By Solomons H.B. No. 1104
75R1731 CLG-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain business organizations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section A, Article 1.02, Texas Business
1-5 Corporation Act, is amended to read as follows:
1-6 A. As used in this Act, unless the context otherwise
1-7 requires, the term:
1-8 (1) "Articles of incorporation" means the original or
1-9 restated articles of incorporation and all amendments thereto.
1-10 (2) "Associate," when used to indicate a relationship
1-11 with a person, means:
1-12 (a) a domestic or foreign corporation or other
1-13 entity of which the person is an officer or partner or is the
1-14 beneficial owner of 10 percent or more of a class of voting shares
1-15 or similar securities of that corporation or other entity;
1-16 (b) a trust or estate in which the person has a
1-17 substantial beneficial interest or as to which the person serves as
1-18 trustee or in a similar fiduciary capacity; or
1-19 (c) a spouse of the person or a relative of the
1-20 person, or of the person's spouse, who has the same home as the
1-21 person or who is a director or officer of such person or any of its
1-22 affiliates.
1-23 (3) [(2)] "Authorized shares" means the shares of all
1-24 classes which the corporation is authorized to issue.
2-1 (4) [(3)] "Cancel" means to restore issued shares to
2-2 the status of authorized but unissued shares.
2-3 (5) [(4)] "Certificated shares" means shares
2-4 represented by instruments in bearer or registered form.
2-5 (6) [(5)] "Conspicuous" or "conspicuously," when
2-6 prescribed for information appearing on a certificate for shares or
2-7 other securities, means the location of such information or use of
2-8 type of sufficient size, color, or character that a reasonable
2-9 person against whom such information may operate should notice it.
2-10 For example, a printed or typed statement in capitals, or boldface
2-11 or underlined type, or in type that is larger than or that
2-12 contrasts in color with that used for other statements on the same
2-13 certificate, is "conspicuous."
2-14 (7) [(6)] "Consuming assets corporation" means a
2-15 corporation which is engaged in the business of exploiting assets
2-16 subject to depletion or amortization and which elects to state in
2-17 its articles of incorporation that it is a consuming assets
2-18 corporation and includes as a part of its official corporate name
2-19 the phrase "a consuming assets corporation," giving such phrase
2-20 equal prominence with the rest of the corporate name on its
2-21 financial statements and certificates representing shares. All its
2-22 certificates representing shares shall also contain a further
2-23 sentence: "This corporation is permitted by law to pay dividends
2-24 out of reserves which may impair its stated capital."
2-25 (8) "Conversion" means:
2-26 (a) the continuance of a domestic corporation
2-27 as, and in the organizational form of, a foreign corporation or
3-1 other entity; or
3-2 (b) the continuance of a foreign corporation or
3-3 other entity as, and in the organizational form of, a domestic
3-4 corporation.
3-5 (9) "Converted entity" means any domestic or foreign
3-6 corporation or other entity to which a converting entity has
3-7 converted or intends to convert as permitted by Article 5.17 of
3-8 this Act.
3-9 (10) "Converting entity" means any domestic or foreign
3-10 corporation or other entity that has converted or intends to
3-11 convert as permitted by Article 5.17 of this Act.
3-12 (11) [(7)] "Corporation" or "domestic corporation"
3-13 means a corporation for profit subject to the provisions of this
3-14 Act, except a foreign corporation.
3-15 (12) "Disinterested," when used to indicate a director
3-16 or other person is disinterested in a contract, transaction, or
3-17 other matter for purposes of approval of a contract or transaction
3-18 under Article 2.35-1 of this Act and for purposes of considering
3-19 the disposition of a claim or challenge with respect to a
3-20 particular contract or transaction or to particular conduct means
3-21 the director or other person, or an associate of the director
3-22 (other than the corporation and its associates) or other person, is
3-23 not a party to the contract or transaction or is not materially
3-24 involved in the conduct that is subject to the claim or challenge,
3-25 and does not otherwise have a material financial interest in the
3-26 outcome of the contract or transaction or the disposition of the
3-27 claim or challenge. A director or other person is not to be
4-1 considered to be materially involved in conduct that is subject to
4-2 a claim or challenge or to otherwise have a material financial
4-3 interest in the outcome of a contract or transaction or the
4-4 disposition of the claim or challenge solely by reason of the
4-5 existence of one or more of the following circumstances:
4-6 (a) the person was nominated or elected as a
4-7 director by persons who are interested in the contract or
4-8 transaction or who are alleged to have engaged in the conduct that
4-9 is subject to the claim or challenge;
4-10 (b) the person receives normal director's fees
4-11 or similar customary compensation, expense reimbursement, and
4-12 benefits as a director of the corporation;
4-13 (c) the person has a direct or indirect equity
4-14 interest in the corporation;
4-15 (d) the corporation or its subsidiaries has an
4-16 interest in the contract or transaction or was affected by the
4-17 alleged conduct;
4-18 (e) the person or an associate or affiliate of
4-19 the person receives ordinary and reasonable compensation for
4-20 services rendered to review, make recommendations, or decide on the
4-21 disposition of the claim or challenge; or
4-22 (f) in the case of a review by the person of
4-23 alleged conduct that is the subject to a claim or challenge:
4-24 (i) the person is named as a defendant in
4-25 the derivative proceeding with respect to such matter or as a
4-26 person who engaged in the alleged conduct; or
4-27 (ii) the person approved of, voted for, or
5-1 acquiesced in, as a director, the act being challenged if the act
5-2 resulted in no material personal or financial benefit to the person
5-3 and the challenging party fails to allege with particularity facts
5-4 that, if true, raise a significant prospect that the director would
5-5 be adjudged liable to the corporation or its shareholders by reason
5-6 of that conduct.
5-7 (13) [(8)] "Distribution" means a transfer of money or
5-8 other property (except its own shares or rights to acquire its own
5-9 shares), or issuance of indebtedness, by a corporation to its
5-10 shareholders in the form of:
5-11 (a) a dividend on any class or series of the
5-12 corporation's outstanding shares;
5-13 (b) a purchase, redemption, or other acquisition
5-14 by the corporation, directly or indirectly, of any of its own
5-15 shares; or
5-16 (c) a payment by the corporation in liquidation
5-17 of all or a portion of its assets.
5-18 (14) [(9)] "Foreign corporation" means a corporation
5-19 for profit organized under laws other than the laws of this State.
5-20 (15) "Independent," when used to indicate a director
5-21 or other person is independent for purposes of considering the
5-22 disposition of a claim or challenge with respect to a particular
5-23 contract or transaction or to a particular conduct or alleged
5-24 conduct means:
5-25 (a) the director or other person is
5-26 disinterested;
5-27 (b) the director or other person is not an
6-1 associate (other than by reason of being a director of the
6-2 corporation or one more of its subsidiaries or associates) or
6-3 member of the immediate family of a party to the contract or
6-4 transaction that is the subject of the claim or challenge or that
6-5 is alleged to have engaged in the conduct that is subject to the
6-6 claim or challenge;
6-7 (c) the director or other person, or an
6-8 associate or member of the immediate family of the director or
6-9 other person, does not have a business, financial, or familial
6-10 relationship with a party to the contract or transaction that is
6-11 the subject of the claim or challenge or that is alleged to have
6-12 engaged in conduct that is subject to the claim or challenge,
6-13 which, in each case, could reasonably be expected to materially and
6-14 adversely affect the director's or other person's judgment with
6-15 respect to the consideration of the disposition of the matter
6-16 subject to the claim or challenge in the interests of the
6-17 corporation; and
6-18 (d) the director or other person is not
6-19 otherwise shown, by a preponderance of the evidence by the person
6-20 challenging the independence of the director or other person, to be
6-21 under the controlling influence of a party to the contract or
6-22 transaction that is the subject of the claim or challenge or that
6-23 is alleged to have engaged in conduct that is subject to the claim
6-24 or challenge.
6-25 A director or other person is not considered to have a
6-26 relationship that could be expected to materially and adversely
6-27 affect the director's or other person's judgment with respect to
7-1 the consideration of the disposition of a matter subject to a claim
7-2 or challenge or to otherwise be under the controlling influence of
7-3 a party to a contract or transaction that is the subject of the
7-4 claim or challenge or that is alleged to have engaged in conduct
7-5 that is subject to a claim or challenge solely by reason of the
7-6 existence of one or more of the following circumstances:
7-7 (a) the person has been nominated or elected as
7-8 a director by persons who are interested in the contract or
7-9 transaction or who are alleged to have engaged in the conduct that
7-10 is subject to the claim or challenge;
7-11 (b) the person receives normal director's fees
7-12 or similar customary compensation, expense reimbursement, and
7-13 benefits as a director of the corporation;
7-14 (c) the person has a direct or indirect equity
7-15 interest in the corporation;
7-16 (d) the corporation or its subsidiaries has an
7-17 interest in the contract or transaction, or was affected by the
7-18 alleged conduct;
7-19 (e) the person or an associate or affiliate of
7-20 such person receives ordinary and reasonable compensation for
7-21 services rendered to review, make recommendations, or decide on the
7-22 disposition of the claim or challenge; or
7-23 (f) the person or an associate (other than the
7-24 corporation and its associates), immediate family member or
7-25 affiliate of the person has an ongoing business relationship with
7-26 the corporation that is not material to that person, associate,
7-27 family member, or affiliate.
8-1 (16) [(10)] "Insolvency" means inability of a
8-2 corporation to pay its debts as they become due in the usual course
8-3 of its business.
8-4 (17) [(11)] "Investment Company Act" means the
8-5 Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.);
8-6 (18) [(12)] "Merger" means (a) the division of a
8-7 domestic corporation into two or more new domestic corporations or
8-8 into a surviving corporation and one or more new domestic or
8-9 foreign corporations or other entities, or (b) the combination of
8-10 one or more domestic corporations with one or more domestic or
8-11 foreign corporations or other entities resulting in (i) one or more
8-12 surviving domestic or foreign corporations or other entities, (ii)
8-13 the creation of one or more new domestic or foreign corporations or
8-14 other entities, or (iii) one or more surviving domestic or foreign
8-15 corporations or other entities and the creation of one or more new
8-16 domestic or foreign corporations or other entities.
8-17 (19) [(13)] "Net assets" means the amount by which the
8-18 total assets of a corporation exceed the total debts of the
8-19 corporation.
8-20 (20) [(14)] "Other entity" means any entity, whether
8-21 organized for profit or not, that is a corporation (other than a
8-22 domestic or foreign corporation), limited or general partnership,
8-23 limited liability company, real estate investment trust, joint
8-24 venture, joint stock company, cooperative, association, bank,
8-25 trust, insurance company or other legal entity organized pursuant
8-26 to the laws of this state or any other state or country [to the
8-27 extent such laws or the constituent documents of that entity, not
9-1 inconsistent with such laws, permit that entity to enter into a
9-2 merger or share exchange as permitted by Article 5.03 of this Act].
9-3 (21) [(15)] "Share dividend" means a dividend by a
9-4 corporation that is payable in its own authorized but unissued
9-5 shares or in treasury shares. An amendment to a corporation's
9-6 articles of incorporation to change the shares of any class or
9-7 series, whether with or without par value, into the same or a
9-8 different number of shares, either with or without par value, of
9-9 the same class or series or another class or series does not
9-10 constitute a share dividend.
9-11 (22) [(16)] "Shareholder" or "holder of shares" means
9-12 the person in whose name shares issued by a corporation are
9-13 registered at the relevant time in the share transfer records
9-14 maintained by the corporation pursuant to Article 2.44 of this Act.
9-15 (23) [(17)] "Shares" means the units into which the
9-16 proprietary interests in a corporation are divided, whether
9-17 certificated or uncertificated shares.
9-18 (24) [(18)] "Stated capital" means, at any particular
9-19 time, the sum of:
9-20 (a) the par value of all shares of the
9-21 corporation having a par value that have been issued;
9-22 (b) the consideration fixed by the corporation
9-23 in the manner provided by Article 2.15 of this Act for all shares
9-24 of the corporation without par value that have been issued, except
9-25 such part of the consideration that is actually received therefor
9-26 (which part must be less than all of that consideration) that the
9-27 board by resolution adopted no later than sixty (60) days after the
10-1 issuance of those shares may have allocated to surplus; and
10-2 (c) such amounts not included in paragraphs (a)
10-3 and (b) of this subsection as have been transferred to stated
10-4 capital of the corporation, whether upon the payment of a share
10-5 dividend or upon adoption by the board of directors of a resolution
10-6 directing that all or part of surplus be transferred to stated
10-7 capital, minus all reductions from such sum as have been effected
10-8 in a manner permitted by law.
10-9 (25) [(19)] "Subscriber" means the offeror in a
10-10 subscription.
10-11 (26) [(20)] "Subscription" means a memorandum in
10-12 writing, executed before or after incorporation, wherein an offer
10-13 is made to purchase and pay for a specified number of theretofore
10-14 unissued shares of a corporation.
10-15 (27) [(21)] "Surplus" means the excess of the net
10-16 assets of a corporation over its stated capital.
10-17 (28) [(22)] "Treasury shares" means shares of a
10-18 corporation which have been issued, have been subsequently acquired
10-19 by and belong to the corporation, and have not been canceled and
10-20 restored to the status of authorized but unissued shares. Treasury
10-21 shares do not include shares held by a corporation, either directly
10-22 or through a trust or similar arrangement, in a fiduciary capacity.
10-23 Treasury shares shall be deemed to be "issued" shares but not
10-24 "outstanding" shares, and shall not be included in the total assets
10-25 of a corporation for purposes of determining its "net assets."
10-26 (29) [(23)] "Uncertificated shares" means shares not
10-27 represented by instruments and the transfers of which are
11-1 registered upon books maintained for that purpose by or on behalf
11-2 of the issuing corporation.
11-3 SECTION 2. Sections A, P, R, and T, Article 2.02-1, Texas
11-4 Business Corporation Act, are amended to read as follows:
11-5 A. In this article:
11-6 (1) "Corporation" includes any domestic or foreign
11-7 predecessor entity of the corporation in a merger, conversion
11-8 [consolidation], or other transaction in which some or all of the
11-9 liabilities of the predecessor are transferred to the corporation
11-10 by operation of law and in any other transaction in which the
11-11 corporation assumes the liabilities of the predecessor but does not
11-12 specifically exclude liabilities that are the subject matter of
11-13 this article.
11-14 (2) "Director" means any person who is or was a
11-15 director of the corporation and any person who, while a director of
11-16 the corporation, is or was serving at the request of the
11-17 corporation as a director, officer, partner, venturer, proprietor,
11-18 trustee, employee, agent, or similar functionary of another foreign
11-19 or domestic corporation, [partnership, joint venture, sole
11-20 proprietorship, trust,] employee benefit plan, [or] other
11-21 enterprise, or other entity.
11-22 (3) "Expenses" include court costs and attorneys'
11-23 fees.
11-24 (4) "Official capacity" means
11-25 (a) when used with respect to a director, the
11-26 office of director in the corporation, and
11-27 (b) when used with respect to a person other
12-1 than a director, the elective or appointive office in the
12-2 corporation held by the officer or the employment or agency
12-3 relationship undertaken by the employee or agent in behalf of the
12-4 corporation, but
12-5 (c) in both Paragraphs (a) and (b) does not
12-6 include service for any other foreign or domestic corporation or
12-7 any [partnership, joint venture, sole proprietorship, trust,]
12-8 employee benefit plan, [or] other enterprise, or other entity.
12-9 (5) "Proceeding" means any threatened, pending, or
12-10 completed action, suit, or proceeding, whether civil, criminal,
12-11 administrative, arbitrative, or investigative, any appeal in such
12-12 an action, suit, or proceeding, and any inquiry or investigation
12-13 that could lead to such an action, suit, or proceeding.
12-14 P. A corporation may indemnify and advance expenses to
12-15 persons who are not or were not officers, employees, or agents of
12-16 the corporation but who are or were serving at the request of the
12-17 corporation as a director, officer, partner, venturer, proprietor,
12-18 trustee, employee, agent, or similar functionary of another foreign
12-19 or domestic corporation, [partnership, joint venture, sole
12-20 proprietorship, trust,] employee benefit plan, [or] other
12-21 enterprise, or other entity to the same extent that it may
12-22 indemnify and advance expenses to directors under this article.
12-23 R. A corporation may purchase and maintain insurance or
12-24 another arrangement on behalf of any person who is or was a
12-25 director, officer, employee, or agent of the corporation or who is
12-26 or was serving at the request of the corporation as a director,
12-27 officer, partner, venturer, proprietor, trustee, employee, agent,
13-1 or similar functionary of another foreign or domestic corporation,
13-2 [partnership, joint venture, sole proprietorship, trust,] employee
13-3 benefit plan, [or] other enterprise, or other entity, against any
13-4 liability asserted against him and incurred by him in such a
13-5 capacity or arising out of his status as such a person, whether or
13-6 not the corporation would have the power to indemnify him against
13-7 that liability under this article. If the insurance or other
13-8 arrangement is with a person or entity that is not regularly
13-9 engaged in the business of providing insurance coverage, the
13-10 insurance or arrangement may provide for payment of a liability
13-11 with respect to which the corporation would not have the power to
13-12 indemnify the person only if including coverage for the additional
13-13 liability has been approved by the shareholders of the corporation.
13-14 Without limiting the power of the corporation to procure or
13-15 maintain any kind of insurance or other arrangement, a corporation
13-16 may, for the benefit of persons indemnified by the corporation, (1)
13-17 create a trust fund; (2) establish any form of self-insurance; (3)
13-18 secure its indemnity obligation by grant of a security interest or
13-19 other lien on the assets of the corporation; or (4) establish a
13-20 letter of credit, guaranty, or surety arrangement. The insurance
13-21 or other arrangement may be procured, maintained, or established
13-22 within the corporation or with any insurer or other person deemed
13-23 appropriate by the board of directors regardless of whether all or
13-24 part of the stock or other securities of the insurer or other
13-25 person are owned in whole or part by the corporation. In the
13-26 absence of fraud, the judgment of the board of directors as to the
13-27 terms and conditions of the insurance or other arrangement and the
14-1 identity of the insurer or other person participating in an
14-2 arrangement shall be conclusive and the insurance or arrangement
14-3 shall not be voidable and shall not subject the directors approving
14-4 the insurance or arrangement to liability, on any ground,
14-5 regardless of whether directors participating in the approval are
14-6 beneficiaries of the insurance or arrangement.
14-7 T. For purposes of this article, the corporation is deemed
14-8 to have requested a director to serve as a trustee, employee,
14-9 agent, or similar functionary of an employee benefit plan whenever
14-10 the performance by him of his duties to the corporation also
14-11 imposes duties on or otherwise involves services by him to the plan
14-12 or participants or beneficiaries of the plan. Excise taxes
14-13 assessed on a director with respect to an employee benefit plan
14-14 pursuant to applicable law are deemed fines. Action taken or
14-15 omitted by a director [him] with respect to an employee benefit
14-16 plan in the performance of his duties for a purpose reasonably
14-17 believed by him to be in the interest of the participants and
14-18 beneficiaries of the plan is deemed to be for a purpose which is
14-19 not opposed to the best interests of the corporation.
14-20 SECTION 3. Section A, Article 2.05, Texas Business
14-21 Corporation Act, is amended to read as follows:
14-22 A. The Corporate name shall conform to the following
14-23 requirements:
14-24 (1) It shall contain the word "corporation,"
14-25 "company," or "incorporated," or shall contain an abbreviation of
14-26 one of such words, and shall contain such additional words as may
14-27 be required by law.
15-1 (2) It shall not contain any word or phrase which
15-2 indicates or implies that it is organized for any purpose other
15-3 than one or more of the purposes contained in its articles of
15-4 incorporation.
15-5 (3) It shall not be the same as, or deceptively
15-6 similar to, the name of any domestic corporation, non-profit
15-7 corporation, real estate investment trust, limited partnership, or
15-8 limited liability company existing under the laws of this State, or
15-9 the name of any foreign corporation, non-profit corporation,
15-10 limited partnership, or limited liability company authorized to
15-11 transact business in this State, or a name the exclusive right to
15-12 which is, at the time, reserved in the manner provided in this Act
15-13 or any other statute providing for reservation of names by a
15-14 limited partnership or limited liability company, or the name of a
15-15 corporation, limited partnership, or limited liability company
15-16 which has in effect a registration of its company [corporate] name
15-17 as provided in this Act or any other applicable law; provided that
15-18 a name may be similar if written consent is obtained from the
15-19 existing corporation, non-profit corporation, real estate
15-20 investment trust, limited partnership, or limited liability company
15-21 having the name deemed to be similar or the person[, or
15-22 corporation,] for whom the name deemed to be similar is reserved in
15-23 the office of the Secretary of State.
15-24 (4) It shall not contain the word "lottery."
15-25 SECTION 4. Article 2.06, Texas Business Corporation Act, is
15-26 amended by adding Section D to read as follows:
15-27 D. Any person for whom a specified corporate name has been
16-1 reserved pursuant to Section B of this article may, during the
16-2 period for which such name is reserved, terminate such reservation
16-3 by filing with the Secretary of State an application for
16-4 cancellation of reservation of corporate name, together with the
16-5 applicable fee.
16-6 SECTION 5. Sections A and B, Article 2.15, Texas Business
16-7 Corporation Act, are amended to read as follows:
16-8 A. Shares having a par value may be issued for such
16-9 consideration, [expressed in dollars,] not less than the par value
16-10 thereof, as shall be fixed from time to time by the board of
16-11 directors or, in the case of shares issued by a converted entity,
16-12 in the plan of conversion or, in the case of a corporation created
16-13 by a merger, in the plan of merger.
16-14 B. Shares without par value may be issued for such
16-15 consideration, [expressed in dollars,] as may be fixed:
16-16 (1) [from time to time] by the board of directors from
16-17 time to time, unless the articles of incorporation reserve to the
16-18 shareholders the right to fix the consideration, in which case,
16-19 prior to the issuance of such[. In the event that such right be
16-20 reserved as to any] shares, the shareholders shall[, prior to the
16-21 issuance of such shares,] fix the consideration to be received for
16-22 such shares, by a vote of the holders of a majority of all shares
16-23 entitled to vote thereon;
16-24 (2) by a plan of conversion, in the case of shares to
16-25 be issued pursuant to the plan of conversion by a corporation that
16-26 is a converted entity; or
16-27 (3) by a plan of merger, in the case of shares to be
17-1 issued pursuant to the plan of merger by a corporation created
17-2 pursuant to the plan of merger.
17-3 SECTION 6. Article 2.16, Texas Business Corporation Act, is
17-4 amended to read as follows:
17-5 Art. 2.16. Payment for Shares. A. The [Subject to any
17-6 provision of the Constitution of the State of Texas to the
17-7 contrary, the] board of directors (or, in the case of shares to be
17-8 issued pursuant to a plan of conversion by a corporation that is a
17-9 converted entity, the plan of conversion, or, in the case of shares
17-10 to be issued pursuant to a plan of merger by a corporation created
17-11 pursuant to the plan of merger, the plan of merger) may authorize
17-12 shares to be issued for consideration consisting of any tangible or
17-13 intangible benefit to the corporation or other property of any kind
17-14 or nature, including cash, promissory notes, services performed,
17-15 contracts for services to be performed, [or] other securities of
17-16 the corporation, or securities of any other corporation, domestic
17-17 or foreign, or other entity. In addition, shares may be issued
17-18 pursuant to a plan of conversion or plan of merger in the manner
17-19 and for such consideration as may be provided for in the plan of
17-20 conversion or plan of merger. Shares may not be issued until the
17-21 full amount of the consideration, fixed as provided by law, has
17-22 been paid or delivered as required in connection with the
17-23 authorization of the shares. When such consideration shall have
17-24 been so paid or delivered [to the corporation or to a corporation
17-25 of which all of the outstanding shares of each class are owned by
17-26 the corporation], the shares shall be deemed to have been issued
17-27 and the subscriber or shareholder entitled to receive such issue
18-1 shall be a shareholder with respect to such shares, and the shares
18-2 shall be considered fully paid and non-assessable.
18-3 B. In the absence of fraud in the transaction, the judgment
18-4 of the board of directors or the shareholders or the party or
18-5 parties approving the plan of conversion or the plan of merger, as
18-6 the case may be, as to the value and sufficiency of the
18-7 consideration received for shares shall be conclusive.
18-8 SECTION 7. Sections A and B, Article 2.21, Texas Business
18-9 Corporation Act, are amended to read as follows:
18-10 A. A holder of shares, an owner of any beneficial interest
18-11 in shares, or a subscriber for shares whose subscription has been
18-12 accepted, or any affiliate thereof or of the corporation, shall be
18-13 under no obligation to the corporation or to its obligees with
18-14 respect to:
18-15 (1) such shares other than the obligation, if any, of
18-16 such person to pay to the corporation the full amount of the
18-17 consideration, fixed in compliance with Article 2.15 of this Act,
18-18 for which such shares were or are to be issued;
18-19 (2) any contractual obligation of the corporation or
18-20 any matter relating to or arising from the obligation on the basis
18-21 that the holder, owner, [or] subscriber, or affiliate is or was the
18-22 alter ego of the corporation, or on the basis of actual fraud or
18-23 constructive fraud, a sham to perpetrate a fraud, or other similar
18-24 theory, unless the obligee demonstrates that the holder, owner,
18-25 [or] subscriber, or affiliate caused the corporation to be used for
18-26 the purpose of perpetrating and did perpetrate an actual fraud on
18-27 the obligee primarily for the direct personal benefit of the
19-1 holder, owner, [or] subscriber, or affiliate; or
19-2 (3) any [contractual] obligation of the corporation on
19-3 the basis of the failure of the corporation to observe any
19-4 corporate formality, including without limitation: (a) the failure
19-5 to comply with any requirement of this Act or of the articles of
19-6 incorporation or bylaws of the corporation; or (b) the failure to
19-7 observe any requirement prescribed by this Act or by the articles
19-8 of incorporation or bylaws for acts to be taken by the corporation,
19-9 its board of directors, or its shareholders.
19-10 B. The liability of a holder, owner, or subscriber of shares
19-11 of a corporation or any affiliate thereof or of the corporation for
19-12 an obligation that is limited by Section A of this article is
19-13 exclusive and preempts any other liability imposed on a holder,
19-14 owner, or subscriber of shares of a corporation or any affiliate
19-15 thereof or of the corporation for that obligation under common law
19-16 or otherwise, except that nothing contained in this article shall
19-17 limit the obligation of a holder, owner, [or] subscriber, or
19-18 affiliate to an obligee of the corporation when:
19-19 (1) the holder, owner, [or] subscriber, or affiliate
19-20 has expressly assumed, guaranteed, or agreed to be personally
19-21 liable to the obligee for the obligation; or
19-22 (2) the holder, owner, [or] subscriber, or affiliate
19-23 is otherwise liable to the obligee for the obligation under this
19-24 Act or another applicable statute.
19-25 SECTION 8. Article 2.28, Texas Business Corporation Act, is
19-26 amended by amending Sections A and B and adding Section E to read
19-27 as follows:
20-1 A. Quorum. With respect to any meeting of shareholders
20-2 [matter], a quorum shall be present for any matter to be presented
20-3 at that meeting [at a meeting of shareholders] if the holders of a
20-4 majority of the shares entitled to vote at the meeting [on that
20-5 matter] are represented at the meeting in person or by proxy,
20-6 unless otherwise provided in the articles of incorporation in
20-7 accordance with this section. The articles of incorporation may
20-8 provide:
20-9 (1) That a quorum shall be present at a meeting of
20-10 shareholders only if the holders of a specified greater portion of
20-11 the shares entitled to vote are represented at the meeting in
20-12 person or by proxy; or
20-13 (2) That a quorum shall be present at a meeting of
20-14 shareholders if the holders of a specified lesser portion, but not
20-15 less than one-third (1/3), of the shares entitled to vote are
20-16 represented at the meeting in person or by proxy.
20-17 Unless otherwise provided in the articles of incorporation or
20-18 the bylaws, once a quorum is present at a meeting of shareholders,
20-19 the shareholders represented in person or by proxy at the meeting
20-20 may conduct such business as may be properly brought before the
20-21 meeting until it is adjourned, and the subsequent withdrawal from
20-22 the meeting of any shareholder or the refusal of any shareholder
20-23 represented in person or by proxy to vote shall not affect the
20-24 presence of a quorum at the meeting. Unless otherwise provided in
20-25 the articles of incorporation or the bylaws, the shareholders
20-26 represented in person or by proxy at a meeting of shareholders at
20-27 which a quorum is not present may adjourn the meeting until such
21-1 time and to such place as may be determined by a vote of the
21-2 holders of a majority of the shares represented in person or by
21-3 proxy at that meeting.
21-4 B. Voting on Matters Other Than the Election of Directors.
21-5 With respect to any matter, other than the election of directors or
21-6 a matter for which the affirmative vote of the holders of a
21-7 specified portion of the shares entitled to vote is required by
21-8 this Act, the affirmative vote of the holders of a majority of the
21-9 shares entitled to vote on, and that voted for or against or
21-10 expressly abstained with respect to, that matter [and represented
21-11 in person or by proxy] at a meeting of shareholders at which a
21-12 quorum is present shall be the act of the shareholders, unless
21-13 otherwise provided in the articles of incorporation or the bylaws
21-14 in accordance with this section. With respect to any matter, other
21-15 than the election of directors or a matter for which the
21-16 affirmative vote of the holders of a specified portion of the
21-17 shares entitled to vote is required by this Act, the articles of
21-18 incorporation or the bylaws may provide:
21-19 (1) That the act of the shareholders shall be the
21-20 affirmative vote of the holders of a specified portion, but not
21-21 less than a majority, of the shares entitled to vote on that
21-22 matter;
21-23 (2) That the act of the shareholders shall be the
21-24 affirmative vote of the holders of a specified portion, but not
21-25 less than a majority, of the shares entitled to vote on that matter
21-26 and represented in person or by proxy at a meeting of shareholders
21-27 at which a quorum is present; [or]
22-1 (3) That the act of the shareholders shall be the
22-2 affirmative vote of the holders of a specified portion, but not
22-3 less than a majority, of the shares entitled to vote on, and voted
22-4 for or against, that matter at a meeting of shareholders at which a
22-5 quorum is present; or
22-6 (4) That the act of the shareholders shall be the
22-7 affirmative vote of the holders of a specified portion, but not
22-8 less than a majority, of the shares entitled to vote on, and that
22-9 voted for or against or expressly abstained with respect to, that
22-10 matter at a meeting of shareholders at which a quorum is present.
22-11 E. A corporation may establish procedures in its bylaws, not
22-12 inconsistent with this Act, for determining the validity of proxies
22-13 and whether shares that are held of record by a bank, broker, or
22-14 other nominee are represented at a meeting of shareholders with
22-15 respect to any matter. The procedures may incorporate or look to
22-16 rules and determinations of any stock exchange or self regulatory
22-17 organization regulating the corporation or that bank, broker, or
22-18 other nominee.
22-19 SECTION 9. Section B, Article 2.29, Texas Business
22-20 Corporation Act, is amended to read as follows:
22-21 B. Shares [Treasury shares, shares] of its own stock owned
22-22 by a corporation or by another domestic or foreign corporation or
22-23 other entity, if a [the] majority of the voting stock or voting
22-24 interest of the other corporation or other entity [which] is owned
22-25 or controlled by the [it, and shares of its own stock held by a]
22-26 corporation, [in a fiduciary capacity] shall not be voted, directly
22-27 or indirectly, at any meeting, and shall not be counted in
23-1 determining the total number of outstanding shares at any given
23-2 time. Nothing in this section shall be construed as limiting the
23-3 right of any domestic or foreign corporation or other entity to
23-4 vote stock, including but not limited to its own stock, held or
23-5 controlled by it in a fiduciary capacity, or with respect to which
23-6 it otherwise exercises voting power in a fiduciary capacity.
23-7 SECTION 10. Part Two, Texas Business Corporation Act, is
23-8 amended by adding Article 2.30-1 to read as follows:
23-9 Art. 2.30-1. SHAREHOLDER AGREEMENTS. A. Scope of
23-10 Agreement. An agreement among the shareholders of a corporation
23-11 that complies with this article is effective among the shareholders
23-12 and the corporation even though it is inconsistent with one or more
23-13 provisions of this Act in that it:
23-14 (1) restricts the discretion or powers of the board of
23-15 directors;
23-16 (2) eliminates the board of directors and permits
23-17 management of the business and affairs of the corporation by its
23-18 shareholders, or in whole or in part by one or more of its
23-19 shareholders, or by one or more persons not shareholders;
23-20 (3) establishes the natural persons who shall be the
23-21 directors or officers of the corporation, their term of office or
23-22 manner of selection or removal, or terms or conditions of
23-23 employment of any director, officer, or other employee of the
23-24 corporation, regardless of the length of employment;
23-25 (4) governs the authorization or making of
23-26 distributions whether in proportion to ownership of shares, subject
23-27 to the limitations in Article 2.38 of this Act, or determines the
24-1 manner in which profits and losses shall be apportioned;
24-2 (5) governs, in general or in regard to specific
24-3 matters, the exercise or division of voting power by and between
24-4 the shareholders, directors (if any), or other persons or by or
24-5 among any of them, including use of disproportionate voting rights
24-6 or director proxies;
24-7 (6) establishes the terms and conditions of any
24-8 agreement for the transfer or use of property or the provision of
24-9 services between the corporation and any shareholder, director,
24-10 officer, or employee of the corporation, or other person or among
24-11 any of them;
24-12 (7) authorizes arbitration or grants authority to any
24-13 shareholder or other person as to any issue about which there is a
24-14 deadlock among the directors, shareholders, or other person or
24-15 persons empowered to manage the corporation to resolve that issue;
24-16 (8) requires dissolution of the corporation at the
24-17 request of one or more of the shareholders or upon the occurrence
24-18 of a specified event or contingency in which case the dissolution
24-19 of the corporation shall proceed as if all the shareholders had
24-20 consented in writing to dissolution of the corporation as provided
24-21 in Article 6.02 of this Act; or
24-22 (9) otherwise governs the exercise of corporate
24-23 powers, the management of the business and affairs of the
24-24 corporation, or the relationship among the shareholders, the
24-25 directors, and the corporation, or among any of them, as if the
24-26 corporation were a partnership or in a manner that would otherwise
24-27 be appropriate only among partners, and is not contrary to public
25-1 policy.
25-2 B. Procedures Required. An agreement authorized by this
25-3 article shall be:
25-4 (1) set forth (a) in the articles of incorporation or
25-5 bylaws and approved by all persons who are shareholders at the time
25-6 of the agreement or (b) in a written agreement that is signed by
25-7 all the persons who are shareholders at the time of the agreement
25-8 and is made known to the corporation;
25-9 (2) subject to amendment only by all persons who are
25-10 shareholders at the time of the amendment, unless the agreement
25-11 provides otherwise; and
25-12 (3) valid for 10 years, unless the agreement provides
25-13 otherwise.
25-14 C. Notation of Existence. The existence of an agreement
25-15 authorized by this article shall be noted conspicuously on the
25-16 front or back of each certificate for outstanding shares or on the
25-17 information statement required for uncertificated shares by Article
25-18 2.19 of this Act and shall include the following: "These shares
25-19 are subject to the provisions of a shareholders' agreement that may
25-20 provide for management of the corporation in a manner different
25-21 than in other corporations and may subject a shareholder to certain
25-22 obligations or liabilities not otherwise imposed on shareholders in
25-23 other corporations." If at the time of the agreement the
25-24 corporation has shares outstanding represented by certificates, the
25-25 corporation shall recall the outstanding certificates and issue
25-26 substitute certificates that comply with this section. The failure
25-27 to note the existence of the agreement on the certificate or
26-1 information statement shall not affect the validity of the
26-2 agreement or any action taken pursuant to it.
26-3 D. Right of Rescission. Any purchaser of shares who, at the
26-4 time of purchase, did not have knowledge of the existence of an
26-5 agreement authorized by this article shall be entitled to
26-6 rescission of the purchase. A purchaser shall be deemed to have
26-7 knowledge of the existence of the agreement if its existence is
26-8 noted on the certificate or information statement for the shares in
26-9 compliance with Section C of this article and, if the shares are
26-10 not represented by a certificate, the information statement noting
26-11 existence of the agreement is delivered to the purchaser at or
26-12 prior to the time of purchase of the shares. An action to enforce
26-13 the right of rescission authorized by this section must be
26-14 commenced within the earlier of 90 days after discovery of the
26-15 existence of the agreement or two years after time of the purchase
26-16 of the shares.
26-17 E. Cessation. An agreement authorized by this article shall
26-18 cease to be effective when shares of the corporation are listed on
26-19 a national securities exchange, quoted on an interdealer quotation
26-20 system of a national securities association, or regularly traded in
26-21 a market maintained by one or more members of a national or
26-22 affiliated securities association. If the agreement ceases to be
26-23 effective for any reason and the corporation does not have a board
26-24 of directors, governance by a board of directors shall be
26-25 instituted or reinstated in the manner provided in Section C,
26-26 Article 12.23, of this Act. If the agreement is contained or
26-27 referred to in the corporation's articles of incorporation or
27-1 bylaws, the board of directors may adopt an amendment to the
27-2 articles of incorporation or bylaws, without shareholder action, to
27-3 delete the agreement and any references to it.
27-4 F. Managerial Liabilities. An agreement authorized by this
27-5 article that limits the discretion or powers of the board of
27-6 directors or supplants the board of directors shall relieve the
27-7 directors of, and impose upon the person or persons in whom such
27-8 discretion or powers or management of the business and affairs of
27-9 the corporation are vested, liability for action or omissions
27-10 imposed by this Act or other law on directors to the extent that
27-11 the discretion or powers of the directors are limited or supplanted
27-12 by the agreement.
27-13 G. Limitation of Liability. The existence or performance of
27-14 an agreement authorized by this article shall not be grounds for
27-15 imposing personal liability on any shareholder for the acts or
27-16 obligations of the corporation by disregarding the separate entity
27-17 of the corporation or otherwise, even if the agreement or its
27-18 performance:
27-19 (1) treats the corporation as if it were a partnership
27-20 or in a manner that otherwise is appropriate only among partners;
27-21 (2) results in the corporation being considered a
27-22 partnership for purposes of taxation; or
27-23 (3) results in failure to observe the corporate
27-24 formalities otherwise applicable to the matters governed by the
27-25 agreement.
27-26 H. If No Shares Issued. Incorporators or subscribers for
27-27 the shares may act as shareholders with respect to an agreement
28-1 authorized by this article if no shares have been issued when the
28-2 agreement is signed.
28-3 SECTION 11. Article 2.31, Texas Business Corporation Act, is
28-4 amended to read as follows:
28-5 Art. 2.31. Board of Directors. A. Except as provided by
28-6 Article 2.30-1 and Part Twelve of this Act, the [The] powers of a
28-7 corporation shall be exercised by or under the authority of, and
28-8 the business and affairs of a corporation shall be managed under
28-9 the direction of, the board of directors of the corporation.
28-10 Directors need not be residents of this State or shareholders of
28-11 the corporation unless the articles of incorporation or bylaws so
28-12 require. The articles of incorporation or bylaws may prescribe
28-13 other qualifications for directors.
28-14 SECTION 12. Article 2.32, Texas Business Corporation Act, is
28-15 amended to read as follows:
28-16 Art. 2.32. Number and Election of Directors. A. The board
28-17 of directors of a corporation shall consist of one or more members.
28-18 The number of directors shall be fixed by, or in the manner
28-19 provided in, the articles of incorporation or the bylaws, except as
28-20 to the number constituting the initial board of directors, which
28-21 number shall be fixed by the articles of incorporation. The number
28-22 of directors may be increased or decreased from time to time by
28-23 amendment to, or in the manner provided in, the articles of
28-24 incorporation or the bylaws, but no decrease shall have the effect
28-25 of shortening the term of any incumbent director. In the absence
28-26 of a bylaw or a provision of the articles of incorporation fixing
28-27 the number of directors or providing for the manner in which the
29-1 number of directors shall be fixed, the number of directors shall
29-2 be the same as the number constituting the initial board of
29-3 directors as fixed by the articles of incorporation. The names and
29-4 addresses of the members of the initial board of directors shall be
29-5 stated in the articles of incorporation. Unless removed in
29-6 accordance with the provisions of the bylaws or the articles of
29-7 incorporation, such persons shall hold office until the first
29-8 annual meeting of shareholders, and until their successors shall
29-9 have been elected and qualified. At the first annual meeting of
29-10 shareholders and at each annual meeting thereafter, the holders of
29-11 shares entitled to vote in the election of directors shall elect
29-12 directors to hold office until the next succeeding annual meeting,
29-13 except in case of the classification of directors as permitted by
29-14 this Act.
29-15 B. The articles of incorporation may provide that the
29-16 holders of any class or series of shares or any group of classes or
29-17 series of shares shall be entitled to elect one or more directors,
29-18 who shall hold office for such terms as shall be stated in the
29-19 articles of incorporation. The articles of incorporation may
29-20 provide that any directors elected by the holders of any such class
29-21 or series of shares or any such group shall be entitled to more or
29-22 less than one vote on all or any specified matters, in which case
29-23 every reference in this Act (or in the articles of incorporation or
29-24 bylaws, unless expressly stated otherwise therein) to a specified
29-25 portion of the directors shall mean such portion of the votes
29-26 entitled to be cast by the directors to which such reference is
29-27 applicable. Unless removed in accordance with provisions of the
30-1 bylaws or the articles of incorporation, each director shall hold
30-2 office for the term for which he is elected and until his successor
30-3 shall have been elected and qualified.
30-4 C. Except as otherwise provided in this Article, the [The]
30-5 bylaws or the articles of incorporation may provide that at any
30-6 meeting of shareholders called expressly for that purpose any
30-7 director or the entire board of directors may be removed, with or
30-8 without cause, by a vote of the holders of a specified portion, but
30-9 not less than a majority, of the shares then entitled to vote at an
30-10 election of directors, subject to any further restrictions on
30-11 removal that may be contained in the bylaws. Whenever the holders
30-12 of any class or series of shares or any such group are entitled to
30-13 elect one or more directors by the provisions of the articles of
30-14 incorporation, only the holders of shares of that class or series
30-15 or group shall be entitled to vote for or against the removal of
30-16 any director elected by the holders of shares of that class or
30-17 series or group. In the case of a corporation having cumulative
30-18 voting, if less than the entire board is to be removed, no one of
30-19 the directors may be removed if the votes cast against his removal
30-20 would be sufficient to elect him if then cumulatively voted at an
30-21 election of the entire board of directors, or if there be classes
30-22 of directors, at an election of the class of directors of which he
30-23 is a part. In the case of a corporation whose directors have been
30-24 classified as permitted by this Act, unless the articles of
30-25 incorporation otherwise provide, a director may not be removed
30-26 except for cause.
30-27 D. [B.] Notwithstanding Section B [A] of this Article, a
31-1 director of a corporation registered under the Investment Company
31-2 Act, unless removed in accordance with the provisions of the
31-3 articles of incorporation or bylaws, holds office for the term for
31-4 which the director is elected and until the director's successor
31-5 has been elected and qualified.
31-6 SECTION 13. Section A, Article 2.35-1, Texas Business
31-7 Corporation Act, is amended to read as follows:
31-8 A. An otherwise valid [No] contract or transaction between a
31-9 corporation and one or more of its directors or officers, or
31-10 between a corporation and any other domestic or foreign
31-11 corporation[, partnership, association,] or other entity
31-12 [organization] in which one or more of its directors or officers
31-13 are directors or officers or have a financial interest, shall be
31-14 valid notwithstanding [void or voidable solely for this reason,
31-15 solely because] the director or officer is present at or
31-16 participates in the meeting of the board or committee thereof which
31-17 authorizes the contract or transaction, or solely because his or
31-18 their votes are counted for such purpose, if any one of the
31-19 following is satisfied:
31-20 (1) The material facts as to his relationship or
31-21 interest and as to the contract or transaction are disclosed or are
31-22 known to the board of directors or the committee, and the board or
31-23 committee in good faith authorizes the contract or transaction by
31-24 the affirmative vote of a majority of the disinterested directors,
31-25 even though the disinterested directors be less than a quorum; or
31-26 (2) The material facts as to his relationship or
31-27 interest and as to the contract or transaction are disclosed or are
32-1 known to the shareholders entitled to vote thereon, and the
32-2 contract or transaction is specifically approved in good faith by
32-3 vote of the shareholders; or
32-4 (3) The contract or transaction is fair as to the
32-5 corporation as of the time it is authorized, approved, or ratified
32-6 by the board of directors, a committee thereof, or the
32-7 shareholders.
32-8 SECTION 14. Section B, Article 2.36, Texas Business
32-9 Corporation Act, is amended to read as follows:
32-10 B. No committee of the board of directors shall have the
32-11 authority of the board of directors in reference to:
32-12 (1) amending the articles of incorporation, except
32-13 that a committee may, to the extent provided in the resolution
32-14 designating that committee or in the articles of incorporation or
32-15 the bylaws, exercise the authority of the board of directors vested
32-16 in it in accordance with Article 2.13 of this Act;
32-17 (2) proposing a reduction of the stated capital of the
32-18 corporation in the manner permitted by Article 4.12 of this Act;
32-19 (3) approving a plan of merger, [or] share exchange,
32-20 or conversion of the corporation;
32-21 (4) recommending to the shareholders the sale, lease,
32-22 or exchange of all or substantially all of the property and assets
32-23 of the corporation otherwise than in the usual and regular course
32-24 of its business;
32-25 (5) recommending to the shareholders a voluntary
32-26 dissolution of the corporation or a revocation thereof;
32-27 (6) amending, altering, or repealing the bylaws of the
33-1 corporation or adopting new bylaws of the corporation;
33-2 (7) filling vacancies in the board of directors;
33-3 (8) filling vacancies in or designating alternate
33-4 members of any such committee;
33-5 (9) filling any directorship to be filled by reason of
33-6 an increase in the number of directors;
33-7 (10) electing or removing officers of the corporation
33-8 or members or alternate members of any such committee;
33-9 (11) fixing the compensation of any member or
33-10 alternate members of such committee; or
33-11 (12) altering or repealing any resolution of the board
33-12 of directors that by its terms provides that it shall not be so
33-13 amendable or repealable.
33-14 SECTION 15. Section B, Article 2.38-4, Texas Business
33-15 Corporation Act, is amended to read as follows:
33-16 B. For the purposes of this Article, a distribution that
33-17 involves the incurrence by a corporation of any indebtedness or
33-18 deferred payment obligation or that involves a requirement in the
33-19 corporation's articles of incorporation or other contract by the
33-20 corporation to redeem, exchange, or otherwise acquire any of its
33-21 own shares is deemed to have been made on the date the indebtedness
33-22 or obligation is incurred or, in the case of a provision in the
33-23 articles of incorporation of a corporation or other contract to
33-24 purchase, redeem, exchange, or otherwise acquire shares, at the
33-25 option of the corporation, is deemed to have been made on either
33-26 the date the provision or other contract is made or takes effect or
33-27 the date on which the shares to be redeemed, exchanged, or acquired
34-1 are redeemed, exchanged, or acquired.
34-2 SECTION 16. Article 3.01, Texas Business Corporation Act, is
34-3 amended to read as follows:
34-4 Art. 3.01. Incorporators. A. Any natural person of the age
34-5 of eighteen (18) years or more, or any domestic or foreign
34-6 corporation, estate, or other entity [partnership, corporation,
34-7 association, trust, or estate (without regard to place of
34-8 residence, domicile, or organization)] may act as an incorporator
34-9 of a corporation by signing the articles of incorporation for such
34-10 corporation and by delivering the original and a copy of the
34-11 articles of incorporation to the Secretary of State.
34-12 SECTION 17. Section A, Article 3.02, Texas Business
34-13 Corporation Act, is amended to read as follows:
34-14 A. The articles of incorporation shall set forth:
34-15 (1) The name of the corporation;
34-16 (2) The period of duration, which may be perpetual;
34-17 (3) The purpose or purposes for which the corporation
34-18 is organized which may be stated to be, or to include, the
34-19 transaction of any or all lawful business for which corporations
34-20 may be incorporated under this Act;
34-21 (4) The aggregate number of shares which the
34-22 corporation shall have authority to issue; if such shares are to
34-23 consist of one class only, the par value of each of such shares, or
34-24 a statement that all of such shares are without par value; or, if
34-25 such shares are to be divided into classes, the number of shares of
34-26 each class, and a statement of the par value of the shares of each
34-27 class or that such shares are to be without par value;
35-1 (5) If the shares are to be divided into classes, the
35-2 designation of each class and statement of the preferences,
35-3 limitations, and relative rights in respect of the shares of each
35-4 class;
35-5 (6) If the corporation is to issue the shares of any
35-6 class in series, then the designation of each series and a
35-7 statement of the variations in the preferences, limitations and
35-8 relative rights as between series insofar as the same are to be
35-9 fixed in the articles of incorporation, and a statement of any
35-10 authority to be vested in the board of directors to establish
35-11 series and fix and determine the preferences, limitations and
35-12 relative rights of each series;
35-13 (7) A statement that the corporation will not commence
35-14 business until it has received for the issuance of shares
35-15 consideration of the value of a stated sum which shall be at least
35-16 One Thousand Dollars ($1,000.00)[, consisting of money, labor done,
35-17 or property actually received];
35-18 (8) Any provision limiting or denying to shareholders
35-19 the preemptive right to acquire additional or treasury shares of
35-20 the corporation;
35-21 (9) If a corporation elects to become a close
35-22 corporation in conformance with Part Twelve of this Act, any
35-23 provision (a) required or permitted by this Act to be stated in the
35-24 articles of incorporation of a close corporation, but not in the
35-25 articles of incorporation of an ordinary corporation, (b) contained
35-26 or permitted to be contained in a shareholders' agreement in
35-27 conformance with Part Twelve of this Act which the incorporators
36-1 elect to set forth in articles of incorporation, or (c) that makes
36-2 a shareholders' agreement in conformance with Part Twelve of this
36-3 Act part of the articles of incorporation of a close corporation in
36-4 the manner prescribed in Section F, Article 2.22 of this Act, but
36-5 any such provision, other than the statement required by Section A,
36-6 Article 12.11 of this Act, shall be preceded by a statement that
36-7 the provision shall be subject to the corporation remaining a close
36-8 corporation in conformance with Part Twelve of this Act;
36-9 (10) Any provision, not inconsistent with law,
36-10 including any provision which under this Act is required or
36-11 permitted to be set forth in the bylaws or which is permitted to be
36-12 included pursuant to Article 2.30-1 of this Act, providing [which
36-13 the incorporators elect to set forth in the articles of
36-14 incorporation] for the regulation of the internal affairs of the
36-15 corporation;
36-16 (11) The street address of its initial registered
36-17 office and the name of its initial registered agent at such
36-18 address;
36-19 (12) Subject to Article 2.30-1 of this Act, the [The]
36-20 number of directors constituting the initial board of directors and
36-21 the names and addresses of the person or persons who are to serve
36-22 as directors until the first annual meeting of shareholders or
36-23 until their successors be elected and qualify, or, in the case of a
36-24 close corporation that, in conformance with Part Twelve of this
36-25 Act, is to be managed in some other manner pursuant to a
36-26 shareholders' agreement by the shareholders or by the persons
36-27 empowered by the agreement to manage its business and affairs, the
37-1 names and addresses of the person or persons who, pursuant to the
37-2 shareholders' agreement, will perform the functions of the initial
37-3 board of directors provided for by this Act;
37-4 (13) The name and address of each incorporator, unless
37-5 the corporation is being incorporated pursuant to a plan of
37-6 conversion or a plan of merger, in which case the articles need not
37-7 include such information; and
37-8 (14) If the corporation is being incorporated pursuant
37-9 to a plan of conversion or a plan of merger, a statement to that
37-10 effect, and in the case of a plan of conversion, the name, address,
37-11 date of formation, and prior form of organization and jurisdiction
37-12 of incorporation or organization of the converting entity.
37-13 SECTION 18. Article 3.03, Texas Business Corporation Act, is
37-14 amended by amending Section A and adding Section C to read as
37-15 follows:
37-16 A. Except as provided by Section C of this Article, the
37-17 [The] original and a copy of the articles of incorporation shall be
37-18 delivered to the Secretary of State. If the Secretary of State
37-19 finds that the articles of incorporation conform to law, he shall,
37-20 when all fees have been paid as required by law:
37-21 (1) Endorse on the original and the copy the word
37-22 "Filed," and the month, day, and year of the filing thereof.
37-23 (2) File the original in his office.
37-24 (3) Issue a certificate of incorporation to which he
37-25 shall affix the copy.
37-26 C. In the case of a new domestic corporation being
37-27 incorporated pursuant to a plan of conversion or a plan of merger
38-1 pursuant to Part Five of this Act, the articles of incorporation of
38-2 the corporation shall be filed with the Secretary of State with the
38-3 articles of conversion or merger and need not be filed separately
38-4 pursuant to Section A of this Article. If the Secretary of State
38-5 finds that the articles of incorporation conform to the law, he
38-6 shall file the articles of incorporation in his office and issue a
38-7 certificate of incorporation, to which he shall affix a copy of the
38-8 articles of incorporation, and deliver the same to the party or
38-9 parties filing the articles of conversion or merger, or their
38-10 representatives, with the certificate of conversion or merger that
38-11 is issued in connection with the conversion or merger. In the case
38-12 of a conversion or a merger, the certificate of incorporation of a
38-13 domestic corporation that is a converted entity or that is to be
38-14 created pursuant to the plan of merger, shall become effective upon
38-15 the effectiveness of the conversion or the merger, as the case may
38-16 be.
38-17 SECTION 19. Article 3.04, Texas Business Corporation Act, is
38-18 amended to read as follows:
38-19 Art. 3.04. Effect of Issuance of Certificate of
38-20 Incorporation. A. Except as provided by Section B of this
38-21 Article, upon [Upon] the issuance of the certificate of
38-22 incorporation, the corporate existence of the corporation being
38-23 incorporated shall begin.
38-24 B. In the case of a new domestic corporation being
38-25 incorporated pursuant to a plan of conversion or a plan of merger
38-26 pursuant to Part Five of this Act, the corporate existence of the
38-27 corporation shall begin upon the effectiveness of the conversion or
39-1 the merger, as the case may be.
39-2 C. The[, and such] certificate of incorporation upon
39-3 effectiveness shall be conclusive evidence that all conditions
39-4 precedent required to be performed for the valid incorporation of
39-5 the corporation [by the incorporators] have been complied with and
39-6 that the corporation has been duly incorporated under this Act,
39-7 except as against the State in a proceeding for involuntary
39-8 dissolution.
39-9 SECTION 20. Article 3.05, Texas Business Corporation Act, is
39-10 amended to read as follows:
39-11 Art. 3.05. Requirement Before Commencing Business. A. A
39-12 corporation shall not transact any business or incur any
39-13 indebtedness, except such as shall be incidental to its
39-14 organization or to obtaining subscriptions to or payment for its
39-15 shares, until it has received for the issuance of shares
39-16 consideration of the value of at least One Thousand Dollars
39-17 ($1,000.00)[, consisting of money, labor done, or property actually
39-18 received].
39-19 SECTION 21. Article 3.06, Texas Business Corporation Act, is
39-20 amended to read as follows:
39-21 Art. 3.06. Organization Meeting of Directors. A. Except as
39-22 provided by Section B of this Article, after [After] the issuance
39-23 of the certificate of incorporation, an organization meeting of the
39-24 initial board of directors named in the articles of incorporation
39-25 (or of the person or persons who, in conformance with Section
39-26 A(12), Article 3.02 of this Act, are named in the articles of
39-27 incorporation as the person or persons who will perform the
40-1 functions of the initial board of directors provided for by this
40-2 Act) shall be held, either within or without this State, at the
40-3 call of a majority of the directors named in the articles of
40-4 incorporation, for the purpose of adopting bylaws, electing
40-5 officers, and transacting such other business as may come before
40-6 the meeting. The directors calling the meeting shall give at least
40-7 three (3) days notice thereof by mail to each director so named,
40-8 stating the time and place of the meeting.
40-9 B. The provisions of Section A of this Article shall not
40-10 apply to a corporation that is a converted entity or a corporation
40-11 that is created pursuant to a plan of merger if the plan of
40-12 conversion or the plan of merger, as the case may be, sets forth
40-13 the bylaws and officers of the corporation.
40-14 SECTION 22. Section A, Article 4.03, Texas Business
40-15 Corporation Act, is amended to read as follows:
40-16 A. The holders of the outstanding shares of a class shall be
40-17 entitled to vote as a class upon a proposed amendment, and the
40-18 holders of the outstanding shares of a series shall be entitled to
40-19 vote as a class upon a proposed amendment, whether or not entitled
40-20 to vote thereon by the provisions of the articles of incorporation,
40-21 if the amendment would accomplish any of the following, unless the
40-22 amendment is undertaken pursuant to authority granted to the board
40-23 of directors in the articles of incorporation in accordance with
40-24 [Section B of] Article 2.13 of this Act:
40-25 (1) Increase or decrease the aggregate number of
40-26 authorized shares of such class or series.
40-27 (2) Increase or decrease the par value of the shares
41-1 of such class, including changing shares having a par value into
41-2 shares without par value, or shares without par value into shares
41-3 with par value.
41-4 (3) Effect an exchange, reclassification, or
41-5 cancellation of all or part of the shares of such class or series.
41-6 (4) Effect an exchange, or create a right of exchange,
41-7 of all or any part of the shares of another class into the shares
41-8 of such class or series.
41-9 (5) Change the designations, preferences, limitations,
41-10 or relative rights of the shares of such class or series.
41-11 (6) Change the shares of such class or series, whether
41-12 with or without par value, into the same or a different number of
41-13 shares, either with or without par value, of the same class or
41-14 series or another class or series.
41-15 (7) Create a new class or series of shares having
41-16 rights and preferences equal, prior, or superior to the shares of
41-17 such class or series, or increase the rights and preferences of any
41-18 class or series having rights and preferences equal, prior, or
41-19 superior to the shares of such class or series, or increase the
41-20 rights and preferences of any class or series having rights or
41-21 preferences later or inferior to the shares of such class or series
41-22 in such a manner as to become equal, prior, or superior to the
41-23 shares of such class or series.
41-24 (8) Divide the shares of such class into series and
41-25 fix and determine the designation of such series and the variations
41-26 in the relative rights and preferences between the shares of such
41-27 series.
42-1 (9) Limit or deny the existing preemptive rights of
42-2 the shares of such class or series.
42-3 (10) Cancel or otherwise affect dividends on the
42-4 shares of such class or series which had accrued but had not been
42-5 declared.
42-6 (11) Include in or delete from the articles of
42-7 incorporation any provisions required or permitted to be included
42-8 in the articles of incorporation of a close corporation in
42-9 conformance with Part Twelve of this Act.
42-10 SECTION 23. Article 4.14, Texas Business Corporation Act, is
42-11 amended to read as follows:
42-12 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE; AMENDMENT
42-13 OF ARTICLES, MERGER, SHARE EXCHANGE, CONVERSION, AND DISSOLUTION
42-14 PURSUANT TO FEDERAL REORGANIZATION PROCEEDINGS. A. Authorization.
42-15 Notwithstanding any other provision of this Act to the contrary, a
42-16 trustee appointed for a corporation being reorganized under a
42-17 federal statute, the designated officers of the corporation, or any
42-18 other individual or individuals designated by the court to act on
42-19 behalf of the corporation may do any of the following without
42-20 action by or notice to its board of directors or shareholders in
42-21 order to carry out a plan of reorganization ordered or decreed by a
42-22 court of competent jurisdiction under the federal statute:
42-23 (1) amend or restate its articles of incorporation if
42-24 the articles after amendment or restatement contain only provisions
42-25 required or permitted in articles;
42-26 (2) merge or engage in a share exchange with one or
42-27 more domestic or foreign corporations or other entities pursuant to
43-1 a plan of merger or exchange having such terms and provisions as
43-2 required or permitted by Articles 5.01 and 5.02 of this Act;
43-3 (3) change the location of its registered office,
43-4 change its registered agent, and remove or appoint any agent to
43-5 receive service of process;
43-6 (4) alter, amend, or repeal its bylaws;
43-7 (5) constitute or reconstitute and classify or
43-8 reclassify its board of directors, and name, constitute, or appoint
43-9 directors and officers in place of or in addition to all or some of
43-10 the officers or directors then in place;
43-11 (6) sell, lease, exchange or otherwise dispose of all,
43-12 or substantially all, of its property and assets;
43-13 (7) authorize and fix the terms, manner, and
43-14 conditions of the issuance of bonds, debentures, or other
43-15 obligations, whether or not convertible into shares of any class or
43-16 bearing warrants or other evidences of optional rights to purchase
43-17 or subscribe for any shares of any class; [or]
43-18 (8) dissolve; or
43-19 (9) effect a conversion.
43-20 Actions taken under Subsection (4) or (5) of this section are
43-21 effective on entry of the order or decree approving the plan of
43-22 reorganization or on another effective date as may be specified,
43-23 without further action of the corporation, as and to the extent set
43-24 forth in the plan of reorganization or the order or decree
43-25 approving the plan of reorganization.
43-26 B. Authority to Sign Documents. A trustee appointed for a
43-27 corporation being reorganized under a federal statute, the
44-1 designated officers of the corporation, or any other individual or
44-2 individuals designated by the court may sign on behalf of a
44-3 corporation that is being reorganized:
44-4 (1) articles of amendment or restated articles of
44-5 incorporation setting forth:
44-6 (a) the name of the corporation;
44-7 (b) the text of each amendment or the
44-8 restatement approved by the court;
44-9 (c) the date of the court's order or decree
44-10 approving the articles of amendment or restatement;
44-11 (d) the court, file name, and case number of the
44-12 reorganization case in which the order or decree was entered; and
44-13 (e) a statement that the court had jurisdiction
44-14 of the case under federal statute; or
44-15 (2) articles of merger or exchange setting forth:
44-16 (a) the name of the corporation;
44-17 (b) the text of the part of the plan of
44-18 reorganization that contains the plan of merger or exchange
44-19 approved by the court, which shall include the information required
44-20 by Article 5.04A or 5.16B of this Act, as applicable, but need not
44-21 include the resolution of the board of directors referred to in
44-22 Article 5.16B(3) of this Act;
44-23 (c) the date of the court's order or decree
44-24 approving the plan of merger or consolidation;
44-25 (d) the court, file name, and case number of the
44-26 reorganization case in which the order or decree was entered; and
44-27 (e) a statement that the court had jurisdiction
45-1 of the case under federal statute; or
45-2 (3) articles of dissolution setting forth:
45-3 (a) the name of the corporation;
45-4 (b) the information required by Articles
45-5 6.06A(1)(2) and (3) of this Act;
45-6 (c) the date of the court's order or decree
45-7 approving the articles of dissolution;
45-8 (d) that the debts, obligations and liabilities
45-9 of the corporation have been paid or discharged as provided in the
45-10 plan of reorganization and that the remaining property and assets
45-11 of the corporation have been distributed as provided in the plan of
45-12 reorganization;
45-13 (e) the court, file name, and case number of the
45-14 reorganization case in which the order or decree was entered; and
45-15 (f) a statement that the court had jurisdiction
45-16 of the case under federal statute; or
45-17 (4) a statement of change of registered office or
45-18 registered agent, or both, setting forth:
45-19 (a) the name of the corporation;
45-20 (b) the information required by Article 2.10A of
45-21 this Act, as applicable, but not the information included in the
45-22 statement referred to in Article 2.10A(7) of this Act;
45-23 (c) the date of the court's order or decree
45-24 approving the statement of change of registered office or
45-25 registered agent, or both;
45-26 (d) the court, file name, and case number of the
45-27 reorganization case in which the order or decree was entered; and
46-1 (e) a statement that the court had jurisdiction
46-2 of the case under federal statute; or
46-3 (5) articles of conversion setting forth:
46-4 (a) the name of the corporation;
46-5 (b) the text of the part of the plan of
46-6 reorganization that contains the plan of conversion approved by the
46-7 court, which shall include the information required by Article 5.18
46-8 of this Act;
46-9 (c) the date of the court's order or decree
46-10 approving the plan of conversion;
46-11 (d) the court, file name, and case number of the
46-12 reorganization case in which the order or decree was entered; and
46-13 (e) a statement that the court had jurisdiction
46-14 of the case under federal statute.
46-15 C. Procedure for Merger or Share Exchange. When a domestic
46-16 or foreign corporation or other entity that is not being
46-17 reorganized merges or engages in a share exchange with a
46-18 corporation that is being reorganized pursuant to a plan of
46-19 reorganization:
46-20 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
46-21 this Act shall apply to the domestic or foreign corporation or
46-22 other entity that is not being reorganized to the same extent they
46-23 would apply if it were merging or engaging in a share exchange with
46-24 a corporation that is not being reorganized;
46-25 (2) Article 5.06 of this Act shall apply to the
46-26 domestic or foreign corporation or other entity that is not being
46-27 reorganized to the same extent it would apply if that domestic or
47-1 foreign corporation or other entity were merging or engaging in a
47-2 share exchange with a corporation that is not being reorganized,
47-3 except as otherwise provided in the plan of reorganization ordered
47-4 or decreed by a court of competent jurisdiction under the federal
47-5 statute;
47-6 (3) Article 5.16E of this Act shall apply to a
47-7 subsidiary corporation that is not being reorganized to the same
47-8 extent it would apply if that corporation were merging with a
47-9 parent corporation that is not being reorganized;
47-10 (4) Upon the receipt of all required authorization for
47-11 all action required by this Act for each corporation that is a
47-12 party to the plan of merger or exchange that is not being
47-13 reorganized and all action by each corporation, foreign
47-14 corporation, or other entity that is a party to the plan of merger
47-15 or exchange required by the laws under which it is incorporated or
47-16 organized and its constituent documents, articles of merger or
47-17 exchange shall be signed by each domestic or foreign corporation or
47-18 other entity that is a party to the merger or exchange other than
47-19 the corporation that is being reorganized as provided in Article
47-20 5.04 of this Act and on behalf of the corporation that is being
47-21 reorganized by the persons specified in Section B of this Article;
47-22 (5) The articles of merger or exchange shall set forth
47-23 the information required in Section B(2) of this Article;
47-24 (6) The articles of merger or exchange shall be filed
47-25 with the Secretary of State in the manner and with such number of
47-26 copies as is provided in Article 5.04B of this Act; and
47-27 (7) Upon the issuance of the certificate of merger or
48-1 share exchange by the Secretary of State as provided in Article
48-2 5.04 of this Act, the merger or share exchange shall become
48-3 effective with the same effect as if it had been adopted by
48-4 unanimous action of the directors and shareholders of the
48-5 corporation being reorganized. The effectiveness of the merger or
48-6 share exchange shall be determined as provided in Article 5.05 of
48-7 this Act.
48-8 D. Dissenters' Rights. Shareholders of a corporation being
48-9 reorganized under a federal statute do not have a right to dissent
48-10 under Article 5.11, [or] 5.16E, or 5.20 of this Act, except as the
48-11 plan of reorganization may provide.
48-12 E. When Applicable. This Article shall not apply after the
48-13 entry of a final decree in the reorganization case even though the
48-14 court may retain jurisdiction of the case for limited purposes
48-15 unrelated to consummation of the plan of reorganization.
48-16 F. Nonexclusivity. This Article shall not preclude other
48-17 changes in a corporation or its securities by a plan of
48-18 reorganization ordered or decreed by a court of competent
48-19 jurisdiction under federal statute.
48-20 SECTION 24. Section B, Article 5.01, Texas Business
48-21 Corporation Act, is amended to read as follows:
48-22 B. A plan of merger shall set forth:
48-23 (1) the name of each domestic or foreign corporation
48-24 or other entity that is a party to the merger and the name of each
48-25 domestic or foreign corporation or other entity, if any, that shall
48-26 survive the merger, which may be one or more of the domestic or
48-27 foreign corporations or other entities party to the merger, and the
49-1 name of each new domestic or foreign corporation or other entity,
49-2 if any, that may be created by the terms of the plan of merger;
49-3 (2) the terms and conditions of the merger including,
49-4 if more than one domestic or foreign corporation or other entity is
49-5 to survive or to be created by the terms of the plan of merger, (a)
49-6 the manner and basis of allocating and vesting the real estate and
49-7 other property of each domestic or foreign corporation and of each
49-8 other entity that is a party to the merger among one or more of the
49-9 surviving or new domestic or foreign corporations and other
49-10 entities, (b) the name of the surviving or new domestic or foreign
49-11 corporation or other entity that is to be obligated for the payment
49-12 of the fair value of any shares held by a shareholder of any
49-13 domestic corporation that is a party to the merger who has complied
49-14 with the requirements of Article 5.12 of this Act for the recovery
49-15 of the fair value of his shares, and (c) the manner and basis of
49-16 allocating all other liabilities and obligations of each domestic
49-17 or foreign corporation and other entity that is a party to the
49-18 merger (or making adequate provision for the payment and discharge
49-19 thereof) among one or more of the surviving or new domestic or
49-20 foreign corporations and other entities;
49-21 (3) the manner and basis of converting any of the
49-22 shares or other evidences of ownership of each domestic or foreign
49-23 corporation and other entity that is a party to the merger into
49-24 shares, obligations, evidences of ownership, rights to purchase
49-25 securities or other securities of one or more of the surviving or
49-26 new domestic or foreign corporations or other entities, into cash
49-27 or other property, including shares, obligations, evidences of
50-1 ownership, rights to purchase securities or other securities of any
50-2 other person or entity, or into any combination of the foregoing,
50-3 and if any shares or other evidences of ownership of any holder of
50-4 a class or series of shares or other evidence of ownership is to be
50-5 converted in a manner or basis different than any other holder of
50-6 shares of such class or series or other evidence of ownership, the
50-7 manner and basis applicable to such holder;
50-8 (4) as an exhibit or attachment, the articles of
50-9 incorporation of any new domestic corporation to be created by the
50-10 terms of the plan of merger; and
50-11 (5) the articles of incorporation or other
50-12 organizational documents of each other entity that is a party to
50-13 the merger and that is to survive the merger or is to be created by
50-14 the terms of the plan of merger.
50-15 SECTION 25. Sections A and B, Article 5.02, Texas Business
50-16 Corporation Act, are amended to read as follows:
50-17 A. One or more domestic or foreign corporations or other
50-18 entities may acquire all of the outstanding shares of one or more
50-19 classes or series of one or more domestic corporations if:
50-20 (1) the board of directors of each domestic
50-21 corporation that is a party to the plan of exchange acts on a plan
50-22 of exchange in the manner prescribed by Article 5.03 of this Act
50-23 and its shareholders (if required by Article 5.03 of this Act) [or
50-24 the laws under which it was incorporated or organized)] approve the
50-25 plan of exchange;
50-26 (2) one or more foreign corporations or other entities
50-27 is to issue shares or other interests as part of the plan of
51-1 exchange, the issuance of such shares or interests is either
51-2 permitted by the laws under which such foreign corporation or other
51-3 entity is incorporated, organized, or not inconsistent with such
51-4 laws; and
51-5 (3) each acquiring domestic or foreign corporation or
51-6 other entity takes all action that may be required by the laws of
51-7 the state or country under which it was incorporated or organized
51-8 and by its constituent documents to effect the exchange.
51-9 B. A plan of exchange must set forth:
51-10 (1) the name of the corporation or corporations whose
51-11 shares will be acquired and the name of each acquiring domestic or
51-12 foreign corporation and other entity;
51-13 (2) the terms and conditions of the exchange
51-14 including, if there is more than one acquiring domestic or foreign
51-15 corporation or other entity, the shares to be acquired by each such
51-16 corporation or other entity; and
51-17 (3) the manner and basis of exchanging the shares to
51-18 be acquired for shares, obligations, evidences of ownership, rights
51-19 to purchase securities or other securities of one or more of the
51-20 acquiring domestic or foreign corporations or other entities that
51-21 is a party to the plan of exchange, or for cash or other property,
51-22 including shares, obligations, evidences of ownership, rights to
51-23 purchase securities or other securities of any other person or
51-24 entity, or for any combination of the foregoing, and if any shares
51-25 or other evidences of ownership of any holder of a class or series
51-26 of shares or other evidence of ownership is to be exchanged in a
51-27 manner or basis different than any other holder of shares of such
52-1 class or series or other evidence of ownership, the manner and
52-2 basis applicable to such holder.
52-3 SECTION 26. Article 5.03, Texas Business Corporation Act, is
52-4 amended to read as follows:
52-5 Art. 5.03. Action on Plan of Merger or Exchange. A. Except
52-6 as provided by Sections [Section] G and H of this Article, after
52-7 acting on a plan of merger or exchange in the manner prescribed by
52-8 Subsection (1) of Section B of this Article, the board of directors
52-9 of each domestic corporation that is a party to the merger, and the
52-10 board of directors of each domestic corporation whose shares are to
52-11 be acquired in the share exchange, shall submit the plan of merger
52-12 or exchange for approval by its shareholders. Unless the articles
52-13 of incorporation otherwise require, no approval by shareholders of
52-14 a plan of merger is required under this Article for any corporation
52-15 that is a party to the plan of merger unless that corporation is
52-16 also a party to the merger.
52-17 B. Except as provided by Sections [Section] G and H of this
52-18 Article, for a plan of merger or exchange to be approved:
52-19 (1) the board of directors of the corporation shall
52-20 [may] adopt a resolution recommending that the plan of merger or
52-21 exchange be approved by the shareholders of the corporation, unless
52-22 the board of directors determines that for any reason it should not
52-23 make that recommendation, in which case the board of directors
52-24 shall [may] adopt a resolution directing that the plan of merger or
52-25 exchange be submitted to shareholders for approval without
52-26 recommendation and, in connection with the submission, communicate
52-27 the basis for its determination that the plan be submitted to
53-1 shareholders without any recommendation; and
53-2 (2) the shareholders entitled to vote on the plan of
53-3 merger or exchange must approve the plan.
53-4 C. The board of directors may condition its submission to
53-5 shareholders of a plan of merger or exchange on any basis.
53-6 D. The corporation shall notify each shareholder, whether or
53-7 not entitled to vote, of the meeting of shareholders at which the
53-8 plan of merger or exchange is to be submitted for approval in
53-9 accordance with Article 2.25 of this Act. The notice shall be
53-10 given at least 20 days before the meeting and shall state that the
53-11 purpose, or one of the purposes, of the meeting is to consider the
53-12 plan of merger or exchange and shall contain or be accompanied by a
53-13 copy or summary of the plan.
53-14 E. Unless the board of directors (acting pursuant to Section
53-15 C of this Article) requires a greater vote or a vote by class or
53-16 series, the vote of shareholders required for approval of a plan of
53-17 merger or exchange shall be the affirmative vote of the holders of
53-18 at least two-thirds of the outstanding shares of each corporation
53-19 entitled to vote thereon, unless any class or series of shares of
53-20 any such corporation is entitled to vote as a class thereon, in
53-21 which event the vote required for approval by the shareholders of
53-22 such corporation shall be the affirmative vote of the holders of at
53-23 least two-thirds of the outstanding shares within each class or
53-24 series of shares entitled to vote thereon as a class and at least
53-25 two-thirds of the outstanding shares otherwise entitled to vote
53-26 thereon. Shares entitled to vote as a class shall be entitled to
53-27 vote only as a class unless otherwise entitled to vote on each
54-1 matter submitted to the shareholders generally or provided in the
54-2 articles of incorporation.
54-3 F. Separate voting by a class or series of shares of a
54-4 corporation shall be required:
54-5 (1) for approval of a plan of merger if (a) the plan
54-6 contains a provision that if contained in a proposed amendment to
54-7 the articles of incorporation would require approval by that class
54-8 or series of shares under Article 4.03 of this Act, or (b) that
54-9 class or series of shares is entitled under the articles of
54-10 incorporation to vote as a class thereon; and
54-11 (2) on a plan of exchange if (a) shares of that class
54-12 or series are to be exchanged pursuant to the terms of the plan, or
54-13 (b) that class or series is entitled under the articles of
54-14 incorporation to vote as a class thereon.
54-15 G. Unless the articles of incorporation otherwise require,
54-16 approval by the shareholders of a corporation on a plan of merger
54-17 shall not be required and the provisions of Sections A, B, C, D, E,
54-18 and F of this Article do not apply if:
54-19 (1) the corporation is the sole surviving corporation
54-20 in the merger;
54-21 (2) the articles of incorporation of the corporation
54-22 will not differ from its articles of incorporation before the
54-23 merger;
54-24 (3) each shareholder of the corporation whose shares
54-25 were outstanding immediately before the effective date of the
54-26 merger will hold the same number of shares, with identical
54-27 designations, preferences, limitations, and relative rights,
55-1 immediately after the effective date of the merger;
55-2 (4) the voting power of the number of voting shares
55-3 outstanding immediately after the merger, plus the voting power of
55-4 the number of voting shares issuable as a result of the merger
55-5 (either by the conversion of securities issued pursuant to the
55-6 merger or the exercise of rights to purchase securities issued
55-7 pursuant to the merger), will not exceed by more than 20 percent
55-8 the voting power of the total number of voting shares of the
55-9 corporation outstanding immediately before the merger;
55-10 (5) the number of participating shares outstanding
55-11 immediately after the merger, plus the number of participating
55-12 shares issuable as a result of the merger (either by the conversion
55-13 of securities issued pursuant to the merger or the exercise of
55-14 rights to purchase securities issued pursuant to the merger), will
55-15 not exceed by more than 20 percent the total number of
55-16 participating shares of the corporation outstanding immediately
55-17 before the merger; and
55-18 (6) the board of directors of the corporation adopts a
55-19 resolution approving the plan of merger.
55-20 H. Unless the articles of incorporation otherwise require,
55-21 approval by the shareholders of a corporation of a plan of merger
55-22 shall not be required and Sections A, B, C, D, E, and F of this
55-23 Article do not apply if:
55-24 (1) the merger is a merger of the corporation with or
55-25 into a direct or indirect wholly-owned subsidiary of the
55-26 corporation and after the merger the corporation or its successor
55-27 is a direct or indirect wholly-owned subsidiary of a holding
56-1 company;
56-2 (2) the corporation and the direct or indirect
56-3 wholly-owned subsidiary of the corporation are the only parties to
56-4 the merger;
56-5 (3) each share or a fraction of a share of stock of
56-6 the corporation outstanding immediately prior to the effectiveness
56-7 of the merger is converted in the merger into a share or fraction
56-8 of share of capital stock of the holding company having the same
56-9 designations, preferences, limitations, and relative rights as a
56-10 share of stock of the corporation being converted in the merger;
56-11 (4) the holding company and the corporation are
56-12 domestic corporations;
56-13 (5) the articles of incorporation and bylaws of the
56-14 holding company immediately following the effective time of the
56-15 merger contain provisions identical to the articles of
56-16 incorporation and bylaws of the corporation immediately prior to
56-17 the effective time of the merger (other than provisions, if any,
56-18 regarding the incorporator or incorporators, the corporate name,
56-19 the registered office and agent, the initial board of directors and
56-20 the initial subscribers of shares and such provisions contained in
56-21 any amendment to the certificate as were necessary to effect a
56-22 change, exchange, reclassification, or cancellation of shares, if
56-23 such change, exchange, reclassification, or cancellation has become
56-24 effective);
56-25 (6) the articles of incorporation and bylaws of the
56-26 surviving corporation immediately following the effective time of
56-27 the merger contain provisions identical to the articles of
57-1 incorporation and bylaws of the corporation immediately prior to
57-2 the effective time of the merger (other than provisions, if any,
57-3 regarding the incorporator or incorporators, the corporate name,
57-4 the registered office and agent, the initial board of directors and
57-5 the initial subscribers of shares and such provisions contained in
57-6 any amendment to the certificate as were necessary to effect a
57-7 change, exchange, reclassification, or cancellation of shares, if
57-8 such change, exchange, reclassification, or cancellation has become
57-9 effective); provided, however, that:
57-10 (a) the articles of incorporation of the
57-11 surviving corporation shall be amended in the merger to contain a
57-12 provision requiring that any act or transaction by or involving a
57-13 surviving corporation that requires for its approval under this Act
57-14 or the corporation's articles of incorporation the approval of
57-15 shareholders of the surviving corporation shall, by specific
57-16 reference to this Section, require the approval of the shareholders
57-17 of the holding company (or any successor by merger) by the same
57-18 vote as is required by this Act and the articles of incorporation
57-19 of the surviving corporation; and
57-20 (b) the articles of incorporation of the
57-21 surviving corporation may be amended in the merger to change the
57-22 classes and series of shares and the number of shares that the
57-23 surviving corporation is authorized to issue;
57-24 (7) the directors of the corporation become or remain
57-25 directors of the holding company upon the effective time of the
57-26 merger;
57-27 (8) the shareholders of the corporation will not
58-1 recognize gain or loss for United States federal income tax
58-2 purposes as determined by the board of directors of the
58-3 corporation; and
58-4 (9) the board of directors of the corporation adopts a
58-5 resolution approving the plan of merger.
58-6 I. As used in this Article:
58-7 (1) "Direct or indirect wholly-owned subsidiary"
58-8 means, with respect to any corporation, another corporation, all of
58-9 the outstanding voting stock of which is owned by the corporation
58-10 or by one or more other domestic or foreign corporations or other
58-11 entities, all of the outstanding voting stock or interests of which
58-12 is owned by the corporation or one or more of such other
58-13 wholly-owned domestic or foreign corporations or other entities.
58-14 (2) "Holding company" means a corporation which, from
58-15 its incorporation until the effectiveness of a merger pursuant to
58-16 Section H of this Article, was at all times a direct or indirect
58-17 wholly-owned subsidiary of the corporation and whose stock is
58-18 issued in the merger permitted by Section H of this Article.
58-19 (3) "Participating shares" means shares that entitle
58-20 the holders thereof to participate without limitation in
58-21 distributions.
58-22 (4) "Party to the merger" means:
58-23 (a) a domestic corporation that is to be divided
58-24 into two or more new domestic corporations or into a surviving
58-25 corporation and one or more new domestic or foreign corporations or
58-26 other entities pursuant to a plan of merger; or
58-27 (b) a domestic or foreign corporation or other
59-1 entity that is to be combined with one or more domestic or foreign
59-2 corporations or other entities pursuant to a plan of merger
59-3 resulting in (i) one or more surviving domestic or foreign
59-4 corporations or other entities, (ii) the creation of one or more
59-5 new domestic or foreign corporations or other entities, or (iii)
59-6 one or more surviving domestic or foreign corporations or other
59-7 entities and the creation of one or more new domestic or foreign
59-8 corporations or other entities. A domestic or foreign corporation
59-9 or other entity that is a party to a plan of merger that is not to
59-10 be divided or combined into or with one or more domestic or foreign
59-11 corporations or other entities is not considered to be a party to
59-12 the merger even if shares, securities, or other property of such
59-13 party is to be issued pursuant to the plan of merger.
59-14 (5) [(2)] "Voting shares" means shares that entitle
59-15 the holders thereof to vote unconditionally in elections of
59-16 directors.
59-17 (6) "Shares" means, without limitation, a receipt or
59-18 other instrument issued by a depositary representing an interest in
59-19 one or more shares of stock, or fractions thereof, solely of a
59-20 domestic or foreign corporation, which stock is deposited with a
59-21 depositary.
59-22 J. To the extent the provisions contained in Part Thirteen
59-23 of this Act apply to the corporation and its shareholders at the
59-24 effective time of a merger pursuant to Section H of this Article,
59-25 those provisions shall continue to apply to the holding company and
59-26 its shareholders immediately after the effective time of the merger
59-27 as though it were the corporation, and all shares of the holding
60-1 company acquired in the merger shall, for purposes of Part
60-2 Thirteen, be deemed to have been acquired at the time that the
60-3 shares of stock of the corporation converted in the merger were
60-4 acquired, and any shareholder who, immediately prior to the
60-5 effective time of the merger, was not an affiliated shareholder
60-6 within the meaning of Article 13.02 of this Act shall not solely
60-7 by reason of the merger become an affiliated shareholder of the
60-8 holding company.
60-9 K. If the corporate name of a holding company immediately
60-10 following the effective time of a merger pursuant to Section H of
60-11 this Article is the same as the corporate name of the corporation
60-12 immediately prior to the effective time of the merger, the shares
60-13 of the holding company into which the shares of the corporation are
60-14 converted in the merger shall be represented by the stock
60-15 certificates that previously represented the shares of the
60-16 corporation.
60-17 L. [I.] After a merger or share exchange is approved, and at
60-18 any time before the merger or share exchange has become effective,
60-19 the plan of merger or share exchange may be abandoned (subject to
60-20 any contractual rights) by any of the corporations that are a party
60-21 to the merger, without shareholder action, in accordance with the
60-22 procedures set forth in the plan of merger or exchange or, if no
60-23 such procedures are set forth in the plan, in the manner determined
60-24 by the board of directors. If articles of merger or exchange have
60-25 been filed with the Secretary of State but the merger or share
60-26 exchange has not yet become effective, the merger or share exchange
60-27 may be abandoned [as provided in this Section I] if a statement,
61-1 executed on behalf of each domestic corporation and foreign
61-2 corporation or other entity that is a party to the merger or share
61-3 exchange by an officer or other duly authorized representative,
61-4 stating that the plan of merger or exchange has been abandoned in
61-5 accordance with applicable law [the plan and this Section] is filed
61-6 with the Secretary of State prior to the effectiveness of the
61-7 merger or share exchange. If the Secretary of State finds that
61-8 such statement conforms to law, he shall, when all fees have been
61-9 paid as required by law:
61-10 (1) Endorse on the original and each copy the word
61-11 "Filed" and the month, day, and year the filing thereof.
61-12 (2) File the original in his office.
61-13 (3) Issue a certificate of abandonment to each
61-14 domestic or foreign corporation or other entity that is a party to
61-15 the [plan of] merger or exchange.
61-16 Upon the filing of such statement by the Secretary of State, the
61-17 merger or share exchange shall be deemed abandoned and shall not
61-18 become effective.
61-19 SECTION 27. Article 5.04, Texas Business Corporation Act, is
61-20 amended to read as follows:
61-21 Art. 5.04. Articles of Merger or Exchange. A. If a plan of
61-22 merger or exchange has been approved in accordance with Article
61-23 5.03 of this Act and has not been abandoned, or approved by the
61-24 board of directors if shareholder approval is not required under
61-25 that Article, articles of merger or exchange shall be executed on
61-26 behalf of each domestic or foreign corporation or other entity that
61-27 is a party to the [plan of] merger or exchange by an officer or
62-1 other duly authorized representative thereof and shall set forth:
62-2 (1) The plan of merger or exchange or statement
62-3 certifying the following:
62-4 (a) the name and state of incorporation or
62-5 organization of each domestic or foreign corporation or other
62-6 entity that is a party to the plan of merger or exchange or that is
62-7 to be created thereby;
62-8 (b) that a plan of merger or exchange has been
62-9 approved;
62-10 (c) in the case of a merger, such amendments or
62-11 changes in the articles of incorporation of each domestic surviving
62-12 corporation, or if no such amendments are desired to be effected by
62-13 the merger, a statement to that effect;
62-14 (d) that the articles of incorporation of each
62-15 new domestic corporation to be created pursuant to the terms of the
62-16 plan of merger are being filed with the Secretary of State with the
62-17 articles of merger or exchange;
62-18 (e) that an executed plan of merger or exchange
62-19 is on file at the principal place of business of each surviving,
62-20 acquiring, or new domestic or foreign corporation or other entity,
62-21 stating the address thereof; and
62-22 (f) that a copy of the plan of merger or
62-23 exchange will be furnished by each surviving, acquiring, or new
62-24 domestic or foreign corporation or other entity, on written request
62-25 and without cost, to any shareholder of each domestic corporation
62-26 that is a party to or created by the plan of merger or exchange
62-27 and, in the case of a merger with multiple surviving domestic or
63-1 foreign corporations or other entities, to any creditor or obligee
63-2 of the parties to the merger at the time of the merger if such
63-3 obligation is then outstanding.
63-4 (2) If shareholder approval is not required by Article
63-5 5.03 of this Act, a statement to that effect.
63-6 (3) As to each corporation the approval of whose
63-7 shareholders is required, the number of shares outstanding, and, if
63-8 the shares of any class or series are entitled to vote as a class,
63-9 the designation and number of outstanding shares of each such class
63-10 or series.
63-11 (4) As to each corporation the approval of whose
63-12 shareholders is required, the number of shares, not entitled to
63-13 vote only as a class, voted for and against the plan, respectively,
63-14 and, if the shares of any class or series are entitled to vote as a
63-15 class, the number of shares of each such class or series voted for
63-16 and against the plan, respectively.
63-17 (5) As to each acquiring domestic or foreign
63-18 corporation or other entity in a plan of exchange, a statement that
63-19 the plan and performance of its terms were duly authorized by all
63-20 action required by the laws under which it was incorporated or
63-21 organized and by its constituent documents.
63-22 (6) As to each foreign corporation or other entity
63-23 that is a party to the [plan of] merger, a statement that the
63-24 approval of the plan of merger was duly authorized by all action
63-25 required by the laws under which it was incorporated or organized
63-26 and by its constituent documents.
63-27 B. The original of the articles of merger or exchange, and
64-1 such number of copies of the articles equal to the number of
64-2 surviving, new, and acquiring domestic or foreign corporations and
64-3 other entities that are a party to the [plan of] merger or exchange
64-4 or that will be created by the terms thereof, shall be delivered to
64-5 the Secretary of State. An equal number of copies of the articles
64-6 of incorporation of each domestic corporation that is to be
64-7 incorporated pursuant to the plan of merger shall also be delivered
64-8 to the Secretary of State with the articles of merger.
64-9 C. If the Secretary of State finds that the articles of
64-10 merger or exchange conform to law, he shall, when all fees and
64-11 franchise taxes have been paid as required by law, or if the plan
64-12 of merger or exchange (or statement provided in lieu thereof)
64-13 provides that one or more of the surviving, new, or acquiring
64-14 domestic or foreign corporations or other entities will be
64-15 responsible for the payment of all such fees and franchise taxes
64-16 and that all of such surviving, new, or acquiring domestic or
64-17 foreign corporations and other entities will be obligated to pay
64-18 such fees and franchise taxes if the same are not timely paid:
64-19 (1) Endorse on the original and each copy the word
64-20 "Filed," and the month, day, and year of the filing thereof.
64-21 (2) File the original in his office.
64-22 (3) Issue a certificate of merger or exchange,
64-23 together with a copy of the articles affixed thereto, to each
64-24 surviving, new, and acquiring domestic or foreign corporation or
64-25 other entity that is a party to the [plan of] merger or exchange or
64-26 that is created thereby, or its or their respective
64-27 representatives.
65-1 SECTION 28. Section B, Article 5.10, Texas Business
65-2 Corporation Act, is amended to read as follows:
65-3 B. A disposition of any, all, or substantially all, of the
65-4 property and assets of a corporation, whether or not it requires
65-5 the special authorization of the shareholders of the corporation,
65-6 effected under Section A of this article or under Article 5.09 of
65-7 this Act or otherwise:
65-8 (1) is not considered to be a merger or conversion
65-9 pursuant to this Act or otherwise; and
65-10 (2) except as otherwise expressly provided by another
65-11 statute, does not make the acquiring corporation, foreign
65-12 corporation, or other entity responsible or liable for any
65-13 liability or obligation of the selling corporation that the
65-14 acquiring corporation, foreign corporation, or other entity did not
65-15 expressly assume.
65-16 SECTION 29. Article 5.11, Texas Business Corporation Act, is
65-17 amended to read as follows:
65-18 Art. 5.11. Rights of Dissenting Shareholders in the Event of
65-19 Certain Corporate Actions. A. Any shareholder of a domestic
65-20 corporation shall have the right to dissent from any of the
65-21 following corporate actions:
65-22 (1) Any plan of merger to which the corporation is a
65-23 party if shareholder approval is required by Article 5.03 or 5.16
65-24 of this Act and the shareholder holds shares of a class or series
65-25 that was entitled to vote thereon as a class or otherwise;
65-26 (2) Any sale, lease, exchange or other disposition
65-27 (not including any pledge, mortgage, deed of trust or trust
66-1 indenture unless otherwise provided in the articles of
66-2 incorporation) of all, or substantially all, the property and
66-3 assets, with or without good will, of a corporation if [requiring
66-4 the] special authorization of the shareholders is required by this
66-5 Act and the shareholders hold shares of a class or series that was
66-6 entitled to vote thereon as a class or otherwise [as provided by
66-7 this Act];
66-8 (3) Any plan of exchange pursuant to Article 5.02 of
66-9 this Act in which the shares of the corporation of the class or
66-10 series held by the shareholder are to be acquired.
66-11 B. Notwithstanding the provisions of Section A of this
66-12 Article, a shareholder shall not have the right to dissent from any
66-13 plan of merger in which there is a single surviving or new domestic
66-14 or foreign corporation, or from any plan of exchange, if:
66-15 (1) the shares held by the shareholder are part of a
66-16 class or series, shares of which are [listed on a national
66-17 securities exchange, or are held of record by not less than 2,000
66-18 holders,] on the record date fixed to determine the shareholders
66-19 entitled to vote on the plan of merger or [the] plan of exchange:
66-20 (a) listed on a national securities exchange;
66-21 (b) listed on the Nasdaq Stock Market (or
66-22 successor quotation system) or designated as a national market
66-23 security on an interdealer quotation system by the National
66-24 Association of Securities Dealers, Inc., or successor entity; or
66-25 (c) held of record by not less than 2,000
66-26 holders;[, and]
66-27 (2) the shareholder is not required by the terms of
67-1 the plan of merger or plan of exchange to accept for the
67-2 shareholder's shares any consideration that is different than the
67-3 consideration (other than cash in lieu of fractional shares that
67-4 the shareholder would otherwise be entitled to receive) to be
67-5 provided to any other holder of shares of the same class or series
67-6 of shares held by such shareholder; and
67-7 (3) the shareholder is not required by the terms of
67-8 the plan of merger or the plan of exchange to accept for the
67-9 shareholder's [his] shares any consideration other than:
67-10 (a) shares of a domestic or foreign corporation
67-11 that, immediately after the effective time of the merger or
67-12 exchange, will be part of a class or series, [of] shares of which
67-13 are:
67-14 (i) listed, or authorized for listing upon
67-15 official notice of issuance, on a national securities exchange;[,
67-16 or]
67-17 (ii) approved for quotation as a national
67-18 market security on an interdealer quotation system by the National
67-19 Association of Securities Dealers, Inc., or successor entity; or
67-20 (iii) held of record by not less than
67-21 2,000 holders;[, and]
67-22 (b) cash in lieu of fractional shares otherwise
67-23 entitled to be received; or
67-24 (c) any combination of the securities and cash
67-25 described in Subdivisions (a) and (b) of this subsection.
67-26 SECTION 30. Article 5.14, Texas Business Corporation Act, is
67-27 amended to read as follows:
68-1 Art. 5.14. DERIVATIVE PROCEEDINGS [SUITS]. A. Certain
68-2 Definitions. For purposes of this Article:
68-3 (1) "Derivative proceeding" means a civil suit in the
68-4 right of a domestic corporation or, to the extent provided in
68-5 Section K of this Article, in the right of a foreign corporation.
68-6 (2) "Shareholder" includes a beneficial owner whose
68-7 shares are held in a voting trust or by a nominee on the beneficial
68-8 owner's behalf.
68-9 B. Standing. A shareholder may not commence or maintain a
68-10 derivative proceeding unless the shareholder:
68-11 (1) was a shareholder of the corporation at the time
68-12 of the act or omission complained of or became a shareholder by
68-13 operation of law from a person that was a shareholder at that time;
68-14 and
68-15 (2) fairly and adequately represents the interests of
68-16 the corporation in enforcing the right of the corporation.
68-17 C. Demand. No shareholder may commence a derivative
68-18 proceeding until:
68-19 (1) a written demand is filed with the corporation
68-20 setting forth with particularity the act, omission, or other matter
68-21 that is the subject of the claim or challenge and requesting that
68-22 the corporation take suitable action; and
68-23 (2) 120 days have expired from the date the demand was
68-24 made, unless the shareholder has earlier been notified that the
68-25 demand has been rejected by the corporation or unless irreparable
68-26 injury to the corporation is being suffered or would result by
68-27 waiting for the expiration of the 120-day period.
69-1 D. Stay; Discovery. (1) If the domestic or foreign
69-2 corporation commences an inquiry into the allegations made in a
69-3 demand or petition and the person or group described in Section H
69-4 of this Article is conducting an active review of the allegations
69-5 in good faith, the court shall stay a derivative proceeding until
69-6 the review is completed and a determination is made by the person
69-7 or group as to what further action, if any, should be taken. To
69-8 obtain a stay, the domestic or foreign corporation must provide the
69-9 court with a written statement containing an undertaking to advise
69-10 the court and the shareholder making the demand of the
69-11 determination promptly upon the completion of the review of the
69-12 matter. A stay shall, upon motion, be reviewed as to its continued
69-13 necessity every 90 days thereafter. If the review and
69-14 determination by the person or group described in Section H of this
69-15 Article is not completed within 90 days, the stay may be renewed
69-16 for one or more additional 90-day periods upon the domestic or
69-17 foreign corporation providing the court and the shareholder making
69-18 the demand with a written statement of the status of the review and
69-19 the reasons a continued extension of the stay is necessary.
69-20 (2) If a domestic or foreign corporation proposes to
69-21 dismiss a derivative proceeding pursuant to Section F of this
69-22 Article, discovery by a shareholder following the filing of the
69-23 derivative proceeding in accordance with the provisions of this
69-24 Article shall be limited to facts relating to whether the person or
69-25 group described in Section H of this Article is independent and
69-26 disinterested, the good faith of the inquiry and review by such
69-27 person or group, and the reasonableness of the procedures followed
70-1 by such person or group in conducting its review and will not
70-2 extend to any facts or substantive matters with respect to the act,
70-3 omission, or other matter that is the subject matter of the action
70-4 in the derivative proceeding. The scope of discovery may be
70-5 expanded if the court determines after notice and hearing that a
70-6 good faith review of the allegations for purposes of Section F of
70-7 this Article has not been made by an independent and disinterested
70-8 person or group in accordance with Section F of this Article.
70-9 E. Tolling of the Statute of Limitations. A written demand
70-10 filed with the corporation under Section C of this Article tolls
70-11 the statute of limitations on the claim upon which demand is made
70-12 until the earlier of (1) 120 days or (2) 30 days after the
70-13 corporation advises the shareholder that the demand has been
70-14 rejected or the review has been completed.
70-15 F. Dismissal of Derivative Proceeding. A court shall
70-16 dismiss a derivative proceeding on a motion by the corporation if
70-17 the person or group described in Section H of this Article
70-18 determines in good faith, after conducting a reasonable inquiry and
70-19 based on the factors as the person or group deems appropriate under
70-20 the circumstances, that the continuation of the derivative
70-21 proceeding is not in the best interests of the corporation. In
70-22 determining whether the requirements of the previous sentence have
70-23 been met, the burden of proof shall be on:
70-24 (1) the plaintiff shareholder, if a majority of the
70-25 board of directors consists of independent and disinterested
70-26 directors at the time the determination is made, or if the
70-27 determination is made by a panel of one or more independent and
71-1 disinterested persons appointed under Section H(3) of this Article;
71-2 or
71-3 (2) the corporation, in all other circumstances;
71-4 provided that if the corporation presents prima facie evidence that
71-5 demonstrates that the directors appointed pursuant to Section H(2)
71-6 of this Article are independent and disinterested, the burden of
71-7 proof is on the plaintiff shareholder.
71-8 G. Commencement of Proceeding After Rejection of Demand. If
71-9 a derivative proceeding is commenced after a demand is rejected,
71-10 the petition must allege with particularity facts that establish
71-11 that the rejection was not made in accordance with the requirements
71-12 of Sections F and H of this Article.
71-13 H. Determination by Directors or Independent Persons. The
71-14 determination described in Section F of this Article must be made
71-15 by:
71-16 (1) a majority vote of independent and disinterested
71-17 directors present at a meeting of the board of directors at which
71-18 interested directors are not present (at the time of the vote) if
71-19 the independent and disinterested directors constitute a quorum of
71-20 the board of directors;
71-21 (2) a majority vote of a committee consisting of two
71-22 or more independent and disinterested directors appointed by a
71-23 majority vote of one or more independent and disinterested
71-24 directors present at a meeting of the board of directors, whether
71-25 or not the independent and disinterested directors so acting
71-26 constitute a quorum of the board of directors; or
71-27 (3) a panel of one or more independent and
72-1 disinterested persons appointed by the court upon a motion by the
72-2 corporation setting forth the names of the persons to be so
72-3 appointed together with a statement that to the best of its
72-4 knowledge the persons so proposed are disinterested persons and
72-5 qualified to make the determinations contemplated by Section F of
72-6 this Article. Such panel shall be appointed if the court finds
72-7 that such persons are independent and disinterested persons and are
72-8 otherwise qualified in regard to expertise, experience, independent
72-9 judgment, and other factors deemed appropriate by the court under
72-10 the circumstances to make such determinations. Persons appointed
72-11 by the court shall have no liability to the corporation or its
72-12 shareholders for any action or omission taken by them in that
72-13 capacity, absent fraud or willful misconduct.
72-14 I. Discontinuance or Settlement. A derivative proceeding
72-15 may not be discontinued or settled without the approval of the
72-16 court. If the court determines that a proposed discontinuance or
72-17 settlement may substantially affect the interest of other
72-18 shareholders, it shall direct that notice be given to the affected
72-19 shareholders.
72-20 J. Payment of Expenses. (1) On termination of a derivative
72-21 proceeding, the court may order:
72-22 (a) the domestic or foreign corporation to pay
72-23 the expenses of the plaintiff incurred in the proceeding if it
72-24 finds that the proceeding has resulted in a substantial benefit to
72-25 the domestic or foreign corporation;
72-26 (b) the plaintiff to pay the expenses of the
72-27 domestic or foreign corporation or any defendant incurred in
73-1 investigating and defending the proceeding if it finds that the
73-2 proceeding was commenced or maintained without reasonable cause or
73-3 for an improper purpose; or
73-4 (c) a party to pay the expenses incurred by
73-5 another party (including the domestic or foreign corporation)
73-6 because of the filing of a pleading, motion, or other paper, if it
73-7 finds that the pleading, motion, or other paper (i) was not
73-8 well-grounded in fact after reasonable inquiry, (ii) was not
73-9 warranted by existing law or a good faith argument for the
73-10 extension, modification, or reversal of existing law or (iii) was
73-11 interposed for an improper purpose, such as to harass or to cause
73-12 unnecessary delay or needless increase in the cost of litigation.
73-13 (2) For purposes of this Section, "expenses" mean
73-14 reasonable expenses incurred in the defense of a derivative
73-15 proceeding, including without limitation:
73-16 (a) attorney's fees;
73-17 (b) costs in pursuing an investigation of the
73-18 matter that was the subject of the derivative proceeding; and
73-19 (c) expenses for which the domestic or foreign
73-20 corporation or a corporate defendant may be required to indemnify
73-21 another person.
73-22 K. Application to Foreign Corporations. In any derivative
73-23 proceeding brought in the right of a foreign corporation, the
73-24 matters covered by this Article are governed by the laws of the
73-25 jurisdiction of incorporation of the foreign corporation, except
73-26 for Sections D, I, and J of this Article, which are procedural and
73-27 not matters relating to the internal affairs of the foreign
74-1 corporation. In the case of matters relating to a foreign
74-2 corporation under Section D of this Article, references to a person
74-3 or group described in Section H of this Article are to be deemed to
74-4 refer to a person or group entitled under the laws of the
74-5 jurisdiction of incorporation of the foreign corporation to review
74-6 and dispose of a derivative proceeding, and the standard of review
74-7 of a decision by the person or group to dismiss the derivative
74-8 proceeding is to be governed by the laws of the jurisdiction of
74-9 incorporation of the foreign corporation.
74-10 L. Closely Held Corporations. (1) The provisions of
74-11 Sections B through H of this Article are not applicable to a
74-12 closely held corporation. If justice requires:
74-13 (a) a derivative proceeding brought by a
74-14 shareholder of a closely held corporation may be treated by a court
74-15 as a direct action brought by the shareholder for his own benefit;
74-16 and
74-17 (b) a recovery in a direct or derivative
74-18 proceeding by a shareholder may be paid either directly to the
74-19 plaintiff or to the corporation if necessary to protect the
74-20 interests of creditors or other shareholders of the corporation.
74-21 (2) For purposes of this Section, a "closely held
74-22 corporation" means a corporation:
74-23 (a) with less than 35 shareholders; and
74-24 (b) that has no shares listed on a national
74-25 securities exchange or regularly quoted in an over-the-counter
74-26 market by one or more members of a national securities association.
74-27 [Definitions. In this Article:]
75-1 [(1) A "derivative suit" is a suit brought in the
75-2 right of a domestic or foreign corporation.]
75-3 [(2) "Expenses" are reasonable expenses, incurred in
75-4 the defense of a derivative suit, including:]
75-5 [(a) Fees of attorneys, and]
75-6 [(b) Expenses for which a corporate defendant
75-7 may be required to indemnify another defendant.]
75-8 [B. Prerequisites. A derivative suit may be brought in this
75-9 State only if:]
75-10 [(1) The plaintiff was a record or beneficial owner of
75-11 shares, or of an interest in a voting trust for shares, at the time
75-12 of the transaction of which he complains, or his shares or interest
75-13 thereafter devolved upon him by operation of law from a person who
75-14 was such an owner at that time, and]
75-15 [(2) The initial pleading in the suit states:]
75-16 [(a) The ownership required by Subsection (1),
75-17 and]
75-18 [(b) With particularity, the efforts of the
75-19 plaintiff to have suit brought for the corporation by the board of
75-20 directors, or the reasons for not making any such efforts.]
75-21 [C. Security for Expenses. The court having jurisdiction in
75-22 a derivative suit may, in its discretion, require the plaintiff or
75-23 plaintiffs to give security for the expenses incurred or expected
75-24 to be incurred by one or more of the defendants. The court may, in
75-25 its discretion, at any time increase or decrease the amount of the
75-26 security on a showing that the security provided is then inadequate
75-27 or excessive.]
76-1 [D. Inability to Give Security. If plaintiff is unable to
76-2 give security, he may file an affidavit in accordance with the
76-3 Texas Rules of Civil Procedure, and those rules shall control.]
76-4 [E. Failure to Give Security. If plaintiff fails to give
76-5 the security within a reasonable time set by the court, the court
76-6 shall (except as provided in Section D of this Article) dismiss the
76-7 suit without prejudice.]
76-8 [F. Judgment for Expenses. The court having jurisdiction in
76-9 a derivative suit may, upon final judgment for one or more
76-10 defendants and a finding that the suit was brought without
76-11 reasonable cause against such defendants, require the plaintiff to
76-12 pay expenses to such defendants, whether or not security has been
76-13 required.]
76-14 SECTION 31. Article 5.16, Texas Business Corporation Act, is
76-15 amended to read as follows:
76-16 Art. 5.16. MERGER WITH [OF] SUBSIDIARY ENTITIES [OR
76-17 SUBSIDIARIES INTO PARENT CORPORATION]. A. In any case in which at
76-18 least ninety (90%) per cent of the outstanding shares of each class
76-19 and series of shares, membership interests, or other ownership
76-20 interests of one or more [a] domestic or foreign [corporation or]
76-21 corporations or other entities is owned by another domestic or
76-22 foreign corporation or other entity, and at least one of the parent
76-23 or subsidiary entities [such corporations] is a domestic
76-24 corporation and the other or others are domestic corporations, [or]
76-25 foreign corporations, or other entities organized under the laws of
76-26 a jurisdiction that permit such a merger or whose organizational
76-27 documents or other constituent documents not inconsistent with
77-1 those laws permit such a merger, the corporation or other entity
77-2 having such share ownership may (1) merge such other domestic or
77-3 foreign corporation or corporations or other entities into itself,
77-4 (2) merge itself into any one or more of such other corporations or
77-5 other entities [corporation], or (3) merge itself and any one or
77-6 more of such entities or corporations into one or more [another] of
77-7 the other entities [such domestic or foreign corporations]:
77-8 (a) in the event that the corporation or other entity
77-9 having at least 90 percent [such share] ownership will be a
77-10 surviving entity [corporation] in the merger, by executing and
77-11 filing articles of merger in accordance with Section B of this
77-12 Article; or
77-13 (b) in the event that the corporation or other entity
77-14 having at least 90 percent [such share] ownership will not be a
77-15 surviving entity [corporation] in the merger, by the entity
77-16 [corporation] having such [share] ownership adopting a plan of
77-17 merger in the manner required by the laws [Article 5.03] of its
77-18 jurisdiction of organization or formation and its organizational or
77-19 other constituent documents [this Act], except that no action under
77-20 Section 5.03 shall be required to be taken by the corporation or
77-21 corporations whose shares are so owned, and executing and filing
77-22 articles of merger in accordance with Section B of this Article.
77-23 B. The articles of merger shall be signed on behalf of the
77-24 parent entity [corporation] by an officer or other duly authorized
77-25 representative of the parent entity, and shall set forth:
77-26 (1) The name of the parent entity [corporation], and
77-27 the name [or names] of each [the] subsidiary entity [corporations]
78-1 and the type of entity and respective jurisdiction under which each
78-2 subsidiary entity [such corporation] is organized.
78-3 (2) The total number or percentage of outstanding
78-4 shares, membership interests, or other ownership interests,
78-5 identified by [of each] class, series, or group, [of each
78-6 subsidiary corporation] and the number or percentage of [such]
78-7 shares, membership interests, or other ownership interests in [of]
78-8 each class, series, or group owned by the parent entity
78-9 [corporation].
78-10 (3) A copy of the resolution or merger adopted by the
78-11 [board of directors of the] parent entity in accordance with the
78-12 laws of its jurisdiction of organization or formation and its
78-13 organizational or other constituent documents together with a
78-14 statement that the resolution was so adopted [corporation to so
78-15 merge] and the date of the adoption thereof. If the parent entity
78-16 [corporation] does not own all the outstanding shares, membership
78-17 interests, or other ownership interests of each class of each
78-18 subsidiary entity [corporation] that is a party to the merger, the
78-19 resolution shall state the terms and conditions of the merger,
78-20 including the cash or other property, including shares,
78-21 obligations, evidences of ownership, rights to purchase securities,
78-22 or other securities of any person or entity or any combination of
78-23 the shares, obligations, evidences of ownership, rights, or other
78-24 securities, to be used, paid or delivered by the surviving entity
78-25 [corporation] upon surrender of each share, membership interest, or
78-26 other ownership interest of the subsidiary entity or entities
78-27 [corporation or corporations] not owned by the parent entity
79-1 [corporation].
79-2 (4) If the surviving entity [corporation] is a foreign
79-3 corporation or other entity, the address, including street number
79-4 if any, of its registered or principal office in the jurisdiction
79-5 under whose laws it is governed. If the surviving entity
79-6 [corporation] is a foreign corporation or other entity, on the
79-7 merger taking effect the surviving entity [foreign corporation] is
79-8 deemed to (a) appoint the Secretary of State of this state as its
79-9 agent for service of process to enforce an obligation or the rights
79-10 of dissenting shareholders of each domestic corporation that is a
79-11 party to the merger, and (b) agree that it will promptly pay to the
79-12 dissenting shareholders of each domestic corporation that is a
79-13 party to the merger the amount, if any, to which they are entitled
79-14 under this Article.
79-15 (5) If a plan of merger is required by Section A of
79-16 this Article to be adopted in the manner required by Article 5.03
79-17 of this Act, the information required by Section A of Article 5.04
79-18 of this Act.
79-19 C. The [original and a copy of the] articles of merger shall
79-20 be delivered to the Secretary of State and filed[. If the
79-21 Secretary of State finds that such articles conform to law, he
79-22 shall, when all fees and franchise taxes have been paid] as
79-23 provided [required] by Sections B and C of Article 5.04 of this Act
79-24 [law:]
79-25 [(1) Endorse on the original and the copy the word
79-26 "Filed," and the month, day and year of the filing thereof.]
79-27 [(2) File the original in his office.]
80-1 [(3) Issue a certificate of merger to which he shall
80-2 affix the copy and deliver them to the surviving corporation or its
80-3 representative].
80-4 D. The effective date and the effect of such merger shall be
80-5 the same as provided in Articles 5.05 and 5.06 of this Act if the
80-6 surviving entity [corporation] is a domestic corporation. If the
80-7 surviving entity [corporation] is a foreign corporation or other
80-8 entity, the effective date and the effect of such merger shall be
80-9 the same as in the case of the merger of domestic corporations
80-10 except in so far as the laws of such other jurisdiction provide
80-11 otherwise.
80-12 E. In the event all of the shares of a subsidiary domestic
80-13 corporation that is a party to a merger effected under this Article
80-14 are not owned by the parent entity [corporation] immediately prior
80-15 to the merger, the surviving parent entity [corporation (foreign or
80-16 domestic)] shall, within ten (10) days after the effective date of
80-17 the merger, mail to each shareholder of record of each subsidiary
80-18 domestic corporation a copy of the articles of merger and notify
80-19 the shareholder that the merger has become effective. Any such
80-20 shareholder who holds shares of a class or series that would have
80-21 been entitled to vote on the merger if it had been effected
80-22 pursuant to Article 5.03 of this Act shall have the right to
80-23 dissent from the merger and demand payment of the fair value for
80-24 the shareholder's [his] shares in lieu of the cash or other
80-25 property to be used, paid or delivered to such shareholder upon the
80-26 surrender of such shareholder's shares pursuant to the terms and
80-27 conditions of the merger, with the following procedure:
81-1 (1) Such shareholder shall within twenty (20) days
81-2 after the mailing of the notice and copy of the articles of merger
81-3 make written demand on the surviving parent entity [corporation,
81-4 domestic or foreign,] for payment of the fair value of the
81-5 shareholder's [his] shares. The fair value of the shares shall be
81-6 the value thereof as of the day before the effective date of the
81-7 merger, excluding any appreciation or depreciation in anticipation
81-8 of such act. The demand shall state the number and class of the
81-9 shares owned by the dissenting shareholder and the fair value of
81-10 such shares as estimated by the shareholder [him]. Any shareholder
81-11 failing to make demand within the twenty (20) day period shall be
81-12 bound by the corporate action.
81-13 (2) Within ten (10) days after receipt by the
81-14 surviving entity [corporation] of a demand for payment by the
81-15 dissenting shareholder of the fair value of the shareholder's [his]
81-16 shares in accordance with Subsection (1) of this section, the
81-17 surviving entity [corporation (foreign or domestic)] shall deliver
81-18 or mail to the dissenting shareholder a written notice which shall
81-19 either set out that the surviving entity [corporation (foreign or
81-20 domestic)] accepts the amount claimed in the demand and agrees to
81-21 pay such amount within ninety (90) days after the date on which the
81-22 corporate action was effected and, in the case of shares
81-23 represented by certificates, upon the surrender of the shares
81-24 certificates duly endorsed, or shall contain an estimate by the
81-25 surviving parent entity [corporation] of the fair value of such
81-26 shares, together with an offer to pay the amount of that estimate
81-27 within ninety (90) days after the date on which such corporate
82-1 action was effected, upon receipt of notice within sixty (60) days
82-2 after that date from the shareholder that the shareholder agrees to
82-3 accept that amount and, in the case of shares represented by
82-4 certificates, upon the surrender of the shares certificates duly
82-5 endorsed.
82-6 (3) If, within sixty (60) days after the date on which
82-7 the corporate action was effected, the value of the shares is
82-8 agreed upon between the dissenting shareholder and the surviving
82-9 entity [corporation (foreign or domestic)], payment for the shares
82-10 shall be made within ninety (90) days after the date on which the
82-11 corporate action was effected and, in the case of shares
82-12 represented by certificates, upon surrender of the [his]
82-13 certificate or certificates representing such shares. Upon payment
82-14 of the agreed value, the dissenting shareholder shall cease to have
82-15 any interest in such shares or in the corporation.
82-16 (4) If, within sixty (60) days after the date on which
82-17 such corporate action was effected, the shareholder and the
82-18 surviving entity [corporation (foreign or domestic)] do not so
82-19 agree, then the dissenting shareholder or the surviving entity
82-20 [corporation (foreign or domestic)] may, within sixty (60) days
82-21 after the expiration of the sixty (60) day period, file a petition
82-22 in any court of competent jurisdiction in the county in which the
82-23 principal office of the corporation is located, asking for a
82-24 finding and determination of the fair value of the shareholder's
82-25 shares as provided in Section B of Article 5.12 of this Act and
82-26 thereupon the parties shall have the rights and duties and follow
82-27 the procedure set forth in Sections B to D inclusive of Article
83-1 5.12.
83-2 (5) In the absence of fraud in the transaction, the
83-3 remedy provided by this Article to a shareholder objecting to the
83-4 corporate action is the exclusive remedy for the recovery of the
83-5 value of the shareholder's [his] shares or money damages to the
83-6 shareholder with respect to the corporate action. If the surviving
83-7 entity [corporation (foreign or domestic)] complies with the
83-8 requirements of this Article, any such shareholder who fails to
83-9 comply with the requirements of this Article shall not be entitled
83-10 to bring suit for the recovery of the value of the shareholder's
83-11 [his] shares or money damages to such shareholder with respect to
83-12 such corporate action.
83-13 F. If a plan of merger is required by Section A of this
83-14 Article to be adopted in the manner required by Article 5.03 of
83-15 this Act, the provisions of Articles 5.11 and 5.12 of this Act
83-16 shall apply to the rights of the shareholders of a [the] parent
83-17 corporation to dissent from such merger. Except as otherwise
83-18 provided in this Article, the provisions of Articles 5.11 and 5.12
83-19 of this Act shall not be applicable to a merger effected under the
83-20 provisions of this Article. The provisions of Article 5.13 of this
83-21 Act shall be applicable to any merger effected under the provisions
83-22 of this Article to the extent provided in Article 5.13 of this Act.
83-23 SECTION 32. Part Five, Texas Business Corporation Act, is
83-24 amended by adding Articles 5.17-5.20 to read as follows:
83-25 Art. 5.17. CONVERSION. A. A domestic corporation may adopt
83-26 a plan of conversion and convert to a foreign corporation or any
83-27 other entity if:
84-1 (1) the converting entity acts upon and its
84-2 shareholders approve a plan of conversion in the manner prescribed
84-3 by Article 5.03 of this Act as if the conversion were a merger to
84-4 which the converting entity were a party and not the survivor;
84-5 (2) the conversion (a) is permitted by, or not
84-6 inconsistent with, the laws of the state or country in which the
84-7 converted entity is to be incorporated, formed, or organized, and
84-8 (b) the incorporation, formation, or organization of the converted
84-9 entity is effected in compliance with such laws;
84-10 (3) at the time the conversion becomes effective, each
84-11 shareholder of the converting entity (other than those who receive
84-12 payment of their shares under Article 5.12 of this Act) will,
84-13 unless otherwise agreed to by that shareholder, own an equity
84-14 interest or other ownership or security interest in, and be a
84-15 shareholder, partner, member, owner, or other security holder of,
84-16 the converted entity;
84-17 (4) no shareholder of the domestic corporation will,
84-18 as a result of the conversion, become personally liable, without
84-19 the shareholder's consent, for the liabilities or obligations of
84-20 the converted entity; and
84-21 (5) the converted entity shall be incorporated,
84-22 formed, or organized as part of or pursuant to the plan of
84-23 conversion.
84-24 B. Any foreign corporation or other entity may adopt a plan
84-25 of conversion and convert to a domestic corporation if:
84-26 (1) the conversion is permitted by the laws of the
84-27 state or country in which the foreign corporation is incorporated,
85-1 if a foreign corporation is converting;
85-2 (2) the conversion is either permitted by the laws
85-3 under which the other entity is formed or organized or by the
85-4 constituent documents of the other entity that are not inconsistent
85-5 with the laws of the state or country in which the other entity is
85-6 formed or organized, if another entity is converting; and
85-7 (3) the converting entity takes all action that may be
85-8 required by the laws of the state or country under which it is
85-9 incorporated, formed, or organized and by its constituent documents
85-10 to effect the conversion.
85-11 C. A plan of conversion shall set forth:
85-12 (1) the name of the converting entity and the
85-13 converted entity;
85-14 (2) a statement that the converting entity is
85-15 continuing its existence in the organizational form of the
85-16 converted entity;
85-17 (3) a statement as to the type of entity that the
85-18 converted entity is to be and the state or country under the laws
85-19 of which the converted entity is to be incorporated, formed, or
85-20 organized;
85-21 (4) the manner and basis of converting the shares or
85-22 other evidences of ownership of the converting entity into shares
85-23 or other evidences of ownership or securities of the converted
85-24 entity, or any combination thereof;
85-25 (5) in an attachment or exhibit, the articles of
85-26 incorporation of the domestic corporation if the converted entity
85-27 is a domestic corporation; and
86-1 (6) in an attachment or exhibit, the articles of
86-2 incorporation or other organizational documents of the converted
86-3 entity if the converted entity is not a domestic corporation.
86-4 D. A plan of conversion may set forth such other provisions
86-5 relating to the conversion not inconsistent with law, including the
86-6 initial bylaws and officers of the converted entity.
86-7 E. After a conversion of a corporation is approved, and at
86-8 any time before the conversion has become effective, the plan of
86-9 conversion may be abandoned (subject to any contractual rights) by
86-10 the converting entity, without shareholder action, in accordance
86-11 with the procedures set forth in the plan of conversion or, if any
86-12 such procedures are not set forth in the plan, in the manner
86-13 determined by the board of directors. If articles of conversion
86-14 have been filed with the Secretary of State but the conversion has
86-15 not become effective, the conversion may be abandoned if a
86-16 statement, executed on behalf of the converting entity by an
86-17 officer or other duly authorized representative, stating that the
86-18 plan of conversion has been abandoned in accordance with applicable
86-19 law, is filed with the Secretary of State prior to the
86-20 effectiveness of the conversion. If the Secretary of State finds
86-21 that such statement conforms to law, the Secretary of State shall,
86-22 when all fees have been paid as required by law:
86-23 (1) endorse on the original and each copy the word
86-24 "Filed" and the month, day, and year of the filing thereof;
86-25 (2) file the original in his office; and
86-26 (3) issue a certificate of abandonment to the
86-27 converting entity or its representatives.
87-1 F. Upon the filing of the statement described by Section E
87-2 of this Article by the Secretary of State, the conversion shall be
87-3 deemed abandoned and shall not become effective.
87-4 Art. 5.18. ARTICLES OF CONVERSION. A. If a plan of
87-5 conversion has been approved in accordance with Article 5.17 of
87-6 this Act and has not been abandoned, articles of conversion shall
87-7 be executed by the converting entity by an officer or other duly
87-8 authorized representative thereof and shall set forth:
87-9 (1) the plan of conversion or a statement certifying
87-10 the following:
87-11 (a) the name, state or country of incorporation,
87-12 formation, and organization of the converting entity, and
87-13 organizational form of the converting entity;
87-14 (b) that a plan of conversion has been approved;
87-15 (c) that an executed plan of conversion is on
87-16 file at the principal place of business of the converting entity,
87-17 stating the address thereof, and that an executed plan of
87-18 conversion will be on file, from and after the conversion, at the
87-19 principal place of business of the converted entity, stating the
87-20 address thereof; and
87-21 (d) that a copy of the plan of conversion will
87-22 be furnished by the converting entity (prior to the conversion) or
87-23 the converted entity (after the conversion), on written request and
87-24 without cost, to any shareholder of the converting entity or the
87-25 converted entity;
87-26 (2) if the converting entity is a domestic
87-27 corporation, the number of shares outstanding and, if the shares of
88-1 any class or series are entitled to vote as a class, the
88-2 designation and number of outstanding shares of each such class or
88-3 series;
88-4 (3) if the converting entity is a domestic
88-5 corporation, the number of outstanding shares, not entitled to vote
88-6 only as a class, voted for and against the plan, respectively, and,
88-7 if the shares of any class or series are entitled to vote as a
88-8 class, the number of shares of each such class or series voted for
88-9 and against the plan, respectively; and
88-10 (4) if the converting entity is a foreign corporation
88-11 or other entity, a statement that the approval of the plan of
88-12 conversion was duly authorized by all action required by the laws
88-13 under which it was incorporated, formed, or organized and by its
88-14 constituent documents.
88-15 B. The original and one copy of the articles of conversion
88-16 shall be delivered to the Secretary of State. Two copies of the
88-17 articles of incorporation of the domestic corporation if the
88-18 converted entity is a domestic corporation shall also be delivered
88-19 to the Secretary of State with the articles of conversion.
88-20 C. If the Secretary of State finds that the articles of
88-21 conversion conform to law and has received all filings required to
88-22 be received and issued all certificates required to be issued in
88-23 connection with the incorporation, formation, or organization of
88-24 the converted entity, if any, the Secretary of State shall, when
88-25 all fees and franchise taxes have been paid as required by law or
88-26 if the articles of conversion provide that the converted entity
88-27 will be liable for the payment of all such fees and franchise
89-1 taxes:
89-2 (1) endorse on the original and each copy the word
89-3 "Filed" and the month, day, and year of the filing thereof;
89-4 (2) file the original in his office; and
89-5 (3) issue a certificate of conversion, together with a
89-6 copy of the articles affixed thereto, to the converted entity or
89-7 its representatives.
89-8 Art. 5.19. EFFECTIVE DATE OF CONVERSION. A. Except as
89-9 otherwise provided by Article 10.03 of this Act, upon the issuance
89-10 of the certificate of conversion by the Secretary of State, the
89-11 conversion of a converting entity shall be effective.
89-12 Art. 5.20. EFFECT OF CONVERSION. A. When a conversion of a
89-13 converting entity takes effect:
89-14 (1) the converting entity shall continue to exist,
89-15 without interruption, but in the organizational form of the
89-16 converted entity rather than in its prior organizational form;
89-17 (2) all rights, title, and interests to all real
89-18 estate and other property owned by the converting entity shall
89-19 continue to be owned by the converted entity in its new
89-20 organizational form without reversion or impairment, without
89-21 further act or deed, and without any transfer or assignment having
89-22 occurred, but subject to any existing liens or other encumbrances
89-23 thereon;
89-24 (3) all liabilities and obligations of the converting
89-25 entity shall continue to be liabilities and obligations of the
89-26 converted entity in its new organizational form without impairment
89-27 or diminution by reason of the conversion;
90-1 (4) all rights of creditors or other parties with
90-2 respect to or against the prior interest holders or other owners of
90-3 the converting entity in their capacities as such in existence as
90-4 of the effective time of the conversion will continue in existence
90-5 as to those liabilities and obligations and may be pursued by such
90-6 creditors and obligees as if such conversion shall not have
90-7 occurred;
90-8 (5) a proceeding pending by or against the converting
90-9 entity or by or against any of the converting entity's interest
90-10 holders or owners in their capacities as such may be continued by
90-11 or against the converted entity in its new organizational form and
90-12 by or against the prior interest holders or owners, as the case may
90-13 be, without any need for substitution of parties;
90-14 (6) the shares and other evidences of ownership in the
90-15 converting entity that are to be converted into shares, evidences
90-16 of ownership or other securities in the converted entity as
90-17 provided in the plan of conversion shall be so converted, and if
90-18 the converting entity is a domestic corporation, the former holders
90-19 of shares in the domestic corporation shall be entitled only to the
90-20 rights provided in the plan of conversion or to their rights under
90-21 Article 5.11 of this Act;
90-22 (7) if, after the effectiveness of the conversion, a
90-23 shareholder, partner, member, or other owner of the converted
90-24 entity would be liable under applicable law, in such capacity, for
90-25 the debts or obligations of the converted entity, such shareholder,
90-26 partner, member, or other owner of the converted entity shall be
90-27 liable for the debts and obligations of the converting entity that
91-1 existed before the conversion takes effect only to the extent that
91-2 such shareholder, partner, member, or other owner: (a) agreed in
91-3 writing to be liable for such debts or obligations, (b) was liable
91-4 under applicable law, prior to the effectiveness of the conversion,
91-5 for such debts or obligations, or (c) by becoming a shareholder,
91-6 partner, member, or other owner of the converted entity, becomes
91-7 liable under applicable law for existing debts and obligations of
91-8 the converted entity;
91-9 (8) if the converted entity is a foreign corporation
91-10 or other entity, such converted entity shall be deemed to: (a)
91-11 appoint the Secretary of State in this State as its agent for
91-12 service of process in a proceeding to enforce any obligation or the
91-13 rights of dissenting shareholders of the converting domestic
91-14 corporation and (b) agree that it will promptly pay the dissenting
91-15 shareholders of the converting domestic corporation the amount, if
91-16 any, to which they are entitled under Article 5.11 of this Act; and
91-17 (9) if the converting corporation is a domestic
91-18 corporation, the provisions of Articles 5.11, 5.12, and 5.13 of
91-19 this Act shall apply as if the converted entity were the survivor
91-20 of a merger with the converting entity.
91-21 SECTION 33. Section A, Article 6.03, Texas Business
91-22 Corporation Act, is amended to read as follows:
91-23 A. A corporation may be dissolved by the act of the
91-24 corporation when authorized in the following manner:
91-25 (1) The board of directors shall adopt a resolution
91-26 recommending that the corporation be dissolved, and directing that
91-27 the question of such dissolution be submitted to a vote at a
92-1 meeting of shareholders, which may be either an annual or a special
92-2 meeting.
92-3 (2) Written or printed notice shall be given to each
92-4 shareholder of record entitled to vote at such meeting within the
92-5 time and in the manner provided in this Act for the giving of
92-6 notice of meetings of shareholders, and, whether the meeting be an
92-7 annual or special meeting, shall state that the purpose, or one of
92-8 the purposes, of such meeting is to consider the advisability of
92-9 dissolving the corporation.
92-10 (3) At such meeting a vote of shareholders entitled to
92-11 vote thereat shall be taken on a resolution to dissolve the
92-12 corporation. Such resolution shall be adopted upon receiving the
92-13 affirmative vote of the holders of at least two-thirds of the
92-14 outstanding shares [Each outstanding share] of the corporation
92-15 [shall be] entitled to vote thereon, [whether or not entitled to
92-16 vote thereon by the provisions of the articles of incorporation.
92-17 Such resolution shall be adopted upon receiving the affirmative
92-18 vote of the holders of at least two-thirds of the outstanding
92-19 shares of the corporation,] unless any class or series of shares is
92-20 entitled to vote as a class thereon, in which event the resolution
92-21 shall require for its adoption the affirmative vote of the holders
92-22 of at least two-thirds of the outstanding shares within [of] each
92-23 class or series of shares entitled to vote as a class thereon and
92-24 at least[, as well as the affirmative vote of] two-thirds of the
92-25 [total] outstanding shares otherwise entitled to vote thereon.
92-26 Shares entitled to vote as a class shall be entitled to vote only
92-27 as a class unless otherwise entitled to vote on each matter
93-1 generally as provided in the articles of incorporation.
93-2 SECTION 34. Sections A and B, Article 6.05, Texas Business
93-3 Corporation Act, are amended to read as follows:
93-4 A. At any time prior to the issuance of a certificate of
93-5 dissolution by the Secretary of State, or within 120 days
93-6 thereafter, a corporation may revoke voluntary dissolution
93-7 proceedings:
93-8 (1) By the written consent of all of its shareholders.
93-9 (2) By the act of the corporation in the following
93-10 manner:
93-11 (a) The board of directors shall adopt a
93-12 resolution recommending that the question of such revocation be
93-13 submitted to a vote at a special meeting of shareholders.
93-14 (b) Written or printed notice, stating that the
93-15 purpose or one of the purposes of such meeting is to consider the
93-16 advisability of revoking the voluntary dissolution proceedings,
93-17 shall be given to each shareholder of record entitled to vote at
93-18 such meeting within the time and in the manner provided in this Act
93-19 for the giving of notice of special meetings of shareholders.
93-20 (c) At such meeting a vote of the shareholders
93-21 entitled to vote thereat shall be taken on a resolution to revoke
93-22 the voluntary dissolution proceedings. [Each outstanding share of
93-23 the corporation shall be entitled to vote thereon, whether or not
93-24 entitled to vote thereon by the provisions of the articles of
93-25 incorporation.] Such resolution shall be adopted upon receiving
93-26 the affirmative vote of the holders of at least two-thirds of the
93-27 outstanding shares of the corporation entitled to vote thereon,
94-1 unless any class or series of shares is entitled to vote [thereon]
94-2 as a class thereon, in which event the resolution shall require for
94-3 its adoption the affirmative vote of the holders of at least
94-4 two-thirds of the outstanding shares within [of] each class or
94-5 series of shares entitled to vote as a class thereon and at least[,
94-6 as well as] two-thirds of the [total] outstanding shares otherwise
94-7 entitled to vote thereon. Shares entitled to vote as a class shall
94-8 be entitled to vote only as a class unless otherwise entitled to
94-9 vote on each matter generally as provided in the articles of
94-10 incorporation.
94-11 B. After revocation of voluntary dissolution is authorized
94-12 as provided in Section A of this Article, the corporation shall, if
94-13 a certificate of dissolution of the corporation has been issued by
94-14 the Secretary of State, deliver to the Secretary of State for
94-15 filing within 120 days after such issuance the original and a copy
94-16 of articles of revocation of dissolution executed on behalf of the
94-17 corporation by an officer, that set forth:
94-18 (1) the name of the corporation;
94-19 (2) the date that the revocation of dissolution was
94-20 authorized and, if the dissolution has become effective, the
94-21 effective date of the dissolution that was revoked; and
94-22 (3) if the corporation elected to revoke voluntary
94-23 dissolution proceedings by the written consent of all of its
94-24 shareholders, a copy of the consent, together with a statement that
94-25 the consent was signed by all shareholders of the corporation or
94-26 was signed in their names by their attorneys thereunto duly
94-27 authorized; or
95-1 (4) if the corporation elected to revoke voluntary
95-2 dissolution proceedings by act of the corporation:
95-3 (a) a [copy of the resolution to revoke,
95-4 together with a] statement that a [such] resolution revoking the
95-5 voluntary dissolution was adopted by the shareholders of the
95-6 corporation and of the date of the adoption thereof;
95-7 (b) the number of shares outstanding and
95-8 entitled to vote on the resolution, and, if the shares of any class
95-9 or series were entitled to vote as a class, the designation and
95-10 number of outstanding shares of each such class or series; and
95-11 (c) the number of shares entitled to vote on the
95-12 resolution generally that voted for and against such resolution,
95-13 respectively, and if the shares of any class or series were
95-14 entitled to vote as a class, the number of shares of each such
95-15 class or series voted for and against such resolution,
95-16 respectively.
95-17 SECTION 35. Article 6.06, Texas Business Corporation Act, is
95-18 amended to read as follows:
95-19 Art. 6.06. ARTICLES OF DISSOLUTION. A. If voluntary
95-20 dissolution proceedings have been taken and have not been revoked,
95-21 then when all debts, liabilities, and obligations of the
95-22 corporation have been paid, satisfied, or discharged or adequate
95-23 provision has been made for payment, satisfaction, or discharge
95-24 thereof or, if the properties and assets of the corporation are not
95-25 sufficient to pay, satisfy, or discharge all the corporation's
95-26 debts, liabilities, and obligations, then when all properties and
95-27 assets of the corporation have been applied so far as they will go
96-1 to the just and equitable payment of the corporation's debts,
96-2 liabilities, and obligations or when adequate provision has been
96-3 made for such application, and the remainder of its properties and
96-4 assets have been distributed to its shareholders according to their
96-5 respective rights and interests, articles of dissolution shall be
96-6 executed on behalf of the corporation by an officer, which shall
96-7 set forth:
96-8 (1) The name of the corporation.
96-9 (2) The names and respective addresses of its
96-10 officers.
96-11 (3) The names and respective addresses of its
96-12 directors.
96-13 (4) That all debts, liabilities, and obligations of
96-14 the corporation have been paid, satisfied, or discharged or that
96-15 adequate provision has been made for payment, satisfaction, or
96-16 discharge thereof or, if the properties and assets of the
96-17 corporation were not sufficient to pay, satisfy, or discharge all
96-18 the corporation's debts, liabilities, and obligations, that all
96-19 properties and assets of the corporation have been applied so far
96-20 as they would go to the just and equitable payment of those debts,
96-21 liabilities, and obligations or that adequate provision has been
96-22 made for such application.
96-23 (5) That the remainder of the properties and assets of
96-24 the corporation have been distributed to its shareholders according
96-25 to their respective rights and interests or that no properties or
96-26 assets of the corporation remained for distribution to shareholders
96-27 after applying the properties and assets of the corporation so far
97-1 as they would go to the just and equitable payment of the debts,
97-2 liabilities, and obligations of the corporation or making adequate
97-3 provision for such application.
97-4 (6) If the corporation elected to dissolve by the
97-5 written consent of all of its shareholders, a [copy of the consent,
97-6 together with a] statement that a [the] consent approving a
97-7 dissolution of the corporation was signed by all shareholders of
97-8 the corporation or was signed in their names by their attorneys
97-9 thereunto duly authorized.
97-10 (7) If the corporation elected to dissolve by act of
97-11 the corporation:
97-12 (a) A [copy of the resolution to dissolve,
97-13 together with a] statement that a [such] resolution approving a
97-14 dissolution of the corporation was adopted by the shareholders of
97-15 the corporation and of the date of adoption.
97-16 (b) The number of shares outstanding and
97-17 entitled to vote on the resolution, and, if the shares of any class
97-18 or series were entitled to vote as a class, the designation and
97-19 number of outstanding shares of each such class or series.
97-20 (c) The number of shares entitled to vote on the
97-21 resolution generally that voted for and against such resolution,
97-22 respectively, and if the shares of any class or series were
97-23 entitled to vote as a class, the number of shares of each such
97-24 class or series voted for and against such resolution,
97-25 respectively.
97-26 SECTION 36. Section E, Article 7.01, Texas Business
97-27 Corporation Act, is amended to read as follows:
98-1 E. Any corporation dissolved by the Secretary of State under
98-2 the provisions of Section B of this article may be reinstated by
98-3 the Secretary of State at any time within a period of 36 [12]
98-4 months from the date of such dissolution, upon approval of an
98-5 application for reinstatement signed by an officer or director of
98-6 the dissolved corporation. Such application shall be filed by the
98-7 Secretary of State whenever it is established to the Secretary's
98-8 [his] satisfaction that in fact there was no cause for the
98-9 dissolution, or whenever the neglect, omission or delinquency
98-10 resulting in dissolution has been corrected and payment of all
98-11 fees, taxes, penalties and interest due thereon which accrued
98-12 before the dissolution plus an amount equal to the total taxes from
98-13 the date of dissolution to the date of reinstatement which would
98-14 have been payable had the corporation not been dissolved. A
98-15 reinstatement filing fee of $50 shall accompany the application for
98-16 reinstatement.
98-17 Reinstatement shall not be authorized if the corporate name
98-18 is the same as or deceptively similar to a corporate, limited
98-19 partnership, or limited liability company name already on file or
98-20 reserved or registered, unless the corporation being reinstated
98-21 contemporaneously amends the articles of incorporation to change
98-22 its name.
98-23 When the application for reinstatement is approved and filed
98-24 by the Secretary of State, the corporate existence shall be deemed
98-25 to have continued without interruption from the date of dissolution
98-26 except the reinstatement shall have no effect upon any issue of
98-27 personal liability of the directors, officers, or agents of the
99-1 corporation during the period between dissolution and
99-2 reinstatement.
99-3 SECTION 37. Article 8.03, Texas Business Corporation Act, is
99-4 amended to read as follows:
99-5 Art. 8.03. Corporate Name of Foreign Corporation. A. No
99-6 certificate of authority shall be issued to a foreign corporation
99-7 unless the corporate name of such corporation:
99-8 (1) Shall contain the word "corporation," "company,"
99-9 "incorporated," or "limited," or shall contain an abbreviation of
99-10 one (1) of such words, or such corporation shall, for use in this
99-11 state, add at the end of its name one (1) of such words or an
99-12 abbreviation thereof.
99-13 (2) Shall not be the same as, or deceptively similar
99-14 to, the name of any domestic corporation, limited partnership, or
99-15 limited liability company existing under the laws of this state or
99-16 of any foreign corporation, limited partnership, or limited
99-17 liability company authorized to transact business in this state, or
99-18 a name the exclusive right to which is, at the time, reserved or
99-19 registered in the manner provided in this Act or any other statute
99-20 providing for the reservation or registration of names by a limited
99-21 partnership or limited liability company; provided that a name may
99-22 be similar if written consent is obtained from the existing
99-23 corporation, limited partnership, or limited liability company
99-24 having the name deemed to be similar or the person[, or
99-25 corporation,] for whom the name deemed to be similar is reserved or
99-26 registered in the office of the Secretary of State. A certificate
99-27 of authority shall be issued as provided in this Act to any foreign
100-1 corporation having a name the same as, deceptively similar to, or,
100-2 if no consent is given, similar to the name of any domestic
100-3 corporation, limited partnership, or limited liability company
100-4 existing under the laws of this state or of any foreign
100-5 corporation, limited partnership, or limited liability company
100-6 authorized to transact business in this state, or a name the
100-7 exclusive right to which is, at the time, reserved or registered in
100-8 accordance with this Act or any other applicable law, provided such
100-9 foreign corporation qualifies and does business under a name that
100-10 meets the requirements of this article. The foreign corporation
100-11 shall set forth in the application for a certificate of authority
100-12 the name under which it is qualifying and shall file an assumed
100-13 name certificate in accordance with Chapter 36, Business & Commerce
100-14 Code, as amended.
100-15 SECTION 38. Sections A and C, Article 8.14, Texas Business
100-16 Corporation Act, are amended to read as follows:
100-17 A. A foreign corporation authorized to transact business in
100-18 this state may withdraw from this state upon procuring from the
100-19 Secretary of State a certificate of withdrawal. In order to
100-20 procure such certificate of withdrawal, such foreign corporation
100-21 shall deliver to the Secretary of State an application for
100-22 withdrawal, which shall set forth:
100-23 (1) The name of the corporation and the state or
100-24 country under the laws of which it is incorporated;
100-25 (2) That the corporation is not transacting business
100-26 in this state;
100-27 (3) That the corporation surrenders its authority to
101-1 transact business in this state;
101-2 (4) That the corporation revokes the authority of its
101-3 registered agent in this state to accept service of process and
101-4 consents that service of process in any action, suit, or proceeding
101-5 based upon any cause of action arising in this state during the
101-6 time the corporation was authorized to transact business in this
101-7 state may thereafter be made on such corporation by service thereof
101-8 on the Secretary of State;
101-9 (5) A post office address to which the Secretary of
101-10 State may mail a copy of any process against the corporation that
101-11 may be served on him; and
101-12 (6) A statement that all sums due, or accrued, to this
101-13 state have been paid, or that adequate provision has been made for
101-14 the payment thereof[; and]
101-15 [(7) A statement that all known creditors or claimants
101-16 have been paid or provided for].
101-17 C. When the existence of a foreign corporation terminates
101-18 because of dissolution, merger, conversion, or otherwise, a
101-19 certificate from the proper officer in the jurisdiction of the
101-20 corporation's incorporation evidencing the termination shall be
101-21 filed with the Secretary of State.
101-22 SECTION 39. Section A, Article 8.15, Texas Business
101-23 Corporation Act, is amended to read as follows:
101-24 A. The original and a copy of such application for
101-25 withdrawal, along with a certificate from the Comptroller of Public
101-26 Accounts that all franchise taxes have been paid, shall be
101-27 delivered to the Secretary of State. If the Secretary of State
102-1 finds that such application conforms to the provisions of this Act,
102-2 the Secretary of State [he] shall, when the appropriate filing fee
102-3 is [all fees and franchise taxes have been] paid as required by
102-4 law:
102-5 (1) Endorse on the original and the copy the word
102-6 "Filed," and the month, day, and year of the filing thereof.
102-7 (2) File the original in the [his] office of the
102-8 Secretary of State.
102-9 (3) Issue a certificate of withdrawal to which [he]
102-10 shall be affixed [affix] the copy.
102-11 SECTION 40. Section E, Article 8.16, Texas Business
102-12 Corporation Act, is amended to read as follows:
102-13 E. Any corporation whose certificate of authority has been
102-14 revoked by the Secretary of State under the provisions of Section B
102-15 of this article may be reinstated by the Secretary of State at any
102-16 time within a period of 36 [12] months from the date of such
102-17 revocation [dissolution], upon approval of an application for
102-18 reinstatement signed by an officer or director of the corporation.
102-19 Such application shall be filed by the Secretary of State whenever
102-20 it is established to the Secretary's [his] satisfaction that in
102-21 fact there was no cause for the revocation, or whenever the
102-22 neglect, omission or delinquency resulting in revocation has been
102-23 corrected and payment made of all fees, taxes, penalties and
102-24 interest due thereon which accrued before the revocation plus an
102-25 amount equal to the total taxes from the date of revocation to the
102-26 date of reinstatement which would have been payable had the
102-27 corporation's certificate not been revoked. A reinstatement filing
103-1 fee of $50 shall accompany the application for reinstatement.
103-2 Reinstatement shall not be authorized if the corporate name
103-3 is the same as or deceptively similar to a corporate, limited
103-4 partnership, or limited liability company name already on file or
103-5 reserved or registered, unless the corporation being reinstated
103-6 contemporaneously amends its certificate of authority to change its
103-7 name.
103-8 When the application for reinstatement is approved and filed
103-9 by the Secretary of State, the corporate authority to do business
103-10 in Texas shall be deemed to have continued without interruption
103-11 from the date of revocation, except that reinstatement shall have
103-12 no effect upon any issue of personal liability of the directors,
103-13 officers, or agents of the corporation during the period between
103-14 revocation and reinstatement.
103-15 SECTION 41. Section A, Article 9.04, Texas Business
103-16 Corporation Act, is amended to read as follows:
103-17 A. If the Secretary of State shall fail to approve any
103-18 articles of incorporation, application for certificate of authority
103-19 to transact business in this State, amendment, merger, share
103-20 exchange, conversion [consolidation], or dissolution, or any other
103-21 document required by this Act to be approved by the Secretary of
103-22 State before the same shall be filed in his office, he shall,
103-23 within ten days after the delivery thereof to him, give written
103-24 notice of his disapproval to the person, [or] corporation, or other
103-25 entity, domestic or foreign, delivering the same, specifying in
103-26 such notice the reasons therefor. From such disapproval such
103-27 person, [or] corporation, or other entity may appeal to any
104-1 district court of Travis County by filing with the clerk of such
104-2 court a petition setting forth a copy of the articles or other
104-3 document sought to be filed and a copy of the written disapproval
104-4 thereof by the Secretary of State; whereupon the matter shall be
104-5 tried de novo by the court, and the court shall either sustain the
104-6 action of the Secretary of State or direct him to take such action
104-7 as the court may deem proper.
104-8 SECTION 42. Article 9.10, Texas Business Corporation Act, is
104-9 amended by adding Section D to read as follows:
104-10 D. If action is taken with respect to a particular matter by
104-11 the holders of shares of a class or series by means of a written
104-12 consent in compliance with Section A of this Article, any provision
104-13 of this Act that requires advance notice of a meeting or of the
104-14 proposed action will not apply as to that class or series for such
104-15 action.
104-16 SECTION 43. Section A, Article 10.01, Texas Business
104-17 Corporation Act, is amended to read as follows:
104-18 A. The Secretary of State is authorized and required to
104-19 collect for the use of the State the following fees:
104-20 (1) Filing articles of incorporation of a domestic
104-21 corporation and issuing a certificate of incorporation, Three
104-22 Hundred Dollars ($300.00).
104-23 (2) Filing articles of amendment of a domestic
104-24 corporation and issuing a certificate of amendment, One Hundred
104-25 Fifty Dollars ($150.00).
104-26 (3) Filing articles of merger [or consolidation],
104-27 whether the surviving or new corporation be a domestic or foreign
105-1 corporation, or articles of exchange, Three Hundred Dollars
105-2 ($300.00).
105-3 (4) Filing an application of a foreign corporation for
105-4 a certificate of authority to transact business in this State and
105-5 issuing such a certificate of authority, Seven Hundred Fifty
105-6 Dollars ($750.00).
105-7 (5) Filing an application of a foreign corporation for
105-8 an amended certificate of authority to transact business in this
105-9 State and issuing such an amended certificate of authority, One
105-10 Hundred Fifty Dollars ($150.00).
105-11 (6) Filing restated articles of incorporation of a
105-12 domestic corporation, Three Hundred Dollars ($300.00).
105-13 (7) Filing application for reservation of corporate
105-14 name and issuing a certificate therefor, Forty Dollars ($40.00).
105-15 (8) Filing notice of transfer of reserved corporate
105-16 name and issuing a certificate therefor, Fifteen Dollars ($15.00).
105-17 (9) Filing application for registration of corporate
105-18 name and issuing a certificate therefor, Seventy-Five Dollars
105-19 ($75.00).
105-20 (10) Filing application for renewal of registration of
105-21 corporate name and issuing a certificate therefor, Seventy-Five
105-22 Dollars ($75.00).
105-23 (11) Filing statement of change of registered office
105-24 or registered agent, or both, Fifteen Dollars ($15.00).
105-25 (12) Filing statement of change of address of
105-26 registered agent, Fifteen Dollars ($15.00); provided, however, that
105-27 the maximum fee for simultaneous filings by a registered agent for
106-1 more than one corporation shall not exceed Seven Hundred Fifty
106-2 Dollars ($750.00).
106-3 (13) Filing statement of resolution establishing
106-4 series of shares, Fifteen Dollars ($15.00).
106-5 (14) Filing statement of cancellation of redeemable
106-6 shares, Fifteen Dollars ($15.00).
106-7 (15) Filing statement of cancellation of re-acquired
106-8 shares, Fifteen Dollars ($15.00).
106-9 (16) Filing statement of reduction of stated capital,
106-10 Fifteen Dollars ($15.00).
106-11 (17) Filing articles of dissolution and issuing
106-12 certificate therefor, Forty Dollars ($40.00).
106-13 (18) Filing application for withdrawal and issuing
106-14 certificate therefor, Fifteen Dollars ($15.00).
106-15 (19) Filing certificate from home state that foreign
106-16 corporation is no longer in existence in said state, Fifteen
106-17 Dollars ($15.00).
106-18 (20) Maintaining a record of service of any process,
106-19 notice or demand upon the Secretary of State as agent for foreign
106-20 and domestic corporations and for any foreign association, joint
106-21 stock company, partnership, or nonresident natural person, Forty
106-22 Dollars ($40.00).
106-23 (21) Filing a bylaw or agreement restricting transfer
106-24 of shares or securities other than as an amendment to the articles
106-25 of incorporation, Fifteen Dollars ($15.00).
106-26 (22) Filing any instrument pursuant to this Act not
106-27 expressly provided for above, Fifteen Dollars ($15.00).
107-1 (23) Filing application for reinstatement of corporate
107-2 charter or certificate of authority following forfeiture under the
107-3 Tax Code, Seventy-Five Dollars ($75.00).
107-4 (24) Filing articles of conversion and issuing a
107-5 certificate of conversion, Three Hundred Dollars ($300.00).
107-6 SECTION 44. Section A, Article 10.03, Texas Business
107-7 Corporation Act, is amended to read as follows:
107-8 A. The effectiveness of (i) the incorporation of a
107-9 corporation under this Act, (ii) an amendment to a corporation's
107-10 articles of incorporation, including an amendment effected pursuant
107-11 to a statement of resolution establishing a series of shares, (iii)
107-12 the restatement of articles of incorporation of a corporation, (iv)
107-13 a merger or share exchange, (v) a cancellation of redeemable or
107-14 reacquired shares or a reduction in stated capital, (vi) a
107-15 voluntary dissolution, (vii) the authorization or withdrawal of a
107-16 foreign corporation to transact business in this State, (viii) an
107-17 amendment to the certificate of authority of a foreign corporation,
107-18 (ix) a bylaw or agreement restricting the transfer of shares or
107-19 securities of a corporation pursuant to this Act, (x) a change in
107-20 registered office or registered agent, [or] (xi) a change of
107-21 address of a registered agent (each such act or document being a
107-22 "Permitted Act"), or (xii) a conversion may be made effective as of
107-23 a time and date after the time and date otherwise provided in this
107-24 Act or may be made effective upon the occurrence of events or facts
107-25 that may occur in the future, which events or facts may include
107-26 future acts of any person or entity, if:
107-27 (1) the articles, statement, application, or other
108-1 filing that is required by this Act to be filed with the Secretary
108-2 of State to make effective such Permitted Act clearly and expressly
108-3 set forth, in addition to any other statement or information
108-4 required to be set forth therein, (i) the time and date on which
108-5 such Permitted Act is to become effective or (ii) if such Permitted
108-6 Act is to become effective upon the occurrence of events or facts
108-7 that may occur in the future, (a) the manner in which such events
108-8 or facts shall operate to cause such Permitted Act to become
108-9 effective and (b) the date of the 90th day after the date of the
108-10 filing of such articles, statement, application or other filing;
108-11 (2) in the case of a Permitted Act that is to become
108-12 effective as of a time or date after the time and date otherwise
108-13 provided in this Act, (i) such subsequent time and date is not more
108-14 than 90 days after the date of the filing of the articles,
108-15 statement, application, or other filing that is otherwise required
108-16 by this Act to be filed with the Secretary of State to make
108-17 effective such Permitted Act and (ii) the time on which the
108-18 Permitted Act is to become effective is not midnight or 12:00 p.m.;
108-19 and
108-20 (3) in the case of a Permitted Act that is to be made
108-21 effective upon the occurrence of events or facts that may occur in
108-22 the future, other than the mere passage of time, a statement that
108-23 all such events or facts upon which the effectiveness of such
108-24 Permitted Act is conditioned have been satisfied or waived, and of
108-25 the date on which such condition was satisfied or waived, is filed
108-26 with the Secretary of State within 90 days of the date of the
108-27 filing of the articles, statement, application or other filing that
109-1 is otherwise required by this Act for such Permitted Act to become
109-2 effective.
109-3 SECTION 45. Section B, Article 12.13, Texas Business
109-4 Corporation Act, is amended to read as follows:
109-5 B. Through Merger, Conversion, or Share Exchange. A
109-6 surviving or new corporation resulting from a merger, a corporation
109-7 incorporated as part of a conversion, or a corporation that
109-8 acquires a corporation pursuant to a share exchange in conformance
109-9 with Part Five of this Act may become a close corporation if as
109-10 part of the plan of merger, conversion, or exchange its articles of
109-11 incorporation conform with Article 12.11 of this Act. Any plan of
109-12 merger, conversion, or exchange adopting close corporation status
109-13 must be approved by the affirmative vote of the holders of all the
109-14 outstanding shares, and of each class or series of shares, of each
109-15 corporation that is party to the merger, conversion, or share
109-16 exchange, whether or not entitled to vote on the plan by the
109-17 articles of incorporation of the corporation.
109-18 SECTION 46. Article 12.21, Texas Business Corporation Act,
109-19 is amended to read as follows:
109-20 Art. 12.21. Termination of Close Corporation Status. A. In
109-21 General. A close corporation terminates its status as a close
109-22 corporation:
109-23 (1) on filing a statement of termination in
109-24 conformance with Article 12.22 of this Act;
109-25 (2) by amending its articles of incorporation in
109-26 conformance with Part Four of this Act to delete from its articles
109-27 the statement that it is a close corporation;
110-1 (3) through a merger, conversion, or share exchange in
110-2 conformance with Part Five of this Act unless the plan of merger,
110-3 conversion, or exchange provides that the surviving or new
110-4 corporation will continue as or become a close corporation and the
110-5 plan has been approved by the affirmative vote or consent of the
110-6 holders of all the outstanding shares, and of each class and series
110-7 of shares, of the close corporation, whether or not entitled to
110-8 vote on the plan by the articles of incorporation; or
110-9 (4) when termination is decreed in a judicial
110-10 proceeding to enforce a close corporation provision providing for
110-11 the termination.
110-12 SECTION 47. The Texas Business Corporation Act is amended by
110-13 adding Part Thirteen to read as follows:
110-14 PART THIRTEEN
110-15 Art. 13.01. SHORT TITLE. A. This part may be cited as the
110-16 Business Combination Law.
110-17 Art. 13.02. DEFINITIONS. A. In this part:
110-18 (1) "Affiliate" means a person who directly or
110-19 indirectly through one or more intermediaries controls, is
110-20 controlled by, or is under common control with a specified person.
110-21 (2) "Affiliated shareholder" means a person, other
110-22 than the issuing public corporation or a wholly owned subsidiary of
110-23 the issuing public corporation, that is the beneficial owner of 20
110-24 percent or more of the outstanding voting shares of the issuing
110-25 public corporation or that, within the preceding three-year period,
110-26 was the beneficial owner of 20 percent or more of the then
110-27 outstanding voting shares of the issuing public corporation. For
111-1 the purpose of determining whether a person is an affiliated
111-2 shareholder, the number of voting shares of the issuing public
111-3 corporation considered outstanding includes shares considered
111-4 beneficially owned by that person under Subdivision (4) of this
111-5 article, but does not include other unissued voting shares of the
111-6 issuing public corporation that may be issuable pursuant to an
111-7 agreement, arrangement, or understanding, or upon exercise of
111-8 conversion rights, warrants, or options, or otherwise.
111-9 (3) "Beneficial owner" means a person who:
111-10 (a) individually, or with or through an
111-11 affiliate or associate, beneficially owns shares or similar
111-12 securities, directly or indirectly;
111-13 (b) individually, or with or through an
111-14 affiliate or associate, has the right to:
111-15 (i) acquire shares or similar securities,
111-16 whether the right may be exercised immediately or only after the
111-17 passage of time, pursuant to an agreement, arrangement, or
111-18 understanding, whether or not in writing, or upon the exercise of
111-19 conversion rights, exchange rights, warrants, or options, or
111-20 otherwise, except that a person is not considered the beneficial
111-21 owner of shares or similar securities (A) tendered pursuant to a
111-22 tender or exchange offer made by the person or an affiliate or
111-23 associate until the tendered shares or similar securities are
111-24 accepted for purchase or exchange, or (B) that may be subject to an
111-25 agreement, arrangement, or understanding that expressly conditions
111-26 the acquisition or purchase on the approval of the acquisition or
111-27 purchase pursuant to Article 13.03 of this Act as long as such
112-1 person has no direct or indirect rights of ownership or voting with
112-2 respect to such shares until such time that such approval is
112-3 obtained, at which time such person shall be considered the
112-4 beneficial owner of such shares; or
112-5 (ii) vote the shares or similar securities
112-6 pursuant to an agreement, arrangement, or understanding, whether or
112-7 not in writing, except that a person is not considered the
112-8 beneficial owner of shares or similar securities for purposes of
112-9 this subparagraph if the agreement, arrangement, or understanding
112-10 to vote the shares: (A) arises solely from an immediately
112-11 revocable proxy that authorizes the person named in the proxy to
112-12 vote at a meeting of shareholders that has been called when the
112-13 proxy is delivered or at any adjournment of the meeting, and (B) is
112-14 not then reportable on a Schedule 13D under the Securities Exchange
112-15 Act of 1934 or a comparable or successor report; or
112-16 (c) has an agreement, arrangement, or
112-17 understanding, whether or not in writing, to acquire, hold, or
112-18 dispose (except pursuant to an agreement, arrangement, or
112-19 understanding permitted by Subdivision (3)(b)(i) of this Article)
112-20 or to vote (except under an immediately revocable proxy under
112-21 Subdivision (3)(b)(ii) of this Article) shares or similar
112-22 securities with another person who beneficially owns, or whose
112-23 affiliate or associate beneficially owns, directly or indirectly,
112-24 the shares or similar securities.
112-25 (4) "Business combination" means:
112-26 (a) any merger, share exchange, or conversion of
112-27 an issuing public corporation or a subsidiary with:
113-1 (i) an affiliated shareholder;
113-2 (ii) a foreign or domestic corporation or
113-3 other entity that is, or after the merger, share exchange, or
113-4 conversion would be, an affiliate or associate of the affiliated
113-5 shareholder; or
113-6 (iii) another domestic or foreign
113-7 corporation or other entity, if the merger, share exchange, or
113-8 conversion is caused by an affiliated shareholder, or an affiliate
113-9 or associate of an affiliated shareholder, and as a result of the
113-10 merger, share exchange, or conversion this part does not apply to
113-11 the surviving corporation or other entity;
113-12 (b) a sale, lease, exchange, mortgage, pledge,
113-13 transfer, or other disposition, in one transaction or a series of
113-14 transactions, including an allocation of assets pursuant to a
113-15 merger, to or with the affiliated shareholder, or an affiliate or
113-16 associate of the affiliated shareholder, of assets of the issuing
113-17 public corporation or any subsidiary that:
113-18 (i) have an aggregate market value equal
113-19 to 10 percent or more of the aggregate market value of all the
113-20 assets, determined on a consolidated basis, of the issuing public
113-21 corporation;
113-22 (ii) have an aggregate market value equal
113-23 to 10 percent or more of the aggregate market value of all the
113-24 outstanding common stock of the issuing public corporation; or
113-25 (iii) represent 10 percent or more of the
113-26 earning power or net income, determined on a consolidated basis, of
113-27 the issuing public corporation;
114-1 (c) the issuance or transfer by an issuing
114-2 public corporation or a subsidiary to an affiliated shareholder or
114-3 an affiliate or associate of the affiliated shareholder, in one
114-4 transaction or a series of transactions, of shares of the issuing
114-5 public corporation or a subsidiary, except by the exercise of
114-6 warrants or rights to purchase shares of the issuing public
114-7 corporation offered, or a share dividend paid, pro rata to all
114-8 shareholders of the issuing public corporation after the affiliated
114-9 shareholder's share acquisition date;
114-10 (d) the adoption of a plan or proposal for the
114-11 liquidation or dissolution of an issuing public corporation
114-12 proposed by, or pursuant to any agreement, arrangement, or
114-13 understanding, whether or not in writing, with an affiliated
114-14 shareholder or an affiliate or associate of the affiliated
114-15 shareholder;
114-16 (e) a reclassification of securities, including
114-17 a reverse share split or a share split-up, share dividend, or other
114-18 distribution of shares, a recapitalization of the issuing public
114-19 corporation, a merger of the issuing public corporation with a
114-20 subsidiary or pursuant to which the assets and liabilities of the
114-21 issuing public corporation are allocated among two or more
114-22 surviving or new domestic or foreign corporations or other
114-23 entities, or any other transaction, whether or not with, into, or
114-24 otherwise involving the affiliated shareholder, proposed by, or
114-25 pursuant to an agreement, arrangement, or understanding, whether or
114-26 not in writing, with an affiliated shareholder or an affiliate or
114-27 associate of the affiliated shareholder that has the effect,
115-1 directly or indirectly, of increasing the proportionate ownership
115-2 percentage of the outstanding shares of a class or series of voting
115-3 shares or securities convertible into voting shares of the issuing
115-4 public corporation that is beneficially owned by the affiliated
115-5 shareholder or an affiliate or associate of the affiliated
115-6 shareholder, except as a result of immaterial changes due to
115-7 fractional share adjustments; or
115-8 (f) the direct or indirect receipt by an
115-9 affiliated shareholder or an affiliate or associate of the
115-10 affiliated shareholder of the benefit of a loan, advance,
115-11 guarantee, pledge, or other financial assistance or a tax credit or
115-12 other tax advantage provided by or through the issuing public
115-13 corporation, except proportionately as a shareholder of the issuing
115-14 public corporation.
115-15 (5) "Control" means the possession, directly or
115-16 indirectly, of the power to direct or cause the direction of the
115-17 management and policies of a person, whether through the ownership
115-18 of equity securities, by contract, or otherwise. A person's
115-19 beneficial ownership of 10 percent or more of a person's
115-20 outstanding voting shares or similar interests creates a
115-21 presumption that the person has control of such other person, but a
115-22 person is not considered to have control of another person if the
115-23 person holds such voting shares or similar interests in good faith
115-24 and not for the purpose of circumventing this part, as an agent,
115-25 bank, broker, nominee, custodian, or trustee for one or more
115-26 beneficial owners who do not individually or as a group have
115-27 control of the person.
116-1 (6) "Issuing public corporation" means a domestic
116-2 corporation that has: (a) 100 or more shareholders, (b) any class
116-3 or series of its voting shares registered under the Securities
116-4 Exchange Act of 1934, as amended, or similar or successor statute,
116-5 or (c) any class or series of its voting shares qualified for
116-6 trading in a national market system. For the purposes of this
116-7 definition of issuing public corporation, a shareholder is a
116-8 shareholder of record as shown by the share transfer records of the
116-9 corporation.
116-10 (7) "Person" means an individual, trust, domestic or
116-11 foreign corporation or other entity, or a government, or a
116-12 political subdivision, agency, or instrumentality of a government.
116-13 If two or more persons act as a partnership, limited partnership,
116-14 syndicate, or other group under an agreement, arrangement, or other
116-15 understanding, whether or not in writing, to acquire, hold, vote,
116-16 or dispose of shares of a corporation, all members of the
116-17 partnership, limited partnership, syndicate, or other group are
116-18 considered to be a person.
116-19 (8) "Share acquisition date" means the date that a
116-20 person first becomes an affiliated shareholder of an issuing public
116-21 corporation.
116-22 (9) "Subsidiary" means a domestic or foreign
116-23 corporation or other entity of which a majority of the outstanding
116-24 voting shares are owned, directly or indirectly, by an issuing
116-25 public corporation.
116-26 (10) "Voting share" means a share of capital stock of
116-27 a corporation entitled to vote generally in the election of
117-1 directors.
117-2 Art. 13.03. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
117-3 COMBINATIONS. A. An issuing public corporation shall not,
117-4 directly or indirectly, enter into or engage in a business
117-5 combination with an affiliated shareholder, or any affiliate or
117-6 associate of the affiliated shareholder, during the three-year
117-7 period immediately following the affiliated shareholder's share
117-8 acquisition date unless:
117-9 (1) the business combination or the purchase or
117-10 acquisition of shares made by the affiliated shareholder on the
117-11 affiliated shareholder's share acquisition date is approved by the
117-12 board of directors of the issuing public corporation before the
117-13 affiliated shareholder's share acquisition date; or
117-14 (2) the business combination is approved, by the
117-15 affirmative vote of the holders of at least two-thirds of the
117-16 outstanding voting shares of the issuing public corporation not
117-17 beneficially owned by the affiliated shareholder or an affiliate or
117-18 associate of the affiliated shareholder, at a meeting of
117-19 shareholders and not by written consent, duly called for that
117-20 purpose not less than six months after the affiliated shareholder's
117-21 share acquisition date.
117-22 Art. 13.04. APPLICATION. A. Article 13.03 of this Act does
117-23 not apply to:
117-24 (1) a business combination of an issuing public
117-25 corporation:
117-26 (a) the original articles of incorporation or
117-27 original bylaws of which contain a provision expressly electing not
118-1 to be governed by this part;
118-2 (b) that adopts an amendment to its articles of
118-3 incorporation or bylaws before December 31, 1997, expressly
118-4 electing not to be governed by this part; or
118-5 (c) that after December 31, 1997, adopts an
118-6 amendment to its articles of incorporation or bylaws, approved by
118-7 the affirmative vote of the shareholders, other than affiliated
118-8 shareholders and their affiliates and associates, of at least
118-9 two-thirds of the outstanding voting shares of the issuing public
118-10 corporation, expressly electing not to be governed by this part,
118-11 except that the amendment to the articles of incorporation or
118-12 bylaws takes effect 18 months after the date of the vote and does
118-13 not apply to a business combination of the issuing public
118-14 corporation with an affiliated shareholder whose share acquisition
118-15 date is on or before the effective date of the amendment;
118-16 (2) a business combination of an issuing public
118-17 corporation with an affiliated shareholder that became an
118-18 affiliated shareholder inadvertently, if the affiliated
118-19 shareholder:
118-20 (a) as soon as practicable divests itself of a
118-21 sufficient number of the voting shares of the issuing public
118-22 corporation so that it no longer is the beneficial owner, directly
118-23 or indirectly, of 20 percent or more of the outstanding voting
118-24 shares of the issuing public corporation; and
118-25 (b) would not at any time within the three-year
118-26 period preceding the announcement date of the business combination
118-27 have been an affiliated shareholder but for the inadvertent
119-1 acquisition;
119-2 (3) a business combination with an affiliated
119-3 shareholder that was the beneficial owner of 20 percent or more of
119-4 the outstanding voting shares of the issuing public corporation on
119-5 December 31, 1996, and continuously until the announcement date of
119-6 the business combination;
119-7 (4) a business combination with an affiliated
119-8 shareholder who became an affiliated shareholder through a transfer
119-9 of shares of the issuing public corporation by will or intestate
119-10 succession and continuously was such an affiliated shareholder
119-11 until the announcement date of the business combination; or
119-12 (5) a business combination of an issuing public
119-13 corporation with a domestic wholly owned subsidiary if the domestic
119-14 subsidiary is not an affiliate or associate of the affiliated
119-15 shareholder other than by reason of the affiliated shareholder's
119-16 beneficial ownership of voting shares in the issuing public
119-17 corporation.
119-18 Art. 13.05. NO EFFECT ON OTHER ACTIONS. A. This part does
119-19 not affect, directly or indirectly, the validity of another action
119-20 by the board of directors of an issuing public corporation, nor
119-21 does it preclude the board of directors from taking other action in
119-22 accordance with law, nor does the board of directors incur
119-23 liability for elections made or not made under this part.
119-24 Art. 13.06. DUTIES OF DIRECTOR. A. In discharging the
119-25 duties of director under this Act or otherwise, a director, in
119-26 considering the best interests of the corporation, may consider the
119-27 long-term as well as the short-term interests of the corporation
120-1 and its shareholders, including the possibility that those
120-2 interests may be best served by the continued independence of the
120-3 corporation.
120-4 Art. 13.07. RELATIONSHIP WITH OTHER PARTS OF ACT. A. If a
120-5 provision of this part conflicts with another provision of this
120-6 Act, the provision of this part controls.
120-7 B. The affirmative vote or concurrence of shareholders
120-8 required for approval of an action required or permitted to be
120-9 submitted for shareholder vote may be increased, but not decreased,
120-10 under Article 2.28 of this Act.
120-11 Art. 13.08. SEVERABILITY. A. If any provision or clause of
120-12 this part or application thereof to any person or circumstance is
120-13 held invalid, such invalidity shall not affect other provisions or
120-14 applications of this part that can be given effect without the
120-15 invalid provision or application and without being inconsistent
120-16 with the intent of this part, and to this end the provisions of
120-17 this part are declared to be severable.
120-18 SECTION 48. Article 2.06, Texas Miscellaneous Corporation
120-19 Laws Act (Article 1302-2.06, Vernon's Texas Civil Statutes), is
120-20 amended to read as follows:
120-21 Art. 2.06. Consideration for Indebtedness; Guaranties.
120-22 A. A corporation may incur indebtedness for such consideration as
120-23 it may deem appropriate, including, without limitation, cash, real
120-24 property, personal property, intangible property, contracts to
120-25 receive real, personal, or intangible property, debt and other
120-26 obligations of [No corporation shall create any indebtedness
120-27 whatever except for money paid, labor done, which is reasonably
121-1 worth at least the sum at which it was taken by] the corporation or
121-2 any other domestic or foreign corporation, person, or other entity,
121-3 services performed, contracts for services to be performed, debt or
121-4 equity securities of [by a corporation of which all of the
121-5 outstanding shares of each class are owned by the corporation, or
121-6 property actually received, reasonably worth at least the sum at
121-7 which it was taken by] the corporation or of any other domestic or
121-8 foreign corporation, person, or other entity, and any direct or
121-9 indirect benefit realized by the corporation. Such consideration
121-10 may be received either directly or indirectly, including by direct
121-11 or indirect wholly owned or partially owned domestic or foreign
121-12 corporations or other entities. In addition, a corporation may
121-13 issue and incur indebtedness without the receipt of any
121-14 consideration by reason of the authorization or payment of a
121-15 distribution [by a corporation of which all of the outstanding
121-16 shares of each class are owned by the corporation, subject to the
121-17 provisions of Sections B, C, and D of this Article]. In the
121-18 absence of fraud in the transaction, the judgment of the Board of
121-19 Directors or the shareholders, as the case may be, as to the value,
121-20 type, and sufficiency of the consideration received for any such
121-21 indebtedness shall be conclusive.
121-22 B. Any [Notwithstanding Section A of this Article, any]
121-23 corporation shall have the power and authority to make a guaranty
121-24 if the guaranty reasonably may be expected to benefit, directly or
121-25 indirectly, the guarantor corporation. For purposes of this
121-26 section [and Section C of this Article], "guaranty" means a
121-27 guaranty, mortgage, pledge, security agreement, or other agreement
122-1 making the guarantor corporation or its assets responsible
122-2 respecting the contracts, securities, or other obligations of any
122-3 person (including, but not limited to, any domestic or foreign
122-4 corporation, person, or other entity [partnership, association,
122-5 joint venture, trust], or any officer, director, or employee of
122-6 such guarantor corporation). The decision of, or a decision made
122-7 pursuant to authority granted by, the Board of Directors that the
122-8 guaranty may reasonably be expected to benefit, directly or
122-9 indirectly, the guarantor corporation shall be binding upon the
122-10 guarantor corporation, and no guaranty made by a corporation in
122-11 accordance with the provisions of this Section B shall be invalid
122-12 or unenforceable as against such corporation, unless such guaranty
122-13 is sought to be enforced by a person who participated in a fraud on
122-14 the guarantor corporation resulting in the making of the guaranty
122-15 or by a person who had notice of such fraud before he acquired his
122-16 rights under the guaranty. Nothing herein contained shall prevent
122-17 a suit (1) prior to the making of a guaranty by a corporation, by a
122-18 shareholder in a representative suit against the guarantor
122-19 corporation, to enjoin the making of such guaranty on the ground
122-20 that such guaranty could not reasonably be expected to benefit,
122-21 directly or indirectly, the guarantor corporation, or (2) after the
122-22 making of a guaranty by a corporation, by the guarantor
122-23 corporation, whether acting directly or through a receiver,
122-24 trustee, or other legal representative or through a shareholder in
122-25 a representative suit, against the directors who voted for or
122-26 assented to the making of such guaranty for damages or other
122-27 appropriate relief on the ground that such guaranty could not
123-1 reasonably have been expected to benefit, directly or indirectly,
123-2 the guarantor corporation, but such directors shall be entitled to
123-3 assert any defenses which they may have under law.
123-4 C. A guaranty will be considered to benefit a guarantor
123-5 corporation for purposes of Section B of this Article if the
123-6 guaranty is of a contract, security, or other obligation of a
123-7 subsidiary or an affiliated corporation or other entity [In
123-8 addition to the power and authority granted in Section B of this
123-9 Article, any corporation has the power and authority to make a
123-10 guaranty respecting any subsidiary, parent, or affiliated
123-11 corporation if the action is approved by, or pursuant to authority
123-12 granted by, the Board of Directors of the guarantor corporation].
123-13 For the purposes of this section only:
123-14 (1) "subsidiary [corporation]" means a domestic or
123-15 foreign corporation or other entity, more than 50 [100] percent of
123-16 the [whose] outstanding voting interests or other ownership
123-17 interest of which is [shares are] owned at the time of the action:
123-18 (a) by the guarantor corporation itself;
123-19 (b) by one or more of the guarantor
123-20 corporation's subsidiaries [subsidiary corporations]; or
123-21 (c) by the guarantor corporation and one or more
123-22 of its subsidiaries [subsidiary corporations];
123-23 (2) "parent [corporation]" means a domestic or foreign
123-24 corporation or other entity that at the time of the action owns
123-25 more than 50 [100] percent of the outstanding voting interests or
123-26 other ownership interest [shares] of the guarantor corporation:
123-27 (a) by itself;
124-1 (b) through one or more of its subsidiaries
124-2 [subsidiary corporations]; or
124-3 (c) with one or more of its subsidiaries
124-4 [subsidiary corporations]; and
124-5 (3) "affiliated corporation or other entity" means a
124-6 domestic or foreign corporation or other entity, more than 50 [100]
124-7 percent of the [whose] outstanding shares or other ownership
124-8 interest of which is [are] owned at the time of the action:
124-9 (a) by the parent [corporation] of the guarantor
124-10 corporation;
124-11 (b) by one or more of the parent's subsidiaries
124-12 [parent corporation's subsidiary corporations]; or
124-13 (c) by the parent [corporation] and one or more
124-14 of its subsidiaries [subsidiary corporations].
124-15 D. [The limitations set forth in Section A of this Article
124-16 shall not apply to indebtedness of a corporation that is incurred
124-17 by reason of the authorization or payment of a dividend or other
124-18 distribution.]
124-19 [E.] Nothing contained in [Section B, C, or D of] this
124-20 Article is intended or shall be construed to limit or deny to any
124-21 corporation the right or power to do or perform any act which it is
124-22 or may be empowered or authorized to do or perform under any other
124-23 laws of the State of Texas now in force or hereafter enacted.
124-24 Provided, however, Sections B and[,] C[, and D] of this Article
124-25 shall not apply to nor enlarge the powers of any corporation that
124-26 does business pursuant to any provision of the Insurance Code of
124-27 Texas, whether licensed in Texas or not, nor shall those sections
125-1 allow or permit any corporation, not licensed under the Insurance
125-2 Code of Texas, to engage in any character, type, class, or kind of
125-3 fidelity, surety, or guaranty business or transaction subject to
125-4 regulation under the Insurance Code.
125-5 SECTION 49. Article 7.07, Texas Miscellaneous Corporation
125-6 Laws Act (Article 1302-7.07, Vernon's Texas Civil Statutes), is
125-7 amended to read as follows:
125-8 Art. 7.07. ELECTRONIC FILINGS AND [OF] REPRODUCTIONS.
125-9 A. If permitted by the rules of the Secretary of State, any
125-10 instrument required or authorized to be filed with the Secretary of
125-11 State under this Act or under any provision of the Texas Business
125-12 Corporation Act, the Texas Non-Profit Corporation Act, the Texas
125-13 Limited Liability Company Act or any special statute of this State
125-14 pertaining to a particular type of corporation or entity to which
125-15 the general corporate laws are applicable, may be transmitted for
125-16 filing electronically. If the instrument conforms to law and the
125-17 rules promulgated by the Secretary of State, the Secretary shall
125-18 file the instrument by acceptance into the filing system adopted by
125-19 the Secretary and assigning to the instrument a date of filing. An
125-20 electronic acknowledgment or certification of the filing, as
125-21 applicable, shall be provided by the Secretary of State to the
125-22 corporation or entity or its representative. The Secretary of
125-23 State may promulgate rules and adopt practices and procedures for
125-24 the transmission, filing, and retention of instruments filed
125-25 electronically or by use of other technological means.
125-26 B. Any original instrument required or authorized to be
125-27 filed with the Secretary of State under any provision of the Texas
126-1 Business Corporation Act, the Texas Non-Profit Corporation Act, the
126-2 Texas Limited Liability Company Act or any special Statute of this
126-3 State pertaining to a particular type of corporation or entity to
126-4 which the general corporate laws are applicable, may be a
126-5 photographic, photostatic, facsimile, or similar reproduction of a
126-6 signed instrument. [Any signature on any instrument required or
126-7 authorized to be filed with the Secretary of State may be a
126-8 facsimile.]
126-9 C. For purposes of this article, any signature on any
126-10 instrument required or authorized to be filed with the Secretary of
126-11 State may be a facsimile, the mark made by a person unable to
126-12 write, in an electronic format permitted by the rules of the
126-13 Secretary of State, or any symbol executed or adopted by a person
126-14 with the intent to authenticate a writing.
126-15 D. This article does not require any instrument authorized
126-16 or required to be filed with the Secretary of State under any
126-17 provision of the Texas Business Corporation Act, the Texas
126-18 Non-Profit Corporation Act, the Texas Limited Liability Company Act
126-19 or any special Statute of this State pertaining to a particular
126-20 type of corporation or entity to which the general corporate laws
126-21 are applicable or any certificate issued by the Secretary of State
126-22 concerning any such instrument to be on paper or reduced to printed
126-23 form.
126-24 E. All electronic acknowledgments and certificates required
126-25 to be issued by the Secretary of State under this Act, or under any
126-26 provision of the Texas Business Corporation Act, the Texas
126-27 Non-Profit Corporation Act, the Texas Limited Liability Act or any
127-1 special statute of this State pertaining to a particular type of
127-2 corporation or entity to which the general corporate laws are
127-3 applicable, shall be considered issued or provided by the Secretary
127-4 of State upon the initial transmission by the Secretary of State of
127-5 the acknowledgment or certificate required to be issued.
127-6 SECTION 50. Part Seven, Texas Miscellaneous Corporation Laws
127-7 Act (Article 1302-7.01 et seq., Vernon's Texas Civil Statutes), is
127-8 amended by adding Article 7.08 to read as follows:
127-9 Art. 7.08. DUTIES OF THE SECRETARY OF STATE; FAILURE TO
127-10 PROVIDE ACKNOWLEDGMENT COPY. The Secretary of State shall not fail
127-11 to approve the filing of any instrument required or authorized to
127-12 be filed in duplicate with the Secretary of State under this Act or
127-13 under any provision of the Texas Business Corporation Act, the
127-14 Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
127-15 Vernon's Texas Civil Statutes), the Texas Limited Liability Company
127-16 Act (Article 1528n, Vernon's Texas Civil Statutes), or any special
127-17 statute of this state pertaining to a particular type of
127-18 corporation or entity to which the general corporate laws are
127-19 applicable, solely for the failure to provide a duplicate copy of
127-20 the instrument to be filed. If the Secretary of State finds that
127-21 such instrument otherwise conforms to law, the Secretary of State
127-22 shall return to the person submitting the instrument or to the
127-23 person's designated representative any certificate required to be
127-24 issued by the Secretary of State without affixing a file-stamped
127-25 copy of the instrument to which the certificate relates.
127-26 SECTION 51. Section 9(A), Texas Professional Association Act
127-27 (Article 1528f, Vernon's Texas Civil Statutes), is amended to read
128-1 as follows:
128-2 (A) Board or committee. A professional association
128-3 organized pursuant to the provisions of this Act shall be governed
128-4 by, and the business and affairs of a professional association
128-5 shall be managed under the direction of, a Board of Directors or an
128-6 Executive Committee elected by the members, and represented by
128-7 officers elected by the Board of Directors or Executive Committee,
128-8 so that centralization of management will be assured.
128-9 SECTION 52. Section A, Article 1.02, Texas Limited Liability
128-10 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
128-11 amended by amending Subsection (4) and adding Subsections (11)-(14)
128-12 to read as follows:
128-13 (4) "Person" includes an individual, corporation,
128-14 business trust, estate, trust, custodian, trustee, executor,
128-15 administrator, nominee, partnership, registered limited liability
128-16 partnership, limited partnership, association, limited liability
128-17 company, government, governmental subdivision, governmental agency,
128-18 governmental instrumentality, and any other legal or commercial
128-19 entity, in its own or representative capacity. Any of the
128-20 foregoing entities may be formed under the laws of this State or
128-21 any other jurisdiction [partnership, limited partnership, limited
128-22 liability company, foreign limited liability company, trust,
128-23 estate, corporation, custodian, trustee, executor, administrator,
128-24 nominee or entity in a representative capacity].
128-25 (11) "Conversion" means:
128-26 (a) the continuance of a domestic limited
128-27 liability company as, and in the organizational form of, a foreign
129-1 limited liability company or other entity; or
129-2 (b) the continuance of a foreign limited
129-3 liability company or other entity as, and in the organizational
129-4 form of, a domestic limited liability company.
129-5 (12) "Converted entity" means any domestic or foreign
129-6 limited liability company or other entity to which a converting
129-7 entity has converted or intends to convert as permitted by Article
129-8 10.08 of this Act.
129-9 (13) "Converting entity" means any domestic or foreign
129-10 limited liability company or other entity that has converted or
129-11 intends to convert as permitted by Article 10.08 of this Act.
129-12 (14) "Other entity" means any entity, whether
129-13 organized for profit or not, that is a corporation, limited or
129-14 general partnership, limited liability company (other than a
129-15 domestic or foreign limited liability company), real estate
129-16 investment trust, joint venture, joint stock company, cooperative,
129-17 association, bank, trust, insurance company, or other legal entity
129-18 organized pursuant to the laws of this state or any other state or
129-19 country.
129-20 SECTION 53. Article 2.09, Texas Limited Liability Company
129-21 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
129-22 read as follows:
129-23 Art. 2.09. REGULATIONS OF LIMITED LIABILITY COMPANY.
129-24 A. The members of a limited liability company have the power to
129-25 adopt, alter, amend, or repeal the regulations of a limited
129-26 liability company [shall be vested in the members of the company
129-27 unless vested in whole or part in the manager or managers of the
130-1 company by the articles of organization or regulations]. The
130-2 articles of organization or regulations may provide that the
130-3 manager or managers also have the power to adopt, alter, amend, or
130-4 repeal the regulations, in whole or in part. Regulations [adopted
130-5 by the members or by the managers may be repealed or altered; new
130-6 regulations may be adopted by the members; and regulations] may
130-7 provide that they may not, in whole or specified part, be altered,
130-8 amended, or repealed by the managers. The regulations may contain
130-9 any provisions for the regulation and management of the affairs of
130-10 the limited liability company not inconsistent with law or the
130-11 articles of organization. [Unless otherwise provided in the
130-12 articles of organization, the initial regulations of the limited
130-13 liability company shall be adopted by the manager or managers named
130-14 in the articles of organization, if any, or by the member or
130-15 members named in the articles of organization, if any.] Any
130-16 provision of this Act subject to variation or modification by the
130-17 regulations of a limited liability company is also subject to
130-18 variation or modification by the articles of organization of the
130-19 limited liability company.
130-20 B. Unless otherwise provided in the articles of organization
130-21 or regulations, adoption, alteration, amendment, or repeal of the
130-22 regulations of a limited liability company requires the affirmative
130-23 vote, approval, or consent of all the members or, if the manager or
130-24 managers have the power to adopt, alter, amend, or repeal the
130-25 regulations of a limited liability company, the affirmative vote,
130-26 approval, or consent of all the managers.
130-27 C. Unless otherwise provided in the articles of organization
131-1 or regulations adopted with the affirmative vote, approval, or
131-2 consent needed to approve an action listed in Section D, G, or H,
131-3 Article 2.23, of this Act, no regulation that effects an action
131-4 listed in Section D, G, or H, Article 2.23, of this Act may be
131-5 indirectly effected through the adoption, alteration, amendment, or
131-6 repeal of regulations of a limited liability company without the
131-7 affirmative vote, approval, or consent required by Section D, G, or
131-8 H, Article 2.23, of this Act.
131-9 SECTION 54. Article 2.13, Texas Limited Liability Company
131-10 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
131-11 read as follows:
131-12 Art. 2.13. Number and election of managers. A. The
131-13 managers of a limited liability company, if any, shall consist of
131-14 one or more persons. The number of managers shall be fixed by, or
131-15 in the manner provided in, the regulations, except as to the number
131-16 constituting the initial managers, which number shall be fixed by
131-17 the articles of organization. The number of managers may be
131-18 increased or decreased from time to time by amendment to, or in the
131-19 manner provided in, the regulations, but, unless provided otherwise
131-20 in the articles of organization or the regulations, no decrease
131-21 shall have the effect of shortening the term of any incumbent
131-22 manager. In the absence of a regulation fixing the number of
131-23 managers or providing for the manner in which the number of
131-24 managers shall be fixed, the number of managers shall be the same
131-25 as the number constituting the initial managers. The names and
131-26 addresses of the initial managers, if any, shall be stated in the
131-27 articles of organization. Unless otherwise provided in the
132-1 regulations or in any resolution of the managers or members
132-2 appointing that manager in accordance with the regulations or
132-3 articles of organization, each manager shall hold office for the
132-4 term for which elected, if any term is specified, and until that
132-5 manager's successor has been elected, or until that manager's
132-6 earlier death, resignation, or removal. The regulations may
132-7 provide for the time or times at which the members entitled to vote
132-8 in the election of managers shall elect managers and the term for
132-9 which the managers shall hold office. The regulations may provide
132-10 that any class or group of members shall be entitled to elect one
132-11 or more managers, who shall hold office for such terms as shall be
132-12 stated in the regulations. The regulations may provide that at any
132-13 meeting of members called expressly for that purpose any managers
132-14 may be removed, with or without cause, as provided therein;
132-15 however, if any class or group of members is entitled to elect one
132-16 or more managers by the provisions of the regulations, only the
132-17 members of that class or group shall be entitled to vote for or
132-18 against the removal of any managers elected by the members of that
132-19 class or group.
132-20 SECTION 55. Sections A and B, Article 2.15, Texas Limited
132-21 Liability Company Act (Article 1528n, Vernon's Texas Civil
132-22 Statutes), are amended to read as follows:
132-23 A. Unless otherwise provided in the articles of organization
132-24 or the regulations, any [Any] vacancy occurring in the managers may
132-25 be filled in accordance with Section B of this Article or may be
132-26 filled by the affirmative vote of a majority of the remaining
132-27 managers though less than a quorum of the managers. Unless
133-1 otherwise provided in the articles of organization or the
133-2 regulations, a [A] manager elected to fill a vacancy shall be
133-3 elected for the unexpired term of the predecessor in office.
133-4 B. Unless otherwise provided in the articles of organization
133-5 or the regulations, any [Any] vacancy occurring in the managers to
133-6 be filled by reason of an increase in the number of managers may be
133-7 filled by election at an annual or special meeting of members
133-8 called for that purpose.
133-9 SECTION 56. Article 2.17, Texas Limited Liability Company
133-10 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
133-11 read as follows:
133-12 Art. 2.17. Interested managers. A. Unless otherwise
133-13 provided in the articles of organization or the regulations, an
133-14 otherwise valid [No] contract or transaction between a limited
133-15 liability company and one or more of its managers or officers, or
133-16 between a limited liability company and any other domestic or
133-17 foreign limited liability company[, corporation, partnership,
133-18 association,] or other entity [organization] in which one or more
133-19 of its managers or officers are managers, directors or officers or
133-20 have a financial interest, shall be valid notwithstanding [void or
133-21 voidable solely for this reason, solely because] the manager or
133-22 officer is present at or participates in the meeting of managers or
133-23 of a committee of managers which authorizes the contract or
133-24 transaction, or solely because such manager's or managers' votes
133-25 are counted for such purpose, if any of the following is satisfied:
133-26 (1) The material facts as to the relationship or
133-27 interest and as to the contract or transaction are disclosed or are
134-1 known to the managers or the committee, and the managers or
134-2 committee in good faith authorizes the contract or transaction by
134-3 the affirmative vote of a majority of the disinterested managers,
134-4 even though the disinterested managers be less than a quorum; or
134-5 (2) The material facts as to the relationship or
134-6 interest and as to the contract or transaction are disclosed or are
134-7 known to the members entitled to vote thereon, and the contract or
134-8 transaction is specifically approved in good faith by vote of the
134-9 members; or
134-10 (3) The contract or transaction is fair as to the
134-11 limited liability company as of the time it is authorized,
134-12 approved, or ratified by the managers, a committee thereof, or the
134-13 members.
134-14 B. Unless otherwise provided in the articles of organization
134-15 or the regulations, common [Common] or interested managers may be
134-16 counted in determining the presence of a quorum at a meeting of the
134-17 managers or of a committee which authorizes the contract or
134-18 transaction.
134-19 SECTION 57. Article 2.19, Texas Limited Liability Company
134-20 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
134-21 read as follows:
134-22 Art. 2.19. Place and notice of managers' meetings.
134-23 A. Except as otherwise provided in the articles of organization or
134-24 the regulations, regular or special meetings [Meetings] of the
134-25 members, managers, or any committee [regular or special,] may be
134-26 held either within or without this State.
134-27 B. Regular meetings of the managers or committees may be
135-1 held with or without notice as prescribed in the regulations.
135-2 Special meetings of the managers or committees shall be held upon
135-3 such notice as is prescribed in the regulations.
135-4 C. Except as otherwise provided in the articles of
135-5 organization or the regulations, if the limited liability company
135-6 is without managers, regular meetings of members may be held with
135-7 or without notice as prescribed in the regulations and special
135-8 meetings of members may be held with or without notice as
135-9 prescribed in the regulations, unless any such meeting is to
135-10 consider any of those matters set forth in Section D, Article 2.23,
135-11 of this Act. Except as otherwise provided in the articles of
135-12 organization or the regulations, for any meeting of the members at
135-13 which any of the matters set forth in Section D, Article 2.23, of
135-14 this Act are to be considered, written or printed notice stating
135-15 the place, day, and hour of the meeting and describing the purpose
135-16 or purposes of such meeting shall be delivered to the members not
135-17 less than ten (10) or more than sixty (60) days before the meeting,
135-18 either personally or by mail.
135-19 D. Except as otherwise provided in the articles of
135-20 organization or the regulations, if the limited liability company
135-21 has managers, meetings of members shall be held upon written or
135-22 printed notice, stating the place, day, and hour of the meeting
135-23 and, in the case of a special meeting, the purpose or purposes for
135-24 which the meeting is called, which notice shall be delivered to the
135-25 members not less than ten (10) or more than sixty (60) days before
135-26 the meeting, either personally or by mail.
135-27 E. If mailed, such notice to a member shall be deemed to be
136-1 delivered when deposited in the United States Mail addressed to the
136-2 member at the member's address that appears on the records of the
136-3 limited liability company, with postage prepaid.
136-4 F. Attendance of a member, manager, or committee member at a
136-5 meeting shall constitute a waiver of notice of such meeting, except
136-6 where that member, [a] manager or committee member attends a
136-7 meeting for the express purpose of objecting to the transaction of
136-8 any business on the ground that the meeting is not lawfully called
136-9 or convened.
136-10 G. The articles of organization and regulations may contain
136-11 provisions relating to giving notice of the time, place, or purpose
136-12 of a meeting at which a matter is to be voted on by any members or
136-13 managers, waiver of notice, action by consent without a meeting,
136-14 the establishment of a record date, quorum requirements, voting in
136-15 person or by proxy, or any other matter relating to the exercise of
136-16 the right to vote. [Neither the business to be transacted at, nor
136-17 the purpose of, any regular or special meeting of the managers need
136-18 be specified in the notice or waiver of notice of such meeting,
136-19 unless required by the regulations.]
136-20 SECTION 58. Article 2.20, Texas Limited Liability Company
136-21 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
136-22 read as follows:
136-23 Art. 2.20. INDEMNIFICATION. A. Subject to such standards
136-24 and restrictions, if any, as are set forth in its articles of
136-25 organization or in its regulations, a [A] limited liability company
136-26 shall have power to indemnify members and managers, officers,
136-27 [employees, agents] and other persons and purchase and maintain
137-1 liability insurance for such persons [others to the same extent a
137-2 corporation may indemnify directors, employees, agents and others
137-3 under the TBCA and shall, to the extent indemnification is required
137-4 under the TBCA for directors, employees, agents and others,
137-5 indemnify managers, officers, employees, agents and others to the
137-6 same extent].
137-7 B. To the extent that at law or in equity, a member,
137-8 manager, officer, or other person has duties (including fiduciary
137-9 duties) and liabilities relating thereto to a limited liability
137-10 company or to another member or manager, such duties and
137-11 liabilities may be expanded or restricted by provisions in the
137-12 regulations.
137-13 SECTION 59. Sections A and B, Article 2.22, Texas Limited
137-14 Liability Company Act (Article 1528n, Vernon's Texas Civil
137-15 Statutes), are amended to read as follows:
137-16 A. A domestic limited liability company shall keep and
137-17 maintain the following records in its principal office in the
137-18 United States or make them available in that office within five
137-19 days after the date of receipt of a written request under Section E
137-20 of this Article:
137-21 (1) a current list that states:
137-22 (a) the name and mailing address of each member;
137-23 (b) the percentage or other interest in the
137-24 limited liability company owned by each member; and
137-25 (c) if one or more classes or groups are
137-26 established in or under the articles of organization or
137-27 regulations, the names of the members who are members of each
138-1 specified class or group;
138-2 (2) copies of the federal, state, and local
138-3 information or income tax returns for each of the limited liability
138-4 company's six most recent tax years;
138-5 (3) a copy of the articles of organization and, if the
138-6 regulations of the limited liability company are in writing, a copy
138-7 of the regulations, copies of all amendments or restatements of the
138-8 articles of organization or regulations, executed copies of any
138-9 powers of attorney, and copies of any document that creates, in the
138-10 manner provided by the articles of organization or regulations,
138-11 classes or groups of members;
138-12 (4) unless contained in the articles of organization
138-13 or regulations, a written statement of:
138-14 (a) the amount of the cash contribution and a
138-15 description and statement of the agreed value of any other
138-16 contribution made by each member, and the amount of the cash
138-17 contribution and a description and statement of the agreed value of
138-18 any other contribution that the member has agreed to make in the
138-19 future as an additional contribution;
138-20 (b) the times at which additional contributions
138-21 are to be made or events requiring additional contributions to be
138-22 made;
138-23 (c) events requiring the limited liability
138-24 company to be dissolved and its affairs wound up; and
138-25 (d) the date on which each member in the limited
138-26 liability company became a member; and
138-27 (5) correct and complete books and records of account
139-1 of the limited liability company.
139-2 B. A limited liability company shall maintain such [its]
139-3 records in written form or in another form capable of conversion
139-4 into written form within a reasonable time.
139-5 SECTION 60. Article 2.23, Texas Limited Liability Company
139-6 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
139-7 amending Sections A and D and adding Sections G and H to read as
139-8 follows:
139-9 A. Except as otherwise provided in this Act [Article], in
139-10 the articles of organization, or in the regulations, a majority of
139-11 the members, managers, or members of any committee constitutes a
139-12 quorum for the transaction of business at any meeting of the
139-13 members, the managers, or the committee. Except as otherwise
139-14 provided in the articles of organization, or the regulations, an
139-15 [An] act of a majority of the members entitled to vote, the
139-16 managers, or the members of a committee, who are present at a
139-17 meeting of the members, the managers, or the committee at which a
139-18 quorum is present is the act of the members, the managers, or the
139-19 committee. Except as otherwise provided in the articles of
139-20 organization or the regulations, any member may vote either in
139-21 person or by proxy executed in writing by the member.
139-22 D. Except as provided in the articles of organization or the
139-23 regulations, the affirmative vote, approval, or consent of a
139-24 majority of all the members is required to:
139-25 (1) [amend the articles of organization or
139-26 regulations;]
139-27 [(2)] change the status of the limited liability
140-1 company from one in which management is reserved to the members to
140-2 one in which management is vested in one or more managers, or vice
140-3 versa;
140-4 (2) [(3)] issue any additional membership interests in
140-5 the limited liability company subsequent to the issuance of
140-6 membership interests to the initial members of the limited
140-7 liability company;
140-8 (3) [(4)] approve any merger, consolidation, share or
140-9 interest exchange, or other transaction authorized by or subject to
140-10 the provisions of Part Ten of this Act;
140-11 (4) [(5)] voluntarily cause the dissolution of the
140-12 limited liability company;
140-13 (5) [(6)] authorize any transaction, agreement, or
140-14 action on behalf of the limited liability company that is unrelated
140-15 to its purpose as set forth in the regulations or articles of
140-16 organization or that otherwise contravenes the regulations; or
140-17 (6) [(7)] authorize any act that would make it
140-18 impossible to carry on the ordinary business of the limited
140-19 liability company.
140-20 G. Except as provided in the articles of organization or the
140-21 regulations, if no capital has been paid into the limited liability
140-22 company, a majority of the managers named in the articles of
140-23 organization may amend the articles of organization or dissolve the
140-24 limited liability company or if the management has been reserved to
140-25 the members, a majority of the members named in the articles of
140-26 organization may amend the articles of organization or dissolve the
140-27 limited liability company. In such event, the persons adopting
141-1 such amendments to the articles of organization or authorizing such
141-2 dissolution shall sign and file with the Secretary of State the
141-3 articles of amendment provided for in Articles 3.06 and 3.07 of
141-4 this Act and the articles of dissolution provided for in Articles
141-5 6.05, 6.07, and 6.08 of this Act, as appropriate.
141-6 H. Except as provided in the articles of organization or the
141-7 regulations, if any capital has been paid into the limited
141-8 liability company, the affirmative vote, approval, or consent of
141-9 all members is required to amend the articles of organization.
141-10 SECTION 61. Section A, Article 3.02, Texas Limited Liability
141-11 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
141-12 amended to read as follows:
141-13 A. The initial Articles of Organization shall set forth:
141-14 (1) The name of the limited liability company;
141-15 (2) The period of duration, which may be perpetual;
141-16 (3) The purpose for which the limited liability
141-17 company is organized which may be stated to be, or to include, the
141-18 transaction of any or all lawful business for which limited
141-19 liability companies may be organized under this Act;
141-20 (4) The address of its initial registered office and
141-21 the name of its initial registered agent at that address;
141-22 (5) If the limited liability company is to have a
141-23 manager or managers, a statement to that effect and the names and
141-24 the addresses of the initial manager or managers, or if[. If] the
141-25 limited liability company will not have managers, a statement to
141-26 that effect and the names [name] and the addresses of the initial
141-27 members;
142-1 (6) The name and the address of each organizer, unless
142-2 the limited liability company is being organized pursuant to a plan
142-3 of conversion or a plan of merger, in which case the articles need
142-4 not include such information;
142-5 (7) Any provision required by Part Eleven of this Act,
142-6 if the limited liability company is a professional limited
142-7 liability company; [and]
142-8 (8) If the limited liability company is being
142-9 organized pursuant to a plan of conversion or a plan of merger, a
142-10 statement to that effect, and in the case of a plan of conversion,
142-11 the name, address, prior form of organization, date of
142-12 incorporation, formation, or organization, and jurisdiction of
142-13 incorporation, formation, or organization of the converting entity;
142-14 and
142-15 (9) Any other provisions, not inconsistent with law,
142-16 that [which] the members elect to set out in the articles of
142-17 organization for the regulation of the internal affairs of the
142-18 limited liability company, including any provisions that [which]
142-19 under this Act are permitted to be set out in the regulations of
142-20 the limited liability company.
142-21 SECTION 62. Article 3.03, Texas Limited Liability Company
142-22 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
142-23 amending Section A and adding Section C to read as follows:
142-24 A. Except as provided by Section C of this Article, the
142-25 [The] original and a copy of the articles of organization shall be
142-26 delivered to the Secretary of State. If the Secretary of State
142-27 finds that the articles of organization conform to law, the
143-1 Secretary of State shall, when all fees have been paid as required
143-2 by law:
143-3 (1) Endorse on the original and the copy the word
143-4 "filed," and the month, day, and year of the filing thereof.
143-5 (2) File the original in the office of the Secretary
143-6 of State.
143-7 (3) Issue a certificate of organization to which shall
143-8 be affixed the copy.
143-9 C. In the case of a new domestic limited liability company
143-10 being organized pursuant to a plan of conversion or a plan of
143-11 merger pursuant to Part Ten of this Act, the articles of
143-12 organization of the limited liability company shall be filed with
143-13 the Secretary of State with the articles of conversion or merger
143-14 and need not be filed separately pursuant to Section A of this
143-15 Article. If the Secretary of State finds that the articles of
143-16 organization conform to the law, the Secretary of State shall file
143-17 the articles of organization in the office of the Secretary of
143-18 State and issue a certificate of organization, to which the
143-19 Secretary of State shall affix a copy of the articles of
143-20 organization, and deliver the same to the party or parties filing
143-21 the articles of conversion or merger or their representatives with
143-22 the certificate of conversion or merger that is issued in
143-23 connection with the conversion or merger. In the case of a
143-24 conversion or a merger, the certificate of organization of a
143-25 domestic limited liability company that is a converted entity or
143-26 that is to be created pursuant to the plan of merger shall become
143-27 effective upon the effectiveness of the conversion or the merger,
144-1 as the case may be.
144-2 SECTION 63. Article 3.04, Texas Limited Liability Company
144-3 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
144-4 read as follows:
144-5 Art. 3.04. Effect of the Issuance of Certificate of
144-6 Organization. A. Except as provided by Section B of this Article,
144-7 upon [Upon] the issuance of the certificate of organization, the
144-8 limited liability company's [company] existence shall begin[, and
144-9 such certificate of organization shall be conclusive evidence that
144-10 all conditions precedents required to be performed by the
144-11 organizers have been complied with and that the limited liability
144-12 company has been organized under this Act, except as against the
144-13 state in proceedings for involuntary dissolution].
144-14 B. In the case of a new domestic limited liability company
144-15 being organized pursuant to a plan of conversion or a plan of
144-16 merger pursuant to Part Ten of this Act, the existence of the
144-17 limited liability company as such shall begin upon the
144-18 effectiveness of the conversion or the merger, as the case may be.
144-19 C. Upon the issuance of the certificate of organization or
144-20 the effectiveness of the merger or conversion, the certificate of
144-21 organization shall be conclusive evidence that all conditions
144-22 precedent required to be performed for the valid organization of
144-23 the limited liability company have been complied with and that the
144-24 limited liability company has been duly organized under this Act,
144-25 except as against the state in a proceeding for involuntary
144-26 dissolution.
144-27 SECTION 64. Article 3.06, Texas Limited Liability Company
145-1 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
145-2 read as follows:
145-3 Art. 3.06. Articles of amendment. A. The articles of
145-4 amendment shall be executed on behalf of the limited liability
145-5 company by an authorized manager or member, or in the case of an
145-6 amendment of the articles of organization by action of a majority
145-7 of the initial managers or of a majority of the initial members as
145-8 provided in Section 2.23 of this Act, by a majority of the initial
145-9 managers or a majority of the initial members as provided in
145-10 Section 2.23 of this Act.
145-11 B. The articles of amendment shall set forth:
145-12 (1) The name of the limited liability company.
145-13 (2) If the amendment alters any provision of the
145-14 original or amended articles of organization an identification by
145-15 reference or description of the altered provision and a statement
145-16 of its text as it is amended to read. If the amendment is an
145-17 addition to the original or amended articles of organization a
145-18 statement of that fact and the text of each provision added.
145-19 (3) A statement that the amendment was approved in
145-20 accordance with Section D or G of Article 2.23 of this Act or as
145-21 otherwise provided in the articles of organization or regulations
145-22 and the date of the approval.
145-23 SECTION 65. Article 5.01, Texas Limited Liability Company
145-24 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
145-25 read as follows:
145-26 Art. 5.01. Form of contribution. A. The contribution of a
145-27 member may consist of any tangible or intangible benefit to the
146-1 limited liability company or other property of any kind or nature,
146-2 including [be in] cash, [property, or services rendered, or] a
146-3 promissory note, services performed, a contract for services to be
146-4 performed, or other interests in or securities or other obligations
146-5 of any other [or other obligation to pay cash or transfer property
146-6 to the] limited liability company, domestic or foreign, or other
146-7 entity.
146-8 SECTION 66. Section D, Article 5.02, Texas Limited Liability
146-9 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
146-10 amended to read as follows:
146-11 D. Unless otherwise provided by the regulations, the
146-12 obligation of a member or a member's legal representative or
146-13 successor to make a contribution or otherwise pay cash or transfer
146-14 property or to return cash or property paid or distributed to the
146-15 member in violation of this Act or the regulations may be
146-16 compromised or released only by consent of all of the members.
146-17 Notwithstanding the compromise or release, a creditor of a limited
146-18 liability company who extends credit or otherwise acts in
146-19 reasonable reliance on that obligation, after the member signs a
146-20 writing that reflects the obligation and before the writing is
146-21 amended or canceled to reflect the compromise or release, may
146-22 enforce the original obligation. A conditional obligation may not
146-23 be enforced unless the conditions of the obligation have been
146-24 satisfied or waived as to or by the applicable member. Conditional
146-25 obligations include contributions payable upon a discretionary call
146-26 of a limited liability company, prior to the time the call occurs.
146-27 SECTION 67. Article 5.08, Texas Limited Liability Company
147-1 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
147-2 read as follows:
147-3 Art. 5.08. Right to Distribution. A. Subject to Articles
147-4 5.09 and 6.04 of this act, at the time that a member becomes
147-5 entitled to receive a distribution, with respect to the [a]
147-6 distribution, that member has the status of and is entitled to all
147-7 remedies available to a creditor of the limited liability company.
147-8 SECTION 68. Section A, Article 6.01, Texas Limited Liability
147-9 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
147-10 amended to read as follows:
147-11 A. Except as provided by Section B of this Article, a
147-12 limited liability company shall be dissolved on the first of the
147-13 following to occur:
147-14 (1) the period, if any, fixed for the duration of the
147-15 limited liability company expires;
147-16 (2) the occurrence of events specified in the articles
147-17 of organization or regulations to cause dissolution;
147-18 (3) the action of the members to dissolve the limited
147-19 liability company;
147-20 (4) if no capital has been paid into the limited
147-21 liability company, the act of a majority of [the organizer or] the
147-22 managers or members named in the articles of organization [of the
147-23 limited company] to dissolve the limited liability company;
147-24 (5) except as otherwise provided in the regulations,
147-25 upon the death, expulsion, withdrawal pursuant to or as provided in
147-26 the articles of organization or regulations, bankruptcy, or
147-27 dissolution of a member or the occurrence of any other event which
148-1 terminates the continued membership of a member in the limited
148-2 liability company; or
148-3 (6) entry of a decree of judicial dissolution under
148-4 Section 6.02 of this Act.
148-5 SECTION 69. Article 6.04, Texas Limited Liability Company
148-6 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
148-7 read as follows:
148-8 Art. 6.04. Transfer of assets. A. On the winding up of a
148-9 limited liability company, its assets shall be paid or transferred
148-10 as follows:
148-11 (1) To the extent otherwise permitted by law, to
148-12 creditors, including members who are creditors in satisfaction of
148-13 liabilities (other than for distributions) of the limited liability
148-14 company, whether by payment or by establishment of reserves;
148-15 (2) Unless otherwise provided by the articles of
148-16 organization or regulations, to members and former members in
148-17 satisfaction of the company's liability for distributions; and
148-18 (3) Unless otherwise provided by the articles of
148-19 organization or regulations, to members in the manner provided in
148-20 Article 6.05 [5.04].
148-21 SECTION 70. Section A, Article 6.08, Texas Limited Liability
148-22 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
148-23 amended to read as follows:
148-24 A. The original and a copy of such articles of dissolution,
148-25 along with a certificate from the Comptroller of Public Accounts
148-26 that all franchise taxes have been paid, shall be delivered to the
148-27 Secretary of State. If the Secretary of State finds that such
149-1 articles of dissolution conform to law, the Secretary of State
149-2 shall, when the appropriate filing fee is paid as required by law:
149-3 (1) Endorse on the original and copy the word "Filed,"
149-4 and the month, day, and year of the filing thereof.
149-5 (2) File the original in the Secretary of State's
149-6 office.
149-7 (3) Issue a certificate of dissolution to which there
149-8 shall be affixed the copy.
149-9 SECTION 71. Section A, Article 7.10, Texas Limited Liability
149-10 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
149-11 amended to read as follows:
149-12 A. The original and a copy of such application for
149-13 withdrawal, along with a certificate from the Comptroller of Public
149-14 Accounts that all franchise taxes have been paid, shall be
149-15 delivered to the Secretary of State. If the Secretary of State
149-16 finds that such application conforms to the provisions of this Act,
149-17 the Secretary of State shall, when the appropriate filing fee is
149-18 [all fees and any taxes have been] paid as required by law:
149-19 (1) Endorse on the original and the copy the word
149-20 "Filed," and the month, day, and year of the filing thereof.
149-21 (2) File the original in the Secretary of State's
149-22 office.
149-23 (3) Issue a certificate of withdrawal to which there
149-24 shall be affixed the copy.
149-25 SECTION 72. Section E, Article 7.11, Texas Limited Liability
149-26 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
149-27 amended to read as follows:
150-1 E. Any foreign limited liability company whose certificate
150-2 of authority has been revoked by the Secretary of State under the
150-3 provisions of Section B of this article may be reinstated by the
150-4 Secretary of State at any time within a period of 24 [12] months
150-5 from the date of revocation [dissolution], upon approval of an
150-6 application for reinstatement signed by a manager or member of the
150-7 foreign limited liability company. Such application shall be filed
150-8 by the Secretary of State whenever it is established to the
150-9 Secretary of State's satisfaction that in fact there was no cause
150-10 for the revocation, or whenever the neglect, omission or
150-11 delinquency resulting in revocation has been corrected and payment
150-12 made of all fees, taxes, penalties and interest due thereon which
150-13 accrued before the revocation plus an amount equal to the total
150-14 taxes from the date of revocation to the date of reinstatement
150-15 which would have been payable had the foreign limited liability
150-16 company certificate not been revoked. A reinstatement filing fee
150-17 of $50 shall accompany the application for reinstatement.
150-18 Reinstatement shall not be authorized if the foreign limited
150-19 liability company name is the same as or deceptively similar to a
150-20 foreign limited liability company, corporation or limited
150-21 partnership name already on file or reserved or registered, unless
150-22 the foreign limited liability company being reinstated
150-23 contemporaneously amends its certificate of authority to change its
150-24 name.
150-25 When the application for reinstatement is approved and filed
150-26 by the Secretary of State, the foreign limited liability company's
150-27 [company] authority to do business in Texas shall be deemed to have
151-1 continued without interruption from the date of revocation, except
151-2 that reinstatement shall have no effect upon any issue of personal
151-3 liability of the manager or member, or agents of the foreign
151-4 limited liability company during the period between revocation and
151-5 reinstatement.
151-6 SECTION 73. Section B, Article 7.13, Texas Limited Liability
151-7 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
151-8 amended to read as follows:
151-9 B. The failure of a foreign limited liability company to
151-10 obtain a certificate of authority to transact business in this
151-11 State shall not impair the validity of any contract or act of such
151-12 foreign limited liability company, shall not cause any member or
151-13 manager of such foreign limited liability company to become liable
151-14 for the debts, obligations, or liabilities of such foreign limited
151-15 liability company, and shall not prevent such foreign limited
151-16 liability company from defending any action, suit or proceeding in
151-17 any court of this State.
151-18 SECTION 74. Sections B and C, Article 8.12, Texas Limited
151-19 Liability Company Act (Article 1528n, Vernon's Texas Civil
151-20 Statutes), are amended to read as follows:
151-21 B. Subject to Section C of this Article, Articles 2.03
151-22 through 2.06, 2.09, 2.09A, 3.01, [and] 7.01 through 7.05, and 7.07,
151-23 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
151-24 seq., Vernon's Texas Civil Statutes), as amended, apply to a
151-25 limited liability company and its members, managers, and officers.
151-26 C. For purposes of the application of the articles of the
151-27 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
152-1 by Sections A and B of this Article, as context requires:
152-2 (1) a reference to a corporation includes a limited
152-3 liability company;
152-4 (2) a reference to a share includes a membership
152-5 interest;
152-6 (3) a reference to a shareholder includes a member;
152-7 (4) a reference to a director includes a manager or,
152-8 to the extent that the management of the limited liability company
152-9 is reserved in whole or in part to the members, a member who
152-10 manages the limited liability company;
152-11 (5) a reference to articles of incorporation includes
152-12 articles of organization; and
152-13 (6) a reference to bylaws includes regulations.
152-14 SECTION 75. Section A, Article 9.01, Texas Limited Liability
152-15 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
152-16 amended to read as follows:
152-17 A. The Secretary of State is authorized and required to
152-18 collect for the use of the State the following fees:
152-19 (1) Filing articles of organization of a domestic
152-20 limited liability company and issuing the certificate of
152-21 organization, Two Hundred Dollars ($200.00).
152-22 (2) Filing articles of amendment of a domestic limited
152-23 liability company and issuing the certificate of amendment, One
152-24 Hundred Dollars ($100.00).
152-25 (3) Filing articles of merger or articles of
152-26 conversion involving one or more domestic or foreign limited
152-27 liability companies,[:]
153-1 [(a)] Two Hundred Dollars ($200.00), provided that any other
153-2 filing fee paid under the corporation, partnership, or other entity
153-3 statutes of this state for the filing of articles of merger or
153-4 articles of conversion with respect to entities organized under
153-5 those statutes shall be credited against the filing fee provided by
153-6 this subsection [if another type of domestic entity is not a party
153-7 to the merger; or]
153-8 [(b) the greater of Two Hundred Dollars ($200.00) or the
153-9 highest filing fee for articles of merger under the applicable
153-10 Texas statute under which the other domestic entity or entities are
153-11 incorporated or organized, if another type of domestic entity is
153-12 party to the merger].
153-13 (4) Filing an application of a foreign limited
153-14 liability company for certificate of authority to transact business
153-15 in this state and issuing such a certificate of authority, Five
153-16 Hundred Dollars ($500.00).
153-17 (5) Filing an application of a foreign limited
153-18 liability company for an amended certificate of authority to
153-19 transact business in this state and issuing such an amended
153-20 certificate of authority, One Hundred Dollars ($100.00).
153-21 (6) Filing restated articles of organization of a
153-22 domestic limited liability company, Two Hundred Dollars ($200.00).
153-23 (7) Filing application for reservations of a limited
153-24 liability company name and issuing certificate thereof, Twenty-Five
153-25 Dollars ($25.00).
153-26 (8) Filing notice of transfer of reserved limited
153-27 liability company name and issuing a certificate therefor, Ten
154-1 Dollars ($10.00).
154-2 (9) Filing statement of change of registered office or
154-3 registered agent, or both, Ten Dollars ($10.00).
154-4 (10) Filing statement of change of address of
154-5 registered agent, Ten Dollars ($10.00); provided, however, that the
154-6 maximum fee for simultaneous filings by a registered agent for more
154-7 than one limited liability company shall not exceed Five Hundred
154-8 Dollars ($500.00).
154-9 (11) Filing articles of dissolution and issuing
154-10 certificate therefor, Twenty-Five Dollars ($25.00).
154-11 (12) Filing application for withdrawal and issuing
154-12 certificate therefor, Ten Dollars ($10.00).
154-13 (13) Filing certificate from home state that foreign
154-14 limited liability company is no longer existent in said state, Ten
154-15 Dollars ($10.00).
154-16 (14) Maintaining the record of service of any process,
154-17 notice or demand upon the Secretary of State as agent for foreign
154-18 and domestic limited liability companies, Twenty-Five Dollars
154-19 ($25.00).
154-20 (15) Filing any instrument pursuant to this act not
154-21 expressly provided for above, Ten Dollars ($10.00).
154-22 (16) Filing an application for reinstatement of the
154-23 limited liability company charter or certificate of authority
154-24 following forfeiture under the Tax Code, Seventy-Five Dollars
154-25 ($75.00).
154-26 SECTION 76. Subsection (1), Section A, Article 9.03, Texas
154-27 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
155-1 Statutes), is amended to read as follows:
155-2 (1) For purposes of this Article, "permitted act"
155-3 means a filing with the Secretary of State under this Act for:
155-4 (a) the articles of organization of a limited
155-5 liability company under this Act;
155-6 (b) an amendment to or restatement of the
155-7 articles of organization;
155-8 (c) a merger or conversion;
155-9 (d) the application of a foreign limited
155-10 liability company to procure a certificate of authority to transact
155-11 business in this state or to withdraw from doing business in this
155-12 state;
155-13 (e) an amendment to the certificate of authority
155-14 of a foreign limited liability company to transact business in this
155-15 state;
155-16 (f) a change in registered office or registered
155-17 agent;
155-18 (g) a change of address of a registered agent;
155-19 or
155-20 (h) a voluntary dissolution.
155-21 SECTION 77. Section F, Article 9.03, Texas Limited Liability
155-22 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
155-23 amended to read as follows:
155-24 F. If articles of organization, articles of amendment or
155-25 restatement, articles of merger, articles of conversion, an
155-26 application, or any other document permitted to be filed pursuant
155-27 to this Act with the Secretary of State have been filed but the
156-1 event or transaction evidenced by the filing has not become
156-2 effective, the filing may be abandoned in accordance with the
156-3 agreement of the parties to the filing by filing a certificate of
156-4 abandonment with the Secretary of State before the effectiveness of
156-5 the event or transaction in accordance with the terms of the
156-6 document so filed. The certificate of abandonment must be signed
156-7 on behalf of each domestic or foreign limited liability company or
156-8 other entity that is a party to the event or transaction by a
156-9 member, manager, officer, or other authorized representative and
156-10 must state the nature of the filing to be abandoned, the date of
156-11 the filing to be abandoned, the parties to the filing to be
156-12 abandoned, and that the event or transaction has been abandoned in
156-13 accordance with the agreement of the parties. On the filing of the
156-14 certificate [statement] of abandonment with the Secretary of State,
156-15 the event or transaction evidenced by the original filing shall be
156-16 considered abandoned and may not become effective.
156-17 SECTION 78. Section B, Article 10.03, Texas Limited
156-18 Liability Company Act (Article 1528n, Vernon's Texas Civil
156-19 Statutes), is amended to read as follows:
156-20 B. The original of the articles of merger and a number of
156-21 copies equal to the number of surviving and new domestic or foreign
156-22 limited liability companies and other entities that are a party to
156-23 the plan of merger or that will be created by its terms shall be
156-24 delivered to the Secretary of State. Unless the Secretary of State
156-25 finds that the articles of merger do not conform to law, on receipt
156-26 of all applicable filing fees and franchise taxes, if any, required
156-27 by law or if the plan of merger provides that one or more of the
157-1 surviving, new, or acquiring domestic or foreign limited liability
157-2 companies or other entities will be responsible for the payment of
157-3 all of such fees and franchise taxes and that all of such
157-4 surviving, new, or acquiring domestic or foreign limited liability
157-5 companies and other entities will be obligated to pay such fees and
157-6 franchise taxes if the same are not timely paid, the Secretary of
157-7 State shall:
157-8 (1) certify that the articles of merger have been
157-9 filed in the Secretary of State's office by endorsing on the
157-10 original the word "Filed" and the date of the filing;
157-11 (2) file and index the endorsed articles of merger;
157-12 and
157-13 (3) issue a certificate of merger, together with a
157-14 copy of the articles affixed to the certificate, to each surviving
157-15 or new domestic or foreign limited liability company or other
157-16 entity that is a party to the plan of merger or that is created by
157-17 the merger, or to its respective representatives.
157-18 SECTION 79. Part Ten, Texas Limited Liability Act (Article
157-19 1528n, Vernon's Texas Civil Statutes), is amended by adding
157-20 Articles 10.08-10.11 to read as follows:
157-21 Art. 10.08. CONVERSION. A. A domestic limited liability
157-22 company may adopt a plan of conversion and convert to a foreign
157-23 limited liability company or any other entity if:
157-24 (1) the converting entity acts upon and its members
157-25 approve a plan of conversion in the manner prescribed by Article
157-26 10.01 of this Act as if the conversion were a merger to which the
157-27 converting entity were a party and not the survivor;
158-1 (2) the conversion is permitted by, or not
158-2 inconsistent with, the laws of the state or country in which the
158-3 converted entity is to be incorporated, formed, or organized, and
158-4 the incorporation, formation, or organization of the converted
158-5 entity is effected in compliance with such laws;
158-6 (3) at the time the conversion becomes effective, each
158-7 member of the converting entity will, unless otherwise agreed to by
158-8 that member, own an equity interest or other ownership or security
158-9 interest in, and be a shareholder, partner, member, owner, or other
158-10 security holder of, the converted entity;
158-11 (4) no member of the domestic limited liability
158-12 company will, as a result of the conversion, become personally
158-13 liable, without the member's consent, for the liabilities or
158-14 obligations of the converted entity; and
158-15 (5) the converted entity shall be incorporated,
158-16 formed, or organized as part of or pursuant to the plan of
158-17 conversion.
158-18 B. Any foreign limited liability company or other entity may
158-19 adopt a plan of conversion and convert to a domestic limited
158-20 liability company if:
158-21 (1) the conversion is permitted by the laws of the
158-22 state or country in which the foreign limited liability company is
158-23 incorporated, formed, or organized, if a foreign limited liability
158-24 company is converting;
158-25 (2) the conversion is either permitted by the laws
158-26 under which the other entity is incorporated, formed, or organized
158-27 or by the constituent documents of the other entity that are not
159-1 inconsistent with the laws of the state or country in which the
159-2 other entity is incorporated, formed, or organized, if another
159-3 entity is converting; and
159-4 (3) the converting entity takes all action that may be
159-5 required by the laws of the state or country under which it is
159-6 incorporated, formed, or organized and by its constituent documents
159-7 to effect the conversion.
159-8 C. A plan of conversion shall set forth:
159-9 (1) the name of the converting entity and the
159-10 converted entity;
159-11 (2) a statement that the converting entity is
159-12 continuing its existence in the organizational form of the
159-13 converted entity;
159-14 (3) a statement as to the type of entity that the
159-15 converted entity is to be and the state or country under the laws
159-16 of which the converted entity is to be incorporated, formed, or
159-17 organized;
159-18 (4) the manner and basis of converting the membership
159-19 interests or other evidences of ownership of the converting entity
159-20 into membership interests or other evidences of ownership or
159-21 securities of the converted entity, or any combination thereof;
159-22 (5) in an attachment or exhibit, the articles of
159-23 organization of the domestic limited liability company if the
159-24 converted entity is a domestic limited liability company; and
159-25 (6) in an attachment or exhibit, the articles of
159-26 organization or other organizational documents of the converted
159-27 entity if the converted entity is not a domestic limited liability
160-1 company.
160-2 D. A plan of conversion may set forth such other provisions
160-3 relating to the conversion not inconsistent with law, including the
160-4 initial regulations of the converted entity.
160-5 Art. 10.09. ARTICLES OF CONVERSION. A. If a plan of
160-6 conversion has been approved in accordance with Article 10.08 of
160-7 this Act and has not been abandoned, articles of conversion shall
160-8 be executed by the converting entity by a manager (or, if none, by
160-9 a member) or other duly authorized representative thereof and shall
160-10 set forth:
160-11 (1) the plan of conversion or a statement certifying
160-12 the following:
160-13 (a) the name, the state of incorporation,
160-14 formation, or organization of the converting entity, and the
160-15 organizational form of the converting entity;
160-16 (b) that a plan of conversion has been approved;
160-17 (c) that an executed plan of conversion is on
160-18 file at the principal place of business of the converting entity,
160-19 stating the address thereof, and that an executed plan of
160-20 conversion will be on file, from and after the conversion, at the
160-21 principal place of business of the converted entity, stating the
160-22 address thereof; and
160-23 (d) that a copy of the plan of conversion will
160-24 be furnished by the converting entity (prior to the conversion) or
160-25 the converted entity (after the conversion), on written request and
160-26 without cost, to any shareholder, partner, or member of the
160-27 converting entity or the converted entity;
161-1 (2) a statement that the approval of the plan of
161-2 conversion was duly authorized by all action required by the laws
161-3 under which the converting entity was incorporated, formed, or
161-4 organized and by its constituent documents; and
161-5 (3) any other statements or information that may be
161-6 required by any law or rule to which the converting entity or
161-7 converted entity is subject or that the converting entity or the
161-8 converted entity chooses to include in the articles.
161-9 B. The original and one copy of the articles of conversion
161-10 shall be delivered to the secretary of state. Two copies of the
161-11 articles of organization of the domestic limited liability company
161-12 if the converted entity is a domestic limited liability company
161-13 shall also be delivered to the secretary of state with the articles
161-14 of conversion.
161-15 C. If the secretary of state finds that the articles of
161-16 conversion conform to law, has received all filings required to be
161-17 received, and issued all certificates required to be issued in
161-18 connection with the incorporation, formation, or organization of
161-19 the converted entity, if any, the secretary of state shall, when
161-20 all fees and franchise taxes have been paid as required by law or
161-21 if the articles of conversion provide that the converted entity
161-22 will be liable for the payment of all such fees and franchise
161-23 taxes:
161-24 (1) Endorse on the original and each copy the word
161-25 "Filed" and the month, day, and year of the filing thereof.
161-26 (2) File the original in the office of the secretary
161-27 of state.
162-1 (3) Issue a certificate of conversion, together with a
162-2 copy of the articles affixed thereto, to the converted entity or
162-3 its representatives.
162-4 Art. 10.10. EFFECTIVE DATE OF CONVERSION. A. Except as
162-5 otherwise provided by Article 9.03 of this Act, upon the issuance
162-6 of the certificate of conversion by the secretary of state, the
162-7 conversion of a converting entity shall be effective.
162-8 Art. 10.11. EFFECT OF CONVERSION. A. When a conversion of
162-9 a converting entity takes effect:
162-10 (1) the converting entity shall continue to exist,
162-11 without interruption, but in the organizational form of the
162-12 converted entity rather than in its prior organizational form;
162-13 (2) all rights, title, and interests to all real
162-14 estate and other property owned by the converting entity shall
162-15 continue to be owned by the converted entity in its new
162-16 organizational form without reversion or impairment, without
162-17 further act or deed, and without any transfer or assignment having
162-18 occurred, but subject to any existing liens or other encumbrances
162-19 thereon;
162-20 (3) all liabilities and obligations of the converting
162-21 entity shall continue to be liabilities and obligations of the
162-22 converted entity in its new organizational form without impairment
162-23 or diminution by reason of the conversion;
162-24 (4) all rights of creditors or other parties with
162-25 respect to or against the prior interest holders or other owners of
162-26 the converting entity in their capacities as such in existence as
162-27 of the effective time of the conversion will continue in existence
163-1 as to those liabilities and obligations and may be pursued by such
163-2 creditors and obligees as if such conversion shall not have
163-3 occurred;
163-4 (5) a proceeding pending by or against the converting
163-5 entity or by or against any of the converting entity's interest
163-6 holders or owners in their capacities as such may be continued by
163-7 or against the converted entity in its new organizational form and
163-8 by or against the prior interest holders or owners, as the case may
163-9 be, without any need for substitution of parties;
163-10 (6) the membership interests and other evidences of
163-11 ownership in the converting entity that are to be converted into
163-12 membership interests, evidences of ownership, or other securities
163-13 in the converted entity as provided in the plan of conversion shall
163-14 be so converted, and if the converting entity is a domestic limited
163-15 liability company, the former holders of membership interests in
163-16 the domestic limited liability company shall be entitled only to
163-17 the rights provided in the plan of conversion;
163-18 (7) if, after the effectiveness of the conversion, a
163-19 shareholder, partner, member, or other owner of the converted
163-20 entity would be liable under applicable law, in such capacity, for
163-21 the debts or obligations of the converted entity, such shareholder,
163-22 partner, member, or other owner of the converted entity shall be
163-23 liable for the debts and obligations of the converting entity that
163-24 existed before the conversion takes effect only to the extent that
163-25 such shareholder, partner, member, or other owner:
163-26 (a) agreed in writing to be liable for such
163-27 debts or obligations;
164-1 (b) was liable under applicable law, prior to
164-2 the effectiveness of the conversion, for such debts or obligations;
164-3 or
164-4 (c) by becoming a shareholder, partner, member,
164-5 or other owner of the converted entity, becomes liable under
164-6 applicable law for existing debts and obligations of the converted
164-7 entity; and
164-8 (8) if the converted entity is a foreign limited
164-9 liability company or other entity, such converted entity shall be
164-10 deemed to appoint the secretary of state in this state as its agent
164-11 for service of process in a proceeding to enforce any obligation or
164-12 the rights of dissenting members of the converting domestic limited
164-13 liability company.
164-14 SECTION 80. Section B, Article 11.01, Texas Limited
164-15 Liability Company Act (Article 1528n, Vernon's Texas Civil
164-16 Statutes), is amended by amending Subsection (2) and adding
164-17 Subsections (3) and (4) to read as follows:
164-18 (2) "Professional limited liability company" means a
164-19 limited liability company that is organized under this Act for the
164-20 sole and specific purpose of rendering professional service and
164-21 that has as its members only professional individuals or
164-22 professional entities [individuals licensed or otherwise authorized
164-23 within this state to render the same professional service as the
164-24 limited liability company].
164-25 (3) "Professional individual," with respect to any
164-26 professional limited liability company, means an individual who is
164-27 licensed or otherwise authorized to render the same professional
165-1 service as such professional limited liability company, either
165-2 within this state or in any other jurisdiction.
165-3 (4) "Professional entity," with respect to any
165-4 professional limited liability company, means a person (other than
165-5 an individual), whether organized for profit or not, including
165-6 corporations organized under the Texas Non-Profit Corporation Act
165-7 (Article 1396-1.01, Vernon's Texas Civil Statutes), and
165-8 unincorporated associations governed by the Texas Uniform
165-9 Unincorporated Nonprofit Association Act (Article 1396-70.01,
165-10 Vernon's Texas Civil Statutes), that renders the same professional
165-11 service as such professional limited liability company only through
165-12 partners, members, shareholders, managers, directors, associates,
165-13 officers, employees, or agents who are professional individuals or
165-14 professional entities.
165-15 SECTION 81. Article 11.03, Texas Limited Liability Company
165-16 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
165-17 read as follows:
165-18 Art. 11.03. Restrictions on members, managers, and officers.
165-19 A. A person who is not a professional individual or professional
165-20 entity [licensed or otherwise authorized to render the professional
165-21 service of the professional limited liability company] may not be a
165-22 member, manager, or officer of the professional limited liability
165-23 company. A membership interest in the professional limited
165-24 liability company may not be transferred to a person who is not a
165-25 professional individual or professional entity [licensed or
165-26 otherwise authorized to render the professional service of the
165-27 professional limited liability company].
166-1 B. If a member, manager, or officer of a professional
166-2 limited liability company ceases to be a professional individual or
166-3 professional entity, [or an agent or employee of the company who
166-4 has been rendering professional service for or with the company of
166-5 the same type for which the professional limited liability company
166-6 was organized to render, becomes legally disqualified to render the
166-7 professional service,] the person shall sever all employment with
166-8 the professional limited liability company and immediately
166-9 terminate all financial interest in the company. The professional
166-10 limited liability company shall purchase or cause to be purchased
166-11 from the person all membership interests owned by the person in the
166-12 professional limited liability company, at a price and on terms as
166-13 may be provided in the articles of organization, the regulations,
166-14 or any applicable agreement among the members and the professional
166-15 limited liability company. If the person is the sole member of the
166-16 professional limited liability company, the person may continue to
166-17 act as member, manager, or officer only for the purposes of winding
166-18 up the affairs of the professional limited liability company and
166-19 effecting its dissolution, including selling the assets of or
166-20 outstanding membership interests in the professional limited
166-21 liability company, but not including rendering professional
166-22 service.
166-23 C. If a person who is not a professional individual or a
166-24 professional entity [licensed or authorized to render the
166-25 professional service that a professional limited liability company
166-26 was organized to render] succeeds to the interest of a member of
166-27 the professional limited liability company, the person holding the
167-1 interest shall immediately terminate all financial interest in the
167-2 professional limited liability company, and the professional
167-3 limited liability company shall purchase or cause to be purchased
167-4 from the person all membership interests owned by the person in the
167-5 professional limited liability company, at a price and on terms as
167-6 may be provided in the articles of organization, the regulations,
167-7 or any applicable agreement among the members and the professional
167-8 limited liability company. If the person succeeded to all of the
167-9 membership interests in the professional limited liability company,
167-10 the person may continue to act as member, manager, or officer only
167-11 for the purposes of winding up the affairs of the professional
167-12 limited liability company and effecting its dissolution, including
167-13 selling the assets of or the outstanding membership interests in
167-14 the professional limited liability company, but not including
167-15 rendering professional service.
167-16 SECTION 82. Section A, Article 11.04, Texas Limited
167-17 Liability Company Act (Article 1528n, Vernon's Texas Civil
167-18 Statutes), is amended to read as follows:
167-19 A. A professional limited liability company may render
167-20 professional service in this state only through a[:]
167-21 [(1) an individual] member, manager, officer,
167-22 employee, or agent who is:
167-23 (1) a professional individual licensed or otherwise
167-24 authorized to render the professional service in this state; or
167-25 (2) a professional entity that renders the
167-26 professional service in this state only through partners, members,
167-27 shareholders, managers, directors, associates, officers, employees,
168-1 or agents who are professional individuals or professional entities
168-2 licensed or otherwise authorized to render the professional service
168-3 in this state[; or]
168-4 [(2) an agent of the professional limited liability
168-5 company that is a professional limited liability company,
168-6 professional corporation, or professional association that is
168-7 authorized in this state to render the professional service of the
168-8 professional limited liability company and that renders the
168-9 professional service only through a licensed individual member,
168-10 manager, officer, or employee].
168-11 SECTION 83. Article 11.05, Texas Limited Liability Company
168-12 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
168-13 read as follows:
168-14 Art. 11.05. PROFESSIONAL RELATIONSHIPS NOT AFFECTED.
168-15 A. Notwithstanding anything contained in Article 4.03 of this Act
168-16 to the contrary, this Act does not alter or affect the professional
168-17 relationship between a person rendering professional service and a
168-18 person receiving the service, and a confidential relationship
168-19 enjoyed in this state between those persons remains unchanged.
168-20 This Act does not remove or diminish any rights at law that a
168-21 person receiving professional service has against a person
168-22 rendering the service for an error, an omission, negligence,
168-23 incompetence, or malfeasance. A professional limited liability
168-24 company, but not the other [individual] members, managers, [or]
168-25 officers, employees, or agents of such professional limited
168-26 liability company (or their respective members, managers, officers,
168-27 employees, or agents), is jointly and severally liable with a
169-1 member, manager, officer, employee, or agent rendering professional
169-2 service for an error, omission, negligence, incompetence, or
169-3 malfeasance on the part of the member, manager, officer, employee,
169-4 or agent when the member, manager, officer, employee, or agent is
169-5 rendering professional service in the course of employment for the
169-6 professional limited liability company. If the member, manager,
169-7 officer, employee, or agent rendering such professional service in
169-8 such circumstances is itself a professional entity, then the
169-9 professional limited liability company and such professional entity
169-10 are jointly and severally liable with the partner, member,
169-11 shareholder, manager, director, associate, officer, employee, or
169-12 agent of such professional entity through which such professional
169-13 entity renders such professional service for an error, omission,
169-14 negligence, incompetence, or malfeasance on the part of such
169-15 partner, member, shareholder, manager, director, associate,
169-16 officer, employee, or agent of such professional entity.
169-17 SECTION 84. Section A, Article 11.07, Texas Limited
169-18 Liability Company Act (Article 1528n, Vernon's Texas Civil
169-19 Statutes), is amended to read as follows:
169-20 A. A foreign professional limited liability company may
169-21 apply for a certificate of authority to perform professional
169-22 service in this state by filing an application in accordance with
169-23 Part Seven of this Act. The Secretary of State may not issue the
169-24 certificate unless the name of the foreign professional limited
169-25 liability company or the name it [the limited liability company]
169-26 elects in this state meets the requirements of Article 11.02 of
169-27 this Act. A foreign professional limited liability company may
170-1 render professional service in this state only through a member,
170-2 manager, officer, employee, or agent described in Section A of
170-3 Article 11.04 of this Act. [A member, manager, officer, employee,
170-4 or agent of the limited liability company who renders professional
170-5 service in this state on behalf of the limited liability company
170-6 must be licensed or otherwise authorized to render that
170-7 professional service in this state.]
170-8 SECTION 85. Section 1.03, Texas Revised Limited Partnership
170-9 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
170-10 read as follows:
170-11 Sec. 1.03. Partnership name. Except as provided by Section
170-12 2.14(a)(3) of this Act, the name of a limited partnership as stated
170-13 in its certificate of limited partnership, a reserved or registered
170-14 name, or the name under which a foreign limited partnership is
170-15 permitted to register to do business in Texas as contained in its
170-16 application for registration as a foreign limited partnership must
170-17 contain the words "Limited Partnership," "Limited," or the
170-18 abbreviation "L.P." or "Ltd." as the last words or letters of its
170-19 name and may not:
170-20 (1) contain the name of a limited partner unless:
170-21 (A) that name is also the name of a general
170-22 partner; or
170-23 (B) the business of the limited partnership or
170-24 foreign limited partnership had been carried on under that name
170-25 before the admission of that limited partner;
170-26 (2) contain a word or phrase indicating or implying
170-27 that it is organized other than for a purpose stated in its
171-1 partnership agreement;
171-2 (3) be the same as or deceptively similar to the name
171-3 of a corporation, limited liability company, or limited partnership
171-4 that exists under the laws of Texas, that has a certificate of
171-5 authority to transact business as a foreign corporation or limited
171-6 liability company in Texas, or that is registered as a foreign
171-7 limited partnership in Texas, or a name that has been reserved or
171-8 registered for a corporation, limited liability company, limited
171-9 partnership, or foreign limited partnership under the laws of
171-10 Texas, except that a limited partnership or foreign limited
171-11 partnership may adopt, reserve, or register, as appropriate, a name
171-12 that is similar if written consent is obtained from the
171-13 corporation, limited liability company, limited partnership, or
171-14 foreign limited partnership having the name considered similar or
171-15 from the person for whom the name considered similar is reserved or
171-16 registered in the office of the secretary of state; or
171-17 (4) contain a word or phrase indicating or implying
171-18 that it is a corporation.
171-19 SECTION 86. Section 1.04, Texas Revised Limited Partnership
171-20 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
171-21 amending Subsection (b) and adding Subsection (c) to read as
171-22 follows:
171-23 (b) A specified name may be reserved by filing with the
171-24 secretary of state an application executed by the applicant or an
171-25 attorney or agent of the applicant, together with a duplicate copy
171-26 of the application, which need not be an executed original or a
171-27 photocopy of an executed original, and paying the applicable filing
172-1 fee. If the secretary of state finds that the name is available
172-2 for use by a domestic or foreign limited partnership, the secretary
172-3 of state shall reserve the name for the exclusive use of the
172-4 applicant for a period of 120 days. An applicant may reserve the
172-5 same name for one or more successive 120-day periods by filing a
172-6 new application and paying the applicable filing fee [before the
172-7 effective 120-day reservation period expires]. The right to the
172-8 exclusive use of a reserved name may be transferred to another
172-9 person by filing with the secretary of state a notice of the
172-10 transfer executed by the applicant for whom the name was reserved
172-11 that specifies the name and address of the transferee and paying
172-12 the applicable filing fee.
172-13 (c) A person for whom a specified limited partnership name
172-14 has been reserved pursuant to Subsection (b) of this section may,
172-15 during the period for which the name is reserved, terminate the
172-16 reservation by filing with the secretary of state an application
172-17 for cancellation of reservation of limited partnership name, and
172-18 paying the applicable fee.
172-19 SECTION 87. Section 2.01, Texas Revised Limited Partnership
172-20 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
172-21 read as follows:
172-22 Sec. 2.01. Certificate of limited partnership. (a) To form
172-23 a limited partnership, the partners must enter into a partnership
172-24 agreement (which, in the case of a limited partnership formed under
172-25 a plan of merger or a plan of conversion under Section 2.11 or 2.15
172-26 of this Act, may be included in the plan of merger or plan of
172-27 conversion) and one or more partners, including all of the general
173-1 partners, must execute a certificate of limited partnership. The
173-2 filing fee and the certificate shall be filed with the secretary of
173-3 state. The certificate must contain:
173-4 (1) the name of the limited partnership;
173-5 (2) the address of the registered office and the name
173-6 and address of the registered agent for service of process required
173-7 to be maintained by Section 1.06 of this Act;
173-8 (3) the address of the principal office in the United
173-9 States where records are to be kept or made available under Section
173-10 1.07 of this Act;
173-11 (4) the name, the mailing address, and the street
173-12 address of the business or residence of each general partner; [and]
173-13 (5) if the limited partnership is being formed
173-14 pursuant to a plan of merger or a plan of conversion under Section
173-15 2.11 or 2.15 of this Act, a statement to that effect;
173-16 (6) if the limited partnership is being formed
173-17 pursuant to a plan of conversion under Section 2.15 of this Act,
173-18 the name, the address, the date of formation, and the prior form of
173-19 organization and jurisdiction of incorporation or organization of
173-20 the converting entity; and
173-21 (7) other matters that the general partners determine
173-22 to include.
173-23 (b) Except in the case of a limited partnership formed under
173-24 a plan of merger or a plan of conversion under Section 2.11 or 2.15
173-25 of this Act, a [A] limited partnership is formed at the time of
173-26 the filing of the initial certificate of limited partnership with
173-27 the secretary of state or at a later date or time specified in the
174-1 certificate if there has been substantial compliance with the
174-2 requirements of this section. In the case of a limited
174-3 partnership being formed under a plan of merger or a plan of
174-4 conversion under Section 2.11 or 2.15 of this Act, the existence of
174-5 the limited partnership as a limited partnership begins on the
174-6 effectiveness of the merger or the conversion, as applicable, and
174-7 the persons to be partners shall become general or limited
174-8 partners, as applicable, as of that time.
174-9 SECTION 88. Sections 2.03(a) and (c), Texas Revised Limited
174-10 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
174-11 are amended to read as follows:
174-12 (a) A certificate of limited partnership shall be canceled
174-13 by paying the filing fee and filing a certificate of cancellation
174-14 with the secretary of state:
174-15 (1) on the completion of the winding up of the
174-16 partnership;
174-17 (2) when there are no limited partners; or
174-18 (3) subject to Subsection (c) of this section, on a
174-19 merger or conversion [consolidation] as provided by Subsection (b)
174-20 of Section 2.11 of this Act or Subsection (c) of Section 2.15 of
174-21 this Act.
174-22 (c) If, in the case of merger or conversion [consolidation],
174-23 one or more limited partnerships formed [or registered] under this
174-24 Act are not the surviving or resulting domestic limited partnership
174-25 or partnerships or other entity or entities, the certificate of
174-26 merger or conversion filed under Subsection (d) [(b)] of Section
174-27 2.11 or Subsection (e) of Section 2.15 of this Act is sufficient,
175-1 without a filing under this section, to cancel the certificate of
175-2 limited partnership of those nonsurviving limited partnerships.
175-3 SECTION 89. Section 2.04(a), Texas Revised Limited
175-4 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
175-5 is amended to read as follows:
175-6 (a) Each certificate required by this article to be filed
175-7 with the secretary of state shall be executed in the following
175-8 manner:
175-9 (1) an initial certificate of limited partnership or a
175-10 certificate of conversion must be signed by all general partners,
175-11 except for an initial certificate of limited partnership [unless]
175-12 signed and filed by a person under Subdivision (1) of Subsection
175-13 (a) of Section 3.04 of this Act;
175-14 (2) a certificate of amendment or restated certificate
175-15 must be signed by at least one general partner and by each other
175-16 general partner designated in the certificate of amendment as a new
175-17 general partner, unless signed and filed by a person under
175-18 Subsection (f) of Section 2.02 of this Act or under Subdivision (1)
175-19 of Subsection (a) of Section 3.04 of this Act, but the certificate
175-20 of amendment need not be signed by a withdrawing general partner;
175-21 (3) a certificate of cancellation must be signed by
175-22 all general partners participating in the winding up of the limited
175-23 partnership's affairs or, if no general partners are winding up the
175-24 limited partnership's affairs, then by all non-partner liquidators,
175-25 or, if the limited partners are winding up the limited
175-26 partnership's affairs, by a majority in interest of the limited
175-27 partners;
176-1 (4) a certificate of merger filed on behalf of a
176-2 domestic limited partnership must be signed as provided in
176-3 Subsection (d), Section 2.11 of this Act;
176-4 (5) a certificate filed under Section 2.06 of this Act
176-5 must be signed by the person designated by the court; and
176-6 (6) a certificate of correction must be signed by at
176-7 least one general partner.
176-8 SECTION 90. Sections 2.06(a)-(d), Texas Revised Limited
176-9 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
176-10 are amended to read as follows:
176-11 (a) Notwithstanding any other provisions of this Act to the
176-12 contrary, to carry out a plan of reorganization ordered or decreed
176-13 by a court of competent jurisdiction under federal statute, a
176-14 domestic limited partnership being reorganized under a federal
176-15 statute may without action by or notice to its partners:
176-16 (1) amend or restate its certificate if the
176-17 certificate after amendment or restatement contains only provisions
176-18 of the type required or permitted in the certificate;
176-19 (2) merge or engage in a conversion or an interest
176-20 exchange with one or more other domestic or foreign limited
176-21 partnerships or other entities pursuant to this Act;
176-22 (3) sell, lease, exchange or otherwise dispose of all
176-23 or substantially all, of its property and assets; or
176-24 (4) cancel its certificate on completion of winding up
176-25 of the limited partnership.
176-26 (b) The individual or individuals designated by the court,
176-27 on behalf of a limited partnership that is being reorganized, may
177-1 execute:
177-2 (1) an amendment or restatement of the certificate
177-3 containing:
177-4 (A) the name of the limited partnership;
177-5 (B) the text of each amendment or restatement
177-6 approved by the court;
177-7 (C) the date of the court's order or decree
177-8 approving the amendment or restatement; [and]
177-9 (D) the court, file name, and case number of the
177-10 reorganization case [proceeding] in which the order or decree was
177-11 entered; and
177-12 (E) a statement that the court had jurisdiction
177-13 of the case under a federal statute; [or]
177-14 (2) a certificate of merger containing:
177-15 (A) the name of the limited partnership;
177-16 (B) the information required by Subsection (b)
177-17 of Section 2.11 of this Act;
177-18 (C) the date of the court's order or decree
177-19 approving the merger; [and]
177-20 (D) the court, file name, and case number of the
177-21 reorganization case [proceeding] in which the order or decree was
177-22 entered; and
177-23 (E) a statement that the court had jurisdiction
177-24 of the case under a federal statute; [or]
177-25 (3) a certificate of cancellation containing:
177-26 (A) the name of the limited partnership;
177-27 (B) the information required by Section 2.03 of
178-1 this Act and any other information permitted by Section 2.03 that
178-2 the court's order requires or permits to be included;
178-3 (C) the date of the court's order or decree
178-4 approving the certificate of cancellation; [and]
178-5 (D) the court, file name, and case number of the
178-6 reorganization case [proceeding] in which the order or decree was
178-7 entered; and
178-8 (E) a statement that the court had jurisdiction
178-9 of the case under a federal statute; or
178-10 (4) a certificate of conversion containing:
178-11 (A) the name of the limited partnership;
178-12 (B) the information required by Subsection (c)
178-13 of Section 2.15 of this Act;
178-14 (C) the date of the court's order or decree
178-15 approving the conversion;
178-16 (D) the court, file name, and case number of the
178-17 reorganization case in which the order or decree was entered; and
178-18 (E) a statement that the court had jurisdiction
178-19 of the case under a federal statute.
178-20 (c) If a domestic or foreign limited partnership that is not
178-21 being reorganized merges or engages in a conversion or an interest
178-22 exchange pursuant to a plan of reorganization with a domestic or
178-23 foreign limited partnership or other entity that is being
178-24 reorganized, Section 2.11 or 2.15 of this Act applies to the
178-25 domestic or foreign limited partnership or other entity that is not
178-26 being reorganized to the same extent that that section would apply
178-27 if the domestic or foreign limited partnership were merging with a
179-1 limited partnership that is not being reorganized except as
179-2 otherwise provided in the plan of reorganization ordered or decreed
179-3 by a court of competent jurisdiction under federal statute.
179-4 Subject to satisfaction of the requirements [the requirement] of
179-5 Section 2.11 or 2.15 of this Act and any other requirements of the
179-6 plan of merger, a certificate of merger or conversion shall be
179-7 signed on behalf of the entities that [which] are parties to the
179-8 merger or conversion and shall be filed with the secretary of state
179-9 [Secretary of State] as required by Section 2.11 or 2.15 of this
179-10 Act.
179-11 (d) On endorsement of the certificate by the secretary of
179-12 state under Section 2.07 of this Act, the certificate of amendment,
179-13 merger, conversion, or cancellation or restated certificate becomes
179-14 effective and has the same effect as if it had been adopted by
179-15 unanimous action of the general and the limited partners of the
179-16 limited partnership being reorganized except as otherwise provided
179-17 by this section or by the plan of reorganization ordered or decreed
179-18 by a court of competent jurisdiction under federal statute.
179-19 SECTION 91. Section 2.07, Texas Revised Limited Partnership
179-20 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
179-21 adding Subsection (c) to read as follows:
179-22 (c) Notwithstanding the provisions of Subsection (a) of this
179-23 section, the secretary of state shall not provide a filed stamped
179-24 duplicate acknowledgment copy of any document required or
179-25 authorized to be filed with the secretary of state that is
179-26 delivered to the secretary of state without a duplicate copy of the
179-27 document attached. If the secretary of state finds that the
180-1 document otherwise conforms to law, the original shall be filed and
180-2 indexed in the manner provided by Subsection (a) of this section
180-3 and a letter acknowledging the filing shall be sent to the person
180-4 who filed the document or to the person's designated
180-5 representative.
180-6 SECTION 92. Section 2.08(a), Texas Revised Limited
180-7 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
180-8 is amended to read as follows:
180-9 (a) If a certificate of limited partnership or a certificate
180-10 of amendment, merger, or cancellation contains a materially false
180-11 statement, [or] fails to state any material fact required to be
180-12 included in the certificate by this Act, or is forged or signed by
180-13 a person not authorized by the limited partnership to execute the
180-14 certificate, a person who did not authorize the certificate or
180-15 other document that purports to have been authorized or a person
180-16 who suffers loss by reasonable reliance on the statement or
180-17 from an omission may recover damages arising from the filing of
180-18 the false, forged or unauthorized certificate [for the loss]
180-19 from:
180-20 (1) any partner or other person who executed the
180-21 certificate and knew or, in the case of a general partner, should
180-22 have known of the forgery, lack of authorization or false statement
180-23 or of the omission when the certificate was executed; and
180-24 (2) any general partner who after execution of the
180-25 certificate knows that any arrangement or other fact described in
180-26 the certificate is false in a material respect or has changed,
180-27 making the statement false in a material respect, or that the
181-1 certificate fails to state a material fact required to be included
181-2 in the certificate by this Act, if that general partner had
181-3 sufficient time to amend or cancel the certificate or to file a
181-4 petition for its amendment or cancellation before the statement was
181-5 reasonably relied on.
181-6 SECTION 93. Sections 2.11(b), (d), (e), (g), and (h), Texas
181-7 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
181-8 Civil Statutes), are amended to read as follows:
181-9 (b) A plan of merger must set forth:
181-10 (1) the name and state of domicile of each domestic or
181-11 foreign limited partnership or other entity that is a party to the
181-12 merger and the name of each domestic or foreign limited partnership
181-13 or other entity, if any, that shall survive the merger, which may
181-14 be one or more of the domestic or foreign limited partnerships or
181-15 other entities party to the merger, and the name and state of
181-16 domicile of each new domestic or foreign limited partnership or
181-17 other entity, if any, that may be created by the terms of the plan
181-18 of merger;
181-19 (2) the terms and conditions of the merger including,
181-20 if more than one domestic or foreign limited partnership or other
181-21 entity is to survive or to be created by the terms of the plan of
181-22 merger, (i) the manner and basis of allocating and vesting the real
181-23 estate and other property of each domestic or foreign limited
181-24 partnership and of each other entity that is a party to the merger
181-25 among one or more of the surviving or new domestic or foreign
181-26 limited partnerships and other entities, and (ii) the manner and
181-27 basis of allocating all liabilities and obligations of each
182-1 domestic or foreign limited partnership and other entity that is a
182-2 party to the merger (or making adequate provision for the payment
182-3 and discharge thereof) among one or more of the surviving or new
182-4 domestic or foreign limited partnerships and other entities;
182-5 (3) the manner and basis of converting any of the
182-6 partnership interests or other evidences of ownership of each
182-7 domestic or foreign limited partnership and other entity that is a
182-8 party to the merger into partnership interests, shares,
182-9 obligations, evidences of ownership, rights to purchase securities
182-10 or other securities of one or more of the surviving or new domestic
182-11 or foreign limited partnerships or other entities, into cash or
182-12 other property including shares, obligations, evidences of
182-13 ownership, rights to purchase securities or other securities of any
182-14 other person or entity or into any combination of the foregoing;
182-15 (4) as an exhibit or attachment, the certificate of
182-16 limited partnership of any new domestic limited partnership to be
182-17 created by the terms of the plan of merger; and
182-18 (5) the certificate of limited partnership or other
182-19 organizational documents of each other entity that is a party to
182-20 the merger and that is to be created by the terms of the plan of
182-21 merger.
182-22 (d) After a plan of merger has been approved by each of the
182-23 limited partnerships or other entities that is a party to the plan
182-24 of merger, a certificate of merger shall be executed on behalf of
182-25 each limited partnership or other entity by at least one general
182-26 partner of each domestic limited partnership that is a party to the
182-27 plan of merger and by a general partner, officer, agent or other
183-1 authorized representative of each other limited partnership or
183-2 other entity that is a party to the plan of merger and shall set
183-3 forth:
183-4 (1) the plan of merger or a statement certifying the
183-5 following:
183-6 (A) the name, the state of incorporation,
183-7 formation, or organization of each of the parties to the merger,
183-8 and the organizational form of each new or surviving limited
183-9 partnership or other entity;
183-10 (B) that a plan of merger has been approved;
183-11 (C) any amendments or changes in the certificate
183-12 of limited partnership of each surviving domestic limited
183-13 partnership, or if no such amendments are desired to be effected by
183-14 the merger, a statement to that effect;
183-15 (D) the certificate of limited partnership of
183-16 each new domestic limited partnership to be formed under the plan
183-17 of merger;
183-18 (E) that an executed plan of merger is on file
183-19 at the principal place of business of each surviving or new
183-20 domestic or foreign limited partnership or other entity, stating
183-21 the address thereof;
183-22 (F) that a copy or summary of the plan of merger
183-23 has been or is being furnished to each partner in each domestic
183-24 limited partnership that is a party to the merger at least 20 days
183-25 before the merger is effective, unless waived by that partner, or
183-26 that the domestic limited partnership has complied with the
183-27 provisions of its partnership agreement regarding furnishing
184-1 partners copies or summaries of the plan of merger or notices
184-2 regarding the merger; and
184-3 (G) in the case of a merger with multiple
184-4 surviving domestic or foreign limited partnerships or other
184-5 entities, that a copy of the plan of merger will be furnished by
184-6 each new or surviving domestic or foreign limited partnership or
184-7 other entity, on written request and without cost, to any creditor
184-8 or obligee of the parties to the merger at the time of the merger
184-9 if the obligation is then outstanding; and
184-10 (2) as to each domestic or foreign limited partnership
184-11 or other entity that is a party to the plan of merger, a statement
184-12 that the plan of merger was duly authorized by all action required
184-13 by the laws under which it was formed or organized and by its
184-14 constituent documents.
184-15 (e) The original of the certificate of merger and such
184-16 number of copies of the certificate equal to the number of
184-17 surviving and new domestic or foreign limited partnerships and
184-18 other entities that are a party to the plan of merger or that will
184-19 be created by the terms thereof, shall be delivered to the
184-20 secretary of state. An equal number of copies of the certificate
184-21 of limited partnership of each domestic limited partnership that is
184-22 to be formed pursuant to the plan of merger shall also be delivered
184-23 to the secretary of state with the articles of merger. Unless the
184-24 secretary of state finds that a certificate of merger does not
184-25 conform to law, on receipt of all applicable filing fees and
184-26 franchise taxes, if any, required by law, or if the plan of merger
184-27 (or a statement provided in lieu thereof) provides that one or more
185-1 of the surviving or new domestic or foreign limited partnerships or
185-2 other entities will be responsible for the payment of all fees and
185-3 franchise taxes and that all of the surviving or new domestic or
185-4 foreign limited partnerships and other entities will be obligated
185-5 to pay the fees and franchise taxes if they are not timely paid,
185-6 the secretary of state shall certify that the certificate of merger
185-7 has been filed in the secretary of state's office by endorsing on
185-8 the original the word "Filed" and the date of the filing, file and
185-9 index the endorsed certificate of merger, and return the copy,
185-10 similarly endorsed, to each surviving or new domestic or foreign
185-11 limited partnership or other entity that is a party to the plan of
185-12 merger or that is created thereby, or its or their respective
185-13 representatives.
185-14 (g) When a merger takes effect:
185-15 (1) the separate existence of every domestic limited
185-16 partnership that is a party to the merger, except any surviving or
185-17 new domestic limited partnership, shall cease;
185-18 (2) all rights, title, and interests to all real
185-19 estate and other property owned by each domestic or foreign limited
185-20 partnership and by each other entity that is a party to the merger
185-21 shall be allocated to and vested in one or more of the surviving or
185-22 resulting entities as provided in the plan of merger without
185-23 reversion or impairment, without further act or deed, and without
185-24 any transfer or assignment having occurred, but subject to any
185-25 existing liens or other encumbrances thereon;
185-26 (3) all liabilities and obligations of each domestic
185-27 or foreign limited partnership and other entity that is a party to
186-1 the merger shall be allocated to one or more of the surviving or
186-2 new domestic or foreign limited partnerships and other entities in
186-3 the manner set forth in the plan of merger, and each surviving or
186-4 new domestic foreign limited partnership, and each surviving or new
186-5 other entity to which a liability or obligation shall have been
186-6 allocated pursuant to the plan of merger, shall be the primary
186-7 obligor therefor and, except as otherwise set forth in the plan of
186-8 merger or as otherwise provided by law or contract, no other party
186-9 to the merger, other than a surviving domestic or foreign limited
186-10 partnership or other entity liable thereon at the time of the
186-11 merger and no other new domestic or foreign limited partnership or
186-12 other entity created thereby, shall be liable therefor;
186-13 (4) a proceeding pending by or against any domestic or
186-14 foreign limited partnership or by or against any other entity that
186-15 is a party to the merger may be continued as if the merger did not
186-16 occur, or the surviving or new domestic or foreign limited
186-17 partnership or limited partnerships or the surviving or new other
186-18 entity or other entities to which the liability, obligation, asset
186-19 or right associated with such proceeding is allocated to and vested
186-20 in pursuant to the plan of merger may be substituted in the
186-21 proceeding;
186-22 (5) the certificate of limited partnership of each
186-23 surviving domestic limited partnership shall be amended to the
186-24 extent provided in the plan of merger;
186-25 (6) each new domestic limited partnership, the
186-26 certificate of limited partnership of which is set forth in the
186-27 plan of merger under Subdivision (4) of Subsection (b) of this
187-1 section, shall be formed as a limited partnership under this Act;
187-2 and each other entity to be formed or organized under the laws of
187-3 this State, the organizational documents of which are set forth in
187-4 the plan of merger, shall, upon an executed copy of the certificate
187-5 of merger being delivered to or filed with any required
187-6 governmental entity with which organizational documents of such
187-7 another entity are required to be delivered or filed, and upon
187-8 meeting such additional requirements, if any, of law for its
187-9 formation or organization, shall be formed or organized as provided
187-10 in the plan of merger; [and]
187-11 (7) the partnership interests of each domestic or
187-12 foreign limited partnership and the partnership interests, shares
187-13 or evidences of ownership in each other entity that is a party to
187-14 the merger that are to be converted or exchanged, in whole or in
187-15 part, into partnership interests, shares, obligations, evidences of
187-16 ownership, rights to purchase securities or other securities of one
187-17 or more of the surviving or new domestic or foreign limited
187-18 partnerships or other entities, into cash or other property,
187-19 including shares, obligations, evidences of ownership, rights to
187-20 purchase securities or other securities of any other person or
187-21 entity, or into any combination of the foregoing, shall be so
187-22 converted and exchanged and the former partners of each domestic
187-23 limited partnership that is a party to the merger shall be entitled
187-24 only to the rights provided in the plan of merger; [and]
187-25 (8) if the plan of merger shall fail to provide for
187-26 the allocation and vesting of the right, title, and interest in any
187-27 particular item of real estate or other property or for the
188-1 allocation of any liability or obligation of any party to the
188-2 merger, such item of real estate or other property shall be owned
188-3 in undivided interest by, or such liability or obligation shall be
188-4 a joint and several liability and obligation of, each of the
188-5 surviving and new domestic and foreign limited partnerships and
188-6 other entities, pro rata to the total number of surviving and new
188-7 domestic and foreign limited partnerships and other entities
188-8 resulting from the merger; and
188-9 (9) a partner of a domestic or foreign limited
188-10 partnership that is a party to a merger does not become personally
188-11 liable as a result of the merger for a liability or obligation of
188-12 another person that is a party to the merger unless the party
188-13 consents to becoming personally liable by action taken in
188-14 connection with the specific plan of merger approved by the
188-15 partner; and for purposes of determining the liability of partners
188-16 in a domestic limited partnership that is a party to the merger for
188-17 the debts and obligations of other parties to the merger in which
188-18 that partner otherwise was not or is not a partner or other owner
188-19 of an interest:
188-20 (a) a partner who remains in or enters a
188-21 domestic or foreign limited partnership or other entity that
188-22 survives a merger or that enters a domestic or foreign limited
188-23 partnership or other entity created by the terms of the plan of
188-24 merger shall be treated as an incoming partner in the new or
188-25 surviving partnership as of the effective date of the merger for
188-26 the purpose of determining the partner's liability for a debt or
188-27 obligation of the other partnership or other entities that are
189-1 parties to the merger and in which the partner was not associated;
189-2 and
189-3 (b) a partner in a domestic partnership that is
189-4 a party to the merger but that does not survive shall be treated as
189-5 a partner who withdrew from the nonsurviving domestic partnership
189-6 as of the effective date of the merger.
189-7 (h) One or more domestic or foreign limited partnerships or
189-8 other entities may adopt a plan of exchange by which a domestic or
189-9 foreign limited partnership or other [an] entity acquires all of
189-10 the outstanding partnership interests of one or more domestic
189-11 limited partnerships in exchange for cash, [and/or] securities, or
189-12 other property of the acquiring domestic or foreign limited
189-13 partnership or other entity, if:
189-14 (1) the partnership agreement of each domestic limited
189-15 partnership the partnership interests of which are to be acquired
189-16 pursuant to the plan of exchange contains provisions that authorize
189-17 the partnership interest exchange provided for in the plan of
189-18 exchange adopted by the limited partnership, and if one or more
189-19 foreign limited partnerships or other entities are to issue shares
189-20 or other interests as part of the plan of exchange, the issuance of
189-21 those shares or other interests is either permitted by the laws
189-22 under which that foreign limited partnership or other entity is
189-23 formed or not inconsistent with those laws;
189-24 (2) each domestic limited partnership the partnership
189-25 interests of which are to be acquired pursuant to the plan of
189-26 exchange approves the plan of exchange in the manner prescribed in
189-27 its partnership agreement; and
190-1 (3) each acquiring domestic or foreign limited
190-2 partnership or other entity takes all action that may be required
190-3 by the laws of the state or country under which it was formed or
190-4 incorporated and as required by its partnership agreement or other
190-5 constituent documents in order to effect the exchange.
190-6 No filing with the secretary of state shall be necessary in
190-7 order to evidence or effect such interest exchange with respect to
190-8 a domestic limited partnership that is a party to such interest
190-9 exchange. When an interest exchange takes effect as provided in
190-10 the plan of exchange, the partnership interests of each domestic
190-11 limited partnership that are to be acquired pursuant to the plan of
190-12 exchange shall be deemed to have been exchanged as provided in the
190-13 plan of exchange and the former holders of the partnership
190-14 interests exchanged pursuant to the plan of exchange shall be
190-15 entitled only to the exchange rights provided in the plan of
190-16 exchange and the acquiring domestic or foreign limited partnership
190-17 or other entity or entities shall be entitled to all rights, title,
190-18 and interests with respect to the partnership interests so acquired
190-19 and exchanged subject to the provisions in the plan of exchange.
190-20 SECTION 94. Subsections A and F, Section 2.12, Texas Revised
190-21 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
190-22 Statutes), are amended to read as follows:
190-23 A. The effectiveness of (i) the certificate of limited
190-24 partnership of a limited partnership under this Act, (ii) an
190-25 amendment to a certificate of limited partnership, (iii) the
190-26 restatement of a certificate of limited partnership, (iv) a merger,
190-27 (v) a certificate of cancellation, (vi) the registration or
191-1 cancellation of registration of a foreign limited partnership to
191-2 transact business in this State, (vii) an amendment to the
191-3 registration of a foreign limited partnership, (viii) a change in
191-4 registered office or registered agent, [and] (ix) a change of
191-5 address of a registered agent (each such act or document being a
191-6 "Permitted Act"), and (x) a conversion may be made effective as of
191-7 a time and date after the time and date otherwise provided in this
191-8 Act or may be made effective upon the occurrence of events or facts
191-9 that may occur in the future, which events or facts may include
191-10 future acts of any person or entity, if:
191-11 (1) the certificate, statement, application, or other
191-12 filing that is required by this Act to be filed with the Secretary
191-13 of State to make effective such Permitted Act clearly and expressly
191-14 sets forth, in addition to any other statement or information
191-15 required to be set forth therein, (i) the time and date on which
191-16 such Permitted Act is to become effective or (ii) if such Permitted
191-17 Act is to become effective upon the occurrence of events or facts
191-18 that may occur in the future, (a) the manner in which such events
191-19 or facts shall operate to cause such Permitted Act to become
191-20 effective and (b) the date of the 90th day after the date of the
191-21 filing of such certificate, statement, application or other filing;
191-22 and either
191-23 (2) If in the case of a Permitted Act that is to
191-24 become effective as of a time or date after the time and date
191-25 otherwise provided in this Act, such subsequent time and date is
191-26 not more than 90 days after the date of the filing of the
191-27 certificate, statement, application, or other filing that is
192-1 otherwise required by this Act to be filed with the Secretary of
192-2 State to make effective such Permitted Act and (iii) the time on
192-3 which the Permitted Act is to become effective is not midnight or
192-4 12:00 p.m.; and
192-5 (3) Permitted Act that is to be made effective upon
192-6 the occurrence of events or facts that may occur in the future,
192-7 other than the mere passage of time, a statement that all such
192-8 events or facts upon which the effectiveness of such Permitted Act
192-9 is conditioned have been satisfied or waived, and of the date on
192-10 which such condition was satisfied or waived is filed with the
192-11 Secretary of State within 90 days of the date of the filing of the
192-12 certificate, statement, application or other filing that is
192-13 otherwise required by this Act for such Permitted Act to become
192-14 effective.
192-15 F. If a certificate of limited partnership, a certificate of
192-16 amendment or cancellation, a judicial decree of amendment or
192-17 cancellation, a certificate of merger, a certificate of conversion,
192-18 a restated certificate or any other document permitted to be filed
192-19 pursuant to this Act with the Secretary of State has been filed but
192-20 the event or transaction evidenced thereby has not become
192-21 effective, such filing may be abandoned in accordance with the
192-22 agreement of the parties thereto and, if so abandoned, a
192-23 certificate of abandonment, signed on behalf of each domestic and
192-24 foreign limited partnership or other entity that is a party to the
192-25 event or transaction by any general partner, an officer or other
192-26 duly authorized representative, stating the nature, date of filing
192-27 and parties to the filing to be abandoned and that the event or
193-1 transaction has been abandoned in accordance with the agreement of
193-2 the parties, is filed with the Secretary of State prior to the
193-3 effectiveness of the event or transaction in accordance with the
193-4 terms of the document so filed. Upon the filing of such statement
193-5 by the Secretary of State, the event or transaction evidenced by
193-6 the original filing shall be deemed abandoned and shall not become
193-7 effective.
193-8 SECTION 95. Article 2, Texas Revised Limited Partnership Act
193-9 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
193-10 adding Section 2.15 to read as follows:
193-11 Sec. 2.15. CONVERSION. (a) A domestic limited partnership
193-12 may adopt a plan of conversion and convert to a foreign limited
193-13 partnership or any other entity if:
193-14 (1) the converting entity acts upon and its partners
193-15 approve a plan of conversion in the manner prescribed by Section
193-16 2.11 of this Act as if the conversion were a merger to which the
193-17 converting entity were a party and not the survivor;
193-18 (2) the conversion is permitted by, or not
193-19 inconsistent with, the laws of the state or country in which the
193-20 converted entity is to be incorporated, formed, or organized, and
193-21 the incorporation, formation, or organization of the converted
193-22 entity is effected in compliance with such laws;
193-23 (3) at the time the conversion becomes effective, each
193-24 partner of the converting entity will, unless otherwise agreed to
193-25 by that partner, own an equity interest or other ownership or
193-26 security interest in, and be a shareholder, partner, member, owner
193-27 or other security holder of, the converted entity;
194-1 (4) no limited partner of the domestic limited
194-2 partnership will, as a result of the conversion, become personally
194-3 liable, without the limited partner's consent, for the liabilities
194-4 or obligations of the converted entity; and
194-5 (5) the converted entity shall be incorporated,
194-6 formed, or organized as part of or pursuant to the plan of
194-7 conversion.
194-8 (b) Any foreign limited partnership or other entity may
194-9 adopt a plan of conversion and convert to a domestic limited
194-10 partnership if:
194-11 (1) the conversion is permitted by the laws of the
194-12 state or country in which the foreign limited partnership is
194-13 formed, if a foreign limited partnership is converting;
194-14 (2) the conversion is either permitted by the laws
194-15 under which the other entity is formed or organized or by the
194-16 constituent documents of the other entity that are not inconsistent
194-17 with the laws of the state or country in which the other entity is
194-18 formed or organized, if another entity is converting; and
194-19 (3) the converting entity takes all action that may be
194-20 required by the laws of the state or country under which it is
194-21 incorporated, formed, or organized and by its constituent documents
194-22 to effect the conversion.
194-23 (c) A plan of conversion shall set forth:
194-24 (1) the name of the converting entity and the
194-25 converted entity;
194-26 (2) a statement that the converting entity is
194-27 continuing its existence in the organizational form of the
195-1 converted entity;
195-2 (3) a statement as to the type of entity that the
195-3 converted entity is to be and the state or country under the laws
195-4 of which the converted entity is to be incorporated, formed, or
195-5 organized;
195-6 (4) the manner and basis of converting the partnership
195-7 interests, shares, or other evidences of ownership of the
195-8 converting entity into partnership interests, shares, or other
195-9 evidences of ownership or securities of the converted entity, or
195-10 any combination thereof;
195-11 (5) in an attachment or exhibit, the certificate of
195-12 limited partnership of the domestic limited partnership if the
195-13 converted entity is a domestic limited partnership; and
195-14 (6) in an attachment or exhibit, the certificate of
195-15 limited partnership, articles of incorporation, or other
195-16 organizational documents of the converted entity if the converted
195-17 entity is not a domestic limited partnership.
195-18 (d) A plan of conversion may set forth such other provisions
195-19 relating to the conversion not inconsistent with law, including the
195-20 initial partnership agreement of the converted entity if the
195-21 converted entity is a partnership.
195-22 (e) If a plan of conversion has been approved in accordance
195-23 with the preceding provisions of this section and has not been
195-24 abandoned, articles of conversion shall be executed by the
195-25 converting entity by a partner, officer, or other duly authorized
195-26 representative thereof and shall set forth:
195-27 (1) the plan of conversion or a statement certifying
196-1 the following:
196-2 (A) the name, the state or country of
196-3 incorporation, formation or organization of the converting entity,
196-4 and the organizational form of the converting entity;
196-5 (B) that a plan of conversion has been approved;
196-6 (C) that an executed plan of conversion is on
196-7 file at the principal place of business of the converting entity,
196-8 stating the address thereof, and that an executed plan of
196-9 conversion will be on file, from and after the conversion, at the
196-10 principal place of business of the converting entity, stating the
196-11 address thereof; and
196-12 (D) that a copy of the plan of conversion will
196-13 be furnished by the converting entity (prior to the conversion) or
196-14 the converted entity (after the conversion), on written request and
196-15 without cost, to any member of the converting entity or the
196-16 converted entity; and
196-17 (2) a statement that the approval of the plan of
196-18 conversion was duly authorized by all action required by the laws
196-19 under which the converting entity was incorporated, formed, or
196-20 organized and by its constituent documents.
196-21 (f) Except as otherwise provided by Section 2.14 of this
196-22 Act, upon the issuance of the certificate of conversion by the
196-23 secretary of state, the conversion of a converting entity shall be
196-24 effective.
196-25 (g) When a conversion of a converting entity takes effect:
196-26 (1) the converting entity shall continue to exist,
196-27 without interruption, but in the organizational form of the
197-1 converted entity rather than in its prior organizational form;
197-2 (2) all rights, title, and interests to all real
197-3 estate and other property owned by the converting entity shall
197-4 continue to be owned by the converted entity in its new
197-5 organizational form without reversion or impairment, without
197-6 further act or deed, and without any transfer or assignment having
197-7 occurred, but subject to any existing liens or other encumbrances
197-8 thereon;
197-9 (3) all liabilities and obligations of the converting
197-10 entity shall continue to be liabilities and obligations of the
197-11 converted entity in its new organizational form without impairment
197-12 or diminution by reason of the conversion;
197-13 (4) all rights of creditors or other parties with
197-14 respect to or against the prior interest holders or other owners of
197-15 the converting entity in their capacities as such in existence as
197-16 of the effective time of the conversion will continue in existence
197-17 as to those liabilities and obligations and may be pursued by such
197-18 creditors and obligees as if such conversion shall not have
197-19 occurred;
197-20 (5) a proceeding pending by or against the converting
197-21 entity or by or against any of the converting entity's interest
197-22 holders or owners in their capacities as such may be continued by
197-23 or against the converted entity in its new organizational form and
197-24 by or against the prior interest holders or owners, as the case may
197-25 be, without any need for substitution of parties;
197-26 (6) the partnership interests, shares, and other
197-27 evidences of ownership in the converting entity that are to be
198-1 converted into partnership interests, shares, evidences of
198-2 ownership, or other securities in the converted entity as provided
198-3 in the plan of conversion shall be so converted, and if the
198-4 converting entity is a domestic limited partnership, the former
198-5 holders of shares in the domestic limited partnership shall be
198-6 entitled only to the rights provided in the plan of conversion;
198-7 (7) if, after the effectiveness of the conversion, a
198-8 shareholder, partner, member, or other owner of the converted
198-9 entity would be liable under applicable law in such capacity for
198-10 the debts or obligations of the converted entity, such shareholder,
198-11 partner, member, or other owner of the converted entity shall be
198-12 liable for the debts and obligations of the converting entity that
198-13 existed before the conversion takes effect only to the extent that
198-14 such shareholder, partner, member, or other owner:
198-15 (A) agreed in writing to be liable for such
198-16 debts or obligations;
198-17 (B) was liable under applicable law, prior to
198-18 the effectiveness of the conversion, for such debts or obligations;
198-19 or
198-20 (C) by becoming a shareholder, partner, member,
198-21 or other owner of the converted entity, becomes liable under
198-22 applicable law for existing debts and obligations of the converted
198-23 entity;
198-24 (8) if the converted entity is a foreign limited
198-25 partnership or other entity, such converted entity shall be deemed
198-26 to appoint the secretary of state as its agent for service of
198-27 process in a proceeding to enforce any obligation or the rights of
199-1 dissenting members of the converting domestic limited partnership;
199-2 and
199-3 (9) if the converting limited partnership is a
199-4 domestic limited partnership, the provisions of Section 2.11 of
199-5 this Act shall apply as if the converted entity were the survivor
199-6 of a merger with the converting entity.
199-7 (h) For purposes of this section:
199-8 (1) "Conversion" means the continuance of:
199-9 (A) a domestic limited partnership as, and in
199-10 the organizational form of, a foreign limited partnership or other
199-11 entity; or
199-12 (B) a foreign limited partnership or other
199-13 entity as, and in the organizational form of, a domestic limited
199-14 partnership.
199-15 (2) "Converted entity" means any domestic or foreign
199-16 limited partnership or other entity to which a converting entity
199-17 has converted or intends to convert as permitted by this section.
199-18 (3) "Converting entity" means any domestic or foreign
199-19 limited partnership or other entity that has converted or intends
199-20 to convert as permitted by this section.
199-21 (4) "Other entity" means any entity, whether organized
199-22 for profit or not, that is a corporation, partnership (other than a
199-23 limited partnership or a general partnership (including a joint
199-24 venture) governed by the Texas Revised Partnership Act (Article
199-25 6132b-1.01 et seq., Vernon's Texas Civil Statutes)), limited
199-26 liability company, joint stock company, cooperative, association,
199-27 bank, insurance company, or other legal entity organized pursuant
200-1 to the laws of this state or any other state or country.
200-2 SECTION 96. Section 3.03(b), Texas Revised Limited
200-3 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
200-4 is amended to read as follows:
200-5 (b) For the purposes of this section, a limited partner does
200-6 not participate in the control of the business by virtue of the
200-7 limited partner's having or acting in one or more of the following
200-8 capacities or possessing or exercising one or more of the following
200-9 powers:
200-10 (1) acting as a contractor for or an agent or employee
200-11 of the limited partnership or of a general partner, an officer,
200-12 director, or stockholder of a corporate general partner, [or] a
200-13 partner of a partnership that is a general partner of the limited
200-14 partnership, a member or manager of a limited liability company
200-15 that is a general partner of the limited partnership, or in a
200-16 similar capacity with any other person that is a general partner;
200-17 (2) consulting with or advising a general partner on
200-18 any matter, including the business of the limited partnership;
200-19 (3) acting as surety, guarantor, or endorser for the
200-20 limited partnership, to guarantee or assume one or more specific
200-21 obligations of the limited partnership, or to provide collateral
200-22 for borrowings of the limited partnership;
200-23 (4) calling, requesting, attending, or participating
200-24 in a meeting of the partners or the limited partners;
200-25 (5) winding up a limited partnership under Section
200-26 8.04 of this Act;
200-27 (6) taking any action required or permitted by law to
201-1 bring, or pursue, or settle or otherwise terminate a derivative
201-2 action in the right of the limited partnership;
201-3 (7) serving on a committee of the limited partnership
201-4 or the limited partners; or
201-5 (8) proposing, approving, or disapproving, by vote or
201-6 otherwise, one or more of the following matters:
201-7 (A) the dissolution and winding up of the
201-8 limited partnership or an election to reconstitute the limited
201-9 partnership or an election to continue the business of the limited
201-10 partnership;
201-11 (B) the sale, exchange, lease, mortgage,
201-12 assignment, pledge, or other transfer of, or granting of a security
201-13 interest in, an asset or assets of the limited partnership;
201-14 (C) the incurring, renewal, refinancing, or
201-15 payment or other discharge of indebtedness by the limited
201-16 partnership;
201-17 (D) a change in the nature of the business of
201-18 the limited partnership;
201-19 (E) the admission, removal, or retention of a
201-20 general partner;
201-21 (F) the admission, removal, or retention of a
201-22 limited partner;
201-23 (G) a transaction or other matter involving an
201-24 actual or potential conflict of interest;
201-25 (H) an amendment to the partnership agreement or
201-26 certificate of limited partnership;
201-27 (I) if the limited partnership is qualified as
202-1 an investment company under the federal Investment Company Act of
202-2 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter
202-3 required by the Investment Company Act of 1940, as amended, or the
202-4 rules and regulations of the Securities and Exchange Commission
202-5 thereunder, to be approved by the holders of beneficial interests
202-6 in an investment company including:
202-7 (i) electing directors or trustees of the
202-8 investment company;
202-9 (ii) approving or terminating investment
202-10 advisory or underwriting contracts;
202-11 (iii) approving auditors; and
202-12 (iv) acting on any other matters that the
202-13 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.)
202-14 requires to be approved by the holders of beneficial interests in
202-15 the investment company;
202-16 (J) indemnification of a general partner under
202-17 Article 11 of this Act;
202-18 (K) any other matter stated in the partnership
202-19 agreement;
202-20 (L) exercising a right or power granted or
202-21 permitted to limited partners under this Act and not specifically
202-22 enumerated in this subsection; or
202-23 (M) the merger of a limited partnership.
202-24 SECTION 97. Section 5.01, Texas Revised Limited Partnership
202-25 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
202-26 read as follows:
202-27 Sec. 5.01. FORM OF CONTRIBUTION. The contribution of a
203-1 limited partner may consist of any tangible or intangible benefit
203-2 [be in cash, property, or services rendered, or a promissory note
203-3 or other obligation to pay cash or transfer property] to the
203-4 limited partnership or other property of any kind or nature,
203-5 including cash, a promissory note, services performed, a contract
203-6 for services to be performed, other interests in or securities of
203-7 the limited partnership, or interests in or securities of any other
203-8 limited partnership, domestic or foreign, or other entity.
203-9 SECTION 98. Section 5.02(d), Texas Revised Limited
203-10 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
203-11 is amended to read as follows:
203-12 (d) Unless otherwise provided by the partnership agreement,
203-13 the obligation of a partner or a partner's legal representative or
203-14 successor to make a contribution or otherwise pay cash or transfer
203-15 property or to return cash or property paid or distributed to the
203-16 partner in violation of this Act or the partnership agreement may
203-17 be compromised or released only by consent of all of the partners.
203-18 Notwithstanding the compromise or release, a creditor of a limited
203-19 partnership who extends credit or otherwise acts in reasonable
203-20 reliance on that obligation, after the partner signs a writing that
203-21 reflects the obligation and before the writing is amended or
203-22 canceled to reflect the compromise or release, may enforce the
203-23 original obligation. A general partner, however, remains liable to
203-24 persons other than the partnership and the other partners, as
203-25 provided by Subsection (b) of Section 4.03 of this Act,
203-26 notwithstanding the compromise or release. A conditional
203-27 obligation may not be enforced unless the conditions of the
204-1 obligation have been satisfied or waived as to or by the applicable
204-2 limited partner. Conditional obligations include contributions
204-3 payable upon a discretionary call of a limited partnership before
204-4 the time the call occurs.
204-5 SECTION 99. Section 6.02(b), Texas Revised Limited
204-6 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
204-7 is amended to read as follows:
204-8 (b) Unless otherwise provided by a written partnership
204-9 agreement and subject to the liability created under Subsection (a)
204-10 of this section, if a general partner [who] ceases to be a general
204-11 partner under Section 4.02 of this Act, then [shall, at the option
204-12 of] the remaining general partner or partners or, if there are no
204-13 remaining general partners, then the limited partners, at the
204-14 option of a majority in interest of the limited partners in a vote
204-15 that excludes any limited partner's [partnership] interest held by
204-16 the withdrawing general partner, may:
204-17 (1) convert [the interest in] that general partner's
204-18 partnership interest [capital account, profits, losses, and
204-19 distributions] to that of a limited partner; or
204-20 (2) pay to the withdrawn general partner in cash, or
204-21 secure by bond approved by a court of competent jurisdiction, the
204-22 value of that partner's partnership interest less the damages
204-23 caused if the withdrawal constituted a breach of the partnership
204-24 agreement.
204-25 Until one of the foregoing actions is taken, the owner of the
204-26 partnership interest of the withdrawn general partner has the
204-27 status of an assignee under Article VII of this Act.
205-1 SECTION 100. Section 6.03, Texas Revised Limited Partnership
205-2 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
205-3 read as follows:
205-4 Sec. 6.03. WITHDRAWAL OF LIMITED PARTNER. A limited partner
205-5 may withdraw from a limited partnership only at the time or on the
205-6 occurrence of events specified in a [written] partnership agreement
205-7 and in accordance with that [written] partnership agreement. [If
205-8 the partnership agreement does not specify such a time or event or
205-9 a definite time for the dissolution and winding up of the limited
205-10 partnership, a limited partner may withdraw on giving written
205-11 notice not less than six months before the date of withdrawal to
205-12 each general partner at that general partner's address as set forth
205-13 in the certificate of limited partnership.]
205-14 SECTION 101. Section 8.01, Texas Revised Limited Partnership
205-15 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
205-16 read as follows:
205-17 Sec. 8.01. DISSOLUTION. A limited partnership is dissolved
205-18 and its affairs shall be wound up only on the first of the
205-19 following to occur:
205-20 (1) [on] the occurrence of events specified in the
205-21 partnership agreement to cause dissolution unless within 90 days
205-22 after the event causing the dissolution, all remaining partners (or
205-23 another group or percentage of partners as specified by the
205-24 partnership agreement) agree in writing to continue the business of
205-25 the limited partnership;
205-26 (2) written consent of all partners to dissolution;
205-27 (3) an event of withdrawal of a general partner,
206-1 unless:
206-2 (A) there remains at least one general partner
206-3 and the partnership agreement permits the business of the limited
206-4 partnership to be carried on by the remaining general partner or
206-5 general partners, and that general partner or those general
206-6 partners do so; or
206-7 (B) within 90 days after the event of
206-8 withdrawal, all remaining partners (or another group or percentage
206-9 of partners as specified by the partnership agreement) agree in
206-10 writing to continue the business of the limited partnership and, to
206-11 the extent that they desire or if there are no remaining general
206-12 partners, agree to the appointment, effective as of the date of
206-13 withdrawal, of one or more new general partners; or
206-14 (4) entry of a decree of judicial dissolution under
206-15 Section 8.02 of this Act.
206-16 SECTION 102. Section 8.02, Texas Revised Limited Partnership
206-17 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
206-18 read as follows:
206-19 Sec. 8.02. JUDICIAL DISSOLUTION. On application by or for a
206-20 partner, a court of competent jurisdiction may decree dissolution
206-21 of a limited partnership if the court determines that:
206-22 (1) the economic purpose of the limited partnership is
206-23 likely to be unreasonably frustrated;
206-24 (2) another partner has engaged in conduct relating to
206-25 the limited partnership business that makes it not reasonably
206-26 practicable to carry on the business in limited partnership with
206-27 that partner; or
207-1 (3) it is not reasonably practicable to carry on the
207-2 business of the limited partnership in conformity with the
207-3 partnership agreement.
207-4 SECTION 103. Section 8.04(a), Texas Revised Limited
207-5 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
207-6 is amended to read as follows:
207-7 (a) Except as provided in the partnership agreement, on [On]
207-8 the dissolution of a limited partnership, [unless it is
207-9 reconstituted in accordance with Section 8.03 of this Act,] the
207-10 partnership's affairs shall be wound up as soon as reasonably
207-11 practicable, and the[. The] winding up shall be accomplished by the
207-12 general partners who have not wrongfully dissolved a limited
207-13 partnership or, if there are none who have not wrongfully dissolved
207-14 the partnership, by the limited partners or a person chosen by the
207-15 limited partners. In addition, a court of competent jurisdiction,
207-16 on cause shown, may wind up the limited partnership's affairs on
207-17 application of any partner or the partner's legal representative or
207-18 assignee and, in connection with the winding up, may appoint a
207-19 person to carry out the liquidation and may make all other orders,
207-20 directions, and inquiries that the circumstances require.
207-21 SECTION 104. Section 12.01, Texas Revised Limited
207-22 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
207-23 is amended to read as follows:
207-24 Sec. 12.01. FEES. The secretary of state shall collect for
207-25 the use of the state:
207-26 (1) for filing a certificate of limited partnership
207-27 under Section 2.01 of this Act, or an application for registration
208-1 as a foreign limited partnership under Section 9.02 of this Act, a
208-2 fee of $750;
208-3 (2) for filing a certificate of amendment under
208-4 Section 2.02 of this Act, a certificate of cancellation under
208-5 Section 2.03 of this Act, a restated certificate of limited
208-6 partnership under Section 2.10 of this Act, a certificate of merger
208-7 under Section 2.11 of this Act, a certificate of correction under
208-8 Section 2.12 of this Act, a certificate of conversion under Section
208-9 2.15 of this Act, a certificate under Section 9.05 of this Act, or
208-10 a certificate of cancellation under Section 9.06 of this Act[, or
208-11 an election to adopt this Act, whether by the filing of a
208-12 certificate of limited partnership, an application for registration
208-13 as a foreign limited partnership or a certificate of amendment,
208-14 under Section 13.02 of this Act], a fee of $200;
208-15 (3) for filing [an application for reservation of
208-16 name, an application for renewal of reservation, a notice of
208-17 transfer of reservation under Subsection (b) of Section 1.04 of
208-18 this Act, or] an application for registration of name or an
208-19 application for renewal of registration of name under Section 1.05
208-20 of this Act, a fee of $75;
208-21 (4) for filing a statement for change of registered
208-22 office, registered agent, or both, under Subsection (b) of Section
208-23 1.06 of this Act, or a statement for change of location of
208-24 registered office under Subsection (h) of Section 1.06 of this Act,
208-25 a fee of $50, except that the maximum fee for simultaneous filings
208-26 by a registered agent for more than one limited partnership may not
208-27 exceed $2,500;
209-1 (5) for the filing of an application for reservation
209-2 of name under Subsection (b) of Section 1.04 of this Act, a notice
209-3 of transfer of reservation under Subsection (b) of Section 1.04 of
209-4 this Act, or for preclearance of any document for filing, a fee of
209-5 $50; and
209-6 (6) for filing any instrument under this Act not
209-7 expressly provided for above, a fee of $25.
209-8 SECTION 105. Section 13.04, Texas Revised Limited
209-9 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
209-10 is amended to read as follows:
209-11 Sec. 13.04. FILINGS BY FACSIMILE OR ELECTRONIC [SIMILAR]
209-12 MEANS. (a) Any original certificate, instrument, or other
209-13 document required or authorized to be filed with the secretary of
209-14 state under this Act may be a photographic, photostatic, facsimile,
209-15 or similar reproduction of a signed certificate, instrument, or
209-16 other document.
209-17 (b) Any signature or the mark made by a person unable to
209-18 write on any certificate, instrument, or other document required or
209-19 authorized to be filed with the secretary of state may be a
209-20 facsimile in an electronic format permitted by the rules of the
209-21 secretary of state or any symbol executed or adopted by a person
209-22 with the intent to authenticate a writing.
209-23 (c) If permitted by the rules of the secretary of state, any
209-24 certificate, instrument, or other document required or authorized
209-25 to be filed with the secretary of state under this Act may be
209-26 transmitted for filing electronically. If the certificate,
209-27 instrument, or other document conforms to law and the rules
210-1 promulgated by the secretary of state, the secretary shall file the
210-2 instrument by acceptance into the filing system adopted by the
210-3 secretary and assigning to the instrument a date of filing. An
210-4 electronic acknowledgment or certification of the filing, as
210-5 applicable, shall be provided by the secretary of state to the
210-6 partnership or its representative. The secretary of state may
210-7 promulgate rules and adopt practices and procedures for the
210-8 transmission, filing, and retention of instruments filed
210-9 electronically or by use of other technological means.
210-10 (d) This section does not require any certificate,
210-11 instrument, or other document authorized or required to be filed
210-12 with the secretary of state under this Act or any certificate
210-13 issued by the secretary of state concerning any other instrument to
210-14 be on paper or reduced to printed form.
210-15 SECTION 106. Section 1.01, Texas Revised Partnership Act
210-16 (Article 6132b-1.01, Vernon's Texas Civil Statutes), is amended to
210-17 read as follows:
210-18 Sec. 1.01. GENERAL DEFINITIONS. In this Act:
210-19 (1) "Business" means a trade, occupation, profession,
210-20 or other commercial activity.
210-21 (2) "Capital account" means the amount of a partner's
210-22 original contribution to a partnership, which consists of cash and
210-23 the agreed value of any other contribution to the partnership,
210-24 increased by the amount of additional contributions made by that
210-25 partner and by profits credited to that partner under Section
210-26 4.01(b), and decreased by the amount of distributions to that
210-27 partner and by losses charged to that partner under Section
211-1 4.01(b).
211-2 (3) "Court" means a court and judge having
211-3 jurisdiction in the case.
211-4 (4) "Debtor in bankruptcy" means a person who is the
211-5 subject of:
211-6 (A) an order for relief under Title 11 of the
211-7 United States Code or a comparable order under a successor statute
211-8 of general application; or
211-9 (B) a comparable order under federal, [or]
211-10 state, or foreign law governing insolvency.
211-11 (5) "Distribution" means a transfer of cash or other
211-12 property from a partnership to:
211-13 (A) a partner in the partner's capacity as a
211-14 partner; or
211-15 (B) the partner's transferee.
211-16 (6) "Event of withdrawal" or "withdrawal" means an
211-17 event specified by Section 6.01(b).
211-18 (7) "Event requiring a winding up" means an event
211-19 specified by Section 8.01.
211-20 (8) "Foreign limited partnership" means a partnership
211-21 formed under the laws of another state and having as partners one
211-22 or more general partners and one or more limited partners.
211-23 (9) "Foreign limited liability partnership" means a
211-24 partnership that:
211-25 (A) is formed under laws other than the laws of
211-26 Texas; and
211-27 (B) has the status of a registered limited
212-1 liability partnership under those laws.
212-2 (10) "Majority-in-interest" means, as to all of or a
212-3 specified group of partners, partners owning more than 50 percent
212-4 of the current interest in the profits of the partnership owned by
212-5 all of the partners or by the partners in the specified group, as
212-6 appropriate.
212-7 (11) [(10)] "Partnership" means an entity created as
212-8 described by Section 2.02(a). The term includes a registered
212-9 limited liability partnership formed under Section 3.08 or under
212-10 the Texas Uniform Partnership Act (Article 6132b, Vernon's Texas
212-11 Civil Statutes) and its subsequent amendments.
212-12 (12) [(11)] "Partnership agreement" means any
212-13 agreement, written or oral, of the partners concerning a
212-14 partnership.
212-15 (13) [(12)] "Partnership interest" means a partner's
212-16 interest in a partnership, including the partner's share of profits
212-17 and losses or similar items, and the right to receive
212-18 distributions. A partnership interest does not include a partner's
212-19 right to participate in management.
212-20 (14) [(13)] "Person" includes an individual,
212-21 corporation, business trust, estate, trust, custodian, trustee,
212-22 executor, administrator, nominee, partnership (including a
212-23 registered limited liability partnership and a limited
212-24 partnership), association, limited liability company, government,
212-25 governmental subdivision, governmental agency, governmental
212-26 instrumentality, and any other legal or commercial entity, in its
212-27 own or representative capacity.
213-1 (15) [(14)] "Property" means all property, real,
213-2 personal, or mixed, tangible or intangible, or an interest in that
213-3 property.
213-4 (16) [(15)] "Registered limited liability partnership"
213-5 means a partnership registered under Section 3.08(b) and complying
213-6 with Sections 3.08(c) and (d)(1).
213-7 (17) [(16)] "State" means a state of the United
213-8 States, the District of Columbia, the Commonwealth of Puerto Rico,
213-9 or any territory or insular possession subject to the jurisdiction
213-10 of the United States.
213-11 (18) [(17)] "Transfer" includes:
213-12 (A) an assignment;
213-13 (B) a conveyance;
213-14 (C) a lease;
213-15 (D) a mortgage;
213-16 (E) a deed;
213-17 (F) an encumbrance; and
213-18 (G) the creation of a security interest.
213-19 (19) [(18)] "Withdrawn partner" means a partner with
213-20 respect to whom an event of withdrawal has occurred. A partner
213-21 withdraws if an event of withdrawal has occurred with respect to
213-22 that partner under Section 6.01.
213-23 SECTION 107. Section 1.03(b), Texas Revised Partnership Act
213-24 (Article 6132b-1.03, Vernon's Texas Civil Statutes), is amended to
213-25 read as follows:
213-26 (b) Statutory Provisions That May Not Be Varied by
213-27 Agreement. A partnership agreement or the partners may not:
214-1 (1) unreasonably restrict a partner's right of access
214-2 to books and records under Section 4.03(b);
214-3 (2) eliminate the duty of loyalty under Section
214-4 4.04(b), but the partners may by agreement identify specific types
214-5 or categories of activities that do not violate the duty of
214-6 loyalty, if not manifestly unreasonable;
214-7 (3) eliminate the duty of care under Section 4.04(c),
214-8 but the partners may by agreement determine the standards by which
214-9 the performance of the obligation is to be measured, if the
214-10 standards are not manifestly unreasonable;
214-11 (4) eliminate the obligation of good faith under
214-12 Section 4.04(d), but the partners may by agreement determine the
214-13 standards by which the performance of the obligation is to be
214-14 measured, if the standards are not manifestly unreasonable;
214-15 (5) vary the power to withdraw as a partner under
214-16 Section 6.01(b)(1), (7), or (8), except to require the notice to be
214-17 in writing;
214-18 (6) vary the right to expel a partner by a court in
214-19 the events specified by Section 6.01(b)(5);
214-20 (7) vary the requirement to wind up the partnership
214-21 business in the events specified by Section 8.01(c), (d), or (e);
214-22 (8) restrict rights of third parties under this Act,
214-23 except for limitations on individual partners' liability in a
214-24 registered limited liability partnership as provided or permitted
214-25 by Section 3.08; or
214-26 (9) select a governing law not permitted under Section
214-27 1.05(a)(1).
215-1 SECTION 108. Section 1.05(a), Texas Revised Partnership Act
215-2 (Article 6132b-1.05, Vernon's Texas Civil Statutes), is amended to
215-3 read as follows:
215-4 (a) Internal Affairs. The determination whether a
215-5 partnership has been formed, a [A] partnership's internal affairs,
215-6 and the relations of the partners to one another are governed by:
215-7 (1) the law of the state chosen by the partners to
215-8 govern if that state bears a reasonable relation to the partners or
215-9 to the partnership business and affairs under principles that apply
215-10 to a contract among the partners other than the partnership
215-11 agreement; or
215-12 (2) if the partners do not choose a governing law
215-13 under Subdivision (1), the law of the state in which the
215-14 partnership has its chief executive office.
215-15 SECTION 109. Section 2.02, Texas Revised Partnership Act
215-16 (Article 6132b-2.02, Vernon's Texas Civil Statutes), is amended by
215-17 adding Subsection (d) to read as follows:
215-18 (d) Partnership Resulting from Merger or Conversion. In
215-19 the case of a new partnership being formed pursuant to a plan of
215-20 merger or a plan of conversion under Article IX of this Act, the
215-21 existence of the partnership as a partnership shall begin on the
215-22 effectiveness of the merger or the conversion, as the case may be,
215-23 and the persons to be partners shall become partners as of that
215-24 time.
215-25 SECTION 110. Sections 3.02(a) and (b), Texas Revised
215-26 Partnership Act (Article 6132b-3.02, Vernon's Texas Civil
215-27 Statutes), are amended to read as follows:
216-1 (a) Partner Agent of Partnership as to Partnership Business.
216-2 Each partner is an agent of the partnership for the purpose of its
216-3 business. Unless the partner does not have authority to act for
216-4 the partnership in the particular matter and the person with whom
216-5 the partner is dealing knows that the partner lacks authority, an
216-6 act of a partner, including the execution of an instrument in the
216-7 partnership name, binds the partnership if the act is for
216-8 apparently carrying on in the ordinary course [usual way]:
216-9 (1) the partnership business; or
216-10 (2) business of the kind carried on by the
216-11 partnership.
216-12 (b) Act Outside Scope of Business. An act of a partner
216-13 binds [does not bind] the partnership only if [unless] authorized
216-14 by the other partners if the act is not apparently for carrying on
216-15 in the ordinary course [usual way]:
216-16 (1) the partnership business; or
216-17 (2) business of the kind carried on by the
216-18 partnership.
216-19 SECTION 111. Section 3.04, Texas Revised Partnership Act
216-20 (Article 6132b-3.04, Vernon's Texas Civil Statutes), is amended to
216-21 read as follows:
216-22 Sec. 3.04. [NATURE OF] PARTNER'S LIABILITY [PARTNERSHIP].
216-23 Except as provided by Section 3.07 or 3.08(a) [for a registered
216-24 limited liability partnership], all partners are liable jointly and
216-25 severally for all debts and obligations of the partnership unless
216-26 otherwise agreed by the claimant or provided by law.
216-27 SECTION 112. Section 3.05, Texas Revised Partnership Act
217-1 (Article 6132b-3.05, Vernon's Texas Civil Statutes), is amended by
217-2 adding Subsection (f) to read as follows:
217-3 (f) Registered Limited Liability Partnership. This section
217-4 does not limit the effect of Section 3.08(a) in the case of a
217-5 registered limited liability partnership.
217-6 SECTION 113. Sections 3.08(a) and (d), Texas Revised
217-7 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
217-8 Statutes), are amended to read as follows:
217-9 (a) Liability of Partner. (1) Except as provided in
217-10 Subsection (a)(2), a partner in a registered limited liability
217-11 partnership is not individually liable, directly or indirectly, by
217-12 contribution, indemnity, or otherwise, for debts and obligations of
217-13 the partnership incurred while the partnership is a registered
217-14 limited liability partnership.
217-15 (2) A partner in a registered limited liability
217-16 partnership is not individually liable, directly or indirectly, by
217-17 contribution, indemnity, or otherwise, for debts and obligations of
217-18 the partnership arising from errors, omissions, negligence,
217-19 incompetence, or malfeasance committed while the partnership is a
217-20 registered limited liability partnership and in the course of the
217-21 partnership business by another partner or a representative of the
217-22 partnership not working under the supervision or direction of the
217-23 first partner unless the first partner:
217-24 (A) was directly involved in the specific
217-25 activity in which the errors, omissions, negligence, incompetence,
217-26 or malfeasance were committed by the other partner or
217-27 representative; or
218-1 (B) had notice or knowledge of the errors,
218-2 omissions, negligence, incompetence, or malfeasance by the other
218-3 partner or representative at the time of occurrence and then failed
218-4 to take reasonable steps to prevent or cure the errors, omissions,
218-5 negligence, incompetence, or malfeasance.
218-6 (3) Subsections [(2) Subsection] (a)(1) and (a)(2) do
218-7 [does] not affect:
218-8 (A) [the joint and several liability of a
218-9 partner for debts and obligations of the partnership arising from a
218-10 cause other than the causes specified by Subsection (a)(1);]
218-11 [(B)] the liability of a partnership to pay its
218-12 debts and obligations out of partnership property; [or]
218-13 (B) the liability of a partner, if any, imposed
218-14 by law or contract independently of the partner's status as a
218-15 partner; or
218-16 (C) the manner in which service of citation or
218-17 other civil process may be served in an action against a
218-18 partnership.
218-19 (4) [(3)] In this subsection, "representative"
218-20 includes an agent, servant, or employee of a registered limited
218-21 liability partnership.
218-22 (5) In the case of a registered limited liability
218-23 partnership, Subsection (a) prevails over the other parts of this
218-24 Act regarding the liability of partners, their chargeability for
218-25 the debts and obligations of the partnership, and their obligations
218-26 regarding contributions and indemnity.
218-27 (d) Insurance or Financial Responsibility. (1) A
219-1 registered limited liability partnership must:
219-2 (A) carry at least $100,000 of liability
219-3 insurance of a kind that is designed to cover the kinds of errors,
219-4 omissions, negligence, incompetence, or malfeasance for which
219-5 liability is limited by Subsection (a)(2) [(a)(1)]; or
219-6 (B) provide $100,000 of funds specifically
219-7 designated and segregated for the satisfaction of judgments against
219-8 the partnership based on the kinds of errors, omissions,
219-9 negligence, incompetence, or malfeasance for which liability is
219-10 limited by Subsection (a)(2) [(a)(1)] by:
219-11 (i) deposit in trust or in bank escrow of
219-12 cash, bank certificates of deposit, or United States Treasury
219-13 obligations; or
219-14 (ii) a bank letter of credit or insurance
219-15 company bond.
219-16 (2) If the registered limited liability partnership is
219-17 in compliance with Subdivision (1), the requirements of this
219-18 subsection shall not be admissible or in any way be made known to
219-19 the jury in determining an issue of liability for or extent of the
219-20 debt or obligation or damages in question.
219-21 (3) If compliance with Subdivision (1) is disputed:
219-22 (A) compliance must be determined separately
219-23 from the trial or proceeding to determine the partnership debt or
219-24 obligation in question, its amount, or partner liability for the
219-25 debt or obligation; and
219-26 (B) the burden of proof of compliance is on the
219-27 person claiming limitation of liability under Subsection (a)(2)
220-1 [(a)(1)].
220-2 SECTION 114. Section 3.08(b), Texas Revised Partnership Act
220-3 (Article 6132b-3.08, Vernon's Texas Civil Statutes), is amended by
220-4 amending Subdivision (12) and adding Subdivisions (16), (17), and
220-5 (18) to read as follows:
220-6 (12) A document filed under this subsection may be a
220-7 photographic, facsimile, or similar reproduction of a signed
220-8 document. A signature on a document filed under this section may
220-9 be a facsimile, the mark made by a person unable to write, in
220-10 electronic format permitted by the rules of the secretary of state
220-11 or any symbol executed or adopted by a person with the intent to
220-12 authenticate a writing.
220-13 (16) If permitted by the rules of the secretary of
220-14 state, any document authorized to be filed with the secretary of
220-15 state under this subsection may be transmitted for filing
220-16 electronically. If the document conforms to the requirements of
220-17 this subsection and the rules promulgated by the secretary of
220-18 state, the secretary shall file the document by acceptance into the
220-19 filing system adopted by the secretary and assigning to the
220-20 document a date of filing. An electronic acknowledgment of the
220-21 filing, together with an electronically transmitted confirmation
220-22 copy of the document, shall be provided by the secretary of state
220-23 to the partnership or its representative.
220-24 (17) This subsection does not require any document
220-25 authorized to be filed with the secretary of state under this
220-26 subsection or any certificate issued by the secretary of state
220-27 concerning any such document to be on paper or reduced to printed
221-1 form.
221-2 (18) All electronic acknowledgments and certificates
221-3 required to be issued by the secretary of state under this Act
221-4 shall be considered issued or provided by the secretary of state
221-5 upon the initial transmission by the secretary of state of the
221-6 acknowledgment or certificate required to be issued.
221-7 SECTION 115. Sections 4.01(b) and (c), Texas Revised
221-8 Partnership Act (Article 6132b-4.01, Vernon's Texas Civil
221-9 Statutes), are amended to read as follows:
221-10 (b) Profits and Losses. Each partner is entitled to be
221-11 credited with an equal share of the partnership's profits [of a
221-12 partnership. Each partner] and is chargeable [charged] with a
221-13 share of the partnership's losses, whether capital or operating,
221-14 [of the partnership] in proportion to the partner's share of the
221-15 profits.
221-16 (c) Disproportionate Payment or Advance. A partner who, in
221-17 the proper conduct of the business of the partnership or for the
221-18 preservation of its business or property, reasonably makes a
221-19 payment or advance beyond the amount the partner agreed to
221-20 contribute, or who reasonably incurs a liability, is entitled to be
221-21 repaid by the partnership and to receive interest from the
221-22 partnership from the date of the payment or advance or the
221-23 incurrence of the liability.
221-24 SECTION 116. Section 4.06(b), Texas Revised Partnership Act
221-25 (Article 6132b-4.06, Vernon's Texas Civil Statutes), is amended to
221-26 read as follows:
221-27 (b) Action by partner. A partner may maintain an action
222-1 against the partnership or another partner for legal or equitable
222-2 relief, with or without [including] an accounting as to partnership
222-3 business, to:
222-4 (1) enforce a right under the partnership agreement;
222-5 (2) enforce a right under this Act, including:
222-6 (A) the partner's rights under Sections 4.01,
222-7 4.03, and 4.04;
222-8 (B) the partner's right on withdrawal to have
222-9 the partner's interest in the partnership redeemed under Section
222-10 7.01 or enforce any other right under Article 6 or 7; and
222-11 (C) the partner's rights under Article 8; or
222-12 (3) enforce the rights and otherwise protect the
222-13 interests of the partner, including rights and interests arising
222-14 independently of the partnership relationship.
222-15 SECTION 117. Section 6.02(b), Texas Revised Partnership Act
222-16 (Article 6132b-6.02, Vernon's Texas Civil Statutes), is amended to
222-17 read as follows:
222-18 (b) Wrongful Withdrawal. A partner's withdrawal is wrongful
222-19 only if:
222-20 (1) it is in breach of an express provision of the
222-21 partnership agreement;
222-22 (2) in the case of a partnership for a definite term
222-23 or particular undertaking or for which the partnership agreement
222-24 provides for winding up on a specified event, before the expiration
222-25 of the term, the completion of the undertaking, or the occurrence
222-26 of the event:
222-27 (A) the partner withdraws by express will;
223-1 (B) the partner withdraws by becoming a debtor
223-2 in bankruptcy; or
223-3 (C) [(B)] in the case of a partner that is not
223-4 an individual, a trust other than a business trust, or an estate,
223-5 the partner is expelled or otherwise withdraws because the partner
223-6 wilfully dissolved or terminated; or
223-7 (3) the partner is expelled by judicial decree under
223-8 Section 6.01(b)(5).
223-9 SECTION 118. Sections 8.06(a), (b), and (c), Texas Revised
223-10 Partnership Act (Article 6132b-8.06, Vernon's Texas Civil
223-11 Statutes), are amended to read as follows:
223-12 (a) Application of Property to Obligations. In winding up
223-13 the partnership business, the property of the partnership,
223-14 including the contributions of the partners required by this
223-15 section, must be applied to discharge its obligations to creditors,
223-16 including, to the extent permitted by other applicable law,
223-17 partners who are creditors other than in their capacities as
223-18 partners. Any [A] surplus must be applied to pay in cash the net
223-19 amount distributable to partners in accordance with their right to
223-20 distributions under Subsection (b).
223-21 (b) Settlement of Accounts Among Partners. Each partner is
223-22 entitled to a settlement of all partnership accounts on winding up
223-23 the partnership business. In settling accounts among the partners,
223-24 the partnership interest of a withdrawn partner that is not
223-25 redeemed under Section 7.01 is credited with a share of any profits
223-26 for the period after the partner's withdrawal but is charged with a
223-27 share of losses for that period only to the extent of profits
224-1 credited for that period, and the profits and losses that result
224-2 from the liquidation of the partnership property must be credited
224-3 and charged to the partners' capital accounts. The partnership
224-4 shall make a distribution to a partner in an amount equal to that
224-5 partner's positive balance in the partner's capital account.
224-6 Except as provided by Section 3.07 or 3.08(a), a [A] partner shall
224-7 contribute to the partnership an amount equal to that partner's
224-8 negative balance in the partner's capital account.
224-9 (c) Contribution to Satisfy Obligations. Except as provided
224-10 by Section 3.07 or 3.08(a), to [To] the extent not taken into
224-11 account in settling the accounts among partners under Subsection
224-12 (b): [,]
224-13 (1) each partner must contribute, in the proportion in
224-14 which the partner shares partnership losses, the amount necessary
224-15 to satisfy partnership obligations, excluding liabilities that
224-16 creditors have agreed may be satisfied only with
224-17 partnership property without recourse to individual partners;
224-18 (2) if[. If] a partner fails to contribute, the other
224-19 partners shall contribute, in the proportions in which the partners
224-20 share partnership losses, the additional amount necessary to
224-21 satisfy the partnership obligations; and
224-22 (3) a[. A] partner or partner's legal representative
224-23 may enforce or recover from the other partners, or from the estate
224-24 of a deceased partner, contributions the partner or estate makes to
224-25 the extent the amount contributed exceeds that partner's or the
224-26 estate's share of the partnership obligations.
224-27 SECTION 119. Section 9.01(b), Texas Revised Partnership Act
225-1 (Article 6132b-9.01, Vernon's Texas Civil Statutes), is amended to
225-2 read as follows:
225-3 (b) Limited to General. A domestic or foreign limited
225-4 partnership may convert, on the affirmative vote of a
225-5 majority-in-interest of the partners, to a partnership that is not
225-6 a limited partnership by:
225-7 (1) cancelling its certificate of limited partnership
225-8 in the state of formation or otherwise complying with the
225-9 provisions for terminating the existence of the limited partnership
225-10 under [of] that state's law as of the date that partnership's
225-11 existence as a limited partnership is to cease [terminated];
225-12 (2) amending its partnership agreement to reflect its
225-13 change in status and any change in name required to comply with
225-14 this Act; and
225-15 (3) stating the effective date of the conversion in
225-16 the partnership agreement if different from the date of the
225-17 cancellation of the limited partnership certificate.
225-18 If a limited partnership converts to a partnership that is
225-19 not a limited partnership, a partner who did not consent to the
225-20 conversion is considered to be a partner who has withdrawn from the
225-21 limited partnership effective immediately before the effective date
225-22 of the conversion unless, within 60 days after the later of the
225-23 effective date of the conversion or the date the partner receives
225-24 actual notice of the conversion, the partner notifies the
225-25 partnership in writing of the partner's desire not to withdraw. A
225-26 withdrawal under the described circumstances is not a wrongful
225-27 withdrawal.
226-1 SECTION 120. Section 9.02, Texas Revised Partnership Act
226-2 (Article 6132b-9.02, Vernon's Texas Civil Statutes), is amended to
226-3 read as follows:
226-4 Sec. 9.02. Mergers. (a) Adoption of Plan. A domestic
226-5 partnership may adopt a plan of merger and one or more domestic
226-6 partnerships may merge with one or more domestic or foreign
226-7 partnerships or other entities if:
226-8 (1) the partnership agreement of each domestic [or
226-9 foreign] partnership that is a party to the plan of merger contains
226-10 provisions that authorize the merger provided for in the plan of
226-11 merger adopted by the partnership;
226-12 (2) each domestic partnership that is a party to the
226-13 plan of merger approves the plan of merger in the manner prescribed
226-14 [for mergers] in its partnership agreement; and
226-15 (3) [or constituent documents or by applicable law.
226-16 If] one or more foreign partnerships or other entities is a party
226-17 to the merger or is to be created by the terms of the plan of
226-18 merger:
226-19 (A) [(1)] the merger is [must be] permitted
226-20 either by[:]
226-21 [(A)] the laws under which each foreign
226-22 partnership and each other entity that is a party to the merger is
226-23 formed or organized[;] or by
226-24 [(B)] the partnership agreement or other
226-25 constituent documents of the foreign [partnership or other entity
226-26 not inconsistent with those laws; and]
226-27 [(2) each foreign] partnership or other entity that
227-1 are not inconsistent with those laws; and
227-2 (B) each foreign partnership or other entity
227-3 that is a party to the merger complies [must comply] with those
227-4 [the] laws or documents in effecting the merger.
227-5 (b) Contents of Plan [of Merger]. A [If a partnership
227-6 merges with one or more domestic or foreign limited partnerships or
227-7 other entities, other than another partnership that is not a
227-8 limited partnership, a] plan of merger must set forth [be adopted.
227-9 The plan must include]:
227-10 (1) the name and state of formation of [organization
227-11 of:]
227-12 [(A)] each domestic or foreign partnership or
227-13 other entity that is a party to the merger and the name of[;]
227-14 [(B)] each domestic or foreign partnership or
227-15 other entity, if any, that shall [will] survive the merger, which
227-16 may be one or more of the domestic or foreign partnerships or other
227-17 entities [who are a] party to the merger, and the name and state of
227-18 domicile or formation of[; and]
227-19 [(C)] each new domestic or foreign partnership
227-20 or other entity, if any, that may be created by the terms of the
227-21 plan of merger;
227-22 (2) the terms and conditions of the merger[,]
227-23 including, if more than one domestic or foreign partnership or
227-24 other entity is to survive or to be created by the terms of the
227-25 plan of merger:[,]
227-26 (A) the manner and basis of[:]
227-27 [(A)] allocating and vesting the real estate and
228-1 other property of each domestic or foreign partnership and of each
228-2 other entity that is a party to the merger among one or more of the
228-3 surviving or new domestic or foreign partnerships and [or] other
228-4 entities; and
228-5 (B) the manner and basis of allocating all
228-6 liabilities and obligations of each domestic or foreign partnership
228-7 and other entity that is a party to the merger[,] (or making
228-8 adequate provisions [provision] for the payment and discharge
228-9 thereof) [of the liabilities and obligations,] among one or more of
228-10 the surviving or new domestic or foreign partnerships and [or]
228-11 other entities;
228-12 (3) the manner and basis of converting any of the
228-13 partnership interests or other evidences of ownership of each
228-14 domestic or foreign partnership and other entity that is a party to
228-15 the merger into[:]
228-16 [(A)] partnership interests, shares,
228-17 obligations, evidences of ownership, rights to purchase securities,
228-18 or other securities of one or more of the surviving or new domestic
228-19 or foreign partnerships or other entities, into[;]
228-20 [(B)] cash[;] or
228-21 [(C)] other property[,] including shares,
228-22 obligations, evidences of ownership, rights to purchase securities,
228-23 or other securities of any [another] person or entity[;] or into
228-24 [(D)] any combination of the foregoing [those
228-25 items]; and
228-26 (4) as an exhibit or attachment, the [certificate of
228-27 limited partnership, articles of incorporation, articles of
229-1 organization, or other] organizational documents of each
229-2 partnership or other entity that is a party to the merger and that
229-3 is to be created [or will act as a surviving entity] by the terms
229-4 of the plan of merger[;]
229-5 [(5) the names of the principal officer of the
229-6 surviving entities and the registered office and registered agent
229-7 of the surviving entities if a registered office or agent is
229-8 required by the laws under which the surviving entities are formed;]
229-9 [(6) a statement describing whether the surviving
229-10 entity is a partnership, limited partnership, corporation, limited
229-11 liability company, or other entity; and]
229-12 [(7) other provisions relating to the merger].
229-13 (c) Optional Provisions. The plan of merger may state:
229-14 (1) any amendments to the partnership agreement of any
229-15 surviving domestic partnership; and
229-16 (2) any other provisions relating to the merger.
229-17 (d) Certificate of Merger. After a plan of merger has been
229-18 approved by each of the partnerships or other entities that is a
229-19 party to the plan of merger, unless the only parties to the merger
229-20 are partnerships [and a partnership merges with one or more
229-21 domestic or foreign limited partnerships or other entities], a
229-22 certificate of merger shall be executed on behalf of each
229-23 partnership or other entity by at least one [general] partner of
229-24 each domestic partnership that is a party to the plan of merger and
229-25 by a general partner, [an authorized] officer, agent[,] or other
229-26 authorized representative of each other partnership or other entity
229-27 that is a party to the plan of merger and shall set forth[. The
230-1 certificate must include]:
230-2 (1) the plan of merger; and
230-3 (2) for each domestic or foreign partnership or other
230-4 entity that is a party to the plan of merger, a statement that the
230-5 plan of merger was duly authorized by all action [actions] required
230-6 by the laws under which it was formed or organized and by its
230-7 constituent documents.
230-8 (e) [(d)] Filing. If a [The] certificate of merger must be
230-9 executed, the original of the certificate of merger and the number
230-10 of copies of the certificate equal to the number of [filed for
230-11 each] surviving and new domestic or foreign partnerships and other
230-12 entities that are [partnership or other entity and for each other
230-13 entity that is] a party to the plan of merger or that will be
230-14 created by its terms, shall be[. The filing must be with the
230-15 secretary of state or other authority with which the entity must
230-16 file organizational or related documents and must comply with that
230-17 authority's filing requirements.]
230-18 [(e) Effective Date of Merger. If a certificate of merger
230-19 is] delivered to the secretary of state. Unless the secretary of
230-20 state finds that a[, the merger is effective on the date of the
230-21 issuance of the] certificate of merger does not conform to law,
230-22 then on receipt of all applicable filing fees and franchise taxes,
230-23 if any, required by law, or if [by the secretary of state or on a
230-24 later date stated in the certificate of merger. If a certificate
230-25 of merger is not required to be filed with the secretary of state,
230-26 the merger is effective on the date agreed to by the parties to the
230-27 merger as set out in] the plan of merger (or a statement provided
231-1 in lieu thereof) provides that one or more of the surviving or new
231-2 domestic or foreign partnerships or other entities that will be
231-3 responsible for the payment of all the fees and franchise taxes and
231-4 that all of the surviving or new domestic or foreign partnerships
231-5 and other entities will be obligated to pay the fees and franchise
231-6 taxes if they are not timely paid, the secretary of state shall
231-7 certify that the certificate of merger has been filed in the
231-8 secretary of state's office by endorsing on the original the word
231-9 "Filed" and the date of the filing, file and index the endorsed
231-10 certificate of merger, and return the copy, similarly endorsed, to
231-11 each surviving or new domestic or foreign partnership or other
231-12 entity that is a party to the plan of merger or that is created
231-13 thereby, or its or their respective representatives [or as
231-14 otherwise agreed to by the parties].
231-15 (f) Effective Date. Except as provided by Section 9.06, the
231-16 merger shall be effective upon the issuance of the certificate of
231-17 merger by the secretary of state or, if a certificate of merger
231-18 need not be executed, as provided in the plan of merger.
231-19 (g) Effect. When a merger takes effect:
231-20 (1) the [Effect of Merger. (1) A partner of a
231-21 partnership that is a party to a merger does not become personally
231-22 liable as a result of the merger for a liability or obligation of
231-23 another person that is a party to the merger unless the partner
231-24 consents to becoming personally liable by action taken in
231-25 connection with the specific plan of merger approved by the
231-26 partner. A partner who remains in or enters a domestic or foreign
231-27 partnership or other entity that survives a merger or that enters a
232-1 domestic or foreign partnership or other entity created by the
232-2 terms of the plan of merger shall be treated as an incoming partner
232-3 in the new or surviving partnership as of the effective date of the
232-4 merger for the purpose of determining the partner's liability for a
232-5 debt or obligation of the other partnerships or entities that are
232-6 parties to the merger and in which the partner was not associated.]
232-7 [(2) The] separate existence of every domestic
232-8 partnership [or other entity] that is a party to the [a] merger,
232-9 except any [a] surviving or new domestic partnership, shall cease;
232-10 (2) all [or other entity, ceases when a merger takes
232-11 effect.]
232-12 [(3) All] rights, title, and interests [interest] to
232-13 all real estate and other property owned by each domestic or
232-14 foreign partnership and by each other entity that is a party to the
232-15 merger shall be [are] allocated to and vested in one or more of the
232-16 surviving or resulting entities as provided in the [a] plan of
232-17 merger without reversion or impairment, without further act or
232-18 deed, and without any transfer or assignment having occurred, but
232-19 subject to any existing liens or other encumbrances thereon;
232-20 (3) [on the property, when a merger takes effect.]
232-21 [(4) When a merger takes effect,] all liabilities and
232-22 obligations of each domestic or foreign partnership and other
232-23 entity that is a party to the merger shall be [are] allocated to
232-24 one or more of the surviving or new domestic or foreign
232-25 partnerships and [or] other entities in the manner set forth in
232-26 [prescribed by] the plan of merger, and each surviving or new
232-27 domestic or foreign partnership, and each surviving or new other
233-1 entity to which a liability or obligation shall have been [is]
233-2 allocated pursuant to [under] the plan of merger, shall be
233-3 [becomes] the primary obligor therefor and, except [for the
233-4 liability or obligation. Except] as otherwise set forth in
233-5 [provided by] the plan of merger or as otherwise provided by law or
233-6 contract, no other [a] party to the merger, other than a surviving
233-7 domestic or foreign partnership or other entity liable thereon
233-8 [with liability] at the time of the merger and no other new [, or
233-9 another] domestic or foreign partnership or other entity created
233-10 thereby, shall be liable therefor;
233-11 (4) [by the merger does not become liable for the debt
233-12 or obligation.]
233-13 [(5) After a merger,] a proceeding pending by or
233-14 against any [a] domestic or foreign partnership or by or against
233-15 any other [another] entity that is a party to the merger may be
233-16 continued as if the merger did not occur [and the partnership or
233-17 other entity that has been allocated the liabilities, obligations,
233-18 asset, or rights associated with the proceeding under the terms of
233-19 the plan of merger remains the primary obligor], or the surviving
233-20 or new domestic or foreign partnership or the surviving or new
233-21 other entity or other entities to which the liability, obligation,
233-22 asset[,] or right associated with such [the] proceeding is
233-23 allocated to and vested in pursuant to [under] the plan of merger
233-24 may be substituted in the proceeding;
233-25 (5) the[.]
233-26 [(6) The] partnership agreement of each surviving
233-27 domestic partnership shall be[, certificate of limited partnership,
234-1 and other constituent documents of each other entity that will act
234-2 as a surviving entity by the terms of a plan of merger is
234-3 considered] amended to the extent provided in the plan of merger;
234-4 (6) each [when the merger takes effect.]
234-5 [(7) Each] new domestic partnership to be formed under
234-6 the plan of merger shall be formed as a partnership under this Act,
234-7 [named in a plan of merger under Subsection (b)(1), each new
234-8 domestic limited partnership for which a certificate of limited
234-9 partnership is included in a plan of merger under Subsection
234-10 (b)(4),] and each other entity to be formed or organized under the
234-11 laws of this state, the [state for which] organizational documents
234-12 of which are set forth [are included in a plan of merger under
234-13 Subsection (b)(4) are formed or organized as provided] in the plan
234-14 of merger, upon [on:]
234-15 [(A) delivering] an executed copy of the
234-16 certificate of merger being delivered to or filed with any required
234-17 [to, or filing the certificate with, the] governmental entity with
234-18 which organizational documents of such [the partnership or] other
234-19 entity are required to be delivered or filed, [if any;] and upon
234-20 [(B)] meeting the additional requirements, if
234-21 any, of law for its formation or organization, shall be formed or
234-22 organized as provided in the plan of merger;
234-23 (7) the[.]
234-24 [(8) The] partnership interests [interest] of each
234-25 domestic or foreign partnership and the partnership interests
234-26 [interest], shares, or evidences of ownership in each other entity
234-27 that is a party to the merger that are to be converted or
235-1 exchanged, in whole or in part, into [(i)] partnership interests,
235-2 shares, obligations, evidences of ownership, rights to purchase
235-3 securities, or other securities of one or more of the surviving or
235-4 new domestic or foreign partnerships or other entities, into [(ii)]
235-5 cash, or [(iii)] other property, including shares, obligations,
235-6 evidences of ownership, rights to purchase securities, or other
235-7 securities of any other person or entity, or into any combination
235-8 of the foregoing, shall be so [those items, are] converted and
235-9 exchanged and [when a merger takes effect. After the merger] the
235-10 former partners of each domestic partnership [and owners of shares
235-11 or evidences of ownership in each other domestic entity] that is a
235-12 party to the merger are entitled [only] to the rights provided in
235-13 the plan of merger;
235-14 (8) if the[.]
235-15 [(9) If a] plan of merger fails to provide for the
235-16 allocation and vesting of the right, title, and interest in a
235-17 particular item of real estate or other property or for the
235-18 allocation of a liability or obligation of a party to the merger,
235-19 then the [when the merger takes effect the] item of real estate or
235-20 other property shall be owned in undivided interest [interests] by,
235-21 or the liability or obligation shall be a joint and several
235-22 liability and obligation of, each of the surviving and new domestic
235-23 and foreign partnerships and other entities, pro rata to the total
235-24 number of surviving and new domestic and foreign partnerships and
235-25 other entities resulting from the merger;
235-26 (9) a partner of a partnership that is a party to a
235-27 merger does not become personally liable as a result of the merger
236-1 for a liability or obligation of another person that is a party to
236-2 the merger unless the partner consents to becoming personally
236-3 liable by action taken in connection with the specific plan of
236-4 merger approved by the partner; and for purposes of determining the
236-5 liability of partners in a domestic partnership that is a party to
236-6 the merger for the debts and obligations of other parties to the
236-7 merger in which that partner otherwise was not or is not a partner
236-8 or other owner of an interest:
236-9 (A) a partner who remains in or enters a
236-10 domestic or foreign partnership or other entity that survives a
236-11 merger or that enters a domestic or foreign partnership or other
236-12 entity created by the terms of the plan of merger shall be treated
236-13 as an incoming partner in the new or surviving partnership as of
236-14 the effective date of the merger; and
236-15 (B) a partner in a domestic partnership that is
236-16 a party to the merger but that does not survive shall be treated as
236-17 a partner who withdrew from the nonsurviving domestic partnership
236-18 as of the effective date of the merger; and[.]
236-19 (10) if [If] a domestic or foreign partnership merges
236-20 with another domestic or foreign partnership or other entity and
236-21 through the merger process no longer exists, a person who becomes a
236-22 member of the surviving domestic or foreign partnership or other
236-23 entity, for a period of one year after the effective date of the
236-24 merger, may bind the surviving entity to a transaction for which it
236-25 no longer has authority to bind the entity if the transaction is
236-26 one in which the partner's actions would bind the foreign or
236-27 domestic partnership before the effective date of the merger and
237-1 the other party to the transaction:
237-2 (A) does not have notice of the merger;
237-3 (B) had done business with the partnership which
237-4 no longer exists within one year preceding the effective date of
237-5 the merger; and
237-6 (C) reasonably believes that the partner who was
237-7 previously a member of the partnership which was merged into the
237-8 surviving entity and is now a partner of the surviving entity was a
237-9 partner with authority to bind the partnership to the transaction
237-10 at the time of the transaction.
237-11 (h) Other Entity. [(g) Definition of "Other Entity."] For
237-12 purposes of this section, the term "other entity" means any entity,
237-13 whether organized for profit or not, that is a corporation, limited
237-14 partnership, limited liability company, [joint venture,] joint
237-15 stock company, cooperative, association, bank, insurance company,
237-16 or other legal entity organized pursuant to [under] the laws of
237-17 this state or any other [another] state or country to the extent
237-18 such [the] laws or the constituent documents of that entity, not
237-19 inconsistent with such laws [law], permit that entity to enter into
237-20 a merger or partnership interest exchange as permitted by this
237-21 section.
237-22 SECTION 121. Section 9.03(a), Texas Revised Partnership Act
237-23 (Article 6132b-9.03, Vernon's Texas Civil Statutes), is amended to
237-24 read as follows:
237-25 (a) One or more domestic or foreign partnerships may adopt a
237-26 plan of exchange by which a domestic or foreign partnership or
237-27 other entity acquires all of the outstanding partnership interests
238-1 of one or more domestic partnerships in exchange for cash or
238-2 securities of the acquiring domestic or foreign partnership or
238-3 other entity, if:
238-4 (1) the partnership agreement of each domestic
238-5 partnership whose partnership interests are to be acquired pursuant
238-6 to the plan of exchange authorizes the partnership interest
238-7 exchange adopted by the partnership, and if one or more foreign
238-8 partnerships or other entities is to issue shares or other
238-9 interests as part of the plan of exchange, the issuance of those
238-10 shares or other interests is either permitted by the laws under
238-11 which that foreign partnership or other entity is formed or not
238-12 inconsistent with those laws;
238-13 (2) [(1)] each domestic or foreign partnership, the
238-14 partnership interests of which are to be acquired under the plan of
238-15 exchange, approves the plan of exchange in the manner prescribed in
238-16 its partnership agreement; and
238-17 (3) [(2)] each acquiring domestic or foreign
238-18 partnership or other entity takes all action that may be required
238-19 by the laws of the state under which it was formed or incorporated
238-20 and as required by its partnership agreement or other constituent
238-21 documents in order to effect the exchange.
238-22 SECTION 122. Article IX, Texas Revised Partnership Act
238-23 (Article 6132b-9.01 et seq., Vernon's Texas Civil Statutes), is
238-24 amended by adding Sections 9.05 and 9.06 to read as follows:
238-25 Sec. 9.05. CONVERSION. (a) A domestic partnership may
238-26 adopt a plan of conversion and convert to a foreign partnership or
238-27 any other entity if:
239-1 (1) the converting entity acts upon and its partners
239-2 approve a plan of conversion in the manner prescribed by Section
239-3 9.02 as if the conversion were a merger to which the converting
239-4 entity were a party and not the survivor;
239-5 (2) the conversion is permitted by, or not
239-6 inconsistent with, the laws of the state or country in which the
239-7 converted entity is to be incorporated, formed, or organized and
239-8 the incorporation, formation, or organization of the converted
239-9 entity is effected in compliance with such laws;
239-10 (3) at the time the conversion becomes effective, each
239-11 partner of the converting entity will, unless otherwise agreed to
239-12 by that partner, own an equity interest or other ownership or
239-13 security interest in, and be a shareholder, partner, member, owner
239-14 or other security holder of, the converted entity; and
239-15 (4) the converted entity shall be incorporated,
239-16 formed, or organized as part of or pursuant to the plan of
239-17 conversion.
239-18 (b) Any foreign partnership or other entity may adopt a plan
239-19 of conversion and convert to a domestic partnership if:
239-20 (1) the conversion is permitted by the laws of the
239-21 state or country in which the foreign partnership is incorporated,
239-22 if a foreign partnership is converting;
239-23 (2) the conversion is either permitted by the laws
239-24 under which the other entity is formed or organized or by the
239-25 constituent documents of the other entity that are not
239-26 inconsistent with the laws of the state or country in which the
239-27 other entity is formed or organized, if another entity is
240-1 converting; and
240-2 (3) the converting entity takes all action that may
240-3 be required by the laws of the state or country under which it is
240-4 incorporated, formed, or organized and by its constituent documents
240-5 to effect the conversion.
240-6 (c) A plan of conversion shall set forth:
240-7 (1) the name of the converting entity and the
240-8 converted entity;
240-9 (2) a statement that the converting entity is
240-10 continuing its existence in the organizational form of the
240-11 converted entity;
240-12 (3) a statement as to the type of entity that the
240-13 converted entity is to be and the state or country under the laws
240-14 of which the converted entity is to be incorporated, formed, or
240-15 organized;
240-16 (4) the manner and basis of converting the partnership
240-17 interests, shares, or other evidences of ownership of the
240-18 converting entity into partnership interests, shares, or other
240-19 evidences of ownership or securities of the converted entity, or
240-20 any combination thereof; and
240-21 (5) in an attachment or exhibit, the certificate of
240-22 limited partnership, articles of incorporation, or other
240-23 organizational documents of the converted entity if the converted
240-24 entity is not a domestic partnership.
240-25 (d) A plan of conversion may set forth such other provisions
240-26 relating to the conversion not inconsistent with law, including the
240-27 initial partnership agreement of the converted entity if the
241-1 converted entity is a partnership.
241-2 (e) If a plan of conversion has been approved in accordance
241-3 with the preceding provisions of this section and has not been
241-4 abandoned, unless the converted entity and the converting entities
241-5 are both partnerships:
241-6 (1) articles of conversion shall be executed by the
241-7 converting entity by a partner, officer, or other duly authorized
241-8 representative thereof and shall set forth:
241-9 (A) the plan of conversion or a statement
241-10 certifying the following:
241-11 (i) the name, the state of incorporation,
241-12 formation, or organization of the converting entity, and the
241-13 organizational form of the converted entity;
241-14 (ii) that a plan of conversion has been
241-15 approved;
241-16 (iii) that an executed plan of conversion
241-17 is on file at the principal place of business of the converting
241-18 entity, stating the address thereof, and that an executed plan of
241-19 conversion will be on file, from and after the conversion, at the
241-20 principal place of business of the converted entity, stating the
241-21 address thereof; and
241-22 (iv) that a copy of the plan of conversion
241-23 will be furnished by the converting entity (prior to the
241-24 conversion) or the converted entity (after the conversion), on
241-25 written request and without cost, to any member of the converting
241-26 entity or the converted entity; and
241-27 (B) a statement that the approval of the plan of
242-1 conversion was duly authorized by all action required by the laws
242-2 under which the converting entity was incorporated, formed, or
242-3 organized and by its constituent documents;
242-4 (2) the original and one copy of the articles of
242-5 conversion shall be delivered to the secretary of state; and
242-6 (3) two copies of the certificate of limited
242-7 partnership of the domestic limited partnership if the converted
242-8 entity is a domestic limited partnership shall also be delivered to
242-9 the secretary of state with the articles of conversion.
242-10 (f) If the secretary of state finds that the articles of
242-11 conversion conform to law and has received all filings required to
242-12 be received, and issued all certificates required to be issued in
242-13 connection with the incorporation, formation, or organization of
242-14 the converted entity, if any, the secretary of state shall, when
242-15 all fees and franchise taxes have been paid as required by law or
242-16 if the articles of conversion provide that the converted entity
242-17 will be liable for the payment of all such fees and franchise
242-18 taxes:
242-19 (1) endorse on the original and each copy the word
242-20 "Filed" and the month, day, and year of the filing thereof;
242-21 (2) file the original in his office; and
242-22 (3) issue a certificate of conversion, together with a
242-23 copy of the articles affixed thereto, to the converted entity or
242-24 its representatives.
242-25 (g) Except as otherwise provided by Section 9.06, upon the
242-26 issuance of the certificate of conversion by the secretary of state
242-27 (or if a certificate of conversion need not be executed, as
243-1 provided in the plan of merger), the conversion of a converting
243-2 entity shall be effective.
243-3 (h) When a conversion of a converting entity takes effect:
243-4 (1) the converting entity shall continue to exist,
243-5 without interruption, but in the organizational form of the
243-6 converted entity rather than in its prior organizational form;
243-7 (2) all rights, title, and interests to all real
243-8 estate and other property owned by the converting entity shall
243-9 continue to be owned by the converted entity in its new
243-10 organizational form without reversion or impairment, without
243-11 further act or deed, and without any transfer or assignment having
243-12 occurred, but subject to any existing liens or other encumbrances
243-13 thereon;
243-14 (3) all liabilities and obligations of the converting
243-15 entity shall continue to be liabilities and obligations of the
243-16 converted entity in its new organizational form without impairment
243-17 or diminution by reason of the conversion;
243-18 (4) all rights of creditors or other parties with
243-19 respect to or against the prior interest holders or other owners of
243-20 the converting entity in their capacities as such in existence as
243-21 of the effective time of the conversion will continue in existence
243-22 as to those liabilities and obligations and may be pursued by such
243-23 creditors and obligees as if such conversion shall not have
243-24 occurred;
243-25 (5) a proceeding pending by or against the converting
243-26 entity or by or against any of the converting entity's interest
243-27 holders or owners in their capacities as such may be continued by
244-1 or against the converted entity in its new organizational form and
244-2 by or against the prior interest holders or owners, as the case may
244-3 be, without any need for substitution of parties;
244-4 (6) the partnership interests, shares, and other
244-5 evidences of ownership in the converting entity that are to be
244-6 converted into partnership interests, shares, evidences of
244-7 ownership, or other securities in the converted entity as provided
244-8 in the plan of conversion shall be so converted, and if the
244-9 converting entity is a domestic partnership, the former holders of
244-10 shares in the domestic partnership shall be entitled only to the
244-11 rights provided in the plan of conversion;
244-12 (7) if, after the effectiveness of the conversion, a
244-13 shareholder, partner, member, or other owner of the converted
244-14 entity would be liable under applicable law in such capacity for
244-15 the debts or obligations of the converted entity, such shareholder,
244-16 partner, member, or other owner of the converted entity shall be
244-17 liable for the debts and obligations of the converting entity that
244-18 existed before the conversion takes effect only to the extent that
244-19 such shareholder, partner, member or other owner:
244-20 (A) agreed in writing to be liable for such
244-21 debts or obligations;
244-22 (B) was liable under applicable law, prior to
244-23 the effectiveness of the conversion, for such debts or obligations;
244-24 or
244-25 (C) by becoming a shareholder, partner, member,
244-26 or other owner of the converted entity, becomes liable under
244-27 applicable law for existing debts and obligations of the converted
245-1 entity;
245-2 (8) if the converted entity is a foreign partnership
245-3 or other entity, such converted entity shall be deemed to appoint
245-4 the secretary of state as its agent for service of process in a
245-5 proceeding to enforce any obligation or the rights of dissenting
245-6 shareholders of the converting domestic partnership; and
245-7 (9) if the converting partnership is a domestic
245-8 partnership, the provisions of Section 9.02 of this Act shall apply
245-9 as if the converted entity were the survivor of a merger with the
245-10 converting entity.
245-11 (i) For purposes of this section:
245-12 (1) "Conversion" means:
245-13 (A) the continuance of a domestic partnership
245-14 as, and in the organizational form of, a foreign partnership or
245-15 other entity; or
245-16 (B) the continuance of a foreign partnership or
245-17 other entity as, and in the organizational form of, a domestic
245-18 partnership.
245-19 (2) "Converted entity" means any domestic or foreign
245-20 partnership or other entity to which a converting entity has
245-21 converted or intends to convert as permitted by this section.
245-22 (3) "Converting entity" means any domestic or foreign
245-23 partnership or other entity that has converted or intends to
245-24 convert as permitted by this section.
245-25 (4) "Domestic partnership" means a partnership the
245-26 internal affairs of which are governed by this Act.
245-27 (5) "Foreign partnership" means a partnership, other
246-1 than a limited partnership, the internal affairs of which are
246-2 governed by the law of another state comparable to this Act or the
246-3 Texas Uniform Partnership Act (Article 6132b, Vernon's Texas Civil
246-4 Statutes).
246-5 (6) "Other entity" means any entity, whether organized
246-6 for profit or not, that is a corporation, limited partnership
246-7 (other than a limited partnership formed under the Texas Revised
246-8 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
246-9 Statutes)), limited liability company, joint stock company,
246-10 cooperative, association, bank, insurance company, or other legal
246-11 entity organized pursuant to the laws of this state or any other
246-12 state or country.
246-13 Sec. 9.06. FILINGS AND FEES. Sections 2.12 and 12.01, Texas
246-14 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
246-15 Civil Statutes), apply to filings made with the secretary of state
246-16 under this article as if those filings related to limited
246-17 partnerships.
246-18 SECTION 123. The Texas Revised Partnership Act (Article
246-19 6132b-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
246-20 redesignating existing Article X as Article XI and adding a new
246-21 Article X to read as follows:
246-22 ARTICLE X. FOREIGN LIMITED LIABILITY PARTNERSHIP
246-23 Sec. 10.01. LAW GOVERNING FOREIGN LIMITED LIABILITY
246-24 PARTNERSHIP. (a) The laws of the state under which a foreign
246-25 limited liability partnership is formed govern its organization and
246-26 internal affairs and the liability of partners for obligations of
246-27 the partnership.
247-1 (b) A foreign limited liability partnership may not be
247-2 denied a statement of foreign qualification by reason of any
247-3 difference between the laws of the state under which it is formed
247-4 and the laws of Texas.
247-5 (c) With respect to its activities in Texas, a foreign
247-6 limited liability partnership is subject to Section 3.01 as if it
247-7 were a domestic registered limited liability partnership.
247-8 Sec. 10.02. STATEMENT OF FOREIGN QUALIFICATION. (a) Before
247-9 transacting business in Texas, a foreign limited liability
247-10 partnership must file with the secretary of state a statement of
247-11 foreign qualification. The statement must contain:
247-12 (1) the name of the foreign limited liability
247-13 partnership which satisfies the requirements of the state under
247-14 whose laws it is formed and ends with "Registered Limited Liability
247-15 Partnership," "Limited Liability Partnership," "R.L.L.P.,"
247-16 "L.L.P.," "RLLP," or "LLP";
247-17 (2) the federal tax identification number of the
247-18 partnership;
247-19 (3) the state where it is formed, the date of initial
247-20 registration as a limited liability partnership under the laws of
247-21 the state of formation, and a statement that, as of the date of
247-22 filing, the foreign limited liability partnership exists as a valid
247-23 limited liability partnership under the laws of the state of its
247-24 formation;
247-25 (4) the street address of the partnership's chief
247-26 executive office and, if different, the street address of any other
247-27 office of the partnership in Texas;
248-1 (5) the address of the registered office and the name
248-2 and address of the registered agent for service of process required
248-3 to be maintained by Section 10.05;
248-4 (6) a statement that the secretary of state is
248-5 appointed the agent of the foreign limited liability partnership
248-6 for service of process under the circumstances set forth in Section
248-7 10.05(k);
248-8 (7) the number of partners at the date of the
248-9 statement; and
248-10 (8) in brief, the partnership's business.
248-11 (b) The statement of qualification must be executed by a
248-12 majority-in-interest of the partners or by one or more partners
248-13 authorized by a majority-in-interest of the partners.
248-14 (c) Two copies of the statement of foreign qualification
248-15 must be filed accompanied by a fee equal to the greater of $200 for
248-16 each partner resident in this state or $750.
248-17 (d) A partnership is registered as a foreign limited
248-18 liability partnership on filing a completed initial or renewal
248-19 statement of foreign qualification, in duplicate with the required
248-20 fee, or on a later date specified in the statement. A registration
248-21 is not affected by later changes in the partners of the
248-22 partnership.
248-23 (e) An initial statement of foreign qualification filed
248-24 under this subsection and registered by the secretary of state
248-25 expires one year after the date of registration or later effective
248-26 date unless earlier withdrawn or revoked or unless renewed in
248-27 accordance with Subsection (g).
249-1 (f) A registration may be withdrawn by filing in duplicate
249-2 with the secretary of state a written withdrawal notice executed by
249-3 a majority-in-interest of the partners or by one or more partners
249-4 authorized by a majority-in-interest of partners. A withdrawal
249-5 notice must include the name of the partnership, the federal tax
249-6 identification number of the partnership, the date of registration
249-7 of the partnership's last statement of foreign qualification under
249-8 this section, and a current street address of the partnership's
249-9 principal office in this state or outside this state, if
249-10 applicable. A withdrawal notice terminates the status of the
249-11 partnership as a foreign limited liability partnership as of the
249-12 date of filing the notice or a later date specified in the notice,
249-13 but not later than the expiration date under Subsection (e).
249-14 (g) An effective registration may be renewed before its
249-15 expiration by filing in duplicate with the secretary of state a
249-16 statement of foreign qualification containing current information
249-17 of the kind required in an initial statement of qualification and
249-18 the most recent date of registration of the partnership. The
249-19 renewal statement of qualification must be accompanied by a fee
249-20 equal to the greater of $200 for each partner resident in this
249-21 state on the date of renewal or $750. A renewal statement of
249-22 foreign qualification filed under this section continues an
249-23 effective registration for one year after the date the effective
249-24 registration would otherwise expire.
249-25 (h) The secretary of state may remove from its active
249-26 records the registration of a foreign limited liability partnership
249-27 whose registration has been withdrawn or revoked or has expired and
250-1 not been renewed.
250-2 (i) The secretary of state may revoke the filing of a
250-3 document filed under this subsection if the secretary of state
250-4 determines that the filing fee for the document was paid by an
250-5 instrument that was dishonored when presented by the state for
250-6 payment. The secretary of state shall return the document and give
250-7 notice of revocation to the filing party by regular mail. Failure
250-8 to give or receive notice does not affect an earlier filing.
250-9 (j) The secretary of state may provide forms for the
250-10 statement of foreign qualification or renewal of registration.
250-11 (k) A document filed under this subsection may be amended or
250-12 corrected by filing in duplicate with the secretary of state
250-13 articles of amendment executed by a majority-in-interest of the
250-14 partners or by one or more partners authorized by a
250-15 majority-in-interest of the partners. The articles of amendment
250-16 must contain the name of the partnership, the tax identification
250-17 number of the partnership, the identity of the document being
250-18 amended, the date on which the document being amended was filed,
250-19 the part of the document being amended, and the amendment or
250-20 correction. Two copies of the articles of amendment must be filed,
250-21 accompanied by a fee of $10 and, if the amendment increases the
250-22 number of partners, the greater of $200 for each partner resident
250-23 in this state added by amendment of the number of partners or $750.
250-24 (l) A document filed under this subsection may be a
250-25 photographic, facsimile, or similar reproduction of a signed
250-26 document. A signature on a document filed under this section may
250-27 be a facsimile.
251-1 (m) A person commits an offense if the person signs a
251-2 document the person knows is false in any material respect with the
251-3 intent that the document be delivered on behalf of the partnership
251-4 to the secretary of state for filing. An offense under this
251-5 subsection is a Class A misdemeanor.
251-6 (n) The secretary of state may adopt procedural rules on
251-7 filing documents under this section.
251-8 Sec. 10.03. EFFECT OF FAILURE TO QUALIFY. (a) A foreign
251-9 limited liability partnership transacting business in Texas may not
251-10 maintain an action, suit, or proceeding in Texas unless it has
251-11 registered in Texas and paid to the secretary of state all amounts
251-12 owing under Section 10.02.
251-13 (b) The failure of a foreign limited liability partnership
251-14 to register in Texas does not impair:
251-15 (1) the validity of a contract or act of the foreign
251-16 limited liability partnership;
251-17 (2) the right of any other party to the contract to
251-18 maintain any action, suit, or proceeding on the contract; or
251-19 (3) defense by the foreign limited liability
251-20 partnership of any action, suit, or proceeding in any Texas court.
251-21 (c) A partner of a foreign limited liability partnership is
251-22 not liable for the debts and obligations of the foreign limited
251-23 liability partnership solely because the foreign limited liability
251-24 partnership transacted business in Texas without registration.
251-25 Sec. 10.04. ACTIVITIES NOT CONSTITUTING TRANSACTING
251-26 BUSINESS. Without excluding other activities that do not
251-27 constitute transacting business in Texas, a foreign limited
252-1 liability partnership is not considered to be transacting business
252-2 in Texas for purposes of this Act because it carries on in Texas
252-3 any one or more of the following activities:
252-4 (1) maintaining or defending any action, suit, or
252-5 administrative or arbitration proceeding, effecting settlement of
252-6 the action, suit, or proceeding, or settling claims or disputes to
252-7 which it is a party;
252-8 (2) holding meetings of its partners or carrying on
252-9 other activities concerning its internal affairs;
252-10 (3) maintaining bank accounts;
252-11 (4) maintaining offices or agencies for the transfer,
252-12 exchange, and registration of partnership interests issued by it,
252-13 or appointing or maintaining trustees or depositories with relation
252-14 to ownership interests in it;
252-15 (5) effecting sales through independent contractors;
252-16 (6) creating as borrower or lender or acquiring
252-17 indebtedness or mortgages or other security interests in real or
252-18 personal property;
252-19 (7) securing or collecting debts due to it or
252-20 enforcing rights in property securing such debts;
252-21 (8) transacting business in interstate commerce;
252-22 (9) conducting an isolated transaction completed
252-23 within 30 days of the date of initiation of the transaction and not
252-24 in the course of a number of repeated similar transactions;
252-25 (10) exercising the powers of executor or
252-26 administrator of the estate of a nonresident decedent under
252-27 ancillary letters issued by a Texas court, or exercising the powers
253-1 of trustee under the will of a nonresident decedent, or under a
253-2 trust created by one or more nonresidents of Texas or by one or
253-3 more foreign corporations or limited partnerships, if the exercise
253-4 of those powers in any of these cases will not involve activities
253-5 that would be considered to constitute the transacting of business
253-6 in Texas in the case of a foreign corporation or foreign limited
253-7 partnership acting in its own right;
253-8 (11) acquiring, in transactions outside Texas or in
253-9 interstate commerce, debts secured by mortgages or liens on real or
253-10 personal property in Texas, collecting or adjusting principal and
253-11 interest payments on those debts, enforcing or adjusting rights in
253-12 property securing those debts, taking any actions necessary to
253-13 preserve and protect the interest of the mortgagee in that
253-14 security, or a combination of these transactions; or
253-15 (12) investing in or acquiring, in transactions
253-16 outside Texas, royalties and other nonoperating mineral interests,
253-17 and the execution of division orders, contracts of sale, and other
253-18 instruments incidental to the ownership of nonoperating mineral
253-19 interests.
253-20 Sec. 10.05. REGISTERED AGENT. (a) A foreign limited
253-21 liability partnership subject to this Act shall have and maintain
253-22 in Texas:
253-23 (1) a registered office, which need not be a place of
253-24 its business in Texas; and
253-25 (2) a registered agent for service of process on the
253-26 foreign limited liability partnership, which may be:
253-27 (A) an individual who is a resident of Texas and
254-1 whose business office is the same as the foreign limited liability
254-2 partnership's registered office; and
254-3 (B) a domestic corporation or a foreign
254-4 corporation that has a certificate of authority to transact
254-5 business in Texas and a business office the same as the foreign
254-6 limited liability partnership's registered office.
254-7 (b) A foreign limited liability partnership subject to this
254-8 Act may change its registered office, its registered agent, or
254-9 both, by paying the filing fee and filing with the secretary of
254-10 state a statement and a duplicate copy of the statement, that does
254-11 not need to be an executed original or a photocopy of an executed
254-12 original. The statement must contain:
254-13 (1) the name of the foreign limited liability
254-14 partnership;
254-15 (2) the street address of its registered office;
254-16 (3) the street address to which its registered office
254-17 is to be changed, if applicable;
254-18 (4) the name of its registered agent;
254-19 (5) the name of its successor registered agent, if
254-20 applicable;
254-21 (6) a provision that the street address of its
254-22 registered office and the street address of the business office of
254-23 its registered agent, as changed, will be the same; and
254-24 (7) a provision that the change was authorized by the
254-25 foreign limited liability partnership.
254-26 (c) The statement required by Subsection (b) must be
254-27 executed on behalf of the foreign limited liability partnership by
255-1 a majority-in-interest of the partners or by one or more partners
255-2 authorized by a majority-in-interest of the partners. If the
255-3 secretary of state finds that the statement conforms to this
255-4 section, the secretary of state, on receipt of all applicable
255-5 filing fees, shall file it in accordance with Section 10.02(k) as
255-6 if it were an amendment to the statement of foreign qualification.
255-7 (d) On the filing of the statement by the secretary of
255-8 state, the change of address of the registered office, the
255-9 appointment of a new registered agent, or both, as the case may be,
255-10 become effective.
255-11 (e) Filing of the statement amends the statement of foreign
255-12 qualification regarding the information required by Section
255-13 10.02(a)(5).
255-14 (f) A registered agent of a foreign limited liability
255-15 partnership may resign by giving written notice to the foreign
255-16 limited liability partnership and to the secretary of state.
255-17 Notice must be given to the foreign limited liability partnership
255-18 at its last known address and to the last known address of the
255-19 attorney or other individual at whose request the registered agent
255-20 was appointed for the foreign limited liability partnership.
255-21 Notice, together with a duplicate copy, which need not be an
255-22 executed original or a photocopy of an executed original, must be
255-23 given to the secretary of state within 10 days after the date of
255-24 mailing or delivery of the notice to the foreign limited liability
255-25 partnership and attorney or individual. The notice to the
255-26 secretary of state must include the last known address of the
255-27 foreign limited liability partnership, the statement that written
256-1 notice of resignation has been given to the foreign limited
256-2 liability partnership, and the date that the notice was given.
256-3 (g) On compliance with the requirements for giving written
256-4 notice under Subsection (f), the appointment of an agent terminates
256-5 on the 31st day after the date of receipt of the notice by the
256-6 secretary of state. If the secretary of state finds that the
256-7 written notice conforms to this section, the secretary of state
256-8 shall file it in accordance with Section 10.02(k) as if it were an
256-9 amendment to the statement of foreign qualification. A fee is not
256-10 required for the filing of a resignation under Subsection (f).
256-11 (h) The location of the registered office in Texas for a
256-12 foreign limited liability partnership may be changed from one
256-13 address to another by paying the filing fee to the secretary of
256-14 state and filing with the secretary of state a statement and a
256-15 duplicate copy, which need not be an executed original or a
256-16 photocopy of an executed original. The statement must contain:
256-17 (1) the name of the foreign limited liability
256-18 partnership represented by the registered agent;
256-19 (2) the address at which the registered agent has
256-20 maintained the registered office;
256-21 (3) the new address at which the registered agent will
256-22 maintain the registered office; and
256-23 (4) a statement that written notice of the change has
256-24 been given to the foreign limited liability partnership at least 10
256-25 days before the date of the filing.
256-26 (i) The statement required by Subsection (h) must be signed
256-27 and verified by the registered agent or, if the registered agent is
257-1 a corporation, by an office of the corporation. If the registered
257-2 agent is simultaneously filing statements for more than one foreign
257-3 limited liability partnership, each statement may contain a
257-4 facsimile signature in the execution. If the secretary of state
257-5 finds that the statement conforms to this section, the secretary of
257-6 state, on receipt of the filing fee, shall file it in accordance
257-7 with Section 10.02(k) as if it were an amendment to the statement
257-8 of foreign qualification. The address of the registered office of
257-9 the foreign limited liability partnership is changed on the filing
257-10 of the statement by the secretary of state. Filing of the
257-11 statement amends the statement of foreign qualification regarding
257-12 the information required by Section 10.02(a)(5) and no further
257-13 action is required under Section 10.02(k).
257-14 (j) Each partner and the registered agent of a foreign
257-15 limited liability partnership registered in Texas are agents of the
257-16 foreign limited liability partnership on whom may be served any
257-17 process, notice, or demand required or permitted by law to be
257-18 served on the foreign limited liability partnership.
257-19 (k) The secretary of state is an agent of the foreign
257-20 limited liability partnership on whom any process, notice, or
257-21 demand may be served if:
257-22 (1) a foreign limited liability partnership registered
257-23 in Texas fails to appoint or maintain a registered agent in Texas;
257-24 (2) its registered agent cannot with reasonable
257-25 diligence be found at the registered office;
257-26 (3) its registration is canceled; or
257-27 (4) a foreign limited liability partnership transacts
258-1 business in Texas without having registered under Section 10.02.
258-2 (l) Service on the secretary of state of any process,
258-3 notice, or demand shall be made by delivering duplicate copies of
258-4 the process, notice, or demand to the secretary of state, assistant
258-5 secretary of state, or any clerk having charge of the corporation
258-6 department of the secretary of state's office. If any process,
258-7 notice, or demand is served on the secretary of state, the
258-8 secretary of state shall immediately forward one of the copies by
258-9 registered mail addressed to the foreign limited liability
258-10 partnership at its principal office in the state under which the
258-11 foreign limited liability partnership is formed as shown on the
258-12 statement of foreign qualification. Service had in this manner on
258-13 the secretary of state is returnable in not less than 30 days.
258-14 (m) The secretary of state shall keep a record of all
258-15 processes, notices, and demands served on the secretary of state
258-16 under this section and shall record the time of the service and the
258-17 action taken with reference to each.
258-18 (n) This section does not limit or affect the right to serve
258-19 any process, notice, or demand required or permitted by law to be
258-20 served on a foreign limited liability partnership in another manner
258-21 permitted by law.
258-22 ARTICLE XI [X]. MISCELLANEOUS PROVISIONS
258-23 Sec. 11.01 [10.01]. SHORT TITLE. This Act may be cited as
258-24 the "Texas Revised Partnership Act."
258-25 Sec. 11.02 [10.02]. SEVERABILITY. If a provision of this
258-26 Act or its application to a person or circumstance is held invalid,
258-27 the invalidity does not affect other provisions or applications of
259-1 this Act that can be given effect without the invalid provision or
259-2 application, and to this end the provisions of this Act are
259-3 severable.
259-4 Sec. 11.03 [10.03]. APPLICATION. (a) Before January 1,
259-5 1999. Except as provided by Subsection (b), before January 1,
259-6 1999, this Act applies only to a partnership formed:
259-7 (1) on or after January 1, 1994, unless that
259-8 partnership is continuing the business of a dissolved partnership
259-9 under Section 41, Texas Uniform Partnership Act (Article 6132b,
259-10 Vernon's Texas Civil Statutes), and its subsequent amendments; and
259-11 (2) before January 1, 1994, that elects, as provided
259-12 by Subsection (d), to be governed by this Act.
259-13 (b) Registered Limited Liability Partnership. Section 3.08
259-14 of this Act, including the fee provisions, applies to a registered
259-15 limited liability partnership, regardless of the date of formation
259-16 and regardless of whether the partnership elects to be governed by
259-17 this Act, except that a registered limited liability partnership
259-18 formed before January 1, 1994, is subject to Sections 2, 15(2)-(4),
259-19 45-A, 45-B, and 45-C, Texas Uniform Partnership Act (Article 6132b,
259-20 Vernon's Texas Civil Statutes), for purposes of determining
259-21 liability for errors, omissions, negligence, incompetence, or
259-22 malfeasance occurring before January 1, 1994.
259-23 (c) After December 31, 1998. After December 31, 1998, this
259-24 Act applies to all partnerships.
259-25 (d) Voluntary Application Early. Before January 1, 1999, a
259-26 partnership formed before January 1, 1994, voluntarily may elect,
259-27 by complying with the procedures provided in its partnership
260-1 agreement for amending the partnership agreement, to adopt this
260-2 Act. The provisions of this Act relating to the liability of the
260-3 partnership's partners to third parties apply to limit those
260-4 partners' liability to a third party who had done business with the
260-5 partnership within one year preceding the partnership's election to
260-6 adopt this Act only if the partnership gives notice to the third
260-7 party of the partnership's election to adopt this Act.
260-8 Sec. 11.04 [10.04]. APPLICATION TO EXISTING RELATIONSHIPS.
260-9 (a) This Act does not impair the obligations of a contract
260-10 existing when this Act takes effect or affect an action or
260-11 proceeding begun or right accrued before this Act takes effect.
260-12 (b) A judgment against a partnership or a partner in an
260-13 action commenced before the effective date of this Act may be
260-14 enforced in the same manner as a judgment rendered before the
260-15 effective date of this Act.
260-16 SECTION 124. Section 171.252, Tax Code, is amended to read
260-17 as follows:
260-18 Sec. 171.252. Effects of Forfeiture. If the corporate
260-19 privileges of a corporation are forfeited under this subchapter:
260-20 (1) the corporation shall be denied the right to sue
260-21 or defend in a court of this state; and
260-22 (2) each director or officer of the corporation is
260-23 liable for a tax, penalty, fee, or other amount owed to the state
260-24 by [debt of] the corporation as provided by Section 171.255 of this
260-25 code.
260-26 SECTION 125. Sections 171.255(a) and (c), Tax Code, are
260-27 amended to read as follows:
261-1 (a) If the corporate privileges of a corporation are
261-2 forfeited for the failure to file a report or pay a tax or penalty,
261-3 each director or officer of the corporation is liable for each tax,
261-4 penalty, fee, or other amount owed to the state by [debt of] the
261-5 corporation that is created or incurred in this state after the
261-6 date on which the report, tax, or penalty is due and before the
261-7 corporate privileges are revived. The liability includes liability
261-8 for any tax or penalty imposed by this chapter on the corporation
261-9 that becomes due and payable after the date of the forfeiture.
261-10 (c) A director or officer is not liable for a tax, penalty,
261-11 fee, or other amount owed to the state by [debt of] the corporation
261-12 if the director or officer shows that the failure to pay the tax,
261-13 penalty, fee, or other amount occurred [debt was created or
261-14 incurred]:
261-15 (1) over the director's or officer's objection; or
261-16 (2) without the director's or officer's knowledge and
261-17 that the exercise of reasonable diligence to become acquainted with
261-18 the affairs of the corporation would not have revealed the
261-19 intention to create the liability for the tax, penalty, fee, or
261-20 other amount [debt].
261-21 SECTION 126. Section 8.03, Texas Revised Limited Partnership
261-22 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is repealed.
261-23 SECTION 127. (a) This Act takes effect September 1, 1997,
261-24 and except as provided by this section, applies to all entities
261-25 affected regardless of the date of formation or incorporation.
261-26 (b) The change to Section 6.03, Texas Revised Limited
261-27 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
262-1 made by this Act, does not apply to domestic limited partnerships
262-2 formed before September 1, 1997, if:
262-3 (1) as of September 1, 1997, the partnership agreement
262-4 of the limited partnership does not specify a time at which or an
262-5 event on the occurrence of which a limited partner may withdraw
262-6 from the limited partnership or a definite time for the dissolution
262-7 and winding up of the limited partnership, and
262-8 (2) either:
262-9 (A) the general partners notify all the limited
262-10 partners in writing on or before December 31, 1997, of the change
262-11 to Section 6.03 and of their right to object to this application to
262-12 the limited partnership, and at least one limited partner notifies
262-13 the general partners in writing on or before the 30th day following
262-14 receipt of the notice from the general partners that the limited
262-15 partner objects to the application of the change to the limited
262-16 partnership, or
262-17 (B) the general partners do not notify all
262-18 limited partners on or before December 31, 1997, of the matters
262-19 described in paragraph (A).
262-20 (c) A domestic limited partnership to which the change in
262-21 Section 6.03, Texas Revised Limited Partnership Act (Article
262-22 6132a-1, Vernon's Texas Civil Statutes), does not apply is governed
262-23 by Section 6.03 as it existed before amendment by this Act, and
262-24 that provision remains in effect for that limited purpose.
262-25 (d) The change to Article 3.08, Texas Revised Partnership
262-26 Act (Article 6132b-3.08, Vernon's Texas Civil Statutes), made by
262-27 this Act shall not impair the obligations of a contract existing
263-1 before the effective date.
263-2 (e) This Act shall not affect any action or proceeding
263-3 commenced before the effective date.
263-4 SECTION 128. The importance of this legislation and the
263-5 crowded condition of the calendars in both houses create an
263-6 emergency and an imperative public necessity that the
263-7 constitutional rule requiring bills to be read on three several
263-8 days in each house be suspended, and this rule is hereby suspended.