75R13296 E
By Turner of Harris H.B. No. 1172
Substitute the following for H.B. No. 1172:
By Rhodes C.S.H.B. No. 1172
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to nonprofit corporations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subdivision (3), Section A, Article 1.02, Texas
1-5 Non-Profit Corporation Act (Article 1396-1.02, Vernon's Texas Civil
1-6 Statutes), is amended to read as follows:
1-7 (3) "Non-Profit Corporation" is the equivalent of "not
1-8 for profit corporation" and means a corporation no part of the
1-9 income of which is distributable to its members, directors, or
1-10 officers, except as otherwise provided by Article 2.24 of this Act.
1-11 SECTION 2. Article 2.04, Texas Non-Profit Corporation Act
1-12 (Article 1396-2.04, Vernon's Texas Civil Statutes), is amended to
1-13 read as follows:
1-14 Art. 2.04. Corporate Name. A. The corporate name shall
1-15 conform to the following requirements:
1-16 (1) It shall not contain any word or phrase which
1-17 indicates or implies that it is organized for any purpose other
1-18 than one or more of the purposes contained in its articles of
1-19 incorporation.
1-20 (2) It shall not be the same as, or deceptively
1-21 similar to, the name of any domestic corporation, whether for
1-22 profit or not for profit, limited partnership, or limited liability
1-23 company existing under the laws of this State, or the name of any
1-24 foreign corporation, whether for profit or not for profit, limited
2-1 partnership, or limited liability company authorized to transact
2-2 business or conduct affairs in this State, or a name the exclusive
2-3 right to which is, at the time, reserved in the manner provided by
2-4 this Act, the Texas Business Corporation Act, or any other statute
2-5 providing for reservation of names by a limited partnership or
2-6 limited liability company, or the name of a corporation, limited
2-7 partnership, or limited liability company which has in effect a
2-8 registration of its company [corporate] name as provided in the
2-9 Texas Business Corporation Act or any other applicable law;
2-10 provided that a name may be similar if written consent is obtained
2-11 from the existing corporation, limited partnership, or limited
2-12 liability company having the name deemed to be similar, or the
2-13 person[, or corporation,] for whom the name deemed to be similar is
2-14 reserved or registered in the office of the Secretary of State.
2-15 (3) It shall not contain the word "lottery."
2-16 SECTION 3. Article 2.04A, Texas Non-Profit Corporation Act
2-17 (Article 1396-2.04A, Vernon's Texas Civil Statutes), is amended by
2-18 adding Section C to read as follows:
2-19 C. Any person for whom a specified corporate name has been
2-20 reserved pursuant to Section B of this article may, during the
2-21 period for which such name is reserved, terminate such reservation
2-22 by filing with the Secretary of State an application for
2-23 cancellation of reservation of corporate name subject to the
2-24 procedures prescribed by Article 2.06, Texas Business Corporation
2-25 Act.
2-26 SECTION 4. Article 2.10, Texas Non-Profit Corporation Act
2-27 (Article 1396-2.10, Vernon's Texas Civil Statutes), is amended to
3-1 read as follows:
3-2 Art. 2.10. Meetings of Members. A. If a corporation has
3-3 members:
3-4 (1) Meetings of members shall be held at such place,
3-5 either within or without this State, as may be provided in the
3-6 by-laws. In the absence of any such provision, all meetings shall
3-7 be held at the registered office of the corporation in this State.
3-8 (2) An annual meeting of the members shall be held at
3-9 such times as may be provided in the by-laws, except that where the
3-10 by-laws of a corporation provide for more than one regular meeting
3-11 of members each year, an annual meeting shall not be required, and
3-12 directors may be elected at such meetings as the by-laws may
3-13 provide. If the by-laws designate a specific date and time for the
3-14 annual meeting, the board of directors may call the annual meeting
3-15 within ten (10) days of the designated date and time. Failure to
3-16 hold the annual meeting at the designated date and time shall not
3-17 work a dissolution of the corporation. In the event the board of
3-18 directors fails to call the annual meeting within ten (10) days of
3-19 [at] the designated date and time, any member may make demand that
3-20 such meeting be held within a reasonable time, such demand to be
3-21 made in writing by registered mail directed to any officer of the
3-22 corporation. If the annual meeting of members is not called within
3-23 sixty (60) days following such demand, any member may compel the
3-24 holding of such annual meeting by legal action directed against
3-25 said board, and all of the extraordinary writs of common law and of
3-26 courts of equity shall be available to such member to compel the
3-27 holding of such annual meeting. Each and every member is hereby
4-1 declared to have a justiciable interest sufficient to enable him to
4-2 institute and prosecute such legal proceedings.
4-3 (3) Special meetings of the members may be called by
4-4 the president, the board of directors, by members having not less
4-5 than one-tenth (1/10) of the votes entitled to be cast at such
4-6 meeting, or such other officers or persons as may be provided in
4-7 the articles of incorporation or by-laws.
4-8 SECTION 5. Section B, Article 2.13, Texas Non-Profit
4-9 Corporation Act (Article 1396-2.13, Vernon's Texas Civil Statutes),
4-10 is amended to read as follows:
4-11 B. A member may vote in person or, unless the articles of
4-12 incorporation or the by-laws otherwise provide, may vote by proxy
4-13 executed in writing by the member or by his duly authorized
4-14 attorney-in-fact. No proxy shall be valid after eleven (11) months
4-15 from the date of its execution, unless otherwise provided in the
4-16 proxy. Each proxy shall be revocable unless expressly provided
4-17 therein to be irrevocable, and in no event shall it remain
4-18 irrevocable for more than eleven (11) months. Where directors or
4-19 officers are to be elected by members, [the by-laws may provide
4-20 that] such elections may be conducted by mail, by facsimile
4-21 transmission, or by any combination of the two.
4-22 SECTION 6. Article 2.23, Texas Non-Profit Corporation Act
4-23 (Article 1396-2.23, Vernon's Texas Civil Statutes), is amended by
4-24 adding Section C to read as follows:
4-25 C. A corporation has no obligation to retain its books and
4-26 records for a given fiscal year more than six years after the
4-27 closing of such fiscal year.
5-1 SECTION 7. Article 2.24, Texas Non-Profit Corporation Act
5-2 (Article 1396-2.24, Vernon's Texas Civil Statutes), is amended to
5-3 read as follows:
5-4 Art. 2.24. DIVIDENDS PROHIBITED. A. No dividend shall be
5-5 paid and no part of the income of a corporation shall be
5-6 distributed to its members, directors, or officers unless such
5-7 member has obtained and maintained an exemption from the Internal
5-8 Revenue Service classifying the member as an organization described
5-9 in Section 501(c)(3) of the Internal Revenue Code of 1986 (26
5-10 U.S.C. Section 501(c)(3)) or corresponding provisions of any
5-11 subsequent federal tax laws. A corporation may pay compensation in
5-12 a reasonable amount to its members, directors, or officers for
5-13 services rendered, may confer benefits upon its members in
5-14 conformity with its purposes, and upon dissolution or final
5-15 liquidation may make distributions to its members, but only as
5-16 permitted by this Act.
5-17 SECTION 8. Section B, Article 3.02, Texas Non-Profit
5-18 Corporation Act (Article 1396-3.02, Vernon's Texas Civil Statutes),
5-19 is amended to read as follows:
5-20 B. Provided that charters or articles of incorporation of
5-21 corporations existing on the effective date of this Act which do
5-22 not contain one or more of the requirements listed in the foregoing
5-23 Section need not be amended for the purpose of meeting such
5-24 requirements. Any subsequent amendment or restatement of the
5-25 articles of incorporation of such corporation shall include such
5-26 requirements, except that any subsequent amendment to the articles
5-27 of incorporation need not [it shall not be necessary, in such
6-1 amended or restated articles, to] include the information required
6-2 in Subsections [(8),] (9)[,] and (10) of Section A.
6-3 SECTION 9. Section A, Article 3.05, Texas Non-Profit
6-4 Corporation Act (Article 1396-3.05, Vernon's Texas Civil Statutes),
6-5 is amended to read as follows:
6-6 A. After the issuance of the certificate of incorporation,
6-7 an organization meeting of the board of directors named in the
6-8 articles of incorporation shall be held, either within or without
6-9 this State, at the call of the incorporators or the call of a
6-10 majority of the directors named in the articles of incorporation,
6-11 for the purpose of adopting by-laws, electing officers, and for
6-12 such other purposes as may come before the meeting. The
6-13 incorporators or directors calling the meeting shall give at least
6-14 three (3) days' notice thereof either personally, by facsimile
6-15 transmission, or by mail to each director named in the articles of
6-16 incorporation, which notice shall state the time and place of the
6-17 meeting.
6-18 SECTION 10. Article 5.06, Texas Non-Profit Corporation Act
6-19 (Article 1396-5.06, Vernon's Texas Civil Statutes), is amended to
6-20 read as follows:
6-21 Art. 5.06. EFFECT OF MERGER OR CONSOLIDATION OF DOMESTIC
6-22 CORPORATIONS. A. When a [such] merger or consolidation of a
6-23 domestic corporation under Article 5.01, 5.02, or 5.07 of this Act
6-24 has been made effective [corporations has been effected]:
6-25 (1) [The several corporations parties to the plan of
6-26 merger or consolidation shall be a single corporation, which, in
6-27 the case of a merger, shall be that corporation designated in the
7-1 plan of merger as the surviving corporation, and, in the case of
7-2 consolidation, shall be the new corporation provided for in the
7-3 plan of consolidation.]
7-4 [(2)] The separate existence of every domestic
7-5 corporation that is a party to the merger, except any surviving or
7-6 new domestic [all corporations parties to the plan of merger or
7-7 consolidation, except the surviving or new] corporation, shall
7-8 cease.
7-9 (2) All rights, title, and interest to all real estate
7-10 and other property owned by each corporation that is a party to the
7-11 merger shall be vested in the [(3) Such] surviving or new
7-12 corporation without reversion or impairment, [shall have all the
7-13 rights, privileges, immunities and powers and shall be subject to
7-14 all the duties and liabilities of a corporation organized under
7-15 this Act.]
7-16 [(4) Such surviving or new corporation shall thereupon
7-17 and thereafter possess all the rights, privileges, immunities and
7-18 franchises, as well of a public as of a private nature, of each of
7-19 the merging or consolidating corporations; and all property, real,
7-20 personal and mixed, and all debts due on whatever account, and all
7-21 other choses in action, and all and every other interest, of or
7-22 belonging to or due to each of the corporations so merged or
7-23 consolidated, shall be taken and deemed to be transferred to and
7-24 vested in such single corporation] without further act or deed, and
7-25 without any transfer or assignment having occurred, but subject to
7-26 any existing liens or encumbrances thereon.
7-27 (3) All [(5) Such surviving or new corporation shall
8-1 thenceforth be responsible and liable for all the] liabilities and
8-2 obligations of each corporation shall become the liabilities and
8-3 obligations of the surviving or new corporation.
8-4 (4) A [of the corporations so merged or consolidated;
8-5 and any claim existing or action or] proceeding pending by or
8-6 against any corporation may be continued as if the merger did not
8-7 occur and the [of such corporations may be prosecuted as if such
8-8 merger or consolidation had not taken place, or such] surviving or
8-9 new corporation may be substituted in the proceeding [its place.
8-10 Neither the rights of creditors nor any liens upon the property of
8-11 any such corporations shall be impaired by such merger or
8-12 consolidation].
8-13 (5) [(6)] In the case of a merger, the articles of
8-14 incorporation of the surviving corporation shall be deemed to be
8-15 amended to the extent, if any, that changes in its articles of
8-16 incorporation are stated in the plan of merger; and, in the case of
8-17 a consolidation, the statement [statements] set forth in the
8-18 articles of consolidation and which is [are] required or are
8-19 permitted to be set forth in the articles of incorporation of
8-20 corporations organized under this Act shall be deemed to be the
8-21 articles of incorporation of the new corporation.
8-22 SECTION 11. Section E, Article 7.01, Texas Non-Profit
8-23 Corporation Act (Article 1396-7.01, Vernon's Texas Civil Statutes),
8-24 is amended to read as follows:
8-25 E. Any corporation dissolved by the Secretary of State under
8-26 the provisions of Section B of this article may be reinstated by
8-27 the Secretary of State at any time within a period of 36 [12]
9-1 months from the date of such dissolution, upon approval of an
9-2 application for reinstatement signed by an officer or director of
9-3 the dissolved corporation. Such application shall be filed by the
9-4 Secretary of State whenever it is established to the Secretary's
9-5 [his] satisfaction that in fact there was no cause for the
9-6 dissolution, or whenever the neglect, omission or delinquency
9-7 resulting in dissolution has been corrected and payment made of all
9-8 fees, taxes, penalties and interest due thereon which accrued
9-9 before the dissolution plus an amount equal to the total taxes from
9-10 the date of dissolution to the date of reinstatement which would
9-11 have been payable had the corporation not been dissolved. A
9-12 reinstatement filing fee of $25.00 shall accompany the application
9-13 for reinstatement.
9-14 Reinstatement shall not be authorized if the corporate name
9-15 is the same as or deceptively similar to a corporate, limited
9-16 partnership, or limited liability company name already on file or
9-17 reserved or registered, unless the corporation being reinstated
9-18 contemporaneously amends the articles of incorporation to change
9-19 its name.
9-20 When the application for reinstatement is approved and filed
9-21 by the Secretary of State, the corporate existence shall be deemed
9-22 to have continued without interruption from the date of dissolution
9-23 except the reinstatement shall have no effect upon any issue of
9-24 personal liability of the directors, officers, or agents of the
9-25 corporation during the period between dissolution and
9-26 reinstatement.
9-27 SECTION 12. Section A, Article 8.03, Texas Non-Profit
10-1 Corporation Act (Article 1396-8.03, Vernon's Texas Civil Statutes),
10-2 is amended to read as follows:
10-3 A. No certificate of authority shall be issued to a foreign
10-4 corporation if the corporate name of such corporation:
10-5 (1) Contains any word or phrase which indicates or
10-6 implies that it is organized for any purpose other than one or more
10-7 of the purposes contained in its articles of incorporation.
10-8 (2) Is the same as, or deceptively similar to, the
10-9 name of any corporation, whether for profit or not for profit,
10-10 limited partnership, or limited liability company existing under
10-11 any Act of this State, or any foreign corporation, whether for
10-12 profit or not for profit, limited partnership, or limited liability
10-13 company authorized to transact business or conduct affairs in this
10-14 State, or a corporate, limited partnership, or limited liability
10-15 company name reserved or registered as permitted by the laws of
10-16 this State; provided that a name may be similar if written consent
10-17 is obtained from the existing corporation, limited partnership, or
10-18 limited liability company having the name deemed to be similar or
10-19 the person[, or corporation] for whom the name deemed to be similar
10-20 is reserved or registered in the office of the Secretary of State.
10-21 A certificate of authority shall be issued as provided by this Act
10-22 to any foreign corporation having a name the same as, deceptively
10-23 similar to, or, if no consent is given, similar to the name of any
10-24 domestic corporation, limited partnership, or limited liability
10-25 company existing under the laws of this State or of any foreign
10-26 corporation, limited partnership, or limited liability company
10-27 authorized to transact business or conduct affairs in this State,
11-1 or a name the exclusive right to which is, at the time, reserved or
11-2 registered in accordance with this Act or any other applicable law,
11-3 provided the foreign corporation qualifies and does business under
11-4 a name that meets the requirements of this article. The foreign
11-5 corporation shall set forth in the application for a certificate of
11-6 authority the name under which it is qualifying and shall file an
11-7 assumed name certificate in accordance with Chapter 36, Business &
11-8 Commerce Code, as amended.
11-9 SECTION 13. Section E, Article 8.15, Texas Non-Profit
11-10 Corporation Act (Article 1396-8.15, Vernon's Texas Civil Statutes),
11-11 is amended to read as follows:
11-12 E. Any corporation whose certificate of authority has been
11-13 revoked by the Secretary of State under the provisions of Section B
11-14 of this article may be reinstated by the Secretary of State at any
11-15 time within a period of 36 [12] months from the date of such
11-16 revocation [dissolution], upon approval of an application for
11-17 reinstatement signed by an officer or director of the corporation.
11-18 Such application shall be filed by the Secretary of State whenever
11-19 it is established to the Secretary's [his] satisfaction that in
11-20 fact there was no cause for the revocation, or whenever the
11-21 neglect, omission or delinquency resulting in revocation has been
11-22 corrected and payment made of all fees, taxes, penalties and
11-23 interest due thereon which accrued before the revocation plus an
11-24 amount equal to the total taxes from the date of revocation to the
11-25 date of reinstatement which would have been payable had the
11-26 corporation's certificate not been revoked. A reinstatement filing
11-27 fee of $25.00 shall accompany the application for reinstatement.
12-1 Reinstatement shall not be authorized if the corporate name
12-2 is the same as or deceptively similar to a corporate, limited
12-3 partnership, or limited liability company name already on file or
12-4 reserved or registered, unless the corporation being reinstated
12-5 contemporaneously amends its certificate of authority to change its
12-6 name.
12-7 When the application for reinstatement is approved and filed
12-8 by the Secretary of State, the corporate authority to do business
12-9 in Texas shall be deemed to have continued without interruption
12-10 from the date of revocation, except that reinstatement shall have
12-11 no effect upon any issue of personal liability of the directors,
12-12 officers, or agents of the corporation during the period between
12-13 revocation and reinstatement.
12-14 SECTION 14. (a) This Act takes effect September 1, 1997,
12-15 and applies to an entity affected regardless of the date of
12-16 formation or incorporation.
12-17 (b) This Act shall not affect any action or proceeding
12-18 commenced before the effective date of this Act.
12-19 SECTION 15. The importance of this legislation and the
12-20 crowded condition of the calendars in both houses create an
12-21 emergency and an imperative public necessity that the
12-22 constitutional rule requiring bills to be read on three several
12-23 days in each house be suspended, and this rule is hereby suspended.