
177-21 or other entity, if any, that may be created by the terms of the
177-22 plan of merger;
177-23 (2) the terms and conditions of the merger<,>
177-24 including, if more than one domestic or foreign partnership or
177-25 other entity is to survive or to be created by the terms of the
177-26 plan of merger:<,>
177-27 (A) the manner and basis of<:>
178-1 <(A)> allocating and vesting the real estate and
178-2 other property of each domestic or foreign partnership and of each
178-3 other entity that is a party to the merger among one or more of the
178-4 surviving or new domestic or foreign partnerships and <or> other
178-5 entities; and
178-6 (B) the manner and basis of allocating all
178-7 liabilities and obligations of each domestic or foreign partnership
178-8 and other entity that is a party to the merger<,> (or making
178-9 adequate provisions <provision> for the payment and discharge
178-10 thereof) <of the liabilities and obligations,> among one or more of
178-11 the surviving or new domestic or foreign partnerships and <or>
178-12 other entities;
178-13 (3) the manner and basis of converting any of the
178-14 partnership interests or other evidences of ownership of each
178-15 domestic or foreign partnership and other entity that is a party to
178-16 the merger into<:>
178-17 <(A)> partnership interests, shares,
178-18 obligations, evidences of ownership, rights to purchase securities,
178-19 or other securities of one or more of the surviving or new domestic
178-20 or foreign partnerships or other entities, into<;>
178-21 <(B)> cash<;> or
178-22 <(C)> other property<,> including shares,
178-23 obligations, evidences of ownership, rights to purchase securities,
178-24 or other securities of any other <another> person or entity<;> or
178-25 into
178-26 <(D)> any combination of the foregoing <those
178-27 items>; and
179-1 (4) as an exhibit or attachment, the <certificate of
179-2 limited partnership, articles of incorporation, articles of
179-3 organization, or other> organizational documents of each
179-4 partnership or other entity that is a party to the merger and that
179-5 is to be created <or will act as a surviving entity> by the terms
179-6 of the plan of merger<;>
179-7 <(5) the names of the principal officer of the
179-8 surviving entities and the registered office and registered agent
179-9 of the surviving entities if a registered office or agent is
179-10 required by the laws under which the surviving entities are formed;>
179-11 <(6) a statement describing whether the surviving
179-12 entity is a partnership, limited partnership, corporation, limited
179-13 liability company, or other entity; and>
179-14 <(7) other provisions relating to the merger>.
179-15 (c) Optional Provisions. The plan of merger may set forth:
179-16 (1) any amendments to the partnership agreement of any
179-17 surviving domestic partnership; and
179-18 (2) any other provisions relating to the merger.
179-19 (d) Certificate of Merger. After a plan of merger has been
179-20 approved by each of the partnerships or other entities that is a
179-21 party to the plan of merger, unless the only parties to the merger
179-22 are partnerships <and a partnership merges with one or more
179-23 domestic or foreign limited partnerships or other entities>, a
179-24 certificate of merger shall be executed on behalf of each
179-25 partnership or other entity by at least one <general> partner of
179-26 each domestic partnership that is a party to the plan of merger and
179-27 by a general partner, <an authorized> officer, agent<,> or other
180-1 authorized representative of each other partnership or other entity
180-2 that is a party to the plan of merger and shall set forth<. The
180-3 certificate must include>:
180-4 (1) the plan of merger; and
180-5 (2) as to <for> each domestic or foreign partnership
180-6 or other entity that is a party to the plan of merger, a statement
180-7 that the plan of merger was duly authorized by all action <actions>
180-8 required by the laws under which it was formed or organized and by
180-9 its constituent documents.
180-10 (e) <(d)> Filing. If a <The> certificate of merger must be
180-11 executed, the original of the certificate of merger and such number
180-12 of copies of the certificate equal to the number of <filed for
180-13 each> surviving and new domestic or foreign partnerships and other
180-14 entities that are <partnership or other entity and for each other
180-15 entity that is> a party to the plan of merger or that will be
180-16 created by the terms thereof, shall be<. The filing must be with
180-17 the secretary of state or other authority with which the entity
180-18 must file organizational or related documents and must comply with
180-19 that authority's filing requirements.>
180-20 <(e) Effective Date of Merger. If a certificate of merger
180-21 is> delivered to the secretary of state. Unless the secretary of
180-22 state finds that a<, the merger is effective on the date of the
180-23 issuance of the> certificate of merger does not conform to law, on
180-24 receipt of all applicable filing fees and franchise taxes, if any,
180-25 required by law, or if <by the secretary of state or on a later
180-26 date stated in the certificate of merger. If a certificate of
180-27 merger is not required to be filed with the secretary of state, the
181-1 merger is effective on the date agreed to by the parties to the
181-2 merger as set out in> the plan of merger (or a statement provided
181-3 in lieu thereof) provides that one or more of the surviving or new
181-4 domestic or foreign partnerships or other entities that will be
181-5 responsible for the payment of all the fees and franchise taxes and
181-6 that all of the surviving or new domestic or foreign partnerships
181-7 and other entities will be obligated to pay the fees and franchise
181-8 taxes if they are not timely paid, the secretary of state shall
181-9 certify that the certificate of merger has been filed in the
181-10 secretary of state's office by endorsing on the original the word
181-11 "Filed" and the date of the filing, file and index the endorsed
181-12 certificate of merger, and return the copy, similarly endorsed, to
181-13 each surviving or new domestic or foreign partnership or other
181-14 entity that is a party to the plan of merger or that is created
181-15 thereby, or its or their respective representatives <or as
181-16 otherwise agreed to by the parties>.
181-17 (f) Effective Date. Except as provided by Section 9.06, the
181-18 merger shall be effective upon the issuance of the certificate of
181-19 merger by the secretary of state or, if a certificate of merger
181-20 need not be executed, as provided in the plan of merger.
181-21 (g) Effect. When a merger takes effect:
181-22 (1) the <Effect of Merger. (1) A partner of a
181-23 partnership that is a party to a merger does not become personally
181-24 liable as a result of the merger for a liability or obligation of
181-25 another person that is a party to the merger unless the partner
181-26 consents to becoming personally liable by action taken in
181-27 connection with the specific plan of merger approved by the
182-1 partner. A partner who remains in or enters a domestic or foreign
182-2 partnership or other entity that survives a merger or that enters a
182-3 domestic or foreign partnership or other entity created by the
182-4 terms of the plan of merger shall be treated as an incoming partner
182-5 in the new or surviving partnership as of the effective date of the
182-6 merger for the purpose of determining the partner's liability for a
182-7 debt or obligation of the other partnerships or entities that are
182-8 parties to the merger and in which the partner was not associated.>
182-9 <(2) The> separate existence of every domestic
182-10 partnership <or other entity> that is a party to the <a> merger,
182-11 except any <a> surviving or new domestic partnership, shall cease;
182-12 (2) all <or other entity, ceases when a merger takes
182-13 effect.>
182-14 <(3) All> rights, title, and interests <interest> to
182-15 all real estate and other property owned by each domestic or
182-16 foreign partnership and by each other entity that is a party to the
182-17 merger shall be <are> allocated to and vested in one or more of the
182-18 surviving or resulting entities as provided in the <a> plan of
182-19 merger without reversion or impairment, without further act or
182-20 deed, and without any transfer or assignment having occurred, but
182-21 subject to any existing liens or other encumbrances thereon;
182-22 (3) <on the property, when a merger takes effect.>
182-23 <(4) When a merger takes effect,> all liabilities and
182-24 obligations of each domestic or foreign partnership and other
182-25 entity that is a party to the merger shall be <are> allocated to
182-26 one or more of the surviving or new domestic or foreign
182-27 partnerships and <or> other entities in the manner set forth in
183-1 <prescribed by> the plan of merger, and each surviving or new
183-2 domestic or foreign partnership, and each surviving or new other
183-3 entity to which a liability or obligation shall have been <is>
183-4 allocated pursuant to <under> the plan of merger, shall be
183-5 <becomes> the primary obligor therefor and, except <for the
183-6 liability or obligation. Except> as otherwise set forth in
183-7 <provided by> the plan of merger or as otherwise provided by law or
183-8 contract, no other <a> party to the merger, other than a surviving
183-9 domestic or foreign partnership or other entity liable thereon
183-10 <with liability> at the time of the merger and no other new <, or
183-11 another> domestic or foreign partnership or other entity created
183-12 thereby, shall be liable therefor;
183-13 (4) <by the merger does not become liable for the debt
183-14 or obligation.>
183-15 <(5) After a merger,> a proceeding pending by or
183-16 against any <a> domestic or foreign partnership or by or against
183-17 any other <another> entity that is a party to the merger may be
183-18 continued as if the merger did not occur <and the partnership or
183-19 other entity that has been allocated the liabilities, obligations,
183-20 asset, or rights associated with the proceeding under the terms of
183-21 the plan of merger remains the primary obligor>, or the surviving
183-22 or new domestic or foreign partnership or the surviving or new
183-23 other entity or other entities to which the liability, obligation,
183-24 asset<,> or right associated with such <the> proceeding is
183-25 allocated to and vested in pursuant to <under> the plan of merger
183-26 may be substituted in the proceeding;
183-27 (5) the<.>
184-1 <(6) The> partnership agreement of each surviving
184-2 domestic partnership shall be<, certificate of limited partnership,
184-3 and other constituent documents of each other entity that will act
184-4 as a surviving entity by the terms of a plan of merger is
184-5 considered> amended to the extent provided in the plan of merger;
184-6 (6) each <when the merger takes effect.>
184-7 <(7) Each> new domestic partnership to be formed under
184-8 the plan of merger shall be formed as a partnership under this Act,
184-9 <named in a plan of merger under Subsection (b)(1), each new
184-10 domestic limited partnership for which a certificate of limited
184-11 partnership is included in a plan of merger under Subsection
184-12 (b)(4),> and each other entity to be formed or organized under the
184-13 laws of this state, the <state for which> organizational documents
184-14 of which are set forth <are included in a plan of merger under
184-15 Subsection (b)(4) are formed or organized as provided> in the plan
184-16 of merger, upon <on:>
184-17 <(A) delivering> an executed copy of the
184-18 certificate of merger being delivered to or filed with any required
184-19 <to, or filing the certificate with, the> governmental entity with
184-20 which organizational documents of such another <the partnership or
184-21 other> entity are required to be delivered or filed, <if any;> and
184-22 upon
184-23 <(B)> meeting such additional requirements, if
184-24 any, of law for its formation or organization, shall be formed or
184-25 organized as provided in the plan of merger;
184-26 (7) the<.>
184-27 <(8) The> partnership interests <interest> of each
185-1 domestic or foreign partnership and the partnership interests
185-2 <interest>, shares, or evidences of ownership in each other entity
185-3 that is a party to the merger that are to be converted or
185-4 exchanged, in whole or in part, into <(i)> partnership interests,
185-5 shares, obligations, evidences of ownership, rights to purchase
185-6 securities, or other securities of one or more of the surviving or
185-7 new domestic or foreign partnerships or other entities, into <(ii)>
185-8 cash, or <(iii)> other property, including shares, obligations,
185-9 evidences of ownership, rights to purchase securities, or other
185-10 securities of any other person or entity, or into any combination
185-11 of the foregoing, shall be so <those items, are> converted and
185-12 exchanged and <when a merger takes effect. After the merger> the
185-13 former partners of each domestic partnership <and owners of shares
185-14 or evidences of ownership in each other domestic entity> that is a
185-15 party to the merger shall be <are> entitled <only> to the rights
185-16 provided in the plan of merger;
185-17 (8) if the<.>
185-18 <(9) If a> plan of merger shall fail <fails> to
185-19 provide for the allocation and vesting of the right, title, and
185-20 interest in any <a> particular item of real estate or other
185-21 property or for the allocation of any <a> liability or obligation
185-22 of any <a> party to the merger, such <when the merger takes effect
185-23 the> item of real estate or other property shall be owned in
185-24 undivided interest <interests> by, or such <the> liability or
185-25 obligation shall be a joint and several liability and obligation
185-26 of, each of the surviving and new domestic and foreign partnerships
185-27 and other entities, pro rata to the total number of surviving and
186-1 new domestic and foreign partnerships and other entities resulting
186-2 from the merger;
186-3 (9) a partner of a partnership that is a party to a
186-4 merger does not become personally liable as a result of the merger
186-5 for a liability or obligation of another person that is a party to
186-6 the merger unless the partner consents to becoming personally
186-7 liable by action taken in connection with the specific plan of
186-8 merger approved by the partner; and for purposes of determining the
186-9 liability of partners in a domestic partnership that is a party to
186-10 the merger for the debts and obligations of other parties to the
186-11 merger in which that partner otherwise was not or is not a partner
186-12 or other owner of an interest:
186-13 (A) a partner who remains in or enters a
186-14 domestic or foreign partnership or other entity that survives a
186-15 merger or that enters a domestic or foreign partnership or other
186-16 entity created by the terms of the plan of merger shall be treated
186-17 as an incoming partner in the new or surviving partnership as of
186-18 the effective date of the merger; and
186-19 (B) a partner in a domestic partnership that is
186-20 a party to the merger but that does not survive shall be treated as
186-21 a partner who withdrew from the nonsurviving domestic partnership
186-22 as of the effective date of the merger; and<.>
186-23 (10) if <If> a domestic or foreign partnership merges
186-24 with another domestic or foreign partnership or other entity and
186-25 through the merger process no longer exists, a person who becomes a
186-26 member of the surviving domestic or foreign partnership or other
186-27 entity, for a period of one year after the effective date of the
187-1 merger, may bind the surviving entity to a transaction for which it
187-2 no longer has authority to bind the entity if the transaction is
187-3 one in which the partner's actions would bind the foreign or
187-4 domestic partnership before the effective date of the merger and
187-5 the other party to the transaction:
187-6 (A) does not have notice of the merger;
187-7 (B) had done business with the partnership which
187-8 no longer exists within one year preceding the effective date of
187-9 the merger; and
187-10 (C) reasonably believes that the partner who was
187-11 previously a member of the partnership which was merged into the
187-12 surviving entity and is now a partner of the surviving entity was a
187-13 partner with authority to bind the partnership to the transaction
187-14 at the time of the transaction.
187-15 (h) Other Entity. <(g) Definition of "Other Entity."> For
187-16 purposes of this section, the term "other entity" means any entity,
187-17 whether organized for profit or not, that is a corporation, limited
187-18 partnership, limited liability company, joint venture, joint stock
187-19 company, cooperative, association, bank, insurance company, or
187-20 other legal entity organized pursuant to <under> the laws of this
187-21 state or any other <another> state or country to the extent such
187-22 <the> laws or the constituent documents of that entity, not
187-23 inconsistent with such laws <law>, permit that entity to enter into
187-24 a merger or partnership interest exchange as permitted by this
187-25 section.
187-26 SECTION 96. Section 9.03(a), Texas Revised Partnership Act
187-27 (Article 6132b-9.03, Vernon's Texas Civil Statutes), is amended to
188-1 read as follows:
188-2 (a) One or more domestic or foreign partnerships may adopt a
188-3 plan of exchange by which a domestic or foreign partnership or
188-4 other entity acquires all of the outstanding partnership interests
188-5 of one or more domestic partnerships in exchange for cash or
188-6 securities of the acquiring domestic or foreign partnership or
188-7 other entity, if:
188-8 (1) the partnership agreement of each domestic
188-9 partnership the partnership interests of which are to be acquired
188-10 pursuant to the plan of exchange contains provisions that authorize
188-11 the partnership interest exchange adopted by the partnership, and
188-12 if one or more foreign partnerships or other entities is to issue
188-13 shares or other interests as part of the plan of exchange, the
188-14 issuance of those shares or other interests is either permitted by
188-15 the laws under which that foreign partnership or other entity is
188-16 formed or not inconsistent with those laws;
188-17 (2) <(1)> each domestic or foreign partnership, the
188-18 partnership interests of which are to be acquired under the plan of
188-19 exchange, approves the plan of exchange in the manner prescribed in
188-20 its partnership agreement; and
188-21 (3) <(2)> each acquiring domestic or foreign
188-22 partnership or other entity takes all action that may be required
188-23 by the laws of the state under which it was formed or incorporated
188-24 and as required by its partnership agreement or other constituent
188-25 documents in order to effect the exchange.
188-26 SECTION 97. Article IX, Texas Revised Partnership Act
188-27 (Article 6132b-9.01 et seq., Vernon's Texas Civil Statutes), is
189-1 amended by adding Sections 9.05 and 9.06 to read as follows:
189-2 Sec. 9.05. CONVERSION. (a) A domestic partnership may
189-3 adopt a plan of conversion and convert to a foreign partnership or
189-4 any other entity if:
189-5 (1) the converting entity acts upon and its partners
189-6 approve a plan of conversion in the manner prescribed by Section
189-7 9.02 as if the conversion were a merger to which the converting
189-8 entity were a party and not the survivor;
189-9 (2) the conversion is permitted by, or not
189-10 inconsistent with, the laws of the state or country in which the
189-11 converted entity is to be incorporated, formed, or organized and
189-12 the incorporation, formation, or organization of the converted
189-13 entity is effected in compliance with such laws;
189-14 (3) at the time the conversion becomes effective, each
189-15 partner of the converting entity will, unless otherwise agreed to
189-16 by that partner, own an equity interest or other ownership or
189-17 security interest in, and be a shareholder, partner, member, owner
189-18 or other security holder of, the converted entity; and
189-19 (4) the converted entity shall be incorporated,
189-20 formed, or organized as part of or pursuant to the plan of
189-21 conversion.
189-22 (b) Any foreign partnership or other entity may adopt a plan
189-23 of conversion and convert to a domestic partnership if:
189-24 (1) the conversion is permitted by the laws of the
189-25 state or country in which the foreign partnership is incorporated,
189-26 if a foreign partnership is converting;
189-27 (2) the conversion is either permitted by the laws
190-1 under which the other entity is formed or organized or by the
190-2 constituent documents of the other entity that are not
190-3 inconsistent with the laws of the state or country in which the
190-4 other entity is formed or organized, if another entity is
190-5 converting; and
190-6 (3) the converting entity takes all action that may
190-7 be required by the laws of the state or country under which it is
190-8 incorporated, formed, or organized and by its constituent documents
190-9 to effect the conversion.
190-10 (c) A plan of conversion shall set forth:
190-11 (1) the name of the converting entity and the
190-12 converted entity;
190-13 (2) a statement that the converting entity is
190-14 continuing its existence in the organizational form of the
190-15 converted entity;
190-16 (3) a statement as to the type of entity that the
190-17 converted entity is to be and the state or country under the laws
190-18 of which the converted entity is to be incorporated, formed, or
190-19 organized;
190-20 (4) the manner and basis of converting the partnership
190-21 interests, shares, or other evidences of ownership of the
190-22 converting entity into partnership interests, shares, or other
190-23 evidences of ownership or securities of the converted entity, or
190-24 any combination thereof; and
190-25 (5) in an attachment or exhibit, the certificate of
190-26 limited partnership, articles of incorporation, or other
190-27 organizational documents of the converted entity if the converted
191-1 entity is not a domestic partnership.
191-2 (d) A plan of conversion may set forth such other provisions
191-3 relating to the conversion not inconsistent with law, including the
191-4 initial partnership agreement of the converted entity if the
191-5 converted entity is a partnership.
191-6 (e) If a plan of conversion has been approved in accordance
191-7 with the preceding provisions of this section and has not been
191-8 abandoned, unless the converted entity and the converting entities
191-9 are both partnerships:
191-10 (1) articles of conversion shall be executed by the
191-11 converting entity by a partner, officer, or other duly authorized
191-12 representative thereof and shall set forth:
191-13 (A) the plan of conversion or a statement
191-14 certifying the following:
191-15 (i) the name, the state of incorporation,
191-16 formation, or organization of the converting entity, and the
191-17 organizational form of the converting entity;
191-18 (ii) that a plan of conversion has been
191-19 approved;
191-20 (iii) that an executed plan of conversion
191-21 is on file at the principal place of business of the converting
191-22 entity, stating the address thereof, and that an executed plan of
191-23 conversion will be on file, from and after the conversion, at the
191-24 principal place of the converting entity, stating the address
191-25 thereof; and
191-26 (iv) that a copy of the plan of conversion
191-27 will be furnished by the converting entity (prior to the
192-1 conversion) or the converted entity (after the conversion), on
192-2 written request and without cost, to any member of the converting
192-3 entity or the converted entity; and
192-4 (B) a statement that the approval of the plan of
192-5 conversion was duly authorized by all action required by the laws
192-6 under which the converting entity was incorporated, formed, or
192-7 organized and by its constituent documents;
192-8 (2) the original and one copy of the articles of
192-9 conversion shall be delivered to the secretary of state; and
192-10 (3) two copies of the certificate of limited
192-11 partnership of the domestic limited partnership if the converted
192-12 entity is a domestic limited partnership shall also be delivered to
192-13 the secretary of state with the articles of conversion.
192-14 (f) If the secretary of state finds that the articles of
192-15 conversion conform to law and has received all filings required to
192-16 be received, and issued all certificates required to be issued in
192-17 connection with the incorporation, formation, or organization of
192-18 the converted entity, if any, he shall, when all fees and franchise
192-19 taxes have been paid as required by law or if the articles of
192-20 conversion provide that the converted entity will be liable for the
192-21 payment of all such fees and franchise taxes:
192-22 (1) endorse on the original and each copy the
192-23 word "Filed" and the month, day, and year of the filing thereof;
192-24 (2) file the original in his office; and
192-25 (3) issue a certificate of conversion, together
192-26 with a copy of the articles affixed thereto, to the converted
192-27 entity or its representatives.
193-1 (g) Except as otherwise provided by Section 9.06, upon the
193-2 issuance of the certificate of conversion by the secretary of state
193-3 (or if a certificate of conversion need not be executed, as
193-4 provided in the plan of merger), the conversion of a converting
193-5 entity shall be effective.
193-6 (h) When a conversion of a converting entity takes effect:
193-7 (1) the converting entity shall continue to exist,
193-8 without interruption, but in the organizational form of the
193-9 converted entity rather than in its prior organizational form;
193-10 (2) all rights, title, and interests to all real
193-11 estate and other property owned by the converting entity shall
193-12 continue to be owned by the converted entity in its new
193-13 organizational form without reversion or impairment, without
193-14 further act or deed, and without any transfer or assignment having
193-15 occurred, but subject to any existing liens or other encumbrances
193-16 thereon;
193-17 (3) all liabilities and obligations of the converting
193-18 entity shall continue to be liabilities and obligations of the
193-19 converted entity in its new organizational form without impairment
193-20 or diminution by reason of the conversion;
193-21 (4) all rights of creditors or other parties with
193-22 respect to or against the prior interest holders or other owners of
193-23 the converting entity in their capacities as such in existence as
193-24 of the effective time of the conversion will continue in existence
193-25 as to those liabilities and obligations and may be pursued by such
193-26 creditors and obligees as if such conversion shall not have
193-27 occurred;
194-1 (5) a proceeding pending by or against the converting
194-2 entity or by or against any of the converting entity's interest
194-3 holders or owners in their capacities as such may be continued by
194-4 or against the converted entity in its new organizational form and
194-5 by or against the prior interest holders or owners, as the case may
194-6 be, without any need for substitution of parties;
194-7 (6) the partnership interests, shares, and other
194-8 evidences of ownership in the converting entity that are to be
194-9 converted into partnership interests, shares, evidences of
194-10 ownership, or other securities in the converted entity as provided
194-11 in the plan of conversion shall be so converted, and if the
194-12 converting entity is a domestic partnership, the former holders of
194-13 shares in the domestic partnership shall be entitled only to the
194-14 rights provided in the plan of conversion;
194-15 (7) if, after the effectiveness of the conversion, a
194-16 shareholder, partner, member, or other owner of the converted
194-17 entity would be liable under applicable law in such capacity for
194-18 the debts or obligations of the converted entity, such shareholder,
194-19 partner, member, or other owner of the converted entity shall be
194-20 liable for the debts and obligations of the converting entity that
194-21 existed before the conversion takes effect only to the extent that
194-22 such shareholder, partner, member or other owner:
194-23 (A) agreed in writing to be liable for such
194-24 debts or obligations;
194-25 (B) was liable under applicable law, prior to
194-26 the effectiveness of the conversion, for such debts or obligations;
194-27 or
195-1 (C) by becoming a shareholder, partner, member,
195-2 or other owner of the converted entity, becomes liable under
195-3 applicable law for existing debts and obligations of the converted
195-4 entity;
195-5 (8) if the converted entity is a foreign partnership
195-6 or other entity, such converted entity shall be deemed to appoint
195-7 the secretary of state as its agent for service of process in a
195-8 proceeding to enforce any obligation or the rights of dissenting
195-9 shareholders of the converting domestic partnership; and
195-10 (9) if the converting partnership is a domestic
195-11 partnership, the provisions of Section 9.02 of this Act shall apply
195-12 as if the converted entity were the survivor of a merger with the
195-13 converting entity.
195-14 (i) For purposes of this section:
195-15 (1) "Conversion" means:
195-16 (A) the continuance of a domestic partnership
195-17 as, and in the organizational form of, a foreign partnership or
195-18 other entity; or
195-19 (B) the continuance of a foreign partnership or
195-20 other entity as, and in the organizational form of, a domestic
195-21 partnership.
195-22 (2) "Converted entity" means any domestic or foreign
195-23 partnership or other entity to which a converting entity has
195-24 converted or intends to convert as permitted by this section.
195-25 (3) "Converting entity" means any domestic or foreign
195-26 partnership or other entity that has converted or intends to
195-27 convert as permitted by this section.
196-1 (4) "Domestic partnership" means a partnership the
196-2 internal affairs of which are governed by this Act.
196-3 (5) "Foreign partnership" means a partnership, other
196-4 than a limited partnership, the internal affairs of which are
196-5 governed by the law of another state comparable to this Act or the
196-6 Texas Uniform Partnership Act (Article 6132b, Vernon's Texas Civil
196-7 Statutes).
196-8 (6) "Other entity" means any entity, whether organized
196-9 for profit or not, that is a corporation, limited partnership
196-10 (other than a limited partnership formed under the Texas Revised
196-11 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
196-12 Statutes)), joint venture, limited liability company, joint stock
196-13 company, cooperative, association, bank, insurance company, or
196-14 other legal entity organized pursuant to the laws of this state or
196-15 any other state or country.
196-16 Sec. 9.06. FILINGS AND FEES. Sections 2.12 and 12.01, Texas
196-17 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
196-18 Civil Statutes), apply to filings made with the secretary of state
196-19 under this article as if those filings related to limited
196-20 partnerships.
196-21 SECTION 98. Section 8.03, Texas Revised Limited Partnership
196-22 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is repealed.
196-23 SECTION 99. (a) This Act takes effect September 1, 1995.
196-24 (b) The change to Section 6.03, Texas Revised Limited
196-25 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
196-26 made by this Act, applies only to domestic limited partnerships
196-27 formed on or after September 1, 1995. A domestic limited
197-1 partnership formed before that date is governed by Section 6.03,
197-2 Texas Revised Limited Partnership Act (Article 6132a-1, Vernon's
197-3 Texas Civil Statutes), as it existed before amendment by this Act,
197-4 and that provision remains in effect for that limited purpose.
197-5 (c) This Act shall not affect any action or proceeding
197-6 commenced before the effective date.
197-7 SECTION 100. The importance of this legislation and the
197-8 crowded condition of the calendars in both houses create an
197-9 emergency and an imperative public necessity that the
197-10 constitutional rule requiring bills to be read on three several
197-11 days in each house be suspended, and this rule is hereby suspended.