1-1 By: Brimer (Senate Sponsor - Sibley) H.B. No. 1425
1-2 (In the Senate - Received from the House May 11, 1995;
1-3 May 12, 1995, read first time and referred to Committee on Economic
1-4 Development; May 24, 1995, reported favorably by the following
1-5 vote: Yeas 9, Nays 0; May 24, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to business organizations.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Section A, Article 1.02, Texas Business
1-11 Corporation Act, is amended to read as follows:
1-12 A. As used in this Act, unless the context otherwise
1-13 requires, the term:
1-14 (1) "Articles of incorporation" means the original or
1-15 restated articles of incorporation and all amendments thereto.
1-16 (2) "Associate," when used to indicate a relationship
1-17 with a person, means:
1-18 (a) a domestic or foreign corporation or other
1-19 entity of which the person is an officer or partner or is the
1-20 beneficial owner of 10 percent or more of a class of voting shares
1-21 or similar securities of that corporation or other entity;
1-22 (b) a trust or other estate in which the person
1-23 has a substantial beneficial interest or as to which the person
1-24 serves as trustee or in a similar fiduciary capacity; or
1-25 (c) a spouse of the person or a relative of the
1-26 person, or of the person's spouse, who has the same home as the
1-27 person or who is a director or officer of such person or any of its
1-28 affiliates.
1-29 (3) <(2)> "Authorized shares" means the shares of all
1-30 classes which the corporation is authorized to issue.
1-31 (4) <(3)> "Cancel" means to restore issued shares to
1-32 the status of authorized but unissued shares.
1-33 (5) <(4)> "Certificated shares" means shares
1-34 represented by instruments in bearer or registered form.
1-35 (6) <(5)> "Conspicuous" or "conspicuously," when
1-36 prescribed for information appearing on a certificate for shares or
1-37 other securities, means the location of such information or use of
1-38 type of sufficient size, color, or character that a reasonable
1-39 person against whom such information may operate should notice it.
1-40 For example, a printed or typed statement in capitals, or boldface
1-41 or underlined type, or in type that is larger than or that
1-42 contrasts in color with that used for other statements on the same
1-43 certificate, is "conspicuous."
1-44 (7) <(6)> "Consuming assets corporation" means a
1-45 corporation which is engaged in the business of exploiting assets
1-46 subject to depletion or amortization and which elects to state in
1-47 its articles of incorporation that it is a consuming assets
1-48 corporation and includes as a part of its official corporate name
1-49 the phrase "a consuming assets corporation," giving such phrase
1-50 equal prominence with the rest of the corporate name on its
1-51 financial statements and certificates representing shares. All its
1-52 certificates representing shares shall also contain a further
1-53 sentence: "This corporation is permitted by law to pay dividends
1-54 out of reserves which may impair its stated capital."
1-55 (8) "Conversion" means:
1-56 (a) the continuance of a domestic corporation
1-57 as, and in the organizational form of, a foreign corporation or
1-58 other entity; or
1-59 (b) the continuance of a foreign corporation or
1-60 other entity as, and in the organizational form of, a domestic
1-61 corporation.
1-62 (9) "Converted entity" means any domestic or foreign
1-63 corporation or other entity to which a converting entity has
1-64 converted or intends to convert as permitted by Article 5.17 of
1-65 this Act.
1-66 (10) "Converting entity" means any domestic or foreign
1-67 corporation or other entity that has converted or intends to
1-68 convert as permitted by Article 5.17 of this Act.
2-1 (11) <(7)> "Corporation" or "domestic corporation"
2-2 means a corporation for profit subject to the provisions of this
2-3 Act, except a foreign corporation.
2-4 (12) "Disinterested," when used to indicate a director
2-5 or other person is disinterested in a contract, transaction, or
2-6 other matter for purposes of approval of a contract or transaction
2-7 under Article 2.35-1 of this Act and for purposes of considering
2-8 the disposition of a claim or challenge with respect to a
2-9 particular contract or transaction or to particular conduct means
2-10 the director or other person, or an associate of the director
2-11 (other than the corporation and its associates) or other person, is
2-12 not a party to the contract or transaction or is not materially
2-13 involved in the conduct that is subject to the claim or challenge,
2-14 and does not otherwise have a material financial interest in the
2-15 outcome of the contract or transaction or the disposition of the
2-16 claim or challenge. A director or other person is not to be
2-17 considered to be materially involved in conduct that is subject to
2-18 a claim or challenge or to otherwise have a material financial
2-19 interest in the outcome of a contract or transaction or the
2-20 disposition of the claim or challenge solely by reason of the
2-21 existence of one or more of the following circumstances:
2-22 (a) the person was nominated or elected as a
2-23 director by persons who are interested in the contract or
2-24 transaction or who are alleged to have engaged in the conduct that
2-25 is subject to the claim or challenge;
2-26 (b) the person receives normal director's fees
2-27 or similar customary compensation, expense reimbursement, and
2-28 benefits as a director of the corporation;
2-29 (c) the person has a direct or indirect equity
2-30 interest in the corporation;
2-31 (d) the corporation or its subsidiaries has an
2-32 interest in the contract or transaction or was affected by the
2-33 alleged conduct;
2-34 (e) the person or an associate or affiliate of
2-35 the person receives ordinary and reasonable compensation for
2-36 services rendered to review, make recommendations, or decide on the
2-37 disposition of the claim or challenge; or
2-38 (f) in the case of a review by the person of
2-39 alleged conduct that is the subject to a claim or challenge:
2-40 (i) the person is named as a defendant in
2-41 the derivative proceeding with respect to such matter or as a
2-42 person who engaged in the alleged conduct; or
2-43 (ii) the person approved of, voted for, or
2-44 acquiesced in, as a director, the act being challenged if the act
2-45 resulted in no material personal or financial benefit to the person
2-46 and the challenging party fails to allege with particularity facts
2-47 that, if true, raise a significant prospect that the director would
2-48 be adjudged liable to the corporation or its shareholders by reason
2-49 of that conduct.
2-50 (13) <(8)> "Distribution" means a transfer of money or
2-51 other property (except its own shares or rights to acquire its own
2-52 shares), or issuance of indebtedness, by a corporation to its
2-53 shareholders in the form of:
2-54 (a) a dividend on any class or series of the
2-55 corporation's outstanding shares;
2-56 (b) a purchase, redemption, or other acquisition
2-57 by the corporation, directly or indirectly, of any of its own
2-58 shares; or
2-59 (c) a payment by the corporation in liquidation
2-60 of all or a portion of its assets.
2-61 (14) <(9)> "Foreign corporation" means a corporation
2-62 for profit organized under laws other than the laws of this State.
2-63 (15) "Independent," when used to indicate a director
2-64 or other person is independent for purposes of considering the
2-65 disposition of a claim or challenge with respect to a particular
2-66 contract or transaction or to a particular conduct or alleged
2-67 conduct means:
2-68 (a) the director or other person is
2-69 disinterested;
2-70 (b) the director or other person is not an
3-1 associate (other than by reason of being a director of the
3-2 corporation or one more of its subsidiaries or associates) or
3-3 member of the immediate family of a party to the contract or
3-4 transaction that is the subject of the claim or challenge or that
3-5 is alleged to have engaged in the conduct that is subject to the
3-6 claim or challenge;
3-7 (c) the director or other person, or an
3-8 associate or member of the immediate family of the director or
3-9 other person, does not have a business, financial, or familial
3-10 relationship with a party to the contract or transaction that is
3-11 the subject of the claim or challenge or that is alleged to have
3-12 engaged in conduct that is subject to the claim or challenge,
3-13 which, in each case, could reasonably be expected to materially and
3-14 adversely affect the director's or other person's judgment with
3-15 respect to the consideration of the disposition of the matter
3-16 subject to the claim or challenge in the interests of the
3-17 corporation; and
3-18 (d) the director or other person is not
3-19 otherwise shown, by a preponderance of the evidence by the person
3-20 challenging the independence of the director or other person, to be
3-21 under the controlling influence of a party to the contract or
3-22 transaction that is the subject of the claim or challenge or that
3-23 is alleged to have engaged in conduct that is subject to the claim
3-24 or challenge.
3-25 A director or other person is not considered to have a
3-26 relationship that could be expected to materially and adversely
3-27 affect the director's or other person's judgment with respect to
3-28 the consideration of the disposition of a matter subject to a claim
3-29 or challenge or to otherwise be under the controlling influence of
3-30 a party to a contract or transaction that is the subject of the
3-31 claim or challenge or that is alleged to have engaged in conduct
3-32 that is subject to a claim or challenge solely by reason of the
3-33 existence of one or more of the following circumstances:
3-34 (a) the person has been nominated or elected as
3-35 a director by persons who are interested in the contract or
3-36 transaction or who are alleged to have engaged in the conduct that
3-37 is subject to the claim or challenge;
3-38 (b) the person receives normal director's fees
3-39 or similar customary compensation, expense reimbursement, and
3-40 benefits as a director of the corporation;
3-41 (c) the person has a direct or indirect equity
3-42 interest in the corporation;
3-43 (d) the corporation or its subsidiaries has an
3-44 interest in the contract or transaction, or was affected by the
3-45 alleged conduct;
3-46 (e) the person or an associate or affiliate of
3-47 such person receives ordinary and reasonable compensation for
3-48 services rendered to review, make recommendations, or decide on the
3-49 disposition of the claim or challenge; or
3-50 (f) the person or an associate (other than the
3-51 corporation and its associates), immediate family member or
3-52 affiliate of the person has an ongoing business relationship with
3-53 the corporation that is not material to that person, associate,
3-54 family member, or affiliate.
3-55 (16) <(10)> "Insolvency" means inability of a
3-56 corporation to pay its debts as they become due in the usual course
3-57 of its business.
3-58 (17) <(11)> "Investment Company Act" means the
3-59 Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.);
3-60 (18) <(12)> "Merger" means (a) the division of a
3-61 domestic corporation into two or more new domestic corporations or
3-62 into a surviving corporation and one or more new domestic or
3-63 foreign corporations or other entities, or (b) the combination of
3-64 one or more domestic corporations with one or more domestic or
3-65 foreign corporations or other entities resulting in (i) one or more
3-66 surviving domestic or foreign corporations or other entities, (ii)
3-67 the creation of one or more new domestic or foreign corporations or
3-68 other entities, or (iii) one or more surviving domestic or foreign
3-69 corporations or other entities and the creation of one or more new
3-70 domestic or foreign corporations or other entities.
4-1 (19) <(13)> "Net assets" means the amount by which the
4-2 total assets of a corporation exceed the total debts of the
4-3 corporation.
4-4 (20) <(14)> "Other entity" means any entity, whether
4-5 organized for profit or not, that is a corporation (other than a
4-6 domestic or foreign corporation), limited or general partnership,
4-7 limited liability company, real estate investment trust, joint
4-8 venture, joint stock company, cooperative, association, bank,
4-9 trust, insurance company or other legal entity organized pursuant
4-10 to the laws of this state or any other state or country <to the
4-11 extent such laws or the constituent documents of that entity, not
4-12 inconsistent with such laws, permit that entity to enter into a
4-13 merger or share exchange as permitted by Article 5.03 of this Act>.
4-14 (21) <(15)> "Share dividend" means a dividend by a
4-15 corporation that is payable in its own authorized but unissued
4-16 shares or in treasury shares. An amendment to a corporation's
4-17 articles of incorporation to change the shares of any class or
4-18 series, whether with or without par value, into the same or a
4-19 different number of shares, either with or without par value, of
4-20 the same class or series or another class or series does not
4-21 constitute a share dividend.
4-22 (22) <(16)> "Shareholder" or "holder of shares" means
4-23 the person in whose name shares issued by a corporation are
4-24 registered at the relevant time in the share transfer records
4-25 maintained by the corporation pursuant to Article 2.44 of this Act.
4-26 (23) <(17)> "Shares" means the units into which the
4-27 proprietary interests in a corporation are divided, whether
4-28 certificated or uncertificated shares.
4-29 (24) <(18)> "Stated capital" means, at any particular
4-30 time, the sum of:
4-31 (a) the par value of all shares of the
4-32 corporation having a par value that have been issued;
4-33 (b) the consideration fixed by the corporation
4-34 in the manner provided by Article 2.15 of this Act for all shares
4-35 of the corporation without par value that have been issued, except
4-36 such part of the consideration that is actually received therefor
4-37 (which part must be less than all of that consideration) that the
4-38 board by resolution adopted no later than sixty (60) days after the
4-39 issuance of those shares may have allocated to surplus; and
4-40 (c) such amounts not included in paragraphs (a)
4-41 and (b) of this subsection as have been transferred to stated
4-42 capital of the corporation, whether upon the payment of a share
4-43 dividend or upon adoption by the board of directors of a resolution
4-44 directing that all or part of surplus be transferred to stated
4-45 capital, minus all reductions from such sum as have been effected
4-46 in a manner permitted by law.
4-47 (25) <(19)> "Subscriber" means the offeror in a
4-48 subscription.
4-49 (26) <(20)> "Subscription" means a memorandum in
4-50 writing, executed before or after incorporation, wherein an offer
4-51 is made to purchase and pay for a specified number of theretofore
4-52 unissued shares of a corporation.
4-53 (27) <(21)> "Surplus" means the excess of the net
4-54 assets of a corporation over its stated capital.
4-55 (28) <(22)> "Treasury shares" means shares of a
4-56 corporation which have been issued, have been subsequently acquired
4-57 by and belong to the corporation, and have not been canceled and
4-58 restored to the status of authorized but unissued shares. Treasury
4-59 shares do not include shares held by a corporation, either directly
4-60 or through a trust or similar arrangement, in a fiduciary capacity.
4-61 Treasury shares shall be deemed to be "issued" shares but not
4-62 "outstanding" shares, and shall not be included in the total assets
4-63 of a corporation for purposes of determining its "net assets."
4-64 (29) <(23)> "Uncertificated shares" means shares not
4-65 represented by instruments and the transfers of which are
4-66 registered upon books maintained for that purpose by or on behalf
4-67 of the issuing corporation.
4-68 SECTION 2. Sections A, P, R, and T, Article 2.02-1, Texas
4-69 Business Corporation Act, are amended to read as follows:
4-70 A. In this article:
5-1 (1) "Corporation" includes any domestic or foreign
5-2 predecessor entity of the corporation in a merger, conversion
5-3 <consolidation>, or other transaction in which some or all of the
5-4 liabilities of the predecessor are transferred to the corporation
5-5 by operation of law and in any other transaction in which the
5-6 corporation assumes the liabilities of the predecessor but does not
5-7 specifically exclude liabilities that are the subject matter of
5-8 this article.
5-9 (2) "Director" means any person who is or was a
5-10 director of the corporation and any person who, while a director of
5-11 the corporation, is or was serving at the request of the
5-12 corporation as a director, officer, partner, venturer, proprietor,
5-13 trustee, employee, agent, or similar functionary of another foreign
5-14 or domestic corporation, <partnership, joint venture, sole
5-15 proprietorship, trust,> employee benefit plan, <or> other
5-16 enterprise, or other entity.
5-17 (3) "Expenses" include court costs and attorneys'
5-18 fees.
5-19 (4) "Official capacity" means
5-20 (a) when used with respect to a director, the
5-21 office of director in the corporation, and
5-22 (b) when used with respect to a person other
5-23 than a director, the elective or appointive office in the
5-24 corporation held by the officer or the employment or agency
5-25 relationship undertaken by the employee or agent in behalf of the
5-26 corporation, but
5-27 (c) in both Paragraphs (a) and (b) does not
5-28 include service for any other foreign or domestic corporation or
5-29 any <partnership, joint venture, sole proprietorship, trust,>
5-30 employee benefit plan, <or> other enterprise, or other entity.
5-31 (5) "Proceeding" means any threatened, pending, or
5-32 completed action, suit, or proceeding, whether civil, criminal,
5-33 administrative, arbitrative, or investigative, any appeal in such
5-34 an action, suit, or proceeding, and any inquiry or investigation
5-35 that could lead to such an action, suit, or proceeding.
5-36 P. A corporation may indemnify and advance expenses to
5-37 persons who are not or were not officers, employees, or agents of
5-38 the corporation but who are or were serving at the request of the
5-39 corporation as a director, officer, partner, venturer, proprietor,
5-40 trustee, employee, agent, or similar functionary of another foreign
5-41 or domestic corporation, <partnership, joint venture, sole
5-42 proprietorship, trust,> employee benefit plan, <or> other
5-43 enterprise, or other entity to the same extent that it may
5-44 indemnify and advance expenses to directors under this article.
5-45 R. A corporation may purchase and maintain insurance or
5-46 another arrangement on behalf of any person who is or was a
5-47 director, officer, employee, or agent of the corporation or who is
5-48 or was serving at the request of the corporation as a director,
5-49 officer, partner, venturer, proprietor, trustee, employee, agent,
5-50 or similar functionary of another foreign or domestic corporation,
5-51 <partnership, joint venture, sole proprietorship, trust,> employee
5-52 benefit plan, <or> other enterprise, or other entity, against any
5-53 liability asserted against him and incurred by him in such a
5-54 capacity or arising out of his status as such a person, whether or
5-55 not the corporation would have the power to indemnify him against
5-56 that liability under this article. If the insurance or other
5-57 arrangement is with a person or entity that is not regularly
5-58 engaged in the business of providing insurance coverage, the
5-59 insurance or arrangement may provide for payment of a liability
5-60 with respect to which the corporation would not have the power to
5-61 indemnify the person only if including coverage for the additional
5-62 liability has been approved by the shareholders of the corporation.
5-63 Without limiting the power of the corporation to procure or
5-64 maintain any kind of insurance or other arrangement, a corporation
5-65 may, for the benefit of persons indemnified by the corporation, (1)
5-66 create a trust fund; (2) establish any form of self-insurance; (3)
5-67 secure its indemnity obligation by grant of a security interest or
5-68 other lien on the assets of the corporation; or (4) establish a
5-69 letter of credit, guaranty, or surety arrangement. The insurance
5-70 or other arrangement may be procured, maintained, or established
6-1 within the corporation or with any insurer or other person deemed
6-2 appropriate by the board of directors regardless of whether all or
6-3 part of the stock or other securities of the insurer or other
6-4 person are owned in whole or part by the corporation. In the
6-5 absence of fraud, the judgment of the board of directors as to the
6-6 terms and conditions of the insurance or other arrangement and the
6-7 identity of the insurer or other person participating in an
6-8 arrangement shall be conclusive and the insurance or arrangement
6-9 shall not be voidable and shall not subject the directors approving
6-10 the insurance or arrangement to liability, on any ground,
6-11 regardless of whether directors participating in the approval are
6-12 beneficiaries of the insurance or arrangement.
6-13 T. For purposes of this article, the corporation is deemed
6-14 to have requested a director to serve as a trustee, employee,
6-15 agent, or similar functionary of an employee benefit plan whenever
6-16 the performance by him of his duties to the corporation also
6-17 imposes duties on or otherwise involves services by him to the plan
6-18 or participants or beneficiaries of the plan. Excise taxes
6-19 assessed on a director with respect to an employee benefit plan
6-20 pursuant to applicable law are deemed fines. Action taken or
6-21 omitted by a director <him> with respect to an employee benefit
6-22 plan in the performance of his duties for a purpose reasonably
6-23 believed by him to be in the interest of the participants and
6-24 beneficiaries of the plan is deemed to be for a purpose which is
6-25 not opposed to the best interests of the corporation.
6-26 SECTION 3. Sections A and B, Article 2.15, Texas Business
6-27 Corporation Act, are amended to read as follows:
6-28 A. Shares having a par value may be issued for such
6-29 consideration, <expressed in dollars,> not less than the par value
6-30 thereof, as shall be fixed from time to time by the board of
6-31 directors or, in the case of shares issued by a converted entity,
6-32 in the plan of conversion or, in the case of a corporation created
6-33 by a merger, in the plan of merger.
6-34 B. Shares without par value may be issued for such
6-35 consideration, <expressed in dollars,> as may be fixed:
6-36 (1) <from time to time> by the board of directors from
6-37 time to time, unless the articles of incorporation reserve to the
6-38 shareholders the right to fix the consideration; in which case,
6-39 prior to the issuance of such<. In the event that such right be
6-40 reserved as to any> shares, the shareholders shall<, prior to the
6-41 issuance of such shares,> fix the consideration to be received for
6-42 such shares, by a vote of the holders of a majority of all shares
6-43 entitled to vote thereon;
6-44 (2) by a plan of conversion, in the case of shares to
6-45 be issued pursuant to the plan of conversion by a corporation that
6-46 is a converted entity; or
6-47 (3) by a plan of merger, in the case of shares to be
6-48 issued pursuant to the plan of merger by a corporation created
6-49 pursuant to the plan of merger.
6-50 SECTION 4. Article 2.16, Texas Business Corporation Act, is
6-51 amended to read as follows:
6-52 Art. 2.16. Payment for Shares. A. The <Subject to any
6-53 provision of the Constitution of the State of Texas to the
6-54 contrary, the> board of directors (or, in the case of shares to be
6-55 issued pursuant to a plan of conversion by a corporation that is a
6-56 converted entity, the plan of conversion, or, in the case of shares
6-57 to be issued pursuant to a plan of merger by a corporation created
6-58 pursuant to the plan of merger, the plan of merger) may authorize
6-59 shares to be issued for consideration consisting of any tangible or
6-60 intangible benefit to the corporation or other property of any kind
6-61 or nature, including cash, promissory notes, services performed,
6-62 contracts for services to be performed, <or> other securities of
6-63 the corporation, or securities of any other corporation, domestic
6-64 or foreign, or other entity. In addition, shares may be issued
6-65 pursuant to a plan of conversion or plan of merger in the manner
6-66 and for such consideration as may be provided for in the plan of
6-67 conversion or plan of merger. Shares may not be issued until the
6-68 full amount of the consideration, fixed as provided by law, has
6-69 been paid or delivered as required in connection with the
6-70 authorization of the shares. When such consideration shall have
7-1 been so paid or delivered <to the corporation or to a corporation
7-2 of which all of the outstanding shares of each class are owned by
7-3 the corporation>, the shares shall be deemed to have been issued
7-4 and the subscriber or shareholder entitled to receive such issue
7-5 shall be a shareholder with respect to such shares, and the shares
7-6 shall be considered fully paid and non-assessable.
7-7 B. In the absence of fraud in the transaction, the judgment
7-8 of the board of directors or the shareholders or the party or
7-9 parties approving the plan of conversion or the plan of merger, as
7-10 the case may be, as to the value and sufficiency of the
7-11 consideration received for shares shall be conclusive.
7-12 SECTION 5. Sections A and B, Article 2.21, Texas Business
7-13 Corporation Act, are amended to read as follows:
7-14 A. A holder of shares, an owner of any beneficial interest
7-15 in shares, or a subscriber for shares whose subscription has been
7-16 accepted, or any affiliate thereof, shall be under no obligation to
7-17 the corporation or to its obligees with respect to:
7-18 (1) such shares other than the obligation to pay to
7-19 the corporation the full amount of the consideration, fixed in
7-20 compliance with Article 2.15 of this Act, for which such shares
7-21 were or are to be issued;
7-22 (2) any contractual obligation of the corporation on
7-23 the basis that the holder, owner, <or> subscriber, or affiliate is
7-24 or was the alter ego of the corporation, or on the basis of actual
7-25 fraud or constructive fraud, a sham to perpetrate a fraud, or other
7-26 similar theory, unless the obligee demonstrates that the holder,
7-27 owner, <or> subscriber, or affiliate caused the corporation to be
7-28 used for the purpose of perpetrating and did perpetrate an actual
7-29 fraud on the obligee primarily for the direct personal benefit of
7-30 the holder, owner, <or> subscriber, or affiliate; or
7-31 (3) any contractual obligation of the corporation on
7-32 the basis of the failure of the corporation to observe any
7-33 corporate formality, including without limitation: (a) the failure
7-34 to comply with any requirement of this Act or of the articles of
7-35 incorporation or bylaws of the corporation; or (b) the failure to
7-36 observe any requirement prescribed by this Act or by the articles
7-37 of incorporation or bylaws for acts to be taken by the corporation,
7-38 its board of directors, or its shareholders.
7-39 B. The liability of a holder, owner, or subscriber of shares
7-40 of a corporation or any affiliate thereof for an obligation that is
7-41 limited by Section A of this article is exclusive and preempts any
7-42 other liability imposed on a holder, owner, or subscriber of shares
7-43 of a corporation or any affiliate thereof for that obligation under
7-44 common law or otherwise, except that nothing contained in this
7-45 article shall limit the obligation of a holder, owner, <or>
7-46 subscriber, or affiliate to an obligee of the corporation when:
7-47 (1) the holder, owner, <or> subscriber, or affiliate
7-48 has expressly assumed, guaranteed, or agreed to be personally
7-49 liable to the obligee for the obligation; or
7-50 (2) the holder, owner, <or> subscriber, or affiliate
7-51 is otherwise liable to the obligee for the obligation under this
7-52 Act or another applicable statute.
7-53 SECTION 6. Article 2.28, Texas Business Corporation Act, is
7-54 amended by amending Sections A and B and adding Section E to read
7-55 as follows:
7-56 A. Quorum. With respect to any meeting of shareholders
7-57 <matter>, a quorum shall be present for any matter to be presented
7-58 at that meeting <at a meeting of shareholders> if the holders of a
7-59 majority of the shares entitled to vote at the meeting <on that
7-60 matter> are represented at the meeting in person or by proxy,
7-61 unless otherwise provided in the articles of incorporation in
7-62 accordance with this section. The articles of incorporation may
7-63 provide:
7-64 (1) That a quorum shall be present at a meeting of
7-65 shareholders only if the holders of a specified greater portion of
7-66 the shares entitled to vote are represented at the meeting in
7-67 person or by proxy; or
7-68 (2) That a quorum shall be present at a meeting of
7-69 shareholders if the holders of a specified lesser portion, but not
7-70 less than one-third (1/3), of the shares entitled to vote are
8-1 represented at the meeting in person or by proxy.
8-2 Unless otherwise provided in the articles of incorporation or
8-3 the bylaws, once a quorum is present at a meeting of shareholders,
8-4 the shareholders represented in person or by proxy at the meeting
8-5 may conduct such business as may be properly brought before the
8-6 meeting until it is adjourned, and the subsequent withdrawal from
8-7 the meeting of any shareholder or the refusal of any shareholder
8-8 represented in person or by proxy to vote shall not affect the
8-9 presence of a quorum at the meeting. Unless otherwise provided in
8-10 the articles of incorporation or the bylaws, the shareholders
8-11 represented in person or by proxy at a meeting of shareholders at
8-12 which a quorum is not present may adjourn the meeting until such
8-13 time and to such place as may be determined by a vote of the
8-14 holders of a majority of the shares represented in person or by
8-15 proxy at that meeting.
8-16 B. Voting on Matters Other Than the Election of Directors.
8-17 With respect to any matter, other than the election of directors or
8-18 a matter for which the affirmative vote of the holders of a
8-19 specified portion of the shares entitled to vote is required by
8-20 this Act, the affirmative vote of the holders of a majority of the
8-21 shares entitled to vote on, and that voted for or against or
8-22 expressly abstained with respect to, that matter <and represented
8-23 in person or by proxy> at a meeting of shareholders at which a
8-24 quorum is present shall be the act of the shareholders, unless
8-25 otherwise provided in the articles of incorporation or the bylaws
8-26 in accordance with this section. With respect to any matter, other
8-27 than the election of directors or a matter for which the
8-28 affirmative vote of the holders of a specified portion of the
8-29 shares entitled to vote is required by this Act, the articles of
8-30 incorporation or the bylaws may provide:
8-31 (1) That the act of the shareholders shall be the
8-32 affirmative vote of the holders of a specified portion, but not
8-33 less than a majority, of the shares entitled to vote on that
8-34 matter;
8-35 (2) That the act of the shareholders shall be the
8-36 affirmative vote of the holders of a specified portion, but not
8-37 less than a majority, of the shares entitled to vote on that matter
8-38 and represented in person or by proxy at a meeting of shareholders
8-39 at which a quorum is present; <or>
8-40 (3) That the act of the shareholders shall be the
8-41 affirmative vote of the holders of a specified portion, but not
8-42 less than a majority, of the shares entitled to vote on, and voted
8-43 for or against, that matter at a meeting of shareholders at which a
8-44 quorum is present; or
8-45 (4) That the act of the shareholders shall be the
8-46 affirmative vote of the holders of a specified portion, but not
8-47 less than a majority, of the shares entitled to vote on, and that
8-48 voted for or against or expressly abstained with respect to, that
8-49 matter at a meeting of shareholders at which a quorum is present.
8-50 E. A corporation may establish procedures in its bylaws, not
8-51 inconsistent with this Act, for determining the validity of proxies
8-52 and whether shares that are held of record by a bank, broker, or
8-53 other nominee are represented at a meeting of shareholders with
8-54 respect to any matter. The procedures may incorporate or look to
8-55 rules and determinations of self regulatory organizations
8-56 regulating that bank, broker, or other nominee.
8-57 SECTION 7. Section B, Article 2.29, Texas Business
8-58 Corporation Act, is amended to read as follows:
8-59 B. Shares <Treasury shares, shares> of its own stock owned
8-60 by a corporation or by another domestic or foreign corporation, if
8-61 a <the> majority of the voting stock of the other corporation
8-62 <which> is owned or controlled by the <it, and shares of its own
8-63 stock held by a> corporation, <in a fiduciary capacity> shall not
8-64 be voted, directly or indirectly, at any meeting, and shall not be
8-65 counted in determining the total number of outstanding shares at
8-66 any given time. Nothing in this section shall be construed as
8-67 limiting the right of any corporation to vote stock, including but
8-68 not limited to its own stock, held or controlled by it in a
8-69 fiduciary capacity, or with respect to which it otherwise exercises
8-70 voting power in a fiduciary capacity.
9-1 SECTION 8. Part Two, Texas Business Corporation Act, is
9-2 amended by adding Article 2.30-1 to read as follows:
9-3 Art. 2.30-1. SHAREHOLDER AGREEMENTS. A. Scope of
9-4 Agreement. An agreement among the shareholders of a corporation
9-5 that complies with this article is effective among the shareholders
9-6 and the corporation even though it is inconsistent with one or more
9-7 provisions of this Act in that it:
9-8 (1) restricts the discretion or powers of the board of
9-9 directors;
9-10 (2) eliminates the board of directors and permits
9-11 management of the business and affairs of the corporation by its
9-12 shareholders, or in whole or in part by one or more of its
9-13 shareholders, or by one or more persons not shareholders;
9-14 (3) establishes the natural persons who shall be the
9-15 directors or officers of the corporation, their term of office or
9-16 manner of selection or removal, or terms or conditions of
9-17 employment of any director, officer, or other employee of the
9-18 corporation, regardless of the length of employment;
9-19 (4) governs the authorization or making of
9-20 distributions whether in proportion to ownership of shares, subject
9-21 to the limitations in Article 2.38 of this Act, or determines the
9-22 manner in which profits and losses shall be apportioned;
9-23 (5) governs, in general or in regard to specific
9-24 matters, the exercise or division of voting power by and between
9-25 the shareholders, directors (if any), or other persons or by or
9-26 among any of them, including use of disproportionate voting rights
9-27 or director proxies;
9-28 (6) establishes the terms and conditions of any
9-29 agreement for the transfer or use of property or the provision of
9-30 services between the corporation and any shareholder, director,
9-31 officer, or employee of the corporation, or other person or among
9-32 any of them;
9-33 (7) authorizes arbitration or grants authority to any
9-34 shareholder or other person as to any issue about which there is a
9-35 deadlock among the directors, shareholders, or other person or
9-36 persons empowered to manage the corporation to resolve that issue;
9-37 (8) requires dissolution of the corporation at the
9-38 request of one or more of the shareholders or upon the occurrence
9-39 of a specified event or contingency in which case the dissolution
9-40 of the corporation shall proceed as if all the shareholders had
9-41 consented in writing to dissolution of the corporation as provided
9-42 in Article 6.02 of this Act; or
9-43 (9) otherwise governs the exercise of corporate
9-44 powers, the management of the business and affairs of the
9-45 corporation, or the relationship among the shareholders, the
9-46 directors, and the corporation, or among any of them, as if the
9-47 corporation were a partnership or in a manner that would otherwise
9-48 be appropriate only among partners, and is not contrary to public
9-49 policy.
9-50 B. Procedures Required. An agreement authorized by this
9-51 article shall be:
9-52 (1) set forth (a) in the articles of incorporation or
9-53 bylaws and approved by all persons who are shareholders at the time
9-54 of the agreement or (b) in a written agreement that is signed by
9-55 all the persons who are shareholders at the time of the agreement
9-56 and is made known to the corporation;
9-57 (2) subject to amendment only by all persons who are
9-58 shareholders at the time of the amendment, unless the agreement
9-59 provides otherwise; and
9-60 (3) valid for 10 years, unless the agreement provides
9-61 otherwise.
9-62 C. Notation of Existence. The existence of an agreement
9-63 authorized by this article shall be noted conspicuously on the
9-64 front or back of each certificate for outstanding shares or on the
9-65 information statement required for uncertificated shares by Article
9-66 2.19 of this Act and shall include the following: "These shares
9-67 are subject to the provisions of a shareholders' agreement that may
9-68 provide for management of the corporation in a manner different
9-69 than in other corporations and may subject a shareholder to certain
9-70 obligations or liabilities not otherwise imposed on shareholders in
10-1 other corporations". If at the time of the agreement the
10-2 corporation has shares outstanding represented by certificates, the
10-3 corporation shall recall the outstanding certificates and issue
10-4 substitute certificates that comply with this section. The failure
10-5 to note the existence of the agreement on the certificate or
10-6 information statement shall not affect the validity of the
10-7 agreement or any action taken pursuant to it.
10-8 D. Right of Rescission. Any purchaser of shares who, at the
10-9 time of purchase, did not have knowledge of the existence of an
10-10 agreement authorized by this article shall be entitled to
10-11 rescission of the purchase. A purchaser shall be deemed to have
10-12 knowledge of the existence of the agreement if its existence is
10-13 noted on the certificate or information statement for the shares in
10-14 compliance with Section C of this article and, if the shares are
10-15 not represented by a certificate, the information statement noting
10-16 existence of the agreement is delivered to the purchaser at or
10-17 prior to the time of purchase of the shares. An action to enforce
10-18 the right of rescission authorized by this section must be
10-19 commenced within the earlier of 90 days after discovery of the
10-20 existence of the agreement or two years after time of the purchase
10-21 of the shares.
10-22 E. Cessation. An agreement authorized by this article shall
10-23 cease to be effective when shares of the corporation are listed on
10-24 a national securities exchange, quoted on an interdealer quotation
10-25 system of a national securities association, or regularly traded in
10-26 a market maintained by one or more members of a national or
10-27 affiliated securities association. If the agreement ceases to be
10-28 effective for any reason and the corporation does not have a board
10-29 of directors, governance by a board of directors shall be
10-30 instituted or reinstated in the manner provided in Section C,
10-31 Article 12.23, of this Act. If the agreement is contained or
10-32 referred to in the corporation's articles of incorporation or
10-33 bylaws, the board of directors may adopt an amendment to the
10-34 articles of incorporation or bylaws, without shareholder action, to
10-35 delete the agreement and any references to it.
10-36 F. Managerial Liabilities. An agreement authorized by this
10-37 article that limits the discretion or powers of the board of
10-38 directors or supplants the board of directors shall relieve the
10-39 directors of, and impose upon the person or persons in whom such
10-40 discretion or powers or management of the business and affairs of
10-41 the corporation are vested, liability for action or omissions
10-42 imposed by this Act or other law on directors to the extent that
10-43 the discretion or powers of the directors are limited or supplanted
10-44 by the agreement.
10-45 G. Limitation of Liability. The existence or performance of
10-46 an agreement authorized by this article shall not be grounds for
10-47 imposing personal liability on any shareholder for the acts or
10-48 obligations of the corporation by disregarding the separate entity
10-49 of the corporation or otherwise, even if the agreement or its
10-50 performance:
10-51 (1) treats the corporation as if it were a partnership
10-52 or in a manner that otherwise is appropriate only among partners;
10-53 (2) results in the corporation being considered a
10-54 partnership for purposes of taxation; or
10-55 (3) results in failure to observe the corporate
10-56 formalities otherwise applicable to the matters governed by the
10-57 agreement.
10-58 H. If No Shares Issued. Incorporators or subscribers for
10-59 the shares may act as shareholders with respect to an agreement
10-60 authorized by this article if no shares have been issued when the
10-61 agreement is signed.
10-62 SECTION 9. Article 2.31, Texas Business Corporation Act, is
10-63 amended to read as follows:
10-64 Art. 2.31. Board of Directors. A. Except as provided by
10-65 Article 2.30-1 and Part Twelve of this Act, the <The> powers of a
10-66 corporation shall be exercised by or under the authority of, and
10-67 the business and affairs of a corporation shall be managed under
10-68 the direction of, the board of directors of the corporation.
10-69 Directors need not be residents of this State or shareholders of
10-70 the corporation unless the articles of incorporation or bylaws so
11-1 require. The articles of incorporation or bylaws may prescribe
11-2 other qualifications for directors.
11-3 SECTION 10. Section A, Article 2.35-1, Texas Business
11-4 Corporation Act, is amended to read as follows:
11-5 A. An otherwise valid <No> contract or transaction between a
11-6 corporation and one or more of its directors or officers, or
11-7 between a corporation and any other domestic or foreign
11-8 corporation<, partnership, association,> or other entity
11-9 <organization> in which one or more of its directors or officers
11-10 are directors or officers or have a financial interest, shall be
11-11 valid notwithstanding <void or voidable solely for this reason,
11-12 solely because> the director or officer is present at or
11-13 participates in the meeting of the board or committee thereof which
11-14 authorizes the contract or transaction, or solely because his or
11-15 their votes are counted for such purpose, if any one of the
11-16 following is satisfied:
11-17 (1) The material facts as to his relationship or
11-18 interest and as to the contract or transaction are disclosed or are
11-19 known to the board of directors or the committee, and the board or
11-20 committee in good faith authorizes the contract or transaction by
11-21 the affirmative vote of a majority of the disinterested directors,
11-22 even though the disinterested directors be less than a quorum; or
11-23 (2) The material facts as to his relationship or
11-24 interest and as to the contract or transaction are disclosed or are
11-25 known to the shareholders entitled to vote thereon, and the
11-26 contract or transaction is specifically approved in good faith by
11-27 vote of the shareholders; or
11-28 (3) The contract or transaction is fair as to the
11-29 corporation as of the time it is authorized, approved, or ratified
11-30 by the board of directors, a committee thereof, or the
11-31 shareholders.
11-32 SECTION 11. Section B, Article 2.36, Texas Business
11-33 Corporation Act, is amended to read as follows:
11-34 B. No committee of the board of directors shall have the
11-35 authority of the board of directors in reference to:
11-36 (1) amending the articles of incorporation, except
11-37 that a committee may, to the extent provided in the resolution
11-38 designating that committee or in the articles of incorporation or
11-39 the bylaws, exercise the authority of the board of directors vested
11-40 in it in accordance with Article 2.13 of this Act;
11-41 (2) proposing a reduction of the stated capital of the
11-42 corporation in the manner permitted by Article 4.12 of this Act;
11-43 (3) approving a plan of merger, <or> share exchange,
11-44 or conversion of the corporation;
11-45 (4) recommending to the shareholders the sale, lease,
11-46 or exchange of all or substantially all of the property and assets
11-47 of the corporation otherwise than in the usual and regular course
11-48 of its business;
11-49 (5) recommending to the shareholders a voluntary
11-50 dissolution of the corporation or a revocation thereof;
11-51 (6) amending, altering, or repealing the bylaws of the
11-52 corporation or adopting new bylaws of the corporation;
11-53 (7) filling vacancies in the board of directors;
11-54 (8) filling vacancies in or designating alternate
11-55 members of any such committee;
11-56 (9) filling any directorship to be filled by reason of
11-57 an increase in the number of directors;
11-58 (10) electing or removing officers of the corporation
11-59 or members or alternate members of any such committee;
11-60 (11) fixing the compensation of any member or
11-61 alternate members of such committee; or
11-62 (12) altering or repealing any resolution of the board
11-63 of directors that by its terms provides that it shall not be so
11-64 amendable or repealable.
11-65 SECTION 12. Section B, Article 2.38-4, Texas Business
11-66 Corporation Act, is amended to read as follows:
11-67 B. For the purposes of this Article, a distribution that
11-68 involves the incurrence by a corporation of any indebtedness or
11-69 deferred payment obligation or that involves a requirement in the
11-70 corporation's articles of incorporation or other contract by the
12-1 corporation to redeem, exchange, or otherwise acquire any of its
12-2 own shares is deemed to have been made on the date the indebtedness
12-3 or obligation is incurred or, in the case of a provision in the
12-4 articles of incorporation of a corporation or other contract to
12-5 purchase, redeem, exchange, or otherwise acquire shares, at the
12-6 option of the corporation, is deemed to have been made on either
12-7 the date the provision or other contract is made or takes effect or
12-8 the date on which the shares to be redeemed, exchanged, or acquired
12-9 are redeemed, exchanged, or acquired.
12-10 SECTION 13. Article 3.01, Texas Business Corporation Act, is
12-11 amended to read as follows:
12-12 Art. 3.01. Incorporators. A. Any natural person of the age
12-13 of eighteen (18) years or more, or any domestic or foreign
12-14 corporation, estate, or other entity <partnership, corporation,
12-15 association, trust, or estate (without regard to place of
12-16 residence, domicile, or organization)> may act as an incorporator
12-17 of a corporation by signing the articles of incorporation for such
12-18 corporation and by delivering the original and a copy of the
12-19 articles of incorporation to the Secretary of State.
12-20 SECTION 14. Section A, Article 3.02, Texas Business
12-21 Corporation Act, is amended to read as follows:
12-22 A. The articles of incorporation shall set forth:
12-23 (1) The name of the corporation;
12-24 (2) The period of duration, which may be perpetual;
12-25 (3) The purpose or purposes for which the corporation
12-26 is organized which may be stated to be, or to include, the
12-27 transaction of any or all lawful business for which corporations
12-28 may be incorporated under this Act;
12-29 (4) The aggregate number of shares which the
12-30 corporation shall have authority to issue; if such shares are to
12-31 consist of one class only, the par value of each of such shares, or
12-32 a statement that all of such shares are without par value; or, if
12-33 such shares are to be divided into classes, the number of shares of
12-34 each class, and a statement of the par value of the shares of each
12-35 class or that such shares are to be without par value;
12-36 (5) If the shares are to be divided into classes, the
12-37 designation of each class and statement of the preferences,
12-38 limitations, and relative rights in respect of the shares of each
12-39 class;
12-40 (6) If the corporation is to issue the shares of any
12-41 class in series, then the designation of each series and a
12-42 statement of the variations in the preferences, limitations and
12-43 relative rights as between series insofar as the same are to be
12-44 fixed in the articles of incorporation, and a statement of any
12-45 authority to be vested in the board of directors to establish
12-46 series and fix and determine the preferences, limitations and
12-47 relative rights of each series;
12-48 (7) A statement that the corporation will not commence
12-49 business until it has received for the issuance of shares
12-50 consideration of the value of a stated sum which shall be at least
12-51 One Thousand Dollars ($1,000.00)<, consisting of money, labor done,
12-52 or property actually received>;
12-53 (8) Any provision limiting or denying to shareholders
12-54 the preemptive right to acquire additional or treasury shares of
12-55 the corporation;
12-56 (9) If a corporation elects to become a close
12-57 corporation in conformance with Part Twelve of this Act, any
12-58 provision (a) required or permitted by this Act to be stated in the
12-59 articles of incorporation of a close corporation, but not in the
12-60 articles of incorporation of an ordinary corporation, (b) contained
12-61 or permitted to be contained in a shareholders' agreement in
12-62 conformance with Part Twelve of this Act which the incorporators
12-63 elect to set forth in articles of incorporation, or (c) that makes
12-64 a shareholders' agreement in conformance with Part Twelve of this
12-65 Act part of the articles of incorporation of a close corporation in
12-66 the manner prescribed in Section F, Article 2.22 of this Act, but
12-67 any such provision, other than the statement required by Section A,
12-68 Article 12.11 of this Act, shall be preceded by a statement that
12-69 the provision shall be subject to the corporation remaining a close
12-70 corporation in conformance with Part Twelve of this Act;
13-1 (10) Any provision, not inconsistent with law,
13-2 including any provision which under this Act is required or
13-3 permitted to be set forth in the bylaws, which the incorporators
13-4 elect to set forth in the articles of incorporation for the
13-5 regulation of the internal affairs of the corporation;
13-6 (11) The street address of its initial registered
13-7 office and the name of its initial registered agent at such
13-8 address;
13-9 (12) The number of directors constituting the initial
13-10 board of directors and the names and addresses of the person or
13-11 persons who are to serve as directors until the first annual
13-12 meeting of shareholders or until their successors be elected and
13-13 qualify, or, in the case of a close corporation that, in
13-14 conformance with Part Twelve of this Act, is to be managed in some
13-15 other manner pursuant to a shareholders' agreement by the
13-16 shareholders or by the persons empowered by the agreement to manage
13-17 its business and affairs, the names and addresses of the person or
13-18 persons who, pursuant to the shareholders' agreement, will perform
13-19 the functions of the initial board of directors provided for by
13-20 this Act;
13-21 (13) The name and address of each incorporator, unless
13-22 the corporation is being incorporated pursuant to a plan of
13-23 conversion or a plan of merger, in which case the articles need not
13-24 include such information; and
13-25 (14) If the corporation is being incorporated pursuant
13-26 to a plan of conversion or a plan of merger, a statement to that
13-27 effect, and in the case of a plan of conversion, the name, address,
13-28 and prior form of organization and jurisdiction of incorporation or
13-29 organization of the converting entity.
13-30 SECTION 15. Article 3.03, Texas Business Corporation Act, is
13-31 amended by amending Section A and adding Section C to read as
13-32 follows:
13-33 A. Except as provided by Section C of this Article, the
13-34 <The> original and a copy of the articles of incorporation shall be
13-35 delivered to the Secretary of State. If the Secretary of State
13-36 finds that the articles of incorporation conform to law, he shall,
13-37 when all fees have been paid as required by law:
13-38 (1) Endorse on the original and the copy the word
13-39 "Filed," and the month, day, and year of the filing thereof.
13-40 (2) File the original in his office.
13-41 (3) Issue a certificate of incorporation to which he
13-42 shall affix the copy.
13-43 C. In the case of a new domestic corporation being
13-44 incorporated pursuant to a plan of conversion or a plan of merger
13-45 pursuant to Part Five of this Act, the articles of incorporation of
13-46 the corporation shall be filed with the Secretary of State with the
13-47 articles of conversion or merger and need not be filed separately
13-48 pursuant to Section A of this Article. If the Secretary of State
13-49 finds that the articles of incorporation conform to the law, he
13-50 shall file the articles of incorporation in his office and issue a
13-51 certificate of incorporation, to which he shall affix a copy of the
13-52 articles of incorporation, and deliver the same to the party or
13-53 parties filing the articles of conversion or merger, or their
13-54 representatives, with the certificate of conversion or merger that
13-55 is issued in connection with the conversion or merger. In the case
13-56 of a conversion or a merger, the certificate of incorporation of a
13-57 domestic corporation that is a converted entity or that is to be
13-58 created pursuant to the plan of merger, shall become effective upon
13-59 the effectiveness of the conversion or the merger, as the case may
13-60 be.
13-61 SECTION 16. Article 3.04, Texas Business Corporation Act, is
13-62 amended to read as follows:
13-63 Art. 3.04. Effect of Issuance of Certificate of
13-64 Incorporation. A. Except as provided by Section B of this
13-65 Article, upon <Upon> the issuance of the certificate of
13-66 incorporation, the corporate existence of the corporation being
13-67 incorporated shall begin.
13-68 B. In the case of a new domestic corporation being
13-69 incorporated pursuant to a plan of conversion or a plan of merger
13-70 pursuant to Part Five of this Act, the corporate existence of the
14-1 corporation shall begin upon the effectiveness of the conversion or
14-2 the merger, as the case may be.
14-3 C. Upon effectiveness, the<, and such> certificate of
14-4 incorporation shall be conclusive evidence that all conditions
14-5 precedent required to be performed for the valid incorporation of
14-6 the corporation <by the incorporators> have been complied with and
14-7 that the corporation has been duly incorporated under this Act,
14-8 except as against the State in a proceeding for involuntary
14-9 dissolution.
14-10 SECTION 17. Article 3.05, Texas Business Corporation Act, is
14-11 amended to read as follows:
14-12 Art. 3.05. Requirement Before Commencing Business. A. A
14-13 corporation shall not transact any business or incur any
14-14 indebtedness, except such as shall be incidental to its
14-15 organization or to obtaining subscriptions to or payment for its
14-16 shares, until it has received for the issuance of shares
14-17 consideration of the value of at least One Thousand Dollars
14-18 ($1,000.00)<, consisting of money, labor done, or property actually
14-19 received>.
14-20 SECTION 18. Article 3.06, Texas Business Corporation Act, is
14-21 amended to read as follows:
14-22 Art. 3.06. Organization Meeting of Directors. A. Except as
14-23 provided by Section B of this Article, after <After> the issuance
14-24 of the certificate of incorporation, an organization meeting of the
14-25 initial board of directors named in the articles of incorporation
14-26 (or of the person or persons who, in conformance with Section
14-27 A(12), Article 3.02 of this Act, are named in the articles of
14-28 incorporation as the person or persons who will perform the
14-29 functions of the initial board of directors provided for by this
14-30 Act) shall be held, either within or without this State, at the
14-31 call of a majority of the directors named in the articles of
14-32 incorporation, for the purpose of adopting bylaws, electing
14-33 officers, and transacting such other business as may come before
14-34 the meeting. The directors calling the meeting shall give at least
14-35 three (3) days notice thereof by mail to each director so named,
14-36 stating the time and place of the meeting.
14-37 B. The provisions of Section A of this Article shall not
14-38 apply to a corporation that is a converted entity or a corporation
14-39 that is created pursuant to a plan of merger if the plan of
14-40 conversion or the plan of merger, as the case may be, sets forth
14-41 the bylaws and officers of the corporation.
14-42 SECTION 19. Section A, Article 4.03, Texas Business
14-43 Corporation Act, is amended to read as follows:
14-44 A. The holders of the outstanding shares of a class shall be
14-45 entitled to vote as a class upon a proposed amendment, and the
14-46 holders of the outstanding shares of a series shall be entitled to
14-47 vote as a class upon a proposed amendment, whether or not entitled
14-48 to vote thereon by the provisions of the articles of incorporation,
14-49 if the amendment would accomplish any of the following, unless the
14-50 amendment is undertaken pursuant to authority granted to the board
14-51 of directors in the articles of incorporation in accordance with
14-52 <Section B of> Article 2.13 of this Act:
14-53 (1) Increase or decrease the aggregate number of
14-54 authorized shares of such class or series.
14-55 (2) Increase or decrease the par value of the shares
14-56 of such class, including changing shares having a par value into
14-57 shares without par value, or shares without par value into shares
14-58 with par value.
14-59 (3) Effect an exchange, reclassification, or
14-60 cancellation of all or part of the shares of such class or series.
14-61 (4) Effect an exchange, or create a right of exchange,
14-62 of all or any part of the shares of another class into the shares
14-63 of such class or series.
14-64 (5) Change the designations, preferences, limitations,
14-65 or relative rights of the shares of such class or series.
14-66 (6) Change the shares of such class or series, whether
14-67 with or without par value, into the same or a different number of
14-68 shares, either with or without par value, of the same class or
14-69 series or another class or series.
14-70 (7) Create a new class or series of shares having
15-1 rights and preferences equal, prior, or superior to the shares of
15-2 such class or series, or increase the rights and preferences of any
15-3 class or series having rights and preferences equal, prior, or
15-4 superior to the shares of such class or series, or increase the
15-5 rights and preferences of any class or series having rights or
15-6 preferences later or inferior to the shares of such class or series
15-7 in such a manner as to become equal, prior, or superior to the
15-8 shares of such class or series.
15-9 (8) Divide the shares of such class into series and
15-10 fix and determine the designation of such series and the variations
15-11 in the relative rights and preferences between the shares of such
15-12 series.
15-13 (9) Limit or deny the existing preemptive rights of
15-14 the shares of such class or series.
15-15 (10) Cancel or otherwise affect dividends on the
15-16 shares of such class or series which had accrued but had not been
15-17 declared.
15-18 (11) Include in or delete from the articles of
15-19 incorporation any provisions required or permitted to be included
15-20 in the articles of incorporation of a close corporation in
15-21 conformance with Part Twelve of this Act.
15-22 SECTION 20. Article 4.14, Texas Business Corporation Act, is
15-23 amended to read as follows:
15-24 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE; AMENDMENT
15-25 OF ARTICLES, MERGER, SHARE EXCHANGE, CONVERSION, AND DISSOLUTION
15-26 PURSUANT TO FEDERAL REORGANIZATION PROCEEDINGS. A. Authorization.
15-27 Notwithstanding any other provision of this Act to the contrary, a
15-28 trustee appointed for a corporation being reorganized under a
15-29 federal statute, the designated officers of the corporation, or any
15-30 other individual or individuals designated by the court to act on
15-31 behalf of the corporation may do any of the following without
15-32 action by or notice to its board of directors or shareholders in
15-33 order to carry out a plan of reorganization ordered or decreed by a
15-34 court of competent jurisdiction under the federal statute:
15-35 (1) amend or restate its articles of incorporation if
15-36 the articles after amendment or restatement contain only provisions
15-37 required or permitted in articles;
15-38 (2) merge or engage in a share exchange with one or
15-39 more domestic or foreign corporations or other entities pursuant to
15-40 a plan of merger or exchange having such terms and provisions as
15-41 required or permitted by Articles 5.01 and 5.02 of this Act;
15-42 (3) change the location of its registered office,
15-43 change its registered agent, and remove or appoint any agent to
15-44 receive service of process;
15-45 (4) alter, amend, or repeal its bylaws;
15-46 (5) constitute or reconstitute and classify or
15-47 reclassify its board of directors, and name, constitute, or appoint
15-48 directors and officers in place of or in addition to all or some of
15-49 the officers or directors then in place;
15-50 (6) sell, lease, exchange or otherwise dispose of all,
15-51 or substantially all, of its property and assets;
15-52 (7) authorize and fix the terms, manner, and
15-53 conditions of the issuance of bonds, debentures, or other
15-54 obligations, whether or not convertible into shares of any class or
15-55 bearing warrants or other evidences of optional rights to purchase
15-56 or subscribe for any shares of any class; <or>
15-57 (8) dissolve; or
15-58 (9) effect a conversion.
15-59 Actions taken under Subsection (4) or (5) of this section are
15-60 effective on entry of the order or decree approving the plan of
15-61 reorganization or on another effective date as may be specified,
15-62 without further action of the corporation, as and to the extent set
15-63 forth in the plan of reorganization or the order or decree
15-64 approving the plan of reorganization.
15-65 B. Authority to Sign Documents. A trustee appointed for a
15-66 corporation being reorganized under a federal statute, the
15-67 designated officers of the corporation, or any other individual or
15-68 individuals designated by the court may sign on behalf of a
15-69 corporation that is being reorganized:
15-70 (1) articles of amendment or restated articles of
16-1 incorporation setting forth:
16-2 (a) the name of the corporation;
16-3 (b) the text of each amendment or the
16-4 restatement approved by the court;
16-5 (c) the date of the court's order or decree
16-6 approving the articles of amendment or restatement;
16-7 (d) the court, file name, and case number of the
16-8 reorganization case in which the order or decree was entered; and
16-9 (e) a statement that the court had jurisdiction
16-10 of the case under federal statute; or
16-11 (2) articles of merger or exchange setting forth:
16-12 (a) the name of the corporation;
16-13 (b) the text of the part of the plan of
16-14 reorganization that contains the plan of merger or exchange
16-15 approved by the court, which shall include the information required
16-16 by Article 5.04A or 5.16B of this Act, as applicable, but need not
16-17 include the resolution of the board of directors referred to in
16-18 Article 5.16B(3) of this Act;
16-19 (c) the date of the court's order or decree
16-20 approving the plan of merger or consolidation;
16-21 (d) the court, file name, and case number of the
16-22 reorganization case in which the order or decree was entered; and
16-23 (e) a statement that the court had jurisdiction
16-24 of the case under federal statute; or
16-25 (3) articles of dissolution setting forth:
16-26 (a) the name of the corporation;
16-27 (b) the information required by Articles
16-28 6.06A(1)(2) and (3) of this Act;
16-29 (c) the date of the court's order or decree
16-30 approving the articles of dissolution;
16-31 (d) that the debts, obligations and liabilities
16-32 of the corporation have been paid or discharged as provided in the
16-33 plan of reorganization and that the remaining property and assets
16-34 of the corporation have been distributed as provided in the plan of
16-35 reorganization;
16-36 (e) the court, file name, and case number of the
16-37 reorganization case in which the order or decree was entered; and
16-38 (f) a statement that the court had jurisdiction
16-39 of the case under federal statute; <or>
16-40 (4) a statement of change of registered office or
16-41 registered agent, or both, setting forth:
16-42 (a) the name of the corporation;
16-43 (b) the information required by Article 2.10A of
16-44 this Act, as applicable, but not the information included in the
16-45 statement referred to in Article 2.10A(7) of this Act;
16-46 (c) the date of the court's order or decree
16-47 approving the statement of change of registered office or
16-48 registered agent, or both;
16-49 (d) the court, file name, and case number of the
16-50 reorganization case in which the order or decree was entered; and
16-51 (e) a statement that the court had jurisdiction
16-52 of the case under federal statute; or
16-53 (5) articles of conversion setting forth:
16-54 (a) the name of the corporation;
16-55 (b) the text of the part of the plan of
16-56 reorganization that contains the plan of conversion approved by the
16-57 court, which shall include the information required by Article 5.18
16-58 of this Act;
16-59 (c) the date of the court's order or decree
16-60 approving the plan of conversion;
16-61 (d) the court, file name, and case number of the
16-62 reorganization case in which the order or decree was entered; and
16-63 (e) a statement that the court had jurisdiction
16-64 of the case under federal statute.
16-65 C. Procedure for Merger or Share Exchange. When a domestic
16-66 or foreign corporation or other entity that is not being
16-67 reorganized merges or engages in a share exchange with a
16-68 corporation that is being reorganized pursuant to a plan of
16-69 reorganization:
16-70 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
17-1 this Act shall apply to the domestic or foreign corporation or
17-2 other entity that is not being reorganized to the same extent they
17-3 would apply if it were merging or engaging in a share exchange with
17-4 a corporation that is not being reorganized;
17-5 (2) Article 5.06 of this Act shall apply to the
17-6 domestic or foreign corporation or other entity that is not being
17-7 reorganized to the same extent it would apply if that domestic or
17-8 foreign corporation or other entity were merging or engaging in a
17-9 share exchange with a corporation that is not being reorganized,
17-10 except as otherwise provided in the plan of reorganization ordered
17-11 or decreed by a court of competent jurisdiction under the federal
17-12 statute;
17-13 (3) Article 5.16E of this Act shall apply to a
17-14 subsidiary corporation that is not being reorganized to the same
17-15 extent it would apply if that corporation were merging with a
17-16 parent corporation that is not being reorganized;
17-17 (4) Upon the receipt of all required authorization for
17-18 all action required by this Act for each corporation that is a
17-19 party to the plan of merger or exchange that is not being
17-20 reorganized and all action by each corporation, foreign
17-21 corporation, or other entity that is a party to the plan of merger
17-22 or exchange required by the laws under which it is incorporated or
17-23 organized and its constituent documents, articles of merger or
17-24 exchange shall be signed by each domestic or foreign corporation or
17-25 other entity that is a party to the merger or exchange other than
17-26 the corporation that is being reorganized as provided in Article
17-27 5.04 of this Act and on behalf of the corporation that is being
17-28 reorganized by the persons specified in Section B of this Article;
17-29 (5) The articles of merger or exchange shall set forth
17-30 the information required in Section B(2) of this Article;
17-31 (6) The articles of merger or exchange shall be filed
17-32 with the Secretary of State in the manner and with such number of
17-33 copies as is provided in Article 5.04B of this Act; and
17-34 (7) Upon the issuance of the certificate of merger or
17-35 share exchange by the Secretary of State as provided in Article
17-36 5.04 of this Act, the merger or share exchange shall become
17-37 effective with the same effect as if it had been adopted by
17-38 unanimous action of the directors and shareholders of the
17-39 corporation being reorganized. The effectiveness of the merger or
17-40 share exchange shall be determined as provided in Article 5.05 of
17-41 this Act.
17-42 D. Dissenters' Rights. Shareholders of a corporation being
17-43 reorganized under a federal statute do not have a right to dissent
17-44 under Article 5.11, <or> 5.16E, or 5.20 of this Act, except as the
17-45 plan of reorganization may provide.
17-46 E. When Applicable. This Article shall not apply after the
17-47 entry of a final decree in the reorganization case even though the
17-48 court may retain jurisdiction of the case for limited purposes
17-49 unrelated to consummation of the plan of reorganization.
17-50 F. Nonexclusivity. This Article shall not preclude other
17-51 changes in a corporation or its securities by a plan of
17-52 reorganization ordered or decreed by a court of competent
17-53 jurisdiction under federal statute.
17-54 SECTION 21. Section B, Article 5.01, Texas Business
17-55 Corporation Act, is amended to read as follows:
17-56 B. A plan of merger shall set forth:
17-57 (1) the name of each domestic or foreign corporation
17-58 or other entity that is a party to the merger and the name of each
17-59 domestic or foreign corporation or other entity, if any, that shall
17-60 survive the merger, which may be one or more of the domestic or
17-61 foreign corporations or other entities party to the merger, and the
17-62 name of each new domestic or foreign corporation or other entity,
17-63 if any, that may be created by the terms of the plan of merger;
17-64 (2) the terms and conditions of the merger including,
17-65 if more than one domestic or foreign corporation or other entity is
17-66 to survive or to be created by the terms of the plan of merger, (a)
17-67 the manner and basis of allocating and vesting the real estate and
17-68 other property of each domestic or foreign corporation and of each
17-69 other entity that is a party to the merger among one or more of the
17-70 surviving or new domestic or foreign corporations and other
18-1 entities, (b) the name of the surviving or new domestic or foreign
18-2 corporation or other entity that is to be obligated for the payment
18-3 of the fair value of any shares held by a shareholder of any
18-4 domestic corporation that is a party to the merger who has complied
18-5 with the requirements of Article 5.12 of this Act for the recovery
18-6 of the fair value of his shares, and (c) the manner and basis of
18-7 allocating all other liabilities and obligations of each domestic
18-8 or foreign corporation and other entity that is a party to the
18-9 merger (or making adequate provision for the payment and discharge
18-10 thereof) among one or more of the surviving or new domestic or
18-11 foreign corporations and other entities;
18-12 (3) the manner and basis of converting any of the
18-13 shares or other evidences of ownership of each domestic or foreign
18-14 corporation and other entity that is a party to the merger into
18-15 shares, obligations, evidences of ownership, rights to purchase
18-16 securities or other securities of one or more of the surviving or
18-17 new domestic or foreign corporations or other entities, into cash
18-18 or other property, including shares, obligations, evidences of
18-19 ownership, rights to purchase securities or other securities of any
18-20 other person or entity, or into any combination of the foregoing;
18-21 (4) as an exhibit or attachment, the articles of
18-22 incorporation of any new domestic corporation to be created by the
18-23 terms of the plan of merger; and
18-24 (5) the articles of incorporation or other
18-25 organizational documents of each other entity that is a party to
18-26 the merger and that is to survive the merger or is to be created by
18-27 the terms of the plan of merger.
18-28 SECTION 22. Section A, Article 5.02, Texas Business
18-29 Corporation Act, is amended to read as follows:
18-30 A. One or more domestic or foreign corporations or other
18-31 entities may acquire all of the outstanding shares of one or more
18-32 classes or series of one or more domestic corporations if:
18-33 (1) the board of directors of each domestic
18-34 corporation that is a party to the plan of exchange acts on a plan
18-35 of exchange in the manner prescribed by Article 5.03 of this Act
18-36 and its shareholders (if required by Article 5.03 of this Act or
18-37 the laws under which it was incorporated or organized) approve the
18-38 plan of exchange;
18-39 (2) if one or more foreign corporations or other
18-40 entities is to issue shares or other interests as part of the plan
18-41 of exchange, the issuance of such shares or interests is either
18-42 permitted by the laws under which such foreign corporation or other
18-43 entity is incorporated, organized, or not inconsistent with such
18-44 laws; and
18-45 (3) each acquiring domestic or foreign corporation or
18-46 other entity takes all action that may be required by the laws of
18-47 the state or country under which it was incorporated or organized
18-48 and by its constituent documents to effect the exchange.
18-49 SECTION 23. Section I, Article 5.03, Texas Business
18-50 Corporation Act, is amended to read as follows:
18-51 I. After a merger or share exchange is approved, and at any
18-52 time before the merger or share exchange has become effective, the
18-53 plan of merger or share exchange may be abandoned (subject to any
18-54 contractual rights) by any of the corporations that are a party to
18-55 the merger, without shareholder action, in accordance with the
18-56 procedures set forth in the plan of merger or exchange or, if no
18-57 such procedures are set forth in the plan, in the manner determined
18-58 by the board of directors. If articles of merger or exchange have
18-59 been filed with the Secretary of State but the merger or share
18-60 exchange has not yet become effective, the merger or share exchange
18-61 may be abandoned <as provided in this Section I> if a statement,
18-62 executed on behalf of each domestic corporation and foreign
18-63 corporation or other entity that is a party to the merger or share
18-64 exchange by an officer or other duly authorized representative,
18-65 stating that the plan of merger or exchange has been abandoned in
18-66 accordance with applicable law <the plan and this Section> is filed
18-67 with the Secretary of State prior to the effectiveness of the
18-68 merger or share exchange. If the Secretary of State finds that
18-69 such statement conforms to law, he shall, when all fees have been
18-70 paid as required by law:
19-1 (1) Endorse on the original and each copy the word
19-2 "Filed" and the month, day, and year of the filing thereof.
19-3 (2) File the original in his office.
19-4 (3) Issue a certificate of abandonment to each
19-5 domestic or foreign corporation or other entity that is a party to
19-6 the plan of merger or exchange.
19-7 Upon the filing of such statement by the Secretary of State, the
19-8 merger or share exchange shall be deemed abandoned and shall not
19-9 become effective.
19-10 SECTION 24. Article 5.04, Texas Business Corporation Act, is
19-11 amended to read as follows:
19-12 Art. 5.04. Articles of Merger or Exchange. A. If a plan of
19-13 merger or exchange has been approved in accordance with Article
19-14 5.03 of this Act and has not been abandoned, or approved by the
19-15 board of directors if shareholder approval is not required under
19-16 that Article, articles of merger or exchange shall be executed on
19-17 behalf of each domestic or foreign corporation or other entity that
19-18 is a party to the plan of merger or exchange by an officer or other
19-19 duly authorized representative thereof and shall set forth:
19-20 (1) The plan of merger or exchange or statement
19-21 certifying the following:
19-22 (a) the name and state of incorporation or
19-23 organization of each domestic or foreign corporation or other
19-24 entity that is a party to the plan of merger or exchange or that is
19-25 to be created thereby;
19-26 (b) that a plan of merger or exchange has been
19-27 approved;
19-28 (c) in the case of a merger, such amendments or
19-29 changes in the articles of incorporation of each domestic surviving
19-30 corporation, or if no such amendments are desired to be effected by
19-31 the merger, a statement to that effect;
19-32 (d) that the articles of incorporation of each
19-33 new domestic corporation to be created pursuant to the terms of the
19-34 plan of merger are being filed with the Secretary of State with the
19-35 articles of merger or exchange;
19-36 (e) that an executed plan of merger or exchange
19-37 is on file at the principal place of business of each surviving,
19-38 acquiring, or new domestic or foreign corporation or other entity,
19-39 stating the address thereof; and
19-40 (f) that a copy of the plan of merger or
19-41 exchange will be furnished by each surviving, acquiring, or new
19-42 domestic or foreign corporation or other entity, on written request
19-43 and without cost, to any shareholder of each domestic corporation
19-44 that is a party to or created by the plan of merger or exchange
19-45 and, in the case of a merger with multiple surviving domestic or
19-46 foreign corporations or other entities, to any creditor or obligee
19-47 of the parties to the merger at the time of the merger if such
19-48 obligation is then outstanding.
19-49 (2) If shareholder approval is not required by Article
19-50 5.03 of this Act, a statement to that effect.
19-51 (3) As to each corporation the approval of whose
19-52 shareholders is required, the number of shares outstanding, and, if
19-53 the shares of any class or series are entitled to vote as a class,
19-54 the designation and number of outstanding shares of each such class
19-55 or series.
19-56 (4) As to each corporation the approval of whose
19-57 shareholders is required, the number of shares, not entitled to
19-58 vote only as a class, voted for and against the plan, respectively,
19-59 and, if the shares of any class or series are entitled to vote as a
19-60 class, the number of shares of each such class or series voted for
19-61 and against the plan, respectively.
19-62 (5) As to each acquiring domestic or foreign
19-63 corporation or other entity in a plan of exchange, a statement that
19-64 the plan and performance of its terms were duly authorized by all
19-65 action required by the laws under which it was incorporated or
19-66 organized and by its constituent documents.
19-67 (6) As to each foreign corporation or other entity
19-68 that is a party to the plan of merger, a statement that the
19-69 approval of the plan of merger was duly authorized by all action
19-70 required by the laws under which it was incorporated or organized
20-1 and by its constituent documents.
20-2 B. The original of the articles of merger or exchange, and
20-3 such number of copies of the articles equal to the number of
20-4 surviving, new, and acquiring domestic or foreign corporations and
20-5 other entities that are a party to the plan of merger or exchange
20-6 or that will be created by the terms thereof, shall be delivered to
20-7 the Secretary of State. An equal number of copies of the articles
20-8 of incorporation of each domestic corporation that is to be
20-9 incorporated pursuant to the plan of merger shall also be delivered
20-10 to the Secretary of State with the articles of merger.
20-11 C. If the Secretary of State finds that the articles of
20-12 merger or exchange conform to law, he shall, when all fees and
20-13 franchise taxes have been paid as required by law, or if the plan
20-14 of merger or exchange (or statement provided in lieu thereof)
20-15 provides that one or more of the surviving, new, or acquiring
20-16 domestic or foreign corporations or other entities will be
20-17 responsible for the payment of all such fees and franchise taxes
20-18 and that all of such surviving, new, or acquiring domestic or
20-19 foreign corporations and other entities will be obligated to pay
20-20 such fees and franchise taxes if the same are not timely paid:
20-21 (1) Endorse on the original and each copy the word
20-22 "Filed," and the month, day, and year of the filing thereof.
20-23 (2) File the original in his office.
20-24 (3) Issue a certificate of merger or exchange,
20-25 together with a copy of the articles affixed thereto, to each
20-26 surviving, new, and acquiring domestic or foreign corporation or
20-27 other entity that is a party to the plan of merger or exchange or
20-28 that is created thereby, or its or their respective
20-29 representatives.
20-30 SECTION 25. Section B, Article 5.10, Texas Business
20-31 Corporation Act, is amended to read as follows:
20-32 B. A disposition of any, all, or substantially all, of the
20-33 property and assets of a corporation, whether or not it requires
20-34 the special authorization of the shareholders of the corporation,
20-35 effected under Section A of this article or under Article 5.09 of
20-36 this Act or otherwise:
20-37 (1) is not considered to be a merger or conversion
20-38 pursuant to this Act or otherwise; and
20-39 (2) except as otherwise expressly provided by another
20-40 statute, does not make the acquiring corporation, foreign
20-41 corporation, or other entity responsible or liable for any
20-42 liability or obligation of the selling corporation that the
20-43 acquiring corporation, foreign corporation, or other entity did not
20-44 expressly assume.
20-45 SECTION 26. Article 5.11, Texas Business Corporation Act, is
20-46 amended to read as follows:
20-47 Art. 5.11. Rights of Dissenting Shareholders in the Event of
20-48 Certain Corporate Actions. A. Any shareholder of a domestic
20-49 corporation shall have the right to dissent from any of the
20-50 following corporate actions:
20-51 (1) Any plan of merger to which the corporation is a
20-52 party if shareholder approval is required by Article 5.03 or 5.16
20-53 of this Act and the shareholder holds shares of a class or series
20-54 that was entitled to vote thereon as a class or otherwise;
20-55 (2) Any sale, lease, exchange or other disposition
20-56 (not including any pledge, mortgage, deed of trust or trust
20-57 indenture unless otherwise provided in the articles of
20-58 incorporation) of all, or substantially all, the property and
20-59 assets, with or without good will, of a corporation if <requiring
20-60 the> special authorization of the shareholders is required by this
20-61 Act and the shareholders hold shares of a class or series that was
20-62 entitled to vote thereon as a class or otherwise <as provided by
20-63 this Act>;
20-64 (3) Any plan of exchange pursuant to Article 5.02 of
20-65 this Act in which the shares of the corporation of the class or
20-66 series held by the shareholder are to be acquired.
20-67 B. Notwithstanding the provisions of Section A of this
20-68 Article, a shareholder shall not have the right to dissent from any
20-69 plan of merger in which there is a single surviving or new domestic
20-70 or foreign corporation, or from any plan of exchange, if:
21-1 (1) the shares held by the shareholder are part of a
21-2 class or series, shares of which are <listed on a national
21-3 securities exchange, or are held of record by not less than 2,000
21-4 holders,> on the record date fixed to determine the shareholders
21-5 entitled to vote on the plan of merger or <the> plan of
21-6 exchange: <,>
21-7 (a) listed on a national securities exchange;
21-8 (b) designated as a national market security on
21-9 an interdealer quotation system by the National Association of
21-10 Securities Dealers, Inc., or successor entity; or
21-11 (c) held of record by not less than 2,000
21-12 holders; and
21-13 (2) the shareholder is not required by the terms of
21-14 the plan of merger or the plan of exchange to accept for his shares
21-15 any consideration other than:
21-16 (a) shares of a domestic or foreign corporation
21-17 that, immediately after the effective time of the merger or
21-18 exchange, will be part of a class or series, <of> shares of which
21-19 are:
21-20 (i) listed, or authorized for listing upon
21-21 official notice of issuance, on a national securities exchange;<,
21-22 or>
21-23 (ii) approved for quotation as a national
21-24 market security on an interdealer quotation system by the National
21-25 Association of Securities Dealers, Inc., or successor entity; or
21-26 (iii) held of record by not less than
21-27 2,000 holders;<, and>
21-28 (b) cash in lieu of fractional shares otherwise
21-29 entitled to be received; or
21-30 (c) any combination of the securities and cash
21-31 described in Subdivisions (a) and (b) of this subsection.
21-32 SECTION 27. Article 5.14, Texas Business Corporation Act, is
21-33 amended to read as follows:
21-34 Art. 5.14. DERIVATIVE PROCEEDINGS <SUITS>. A. Certain
21-35 Definitions. For purposes of this Article, (1) a "derivative
21-36 proceeding" means a civil suit in the right of a domestic
21-37 corporation or, to the extent provided in Section K of this
21-38 Article, in the right of a foreign corporation, and (2) a
21-39 "shareholder" includes a beneficial owner whose shares are held in
21-40 a voting trust or by a nominee on the beneficial owner's behalf.
21-41 B. Standing. A shareholder may not commence or maintain a
21-42 derivative proceeding unless the shareholder:
21-43 (1) was a shareholder of the corporation at the time
21-44 of the act or omission complained of or became a shareholder by
21-45 operation of law from a person that was a shareholder at that time;
21-46 and
21-47 (2) fairly and adequately represents the interests of
21-48 the corporation in enforcing the right of the corporation.
21-49 C. Demand. No shareholder may commence a derivative
21-50 proceeding until:
21-51 (1) a written demand is filed with the corporation
21-52 setting forth with particularity the act, omission, or other matter
21-53 that is the subject of the claim or challenge and requesting that
21-54 the corporation take suitable action; and
21-55 (2) 120 days have expired from the date the demand was
21-56 made, unless the shareholder has earlier been notified that the
21-57 demand has been rejected by the corporation or unless irreparable
21-58 injury to the corporation is being suffered or would result by
21-59 waiting for the expiration of the 120-day period.
21-60 D. Stay; Discovery. (1) If the domestic or foreign
21-61 corporation commences an inquiry into the allegations made in a
21-62 demand or petition and the person or group described in Section H
21-63 of this Article is conducting an active review of the allegations
21-64 in good faith, the court shall stay a derivative proceeding until
21-65 the review is completed and a determination is made by the person
21-66 or group as to what further action, if any, should be taken. To
21-67 obtain a stay, the domestic or foreign corporation must provide the
21-68 court with a written statement containing an undertaking to advise
21-69 the court and the shareholder making the demand of the
21-70 determination promptly upon the completion of the review of the
22-1 matter. A stay shall, upon motion, be reviewed as to its continued
22-2 necessity every 90 days thereafter. If the review and
22-3 determination by the person or group described in Section H of this
22-4 Article is not completed within 90 days, the stay may be renewed
22-5 for one or more additional 90-day periods upon the domestic or
22-6 foreign corporation providing the court and the shareholder making
22-7 the demand with a written statement of the status of the review and
22-8 the reasons a continued extension of the stay is necessary.
22-9 (2) If a domestic or foreign corporation proposes to
22-10 dismiss a derivative proceeding pursuant to Section F of this
22-11 Article, discovery by a shareholder following the filing of the
22-12 derivative proceeding in accordance with the provisions of this
22-13 Article shall be limited to facts relating to whether the person or
22-14 group described in Section H of this Article is independent and
22-15 disinterested, the good faith of the inquiry and review by such
22-16 person or group, and the reasonableness of the procedures followed
22-17 by such person or group in conducting its review and will not
22-18 extend to any facts or substantive matters with respect to the act,
22-19 omission, or other matter that is the subject matter of the action
22-20 in the derivative proceeding. The scope of discovery may be
22-21 expanded if the court determines after notice and hearing that a
22-22 good faith review of the allegations for purposes of Section F of
22-23 this Article has not been made by an independent and disinterested
22-24 person or group in accordance with Section F of this Article.
22-25 E. Tolling of the Statute of Limitations. A written demand
22-26 filed with the corporation under Section C of this Article tolls
22-27 the statute of limitations on the claim upon which demand is made
22-28 until the earlier of (1) 120 days or (2) 30 days after the
22-29 corporation advises the shareholder that the demand has been
22-30 rejected or the review has been completed.
22-31 F. Dismissal of Derivative Proceeding. A court shall
22-32 dismiss a derivative proceeding on a motion by the corporation if
22-33 the person or group described in Section H of this Article
22-34 determines in good faith, after conducting a reasonable inquiry and
22-35 based on the factors as the person or group deems appropriate under
22-36 the circumstances, that the continuation of the derivative
22-37 proceeding is not in the best interests of the corporation. In
22-38 determining whether the requirements of the previous sentence have
22-39 been met, the burden of proof shall be on:
22-40 (1) the plaintiff shareholder, if a majority of the
22-41 board of directors consists of independent and disinterested
22-42 directors at the time the determination is made, or if the
22-43 determination is made by a panel of one or more independent and
22-44 disinterested persons appointed under Section H(3) of this Article;
22-45 or
22-46 (2) the corporation, in all other circumstances;
22-47 provided that if the corporation presents prima facie evidence that
22-48 demonstrates that the directors appointed pursuant to Section H(2)
22-49 of this Article are independent and disinterested, the burden of
22-50 proof is on the plaintiff shareholder.
22-51 G. Commencement of Proceeding After Rejection of Demand. If
22-52 a derivative proceeding is commenced after a demand is rejected,
22-53 the petition must allege with particularity facts that establish
22-54 that the rejection was not made in accordance with the requirements
22-55 of Sections F and H of this Article.
22-56 H. Determination by Directors or Independent Persons. The
22-57 determination described in Section F of this Article must be made
22-58 by:
22-59 (1) a majority vote of independent and disinterested
22-60 directors present at a meeting of the board of directors at which
22-61 interested directors are not present (at the time of the vote) if
22-62 the independent and disinterested directors constitute a quorum of
22-63 the board of directors;
22-64 (2) a majority vote of a committee consisting of two
22-65 or more independent and disinterested directors appointed by a
22-66 majority vote of one or more independent and disinterested
22-67 directors present at a meeting of the board of directors, whether
22-68 or not the independent and disinterested directors so acting
22-69 constitute a quorum of the board of directors; or
22-70 (3) a panel of one or more independent and
23-1 disinterested persons appointed by the court upon a motion by the
23-2 corporation setting forth the names of the persons to be so
23-3 appointed together with a statement that to the best of its
23-4 knowledge the persons so proposed are disinterested persons and
23-5 qualified to make the determinations contemplated by Section F of
23-6 this Article. Such panel shall be appointed if the court finds
23-7 that such persons are independent and disinterested persons and are
23-8 otherwise qualified in regard to expertise, experience, independent
23-9 judgment, and other factors deemed appropriate by the court under
23-10 the circumstances to make such determinations. Persons appointed
23-11 by the court shall have no liability to the corporation or its
23-12 shareholders for any action or omission taken by them in that
23-13 capacity, absent fraud or willful misconduct.
23-14 I. Discontinuance or Settlement. A derivative proceeding
23-15 may not be discontinued or settled without the approval of the
23-16 court. If the court determines that a proposed discontinuance or
23-17 settlement may substantially affect the interest of other
23-18 shareholders, it shall direct that notice be given to the affected
23-19 shareholders.
23-20 J. Payment of Expenses. (1) On termination of a derivative
23-21 proceeding, the court may order:
23-22 (a) the domestic or foreign corporation to pay
23-23 the expenses of the plaintiff incurred in the proceeding if it
23-24 finds that the proceeding has resulted in a substantial benefit to
23-25 the domestic or foreign corporation;
23-26 (b) the plaintiff to pay the expenses of the
23-27 domestic or foreign corporation or any defendant incurred in
23-28 investigating and defending the proceeding if it finds that the
23-29 proceeding was commenced or maintained without reasonable cause or
23-30 for an improper purpose; or
23-31 (c) a party to pay the expenses incurred by
23-32 another party (including the domestic or foreign corporation)
23-33 because of the filing of a pleading, motion, or other paper, if it
23-34 finds that the pleading, motion, or other paper (i) was not
23-35 well-grounded in fact after reasonable inquiry, (ii) was not
23-36 warranted by existing law or a good faith argument for the
23-37 extension, modification, or reversal of existing law or (iii) was
23-38 interposed for an improper purpose, such as to harass or to cause
23-39 unnecessary delay or needless increase in the cost of litigation.
23-40 (2) For purposes of this Section, "expenses" mean
23-41 reasonable expenses incurred in the defense of a derivative
23-42 proceeding, including without limitation:
23-43 (a) attorney's fees;
23-44 (b) costs in pursuing an investigation of the
23-45 matter that was the subject of the derivative proceeding; and
23-46 (c) expenses for which the domestic or foreign
23-47 corporation or a corporate defendant may be required to indemnify
23-48 another person.
23-49 K. Application to Foreign Corporations. In any derivative
23-50 proceeding brought in the right of a foreign corporation, the
23-51 matters covered by this Article are governed by the laws of the
23-52 jurisdiction of incorporation of the foreign corporation, except
23-53 for Sections D, I, and J of this Article, which are procedural and
23-54 not matters relating to the internal affairs of the foreign
23-55 corporation. In the case of matters relating to a foreign
23-56 corporation under Section D of this Article, references to a person
23-57 or group described in Section H of this Article are to be deemed to
23-58 refer to a person or group entitled under the laws of the
23-59 jurisdiction of incorporation of the foreign corporation to review
23-60 and dispose of a derivative proceeding, and the standard of review
23-61 of a decision by the person or group to dismiss the derivative
23-62 proceeding is to be governed by the laws of the jurisdiction of
23-63 incorporation of the foreign corporation.
23-64 L. Closely Held Corporations. (1) The provisions of
23-65 Sections B through H of this Article are not applicable to a
23-66 closely held corporation. If justice requires:
23-67 (a) a derivative proceeding brought by a
23-68 shareholder of a closely held corporation may be treated by a court
23-69 as a direct action brought by the shareholder for his own benefit;
23-70 and
24-1 (b) a recovery in a direct or derivative
24-2 proceeding by a shareholder may be paid either directly to the
24-3 plaintiff or to the corporation if necessary to protect the
24-4 interests of creditors or other shareholders of the corporation.
24-5 (2) For purposes of this Section, a "closely held
24-6 corporation" means a corporation:
24-7 (a) with less than 35 shareholders; and
24-8 (b) that has no shares listed on a national
24-9 securities exchange or regularly quoted in an over-the-counter
24-10 market by one or more members of a national securities association
24-11 <A. Definitions. In this Article:>
24-12 <(1) A "derivative suit" is a suit brought in the
24-13 right of a domestic or foreign corporation.>
24-14 <(2) "Expenses" are reasonable expenses, incurred in
24-15 the defense of a derivative suit, including:>
24-16 <(a) Fees of attorneys, and>
24-17 <(b) Expenses for which a corporate defendant may be
24-18 required to indemnify another defendant.>
24-19 <B. Prerequisites. A derivative suit may be brought in this
24-20 State only if:>
24-21 <(1) The plaintiff was a record or beneficial owner of
24-22 shares, or of an interest in a voting trust for shares, at the time
24-23 of the transaction of which he complains, or his shares or interest
24-24 thereafter devolved upon him by operation of law from a person who
24-25 was such an owner at that time, and>
24-26 <(2) The initial pleading in the suit states:>
24-27 <(a) The ownership required by Subsection (1), and>
24-28 <(b) With particularity, the efforts of the plaintiff to
24-29 have suit brought for the corporation by the board of directors, or
24-30 the reasons for not making any such efforts.>
24-31 <C. Security for Expenses. The court having jurisdiction in
24-32 a derivative suit may, in its discretion, require the plaintiff or
24-33 plaintiffs to give security for the expenses incurred or expected
24-34 to be incurred by one or more of the defendants. The court may, in
24-35 its discretion, at any time increase or decrease the amount of the
24-36 security on a showing that the security provided is then inadequate
24-37 or excessive.>
24-38 <D. Inability to Give Security. If plaintiff is unable to
24-39 give security, he may file an affidavit in accordance with the
24-40 Texas Rules of Civil Procedure, and those rules shall control.>
24-41 <E. Failure to Give Security. If plaintiff fails to give
24-42 the security within a reasonable time set by the court, the court
24-43 shall (except as provided in Section D of this Article) dismiss the
24-44 suit without prejudice.>
24-45 <F. Judgment for Expenses. The court having jurisdiction in
24-46 a derivative suit may, upon final judgment for one or more
24-47 defendants and a finding that the suit was brought without
24-48 reasonable cause against such defendants, require the plaintiff to
24-49 pay expenses to such defendants, whether or not security has been
24-50 required>.
24-51 SECTION 28. Part Five, Texas Business Corporation Act, is
24-52 amended by adding Articles 5.17-5.20 to read as follows:
24-53 Art. 5.17. CONVERSION. A. A domestic corporation may adopt
24-54 a plan of conversion and convert to a foreign corporation or any
24-55 other entity if:
24-56 (1) the converting entity acts upon and its
24-57 shareholders approve a plan of conversion in the manner prescribed
24-58 by Article 5.03 of this Act as if the conversion were a merger to
24-59 which the converting entity were a party and not the survivor;
24-60 (2) the conversion (a) is permitted by, or not
24-61 inconsistent with, the laws of the state or country in which the
24-62 converted entity is to be incorporated, formed, or organized, and
24-63 (b) the incorporation, formation, or organization of the converted
24-64 entity is effected in compliance with such laws;
24-65 (3) at the time the conversion becomes effective, each
24-66 shareholder of the converting entity (other than those who receive
24-67 payment of their shares under Article 5.12 of this Act) will,
24-68 unless otherwise agreed to by that shareholder, own an equity
24-69 interest or other ownership or security interest in, and be a
24-70 shareholder, partner, member, owner, or other security holder of,
25-1 the converted entity;
25-2 (4) no shareholder of the domestic corporation will,
25-3 as a result of the conversion, become personally liable, without
25-4 the shareholder's consent, for the liabilities or obligations of
25-5 the converted entity; and
25-6 (5) the converted entity shall be incorporated,
25-7 formed, or organized as part of or pursuant to the plan of
25-8 conversion.
25-9 B. Any foreign corporation or other entity may adopt a plan
25-10 of conversion and convert to a domestic corporation if:
25-11 (1) the conversion is permitted by the laws of the
25-12 state or country in which the foreign corporation is incorporated,
25-13 if a foreign corporation is converting;
25-14 (2) the conversion is either permitted by the laws
25-15 under which the other entity is formed or organized or by the
25-16 constituent documents of the other entity that are not inconsistent
25-17 with the laws of the state or country in which the other entity is
25-18 formed or organized, if another entity is converting; and
25-19 (3) the converting entity takes all action that may be
25-20 required by the laws of the state or country under which it is
25-21 incorporated, formed, or organized and by its constituent documents
25-22 to effect the conversion.
25-23 C. A plan of conversion shall set forth:
25-24 (1) the name of the converting entity and the
25-25 converted entity;
25-26 (2) a statement that the converting entity is
25-27 continuing its existence in the organizational form of the
25-28 converted entity;
25-29 (3) a statement as to the type of entity that the
25-30 converted entity is to be and the state or country under the laws
25-31 of which the converted entity is to be incorporated, formed, or
25-32 organized;
25-33 (4) the manner and basis of converting the shares or
25-34 other evidences of ownership of the converting entity into shares
25-35 or other evidences of ownership or securities of the converted
25-36 entity, or any combination thereof;
25-37 (5) in an attachment or exhibit, the articles of
25-38 incorporation of the domestic corporation if the converted entity
25-39 is a domestic corporation; and
25-40 (6) in an attachment or exhibit, the articles of
25-41 incorporation or other organizational documents of the converted
25-42 entity if the converted entity is not a domestic corporation.
25-43 D. A plan of conversion may set forth such other provisions
25-44 relating to the conversion not inconsistent with law, including the
25-45 initial bylaws and officers of the converted entity.
25-46 E. After a conversion of a corporation is approved, and at
25-47 any time before the conversion has become effective, the plan of
25-48 conversion may be abandoned (subject to any contractual rights) by
25-49 the converting entity, without shareholder action, in accordance
25-50 with the procedures set forth in the plan of conversion or, if any
25-51 such procedures are not set forth in the plan, in the manner
25-52 determined by the board of directors. If articles of conversion
25-53 have been filed with the Secretary of State but the conversion has
25-54 not become effective, the conversion may be abandoned if a
25-55 statement, executed on behalf of the converting entity by an
25-56 officer or other duly authorized representative, stating that the
25-57 plan of conversion has been abandoned in accordance with applicable
25-58 law, is filed with the Secretary of State prior to the
25-59 effectiveness of the conversion. If the Secretary of State finds
25-60 that such statement conforms to law, he shall, when all fees have
25-61 been paid as required by law:
25-62 (1) endorse on the original and each copy the word
25-63 "Filed" and the month, day, and year of the filing thereof;
25-64 (2) file the original in his office; and
25-65 (3) issue a certificate of abandonment to the
25-66 converting entity or its representatives.
25-67 F. Upon the filing of the statement described by Section E
25-68 of this Article by the Secretary of State, the conversion shall be
25-69 deemed abandoned and shall not become effective.
25-70 Art. 5.18. ARTICLES OF CONVERSION. A. If a plan of
26-1 conversion has been approved in accordance with Article 5.17 of
26-2 this Act and has not been abandoned, articles of conversion shall
26-3 be executed by the converting entity by an officer or other duly
26-4 authorized representative thereof and shall set forth:
26-5 (1) the plan of conversion or a statement certifying
26-6 the following:
26-7 (a) the name, state of incorporation, formation,
26-8 or organization of the converting entity, and organizational form
26-9 of the converting entity;
26-10 (b) that a plan of conversion has been approved;
26-11 (c) that an executed plan of conversion is on
26-12 file at the principal place of business of the converting entity,
26-13 stating the address thereof, and that an executed plan of
26-14 conversion will be on file, from and after the conversion, at the
26-15 principal place of the converting entity, stating the address
26-16 thereof; and
26-17 (d) that a copy of the plan of conversion will
26-18 be furnished by the converting entity (prior to the conversion) or
26-19 the converted entity (after the conversion), on written request and
26-20 without cost, to any shareholder of the converting entity or the
26-21 converted entity;
26-22 (2) if the converting entity is a domestic
26-23 corporation, the number of shares outstanding and, if the shares of
26-24 any class or series are entitled to vote as a class, the
26-25 designation and number of outstanding shares of each such class or
26-26 series;
26-27 (3) if the converting entity is a domestic
26-28 corporation, the number of outstanding shares, not entitled to vote
26-29 only as a class, voted for and against the plan, respectively, and,
26-30 if the shares of any class or series are entitled to vote as a
26-31 class, the number of shares of each such class or series voted for
26-32 and against the plan, respectively; and
26-33 (4) if the converting entity is a foreign corporation
26-34 or other entity, a statement that the approval of the plan of
26-35 conversion was duly authorized by all action required by the laws
26-36 under which it was incorporated, formed, or organized and by its
26-37 constituent documents.
26-38 B. The original and one copy of the articles of conversion
26-39 shall be delivered to the Secretary of State. Two copies of the
26-40 articles of incorporation of the domestic corporation if the
26-41 converted entity is a domestic corporation shall also be delivered
26-42 to the Secretary of State with the articles of conversion.
26-43 C. If the Secretary of State finds that the articles of
26-44 conversion conform to law and has received all filings required to
26-45 be received and issued all certificates required to be issued in
26-46 connection with the incorporation, formation, or organization of
26-47 the converted entity, if any, he shall, when all fees and franchise
26-48 taxes have been paid as required by law or if the articles of
26-49 conversion provide that the converted entity will be liable for the
26-50 payment of all such fees and franchise taxes:
26-51 (1) endorse on the original and each copy the word
26-52 "Filed" and the month, day, and year of the filing thereof;
26-53 (2) file the original in his office; and
26-54 (3) issue a certificate of conversion, together with a
26-55 copy of the articles affixed thereto, to the converted entity or
26-56 its representatives.
26-57 Art. 5.19. EFFECTIVE DATE OF CONVERSION. Except as
26-58 otherwise provided by Article 10.03 of this Act, upon the issuance
26-59 of the certificate of conversion by the Secretary of State, the
26-60 conversion of a converting entity shall be effective.
26-61 Art. 5.20. EFFECT OF CONVERSION. A. When a conversion of a
26-62 converting entity takes effect:
26-63 (1) the converting entity shall continue to exist,
26-64 without interruption, but in the organizational form of the
26-65 converted entity rather than in its prior organizational form;
26-66 (2) all rights, title, and interests to all real
26-67 estate and other property owned by the converting entity shall
26-68 continue to be owned by the converted entity in its new
26-69 organizational form without reversion or impairment, without
26-70 further act or deed, and without any transfer or assignment having
27-1 occurred, but subject to any existing liens or other encumbrances
27-2 thereon;
27-3 (3) all liabilities and obligations of the converting
27-4 entity shall continue to be liabilities and obligations of the
27-5 converted entity in its new organizational form without impairment
27-6 or diminution by reason of the conversion;
27-7 (4) all rights of creditors or other parties with
27-8 respect to or against the prior interest holders or other owners of
27-9 the converting entity in their capacities as such in existence as
27-10 of the effective time of the conversion will continue in existence
27-11 as to those liabilities and obligations and may be pursued by such
27-12 creditors and obligees as if such conversion shall not have
27-13 occurred;
27-14 (5) a proceeding pending by or against the converting
27-15 entity or by or against any of the converting entity's interest
27-16 holders or owners in their capacities as such may be continued by
27-17 or against the converted entity in its new organizational form and
27-18 by or against the prior interest holders or owners, as the case may
27-19 be, without any need for substitution of parties;
27-20 (6) the shares and other evidences of ownership in the
27-21 converting entity that are to be converted into shares, evidences
27-22 of ownership or other securities in the converted entity as
27-23 provided in the plan of conversion shall be so converted, and if
27-24 the converting entity is a domestic corporation, the former holders
27-25 of shares in the domestic corporation shall be entitled only to the
27-26 rights provided in the plan of conversion or to their rights under
27-27 Article 5.11 of this Act;
27-28 (7) if, after the effectiveness of the conversion, a
27-29 shareholder, partner, member, or other owner of the converted
27-30 entity would be liable under applicable law, in such capacity, for
27-31 the debts or obligations of the converted entity, such shareholder,
27-32 partner, member, or other owner of the converted entity shall be
27-33 liable for the debts and obligations of the converting entity that
27-34 existed before the conversion takes effect only to the extent that
27-35 such shareholder, partner, member, or other owner: (a) agreed in
27-36 writing to be liable for such debts or obligations, (b) was liable
27-37 under applicable law, prior to the effectiveness of the conversion,
27-38 for such debts or obligations, or (c) by becoming a shareholder,
27-39 partner, member, or other owner of the converted entity, becomes
27-40 liable under applicable law for existing debts and obligations of
27-41 the converted entity;
27-42 (8) if the converted entity is a foreign corporation
27-43 or other entity, such converted entity shall be deemed to: (a)
27-44 appoint the Secretary of State in this State as its agent for
27-45 service of process in a proceeding to enforce any obligation or the
27-46 rights of dissenting shareholders of the converting domestic
27-47 corporation and (b) agree that it will promptly pay the dissenting
27-48 shareholders of the converting domestic corporation the amount, if
27-49 any, to which they are entitled under Article 5.11 of this Act; and
27-50 (9) if the converting corporation is a domestic
27-51 corporation, the provisions of Articles 5.11, 5.12, and 5.13 of
27-52 this Act shall apply as if the converted entity were the survivor
27-53 of a merger with the converting entity.
27-54 SECTION 29. Section A, Article 6.03, Texas Business
27-55 Corporation Act, is amended to read as follows:
27-56 A. A corporation may be dissolved by the act of the
27-57 corporation when authorized in the following manner:
27-58 (1) The board of directors shall adopt a resolution
27-59 recommending that the corporation be dissolved, and directing that
27-60 the question of such dissolution be submitted to a vote at a
27-61 meeting of shareholders, which may be either an annual or a special
27-62 meeting.
27-63 (2) Written or printed notice shall be given to each
27-64 shareholder of record entitled to vote at such meeting within the
27-65 time and in the manner provided in this Act for the giving of
27-66 notice of meetings of shareholders, and, whether the meeting be an
27-67 annual or special meeting, shall state that the purpose, or one of
27-68 the purposes, of such meeting is to consider the advisability of
27-69 dissolving the corporation.
27-70 (3) At such meeting a vote of shareholders entitled to
28-1 vote thereat shall be taken on a resolution to dissolve the
28-2 corporation. Such resolution shall be adopted upon receiving the
28-3 affirmative vote of the holders of at least two-thirds of the
28-4 outstanding shares <Each outstanding share> of the corporation
28-5 <shall be> entitled to vote thereon, <whether or not entitled to
28-6 vote thereon by the provisions of the articles of incorporation.
28-7 Such resolution shall be adopted upon receiving the affirmative
28-8 vote of the holders of at least two-thirds of the outstanding
28-9 shares of the corporation,> unless any class or series of shares is
28-10 entitled to vote as a class thereon, in which event the resolution
28-11 shall require for its adoption the affirmative vote of the holders
28-12 of at least two-thirds of the outstanding shares within <of> each
28-13 class or series of shares entitled to vote as a class thereon and
28-14 at least<, as well as the affirmative vote of> two-thirds of the
28-15 <total> outstanding shares otherwise entitled to vote thereon.
28-16 Shares entitled to vote as a class shall be entitled to vote only
28-17 as a class unless otherwise entitled to vote on each matter
28-18 generally or otherwise provided in the articles of incorporation.
28-19 SECTION 30. Sections A and B, Article 6.05, Texas Business
28-20 Corporation Act, are amended to read as follows:
28-21 A. At any time prior to the issuance of a certificate of
28-22 dissolution by the Secretary of State, or within 120 days
28-23 thereafter, a corporation may revoke voluntary dissolution
28-24 proceedings:
28-25 (1) By the written consent of all of its shareholders.
28-26 (2) By the act of the corporation in the following
28-27 manner:
28-28 (a) The board of directors shall adopt a
28-29 resolution recommending that the question of such revocation be
28-30 submitted to a vote at a special meeting of shareholders.
28-31 (b) Written or printed notice, stating that the
28-32 purpose or one of the purposes of such meeting is to consider the
28-33 advisability of revoking the voluntary dissolution proceedings,
28-34 shall be given to each shareholder of record entitled to vote at
28-35 such meeting within the time and in the manner provided in this Act
28-36 for the giving of notice of special meetings of shareholders.
28-37 (c) At such meeting a vote of the shareholders
28-38 entitled to vote thereat shall be taken on a resolution to revoke
28-39 the voluntary dissolution proceedings. <Each outstanding share of
28-40 the corporation shall be entitled to vote thereon, whether or not
28-41 entitled to vote thereon by the provisions of the articles of
28-42 incorporation.> Such resolution shall be adopted upon receiving
28-43 the affirmative vote of the holders of at least two-thirds of the
28-44 outstanding shares of the corporation entitled to vote thereon,
28-45 unless any class or series of shares is entitled to vote <thereon>
28-46 as a class thereon, in which event the resolution shall require for
28-47 its adoption the affirmative vote of the holders of at least
28-48 two-thirds of the outstanding shares within <of> each class or
28-49 series of shares entitled to vote as a class thereon and at least<,
28-50 as well as> two-thirds of the <total> outstanding shares otherwise
28-51 entitled to vote thereon. Shares entitled to vote as a class shall
28-52 be entitled to vote only as a class unless otherwise entitled to
28-53 vote on each matter generally as provided in the articles of
28-54 incorporation.
28-55 B. After revocation of voluntary dissolution is authorized
28-56 as provided in Section A of this Article, the corporation shall, if
28-57 a certificate of dissolution of the corporation has been issued by
28-58 the Secretary of State, deliver to the Secretary of State for
28-59 filing within 120 days after such issuance the original and a copy
28-60 of articles of revocation of dissolution executed on behalf of the
28-61 corporation by an officer, that set forth:
28-62 (1) the name of the corporation;
28-63 (2) the date that the revocation of dissolution was
28-64 authorized and, if the dissolution has become effective, the
28-65 effective date of the dissolution that was revoked; and
28-66 (3) if the corporation elected to revoke voluntary
28-67 dissolution proceedings by the written consent of all of its
28-68 shareholders, a copy of the consent, together with a statement that
28-69 the consent was signed by all shareholders of the corporation or
28-70 was signed in their names by their attorneys thereunto duly
29-1 authorized; or
29-2 (4) if the corporation elected to revoke voluntary
29-3 dissolution proceedings by act of the corporation:
29-4 (a) a copy of the resolution to revoke, together
29-5 with a statement that such resolution was adopted by the
29-6 shareholders of the corporation and of the date of the adoption
29-7 thereof;
29-8 (b) the number of shares outstanding and
29-9 entitled to vote on the resolution, and, if the shares of any class
29-10 or series were entitled to vote as a class, the designation and
29-11 number of outstanding shares of each such class or series; and
29-12 (c) the number of shares entitled to vote on the
29-13 resolution generally that voted for and against such resolution,
29-14 respectively, and if the shares of any class or series were
29-15 entitled to vote as a class, the number of shares of each such
29-16 class or series voted for and against such resolution,
29-17 respectively.
29-18 SECTION 31. Section A, Article 6.06, Texas Business
29-19 Corporation Act, is amended to read as follows:
29-20 A. If voluntary dissolution proceedings have been taken and
29-21 have not been revoked, then when all debts, liabilities, and
29-22 obligations of the corporation have been paid, satisfied, or
29-23 discharged or adequate provision has been made for payment,
29-24 satisfaction, or discharge thereof or, if the properties and assets
29-25 of the corporation are not sufficient to pay, satisfy, or discharge
29-26 all the corporation's debts, liabilities, and obligations, then
29-27 when all properties and assets of the corporation have been applied
29-28 so far as they will go to the just and equitable payment of the
29-29 corporation's debts, liabilities, and obligations or when adequate
29-30 provision has been made for such application, and the remainder of
29-31 its properties and assets have been distributed to its shareholders
29-32 according to their respective rights and interests, articles of
29-33 dissolution shall be executed on behalf of the corporation by an
29-34 officer, which shall set forth:
29-35 (1) The name of the corporation.
29-36 (2) The names and respective addresses of its
29-37 officers.
29-38 (3) The names and respective addresses of its
29-39 directors.
29-40 (4) That all debts, liabilities, and obligations of
29-41 the corporation have been paid, satisfied, or discharged or that
29-42 adequate provision has been made for payment, satisfaction, or
29-43 discharge thereof or, if the properties and assets of the
29-44 corporation were not sufficient to pay, satisfy, or discharge all
29-45 the corporation's debts, liabilities, and obligations, that all
29-46 properties and assets of the corporation have been applied so far
29-47 as they would go to the just and equitable payment of those debts,
29-48 liabilities, and obligations or that adequate provision has been
29-49 made for such application.
29-50 (5) That the remainder of the properties and assets of
29-51 the corporation have been distributed to its shareholders according
29-52 to their respective rights and interests or that no properties or
29-53 assets of the corporation remained for distribution to shareholders
29-54 after applying the properties and assets of the corporation so far
29-55 as they would go to the just and equitable payment of the debts,
29-56 liabilities, and obligations of the corporation or making adequate
29-57 provision for such application.
29-58 (6) If the corporation elected to dissolve by the
29-59 written consent of all of its shareholders, a copy of the consent,
29-60 together with a statement that the consent was signed by all
29-61 shareholders of the corporation or was signed in their names by
29-62 their attorneys thereunto duly authorized.
29-63 (7) If the corporation elected to dissolve by act of
29-64 the corporation:
29-65 (a) A copy of the resolution to dissolve,
29-66 together with a statement that such resolution was adopted by the
29-67 shareholders of the corporation and of the date of adoption.
29-68 (b) The number of shares outstanding and
29-69 entitled to vote on the resolution, and, if the shares of any class
29-70 or series were entitled to vote as a class, the designation and
30-1 number of outstanding shares of each such class or series.
30-2 (c) The number of shares entitled to vote on the
30-3 resolution generally that voted for and against such resolution,
30-4 respectively, and if the shares of any class or series were
30-5 entitled to vote as a class, the number of shares of each such
30-6 class or series voted for and against such resolution,
30-7 respectively.
30-8 SECTION 32. Sections A and C, Article 8.14, Texas Business
30-9 Corporation Act, are amended to read as follows:
30-10 A. A foreign corporation authorized to transact business in
30-11 this state may withdraw from this state upon procuring from the
30-12 Secretary of State a certificate of withdrawal. In order to
30-13 procure such certificate of withdrawal, such foreign corporation
30-14 shall deliver to the Secretary of State an application for
30-15 withdrawal, which shall set forth:
30-16 (1) The name of the corporation and the state or
30-17 country under the laws of which it is incorporated;
30-18 (2) That the corporation is not transacting business
30-19 in this state;
30-20 (3) That the corporation surrenders its authority to
30-21 transact business in this state;
30-22 (4) That the corporation revokes the authority of its
30-23 registered agent in this state to accept service of process and
30-24 consents that service of process in any action, suit, or proceeding
30-25 based upon any cause of action arising in this state during the
30-26 time the corporation was authorized to transact business in this
30-27 state may thereafter be made on such corporation by service thereof
30-28 on the Secretary of State;
30-29 (5) A post office address to which the Secretary of
30-30 State may mail a copy of any process against the corporation that
30-31 may be served on him; and
30-32 (6) A statement that all sums due, or accrued, to this
30-33 state have been paid, or that adequate provision has been made for
30-34 the payment thereof<; and>
30-35 <(7) A statement that all known creditors or claimants
30-36 have been paid or provided for>.
30-37 C. When the existence of a foreign corporation terminates
30-38 because of dissolution, merger, conversion, or otherwise, a
30-39 certificate from the proper officer in the jurisdiction of the
30-40 corporation's incorporation evidencing the termination shall be
30-41 filed with the Secretary of State.
30-42 SECTION 33. Section A, Article 9.04, Texas Business
30-43 Corporation Act, is amended to read as follows:
30-44 A. If the Secretary of State shall fail to approve any
30-45 articles of incorporation, application for certificate of authority
30-46 to transact business in this State, amendment, merger, share
30-47 exchange, conversion <consolidation>, or dissolution, or any other
30-48 document required by this Act to be approved by the Secretary of
30-49 State before the same shall be filed in his office, he shall,
30-50 within ten days after the delivery thereof to him, give written
30-51 notice of his disapproval to the person, <or> corporation, or other
30-52 entity, domestic or foreign, delivering the same, specifying in
30-53 such notice the reasons therefor. From such disapproval such
30-54 person, <or> corporation, or other entity may appeal to any
30-55 district court of Travis County by filing with the clerk of such
30-56 court a petition setting forth a copy of the articles or other
30-57 document sought to be filed and a copy of the written disapproval
30-58 thereof by the Secretary of State; whereupon the matter shall be
30-59 tried de novo by the court, and the court shall either sustain the
30-60 action of the Secretary of State or direct him to take such action
30-61 as the court may deem proper.
30-62 SECTION 34. Article 9.10, Texas Business Corporation Act, is
30-63 amended by adding Section D to read as follows:
30-64 D. If action is taken with respect to a particular matter by
30-65 the holders of shares of a class or series by means of a written
30-66 consent in compliance with Section A of this Article, any provision
30-67 of this Act that requires advance notice of a meeting or of the
30-68 proposed action will not apply as to that class or series for such
30-69 action.
30-70 SECTION 35. Section A, Article 10.01, Texas Business
31-1 Corporation Act, is amended to read as follows:
31-2 A. The Secretary of State is authorized and required to
31-3 collect for the use of the State the following fees:
31-4 (1) Filing articles of incorporation of a domestic
31-5 corporation and issuing a certificate of incorporation, Three
31-6 Hundred Dollars ($300.00).
31-7 (2) Filing articles of amendment of a domestic
31-8 corporation and issuing a certificate of amendment, One Hundred
31-9 Fifty Dollars ($150.00).
31-10 (3) Filing articles of merger <or consolidation>,
31-11 whether the surviving or new corporation be a domestic or foreign
31-12 corporation, or articles of exchange, Three Hundred Dollars
31-13 ($300.00).
31-14 (4) Filing an application of a foreign corporation for
31-15 a certificate of authority to transact business in this State and
31-16 issuing such a certificate of authority, Seven Hundred Fifty
31-17 Dollars ($750.00).
31-18 (5) Filing an application of a foreign corporation for
31-19 an amended certificate of authority to transact business in this
31-20 State and issuing such an amended certificate of authority, One
31-21 Hundred Fifty Dollars ($150.00).
31-22 (6) Filing restated articles of incorporation of a
31-23 domestic corporation, Three Hundred Dollars ($300.00).
31-24 (7) Filing application for reservation of corporate
31-25 name and issuing a certificate therefor, Forty Dollars ($40.00).
31-26 (8) Filing notice of transfer of reserved corporate
31-27 name and issuing a certificate therefor, Fifteen Dollars ($15.00).
31-28 (9) Filing application for registration of corporate
31-29 name and issuing a certificate therefor, Seventy-Five Dollars
31-30 ($75.00).
31-31 (10) Filing application for renewal of registration of
31-32 corporate name and issuing a certificate therefor, Seventy-Five
31-33 Dollars ($75.00).
31-34 (11) Filing statement of change of registered office
31-35 or registered agent, or both, Fifteen Dollars ($15.00).
31-36 (12) Filing statement of change of address of
31-37 registered agent, Fifteen Dollars ($15.00); provided, however, that
31-38 the maximum fee for simultaneous filings by a registered agent for
31-39 more than one corporation shall not exceed Seven Hundred Fifty
31-40 Dollars ($750.00).
31-41 (13) Filing statement of resolution establishing
31-42 series of shares, Fifteen Dollars ($15.00).
31-43 (14) Filing statement of cancellation of redeemable
31-44 shares, Fifteen Dollars ($15.00).
31-45 (15) Filing statement of cancellation of re-acquired
31-46 shares, Fifteen Dollars ($15.00).
31-47 (16) Filing statement of reduction of stated capital,
31-48 Fifteen Dollars ($15.00).
31-49 (17) Filing articles of dissolution and issuing
31-50 certificate therefor, Forty Dollars ($40.00).
31-51 (18) Filing application for withdrawal and issuing
31-52 certificate therefor, Fifteen Dollars ($15.00).
31-53 (19) Filing certificate from home state that foreign
31-54 corporation is no longer in existence in said state, Fifteen
31-55 Dollars ($15.00).
31-56 (20) Maintaining a record of service of any process,
31-57 notice or demand upon the Secretary of State as agent for foreign
31-58 and domestic corporations and for any foreign association, joint
31-59 stock company, partnership, or nonresident natural person, Forty
31-60 Dollars ($40.00).
31-61 (21) Filing a bylaw or agreement restricting transfer
31-62 of shares or securities other than as an amendment to the articles
31-63 of incorporation, Fifteen Dollars ($15.00).
31-64 (22) Filing any instrument pursuant to this Act not
31-65 expressly provided for above, Fifteen Dollars ($15.00).
31-66 (23) Filing application for reinstatement of corporate
31-67 charter or certificate of authority following forfeiture under the
31-68 Tax Code, Seventy-Five Dollars ($75.00).
31-69 (24) Filing articles of conversion and issuing a
31-70 certificate of conversion, Three Hundred Dollars ($300.00).
32-1 SECTION 36. Section A, Article 10.03, Texas Business
32-2 Corporation Act, is amended to read as follows:
32-3 A. The effectiveness of (i) the incorporation of a
32-4 corporation under this Act, (ii) an amendment to a corporation's
32-5 articles of incorporation, including an amendment effected pursuant
32-6 to a statement of resolution establishing a series of shares, (iii)
32-7 the restatement of articles of incorporation of a corporation, (iv)
32-8 a merger or share exchange, (v) a cancellation of redeemable or
32-9 reacquired shares or a reduction in stated capital, (vi) a
32-10 voluntary dissolution, (vii) the authorization or withdrawal of a
32-11 foreign corporation to transact business in this State, (viii) an
32-12 amendment to the certificate of authority of a foreign corporation,
32-13 (ix) a bylaw or agreement restricting the transfer of shares or
32-14 securities of a corporation pursuant to this Act, (x) a change in
32-15 registered office or registered agent, <or> (xi) a change of
32-16 address of a registered agent (each such act or document being a
32-17 "Permitted Act"), or (xii) a conversion may be made effective as of
32-18 a time and date after the time and date otherwise provided in this
32-19 Act or may be made effective upon the occurrence of events or facts
32-20 that may occur in the future, which events or facts may include
32-21 future acts of any person or entity, if:
32-22 (1) the articles, statement, application, or other
32-23 filing that is required by this Act to be filed with the Secretary
32-24 of State to make effective such Permitted Act clearly and expressly
32-25 set forth, in addition to any other statement or information
32-26 required to be set forth therein, (i) the time and date on which
32-27 such Permitted Act is to become effective or (ii) if such Permitted
32-28 Act is to become effective upon the occurrence of events or facts
32-29 that may occur in the future, (a) the manner in which such events
32-30 or facts shall operate to cause such Permitted Act to become
32-31 effective and (b) the date of the 90th day after the date of the
32-32 filing of such articles, statement, application or other filing;
32-33 (2) in the case of a Permitted Act that is to become
32-34 effective as of a time or date after the time and date otherwise
32-35 provided in this Act, (i) such subsequent time and date is not more
32-36 than 90 days after the date of the filing of the articles,
32-37 statement, application, or other filing that is otherwise required
32-38 by this Act to be filed with the Secretary of State to make
32-39 effective such Permitted Act and (ii) the time on which the
32-40 Permitted Act is to become effective is not midnight or 12:00 p.m.;
32-41 and
32-42 (3) in the case of a Permitted Act that is to be made
32-43 effective upon the occurrence of events or facts that may occur in
32-44 the future, other than the mere passage of time, a statement that
32-45 all such events or facts upon which the effectiveness of such
32-46 Permitted Act is conditioned have been satisfied or waived, and of
32-47 the date on which such condition was satisfied or waived, is filed
32-48 with the Secretary of State within 90 days of the date of the
32-49 filing of the articles, statement, application or other filing that
32-50 is otherwise required by this Act for such Permitted Act to become
32-51 effective.
32-52 SECTION 37. Section B, Article 12.13, Texas Business
32-53 Corporation Act, is amended to read as follows:
32-54 B. Through Merger, Conversion, or Share Exchange. A
32-55 surviving or new corporation resulting from a merger, a corporation
32-56 incorporated as part of a conversion, or a corporation that
32-57 acquires a corporation pursuant to a share exchange in conformance
32-58 with Part Five of this Act may become a close corporation if as
32-59 part of the plan of merger, conversion, or exchange its articles of
32-60 incorporation conform with Article 12.11 of this Act. Any plan of
32-61 merger, conversion, or exchange adopting close corporation status
32-62 must be approved by the affirmative vote of the holders of all the
32-63 outstanding shares, and of each class or series of shares, of each
32-64 corporation that is party to the merger, conversion, or share
32-65 exchange, whether or not entitled to vote on the plan by the
32-66 articles of incorporation of the corporation.
32-67 SECTION 38. Article 12.21, Texas Business Corporation Act,
32-68 is amended to read as follows:
32-69 Art. 12.21. Termination of Close Corporation Status. A. In
32-70 General. A close corporation terminates its status as a close
33-1 corporation:
33-2 (1) on filing a statement of termination in
33-3 conformance with Article 12.22 of this Act;
33-4 (2) by amending its articles of incorporation in
33-5 conformance with Part Four of this Act to delete from its articles
33-6 the statement that it is a close corporation;
33-7 (3) through a merger, conversion, or share exchange in
33-8 conformance with Part Five of this Act unless the plan of merger,
33-9 conversion, or exchange provides that the surviving or new
33-10 corporation will continue as or become a close corporation and the
33-11 plan has been approved by the affirmative vote or consent of the
33-12 holders of all the outstanding shares, and of each class and series
33-13 of shares, of the close corporation, whether or not entitled to
33-14 vote on the plan by the articles of incorporation; or
33-15 (4) when termination is decreed in a judicial
33-16 proceeding to enforce a close corporation provision providing for
33-17 the termination.
33-18 SECTION 39. The Texas Business Corporation Act is amended by
33-19 adding Part Thirteen to read as follows:
33-20 PART THIRTEEN
33-21 Art. 13.01. SHORT TITLE. This part may be cited as the
33-22 Business Combination Law.
33-23 Art. 13.02. DEFINITIONS. In this part:
33-24 (1) "Affiliate" means a person who directly or
33-25 indirectly through one or more intermediaries controls, is
33-26 controlled by, or is under common control with a specified person.
33-27 (2) "Affiliated shareholder" means a person, other
33-28 than the issuing public corporation or a wholly-owned subsidiary of
33-29 the issuing public corporation, that is the beneficial owner of 20
33-30 percent or more of the outstanding voting shares of the issuing
33-31 public corporation that, within the preceding three-year period,
33-32 was the beneficial owner of 20 percent or more of the then
33-33 outstanding voting shares of the issuing public corporation. For
33-34 the purpose of determining whether a person is an affiliated
33-35 shareholder, the number of voting shares of the issuing public
33-36 corporation considered outstanding includes shares considered
33-37 beneficially owned by that person under Subdivision (4) of this
33-38 article, but does not include other unissued voting shares of the
33-39 issuing public corporation that may be issuable pursuant to an
33-40 agreement, arrangement, or understanding, or upon exercise or
33-41 conversion rights, warrants, or options, or otherwise.
33-42 (3) "Beneficial owner" means a person who:
33-43 (a) individually, or with or through an
33-44 affiliate or associate, beneficially owns shares or similar
33-45 securities, directly or indirectly;
33-46 (b) individually, or with or through an
33-47 affiliate or associate, has the right to:
33-48 (i) acquire shares or similar securities,
33-49 whether the right may be exercised immediately or only after the
33-50 passage of time, pursuant to an agreement, arrangement, or
33-51 understanding, whether or not in writing, or upon the exercise of
33-52 conversion rights, exchange rights, warrants, or options, or
33-53 otherwise, except that a person is not considered the beneficial
33-54 owner of shares or similar securities (A) tendered pursuant to a
33-55 tender or exchange offer made by the person or an affiliate or
33-56 associate until the tendered shares or similar securities are
33-57 accepted for purchase or exchange, or (B) that may be subject to an
33-58 agreement, arrangement, or understanding that expressly conditions
33-59 the acquisition or purchase on the approval of the acquisition or
33-60 purchase pursuant to Article 13.03 of this Act as long as such
33-61 person has no direct or indirect rights of ownership or voting with
33-62 respect to such shares until such time that such approval is
33-63 obtained, at which time such person shall be considered the
33-64 beneficial owner of such shares; or
33-65 (ii) vote the shares or similar securities
33-66 pursuant to an agreement, arrangement, or understanding, whether or
33-67 not in writing, except that a person is not considered the
33-68 beneficial owner of shares or similar securities for purposes of
33-69 this subparagraph if the agreement, arrangement, or understanding
33-70 to vote the shares: (A) arises solely from an immediately
34-1 revocable proxy that authorizes the person named in the proxy to
34-2 vote at a meeting of shareholders that has been called when the
34-3 proxy is delivered or at any adjournment of the meeting, and (B) is
34-4 not then reportable on a Schedule 13D under the Securities Exchange
34-5 Act of 1934 or a comparable or successor report; or
34-6 (c) has an agreement, arrangement, or
34-7 understanding, whether or not in writing, to acquire, hold, or
34-8 dispose (except pursuant to an agreement, arrangement, or
34-9 understanding permitted by Subdivision (3)(b)(i) of this Article)
34-10 or to vote (except under an immediately revocable proxy under
34-11 Subdivision (3)(b)(ii) of this Article) shares or similar
34-12 securities with another person who beneficially owns, or whose
34-13 affiliate or associate beneficially owns, directly or indirectly,
34-14 the shares or similar securities.
34-15 (4) "Business combination" means:
34-16 (a) any merger, share exchange, or conversion of
34-17 an issuing public corporation or a subsidiary with:
34-18 (i) an affiliated shareholder;
34-19 (ii) a foreign or domestic corporation or
34-20 other entity that is, or after the merger, share exchange, or
34-21 conversion would be, an affiliate or associate of the affiliated
34-22 shareholder; or
34-23 (iii) another domestic or foreign
34-24 corporation or other entity, if the merger, share exchange, or
34-25 conversion is caused by an affiliated shareholder, or an affiliate
34-26 or associate of an affiliated shareholder, and as a result of the
34-27 merger, share exchange, or conversion this part does not apply to
34-28 the surviving corporation or other entity;
34-29 (b) a sale, lease, exchange, mortgage, pledge,
34-30 transfer, or other disposition, in one transaction or a series of
34-31 transactions, including an allocation of assets pursuant to a
34-32 merger, to or with the affiliated shareholder, or an affiliate or
34-33 associate of the affiliated shareholder, of assets of the issuing
34-34 public corporation or any subsidiary that:
34-35 (i) have an aggregate market value equal
34-36 to 10 percent or more of the aggregate market value of all the
34-37 assets, determined on a consolidated basis, of the issuing public
34-38 corporation;
34-39 (ii) have an aggregate market value equal
34-40 to 10 percent or more of the aggregate market value of all the
34-41 outstanding common stock of the issuing public corporation; or
34-42 (iii) represent 10 percent or more of the
34-43 earning power or net income, determined on a consolidated basis, of
34-44 the issuing public corporation;
34-45 (c) the issuance or transfer by an issuing
34-46 public corporation or a subsidiary to an affiliated shareholder or
34-47 an affiliate or associate of the affiliated shareholder, in one
34-48 transaction or a series of transactions, of shares of the issuing
34-49 public corporation or a subsidiary, except by the exercise of
34-50 warrants or rights to purchase shares of the issuing public
34-51 corporation offered, or a share dividend paid, pro rata to all
34-52 shareholders of the issuing public corporation after the affiliated
34-53 shareholder's share acquisition date;
34-54 (d) the adoption of a plan or proposal for the
34-55 liquidation or dissolution of an issuing public corporation
34-56 proposed by, or pursuant to any agreement, arrangement, or
34-57 understanding, whether or not in writing, with an affiliated
34-58 shareholder or an affiliate or associate of the affiliated
34-59 shareholder;
34-60 (e) a reclassification of securities, including
34-61 a reverse share split or a share split-up, share dividend, or other
34-62 distribution of shares, a recapitalization of the issuing public
34-63 corporation, a merger of the issuing public corporation with a
34-64 subsidiary or pursuant to which the assets and liabilities of the
34-65 issuing public corporation are allocated among two or more
34-66 surviving or new domestic or foreign corporations or other
34-67 entities, or any other transaction, whether or not with, into, or
34-68 otherwise involving the affiliated shareholder, proposed by, or
34-69 pursuant to an agreement, arrangement, or understanding, whether or
34-70 not in writing, with an affiliated shareholder or an affiliate or
35-1 associate of the affiliated shareholder that has the effect,
35-2 directly or indirectly, of increasing the proportionate ownership
35-3 percentage of the outstanding shares of a class or series of voting
35-4 shares or securities convertible into voting shares of the issuing
35-5 public corporation that is beneficially owned by the affiliated
35-6 shareholder or an affiliate or associate of the affiliated
35-7 shareholder, except as a result of immaterial changes due to
35-8 fractional share adjustments; or
35-9 (f) the direct or indirect receipt by an
35-10 affiliated shareholder or an affiliate or associate of the
35-11 affiliated shareholder of the benefit of a loan, advance,
35-12 guarantee, pledge, or other financial assistance or a tax credit or
35-13 other tax advantage provided by or through the issuing public
35-14 corporation, except proportionately as a shareholder of the issuing
35-15 public corporation.
35-16 (5) "Control" means the possession, directly or
35-17 indirectly, of the power to direct or cause the direction of the
35-18 management and policies of a person, whether through the ownership
35-19 of equity securities, by contract, or otherwise. A person's
35-20 beneficial ownership of 10 percent or more of a person's
35-21 outstanding voting shares or similar interests creates a
35-22 presumption that the person has control of such other person, but a
35-23 person is not considered to have control of another person if the
35-24 person holds such voting shares or similar interests in good faith
35-25 and not for the purpose of circumventing this part, as an agent,
35-26 bank, broker, nominee, custodian, or trustee for one or more
35-27 beneficial owners who do not individually or as a group have
35-28 control of the person.
35-29 (6) "Issuing public corporation" means a domestic
35-30 corporation that has: (a) 100 or more shareholders, (b) any class
35-31 or series of its voting shares registered under the Securities
35-32 Exchange Act of 1934, as amended, or similar or successor statute,
35-33 or (c) any class or series of its voting shares qualified for
35-34 trading in a national market system. For the purposes of this
35-35 definition of issuing public corporation, a shareholder is a
35-36 shareholder of record as shown by the share transfer records of the
35-37 corporation.
35-38 (7) "Person" means an individual, trust, domestic or
35-39 foreign corporation or other entity, or a government, or a
35-40 political subdivision, agency, or instrumentality of a government.
35-41 If two or more persons act as a partnership, limited partnership,
35-42 syndicate, or other group under an agreement, arrangement, or other
35-43 understanding, whether or not in writing, to acquire, hold, vote,
35-44 or dispose of shares of a corporation, all members of the
35-45 partnership, limited partnership, syndicate, or other group are
35-46 considered to be a person.
35-47 (8) "Share acquisition date" means the date that a
35-48 person first becomes an affiliated shareholder of an issuing public
35-49 corporation.
35-50 (9) "Subsidiary" means a domestic or foreign
35-51 corporation or other entity of which a majority of the outstanding
35-52 voting shares are owned, directly or indirectly, by an issuing
35-53 public corporation.
35-54 (10) "Voting share" means a share of capital stock of
35-55 a corporation entitled to vote generally in the election of
35-56 directors.
35-57 Art. 13.03. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
35-58 COMBINATIONS. An issuing public corporation shall not, directly or
35-59 indirectly, enter into or engage in a business combination with an
35-60 affiliated shareholder, or any affiliate or associate of the
35-61 affiliated shareholder, during the three-year period immediately
35-62 following the affiliated shareholder's share acquisition date
35-63 unless:
35-64 (1) the business combination or the purchase or
35-65 acquisition of shares made by the affiliated shareholder on the
35-66 affiliated shareholder's share acquisition date is approved by the
35-67 board of directors of the issuing public corporation before the
35-68 affiliated shareholder's share acquisition date; or
35-69 (2) the business combination is approved, by the
35-70 affirmative vote of the holders of at least two-thirds of the
36-1 outstanding voting shares of the issuing public corporation not
36-2 beneficially owned by the affiliated shareholder or an affiliate or
36-3 associate of the affiliated shareholder, at a meeting of
36-4 shareholders and not by written consent, duly called for that
36-5 purpose not less than six months after the affiliated shareholder's
36-6 share acquisition date.
36-7 Art. 13.04. APPLICATION. Article 13.03 of this Act does not
36-8 apply to:
36-9 (1) a business combination of an issuing public
36-10 corporation:
36-11 (a) the original articles of incorporation or
36-12 original bylaws of which contain a provision expressly electing not
36-13 to be governed by this part;
36-14 (b) that adopts an amendment to its articles of
36-15 incorporation or bylaws before December 31, 1995, expressly
36-16 electing not to be governed by this part; or
36-17 (c) that after December 31, 1995, adopts an
36-18 amendment to its articles of incorporation or bylaws, approved by
36-19 the affirmative vote of the shareholders, other than affiliated
36-20 shareholders and their affiliates and associates, of at least
36-21 two-thirds of the outstanding voting shares of the issuing public
36-22 corporation, expressly electing not to be governed by this part,
36-23 except that the amendment to the articles of incorporation or
36-24 bylaws takes effect 18 months after the date of the vote and does
36-25 not apply to a business combination of the issuing public
36-26 corporation with an affiliated shareholder whose share acquisition
36-27 date is on or before the effective date of the amendment;
36-28 (2) a business combination of an issuing public
36-29 corporation with an affiliated shareholder that became an
36-30 affiliated shareholder inadvertently, if the affiliated
36-31 shareholder:
36-32 (a) as soon as practicable divests itself of a
36-33 sufficient number of the voting shares of the issuing public
36-34 corporation so that it no longer is the beneficial owner, directly
36-35 or indirectly, of 20 percent or more of the outstanding voting
36-36 shares of the issuing public corporation; and
36-37 (b) would not at any time within the three-year
36-38 period preceding the announcement date of the business combination
36-39 have been an affiliated shareholder but for the inadvertent
36-40 acquisition;
36-41 (3) a business combination with an affiliated
36-42 shareholder that was the beneficial owner of 20 percent or more of
36-43 the outstanding voting shares of the issuing public corporation on
36-44 December 31, 1994, and continuously until the announcement date of
36-45 the business combination;
36-46 (4) a business combination with an affiliated
36-47 shareholder who became an affiliated shareholder through a transfer
36-48 of shares of the issuing public corporation by will or intestate
36-49 succession and continuously was such an affiliated shareholder
36-50 until the announcement date of the business combination; or
36-51 (5) a business combination of an issuing public
36-52 corporation with a domestic wholly-owned subsidiary if the domestic
36-53 subsidiary is not an affiliate or associate of the affiliated
36-54 shareholder other than by reason of the affiliated shareholder's
36-55 beneficial ownership of voting shares in the issuing public
36-56 corporation.
36-57 Art. 13.05. NO EFFECT ON OTHER ACTIONS. This part does not
36-58 affect, directly or indirectly, the validity of another action by
36-59 the board of directors of an issuing public corporation, nor does
36-60 it preclude the board of directors from taking other action in
36-61 accordance with law, nor does the board of directors incur
36-62 liability for elections made or not made under this part.
36-63 Art. 13.06. DUTIES OF DIRECTOR. In discharging the duties
36-64 of director under this Act or otherwise, a director, in considering
36-65 the best interests of the corporation, may consider the long-term
36-66 as well as the short-term interests of the corporation and its
36-67 shareholders, including the possibility that those interests may be
36-68 best served by the continued independence of the corporation.
36-69 Art. 13.07. RELATIONSHIP WITH OTHER PARTS OF ACT. A. If a
36-70 provision of this part conflicts with another provision of this
37-1 Act, the provision of this part controls.
37-2 B. The affirmative vote or concurrence of shareholders
37-3 required for approval of an action required or permitted to be
37-4 submitted for shareholder vote may be increased, but not decreased,
37-5 under Article 2.28 of this Act.
37-6 Art. 13.08. SEVERABILITY. If any provision or clause of
37-7 this part or application thereof to any person or circumstance is
37-8 held invalid, such invalidity shall not affect other provisions or
37-9 applications of this part that can be given effect without the
37-10 invalid provision or application and without being inconsistent
37-11 with the intent of this part, and to this end the provisions of
37-12 this part are declared to be severable.
37-13 SECTION 40. Article 2.06, Texas Miscellaneous Corporation
37-14 Laws Act (Article 1302-2.06, Vernon's Texas Civil Statutes), is
37-15 amended to read as follows:
37-16 Art. 2.06. Consideration for Indebtedness; Guaranties.
37-17 A. A corporation may incur indebtedness for such consideration as
37-18 it may deem appropriate, including, without limitation, cash, real
37-19 property, personal property, intangible property, contracts to
37-20 receive real, personal, or intangible property, debt and other
37-21 obligations of <No corporation shall create any indebtedness
37-22 whatever except for money paid, labor done, which is reasonably
37-23 worth at least the sum at which it was taken by> the corporation or
37-24 other corporations, persons, or other entities, services performed,
37-25 contracts for services to be performed, debt or equity securities
37-26 of <by a corporation of which all of the outstanding shares of each
37-27 class are owned by the corporation, or property actually received,
37-28 reasonably worth at least the sum at which it was taken by> the
37-29 corporation or of other corporations and entities, and any direct
37-30 or indirect benefit realized by the corporation. Such
37-31 consideration may be received either directly or indirectly,
37-32 including by direct or indirect wholly owned or partially owned
37-33 corporations, partnerships, or other entities. In addition, a
37-34 corporation may issue and incur indebtedness without the receipt of
37-35 any consideration by reason of the authorization or payment of a
37-36 distribution <by a corporation of which all of the outstanding
37-37 shares of each class are owned by the corporation, subject to the
37-38 provisions of Sections B, C, and D of this Article>. In the
37-39 absence of fraud in the transaction, the judgment of the Board of
37-40 Directors or the shareholders, as the case may be, as to the value,
37-41 type, and sufficiency of the consideration received for any such
37-42 indebtedness shall be conclusive.
37-43 B. Any <Notwithstanding Section A of this Article, any>
37-44 corporation shall have the power and authority to make a guaranty
37-45 if the guaranty reasonably may be expected to benefit, directly or
37-46 indirectly, the guarantor corporation. For purposes of this
37-47 section and Section C of this Article, "guaranty" means a guaranty,
37-48 mortgage, pledge, security agreement, or other agreement making the
37-49 guarantor corporation or its assets responsible respecting the
37-50 contracts, securities, or other obligations of any person
37-51 (including, but not limited to, any domestic or foreign
37-52 corporation, partnership, association, joint venture, trust, or any
37-53 officer, director, or employee of such guarantor corporation). The
37-54 decision of, or a decision made pursuant to authority granted by,
37-55 the Board of Directors that the guaranty may reasonably be expected
37-56 to benefit, directly or indirectly, the guarantor corporation shall
37-57 be binding upon the guarantor corporation, and no guaranty made by
37-58 a corporation in accordance with the provisions of this Section B
37-59 shall be invalid or unenforceable as against such corporation,
37-60 unless such guaranty is sought to be enforced by a person who
37-61 participated in a fraud on the guarantor corporation resulting in
37-62 the making of the guaranty or by a person who had notice of such
37-63 fraud before he acquired his rights under the guaranty. Nothing
37-64 herein contained shall prevent a suit (1) prior to the making of a
37-65 guaranty by a corporation, by a shareholder in a representative
37-66 suit against the guarantor corporation, to enjoin the making of
37-67 such guaranty on the ground that such guaranty could not reasonably
37-68 be expected to benefit, directly or indirectly, the guarantor
37-69 corporation, or (2) after the making of a guaranty by a
37-70 corporation, by the guarantor corporation, whether acting directly
38-1 or through a receiver, trustee, or other legal representative or
38-2 through a shareholder in a representative suit, against the
38-3 directors who voted for or assented to the making of such guaranty
38-4 for damages or other appropriate relief on the ground that such
38-5 guaranty could not reasonably have been expected to benefit,
38-6 directly or indirectly, the guarantor corporation, but such
38-7 directors shall be entitled to assert any defenses which they may
38-8 have under law.
38-9 C. In addition to the power and authority granted in Section
38-10 B of this Article, any corporation has the power and authority to
38-11 make a guaranty respecting any subsidiary, parent, or affiliated
38-12 corporation if the action is approved by, or pursuant to authority
38-13 granted by, the Board of Directors of the guarantor corporation.
38-14 For the purposes of this section only:
38-15 (1) "subsidiary corporation" means a corporation, 100
38-16 percent of whose outstanding shares are owned at the time of the
38-17 action:
38-18 (a) by the guarantor corporation itself;
38-19 (b) by one or more of the guarantor
38-20 corporation's subsidiary corporations; or
38-21 (c) by the guarantor corporation and one or more
38-22 of its subsidiary corporations;
38-23 (2) "parent corporation" means a corporation that at
38-24 the time of the action owns 100 percent of the outstanding shares
38-25 of the guarantor corporation:
38-26 (a) by itself;
38-27 (b) through one or more of its subsidiary
38-28 corporations; or
38-29 (c) with one or more of its subsidiary
38-30 corporations; and
38-31 (3) "affiliated corporation" means a corporation, 100
38-32 percent of whose outstanding shares are owned at the time of the
38-33 action:
38-34 (a) by the parent corporation of the guarantor
38-35 corporation;
38-36 (b) by one or more of the parent corporation's
38-37 subsidiary corporations; or
38-38 (c) by the parent corporation and one or more of
38-39 its subsidiary corporations.
38-40 D. <The limitations set forth in Section A of this Article
38-41 shall not apply to indebtedness of a corporation that is incurred
38-42 by reason of the authorization or payment of a dividend or other
38-43 distribution.>
38-44 <E.> Nothing contained in <Section B, C, or D of> this
38-45 Article is intended or shall be construed to limit or deny to any
38-46 corporation the right or power to do or perform any act which it is
38-47 or may be empowered or authorized to do or perform under any other
38-48 laws of the State of Texas now in force or hereafter enacted.
38-49 Provided, however, Sections B and<,> C<, and D> of this Article
38-50 shall not apply to nor enlarge the powers of any corporation that
38-51 does business pursuant to any provision of the Insurance Code of
38-52 Texas, whether licensed in Texas or not, nor shall those sections
38-53 allow or permit any corporation, not licensed under the Insurance
38-54 Code of Texas, to engage in any character, type, class, or kind of
38-55 fidelity, surety, or guaranty business or transaction subject to
38-56 regulation under the Insurance Code.
38-57 SECTION 41. Article 5.06, Texas Non-Profit Corporation Act
38-58 (Article 1396-5.06, Vernon's Texas Civil Statutes), is amended to
38-59 read as follows:
38-60 Art. 5.06. Effect of Merger or Consolidation of Domestic
38-61 Corporations. A. When a <such> merger or consolidation of a
38-62 domestic corporation under Article 5.01, 5.02, or 5.07 of this Act
38-63 has been made effective <corporations has been effected>:
38-64 (1) <The several corporations parties to the plan of
38-65 merger or consolidation shall be a single corporation, which, in
38-66 the case of a merger, shall be that corporation designated in the
38-67 plan of merger as the surviving corporation, and, in the case of
38-68 consolidation, shall be the new corporation provided for in the
38-69 plan of consolidation.>
38-70 <(2)> The separate existence of every domestic
39-1 corporation that is a party to the merger, except any surviving or
39-2 new domestic <all corporations parties to the plan of merger or
39-3 consolidation, except the surviving or new> corporation, shall
39-4 cease.
39-5 (2) All rights, title, and interest to all real estate
39-6 and other property owned by each corporation that is a party to the
39-7 merger shall be vested in the <(3) Such> surviving or new
39-8 corporation without revision or impairment, <shall have all the
39-9 rights, privileges, immunities and powers and shall be subject to
39-10 all the duties and liabilities of a corporation organized under
39-11 this Act.>
39-12 <(4) Such surviving or new corporation shall thereupon
39-13 and thereafter possess all the rights, privileges, immunities and
39-14 franchises, as well of a public as of a private nature, of each of
39-15 the merging or consolidating corporations; and all property, real,
39-16 personal and mixed, and all debts due on whatever account, and all
39-17 other choses in action, and all and every other interest, of or
39-18 belonging to or due to each of the corporations so merged or
39-19 consolidated, shall be taken and deemed to be transferred to and
39-20 vested in such single corporation> without further act or deed, and
39-21 without any transfer or assignment having occurred, but subject to
39-22 any existing liens or encumbrances thereon.
39-23 (3) All <(5) Such surviving or new corporation shall
39-24 thenceforth be responsible and liable for all the> liabilities and
39-25 obligations of each corporation shall become the liabilities and
39-26 obligations of the surviving or new corporation.
39-27 (4) A <of the corporations so merged or consolidated;
39-28 and any claim existing or action or> proceeding pending by or
39-29 against any corporation may be continued as if the merger did not
39-30 occur and the <of such corporations may be prosecuted as if such
39-31 merger or consolidation had not taken place, or such> surviving or
39-32 new corporation may be substituted in the proceeding <its place.
39-33 Neither the rights of creditors nor any liens upon the property of
39-34 any such corporations shall be impaired by such merger or
39-35 consolidation>.
39-36 (5) <(6)> In the case of a merger, the articles of
39-37 incorporation of the surviving corporation shall be deemed to be
39-38 amended to the extent, if any, that changes in its articles of
39-39 incorporation are stated in the plan of merger; and, in the case of
39-40 a consolidation, the statement <statements> set forth in the
39-41 articles of consolidation and which are required or are permitted
39-42 to be set forth in the articles of incorporation of corporations
39-43 organized under this Act shall be deemed to be the articles of
39-44 incorporation of the new corporation.
39-45 SECTION 42. The Texas Non-Profit Corporation Act (Article
39-46 1396-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
39-47 adding Article 5.10 to read as follows:
39-48 Art. 5.10. MERGERS WITH OTHER ENTITIES. A. In addition to
39-49 a merger or consolidation effected pursuant to Article 5.01, 5.02,
39-50 or 5.07 of this Act and subject to this article, a domestic
39-51 corporation may adopt a plan of merger and one or more domestic
39-52 corporations may merge with one or more domestic or foreign
39-53 corporations or other entities in accordance with Part Five of the
39-54 Texas Business Corporation Act; provided, however, that nothing in
39-55 this article shall be deemed to authorize the merger of a
39-56 charitable corporation into another entity if such charitable
39-57 corporation would thereby have its charitable status lost or
39-58 impaired; but a for-profit corporation or other entity may be
39-59 merged into one or more charitable corporations which shall
39-60 continue as the surviving entity or entities.
39-61 B. For purposes of this article, the term "merger" means:
39-62 (1) the division of a domestic corporation into two or
39-63 more domestic corporations or into a surviving corporation or one
39-64 or more domestic or foreign corporations or other entities; or
39-65 (2) the combination of one or more domestic
39-66 corporations with one or more domestic or foreign corporations or
39-67 other entities resulting in:
39-68 (a) one or more surviving domestic or foreign
39-69 corporations or other entities;
39-70 (b) the creation of one or more domestic or
40-1 foreign corporations or other entities; or
40-2 (c) one or more surviving domestic or foreign
40-3 corporations or other entities and the creation of one or more
40-4 domestic or foreign corporations or other entities.
40-5 C. For purposes of this article, the term "other entity"
40-6 means any entity, whether organized for profit or not, that is a
40-7 corporation (other than a domestic corporation or foreign
40-8 corporation), limited or general partnership, limited liability
40-9 company, real estate investment trust, joint venture, stock
40-10 company, cooperative, association, bank, trust, insurance company,
40-11 or other legal entity organized pursuant to the laws of this state
40-12 or any other state or country to the extent such laws or the
40-13 constituent documents of that entity, not inconsistent with such
40-14 laws, permit that entity to enter into a merger with a domestic
40-15 corporation as permitted by this article.
40-16 D. The procedures for approval of a merger set forth in
40-17 Article 5.03 of this Act shall also apply to any merger effected
40-18 pursuant to this article in lieu of Section A(1), Article 5.01, and
40-19 Article 5.03 of the Texas Business Corporation Act. The provisions
40-20 set forth in Article 5.04 of the Texas Business Corporation Act and
40-21 Article 5.04 of this Act with respect to articles of merger shall
40-22 both apply to any merger to the extent applicable. The effects of
40-23 any merger effected pursuant to this article shall be as set forth
40-24 in Article 5.06 of the Texas Business Corporation Act. All other
40-25 provisions of this part shall apply to a merger under this article
40-26 except to the extent the provisions of Part Five of the Texas
40-27 Business Corporation Act expressly apply to the merger and such
40-28 provisions are not in conflict with the provisions of this Act.
40-29 SECTION 43. Subsection (4), Section A, Article 1.02, Texas
40-30 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
40-31 Statutes), is amended to read as follows:
40-32 (4) "Person" includes an individual, corporation,
40-33 business trust, estate, trust, custodian, trustee, executor,
40-34 administrator, nominee, partnership, registered limited liability
40-35 partnership, limited partnership, association, limited liability
40-36 company, government, governmental subdivision, governmental agency,
40-37 governmental instrumentality, and any other legal or commercial
40-38 entity, in its own or representative capacity. Any of the
40-39 foregoing entities may be formed under the laws of this State or
40-40 any other jurisdiction <partnership, limited partnership, limited
40-41 liability company, foreign limited liability company, trust,
40-42 estate, corporation, custodian, trustee, executor, administrator,
40-43 nominee or entity in a representative capacity>.
40-44 SECTION 44. Article 1.02, Texas Limited Liability Company
40-45 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
40-46 adding Subsections (11), (12), and (13) to read as follows:
40-47 (11) "Conversion" means:
40-48 (a) the continuance of a domestic limited
40-49 liability company as, and in the organizational form of, a foreign
40-50 limited liability company or other entity; or
40-51 (b) the continuance of a foreign limited
40-52 liability company or other entity as, and in the organizational
40-53 form of, a domestic limited liability company.
40-54 (12) "Converted entity" means any domestic or foreign
40-55 limited liability company or other entity to which a converting
40-56 entity has converted or intends to convert as permitted by Article
40-57 10.08 of this Act.
40-58 (13) "Converting entity" means any domestic or foreign
40-59 limited liability company or other entity that has converted or
40-60 intends to convert as permitted by Article 10.08 of this Act.
40-61 SECTION 45. Article 2.09, Texas Limited Liability Company
40-62 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
40-63 read as follows:
40-64 Art. 2.09. Regulations of limited liability company.
40-65 A. The power to adopt, alter, amend, or repeal the regulations of
40-66 a limited liability company shall be vested in the members of the
40-67 company unless vested in whole or part in the manager or managers
40-68 of the company by the articles of organization or regulations.
40-69 Regulations adopted by the members or by the managers may be
40-70 repealed or altered; new regulations may be adopted by the members;
41-1 and regulations may provide that they may not, in whole or
41-2 specified part, be altered, amended, or repealed by the managers.
41-3 The regulations may contain any provisions for the regulation and
41-4 management of the affairs of the limited liability company not
41-5 inconsistent with law or the articles of organization. <Unless
41-6 otherwise provided in the articles of organization, the initial
41-7 regulations of the limited liability company shall be adopted by
41-8 the manager or managers named in the articles of organization, if
41-9 any, or by the member or members named in the articles of
41-10 organization, if any.> Any provision of this Act subject to
41-11 variation or modification by the regulations of a limited liability
41-12 company is also subject to variation or modification by the
41-13 articles of organization of the limited liability company.
41-14 SECTION 46. Article 2.13, Texas Limited Liability Company
41-15 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
41-16 read as follows:
41-17 Art. 2.13. Number and election of managers. A. The
41-18 managers of a limited liability company, if any, shall consist of
41-19 one or more persons. The number of managers shall be fixed by, or
41-20 in the manner provided in, the regulations, except as to the number
41-21 constituting the initial managers, which number shall be fixed by
41-22 the articles of organization. The number of managers may be
41-23 increased or decreased from time to time by amendment to, or in the
41-24 manner provided in, the regulations, but, unless provided otherwise
41-25 in the articles of organization or the regulations, no decrease
41-26 shall have the effect of shortening the term of any incumbent
41-27 manager. In the absence of a regulation fixing the number of
41-28 managers or providing for the manner in which the number of
41-29 managers shall be fixed, the number of managers shall be the same
41-30 as the number constituting the initial managers. The names and
41-31 addresses of the initial managers, if any, shall be stated in the
41-32 articles of organization. Unless otherwise provided in the
41-33 regulations or in any resolution of the managers or members
41-34 appointing that manager in accordance with the regulations or
41-35 articles of organization, each manager shall hold office for the
41-36 term for which elected, if any term is specified, and until that
41-37 manager's successor has been elected, or until that manager's
41-38 earlier death, resignation, or removal. The regulations may
41-39 provide for the time or times at which the members entitled to vote
41-40 in the election of managers shall elect managers and the term for
41-41 which the managers shall hold office. The regulations may provide
41-42 that any class or group of members shall be entitled to elect one
41-43 or more managers, who shall hold office for such terms as shall be
41-44 stated in the regulations. The regulations may provide that at any
41-45 meeting of members called expressly for that purpose any managers
41-46 may be removed, with or without cause, as provided therein;
41-47 however, if any class or group of members is entitled to elect one
41-48 or more managers by the provisions of the regulations, only the
41-49 members of that class or group shall be entitled to vote for or
41-50 against the removal of any managers elected by the members of that
41-51 class or group.
41-52 SECTION 47. Sections A and B, Article 2.15, Texas Limited
41-53 Liability Company Act (Article 1528n, Vernon's Texas Civil
41-54 Statutes), are amended to read as follows:
41-55 A. Unless otherwise provided in the articles of organization
41-56 or the regulations, any <Any> vacancy occurring in the managers may
41-57 be filled in accordance with Section B of this Article or may be
41-58 filled by the affirmative vote of a majority of the remaining
41-59 managers though less than a quorum of the managers. Unless
41-60 otherwise provided in the articles of organization or the
41-61 regulations, a <A> manager elected to fill a vacancy shall be
41-62 elected for the unexpired term of the predecessor in office.
41-63 B. Unless otherwise provided in the articles of organization
41-64 or the regulations, any <Any> vacancy occurring in the managers to
41-65 be filled by reason of an increase in the number of managers may be
41-66 filled by election at an annual or special meeting of members
41-67 called for that purpose.
41-68 SECTION 48. Article 2.17, Texas Limited Liability Company
41-69 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
41-70 read as follows:
42-1 Art. 2.17. Interested managers. A. Unless otherwise
42-2 provided in the regulations, no <No> contract or transaction
42-3 between a limited liability company and one or more of its managers
42-4 or officers, or between a limited liability company and any other
42-5 limited liability company, corporation, partnership, association,
42-6 or other organization in which one or more of its managers or
42-7 officers are managers, directors or officers or have a financial
42-8 interest, shall be void or voidable solely for this reason, solely
42-9 because the manager or officer is present at or participates in the
42-10 meeting of managers or of a committee of managers which authorizes
42-11 the contract or transaction, or solely because such manager's or
42-12 managers' votes are counted for such purpose, if:
42-13 (1) The material facts as to the relationship or
42-14 interest and as to the contract or transaction are disclosed or are
42-15 known to the managers or the committee, and the managers or
42-16 committee in good faith authorizes the contract or transaction by
42-17 the affirmative vote of a majority of the disinterested managers,
42-18 even though the disinterested managers be less than a quorum; or
42-19 (2) The material facts as to the relationship or
42-20 interest and as to the contract or transaction are disclosed or are
42-21 known to the members entitled to vote thereon, and the contract or
42-22 transaction is specifically approved in good faith by vote of the
42-23 members; or
42-24 (3) The contract or transaction is fair as to the
42-25 limited liability company as of the time it is authorized,
42-26 approved, or ratified by the managers, a committee thereof, or the
42-27 members.
42-28 B. Unless otherwise provided in the regulations, common
42-29 <Common> or interested managers may be counted in determining the
42-30 presence of a quorum at a meeting of the managers or of a committee
42-31 which authorizes the contract or transaction.
42-32 SECTION 49. Article 2.19, Texas Limited Liability Company
42-33 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
42-34 read as follows:
42-35 Art. 2.19. Place and notice of managers' meetings.
42-36 A. Except as otherwise provided in the articles of organization or
42-37 the regulations, regular or special meetings <Meetings> of the
42-38 members, managers, or any committee <regular or special,> may be
42-39 held either within or without this State.
42-40 B. Regular meetings of the managers or committees may be
42-41 held with or without notice as prescribed in the regulations.
42-42 Special meetings of the managers or committees shall be held upon
42-43 such notice as is prescribed in the regulations.
42-44 C. Except as otherwise provided in the articles of
42-45 organization or the regulations, if the limited liability company
42-46 is without managers, regular meetings of members may be held with
42-47 or without notice as prescribed in the regulations and special
42-48 meetings of members may be held with or without notice as
42-49 prescribed in the regulations, unless any such meeting is to
42-50 consider any of those matters set forth in Section D, Article 2.23,
42-51 of this Act. Except as otherwise provided in the articles of
42-52 organization or the regulations, for any meeting of the members at
42-53 which any of the matters set forth in Section D, Article 2.23, of
42-54 this Act are to be considered, written or printed notice stating
42-55 the place, day, and hour of the meeting and describing the purpose
42-56 or purposes of such meeting shall be delivered to the members not
42-57 less than ten (10) or more than sixty (60) days before the meeting,
42-58 either personally or by mail.
42-59 D. Except as otherwise provided in the articles of
42-60 organization or the regulations, if the limited liability company
42-61 has managers, meetings of members shall be held upon written or
42-62 printed notice, stating the place, day, and hour of the meeting
42-63 and, in the case of a special meeting, the purpose or purposes for
42-64 which the meeting is called, which notice shall be delivered to the
42-65 members not less than ten (10) or more than sixty (60) days before
42-66 the meeting, either personally or by mail.
42-67 E. If mailed, such notice to a member shall be deemed to be
42-68 delivered when deposited in the United States Mail addressed to the
42-69 member at the member's address that appears on the records of the
42-70 limited liability company, with postage prepaid.
43-1 F. Attendance of a member, manager, or committee member at a
43-2 meeting shall constitute a waiver of notice of such meeting, except
43-3 where that member, <a> manager or committee member attends a
43-4 meeting for the express purpose of objecting to the transaction of
43-5 any business on the ground that the meeting is not lawfully called
43-6 or convened.
43-7 G. The articles of organization and regulations may contain
43-8 provisions relating to giving notice of the time, place, or purpose
43-9 of a meeting at which a matter is to be voted on by any members or
43-10 managers, waiver of notice, action by consent without a meeting,
43-11 the establishment of a record date, quorum requirements, voting in
43-12 person or by proxy, or any other matter relating to the exercise of
43-13 the right to vote <Neither the business to be transacted at, nor
43-14 the purpose of, any regular or special meeting of the managers need
43-15 be specified in the notice or waiver of notice of such meeting,
43-16 unless required by the regulations>.
43-17 SECTION 50. Sections A and B, Article 2.22, Texas Limited
43-18 Liability Company Act (Article 1528n, Vernon's Texas Civil
43-19 Statutes), are amended to read as follows:
43-20 A. A domestic limited liability company shall keep and
43-21 maintain the following records in its principal office in the
43-22 United States or make them available in that office within five
43-23 days after the date of receipt of a written request under Section E
43-24 of this Article:
43-25 (1) a current list that states:
43-26 (a) the name and mailing address of each member;
43-27 (b) the percentage or other interest in the
43-28 limited liability company owned by each member; and
43-29 (c) if one or more classes or groups are
43-30 established in or under the articles of organization or
43-31 regulations, the names of the members who are members of each
43-32 specified class or group;
43-33 (2) copies of the federal, state, and local
43-34 information or income tax returns for each of the limited liability
43-35 company's six most recent tax years;
43-36 (3) a copy of the articles of organization and, if the
43-37 regulations of the limited liability company are in writing, a copy
43-38 of the regulations, copies of all amendments or restatements of the
43-39 articles of organization or regulations, executed copies of any
43-40 powers of attorney, and copies of any document that creates, in the
43-41 manner provided by the articles of organization or regulations,
43-42 classes or groups of members;
43-43 (4) unless contained in the articles of organization
43-44 or regulations, a written statement of:
43-45 (a) the amount of the cash contribution and a
43-46 description and statement of the agreed value of any other
43-47 contribution made by each member, and the amount of the cash
43-48 contribution and a description and statement of the agreed value of
43-49 any other contribution that the member has agreed to make in the
43-50 future as an additional contribution;
43-51 (b) the times at which additional contributions
43-52 are to be made or events requiring additional contributions to be
43-53 made;
43-54 (c) events requiring the limited liability
43-55 company to be dissolved and its affairs wound up; and
43-56 (d) the date on which each member in the limited
43-57 liability company became a member; and
43-58 (5) correct and complete books and records of account
43-59 of the limited liability company.
43-60 B. A limited liability company shall maintain such <its>
43-61 records in written form or in another form capable of conversion
43-62 into written form within a reasonable time.
43-63 SECTION 51. Section A, Article 2.23, Texas Limited Liability
43-64 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
43-65 amended to read as follows:
43-66 A. Except as otherwise provided in this Article, in the
43-67 articles of organization, or in the regulations, a majority of the
43-68 members, managers, or members of any committee constitutes a quorum
43-69 for the transaction of business at any meeting of the members, the
43-70 managers, or the committee. An act of a majority of the members
44-1 entitled to vote, the managers, or the members of a committee, who
44-2 are present at a meeting of the members, the managers, or the
44-3 committee at which a quorum is present is the act of the members,
44-4 the managers, or the committee. Except as otherwise provided in
44-5 the articles of organization or the regulations, any member may
44-6 vote either in person or by proxy executed in writing by the
44-7 member.
44-8 SECTION 52. Section A, Article 3.02, Texas Limited Liability
44-9 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
44-10 amended to read as follows:
44-11 A. The initial Articles of Organization shall set forth:
44-12 (1) The name of the limited liability company;
44-13 (2) The period of duration, which may be perpetual;
44-14 (3) The purpose for which the limited liability
44-15 company is organized which may be stated to be, or to include, the
44-16 transaction of any or all lawful business for which limited
44-17 liability companies may be organized under this Act;
44-18 (4) The address of its initial registered office and
44-19 the name of its initial registered agent at that address;
44-20 (5) If the limited liability company is to have a
44-21 manager or managers, a statement to that effect and the names and
44-22 the addresses of the initial manager or managers, or if<. If> the
44-23 limited liability company will not have managers, a statement to
44-24 that effect and the name and the addresses of the initial members;
44-25 (6) The name and the address of each organizer, unless
44-26 the limited liability company is being organized pursuant to a plan
44-27 of conversion or a plan of merger, in which case the articles need
44-28 not include such information;
44-29 (7) Any provision required by Part Eleven of this Act,
44-30 if the limited liability company is a professional limited
44-31 liability company; <and>
44-32 (8) If the limited liability company is being
44-33 incorporated pursuant to a plan of conversion or a plan of merger,
44-34 a statement to that effect, and in the case of a plan of
44-35 conversion, the name, address, and prior form of organization, date
44-36 of incorporation, or organization and jurisdiction of incorporation
44-37 or organization of the converting entity; and
44-38 (9) Any other provisions, not inconsistent with law,
44-39 that <which> the members elect to set out in the articles of
44-40 organization for the regulation of the internal affairs of the
44-41 limited liability company, including any provisions that <which>
44-42 under this Act are permitted to be set out in the regulations of
44-43 the limited liability company.
44-44 SECTION 53. Article 3.03, Texas Limited Liability Company
44-45 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
44-46 amending Section A and adding Section C to read as follows:
44-47 A. Except as provided by Section C of this Article, the
44-48 <The> original and a copy of the articles of organization shall be
44-49 delivered to the Secretary of State. If the Secretary of State
44-50 finds that the articles of organization conform to law, the
44-51 Secretary of State shall, when all fees have been paid as required
44-52 by law:
44-53 (1) Endorse on the original and the copy the word
44-54 "filed," and the month, day, and year of the filing thereof.
44-55 (2) File the original in the office of the Secretary
44-56 of State.
44-57 (3) Issue a certificate of organization to which shall
44-58 be affixed the copy.
44-59 C. In the case of a new domestic limited liability company
44-60 being organized pursuant to a plan of conversion or a plan of
44-61 merger pursuant to Part Ten of this Act, the articles of
44-62 organization of the limited liability company shall be filed with
44-63 the secretary of state with the articles of conversion or merger
44-64 and need not be filed separately pursuant to Section A of this
44-65 article. If the secretary of state finds that the articles of
44-66 organization conform to the law, the secretary of state shall file
44-67 the articles of organization in the office of the secretary of
44-68 state and issue a certificate of organization, to which the
44-69 secretary of state shall affix a copy of the articles of
44-70 organization, and deliver the same to the party or parties filing
45-1 the articles of conversion or merger or their representatives with
45-2 the certificate of conversion or merger that is issued in
45-3 connection with the conversion or merger. In the case of a
45-4 conversion or a merger, the certificate of organization of a
45-5 domestic limited liability company that is a converted entity or
45-6 that is to be created pursuant to the plan of merger shall become
45-7 effective upon the effectiveness of the conversion or the merger,
45-8 as the case may be.
45-9 SECTION 54. Article 3.04, Texas Limited Liability Company
45-10 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
45-11 read as follows:
45-12 Art. 3.04. Effect of the Issuance of Certificate of
45-13 Organization. A. Except as provided by Section B of this article,
45-14 upon <Upon> the issuance of the certificate of organization, the
45-15 limited liability company's <company> existence shall begin<, and
45-16 such certificate of organization shall be conclusive evidence that
45-17 all conditions precedents required to be performed by the
45-18 organizers have been complied with and that the limited liability
45-19 company has been organized under this Act, except as against the
45-20 state in proceedings for involuntary dissolution>.
45-21 B. In the case of a new domestic limited liability company
45-22 being organized pursuant to a plan of conversion or a plan of
45-23 merger pursuant to Part Ten of this Act, the existence of the
45-24 limited liability company as such shall begin upon the
45-25 effectiveness of the conversion or the merger, as the case may be.
45-26 C. Upon effectiveness, the certificate of organization shall
45-27 be conclusive evidence that all conditions precedent required to be
45-28 performed for the valid organization of the limited liability
45-29 company have been complied with and that the limited liability
45-30 company has been duly organized under this Act, except as against
45-31 the state in a proceeding for involuntary dissolution.
45-32 SECTION 55. Article 5.08, Texas Limited Liability Company
45-33 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
45-34 read as follows:
45-35 Art. 5.08. Right to Distribution. A. Subject to Articles
45-36 5.09 and 6.04 of this act, at the time that a member becomes
45-37 entitled to receive a distribution, with respect to the <a>
45-38 distribution, that member has the status of and is entitled to all
45-39 remedies available to a creditor of the limited liability company.
45-40 SECTION 56. Section A, Article 6.01, Texas Limited Liability
45-41 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
45-42 amended to read as follows:
45-43 A. Except as provided by Section B of this Article, a
45-44 limited liability company shall be dissolved on the first of the
45-45 following to occur:
45-46 (1) the period fixed for the duration of the limited
45-47 liability company expires;
45-48 (2) the occurrence of events specified in the articles
45-49 of organization or regulations to cause dissolution;
45-50 (3) the action of the members to dissolve the limited
45-51 liability company;
45-52 (4) if no capital has been paid into the limited
45-53 liability company, the act of the organizer or the managers <of the
45-54 limited company> to dissolve the limited liability company;
45-55 (5) except as otherwise provided in the regulations,
45-56 upon the death, expulsion, withdrawal pursuant to or as provided in
45-57 the articles of organization or regulations, bankruptcy, or
45-58 dissolution of a member or the occurrence of any other event which
45-59 terminates the continued membership of a member in the limited
45-60 liability company; or
45-61 (6) entry of a decree of judicial dissolution under
45-62 Section 6.02 of this Act.
45-63 SECTION 57. Section B, Article 7.13, Texas Limited Liability
45-64 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
45-65 amended to read as follows:
45-66 B. The failure of a foreign limited liability company to
45-67 obtain a certificate of authority to transact business in this
45-68 State shall not impair the validity of any contract or act of such
45-69 foreign limited liability company, shall not cause any member or
45-70 manager of such foreign limited liability company to become liable
46-1 for the debts, obligations, or liabilities of such foreign limited
46-2 liability company, and shall not prevent such foreign limited
46-3 liability company from defending any action, suit or proceeding in
46-4 any court of this State.
46-5 SECTION 58. Section C, Article 8.12, Texas Limited Liability
46-6 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
46-7 amended to read as follows:
46-8 C. For purposes of the application of the articles of the
46-9 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
46-10 by Sections A and B of this Article, as context requires:
46-11 (1) a reference to a corporation includes a limited
46-12 liability company;
46-13 (2) a reference to a share includes a membership
46-14 interest;
46-15 (3) a reference to a shareholder includes a member;
46-16 (4) a reference to a director includes a manager or,
46-17 to the extent that the management of the limited liability company
46-18 is reserved in whole or in part to the members, a member who
46-19 manages the limited liability company;
46-20 (5) a reference to articles of incorporation includes
46-21 articles of organization; provided, however, that the references to
46-22 articles of incorporation in Article 7.06, Texas Miscellaneous
46-23 Corporation Laws Act (Article 1302-7.06, Vernon's Texas Civil
46-24 Statutes), include either articles of organization or regulations;
46-25 and
46-26 (6) a reference to bylaws includes regulations.
46-27 SECTION 59. Section A, Article 9.01, Texas Limited Liability
46-28 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
46-29 amended to read as follows:
46-30 A. The Secretary of State is authorized and required to
46-31 collect for the use of the State the following fees:
46-32 (1) Filing articles of organization of a domestic
46-33 limited liability company and issuing the certificate of
46-34 organization, Two Hundred Dollars ($200.00).
46-35 (2) Filing articles of amendment of a domestic limited
46-36 liability company and issuing the certificate of amendment, One
46-37 Hundred Dollars ($100.00).
46-38 (3) Filing articles of merger or articles of
46-39 conversion involving one or more domestic or foreign limited
46-40 liability companies,<:>
46-41 <(a)> Two Hundred Dollars ($200.00), provided that any other
46-42 filing fee paid under the corporation or partnership statutes of
46-43 this state for the filing of articles of merger or articles of
46-44 conversion with respect to entities organized under those statutes
46-45 shall be credited against the filing fee provided by this
46-46 subsection <if another type of domestic entity is not a party to
46-47 the merger; or>
46-48 <(b) the greater of Two Hundred Dollars ($200.00) or the
46-49 highest filing fee for articles of merger under the applicable
46-50 Texas statute under which the other domestic entity or entities are
46-51 incorporated or organized, if another type of domestic entity is
46-52 party to the merger>.
46-53 (4) Filing an application of a foreign limited
46-54 liability company for certificate of authority to transact business
46-55 in this state and issuing such a certificate of authority, Five
46-56 Hundred Dollars ($500.00).
46-57 (5) Filing an application of a foreign limited
46-58 liability company for an amended certificate of authority to
46-59 transact business in this state and issuing such an amended
46-60 certificate of authority, One Hundred Dollars ($100.00).
46-61 (6) Filing restated articles of organization of a
46-62 domestic limited liability company, Two Hundred Dollars ($200.00).
46-63 (7) Filing application for reservations of a limited
46-64 liability company name and issuing certificate thereof, Twenty-Five
46-65 Dollars ($25.00).
46-66 (8) Filing notice of transfer of reserved limited
46-67 liability company name and issuing a certificate therefor, Ten
46-68 Dollars ($10.00).
46-69 (9) Filing statement of change of registered office or
46-70 registered agent, or both, Ten Dollars ($10.00).
47-1 (10) Filing statement of change of address of
47-2 registered agent, Ten Dollars ($10.00); provided, however, that the
47-3 maximum fee for simultaneous filings by a registered agent for more
47-4 than one limited liability company shall not exceed Five Hundred
47-5 Dollars ($500.00).
47-6 (11) Filing articles of dissolution and issuing
47-7 certificate therefor, Twenty-Five Dollars ($25.00).
47-8 (12) Filing application for withdrawal and issuing
47-9 certificate therefor, Ten Dollars ($10.00).
47-10 (13) Filing certificate from home state that foreign
47-11 limited liability company is no longer existent in said state, Ten
47-12 Dollars ($10.00).
47-13 (14) Maintaining the record of service of any process,
47-14 notice or demand upon the Secretary of State as agent for foreign
47-15 and domestic limited liability companies, Twenty-Five Dollars
47-16 ($25.00).
47-17 (15) Filing any instrument pursuant to this act not
47-18 expressly provided for above, Ten Dollars ($10.00).
47-19 SECTION 60. Subsection (1), Section A, Article 9.03, Texas
47-20 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
47-21 Statutes), is amended to read as follows:
47-22 (1) For purposes of this Article, "permitted act"
47-23 means a filing with the Secretary of State under this Act for:
47-24 (a) the articles of organization of a limited
47-25 liability company under this Act;
47-26 (b) an amendment to or restatement of the
47-27 articles of organization;
47-28 (c) a merger or conversion;
47-29 (d) the application of a foreign limited
47-30 liability company to procure a certificate of authority to transact
47-31 business in this state or to withdraw from doing business in this
47-32 state;
47-33 (e) an amendment to the certificate of authority
47-34 of a foreign limited liability company to transact business in this
47-35 state;
47-36 (f) a change in registered office or registered
47-37 agent;
47-38 (g) a change of address of a registered agent;
47-39 or
47-40 (h) a voluntary dissolution.
47-41 SECTION 61. Section F, Article 9.03, Texas Limited Liability
47-42 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
47-43 amended to read as follows:
47-44 F. If articles of organization, articles of amendment or
47-45 restatement, articles of merger, articles of conversion, an
47-46 application, or any other document permitted to be filed pursuant
47-47 to this Act with the Secretary of State have been filed but the
47-48 event or transaction evidenced by the filing has not become
47-49 effective, the filing may be abandoned in accordance with the
47-50 agreement of the parties to the filing by filing a certificate of
47-51 abandonment with the Secretary of State before the effectiveness of
47-52 the event or transaction in accordance with the terms of the
47-53 document so filed. The certificate of abandonment must be signed
47-54 on behalf of each domestic or foreign limited liability company or
47-55 other entity that is a party to the event or transaction by a
47-56 member, manager, officer, or other authorized representative and
47-57 must state the nature of the filing to be abandoned, the date of
47-58 the filing to be abandoned, the parties to the filing to be
47-59 abandoned, and that the event or transaction has been abandoned in
47-60 accordance with the agreement of the parties. On the filing of the
47-61 certificate <statement> of abandonment with the Secretary of State,
47-62 the event or transaction evidenced by the original filing shall be
47-63 considered abandoned and may not become effective.
47-64 SECTION 62. Section B, Article 10.03, Texas Limited
47-65 Liability Company Act (Article 1528n, Vernon's Texas Civil
47-66 Statutes), is amended to read as follows:
47-67 B. The original of the articles of merger and a number of
47-68 copies equal to the number of surviving and new domestic or foreign
47-69 limited liability companies and other entities that are a party to
47-70 the plan of merger or that will be created by its terms shall be
48-1 delivered to the Secretary of State. Unless the Secretary of State
48-2 finds that the articles of merger do not conform to law, on receipt
48-3 of all applicable filing fees and franchise taxes, if any, required
48-4 by law or if the plan of merger provides that one or more of the
48-5 surviving, new, or acquiring domestic or foreign limited liability
48-6 companies or other entities will be responsible for the payment of
48-7 all of such fees and franchise taxes and that all of such
48-8 surviving, new, or acquiring domestic or foreign limited liability
48-9 companies and other entities will be obligated to pay such fees and
48-10 franchise taxes if the same are not timely paid, the Secretary of
48-11 State shall:
48-12 (1) certify that the articles of merger have been
48-13 filed in the Secretary of State's office by endorsing on the
48-14 original the word "Filed" and the date of the filing;
48-15 (2) file and index the endorsed articles of merger;
48-16 and
48-17 (3) issue a certificate of merger, together with a
48-18 copy of the articles affixed to the certificate, to each surviving
48-19 or new domestic or foreign limited liability company or other
48-20 entity that is a party to the plan of merger or that is created by
48-21 the merger, or to its respective representatives.
48-22 SECTION 63. Part Ten, Texas Limited Liability Act (Article
48-23 1528n, Vernon's Texas Civil Statutes), is amended by adding
48-24 Articles 10.08-10.11 to read as follows:
48-25 Art. 10.08. CONVERSION. A. A domestic limited liability
48-26 company may adopt a plan of conversion and convert to a foreign
48-27 limited liability company or any other entity if:
48-28 (1) the converting entity acts upon and its members
48-29 approve a plan of conversion in the manner prescribed by Article
48-30 10.01 of this Act as if the conversion were a merger to which the
48-31 converting entity were a party and not the survivor;
48-32 (2) the conversion is permitted by, or not
48-33 inconsistent with, the laws of the state or country in which the
48-34 converted entity is to be incorporated, formed, or organized, and
48-35 the incorporation, formation, or organization of the converted
48-36 entity is effected in compliance with such laws;
48-37 (3) at the time the conversion becomes effective, each
48-38 member of the converting entity will, unless otherwise agreed to by
48-39 that member, own an equity interest or other ownership or security
48-40 interest in, and be a shareholder, partner, member, owner, or other
48-41 security holder of, the converted entity;
48-42 (4) no member of the domestic limited liability
48-43 company will, as a result of the conversion, become personally
48-44 liable, without the member's consent, for the liabilities or
48-45 obligations of the converted entity; and
48-46 (5) the converted entity shall be incorporated,
48-47 formed, or organized as part of or pursuant to the plan of
48-48 conversion.
48-49 B. Any foreign limited liability company or other entity may
48-50 adopt a plan of conversion and convert to a domestic limited
48-51 liability company if:
48-52 (1) the conversion is permitted by the laws of the
48-53 state or country in which the foreign limited liability company is
48-54 incorporated, if a foreign limited liability company is converting;
48-55 (2) the conversion is either permitted by the laws
48-56 under which the other entity is formed or organized or by the
48-57 constituent documents of the other entity that are not inconsistent
48-58 with the laws of the state or country in which the other entity is
48-59 formed or organized, if another entity is converting; and
48-60 (3) the converting entity takes all action that may be
48-61 required by the laws of the state or country under which it is
48-62 incorporated, formed, or organized and by its constituent documents
48-63 to effect the conversion.
48-64 C. A plan of conversion shall set forth:
48-65 (1) the name of the converting entity and the
48-66 converted entity;
48-67 (2) a statement that the converting entity is
48-68 continuing its existence in the organizational form of the
48-69 converted entity;
48-70 (3) a statement as to the type of entity that the
49-1 converted entity is to be and the state or country under the laws
49-2 of which the converted entity is to be incorporated, formed, or
49-3 organized;
49-4 (4) the manner and basis of converting the membership
49-5 interests or other evidences of ownership of the converting entity
49-6 into membership interests or other evidences of ownership or
49-7 securities of the converted entity, or any combination thereof;
49-8 (5) in an attachment or exhibit, the articles of
49-9 organization of the domestic limited liability company if the
49-10 converted entity is a domestic limited liability company; and
49-11 (6) in an attachment or exhibit, the articles of
49-12 organization or other organizational documents of the converted
49-13 entity if the converted entity is not a domestic limited liability
49-14 company.
49-15 D. A plan of conversion may set forth such other provisions
49-16 relating to the conversion not inconsistent with law, including the
49-17 initial regulations of the converted entity.
49-18 Art. 10.09. ARTICLES OF CONVERSION. A. If a plan of
49-19 conversion has been approved in accordance with Article 10.08 of
49-20 this Act and has not been abandoned, articles of conversion shall
49-21 be executed by the converting entity by a manager or other duly
49-22 authorized representative thereof and shall set forth:
49-23 (1) the plan of conversion or a statement certifying
49-24 the following:
49-25 (a) the name, the state of incorporation,
49-26 formation, or organization of the converting entity, and the
49-27 organizational form of the converting entity;
49-28 (b) that a plan of conversion has been approved;
49-29 (c) that an executed plan of conversion is on
49-30 file at the principal place of business of the converting entity,
49-31 stating the address thereof, and that an executed plan of
49-32 conversion will be on file, from and after the conversion, at the
49-33 principal place of business of the converting entity, stating the
49-34 address thereof; and
49-35 (d) that a copy of the plan of conversion will
49-36 be furnished by the converting entity (prior to the conversion) or
49-37 the converted entity (after the conversion), on written request and
49-38 without cost, to any member of the converting entity or the
49-39 converted entity; and
49-40 (2) a statement that the approval of the plan of
49-41 conversion was duly authorized by all action required by the laws
49-42 under which the converting entity was incorporated, formed, or
49-43 organized and by its constituent documents.
49-44 B. The original and one copy of the articles of conversion
49-45 shall be delivered to the secretary of state. Two copies of the
49-46 articles of organization of the domestic limited liability company
49-47 if the converted entity is a domestic limited liability company
49-48 shall also be delivered to the secretary of state with the articles
49-49 of conversion.
49-50 C. If the secretary of state finds that the articles of
49-51 conversion conform to law, has received all filings required to be
49-52 received, and issued all certificates required to be issued in
49-53 connection with the incorporation, formation, or organization of
49-54 the converted entity, if any, the secretary of state shall, when
49-55 all fees and franchise taxes have been paid as required by law or
49-56 if the articles of conversion provide that the converted entity
49-57 will be liable for the payment of all such fees and franchise
49-58 taxes:
49-59 (1) Endorse on the original and each copy the word
49-60 "Filed" and the month, day, and year of the filing thereof.
49-61 (2) File the original in the office of the secretary
49-62 of state.
49-63 (3) Issue a certificate of conversion, together with a
49-64 copy of the articles affixed thereto, to the converted entity or
49-65 its representatives.
49-66 Art. 10.10. EFFECTIVE DATE OF CONVERSION. Except as
49-67 otherwise provided by Article 9.03 of this Act, upon the issuance
49-68 of the certificate of conversion by the secretary of state, the
49-69 conversion of a converting entity shall be effective.
49-70 Art. 10.11. EFFECT OF CONVERSION. When a conversion of a
50-1 converting entity takes effect:
50-2 (1) the converting entity shall continue to exist,
50-3 without interruption, but in the organizational form of the
50-4 converted entity rather than in its prior organizational form;
50-5 (2) all rights, title, and interests to all real
50-6 estate and other property owned by the converting entity shall
50-7 continue to be owned by the converted entity in its new
50-8 organizational form without reversion or impairment, without
50-9 further act or deed, and without any transfer or assignment having
50-10 occurred, but subject to any existing liens or other encumbrances
50-11 thereon;
50-12 (3) all liabilities and obligations of the converting
50-13 entity shall continue to be liabilities and obligations of the
50-14 converted entity in its new organizational form without impairment
50-15 or diminution by reason of the conversion;
50-16 (4) all rights of creditors or other parties with
50-17 respect to or against the prior interest holders or other owners of
50-18 the converting entity in their capacities as such in existence as
50-19 of the effective time of the conversion will continue in existence
50-20 as to those liabilities and obligations and may be pursued by such
50-21 creditors and obligees as if such conversion shall not have
50-22 occurred;
50-23 (5) a proceeding pending by or against the converting
50-24 entity or by or against any of the converting entity's interest
50-25 holders or owners in their capacities as such may be continued by
50-26 or against the converted entity in its new organizational form and
50-27 by or against the prior interest holders or owners, as the case may
50-28 be, without any need for substitution of parties;
50-29 (6) the membership interests and other evidences of
50-30 ownership in the converting entity that are to be converted into
50-31 membership interests, evidences of ownership, or other securities
50-32 in the converted entity as provided in the plan of conversion shall
50-33 be so converted, and if the converting entity is a domestic limited
50-34 liability company, the former holders of membership interests in
50-35 the domestic limited liability company shall be entitled only to
50-36 the rights provided in the plan of conversion;
50-37 (7) if, after the effectiveness of the conversion, a
50-38 shareholder, partner, member, or other owner of the converted
50-39 entity would be liable under applicable law, in such capacity, for
50-40 the debts or obligations of the converted entity, such shareholder,
50-41 partner, member, or other owner of the converted entity shall be
50-42 liable for the debts and obligations of the converting entity that
50-43 existed before the conversion takes effect only to the extent that
50-44 such shareholder, partner, member, or other owner:
50-45 (a) agreed in writing to be liable for such
50-46 debts or obligations;
50-47 (b) was liable under applicable law, prior to
50-48 the effectiveness of the conversion, for such debts or obligations;
50-49 or
50-50 (c) by becoming a shareholder, partner, member,
50-51 or other owner of the converted entity, becomes liable under
50-52 applicable law for existing debts and obligations of the converted
50-53 entity; and
50-54 (8) if the converted entity is a foreign limited
50-55 liability company or other entity, such converted entity shall be
50-56 deemed to appoint the secretary of state in this state as its agent
50-57 for service of process in a proceeding to enforce any obligation or
50-58 the rights of dissenting members of the converting domestic limited
50-59 liability company.
50-60 SECTION 64. Section B, Article 11.01, Texas Limited
50-61 Liability Company Act (Article 1528n, Vernon's Texas Civil
50-62 Statutes), is amended by amending Subsection (2) and adding
50-63 Subsections (3) and (4) to read as follows:
50-64 (2) "Professional limited liability company" means a
50-65 limited liability company that is organized under this Act for the
50-66 sole and specific purpose of rendering professional service and
50-67 that has as its members only professional individuals or
50-68 professional entities <individuals licensed or otherwise authorized
50-69 within this state to render the same professional service as the
50-70 limited liability company>.
51-1 (3) "Professional individual," with respect to any
51-2 professional limited liability company, means an individual who is
51-3 licensed or otherwise authorized to render the same professional
51-4 service as such professional limited liability company, either
51-5 within this state or in any other jurisdiction.
51-6 (4) "Professional entity," with respect to any
51-7 professional limited liability company, means a person (other than
51-8 an individual) that renders the same professional service as such
51-9 professional limited liability company only through partners,
51-10 members, shareholders, managers, directors, associates, officers,
51-11 employees, or agents who are professional individuals or
51-12 professional entities.
51-13 SECTION 65. Article 11.03, Texas Limited Liability Company
51-14 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
51-15 read as follows:
51-16 Art. 11.03. Restrictions on members, managers, and officers.
51-17 A. A person who is not a professional individual or professional
51-18 entity <licensed or otherwise authorized to render the professional
51-19 service of the professional limited liability company> may not be a
51-20 member, manager, or officer of the professional limited liability
51-21 company. A membership interest in the professional limited
51-22 liability company may not be transferred to a person who is not a
51-23 professional individual or professional entity <licensed or
51-24 otherwise authorized to render the professional service of the
51-25 professional limited liability company>.
51-26 B. If a member, manager, or officer of a professional
51-27 limited liability company ceases to be a professional individual or
51-28 professional entity, <or an agent or employee of the company who
51-29 has been rendering professional service for or with the company of
51-30 the same type for which the professional limited liability company
51-31 was organized to render, becomes legally disqualified to render the
51-32 professional service,> the person shall sever all employment with
51-33 the professional limited liability company and immediately
51-34 terminate all financial interest in the company. The professional
51-35 limited liability company shall purchase or cause to be purchased
51-36 from the person all membership interests owned by the person in the
51-37 professional limited liability company, at a price and on terms as
51-38 may be provided in the articles of organization, the regulations,
51-39 or any applicable agreement among the members and the professional
51-40 limited liability company. If the person is the sole member of the
51-41 professional limited liability company, the person may continue to
51-42 act as member, manager, or officer only for the purposes of winding
51-43 up the affairs of the professional limited liability company and
51-44 effecting its dissolution, including selling the assets of or
51-45 outstanding membership interests in the professional limited
51-46 liability company, but not including rendering professional
51-47 service.
51-48 C. If a person who is not a professional individual or a
51-49 professional entity <licensed or authorized to render the
51-50 professional service that a professional limited liability company
51-51 was organized to render> succeeds to the interest of a member of
51-52 the professional limited liability company, the person holding the
51-53 interest shall immediately terminate all financial interest in the
51-54 professional limited liability company, and the professional
51-55 limited liability company shall purchase or cause to be purchased
51-56 from the person all membership interests owned by the person in the
51-57 professional limited liability company, at a price and on terms as
51-58 may be provided in the articles of organization, the regulations,
51-59 or any applicable agreement among the members and the professional
51-60 limited liability company. If the person succeeded to all of the
51-61 membership interests in the professional limited liability company,
51-62 the person may continue to act as member, manager, or officer only
51-63 for the purposes of winding up the affairs of the professional
51-64 limited liability company and effecting its dissolution, including
51-65 selling the assets of or the outstanding membership interests in
51-66 the professional limited liability company, but not including
51-67 rendering professional service.
51-68 SECTION 66. Section A, Article 11.04, Texas Limited
51-69 Liability Company Act (Article 1528n, Vernon's Texas Civil
51-70 Statutes), is amended to read as follows:
52-1 A. A professional limited liability company may render
52-2 professional service in this state only through a<:>
52-3 <(1) an individual> member, manager, officer,
52-4 employee, or agent who is:
52-5 (1) a professional individual licensed or otherwise
52-6 authorized to render the professional service in this state; or
52-7 (2) a professional entity that renders the
52-8 professional service in this state only through partners, members,
52-9 shareholders, managers, directors, associates, officers, employees,
52-10 or agents who are professional individuals or professional entities
52-11 licensed or otherwise authorized to render the professional service
52-12 in this state<; or>
52-13 <(2) an agent of the professional limited liability
52-14 company that is a professional limited liability company,
52-15 professional corporation, or professional association that is
52-16 authorized in this state to render the professional service of the
52-17 professional limited liability company and that renders the
52-18 professional service only through a licensed individual member,
52-19 manager, officer, or employee>.
52-20 SECTION 67. Section A, Article 11.05, Texas Limited
52-21 Liability Company Act (Article 1528n, Vernon's Texas Civil
52-22 Statutes), is amended to read as follows:
52-23 A. Notwithstanding anything contained in Article 4.03 of
52-24 this Act to the contrary, this Act does not alter or affect the
52-25 professional relationship between a person rendering professional
52-26 service and a person receiving the service, and a confidential
52-27 relationship enjoyed in this state between those persons remains
52-28 unchanged. This Act does not remove or diminish any rights at law
52-29 that a person receiving professional service has against a person
52-30 rendering the service for an error, an omission, negligence,
52-31 incompetence, or malfeasance. A professional limited liability
52-32 company, but not the other <individual> members, managers, <or>
52-33 officers, employees, or agents of such professional limited
52-34 liability company (or their respective members, managers, officers,
52-35 employees, or agents), is jointly and severally liable with a
52-36 member, manager, officer, employee, or agent rendering professional
52-37 service for an error, omission, negligence, incompetence, or
52-38 malfeasance on the part of the member, manager, officer, employee,
52-39 or agent when the member, manager, officer, employee, or agent is
52-40 rendering professional service in the course of employment for the
52-41 professional limited liability company. If the member, manager,
52-42 officer, employee, or agent rendering such professional service in
52-43 such circumstances is itself a professional entity, then the
52-44 professional limited liability company and such professional entity
52-45 are jointly and severally liable with the partner, member,
52-46 shareholder, manager, director, associate, officer, employee, or
52-47 agent of such professional entity through which such professional
52-48 entity renders such professional service for an error, omission,
52-49 negligence, incompetence, or malfeasance on the part of such
52-50 partner, member, shareholder, manager, director, associate,
52-51 officer, employee, or agent of such professional entity.
52-52 SECTION 68. Section A, Article 11.07, Texas Limited
52-53 Liability Company Act (Article 1528n, Vernon's Texas Civil
52-54 Statutes), is amended to read as follows:
52-55 A. A foreign professional limited liability company may
52-56 apply for a certificate of authority to perform professional
52-57 service in this state by filing an application in accordance with
52-58 Part Seven of this Act. The Secretary of State may not issue the
52-59 certificate unless the name of the foreign professional limited
52-60 liability company or the name it <the limited liability company>
52-61 elects in this state meets the requirements of Article 11.02 of
52-62 this Act. A foreign professional limited liability company may
52-63 render professional service in this state only through a member,
52-64 manager, officer, employee, or agent described in Section A of
52-65 Article 11.04 of this Act. <A member, manager, officer, employee,
52-66 or agent of the limited liability company who renders professional
52-67 service in this state on behalf of the limited liability company
52-68 must be licensed or otherwise authorized to render that
52-69 professional service in this state.>
52-70 SECTION 69. Section 2.01, Texas Revised Limited Partnership
53-1 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
53-2 read as follows:
53-3 Sec. 2.01. Certificate of limited partnership. (a) To form
53-4 a limited partnership, the partners must enter into a partnership
53-5 agreement (which, in the case of a limited partnership formed under
53-6 a plan of merger or a plan of conversion under Section 2.11 or 2.15
53-7 of this Act, may be included in the plan of merger or plan of
53-8 conversion) and one or more partners, including all of the general
53-9 partners, must execute a certificate of limited partnership. The
53-10 filing fee and the certificate shall be filed with the secretary of
53-11 state. The certificate must contain:
53-12 (1) the name of the limited partnership;
53-13 (2) the address of the registered office and the name
53-14 and address of the registered agent for service of process required
53-15 to be maintained by Section 1.06 of this Act;
53-16 (3) the address of the principal office in the United
53-17 States where records are to be kept or made available under Section
53-18 1.07 of this Act;
53-19 (4) the name, the mailing address, and the street
53-20 address of the business or residence of each general partner; <and>
53-21 (5) if the limited partnership is being formed
53-22 pursuant to a plan of merger or a plan of conversion under Section
53-23 2.11 or 2.15 of this Act, a statement to that effect;
53-24 (6) if the limited partnership is being formed
53-25 pursuant to a plan of conversion under Section 2.15 of this Act,
53-26 the name, the address, and the prior form of organization and
53-27 jurisdiction of incorporation or organization of the converting
53-28 entity; and
53-29 (7) other matters that the general partners determine
53-30 to include.
53-31 (b) Except in the case of a limited partnership formed under
53-32 a plan of merger or a plan of conversion under Section 2.11 or 2.15
53-33 of this Act, a <A> limited partnership is formed at the time of
53-34 the filing of the initial certificate of limited partnership with
53-35 the secretary of state or at a later date or time specified in the
53-36 certificate if there has been substantial compliance with the
53-37 requirements of this section. In the case of a limited
53-38 partnership being formed under a plan or merger or a plan of
53-39 conversion under Section 2.11 or 2.15 of this Act, the existence of
53-40 the limited partnership as a limited partnership shall begin on the
53-41 effectiveness of the merger or the conversion, as the case may be,
53-42 and the persons to be partners shall become general or limited
53-43 partners, as applicable, as of that time.
53-44 SECTION 70. Sections 2.03(a) and (c), Texas Revised Limited
53-45 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
53-46 are amended to read as follows:
53-47 (a) A certificate of limited partnership shall be canceled
53-48 by paying the filing fee and filing a certificate of cancellation
53-49 with the secretary of state:
53-50 (1) on the completion of the winding up of the
53-51 partnership;
53-52 (2) when there are no limited partners; or
53-53 (3) subject to Subsection (c) of this section, on a
53-54 merger or conversion <consolidation> as provided by Subsection (b)
53-55 of Section 2.11 of this Act or Subsection (c) of Section 2.15 of
53-56 this Act.
53-57 (c) If, in the case of merger or conversion <consolidation>,
53-58 one or more limited partnerships formed <or registered> under this
53-59 Act are not the surviving or resulting domestic limited partnership
53-60 or partnerships or other entity or entities, the certificate of
53-61 merger or conversion filed under Subsection (d) <(b)> of Section
53-62 2.11 or Subsection (e) of Section 2.15 of this Act is sufficient,
53-63 without a filing under this section, to cancel the certificate of
53-64 limited partnership of those nonsurviving limited partnerships.
53-65 SECTION 71. Section 2.04(a), Texas Revised Limited
53-66 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
53-67 is amended to read as follows:
53-68 (a) Each certificate required by this article to be filed
53-69 with the secretary of state shall be executed in the following
53-70 manner:
54-1 (1) an initial certificate of limited partnership or a
54-2 certificate of conversion must be signed by all general partners,
54-3 except for an initial certificate of limited partnership <unless>
54-4 signed and filed by a person under Subdivision (1) of Subsection
54-5 (a) of Section 3.04 of this Act;
54-6 (2) a certificate of amendment or restated certificate
54-7 must be signed by at least one general partner and by each other
54-8 general partner designated in the certificate of amendment as a new
54-9 general partner, unless signed and filed by a person under
54-10 Subsection (f) of Section 2.02 of this Act or under Subdivision (1)
54-11 of Subsection (a) of Section 3.04 of this Act, but the certificate
54-12 of amendment need not be signed by a withdrawing general partner;
54-13 (3) a certificate of cancellation must be signed by
54-14 all general partners participating in the winding up of the limited
54-15 partnership's affairs or, if no general partners are winding up the
54-16 limited partnership's affairs, then by all non-partner liquidators,
54-17 or, if the limited partners are winding up the limited
54-18 partnership's affairs, by a majority in interest of the limited
54-19 partners;
54-20 (4) a certificate of merger filed on behalf of a
54-21 domestic limited partnership must be signed as provided in
54-22 Subsection (d), Section 2.11 of this Act;
54-23 (5) a certificate filed under Section 2.06 of this Act
54-24 must be signed by the person designated by the court; and
54-25 (6) a certificate of correction must be signed by at
54-26 least one general partner.
54-27 SECTION 72. Sections 2.06(a)-(d), Texas Revised Limited
54-28 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
54-29 are amended to read as follows:
54-30 (a) Notwithstanding any other provisions of this Act to the
54-31 contrary, to carry out a plan of reorganization ordered or decreed
54-32 by a court of competent jurisdiction under federal statute, a
54-33 domestic limited partnership being reorganized under a federal
54-34 statute may without action by or notice to its partners:
54-35 (1) amend or restate its certificate if the
54-36 certificate after amendment or restatement contains only provisions
54-37 of the type required or permitted in the certificate;
54-38 (2) merge or engage in a conversion or an interest
54-39 exchange with one or more other domestic or foreign limited
54-40 partnerships or other entities pursuant to this Act;
54-41 (3) sell, lease, exchange or otherwise dispose of all
54-42 or substantially all, of its property and assets; or
54-43 (4) cancel its certificate on completion of winding up
54-44 of the limited partnership.
54-45 (b) The individual or individuals designated by the court,
54-46 on behalf of a limited partnership that is being reorganized, may
54-47 execute:
54-48 (1) an amendment or restatement of the certificate
54-49 containing:
54-50 (A) the name of the limited partnership;
54-51 (B) the text of each amendment or restatement
54-52 approved by the court;
54-53 (C) the date of the court's order or decree
54-54 approving the amendment or restatement; <and>
54-55 (D) the court, file name, and case number of the
54-56 reorganization case <proceeding> in which the order or decree was
54-57 entered; and
54-58 (E) a statement that the court had jurisdiction
54-59 of the case under a federal statute; <or>
54-60 (2) a certificate of merger containing:
54-61 (A) the name of the limited partnership;
54-62 (B) the information required by Subsection (b)
54-63 of Section 2.11 of this Act;
54-64 (C) the date of the court's order or decree
54-65 approving the merger; <and>
54-66 (D) the court, file name, and case number of the
54-67 reorganization case <proceeding> in which the order or decree was
54-68 entered; and
54-69 (E) a statement that the court had jurisdiction
54-70 of the case under a federal statute; <or>
55-1 (3) a certificate of cancellation containing:
55-2 (A) the name of the limited partnership;
55-3 (B) the information required by Section 2.03 of
55-4 this Act and any other information permitted by Section 2.03 that
55-5 the court's order requires or permits to be included;
55-6 (C) the date of the court's order or decree
55-7 approving the certificate of cancellation; <and>
55-8 (D) the court, file name, and case number of the
55-9 reorganization case <proceeding> in which the order or decree was
55-10 entered; and
55-11 (E) a statement that the court had jurisdiction
55-12 of the case under a federal statute; or
55-13 (4) a certificate of conversion containing:
55-14 (A) the name of the limited partnership;
55-15 (B) the information required by Subsection (c)
55-16 of Section 2.15 of this Act;
55-17 (C) the date of the court's order or decree
55-18 approving the conversion;
55-19 (D) the court, file name, and case number of the
55-20 reorganization case in which the order or decree was entered; and
55-21 (E) a statement that the court had jurisdiction
55-22 of the case under a federal statute.
55-23 (c) If a domestic or foreign limited partnership that is not
55-24 being reorganized merges or engages in a conversion or an interest
55-25 exchange pursuant to a plan of reorganization with a domestic or
55-26 foreign limited partnership or other entity that is being
55-27 reorganized, Section 2.11 or 2.15 of this Act applies to the
55-28 domestic or foreign limited partnership or other entity that is not
55-29 being reorganized to the same extent that that section would apply
55-30 if the domestic or foreign limited partnership were merging with a
55-31 limited partnership that is not being reorganized except as
55-32 otherwise provided in the plan of reorganization ordered or decreed
55-33 by a court of competent jurisdiction under federal statute.
55-34 Subject to satisfaction of the requirements <the requirement> of
55-35 Section 2.11 or 2.15 of this Act and any other requirements of the
55-36 plan of merger, a certificate of merger or conversion shall be
55-37 signed on behalf of the entities that <which> are parties to the
55-38 merger or conversion and shall be filed with the secretary of state
55-39 <Secretary of State> as required by Section 2.11 or 2.15 of this
55-40 Act.
55-41 (d) On endorsement of the certificate by the secretary of
55-42 state under Section 2.07 of this Act, the certificate of amendment,
55-43 merger, conversion, or cancellation or restated certificate becomes
55-44 effective and has the same effect as if it had been adopted by
55-45 unanimous action of the general and the limited partners of the
55-46 limited partnership being reorganized except as otherwise provided
55-47 by this section or by the plan of reorganization ordered or decreed
55-48 by a court of competent jurisdiction under federal statute.
55-49 SECTION 73. Sections 2.11(b), (d), (e), (g), and (h), Texas
55-50 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
55-51 Civil Statutes), are amended to read as follows:
55-52 (b) A plan of merger must set forth:
55-53 (1) the name and state of domicile of each domestic or
55-54 foreign limited partnership or other entity that is a party to the
55-55 merger and the name of each domestic or foreign limited partnership
55-56 or other entity, if any, that shall survive the merger, which may
55-57 be one or more of the domestic or foreign limited partnerships or
55-58 other entities party to the merger, and the name and state of
55-59 domicile of each new domestic or foreign limited partnership or
55-60 other entity, if any, that may be created by the terms of the plan
55-61 of merger;
55-62 (2) the terms and conditions of the merger including,
55-63 if more than one domestic or foreign limited partnership or other
55-64 entity is to survive or to be created by the terms of the plan of
55-65 merger, (i) the manner and basis of allocating and vesting the real
55-66 estate and other property of each domestic or foreign limited
55-67 partnership and of each other entity that is a party to the merger
55-68 among one or more of the surviving or new domestic or foreign
55-69 limited partnerships and other entities, and (ii) the manner and
55-70 basis of allocating all liabilities and obligations of each
56-1 domestic or foreign limited partnership and other entity that is a
56-2 party to the merger (or making adequate provision for the payment
56-3 and discharge thereof) among one or more of the surviving or new
56-4 domestic or foreign limited partnerships and other entities;
56-5 (3) the manner and basis of converting any of the
56-6 partnership interests or other evidences of ownership of each
56-7 domestic or foreign limited partnership and other entity that is a
56-8 party to the merger into partnership interests, shares,
56-9 obligations, evidences of ownership, rights to purchase securities
56-10 or other securities of one or more of the surviving or new domestic
56-11 or foreign limited partnerships or other entities, into cash or
56-12 other property including shares, obligations, evidences of
56-13 ownership, rights to purchase securities or other securities of any
56-14 other person or entity or into any combination of the foregoing;
56-15 (4) as an exhibit or attachment, the certificate of
56-16 limited partnership of any new domestic limited partnership to be
56-17 created by the terms of the plan of merger; and
56-18 (5) the certificate of limited partnership or other
56-19 organizational documents of each other entity that is a party to
56-20 the merger and that is to be created by the terms of the plan of
56-21 merger.
56-22 (d) After a plan of merger has been approved by each of the
56-23 limited partnerships or other entities that is a party to the plan
56-24 of merger, a certificate of merger shall be executed on behalf of
56-25 each limited partnership or other entity by at least one general
56-26 partner of each domestic limited partnership that is a party to the
56-27 plan of merger and by a general partner, officer, agent or other
56-28 authorized representative of each other limited partnership or
56-29 other entity that is a party to the plan of merger and shall set
56-30 forth:
56-31 (1) the plan of merger or a statement certifying the
56-32 following:
56-33 (A) the name, the state of incorporation,
56-34 formation, or organization of each of the parties to the merger,
56-35 and the organizational form of each new or surviving limited
56-36 partnership or other entity;
56-37 (B) that a plan of merger has been approved;
56-38 (C) any amendments or changes in the certificate
56-39 of limited partnership of each surviving domestic limited
56-40 partnership, or if no such amendments are desired to be effected by
56-41 the merger, a statement to that effect;
56-42 (D) the certificate of limited partnership of
56-43 each new domestic limited partnership to be formed under the plan
56-44 of merger;
56-45 (E) that an executed plan of merger is on file
56-46 at the principal place of business of each surviving or new
56-47 domestic or foreign limited partnership or other entity, stating
56-48 the address thereof;
56-49 (F) that a copy or summary of the plan of merger
56-50 has been or is being furnished to each partner in each domestic
56-51 limited partnership that is a party to the merger at least 20 days
56-52 before the merger is effective, unless waived by that partner, or
56-53 that the domestic limited partnership has complied with the
56-54 provisions of its partnership agreement regarding furnishing
56-55 partners copies or summaries of the plan of merger or notices
56-56 regarding the merger; and
56-57 (G) in the case of a merger with multiple
56-58 surviving domestic or foreign limited partnerships or other
56-59 entities, that a copy of the plan of merger will be furnished by
56-60 each new or surviving domestic or foreign limited partnership or
56-61 other entity, on written request and without cost, to any creditor
56-62 or obligee of the parties to the merger at the time of the merger
56-63 if the obligation is then outstanding; and
56-64 (2) as to each domestic or foreign limited partnership
56-65 or other entity that is a party to the plan of merger, a statement
56-66 that the plan of merger was duly authorized by all action required
56-67 by the laws under which it was formed or organized and by its
56-68 constituent documents.
56-69 (e) The original of the certificate of merger and such
56-70 number of copies of the certificate equal to the number of
57-1 surviving and new domestic or foreign limited partnerships and
57-2 other entities that are a party to the plan of merger or that will
57-3 be created by the terms thereof, shall be delivered to the
57-4 secretary of state. An equal number of copies of the certificate
57-5 of limited partnership of each domestic limited partnership that is
57-6 to be formed pursuant to the plan of merger shall also be delivered
57-7 to the secretary of state with the articles of merger. Unless the
57-8 secretary of state finds that a certificate of merger does not
57-9 conform to law, on receipt of all applicable filing fees and
57-10 franchise taxes, if any, required by law, or if the plan of merger
57-11 (or a statement provided in lieu thereof) provides that one or more
57-12 of the surviving or new domestic or foreign limited partnerships or
57-13 other entities will be responsible for the payment of all fees and
57-14 franchise taxes and that all of the surviving or new domestic or
57-15 foreign limited partnerships and other entities will be obligated
57-16 to pay the fees and franchise taxes if they are not timely paid,
57-17 the secretary of state shall certify that the certificate of merger
57-18 has been filed in the secretary of state's office by endorsing on
57-19 the original the word "Filed" and the date of the filing, file and
57-20 index the endorsed certificate of merger, and return the copy,
57-21 similarly endorsed, to each surviving or new domestic or foreign
57-22 limited partnership or other entity that is a party to the plan of
57-23 merger or that is created thereby, or its or their respective
57-24 representatives.
57-25 (g) When a merger takes effect:
57-26 (1) the separate existence of every domestic limited
57-27 partnership that is a party to the merger, except any surviving or
57-28 new domestic limited partnership, shall cease;
57-29 (2) all rights, title, and interests to all real
57-30 estate and other property owned by each domestic or foreign limited
57-31 partnership and by each other entity that is a party to the merger
57-32 shall be allocated to and vested in one or more of the surviving or
57-33 resulting entities as provided in the plan of merger without
57-34 reversion or impairment, without further act or deed, and without
57-35 any transfer or assignment having occurred, but subject to any
57-36 existing liens or other encumbrances thereon;
57-37 (3) all liabilities and obligations of each domestic
57-38 or foreign limited partnership and other entity that is a party to
57-39 the merger shall be allocated to one or more of the surviving or
57-40 new domestic or foreign limited partnerships and other entities in
57-41 the manner set forth in the plan of merger, and each surviving or
57-42 new domestic foreign limited partnership, and each surviving or new
57-43 other entity to which a liability or obligation shall have been
57-44 allocated pursuant to the plan of merger, shall be the primary
57-45 obligor therefor and, except as otherwise set forth in the plan of
57-46 merger or as otherwise provided by law or contract, no other party
57-47 to the merger, other than a surviving domestic or foreign limited
57-48 partnership or other entity liable thereon at the time of the
57-49 merger and no other new domestic or foreign limited partnership or
57-50 other entity created thereby, shall be liable therefor;
57-51 (4) a proceeding pending by or against any domestic or
57-52 foreign limited partnership or by or against any other entity that
57-53 is a party to the merger may be continued as if the merger did not
57-54 occur, or the surviving or new domestic or foreign limited
57-55 partnership or limited partnerships or the surviving or new other
57-56 entity or other entities to which the liability, obligation, asset
57-57 or right associated with such proceeding is allocated to and vested
57-58 in pursuant to the plan of merger may be substituted in the
57-59 proceeding;
57-60 (5) the certificate of limited partnership of each
57-61 surviving domestic limited partnership shall be amended to the
57-62 extent provided in the plan of merger;
57-63 (6) each new domestic limited partnership, the
57-64 certificate of limited partnership of which is set forth in the
57-65 plan of merger under Subdivision (4) of Subsection (b) of this
57-66 section, shall be formed as a limited partnership under this Act;
57-67 and each other entity to be formed or organized under the laws of
57-68 this State, the organizational documents of which are set forth in
57-69 the plan of merger, shall, upon an executed copy of the certificate
57-70 of merger being delivered to or filed with any required
58-1 governmental entity with which organizational documents of such
58-2 another entity are required to be delivered or filed, and upon
58-3 meeting such additional requirements, if any, of law for its
58-4 formation or organization, shall be formed or organized as provided
58-5 in the plan of merger; <and>
58-6 (7) the partnership interests of each domestic or
58-7 foreign limited partnership and the partnership interests, shares
58-8 or evidences of ownership in each other entity that is a party to
58-9 the merger that are to be converted or exchanged, in whole or in
58-10 part, into partnership interests, shares, obligations, evidences of
58-11 ownership, rights to purchase securities or other securities of one
58-12 or more of the surviving or new domestic or foreign limited
58-13 partnerships or other entities, into cash or other property,
58-14 including shares, obligations, evidences of ownership, rights to
58-15 purchase securities or other securities of any other person or
58-16 entity, or into any combination of the foregoing, shall be so
58-17 converted and exchanged and the former partners of each domestic
58-18 limited partnership that is a party to the merger shall be entitled
58-19 only to the rights provided in the plan of merger; <and>
58-20 (8) if the plan of merger shall fail to provide for
58-21 the allocation and vesting of the right, title, and interest in any
58-22 particular item of real estate or other property or for the
58-23 allocation of any liability or obligation of any party to the
58-24 merger, such item of real estate or other property shall be owned
58-25 in undivided interest by, or such liability or obligation shall be
58-26 a joint and several liability and obligation of, each of the
58-27 surviving and new domestic and foreign limited partnerships and
58-28 other entities, pro rata to the total number of surviving and new
58-29 domestic and foreign limited partnerships and other entities
58-30 resulting from the merger; and
58-31 (9) a partner of a domestic or foreign limited
58-32 partnership that is a party to a merger does not become personally
58-33 liable as a result of the merger for a liability or obligation of
58-34 another person that is a party to the merger unless the party
58-35 consents to becoming personally liable by action taken in
58-36 connection with the specific plan of merger approved by the
58-37 partner; and for purposes of determining the liability of partners
58-38 in a domestic limited partnership that is a party to the merger for
58-39 the debts and obligations of other parties to the merger in which
58-40 that partner otherwise was not or is not a partner or other owner
58-41 of an interest:
58-42 (a) a partner who remains in or enters a
58-43 domestic or foreign limited partnership or other entity that
58-44 survives a merger or that enters a domestic or foreign limited
58-45 partnership or other entity created by the terms of the plan of
58-46 merger shall be treated as an incoming partner in the new or
58-47 surviving partnership as of the effective date of the merger; and
58-48 (b) a partner in a domestic partnership that is
58-49 a party to the merger but that does not survive shall be treated as
58-50 a partner who withdrew from the nonsurviving domestic partnership
58-51 as of the effective date of the merger.
58-52 (h) One or more domestic or foreign limited partnerships or
58-53 other entities may adopt a plan of exchange by which a domestic or
58-54 foreign limited partnership or other <an> entity acquires all of
58-55 the outstanding partnership interests of one or more domestic
58-56 limited partnerships in exchange for cash, <and/or> securities, or
58-57 other property of the acquiring domestic or foreign limited
58-58 partnership or other entity, if:
58-59 (1) the partnership agreement of each domestic limited
58-60 partnership the partnership interests of which are to be acquired
58-61 pursuant to the plan of exchange contains provisions that authorize
58-62 the partnership interest exchange provided for in the plan of
58-63 exchange adopted by the limited partnership, and if one or more
58-64 foreign limited partnerships or other entities are to issue shares
58-65 or other interests as part of the plan of exchange, the issuance of
58-66 those shares or other interests is either permitted by the laws
58-67 under which that foreign limited partnership or other entity is
58-68 formed or not inconsistent with those laws;
58-69 (2) each domestic limited partnership the partnership
58-70 interests of which are to be acquired pursuant to the plan of
59-1 exchange approves the plan of exchange in the manner prescribed in
59-2 its partnership agreement; and
59-3 (3) each acquiring domestic or foreign limited
59-4 partnership or other entity takes all action that may be required
59-5 by the laws of the state or country under which it was formed or
59-6 incorporated and as required by its partnership agreement or other
59-7 constituent documents in order to effect the exchange.
59-8 No filing with the secretary of state shall be necessary in
59-9 order to evidence or effect such interest exchange with respect to
59-10 a domestic limited partnership that is a party to such interest
59-11 exchange. When an interest exchange takes effect as provided in
59-12 the plan of exchange, the partnership interests of each domestic
59-13 limited partnership that are to be acquired pursuant to the plan of
59-14 exchange shall be deemed to have been exchanged as provided in the
59-15 plan of exchange and the former holders of the partnership
59-16 interests exchanged pursuant to the plan of exchange shall be
59-17 entitled only to the exchange rights provided in the plan of
59-18 exchange and the acquiring domestic or foreign limited partnership
59-19 or other entity or entities shall be entitled to all rights, title,
59-20 and interests with respect to the partnership interests so acquired
59-21 and exchanged subject to the provisions in the plan of exchange.
59-22 SECTION 74. Subsections A and F, Section 2.12, Texas Revised
59-23 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
59-24 Statutes), are amended to read as follows:
59-25 A. The effectiveness of (i) the certificate of limited
59-26 partnership of a limited partnership under this Act, (ii) an
59-27 amendment to a certificate of limited partnership, (iii) the
59-28 restatement of a certificate of limited partnership, (iv) a merger,
59-29 (v) a certificate of cancellation, (vi) the registration or
59-30 cancellation of registration of a foreign limited partnership to
59-31 transact business in this State, (vii) an amendment to the
59-32 registration of a foreign limited partnership, (viii) a change in
59-33 registered office or registered agent, <and> (ix) a change of
59-34 address of a registered agent (each such act or document being a
59-35 "Permitted Act"), and (x) a conversion may be made effective as of
59-36 a time and date after the time and date otherwise provided in this
59-37 Act or may be made effective upon the occurrence of events or facts
59-38 that may occur in the future, which events or facts may include
59-39 future acts of any person or entity, if:
59-40 (1) the certificate, statement, application, or other
59-41 filing that is required by this Act to be filed with the Secretary
59-42 of State to make effective such Permitted Act clearly and expressly
59-43 sets forth, in addition to any other statement or information
59-44 required to be set forth therein, (i) the time and date on which
59-45 such Permitted Act is to become effective or (ii) if such Permitted
59-46 Act is to become effective upon the occurrence of events or facts
59-47 that may occur in the future, (a) the manner in which such events
59-48 or facts shall operate to cause such Permitted Act to become
59-49 effective and (b) the date of the 90th day after the date of the
59-50 filing of such certificate, statement, application or other filing;
59-51 and either
59-52 (2) If in the case of a Permitted Act that is to
59-53 become effective as of a time or date after the time and date
59-54 otherwise provided in this Act, such subsequent time and date is
59-55 not more than 90 days after the date of the filing of the
59-56 certificate, statement, application, or other filing that is
59-57 otherwise required by this Act to be filed with the Secretary of
59-58 State to make effective such Permitted Act and (iii) the time on
59-59 which the Permitted Act is to become effective is not midnight or
59-60 12:00 p.m.; and
59-61 (3) Permitted Act that is to be made effective upon
59-62 the occurrence of events or facts that may occur in the future,
59-63 other than the mere passage of time, a statement that all such
59-64 events or facts upon which the effectiveness of such Permitted Act
59-65 is conditioned have been satisfied or waived, and of the date on
59-66 which such condition was satisfied or waived is filed with the
59-67 Secretary of State within 90 days of the date of the filing of the
59-68 certificate, statement, application or other filing that is
59-69 otherwise required by this Act for such Permitted Act to become
59-70 effective.
60-1 F. If a certificate of limited partnership, a certificate of
60-2 amendment or cancellation, a judicial decree of amendment or
60-3 cancellation, a certificate of merger, a certificate of conversion,
60-4 a restated certificate or any other document permitted to be filed
60-5 pursuant to this Act with the Secretary of State has been filed but
60-6 the event or transaction evidenced thereby has not become
60-7 effective, such filing may be abandoned in accordance with the
60-8 agreement of the parties thereto and, if so abandoned, a
60-9 certificate of abandonment, signed on behalf of each domestic and
60-10 foreign limited partnership or other entity that is a party to the
60-11 event or transaction by any general partner, an officer or other
60-12 duly authorized representative, stating the nature, date of filing
60-13 and parties to the filing to be abandoned and that the event or
60-14 transaction has been abandoned in accordance with the agreement of
60-15 the parties, is filed with the Secretary of State prior to the
60-16 effectiveness of the event or transaction in accordance with the
60-17 terms of the document so filed. Upon the filing of such statement
60-18 by the Secretary of State, the event or transaction evidenced by
60-19 the original filing shall be deemed abandoned and shall not become
60-20 effective.
60-21 SECTION 75. Article 2, Texas Revised Limited Partnership Act
60-22 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
60-23 adding Section 2.15 to read as follows:
60-24 Sec. 2.15. CONVERSION. (a) A domestic limited partnership
60-25 may adopt a plan of conversion and convert to a foreign limited
60-26 partnership or any other entity if:
60-27 (1) the converting entity acts upon and its partners
60-28 approve a plan of conversion in the manner prescribed by Section
60-29 2.11 of this Act as if the conversion were a merger to which the
60-30 converting entity were a party and not the survivor;
60-31 (2) the conversion is permitted by, or not
60-32 inconsistent with, the laws of the state or country in which the
60-33 converted entity is to be incorporated, formed, or organized, and
60-34 the incorporation, formation, or organization of the converted
60-35 entity is effected in compliance with such laws;
60-36 (3) at the time the conversion becomes effective, each
60-37 partner of the converting entity will, unless otherwise agreed to
60-38 by that partner, own an equity interest or other ownership or
60-39 security interest in, and be a shareholder, partner, member, owner
60-40 or other security holder of, the converted entity;
60-41 (4) no limited partner of the domestic limited
60-42 partnership will, as a result of the conversion, become personally
60-43 liable, without the limited partner's consent, for the liabilities
60-44 or obligations of the converted entity; and
60-45 (5) the converted entity shall be incorporated,
60-46 formed, or organized as part of or pursuant to the plan of
60-47 conversion.
60-48 (b) Any foreign limited partnership or other entity may
60-49 adopt a plan of conversion and convert to a domestic limited
60-50 partnership if:
60-51 (1) the conversion is permitted by the laws of the
60-52 state or country in which the foreign limited partnership is
60-53 incorporated, if a foreign limited partnership is converting;
60-54 (2) the conversion is either permitted by the laws
60-55 under which the other entity is formed or organized or by the
60-56 constituent documents of the other entity that are not inconsistent
60-57 with the laws of the state or country in which the other entity is
60-58 formed or organized, if another entity is converting; and
60-59 (3) the converting entity takes all action that may be
60-60 required by the laws of the state or country under which it is
60-61 incorporated, formed, or organized and by its constituent documents
60-62 to effect the conversion.
60-63 (c) A plan of conversion shall set forth:
60-64 (1) the name of the converting entity and the
60-65 converted entity;
60-66 (2) a statement that the converting entity is
60-67 continuing its existence in the organizational form of the
60-68 converted entity;
60-69 (3) a statement as to the type of entity that the
60-70 converted entity is to be and the state or country under the laws
61-1 of which the converted entity is to be incorporated, formed, or
61-2 organized;
61-3 (4) the manner and basis of converting the partnership
61-4 interests, shares, or other evidences of ownership of the
61-5 converting entity into partnership interests, shares, or other
61-6 evidences of ownership or securities of the converted entity, or
61-7 any combination thereof;
61-8 (5) in an attachment or exhibit, the certificate of
61-9 limited partnership of the domestic limited partnership if the
61-10 converted entity is a domestic limited partnership; and
61-11 (6) in an attachment or exhibit, the certificate of
61-12 limited partnership, articles of incorporation, or other
61-13 organizational documents of the converted entity if the converted
61-14 entity is not a domestic limited partnership.
61-15 (d) A plan of conversion may set forth such other provisions
61-16 relating to the conversion not inconsistent with law, including the
61-17 initial partnership agreement of the converted entity if the
61-18 converted entity is a partnership.
61-19 (e) If a plan of conversion has been approved in accordance
61-20 with the preceding provisions of this section and has not been
61-21 abandoned, articles of conversion shall be executed by the
61-22 converting entity by a partner, officer, or other duly authorized
61-23 representative thereof and shall set forth:
61-24 (1) the plan of conversion or a statement certifying
61-25 the following:
61-26 (A) the name, the state of incorporation,
61-27 formation, or organization of the converting entity, and the
61-28 organizational form of the converting entity;
61-29 (B) that a plan of conversion has been approved;
61-30 (C) that an executed plan of conversion is on
61-31 file at the principal place of business of the converting entity,
61-32 stating the address thereof, and that an executed plan of
61-33 conversion will be on file, from and after the conversion, at the
61-34 principal place of business of the converting entity, stating the
61-35 address thereof; and
61-36 (D) that a copy of the plan of conversion will
61-37 be furnished by the converting entity (prior to the conversion) or
61-38 the converted entity (after the conversion), on written request and
61-39 without cost, to any member of the converting entity or the
61-40 converted entity; and
61-41 (2) a statement that the approval of the plan of
61-42 conversion was duly authorized by all action required by the laws
61-43 under which the converting entity was incorporated, formed, or
61-44 organized and by its constituent documents.
61-45 (f) Except as otherwise provided by Section 2.14 of this
61-46 Act, upon the issuance of the certificate of conversion by the
61-47 secretary of state, the conversion of a converting entity shall be
61-48 effective.
61-49 (g) When a conversion of a converting entity takes effect:
61-50 (1) the converting entity shall continue to exist,
61-51 without interruption, but in the organizational form of the
61-52 converted entity rather than in its prior organizational form;
61-53 (2) all rights, title, and interests to all real
61-54 estate and other property owned by the converting entity shall
61-55 continue to be owned by the converted entity in its new
61-56 organizational form without reversion or impairment, without
61-57 further act or deed, and without any transfer or assignment having
61-58 occurred, but subject to any existing liens or other encumbrances
61-59 thereon;
61-60 (3) all liabilities and obligations of the converting
61-61 entity shall continue to be liabilities and obligations of the
61-62 converted entity in its new organizational form without impairment
61-63 or diminution by reason of the conversion;
61-64 (4) all rights of creditors or other parties with
61-65 respect to or against the prior interest holders or other owners of
61-66 the converting entity in their capacities as such in existence as
61-67 of the effective time of the conversion will continue in existence
61-68 as to those liabilities and obligations and may be pursued by such
61-69 creditors and obligees as if such conversion shall not have
61-70 occurred;
62-1 (5) a proceeding pending by or against the converting
62-2 entity or by or against any of the converting entity's interest
62-3 holders or owners in their capacities as such may be continued by
62-4 or against the converted entity in its new organizational form and
62-5 by or against the prior interest holders or owners, as the case may
62-6 be, without any need for substitution of parties;
62-7 (6) the partnership interests, shares, and other
62-8 evidences of ownership in the converting entity that are to be
62-9 converted into partnership interests, shares, evidences of
62-10 ownership, or other securities in the converted entity as provided
62-11 in the plan of conversion shall be so converted, and if the
62-12 converting entity is a domestic limited partnership, the former
62-13 holders of shares in the domestic limited partnership shall be
62-14 entitled only to the rights provided in the plan of conversion;
62-15 (7) if, after the effectiveness of the conversion, a
62-16 shareholder, partner, member, or other owner of the converted
62-17 entity would be liable under applicable law in such capacity for
62-18 the debts or obligations of the converted entity, such shareholder,
62-19 partner, member, or other owner of the converted entity shall be
62-20 liable for the debts and obligations of the converting entity that
62-21 existed before the conversion takes effect only to the extent that
62-22 such shareholder, partner, member, or other owner:
62-23 (A) agreed in writing to be liable for such
62-24 debts or obligations;
62-25 (B) was liable under applicable law, prior to
62-26 the effectiveness of the conversion, for such debts or obligations;
62-27 or
62-28 (C) by becoming a shareholder, partner, member,
62-29 or other owner of the converted entity, becomes liable under
62-30 applicable law for existing debts and obligations of the converted
62-31 entity;
62-32 (8) if the converted entity is a foreign limited
62-33 partnership or other entity, such converted entity shall be deemed
62-34 to appoint the secretary of state as its agent for service of
62-35 process in a proceeding to enforce any obligation or the rights of
62-36 dissenting members of the converting domestic limited partnership;
62-37 and
62-38 (9) if the converting limited partnership is a
62-39 domestic limited partnership, the provisions of Section 2.11 of
62-40 this Act shall apply as if the converted entity were the survivor
62-41 of a merger with the converting entity.
62-42 (h) For purposes of this section:
62-43 (1) "Conversion" means the continuance of:
62-44 (A) a domestic limited partnership as, and in
62-45 the organizational form of, a foreign limited partnership or other
62-46 entity; or
62-47 (B) a foreign limited partnership or other
62-48 entity as, and in the organizational form of, a domestic limited
62-49 partnership.
62-50 (2) "Converted entity" means any domestic or foreign
62-51 limited partnership or other entity to which a converting entity
62-52 has converted or intends to convert as permitted by this section.
62-53 (3) "Converting entity" means any domestic or foreign
62-54 limited partnership or other entity that has converted or intends
62-55 to convert as permitted by this section.
62-56 (4) "Other entity" means any entity, whether organized
62-57 for profit or not, that is a corporation, partnership (other than a
62-58 limited partnership or a general partnership governed by the Texas
62-59 Revised Partnership Act (Article 6132b-1.01 et seq., Vernon's Texas
62-60 Civil Statutes)), joint venture, limited liability company, joint
62-61 stock company, cooperative, association, bank, insurance company,
62-62 or other legal entity organized pursuant to the laws of this state
62-63 or any other state or country.
62-64 SECTION 76. Section 3.03(b), Texas Revised Limited
62-65 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
62-66 is amended to read as follows:
62-67 (b) For the purposes of this section, a limited partner does
62-68 not participate in the control of the business by virtue of the
62-69 limited partner's having or acting in one or more of the following
62-70 capacities or possessing or exercising one or more of the following
63-1 powers:
63-2 (1) acting as a contractor for or an agent or employee
63-3 of the limited partnership or of a general partner, an officer,
63-4 director, or stockholder of a corporate general partner, <or> a
63-5 partner of a partnership that is a general partner of the limited
63-6 partnership, a member or manager of a limited liability company
63-7 that is a general partner of the limited partnership, or in a
63-8 similar capacity with any other person that is a general partner;
63-9 (2) consulting with or advising a general partner on
63-10 any matter, including the business of the limited partnership;
63-11 (3) acting as surety, guarantor, or endorser for the
63-12 limited partnership, to guarantee or assume one or more specific
63-13 obligations of the limited partnership, or to provide collateral
63-14 for borrowings of the limited partnership;
63-15 (4) calling, requesting, attending, or participating
63-16 in a meeting of the partners or the limited partners;
63-17 (5) winding up a limited partnership under Section
63-18 8.04 of this Act;
63-19 (6) taking any action required or permitted by law to
63-20 bring, or pursue, or settle or otherwise terminate a derivative
63-21 action in the right of the limited partnership;
63-22 (7) serving on a committee of the limited partnership
63-23 or the limited partners; or
63-24 (8) proposing, approving, or disapproving, by vote or
63-25 otherwise, one or more of the following matters:
63-26 (A) the dissolution and winding up of the
63-27 limited partnership or an election to reconstitute the limited
63-28 partnership or an election to continue the business of the limited
63-29 partnership;
63-30 (B) the sale, exchange, lease, mortgage,
63-31 assignment, pledge, or other transfer of, or granting of a security
63-32 interest in, an asset or assets of the limited partnership;
63-33 (C) the incurring, renewal, refinancing, or
63-34 payment or other discharge of indebtedness by the limited
63-35 partnership;
63-36 (D) a change in the nature of the business of
63-37 the limited partnership;
63-38 (E) the admission, removal, or retention of a
63-39 general partner;
63-40 (F) the admission, removal, or retention of a
63-41 limited partner;
63-42 (G) a transaction or other matter involving an
63-43 actual or potential conflict of interest;
63-44 (H) an amendment to the partnership agreement or
63-45 certificate of limited partnership;
63-46 (I) if the limited partnership is qualified as
63-47 an investment company under the federal Investment Company Act of
63-48 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter
63-49 required by the Investment Company Act of 1940, as amended, or the
63-50 rules and regulations of the Securities and Exchange Commission
63-51 thereunder, to be approved by the holders of beneficial interests
63-52 in an investment company including:
63-53 (i) electing directors or trustees of the
63-54 investment company;
63-55 (ii) approving or terminating investment
63-56 advisory or underwriting contracts;
63-57 (iii) approving auditors; and
63-58 (iv) acting on any other matters that the
63-59 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.)
63-60 requires to be approved by the holders of beneficial interests in
63-61 the investment company;
63-62 (J) indemnification of a general partner under
63-63 Article 11 of this Act;
63-64 (K) any other matter stated in the partnership
63-65 agreement;
63-66 (L) exercising a right or power granted or
63-67 permitted to limited partners under this Act and not specifically
63-68 enumerated in this subsection; or
63-69 (M) the merger of a limited partnership.
63-70 SECTION 77. Section 6.03, Texas Revised Limited Partnership
64-1 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
64-2 read as follows:
64-3 Sec. 6.03. Withdrawal of limited partner. A limited partner
64-4 may withdraw from a limited partnership only at the time or on the
64-5 occurrence of events specified in a <written> partnership agreement
64-6 and in accordance with that <written> partnership agreement. <If
64-7 the partnership agreement does not specify such a time or event or
64-8 a definite time for the dissolution and winding up of the limited
64-9 partnership, a limited partner may withdraw on giving written
64-10 notice not less than six months before the date of withdrawal to
64-11 each general partner at that general partner's address as set forth
64-12 in the certificate of limited partnership.>
64-13 SECTION 78. Section 8.01, Texas Revised Limited Partnership
64-14 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
64-15 read as follows:
64-16 Sec. 8.01. Dissolution. A limited partnership is dissolved
64-17 and its affairs shall be wound up only on the first of the
64-18 following to occur:
64-19 (1) <on> the occurrence of events specified in the
64-20 partnership agreement to cause dissolution unless within 90 days
64-21 after the event causing the dissolution, all remaining partners (or
64-22 such other group or percentage of partners as the partnership
64-23 agreement may provide) agree in writing to continue the business of
64-24 the limited partnership;
64-25 (2) written consent of all partners to dissolution;
64-26 (3) an event of withdrawal of a general partner,
64-27 unless:
64-28 (A) there remains at least one general partner
64-29 and the partnership agreement permits the business of the limited
64-30 partnership to be carried on by the remaining general partner or
64-31 general partners, and that general partner or those general
64-32 partners do so; or
64-33 (B) within 90 days after the event of
64-34 withdrawal, all remaining partners (or such other group or
64-35 percentage of partners as the partnership agreement may provide)
64-36 agree in writing to continue the business of the limited
64-37 partnership and to the extent that they desire or if there are no
64-38 remaining general partners, agree to the appointment, effective as
64-39 of the date of withdrawal, of one or more new general partners; or
64-40 (4) entry of a decree of judicial dissolution under
64-41 Section 8.02 of this Act.
64-42 SECTION 79. Section 8.04(a), Texas Revised Limited
64-43 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
64-44 is amended to read as follows:
64-45 (a) Except as provided in the partnership agreement, on <On>
64-46 the dissolution of a limited partnership, <unless it is
64-47 reconstituted in accordance with Section 8.03 of this Act,> the
64-48 partnership's affairs shall be wound up as soon as reasonably
64-49 practicable, and the<. The> winding up shall be accomplished by
64-50 the general partners who have not wrongfully dissolved a limited
64-51 partnership or, if there are none who have not wrongfully dissolved
64-52 the partnership, by the limited partners or a person chosen by the
64-53 limited partners. In addition, a court of competent jurisdiction,
64-54 on cause shown, may wind up the limited partnership's affairs on
64-55 application of any partner or the partner's legal representative or
64-56 assignee and, in connection with the winding up, may appoint a
64-57 person to carry out the liquidation and may make all other orders,
64-58 directions, and inquiries that the circumstances require.
64-59 SECTION 80. Section 12.01, Texas Revised Limited Partnership
64-60 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
64-61 read as follows:
64-62 Sec. 12.01. Fees. The secretary of state shall collect for
64-63 the use of the state:
64-64 (1) for filing a certificate of limited partnership
64-65 under Section 2.01 of this Act, or an application for registration
64-66 as a foreign limited partnership under Section 9.02 of this Act, a
64-67 fee of $750;
64-68 (2) for filing a certificate of amendment under
64-69 Section 2.02 of this Act, a certificate of cancellation under
64-70 Section 2.03 of this Act, a restated certificate of limited
65-1 partnership under Section 2.10 of this Act, a certificate of merger
65-2 under Section 2.11 of this Act, a certificate of correction under
65-3 Section 2.12 of this Act, a certificate of conversion under Section
65-4 2.15 of this Act, a certificate under Section 9.05 of this Act, or
65-5 a certificate of cancellation under Section 9.06 of this Act<, or
65-6 an election to adopt this Act, whether by the filing of a
65-7 certificate of limited partnership, an application for registration
65-8 as a foreign limited partnership or a certificate of amendment,
65-9 under Section 13.02 of this Act>, a fee of $200;
65-10 (3) for filing an application for reservation of name,
65-11 an application for renewal of reservation, a notice of transfer of
65-12 reservation under Subsection (b) of Section 1.04 of this Act, or an
65-13 application for registration of name or an application for renewal
65-14 of registration of name under Section 1.05 of this Act, a fee of
65-15 $75;
65-16 (4) for filing a statement for change of registered
65-17 office, registered agent, or both, under Subsection (b) of Section
65-18 1.06 of this Act, or a statement for change of location of
65-19 registered office under Subsection (h) of Section 1.06 of this Act,
65-20 a fee of $50, except that the maximum fee for simultaneous filings
65-21 by a registered agent for more than one limited partnership may not
65-22 exceed $2,500;
65-23 (5) for preclearance of any document for filing, a fee
65-24 of $50; and
65-25 (6) for filing any instrument under this Act not
65-26 expressly provided for above, a fee of $25.
65-27 SECTION 81. Section 1.01(4), Texas Revised Partnership Act
65-28 (Article 6132b-1.01, Vernon's Texas Civil Statutes), is amended to
65-29 read as follows:
65-30 (4) "Debtor in bankruptcy" means a person who is the
65-31 subject of:
65-32 (A) an order for relief under Title 11 of the
65-33 United States Code or a comparable order under a successor statute
65-34 of general application; or
65-35 (B) a comparable order under federal, <or>
65-36 state, or foreign law governing insolvency.
65-37 SECTION 82. Section 1.03(b), Texas Revised Partnership Act
65-38 (Article 6132b-1.03, Vernon's Texas Civil Statutes), is amended to
65-39 read as follows:
65-40 (b) Statutory Provisions that may not be Varied by
65-41 Agreement. A partnership agreement or the partners may not:
65-42 (1) unreasonably restrict a partner's right of access
65-43 to books and records under Section 4.03(b);
65-44 (2) eliminate the duty of loyalty under Section
65-45 4.04(b), but the partners may by agreement identify specific types
65-46 or categories of activities that do not violate the duty of
65-47 loyalty, if not manifestly unreasonable;
65-48 (3) eliminate the duty of care under Section 4.04(c),
65-49 but the partners may by agreement determine the standards by which
65-50 the performance of the obligation is to be measured, if the
65-51 standards are not manifestly unreasonable;
65-52 (4) eliminate the obligation of good faith under
65-53 Section 4.04(d), but the partners may by agreement determine the
65-54 standards by which the performance of the obligation is to be
65-55 measured, if the standards are not manifestly unreasonable;
65-56 (5) vary the power to withdraw as a partner under
65-57 Section 6.01(b)(1), (7), or (8), except to require the notice to be
65-58 in writing;
65-59 (6) vary the right to expel a partner by a court in
65-60 the events specified by Section 6.01(b)(5);
65-61 (7) vary the requirement to wind up the partnership
65-62 business in the events specified by Section 8.01(c), (d), or (e);
65-63 (8) restrict rights of third parties under this Act,
65-64 except for limitations on individual partners' liability in a
65-65 registered limited liability partnership as provided or permitted
65-66 by Section 3.08; or
65-67 (9) select a governing law not permitted under Section
65-68 1.05(a)(1).
65-69 SECTION 83. Section 1.05(a), Texas Revised Partnership Act
65-70 (Article 6132b-1.05, Vernon's Texas Civil Statutes), is amended to
66-1 read as follows:
66-2 (a) Internal Affairs. The determination whether a
66-3 partnership has been formed, a <A> partnership's internal affairs,
66-4 and the relations of the partners to one another are governed by:
66-5 (1) the law of the state chosen by the partners to
66-6 govern if that state bears a reasonable relation to the partners or
66-7 to the partnership business and affairs under principles that apply
66-8 to a contract among the partners other than the partnership
66-9 agreement; or
66-10 (2) if the partners do not choose a governing law
66-11 under Subdivision (1), the law of the state in which the
66-12 partnership has its chief executive office.
66-13 SECTION 84. Section 2.02, Texas Revised Partnership Act
66-14 (Article 6132b-2.02, Vernon's Texas Civil Statutes), is amended by
66-15 adding Subsection (d) to read as follows:
66-16 (d) Partnership Resulting from Merger or Conversion. In
66-17 the case of a new partnership being formed pursuant to a plan of
66-18 merger or a plan of conversion under Article IX of this Act, the
66-19 existence of the partnership as a partnership shall begin on the
66-20 effectiveness of the merger or the conversion, as the case may be,
66-21 and the persons to be partners shall become partners as of that
66-22 time.
66-23 SECTION 85. Sections 3.02(a) and (b), Texas Revised
66-24 Partnership Act (Article 6132b-3.02, Vernon's Texas Civil
66-25 Statutes), are amended to read as follows:
66-26 (a) Partner Agent of Partnership as to Partnership Business.
66-27 Each partner is an agent of the partnership for the purpose of its
66-28 business. Unless the partner does not have authority to act for
66-29 the partnership in the particular matter and the person with whom
66-30 the partner is dealing knows that the partner lacks authority, an
66-31 act of a partner, including the execution of an instrument in the
66-32 partnership name, binds the partnership if the act is for
66-33 apparently carrying on in the ordinary course <usual way>:
66-34 (1) the partnership business; or
66-35 (2) business of the kind carried on by the
66-36 partnership.
66-37 (b) Act Outside Scope of Business. An act of a partner
66-38 binds <does not bind> the partnership only if <unless> authorized
66-39 by the other partners if the act is not apparently for carrying on
66-40 in the ordinary course <usual way>:
66-41 (1) the partnership business; or
66-42 (2) business of the kind carried on by the
66-43 partnership.
66-44 SECTION 86. Section 3.04, Texas Revised Partnership Act
66-45 (Article 6132b-3.04, Vernon's Texas Civil Statutes), is amended to
66-46 read as follows:
66-47 Sec. 3.04. <NATURE OF> PARTNER'S LIABILITY <PARTNERSHIP>.
66-48 Except as provided by Section 3.07 or 3.08(a) <for a registered
66-49 limited liability partnership>, all partners are liable jointly and
66-50 severally for all debts and obligations of the partnership unless
66-51 otherwise agreed by the claimant or provided by law.
66-52 SECTION 87. Section 3.05, Texas Revised Partnership Act
66-53 (Article 6132b-3.05, Vernon's Texas Civil Statutes), is amended by
66-54 adding Subsection (f) to read as follows:
66-55 (f) Registered Limited Liability Partnership. The
66-56 provisions of this section do not limit the provisions of Section
66-57 3.08(a) in the case of a registered limited liability partnership.
66-58 SECTION 88. Section 3.08(a), Texas Revised Partnership Act
66-59 (Article 6132b-3.08, Vernon's Texas Civil Statutes), is amended by
66-60 amending Subdivision (1) and adding Subdivision (4) to read as
66-61 follows:
66-62 (1) A partner in a registered limited liability
66-63 partnership is not individually liable, directly or indirectly, by
66-64 contribution, indemnity, or otherwise, for debts and obligations of
66-65 the partnership arising from errors, omissions, negligence,
66-66 incompetence, or malfeasance committed while the partnership is a
66-67 registered limited liability partnership and in the course of the
66-68 partnership business by another partner or a representative of the
66-69 partnership not working under the supervision or direction of the
66-70 first partner unless the first partner:
67-1 (A) was directly involved in the specific
67-2 activity in which the errors, omissions, negligence, incompetence,
67-3 or malfeasance were committed by the other partner or
67-4 representative; or
67-5 (B) had notice or knowledge of the errors,
67-6 omissions, negligence, incompetence, or malfeasance by the other
67-7 partner or representative at the time of occurrence and then failed
67-8 to take reasonable steps to prevent or cure the errors, omissions,
67-9 negligence, incompetence, or malfeasance.
67-10 (4) The provisions of this subsection prevail, in the
67-11 case of a registered limited liability partnership, over the other
67-12 provisions of this Act regarding the liability of partners, their
67-13 chargeability for the debts and obligations of the partnership, and
67-14 their obligations regarding contributions and indemnity.
67-15 SECTION 89. Sections 4.01(b) and (c), Texas Revised
67-16 Partnership Act (Article 6132b-4.01, Vernon's Texas Civil
67-17 Statutes), are amended to read as follows:
67-18 (b) Profits and Losses. Each partner is entitled to be
67-19 credited with an equal share of the partnership's profits <of a
67-20 partnership. Each partner> and is chargeable <charged> with a
67-21 share of the partnership's losses, whether capital or operating,
67-22 <of the partnership> in proportion to the partner's share of the
67-23 profits.
67-24 (c) Disproportionate Payment or Advance. A partner who, in
67-25 the proper conduct of the business of the partnership or for the
67-26 preservation of its business or property, reasonably makes a
67-27 payment or advance beyond the amount the partner agreed to
67-28 contribute, or who reasonably incurs a liability, is entitled to be
67-29 repaid by the partnership and to receive interest from the
67-30 partnership from the date of the payment or advance or the
67-31 incurrence of the liability.
67-32 SECTION 90. Section 4.06(b), Texas Revised Partnership Act
67-33 (Article 6132b-4.06, Vernon's Texas Civil Statutes), is amended to
67-34 read as follows:
67-35 (b) Action by partner. A partner may maintain an action
67-36 against the partnership or another partner for legal or equitable
67-37 relief, with or without <including> an accounting as to partnership
67-38 business, to:
67-39 (1) enforce a right under the partnership agreement;
67-40 (2) enforce a right under this Act, including:
67-41 (A) the partner's rights under Sections 4.01,
67-42 4.03, and 4.04;
67-43 (B) the partner's right on withdrawal to have
67-44 the partner's interest in the partnership redeemed under Section
67-45 7.01 or enforce any other right under Article 6 or 7; and
67-46 (C) the partner's rights under Article 8; or
67-47 (3) enforce the rights and otherwise protect the
67-48 interests of the partner, including rights and interests arising
67-49 independently of the partnership relationship.
67-50 SECTION 91. Section 6.02(b), Texas Revised Partnership Act
67-51 (Article 6132b-6.02, Vernon's Texas Civil Statutes), is amended to
67-52 read as follows:
67-53 (b) Wrongful Withdrawal. A partner's withdrawal is wrongful
67-54 only if:
67-55 (1) it is in breach of an express provision of the
67-56 partnership agreement;
67-57 (2) in the case of a partnership for a definite term
67-58 or particular undertaking or for which the partnership agreement
67-59 provides for winding up on a specified event, before the expiration
67-60 of the term, the completion of the undertaking, or the occurrence
67-61 of the event:
67-62 (A) the partner withdraws by express will;
67-63 (B) the partner withdraws by becoming a debtor
67-64 in bankruptcy; or
67-65 (C) <(B)> in the case of a partner that is not
67-66 an individual, a trust other than a business trust, or an estate,
67-67 the partner is expelled or otherwise withdraws because the partner
67-68 wilfully dissolved or terminated; or
67-69 (3) the partner is expelled by judicial decree under
67-70 Section 6.01(b)(5).
68-1 SECTION 92. Section 8.06(a), Texas Revised Partnership Act
68-2 (Article 6132b-8.06, Vernon's Texas Civil Statutes), is amended to
68-3 read as follows:
68-4 (a) Application of Property to Obligations. In winding up
68-5 the partnership business, the property of the partnership,
68-6 including the contributions of the partners required by this
68-7 section, must be applied to discharge its obligations to creditors,
68-8 including, to the extent permitted by other applicable law,
68-9 partners who are creditors other than in their capacities as
68-10 partners. Any <A> surplus must be applied to pay in cash the net
68-11 amount distributable to partners in accordance with their right to
68-12 distributions under Subsection (b).
68-13 SECTION 93. Section 9.01(b), Texas Revised Partnership Act
68-14 (Article 6132b-9.01, Vernon's Texas Civil Statutes), is amended to
68-15 read as follows:
68-16 (b) Limited to General. A domestic or foreign limited
68-17 partnership may convert, on the affirmative vote of a
68-18 majority-in-interest of the partners, to a partnership that is not
68-19 a limited partnership by:
68-20 (1) cancelling its certificate of limited partnership
68-21 in the state of formation or otherwise complying with the
68-22 provisions for terminating the existence of the limited partnership
68-23 under <of> that state's law as of the date that partnership's
68-24 existence as a limited partnership is to cease <terminated>;
68-25 (2) amending its partnership agreement to reflect its
68-26 change in status and any change in name required to comply with
68-27 this Act; and
68-28 (3) stating the effective date of the conversion in
68-29 the partnership agreement if different from the date of the
68-30 cancellation of the limited partnership certificate.
68-31 If a limited partnership converts to a partnership that is
68-32 not a limited partnership, a partner who did not consent to the
68-33 conversion is considered to be a partner who has withdrawn from the
68-34 limited partnership effective immediately before the effective date
68-35 of the conversion unless, within 60 days after the later of the
68-36 effective date of the conversion or the date the partner receives
68-37 actual notice of the conversion, the partner notifies the
68-38 partnership in writing of the partner's desire not to withdraw. A
68-39 withdrawal under the described circumstances is not a wrongful
68-40 withdrawal.
68-41 SECTION 94. Section 9.02, Texas Revised Partnership Act
68-42 (Article 6132b-9.02, Vernon's Texas Civil Statutes), is amended to
68-43 read as follows:
68-44 Sec. 9.02. Mergers. (a) Adoption of Plan. A domestic
68-45 partnership may adopt a plan of merger and one or more domestic
68-46 partnerships may merge with one or more domestic or foreign
68-47 partnerships or other entities if:
68-48 (1) the partnership agreement of each domestic <or
68-49 foreign> partnership that is a party to the plan of merger contains
68-50 provisions that authorize the merger provided for in the plan of
68-51 merger adopted by the partnership;
68-52 (2) each domestic partnership that is a party to the
68-53 plan of merger approves the plan of merger in the manner prescribed
68-54 <for mergers> in its partnership agreement; and
68-55 (3) in the event <or constituent documents or by
68-56 applicable law. If> one or more foreign partnerships or other
68-57 entities is a party to the merger or is to be created by the terms
68-58 of the plan of merger:
68-59 (A) <(1)> the merger is <must be> permitted
68-60 either by<:>
68-61 <(A)> the laws under which each foreign
68-62 partnership and each other entity that is a party to the merger is
68-63 formed or organized<;> or by
68-64 <(B)> the partnership agreement or other
68-65 constituent documents of the foreign <partnership or other entity
68-66 not inconsistent with those laws; and>
68-67 <(2) each foreign> partnership or other entity that
68-68 are not inconsistent with such laws; and
68-69 (B) each foreign partnership or other entity
68-70 that is a party to the merger complies <must comply> with such
69-1 <the> laws or documents in effecting the merger.
69-2 (b) Contents of Plan <of Merger>. A <If a partnership
69-3 merges with one or more domestic or foreign limited partnerships or
69-4 other entities, other than another partnership that is not a
69-5 limited partnership, a> plan of merger must set forth <be adopted.
69-6 The plan must include>:
69-7 (1) the name and state of domicile or formation of
69-8 <organization of:>
69-9 <(A)> each domestic or foreign partnership or
69-10 other entity that is a party to the merger and the name of<;>
69-11 <(B)> each domestic or foreign partnership or
69-12 other entity, if any, that shall <will> survive the merger, which
69-13 may be one or more of the domestic or foreign partnerships or other
69-14 entities <who are a> party to the merger, and the name and state of
69-15 domicile or formation of<; and>
69-16 <(C)> each new domestic or foreign partnership
69-17 or other entity, if any, that may be created by the terms of the
69-18 plan of merger;
69-19 (2) the terms and conditions of the merger<,>
69-20 including, if more than one domestic or foreign partnership or
69-21 other entity is to survive or to be created by the terms of the
69-22 plan of merger:<,>
69-23 (A) the manner and basis of<:>
69-24 <(A)> allocating and vesting the real estate and
69-25 other property of each domestic or foreign partnership and of each
69-26 other entity that is a party to the merger among one or more of the
69-27 surviving or new domestic or foreign partnerships and <or> other
69-28 entities; and
69-29 (B) the manner and basis of allocating all
69-30 liabilities and obligations of each domestic or foreign partnership
69-31 and other entity that is a party to the merger<,> (or making
69-32 adequate provisions <provision> for the payment and discharge
69-33 thereof) <of the liabilities and obligations,> among one or more of
69-34 the surviving or new domestic or foreign partnerships and <or>
69-35 other entities;
69-36 (3) the manner and basis of converting any of the
69-37 partnership interests or other evidences of ownership of each
69-38 domestic or foreign partnership and other entity that is a party to
69-39 the merger into<:>
69-40 <(A)> partnership interests, shares,
69-41 obligations, evidences of ownership, rights to purchase securities,
69-42 or other securities of one or more of the surviving or new domestic
69-43 or foreign partnerships or other entities, into<;>
69-44 <(B)> cash<;> or
69-45 <(C)> other property<,> including shares,
69-46 obligations, evidences of ownership, rights to purchase securities,
69-47 or other securities of any other <another> person or entity<;> or
69-48 into
69-49 <(D)> any combination of the foregoing <those
69-50 items>; and
69-51 (4) as an exhibit or attachment, the <certificate of
69-52 limited partnership, articles of incorporation, articles of
69-53 organization, or other> organizational documents of each
69-54 partnership or other entity that is a party to the merger and that
69-55 is to be created <or will act as a surviving entity> by the terms
69-56 of the plan of merger<;>
69-57 <(5) the names of the principal officer of the
69-58 surviving entities and the registered office and registered agent
69-59 of the surviving entities if a registered office or agent is
69-60 required by the laws under which the surviving entities are formed;>
69-61 <(6) a statement describing whether the surviving
69-62 entity is a partnership, limited partnership, corporation, limited
69-63 liability company, or other entity; and>
69-64 <(7) other provisions relating to the merger>.
69-65 (c) Optional Provisions. The plan of merger may set forth:
69-66 (1) any amendments to the partnership agreement of any
69-67 surviving domestic partnership; and
69-68 (2) any other provisions relating to the merger.
69-69 (d) Certificate of Merger. After a plan of merger has been
69-70 approved by each of the partnerships or other entities that is a
70-1 party to the plan of merger, unless the only parties to the merger
70-2 are partnerships <and a partnership merges with one or more
70-3 domestic or foreign limited partnerships or other entities>, a
70-4 certificate of merger shall be executed on behalf of each
70-5 partnership or other entity by at least one <general> partner of
70-6 each domestic partnership that is a party to the plan of merger and
70-7 by a general partner, <an authorized> officer, agent<,> or other
70-8 authorized representative of each other partnership or other entity
70-9 that is a party to the plan of merger and shall set forth<. The
70-10 certificate must include>:
70-11 (1) the plan of merger; and
70-12 (2) as to <for> each domestic or foreign partnership
70-13 or other entity that is a party to the plan of merger, a statement
70-14 that the plan of merger was duly authorized by all action <actions>
70-15 required by the laws under which it was formed or organized and by
70-16 its constituent documents.
70-17 (e) <(d)> Filing. If a <The> certificate of merger must be
70-18 executed, the original of the certificate of merger and such number
70-19 of copies of the certificate equal to the number of <filed for
70-20 each> surviving and new domestic or foreign partnerships and other
70-21 entities that are <partnership or other entity and for each other
70-22 entity that is> a party to the plan of merger or that will be
70-23 created by the terms thereof, shall be<. The filing must be with
70-24 the secretary of state or other authority with which the entity
70-25 must file organizational or related documents and must comply with
70-26 that authority's filing requirements.>
70-27 <(e) Effective Date of Merger. If a certificate of merger
70-28 is> delivered to the secretary of state. Unless the secretary of
70-29 state finds that a<, the merger is effective on the date of the
70-30 issuance of the> certificate of merger does not conform to law, on
70-31 receipt of all applicable filing fees and franchise taxes, if any,
70-32 required by law, or if <by the secretary of state or on a later
70-33 date stated in the certificate of merger. If a certificate of
70-34 merger is not required to be filed with the secretary of state, the
70-35 merger is effective on the date agreed to by the parties to the
70-36 merger as set out in> the plan of merger (or a statement provided
70-37 in lieu thereof) provides that one or more of the surviving or new
70-38 domestic or foreign partnerships or other entities that will be
70-39 responsible for the payment of all the fees and franchise taxes and
70-40 that all of the surviving or new domestic or foreign partnerships
70-41 and other entities will be obligated to pay the fees and franchise
70-42 taxes if they are not timely paid, the secretary of state shall
70-43 certify that the certificate of merger has been filed in the
70-44 secretary of state's office by endorsing on the original the word
70-45 "Filed" and the date of the filing, file and index the endorsed
70-46 certificate of merger, and return the copy, similarly endorsed, to
70-47 each surviving or new domestic or foreign partnership or other
70-48 entity that is a party to the plan of merger or that is created
70-49 thereby, or its or their respective representatives <or as
70-50 otherwise agreed to by the parties>.
70-51 (f) Effective Date. Except as provided by Section 9.06, the
70-52 merger shall be effective upon the issuance of the certificate of
70-53 merger by the secretary of state or, if a certificate of merger
70-54 need not be executed, as provided in the plan of merger.
70-55 (g) Effect. When a merger takes effect:
70-56 (1) the <Effect of Merger. (1) A partner of a
70-57 partnership that is a party to a merger does not become personally
70-58 liable as a result of the merger for a liability or obligation of
70-59 another person that is a party to the merger unless the partner
70-60 consents to becoming personally liable by action taken in
70-61 connection with the specific plan of merger approved by the
70-62 partner. A partner who remains in or enters a domestic or foreign
70-63 partnership or other entity that survives a merger or that enters a
70-64 domestic or foreign partnership or other entity created by the
70-65 terms of the plan of merger shall be treated as an incoming partner
70-66 in the new or surviving partnership as of the effective date of the
70-67 merger for the purpose of determining the partner's liability for a
70-68 debt or obligation of the other partnerships or entities that are
70-69 parties to the merger and in which the partner was not associated.>
70-70 <(2) The> separate existence of every domestic
71-1 partnership <or other entity> that is a party to the <a> merger,
71-2 except any <a> surviving or new domestic partnership, shall cease;
71-3 (2) all <or other entity, ceases when a merger takes
71-4 effect.>
71-5 <(3) All> rights, title, and interests <interest> to
71-6 all real estate and other property owned by each domestic or
71-7 foreign partnership and by each other entity that is a party to the
71-8 merger shall be <are> allocated to and vested in one or more of the
71-9 surviving or resulting entities as provided in the <a> plan of
71-10 merger without reversion or impairment, without further act or
71-11 deed, and without any transfer or assignment having occurred, but
71-12 subject to any existing liens or other encumbrances thereon;
71-13 (3) <on the property, when a merger takes effect.>
71-14 <(4) When a merger takes effect,> all liabilities and
71-15 obligations of each domestic or foreign partnership and other
71-16 entity that is a party to the merger shall be <are> allocated to
71-17 one or more of the surviving or new domestic or foreign
71-18 partnerships and <or> other entities in the manner set forth in
71-19 <prescribed by> the plan of merger, and each surviving or new
71-20 domestic or foreign partnership, and each surviving or new other
71-21 entity to which a liability or obligation shall have been <is>
71-22 allocated pursuant to <under> the plan of merger, shall be
71-23 <becomes> the primary obligor therefor and, except <for the
71-24 liability or obligation. Except> as otherwise set forth in
71-25 <provided by> the plan of merger or as otherwise provided by law or
71-26 contract, no other <a> party to the merger, other than a surviving
71-27 domestic or foreign partnership or other entity liable thereon
71-28 <with liability> at the time of the merger and no other new <, or
71-29 another> domestic or foreign partnership or other entity created
71-30 thereby, shall be liable therefor;
71-31 (4) <by the merger does not become liable for the debt
71-32 or obligation.>
71-33 <(5) After a merger,> a proceeding pending by or
71-34 against any <a> domestic or foreign partnership or by or against
71-35 any other <another> entity that is a party to the merger may be
71-36 continued as if the merger did not occur <and the partnership or
71-37 other entity that has been allocated the liabilities, obligations,
71-38 asset, or rights associated with the proceeding under the terms of
71-39 the plan of merger remains the primary obligor>, or the surviving
71-40 or new domestic or foreign partnership or the surviving or new
71-41 other entity or other entities to which the liability, obligation,
71-42 asset<,> or right associated with such <the> proceeding is
71-43 allocated to and vested in pursuant to <under> the plan of merger
71-44 may be substituted in the proceeding;
71-45 (5) the<.>
71-46 <(6) The> partnership agreement of each surviving
71-47 domestic partnership shall be<, certificate of limited partnership,
71-48 and other constituent documents of each other entity that will act
71-49 as a surviving entity by the terms of a plan of merger is
71-50 considered> amended to the extent provided in the plan of merger;
71-51 (6) each <when the merger takes effect.>
71-52 <(7) Each> new domestic partnership to be formed under
71-53 the plan of merger shall be formed as a partnership under this Act,
71-54 <named in a plan of merger under Subsection (b)(1), each new
71-55 domestic limited partnership for which a certificate of limited
71-56 partnership is included in a plan of merger under Subsection
71-57 (b)(4),> and each other entity to be formed or organized under the
71-58 laws of this state, the <state for which> organizational documents
71-59 of which are set forth <are included in a plan of merger under
71-60 Subsection (b)(4) are formed or organized as provided> in the plan
71-61 of merger, upon <on:>
71-62 <(A) delivering> an executed copy of the
71-63 certificate of merger being delivered to or filed with any required
71-64 <to, or filing the certificate with, the> governmental entity with
71-65 which organizational documents of such another <the partnership or
71-66 other> entity are required to be delivered or filed, <if any;> and
71-67 upon
71-68 <(B)> meeting such additional requirements, if
71-69 any, of law for its formation or organization, shall be formed or
71-70 organized as provided in the plan of merger;
72-1 (7) the<.>
72-2 <(8) The> partnership interests <interest> of each
72-3 domestic or foreign partnership and the partnership interests
72-4 <interest>, shares, or evidences of ownership in each other entity
72-5 that is a party to the merger that are to be converted or
72-6 exchanged, in whole or in part, into <(i)> partnership interests,
72-7 shares, obligations, evidences of ownership, rights to purchase
72-8 securities, or other securities of one or more of the surviving or
72-9 new domestic or foreign partnerships or other entities, into <(ii)>
72-10 cash, or <(iii)> other property, including shares, obligations,
72-11 evidences of ownership, rights to purchase securities, or other
72-12 securities of any other person or entity, or into any combination
72-13 of the foregoing, shall be so <those items, are> converted and
72-14 exchanged and <when a merger takes effect. After the merger> the
72-15 former partners of each domestic partnership <and owners of shares
72-16 or evidences of ownership in each other domestic entity> that is a
72-17 party to the merger shall be <are> entitled <only> to the rights
72-18 provided in the plan of merger;
72-19 (8) if the<.>
72-20 <(9) If a> plan of merger shall fail <fails> to
72-21 provide for the allocation and vesting of the right, title, and
72-22 interest in any <a> particular item of real estate or other
72-23 property or for the allocation of any <a> liability or obligation
72-24 of any <a> party to the merger, such <when the merger takes effect
72-25 the> item of real estate or other property shall be owned in
72-26 undivided interest <interests> by, or such <the> liability or
72-27 obligation shall be a joint and several liability and obligation
72-28 of, each of the surviving and new domestic and foreign partnerships
72-29 and other entities, pro rata to the total number of surviving and
72-30 new domestic and foreign partnerships and other entities resulting
72-31 from the merger;
72-32 (9) a partner of a partnership that is a party to a
72-33 merger does not become personally liable as a result of the merger
72-34 for a liability or obligation of another person that is a party to
72-35 the merger unless the partner consents to becoming personally
72-36 liable by action taken in connection with the specific plan of
72-37 merger approved by the partner; and for purposes of determining the
72-38 liability of partners in a domestic partnership that is a party to
72-39 the merger for the debts and obligations of other parties to the
72-40 merger in which that partner otherwise was not or is not a partner
72-41 or other owner of an interest:
72-42 (A) a partner who remains in or enters a
72-43 domestic or foreign partnership or other entity that survives a
72-44 merger or that enters a domestic or foreign partnership or other
72-45 entity created by the terms of the plan of merger shall be treated
72-46 as an incoming partner in the new or surviving partnership as of
72-47 the effective date of the merger; and
72-48 (B) a partner in a domestic partnership that is
72-49 a party to the merger but that does not survive shall be treated as
72-50 a partner who withdrew from the nonsurviving domestic partnership
72-51 as of the effective date of the merger; and<.>
72-52 (10) if <If> a domestic or foreign partnership merges
72-53 with another domestic or foreign partnership or other entity and
72-54 through the merger process no longer exists, a person who becomes a
72-55 member of the surviving domestic or foreign partnership or other
72-56 entity, for a period of one year after the effective date of the
72-57 merger, may bind the surviving entity to a transaction for which it
72-58 no longer has authority to bind the entity if the transaction is
72-59 one in which the partner's actions would bind the foreign or
72-60 domestic partnership before the effective date of the merger and
72-61 the other party to the transaction:
72-62 (A) does not have notice of the merger;
72-63 (B) had done business with the partnership which
72-64 no longer exists within one year preceding the effective date of
72-65 the merger; and
72-66 (C) reasonably believes that the partner who was
72-67 previously a member of the partnership which was merged into the
72-68 surviving entity and is now a partner of the surviving entity was a
72-69 partner with authority to bind the partnership to the transaction
72-70 at the time of the transaction.
73-1 (h) Other Entity. <(g) Definition of "Other Entity."> For
73-2 purposes of this section, the term "other entity" means any entity,
73-3 whether organized for profit or not, that is a corporation, limited
73-4 partnership, limited liability company, joint venture, joint stock
73-5 company, cooperative, association, bank, insurance company, or
73-6 other legal entity organized pursuant to <under> the laws of this
73-7 state or any other <another> state or country to the extent such
73-8 <the> laws or the constituent documents of that entity, not
73-9 inconsistent with such laws <law>, permit that entity to enter into
73-10 a merger or partnership interest exchange as permitted by this
73-11 section.
73-12 SECTION 95. Section 9.03(a), Texas Revised Partnership Act
73-13 (Article 6132b-9.03, Vernon's Texas Civil Statutes), is amended to
73-14 read as follows:
73-15 (a) One or more domestic or foreign partnerships may adopt a
73-16 plan of exchange by which a domestic or foreign partnership or
73-17 other entity acquires all of the outstanding partnership interests
73-18 of one or more domestic partnerships in exchange for cash or
73-19 securities of the acquiring domestic or foreign partnership or
73-20 other entity, if:
73-21 (1) the partnership agreement of each domestic
73-22 partnership the partnership interests of which are to be acquired
73-23 pursuant to the plan of exchange contains provisions that authorize
73-24 the partnership interest exchange adopted by the partnership, and
73-25 if one or more foreign partnerships or other entities is to issue
73-26 shares or other interests as part of the plan of exchange, the
73-27 issuance of those shares or other interests is either permitted by
73-28 the laws under which that foreign partnership or other entity is
73-29 formed or not inconsistent with those laws;
73-30 (2) <(1)> each domestic or foreign partnership, the
73-31 partnership interests of which are to be acquired under the plan of
73-32 exchange, approves the plan of exchange in the manner prescribed in
73-33 its partnership agreement; and
73-34 (3) <(2)> each acquiring domestic or foreign
73-35 partnership or other entity takes all action that may be required
73-36 by the laws of the state under which it was formed or incorporated
73-37 and as required by its partnership agreement or other constituent
73-38 documents in order to effect the exchange.
73-39 SECTION 96. Article IX, Texas Revised Partnership Act
73-40 (Article 6132b-9.01 et seq., Vernon's Texas Civil Statutes), is
73-41 amended by adding Sections 9.05 and 9.06 to read as follows:
73-42 Sec. 9.05. CONVERSION. (a) A domestic partnership may
73-43 adopt a plan of conversion and convert to a foreign partnership or
73-44 any other entity if:
73-45 (1) the converting entity acts upon and its partners
73-46 approve a plan of conversion in the manner prescribed by Section
73-47 9.02 as if the conversion were a merger to which the converting
73-48 entity were a party and not the survivor;
73-49 (2) the conversion is permitted by, or not
73-50 inconsistent with, the laws of the state or country in which the
73-51 converted entity is to be incorporated, formed, or organized and
73-52 the incorporation, formation, or organization of the converted
73-53 entity is effected in compliance with such laws;
73-54 (3) at the time the conversion becomes effective, each
73-55 partner of the converting entity will, unless otherwise agreed to
73-56 by that partner, own an equity interest or other ownership or
73-57 security interest in, and be a shareholder, partner, member, owner
73-58 or other security holder of, the converted entity; and
73-59 (4) the converted entity shall be incorporated,
73-60 formed, or organized as part of or pursuant to the plan of
73-61 conversion.
73-62 (b) Any foreign partnership or other entity may adopt a plan
73-63 of conversion and convert to a domestic partnership if:
73-64 (1) the conversion is permitted by the laws of the
73-65 state or country in which the foreign partnership is incorporated,
73-66 if a foreign partnership is converting;
73-67 (2) the conversion is either permitted by the laws
73-68 under which the other entity is formed or organized or by the
73-69 constituent documents of the other entity that are not
73-70 inconsistent with the laws of the state or country in which the
74-1 other entity is formed or organized, if another entity is
74-2 converting; and
74-3 (3) the converting entity takes all action that may
74-4 be required by the laws of the state or country under which it is
74-5 incorporated, formed, or organized and by its constituent documents
74-6 to effect the conversion.
74-7 (c) A plan of conversion shall set forth:
74-8 (1) the name of the converting entity and the
74-9 converted entity;
74-10 (2) a statement that the converting entity is
74-11 continuing its existence in the organizational form of the
74-12 converted entity;
74-13 (3) a statement as to the type of entity that the
74-14 converted entity is to be and the state or country under the laws
74-15 of which the converted entity is to be incorporated, formed, or
74-16 organized;
74-17 (4) the manner and basis of converting the partnership
74-18 interests, shares, or other evidences of ownership of the
74-19 converting entity into partnership interests, shares, or other
74-20 evidences of ownership or securities of the converted entity, or
74-21 any combination thereof; and
74-22 (5) in an attachment or exhibit, the certificate of
74-23 limited partnership, articles of incorporation, or other
74-24 organizational documents of the converted entity if the converted
74-25 entity is not a domestic partnership.
74-26 (d) A plan of conversion may set forth such other provisions
74-27 relating to the conversion not inconsistent with law, including the
74-28 initial partnership agreement of the converted entity if the
74-29 converted entity is a partnership.
74-30 (e) If a plan of conversion has been approved in accordance
74-31 with the preceding provisions of this section and has not been
74-32 abandoned, unless the converted entity and the converting entities
74-33 are both partnerships:
74-34 (1) articles of conversion shall be executed by the
74-35 converting entity by a partner, officer, or other duly authorized
74-36 representative thereof and shall set forth:
74-37 (A) the plan of conversion or a statement
74-38 certifying the following:
74-39 (i) the name, the state of incorporation,
74-40 formation, or organization of the converting entity, and the
74-41 organizational form of the converting entity;
74-42 (ii) that a plan of conversion has been
74-43 approved;
74-44 (iii) that an executed plan of conversion
74-45 is on file at the principal place of business of the converting
74-46 entity, stating the address thereof, and that an executed plan of
74-47 conversion will be on file, from and after the conversion, at the
74-48 principal place of the converting entity, stating the address
74-49 thereof; and
74-50 (iv) that a copy of the plan of conversion
74-51 will be furnished by the converting entity (prior to the
74-52 conversion) or the converted entity (after the conversion), on
74-53 written request and without cost, to any member of the converting
74-54 entity or the converted entity; and
74-55 (B) a statement that the approval of the plan of
74-56 conversion was duly authorized by all action required by the laws
74-57 under which the converting entity was incorporated, formed, or
74-58 organized and by its constituent documents;
74-59 (2) the original and one copy of the articles of
74-60 conversion shall be delivered to the secretary of state; and
74-61 (3) two copies of the certificate of limited
74-62 partnership of the domestic limited partnership if the converted
74-63 entity is a domestic limited partnership shall also be delivered to
74-64 the secretary of state with the articles of conversion.
74-65 (f) If the secretary of state finds that the articles of
74-66 conversion conform to law and has received all filings required to
74-67 be received, and issued all certificates required to be issued in
74-68 connection with the incorporation, formation, or organization of
74-69 the converted entity, if any, he shall, when all fees and franchise
74-70 taxes have been paid as required by law or if the articles of
75-1 conversion provide that the converted entity will be liable for the
75-2 payment of all such fees and franchise taxes:
75-3 (1) endorse on the original and each copy the
75-4 word "Filed" and the month, day, and year of the filing thereof;
75-5 (2) file the original in his office; and
75-6 (3) issue a certificate of conversion, together
75-7 with a copy of the articles affixed thereto, to the converted
75-8 entity or its representatives.
75-9 (g) Except as otherwise provided by Section 9.06, upon the
75-10 issuance of the certificate of conversion by the secretary of state
75-11 (or if a certificate of conversion need not be executed, as
75-12 provided in the plan of merger), the conversion of a converting
75-13 entity shall be effective.
75-14 (h) When a conversion of a converting entity takes effect:
75-15 (1) the converting entity shall continue to exist,
75-16 without interruption, but in the organizational form of the
75-17 converted entity rather than in its prior organizational form;
75-18 (2) all rights, title, and interests to all real
75-19 estate and other property owned by the converting entity shall
75-20 continue to be owned by the converted entity in its new
75-21 organizational form without reversion or impairment, without
75-22 further act or deed, and without any transfer or assignment having
75-23 occurred, but subject to any existing liens or other encumbrances
75-24 thereon;
75-25 (3) all liabilities and obligations of the converting
75-26 entity shall continue to be liabilities and obligations of the
75-27 converted entity in its new organizational form without impairment
75-28 or diminution by reason of the conversion;
75-29 (4) all rights of creditors or other parties with
75-30 respect to or against the prior interest holders or other owners of
75-31 the converting entity in their capacities as such in existence as
75-32 of the effective time of the conversion will continue in existence
75-33 as to those liabilities and obligations and may be pursued by such
75-34 creditors and obligees as if such conversion shall not have
75-35 occurred;
75-36 (5) a proceeding pending by or against the converting
75-37 entity or by or against any of the converting entity's interest
75-38 holders or owners in their capacities as such may be continued by
75-39 or against the converted entity in its new organizational form and
75-40 by or against the prior interest holders or owners, as the case may
75-41 be, without any need for substitution of parties;
75-42 (6) the partnership interests, shares, and other
75-43 evidences of ownership in the converting entity that are to be
75-44 converted into partnership interests, shares, evidences of
75-45 ownership, or other securities in the converted entity as provided
75-46 in the plan of conversion shall be so converted, and if the
75-47 converting entity is a domestic partnership, the former holders of
75-48 shares in the domestic partnership shall be entitled only to the
75-49 rights provided in the plan of conversion;
75-50 (7) if, after the effectiveness of the conversion, a
75-51 shareholder, partner, member, or other owner of the converted
75-52 entity would be liable under applicable law in such capacity for
75-53 the debts or obligations of the converted entity, such shareholder,
75-54 partner, member, or other owner of the converted entity shall be
75-55 liable for the debts and obligations of the converting entity that
75-56 existed before the conversion takes effect only to the extent that
75-57 such shareholder, partner, member or other owner:
75-58 (A) agreed in writing to be liable for such
75-59 debts or obligations;
75-60 (B) was liable under applicable law, prior to
75-61 the effectiveness of the conversion, for such debts or obligations;
75-62 or
75-63 (C) by becoming a shareholder, partner, member,
75-64 or other owner of the converted entity, becomes liable under
75-65 applicable law for existing debts and obligations of the converted
75-66 entity;
75-67 (8) if the converted entity is a foreign partnership
75-68 or other entity, such converted entity shall be deemed to appoint
75-69 the secretary of state as its agent for service of process in a
75-70 proceeding to enforce any obligation or the rights of dissenting
76-1 shareholders of the converting domestic partnership; and
76-2 (9) if the converting partnership is a domestic
76-3 partnership, the provisions of Section 9.02 of this Act shall apply
76-4 as if the converted entity were the survivor of a merger with the
76-5 converting entity.
76-6 (i) For purposes of this section:
76-7 (1) "Conversion" means:
76-8 (A) the continuance of a domestic partnership
76-9 as, and in the organizational form of, a foreign partnership or
76-10 other entity; or
76-11 (B) the continuance of a foreign partnership or
76-12 other entity as, and in the organizational form of, a domestic
76-13 partnership.
76-14 (2) "Converted entity" means any domestic or foreign
76-15 partnership or other entity to which a converting entity has
76-16 converted or intends to convert as permitted by this section.
76-17 (3) "Converting entity" means any domestic or foreign
76-18 partnership or other entity that has converted or intends to
76-19 convert as permitted by this section.
76-20 (4) "Domestic partnership" means a partnership the
76-21 internal affairs of which are governed by this Act.
76-22 (5) "Foreign partnership" means a partnership, other
76-23 than a limited partnership, the internal affairs of which are
76-24 governed by the law of another state comparable to this Act or the
76-25 Texas Uniform Partnership Act (Article 6132b, Vernon's Texas Civil
76-26 Statutes).
76-27 (6) "Other entity" means any entity, whether organized
76-28 for profit or not, that is a corporation, limited partnership
76-29 (other than a limited partnership formed under the Texas Revised
76-30 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
76-31 Statutes)), joint venture, limited liability company, joint stock
76-32 company, cooperative, association, bank, insurance company, or
76-33 other legal entity organized pursuant to the laws of this state or
76-34 any other state or country.
76-35 Sec. 9.06. FILINGS AND FEES. Sections 2.12 and 12.01, Texas
76-36 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
76-37 Civil Statutes), apply to filings made with the secretary of state
76-38 under this article as if those filings related to limited
76-39 partnerships.
76-40 SECTION 97. Section 171.252, Tax Code, is amended to read as
76-41 follows:
76-42 Sec. 171.252. Effects of Forfeiture. If the corporate
76-43 privileges of a corporation are forfeited under this subchapter:
76-44 (1) the corporation shall be denied the right to sue
76-45 or defend in a court of this state; and
76-46 (2) each director or officer of the corporation is
76-47 liable for a tax, penalty, fee, or other amount owed to the state
76-48 by <debt of> the corporation as provided by Section 171.255 of this
76-49 code.
76-50 SECTION 98. Sections 171.255(a) and (c), Tax Code, are
76-51 amended to read as follows:
76-52 (a) If the corporate privileges of a corporation are
76-53 forfeited for the failure to file a report or pay a tax or penalty,
76-54 each director or officer of the corporation is liable for each tax,
76-55 penalty, fee, or other amount owed to the state by <debt of> the
76-56 corporation that is created or incurred in this state after the
76-57 date on which the report, tax, or penalty is due and before the
76-58 corporate privileges are revived. The liability includes liability
76-59 for any tax or penalty imposed by this chapter on the corporation
76-60 that becomes due and payable after the date of the forfeiture.
76-61 (c) A director or officer is not liable for a tax, penalty,
76-62 fee, or other amount owed to the state by <debt of> the corporation
76-63 if the director or officer shows that the failure to pay the tax,
76-64 penalty, fee, or other amount occurred <debt was created or
76-65 incurred>:
76-66 (1) over the director's or officer's objection; or
76-67 (2) without the director's or officer's knowledge and
76-68 that the exercise of reasonable diligence to become acquainted with
76-69 the affairs of the corporation would not have revealed the
76-70 intention to create the liability for the tax, penalty, fee, or
77-1 other amount <debt>.
77-2 SECTION 99. Section 8.03, Texas Revised Limited Partnership
77-3 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is repealed.
77-4 SECTION 100. (a) This Act takes effect September 1, 1995.
77-5 (b) The change to Section 6.03, Texas Revised Limited
77-6 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
77-7 made by this Act, applies only to domestic limited partnerships
77-8 formed on or after September 1, 1995. A domestic limited
77-9 partnership formed before that date is governed by Section 6.03,
77-10 Texas Revised Limited Partnership Act (Article 6132a-1, Vernon's
77-11 Texas Civil Statutes), as it existed before amendment by this Act,
77-12 and that provision remains in effect for that limited purpose.
77-13 (c) This Act shall not affect any action or proceeding
77-14 commenced before the effective date.
77-15 SECTION 101. The importance of this legislation and the
77-16 crowded condition of the calendars in both houses create an
77-17 emergency and an imperative public necessity that the
77-18 constitutional rule requiring bills to be read on three several
77-19 days in each house be suspended, and this rule is hereby suspended.
77-20 * * * * *