By: Sibley S.B. No. 555
A BILL TO BE ENTITLED
AN ACT
1-1 relating to certain business organizations; providing penalties.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section A, Article 1.02, Texas Business
1-4 Corporation Act, is amended to read as follows:
1-5 A. As used in this Act, unless the context otherwise
1-6 requires, the term:
1-7 (1) "Articles of incorporation" means the original or
1-8 restated articles of incorporation and all amendments thereto.
1-9 (2) "Associate," when used to indicate a relationship
1-10 with a person, means:
1-11 (a) a domestic or foreign corporation or other
1-12 entity of which the person is an officer or partner or is the
1-13 beneficial owner of 10 percent or more of a class of voting shares
1-14 or similar securities of that corporation or other entity;
1-15 (b) a trust or estate in which the person has a
1-16 substantial beneficial interest or as to which the person serves as
1-17 trustee or in a similar fiduciary capacity; or
1-18 (c) a spouse of the person or a relative of the
1-19 person, or of the person's spouse, who has the same home as the
1-20 person or who is a director or officer of such person or any of its
1-21 affiliates.
1-22 (3) "Authorized shares" means the shares of all
1-23 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:
3-1 (a) the continuance of a domestic corporation
3-2 as, and in the organizational form of, a foreign corporation or
3-3 other entity; or
3-4 (b) the continuance of a foreign corporation or
3-5 other entity as, and in the organizational form of, a domestic
3-6 corporation.
3-7 (9) "Converted entity" means any domestic or foreign
3-8 corporation or other entity to which a converting entity has
3-9 converted or intends to convert as permitted by Article 5.17 of
3-10 this Act.
3-11 (10) "Converting entity" means any domestic or foreign
3-12 corporation or other entity that has converted or intends to
3-13 convert as permitted by Article 5.17 of this Act.
3-14 (11) [(7)] "Corporation" or "domestic corporation"
3-15 means a corporation for profit subject to the provisions of this
3-16 Act, except a foreign corporation.
3-17 (12) "Disinterested," when used to indicate a director
3-18 or other person is disinterested in a contract, transaction, or
3-19 other matter for purposes of approval of a contract or transaction
3-20 under Article 2.35-1 of this Act and for purposes of considering
3-21 the disposition of a claim or challenge with respect to a
3-22 particular contract or transaction or to particular conduct means
3-23 the director or other person, or an associate of the director
3-24 (other than the corporation and its associates) or other person, is
3-25 not a party to the contract or transaction or is not materially
4-1 involved in the conduct that is subject to the claim or challenge
4-2 and does not otherwise have a material financial interest in the
4-3 outcome of the contract or transaction or the disposition of the
4-4 claim or challenge. A director or other person is not to be
4-5 considered to be materially involved in conduct that is subject to
4-6 a claim or challenge or to otherwise have a material financial
4-7 interest in the outcome of a contract or transaction or the
4-8 disposition of the claim or challenge solely by reason of the
4-9 existence of one or more of the following circumstances:
4-10 (a) the person was nominated or elected as a
4-11 director by persons who are interested in the contract or
4-12 transaction or who are alleged to have engaged in the conduct that
4-13 is subject to the claim or challenge;
4-14 (b) the person receives normal director's fees
4-15 or similar customary compensation, expense reimbursement, and
4-16 benefits as a director of the corporation;
4-17 (c) the person has a direct or indirect equity
4-18 interest in the corporation;
4-19 (d) the corporation or its subsidiaries has an
4-20 interest in the contract or transaction or was affected by the
4-21 alleged conduct;
4-22 (e) the person or an associate or affiliate of
4-23 the person receives ordinary and reasonable compensation for
4-24 services rendered to review, make recommendations, or decide on the
4-25 disposition of the claim or challenge; or
5-1 (f) in the case of a review by the person of
5-2 alleged conduct that is subject to a claim or challenge:
5-3 (i) the person is named as a defendant in
5-4 the derivative proceeding with respect to such matter or as a
5-5 person who engaged in the alleged conduct; or
5-6 (ii) the person approved of, voted for, or
5-7 acquiesced in, as a director, the act being challenged if the act
5-8 resulted in no material personal or financial benefit to the person
5-9 and the challenging party fails to allege with particularity facts
5-10 that, if true, raise a significant prospect that the director would
5-11 be adjudged liable to the corporation or its shareholders by reason
5-12 of that conduct.
5-13 (13) [(8)] "Distribution" means a transfer of money or
5-14 other property (except its own shares or rights to acquire its own
5-15 shares), or issuance of indebtedness, by a corporation to its
5-16 shareholders in the form of:
5-17 (a) a dividend on any class or series of the
5-18 corporation's outstanding shares;
5-19 (b) a purchase, redemption, or other acquisition
5-20 by the corporation, directly or indirectly, of any of its own
5-21 shares; or
5-22 (c) a payment by the corporation in liquidation
5-23 of all or a portion of its assets.
5-24 (14) [(9)] "Foreign corporation" means a corporation
5-25 for profit organized under laws other than the laws of this State.
6-1 (15) "Independent," when used to indicate a director
6-2 or other person is independent for purposes of considering the
6-3 disposition of a claim or challenge with respect to a particular
6-4 contract or transaction or to particular conduct or alleged conduct
6-5 means:
6-6 (a) the director or other person is
6-7 disinterested;
6-8 (b) the director or other person is not an
6-9 associate (other than by reason of being a director of the
6-10 corporation or one more of its subsidiaries or associates) or
6-11 member of the immediate family of a party to the contract or
6-12 transaction that is the subject of the claim or challenge or that
6-13 is alleged to have engaged in the conduct that is subject to the
6-14 claim or challenge;
6-15 (c) the director or other person, or an
6-16 associate or member of the immediate family of the director or
6-17 other person, does not have a business, financial, or familial
6-18 relationship with a party to the contract or transaction that is
6-19 the subject of the claim or challenge or that is alleged to have
6-20 engaged in conduct that is subject to the claim or challenge,
6-21 which, in each case, could reasonably be expected to materially and
6-22 adversely affect the director's or other person's judgment with
6-23 respect to the consideration of the disposition of the matter
6-24 subject to the claim or challenge in the interests of the
6-25 corporation; and
7-1 (d) the director or other person is not
7-2 otherwise shown, by a preponderance of the evidence by the person
7-3 challenging the independence of the director or other person, to be
7-4 under the controlling influence of a party to the contract or
7-5 transaction that is the subject of the claim or challenge or that
7-6 is alleged to have engaged in conduct that is subject to the claim
7-7 or challenge.
7-8 A director or other person is not considered to have a
7-9 relationship that could be expected to materially and adversely
7-10 affect the director's or other person's judgment with respect to
7-11 the consideration of the disposition of a matter subject to a claim
7-12 or challenge or to otherwise be under the controlling influence of
7-13 a party to a contract or transaction that is the subject of the
7-14 claim or challenge or that is alleged to have engaged in conduct
7-15 that is subject to a claim or challenge solely by reason of the
7-16 existence of one or more of the following circumstances:
7-17 (a) the person has been nominated or elected as
7-18 a director by persons who are interested in the contract or
7-19 transaction or who are alleged to have engaged in the conduct that
7-20 is subject to the claim or challenge;
7-21 (b) the person receives normal director's fees
7-22 or similar customary compensation, expense reimbursement, and
7-23 benefits as a director of the corporation;
7-24 (c) the person has a direct or indirect equity
7-25 interest in the corporation;
8-1 (d) the corporation or its subsidiaries have an
8-2 interest in the contract or transaction or were affected by the
8-3 alleged conduct;
8-4 (e) the person or an associate or affiliate of
8-5 such person receives ordinary and reasonable compensation for
8-6 services rendered to review, make recommendations, or decide on the
8-7 disposition of the claim or challenge; or
8-8 (f) the person or an associate (other than the
8-9 corporation and its associates), immediate family, member or
8-10 affiliate of the person has an ongoing business relationship with
8-11 the corporation that is not material to that person, associate,
8-12 family member, or affiliate.
8-13 (16) [(10)] "Insolvency" means inability of a
8-14 corporation to pay its debts as they become due in the usual course
8-15 of its business.
8-16 (17) [(11)] "Investment Company Act" means the
8-17 Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.);
8-18 (18) [(12)] "Merger" means (a) the division of a
8-19 domestic corporation into two or more new domestic corporations or
8-20 into a surviving corporation and one or more new domestic or
8-21 foreign corporations or other entities, or (b) the combination of
8-22 one or more domestic corporations with one or more domestic or
8-23 foreign corporations or other entities resulting in (i) one or more
8-24 surviving domestic or foreign corporations or other entities, (ii)
8-25 the creation of one or more new domestic or foreign corporations or
9-1 other entities, or (iii) one or more surviving domestic or foreign
9-2 corporations or other entities and the creation of one or more new
9-3 domestic or foreign corporations or other entities.
9-4 (19) [(13)] "Net assets" means the amount by which the
9-5 total assets of a corporation exceed the total debts of the
9-6 corporation.
9-7 (20) [(14)] "Other entity" means any entity, whether
9-8 organized for profit or not, that is a corporation (other than a
9-9 domestic or foreign corporation), limited or general partnership,
9-10 limited liability company, real estate investment trust, joint
9-11 venture, joint stock company, cooperative, association, bank,
9-12 trust, insurance company or other legal entity organized pursuant
9-13 to the laws of this state or any other state or country [to the
9-14 extent such laws or the constituent documents of that entity, not
9-15 inconsistent with such laws, permit that entity to enter into a
9-16 merger or share exchange as permitted by Article 5.03 of this Act].
9-17 (21) [(15)] "Share dividend" means a dividend by a
9-18 corporation that is payable in its own authorized but unissued
9-19 shares or in treasury shares. An amendment to a corporation's
9-20 articles of incorporation to change the shares of any class or
9-21 series, whether with or without par value, into the same or a
9-22 different number of shares, either with or without par value, of
9-23 the same class or series or another class or series does not
9-24 constitute a share dividend.
9-25 (22) [(16)] "Shareholder" or "holder of shares" means
10-1 the person in whose name shares issued by a corporation are
10-2 registered at the relevant time in the share transfer records
10-3 maintained by the corporation pursuant to Article 2.44 of this Act.
10-4 (23) [(17)] "Shares" means the units into which the
10-5 proprietary interests in a corporation are divided, whether
10-6 certificated or uncertificated shares.
10-7 (24) [(18)] "Stated capital" means, at any particular
10-8 time, the sum of:
10-9 (a) the par value of all shares of the
10-10 corporation having a par value that have been issued;
10-11 (b) the consideration fixed by the corporation
10-12 in the manner provided by Article 2.15 of this Act for all shares
10-13 of the corporation without par value that have been issued, except
10-14 such part of the consideration that is actually received therefor
10-15 (which part must be less than all of that consideration) that the
10-16 board by resolution adopted no later than sixty (60) days after the
10-17 issuance of those shares may have allocated to surplus; and
10-18 (c) such amounts not included in paragraphs (a)
10-19 and (b) of this subsection as have been transferred to stated
10-20 capital of the corporation, whether upon the payment of a share
10-21 dividend or upon adoption by the board of directors of a resolution
10-22 directing that all or part of surplus be transferred to stated
10-23 capital, minus all reductions from such sum as have been effected
10-24 in a manner permitted by law.
10-25 (25) [(19)] "Subscriber" means the offeror in a
11-1 subscription.
11-2 (26) [(20)] "Subscription" means a memorandum in
11-3 writing, executed before or after incorporation, wherein an offer
11-4 is made to purchase and pay for a specified number of theretofore
11-5 unissued shares of a corporation.
11-6 (27) [(21)] "Surplus" means the excess of the net
11-7 assets of a corporation over its stated capital.
11-8 (28) [(22)] "Treasury shares" means shares of a
11-9 corporation which have been issued, have been subsequently acquired
11-10 by and belong to the corporation, and have not been canceled and
11-11 restored to the status of authorized but unissued shares. Treasury
11-12 shares do not include shares held by a corporation, either directly
11-13 or through a trust or similar arrangement, in a fiduciary capacity.
11-14 Treasury shares shall be deemed to be "issued" shares but not
11-15 "outstanding" shares, and shall not be included in the total assets
11-16 of a corporation for purposes of determining its "net assets."
11-17 (29) [(23)] "Uncertificated shares" means shares not
11-18 represented by instruments and the transfers of which are
11-19 registered upon books maintained for that purpose by or on behalf
11-20 of the issuing corporation.
11-21 SECTION 2. Sections A, P, R, and T, Article 2.02-1, Texas
11-22 Business Corporation Act, are amended to read as follows:
11-23 A. In this article:
11-24 (1) "Corporation" includes any domestic or foreign
11-25 predecessor entity of the corporation in a merger, conversion
12-1 [consolidation], or other transaction in which some or all of the
12-2 liabilities of the predecessor are transferred to the corporation
12-3 by operation of law and in any other transaction in which the
12-4 corporation assumes the liabilities of the predecessor but does not
12-5 specifically exclude liabilities that are the subject matter of
12-6 this article.
12-7 (2) "Director" means any person who is or was a
12-8 director of the corporation and any person who, while a director of
12-9 the corporation, is or was serving at the request of the
12-10 corporation as a director, officer, partner, venturer, proprietor,
12-11 trustee, employee, agent, or similar functionary of another foreign
12-12 or domestic corporation, [partnership, joint venture, sole
12-13 proprietorship, trust,] employee benefit plan, [or] other
12-14 enterprise, or other entity.
12-15 (3) "Expenses" include court costs and attorneys'
12-16 fees.
12-17 (4) "Official capacity" means
12-18 (a) when used with respect to a director, the
12-19 office of director in the corporation, and
12-20 (b) when used with respect to a person other
12-21 than a director, the elective or appointive office in the
12-22 corporation held by the officer or the employment or agency
12-23 relationship undertaken by the employee or agent in behalf of the
12-24 corporation, but
12-25 (c) in both Paragraphs (a) and (b) does not
13-1 include service for any other foreign or domestic corporation or
13-2 any [partnership, joint venture, sole proprietorship, trust,]
13-3 employee benefit plan, [or] other enterprise, or other entity.
13-4 (5) "Proceeding" means any threatened, pending, or
13-5 completed action, suit, or proceeding, whether civil, criminal,
13-6 administrative, arbitrative, or investigative, any appeal in such
13-7 an action, suit, or proceeding, and any inquiry or investigation
13-8 that could lead to such an action, suit, or proceeding.
13-9 P. A corporation may indemnify and advance expenses to
13-10 persons who are not or were not officers, employees, or agents of
13-11 the corporation but who are or were serving at the request of the
13-12 corporation as a director, officer, partner, venturer, proprietor,
13-13 trustee, employee, agent, or similar functionary of another foreign
13-14 or domestic corporation, [partnership, joint venture, sole
13-15 proprietorship, trust,] employee benefit plan, [or] other
13-16 enterprise, or other entity to the same extent that it may
13-17 indemnify and advance expenses to directors under this article.
13-18 R. A corporation may purchase and maintain insurance or
13-19 another arrangement on behalf of any person who is or was a
13-20 director, officer, employee, or agent of the corporation or who is
13-21 or was serving at the request of the corporation as a director,
13-22 officer, partner, venturer, proprietor, trustee, employee, agent,
13-23 or similar functionary of another foreign or domestic corporation,
13-24 [partnership, joint venture, sole proprietorship, trust,] employee
13-25 benefit plan, [or] other enterprise, or other entity, against any
14-1 liability asserted against him and incurred by him in such a
14-2 capacity or arising out of his status as such a person, whether or
14-3 not the corporation would have the power to indemnify him against
14-4 that liability under this article. If the insurance or other
14-5 arrangement is with a person or entity that is not regularly
14-6 engaged in the business of providing insurance coverage, the
14-7 insurance or arrangement may provide for payment of a liability
14-8 with respect to which the corporation would not have the power to
14-9 indemnify the person only if including coverage for the additional
14-10 liability has been approved by the shareholders of the corporation.
14-11 Without limiting the power of the corporation to procure or
14-12 maintain any kind of insurance or other arrangement, a corporation
14-13 may, for the benefit of persons indemnified by the corporation,
14-14 (1) create a trust fund; (2) establish any form of self-insurance;
14-15 (3) secure its indemnity obligation by grant of a security interest
14-16 or other lien on the assets of the corporation; or (4) establish a
14-17 letter of credit, guaranty, or surety arrangement. The insurance
14-18 or other arrangement may be procured, maintained, or established
14-19 within the corporation or with any insurer or other person deemed
14-20 appropriate by the board of directors regardless of whether all or
14-21 part of the stock or other securities of the insurer or other
14-22 person are owned in whole or part by the corporation. In the
14-23 absence of fraud, the judgment of the board of directors as to the
14-24 terms and conditions of the insurance or other arrangement and the
14-25 identity of the insurer or other person participating in an
15-1 arrangement shall be conclusive and the insurance or arrangement
15-2 shall not be voidable and shall not subject the directors approving
15-3 the insurance or arrangement to liability, on any ground,
15-4 regardless of whether directors participating in the approval are
15-5 beneficiaries of the insurance or arrangement.
15-6 T. For purposes of this article, the corporation is deemed
15-7 to have requested a director to serve as a trustee, employee,
15-8 agent, or similar functionary of an employee benefit plan whenever
15-9 the performance by him of his duties to the corporation also
15-10 imposes duties on or otherwise involves services by him to the plan
15-11 or participants or beneficiaries of the plan. Excise taxes
15-12 assessed on a director with respect to an employee benefit plan
15-13 pursuant to applicable law are deemed fines. Action taken or
15-14 omitted by a director [him] with respect to an employee benefit
15-15 plan in the performance of his duties for a purpose reasonably
15-16 believed by him to be in the interest of the participants and
15-17 beneficiaries of the plan is deemed to be for a purpose which is
15-18 not opposed to the best interests of the corporation.
15-19 SECTION 3. Section A, Article 2.05, Texas Business
15-20 Corporation Act, is amended to read as follows:
15-21 A. The Corporate name shall conform to the following
15-22 requirements:
15-23 (1) It shall contain the word "corporation,"
15-24 "company," or "incorporated," or shall contain an abbreviation of
15-25 one of such words, and shall contain such additional words as may
16-1 be required by law.
16-2 (2) It shall not contain any word or phrase which
16-3 indicates or implies that it is organized for any purpose other
16-4 than one or more of the purposes contained in its articles of
16-5 incorporation.
16-6 (3) It shall not be the same as, or deceptively
16-7 similar to, the name of any domestic corporation, limited
16-8 partnership, or limited liability company existing under the laws
16-9 of this State, or the name of any foreign corporation, non-profit
16-10 corporation, limited partnership, or limited liability company
16-11 authorized to transact business in this State, or a name the
16-12 exclusive right to which is, at the time, reserved in the manner
16-13 provided in this Act or any other statute providing for reservation
16-14 of names by a limited partnership or limited liability company, or
16-15 the name of a corporation, limited partnership, or limited
16-16 liability company which has in effect a registration of its company
16-17 [corporate] name as provided in this Act or any other applicable
16-18 law; provided that a name may be similar if written consent is
16-19 obtained from the existing corporation, limited partnership, or
16-20 limited liability company having the name deemed to be similar or
16-21 the person[, or corporation,] for whom the name deemed to be
16-22 similar is reserved in the office of the Secretary of State.
16-23 (4) It shall not contain the word "lottery."
16-24 SECTION 4. Article 2.06, Texas Business Corporation Act, is
16-25 amended by adding Section D to read as follows:
17-1 D. Any person for whom a specified corporate name has been
17-2 reserved pursuant to Section B of this article may, during the
17-3 period for which such name is reserved, terminate such reservation
17-4 by filing with the Secretary of State an application for
17-5 cancellation of reservation of corporate name, together with the
17-6 applicable fee.
17-7 SECTION 5. Sections A and B, Article 2.15, Texas Business
17-8 Corporation Act, are amended to read as follows:
17-9 A. Shares having a par value may be issued for such
17-10 consideration, [expressed in dollars,] not less than the par value
17-11 thereof, as shall be fixed from time to time by the board of
17-12 directors or, in the case of shares issued by a converted entity,
17-13 in the plan of conversion or, in the case of a corporation created
17-14 by a merger, in the plan of merger.
17-15 B. Shares without par value may be issued for such
17-16 consideration, [expressed in dollars,] as may be fixed:
17-17 (1) [from time to time] by the board of directors from
17-18 time to time, unless the articles of incorporation reserve to the
17-19 shareholders the right to fix the consideration, in which case,
17-20 prior to the issuance of such[. In the event that such right be
17-21 reserved as to any] shares, the shareholders shall[, prior to the
17-22 issuance of such shares,] fix the consideration to be received for
17-23 such shares, by a vote of the holders of a majority of all shares
17-24 entitled to vote thereon;
17-25 (2) by a plan of conversion, in the case of shares to
18-1 be issued pursuant to the plan of conversion by a corporation that
18-2 is a converted entity; or
18-3 (3) by a plan of merger, in the case of shares to be
18-4 issued pursuant to the plan of merger by a corporation created
18-5 pursuant to the plan of merger.
18-6 SECTION 6. Article 2.16, Texas Business Corporation Act, is
18-7 amended to read as follows:
18-8 Art. 2.16. PAYMENT FOR SHARES. A. The [Subject to any
18-9 provision of the Constitution of the State of Texas to the
18-10 contrary, the] board of directors or, in the case of shares to be
18-11 issued pursuant to a plan of conversion by a corporation that is a
18-12 converted entity, the plan of conversion, or, in the case of shares
18-13 to be issued pursuant to a plan of merger by a corporation created
18-14 pursuant to the plan of merger, the plan of merger may authorize
18-15 shares to be issued for consideration consisting of any tangible or
18-16 intangible benefit to the corporation or other property of any kind
18-17 or nature, including cash, promissory notes, services performed,
18-18 contracts for services to be performed, [or] other securities of
18-19 the corporation, or securities of any other corporation, domestic
18-20 or foreign, or other entity. In addition, shares may be issued
18-21 pursuant to a plan of conversion or plan of merger in the manner
18-22 and for such consideration as may be provided for in the plan of
18-23 conversion or plan of merger. Shares may not be issued until the
18-24 full amount of the consideration, fixed as provided by law, has
18-25 been paid or delivered as required in connection with the
19-1 authorization of the shares. When such consideration shall have
19-2 been so paid or delivered [to the corporation or to a corporation
19-3 of which all of the outstanding shares of each class are owned by
19-4 the corporation], the shares shall be deemed to have been issued
19-5 and the subscriber or shareholder entitled to receive such issue
19-6 shall be a shareholder with respect to such shares, and the shares
19-7 shall be considered fully paid and non-assessable.
19-8 B. In the absence of fraud in the transaction, the judgment
19-9 of the board of directors or the shareholders or the party or
19-10 parties approving the plan of conversion or the plan of merger, as
19-11 the case may be, as to the value and sufficiency of the
19-12 consideration received for shares shall be conclusive.
19-13 SECTION 7. Sections A and B, Article 2.21, Texas Business
19-14 Corporation Act, are amended to read as follows:
19-15 A. A holder of shares, an owner of any beneficial interest
19-16 in shares, or a subscriber for shares whose subscription has been
19-17 accepted, or any affiliate thereof or of the corporation, shall be
19-18 under no obligation to the corporation or to its obligees with
19-19 respect to:
19-20 (1) such shares other than the obligation, if any, of
19-21 such person to pay to the corporation the full amount of the
19-22 consideration, fixed in compliance with Article 2.15 of this Act,
19-23 for which such shares were or are to be issued;
19-24 (2) any contractual obligation of the corporation or
19-25 any matter relating to or arising from the obligation on the basis
20-1 that the holder, owner, [or] subscriber, or affiliate is or was the
20-2 alter ego of the corporation, or on the basis of actual fraud or
20-3 constructive fraud, a sham to perpetrate a fraud, or other similar
20-4 theory, unless the obligee demonstrates that the holder, owner,
20-5 [or] subscriber, or affiliate caused the corporation to be used for
20-6 the purpose of perpetrating and did perpetrate an actual fraud on
20-7 the obligee primarily for the direct personal benefit of the
20-8 holder, owner, [or] subscriber, or affiliate; or
20-9 (3) any [contractual] obligation of the corporation on
20-10 the basis of the failure of the corporation to observe any
20-11 corporate formality, including without limitation: (a) the failure
20-12 to comply with any requirement of this Act or of the articles of
20-13 incorporation or bylaws of the corporation; or (b) the failure to
20-14 observe any requirement prescribed by this Act or by the articles
20-15 of incorporation or bylaws for acts to be taken by the corporation,
20-16 its board of directors, or its shareholders.
20-17 B. The liability of a holder, owner, or subscriber of shares
20-18 of a corporation or any affiliate thereof or of the corporation for
20-19 an obligation that is limited by Section A of this article is
20-20 exclusive and preempts any other liability imposed on a holder,
20-21 owner, or subscriber of shares of a corporation or any affiliate
20-22 thereof or of the corporation for that obligation under common law
20-23 or otherwise, except that nothing contained in this article shall
20-24 limit the obligation of a holder, owner, [or] subscriber, or
20-25 affiliate to an obligee of the corporation when:
21-1 (1) the holder, owner, [or] subscriber, or affiliate
21-2 has expressly assumed, guaranteed, or agreed to be personally
21-3 liable to the obligee for the obligation; or
21-4 (2) the holder, owner, [or] subscriber, or affiliate
21-5 is otherwise liable to the obligee for the obligation under this
21-6 Act or another applicable statute.
21-7 SECTION 8. Article 2.28, Texas Business Corporation Act, is
21-8 amended by amending Sections A and B and adding Section E to read
21-9 as follows:
21-10 A. Quorum. With respect to any meeting of shareholders
21-11 [matter], a quorum shall be present for any matter to be presented
21-12 at that [a] meeting [of shareholders] if the holders of a majority
21-13 of the shares entitled to vote at the meeting [on that matter] are
21-14 represented at the meeting in person or by proxy, unless otherwise
21-15 provided in the articles of incorporation in accordance with this
21-16 section. The articles of incorporation may provide:
21-17 (1) That a quorum shall be present at a meeting of
21-18 shareholders only if the holders of a specified greater portion of
21-19 the shares entitled to vote are represented at the meeting in
21-20 person or by proxy; or
21-21 (2) That a quorum shall be present at a meeting of
21-22 shareholders if the holders of a specified lesser portion, but not
21-23 less than one-third (1/3), of the shares entitled to vote are
21-24 represented at the meeting in person or by proxy.
21-25 Unless otherwise provided in the articles of incorporation or
22-1 the bylaws, once a quorum is present at a meeting of shareholders,
22-2 the shareholders represented in person or by proxy at the meeting
22-3 may conduct such business as may be properly brought before the
22-4 meeting until it is adjourned, and the subsequent withdrawal from
22-5 the meeting of any shareholder or the refusal of any shareholder
22-6 represented in person or by proxy to vote shall not affect the
22-7 presence of a quorum at the meeting. Unless otherwise provided in
22-8 the articles of incorporation or the bylaws, the shareholders
22-9 represented in person or by proxy at a meeting of shareholders at
22-10 which a quorum is not present may adjourn the meeting until such
22-11 time and to such place as may be determined by a vote of the
22-12 holders of a majority of the shares represented in person or by
22-13 proxy at that meeting.
22-14 B. Voting on Matters Other Than the Election of Directors.
22-15 With respect to any matter, other than the election of directors or
22-16 a matter for which the affirmative vote of the holders of a
22-17 specified portion of the shares entitled to vote is required by
22-18 this Act, the affirmative vote of the holders of a majority of the
22-19 shares entitled to vote on, and that voted for or against or
22-20 expressly abstained with respect to, that matter [and represented
22-21 in person or by proxy] at a meeting of shareholders at which a
22-22 quorum is present shall be the act of the shareholders, unless
22-23 otherwise provided in the articles of incorporation or the bylaws
22-24 in accordance with this section. With respect to any matter, other
22-25 than the election of directors or a matter for which the
23-1 affirmative vote of the holders of a specified portion of the
23-2 shares entitled to vote is required by this Act, the articles of
23-3 incorporation or the bylaws may provide:
23-4 (1) That the act of the shareholders shall be the
23-5 affirmative vote of the holders of a specified portion, but not
23-6 less than a majority, of the shares entitled to vote on that
23-7 matter;
23-8 (2) That the act of the shareholders shall be the
23-9 affirmative vote of the holders of a specified portion, but not
23-10 less than a majority, of the shares entitled to vote on that matter
23-11 and represented in person or by proxy at a meeting of shareholders
23-12 at which a quorum is present; [or]
23-13 (3) That the act of the shareholders shall be the
23-14 affirmative vote of the holders of a specified portion, but not
23-15 less than a majority, of the shares entitled to vote on, and voted
23-16 for or against, that matter at a meeting of shareholders at which a
23-17 quorum is present; or
23-18 (4) That the act of the shareholders shall be the
23-19 affirmative vote of the holders of a specified portion, but not
23-20 less than a majority, of the shares entitled to vote on, and that
23-21 voted for or against or expressly abstained with respect to, that
23-22 matter at a meeting of shareholders at which a quorum is present.
23-23 E. A corporation may establish procedures in its bylaws, not
23-24 inconsistent with this Act, for determining the validity of proxies
23-25 and whether shares that are held of record by a bank, broker, or
24-1 other nominee are represented at a meeting of shareholders with
24-2 respect to any matter. The procedures may incorporate or look to
24-3 rules and determinations of any stock exchange or self-regulatory
24-4 organization regulating the corporation or that bank, broker, or
24-5 other nominee.
24-6 SECTION 9. Section B, Article 2.29, Texas Business
24-7 Corporation Act, is amended to read as follows:
24-8 B. Shares [Treasury shares, shares] of its own stock owned
24-9 by a corporation or by another domestic or foreign corporation or
24-10 other entity, if a [the] majority of the voting stock or voting
24-11 interest of the other corporation or other entity [which] is owned
24-12 or controlled by the [it, and shares of its own stock held by a]
24-13 corporation, [in a fiduciary capacity] shall not be voted, directly
24-14 or indirectly, at any meeting, and shall not be counted in
24-15 determining the total number of outstanding shares at any given
24-16 time. Nothing in this section shall be construed as limiting the
24-17 right of any domestic or foreign corporation or other entity to
24-18 vote stock, including but not limited to its own stock, held or
24-19 controlled by it in a fiduciary capacity, or with respect to which
24-20 it otherwise exercises voting power in a fiduciary capacity.
24-21 SECTION 10. Part Two, Texas Business Corporation Act, is
24-22 amended by adding Article 2.30-1 to read as follows:
24-23 Art. 2.30-1. SHAREHOLDER AGREEMENTS. A. Scope of
24-24 Agreement. An agreement among the shareholders of a corporation
24-25 that complies with this article is effective among the shareholders
25-1 and the corporation even though it is inconsistent with one or more
25-2 provisions of this Act in that it:
25-3 (1) restricts the discretion or powers of the board of
25-4 directors;
25-5 (2) eliminates the board of directors and permits
25-6 management of the business and affairs of the corporation by its
25-7 shareholders, or in whole or in part by one or more of its
25-8 shareholders, or by one or more persons not shareholders;
25-9 (3) establishes the natural persons who shall be the
25-10 directors or officers of the corporation, their term of office or
25-11 manner of selection or removal, or terms or conditions of
25-12 employment of any director, officer, or other employee of the
25-13 corporation, regardless of the length of employment;
25-14 (4) governs the authorization or making of
25-15 distributions whether in proportion to ownership of shares, subject
25-16 to the limitations in Article 2.38 of this Act, or determines the
25-17 manner in which profits and losses shall be apportioned;
25-18 (5) governs, in general or in regard to specific
25-19 matters, the exercise or division of voting power by and between
25-20 the shareholders, directors (if any), or other persons or by or
25-21 among any of them, including use of disproportionate voting rights
25-22 or director proxies;
25-23 (6) establishes the terms and conditions of any
25-24 agreement for the transfer or use of property or the provision of
25-25 services between the corporation and any shareholder, director,
26-1 officer, or employee of the corporation, or other person or among
26-2 any of them;
26-3 (7) authorizes arbitration or grants authority to any
26-4 shareholder or other person as to any issue about which there is a
26-5 deadlock among the directors, shareholders, or other person or
26-6 persons empowered to manage the corporation to resolve that issue;
26-7 (8) requires dissolution of the corporation at the
26-8 request of one or more of the shareholders or on the occurrence of
26-9 a specified event or contingency, in which case the dissolution of
26-10 the corporation shall proceed as if all the shareholders had
26-11 consented in writing to dissolution of the corporation as provided
26-12 in Article 6.02 of this Act; or
26-13 (9) otherwise governs the exercise of corporate
26-14 powers, the management of the business and affairs of the
26-15 corporation, or the relationship among the shareholders, the
26-16 directors, and the corporation, or among any of them, as if the
26-17 corporation were a partnership or in a manner that would otherwise
26-18 be appropriate only among partners, and is not contrary to public
26-19 policy.
26-20 B. Procedures Required. An agreement authorized by this
26-21 article shall be:
26-22 (1) set forth (a) in the articles of incorporation or
26-23 bylaws and approved by all persons who are shareholders at the time
26-24 of the agreement, or (b) in a written agreement that is signed by
26-25 all the persons who are shareholders at the time of the agreement
27-1 and is made known to the corporation;
27-2 (2) subject to amendment only by all persons who are
27-3 shareholders at the time of the amendment, unless the agreement
27-4 provides otherwise; and
27-5 (3) valid for 10 years, unless the agreement provides
27-6 otherwise.
27-7 C. Notation of Existence. The existence of an agreement
27-8 authorized by this article shall be noted conspicuously on the
27-9 front or back of each certificate for outstanding shares or on the
27-10 information statement required for uncertificated shares by Article
27-11 2.19 of this Act and shall include the following: "These shares
27-12 are subject to the provisions of a shareholders' agreement that may
27-13 provide for management of the corporation in a manner different
27-14 than in other corporations and may subject a shareholder to certain
27-15 obligations or liabilities not otherwise imposed on shareholders in
27-16 other corporations." If at the time of the agreement the
27-17 corporation has shares outstanding represented by certificates, the
27-18 corporation shall recall the outstanding certificates and issue
27-19 substitute certificates that comply with this section. The failure
27-20 to note the existence of the agreement on the certificate or
27-21 information statement shall not affect the validity of the
27-22 agreement or any action taken pursuant to it.
27-23 D. Right of Rescission. Any purchaser of shares who, at the
27-24 time of purchase, did not have knowledge of the existence of an
27-25 agreement authorized by this article shall be entitled to
28-1 rescission of the purchase. A purchaser shall be deemed to have
28-2 knowledge of the existence of the agreement if its existence is
28-3 noted on the certificate or information statement for the shares in
28-4 compliance with Section C of this article and, if the shares are
28-5 not represented by a certificate, the information statement noting
28-6 existence of the agreement is delivered to the purchaser at or
28-7 prior to the time of purchase of the shares. An action to enforce
28-8 the right of rescission authorized by this section must be
28-9 commenced within the earlier of 90 days after discovery of the
28-10 existence of the agreement or two years after time of the purchase
28-11 of the shares.
28-12 E. Cessation. An agreement authorized by this article shall
28-13 cease to be effective when shares of the corporation are listed on
28-14 a national securities exchange, quoted on an interdealer quotation
28-15 system of a national securities association, or regularly traded in
28-16 a market maintained by one or more members of a national or
28-17 affiliated securities association. If the agreement ceases to be
28-18 effective for any reason and the corporation does not have a board
28-19 of directors, governance by a board of directors shall be
28-20 instituted or reinstated in the manner provided in Section C,
28-21 Article 12.23, of this Act. If the agreement is contained or
28-22 referred to in the corporation's articles of incorporation or
28-23 bylaws, the board of directors may adopt an amendment to the
28-24 articles of incorporation or bylaws, without shareholder action, to
28-25 delete the agreement and any references to it.
29-1 F. Managerial Liabilities. An agreement authorized by this
29-2 article that limits the discretion or powers of the board of
29-3 directors or supplants the board of directors shall relieve the
29-4 directors of, and impose on the person or persons in whom such
29-5 discretion or powers or management of the business and affairs of
29-6 the corporation are vested, liability for action or omissions
29-7 imposed by this Act or other law on directors to the extent that
29-8 the discretion or powers of the directors are limited or supplanted
29-9 by the agreement.
29-10 G. Limitation of Liability. The existence or performance of
29-11 an agreement authorized by this article shall not be grounds for
29-12 imposing personal liability on any shareholder for the acts or
29-13 obligations of the corporation by disregarding the separate entity
29-14 of the corporation or otherwise, even if the agreement or its
29-15 performance:
29-16 (1) treats the corporation as if it were a partnership
29-17 or in a manner that otherwise is appropriate only among partners;
29-18 (2) results in the corporation being considered a
29-19 partnership for purposes of taxation; or
29-20 (3) results in failure to observe the corporate
29-21 formalities otherwise applicable to the matters governed by the
29-22 agreement.
29-23 H. If No Shares Issued. Incorporators or subscribers for
29-24 the shares may act as shareholders with respect to an agreement
29-25 authorized by this article if no shares have been issued when the
30-1 agreement is signed.
30-2 SECTION 11. Article 2.31, Texas Business Corporation Act, is
30-3 amended to read as follows:
30-4 Art. 2.31. BOARD OF DIRECTORS. A. Except as provided by
30-5 Article 2.30-1 and Part Twelve of this Act, the [The] powers of a
30-6 corporation shall be exercised by or under the authority of, and
30-7 the business and affairs of a corporation shall be managed under
30-8 the direction of, the board of directors of the corporation.
30-9 Directors need not be residents of this State or shareholders of
30-10 the corporation unless the articles of incorporation or bylaws so
30-11 require. The articles of incorporation or bylaws may prescribe
30-12 other qualifications for directors.
30-13 SECTION 12. Article 2.32, Texas Business Corporation Act, is
30-14 amended to read as follows:
30-15 Art. 2.32. NUMBER AND ELECTION OF DIRECTORS. A. The board
30-16 of directors of a corporation shall consist of one or more members.
30-17 The number of directors shall be fixed by, or in the manner
30-18 provided in, the articles of incorporation or the bylaws, except as
30-19 to the number constituting the initial board of directors, which
30-20 number shall be fixed by the articles of incorporation. The number
30-21 of directors may be increased or decreased from time to time by
30-22 amendment to, or in the manner provided in, the articles of
30-23 incorporation or the bylaws, but no decrease shall have the effect
30-24 of shortening the term of any incumbent director. In the absence
30-25 of a bylaw or a provision of the articles of incorporation fixing
31-1 the number of directors or providing for the manner in which the
31-2 number of directors shall be fixed, the number of directors shall
31-3 be the same as the number constituting the initial board of
31-4 directors as fixed by the articles of incorporation. The names and
31-5 addresses of the members of the initial board of directors shall be
31-6 stated in the articles of incorporation. Unless removed in
31-7 accordance with the provisions of the bylaws or the articles of
31-8 incorporation, such persons shall hold office until the first
31-9 annual meeting of shareholders, and until their successors shall
31-10 have been elected and qualified. At the first annual meeting of
31-11 shareholders and at each annual meeting thereafter, the holders of
31-12 shares entitled to vote in the election of directors shall elect
31-13 directors to hold office until the next succeeding annual meeting,
31-14 except in case of the classification of directors as permitted by
31-15 this Act.
31-16 B. The articles of incorporation may provide that the
31-17 holders of any class or series of shares or any group of classes or
31-18 series of shares shall be entitled to elect one or more directors,
31-19 who shall hold office for such terms as shall be stated in the
31-20 articles of incorporation. The articles of incorporation may
31-21 provide that any directors elected by the holders of any such class
31-22 or series of shares or any such group shall be entitled to more or
31-23 less than one vote on all or any specified matters, in which case
31-24 every reference in this Act (or in the articles of incorporation or
31-25 bylaws, unless expressly stated otherwise therein) to a specified
32-1 portion of the directors shall mean such portion of the votes
32-2 entitled to be cast by the directors to which such reference is
32-3 applicable. Unless removed in accordance with provisions of the
32-4 bylaws or the articles of incorporation, each director shall hold
32-5 office for the term for which he is elected and until his successor
32-6 shall have been elected and qualified.
32-7 C. Except as otherwise provided in this Article, the [The]
32-8 bylaws or the articles of incorporation may provide that at any
32-9 meeting of shareholders called expressly for that purpose any
32-10 director or the entire board of directors may be removed, with or
32-11 without cause, by a vote of the holders of a specified portion, but
32-12 not less than a majority, of the shares then entitled to vote at an
32-13 election of directors, subject to any further restrictions on
32-14 removal that may be contained in the bylaws. Whenever the holders
32-15 of any class or series of shares or any such group are entitled to
32-16 elect one or more directors by the provisions of the articles of
32-17 incorporation, only the holders of shares of that class or series
32-18 or group shall be entitled to vote for or against the removal of
32-19 any director elected by the holders of shares of that class or
32-20 series or group. In the case of a corporation having cumulative
32-21 voting, if less than the entire board is to be removed, no one of
32-22 the directors may be removed if the votes cast against his removal
32-23 would be sufficient to elect him if then cumulatively voted at an
32-24 election of the entire board of directors, or if there be classes
32-25 of directors, at an election of the class of directors of which he
33-1 is a part. In the case of a corporation whose directors have been
33-2 classified as permitted by this Act, unless the articles of
33-3 incorporation otherwise provide, a director may not be removed
33-4 except for cause.
33-5 D. [B.] Notwithstanding Section B [A] of this Article, a
33-6 director of a corporation registered under the Investment Company
33-7 Act, unless removed in accordance with the provisions of the
33-8 articles of incorporation or bylaws, holds office for the term for
33-9 which the director is elected and until the director's successor
33-10 has been elected and qualified.
33-11 SECTION 13. Section A, Article 2.35-1, Texas Business
33-12 Corporation Act, is amended to read as follows:
33-13 A. An otherwise valid [No] contract or transaction between a
33-14 corporation and one or more of its directors or officers, or
33-15 between a corporation and any other domestic or foreign
33-16 corporation[, partnership, association,] or other entity
33-17 [organization] in which one or more of its directors or officers
33-18 are directors or officers or have a financial interest, shall be
33-19 valid notwithstanding whether [void or voidable solely for this
33-20 reason, solely because] the director or officer is present at or
33-21 participates in the meeting of the board or committee thereof which
33-22 authorizes the contract or transaction, or solely because his or
33-23 their votes are counted for such purpose, if any one of the
33-24 following is satisfied:
33-25 (1) The material facts as to his relationship or
34-1 interest and as to the contract or transaction are disclosed or are
34-2 known to the board of directors or the committee, and the board or
34-3 committee in good faith authorizes the contract or transaction by
34-4 the affirmative vote of a majority of the disinterested directors,
34-5 even though the disinterested directors be less than a quorum; or
34-6 (2) The material facts as to his relationship or
34-7 interest and as to the contract or transaction are disclosed or are
34-8 known to the shareholders entitled to vote thereon, and the
34-9 contract or transaction is specifically approved in good faith by
34-10 vote of the shareholders; or
34-11 (3) The contract or transaction is fair as to the
34-12 corporation as of the time it is authorized, approved, or ratified
34-13 by the board of directors, a committee thereof, or the
34-14 shareholders.
34-15 SECTION 14. Section B, Article 2.36, Texas Business
34-16 Corporation Act, is amended to read as follows:
34-17 B. No committee of the board of directors shall have the
34-18 authority of the board of directors in reference to:
34-19 (1) amending the articles of incorporation, except
34-20 that a committee may, to the extent provided in the resolution
34-21 designating that committee or in the articles of incorporation or
34-22 the bylaws, exercise the authority of the board of directors vested
34-23 in it in accordance with Article 2.13 of this Act;
34-24 (2) proposing a reduction of the stated capital of the
34-25 corporation in the manner permitted by Article 4.12 of this Act;
35-1 (3) approving a plan of merger, [or] share exchange,
35-2 or conversion of the corporation;
35-3 (4) recommending to the shareholders the sale, lease,
35-4 or exchange of all or substantially all of the property and assets
35-5 of the corporation otherwise than in the usual and regular course
35-6 of its business;
35-7 (5) recommending to the shareholders a voluntary
35-8 dissolution of the corporation or a revocation thereof;
35-9 (6) amending, altering, or repealing the bylaws of the
35-10 corporation or adopting new bylaws of the corporation;
35-11 (7) filling vacancies in the board of directors;
35-12 (8) filling vacancies in or designating alternate
35-13 members of any such committee;
35-14 (9) filling any directorship to be filled by reason of
35-15 an increase in the number of directors;
35-16 (10) electing or removing officers of the corporation
35-17 or members or alternate members of any such committee;
35-18 (11) fixing the compensation of any member or
35-19 alternate members of such committee; or
35-20 (12) altering or repealing any resolution of the board
35-21 of directors that by its terms provides that it shall not be so
35-22 amendable or repealable.
35-23 SECTION 15. Section B, Article 2.38-4, Texas Business
35-24 Corporation Act, is amended to read as follows:
35-25 B. For the purposes of this Article, a distribution that
36-1 involves the incurrence by a corporation of any indebtedness or
36-2 deferred payment obligation or that involves a requirement in the
36-3 corporation's articles of incorporation or other contract by the
36-4 corporation to redeem, exchange, or otherwise acquire any of its
36-5 own shares is deemed to have been made on the date the indebtedness
36-6 or obligation is incurred or, in the case of a provision in the
36-7 articles of incorporation of a corporation or other contract to
36-8 purchase, redeem, exchange, or otherwise acquire shares, at the
36-9 option of the corporation, is deemed to have been made on either
36-10 the date the provision or other contract is made or takes effect or
36-11 the date on which the shares to be redeemed, exchanged, or acquired
36-12 are redeemed, exchanged, or acquired.
36-13 SECTION 16. Article 3.01, Texas Business Corporation Act, is
36-14 amended to read as follows:
36-15 Art. 3.01. INCORPORATORS. A. Any natural person of the age
36-16 of eighteen (18) years or more, or any domestic or foreign
36-17 corporation, estate, or other entity [partnership, corporation,
36-18 association, trust, or estate (without regard to place of
36-19 residence, domicile, or organization)] may act as an incorporator
36-20 of a corporation by signing the articles of incorporation for such
36-21 corporation and by delivering the original and a copy of the
36-22 articles of incorporation to the Secretary of State.
36-23 SECTION 17. Section A, Article 3.02, Texas Business
36-24 Corporation Act, is amended to read as follows:
36-25 A. The articles of incorporation shall set forth:
37-1 (1) The name of the corporation;
37-2 (2) The period of duration, which may be perpetual;
37-3 (3) The purpose or purposes for which the corporation
37-4 is organized which may be stated to be, or to include, the
37-5 transaction of any or all lawful business for which corporations
37-6 may be incorporated under this Act;
37-7 (4) The aggregate number of shares which the
37-8 corporation shall have authority to issue; if such shares are to
37-9 consist of one class only, the par value of each of such shares, or
37-10 a statement that all of such shares are without par value; or, if
37-11 such shares are to be divided into classes, the number of shares of
37-12 each class, and a statement of the par value of the shares of each
37-13 class or that such shares are to be without par value;
37-14 (5) If the shares are to be divided into classes, the
37-15 designation of each class and statement of the preferences,
37-16 limitations, and relative rights in respect of the shares of each
37-17 class;
37-18 (6) If the corporation is to issue the shares of any
37-19 class in series, then the designation of each series and a
37-20 statement of the variations in the preferences, limitations and
37-21 relative rights as between series insofar as the same are to be
37-22 fixed in the articles of incorporation, and a statement of any
37-23 authority to be vested in the board of directors to establish
37-24 series and fix and determine the preferences, limitations and
37-25 relative rights of each series;
38-1 (7) A statement that the corporation will not commence
38-2 business until it has received for the issuance of shares
38-3 consideration of the value of a stated sum which shall be at least
38-4 One Thousand Dollars ($1,000.00)[, consisting of money, labor done,
38-5 or property actually received];
38-6 (8) Any provision limiting or denying to shareholders
38-7 the preemptive right to acquire additional or treasury shares of
38-8 the corporation;
38-9 (9) If a corporation elects to become a close
38-10 corporation in conformance with Part Twelve of this Act, any
38-11 provision (a) required or permitted by this Act to be stated in the
38-12 articles of incorporation of a close corporation, but not in the
38-13 articles of incorporation of an ordinary corporation, (b) contained
38-14 or permitted to be contained in a shareholders' agreement in
38-15 conformance with Part Twelve of this Act which the incorporators
38-16 elect to set forth in articles of incorporation, or (c) that makes
38-17 a shareholders' agreement in conformance with Part Twelve of this
38-18 Act part of the articles of incorporation of a close corporation in
38-19 the manner prescribed in Section F, Article 2.22 of this Act, but
38-20 any such provision, other than the statement required by Section A,
38-21 Article 12.11 of this Act, shall be preceded by a statement that
38-22 the provision shall be subject to the corporation remaining a close
38-23 corporation in conformance with Part Twelve of this Act;
38-24 (10) Any provision, not inconsistent with law,
38-25 including any provision which under this Act is required or
39-1 permitted to be set forth in the bylaws or which is permitted to be
39-2 included pursuant to Article 2.30-1 of this Act, providing [which
39-3 the incorporators elect to set forth in the articles of
39-4 incorporation] for the regulation of the internal affairs of the
39-5 corporation;
39-6 (11) The street address of its initial registered
39-7 office and the name of its initial registered agent at such
39-8 address;
39-9 (12) Subject to Article 2.30-1 of this Act, the [The]
39-10 number of directors constituting the initial board of directors and
39-11 the names and addresses of the person or persons who are to serve
39-12 as directors until the first annual meeting of shareholders or
39-13 until their successors be elected and qualify, or, in the case of a
39-14 close corporation that, in conformance with Part Twelve of this
39-15 Act, is to be managed in some other manner pursuant to a
39-16 shareholders' agreement by the shareholders or by the persons
39-17 empowered by the agreement to manage its business and affairs, the
39-18 names and addresses of the person or persons who, pursuant to the
39-19 shareholders' agreement, will perform the functions of the initial
39-20 board of directors provided for by this Act;
39-21 (13) The name and address of each incorporator, unless
39-22 the corporation is being incorporated pursuant to a plan of
39-23 conversion or a plan of merger, in which case the articles need not
39-24 include such information; and
39-25 (14) If the corporation is being incorporated pursuant
40-1 to a plan of conversion or a plan of merger, a statement to that
40-2 effect, and in the case of a plan of conversion, the name, address,
40-3 date of formation, and prior form of organization and jurisdiction
40-4 of incorporation or organization of the converting entity.
40-5 SECTION 18. Article 3.03, Texas Business Corporation Act, is
40-6 amended by amending Section A and adding Section C to read as
40-7 follows:
40-8 A. Except as provided by Section C of this Article, the
40-9 [The] original and a copy of the articles of incorporation shall be
40-10 delivered to the Secretary of State. If the Secretary of State
40-11 finds that the articles of incorporation conform to law, he shall,
40-12 when all fees have been paid as required by law:
40-13 (1) Endorse on the original and the copy the word
40-14 "Filed," and the month, day, and year of the filing thereof.
40-15 (2) File the original in his office.
40-16 (3) Issue a certificate of incorporation to which he
40-17 shall affix the copy.
40-18 C. In the case of a new domestic corporation being
40-19 incorporated pursuant to a plan of conversion or a plan of merger
40-20 pursuant to Part Five of this Act, the articles of incorporation of
40-21 the corporation shall be filed with the Secretary of State with the
40-22 articles of conversion or merger and need not be filed separately
40-23 pursuant to Section A of this Article. If the Secretary of State
40-24 finds that the articles of incorporation conform to the law, he
40-25 shall file the articles of incorporation in his office and issue a
41-1 certificate of incorporation, to which he shall affix a copy of the
41-2 articles of incorporation, and deliver the same to the party or
41-3 parties filing the articles of conversion or merger, or their
41-4 representatives, with the certificate of conversion or merger that
41-5 is issued in connection with the conversion or merger. In the case
41-6 of a conversion or a merger, the certificate of incorporation of a
41-7 domestic corporation that is a converted entity or that is to be
41-8 created pursuant to the plan of merger shall become effective on
41-9 the effectiveness of the conversion or the merger, as the case may
41-10 be.
41-11 SECTION 19. Article 3.04, Texas Business Corporation Act, is
41-12 amended to read as follows:
41-13 Art. 3.04. EFFECT OF ISSUANCE OF CERTIFICATE OF
41-14 INCORPORATION. A. Except as provided by Section B of this
41-15 Article, on [Upon] the issuance of the certificate of
41-16 incorporation, the corporate existence of the corporation being
41-17 incorporated shall begin.
41-18 B. In the case of a new domestic corporation being
41-19 incorporated pursuant to a plan of conversion or a plan of merger
41-20 pursuant to Part Five of this Act, the corporate existence of the
41-21 corporation shall begin upon the effectiveness of the conversion or
41-22 the merger, as the case may be.
41-23 C. The[, and such] certificate of incorporation on
41-24 effectiveness shall be conclusive evidence that all conditions
41-25 precedent required to be performed for the valid incorporation of
42-1 the corporation [by the incorporators] have been complied with and
42-2 that the corporation has been duly incorporated under this Act,
42-3 except as against the State in a proceeding for involuntary
42-4 dissolution.
42-5 SECTION 20. Article 3.05, Texas Business Corporation Act, is
42-6 amended to read as follows:
42-7 Art. 3.05. REQUIREMENT BEFORE COMMENCING BUSINESS. A. A
42-8 corporation shall not transact any business or incur any
42-9 indebtedness, except such as shall be incidental to its
42-10 organization or to obtaining subscriptions to or payment for its
42-11 shares, until it has received for the issuance of shares
42-12 consideration of the value of at least One Thousand Dollars
42-13 ($1,000.00)[, consisting of money, labor done, or property actually
42-14 received].
42-15 SECTION 21. Article 3.06, Texas Business Corporation Act, is
42-16 amended to read as follows:
42-17 Art. 3.06. ORGANIZATION MEETING OF DIRECTORS. A. Except as
42-18 provided by Section B of this Article, after [After] the issuance
42-19 of the certificate of incorporation, an organization meeting of the
42-20 initial board of directors named in the articles of incorporation
42-21 (or of the person or persons who, in conformance with Section
42-22 A(12), Article 3.02 of this Act, are named in the articles of
42-23 incorporation as the person or persons who will perform the
42-24 functions of the initial board of directors provided for by this
42-25 Act) shall be held, either within or without this State, at the
43-1 call of a majority of the directors named in the articles of
43-2 incorporation, for the purpose of adopting bylaws, electing
43-3 officers, and transacting such other business as may come before
43-4 the meeting. The directors calling the meeting shall give at least
43-5 three (3) days notice thereof by mail to each director so named,
43-6 stating the time and place of the meeting.
43-7 B. The provisions of Section A of this Article shall not
43-8 apply to a corporation that is a converted entity or a corporation
43-9 that is created pursuant to a plan of merger if the plan of
43-10 conversion or the plan of merger, as the case may be, sets forth
43-11 the bylaws and officers of the corporation.
43-12 SECTION 22. Section A, Article 4.03, Texas Business
43-13 Corporation Act, is amended to read as follows:
43-14 A. The holders of the outstanding shares of a class shall be
43-15 entitled to vote as a class upon a proposed amendment, and the
43-16 holders of the outstanding shares of a series shall be entitled to
43-17 vote as a class upon a proposed amendment, whether or not entitled
43-18 to vote thereon by the provisions of the articles of incorporation,
43-19 if the amendment would accomplish any of the following, unless the
43-20 amendment is undertaken pursuant to authority granted to the board
43-21 of directors in the articles of incorporation in accordance with
43-22 [Section B of] Article 2.13 of this Act:
43-23 (1) Increase or decrease the aggregate number of
43-24 authorized shares of such class or series.
43-25 (2) Increase or decrease the par value of the shares
44-1 of such class, including changing shares having a par value into
44-2 shares without par value, or shares without par value into shares
44-3 with par value.
44-4 (3) Effect an exchange, reclassification, or
44-5 cancellation of all or part of the shares of such class or series.
44-6 (4) Effect an exchange, or create a right of exchange,
44-7 of all or any part of the shares of another class into the shares
44-8 of such class or series.
44-9 (5) Change the designations, preferences, limitations,
44-10 or relative rights of the shares of such class or series.
44-11 (6) Change the shares of such class or series, whether
44-12 with or without par value, into the same or a different number of
44-13 shares, either with or without par value, of the same class or
44-14 series or another class or series.
44-15 (7) Create a new class or series of shares having
44-16 rights and preferences equal, prior, or superior to the shares of
44-17 such class or series, or increase the rights and preferences of any
44-18 class or series having rights and preferences equal, prior, or
44-19 superior to the shares of such class or series, or increase the
44-20 rights and preferences of any class or series having rights or
44-21 preferences later or inferior to the shares of such class or series
44-22 in such a manner as to become equal, prior, or superior to the
44-23 shares of such class or series.
44-24 (8) Divide the shares of such class into series and
44-25 fix and determine the designation of such series and the variations
45-1 in the relative rights and preferences between the shares of such
45-2 series.
45-3 (9) Limit or deny the existing preemptive rights of
45-4 the shares of such class or series.
45-5 (10) Cancel or otherwise affect dividends on the
45-6 shares of such class or series which had accrued but had not been
45-7 declared.
45-8 (11) Include in or delete from the articles of
45-9 incorporation any provisions required or permitted to be included
45-10 in the articles of incorporation of a close corporation in
45-11 conformance with Part Twelve of this Act.
45-12 SECTION 23. Article 4.14, Texas Business Corporation Act, is
45-13 amended to read as follows:
45-14 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE; AMENDMENT
45-15 OF ARTICLES, MERGER, SHARE EXCHANGE, CONVERSION, AND DISSOLUTION
45-16 PURSUANT TO FEDERAL REORGANIZATION PROCEEDINGS. A. Authorization.
45-17 Notwithstanding any other provision of this Act to the contrary, a
45-18 trustee appointed for a corporation being reorganized under a
45-19 federal statute, the designated officers of the corporation, or any
45-20 other individual or individuals designated by the court to act on
45-21 behalf of the corporation may do any of the following without
45-22 action by or notice to its board of directors or shareholders in
45-23 order to carry out a plan of reorganization ordered or decreed by a
45-24 court of competent jurisdiction under the federal statute:
45-25 (1) amend or restate its articles of incorporation if
46-1 the articles after amendment or restatement contain only provisions
46-2 required or permitted in articles;
46-3 (2) merge or engage in a share exchange with one or
46-4 more domestic or foreign corporations or other entities pursuant to
46-5 a plan of merger or exchange having such terms and provisions as
46-6 required or permitted by Articles 5.01 and 5.02 of this Act;
46-7 (3) change the location of its registered office,
46-8 change its registered agent, and remove or appoint any agent to
46-9 receive service of process;
46-10 (4) alter, amend, or repeal its bylaws;
46-11 (5) constitute or reconstitute and classify or
46-12 reclassify its board of directors, and name, constitute, or appoint
46-13 directors and officers in place of or in addition to all or some of
46-14 the officers or directors then in place;
46-15 (6) sell, lease, exchange or otherwise dispose of all,
46-16 or substantially all, of its property and assets;
46-17 (7) authorize and fix the terms, manner, and
46-18 conditions of the issuance of bonds, debentures, or other
46-19 obligations, whether or not convertible into shares of any class or
46-20 bearing warrants or other evidences of optional rights to purchase
46-21 or subscribe for any shares of any class; [or]
46-22 (8) dissolve; or
46-23 (9) effect a conversion.
46-24 Actions taken under Subsection (4) or (5) of this section are
46-25 effective on entry of the order or decree approving the plan of
47-1 reorganization or on another effective date as may be specified,
47-2 without further action of the corporation, as and to the extent set
47-3 forth in the plan of reorganization or the order or decree
47-4 approving the plan of reorganization.
47-5 B. Authority to Sign Documents. A trustee appointed for a
47-6 corporation being reorganized under a federal statute, the
47-7 designated officers of the corporation, or any other individual or
47-8 individuals designated by the court may sign on behalf of a
47-9 corporation that is being reorganized:
47-10 (1) articles of amendment or restated articles of
47-11 incorporation setting forth:
47-12 (a) the name of the corporation;
47-13 (b) the text of each amendment or the
47-14 restatement approved by the court;
47-15 (c) the date of the court's order or decree
47-16 approving the articles of amendment or restatement;
47-17 (d) the court, file name, and case number of the
47-18 reorganization case in which the order or decree was entered; and
47-19 (e) a statement that the court had jurisdiction
47-20 of the case under federal statute; or
47-21 (2) articles of merger or exchange setting forth:
47-22 (a) the name of the corporation;
47-23 (b) the text of the part of the plan of
47-24 reorganization that contains the plan of merger or exchange
47-25 approved by the court, which shall include the information required
48-1 by Article 5.04A or 5.16B of this Act, as applicable, but need not
48-2 include the resolution of the board of directors referred to in
48-3 Article 5.16B(3) of this Act;
48-4 (c) the date of the court's order or decree
48-5 approving the plan of merger or consolidation;
48-6 (d) the court, file name, and case number of the
48-7 reorganization case in which the order or decree was entered; and
48-8 (e) a statement that the court had jurisdiction
48-9 of the case under federal statute; or
48-10 (3) articles of dissolution setting forth:
48-11 (a) the name of the corporation;
48-12 (b) the information required by Articles
48-13 6.06A(1)(2) and (3) of this Act;
48-14 (c) the date of the court's order or decree
48-15 approving the articles of dissolution;
48-16 (d) that the debts, obligations and liabilities
48-17 of the corporation have been paid or discharged as provided in the
48-18 plan of reorganization and that the remaining property and assets
48-19 of the corporation have been distributed as provided in the plan of
48-20 reorganization;
48-21 (e) the court, file name, and case number of the
48-22 reorganization case in which the order or decree was entered; and
48-23 (f) a statement that the court had jurisdiction
48-24 of the case under federal statute; or
48-25 (4) a statement of change of registered office or
49-1 registered agent, or both, setting forth:
49-2 (a) the name of the corporation;
49-3 (b) the information required by Article 2.10A of
49-4 this Act, as applicable, but not the information included in the
49-5 statement referred to in Article 2.10A(7) of this Act;
49-6 (c) the date of the court's order or decree
49-7 approving the statement of change of registered office or
49-8 registered agent, or both;
49-9 (d) the court, file name, and case number of the
49-10 reorganization case in which the order or decree was entered; and
49-11 (e) a statement that the court had jurisdiction
49-12 of the case under federal statute; or
49-13 (5) articles of conversion setting forth:
49-14 (a) the name of the corporation;
49-15 (b) the text of the part of the plan of
49-16 reorganization that contains the plan of conversion approved by the
49-17 court, which shall include the information required by Article 5.18
49-18 of this Act;
49-19 (c) the date of the court's order or decree
49-20 approving the plan of conversion;
49-21 (d) the court, file name, and case number of the
49-22 reorganization case in which the order or decree was entered; and
49-23 (e) a statement that the court had jurisdiction
49-24 of the case under federal statute.
49-25 C. Procedure for Merger or Share Exchange. When a domestic
50-1 or foreign corporation or other entity that is not being
50-2 reorganized merges or engages in a share exchange with a
50-3 corporation that is being reorganized pursuant to a plan of
50-4 reorganization:
50-5 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
50-6 this Act shall apply to the domestic or foreign corporation or
50-7 other entity that is not being reorganized to the same extent they
50-8 would apply if it were merging or engaging in a share exchange with
50-9 a corporation that is not being reorganized;
50-10 (2) Article 5.06 of this Act shall apply to the
50-11 domestic or foreign corporation or other entity that is not being
50-12 reorganized to the same extent it would apply if that domestic or
50-13 foreign corporation or other entity were merging or engaging in a
50-14 share exchange with a corporation that is not being reorganized,
50-15 except as otherwise provided in the plan of reorganization ordered
50-16 or decreed by a court of competent jurisdiction under the federal
50-17 statute;
50-18 (3) Article 5.16E of this Act shall apply to a
50-19 subsidiary corporation that is not being reorganized to the same
50-20 extent it would apply if that corporation were merging with a
50-21 parent corporation that is not being reorganized;
50-22 (4) Upon the receipt of all required authorization for
50-23 all action required by this Act for each corporation that is a
50-24 party to the plan of merger or exchange that is not being
50-25 reorganized and all action by each corporation, foreign
51-1 corporation, or other entity that is a party to the plan of merger
51-2 or exchange required by the laws under which it is incorporated or
51-3 organized and its constituent documents, articles of merger or
51-4 exchange shall be signed by each domestic or foreign corporation or
51-5 other entity that is a party to the merger or exchange other than
51-6 the corporation that is being reorganized as provided in Article
51-7 5.04 of this Act and on behalf of the corporation that is being
51-8 reorganized by the persons specified in Section B of this Article;
51-9 (5) The articles of merger or exchange shall set forth
51-10 the information required in Section B(2) of this Article;
51-11 (6) The articles of merger or exchange shall be filed
51-12 with the Secretary of State in the manner and with such number of
51-13 copies as is provided in Article 5.04B of this Act; and
51-14 (7) Upon the issuance of the certificate of merger or
51-15 share exchange by the Secretary of State as provided in Article
51-16 5.04 of this Act, the merger or share exchange shall become
51-17 effective with the same effect as if it had been adopted by
51-18 unanimous action of the directors and shareholders of the
51-19 corporation being reorganized. The effectiveness of the merger or
51-20 share exchange shall be determined as provided in Article 5.05 of
51-21 this Act.
51-22 D. Dissenters' Rights. Shareholders of a corporation being
51-23 reorganized under a federal statute do not have a right to dissent
51-24 under Article 5.11, [or] 5.16E, or 5.20 of this Act, except as the
51-25 plan of reorganization may provide.
52-1 E. When Applicable. This Article shall not apply after the
52-2 entry of a final decree in the reorganization case even though the
52-3 court may retain jurisdiction of the case for limited purposes
52-4 unrelated to consummation of the plan of reorganization.
52-5 F. Nonexclusivity. This Article shall not preclude other
52-6 changes in a corporation or its securities by a plan of
52-7 reorganization ordered or decreed by a court of competent
52-8 jurisdiction under federal statute.
52-9 SECTION 24. Section B, Article 5.01, Texas Business
52-10 Corporation Act, is amended to read as follows:
52-11 B. A plan of merger shall set forth:
52-12 (1) the name of each domestic or foreign corporation
52-13 or other entity that is a party to the merger and the name of each
52-14 domestic or foreign corporation or other entity, if any, that shall
52-15 survive the merger, which may be one or more of the domestic or
52-16 foreign corporations or other entities party to the merger, and the
52-17 name of each new domestic or foreign corporation or other entity,
52-18 if any, that may be created by the terms of the plan of merger;
52-19 (2) the terms and conditions of the merger including,
52-20 if more than one domestic or foreign corporation or other entity is
52-21 to survive or to be created by the terms of the plan of merger, (a)
52-22 the manner and basis of allocating and vesting the real estate and
52-23 other property of each domestic or foreign corporation and of each
52-24 other entity that is a party to the merger among one or more of the
52-25 surviving or new domestic or foreign corporations and other
53-1 entities, (b) the name of the surviving or new domestic or foreign
53-2 corporation or other entity that is to be obligated for the payment
53-3 of the fair value of any shares held by a shareholder of any
53-4 domestic corporation that is a party to the merger who has complied
53-5 with the requirements of Article 5.12 of this Act for the recovery
53-6 of the fair value of his shares, and (c) the manner and basis of
53-7 allocating all other liabilities and obligations of each domestic
53-8 or foreign corporation and other entity that is a party to the
53-9 merger (or making adequate provision for the payment and discharge
53-10 thereof) among one or more of the surviving or new domestic or
53-11 foreign corporations and other entities;
53-12 (3) the manner and basis of converting any of the
53-13 shares or other evidences of ownership of each domestic or foreign
53-14 corporation and other entity that is a party to the merger into
53-15 shares, obligations, evidences of ownership, rights to purchase
53-16 securities or other securities of one or more of the surviving or
53-17 new domestic or foreign corporations or other entities, into cash
53-18 or other property, including shares, obligations, evidences of
53-19 ownership, rights to purchase securities or other securities of any
53-20 other person or entity, or into any combination of the foregoing,
53-21 and if any shares or other evidences of ownership of any holder of
53-22 a class or series of shares or other evidence of ownership is to be
53-23 converted in a manner or basis different than any other holder of
53-24 shares of such class or series or other evidence of ownership, the
53-25 manner and basis applicable to such holder;
54-1 (4) as an exhibit or attachment, the articles of
54-2 incorporation of any new domestic corporation to be created by the
54-3 terms of the plan of merger; and
54-4 (5) the articles of incorporation or other
54-5 organizational documents of each other entity that is a party to
54-6 the merger and that is to survive the merger or is to be created by
54-7 the terms of the plan of merger.
54-8 SECTION 25. Sections A and B, Article 5.02, Texas Business
54-9 Corporation Act, are amended to read as follows:
54-10 A. One or more domestic or foreign corporations or other
54-11 entities may acquire all of the outstanding shares of one or more
54-12 classes or series of one or more domestic corporations if:
54-13 (1) the board of directors of each domestic
54-14 corporation that is a party to the plan of exchange acts on a plan
54-15 of exchange in the manner prescribed by Article 5.03 of this Act
54-16 and its shareholders (if required by Article 5.03 of this Act [or
54-17 the laws under which it was incorporated or organized]) approve the
54-18 plan of exchange;
54-19 (2) one or more foreign corporations or other entities
54-20 is to issue shares or other interests as part of the plan of
54-21 exchange, the issuance of such shares or interests is either
54-22 permitted by the laws under which such foreign corporation or other
54-23 entity is incorporated, organized, or not inconsistent with such
54-24 laws; and
54-25 (3) each acquiring domestic or foreign corporation or
55-1 other entity takes all action that may be required by the laws of
55-2 the state or country under which it was incorporated or organized
55-3 and by its constituent documents to effect the exchange.
55-4 B. A plan of exchange must set forth:
55-5 (1) the name of the corporation or corporations whose
55-6 shares will be acquired and the name of each acquiring domestic or
55-7 foreign corporation and other entity;
55-8 (2) the terms and conditions of the exchange
55-9 including, if there is more than one acquiring domestic or foreign
55-10 corporation or other entity, the shares to be acquired by each such
55-11 corporation or other entity; and
55-12 (3) the manner and basis of exchanging the shares to
55-13 be acquired for shares, obligations, evidences of ownership, rights
55-14 to purchase securities or other securities of one or more of the
55-15 acquiring domestic or foreign corporations or other entities that
55-16 is a party to the plan of exchange, or for cash or other property,
55-17 including shares, obligations, evidences of ownership, rights to
55-18 purchase securities or other securities of any other person or
55-19 entity, or for any combination of the foregoing, and if any shares
55-20 or other evidences of ownership of any holder of a class or series
55-21 of shares or other evidence of ownership is to be exchanged in a
55-22 manner or basis different than any other holder of shares of such
55-23 class or series or other evidence of ownership, the manner and
55-24 basis applicable to such holder.
55-25 SECTION 26. Article 5.03, Texas Business Corporation Act, is
56-1 amended to read as follows:
56-2 Art. 5.03. ACTION ON PLAN OF MERGER OR EXCHANGE. A. Except
56-3 as provided by Sections [Section] G and H of this Article, after
56-4 acting on a plan of merger or exchange in the manner prescribed by
56-5 Subsection (1) of Section B of this Article, the board of directors
56-6 of each domestic corporation that is a party to the merger, and the
56-7 board of directors of each domestic corporation whose shares are to
56-8 be acquired in the share exchange, shall submit the plan of merger
56-9 or exchange for approval by its shareholders. Unless the articles
56-10 of incorporation otherwise require, no approval by shareholders of
56-11 a plan of merger is required under this Article for any corporation
56-12 that is a party to the plan of merger unless that corporation is
56-13 also a party to the merger.
56-14 B. Except as provided by Sections [Section] G and H of this
56-15 Article, for a plan of merger or exchange to be approved:
56-16 (1) the board of directors of the corporation shall
56-17 [may] adopt a resolution recommending that the plan of merger or
56-18 exchange be approved by the shareholders of the corporation, unless
56-19 the board of directors determines that for any reason it should not
56-20 make that recommendation, in which case the board of directors
56-21 shall [may] adopt a resolution directing that the plan of merger or
56-22 exchange be submitted to shareholders for approval without
56-23 recommendation and, in connection with the submission, communicate
56-24 the basis for its determination that the plan be submitted to
56-25 shareholders without any recommendation; and
57-1 (2) the shareholders entitled to vote on the plan of
57-2 merger or exchange must approve the plan.
57-3 C. The board of directors may condition its submission to
57-4 shareholders of a plan of merger or exchange on any basis.
57-5 D. The corporation shall notify each shareholder, whether or
57-6 not entitled to vote, of the meeting of shareholders at which the
57-7 plan of merger or exchange is to be submitted for approval in
57-8 accordance with Article 2.25 of this Act. The notice shall be
57-9 given at least 20 days before the meeting and shall state that the
57-10 purpose, or one of the purposes, of the meeting is to consider the
57-11 plan of merger or exchange and shall contain or be accompanied by a
57-12 copy or summary of the plan.
57-13 E. Unless the board of directors (acting pursuant to Section
57-14 C of this Article) requires a greater vote or a vote by class or
57-15 series, the vote of shareholders required for approval of a plan of
57-16 merger or exchange shall be the affirmative vote of the holders of
57-17 at least two-thirds of the outstanding shares of each corporation
57-18 entitled to vote thereon, unless any class or series of shares of
57-19 any such corporation is entitled to vote as a class thereon, in
57-20 which event the vote required for approval by the shareholders of
57-21 such corporation shall be the affirmative vote of the holders of at
57-22 least two-thirds of the outstanding shares within each class or
57-23 series of shares entitled to vote thereon as a class and at least
57-24 two-thirds of the outstanding shares otherwise entitled to vote
57-25 thereon. Shares entitled to vote as a class shall be entitled to
58-1 vote only as a class unless otherwise entitled to vote on each
58-2 matter submitted to the shareholders generally or provided in the
58-3 articles of incorporation.
58-4 F. Separate voting by a class or series of shares of a
58-5 corporation shall be required:
58-6 (1) for approval of a plan of merger if (a) the plan
58-7 contains a provision that if contained in a proposed amendment to
58-8 the articles of incorporation would require approval by that class
58-9 or series of shares under Article 4.03 of this Act, or (b) that
58-10 class or series of shares is entitled under the articles of
58-11 incorporation to vote as a class thereon; and
58-12 (2) on a plan of exchange if (a) shares of that class
58-13 or series are to be exchanged pursuant to the terms of the plan, or
58-14 (b) that class or series is entitled under the articles of
58-15 incorporation to vote as a class thereon.
58-16 G. Unless the articles of incorporation otherwise require,
58-17 approval by the shareholders of a corporation on a plan of merger
58-18 shall not be required and the provisions of Sections A, B, C, D, E,
58-19 and F of this Article do not apply if:
58-20 (1) the corporation is the sole surviving corporation
58-21 in the merger;
58-22 (2) the articles of incorporation of the corporation
58-23 will not differ from its articles of incorporation before the
58-24 merger;
58-25 (3) each shareholder of the corporation whose shares
59-1 were outstanding immediately before the effective date of the
59-2 merger will hold the same number of shares, with identical
59-3 designations, preferences, limitations, and relative rights,
59-4 immediately after the effective date of the merger;
59-5 (4) the voting power of the number of voting shares
59-6 outstanding immediately after the merger, plus the voting power of
59-7 the number of voting shares issuable as a result of the merger
59-8 (either by the conversion of securities issued pursuant to the
59-9 merger or the exercise of rights to purchase securities issued
59-10 pursuant to the merger), will not exceed by more than 20 percent
59-11 the voting power of the total number of voting shares of the
59-12 corporation outstanding immediately before the merger;
59-13 (5) the number of participating shares outstanding
59-14 immediately after the merger, plus the number of participating
59-15 shares issuable as a result of the merger (either by the conversion
59-16 of securities issued pursuant to the merger or the exercise of
59-17 rights to purchase securities issued pursuant to the merger), will
59-18 not exceed by more than 20 percent the total number of
59-19 participating shares of the corporation outstanding immediately
59-20 before the merger; and
59-21 (6) the board of directors of the corporation adopts a
59-22 resolution approving the plan of merger.
59-23 H. Unless the articles of incorporation otherwise require,
59-24 approval by the shareholders of a corporation of a plan of merger
59-25 shall not be required and Sections A, B, C, D, E, and F of this
60-1 Article do not apply if:
60-2 (1) the merger is a merger of the corporation with or
60-3 into a direct or indirect wholly owned subsidiary of the
60-4 corporation and after the merger the corporation or its successor
60-5 is a direct or indirect wholly owned subsidiary of a holding
60-6 company;
60-7 (2) the corporation and the direct or indirect wholly
60-8 owned subsidiary of the corporation are the only parties to the
60-9 merger;
60-10 (3) each share or a fraction of a share of stock of
60-11 the corporation outstanding immediately prior to the effectiveness
60-12 of the merger is converted in the merger into a share or fraction
60-13 of share of capital stock of the holding company having the same
60-14 designations, preferences, limitations, and relative rights as a
60-15 share of stock of the corporation being converted in the merger;
60-16 (4) the holding company and the corporation are
60-17 domestic corporations;
60-18 (5) the articles of incorporation and bylaws of the
60-19 holding company immediately following the effective time of the
60-20 merger contain provisions identical to the articles of
60-21 incorporation and bylaws of the corporation immediately prior to
60-22 the effective time of the merger (other than provisions, if any,
60-23 regarding the incorporator or incorporators, the corporate name,
60-24 the registered office and agent, the initial board of directors,
60-25 and the initial subscribers of shares and such provisions contained
61-1 in any amendment to the certificate as were necessary to effect a
61-2 change, exchange, reclassification, or cancellation of shares, if
61-3 such change, exchange, reclassification, or cancellation has become
61-4 effective);
61-5 (6) the articles of incorporation and bylaws of the
61-6 surviving corporation immediately following the effective time of
61-7 the merger contain provisions identical to the articles of
61-8 incorporation and bylaws of the corporation immediately prior to
61-9 the effective time of the merger (other than provisions, if any,
61-10 regarding the incorporator or incorporators, the corporate name,
61-11 the registered office and agent, the initial board of directors,
61-12 and the initial subscribers of shares and such provisions contained
61-13 in any amendment to the certificate as were necessary to effect a
61-14 change, exchange, reclassification, or cancellation of shares, if
61-15 such change, exchange, reclassification, or cancellation has become
61-16 effective); provided, however, that:
61-17 (a) the articles of incorporation of the
61-18 surviving corporation shall be amended in the merger to contain a
61-19 provision requiring that any act or transaction by or involving a
61-20 surviving corporation that requires for its approval under this Act
61-21 or the corporation's articles of incorporation the approval of
61-22 shareholders of the surviving corporation shall, by specific
61-23 reference to this section, require the approval of the shareholders
61-24 of the holding company (or any successor by merger) by the same
61-25 vote as is required by this Act and the articles of incorporation
62-1 of the surviving corporation; and
62-2 (b) the articles of incorporation of the
62-3 surviving corporation may be amended in the merger to change the
62-4 classes and series of shares and the number of shares that the
62-5 surviving corporation is authorized to issue;
62-6 (7) the directors of the corporation become or remain
62-7 directors of the holding company on the effective time of the
62-8 merger;
62-9 (8) the shareholders of the corporation will not
62-10 recognize gain or loss for United States federal income tax
62-11 purposes as determined by the board of directors of the
62-12 corporation; and
62-13 (9) the board of directors of the corporation adopts a
62-14 resolution approving the plan of merger.
62-15 I. As used in this Article:
62-16 (1) "Direct or indirect wholly owned subsidiary"
62-17 means, with respect to any corporation, another corporation, all of
62-18 the outstanding voting stock of which is owned by the corporation
62-19 or by one or more other domestic or foreign corporations or other
62-20 entities, all of the outstanding voting stock or interests of which
62-21 is owned by the corporation or one or more of such other wholly
62-22 owned domestic or foreign corporations or other entities.
62-23 (2) "Holding company" means a corporation which, from
62-24 its incorporation until the effectiveness of a merger pursuant to
62-25 Section H of this Article, was at all times a direct or indirect
63-1 wholly owned subsidiary of the corporation and whose stock is
63-2 issued in the merger permitted by Section H of this Article.
63-3 (3) "Participating shares" means shares that entitle
63-4 the holders thereof to participate without limitation in
63-5 distributions.
63-6 (4) "Party to the merger" means:
63-7 (a) a domestic corporation that is to be divided
63-8 into two or more new domestic corporations or into a surviving
63-9 corporation and one or more new domestic or foreign corporations or
63-10 other entities pursuant to a plan of merger; or
63-11 (b) a domestic or foreign corporation or other
63-12 entity that is to be combined with one or more domestic or foreign
63-13 corporations or other entities pursuant to a plan of merger
63-14 resulting in (i) one or more surviving domestic or foreign
63-15 corporations or other entities, (ii) the creation of one or more
63-16 new domestic or foreign corporations or other entities, or
63-17 (iii) one or more surviving domestic or foreign corporations or
63-18 other entities and the creation of one or more new domestic or
63-19 foreign corporations or other entities. A domestic or foreign
63-20 corporation or other entity that is a party to a plan of merger
63-21 that is not to be divided or combined into or with one or more
63-22 domestic or foreign corporations or other entities is not
63-23 considered to be a party to the merger even if shares, securities,
63-24 or other property of such party is to be issued pursuant to the
63-25 plan of merger.
64-1 (5) [(2)] "Voting shares" means shares that entitle
64-2 the holders thereof to vote unconditionally in elections of
64-3 directors.
64-4 (6) "Shares" means, without limitation, a receipt or
64-5 other instrument issued by a depositary representing an interest in
64-6 one or more shares of stock, or fractions thereof, solely of a
64-7 domestic or foreign corporation, which stock is deposited with a
64-8 depositary.
64-9 J. To the extent the provisions contained in Part Thirteen
64-10 of this Act apply to the corporation and its shareholders at the
64-11 effective time of a merger pursuant to Section H of this Article,
64-12 those provisions shall continue to apply to the holding company and
64-13 its shareholders immediately after the effective time of the merger
64-14 as though it were the corporation, and all shares of the holding
64-15 company acquired in the merger shall, for purposes of Part
64-16 Thirteen, be deemed to have been acquired at the time that the
64-17 shares of stock of the corporation converted in the merger were
64-18 acquired, and any shareholder who, immediately prior to the
64-19 effective time of the merger, was not an affiliated shareholder
64-20 within the meaning of Article 13.02 of this Act shall not solely
64-21 by reason of the merger become an affiliated shareholder of the
64-22 holding company.
64-23 K. If the corporate name of a holding company immediately
64-24 following the effective time of a merger pursuant to Section H of
64-25 this Article is the same as the corporate name of the corporation
65-1 immediately prior to the effective time of the merger, the shares
65-2 of the holding company into which the shares of the corporation are
65-3 converted in the merger shall be represented by the stock
65-4 certificates that previously represented the shares of the
65-5 corporation.
65-6 L. [I.] After a merger or share exchange is approved, and at
65-7 any time before the merger or share exchange has become effective,
65-8 the plan of merger or share exchange may be abandoned (subject to
65-9 any contractual rights) by any of the corporations that are a party
65-10 to the merger, without shareholder action, in accordance with the
65-11 procedures set forth in the plan of merger or exchange or, if no
65-12 such procedures are set forth in the plan, in the manner determined
65-13 by the board of directors. If articles of merger or exchange have
65-14 been filed with the Secretary of State but the merger or share
65-15 exchange has not yet become effective, the merger or share exchange
65-16 may be abandoned [as provided in this Section I] if a statement,
65-17 executed on behalf of each domestic corporation and foreign
65-18 corporation or other entity that is a party to the merger or share
65-19 exchange by an officer or other duly authorized representative,
65-20 stating that the plan of merger or exchange has been abandoned in
65-21 accordance with applicable law [the plan and this Section] is filed
65-22 with the Secretary of State prior to the effectiveness of the
65-23 merger or share exchange. If the Secretary of State finds that
65-24 such statement conforms to law, he shall, when all fees have been
65-25 paid as required by law:
66-1 (1) Endorse on the original and each copy the word
66-2 "Filed" and the month, day, and year the filing thereof.
66-3 (2) File the original in his office.
66-4 (3) Issue a certificate of abandonment to each
66-5 domestic or foreign corporation or other entity that is a party to
66-6 the [plan of] merger or exchange.
66-7 Upon the filing of such statement by the Secretary of State, the
66-8 merger or share exchange shall be deemed abandoned and shall not
66-9 become effective.
66-10 SECTION 27. Article 5.04, Texas Business Corporation Act, is
66-11 amended to read as follows:
66-12 Art. 5.04. ARTICLES OF MERGER OR EXCHANGE. A. If a plan of
66-13 merger or exchange has been approved in accordance with Article
66-14 5.03 of this Act and has not been abandoned, or approved by the
66-15 board of directors if shareholder approval is not required under
66-16 that Article, articles of merger or exchange shall be executed on
66-17 behalf of each domestic or foreign corporation or other entity that
66-18 is a party to the [plan of] merger or exchange by an officer or
66-19 other duly authorized representative thereof and shall set forth:
66-20 (1) The plan of merger or exchange or statement
66-21 certifying the following:
66-22 (a) the name and state of incorporation or
66-23 organization of each domestic or foreign corporation or other
66-24 entity that is a party to the plan of merger or exchange or that is
66-25 to be created thereby;
67-1 (b) that a plan of merger or exchange has been
67-2 approved;
67-3 (c) in the case of a merger, such amendments or
67-4 changes in the articles of incorporation of each domestic surviving
67-5 corporation, or if no such amendments are desired to be effected by
67-6 the merger, a statement to that effect;
67-7 (d) that the articles of incorporation of each
67-8 new domestic corporation to be created pursuant to the terms of the
67-9 plan of merger are being filed with the Secretary of State with the
67-10 articles of merger or exchange;
67-11 (e) that an executed plan of merger or exchange
67-12 is on file at the principal place of business of each surviving,
67-13 acquiring, or new domestic or foreign corporation or other entity,
67-14 stating the address thereof; and
67-15 (f) that a copy of the plan of merger or
67-16 exchange will be furnished by each surviving, acquiring, or new
67-17 domestic or foreign corporation or other entity, on written request
67-18 and without cost, to any shareholder of each domestic corporation
67-19 that is a party to or created by the plan of merger or exchange
67-20 and, in the case of a merger with multiple surviving domestic or
67-21 foreign corporations or other entities, to any creditor or obligee
67-22 of the parties to the merger at the time of the merger if such
67-23 obligation is then outstanding.
67-24 (2) If shareholder approval is not required by Article
67-25 5.03 of this Act, a statement to that effect.
68-1 (3) As to each corporation the approval of whose
68-2 shareholders is required, the number of shares outstanding, and, if
68-3 the shares of any class or series are entitled to vote as a class,
68-4 the designation and number of outstanding shares of each such class
68-5 or series.
68-6 (4) As to each corporation the approval of whose
68-7 shareholders is required, the number of shares, not entitled to
68-8 vote only as a class, voted for and against the plan, respectively,
68-9 and, if the shares of any class or series are entitled to vote as a
68-10 class, the number of shares of each such class or series voted for
68-11 and against the plan, respectively.
68-12 (5) As to each acquiring domestic or foreign
68-13 corporation or other entity in a plan of exchange, a statement that
68-14 the plan and performance of its terms were duly authorized by all
68-15 action required by the laws under which it was incorporated or
68-16 organized and by its constituent documents.
68-17 (6) As to each foreign corporation or other entity
68-18 that is a party to the [plan of] merger, a statement that the
68-19 approval of the plan of merger was duly authorized by all action
68-20 required by the laws under which it was incorporated or organized
68-21 and by its constituent documents.
68-22 B. The original of the articles of merger or exchange, and
68-23 such number of copies of the articles equal to the number of
68-24 surviving, new, and acquiring domestic or foreign corporations and
68-25 other entities that are a party to the [plan of] merger or exchange
69-1 or that will be created by the terms thereof, shall be delivered to
69-2 the Secretary of State. An equal number of copies of the articles
69-3 of incorporation of each domestic corporation that is to be
69-4 incorporated pursuant to the plan of merger shall also be delivered
69-5 to the Secretary of State with the articles of merger.
69-6 C. If the Secretary of State finds that the articles of
69-7 merger or exchange conform to law, he shall, when all fees and
69-8 franchise taxes have been paid as required by law, or if the plan
69-9 of merger or exchange (or statement provided in lieu thereof)
69-10 provides that one or more of the surviving, new, or acquiring
69-11 domestic or foreign corporations or other entities will be
69-12 responsible for the payment of all such fees and franchise taxes
69-13 and that all of such surviving, new, or acquiring domestic or
69-14 foreign corporations and other entities will be obligated to pay
69-15 such fees and franchise taxes if the same are not timely paid:
69-16 (1) Endorse on the original and each copy the word
69-17 "Filed," and the month, day, and year of the filing thereof.
69-18 (2) File the original in his office.
69-19 (3) Issue a certificate of merger or exchange,
69-20 together with a copy of the articles affixed thereto, to each
69-21 surviving, new, and acquiring domestic or foreign corporation or
69-22 other entity that is a party to the [plan of] merger or exchange or
69-23 that is created thereby, or its or their respective
69-24 representatives.
69-25 SECTION 28. Section B, Article 5.10, Texas Business
70-1 Corporation Act, is amended to read as follows:
70-2 B. A disposition of any, all, or substantially all, of the
70-3 property and assets of a corporation, whether or not it requires
70-4 the special authorization of the shareholders of the corporation,
70-5 effected under Section A of this article or under Article 5.09 of
70-6 this Act or otherwise:
70-7 (1) is not considered to be a merger or conversion
70-8 pursuant to this Act or otherwise; and
70-9 (2) except as otherwise expressly provided by another
70-10 statute, does not make the acquiring corporation, foreign
70-11 corporation, or other entity responsible or liable for any
70-12 liability or obligation of the selling corporation that the
70-13 acquiring corporation, foreign corporation, or other entity did not
70-14 expressly assume.
70-15 SECTION 29. Article 5.11, Texas Business Corporation Act, is
70-16 amended to read as follows:
70-17 Art. 5.11. RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF
70-18 CERTAIN CORPORATE ACTIONS. A. Any shareholder of a domestic
70-19 corporation shall have the right to dissent from any of the
70-20 following corporate actions:
70-21 (1) Any plan of merger to which the corporation is a
70-22 party if shareholder approval is required by Article 5.03 or 5.16
70-23 of this Act and the shareholder holds shares of a class or series
70-24 that was entitled to vote thereon as a class or otherwise;
70-25 (2) Any sale, lease, exchange or other disposition
71-1 (not including any pledge, mortgage, deed of trust or trust
71-2 indenture unless otherwise provided in the articles of
71-3 incorporation) of all, or substantially all, the property and
71-4 assets, with or without good will, of a corporation if [requiring
71-5 the] special authorization of the shareholders is required by this
71-6 Act and the shareholders hold shares of a class or series that was
71-7 entitled to vote thereon as a class or otherwise [as provided by
71-8 this Act];
71-9 (3) Any plan of exchange pursuant to Article 5.02 of
71-10 this Act in which the shares of the corporation of the class or
71-11 series held by the shareholder are to be acquired.
71-12 B. Notwithstanding the provisions of Section A of this
71-13 Article, a shareholder shall not have the right to dissent from any
71-14 plan of merger in which there is a single surviving or new domestic
71-15 or foreign corporation, or from any plan of exchange, if:
71-16 (1) the shares held by the shareholder are part of a
71-17 class or series, shares of which are [listed on a national
71-18 securities exchange, or are held of record by not less than 2,000
71-19 holders,] on the record date fixed to determine the shareholders
71-20 entitled to vote on the plan of merger or [the] plan of exchange:
71-21 (a) listed on a national securities exchange;
71-22 (b) listed on the Nasdaq Stock Market (or
71-23 successor quotation system) or designated as a national market
71-24 security on an interdealer quotation system by the National
71-25 Association of Securities Dealers, Inc., or successor entity; or
72-1 (c) held of record by not less than 2,000
72-2 holders;[, and]
72-3 (2) the shareholder is not required by the terms of
72-4 the plan of merger or plan of exchange to accept for the
72-5 shareholder's shares any consideration that is different than the
72-6 consideration (other than cash in lieu of fractional shares that
72-7 the shareholder would otherwise be entitled to receive) to be
72-8 provided to any other holder of shares of the same class or series
72-9 of shares held by such shareholder; and
72-10 (3) the shareholder is not required by the terms of
72-11 the plan of merger or the plan of exchange to accept for the
72-12 shareholder's [his] shares any consideration other than:
72-13 (a) shares of a domestic or foreign corporation
72-14 that, immediately after the effective time of the merger or
72-15 exchange, will be part of a class or series, [of] shares of which
72-16 are:
72-17 (i) listed, or authorized for listing upon
72-18 official notice of issuance, on a national securities exchange;[,
72-19 or]
72-20 (ii) approved for quotation as a national
72-21 market security on an interdealer quotation system by the National
72-22 Association of Securities Dealers, Inc., or successor entity; or
72-23 (iii) held of record by not less than
72-24 2,000 holders;[, and]
72-25 (b) cash in lieu of fractional shares otherwise
73-1 entitled to be received; or
73-2 (c) any combination of the securities and cash
73-3 described in Subdivisions (a) and (b) of this subsection.
73-4 SECTION 30. Article 5.14, Texas Business Corporation Act, is
73-5 amended to read as follows:
73-6 Art. 5.14. DERIVATIVE PROCEEDINGS [SUITS]. A. Certain
73-7 Definitions. For purposes of this Article:
73-8 (1) "Derivative proceeding" means a civil suit in the
73-9 right of a domestic corporation or, to the extent provided in
73-10 Section K of this Article, in the right of a foreign corporation.
73-11 (2) "Shareholder" includes a beneficial owner whose
73-12 shares are held in a voting trust or by a nominee on the beneficial
73-13 owner's behalf.
73-14 B. Standing. A shareholder may not commence or maintain a
73-15 derivative proceeding unless the shareholder:
73-16 (1) was a shareholder of the corporation at the time
73-17 of the act or omission complained of or became a shareholder by
73-18 operation of law from a person that was a shareholder at that time;
73-19 and
73-20 (2) fairly and adequately represents the interests of
73-21 the corporation in enforcing the right of the corporation.
73-22 C. Demand. No shareholder may commence a derivative
73-23 proceeding until:
73-24 (1) a written demand is filed with the corporation
73-25 setting forth with particularity the act, omission, or other matter
74-1 that is the subject of the claim or challenge and requesting that
74-2 the corporation take suitable action; and
74-3 (2) 90 days have expired from the date the demand was
74-4 made, unless the shareholder has earlier been notified that the
74-5 demand has been rejected by the corporation or unless irreparable
74-6 injury to the corporation is being suffered or would result by
74-7 waiting for the expiration of the 90-day period.
74-8 D. Stay; Discovery. (1) If the domestic or foreign
74-9 corporation commences an inquiry into the allegations made in a
74-10 demand or petition and the person or group described in Section H
74-11 of this Article is conducting an active review of the allegations
74-12 in good faith, the court shall stay a derivative proceeding until
74-13 the review is completed and a determination is made by the person
74-14 or group as to what further action, if any, should be taken. To
74-15 obtain a stay, the domestic or foreign corporation must provide the
74-16 court with a written statement containing an undertaking to advise
74-17 the court and the shareholder making the demand of the
74-18 determination promptly on the completion of the review of the
74-19 matter. A stay shall, on motion, be reviewed as to its continued
74-20 necessity every 60 days thereafter. If the review and
74-21 determination by the person or group described in Section H of this
74-22 Article is not completed within 60 days, the stay may be renewed
74-23 for one or more additional 60-day periods on the domestic or
74-24 foreign corporation providing the court and the shareholder making
74-25 the demand with a written statement of the status of the review and
75-1 the reasons a continued extension of the stay is necessary.
75-2 (2) If a domestic or foreign corporation proposes to
75-3 dismiss a derivative proceeding pursuant to Section F of this
75-4 Article, discovery by a shareholder following the filing of the
75-5 derivative proceeding in accordance with the provisions of this
75-6 Article shall be limited to facts relating to whether the person or
75-7 group described in Section H of this Article is independent and
75-8 disinterested, the good faith of the inquiry and review by such
75-9 person or group, and the reasonableness of the procedures followed
75-10 by such person or group in conducting its review and will not
75-11 extend to any facts or substantive matters with respect to the act,
75-12 omission, or other matter that is the subject matter of the action
75-13 in the derivative proceeding. The scope of discovery may be
75-14 expanded if the court determines after notice and hearing that a
75-15 good faith review of the allegations for purposes of Section F of
75-16 this Article has not been made by an independent and disinterested
75-17 person or group in accordance with Section F of this Article.
75-18 E. Tolling of the Statute of Limitations. A written demand
75-19 filed with the corporation under Section C of this Article tolls
75-20 the statute of limitations on the claim on which demand is made
75-21 until the earlier of (1) 90 days or (2) 30 days after the
75-22 corporation advises the shareholder that the demand has been
75-23 rejected or the review has been completed.
75-24 F. Dismissal of Derivative Proceeding. A court shall
75-25 dismiss a derivative proceeding on a motion by the corporation if
76-1 the person or group described in Section H of this Article
76-2 determines in good faith, after conducting a reasonable inquiry and
76-3 based on the factors as the person or group deems appropriate under
76-4 the circumstances, that the continuation of the derivative
76-5 proceeding is not in the best interests of the corporation. In
76-6 determining whether the requirements of the previous sentence have
76-7 been met, the burden of proof shall be on:
76-8 (1) the plaintiff shareholder, if a majority of the
76-9 board of directors consists of independent and disinterested
76-10 directors at the time the determination is made or if the
76-11 determination is made by a panel of one or more independent and
76-12 disinterested persons appointed under Section H(3) of this Article;
76-13 or
76-14 (2) the corporation, in all other circumstances;
76-15 provided that if the corporation presents prima facie evidence that
76-16 demonstrates that the directors appointed pursuant to Section H(2)
76-17 of this Article are independent and disinterested, the burden of
76-18 proof is on the plaintiff shareholder.
76-19 G. Commencement of Proceeding After Rejection of Demand. If
76-20 a derivative proceeding is commenced after a demand is rejected,
76-21 the petition must allege with particularity facts that establish
76-22 that the rejection was not made in accordance with the requirements
76-23 of Sections F and H of this Article.
76-24 H. Determination by Directors or Independent Persons. The
76-25 determination described in Section F of this Article must be made
77-1 by:
77-2 (1) a majority vote of independent and disinterested
77-3 directors present at a meeting of the board of directors at which
77-4 interested directors are not present (at the time of the vote) if
77-5 the independent and disinterested directors constitute a quorum of
77-6 the board of directors;
77-7 (2) a majority vote of a committee consisting of two
77-8 or more independent and disinterested directors appointed by a
77-9 majority vote of one or more independent and disinterested
77-10 directors present at a meeting of the board of directors, whether
77-11 or not the independent and disinterested directors so acting
77-12 constitute a quorum of the board of directors; or
77-13 (3) a panel of one or more independent and
77-14 disinterested persons appointed by the court on a motion by the
77-15 corporation setting forth the names of the persons to be so
77-16 appointed together with a statement that to the best of its
77-17 knowledge the persons so proposed are disinterested persons and
77-18 qualified to make the determinations contemplated by Section F of
77-19 this Article. Such panel shall be appointed if the court finds
77-20 that such persons are independent and disinterested persons and are
77-21 otherwise qualified in regard to expertise, experience, independent
77-22 judgment, and other factors deemed appropriate by the court under
77-23 the circumstances to make such determinations. Persons appointed
77-24 by the court shall have no liability to the corporation or its
77-25 shareholders for any action or omission taken by them in that
78-1 capacity, absent fraud or wilful misconduct.
78-2 I. Discontinuance or Settlement. A derivative proceeding
78-3 may not be discontinued or settled without the approval of the
78-4 court. If the court determines that a proposed discontinuance or
78-5 settlement may substantially affect the interest of other
78-6 shareholders, it shall direct that notice be given to the affected
78-7 shareholders.
78-8 J. Payment of Expenses. (1) On termination of a derivative
78-9 proceeding, the court may order:
78-10 (a) the domestic or foreign corporation to pay
78-11 the expenses of the plaintiff incurred in the proceeding if it
78-12 finds that the proceeding has resulted in a substantial benefit to
78-13 the domestic or foreign corporation;
78-14 (b) the plaintiff to pay the expenses of the
78-15 domestic or foreign corporation or any defendant incurred in
78-16 investigating and defending the proceeding if it finds that the
78-17 proceeding was commenced or maintained without reasonable cause or
78-18 for an improper purpose; or
78-19 (c) a party to pay the expenses incurred by
78-20 another party (including the domestic or foreign corporation)
78-21 because of the filing of a pleading, motion, or other paper, if it
78-22 finds that the pleading, motion, or other paper (i) was not well
78-23 grounded in fact after reasonable inquiry, (ii) was not warranted
78-24 by existing law or a good faith argument for the extension,
78-25 modification, or reversal of existing law, or (iii) was interposed
79-1 for an improper purpose, such as to harass or to cause unnecessary
79-2 delay or needless increase in the cost of litigation.
79-3 (2) For purposes of this section, "expenses" mean
79-4 reasonable expenses incurred in the defense of a derivative
79-5 proceeding, including without limitation:
79-6 (a) attorney's fees;
79-7 (b) costs in pursuing an investigation of the
79-8 matter that was the subject of the derivative proceeding; and
79-9 (c) expenses for which the domestic or foreign
79-10 corporation or a corporate defendant may be required to indemnify
79-11 another person.
79-12 K. Application to Foreign Corporations. In any derivative
79-13 proceeding brought in the right of a foreign corporation, the
79-14 matters covered by this Article are governed by the laws of the
79-15 jurisdiction of incorporation of the foreign corporation, except
79-16 for Sections D, I, and J of this Article, which are procedural and
79-17 not matters relating to the internal affairs of the foreign
79-18 corporation. In the case of matters relating to a foreign
79-19 corporation under Section D of this Article, references to a person
79-20 or group described in Section H of this Article are to be deemed to
79-21 refer to a person or group entitled under the laws of the
79-22 jurisdiction of incorporation of the foreign corporation to review
79-23 and dispose of a derivative proceeding, and the standard of review
79-24 of a decision by the person or group to dismiss the derivative
79-25 proceeding is to be governed by the laws of the jurisdiction of
80-1 incorporation of the foreign corporation.
80-2 L. Closely Held Corporations. (1) The provisions of
80-3 Sections B through H of this Article are not applicable to a
80-4 closely held corporation. If justice requires:
80-5 (a) a derivative proceeding brought by a
80-6 shareholder of a closely held corporation may be treated by a court
80-7 as a direct action brought by the shareholder for his own benefit;
80-8 and
80-9 (b) a recovery in a direct or derivative
80-10 proceeding by a shareholder may be paid either directly to the
80-11 plaintiff or to the corporation if necessary to protect the
80-12 interests of creditors or other shareholders of the corporation.
80-13 (2) For purposes of this section, a "closely held
80-14 corporation" means a corporation:
80-15 (a) with less than 35 shareholders; and
80-16 (b) that has no shares listed on a national
80-17 securities exchange or regularly quoted in an over-the-counter
80-18 market by one or more members of a national securities association.
80-19 [Definitions. In this Article:]
80-20 [(1) A "derivative suit" is a suit brought in the
80-21 right of a domestic or foreign corporation.]
80-22 [(2) "Expenses" are reasonable expenses, incurred in
80-23 the defense of a derivative suit, including:]
80-24 [(a) Fees of attorneys, and]
80-25 [(b) Expenses for which a corporate defendant
81-1 may be required to indemnify another defendant.]
81-2 [B. Prerequisites. A derivative suit may be brought in this
81-3 State only if:]
81-4 [(1) The plaintiff was a record or beneficial owner of
81-5 shares, or of an interest in a voting trust for shares, at the time
81-6 of the transaction of which he complains, or his shares or interest
81-7 thereafter devolved upon him by operation of law from a person who
81-8 was such an owner at that time, and]
81-9 [(2) The initial pleading in the suit states:]
81-10 [(a) The ownership required by Subsection (1),
81-11 and]
81-12 [(b) With particularity, the efforts of the
81-13 plaintiff to have suit brought for the corporation by the board of
81-14 directors, or the reasons for not making any such efforts.]
81-15 [C. Security for expenses. The court having jurisdiction in
81-16 a derivative suit may, in its discretion, require the plaintiff or
81-17 plaintiffs to give security for the expenses incurred or expected
81-18 to be incurred by one or more of the defendants. The court may, in
81-19 its discretion, at any time increase or decrease the amount of the
81-20 security on a showing that the security provided is then inadequate
81-21 or excessive.]
81-22 [D. Inability to give security. If plaintiff is unable to
81-23 give security, he may file an affidavit in accordance with the
81-24 Texas Rules of Civil Procedure, and those rules shall control.]
81-25 [E. Failure to give security. If plaintiff fails to give
82-1 the security within a reasonable time set by the court, the court
82-2 shall (except as provided in Section D of this Article) dismiss the
82-3 suit without prejudice.]
82-4 [F. Judgment for expenses. The court having jurisdiction in
82-5 a derivative suit may, upon final judgment for one or more
82-6 defendants and a finding that the suit was brought without
82-7 reasonable cause against such defendants, require the plaintiff to
82-8 pay expenses to such defendants, whether or not security has been
82-9 required.]
82-10 SECTION 31. Article 5.16, Texas Business Corporation Act, is
82-11 amended to read as follows:
82-12 Art. 5.16. MERGER WITH [OF] SUBSIDIARY ENTITIES [OR
82-13 SUBSIDIARIES INTO PARENT CORPORATION]. A. In any case in which at
82-14 least ninety (90%) per cent of the outstanding shares of each class
82-15 and series of shares, membership interests, or other ownership
82-16 interests of one or more [a] domestic or foreign [corporation or]
82-17 corporations or other entities is owned by another domestic or
82-18 foreign corporation or other entity, and at least one of the parent
82-19 or subsidiary entities [such corporations] is a domestic
82-20 corporation and the other or others are domestic corporations, [or]
82-21 foreign corporations, or other entities organized under the laws of
82-22 a jurisdiction that permit such a merger or whose organizational
82-23 documents or other constituent documents not inconsistent with
82-24 those laws permit such a merger, the corporation or other entity
82-25 having such share ownership may (1) merge such other domestic or
83-1 foreign corporation or corporations or other entities into itself,
83-2 (2) merge itself into any one or more of such other corporations or
83-3 other entities [corporation], or (3) merge itself and any one or
83-4 more of such entities or corporations into one or more [another] of
83-5 the other entities [such domestic or foreign corporations]:
83-6 (a) in the event that the corporation or other entity
83-7 having at least 90 percent [such share] ownership will be a
83-8 surviving entity [corporation] in the merger, by executing and
83-9 filing articles of merger in accordance with Section B of this
83-10 Article; or
83-11 (b) in the event that the corporation or other entity
83-12 having at least 90 percent [such share] ownership will not be a
83-13 surviving entity [corporation] in the merger, by the entity
83-14 [corporation] having such [share] ownership adopting a plan of
83-15 merger in the manner required by the laws [Article 5.03] of its
83-16 jurisdiction of organization or formation and its organizational or
83-17 other constituent documents [this Act], except that no action under
83-18 Section 5.03 shall be required to be taken by the corporation or
83-19 corporations whose shares are so owned, and executing and filing
83-20 articles of merger in accordance with Section B of this Article.
83-21 B. The articles of merger shall be signed on behalf of the
83-22 parent entity [corporation] by an officer or other duly authorized
83-23 representative of the parent entity and shall set forth:
83-24 (1) The name of the parent entity [corporation,] and
83-25 the name [or names] of each [the] subsidiary entity [corporations]
84-1 and the type of entity and respective jurisdiction under which each
84-2 subsidiary entity [such corporation] is organized.
84-3 (2) The total number or percentage of outstanding
84-4 shares, membership interests, or other ownership interests,
84-5 identified by [of each] class, series, or group, [of each
84-6 subsidiary corporation] and the number or percentage of [such]
84-7 shares, membership interests, or other ownership interests in [of]
84-8 each class, series, or group owned by the parent entity
84-9 [corporation].
84-10 (3) A copy of the resolution or merger adopted by the
84-11 [board of directors of the] parent entity in accordance with the
84-12 laws of its jurisdiction of organization or formation and its
84-13 organizational or other constituent documents together with a
84-14 statement that the resolution was so adopted [corporation to so
84-15 merge] and the date of the adoption thereof. If the parent entity
84-16 [corporation] does not own all the outstanding shares, membership
84-17 interests, or other ownership interests of each class of each
84-18 subsidiary entity [corporation] that is a party to the merger, the
84-19 resolution shall state the terms and conditions of the merger,
84-20 including the cash or other property, including shares,
84-21 obligations, evidences of ownership, rights to purchase securities,
84-22 or other securities of any person or entity or any combination of
84-23 the shares, obligations, evidences of ownership, rights, or other
84-24 securities, to be used, paid or delivered by the surviving entity
84-25 [corporation] upon surrender of each share, membership interest, or
85-1 other ownership interest of the subsidiary entity or entities
85-2 [corporation or corporations] not owned by the parent entity
85-3 [corporation].
85-4 (4) If the surviving entity [corporation] is a foreign
85-5 corporation or other entity, the address, including street number
85-6 if any, of its registered or principal office in the jurisdiction
85-7 under whose laws it is governed. If the surviving entity
85-8 [corporation] is a foreign corporation or other entity, on the
85-9 merger taking effect the surviving entity [foreign corporation] is
85-10 deemed to (a) appoint the Secretary of State of this state as its
85-11 agent for service of process to enforce an obligation or the rights
85-12 of dissenting shareholders of each domestic corporation that is a
85-13 party to the merger, and (b) agree that it will promptly pay to the
85-14 dissenting shareholders of each domestic corporation that is a
85-15 party to the merger the amount, if any, to which they are entitled
85-16 under this Article.
85-17 (5) If a plan of merger is required by Section A of
85-18 this Article to be adopted in the manner required by Article 5.03
85-19 of this Act, the information required by Section A of Article 5.04
85-20 of this Act.
85-21 C. The [original and a copy of the] articles of merger shall
85-22 be delivered to the Secretary of State and filed[. If the
85-23 Secretary of State finds that such articles conform to law, he
85-24 shall, when all fees and franchise taxes have been paid] as
85-25 provided [required] by Sections B and C of Article 5.04 of this Act
86-1 [law:]
86-2 [(1) Endorse on the original and the copy the word
86-3 "Filed," and the month, day and year of the filing thereof.]
86-4 [(2) File the original in his office.]
86-5 [(3) Issue a certificate of merger to which he shall
86-6 affix the copy and deliver them to the surviving corporation or its
86-7 representative].
86-8 D. The effective date and the effect of such merger shall be
86-9 the same as provided in Articles 5.05 and 5.06 of this Act if the
86-10 surviving entity [corporation] is a domestic corporation. If the
86-11 surviving entity [corporation] is a foreign corporation or other
86-12 entity, the effective date and the effect of such merger shall be
86-13 the same as in the case of the merger of domestic corporations
86-14 except in so far as the laws of such other jurisdiction provide
86-15 otherwise.
86-16 E. In the event all of the shares of a subsidiary domestic
86-17 corporation that is a party to a merger effected under this Article
86-18 are not owned by the parent entity [corporation] immediately prior
86-19 to the merger, the surviving parent entity [corporation (foreign or
86-20 domestic)] shall, within ten (10) days after the effective date of
86-21 the merger, mail to each shareholder of record of each subsidiary
86-22 domestic corporation a copy of the articles of merger and notify
86-23 the shareholder that the merger has become effective. Any such
86-24 shareholder who holds shares of a class or series that would have
86-25 been entitled to vote on the merger if it had been effected
87-1 pursuant to Article 5.03 of this Act shall have the right to
87-2 dissent from the merger and demand payment of the fair value for
87-3 the shareholder's [his] shares in lieu of the cash or other
87-4 property to be used, paid or delivered to such shareholder upon the
87-5 surrender of such shareholder's shares pursuant to the terms and
87-6 conditions of the merger, with the following procedure:
87-7 (1) Such shareholder shall within twenty (20) days
87-8 after the mailing of the notice and copy of the articles of merger
87-9 make written demand on the surviving parent entity [corporation,
87-10 domestic or foreign,] for payment of the fair value of the
87-11 shareholder's [his] shares. The fair value of the shares shall be
87-12 the value thereof as of the day before the effective date of the
87-13 merger, excluding any appreciation or depreciation in anticipation
87-14 of such act. The demand shall state the number and class of the
87-15 shares owned by the dissenting shareholder and the fair value of
87-16 such shares as estimated by the shareholder [him]. Any shareholder
87-17 failing to make demand within the twenty (20) day period shall be
87-18 bound by the corporate action.
87-19 (2) Within ten (10) days after receipt by the
87-20 surviving entity [corporation] of a demand for payment by the
87-21 dissenting shareholder of the fair value of the shareholder's [his]
87-22 shares in accordance with Subsection (1) of this section, the
87-23 surviving entity [corporation (foreign or domestic)] shall deliver
87-24 or mail to the dissenting shareholder a written notice which shall
87-25 either set out that the surviving entity [corporation (foreign or
88-1 domestic)] accepts the amount claimed in the demand and agrees to
88-2 pay such amount within ninety (90) days after the date on which the
88-3 corporate action was effected and, in the case of shares
88-4 represented by certificates, upon the surrender of the shares
88-5 certificates duly endorsed, or shall contain an estimate by the
88-6 surviving parent entity [corporation] of the fair value of such
88-7 shares, together with an offer to pay the amount of that estimate
88-8 within ninety (90) days after the date on which such corporate
88-9 action was effected, upon receipt of notice within sixty (60) days
88-10 after that date from the shareholder that the shareholder agrees to
88-11 accept that amount and, in the case of shares represented by
88-12 certificates, upon the surrender of the shares certificates duly
88-13 endorsed.
88-14 (3) If, within sixty (60) days after the date on which
88-15 the corporate action was effected, the value of the shares is
88-16 agreed upon between the dissenting shareholder and the surviving
88-17 entity [corporation (foreign or domestic)], payment for the shares
88-18 shall be made within ninety (90) days after the date on which the
88-19 corporate action was effected and, in the case of shares
88-20 represented by certificates, upon surrender of the [his]
88-21 certificate or certificates representing such shares. Upon payment
88-22 of the agreed value, the dissenting shareholder shall cease to have
88-23 any interest in such shares or in the corporation.
88-24 (4) If, within sixty (60) days after the date on which
88-25 such corporate action was effected, the shareholder and the
89-1 surviving entity [corporation (foreign or domestic)] do not so
89-2 agree, then the dissenting shareholder or the surviving entity
89-3 [corporation (foreign or domestic)] may, within sixty (60) days
89-4 after the expiration of the sixty (60) day period, file a petition
89-5 in any court of competent jurisdiction in the county in which the
89-6 principal office of the corporation is located, asking for a
89-7 finding and determination of the fair value of the shareholder's
89-8 shares as provided in Section B of Article 5.12 of this Act and
89-9 thereupon the parties shall have the rights and duties and follow
89-10 the procedure set forth in Sections B to D inclusive of Article
89-11 5.12.
89-12 (5) In the absence of fraud in the transaction, the
89-13 remedy provided by this Article to a shareholder objecting to the
89-14 corporate action is the exclusive remedy for the recovery of the
89-15 value of the shareholder's [his] shares or money damages to the
89-16 shareholder with respect to the corporate action. If the surviving
89-17 entity [corporation (foreign or domestic)] complies with the
89-18 requirements of this Article, any such shareholder who fails to
89-19 comply with the requirements of this Article shall not be entitled
89-20 to bring suit for the recovery of the value of the shareholder's
89-21 [his] shares or money damages to such shareholder with respect to
89-22 such corporate action.
89-23 F. If a plan of merger is required by Section A of this
89-24 Article to be adopted in the manner required by Article 5.03 of
89-25 this Act, the provisions of Articles 5.11 and 5.12 of this Act
90-1 shall apply to the rights of the shareholders of a [the] parent
90-2 corporation to dissent from such merger. Except as otherwise
90-3 provided in this Article, the provisions of Articles 5.11 and 5.12
90-4 of this Act shall not be applicable to a merger effected under the
90-5 provisions of this Article. The provisions of Article 5.13 of this
90-6 Act shall be applicable to any merger effected under the provisions
90-7 of this Article to the extent provided in Article 5.13 of this Act.
90-8 SECTION 32. Part Five, Texas Business Corporation Act, is
90-9 amended by adding Articles 5.17 through 5.20 to read as follows:
90-10 Art. 5.17. CONVERSION. A. A domestic corporation may adopt
90-11 a plan of conversion and convert to a foreign corporation or any
90-12 other entity if:
90-13 (1) the converting entity acts on and its shareholders
90-14 approve a plan of conversion in the manner prescribed by Article
90-15 5.03 of this Act as if the conversion were a merger to which the
90-16 converting entity were a party and not the survivor;
90-17 (2) the conversion (a) is permitted by, or not
90-18 inconsistent with, the laws of the state or country in which the
90-19 converted entity is to be incorporated, formed, or organized, and
90-20 (b) the incorporation, formation, or organization of the converted
90-21 entity is effected in compliance with such laws;
90-22 (3) at the time the conversion becomes effective, each
90-23 shareholder of the converting entity (other than those who receive
90-24 payment of their shares under Article 5.12 of this Act) will,
90-25 unless otherwise agreed to by that shareholder, own an equity
91-1 interest or other ownership or security interest in, and be a
91-2 shareholder, partner, member, owner, or other security holder of,
91-3 the converted entity;
91-4 (4) no shareholder of the domestic corporation will,
91-5 as a result of the conversion, become personally liable, without
91-6 the shareholder's consent, for the liabilities or obligations of
91-7 the converted entity; and
91-8 (5) the converted entity shall be incorporated,
91-9 formed, or organized as part of or pursuant to the plan of
91-10 conversion.
91-11 B. Any foreign corporation or other entity may adopt a plan
91-12 of conversion and convert to a domestic corporation if:
91-13 (1) the conversion is permitted by the laws of the
91-14 state or country in which the foreign corporation is incorporated,
91-15 if a foreign corporation is converting;
91-16 (2) the conversion is either permitted by the laws
91-17 under which the other entity is formed or organized or by the
91-18 constituent documents of the other entity that are not inconsistent
91-19 with the laws of the state or country in which the other entity is
91-20 formed or organized, if another entity is converting; and
91-21 (3) the converting entity takes all action that may be
91-22 required by the laws of the state or country under which it is
91-23 incorporated, formed, or organized and by its constituent documents
91-24 to effect the conversion.
91-25 C. A plan of conversion shall set forth:
92-1 (1) the name of the converting entity and the
92-2 converted entity;
92-3 (2) a statement that the converting entity is
92-4 continuing its existence in the organizational form of the
92-5 converted entity;
92-6 (3) a statement as to the type of entity that the
92-7 converted entity is to be and the state or country under the laws
92-8 of which the converted entity is to be incorporated, formed, or
92-9 organized;
92-10 (4) the manner and basis of converting the shares or
92-11 other evidences of ownership of the converting entity into shares
92-12 or other evidences of ownership or securities of the converted
92-13 entity, or any combination thereof;
92-14 (5) in an attachment or exhibit, the articles of
92-15 incorporation of the domestic corporation, if the converted entity
92-16 is a domestic corporation; and
92-17 (6) in an attachment or exhibit, the articles of
92-18 incorporation or other organizational documents of the converted
92-19 entity, if the converted entity is not a domestic corporation.
92-20 D. A plan of conversion may set forth such other provisions
92-21 relating to the conversion not inconsistent with law, including the
92-22 initial bylaws and officers of the converted entity.
92-23 E. After a conversion of a corporation is approved, and at
92-24 any time before the conversion has become effective, the plan of
92-25 conversion may be abandoned (subject to any contractual rights) by
93-1 the converting entity, without shareholder action, in accordance
93-2 with the procedures set forth in the plan of conversion or, if any
93-3 such procedures are not set forth in the plan, in the manner
93-4 determined by the board of directors. If articles of conversion
93-5 have been filed with the Secretary of State but the conversion has
93-6 not become effective, the conversion may be abandoned if a
93-7 statement, executed on behalf of the converting entity by an
93-8 officer or other duly authorized representative and stating that
93-9 the plan of conversion has been abandoned in accordance with
93-10 applicable law, is filed with the Secretary of State prior to the
93-11 effectiveness of the conversion. If the Secretary of State finds
93-12 that such statement conforms to law, the Secretary of State shall,
93-13 when all fees have been paid as required by law:
93-14 (1) endorse on the original and each copy the word
93-15 "Filed" and the month, day, and year of the filing;
93-16 (2) file the original in his office; and
93-17 (3) issue a certificate of abandonment to the
93-18 converting entity or its representatives.
93-19 F. On the filing of the statement described by Section E of
93-20 this Article by the Secretary of State, the conversion shall be
93-21 deemed abandoned and shall not become effective.
93-22 Art. 5.18. ARTICLES OF CONVERSION. A. If a plan of
93-23 conversion has been approved in accordance with Article 5.17 of
93-24 this Act and has not been abandoned, articles of conversion shall
93-25 be executed by the converting entity by an officer or other duly
94-1 authorized representative and shall set forth:
94-2 (1) the plan of conversion or a statement certifying
94-3 the following:
94-4 (a) the name, state or country of incorporation,
94-5 formation, and organization of the converting entity, and
94-6 organizational form of the converting entity;
94-7 (b) that a plan of conversion has been approved;
94-8 (c) that an executed plan of conversion is on
94-9 file at the principal place of business of the converting entity,
94-10 stating the address thereof, and that an executed plan of
94-11 conversion will be on file, from and after the conversion, at the
94-12 principal place of business of the converted entity, stating the
94-13 address thereof; and
94-14 (d) that a copy of the plan of conversion will
94-15 be furnished by the converting entity (prior to the conversion) or
94-16 the converted entity (after the conversion), on written request and
94-17 without cost, to any shareholder of the converting entity or the
94-18 converted entity;
94-19 (2) if the converting entity is a domestic
94-20 corporation, the number of shares outstanding and, if the shares of
94-21 any class or series are entitled to vote as a class, the
94-22 designation and number of outstanding shares of each such class or
94-23 series;
94-24 (3) if the converting entity is a domestic
94-25 corporation, the number of outstanding shares, not entitled to vote
95-1 only as a class, voted for and against the plan, respectively, and,
95-2 if the shares of any class or series are entitled to vote as a
95-3 class, the number of shares of each such class or series voted for
95-4 and against the plan, respectively; and
95-5 (4) if the converting entity is a foreign corporation
95-6 or other entity, a statement that the approval of the plan of
95-7 conversion was duly authorized by all action required by the laws
95-8 under which it was incorporated, formed, or organized and by its
95-9 constituent documents.
95-10 B. The original and one copy of the articles of conversion
95-11 shall be delivered to the Secretary of State. Two copies of the
95-12 articles of incorporation of the domestic corporation, if the
95-13 converted entity is a domestic corporation, shall also be delivered
95-14 to the Secretary of State with the articles of conversion.
95-15 C. If the Secretary of State finds that the articles of
95-16 conversion conform to law, has received all filings required to be
95-17 received, and has issued all certificates required to be issued in
95-18 connection with the incorporation, formation, or organization of
95-19 the converted entity, if any, the Secretary of State shall, when
95-20 all fees and franchise taxes have been paid as required by law or
95-21 if the articles of conversion provide that the converted entity
95-22 will be liable for the payment of all such fees and franchise
95-23 taxes:
95-24 (1) endorse on the original and each copy the word
95-25 "Filed" and the month, day, and year of the filing;
96-1 (2) file the original in his office; and
96-2 (3) issue a certificate of conversion, together with a
96-3 copy of the articles affixed thereto, to the converted entity or
96-4 its representatives.
96-5 Art. 5.19. EFFECTIVE DATE OF CONVERSION. A. Except as
96-6 otherwise provided by Article 10.03 of this Act, on the issuance of
96-7 the certificate of conversion by the Secretary of State, the
96-8 conversion of a converting entity shall be effective.
96-9 Art. 5.20. EFFECT OF CONVERSION. A. When a conversion of a
96-10 converting entity takes effect:
96-11 (1) the converting entity shall continue to exist,
96-12 without interruption, but in the organizational form of the
96-13 converted entity rather than in its prior organizational form;
96-14 (2) all rights, title, and interests to all real
96-15 estate and other property owned by the converting entity shall
96-16 continue to be owned by the converted entity in its new
96-17 organizational form without reversion or impairment, without
96-18 further act or deed, and without any transfer or assignment having
96-19 occurred, but subject to any existing liens or other encumbrances
96-20 thereon;
96-21 (3) all liabilities and obligations of the converting
96-22 entity shall continue to be liabilities and obligations of the
96-23 converted entity in its new organizational form without impairment
96-24 or diminution by reason of the conversion;
96-25 (4) all rights of creditors or other parties with
97-1 respect to or against the prior interest holders or other owners of
97-2 the converting entity in their capacities as such in existence as
97-3 of the effective time of the conversion will continue in existence
97-4 as to those liabilities and obligations and may be pursued by such
97-5 creditors and obligees as if the conversion had not occurred;
97-6 (5) a proceeding pending by or against the converting
97-7 entity or by or against any of the converting entity's interest
97-8 holders or owners in their capacities as such may be continued by
97-9 or against the converted entity in its new organizational form and
97-10 by or against the prior interest holders or owners, as the case may
97-11 be, without any need for substitution of parties;
97-12 (6) the shares and other evidences of ownership in the
97-13 converting entity that are to be converted into shares, evidences
97-14 of ownership, or other securities in the converted entity as
97-15 provided in the plan of conversion shall be so converted, and if
97-16 the converting entity is a domestic corporation, the former holders
97-17 of shares in the domestic corporation shall be entitled only to the
97-18 rights provided in the plan of conversion or to their rights under
97-19 Article 5.11 of this Act;
97-20 (7) if, after the effectiveness of the conversion, a
97-21 shareholder, partner, member, or other owner of the converted
97-22 entity would be liable under applicable law, in such capacity, for
97-23 the debts or obligations of the converted entity, such shareholder,
97-24 partner, member, or other owner of the converted entity shall be
97-25 liable for the debts and obligations of the converting entity that
98-1 existed before the conversion takes effect only to the extent that
98-2 such shareholder, partner, member, or other owner: (a) agreed in
98-3 writing to be liable for such debts or obligations, (b) was liable
98-4 under applicable law, prior to the effectiveness of the conversion,
98-5 for such debts or obligations, or (c) by becoming a shareholder,
98-6 partner, member, or other owner of the converted entity, becomes
98-7 liable under applicable law for existing debts and obligations of
98-8 the converted entity;
98-9 (8) if the converted entity is a foreign corporation
98-10 or other entity, such converted entity shall be deemed to:
98-11 (a) appoint the Secretary of State in this state as its agent for
98-12 service of process in a proceeding to enforce any obligation or the
98-13 rights of dissenting shareholders of the converting domestic
98-14 corporation, and (b) agree that it will promptly pay the dissenting
98-15 shareholders of the converting domestic corporation the amount, if
98-16 any, to which they are entitled under Article 5.11 of this Act; and
98-17 (9) if the converting corporation is a domestic
98-18 corporation, the provisions of Articles 5.11, 5.12, and 5.13 of
98-19 this Act shall apply as if the converted entity were the survivor
98-20 of a merger with the converting entity.
98-21 SECTION 33. Section A, Article 6.03, Texas Business
98-22 Corporation Act, is amended to read as follows:
98-23 A. A corporation may be dissolved by the act of the
98-24 corporation when authorized in the following manner:
98-25 (1) The board of directors shall adopt a resolution
99-1 recommending that the corporation be dissolved, and directing that
99-2 the question of such dissolution be submitted to a vote at a
99-3 meeting of shareholders, which may be either an annual or a special
99-4 meeting.
99-5 (2) Written or printed notice shall be given to each
99-6 shareholder of record entitled to vote at such meeting within the
99-7 time and in the manner provided in this Act for the giving of
99-8 notice of meetings of shareholders, and, whether the meeting be an
99-9 annual or special meeting, shall state that the purpose, or one of
99-10 the purposes, of such meeting is to consider the advisability of
99-11 dissolving the corporation.
99-12 (3) At such meeting a vote of shareholders entitled to
99-13 vote thereat shall be taken on a resolution to dissolve the
99-14 corporation. Such resolution shall be adopted on receiving the
99-15 affirmative vote of the holders of at least two-thirds of the
99-16 outstanding shares [Each outstanding share] of the corporation
99-17 [shall be] entitled to vote thereon[, whether or not entitled to
99-18 vote thereon by the provisions of the articles of incorporation.
99-19 Such resolution shall be adopted upon receiving the affirmative
99-20 vote of the holders of at least two-thirds of the outstanding
99-21 shares of the corporation,] unless any class or series of shares is
99-22 entitled to vote as a class thereon, in which event the resolution
99-23 shall require for its adoption the affirmative vote of the holders
99-24 of at least two-thirds of the outstanding shares within [of] each
99-25 class or series of shares entitled to vote as a class thereon and
100-1 at least[, as well as the affirmative vote of] two-thirds of the
100-2 [total] outstanding shares otherwise entitled to vote thereon.
100-3 Shares entitled to vote as a class shall be entitled to vote only
100-4 as a class unless otherwise entitled to vote on each matter
100-5 generally as provided in the articles of incorporation.
100-6 SECTION 34. Sections A and B, Article 6.05, Texas Business
100-7 Corporation Act, are amended to read as follows:
100-8 A. At any time prior to the issuance of a certificate of
100-9 dissolution by the Secretary of State, or within 120 days
100-10 thereafter, a corporation may revoke voluntary dissolution
100-11 proceedings:
100-12 (1) By the written consent of all of its shareholders.
100-13 (2) By the act of the corporation in the following
100-14 manner:
100-15 (a) The board of directors shall adopt a
100-16 resolution recommending that the question of such revocation be
100-17 submitted to a vote at a special meeting of shareholders.
100-18 (b) Written or printed notice, stating that the
100-19 purpose or one of the purposes of such meeting is to consider the
100-20 advisability of revoking the voluntary dissolution proceedings,
100-21 shall be given to each shareholder of record entitled to vote at
100-22 such meeting within the time and in the manner provided in this Act
100-23 for the giving of notice of special meetings of shareholders.
100-24 (c) At such meeting a vote of the shareholders
100-25 entitled to vote thereat shall be taken on a resolution to revoke
101-1 the voluntary dissolution proceedings. [Each outstanding share of
101-2 the corporation shall be entitled to vote thereon, whether or not
101-3 entitled to vote thereon by the provisions of the articles of
101-4 incorporation.] Such resolution shall be adopted upon receiving
101-5 the affirmative vote of the holders of at least two-thirds of the
101-6 outstanding shares of the corporation entitled to vote thereon[,]
101-7 unless any class or series of shares is entitled to vote [thereon]
101-8 as a class thereon, in which event the resolution shall require for
101-9 its adoption the affirmative vote of the holders of at least
101-10 two-thirds of the outstanding shares within [of] each class or
101-11 series of shares entitled to vote as a class thereon and at least
101-12 [, as well as] two-thirds of the [total] outstanding shares
101-13 otherwise entitled to vote thereon. Shares entitled to vote as a
101-14 class shall be entitled to vote only as a class unless otherwise
101-15 entitled to vote on each matter generally as provided in the
101-16 articles of incorporation.
101-17 B. After revocation of voluntary dissolution is authorized
101-18 as provided in Section A of this Article, the corporation shall, if
101-19 a certificate of dissolution of the corporation has been issued by
101-20 the Secretary of State, deliver to the Secretary of State for
101-21 filing within 120 days after such issuance the original and a copy
101-22 of articles of revocation of dissolution executed on behalf of the
101-23 corporation by an officer, that set forth:
101-24 (1) the name of the corporation;
101-25 (2) the date that the revocation of dissolution was
102-1 authorized and, if the dissolution has become effective, the
102-2 effective date of the dissolution that was revoked; and
102-3 (3) if the corporation elected to revoke voluntary
102-4 dissolution proceedings by the written consent of all of its
102-5 shareholders, a copy of the consent, together with a statement that
102-6 the consent was signed by all shareholders of the corporation or
102-7 was signed in their names by their attorneys thereunto duly
102-8 authorized; or
102-9 (4) if the corporation elected to revoke voluntary
102-10 dissolution proceedings by act of the corporation:
102-11 (a) a [copy of the resolution to revoke,
102-12 together with a] statement that a [such] resolution revoking the
102-13 voluntary dissolution was adopted by the shareholders of the
102-14 corporation and of the date of the adoption thereof;
102-15 (b) the number of shares outstanding and
102-16 entitled to vote on the resolution, and, if the shares of any class
102-17 or series were entitled to vote as a class, the designation and
102-18 number of outstanding shares of each such class or series; and
102-19 (c) the number of shares entitled to vote on the
102-20 resolution generally that voted for and against such resolution,
102-21 respectively, and if the shares of any class or series were
102-22 entitled to vote as a class, the number of shares of each such
102-23 class or series voted for and against such resolution,
102-24 respectively.
102-25 SECTION 35. Article 6.06, Texas Business Corporation Act, is
103-1 amended to read as follows:
103-2 Art. 6.06. ARTICLES OF DISSOLUTION. A. If voluntary
103-3 dissolution proceedings have been taken and have not been revoked,
103-4 then when all debts, liabilities, and obligations of the
103-5 corporation have been paid, satisfied, or discharged or adequate
103-6 provision has been made for payment, satisfaction, or discharge
103-7 thereof or, if the properties and assets of the corporation are not
103-8 sufficient to pay, satisfy, or discharge all the corporation's
103-9 debts, liabilities, and obligations, then when all properties and
103-10 assets of the corporation have been applied so far as they will go
103-11 to the just and equitable payment of the corporation's debts,
103-12 liabilities, and obligations or when adequate provision has been
103-13 made for such application, and the remainder of its properties and
103-14 assets have been distributed to its shareholders according to their
103-15 respective rights and interests, articles of dissolution shall be
103-16 executed on behalf of the corporation by an officer, which shall
103-17 set forth:
103-18 (1) The name of the corporation.
103-19 (2) The names and respective addresses of its
103-20 officers.
103-21 (3) The names and respective addresses of its
103-22 directors.
103-23 (4) That all debts, liabilities, and obligations of
103-24 the corporation have been paid, satisfied, or discharged or that
103-25 adequate provision has been made for payment, satisfaction, or
104-1 discharge thereof or, if the properties and assets of the
104-2 corporation were not sufficient to pay, satisfy, or discharge all
104-3 the corporation's debts, liabilities, and obligations, that all
104-4 properties and assets of the corporation have been applied so far
104-5 as they would go to the just and equitable payment of those debts,
104-6 liabilities, and obligations or that adequate provision has been
104-7 made for such application.
104-8 (5) That the remainder of the properties and assets of
104-9 the corporation have been distributed to its shareholders according
104-10 to their respective rights and interests or that no properties or
104-11 assets of the corporation remained for distribution to shareholders
104-12 after applying the properties and assets of the corporation so far
104-13 as they would go to the just and equitable payment of the debts,
104-14 liabilities, and obligations of the corporation or making adequate
104-15 provision for such application.
104-16 (6) If the corporation elected to dissolve by the
104-17 written consent of all of its shareholders, a [copy of the consent,
104-18 together with a] statement that a [the] consent approving a
104-19 dissolution of the corporation was signed by all shareholders of
104-20 the corporation or was signed in their names by their attorneys
104-21 thereunto duly authorized.
104-22 (7) If the corporation elected to dissolve by act of
104-23 the corporation:
104-24 (a) A [copy of the resolution to dissolve,
104-25 together with a] statement that a [such] resolution approving a
105-1 dissolution of the corporation was adopted by the shareholders of
105-2 the corporation and of the date of adoption.
105-3 (b) The number of shares outstanding and
105-4 entitled to vote on the resolution, and, if the shares of any class
105-5 or series were entitled to vote as a class, the designation and
105-6 number of outstanding shares of each such class or series.
105-7 (c) The number of shares entitled to vote on the
105-8 resolution generally that voted for and against such resolution,
105-9 respectively, and if the shares of any class or series were
105-10 entitled to vote as a class, the number of shares of each such
105-11 class or series voted for and against such resolution,
105-12 respectively.
105-13 SECTION 36. Section E, Article 7.01, Texas Business
105-14 Corporation Act, is amended to read as follows:
105-15 E. Any corporation dissolved by the Secretary of State under
105-16 the provisions of Section B of this article may be reinstated by
105-17 the Secretary of State at any time within a period of 36 [12]
105-18 months from the date of such dissolution, upon approval of an
105-19 application for reinstatement signed by an officer or director of
105-20 the dissolved corporation. Such application shall be filed by the
105-21 Secretary of State whenever it is established to the Secretary's
105-22 [his] satisfaction that in fact there was no cause for the
105-23 dissolution, or whenever the neglect, omission or delinquency
105-24 resulting in dissolution has been corrected and payment of all
105-25 fees, taxes, penalties and interest due thereon which accrued
106-1 before the dissolution plus an amount equal to the total taxes from
106-2 the date of dissolution to the date of reinstatement which would
106-3 have been payable had the corporation not been dissolved. A
106-4 reinstatement filing fee of $50 shall accompany the application for
106-5 reinstatement.
106-6 Reinstatement shall not be authorized if the corporate name
106-7 is the same as or deceptively similar to a corporate, limited
106-8 partnership, or limited liability company name already on file or
106-9 reserved or registered, unless the corporation being reinstated
106-10 contemporaneously amends the articles of incorporation to change
106-11 its name.
106-12 When the application for reinstatement is approved and filed
106-13 by the Secretary of State, the corporate existence shall be deemed
106-14 to have continued without interruption from the date of dissolution
106-15 except the reinstatement shall have no effect upon any issue of
106-16 personal liability of the directors, officers, or agents of the
106-17 corporation during the period between dissolution and
106-18 reinstatement.
106-19 SECTION 37. Article 8.03, Texas Business Corporation Act, is
106-20 amended to read as follows:
106-21 Art. 8.03. CORPORATE NAME OF FOREIGN CORPORATION. A. No
106-22 certificate of authority shall be issued to a foreign corporation
106-23 unless the corporate name of such corporation:
106-24 (1) Shall contain the word "corporation," "company,"
106-25 "incorporated," or "limited," or shall contain an abbreviation of
107-1 one (1) of such words, or such corporation shall, for use in this
107-2 state, add at the end of its name one (1) of such words or an
107-3 abbreviation thereof.
107-4 (2) Shall not be the same as, or deceptively similar
107-5 to, the name of any domestic corporation, limited partnership, or
107-6 limited liability company existing under the laws of this state or
107-7 of any foreign corporation, limited partnership, or limited
107-8 liability company authorized to transact business in this state, or
107-9 a name the exclusive right to which is, at the time, reserved or
107-10 registered in the manner provided in this Act or any other statute
107-11 providing for the reservation or registration of names by a limited
107-12 partnership or limited liability company; provided that a name may
107-13 be similar if written consent is obtained from the existing
107-14 corporation, limited partnership, or limited liability company
107-15 having the name deemed to be similar or the person[, or
107-16 corporation,] for whom the name deemed to be similar is reserved or
107-17 registered in the office of the Secretary of State. A certificate
107-18 of authority shall be issued as provided in this Act to any foreign
107-19 corporation having a name the same as, deceptively similar to, or,
107-20 if no consent is given, similar to the name of any domestic
107-21 corporation, limited partnership, or limited liability company
107-22 existing under the laws of this state or of any foreign
107-23 corporation, limited partnership, or limited liability company
107-24 authorized to transact business in this state, or a name the
107-25 exclusive right to which is, at the time, reserved or registered in
108-1 accordance with this Act or any other applicable law, provided such
108-2 foreign corporation qualifies and does business under a name that
108-3 meets the requirements of this article. The foreign corporation
108-4 shall set forth in the application for a certificate of authority
108-5 the name under which it is qualifying and shall file an assumed
108-6 name certificate in accordance with Chapter 36, Business & Commerce
108-7 Code, as amended.
108-8 SECTION 38. Sections A and C, Article 8.14, Texas Business
108-9 Corporation Act, are amended to read as follows:
108-10 A. A foreign corporation authorized to transact business in
108-11 this state may withdraw from this state upon procuring from the
108-12 Secretary of State a certificate of withdrawal. In order to
108-13 procure such certificate of withdrawal, such foreign corporation
108-14 shall deliver to the Secretary of State an application for
108-15 withdrawal, which shall set forth:
108-16 (1) The name of the corporation and the state or
108-17 country under the laws of which it is incorporated;
108-18 (2) That the corporation is not transacting business
108-19 in this state;
108-20 (3) That the corporation surrenders its authority to
108-21 transact business in this state;
108-22 (4) That the corporation revokes the authority of its
108-23 registered agent in this state to accept service of process and
108-24 consents that service of process in any action, suit, or proceeding
108-25 based upon any cause of action arising in this state during the
109-1 time the corporation was authorized to transact business in this
109-2 state may thereafter be made on such corporation by service thereof
109-3 on the Secretary of State;
109-4 (5) A post office address to which the Secretary of
109-5 State may mail a copy of any process against the corporation that
109-6 may be served on him; and
109-7 (6) A statement that all sums due, or accrued, to this
109-8 state have been paid, or that adequate provision has been made for
109-9 the payment thereof[; and]
109-10 [(7) A statement that all known creditors or claimants
109-11 have been paid or provided for].
109-12 C. When the existence of a foreign corporation terminates
109-13 because of dissolution, merger, conversion, or otherwise, a
109-14 certificate from the proper officer in the jurisdiction of the
109-15 corporation's incorporation evidencing the termination shall be
109-16 filed with the Secretary of State.
109-17 SECTION 39. Section A, Article 8.15, Texas Business
109-18 Corporation Act, is amended to read as follows:
109-19 A. The original and a copy of such application for
109-20 withdrawal, along with a certificate from the Comptroller of Public
109-21 Accounts that all franchise taxes have been paid, shall be
109-22 delivered to the Secretary of State. If the Secretary of State
109-23 finds that such application conforms to the provisions of this Act,
109-24 the Secretary of State [he] shall, when the appropriate filing fee
109-25 is [all fees and franchise taxes have been] paid as required by
110-1 law:
110-2 (1) Endorse on the original and the copy the word
110-3 "Filed," and the month, day, and year of the filing thereof.
110-4 (2) File the original in the [his] office of the
110-5 Secretary of State.
110-6 (3) Issue a certificate of withdrawal to which [he]
110-7 shall be affixed [affix] the copy.
110-8 SECTION 40. Section E, Article 8.16, Texas Business
110-9 Corporation Act, is amended to read as follows:
110-10 E. Any corporation whose certificate of authority has been
110-11 revoked by the Secretary of State under the provisions of Section B
110-12 of this article may be reinstated by the Secretary of State at any
110-13 time within a period of 36 [12] months from the date of such
110-14 revocation [dissolution], upon approval of an application for
110-15 reinstatement signed by an officer or director of the corporation.
110-16 Such application shall be filed by the Secretary of State whenever
110-17 it is established to the Secretary's [his] satisfaction that in
110-18 fact there was no cause for the revocation, or whenever the
110-19 neglect, omission or delinquency resulting in revocation has been
110-20 corrected and payment made of all fees, taxes, penalties and
110-21 interest due thereon which accrued before the revocation plus an
110-22 amount equal to the total taxes from the date of revocation to the
110-23 date of reinstatement which would have been payable had the
110-24 corporation's certificate not been revoked. A reinstatement filing
110-25 fee of $50 shall accompany the application for reinstatement.
111-1 Reinstatement shall not be authorized if the corporate name
111-2 is the same as or deceptively similar to a corporate, limited
111-3 partnership, or limited liability company name already on file or
111-4 reserved or registered, unless the corporation being reinstated
111-5 contemporaneously amends its certificate of authority to change its
111-6 name.
111-7 When the application for reinstatement is approved and filed
111-8 by the Secretary of State, the corporate authority to do business
111-9 in Texas shall be deemed to have continued without interruption
111-10 from the date of revocation, except that reinstatement shall have
111-11 no effect upon any issue of personal liability of the directors,
111-12 officers, or agents of the corporation during the period between
111-13 revocation and reinstatement.
111-14 SECTION 41. Section A, Article 9.04, Texas Business
111-15 Corporation Act, is amended to read as follows:
111-16 A. If the Secretary of State shall fail to approve any
111-17 articles of incorporation, application for certificate of authority
111-18 to transact business in this State, amendment, merger, share
111-19 exchange, conversion [consolidation], or dissolution, or any other
111-20 document required by this Act to be approved by the Secretary of
111-21 State before the same shall be filed in his office, he shall,
111-22 within ten days after the delivery thereof to him, give written
111-23 notice of his disapproval to the person, [or] corporation, or other
111-24 entity, domestic or foreign, delivering the same, specifying in
111-25 such notice the reasons therefor. From such disapproval such
112-1 person, [or] corporation, or other entity may appeal to any
112-2 district court of Travis County by filing with the clerk of such
112-3 court a petition setting forth a copy of the articles or other
112-4 document sought to be filed and a copy of the written disapproval
112-5 thereof by the Secretary of State; whereupon the matter shall be
112-6 tried de novo by the court, and the court shall either sustain the
112-7 action of the Secretary of State or direct him to take such action
112-8 as the court may deem proper.
112-9 SECTION 42. Article 9.10, Texas Business Corporation Act, is
112-10 amended by adding Section D to read as follows:
112-11 D. If action is taken with respect to a particular matter by
112-12 the holders of shares of a class or series by means of a written
112-13 consent in compliance with Section A of this Article, any provision
112-14 of this Act that requires advance notice of a meeting or of the
112-15 proposed action will not apply as to that class or series for such
112-16 action.
112-17 SECTION 43. Section A, Article 10.01, Texas Business
112-18 Corporation Act, is amended to read as follows:
112-19 A. The Secretary of State is authorized and required to
112-20 collect for the use of the State the following fees:
112-21 (1) Filing articles of incorporation of a domestic
112-22 corporation and issuing a certificate of incorporation, Three
112-23 Hundred Dollars ($300.00).
112-24 (2) Filing articles of amendment of a domestic
112-25 corporation and issuing a certificate of amendment, One Hundred
113-1 Fifty Dollars ($150.00).
113-2 (3) Filing articles of merger [or consolidation],
113-3 whether the surviving or new corporation be a domestic or foreign
113-4 corporation, or articles of exchange, Three Hundred Dollars
113-5 ($300.00).
113-6 (4) Filing an application of a foreign corporation for
113-7 a certificate of authority to transact business in this State and
113-8 issuing such a certificate of authority, Seven Hundred Fifty
113-9 Dollars ($750.00).
113-10 (5) Filing an application of a foreign corporation for
113-11 an amended certificate of authority to transact business in this
113-12 State and issuing such an amended certificate of authority, One
113-13 Hundred Fifty Dollars ($150.00).
113-14 (6) Filing restated articles of incorporation of a
113-15 domestic corporation, Three Hundred Dollars ($300.00).
113-16 (7) Filing application for reservation of corporate
113-17 name and issuing a certificate therefor, Forty Dollars ($40.00).
113-18 (8) Filing notice of transfer of reserved corporate
113-19 name and issuing a certificate therefor, Fifteen Dollars ($15.00).
113-20 (9) Filing application for registration of corporate
113-21 name and issuing a certificate therefor, Seventy-Five Dollars
113-22 ($75.00).
113-23 (10) Filing application for renewal of registration of
113-24 corporate name and issuing a certificate therefor, Seventy-Five
113-25 Dollars ($75.00).
114-1 (11) Filing statement of change of registered office
114-2 or registered agent, or both, Fifteen Dollars ($15.00).
114-3 (12) Filing statement of change of address of
114-4 registered agent, Fifteen Dollars ($15.00); provided, however, that
114-5 the maximum fee for simultaneous filings by a registered agent for
114-6 more than one corporation shall not exceed Seven Hundred Fifty
114-7 Dollars ($750.00).
114-8 (13) Filing statement of resolution establishing
114-9 series of shares, Fifteen Dollars ($15.00).
114-10 (14) Filing statement of cancellation of redeemable
114-11 shares, Fifteen Dollars ($15.00).
114-12 (15) Filing statement of cancellation of re-acquired
114-13 shares, Fifteen Dollars ($15.00).
114-14 (16) Filing statement of reduction of stated capital,
114-15 Fifteen Dollars ($15.00).
114-16 (17) Filing articles of dissolution and issuing
114-17 certificate therefor, Forty Dollars ($40.00).
114-18 (18) Filing application for withdrawal and issuing
114-19 certificate therefor, Fifteen Dollars ($15.00).
114-20 (19) Filing certificate from home state that foreign
114-21 corporation is no longer in existence in said state, Fifteen
114-22 Dollars ($15.00).
114-23 (20) Maintaining a record of service of any process,
114-24 notice or demand upon the Secretary of State as agent for foreign
114-25 and domestic corporations and for any foreign association, joint
115-1 stock company, partnership, or nonresident natural person, Forty
115-2 Dollars ($40.00).
115-3 (21) Filing a bylaw or agreement restricting transfer
115-4 of shares or securities other than as an amendment to the articles
115-5 of incorporation, Fifteen Dollars ($15.00).
115-6 (22) Filing any instrument pursuant to this Act not
115-7 expressly provided for above, Fifteen Dollars ($15.00).
115-8 (23) Filing application for reinstatement of corporate
115-9 charter or certificate of authority following forfeiture under the
115-10 Tax Code, Seventy-Five Dollars ($75.00).
115-11 (24) Filing articles of conversion and issuing a
115-12 certificate of conversion, Three Hundred Dollars ($300.00).
115-13 SECTION 44. Section A, Article 10.03, Texas Business
115-14 Corporation Act, is amended to read as follows:
115-15 A. The effectiveness of (i) the incorporation of a
115-16 corporation under this Act, (ii) an amendment to a corporation's
115-17 articles of incorporation, including an amendment effected pursuant
115-18 to a statement of resolution establishing a series of shares,
115-19 (iii) the restatement of articles of incorporation of a
115-20 corporation, (iv) a merger or share exchange, (v) a cancellation of
115-21 redeemable or reacquired shares or a reduction in stated capital,
115-22 (vi) a voluntary dissolution, (vii) the authorization or withdrawal
115-23 of a foreign corporation to transact business in this State,
115-24 (viii) an amendment to the certificate of authority of a foreign
115-25 corporation, (ix) a bylaw or agreement restricting the transfer of
116-1 shares or securities of a corporation pursuant to this Act, (x) a
116-2 change in registered office or registered agent, [or] (xi) a change
116-3 of address of a registered agent (each such act or document being a
116-4 "Permitted Act"), or (xii) a conversion may be made effective as of
116-5 a time and date after the time and date otherwise provided in this
116-6 Act or may be made effective upon the occurrence of events or facts
116-7 that may occur in the future, which events or facts may include
116-8 future acts of any person or entity, if:
116-9 (1) the articles, statement, application, or other
116-10 filing that is required by this Act to be filed with the Secretary
116-11 of State to make effective such Permitted Act clearly and expressly
116-12 set forth, in addition to any other statement or information
116-13 required to be set forth therein, (i) the time and date on which
116-14 such Permitted Act is to become effective or (ii) if such Permitted
116-15 Act is to become effective upon the occurrence of events or facts
116-16 that may occur in the future, (a) the manner in which such events
116-17 or facts shall operate to cause such Permitted Act to become
116-18 effective and (b) the date of the 90th day after the date of the
116-19 filing of such articles, statement, application or other filing;
116-20 (2) in the case of a Permitted Act that is to become
116-21 effective as of a time or date after the time and date otherwise
116-22 provided in this Act, (i) such subsequent time and date is not more
116-23 than 90 days after the date of the filing of the articles,
116-24 statement, application, or other filing that is otherwise required
116-25 by this Act to be filed with the Secretary of State to make
117-1 effective such Permitted Act and (ii) the time on which the
117-2 Permitted Act is to become effective is not midnight or 12:00 p.m.;
117-3 and
117-4 (3) in the case of a Permitted Act that is to be made
117-5 effective upon the occurrence of events or facts that may occur in
117-6 the future, other than the mere passage of time, a statement that
117-7 all such events or facts upon which the effectiveness of such
117-8 Permitted Act is conditioned have been satisfied or waived, and of
117-9 the date on which such condition was satisfied or waived, is filed
117-10 with the Secretary of State within 90 days of the date of the
117-11 filing of the articles, statement, application or other filing that
117-12 is otherwise required by this Act for such Permitted Act to become
117-13 effective.
117-14 SECTION 45. Section B, Article 12.13, Texas Business
117-15 Corporation Act, is amended to read as follows:
117-16 B. Through Merger, Conversion, or Share Exchange. A
117-17 surviving or new corporation resulting from a merger, a corporation
117-18 incorporated as part of a conversion, or a corporation that
117-19 acquires a corporation pursuant to a share exchange in conformance
117-20 with Part Five of this Act may become a close corporation if as
117-21 part of the plan of merger, conversion, or exchange its articles of
117-22 incorporation conform with Article 12.11 of this Act. Any plan of
117-23 merger, conversion, or exchange adopting close corporation status
117-24 must be approved by the affirmative vote of the holders of all the
117-25 outstanding shares, and of each class or series of shares, of each
118-1 corporation that is party to the merger, conversion, or share
118-2 exchange, whether or not entitled to vote on the plan by the
118-3 articles of incorporation of the corporation.
118-4 SECTION 46. Article 12.21, Texas Business Corporation Act,
118-5 is amended to read as follows:
118-6 Art. 12.21. TERMINATION OF CLOSE CORPORATION STATUS. A. In
118-7 General. A close corporation terminates its status as a close
118-8 corporation:
118-9 (1) on filing a statement of termination in
118-10 conformance with Article 12.22 of this Act;
118-11 (2) by amending its articles of incorporation in
118-12 conformance with Part Four of this Act to delete from its articles
118-13 the statement that it is a close corporation;
118-14 (3) through a merger, conversion, or share exchange in
118-15 conformance with Part Five of this Act unless the plan of merger,
118-16 conversion, or exchange provides that the surviving or new
118-17 corporation will continue as or become a close corporation and the
118-18 plan has been approved by the affirmative vote or consent of the
118-19 holders of all the outstanding shares, and of each class and series
118-20 of shares, of the close corporation, whether or not entitled to
118-21 vote on the plan by the articles of incorporation; or
118-22 (4) when termination is decreed in a judicial
118-23 proceeding to enforce a close corporation provision providing for
118-24 the termination.
118-25 SECTION 47. The Texas Business Corporation Act is amended by
119-1 adding Part Thirteen to read as follows:
119-2 PART THIRTEEN
119-3 Art. 13.01. SHORT TITLE. A. This part may be cited as the
119-4 Business Combination Law.
119-5 Art. 13.02. DEFINITIONS. A. In this part:
119-6 (1) "Affiliate" means a person who directly or
119-7 indirectly through one or more intermediaries controls, is
119-8 controlled by, or is under common control with a specified person.
119-9 (2) "Affiliated shareholder" means a person, other
119-10 than the issuing public corporation or a wholly owned subsidiary of
119-11 the issuing public corporation, that is the beneficial owner of 20
119-12 percent or more of the outstanding voting shares of the issuing
119-13 public corporation or that, within the preceding three-year period,
119-14 was the beneficial owner of 20 percent or more of the then
119-15 outstanding voting shares of the issuing public corporation. For
119-16 the purpose of determining whether a person is an affiliated
119-17 shareholder, the number of voting shares of the issuing public
119-18 corporation considered outstanding includes shares considered
119-19 beneficially owned by that person under Subdivision (3) of this
119-20 Article, but does not include other unissued voting shares of the
119-21 issuing public corporation that may be issuable pursuant to an
119-22 agreement, arrangement, or understanding, or on exercise of
119-23 conversion rights, warrants, or options, or otherwise.
119-24 (3) "Beneficial owner" means a person who:
119-25 (a) individually, or with or through an
120-1 affiliate or associate, beneficially owns shares or similar
120-2 securities, directly or indirectly;
120-3 (b) individually, or with or through an
120-4 affiliate or associate, has the right to:
120-5 (i) acquire shares or similar securities,
120-6 whether the right may be exercised immediately or only after the
120-7 passage of time, pursuant to an agreement, arrangement, or
120-8 understanding, whether or not in writing, or on the exercise of
120-9 conversion rights, exchange rights, warrants, or options, or
120-10 otherwise, except that a person is not considered the beneficial
120-11 owner of shares or similar securities (A) tendered pursuant to a
120-12 tender or exchange offer made by the person or an affiliate or
120-13 associate until the tendered shares or similar securities are
120-14 accepted for purchase or exchange, or (B) that may be subject to an
120-15 agreement, arrangement, or understanding that expressly conditions
120-16 the acquisition or purchase on the approval of the acquisition or
120-17 purchase pursuant to Article 13.03 of this Act as long as such
120-18 person has no direct or indirect rights of ownership or voting with
120-19 respect to such shares until such time that such approval is
120-20 obtained, at which time such person shall be considered the
120-21 beneficial owner of such shares; or
120-22 (ii) vote the shares or similar securities
120-23 pursuant to an agreement, arrangement, or understanding, whether or
120-24 not in writing, except that a person is not considered the
120-25 beneficial owner of shares or similar securities for purposes of
121-1 this subparagraph if the agreement, arrangement, or understanding
121-2 to vote the shares: (A) arises solely from an immediately
121-3 revocable proxy that authorizes the person named in the proxy to
121-4 vote at a meeting of shareholders that has been called when the
121-5 proxy is delivered or at any adjournment of the meeting, and (B) is
121-6 not then reportable on a Schedule 13D under the Securities Exchange
121-7 Act of 1934 (15 U.S.C. Section 78a et seq.) or a comparable or
121-8 successor report; or
121-9 (c) has an agreement, arrangement, or
121-10 understanding, whether or not in writing, to acquire, hold, or
121-11 dispose (except pursuant to an agreement, arrangement, or
121-12 understanding permitted by Paragraph (b)(i) of this subdivision) or
121-13 to vote (except under an immediately revocable proxy under
121-14 Paragraph (b)(ii) of this subdivision) shares or similar securities
121-15 with another person who beneficially owns, or whose affiliate or
121-16 associate beneficially owns, directly or indirectly, the shares or
121-17 similar securities.
121-18 (4) "Business combination" means:
121-19 (a) any merger, share exchange, or conversion of
121-20 an issuing public corporation or a subsidiary with:
121-21 (i) an affiliated shareholder;
121-22 (ii) a foreign or domestic corporation or
121-23 other entity that is, or after the merger, share exchange, or
121-24 conversion would be, an affiliate or associate of the affiliated
121-25 shareholder; or
122-1 (iii) another domestic or foreign
122-2 corporation or other entity, if the merger, share exchange, or
122-3 conversion is caused by an affiliated shareholder, or an affiliate
122-4 or associate of an affiliated shareholder, and as a result of the
122-5 merger, share exchange, or conversion this part does not apply to
122-6 the surviving corporation or other entity;
122-7 (b) a sale, lease, exchange, mortgage, pledge,
122-8 transfer, or other disposition, in one transaction or a series of
122-9 transactions, including an allocation of assets pursuant to a
122-10 merger, to or with the affiliated shareholder, or an affiliate or
122-11 associate of the affiliated shareholder, of assets of the issuing
122-12 public corporation or any subsidiary that:
122-13 (i) have an aggregate market value equal
122-14 to 10 percent or more of the aggregate market value of all the
122-15 assets, determined on a consolidated basis, of the issuing public
122-16 corporation;
122-17 (ii) have an aggregate market value equal
122-18 to 10 percent or more of the aggregate market value of all the
122-19 outstanding common stock of the issuing public corporation; or
122-20 (iii) represent 10 percent or more of the
122-21 earning power or net income, determined on a consolidated basis, of
122-22 the issuing public corporation;
122-23 (c) the issuance or transfer by an issuing
122-24 public corporation or a subsidiary to an affiliated shareholder or
122-25 an affiliate or associate of the affiliated shareholder, in one
123-1 transaction or a series of transactions, of shares of the issuing
123-2 public corporation or a subsidiary, except by the exercise of
123-3 warrants or rights to purchase shares of the issuing public
123-4 corporation offered, or a share dividend paid, pro rata to all
123-5 shareholders of the issuing public corporation after the affiliated
123-6 shareholder's share acquisition date;
123-7 (d) the adoption of a plan or proposal for the
123-8 liquidation or dissolution of an issuing public corporation
123-9 proposed by, or pursuant to any agreement, arrangement, or
123-10 understanding, whether or not in writing, with an affiliated
123-11 shareholder or an affiliate or associate of the affiliated
123-12 shareholder;
123-13 (e) a reclassification of securities, including
123-14 a reverse share split or a share split-up, share dividend, or other
123-15 distribution of shares, a recapitalization of the issuing public
123-16 corporation, a merger of the issuing public corporation with a
123-17 subsidiary or pursuant to which the assets and liabilities of the
123-18 issuing public corporation are allocated among two or more
123-19 surviving or new domestic or foreign corporations or other
123-20 entities, or any other transaction, whether or not with, into, or
123-21 otherwise involving the affiliated shareholder, proposed by, or
123-22 pursuant to an agreement, arrangement, or understanding, whether or
123-23 not in writing, with an affiliated shareholder or an affiliate or
123-24 associate of the affiliated shareholder that has the effect,
123-25 directly or indirectly, of increasing the proportionate ownership
124-1 percentage of the outstanding shares of a class or series of voting
124-2 shares or securities convertible into voting shares of the issuing
124-3 public corporation that is beneficially owned by the affiliated
124-4 shareholder or an affiliate or associate of the affiliated
124-5 shareholder, except as a result of immaterial changes due to
124-6 fractional share adjustments; or
124-7 (f) the direct or indirect receipt by an
124-8 affiliated shareholder or an affiliate or associate of the
124-9 affiliated shareholder of the benefit of a loan, advance,
124-10 guarantee, pledge, or other financial assistance or a tax credit or
124-11 other tax advantage provided by or through the issuing public
124-12 corporation, except proportionately as a shareholder of the issuing
124-13 public corporation.
124-14 (5) "Control" means the possession, directly or
124-15 indirectly, of the power to direct or cause the direction of the
124-16 management and policies of a person, whether through the ownership
124-17 of equity securities, by contract, or otherwise. A person's
124-18 beneficial ownership of 10 percent or more of a person's
124-19 outstanding voting shares or similar interests creates a
124-20 presumption that the person has control of such other person, but a
124-21 person is not considered to have control of another person if the
124-22 person holds such voting shares or similar interests in good faith
124-23 and not for the purpose of circumventing this part, as an agent,
124-24 bank, broker, nominee, custodian, or trustee for one or more
124-25 beneficial owners who do not individually or as a group have
125-1 control of the person.
125-2 (6) "Issuing public corporation" means a domestic
125-3 corporation that has: (a) 100 or more shareholders, (b) any class
125-4 or series of its voting shares registered under the Securities
125-5 Exchange Act of 1934, as amended, or similar or successor statute,
125-6 or (c) any class or series of its voting shares qualified for
125-7 trading in a national market system. For the purposes of this
125-8 definition of issuing public corporation, a shareholder is a
125-9 shareholder of record as shown by the share transfer records of the
125-10 corporation.
125-11 (7) "Person" means an individual, trust, domestic or
125-12 foreign corporation or other entity, or a government, or a
125-13 political subdivision, agency, or instrumentality of a government.
125-14 If two or more persons act as a partnership, limited partnership,
125-15 syndicate, or other group under an agreement, arrangement, or other
125-16 understanding, whether or not in writing, to acquire, hold, vote,
125-17 or dispose of shares of a corporation, all members of the
125-18 partnership, limited partnership, syndicate, or other group are
125-19 considered to be a person.
125-20 (8) "Share acquisition date" means the date that a
125-21 person first becomes an affiliated shareholder of an issuing public
125-22 corporation.
125-23 (9) "Subsidiary" means a domestic or foreign
125-24 corporation or other entity of which a majority of the outstanding
125-25 voting shares are owned, directly or indirectly, by an issuing
126-1 public corporation.
126-2 (10) "Voting share" means a share of capital stock of
126-3 a corporation entitled to vote generally in the election of
126-4 directors.
126-5 Art. 13.03. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
126-6 COMBINATIONS. A. An issuing public corporation shall not,
126-7 directly or indirectly, enter into or engage in a business
126-8 combination with an affiliated shareholder, or any affiliate or
126-9 associate of the affiliated shareholder, during the three-year
126-10 period immediately following the affiliated shareholder's share
126-11 acquisition date unless:
126-12 (1) the business combination or the purchase or
126-13 acquisition of shares made by the affiliated shareholder on the
126-14 affiliated shareholder's share acquisition date is approved by the
126-15 board of directors of the issuing public corporation before the
126-16 affiliated shareholder's share acquisition date; or
126-17 (2) the business combination is approved, by the
126-18 affirmative vote of the holders of at least two-thirds of the
126-19 outstanding voting shares of the issuing public corporation not
126-20 beneficially owned by the affiliated shareholder or an affiliate or
126-21 associate of the affiliated shareholder, at a meeting of
126-22 shareholders and not by written consent, duly called for that
126-23 purpose not less than six months after the affiliated shareholder's
126-24 share acquisition date.
126-25 Art. 13.04. APPLICATION. A. Article 13.03 of this Act does
127-1 not apply to:
127-2 (1) a business combination of an issuing public
127-3 corporation:
127-4 (a) the original articles of incorporation or
127-5 original bylaws of which contain a provision expressly electing not
127-6 to be governed by this part;
127-7 (b) that adopts an amendment to its articles of
127-8 incorporation or bylaws before December 31, 1997, expressly
127-9 electing not to be governed by this part; or
127-10 (c) that after December 31, 1997, adopts an
127-11 amendment to its articles of incorporation or bylaws, approved by
127-12 the affirmative vote of the shareholders, other than affiliated
127-13 shareholders and their affiliates and associates, of at least
127-14 two-thirds of the outstanding voting shares of the issuing public
127-15 corporation, expressly electing not to be governed by this part,
127-16 except that the amendment to the articles of incorporation or
127-17 bylaws takes effect 18 months after the date of the vote and does
127-18 not apply to a business combination of the issuing public
127-19 corporation with an affiliated shareholder whose share acquisition
127-20 date is on or before the effective date of the amendment;
127-21 (2) a business combination of an issuing public
127-22 corporation with an affiliated shareholder that became an
127-23 affiliated shareholder inadvertently, if the affiliated
127-24 shareholder:
127-25 (a) as soon as practicable divests itself of a
128-1 sufficient number of the voting shares of the issuing public
128-2 corporation so that it no longer is the beneficial owner, directly
128-3 or indirectly, of 20 percent or more of the outstanding voting
128-4 shares of the issuing public corporation; and
128-5 (b) would not at any time within the three-year
128-6 period preceding the announcement date of the business combination
128-7 have been an affiliated shareholder but for the inadvertent
128-8 acquisition;
128-9 (3) a business combination with an affiliated
128-10 shareholder that was the beneficial owner of 20 percent or more of
128-11 the outstanding voting shares of the issuing public corporation on
128-12 December 31, 1996, and continuously until the announcement date of
128-13 the business combination;
128-14 (4) a business combination with an affiliated
128-15 shareholder who became an affiliated shareholder through a transfer
128-16 of shares of the issuing public corporation by will or intestate
128-17 succession and continuously was such an affiliated shareholder
128-18 until the announcement date of the business combination; or
128-19 (5) a business combination of an issuing public
128-20 corporation with a domestic wholly owned subsidiary if the domestic
128-21 subsidiary is not an affiliate or associate of the affiliated
128-22 shareholder other than by reason of the affiliated shareholder's
128-23 beneficial ownership of voting shares in the issuing public
128-24 corporation.
128-25 Art. 13.05. NO EFFECT ON OTHER ACTIONS. A. This part does
129-1 not affect, directly or indirectly, the validity of another action
129-2 by the board of directors of an issuing public corporation, nor
129-3 does it preclude the board of directors from taking other action in
129-4 accordance with law, nor does the board of directors incur
129-5 liability for elections made or not made under this part.
129-6 Art. 13.06. DUTIES OF DIRECTOR. A. In discharging the
129-7 duties of director under this Act or otherwise, a director, in
129-8 considering the best interests of the corporation, may consider the
129-9 long-term as well as the short-term interests of the corporation
129-10 and its shareholders, including the possibility that those
129-11 interests may be best served by the continued independence of the
129-12 corporation.
129-13 Art. 13.07. RELATIONSHIP WITH OTHER PARTS OF ACT. A. If a
129-14 provision of this part conflicts with another provision of this
129-15 Act, the provision of this part controls.
129-16 B. The affirmative vote or concurrence of shareholders
129-17 required for approval of an action required or permitted to be
129-18 submitted for shareholder vote may be increased, but not decreased,
129-19 under Article 2.28 of this Act.
129-20 Art. 13.08. SEVERABILITY. A. If any provision or clause of
129-21 this part or application thereof to any person or circumstance is
129-22 held invalid, such invalidity shall not affect other provisions or
129-23 applications of this part that can be given effect without the
129-24 invalid provision or application and without being inconsistent
129-25 with the intent of this part, and to this end the provisions of
130-1 this part are declared to be severable.
130-2 SECTION 48. Article 2.06, Texas Miscellaneous Corporation
130-3 Laws Act (Article 1302-2.06, Vernon's Texas Civil Statutes), is
130-4 amended to read as follows:
130-5 Art. 2.06. CONSIDERATION FOR INDEBTEDNESS; GUARANTIES.
130-6 A. A corporation may incur indebtedness for such consideration as
130-7 it may deem appropriate, including, without limitation, cash, real
130-8 property, personal property, intangible property, contracts to
130-9 receive real, personal, or intangible property, debt and other
130-10 obligations of [No corporation shall create any indebtedness
130-11 whatever except for money paid, labor done, which is reasonably
130-12 worth at least the sum at which it was taken by] the corporation or
130-13 any other domestic or foreign corporation, person, or other entity,
130-14 services performed, contracts for services to be performed, debt or
130-15 equity securities of [by a corporation of which all of the
130-16 outstanding shares of each class are owned by the corporation, or
130-17 property actually received, reasonably worth at least the sum at
130-18 which it was taken by] the corporation or of any other domestic or
130-19 foreign corporation, person, or other entity, and any direct or
130-20 indirect benefit realized by the corporation. Such consideration
130-21 may be received either directly or indirectly, including by direct
130-22 or indirect wholly owned or partially owned domestic or foreign
130-23 corporations or other entities. In addition, a corporation may
130-24 issue and incur indebtedness without the receipt of any
130-25 consideration by reason of the authorization or payment of a
131-1 distribution [by a corporation of which all of the outstanding
131-2 shares of each class are owned by the corporation, subject to the
131-3 provisions of Sections B, C, and D of this Article]. In the
131-4 absence of fraud in the transaction, the judgment of the Board of
131-5 Directors or the shareholders, as the case may be, as to the value,
131-6 type, and sufficiency of the consideration received for any such
131-7 indebtedness shall be conclusive.
131-8 B. Any [Notwithstanding Section A of this Article, any]
131-9 corporation shall have the power and authority to make a guaranty
131-10 if the guaranty reasonably may be expected to benefit, directly or
131-11 indirectly, the guarantor corporation. For purposes of this
131-12 section [and Section C of this Article], "guaranty" means a
131-13 guaranty, mortgage, pledge, security agreement, or other agreement
131-14 making the guarantor corporation or its assets responsible
131-15 respecting the contracts, securities, or other obligations of any
131-16 person (including, but not limited to, any domestic or foreign
131-17 corporation, person, or other entity [partnership, association,
131-18 joint venture, trust], or any officer, director, or employee of
131-19 such guarantor corporation). The decision of, or a decision made
131-20 pursuant to authority granted by, the Board of Directors that the
131-21 guaranty may reasonably be expected to benefit, directly or
131-22 indirectly, the guarantor corporation shall be binding upon the
131-23 guarantor corporation, and no guaranty made by a corporation in
131-24 accordance with the provisions of this Section B shall be invalid
131-25 or unenforceable as against such corporation, unless such guaranty
132-1 is sought to be enforced by a person who participated in a fraud on
132-2 the guarantor corporation resulting in the making of the guaranty
132-3 or by a person who had notice of such fraud before he acquired his
132-4 rights under the guaranty. Nothing herein contained shall prevent
132-5 a suit (1) prior to the making of a guaranty by a corporation, by a
132-6 shareholder in a representative suit against the guarantor
132-7 corporation, to enjoin the making of such guaranty on the ground
132-8 that such guaranty could not reasonably be expected to benefit,
132-9 directly or indirectly, the guarantor corporation, or (2) after the
132-10 making of a guaranty by a corporation, by the guarantor
132-11 corporation, whether acting directly or through a receiver,
132-12 trustee, or other legal representative or through a shareholder in
132-13 a representative suit, against the directors who voted for or
132-14 assented to the making of such guaranty for damages or other
132-15 appropriate relief on the ground that such guaranty could not
132-16 reasonably have been expected to benefit, directly or indirectly,
132-17 the guarantor corporation, but such directors shall be entitled to
132-18 assert any defenses which they may have under law.
132-19 C. A guaranty will be considered to benefit a guarantor
132-20 corporation for purposes of Section B of this Article if the
132-21 guaranty is of a contract, security, or other obligation of a
132-22 subsidiary or an affiliated corporation or other entity [In
132-23 addition to the power and authority granted in Section B of this
132-24 Article, any corporation has the power and authority to make a
132-25 guaranty respecting any subsidiary, parent, or affiliated
133-1 corporation if the action is approved by, or pursuant to authority
133-2 granted by, the Board of Directors of the guarantor corporation].
133-3 For the purposes of this section only:
133-4 (1) "subsidiary [corporation]" means a domestic or
133-5 foreign corporation or other entity, 50 [100] percent or more of
133-6 the [whose] outstanding voting interests or other ownership
133-7 interest of which is [shares are] owned at the time of the action:
133-8 (a) by the guarantor corporation itself;
133-9 (b) by one or more of the guarantor
133-10 corporation's subsidiaries [subsidiary corporations]; or
133-11 (c) by the guarantor corporation and one or more
133-12 of its subsidiaries [subsidiary corporations];
133-13 (2) "parent [corporation]" means a domestic or foreign
133-14 corporation or other entity that at the time of the action owns 50
133-15 [100] percent or more of the outstanding voting interests or other
133-16 ownership interest [shares] of the guarantor corporation:
133-17 (a) by itself;
133-18 (b) through one or more of its subsidiaries
133-19 [subsidiary corporations]; or
133-20 (c) with one or more of its subsidiaries
133-21 [subsidiary corporations]; and
133-22 (3) "affiliated corporation or other entity" means a
133-23 domestic or foreign corporation or other entity, 50 [100] percent
133-24 or more of the [whose] outstanding shares or other ownership
133-25 interest of which is [are] owned at the time of the action:
134-1 (a) by the parent [corporation] of the guarantor
134-2 corporation;
134-3 (b) by one or more of the parent's subsidiaries
134-4 [parent corporation's subsidiary corporations]; or
134-5 (c) by the parent [corporation] and one or more
134-6 of its subsidiaries [subsidiary corporations].
134-7 D. [The limitations set forth in Section A of this Article
134-8 shall not apply to indebtedness of a corporation that is incurred
134-9 by reason of the authorization or payment of a dividend or other
134-10 distribution.]
134-11 [E.] Nothing contained in [Section B, C, or D of] this
134-12 Article is intended or shall be construed to limit or deny to any
134-13 corporation the right or power to do or perform any act which it is
134-14 or may be empowered or authorized to do or perform under any other
134-15 laws of the State of Texas now in force or hereafter enacted.
134-16 Provided, however, Sections B and[,] C[, and D] of this Article
134-17 shall not apply to nor enlarge the powers of any corporation that
134-18 does business pursuant to any provision of the Insurance Code of
134-19 Texas, whether licensed in Texas or not, nor shall those sections
134-20 allow or permit any corporation, not licensed under the Insurance
134-21 Code of Texas, to engage in any character, type, class, or kind of
134-22 fidelity, surety, or guaranty business or transaction subject to
134-23 regulation under the Insurance Code.
134-24 SECTION 49. Article 7.07, Texas Miscellaneous Corporation
134-25 Laws Act (Article 1302-7.07, Vernon's Texas Civil Statutes), is
135-1 amended to read as follows:
135-2 Art. 7.07. ELECTRONIC FILINGS AND [OF] REPRODUCTIONS.
135-3 A. If permitted by the rules of the Secretary of State, any
135-4 instrument required or authorized to be filed with the Secretary of
135-5 State under this Act or under any provision of the Texas Business
135-6 Corporation Act, the Texas Non-Profit Corporation Act, the Texas
135-7 Limited Liability Company Act, or any special Statute of this State
135-8 pertaining to a particular type of corporation or entity to which
135-9 the general corporate laws are applicable, may be transmitted for
135-10 filing electronically. If the instrument conforms to law and the
135-11 rules promulgated by the Secretary of State, the Secretary shall
135-12 file the instrument by acceptance into the filing system adopted by
135-13 the Secretary and assigning to the instrument a date of filing. An
135-14 electronic acknowledgment or certification of the filing, as
135-15 applicable, shall be provided by the Secretary of State to the
135-16 corporation or entity or its representative. The Secretary of
135-17 State may promulgate rules and adopt practices and procedures for
135-18 the transmission, filing, and retention of instruments filed
135-19 electronically or by use of other technological means.
135-20 B. Any original instrument required or authorized to be
135-21 filed with the Secretary of State under any provision of the Texas
135-22 Business Corporation Act, the Texas Non-Profit Corporation Act, the
135-23 Texas Limited Liability Company Act or any special Statute of this
135-24 State pertaining to a particular type of corporation or entity to
135-25 which the general corporate laws are applicable, may be a
136-1 photographic, photostatic, facsimile, or similar reproduction of a
136-2 signed instrument. [Any signature on any instrument required or
136-3 authorized to be filed with the Secretary of State may be a
136-4 facsimile.]
136-5 C. For purposes of this article, any signature on any
136-6 instrument required or authorized to be filed with the Secretary of
136-7 State may be a facsimile, the mark made by a person unable to
136-8 write, in an electronic format permitted by the rules of the
136-9 Secretary of State, or any symbol executed or adopted by a person
136-10 with the intent to authenticate a writing.
136-11 D. This article does not require any instrument authorized
136-12 or required to be filed with the Secretary of State under any
136-13 provision of the Texas Business Corporation Act, the Texas
136-14 Non-Profit Corporation Act, the Texas Limited Liability Company
136-15 Act, or any special Statute of this State pertaining to a
136-16 particular type of corporation or entity to which the general
136-17 corporate laws are applicable or any certificate issued by the
136-18 Secretary of State concerning any such instrument to be on paper or
136-19 reduced to printed form.
136-20 E. All electronic acknowledgments and certificates required
136-21 to be issued by the Secretary of State under this Act, or under any
136-22 provision of the Texas Business Corporation Act, the Texas
136-23 Non-Profit Corporation Act, the Texas Limited Liability Act, or any
136-24 special Statute of this State pertaining to a particular type of
136-25 corporation or entity to which the general corporate laws are
137-1 applicable, shall be considered issued or provided by the Secretary
137-2 of State on the initial transmission by the Secretary of State of
137-3 the acknowledgment or certificate required to be issued.
137-4 SECTION 50. Part Seven, Texas Miscellaneous Corporation Laws
137-5 Act (Article 1302-7.01 et seq., Vernon's Texas Civil Statutes), is
137-6 amended by adding Article 7.08 to read as follows:
137-7 Art. 7.08. DUTIES OF THE SECRETARY OF STATE; FAILURE TO
137-8 PROVIDE ACKNOWLEDGMENT COPY. The Secretary of State shall not fail
137-9 to approve the filing of any instrument required or authorized to
137-10 be filed in duplicate with the Secretary of State under this Act or
137-11 under any provision of the Texas Business Corporation Act, the
137-12 Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
137-13 Vernon's Texas Civil Statutes), the Texas Limited Liability Company
137-14 Act (Article 1528n, Vernon's Texas Civil Statutes), or any special
137-15 statute of this state pertaining to a particular type of
137-16 corporation or entity to which the general corporate laws are
137-17 applicable, solely for the failure to provide a duplicate copy of
137-18 the instrument to be filed. If the Secretary of State finds that
137-19 such instrument otherwise conforms to law, the Secretary of State
137-20 shall return to the person submitting the instrument or to the
137-21 person's designated representative any certificate required to be
137-22 issued by the Secretary of State without affixing a file-stamped
137-23 copy of the instrument to which the certificate relates.
137-24 SECTION 51. Subsection (A), Section 9, Texas Professional
137-25 Association Act (Article 1528f, Vernon's Texas Civil Statutes), is
138-1 amended to read as follows:
138-2 (A) Board or committee. A professional association
138-3 organized pursuant to the provisions of this Act shall be governed
138-4 by, and the business and affairs of a professional association
138-5 shall be managed under the direction of, a Board of Directors or an
138-6 Executive Committee elected by the members, and represented by
138-7 officers elected by the Board of Directors or Executive Committee,
138-8 so that centralization of management will be assured.
138-9 SECTION 52. Section A, Article 1.02, Texas Limited Liability
138-10 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
138-11 amended by amending Subsection (4) and adding Subsections (11)
138-12 through (14) to read as follows:
138-13 (4) "Person" includes an individual, corporation,
138-14 business trust, estate, trust, custodian, trustee, executor,
138-15 administrator, nominee, partnership, registered limited liability
138-16 partnership, limited partnership, association, limited liability
138-17 company, government, governmental subdivision, governmental agency,
138-18 governmental instrumentality, and any other legal or commercial
138-19 entity, in its own or representative capacity. Any of the
138-20 foregoing entities may be formed under the laws of this state or
138-21 any other jurisdiction [partnership, limited partnership, limited
138-22 liability company, foreign limited liability company, trust,
138-23 estate, corporation, custodian, trustee, executor, administrator,
138-24 nominee or entity in a representative capacity].
138-25 (11) "Conversion" means:
139-1 (a) the continuance of a domestic limited
139-2 liability company as, and in the organizational form of, a foreign
139-3 limited liability company or other entity; or
139-4 (b) the continuance of a foreign limited
139-5 liability company or other entity as, and in the organizational
139-6 form of, a domestic limited liability company.
139-7 (12) "Converted entity" means any domestic or foreign
139-8 limited liability company or other entity to which a converting
139-9 entity has converted or intends to convert as permitted by Article
139-10 10.08 of this Act.
139-11 (13) "Converting entity" means any domestic or foreign
139-12 limited liability company or other entity that has converted or
139-13 intends to convert as permitted by Article 10.08 of this Act.
139-14 (14) "Other entity" means any entity, whether
139-15 organized for profit or not, that is a corporation, limited or
139-16 general partnership, limited liability company (other than a
139-17 domestic or foreign limited liability company), real estate
139-18 investment trust, joint venture, joint stock company, cooperative,
139-19 association, bank, trust, insurance company, or other legal entity
139-20 organized pursuant to the laws of this state or any other state or
139-21 country.
139-22 SECTION 53. Article 2.09, Texas Limited Liability Company
139-23 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
139-24 read as follows:
139-25 Art. 2.09. REGULATIONS OF LIMITED LIABILITY COMPANY.
140-1 A. The members of a limited liability company have the power to
140-2 adopt, alter, amend, or repeal the regulations of a limited
140-3 liability company [shall be vested in the members of the company
140-4 unless vested in whole or part in the manager or managers of the
140-5 company by the articles of organization or regulations]. The
140-6 articles of organization or regulations may provide that the
140-7 manager or managers also have the power to adopt, alter, amend, or
140-8 repeal the regulations, in whole or in part. Regulations [adopted
140-9 by the members or by the managers may be repealed or altered; new
140-10 regulations may be adopted by the members; and regulations] may
140-11 provide that they may not, in whole or specified part, be altered,
140-12 amended, or repealed by the managers. The regulations may contain
140-13 any provisions for the regulation and management of the affairs of
140-14 the limited liability company not inconsistent with law or the
140-15 articles of organization. [Unless otherwise provided in the
140-16 articles of organization, the initial regulations of the limited
140-17 liability company shall be adopted by the manager or managers named
140-18 in the articles of organization, if any, or by the member or
140-19 members named in the articles of organization, if any.] Any
140-20 provision of this Act subject to variation or modification by the
140-21 regulations of a limited liability company is also subject to
140-22 variation or modification by the articles of organization of the
140-23 limited liability company.
140-24 B. Unless otherwise provided in the articles of organization
140-25 or regulations, adoption, alteration, amendment, or repeal of the
141-1 regulations of a limited liability company requires the affirmative
141-2 vote, approval, or consent of all the members or, if the manager or
141-3 managers have the power to adopt, alter, amend, or repeal the
141-4 regulations of a limited liability company, the affirmative vote,
141-5 approval, or consent of all the managers.
141-6 C. Unless otherwise provided in the articles of organization
141-7 or regulations adopted with the affirmative vote, approval, or
141-8 consent needed to approve an action listed in Section D, G, or H,
141-9 Article 2.23, of this Act, no regulation that effects an action
141-10 listed in Section D, G, or H, Article 2.23, of this Act may be
141-11 indirectly effected through the adoption, alteration, amendment, or
141-12 repeal of regulations of a limited liability company without the
141-13 affirmative vote, approval, or consent required by Section D, G, or
141-14 H, Article 2.23, of this Act.
141-15 SECTION 54. Article 2.13, Texas Limited Liability Company
141-16 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
141-17 read as follows:
141-18 Art. 2.13. NUMBER AND ELECTION OF MANAGERS. A. The
141-19 managers of a limited liability company, if any, shall consist of
141-20 one or more persons. The number of managers shall be fixed by, or
141-21 in the manner provided in, the regulations, except as to the number
141-22 constituting the initial managers, which number shall be fixed by
141-23 the articles of organization. The number of managers may be
141-24 increased or decreased from time to time by amendment to, or in the
141-25 manner provided in, the regulations, but, unless provided otherwise
142-1 in the articles of organization or the regulations, no decrease
142-2 shall have the effect of shortening the term of any incumbent
142-3 manager. In the absence of a regulation fixing the number of
142-4 managers or providing for the manner in which the number of
142-5 managers shall be fixed, the number of managers shall be the same
142-6 as the number constituting the initial managers. The names and
142-7 addresses of the initial managers, if any, shall be stated in the
142-8 articles of organization. Unless otherwise provided in the
142-9 regulations or in any resolution of the managers or members
142-10 appointing that manager in accordance with the regulations or
142-11 articles of organization, each manager shall hold office for the
142-12 term for which elected, if any term is specified, and until that
142-13 manager's successor has been elected, or until that manager's
142-14 earlier death, resignation, or removal. The regulations may
142-15 provide for the time or times at which the members entitled to vote
142-16 in the election of managers shall elect managers and the term for
142-17 which the managers shall hold office. The regulations may provide
142-18 that any class or group of members shall be entitled to elect one
142-19 or more managers, who shall hold office for such terms as shall be
142-20 stated in the regulations. The regulations may provide that at any
142-21 meeting of members called expressly for that purpose any managers
142-22 may be removed, with or without cause, as provided therein;
142-23 however, if any class or group of members is entitled to elect one
142-24 or more managers by the provisions of the regulations, only the
142-25 members of that class or group shall be entitled to vote for or
143-1 against the removal of any managers elected by the members of that
143-2 class or group.
143-3 SECTION 55. Sections A and B, Article 2.15, Texas Limited
143-4 Liability Company Act (Article 1528n, Vernon's Texas Civil
143-5 Statutes), are amended to read as follows:
143-6 A. Unless otherwise provided in the articles of organization
143-7 or the regulations, any [Any] vacancy occurring in the managers may
143-8 be filled in accordance with Section B of this Article or may be
143-9 filled by the affirmative vote of a majority of the remaining
143-10 managers though less than a quorum of the managers. Unless
143-11 otherwise provided in the articles of organization or the
143-12 regulations, a [A] manager elected to fill a vacancy shall be
143-13 elected for the unexpired term of the predecessor in office.
143-14 B. Unless otherwise provided in the articles of organization
143-15 or the regulations, any [Any] vacancy occurring in the managers to
143-16 be filled by reason of an increase in the number of managers may be
143-17 filled by election at an annual or special meeting of members
143-18 called for that purpose.
143-19 SECTION 56. Article 2.17, Texas Limited Liability Company
143-20 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
143-21 read as follows:
143-22 Art. 2.17. INTERESTED MANAGERS. A. Unless otherwise
143-23 provided in the articles of organization or the regulations, an
143-24 otherwise valid [No] contract or transaction between a limited
143-25 liability company and one or more of its managers or officers, or
144-1 between a limited liability company and any other domestic or
144-2 foreign limited liability company[, corporation, partnership,
144-3 association,] or other entity [organization] in which one or more
144-4 of its managers or officers are managers, directors or officers or
144-5 have a financial interest, shall be valid notwithstanding [void or
144-6 voidable solely for this reason, solely because] the manager or
144-7 officer is present at or participates in the meeting of managers or
144-8 of a committee of managers which authorizes the contract or
144-9 transaction, or solely because such manager's or managers' votes
144-10 are counted for such purpose, if any of the following is satisfied:
144-11 (1) The material facts as to the relationship or
144-12 interest and as to the contract or transaction are disclosed or are
144-13 known to the managers or the committee, and the managers or
144-14 committee in good faith authorizes the contract or transaction by
144-15 the affirmative vote of a majority of the disinterested managers,
144-16 even though the disinterested managers be less than a quorum; or
144-17 (2) The material facts as to the relationship or
144-18 interest and as to the contract or transaction are disclosed or are
144-19 known to the members entitled to vote thereon, and the contract or
144-20 transaction is specifically approved in good faith by vote of the
144-21 members; or
144-22 (3) The contract or transaction is fair as to the
144-23 limited liability company as of the time it is authorized,
144-24 approved, or ratified by the managers, a committee thereof, or the
144-25 members.
145-1 B. Unless otherwise provided in the articles of organization
145-2 or the regulations, common [Common] or interested managers may be
145-3 counted in determining the presence of a quorum at a meeting of the
145-4 managers or of a committee which authorizes the contract or
145-5 transaction.
145-6 SECTION 57. Article 2.19, Texas Limited Liability Company
145-7 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
145-8 read as follows:
145-9 Art. 2.19. PLACE AND NOTICE OF MANAGERS' MEETINGS.
145-10 A. Except as otherwise provided in the articles of organization or
145-11 the regulations, regular or special meetings [Meetings] of the
145-12 members, managers, or any committee [regular or special,] may be
145-13 held either within or without this State.
145-14 B. Regular meetings of the managers or committees may be
145-15 held with or without notice as prescribed in the regulations.
145-16 Special meetings of the managers or committees shall be held upon
145-17 such notice as is prescribed in the regulations.
145-18 C. Except as otherwise provided in the articles of
145-19 organization or the regulations, if the limited liability company
145-20 is without managers, regular meetings of members may be held with
145-21 or without notice as prescribed in the regulations and special
145-22 meetings of members may be held with or without notice as
145-23 prescribed in the regulations, unless any such meeting is to
145-24 consider any of those matters set forth in Section D, Article 2.23,
145-25 of this Act. Except as otherwise provided in the articles of
146-1 organization or the regulations, for any meeting of the members at
146-2 which any of the matters set forth in Section D, Article 2.23, of
146-3 this Act are to be considered, written or printed notice stating
146-4 the place, day, and hour of the meeting and describing the purpose
146-5 or purposes of such meeting shall be delivered to the members not
146-6 less than 10 or more than 60 days before the meeting, either
146-7 personally or by mail.
146-8 D. Except as otherwise provided in the articles of
146-9 organization or the regulations, if the limited liability company
146-10 has managers, meetings of members shall be held on written or
146-11 printed notice, stating the place, day, and hour of the meeting
146-12 and, in the case of a special meeting, the purpose or purposes for
146-13 which the meeting is called, which notice shall be delivered to the
146-14 members not less than 10 or more than 60 days before the meeting,
146-15 either personally or by mail.
146-16 E. If mailed, such notice to a member shall be deemed to be
146-17 delivered when deposited in the United States mail addressed to the
146-18 member at the member's address that appears on the records of the
146-19 limited liability company, with postage prepaid.
146-20 F. Attendance of a member, manager, or committee member at a
146-21 meeting shall constitute a waiver of notice of such meeting, except
146-22 where that member, [a] manager, or committee member attends a
146-23 meeting for the express purpose of objecting to the transaction of
146-24 any business on the ground that the meeting is not lawfully called
146-25 or convened.
147-1 G. The articles of organization and regulations may contain
147-2 provisions relating to giving notice of the time, place, or purpose
147-3 of a meeting at which a matter is to be voted on by any members or
147-4 managers, waiver of notice, action by consent without a meeting,
147-5 the establishment of a record date, quorum requirements, voting in
147-6 person or by proxy, or any other matter relating to the exercise of
147-7 the right to vote. [Neither the business to be transacted at, nor
147-8 the purpose of, any regular or special meeting of the managers need
147-9 be specified in the notice or waiver of notice of such meeting,
147-10 unless required by the regulations.]
147-11 SECTION 58. Article 2.20, Texas Limited Liability Company
147-12 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
147-13 read as follows:
147-14 Art. 2.20. INDEMNIFICATION. A. Subject to such standards
147-15 and restrictions, if any, as are set forth in its articles of
147-16 organization or in its regulations, a [A] limited liability company
147-17 shall have power to indemnify members and managers, officers,
147-18 [employees, agents] and other persons and purchase and maintain
147-19 liability insurance for such persons [others to the same extent a
147-20 corporation may indemnify directors, employees, agents and others
147-21 under the TBCA and shall, to the extent indemnification is required
147-22 under the TBCA for directors, employees, agents and others,
147-23 indemnify managers, officers, employees, agents and others to the
147-24 same extent].
147-25 B. To the extent that at law or in equity, a member,
148-1 manager, officer, or other person has duties (including fiduciary
148-2 duties) and liabilities relating thereto to a limited liability
148-3 company or to another member or manager, such duties and
148-4 liabilities may be expanded or restricted by provisions in the
148-5 regulations.
148-6 SECTION 59. Sections A and B, Article 2.22, Texas Limited
148-7 Liability Company Act (Article 1528n, Vernon's Texas Civil
148-8 Statutes), are amended to read as follows:
148-9 A. A domestic limited liability company shall keep and
148-10 maintain the following records in its principal office in the
148-11 United States or make them available in that office within five
148-12 days after the date of receipt of a written request under Section E
148-13 of this Article:
148-14 (1) a current list that states:
148-15 (a) the name and mailing address of each member;
148-16 (b) the percentage or other interest in the
148-17 limited liability company owned by each member; and
148-18 (c) if one or more classes or groups are
148-19 established in or under the articles of organization or
148-20 regulations, the names of the members who are members of each
148-21 specified class or group;
148-22 (2) copies of the federal, state, and local
148-23 information or income tax returns for each of the limited liability
148-24 company's six most recent tax years;
148-25 (3) a copy of the articles of organization and, if the
149-1 regulations of the limited liability company are in writing, a copy
149-2 of the regulations, copies of all amendments or restatements of the
149-3 articles of organization or regulations, executed copies of any
149-4 powers of attorney, and copies of any document that creates, in the
149-5 manner provided by the articles of organization or regulations,
149-6 classes or groups of members;
149-7 (4) unless contained in the articles of organization
149-8 or regulations, a written statement of:
149-9 (a) the amount of the cash contribution and a
149-10 description and statement of the agreed value of any other
149-11 contribution made by each member, and the amount of the cash
149-12 contribution and a description and statement of the agreed value of
149-13 any other contribution that the member has agreed to make in the
149-14 future as an additional contribution;
149-15 (b) the times at which additional contributions
149-16 are to be made or events requiring additional contributions to be
149-17 made;
149-18 (c) events requiring the limited liability
149-19 company to be dissolved and its affairs wound up; and
149-20 (d) the date on which each member in the limited
149-21 liability company became a member; and
149-22 (5) correct and complete books and records of account
149-23 of the limited liability company.
149-24 B. A limited liability company shall maintain such [its]
149-25 records in written form or in another form capable of conversion
150-1 into written form within a reasonable time.
150-2 SECTION 60. Article 2.23, Texas Limited Liability Company
150-3 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
150-4 amending Sections A and D and adding Sections G and H to read as
150-5 follows:
150-6 A. Except as otherwise provided in this Act [Article], in
150-7 the articles of organization, or in the regulations, a majority of
150-8 the members, managers, or members of any committee constitutes a
150-9 quorum for the transaction of business at any meeting of the
150-10 members, the managers, or the committee. Except as otherwise
150-11 provided in the articles of organization or the regulations, an
150-12 [An] act of a majority of the members entitled to vote, the
150-13 managers, or the members of a committee, who are present at a
150-14 meeting of the members, the managers, or the committee at which a
150-15 quorum is present is the act of the members, the managers, or the
150-16 committee. Except as otherwise provided in the articles of
150-17 organization or the regulations, any member may vote either in
150-18 person or by proxy executed in writing by the member.
150-19 D. Except as provided in the articles of organization or the
150-20 regulations, the affirmative vote, approval, or consent of a
150-21 majority of all the members is required to:
150-22 (1) [amend the articles of organization or
150-23 regulations;]
150-24 [(2)] change the status of the limited liability
150-25 company from one in which management is reserved to the members to
151-1 one in which management is vested in one or more managers, or vice
151-2 versa;
151-3 (2) [(3)] issue any additional membership interests in
151-4 the limited liability company subsequent to the issuance of
151-5 membership interests to the initial members of the limited
151-6 liability company;
151-7 (3) [(4)] approve any merger, consolidation, share or
151-8 interest exchange, or other transaction authorized by or subject to
151-9 the provisions of Part Ten of this Act;
151-10 (4) [(5)] voluntarily cause the dissolution of the
151-11 limited liability company;
151-12 (5) [(6)] authorize any transaction, agreement, or
151-13 action on behalf of the limited liability company that is unrelated
151-14 to its purpose as set forth in the regulations or articles of
151-15 organization or that otherwise contravenes the regulations; or
151-16 (6) [(7)] authorize any act that would make it
151-17 impossible to carry on the ordinary business of the limited
151-18 liability company.
151-19 G. Except as provided in the articles of organization or the
151-20 regulations, if no capital has been paid into the limited liability
151-21 company, a majority of the managers named in the articles of
151-22 organization may amend the articles of organization or dissolve the
151-23 limited liability company or if the management has been reserved to
151-24 the members, a majority of the members named in the articles of
151-25 organization may amend the articles of organization or dissolve the
152-1 limited liability company. In such event, the persons adopting
152-2 such amendments to the articles of organization or authorizing such
152-3 dissolution shall sign and file with the Secretary of State the
152-4 articles of amendment provided for in Articles 3.06 and 3.07 of
152-5 this Act and the articles of dissolution provided for in Articles
152-6 6.05, 6.07, and 6.08 of this Act, as appropriate.
152-7 H. Except as provided in the articles of organization or the
152-8 regulations, if any capital has been paid into the limited
152-9 liability company, the affirmative vote, approval, or consent of
152-10 all members is required to amend the articles of organization.
152-11 SECTION 61. Section A, Article 3.02, Texas Limited Liability
152-12 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
152-13 amended to read as follows:
152-14 A. The initial Articles of Organization shall set forth:
152-15 (1) The name of the limited liability company;
152-16 (2) The period of duration, which may be perpetual;
152-17 (3) The purpose for which the limited liability
152-18 company is organized which may be stated to be, or to include, the
152-19 transaction of any or all lawful business for which limited
152-20 liability companies may be organized under this Act;
152-21 (4) The address of its initial registered office and
152-22 the name of its initial registered agent at that address;
152-23 (5) If the limited liability company is to have a
152-24 manager or managers, a statement to that effect and the names and
152-25 the addresses of the initial manager or managers, or if[. If] the
153-1 limited liability company will not have managers, a statement to
153-2 that effect and the names [name] and the addresses of the initial
153-3 members;
153-4 (6) The name and the address of each organizer, unless
153-5 the limited liability company is being organized pursuant to a plan
153-6 of conversion or a plan of merger, in which case the articles need
153-7 not include such information;
153-8 (7) Any provision required by Part Eleven of this Act,
153-9 if the limited liability company is a professional limited
153-10 liability company; [and]
153-11 (8) If the limited liability company is being
153-12 organized pursuant to a plan of conversion or a plan of merger, a
153-13 statement to that effect, and in the case of a plan of conversion,
153-14 the name, address, prior form of organization, date of
153-15 incorporation, formation, or organization, and jurisdiction of
153-16 incorporation, formation, or organization of the converting entity;
153-17 and
153-18 (9) Any other provisions, not inconsistent with law,
153-19 that [which] the members elect to set out in the articles of
153-20 organization for the regulation of the internal affairs of the
153-21 limited liability company, including any provisions that [which]
153-22 under this Act are permitted to be set out in the regulations of
153-23 the limited liability company.
153-24 SECTION 62. Article 3.03, Texas Limited Liability Company
153-25 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
154-1 amending Section A and adding Section C to read as follows:
154-2 A. Except as provided by Section C of this Article, the
154-3 [The] original and a copy of the articles of organization shall be
154-4 delivered to the Secretary of State. If the Secretary of State
154-5 finds that the articles of organization conform to law, the
154-6 Secretary of State shall, when all fees have been paid as required
154-7 by law:
154-8 (1) Endorse on the original and the copy the word
154-9 "filed," and the month, day, and year of the filing thereof.
154-10 (2) File the original in the office of the Secretary
154-11 of State.
154-12 (3) Issue a certificate of organization to which shall
154-13 be affixed the copy.
154-14 C. In the case of a new domestic limited liability company
154-15 being organized pursuant to a plan of conversion or a plan of
154-16 merger pursuant to Part Ten of this Act, the articles of
154-17 organization of the limited liability company shall be filed with
154-18 the Secretary of State with the articles of conversion or merger
154-19 and need not be filed separately pursuant to Section A of this
154-20 Article. If the Secretary of State finds that the articles of
154-21 organization conform to the law, the Secretary of State shall file
154-22 the articles of organization in the office of the Secretary of
154-23 State and issue a certificate of organization, to which the
154-24 Secretary of State shall affix a copy of the articles of
154-25 organization, and deliver the same to the party or parties filing
155-1 the articles of conversion or merger or their representatives with
155-2 the certificate of conversion or merger that is issued in
155-3 connection with the conversion or merger. In the case of a
155-4 conversion or a merger, the certificate of organization of a
155-5 domestic limited liability company that is a converted entity or
155-6 that is to be created pursuant to the plan of merger shall become
155-7 effective on the effectiveness of the conversion or the merger, as
155-8 the case may be.
155-9 SECTION 63. Article 3.04, Texas Limited Liability Company
155-10 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
155-11 read as follows:
155-12 Art. 3.04. EFFECT OF THE ISSUANCE OF CERTIFICATE OF
155-13 ORGANIZATION. A. Except as provided by Section B of this Article,
155-14 on [Upon] the issuance of the certificate of organization, the
155-15 limited liability company's [company] existence shall begin[, and
155-16 such certificate of organization shall be conclusive evidence that
155-17 all conditions precedents required to be performed by the
155-18 organizers have been complied with and that the limited liability
155-19 company has been organized under this Act, except as against the
155-20 state in proceedings for involuntary dissolution].
155-21 B. In the case of a new domestic limited liability company
155-22 being organized pursuant to a plan of conversion or a plan of
155-23 merger pursuant to Part Ten of this Act, the existence of the
155-24 limited liability company as such shall begin on the effectiveness
155-25 of the conversion or the merger, as the case may be.
156-1 C. On the issuance of the certificate of organization or the
156-2 effectiveness of the merger or conversion, the certificate of
156-3 organization shall be conclusive evidence that all conditions
156-4 precedent required to be performed for the valid organization of
156-5 the limited liability company have been complied with and that the
156-6 limited liability company has been duly organized under this Act,
156-7 except as against the state in a proceeding for involuntary
156-8 dissolution.
156-9 SECTION 64. Article 3.06, Texas Limited Liability Company
156-10 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
156-11 read as follows:
156-12 Art. 3.06. ARTICLES OF AMENDMENT. A. The articles of
156-13 amendment shall be executed on behalf of the limited liability
156-14 company by an authorized manager or member, or in the case of an
156-15 amendment of the articles of organization by action of a majority
156-16 of the initial managers or of a majority of the initial members as
156-17 provided in Section 2.23 of this Act, by a majority of the initial
156-18 managers or a majority of the initial members as provided in
156-19 Section 2.23 of this Act.
156-20 B. The articles of amendment shall set forth:
156-21 (1) The name of the limited liability company.
156-22 (2) If the amendment alters any provision of the
156-23 original or amended articles of organization an identification by
156-24 reference or description of the altered provision and a statement
156-25 of its text as it is amended to read. If the amendment is an
157-1 addition to the original or amended articles of organization a
157-2 statement of that fact and the text of each provision added.
157-3 (3) A statement that the amendment was approved in
157-4 accordance with Section D or G of Article 2.23 of this Act or as
157-5 otherwise provided in the articles of organization or regulations
157-6 and the date of the approval.
157-7 SECTION 65. Article 5.01, Texas Limited Liability Company
157-8 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
157-9 read as follows:
157-10 Art. 5.01. FORM OF CONTRIBUTION. A. The contribution of a
157-11 member may consist of any tangible or intangible benefit to the
157-12 limited liability company or other property of any kind or nature,
157-13 including [be in] cash, [property, or services rendered, or] a
157-14 promissory note, services performed, a contract for services to be
157-15 performed, or other interests in or securities or other obligations
157-16 of any other [or other obligation to pay cash or transfer property
157-17 to the] limited liability company, domestic or foreign, or other
157-18 entity.
157-19 SECTION 66. Section D, Article 5.02, Texas Limited Liability
157-20 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
157-21 amended to read as follows:
157-22 D. Unless otherwise provided by the regulations, the
157-23 obligation of a member or a member's legal representative or
157-24 successor to make a contribution or otherwise pay cash or transfer
157-25 property or to return cash or property paid or distributed to the
158-1 member in violation of this Act or the regulations may be
158-2 compromised or released only by consent of all of the members.
158-3 Notwithstanding the compromise or release, a creditor of a limited
158-4 liability company who extends credit or otherwise acts in
158-5 reasonable reliance on that obligation, after the member signs a
158-6 writing that reflects the obligation and before the writing is
158-7 amended or canceled to reflect the compromise or release, may
158-8 enforce the original obligation. A conditional obligation may not
158-9 be enforced unless the conditions of the obligation have been
158-10 satisfied or waived as to or by the applicable member. Conditional
158-11 obligations include contributions payable on a discretionary call
158-12 of a limited liability company, prior to the time the call occurs.
158-13 SECTION 67. Article 5.08, Texas Limited Liability Company
158-14 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
158-15 read as follows:
158-16 Art. 5.08. RIGHT TO DISTRIBUTION. A. Subject to Articles
158-17 5.09 and 6.04 of this act, at the time that a member becomes
158-18 entitled to receive a distribution, with respect to the [a]
158-19 distribution, that member has the status of and is entitled to all
158-20 remedies available to a creditor of the limited liability company.
158-21 SECTION 68. Section A, Article 6.01, Texas Limited Liability
158-22 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
158-23 amended to read as follows:
158-24 A. Except as provided by Section B of this Article, a
158-25 limited liability company shall be dissolved on the first of the
159-1 following to occur:
159-2 (1) the period, if any, fixed for the duration of the
159-3 limited liability company expires;
159-4 (2) the occurrence of events specified in the articles
159-5 of organization or regulations to cause dissolution;
159-6 (3) the action of the members to dissolve the limited
159-7 liability company;
159-8 (4) if no capital has been paid into the limited
159-9 liability company, the act of a majority of [the organizer or] the
159-10 managers or members named in the articles of organization [of the
159-11 limited company] to dissolve the limited liability company;
159-12 (5) except as otherwise provided in the regulations,
159-13 upon the death, expulsion, withdrawal pursuant to or as provided in
159-14 the articles of organization or regulations, bankruptcy, or
159-15 dissolution of a member or the occurrence of any other event which
159-16 terminates the continued membership of a member in the limited
159-17 liability company; or
159-18 (6) entry of a decree of judicial dissolution under
159-19 Section 6.02 of this Act.
159-20 SECTION 69. Article 6.04, Texas Limited Liability Company
159-21 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
159-22 read as follows:
159-23 Art. 6.04. TRANSFER OF ASSETS. A. On the winding up of a
159-24 limited liability company, its assets shall be paid or transferred
159-25 as follows:
160-1 (1) To the extent otherwise permitted by law, to
160-2 creditors, including members who are creditors in satisfaction of
160-3 liabilities (other than for distributions) of the limited liability
160-4 company, whether by payment or by establishment of reserves;
160-5 (2) Unless otherwise provided by the articles of
160-6 organization or regulations, to members and former members in
160-7 satisfaction of the company's liability for distributions; and
160-8 (3) Unless otherwise provided by the articles of
160-9 organization or regulations, to members in the manner provided in
160-10 Article 6.05 [5.04].
160-11 SECTION 70. Section A, Article 6.08, Texas Limited Liability
160-12 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
160-13 amended to read as follows:
160-14 A. The original and a copy of such articles of dissolution,
160-15 along with a certificate from the comptroller that all franchise
160-16 taxes have been paid, shall be delivered to the Secretary of State.
160-17 If the Secretary of State finds that such articles of dissolution
160-18 conform to law, the Secretary of State shall, when the appropriate
160-19 filing fee is paid as required by law:
160-20 (1) Endorse on the original and copy the word "Filed,"
160-21 and the month, day, and year of the filing thereof.
160-22 (2) File the original in the Secretary of State's
160-23 office.
160-24 (3) Issue a certificate of dissolution to which there
160-25 shall be affixed the copy.
161-1 SECTION 71. Section A, Article 7.10, Texas Limited Liability
161-2 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
161-3 amended to read as follows:
161-4 A. The original and a copy of such application for
161-5 withdrawal, along with a certificate from the comptroller that all
161-6 franchise taxes have been paid, shall be delivered to the Secretary
161-7 of State. If the Secretary of State finds that such application
161-8 conforms to the provisions of this Act, the Secretary of State
161-9 shall, when the appropriate filing fee is [all fees and any taxes
161-10 have been] paid as required by law:
161-11 (1) Endorse on the original and the copy the word
161-12 "Filed," and the month, day, and year of the filing thereof.
161-13 (2) File the original in the Secretary of State's
161-14 office.
161-15 (3) Issue a certificate of withdrawal to which there
161-16 shall be affixed the copy.
161-17 SECTION 72. Section E, Article 7.11, Texas Limited Liability
161-18 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
161-19 amended to read as follows:
161-20 E. Any foreign limited liability company whose certificate
161-21 of authority has been revoked by the Secretary of State under the
161-22 provisions of Section B of this article may be reinstated by the
161-23 Secretary of State at any time within a period of 24 [12] months
161-24 from the date of revocation [dissolution], upon approval of an
161-25 application for reinstatement signed by a manager or member of the
162-1 foreign limited liability company. Such application shall be filed
162-2 by the Secretary of State whenever it is established to the
162-3 Secretary of State's satisfaction that in fact there was no cause
162-4 for the revocation, or whenever the neglect, omission or
162-5 delinquency resulting in revocation has been corrected and payment
162-6 made of all fees, taxes, penalties and interest due thereon which
162-7 accrued before the revocation plus an amount equal to the total
162-8 taxes from the date of revocation to the date of reinstatement
162-9 which would have been payable had the foreign limited liability
162-10 company certificate not been revoked. A reinstatement filing fee
162-11 of $50 shall accompany the application for reinstatement.
162-12 Reinstatement shall not be authorized if the foreign limited
162-13 liability company name is the same as or deceptively similar to a
162-14 foreign limited liability company, corporation or limited
162-15 partnership name already on file or reserved or registered, unless
162-16 the foreign limited liability company being reinstated
162-17 contemporaneously amends its certificate of authority to change its
162-18 name.
162-19 When the application for reinstatement is approved and filed
162-20 by the Secretary of State, the foreign limited liability company's
162-21 [company] authority to do business in Texas shall be deemed to have
162-22 continued without interruption from the date of revocation, except
162-23 that reinstatement shall have no effect upon any issue of personal
162-24 liability of the manager or member, or agents of the foreign
162-25 limited liability company during the period between revocation and
163-1 reinstatement.
163-2 SECTION 73. Section B, Article 7.13, Texas Limited Liability
163-3 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
163-4 amended to read as follows:
163-5 B. The failure of a foreign limited liability company to
163-6 obtain a certificate of authority to transact business in this
163-7 State shall not impair the validity of any contract or act of such
163-8 foreign limited liability company, shall not cause any member or
163-9 manager of such foreign limited liability company to become liable
163-10 for the debts, obligations, or liabilities of such foreign limited
163-11 liability company, and shall not prevent such foreign limited
163-12 liability company from defending any action, suit or proceeding in
163-13 any court of this State.
163-14 SECTION 74. Sections B and C, Article 8.12, Texas Limited
163-15 Liability Company Act (Article 1528n, Vernon's Texas Civil
163-16 Statutes), are amended to read as follows:
163-17 B. Subject to Section C of this Article, Articles 2.03
163-18 through 2.06, 2.09, 2.09A, 3.01, [and] 7.01 through 7.05, and 7.07,
163-19 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
163-20 seq., Vernon's Texas Civil Statutes), as amended, apply to a
163-21 limited liability company and its members, managers, and officers.
163-22 C. For purposes of the application of the articles of the
163-23 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
163-24 by Sections A and B of this Article, as context requires:
163-25 (1) a reference to a corporation includes a limited
164-1 liability company;
164-2 (2) a reference to a share includes a membership
164-3 interest;
164-4 (3) a reference to a shareholder includes a member;
164-5 (4) a reference to a director includes a manager or,
164-6 to the extent that the management of the limited liability company
164-7 is reserved in whole or in part to the members, a member who
164-8 manages the limited liability company;
164-9 (5) a reference to articles of incorporation includes
164-10 articles of organization; and
164-11 (6) a reference to bylaws includes regulations.
164-12 SECTION 75. Section A, Article 9.01, Texas Limited Liability
164-13 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
164-14 amended to read as follows:
164-15 A. The Secretary of State is authorized and required to
164-16 collect for the use of the State the following fees:
164-17 (1) Filing articles of organization of a domestic
164-18 limited liability company and issuing the certificate of
164-19 organization, Two Hundred Dollars ($200.00).
164-20 (2) Filing articles of amendment of a domestic limited
164-21 liability company and issuing the certificate of amendment, One
164-22 Hundred Dollars ($100.00).
164-23 (3) Filing articles of merger or articles of
164-24 conversion involving one or more domestic or foreign limited
164-25 liability companies,[:]
165-1 [(a)] Two Hundred Dollars ($200.00), provided that any other
165-2 filing fee paid under the corporation, partnership, or other entity
165-3 statutes of this State for the filing of articles of merger or
165-4 articles of conversion with respect to entities organized under
165-5 those statutes shall be credited against the filing fee provided by
165-6 this subsection [if another type of domestic entity is not a party
165-7 to the merger; or]
165-8 [(b) the greater of Two Hundred Dollars ($200.00) or the
165-9 highest filing fee for articles of merger under the applicable
165-10 Texas statute under which the other domestic entity or entities are
165-11 incorporated or organized, if another type of domestic entity is
165-12 party to the merger].
165-13 (4) Filing an application of a foreign limited
165-14 liability company for certificate of authority to transact business
165-15 in this state and issuing such a certificate of authority, Five
165-16 Hundred Dollars ($500.00).
165-17 (5) Filing an application of a foreign limited
165-18 liability company for an amended certificate of authority to
165-19 transact business in this state and issuing such an amended
165-20 certificate of authority, One Hundred Dollars ($100.00).
165-21 (6) Filing restated articles of organization of a
165-22 domestic limited liability company, Two Hundred Dollars ($200.00).
165-23 (7) Filing application for reservations of a limited
165-24 liability company name and issuing certificate thereof, Twenty-Five
165-25 Dollars ($25.00).
166-1 (8) Filing notice of transfer of reserved limited
166-2 liability company name and issuing a certificate therefor, Ten
166-3 Dollars ($10.00).
166-4 (9) Filing statement of change of registered office or
166-5 registered agent, or both, Ten Dollars ($10.00).
166-6 (10) Filing statement of change of address of
166-7 registered agent, Ten Dollars ($10.00); provided, however, that the
166-8 maximum fee for simultaneous filings by a registered agent for more
166-9 than one limited liability company shall not exceed Five Hundred
166-10 Dollars ($500.00).
166-11 (11) Filing articles of dissolution and issuing
166-12 certificate therefor, Twenty-Five Dollars ($25.00).
166-13 (12) Filing application for withdrawal and issuing
166-14 certificate therefor, Ten Dollars ($10.00).
166-15 (13) Filing certificate from home state that foreign
166-16 limited liability company is no longer existent in said state, Ten
166-17 Dollars ($10.00).
166-18 (14) Maintaining the record of service of any process,
166-19 notice or demand upon the Secretary of State as agent for foreign
166-20 and domestic limited liability companies, Twenty-Five Dollars
166-21 ($25.00).
166-22 (15) Filing any instrument pursuant to this act not
166-23 expressly provided for above, Ten Dollars ($10.00).
166-24 (16) Filing an application for reinstatement of the
166-25 limited liability company charter or certificate of authority
167-1 following forfeiture under the Tax Code, Seventy-Five Dollars
167-2 ($75.00).
167-3 SECTION 76. Subsection (1), Section A, Article 9.03, Texas
167-4 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
167-5 Statutes), is amended to read as follows:
167-6 (1) For purposes of this Article, "permitted act"
167-7 means a filing with the Secretary of State under this Act for:
167-8 (a) the articles of organization of a limited
167-9 liability company under this Act;
167-10 (b) an amendment to or restatement of the
167-11 articles of organization;
167-12 (c) a merger or conversion;
167-13 (d) the application of a foreign limited
167-14 liability company to procure a certificate of authority to transact
167-15 business in this state or to withdraw from doing business in this
167-16 state;
167-17 (e) an amendment to the certificate of authority
167-18 of a foreign limited liability company to transact business in this
167-19 state;
167-20 (f) a change in registered office or registered
167-21 agent;
167-22 (g) a change of address of a registered agent;
167-23 or
167-24 (h) a voluntary dissolution.
167-25 SECTION 77. Section F, Article 9.03, Texas Limited Liability
168-1 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
168-2 amended to read as follows:
168-3 F. If articles of organization, articles of amendment or
168-4 restatement, articles of merger, articles of conversion, an
168-5 application, or any other document permitted to be filed pursuant
168-6 to this Act with the Secretary of State have been filed but the
168-7 event or transaction evidenced by the filing has not become
168-8 effective, the filing may be abandoned in accordance with the
168-9 agreement of the parties to the filing by filing a certificate of
168-10 abandonment with the Secretary of State before the effectiveness of
168-11 the event or transaction in accordance with the terms of the
168-12 document so filed. The certificate of abandonment must be signed
168-13 on behalf of each domestic or foreign limited liability company or
168-14 other entity that is a party to the event or transaction by a
168-15 member, manager, officer, or other authorized representative and
168-16 must state the nature of the filing to be abandoned, the date of
168-17 the filing to be abandoned, the parties to the filing to be
168-18 abandoned, and that the event or transaction has been abandoned in
168-19 accordance with the agreement of the parties. On the filing of the
168-20 certificate [statement] of abandonment with the Secretary of State,
168-21 the event or transaction evidenced by the original filing shall be
168-22 considered abandoned and may not become effective.
168-23 SECTION 78. Section B, Article 10.03, Texas Limited
168-24 Liability Company Act (Article 1528n, Vernon's Texas Civil
168-25 Statutes), is amended to read as follows:
169-1 B. The original of the articles of merger and a number of
169-2 copies equal to the number of surviving and new domestic or foreign
169-3 limited liability companies and other entities that are a party to
169-4 the plan of merger or that will be created by its terms shall be
169-5 delivered to the Secretary of State. Unless the Secretary of State
169-6 finds that the articles of merger do not conform to law, on receipt
169-7 of all applicable filing fees and franchise taxes, if any, required
169-8 by law or if the plan of merger provides that one or more of the
169-9 surviving, new, or acquiring domestic or foreign limited liability
169-10 companies or other entities will be responsible for the payment of
169-11 all of such fees and franchise taxes and that all of such
169-12 surviving, new, or acquiring domestic or foreign limited liability
169-13 companies and other entities will be obligated to pay such fees and
169-14 franchise taxes if the same are not timely paid, the Secretary of
169-15 State shall:
169-16 (1) certify that the articles of merger have been
169-17 filed in the Secretary of State's office by endorsing on the
169-18 original the word "Filed" and the date of the filing;
169-19 (2) file and index the endorsed articles of merger;
169-20 and
169-21 (3) issue a certificate of merger, together with a
169-22 copy of the articles affixed to the certificate, to each surviving
169-23 or new domestic or foreign limited liability company or other
169-24 entity that is a party to the plan of merger or that is created by
169-25 the merger, or to its respective representatives.
170-1 SECTION 79. Part Ten, Texas Limited Liability Act (Article
170-2 1528n, Vernon's Texas Civil Statutes), is amended by adding
170-3 Articles 10.08 through 10.11 to read as follows:
170-4 Art. 10.08. CONVERSION. A. A domestic limited liability
170-5 company may adopt a plan of conversion and convert to a foreign
170-6 limited liability company or any other entity if:
170-7 (1) the converting entity acts on and its members
170-8 approve a plan of conversion in the manner prescribed by Article
170-9 10.01 of this Act as if the conversion were a merger to which the
170-10 converting entity were a party and not the survivor;
170-11 (2) the conversion is permitted by, or not
170-12 inconsistent with, the laws of the state or country in which the
170-13 converted entity is to be incorporated, formed, or organized, and
170-14 the incorporation, formation, or organization of the converted
170-15 entity is effected in compliance with such laws;
170-16 (3) at the time the conversion becomes effective, each
170-17 member of the converting entity will, unless otherwise agreed to by
170-18 that member, own an equity interest or other ownership or security
170-19 interest in, and be a shareholder, partner, member, owner, or other
170-20 security holder of, the converted entity;
170-21 (4) no member of the domestic limited liability
170-22 company will, as a result of the conversion, become personally
170-23 liable, without the member's consent, for the liabilities or
170-24 obligations of the converted entity; and
170-25 (5) the converted entity shall be incorporated,
171-1 formed, or organized as part of or pursuant to the plan of
171-2 conversion.
171-3 B. Any foreign limited liability company or other entity may
171-4 adopt a plan of conversion and convert to a domestic limited
171-5 liability company if:
171-6 (1) the conversion is permitted by the laws of the
171-7 state or country in which the foreign limited liability company is
171-8 incorporated, formed, or organized, if a foreign limited liability
171-9 company is converting;
171-10 (2) the conversion is either permitted by the laws
171-11 under which the other entity is incorporated, formed, or organized
171-12 or by the constituent documents of the other entity that are not
171-13 inconsistent with the laws of the state or country in which the
171-14 other entity is incorporated, formed, or organized, if another
171-15 entity is converting; and
171-16 (3) the converting entity takes all action that may be
171-17 required by the laws of the state or country under which it is
171-18 incorporated, formed, or organized and by its constituent documents
171-19 to effect the conversion.
171-20 C. A plan of conversion shall set forth:
171-21 (1) the name of the converting entity and the
171-22 converted entity;
171-23 (2) a statement that the converting entity is
171-24 continuing its existence in the organizational form of the
171-25 converted entity;
172-1 (3) a statement as to the type of entity that the
172-2 converted entity is to be and the state or country under the laws
172-3 of which the converted entity is to be incorporated, formed, or
172-4 organized;
172-5 (4) the manner and basis of converting the membership
172-6 interests or other evidences of ownership of the converting entity
172-7 into membership interests or other evidences of ownership or
172-8 securities of the converted entity, or any combination thereof;
172-9 (5) in an attachment or exhibit, the articles of
172-10 organization of the domestic limited liability company, if the
172-11 converted entity is a domestic limited liability company; and
172-12 (6) in an attachment or exhibit, the articles of
172-13 organization or other organizational documents of the converted
172-14 entity, if the converted entity is not a domestic limited liability
172-15 company.
172-16 D. A plan of conversion may set forth such other provisions
172-17 relating to the conversion not inconsistent with law, including the
172-18 initial regulations of the converted entity.
172-19 Art. 10.09. ARTICLES OF CONVERSION. A. If a plan of
172-20 conversion has been approved in accordance with Article 10.08 of
172-21 this Act and has not been abandoned, articles of conversion shall
172-22 be executed by the converting entity by a manager (or, if none, by
172-23 a member) or other duly authorized representative thereof and shall
172-24 set forth:
172-25 (1) the plan of conversion or a statement certifying
173-1 the following:
173-2 (a) the name, the state of incorporation,
173-3 formation, or organization of the converting entity, and the
173-4 organizational form of the converting entity;
173-5 (b) that a plan of conversion has been approved;
173-6 (c) that an executed plan of conversion is on
173-7 file at the principal place of business of the converting entity,
173-8 stating the address thereof, and that an executed plan of
173-9 conversion will be on file, from and after the conversion, at the
173-10 principal place of business of the converted entity, stating the
173-11 address thereof; and
173-12 (d) that a copy of the plan of conversion will
173-13 be furnished by the converting entity (prior to the conversion) or
173-14 the converted entity (after the conversion), on written request and
173-15 without cost, to any shareholder, partner, or member of the
173-16 converting entity or the converted entity;
173-17 (2) a statement that the approval of the plan of
173-18 conversion was duly authorized by all action required by the laws
173-19 under which the converting entity was incorporated, formed, or
173-20 organized and by its constituent documents; and
173-21 (3) any other statements or information that may be
173-22 required by any law or rule to which the converting entity or
173-23 converted entity is subject or that the converting entity or the
173-24 converted entity chooses to include in the articles.
173-25 B. The original and one copy of the articles of conversion
174-1 shall be delivered to the Secretary of State. Two copies of the
174-2 articles of organization of the domestic limited liability company,
174-3 if the converted entity is a domestic limited liability company,
174-4 shall also be delivered to the Secretary of State with the articles
174-5 of conversion.
174-6 C. If the Secretary of State finds that the articles of
174-7 conversion conform to law, has received all filings required to be
174-8 received, and has issued all certificates required to be issued in
174-9 connection with the incorporation, formation, or organization of
174-10 the converted entity, if any, the Secretary of State shall, when
174-11 all fees and franchise taxes have been paid as required by law or
174-12 if the articles of conversion provide that the converted entity
174-13 will be liable for the payment of all such fees and franchise
174-14 taxes:
174-15 (1) Endorse on the original and each copy the word
174-16 "Filed" and the month, day, and year of the filing.
174-17 (2) File the original in the office of the Secretary
174-18 of State.
174-19 (3) Issue a certificate of conversion, together with a
174-20 copy of the articles affixed thereto, to the converted entity or
174-21 its representatives.
174-22 Art. 10.10. EFFECTIVE DATE OF CONVERSION. A. Except as
174-23 otherwise provided by Article 9.03 of this Act, on the issuance of
174-24 the certificate of conversion by the Secretary of State, the
174-25 conversion of a converting entity shall be effective.
175-1 Art. 10.11. EFFECT OF CONVERSION. A. When a conversion of
175-2 a converting entity takes effect:
175-3 (1) the converting entity shall continue to exist,
175-4 without interruption, but in the organizational form of the
175-5 converted entity rather than in its prior organizational form;
175-6 (2) all rights, title, and interests to all real
175-7 estate and other property owned by the converting entity shall
175-8 continue to be owned by the converted entity in its new
175-9 organizational form without reversion or impairment, without
175-10 further act or deed, and without any transfer or assignment having
175-11 occurred, but subject to any existing liens or other encumbrances
175-12 thereon;
175-13 (3) all liabilities and obligations of the converting
175-14 entity shall continue to be liabilities and obligations of the
175-15 converted entity in its new organizational form without impairment
175-16 or diminution by reason of the conversion;
175-17 (4) all rights of creditors or other parties with
175-18 respect to or against the prior interest holders or other owners of
175-19 the converting entity in their capacities as such in existence as
175-20 of the effective time of the conversion will continue in existence
175-21 as to those liabilities and obligations and may be pursued by such
175-22 creditors and obligees as if such conversion shall not have
175-23 occurred;
175-24 (5) a proceeding pending by or against the converting
175-25 entity or by or against any of the converting entity's interest
176-1 holders or owners in their capacities as such may be continued by
176-2 or against the converted entity in its new organizational form and
176-3 by or against the prior interest holders or owners, as the case may
176-4 be, without any need for substitution of parties;
176-5 (6) the membership interests and other evidences of
176-6 ownership in the converting entity that are to be converted into
176-7 membership interests, evidences of ownership, or other securities
176-8 in the converted entity as provided in the plan of conversion shall
176-9 be so converted, and if the converting entity is a domestic limited
176-10 liability company, the former holders of membership interests in
176-11 the domestic limited liability company shall be entitled only to
176-12 the rights provided in the plan of conversion;
176-13 (7) if, after the effectiveness of the conversion, a
176-14 shareholder, partner, member, or other owner of the converted
176-15 entity would be liable under applicable law, in such capacity, for
176-16 the debts or obligations of the converted entity, such shareholder,
176-17 partner, member, or other owner of the converted entity shall be
176-18 liable for the debts and obligations of the converting entity that
176-19 existed before the conversion takes effect only to the extent that
176-20 such shareholder, partner, member, or other owner:
176-21 (a) agreed in writing to be liable for such
176-22 debts or obligations;
176-23 (b) was liable under applicable law, prior to
176-24 the effectiveness of the conversion, for such debts or obligations;
176-25 or
177-1 (c) by becoming a shareholder, partner, member,
177-2 or other owner of the converted entity, becomes liable under
177-3 applicable law for existing debts and obligations of the converted
177-4 entity; and
177-5 (8) if the converted entity is a foreign limited
177-6 liability company or other entity, such converted entity shall be
177-7 deemed to appoint the Secretary of State in this state as its agent
177-8 for service of process in a proceeding to enforce any obligation or
177-9 the rights of dissenting members of the converting domestic limited
177-10 liability company.
177-11 SECTION 80. Section B, Article 11.01, Texas Limited
177-12 Liability Company Act (Article 1528n, Vernon's Texas Civil
177-13 Statutes), is amended by amending Subsection (2) and adding
177-14 Subsections (3) and (4) to read as follows:
177-15 (2) "Professional limited liability company" means a
177-16 limited liability company that is organized under this Act for the
177-17 sole and specific purpose of rendering professional service and
177-18 that has as its members only professional individuals or
177-19 professional entities [individuals licensed or otherwise authorized
177-20 within this state to render the same professional service as the
177-21 limited liability company].
177-22 (3) "Professional individual," with respect to any
177-23 professional limited liability company, means an individual who is
177-24 licensed or otherwise authorized to render the same professional
177-25 service as such professional limited liability company, either
178-1 within this state or in any other jurisdiction.
178-2 (4) "Professional entity," with respect to any
178-3 professional limited liability company, means a person (other than
178-4 an individual), whether organized for profit or not, including
178-5 corporations organized under the Texas Non-Profit Corporation Act
178-6 (Article 1396-1.01, Vernon's Texas Civil Statutes), and
178-7 unincorporated associations governed by the Texas Uniform
178-8 Unincorporated Nonprofit Association Act (Article 1396-70.01,
178-9 Vernon's Texas Civil Statutes), that renders the same professional
178-10 service as such professional limited liability company only through
178-11 partners, members, shareholders, managers, directors, associates,
178-12 officers, employees, or agents who are professional individuals or
178-13 professional entities.
178-14 SECTION 81. Article 11.03, Texas Limited Liability Company
178-15 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
178-16 read as follows:
178-17 Art. 11.03. RESTRICTIONS ON MEMBERS, MANAGERS, AND OFFICERS.
178-18 A. A person who is not a professional individual or professional
178-19 entity [licensed or otherwise authorized to render the professional
178-20 service of the professional limited liability company] may not be a
178-21 member, manager, or officer of the professional limited liability
178-22 company. A membership interest in the professional limited
178-23 liability company may not be transferred to a person who is not a
178-24 professional individual or professional entity [licensed or
178-25 otherwise authorized to render the professional service of the
179-1 professional limited liability company].
179-2 B. If a member, manager, or officer of a professional
179-3 limited liability company ceases to be a professional individual or
179-4 professional entity, [or an agent or employee of the company who
179-5 has been rendering professional service for or with the company of
179-6 the same type for which the professional limited liability company
179-7 was organized to render, becomes legally disqualified to render the
179-8 professional service,] the person shall sever all employment with
179-9 the professional limited liability company and immediately
179-10 terminate all financial interest in the company. The professional
179-11 limited liability company shall purchase or cause to be purchased
179-12 from the person all membership interests owned by the person in the
179-13 professional limited liability company, at a price and on terms as
179-14 may be provided in the articles of organization, the regulations,
179-15 or any applicable agreement among the members and the professional
179-16 limited liability company. If the person is the sole member of the
179-17 professional limited liability company, the person may continue to
179-18 act as member, manager, or officer only for the purposes of winding
179-19 up the affairs of the professional limited liability company and
179-20 effecting its dissolution, including selling the assets of or
179-21 outstanding membership interests in the professional limited
179-22 liability company, but not including rendering professional
179-23 service.
179-24 C. If a person who is not a professional individual or a
179-25 professional entity [licensed or authorized to render the
180-1 professional service that a professional limited liability company
180-2 was organized to render] succeeds to the interest of a member of
180-3 the professional limited liability company, the person holding the
180-4 interest shall immediately terminate all financial interest in the
180-5 professional limited liability company, and the professional
180-6 limited liability company shall purchase or cause to be purchased
180-7 from the person all membership interests owned by the person in the
180-8 professional limited liability company, at a price and on terms as
180-9 may be provided in the articles of organization, the regulations,
180-10 or any applicable agreement among the members and the professional
180-11 limited liability company. If the person succeeded to all of the
180-12 membership interests in the professional limited liability company,
180-13 the person may continue to act as member, manager, or officer only
180-14 for the purposes of winding up the affairs of the professional
180-15 limited liability company and effecting its dissolution, including
180-16 selling the assets of or the outstanding membership interests in
180-17 the professional limited liability company, but not including
180-18 rendering professional service.
180-19 SECTION 82. Section A, Article 11.04, Texas Limited
180-20 Liability Company Act (Article 1528n, Vernon's Texas Civil
180-21 Statutes), is amended to read as follows:
180-22 A. A professional limited liability company may render
180-23 professional service in this state only through a[:]
180-24 [(1) an individual] member, manager, officer,
180-25 employee, or agent who is:
181-1 (1) a professional individual licensed or otherwise
181-2 authorized to render the professional service in this state; or
181-3 (2) a professional entity that renders the
181-4 professional service in this state only through partners, members,
181-5 shareholders, managers, directors, associates, officers, employees,
181-6 or agents who are professional individuals or professional entities
181-7 licensed or otherwise authorized to render the professional service
181-8 in this state[; or]
181-9 [(2) an agent of the professional limited liability
181-10 company that is a professional limited liability company,
181-11 professional corporation, or professional association that is
181-12 authorized in this state to render the professional service of the
181-13 professional limited liability company and that renders the
181-14 professional service only through a licensed individual member,
181-15 manager, officer, or employee].
181-16 SECTION 83. Article 11.05, Texas Limited Liability Company
181-17 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
181-18 read as follows:
181-19 Art. 11.05. PROFESSIONAL RELATIONSHIPS NOT AFFECTED.
181-20 A. Notwithstanding anything contained in Article 4.03 of this Act
181-21 to the contrary, this Act does not alter or affect the professional
181-22 relationship between a person rendering professional service and a
181-23 person receiving the service, and a confidential relationship
181-24 enjoyed in this state between those persons remains unchanged.
181-25 This Act does not remove or diminish any rights at law that a
182-1 person receiving professional service has against a person
182-2 rendering the service for an error, an omission, negligence,
182-3 incompetence, or malfeasance. A professional limited liability
182-4 company, but not the other [individual] members, managers, [or]
182-5 officers, employees, or agents of such professional limited
182-6 liability company (or their respective members, managers, officers,
182-7 employees, or agents), is jointly and severally liable with a
182-8 member, manager, officer, employee, or agent rendering professional
182-9 service for an error, omission, negligence, incompetence, or
182-10 malfeasance on the part of the member, manager, officer, employee,
182-11 or agent when the member, manager, officer, employee, or agent is
182-12 rendering professional service in the course of employment for the
182-13 professional limited liability company. If the member, manager,
182-14 officer, employee, or agent rendering such professional service in
182-15 such circumstances is itself a professional entity, then the
182-16 professional limited liability company and such professional entity
182-17 are jointly and severally liable with the partner, member,
182-18 shareholder, manager, director, associate, officer, employee, or
182-19 agent of such professional entity through which such professional
182-20 entity renders such professional service for an error, omission,
182-21 negligence, incompetence, or malfeasance on the part of such
182-22 partner, member, shareholder, manager, director, associate,
182-23 officer, employee, or agent of such professional entity.
182-24 SECTION 84. Section A, Article 11.07, Texas Limited
182-25 Liability Company Act (Article 1528n, Vernon's Texas Civil
183-1 Statutes), is amended to read as follows:
183-2 A. A foreign professional limited liability company may
183-3 apply for a certificate of authority to perform professional
183-4 service in this state by filing an application in accordance with
183-5 Part Seven of this Act. The Secretary of State may not issue the
183-6 certificate unless the name of the foreign professional limited
183-7 liability company or the name it [the limited liability company]
183-8 elects in this state meets the requirements of Article 11.02 of
183-9 this Act. A foreign professional limited liability company may
183-10 render professional service in this state only through a member,
183-11 manager, officer, employee, or agent described in Section A of
183-12 Article 11.04 of this Act [member, manager, officer, employee, or
183-13 agent of the limited liability company who renders professional
183-14 service in this state on behalf of the limited liability company
183-15 must be licensed or otherwise authorized to render that
183-16 professional service in this state].
183-17 SECTION 85. Section 1.03, Texas Revised Limited Partnership
183-18 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
183-19 read as follows:
183-20 Sec. 1.03. PARTNERSHIP NAME. Except as provided by Section
183-21 2.14(a)(3) of this Act, the name of a limited partnership as stated
183-22 in its certificate of limited partnership, a reserved or registered
183-23 name, or the name under which a foreign limited partnership is
183-24 permitted to register to do business in Texas as contained in its
183-25 application for registration as a foreign limited partnership must
184-1 contain the words "Limited Partnership," "Limited," or the
184-2 abbreviation "L.P." or "Ltd." as the last words or letters of its
184-3 name and may not:
184-4 (1) contain the name of a limited partner unless:
184-5 (A) that name is also the name of a general
184-6 partner; or
184-7 (B) the business of the limited partnership or
184-8 foreign limited partnership had been carried on under that name
184-9 before the admission of that limited partner;
184-10 (2) contain a word or phrase indicating or implying
184-11 that it is organized other than for a purpose stated in its
184-12 partnership agreement;
184-13 (3) be the same as or deceptively similar to the name
184-14 of a corporation, limited liability company, or limited partnership
184-15 that exists under the laws of Texas, that has a certificate of
184-16 authority to transact business as a foreign corporation or limited
184-17 liability company in Texas, or that is registered as a foreign
184-18 limited partnership in Texas, or a name that has been reserved or
184-19 registered for a corporation, limited liability company, limited
184-20 partnership, or foreign limited partnership under the laws of
184-21 Texas, except that a limited partnership or foreign limited
184-22 partnership may adopt, reserve, or register, as appropriate, a name
184-23 that is similar if written consent is obtained from the
184-24 corporation, limited liability company, limited partnership, or
184-25 foreign limited partnership having the name considered similar or
185-1 from the person for whom the name considered similar is reserved or
185-2 registered in the office of the secretary of state; or
185-3 (4) contain a word or phrase indicating or implying
185-4 that it is a corporation.
185-5 SECTION 86. Section 1.04, Texas Revised Limited Partnership
185-6 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
185-7 amending Subsection (b) and adding Subsection (c) to read as
185-8 follows:
185-9 (b) A specified name may be reserved by filing with the
185-10 secretary of state an application executed by the applicant or an
185-11 attorney or agent of the applicant, together with a duplicate copy
185-12 of the application, which need not be an executed original or a
185-13 photocopy of an executed original, and paying the applicable filing
185-14 fee. If the secretary of state finds that the name is available
185-15 for use by a domestic or foreign limited partnership, the secretary
185-16 of state shall reserve the name for the exclusive use of the
185-17 applicant for a period of 120 days. An applicant may reserve the
185-18 same name for one or more successive 120-day periods by filing a
185-19 new application and paying the applicable filing fee [before the
185-20 effective 120-day reservation period expires]. The right to the
185-21 exclusive use of a reserved name may be transferred to another
185-22 person by filing with the secretary of state a notice of the
185-23 transfer executed by the applicant for whom the name was reserved
185-24 that specifies the name and address of the transferee and paying
185-25 the applicable filing fee.
186-1 (c) A person for whom a specified limited partnership name
186-2 has been reserved pursuant to Subsection (b) of this section may,
186-3 during the period for which the name is reserved, terminate the
186-4 reservation by filing with the secretary of state an application
186-5 for cancellation of reservation of limited partnership name and
186-6 paying the applicable fee.
186-7 SECTION 87. Section 2.01, Texas Revised Limited Partnership
186-8 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
186-9 read as follows:
186-10 Sec. 2.01. CERTIFICATE OF LIMITED PARTNERSHIP. (a) To form
186-11 a limited partnership, the partners must enter into a partnership
186-12 agreement (which, in the case of a limited partnership formed under
186-13 a plan of merger or a plan of conversion under Section 2.11 or 2.15
186-14 of this Act, may be included in the plan of merger or plan of
186-15 conversion) and one or more partners, including all of the general
186-16 partners, must execute a certificate of limited partnership. The
186-17 filing fee and the certificate shall be filed with the secretary of
186-18 state. The certificate must contain:
186-19 (1) the name of the limited partnership;
186-20 (2) the address of the registered office and the name
186-21 and address of the registered agent for service of process required
186-22 to be maintained by Section 1.06 of this Act;
186-23 (3) the address of the principal office in the United
186-24 States where records are to be kept or made available under Section
186-25 1.07 of this Act;
187-1 (4) the name, the mailing address, and the street
187-2 address of the business or residence of each general partner; [and]
187-3 (5) if the limited partnership is being formed
187-4 pursuant to a plan of merger or a plan of conversion under Section
187-5 2.11 or 2.15 of this Act, a statement to that effect;
187-6 (6) if the limited partnership is being formed
187-7 pursuant to a plan of conversion under Section 2.15 of this Act,
187-8 the name, the address, the date of formation, and the prior form of
187-9 organization and jurisdiction of incorporation or organization of
187-10 the converting entity; and
187-11 (7) other matters that the general partners determine
187-12 to include.
187-13 (b) Except in the case of a limited partnership formed under
187-14 a plan of merger or a plan of conversion under Section 2.11 or 2.15
187-15 of this Act, a [A] limited partnership is formed at the time of the
187-16 filing of the initial certificate of limited partnership with the
187-17 secretary of state or at a later date or time specified in the
187-18 certificate if there has been substantial compliance with the
187-19 requirements of this section. In the case of a limited partnership
187-20 being formed under a plan of merger or a plan of conversion under
187-21 Section 2.11 or 2.15 of this Act, the existence of the limited
187-22 partnership as a limited partnership begins on the effectiveness of
187-23 the merger or the conversion, as applicable, and the persons to be
187-24 partners shall become general or limited partners, as applicable,
187-25 as of that time.
188-1 SECTION 88. Subsections (a) and (c), Section 2.03, Texas
188-2 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
188-3 Civil Statutes), are amended to read as follows:
188-4 (a) A certificate of limited partnership shall be canceled
188-5 by paying the filing fee and filing a certificate of cancellation
188-6 with the secretary of state:
188-7 (1) on the completion of the winding up of the
188-8 partnership;
188-9 (2) when there are no limited partners; or
188-10 (3) subject to Subsection (c) of this section, on a
188-11 merger or conversion [consolidation] as provided by Subsection (b)
188-12 of Section 2.11 of this Act or Subsection (c) of Section 2.15 of
188-13 this Act.
188-14 (c) If, in the case of merger or conversion [consolidation],
188-15 one or more limited partnerships formed [or registered] under this
188-16 Act are not the surviving or resulting domestic limited partnership
188-17 or partnerships or other entity or entities, the certificate of
188-18 merger or conversion filed under Subsection (d) [(b)] of Section
188-19 2.11 or Subsection (e) of Section 2.15 of this Act is sufficient,
188-20 without a filing under this section, to cancel the certificate of
188-21 limited partnership of those nonsurviving limited partnerships.
188-22 SECTION 89. Subsection (a), Section 2.04, Texas Revised
188-23 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
188-24 Statutes), is amended to read as follows:
188-25 (a) Each certificate required by this article to be filed
189-1 with the secretary of state shall be executed in the following
189-2 manner:
189-3 (1) an initial certificate of limited partnership or a
189-4 certificate of conversion must be signed by all general partners,
189-5 except for an initial certificate of limited partnership [unless]
189-6 signed and filed by a person under Subdivision (1) of Subsection
189-7 (a) of Section 3.04 of this Act;
189-8 (2) a certificate of amendment or restated certificate
189-9 must be signed by at least one general partner and by each other
189-10 general partner designated in the certificate of amendment as a new
189-11 general partner, unless signed and filed by a person under
189-12 Subsection (f) of Section 2.02 of this Act or under Subdivision (1)
189-13 of Subsection (a) of Section 3.04 of this Act, but the certificate
189-14 of amendment need not be signed by a withdrawing general partner;
189-15 (3) a certificate of cancellation must be signed by
189-16 all general partners participating in the winding up of the limited
189-17 partnership's affairs or, if no general partners are winding up the
189-18 limited partnership's affairs, then by all non-partner liquidators,
189-19 or, if the limited partners are winding up the limited
189-20 partnership's affairs, by a majority in interest of the limited
189-21 partners;
189-22 (4) a certificate of merger filed on behalf of a
189-23 domestic limited partnership must be signed as provided in
189-24 Subsection (d), Section 2.11 of this Act;
189-25 (5) a certificate filed under Section 2.06 of this Act
190-1 must be signed by the person designated by the court; and
190-2 (6) a certificate of correction must be signed by at
190-3 least one general partner.
190-4 SECTION 90. Subsections (a) through (d), Section 2.06, Texas
190-5 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
190-6 Civil Statutes), are amended to read as follows:
190-7 (a) Notwithstanding any other provisions of this Act to the
190-8 contrary, to carry out a plan of reorganization ordered or decreed
190-9 by a court of competent jurisdiction under federal statute, a
190-10 domestic limited partnership being reorganized under a federal
190-11 statute may without action by or notice to its partners:
190-12 (1) amend or restate its certificate if the
190-13 certificate after amendment or restatement contains only provisions
190-14 of the type required or permitted in the certificate;
190-15 (2) merge or engage in a conversion or an interest
190-16 exchange with one or more other domestic or foreign limited
190-17 partnerships or other entities pursuant to this Act;
190-18 (3) sell, lease, exchange or otherwise dispose of all
190-19 or substantially all, of its property and assets; or
190-20 (4) cancel its certificate on completion of winding up
190-21 of the limited partnership.
190-22 (b) The individual or individuals designated by the court,
190-23 on behalf of a limited partnership that is being reorganized, may
190-24 execute:
190-25 (1) an amendment or restatement of the certificate
191-1 containing:
191-2 (A) the name of the limited partnership;
191-3 (B) the text of each amendment or restatement
191-4 approved by the court;
191-5 (C) the date of the court's order or decree
191-6 approving the amendment or restatement; [and]
191-7 (D) the court, file name, and case number of the
191-8 reorganization case [proceeding] in which the order or decree was
191-9 entered; and
191-10 (E) a statement that the court had jurisdiction
191-11 of the case under a federal statute; [or]
191-12 (2) a certificate of merger containing:
191-13 (A) the name of the limited partnership;
191-14 (B) the information required by Subsection (b)
191-15 of Section 2.11 of this Act;
191-16 (C) the date of the court's order or decree
191-17 approving the merger; [and]
191-18 (D) the court, file name, and case number of the
191-19 reorganization case [proceeding] in which the order or decree was
191-20 entered; and
191-21 (E) a statement that the court had jurisdiction
191-22 of the case under a federal statute; [or]
191-23 (3) a certificate of cancellation containing:
191-24 (A) the name of the limited partnership;
191-25 (B) the information required by Section 2.03 of
192-1 this Act and any other information permitted by Section 2.03 that
192-2 the court's order requires or permits to be included;
192-3 (C) the date of the court's order or decree
192-4 approving the certificate of cancellation; [and]
192-5 (D) the court, file name, and case number of the
192-6 reorganization case [proceeding] in which the order or decree was
192-7 entered; and
192-8 (E) a statement that the court had jurisdiction
192-9 of the case under a federal statute; or
192-10 (4) a certificate of conversion containing:
192-11 (A) the name of the limited partnership;
192-12 (B) the information required by Subsection (c)
192-13 of Section 2.15 of this Act;
192-14 (C) the date of the court's order or decree
192-15 approving the conversion;
192-16 (D) the court, file name, and case number of the
192-17 reorganization case in which the order or decree was entered; and
192-18 (E) a statement that the court had jurisdiction
192-19 of the case under a federal statute.
192-20 (c) If a domestic or foreign limited partnership that is not
192-21 being reorganized merges or engages in a conversion or an interest
192-22 exchange pursuant to a plan of reorganization with a domestic or
192-23 foreign limited partnership or other entity that is being
192-24 reorganized, Section 2.11 or 2.15 of this Act applies to the
192-25 domestic or foreign limited partnership or other entity that is not
193-1 being reorganized to the same extent that that section would apply
193-2 if the domestic or foreign limited partnership were merging with a
193-3 limited partnership that is not being reorganized except as
193-4 otherwise provided in the plan of reorganization ordered or decreed
193-5 by a court of competent jurisdiction under federal statute.
193-6 Subject to satisfaction of the requirements [the requirement] of
193-7 Section 2.11 or 2.15 of this Act and any other requirements of the
193-8 plan of merger, a certificate of merger or conversion shall be
193-9 signed on behalf of the entities that [which] are parties to the
193-10 merger or conversion and shall be filed with the secretary of state
193-11 [Secretary of State] as required by Section 2.11 or 2.15 of this
193-12 Act.
193-13 (d) On endorsement of the certificate by the secretary of
193-14 state under Section 2.07 of this Act, the certificate of amendment,
193-15 merger, conversion, or cancellation or restated certificate becomes
193-16 effective and has the same effect as if it had been adopted by
193-17 unanimous action of the general and the limited partners of the
193-18 limited partnership being reorganized except as otherwise provided
193-19 by this section or by the plan of reorganization ordered or decreed
193-20 by a court of competent jurisdiction under federal statute.
193-21 SECTION 91. Section 2.07, Texas Revised Limited Partnership
193-22 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
193-23 adding Subsection (c) to read as follows:
193-24 (c) Notwithstanding the provisions of Subsection (a) of this
193-25 section, the secretary of state shall not provide a filed stamped
194-1 duplicate acknowledgment copy of any document required or
194-2 authorized to be filed with the secretary of state that is
194-3 delivered to the secretary of state without a duplicate copy of the
194-4 document attached. If the secretary of state finds that the
194-5 document otherwise conforms to law, the original shall be filed and
194-6 indexed in the manner provided by Subsection (a) of this section
194-7 and a letter acknowledging the filing shall be sent to the person
194-8 who filed the document or to the person's designated
194-9 representative.
194-10 SECTION 92. Subsection (a), Section 2.08, Texas Revised
194-11 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
194-12 Statutes), is amended to read as follows:
194-13 (a) If a certificate of limited partnership or a certificate
194-14 of amendment, merger, or cancellation contains a materially false
194-15 statement, [or] fails to state any material fact required to be
194-16 included in the certificate by this Act, or is forged or signed by
194-17 a person not authorized by the limited partnership to execute the
194-18 certificate, a person who did not authorize the certificate or
194-19 other document that purports to have been authorized or a person
194-20 who suffers loss by reasonable reliance on the statement or from an
194-21 omission may recover damages arising from the filing of the false,
194-22 forged, or unauthorized certificate [for the loss] from:
194-23 (1) any partner or other person who executed the
194-24 certificate and knew or, in the case of a general partner, should
194-25 have known of the forgery, lack of authorization, or false
195-1 statement or of the omission when the certificate was executed; and
195-2 (2) any general partner who after execution of the
195-3 certificate knows that any arrangement or other fact described in
195-4 the certificate is false in a material respect or has changed,
195-5 making the statement false in a material respect, or that the
195-6 certificate fails to state a material fact required to be included
195-7 in the certificate by this Act, if that general partner had
195-8 sufficient time to amend or cancel the certificate or to file a
195-9 petition for its amendment or cancellation before the statement was
195-10 reasonably relied on.
195-11 SECTION 93. Subsections (b), (d), (e), (g), and (h), Section
195-12 2.11, Texas Revised Limited Partnership Act (Article 6132a-1,
195-13 Vernon's Texas Civil Statutes), are amended to read as follows:
195-14 (b) A plan of merger must set forth:
195-15 (1) the name and state of domicile of each domestic or
195-16 foreign limited partnership or other entity that is a party to the
195-17 merger and the name of each domestic or foreign limited partnership
195-18 or other entity, if any, that shall survive the merger, which may
195-19 be one or more of the domestic or foreign limited partnerships or
195-20 other entities party to the merger, and the name and state of
195-21 domicile of each new domestic or foreign limited partnership or
195-22 other entity, if any, that may be created by the terms of the plan
195-23 of merger;
195-24 (2) the terms and conditions of the merger including,
195-25 if more than one domestic or foreign limited partnership or other
196-1 entity is to survive or to be created by the terms of the plan of
196-2 merger, (i) the manner and basis of allocating and vesting the real
196-3 estate and other property of each domestic or foreign limited
196-4 partnership and of each other entity that is a party to the merger
196-5 among one or more of the surviving or new domestic or foreign
196-6 limited partnerships and other entities, and (ii) the manner and
196-7 basis of allocating all liabilities and obligations of each
196-8 domestic or foreign limited partnership and other entity that is a
196-9 party to the merger (or making adequate provision for the payment
196-10 and discharge thereof) among one or more of the surviving or new
196-11 domestic or foreign limited partnerships and other entities;
196-12 (3) the manner and basis of converting any of the
196-13 partnership interests or other evidences of ownership of each
196-14 domestic or foreign limited partnership and other entity that is a
196-15 party to the merger into partnership interests, shares,
196-16 obligations, evidences of ownership, rights to purchase securities
196-17 or other securities of one or more of the surviving or new domestic
196-18 or foreign limited partnerships or other entities, into cash or
196-19 other property including shares, obligations, evidences of
196-20 ownership, rights to purchase securities or other securities of any
196-21 other person or entity or into any combination of the foregoing;
196-22 (4) as an exhibit or attachment, the certificate of
196-23 limited partnership of any new domestic limited partnership to be
196-24 created by the terms of the plan of merger; and
196-25 (5) the certificate of limited partnership or other
197-1 organizational documents of each other entity that is a party to
197-2 the merger and that is to be created by the terms of the plan of
197-3 merger.
197-4 (d) After a plan of merger has been approved by each of the
197-5 limited partnerships or other entities that is a party to the plan
197-6 of merger, a certificate of merger shall be executed on behalf of
197-7 each limited partnership or other entity by at least one general
197-8 partner of each domestic limited partnership that is a party to the
197-9 plan of merger and by a general partner, officer, agent or other
197-10 authorized representative of each other limited partnership or
197-11 other entity that is a party to the plan of merger and shall set
197-12 forth:
197-13 (1) the plan of merger or a statement certifying the
197-14 following:
197-15 (A) the name and the state of incorporation,
197-16 formation, or organization of each of the parties to the merger and
197-17 the organizational form of each new or surviving limited
197-18 partnership or other entity;
197-19 (B) that a plan of merger has been approved;
197-20 (C) any amendments or changes in the certificate
197-21 of limited partnership of each surviving domestic limited
197-22 partnership, or if no such amendments are desired to be effected by
197-23 the merger, a statement to that effect;
197-24 (D) the certificate of limited partnership of
197-25 each new domestic limited partnership to be formed under the plan
198-1 of merger;
198-2 (E) that an executed plan of merger is on file
198-3 at the principal place of business of each surviving or new
198-4 domestic or foreign limited partnership or other entity, stating
198-5 the address thereof;
198-6 (F) that a copy or summary of the plan of merger
198-7 has been or is being furnished to each partner in each domestic
198-8 limited partnership that is a party to the merger at least 20 days
198-9 before the merger is effective, unless waived by that partner, or
198-10 that the domestic limited partnership has complied with the
198-11 provisions of its partnership agreement regarding furnishing
198-12 partners copies or summaries of the plan of merger or notices
198-13 regarding the merger; and
198-14 (G) in the case of a merger with multiple
198-15 surviving domestic or foreign limited partnerships or other
198-16 entities, that a copy of the plan of merger will be furnished by
198-17 each new or surviving domestic or foreign limited partnership or
198-18 other entity, on written request and without cost, to any creditor
198-19 or obligee of the parties to the merger at the time of the merger
198-20 if the obligation is then outstanding; and
198-21 (2) as to each domestic or foreign limited partnership
198-22 or other entity that is a party to the plan of merger, a statement
198-23 that the plan of merger was duly authorized by all action required
198-24 by the laws under which it was formed or organized and by its
198-25 constituent documents.
199-1 (e) The original of the certificate of merger and such
199-2 number of copies of the certificate equal to the number of
199-3 surviving and new domestic or foreign limited partnerships and
199-4 other entities that are a party to the plan of merger or that will
199-5 be created by the terms thereof, shall be delivered to the
199-6 secretary of state. An equal number of copies of the certificate
199-7 of limited partnership of each domestic limited partnership that is
199-8 to be formed pursuant to the plan of merger shall also be delivered
199-9 to the secretary of state with the articles of merger. Unless the
199-10 secretary of state finds that a certificate of merger does not
199-11 conform to law, on receipt of all applicable filing fees and
199-12 franchise taxes, if any, required by law, or if the plan of merger
199-13 (or a statement provided in lieu thereof) provides that one or more
199-14 of the surviving or new domestic or foreign limited partnerships or
199-15 other entities will be responsible for the payment of all fees and
199-16 franchise taxes and that all of the surviving or new domestic or
199-17 foreign limited partnerships and other entities will be obligated
199-18 to pay the fees and franchise taxes if they are not timely paid,
199-19 the secretary of state shall certify that the certificate of merger
199-20 has been filed in the secretary of state's office by endorsing on
199-21 the original the word "Filed" and the date of the filing, file and
199-22 index the endorsed certificate of merger, and return the copy,
199-23 similarly endorsed, to each surviving or new domestic or foreign
199-24 limited partnership or other entity that is a party to the plan of
199-25 merger or that is created thereby, or its or their respective
200-1 representatives.
200-2 (g) When a merger takes effect:
200-3 (1) the separate existence of every domestic limited
200-4 partnership that is a party to the merger, except any surviving or
200-5 new domestic limited partnership, shall cease;
200-6 (2) all rights, title, and interests to all real
200-7 estate and other property owned by each domestic or foreign limited
200-8 partnership and by each other entity that is a party to the merger
200-9 shall be allocated to and vested in one or more of the surviving or
200-10 resulting entities as provided in the plan of merger without
200-11 reversion or impairment, without further act or deed, and without
200-12 any transfer or assignment having occurred, but subject to any
200-13 existing liens or other encumbrances thereon;
200-14 (3) all liabilities and obligations of each domestic
200-15 or foreign limited partnership and other entity that is a party to
200-16 the merger shall be allocated to one or more of the surviving or
200-17 new domestic or foreign limited partnerships and other entities in
200-18 the manner set forth in the plan of merger, and each surviving or
200-19 new domestic foreign limited partnership, and each surviving or new
200-20 other entity to which a liability or obligation shall have been
200-21 allocated pursuant to the plan of merger, shall be the primary
200-22 obligor therefor and, except as otherwise set forth in the plan of
200-23 merger or as otherwise provided by law or contract, no other party
200-24 to the merger, other than a surviving domestic or foreign limited
200-25 partnership or other entity liable thereon at the time of the
201-1 merger and no other new domestic or foreign limited partnership or
201-2 other entity created thereby, shall be liable therefor;
201-3 (4) a proceeding pending by or against any domestic or
201-4 foreign limited partnership or by or against any other entity that
201-5 is a party to the merger may be continued as if the merger did not
201-6 occur, or the surviving or new domestic or foreign limited
201-7 partnership or limited partnerships or the surviving or new other
201-8 entity or other entities to which the liability, obligation, asset
201-9 or right associated with such proceeding is allocated to and vested
201-10 in pursuant to the plan of merger may be substituted in the
201-11 proceeding;
201-12 (5) the certificate of limited partnership of each
201-13 surviving domestic limited partnership shall be amended to the
201-14 extent provided in the plan of merger;
201-15 (6) each new domestic limited partnership, the
201-16 certificate of limited partnership of which is set forth in the
201-17 plan of merger under Subdivision (4) of Subsection (b) of this
201-18 section, shall be formed as a limited partnership under this Act;
201-19 and each other entity to be formed or organized under the laws of
201-20 this State, the organizational documents of which are set forth in
201-21 the plan of merger, shall, upon an executed copy of the certificate
201-22 of merger being delivered to or filed with any required
201-23 governmental entity with which organizational documents of such
201-24 another entity are required to be delivered or filed, and upon
201-25 meeting such additional requirements, if any, of law for its
202-1 formation or organization, shall be formed or organized as provided
202-2 in the plan of merger; [and]
202-3 (7) the partnership interests of each domestic or
202-4 foreign limited partnership and the partnership interests, shares
202-5 or evidences of ownership in each other entity that is a party to
202-6 the merger that are to be converted or exchanged, in whole or in
202-7 part, into partnership interests, shares, obligations, evidences of
202-8 ownership, rights to purchase securities or other securities of one
202-9 or more of the surviving or new domestic or foreign limited
202-10 partnerships or other entities, into cash or other property,
202-11 including shares, obligations, evidences of ownership, rights to
202-12 purchase securities or other securities of any other person or
202-13 entity, or into any combination of the foregoing, shall be so
202-14 converted and exchanged and the former partners of each domestic
202-15 limited partnership that is a party to the merger shall be entitled
202-16 only to the rights provided in the plan of merger; [and]
202-17 (8) if the plan of merger shall fail to provide for
202-18 the allocation and vesting of the right, title, and interest in any
202-19 particular item of real estate or other property or for the
202-20 allocation of any liability or obligation of any party to the
202-21 merger, such item of real estate or other property shall be owned
202-22 in undivided interest by, or such liability or obligation shall be
202-23 a joint and several liability and obligation of, each of the
202-24 surviving and new domestic and foreign limited partnerships and
202-25 other entities, pro rata to the total number of surviving and new
203-1 domestic and foreign limited partnerships and other entities
203-2 resulting from the merger; and
203-3 (9) a partner of a domestic or foreign limited
203-4 partnership that is a party to a merger does not become personally
203-5 liable as a result of the merger for a liability or obligation of
203-6 another person that is a party to the merger unless the party
203-7 consents to becoming personally liable by action taken in
203-8 connection with the specific plan of merger approved by the
203-9 partner; and for purposes of determining the liability of partners
203-10 in a domestic limited partnership that is a party to the merger for
203-11 the debts and obligations of other parties to the merger in which
203-12 that partner otherwise was not or is not a partner or other owner
203-13 of an interest:
203-14 (A) a partner who remains in or enters a
203-15 domestic or foreign limited partnership or other entity that
203-16 survives a merger or that enters a domestic or foreign limited
203-17 partnership or other entity created by the terms of the plan of
203-18 merger shall be treated as an incoming partner in the new or
203-19 surviving partnership as of the effective date of the merger for
203-20 the purpose of determining the partner's liability for a debt or
203-21 obligation of the other partnership or other entities that are
203-22 parties to the merger and in which the partner was not associated;
203-23 and
203-24 (B) a partner in a domestic partnership that is
203-25 a party to the merger but that does not survive shall be treated as
204-1 a partner who withdrew from the nonsurviving domestic partnership
204-2 as of the effective date of the merger.
204-3 (h) One or more domestic or foreign limited partnerships or
204-4 other entities may adopt a plan of exchange by which a domestic or
204-5 foreign limited partnership or other [an] entity acquires all of
204-6 the outstanding partnership interests of one or more domestic
204-7 limited partnerships in exchange for cash, [and/or] securities, or
204-8 other property of the acquiring domestic or foreign limited
204-9 partnership or other entity, if:
204-10 (1) the partnership agreement of each domestic limited
204-11 partnership the partnership interests of which are to be acquired
204-12 pursuant to the plan of exchange contains provisions that authorize
204-13 the partnership interest exchange provided for in the plan of
204-14 exchange adopted by the limited partnership, and if one or more
204-15 foreign limited partnerships or other entities are to issue shares
204-16 or other interests as part of the plan of exchange, the issuance of
204-17 those shares or other interests is either permitted by the laws
204-18 under which that foreign limited partnership or other entity is
204-19 formed or not inconsistent with those laws;
204-20 (2) each domestic limited partnership the partnership
204-21 interests of which are to be acquired pursuant to the plan of
204-22 exchange approves the plan of exchange in the manner prescribed in
204-23 its partnership agreement; and
204-24 (3) each acquiring domestic or foreign limited
204-25 partnership or other entity takes all action that may be required
205-1 by the laws of the state or country under which it was formed or
205-2 incorporated and as required by its partnership agreement or other
205-3 constituent documents in order to effect the exchange. No filing
205-4 with the secretary of state shall be necessary in order to evidence
205-5 or effect such interest exchange with respect to a domestic limited
205-6 partnership that is a party to such interest exchange. When an
205-7 interest exchange takes effect as provided in the plan of exchange,
205-8 the partnership interests of each domestic limited partnership that
205-9 are to be acquired pursuant to the plan of exchange shall be deemed
205-10 to have been exchanged as provided in the plan of exchange and the
205-11 former holders of the partnership interests exchanged pursuant to
205-12 the plan of exchange shall be entitled only to the exchange rights
205-13 provided in the plan of exchange and the acquiring domestic or
205-14 foreign limited partnership or other entity or entities shall be
205-15 entitled to all rights, title, and interests with respect to the
205-16 partnership interests so acquired and exchanged subject to the
205-17 provisions in the plan of exchange.
205-18 SECTION 94. Sections A and F, Section 2.12, Texas Revised
205-19 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
205-20 Statutes), are amended to read as follows:
205-21 A. The effectiveness of (i) the certificate of limited
205-22 partnership of a limited partnership under this Act, (ii) an
205-23 amendment to a certificate of limited partnership, (iii) the
205-24 restatement of a certificate of limited partnership, (iv) a merger,
205-25 (v) a certificate of cancellation, (vi) the registration or
206-1 cancellation of registration of a foreign limited partnership to
206-2 transact business in this State, (vii) an amendment to the
206-3 registration of a foreign limited partnership, (viii) a change in
206-4 registered office or registered agent, [and] (ix) a change of
206-5 address of a registered agent (each such act or document being a
206-6 "Permitted Act"), and (x) a conversion may be made effective as of
206-7 a time and date after the time and date otherwise provided in this
206-8 Act or may be made effective upon the occurrence of events or facts
206-9 that may occur in the future, which events or facts may include
206-10 future acts of any person or entity, if:
206-11 (1) the certificate, statement, application, or other
206-12 filing that is required by this Act to be filed with the Secretary
206-13 of State to make effective such Permitted Act clearly and expressly
206-14 sets forth, in addition to any other statement or information
206-15 required to be set forth therein, (i) the time and date on which
206-16 such Permitted Act is to become effective or (ii) if such Permitted
206-17 Act is to become effective upon the occurrence of events or facts
206-18 that may occur in the future, (a) the manner in which such events
206-19 or facts shall operate to cause such Permitted Act to become
206-20 effective and (b) the date of the 90th day after the date of the
206-21 filing of such certificate, statement, application or other filing;
206-22 and either
206-23 (2) If in the case of a Permitted Act that is to
206-24 become effective as of a time or date after the time and date
206-25 otherwise provided in this Act, such subsequent time and date is
207-1 not more than 90 days after the date of the filing of the
207-2 certificate, statement, application, or other filing that is
207-3 otherwise required by this Act to be filed with the Secretary of
207-4 State to make effective such Permitted Act and (iii) the time on
207-5 which the Permitted Act is to become effective is not midnight or
207-6 12:00 p.m.; and
207-7 (3) Permitted Act that is to be made effective upon
207-8 the occurrence of events or facts that may occur in the future,
207-9 other than the mere passage of time, a statement that all such
207-10 events or facts upon which the effectiveness of such Permitted Act
207-11 is conditioned have been satisfied or waived, and of the date on
207-12 which such condition was satisfied or waived is filed with the
207-13 Secretary of State within 90 days of the date of the filing of the
207-14 certificate, statement, application or other filing that is
207-15 otherwise required by this Act for such Permitted Act to become
207-16 effective.
207-17 F. If a certificate of limited partnership, a certificate of
207-18 amendment or cancellation, a judicial decree of amendment or
207-19 cancellation, a certificate of merger, a certificate of conversion,
207-20 a restated certificate or any other document permitted to be filed
207-21 pursuant to this Act with the Secretary of State has been filed but
207-22 the event or transaction evidenced thereby has not become
207-23 effective, such filing may be abandoned in accordance with the
207-24 agreement of the parties thereto and, if so abandoned, a
207-25 certificate of abandonment, signed on behalf of each domestic and
208-1 foreign limited partnership or other entity that is a party to the
208-2 event or transaction by any general partner, an officer or other
208-3 duly authorized representative, stating the nature, date of filing
208-4 and parties to the filing to be abandoned and that the event or
208-5 transaction has been abandoned in accordance with the agreement of
208-6 the parties, is filed with the Secretary of State prior to the
208-7 effectiveness of the event or transaction in accordance with the
208-8 terms of the document so filed. Upon the filing of such statement
208-9 by the Secretary of State, the event or transaction evidenced by
208-10 the original filing shall be deemed abandoned and shall not become
208-11 effective.
208-12 SECTION 95. Article 2, Texas Revised Limited Partnership Act
208-13 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
208-14 adding Section 2.15 to read as follows:
208-15 Sec. 2.15. CONVERSION. (a) A domestic limited partnership
208-16 may adopt a plan of conversion and convert to a foreign limited
208-17 partnership or any other entity if:
208-18 (1) the converting entity acts on and its partners
208-19 approve a plan of conversion in the manner prescribed by Section
208-20 2.11 of this Act as if the conversion were a merger to which the
208-21 converting entity were a party and not the survivor;
208-22 (2) the conversion is permitted by, or not
208-23 inconsistent with, the laws of the state or country in which the
208-24 converted entity is to be incorporated, formed, or organized and
208-25 the incorporation, formation, or organization of the converted
209-1 entity is effected in compliance with such laws;
209-2 (3) at the time the conversion becomes effective, each
209-3 partner of the converting entity will, unless otherwise agreed to
209-4 by that partner, own an equity interest or other ownership or
209-5 security interest in, and be a shareholder, partner, member, owner
209-6 or other security holder of, the converted entity;
209-7 (4) no limited partner of the domestic limited
209-8 partnership will, as a result of the conversion, become personally
209-9 liable, without the limited partner's consent, for the liabilities
209-10 or obligations of the converted entity; and
209-11 (5) the converted entity shall be incorporated,
209-12 formed, or organized as part of or pursuant to the plan of
209-13 conversion.
209-14 (b) Any foreign limited partnership or other entity may
209-15 adopt a plan of conversion and convert to a domestic limited
209-16 partnership if:
209-17 (1) the conversion is permitted by the laws of the
209-18 state or country in which the foreign limited partnership is
209-19 formed, if a foreign limited partnership is converting;
209-20 (2) the conversion is either permitted by the laws
209-21 under which the other entity is formed or organized or by the
209-22 constituent documents of the other entity that are not inconsistent
209-23 with the laws of the state or country in which the other entity is
209-24 formed or organized, if another entity is converting; and
209-25 (3) the converting entity takes all action that may be
210-1 required by the laws of the state or country under which it is
210-2 incorporated, formed, or organized and by its constituent documents
210-3 to effect the conversion.
210-4 (c) A plan of conversion shall set forth:
210-5 (1) the name of the converting entity and the
210-6 converted entity;
210-7 (2) a statement that the converting entity is
210-8 continuing its existence in the organizational form of the
210-9 converted entity;
210-10 (3) a statement as to the type of entity that the
210-11 converted entity is to be and the state or country under the laws
210-12 of which the converted entity is to be incorporated, formed, or
210-13 organized;
210-14 (4) the manner and basis of converting the partnership
210-15 interests, shares, or other evidences of ownership of the
210-16 converting entity into partnership interests, shares, or other
210-17 evidences of ownership or securities of the converted entity, or
210-18 any combination thereof;
210-19 (5) in an attachment or exhibit, the certificate of
210-20 limited partnership of the domestic limited partnership, if the
210-21 converted entity is a domestic limited partnership; and
210-22 (6) in an attachment or exhibit, the certificate of
210-23 limited partnership, articles of incorporation, or other
210-24 organizational documents of the converted entity, if the converted
210-25 entity is not a domestic limited partnership.
211-1 (d) A plan of conversion may set forth such other provisions
211-2 relating to the conversion not inconsistent with law, including the
211-3 initial partnership agreement of the converted entity if the
211-4 converted entity is a partnership.
211-5 (e) If a plan of conversion has been approved in accordance
211-6 with the preceding provisions of this section and has not been
211-7 abandoned, articles of conversion shall be executed by the
211-8 converting entity by a partner, officer, or other duly authorized
211-9 representative thereof and shall set forth:
211-10 (1) the plan of conversion or a statement certifying
211-11 the following:
211-12 (A) the name, the state or country of
211-13 incorporation, formation, or organization of the converting entity
211-14 and the organizational form of the converting entity;
211-15 (B) that a plan of conversion has been approved;
211-16 (C) that an executed plan of conversion is on
211-17 file at the principal place of business of the converting entity,
211-18 stating the address thereof, and that an executed plan of
211-19 conversion will be on file, from and after the conversion, at the
211-20 principal place of business of the converting entity, stating the
211-21 address thereof; and
211-22 (D) that a copy of the plan of conversion will
211-23 be furnished by the converting entity (prior to the conversion) or
211-24 the converted entity (after the conversion), on written request and
211-25 without cost, to any member of the converting entity or the
212-1 converted entity; and
212-2 (2) a statement that the approval of the plan of
212-3 conversion was duly authorized by all action required by the laws
212-4 under which the converting entity was incorporated, formed, or
212-5 organized and by its constituent documents.
212-6 (f) Except as otherwise provided by Section 2.14 of this
212-7 Act, on the issuance of the certificate of conversion by the
212-8 secretary of state, the conversion of a converting entity shall be
212-9 effective.
212-10 (g) When a conversion of a converting entity takes effect:
212-11 (1) the converting entity shall continue to exist,
212-12 without interruption, but in the organizational form of the
212-13 converted entity rather than in its prior organizational form;
212-14 (2) all rights, title, and interests to all real
212-15 estate and other property owned by the converting entity shall
212-16 continue to be owned by the converted entity in its new
212-17 organizational form without reversion or impairment, without
212-18 further act or deed, and without any transfer or assignment having
212-19 occurred, but subject to any existing liens or other encumbrances
212-20 thereon;
212-21 (3) all liabilities and obligations of the converting
212-22 entity shall continue to be liabilities and obligations of the
212-23 converted entity in its new organizational form without impairment
212-24 or diminution by reason of the conversion;
212-25 (4) all rights of creditors or other parties with
213-1 respect to or against the prior interest holders or other owners of
213-2 the converting entity in their capacities as such in existence as
213-3 of the effective time of the conversion will continue in existence
213-4 as to those liabilities and obligations and may be pursued by such
213-5 creditors and obligees as if the conversion did not occur;
213-6 (5) a proceeding pending by or against the converting
213-7 entity or by or against any of the converting entity's interest
213-8 holders or owners in their capacities as such may be continued by
213-9 or against the converted entity in its new organizational form and
213-10 by or against the prior interest holders or owners, as the case may
213-11 be, without any need for substitution of parties;
213-12 (6) the partnership interests, shares, and other
213-13 evidences of ownership in the converting entity that are to be
213-14 converted into partnership interests, shares, evidences of
213-15 ownership, or other securities in the converted entity as provided
213-16 in the plan of conversion shall be so converted, and if the
213-17 converting entity is a domestic limited partnership, the former
213-18 holders of shares in the domestic limited partnership shall be
213-19 entitled only to the rights provided in the plan of conversion;
213-20 (7) if, after the effectiveness of the conversion, a
213-21 shareholder, partner, member, or other owner of the converted
213-22 entity would be liable under applicable law in such capacity for
213-23 the debts or obligations of the converted entity, such shareholder,
213-24 partner, member, or other owner of the converted entity shall be
213-25 liable for the debts and obligations of the converting entity that
214-1 existed before the conversion takes effect only to the extent that
214-2 such shareholder, partner, member, or other owner:
214-3 (A) agreed in writing to be liable for such
214-4 debts or obligations;
214-5 (B) was liable under applicable law, prior to
214-6 the effectiveness of the conversion, for such debts or obligations;
214-7 or
214-8 (C) by becoming a shareholder, partner, member,
214-9 or other owner of the converted entity, becomes liable under
214-10 applicable law for existing debts and obligations of the converted
214-11 entity;
214-12 (8) if the converted entity is a foreign limited
214-13 partnership or other entity, such converted entity shall be deemed
214-14 to appoint the secretary of state as its agent for service of
214-15 process in a proceeding to enforce any obligation or the rights of
214-16 dissenting members of the converting domestic limited partnership;
214-17 and
214-18 (9) if the converting limited partnership is a
214-19 domestic limited partnership, the provisions of Section 2.11 of
214-20 this Act shall apply as if the converted entity were the survivor
214-21 of a merger with the converting entity.
214-22 (h) For purposes of this section:
214-23 (1) "Conversion" means the continuance of:
214-24 (A) a domestic limited partnership as, and in
214-25 the organizational form of, a foreign limited partnership or other
215-1 entity; or
215-2 (B) a foreign limited partnership or other
215-3 entity as, and in the organizational form of, a domestic limited
215-4 partnership.
215-5 (2) "Converted entity" means any domestic or foreign
215-6 limited partnership or other entity to which a converting entity
215-7 has converted or intends to convert as permitted by this section.
215-8 (3) "Converting entity" means any domestic or foreign
215-9 limited partnership or other entity that has converted or intends
215-10 to convert as permitted by this section.
215-11 (4) "Other entity" means any entity, whether organized
215-12 for profit or not, that is a corporation, partnership (other than a
215-13 limited partnership or a general partnership (including a joint
215-14 venture) governed by the Texas Revised Partnership Act (Article
215-15 6132b-1.01 et seq., Vernon's Texas Civil Statutes)), limited
215-16 liability company, joint stock company, cooperative, association,
215-17 bank, insurance company, or other legal entity organized pursuant
215-18 to the laws of this state or any other state or country.
215-19 SECTION 96. Subsection (b), Section 3.03, Texas Revised
215-20 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
215-21 Statutes), is amended to read as follows:
215-22 (b) For the purposes of this section, a limited partner does
215-23 not participate in the control of the business by virtue of the
215-24 limited partner's having or acting in one or more of the following
215-25 capacities or possessing or exercising one or more of the following
216-1 powers:
216-2 (1) acting as a contractor for or an agent or employee
216-3 of the limited partnership or of a general partner, an officer,
216-4 director, or stockholder of a corporate general partner, [or] a
216-5 partner of a partnership that is a general partner of the limited
216-6 partnership, a member or manager of a limited liability company
216-7 that is a general partner of the limited partnership, or in a
216-8 similar capacity with any other person that is a general partner;
216-9 (2) consulting with or advising a general partner on
216-10 any matter, including the business of the limited partnership;
216-11 (3) acting as surety, guarantor, or endorser for the
216-12 limited partnership, to guarantee or assume one or more specific
216-13 obligations of the limited partnership, or to provide collateral
216-14 for borrowings of the limited partnership;
216-15 (4) calling, requesting, attending, or participating
216-16 in a meeting of the partners or the limited partners;
216-17 (5) winding up a limited partnership under Section
216-18 8.04 of this Act;
216-19 (6) taking any action required or permitted by law to
216-20 bring, or pursue, or settle or otherwise terminate a derivative
216-21 action in the right of the limited partnership;
216-22 (7) serving on a committee of the limited partnership
216-23 or the limited partners; or
216-24 (8) proposing, approving, or disapproving, by vote or
216-25 otherwise, one or more of the following matters:
217-1 (A) the dissolution and winding up of the
217-2 limited partnership or an election to reconstitute the limited
217-3 partnership or an election to continue the business of the limited
217-4 partnership;
217-5 (B) the sale, exchange, lease, mortgage,
217-6 assignment, pledge, or other transfer of, or granting of a security
217-7 interest in, an asset or assets of the limited partnership;
217-8 (C) the incurring, renewal, refinancing, or
217-9 payment or other discharge of indebtedness by the limited
217-10 partnership;
217-11 (D) a change in the nature of the business of
217-12 the limited partnership;
217-13 (E) the admission, removal, or retention of a
217-14 general partner;
217-15 (F) the admission, removal, or retention of a
217-16 limited partner;
217-17 (G) a transaction or other matter involving an
217-18 actual or potential conflict of interest;
217-19 (H) an amendment to the partnership agreement or
217-20 certificate of limited partnership;
217-21 (I) if the limited partnership is qualified as
217-22 an investment company under the federal Investment Company Act of
217-23 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter
217-24 required by the Investment Company Act of 1940, as amended, or the
217-25 rules and regulations of the Securities and Exchange Commission
218-1 thereunder, to be approved by the holders of beneficial interests
218-2 in an investment company including:
218-3 (i) electing directors or trustees of the
218-4 investment company;
218-5 (ii) approving or terminating investment
218-6 advisory or underwriting contracts;
218-7 (iii) approving auditors; and
218-8 (iv) acting on any other matters that the
218-9 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.)
218-10 requires to be approved by the holders of beneficial interests in
218-11 the investment company;
218-12 (J) indemnification of a general partner under
218-13 Article 11 of this Act;
218-14 (K) any other matter stated in the partnership
218-15 agreement;
218-16 (L) exercising a right or power granted or
218-17 permitted to limited partners under this Act and not specifically
218-18 enumerated in this subsection; or
218-19 (M) the merger of a limited partnership.
218-20 SECTION 97. Section 5.01, Texas Revised Limited Partnership
218-21 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
218-22 read as follows:
218-23 Sec. 5.01. FORM OF CONTRIBUTION. The contribution of a
218-24 limited partner may consist of any tangible or intangible benefit
218-25 [be in cash, property, or services rendered, or a promissory note
219-1 or other obligation to pay cash or transfer property] to the
219-2 limited partnership or other property of any kind or nature,
219-3 including cash, a promissory note, services performed, a contract
219-4 for services to be performed, other interests in or securities of
219-5 the limited partnership, or interests in or securities of any other
219-6 limited partnership, domestic or foreign, or other entity.
219-7 SECTION 98. Subsection (d), Section 5.02, Texas Revised
219-8 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
219-9 Statutes), is amended to read as follows:
219-10 (d) Unless otherwise provided by the partnership agreement,
219-11 the obligation of a partner or a partner's legal representative or
219-12 successor to make a contribution or otherwise pay cash or transfer
219-13 property or to return cash or property paid or distributed to the
219-14 partner in violation of this Act or the partnership agreement may
219-15 be compromised or released only by consent of all of the partners.
219-16 Notwithstanding the compromise or release, a creditor of a limited
219-17 partnership who extends credit or otherwise acts in reasonable
219-18 reliance on that obligation, after the partner signs a writing that
219-19 reflects the obligation and before the writing is amended or
219-20 canceled to reflect the compromise or release, may enforce the
219-21 original obligation. A general partner, however, remains liable to
219-22 persons other than the partnership and the other partners, as
219-23 provided by Subsection (b) of Section 4.03 of this Act,
219-24 notwithstanding the compromise or release. A conditional
219-25 obligation may not be enforced unless the conditions of the
220-1 obligation have been satisfied or waived as to or by the applicable
220-2 limited partner. Conditional obligations include contributions
220-3 payable upon a discretionary call of a limited partnership before
220-4 the time the call occurs.
220-5 SECTION 99. Subsection (b), Section 6.02, Texas Revised
220-6 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
220-7 Statutes), is amended to read as follows:
220-8 (b) Unless otherwise provided by a written partnership
220-9 agreement and subject to the liability created under Subsection (a)
220-10 of this section, if a general partner [who] ceases to be a general
220-11 partner under Section 4.02 of this Act, then [shall, at the option
220-12 of] the remaining general partner or partners or, if there are no
220-13 remaining general partners, then the limited partners, at the
220-14 option of a majority in interest of the limited partners in a vote
220-15 that excludes any limited partner's [partnership] interest held by
220-16 the withdrawing general partner, may:
220-17 (1) convert [the interest in] that general partner's
220-18 partnership interest [capital account, profits, losses, and
220-19 distributions] to that of a limited partner; or
220-20 (2) pay to the withdrawn general partner in cash, or
220-21 secure by bond approved by a court of competent jurisdiction, the
220-22 value of that partner's partnership interest less the damages
220-23 caused if the withdrawal constituted a breach of the partnership
220-24 agreement.
220-25 Until one of the actions under Subdivision (1) or (2) of this
221-1 subsection is taken, the owner of the partnership interest of the
221-2 withdrawn general partner has the status of an assignee under
221-3 Article VII of this Act.
221-4 SECTION 100. Section 6.03, Texas Revised Limited Partnership
221-5 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
221-6 read as follows:
221-7 Sec. 6.03. WITHDRAWAL OF LIMITED PARTNER. A limited partner
221-8 may withdraw from a limited partnership only at the time or on the
221-9 occurrence of events specified in a [written] partnership agreement
221-10 and in accordance with that [written] partnership agreement. [If
221-11 the partnership agreement does not specify such a time or event or
221-12 a definite time for the dissolution and winding up of the limited
221-13 partnership, a limited partner may withdraw on giving written
221-14 notice not less than six months before the date of withdrawal to
221-15 each general partner at that general partner's address as set forth
221-16 in the certificate of limited partnership.]
221-17 SECTION 101. Section 8.01, Texas Revised Limited Partnership
221-18 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
221-19 read as follows:
221-20 Sec. 8.01. DISSOLUTION. A limited partnership is dissolved
221-21 and its affairs shall be wound up only on the first of the
221-22 following to occur:
221-23 (1) [on] the occurrence of events specified in the
221-24 partnership agreement to cause dissolution unless within 90 days
221-25 after the event causing the dissolution, all remaining partners (or
222-1 another group or percentage of partners as specified by the
222-2 partnership agreement) agree in writing to continue the business of
222-3 the limited partnership;
222-4 (2) written consent of all partners to dissolution;
222-5 (3) an event of withdrawal of a general partner,
222-6 unless:
222-7 (A) there remains at least one general partner
222-8 and the partnership agreement permits the business of the limited
222-9 partnership to be carried on by the remaining general partner or
222-10 general partners, and that general partner or those general
222-11 partners do so; or
222-12 (B) within 90 days after the event of
222-13 withdrawal, all remaining partners (or another group or percentage
222-14 of partners as specified by the partnership agreement) agree in
222-15 writing to continue the business of the limited partnership and, to
222-16 the extent that they desire or if there are no remaining general
222-17 partners, agree to the appointment, effective as of the date of
222-18 withdrawal, of one or more new general partners; or
222-19 (4) entry of a decree of judicial dissolution under
222-20 Section 8.02 of this Act.
222-21 SECTION 102. Section 8.02, Texas Revised Limited Partnership
222-22 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
222-23 read as follows:
222-24 Sec. 8.02. JUDICIAL DISSOLUTION. On application by or for a
222-25 partner, a court of competent jurisdiction may decree dissolution
223-1 of a limited partnership if the court determines that:
223-2 (1) the economic purpose of the limited partnership is
223-3 likely to be unreasonably frustrated;
223-4 (2) another partner has engaged in conduct relating to
223-5 the limited partnership business that makes it not reasonably
223-6 practicable to carry on the business in limited partnership with
223-7 that partner; or
223-8 (3) it is not reasonably practicable to carry on the
223-9 business of the limited partnership in conformity with the
223-10 partnership agreement.
223-11 SECTION 103. Subsection (a), Section 8.04, Texas Revised
223-12 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
223-13 Statutes), is amended to read as follows:
223-14 (a) Except as provided in the partnership agreement, on [On]
223-15 the dissolution of a limited partnership, [unless it is
223-16 reconstituted in accordance with Section 8.03 of this Act,] the
223-17 partnership's affairs shall be wound up as soon as reasonably
223-18 practicable, and the[. The] winding up shall be accomplished by
223-19 the general partners who have not wrongfully dissolved a limited
223-20 partnership or, if there are none who have not wrongfully dissolved
223-21 the partnership, by the limited partners or a person chosen by the
223-22 limited partners. In addition, a court of competent jurisdiction,
223-23 on cause shown, may wind up the limited partnership's affairs on
223-24 application of any partner or the partner's legal representative or
223-25 assignee and, in connection with the winding up, may appoint a
224-1 person to carry out the liquidation and may make all other orders,
224-2 directions, and inquiries that the circumstances require.
224-3 SECTION 104. Section 12.01, Texas Revised Limited
224-4 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
224-5 is amended to read as follows:
224-6 Sec. 12.01. FEES. The secretary of state shall collect for
224-7 the use of the state:
224-8 (1) for filing a certificate of limited partnership
224-9 under Section 2.01 of this Act, or an application for registration
224-10 as a foreign limited partnership under Section 9.02 of this Act, a
224-11 fee of $750;
224-12 (2) for filing a certificate of amendment under
224-13 Section 2.02 of this Act, a certificate of cancellation under
224-14 Section 2.03 of this Act, a restated certificate of limited
224-15 partnership under Section 2.10 of this Act, a certificate of merger
224-16 under Section 2.11 of this Act, a certificate of correction under
224-17 Section 2.12 of this Act, a certificate of conversion under Section
224-18 2.15 of this Act, a certificate under Section 9.05 of this Act, or
224-19 a certificate of cancellation under Section 9.06 of this Act[, or
224-20 an election to adopt this Act, whether by the filing of a
224-21 certificate of limited partnership, an application for registration
224-22 as a foreign limited partnership or a certificate of amendment,
224-23 under Section 13.02 of this Act], a fee of $200;
224-24 (3) for filing [an application for reservation of
224-25 name, an application for renewal of reservation, a notice of
225-1 transfer of reservation under Subsection (b) of Section 1.04 of
225-2 this Act, or] an application for registration of name or an
225-3 application for renewal of registration of name under Section 1.05
225-4 of this Act, a fee of $75;
225-5 (4) for filing a statement for change of registered
225-6 office, registered agent, or both, under Subsection (b) of Section
225-7 1.06 of this Act, or a statement for change of location of
225-8 registered office under Subsection (h) of Section 1.06 of this Act,
225-9 a fee of $50, except that the maximum fee for simultaneous filings
225-10 by a registered agent for more than one limited partnership may not
225-11 exceed $2,500;
225-12 (5) for the filing of an application for reservation
225-13 of name under Subsection (b) of Section 1.04 of this Act, a notice
225-14 of transfer of reservation under Subsection (b) of Section 1.04 of
225-15 this Act, or for preclearance of any document for filing, a fee of
225-16 $50; and
225-17 (6) for filing any instrument under this Act not
225-18 expressly provided for above, a fee of $25.
225-19 SECTION 105. Section 13.04, Texas Revised Limited
225-20 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
225-21 is amended to read as follows:
225-22 Sec. 13.04. FILINGS BY FACSIMILE OR ELECTRONIC [SIMILAR]
225-23 MEANS. (a) Any original certificate, instrument, or other
225-24 document required or authorized to be filed with the secretary of
225-25 state under this Act may be a photographic, photostatic, facsimile,
226-1 or similar reproduction of a signed certificate, instrument, or
226-2 other document.
226-3 (b) Any signature or the mark made by a person unable to
226-4 write on any certificate, instrument, or other document required or
226-5 authorized to be filed with the secretary of state may be a
226-6 facsimile in an electronic format permitted by the rules of the
226-7 secretary of state or any symbol executed or adopted by a person
226-8 with the intent to authenticate a writing.
226-9 (c) If permitted by the rules of the secretary of state, any
226-10 certificate, instrument, or other document required or authorized
226-11 to be filed with the secretary of state under this Act may be
226-12 transmitted for filing electronically. If the certificate,
226-13 instrument, or other document conforms to law and the rules
226-14 promulgated by the secretary of state, the secretary shall file the
226-15 instrument by acceptance into the filing system adopted by the
226-16 secretary and assigning to the instrument a date of filing. An
226-17 electronic acknowledgment or certification of the filing, as
226-18 applicable, shall be provided by the secretary of state to the
226-19 partnership or its representative. The secretary of state may
226-20 promulgate rules and adopt practices and procedures for the
226-21 transmission, filing, and retention of instruments filed
226-22 electronically or by use of other technological means.
226-23 (d) This section does not require any certificate,
226-24 instrument, or other document authorized or required to be filed
226-25 with the secretary of state under this Act or any certificate
227-1 issued by the secretary of state concerning any other instrument to
227-2 be on paper or reduced to printed form.
227-3 SECTION 106. Section 1.01, Texas Revised Partnership Act
227-4 (Article 6132b-1.01, Vernon's Texas Civil Statutes), is amended to
227-5 read as follows:
227-6 Sec. 1.01. GENERAL DEFINITIONS. In this Act:
227-7 (1) "Business" means a trade, occupation, profession,
227-8 or other commercial activity.
227-9 (2) "Capital account" means the amount of a partner's
227-10 original contribution to a partnership, which consists of cash and
227-11 the agreed value of any other contribution to the partnership,
227-12 increased by the amount of additional contributions made by that
227-13 partner and by profits credited to that partner under Section
227-14 4.01(b), and decreased by the amount of distributions to that
227-15 partner and by losses charged to that partner under Section
227-16 4.01(b).
227-17 (3) "Court" means a court and judge having
227-18 jurisdiction in the case.
227-19 (4) "Debtor in bankruptcy" means a person who is the
227-20 subject of:
227-21 (A) an order for relief under Title 11 of the
227-22 United States Code or a comparable order under a successor statute
227-23 of general application; or
227-24 (B) a comparable order under federal, [or]
227-25 state, or foreign law governing insolvency.
228-1 (5) "Distribution" means a transfer of cash or other
228-2 property from a partnership to:
228-3 (A) a partner in the partner's capacity as a
228-4 partner; or
228-5 (B) the partner's transferee.
228-6 (6) "Event of withdrawal" or "withdrawal" means an
228-7 event specified by Section 6.01(b).
228-8 (7) "Event requiring a winding up" means an event
228-9 specified by Section 8.01.
228-10 (8) "Foreign limited partnership" means a partnership
228-11 formed under the laws of another state and having as partners one
228-12 or more general partners and one or more limited partners.
228-13 (9) "Foreign limited liability partnership" means a
228-14 partnership that:
228-15 (A) is formed under laws other than the laws of
228-16 Texas; and
228-17 (B) has the status of a registered limited
228-18 liability partnership under those laws.
228-19 (10) "Majority-in-interest" means, as to all of or a
228-20 specified group of partners, partners owning more than 50 percent
228-21 of the current interest in the profits of the partnership owned by
228-22 all of the partners or by the partners in the specified group, as
228-23 appropriate.
228-24 (11) [(10)] "Partnership" means an entity created as
228-25 described by Section 2.02(a). The term includes a registered
229-1 limited liability partnership formed under Section 3.08 or under
229-2 the Texas Uniform Partnership Act (Article 6132b, Vernon's Texas
229-3 Civil Statutes) and its subsequent amendments.
229-4 (12) [(11)] "Partnership agreement" means any
229-5 agreement, written or oral, of the partners concerning a
229-6 partnership.
229-7 (13) [(12)] "Partnership interest" means a partner's
229-8 interest in a partnership, including the partner's share of profits
229-9 and losses or similar items, and the right to receive
229-10 distributions. A partnership interest does not include a partner's
229-11 right to participate in management.
229-12 (14) [(13)] "Person" includes an individual,
229-13 corporation, business trust, estate, trust, custodian, trustee,
229-14 executor, administrator, nominee, partnership (including a
229-15 registered limited liability partnership and a limited
229-16 partnership), association, limited liability company, government,
229-17 governmental subdivision, governmental agency, governmental
229-18 instrumentality, and any other legal or commercial entity, in its
229-19 own or representative capacity.
229-20 (15) [(14)] "Property" means all property, real,
229-21 personal, or mixed, tangible or intangible, or an interest in that
229-22 property.
229-23 (16) [(15)] "Registered limited liability partnership"
229-24 means a partnership registered under Section 3.08(b) and complying
229-25 with Sections 3.08(c) and (d)(1).
230-1 (17) [(16)] "State" means a state of the United
230-2 States, the District of Columbia, the Commonwealth of Puerto Rico,
230-3 or any territory or insular possession subject to the jurisdiction
230-4 of the United States.
230-5 (18) [(17)] "Transfer" includes:
230-6 (A) an assignment;
230-7 (B) a conveyance;
230-8 (C) a lease;
230-9 (D) a mortgage;
230-10 (E) a deed;
230-11 (F) an encumbrance; and
230-12 (G) the creation of a security interest.
230-13 (19) [(18)] "Withdrawn partner" means a partner with
230-14 respect to whom an event of withdrawal has occurred. A partner
230-15 withdraws if an event of withdrawal has occurred with respect to
230-16 that partner under Section 6.01.
230-17 SECTION 107. Subsection (b), Section 1.03, Texas Revised
230-18 Partnership Act (Article 6132b-1.03, Vernon's Texas Civil
230-19 Statutes), is amended to read as follows:
230-20 (b) Statutory Provisions that may not be Varied by
230-21 Agreement. A partnership agreement or the partners may not:
230-22 (1) unreasonably restrict a partner's right of access
230-23 to books and records under Section 4.03(b);
230-24 (2) eliminate the duty of loyalty under Section
230-25 4.04(b), but the partners may by agreement identify specific types
231-1 or categories of activities that do not violate the duty of
231-2 loyalty, if not manifestly unreasonable;
231-3 (3) eliminate the duty of care under Section 4.04(c),
231-4 but the partners may by agreement determine the standards by which
231-5 the performance of the obligation is to be measured, if the
231-6 standards are not manifestly unreasonable;
231-7 (4) eliminate the obligation of good faith under
231-8 Section 4.04(d), but the partners may by agreement determine the
231-9 standards by which the performance of the obligation is to be
231-10 measured, if the standards are not manifestly unreasonable;
231-11 (5) vary the power to withdraw as a partner under
231-12 Section 6.01(b)(1), (7), or (8), except to require the notice to be
231-13 in writing;
231-14 (6) vary the right to expel a partner by a court in
231-15 the events specified by Section 6.01(b)(5);
231-16 (7) vary the requirement to wind up the partnership
231-17 business in the events specified by Section 8.01(c), (d), or (e);
231-18 (8) restrict rights of third parties under this Act,
231-19 except for limitations on individual partners' liability in a
231-20 registered limited liability partnership as provided or permitted
231-21 by Section 3.08; or
231-22 (9) select a governing law not permitted under Section
231-23 1.05(a)(1).
231-24 SECTION 108. Subsection (a), Section 1.05, Texas Revised
231-25 Partnership Act (Article 6132b-1.05, Vernon's Texas Civil
232-1 Statutes), is amended to read as follows:
232-2 (a) Internal Affairs. The determination whether a
232-3 partnership has been formed, a [A] partnership's internal affairs,
232-4 and the relations of the partners to one another are governed by:
232-5 (1) the law of the state chosen by the partners to
232-6 govern if that state bears a reasonable relation to the partners or
232-7 to the partnership business and affairs under principles that apply
232-8 to a contract among the partners other than the partnership
232-9 agreement; or
232-10 (2) if the partners do not choose a governing law
232-11 under Subdivision (1), the law of the state in which the
232-12 partnership has its chief executive office.
232-13 SECTION 109. Section 2.02, Texas Revised Partnership Act
232-14 (Article 6132b-2.02, Vernon's Texas Civil Statutes), is amended by
232-15 adding Subsection (d) to read as follows:
232-16 (d) Partnership Resulting from Merger or Conversion. In
232-17 the case of a new partnership being formed pursuant to a plan of
232-18 merger or a plan of conversion under Article IX of this Act, the
232-19 existence of the partnership as a partnership shall begin on the
232-20 effectiveness of the merger or the conversion, as the case may be,
232-21 and the persons to be partners shall become partners as of that
232-22 time.
232-23 SECTION 110. Subsections (a) and (b), Section 3.02, Texas
232-24 Revised Partnership Act (Article 6132b-3.02, Vernon's Texas Civil
232-25 Statutes), are amended to read as follows:
233-1 (a) Partner Agent of Partnership as to Partnership Business.
233-2 Each partner is an agent of the partnership for the purpose of its
233-3 business. Unless the partner does not have authority to act for
233-4 the partnership in the particular matter and the person with whom
233-5 the partner is dealing knows that the partner lacks authority, an
233-6 act of a partner, including the execution of an instrument in the
233-7 partnership name, binds the partnership if the act is for
233-8 apparently carrying on in the ordinary course [usual way]:
233-9 (1) the partnership business; or
233-10 (2) business of the kind carried on by the
233-11 partnership.
233-12 (b) Act Outside Scope of Business. An act of a partner
233-13 binds [does not bind] the partnership only if [unless] authorized
233-14 by the other partners if the act is not apparently for carrying on
233-15 in the ordinary course [usual way]:
233-16 (1) the partnership business; or
233-17 (2) business of the kind carried on by the
233-18 partnership.
233-19 SECTION 111. Section 3.04, Texas Revised Partnership Act
233-20 (Article 6132b-3.04, Vernon's Texas Civil Statutes), is amended to
233-21 read as follows:
233-22 Sec. 3.04. [NATURE OF] PARTNER'S LIABILITY [PARTNERSHIP].
233-23 Except as provided by Section 3.07 or 3.08(a) [for a registered
233-24 limited liability partnership], all partners are liable jointly and
233-25 severally for all debts and obligations of the partnership unless
234-1 otherwise agreed by the claimant or provided by law.
234-2 SECTION 112. Section 3.05, Texas Revised Partnership Act
234-3 (Article 6132b-3.05, Vernon's Texas Civil Statutes), is amended by
234-4 adding Subsection (f) to read as follows:
234-5 (f) Registered Limited Liability Partnership. This section
234-6 does not limit the effect of Section 3.08(a) in the case of a
234-7 registered limited liability partnership.
234-8 SECTION 113. Subsections (a) and (d), Section 3.08, Texas
234-9 Revised Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
234-10 Statutes), are amended to read as follows:
234-11 (a) Liability of Partner. (1) Except as provided in
234-12 Subsection (a)(2), a partner in a registered limited liability
234-13 partnership is not individually liable, directly or indirectly, by
234-14 contribution, indemnity, or otherwise, for debts and obligations of
234-15 the partnership incurred while the partnership is a registered
234-16 limited liability partnership.
234-17 (2) A partner in a registered limited liability
234-18 partnership is not individually liable, directly or indirectly, by
234-19 contribution, indemnity, or otherwise, for debts and obligations of
234-20 the partnership arising from errors, omissions, negligence,
234-21 incompetence, or malfeasance committed while the partnership is a
234-22 registered limited liability partnership and in the course of the
234-23 partnership business by another partner or a representative of the
234-24 partnership not working under the supervision or direction of the
234-25 first partner unless the first partner:
235-1 (A) was directly involved in the specific
235-2 activity in which the errors, omissions, negligence, incompetence,
235-3 or malfeasance were committed by the other partner or
235-4 representative; or
235-5 (B) had notice or knowledge of the errors,
235-6 omissions, negligence, incompetence, or malfeasance by the other
235-7 partner or representative at the time of occurrence and then failed
235-8 to take reasonable steps to prevent or cure the errors, omissions,
235-9 negligence, incompetence, or malfeasance.
235-10 (3) Subsections [(2) Subsection] (a)(1) and (a)(2) do
235-11 [does] not affect:
235-12 (A) [the joint and several liability of a
235-13 partner for debts and obligations of the partnership arising from a
235-14 cause other than the causes specified by Subsection (a)(1);]
235-15 [(B)] the liability of a partnership to pay its
235-16 debts and obligations out of partnership property; [or]
235-17 (B) the liability of a partner, if any, imposed
235-18 by law or contract independently of the partner's status as a
235-19 partner; or
235-20 (C) the manner in which service of citation or
235-21 other civil process may be served in an action against a
235-22 partnership.
235-23 (4) [(3)] In this subsection, "representative"
235-24 includes an agent, servant, or employee of a registered limited
235-25 liability partnership.
236-1 (5) In the case of a registered limited liability
236-2 partnership, Subsection (a) prevails over the other parts of this
236-3 Act regarding the liability of partners, their chargeability for
236-4 the debts and obligations of the partnership, and their obligations
236-5 regarding contributions and indemnity.
236-6 (d) Insurance or Financial Responsibility. (1) A
236-7 registered limited liability partnership must:
236-8 (A) carry at least $100,000 of liability
236-9 insurance of a kind that is designed to cover the kinds of errors,
236-10 omissions, negligence, incompetence, or malfeasance for which
236-11 liability is limited by Subsection (a)(2) [(a)(1)]; or
236-12 (B) provide $100,000 of funds specifically
236-13 designated and segregated for the satisfaction of judgments against
236-14 the partnership based on the kinds of errors, omissions,
236-15 negligence, incompetence, or malfeasance for which liability is
236-16 limited by Subsection (a)(2) [(a)(1)] by:
236-17 (i) deposit in trust or in bank escrow of
236-18 cash, bank certificates of deposit, or United States Treasury
236-19 obligations; or
236-20 (ii) a bank letter of credit or insurance
236-21 company bond.
236-22 (2) If the registered limited liability partnership is
236-23 in compliance with Subdivision (1), the requirements of this
236-24 subsection shall not be admissible or in any way be made known to
236-25 the jury in determining an issue of liability for or extent of the
237-1 debt or obligation or damages in question.
237-2 (3) If compliance with Subdivision (1) is disputed:
237-3 (A) compliance must be determined separately
237-4 from the trial or proceeding to determine the partnership debt or
237-5 obligation in question, its amount, or partner liability for the
237-6 debt or obligation; and
237-7 (B) the burden of proof of compliance is on the
237-8 person claiming limitation of liability under Subsection (a)(2)
237-9 [(a)(1)].
237-10 SECTION 114. Subsection (b), Section 3.08, Texas Revised
237-11 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
237-12 Statutes), is amended by amending Subdivision (12) and adding
237-13 Subdivisions (16), (17), and (18) to read as follows:
237-14 (12) A document filed under this subsection may be a
237-15 photographic, facsimile, or similar reproduction of a signed
237-16 document. A signature on a document filed under this section may
237-17 be a facsimile, the mark made by a person unable to write, in
237-18 electronic format permitted by the rules of the secretary of state
237-19 or any symbol executed or adopted by a person with the intent to
237-20 authenticate a writing.
237-21 (16) If permitted by the rules of the secretary of
237-22 state, any document authorized to be filed with the secretary of
237-23 state under this subsection may be transmitted for filing
237-24 electronically. If the document conforms to the requirements of
237-25 this subsection and the rules promulgated by the secretary of
238-1 state, the secretary shall file the document by acceptance into the
238-2 filing system adopted by the secretary and assigning to the
238-3 document a date of filing. An electronic acknowledgment of the
238-4 filing, together with an electronically transmitted confirmation
238-5 copy of the document, shall be provided by the secretary of state
238-6 to the partnership or its representative.
238-7 (17) This subsection does not require any document
238-8 authorized to be filed with the secretary of state under this
238-9 subsection or any certificate issued by the secretary of state
238-10 concerning any such document to be on paper or reduced to printed
238-11 form.
238-12 (18) All electronic acknowledgments and certificates
238-13 required to be issued by the secretary of state under this Act
238-14 shall be considered issued or provided by the secretary of state on
238-15 the initial transmission by the secretary of state of the
238-16 acknowledgment or certificate required to be issued.
238-17 SECTION 115. Subsections (b) and (c), Section 4.01, Texas
238-18 Revised Partnership Act (Article 6132b-4.01, Vernon's Texas Civil
238-19 Statutes), are amended to read as follows:
238-20 (b) Profits and Losses. Each partner is entitled to be
238-21 credited with an equal share of the partnership's profits and [of a
238-22 partnership. Each partner] is chargeable [charged] with a share of
238-23 the partnership's losses, whether capital or operating, [of the
238-24 partnership] in proportion to the partner's share of the profits.
238-25 (c) Disproportionate Payment or Advance. A partner who, in
239-1 the proper conduct of the business of the partnership or for the
239-2 preservation of its business or property, reasonably makes a
239-3 payment or advance beyond the amount the partner agreed to
239-4 contribute, or who reasonably incurs a liability, is entitled to be
239-5 repaid by the partnership and to receive interest from the
239-6 partnership from the date of the payment or advance or the
239-7 incurrence of the liability.
239-8 SECTION 116. Subsection (b), Section 4.06, Texas Revised
239-9 Partnership Act (Article 6132b-4.06, Vernon's Texas Civil
239-10 Statutes), is amended to read as follows:
239-11 (b) Action by partner. A partner may maintain an action
239-12 against the partnership or another partner for legal or equitable
239-13 relief, with or without [including] an accounting as to partnership
239-14 business, to:
239-15 (1) enforce a right under the partnership agreement;
239-16 (2) enforce a right under this Act, including:
239-17 (A) the partner's rights under Sections 4.01,
239-18 4.03, and 4.04;
239-19 (B) the partner's right on withdrawal to have
239-20 the partner's interest in the partnership redeemed under Section
239-21 7.01 or enforce any other right under Article 6 or 7; and
239-22 (C) the partner's rights under Article 8; or
239-23 (3) enforce the rights and otherwise protect the
239-24 interests of the partner, including rights and interests arising
239-25 independently of the partnership relationship.
240-1 SECTION 117. Subsection (b), Section 6.02, Texas Revised
240-2 Partnership Act (Article 6132b-6.02, Vernon's Texas Civil
240-3 Statutes), is amended to read as follows:
240-4 (b) Wrongful Withdrawal. A partner's withdrawal is wrongful
240-5 only if:
240-6 (1) it is in breach of an express provision of the
240-7 partnership agreement;
240-8 (2) in the case of a partnership for a definite term
240-9 or particular undertaking or for which the partnership agreement
240-10 provides for winding up on a specified event, before the expiration
240-11 of the term, the completion of the undertaking, or the occurrence
240-12 of the event:
240-13 (A) the partner withdraws by express will; [or]
240-14 (B) the partner withdraws by becoming a debtor
240-15 in bankruptcy; or
240-16 (C) in the case of a partner that is not an
240-17 individual, a trust other than a business trust, or an estate, the
240-18 partner is expelled or otherwise withdraws because the partner
240-19 wilfully dissolved or terminated; or
240-20 (3) the partner is expelled by judicial decree under
240-21 Section 6.01(b)(5).
240-22 SECTION 118. Subsections (a), (b), and (c), Section 8.06,
240-23 Texas Revised Partnership Act (Article 6132b-8.06, Vernon's Texas
240-24 Civil Statutes), are amended to read as follows:
240-25 (a) Application of Property to Obligations. In winding up
241-1 the partnership business, the property of the partnership,
241-2 including the contributions of the partners required by this
241-3 section, must be applied to discharge its obligations to creditors,
241-4 including, to the extent permitted by other applicable law,
241-5 partners who are creditors other than in their capacities as
241-6 partners. Any [A] surplus must be applied to pay in cash the net
241-7 amount distributable to partners in accordance with their right to
241-8 distributions under Subsection (b).
241-9 (b) Settlement of Accounts Among Partners. Each partner is
241-10 entitled to a settlement of all partnership accounts on winding up
241-11 the partnership business. In settling accounts among the partners,
241-12 the partnership interest of a withdrawn partner that is not
241-13 redeemed under Section 7.01 is credited with a share of any profits
241-14 for the period after the partner's withdrawal but is charged with a
241-15 share of losses for that period only to the extent of profits
241-16 credited for that period, and the profits and losses that result
241-17 from the liquidation of the partnership property must be credited
241-18 and charged to the partners' capital accounts. The partnership
241-19 shall make a distribution to a partner in an amount equal to that
241-20 partner's positive balance in the partner's capital account.
241-21 Except as provided by Section 3.07 or 3.08(a), a [A] partner shall
241-22 contribute to the partnership an amount equal to that partner's
241-23 negative balance in the partner's capital account.
241-24 (c) Contribution to Satisfy Obligations. Except as provided
241-25 by Section 3.07 or 3.08(a), to [To] the extent not taken into
242-1 account in settling the accounts among partners under Subsection
242-2 (b):
242-3 (1) [,] each partner must contribute, in the
242-4 proportion in which the partner shares partnership losses, the
242-5 amount necessary to satisfy partnership obligations, excluding
242-6 liabilities that creditors have agreed may be satisfied only with
242-7 partnership property without recourse to individual partners;
242-8 (2) if[. If] a partner fails to contribute, the other
242-9 partners shall contribute, in the proportions in which the partners
242-10 share partnership losses, the additional amount necessary to
242-11 satisfy the partnership obligations; and
242-12 (3) a[. A] partner or partner's legal representative
242-13 may enforce or recover from the other partners, or from the estate
242-14 of a deceased partner, contributions the partner or estate makes to
242-15 the extent the amount contributed exceeds that partner's or the
242-16 estate's share of the partnership obligations.
242-17 SECTION 119. Subsection (b), Section 9.01, Texas Revised
242-18 Partnership Act (Article 6132b-9.01, Vernon's Texas Civil
242-19 Statutes), is amended to read as follows:
242-20 (b) Limited to General. A domestic or foreign limited
242-21 partnership may convert, on the affirmative vote of a
242-22 majority-in-interest of the partners, to a partnership that is not
242-23 a limited partnership by:
242-24 (1) cancelling its certificate of limited partnership
242-25 in the state of formation or otherwise complying with the
243-1 provisions for terminating the existence of the limited partnership
243-2 under [of] that state's law as of the date that partnership's
243-3 existence as a limited partnership is to cease [terminated];
243-4 (2) amending its partnership agreement to reflect its
243-5 change in status and any change in name required to comply with
243-6 this Act; and
243-7 (3) stating the effective date of the conversion in
243-8 the partnership agreement if different from the date of the
243-9 cancellation of the limited partnership certificate.
243-10 If a limited partnership converts to a partnership that is
243-11 not a limited partnership, a partner who did not consent to the
243-12 conversion is considered to be a partner who has withdrawn from the
243-13 limited partnership effective immediately before the effective date
243-14 of the conversion unless, within 60 days after the later of the
243-15 effective date of the conversion or the date the partner receives
243-16 actual notice of the conversion, the partner notifies the
243-17 partnership in writing of the partner's desire not to withdraw. A
243-18 withdrawal under the described circumstances is not a wrongful
243-19 withdrawal.
243-20 SECTION 120. Section 9.02, Texas Revised Partnership Act
243-21 (Article 6132b-9.02, Vernon's Texas Civil Statutes), is amended to
243-22 read as follows:
243-23 Sec. 9.02. MERGERS. (a) Adoption of Plan. A domestic
243-24 partnership may adopt a plan of merger and one or more domestic
243-25 partnerships may merge with one or more domestic or foreign
244-1 partnerships or other entities if:
244-2 (1) the partnership agreement of each domestic [or
244-3 foreign] partnership that is a party to the plan of merger contains
244-4 provisions that authorize the merger provided for in the plan of
244-5 merger adopted by the partnership;
244-6 (2) each domestic partnership that is a party to the
244-7 plan of merger approves the plan of merger in the manner prescribed
244-8 [for mergers] in its partnership agreement; and
244-9 (3) [or constituent documents or by applicable law.
244-10 If] one or more foreign partnerships or other entities is a party
244-11 to the merger or is to be created by the terms of the plan of
244-12 merger:
244-13 (A) [(1)] the merger is [must be] permitted
244-14 either by[:]
244-15 [(A)] the laws under which each foreign
244-16 partnership and each other entity that is a party to the merger is
244-17 formed or organized[;] or by
244-18 [(B)] the partnership agreement or other
244-19 constituent documents of the foreign [partnership or other entity
244-20 not inconsistent with those laws; and]
244-21 [(2) each foreign] partnership or other entity that
244-22 are not inconsistent with those laws; and
244-23 (B) each foreign partnership or other entity
244-24 that is a party to the merger complies [must comply] with those
244-25 [the] laws or documents in effecting the merger.
245-1 (b) Contents of Plan [of Merger]. A [If a partnership
245-2 merges with one or more domestic or foreign limited partnerships or
245-3 other entities, other than another partnership that is not a
245-4 limited partnership, a] plan of merger must set forth [be adopted.
245-5 The plan must include]:
245-6 (1) the name and state of formation of [organization
245-7 of:]
245-8 [(A)] each domestic or foreign partnership or
245-9 other entity that is a party to the merger and the name of[;]
245-10 [(B)] each domestic or foreign partnership or
245-11 other entity, if any, that shall [will] survive the merger, which
245-12 may be one or more of the domestic or foreign partnerships or other
245-13 entities [who are a] party to the merger, and the name and state of
245-14 domicile or formation of[; and]
245-15 [(C)] each new domestic or foreign partnership
245-16 or other entity, if any, that may be created by the terms of the
245-17 plan of merger;
245-18 (2) the terms and conditions of the merger[,]
245-19 including, if more than one domestic or foreign partnership or
245-20 other entity is to survive or to be created by the terms of the
245-21 plan of merger:[,]
245-22 (A) the manner and basis of[:]
245-23 [(A)] allocating and vesting the real estate and
245-24 other property of each domestic or foreign partnership and of each
245-25 other entity that is a party to the merger among one or more of the
246-1 surviving or new domestic or foreign partnerships and [or] other
246-2 entities; and
246-3 (B) the manner and basis of allocating all
246-4 liabilities and obligations of each domestic or foreign partnership
246-5 and other entity that is a party to the merger[,] (or making
246-6 adequate provisions [provision] for the payment and discharge
246-7 thereof) [of the liabilities and obligations,] among one or more of
246-8 the surviving or new domestic or foreign partnerships and [or]
246-9 other entities;
246-10 (3) the manner and basis of converting any of the
246-11 partnership interests or other evidences of ownership of each
246-12 domestic or foreign partnership and other entity that is a party to
246-13 the merger into[:]
246-14 [(A)] partnership interests, shares,
246-15 obligations, evidences of ownership, rights to purchase securities,
246-16 or other securities of one or more of the surviving or new domestic
246-17 or foreign partnerships or other entities, into[;]
246-18 [(B)] cash[;] or
246-19 [(C)] other property[,] including shares,
246-20 obligations, evidences of ownership, rights to purchase securities,
246-21 or other securities of any [another] person or entity[;] or into
246-22 [(D)] any combination of the foregoing [those
246-23 items]; and
246-24 (4) as an exhibit or attachment, the [certificate of
246-25 limited partnership, articles of incorporation, articles of
247-1 organization, or other] organizational documents of each
247-2 partnership or other entity that is a party to the merger and that
247-3 is to be created [or will act as a surviving entity] by the terms
247-4 of the plan of merger[;]
247-5 [(5) the names of the principal officer of the
247-6 surviving entities and the registered office and registered agent
247-7 of the surviving entities if a registered office or agent is
247-8 required by the laws under which the surviving entities are formed;]
247-9 [(6) a statement describing whether the surviving
247-10 entity is a partnership, limited partnership, corporation, limited
247-11 liability company, or other entity; and]
247-12 [(7) other provisions relating to the merger].
247-13 (c) Optional Provisions. The plan of merger may state:
247-14 (1) any amendments to the partnership agreement of any
247-15 surviving domestic partnership; and
247-16 (2) any other provisions relating to the merger.
247-17 (d) Certificate of Merger. After a plan of merger has been
247-18 approved by each of the partnerships or other entities that is a
247-19 party to the plan of merger, unless the only parties to the merger
247-20 are partnerships [and a partnership merges with one or more
247-21 domestic or foreign limited partnerships or other entities], a
247-22 certificate of merger shall be executed on behalf of each
247-23 partnership or other entity by at least one [general] partner of
247-24 each domestic partnership that is a party to the plan of merger and
247-25 by a general partner, [an authorized] officer, agent[,] or other
248-1 authorized representative of each other partnership or other entity
248-2 that is a party to the plan of merger and shall set forth[. The
248-3 certificate must include]:
248-4 (1) the plan of merger; and
248-5 (2) for each domestic or foreign partnership or other
248-6 entity that is a party to the plan of merger, a statement that the
248-7 plan of merger was duly authorized by all action [actions] required
248-8 by the laws under which it was formed or organized and by its
248-9 constituent documents.
248-10 (e) [(d)] Filing. If a [The] certificate of merger must be
248-11 executed, the original of the certificate of merger and the number
248-12 of copies of the certificate equal to the number of [filed for
248-13 each] surviving and new domestic or foreign partnerships and other
248-14 entities that are [partnership or other entity and for each other
248-15 entity that is] a party to the plan of merger or that will be
248-16 created by its terms, shall be[. The filing must be with the
248-17 secretary of state or other authority with which the entity must
248-18 file organizational or related documents and must comply with that
248-19 authority's filing requirements.]
248-20 [(e) Effective Date of Merger. If a certificate of merger
248-21 is] delivered to the secretary of state. Unless the secretary of
248-22 state finds that a[, the merger is effective on the date of the
248-23 issuance of the] certificate of merger does not conform to law,
248-24 then on receipt of all applicable filing fees and franchise taxes,
248-25 if any, required by law, or if [by the secretary of state or on a
249-1 later date stated in the certificate of merger. If a certificate
249-2 of merger is not required to be filed with the secretary of state,
249-3 the merger is effective on the date agreed to by the parties to the
249-4 merger as set out in] the plan of merger (or a statement provided
249-5 in lieu thereof) provides that one or more of the surviving or new
249-6 domestic or foreign partnerships or other entities that will be
249-7 responsible for the payment of all the fees and franchise taxes and
249-8 that all of the surviving or new domestic or foreign partnerships
249-9 and other entities will be obligated to pay the fees and franchise
249-10 taxes if they are not timely paid, the secretary of state shall
249-11 certify that the certificate of merger has been filed in the
249-12 secretary of state's office by endorsing on the original the word
249-13 "Filed" and the date of the filing, file and index the endorsed
249-14 certificate of merger, and return the copy, similarly endorsed, to
249-15 each surviving or new domestic or foreign partnership or other
249-16 entity that is a party to the plan of merger or that is created
249-17 thereby, or its or their respective representatives [or as
249-18 otherwise agreed to by the parties].
249-19 (f) Effective Date. Except as provided by Section 9.06, the
249-20 merger shall be effective on the issuance of the certificate of
249-21 merger by the secretary of state or, if a certificate of merger
249-22 need not be executed, as provided in the plan of merger.
249-23 (g) Effect. When a merger takes effect:
249-24 (1) the [Effect of Merger. (1) A partner of a
249-25 partnership that is a party to a merger does not become personally
250-1 liable as a result of the merger for a liability or obligation of
250-2 another person that is a party to the merger unless the partner
250-3 consents to becoming personally liable by action taken in
250-4 connection with the specific plan of merger approved by the
250-5 partner. A partner who remains in or enters a domestic or foreign
250-6 partnership or other entity that survives a merger or that enters a
250-7 domestic or foreign partnership or other entity created by the
250-8 terms of the plan of merger shall be treated as an incoming partner
250-9 in the new or surviving partnership as of the effective date of the
250-10 merger for the purpose of determining the partner's liability for a
250-11 debt or obligation of the other partnerships or entities that are
250-12 parties to the merger and in which the partner was not associated.]
250-13 [(2) The] separate existence of every domestic
250-14 partnership [or other entity] that is a party to the [a] merger,
250-15 except any [a] surviving or new domestic partnership, shall cease;
250-16 (2) all [or other entity, ceases when a merger takes
250-17 effect.]
250-18 [(3) All] rights, title, and interests [interest] to
250-19 all real estate and other property owned by each domestic or
250-20 foreign partnership and by each other entity that is a party to the
250-21 merger shall be [are] allocated to and vested in one or more of the
250-22 surviving or resulting entities as provided in the [a] plan of
250-23 merger without reversion or impairment, without further act or
250-24 deed, and without any transfer or assignment having occurred, but
250-25 subject to any existing liens or other encumbrances thereon;
251-1 (3) [on the property, when a merger takes effect.]
251-2 [(4) When a merger takes effect,] all liabilities and
251-3 obligations of each domestic or foreign partnership and other
251-4 entity that is a party to the merger shall be [are] allocated to
251-5 one or more of the surviving or new domestic or foreign
251-6 partnerships and [or] other entities in the manner set forth in
251-7 [prescribed by] the plan of merger, and each surviving or new
251-8 domestic or foreign partnership, and each surviving or new other
251-9 entity to which a liability or obligation shall have been [is]
251-10 allocated pursuant to [under] the plan of merger, shall be
251-11 [becomes] the primary obligor therefor and, except [for the
251-12 liability or obligation. Except] as otherwise set forth in
251-13 [provided by] the plan of merger or as otherwise provided by law or
251-14 contract, no other [a] party to the merger, other than a surviving
251-15 domestic or foreign partnership or other entity liable thereon
251-16 [with liability] at the time of the merger and no other new[, or
251-17 another] domestic or foreign partnership or other entity created
251-18 thereby, shall be liable therefor;
251-19 (4) [by the merger does not become liable for the debt
251-20 or obligation.]
251-21 [(5) After a merger,] a proceeding pending by or
251-22 against any [a] domestic or foreign partnership or by or against
251-23 any other [another] entity that is a party to the merger may be
251-24 continued as if the merger did not occur [and the partnership or
251-25 other entity that has been allocated the liabilities, obligations,
252-1 asset, or rights associated with the proceeding under the terms of
252-2 the plan of merger remains the primary obligor], or the surviving
252-3 or new domestic or foreign partnership or the surviving or new
252-4 other entity or other entities to which the liability, obligation,
252-5 asset[,] or right associated with such [the] proceeding is
252-6 allocated to and vested in pursuant to [under] the plan of merger
252-7 may be substituted in the proceeding;
252-8 (5) the[.]
252-9 [(6) The] partnership agreement of each surviving
252-10 domestic partnership shall be[, certificate of limited partnership,
252-11 and other constituent documents of each other entity that will act
252-12 as a surviving entity by the terms of a plan of merger is
252-13 considered] amended to the extent provided in the plan of merger;
252-14 (6) each [when the merger takes effect.]
252-15 [(7) Each] new domestic partnership to be formed under
252-16 the plan of merger shall be formed as a partnership under this Act,
252-17 [named in a plan of merger under Subsection (b)(1), each new
252-18 domestic limited partnership for which a certificate of limited
252-19 partnership is included in a plan of merger under Subsection
252-20 (b)(4),] and each other entity to be formed or organized under the
252-21 laws of this state, the [state for which] organizational documents
252-22 of which are set forth [are included in a plan of merger under
252-23 Subsection (b)(4) are formed or organized as provided] in the plan
252-24 of merger, upon [on:]
252-25 [(A) delivering] an executed copy of the
253-1 certificate of merger being delivered to or filed with any required
253-2 [to, or filing the certificate with, the] governmental entity with
253-3 which organizational documents of such [the partnership or] other
253-4 entity are required to be delivered or filed, [if any;] and upon
253-5 [(B)] meeting the additional requirements, if
253-6 any, of law for its formation or organization, shall be formed or
253-7 organized as provided in the plan of merger;
253-8 (7) the[.]
253-9 [(8) The] partnership interests [interest] of each
253-10 domestic or foreign partnership and the partnership interests
253-11 [interest], shares, or evidences of ownership in each other entity
253-12 that is a party to the merger that are to be converted or
253-13 exchanged, in whole or in part, into [(i)] partnership interests,
253-14 shares, obligations, evidences of ownership, rights to purchase
253-15 securities, or other securities of one or more of the surviving or
253-16 new domestic or foreign partnerships or other entities, into
253-17 [(ii)] cash, or [(iii)] other property, including shares,
253-18 obligations, evidences of ownership, rights to purchase securities,
253-19 or other securities of any other person or entity, or into any
253-20 combination of the foregoing, shall be so [those items, are]
253-21 converted and exchanged and [when a merger takes effect. After the
253-22 merger] the former partners of each domestic partnership [and
253-23 owners of shares or evidences of ownership in each other domestic
253-24 entity] that is a party to the merger are entitled [only] to the
253-25 rights provided in the plan of merger;
254-1 (8) if the[.]
254-2 [(9) If a] plan of merger fails to provide for the
254-3 allocation and vesting of the right, title, and interest in a
254-4 particular item of real estate or other property or for the
254-5 allocation of a liability or obligation of a party to the merger,
254-6 then the [when the merger takes effect the] item of real estate or
254-7 other property shall be owned in undivided interest [interests] by,
254-8 or the liability or obligation shall be a joint and several
254-9 liability and obligation of, each of the surviving and new domestic
254-10 and foreign partnerships and other entities, pro rata to the total
254-11 number of surviving and new domestic and foreign partnerships and
254-12 other entities resulting from the merger;
254-13 (9) a partner of a partnership that is a party to a
254-14 merger does not become personally liable as a result of the merger
254-15 for a liability or obligation of another person that is a party to
254-16 the merger unless the partner consents to becoming personally
254-17 liable by action taken in connection with the specific plan of
254-18 merger approved by the partner; and for purposes of determining the
254-19 liability of partners in a domestic partnership that is a party to
254-20 the merger for the debts and obligations of other parties to the
254-21 merger in which that partner otherwise was not or is not a partner
254-22 or other owner of an interest:
254-23 (A) a partner who remains in or enters a
254-24 domestic or foreign partnership or other entity that survives a
254-25 merger or that enters a domestic or foreign partnership or other
255-1 entity created by the terms of the plan of merger shall be treated
255-2 as an incoming partner in the new or surviving partnership as of
255-3 the effective date of the merger; and
255-4 (B) a partner in a domestic partnership that is
255-5 a party to the merger but that does not survive shall be treated as
255-6 a partner who withdrew from the nonsurviving domestic partnership
255-7 as of the effective date of the merger; and[.]
255-8 (10) if [If] a domestic or foreign partnership merges
255-9 with another domestic or foreign partnership or other entity and
255-10 through the merger process no longer exists, a person who becomes a
255-11 member of the surviving domestic or foreign partnership or other
255-12 entity, for a period of one year after the effective date of the
255-13 merger, may bind the surviving entity to a transaction for which it
255-14 no longer has authority to bind the entity if the transaction is
255-15 one in which the partner's actions would bind the foreign or
255-16 domestic partnership before the effective date of the merger and
255-17 the other party to the transaction:
255-18 (A) does not have notice of the merger;
255-19 (B) had done business with the partnership which
255-20 no longer exists within one year preceding the effective date of
255-21 the merger; and
255-22 (C) reasonably believes that the partner who was
255-23 previously a member of the partnership which was merged into the
255-24 surviving entity and is now a partner of the surviving entity was a
255-25 partner with authority to bind the partnership to the transaction
256-1 at the time of the transaction.
256-2 (h) Other Entity. [(g) Definition of "Other Entity."] For
256-3 purposes of this section, the term "other entity" means any entity,
256-4 whether organized for profit or not, that is a corporation, limited
256-5 partnership, limited liability company, [joint venture,] joint
256-6 stock company, cooperative, association, bank, insurance company,
256-7 or other legal entity organized pursuant to [under] the laws of
256-8 this state or any other [another] state or country to the extent
256-9 such [the] laws or the constituent documents of that entity, not
256-10 inconsistent with such laws [law], permit that entity to enter into
256-11 a merger or partnership interest exchange as permitted by this
256-12 section.
256-13 SECTION 121. Subsection (a), Section 9.03, Texas Revised
256-14 Partnership Act (Article 6132b-9.03, Vernon's Texas Civil
256-15 Statutes), is amended to read as follows:
256-16 (a) One or more domestic or foreign partnerships may adopt a
256-17 plan of exchange by which a domestic or foreign partnership or
256-18 other entity acquires all of the outstanding partnership interests
256-19 of one or more domestic partnerships in exchange for cash or
256-20 securities of the acquiring domestic or foreign partnership or
256-21 other entity, if:
256-22 (1) the partnership agreement of each domestic
256-23 partnership whose partnership interests are to be acquired pursuant
256-24 to the plan of exchange authorizes the partnership interest
256-25 exchange adopted by the partnership, and if one or more foreign
257-1 partnerships or other entities is to issue shares or other
257-2 interests as part of the plan of exchange, the issuance of those
257-3 shares or other interests is either permitted by the laws under
257-4 which that foreign partnership or other entity is formed or not
257-5 inconsistent with those laws;
257-6 (2) each domestic or foreign partnership, the
257-7 partnership interests of which are to be acquired under the plan of
257-8 exchange, approves the plan of exchange in the manner prescribed in
257-9 its partnership agreement; and
257-10 (3) [(2)] each acquiring domestic or foreign
257-11 partnership or other entity takes all action that may be required
257-12 by the laws of the state under which it was formed or incorporated
257-13 and as required by its partnership agreement or other constituent
257-14 documents in order to effect the exchange.
257-15 SECTION 122. Article IX, Texas Revised Partnership Act
257-16 (Article 6132b-9.01 et seq., Vernon's Texas Civil Statutes), is
257-17 amended by adding Sections 9.05 and 9.06 to read as follows:
257-18 Sec. 9.05. CONVERSION. (a) A domestic partnership may
257-19 adopt a plan of conversion and convert to a foreign partnership or
257-20 any other entity if:
257-21 (1) the converting entity acts on and its partners
257-22 approve a plan of conversion in the manner prescribed by Section
257-23 9.02 as if the conversion were a merger to which the converting
257-24 entity were a party and not the survivor;
257-25 (2) the conversion is permitted by, or not
258-1 inconsistent with, the laws of the state or country in which the
258-2 converted entity is to be incorporated, formed, or organized and
258-3 the incorporation, formation, or organization of the converted
258-4 entity is effected in compliance with such laws;
258-5 (3) at the time the conversion becomes effective, each
258-6 partner of the converting entity will, unless otherwise agreed to
258-7 by that partner, own an equity interest or other ownership or
258-8 security interest in, and be a shareholder, partner, member, owner,
258-9 or other security holder of, the converted entity; and
258-10 (4) the converted entity shall be incorporated,
258-11 formed, or organized as part of or pursuant to the plan of
258-12 conversion.
258-13 (b) Any foreign partnership or other entity may adopt a plan
258-14 of conversion and convert to a domestic partnership if:
258-15 (1) the conversion is permitted by the laws of the
258-16 state or country in which the foreign partnership is incorporated,
258-17 if a foreign partnership is converting;
258-18 (2) the conversion is either permitted by the laws
258-19 under which the other entity is formed or organized or by the
258-20 constituent documents of the other entity that are not inconsistent
258-21 with the laws of the state or country in which the other entity is
258-22 formed or organized, if another entity is converting; and
258-23 (3) the converting entity takes all action that may be
258-24 required by the laws of the state or country under which it is
258-25 incorporated, formed, or organized and by its constituent documents
259-1 to effect the conversion.
259-2 (c) A plan of conversion shall set forth:
259-3 (1) the name of the converting entity and the
259-4 converted entity;
259-5 (2) a statement that the converting entity is
259-6 continuing its existence in the organizational form of the
259-7 converted entity;
259-8 (3) a statement as to the type of entity that the
259-9 converted entity is to be and the state or country under the laws
259-10 of which the converted entity is to be incorporated, formed, or
259-11 organized;
259-12 (4) the manner and basis of converting the partnership
259-13 interests, shares, or other evidences of ownership of the
259-14 converting entity into partnership interests, shares, or other
259-15 evidences of ownership or securities of the converted entity, or
259-16 any combination thereof; and
259-17 (5) in an attachment or exhibit, the certificate of
259-18 limited partnership, articles of incorporation, or other
259-19 organizational documents of the converted entity, if the converted
259-20 entity is not a domestic partnership.
259-21 (d) A plan of conversion may set forth such other provisions
259-22 relating to the conversion not inconsistent with law, including the
259-23 initial partnership agreement of the converted entity if the
259-24 converted entity is a partnership.
259-25 (e) If a plan of conversion has been approved in accordance
260-1 with the preceding provisions of this section and has not been
260-2 abandoned, unless the converted entity and the converting entities
260-3 are both partnerships:
260-4 (1) articles of conversion shall be executed by the
260-5 converting entity by a partner, officer, or other duly authorized
260-6 representative thereof and shall set forth:
260-7 (A) the plan of conversion or a statement
260-8 certifying the following:
260-9 (i) the name, the state of incorporation,
260-10 formation, or organization of the converting entity and the
260-11 organizational form of the converted entity;
260-12 (ii) that a plan of conversion has been
260-13 approved;
260-14 (iii) that an executed plan of conversion
260-15 is on file at the principal place of business of the converting
260-16 entity, stating the address thereof, and that an executed plan of
260-17 conversion will be on file, from and after the conversion, at the
260-18 principal place of business of the converted entity, stating the
260-19 address thereof; and
260-20 (iv) that a copy of the plan of conversion
260-21 will be furnished by the converting entity (prior to the
260-22 conversion) or the converted entity (after the conversion), on
260-23 written request and without cost, to any member of the converting
260-24 entity or the converted entity; and
260-25 (B) a statement that the approval of the plan of
261-1 conversion was duly authorized by all action required by the laws
261-2 under which the converting entity was incorporated, formed, or
261-3 organized and by its constituent documents;
261-4 (2) the original and one copy of the articles of
261-5 conversion shall be delivered to the secretary of state; and
261-6 (3) two copies of the certificate of limited
261-7 partnership of the domestic limited partnership, if the converted
261-8 entity is a domestic limited partnership, shall also be delivered
261-9 to the secretary of state with the articles of conversion.
261-10 (f) If the secretary of state finds that the articles of
261-11 conversion conform to law, has received all filings required to be
261-12 received, and has issued all certificates required to be issued in
261-13 connection with the incorporation, formation, or organization of
261-14 the converted entity, if any, the secretary of state shall, when
261-15 all fees and franchise taxes have been paid as required by law or
261-16 if the articles of conversion provide that the converted entity
261-17 will be liable for the payment of all such fees and franchise
261-18 taxes:
261-19 (1) endorse on the original and each copy the word
261-20 "Filed" and the month, day, and year of the filing;
261-21 (2) file the original in his office; and
261-22 (3) issue a certificate of conversion, together with a
261-23 copy of the articles affixed thereto, to the converted entity or
261-24 its representatives.
261-25 (g) Except as otherwise provided by Section 9.06, on the
262-1 issuance of the certificate of conversion by the secretary of state
262-2 (or if a certificate of conversion need not be executed, as
262-3 provided in the plan of merger), the conversion of a converting
262-4 entity shall be effective.
262-5 (h) When a conversion of a converting entity takes effect:
262-6 (1) the converting entity shall continue to exist,
262-7 without interruption, but in the organizational form of the
262-8 converted entity rather than in its prior organizational form;
262-9 (2) all rights, title, and interests to all real
262-10 estate and other property owned by the converting entity shall
262-11 continue to be owned by the converted entity in its new
262-12 organizational form without reversion or impairment, without
262-13 further act or deed, and without any transfer or assignment having
262-14 occurred, but subject to any existing liens or other encumbrances
262-15 thereon;
262-16 (3) all liabilities and obligations of the converting
262-17 entity shall continue to be liabilities and obligations of the
262-18 converted entity in its new organizational form without impairment
262-19 or diminution by reason of the conversion;
262-20 (4) all rights of creditors or other parties with
262-21 respect to or against the prior interest holders or other owners of
262-22 the converting entity in their capacities as such in existence as
262-23 of the effective time of the conversion will continue in existence
262-24 as to those liabilities and obligations and may be pursued by such
262-25 creditors and obligees as if such conversion shall not have
263-1 occurred;
263-2 (5) a proceeding pending by or against the converting
263-3 entity or by or against any of the converting entity's interest
263-4 holders or owners in their capacities as such may be continued by
263-5 or against the converted entity in its new organizational form and
263-6 by or against the prior interest holders or owners, as the case may
263-7 be, without any need for substitution of parties;
263-8 (6) the partnership interests, shares, and other
263-9 evidences of ownership in the converting entity that are to be
263-10 converted into partnership interests, shares, evidences of
263-11 ownership, or other securities in the converted entity as provided
263-12 in the plan of conversion shall be so converted, and if the
263-13 converting entity is a domestic partnership, the former holders of
263-14 shares in the domestic partnership shall be entitled only to the
263-15 rights provided in the plan of conversion;
263-16 (7) if, after the effectiveness of the conversion, a
263-17 shareholder, partner, member, or other owner of the converted
263-18 entity would be liable under applicable law in such capacity for
263-19 the debts or obligations of the converted entity, such shareholder,
263-20 partner, member, or other owner of the converted entity shall be
263-21 liable for the debts and obligations of the converting entity that
263-22 existed before the conversion takes effect only to the extent that
263-23 such shareholder, partner, member, or other owner:
263-24 (A) agreed in writing to be liable for such
263-25 debts or obligations;
264-1 (B) was liable under applicable law, prior to
264-2 the effectiveness of the conversion, for such debts or obligations;
264-3 or
264-4 (C) by becoming a shareholder, partner, member,
264-5 or other owner of the converted entity, becomes liable under
264-6 applicable law for existing debts and obligations of the converted
264-7 entity;
264-8 (8) if the converted entity is a foreign partnership
264-9 or other entity, such converted entity shall be deemed to appoint
264-10 the secretary of state as its agent for service of process in a
264-11 proceeding to enforce any obligation or the rights of dissenting
264-12 shareholders of the converting domestic partnership; and
264-13 (9) if the converting partnership is a domestic
264-14 partnership, the provisions of Section 9.02 of this Act shall apply
264-15 as if the converted entity were the survivor of a merger with the
264-16 converting entity.
264-17 (i) For purposes of this section:
264-18 (1) "Conversion" means:
264-19 (A) the continuance of a domestic partnership
264-20 as, and in the organizational form of, a foreign partnership or
264-21 other entity; or
264-22 (B) the continuance of a foreign partnership or
264-23 other entity as, and in the organizational form of, a domestic
264-24 partnership.
264-25 (2) "Converted entity" means any domestic or foreign
265-1 partnership or other entity to which a converting entity has
265-2 converted or intends to convert as permitted by this section.
265-3 (3) "Converting entity" means any domestic or foreign
265-4 partnership or other entity that has converted or intends to
265-5 convert as permitted by this section.
265-6 (4) "Domestic partnership" means a partnership the
265-7 internal affairs of which are governed by this Act.
265-8 (5) "Foreign partnership" means a partnership, other
265-9 than a limited partnership, the internal affairs of which are
265-10 governed by the law of another state comparable to this Act or the
265-11 Texas Uniform Partnership Act (Article 6132b, Vernon's Texas Civil
265-12 Statutes).
265-13 (6) "Other entity" means any entity, whether organized
265-14 for profit or not, that is a corporation, limited partnership
265-15 (other than a limited partnership formed under the Texas Revised
265-16 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
265-17 Statutes)), limited liability company, joint stock company,
265-18 cooperative, association, bank, insurance company, or other legal
265-19 entity organized pursuant to the laws of this state or any other
265-20 state or country.
265-21 Sec. 9.06. FILINGS AND FEES. Sections 2.12 and 12.01, Texas
265-22 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
265-23 Civil Statutes), apply to filings made with the secretary of state
265-24 under this article as if those filings related to limited
265-25 partnerships.
266-1 SECTION 123. The Texas Revised Partnership Act (Article
266-2 6132b-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
266-3 redesignating existing Article X as Article XI and adding a new
266-4 Article X to read as follows:
266-5 ARTICLE X. FOREIGN LIMITED LIABILITY PARTNERSHIP
266-6 Sec. 10.01. LAW GOVERNING FOREIGN LIMITED LIABILITY
266-7 PARTNERSHIP. (a) The laws of the state under which a foreign
266-8 limited liability partnership is formed govern its organization and
266-9 internal affairs and the liability of partners for obligations of
266-10 the partnership.
266-11 (b) A foreign limited liability partnership may not be
266-12 denied a statement of foreign qualification by reason of any
266-13 difference between the laws of the state under which it is formed
266-14 and the laws of Texas.
266-15 (c) With respect to its activities in Texas, a foreign
266-16 limited liability partnership is subject to Section 3.01 as if it
266-17 were a domestic registered limited liability partnership.
266-18 Sec. 10.02. STATEMENT OF FOREIGN QUALIFICATION. (a) Before
266-19 transacting business in Texas, a foreign limited liability
266-20 partnership must file with the secretary of state a statement of
266-21 foreign qualification. The statement must contain:
266-22 (1) the name of the foreign limited liability
266-23 partnership which satisfies the requirements of the state under
266-24 whose laws it is formed and ends with "Registered Limited Liability
266-25 Partnership," "Limited Liability Partnership," "R.L.L.P.,"
267-1 "L.L.P.," "RLLP," or "LLP";
267-2 (2) the federal tax identification number of the
267-3 partnership;
267-4 (3) the state where it is formed, the date of initial
267-5 registration as a limited liability partnership under the laws of
267-6 the state of formation, and a statement that, as of the date of
267-7 filing, the foreign limited liability partnership exists as a valid
267-8 limited liability partnership under the laws of the state of its
267-9 formation;
267-10 (4) the street address of the partnership's chief
267-11 executive office and, if different, the street address of any other
267-12 office of the partnership in Texas;
267-13 (5) the address of the registered office and the name
267-14 and address of the registered agent for service of process required
267-15 to be maintained by Section 10.05;
267-16 (6) a statement that the secretary of state is
267-17 appointed the agent of the foreign limited liability partnership
267-18 for service of process under the circumstances set forth in Section
267-19 10.05(k);
267-20 (7) the number of partners at the date of the
267-21 statement; and
267-22 (8) in brief, the partnership's business.
267-23 (b) The statement of qualification must be executed by a
267-24 majority-in-interest of the partners or by one or more partners
267-25 authorized by a majority-in-interest of the partners.
268-1 (c) Two copies of the statement of foreign qualification
268-2 must be filed accompanied by a fee of $200 for each partner in this
268-3 state, not to exceed $750.
268-4 (d) A partnership is registered as a foreign limited
268-5 liability partnership on filing a completed initial or renewal
268-6 statement of foreign qualification, in duplicate with the required
268-7 fee, or on a later date specified in the statement. A registration
268-8 is not affected by later changes in the partners of the
268-9 partnership.
268-10 (e) An initial statement of foreign qualification filed
268-11 under this subsection and registered by the secretary of state
268-12 expires one year after the date of registration or later effective
268-13 date unless earlier withdrawn or revoked or unless renewed in
268-14 accordance with Subsection (g).
268-15 (f) A registration may be withdrawn by filing in duplicate
268-16 with the secretary of state a written withdrawal notice executed by
268-17 a majority-in-interest of the partners or by one or more partners
268-18 authorized by a majority-in-interest of partners. A withdrawal
268-19 notice must include the name of the partnership, the federal tax
268-20 identification number of the partnership, the date of registration
268-21 of the partnership's last statement of foreign qualification under
268-22 this section, and a current street address of the partnership's
268-23 principal office in this state or outside this state, if
268-24 applicable. A withdrawal notice terminates the status of the
268-25 partnership as a foreign limited liability partnership as of the
269-1 date of filing the notice or a later date specified in the notice,
269-2 but not later than the expiration date under Subsection (e).
269-3 (g) An effective registration may be renewed before its
269-4 expiration by filing in duplicate with the secretary of state a
269-5 statement of foreign qualification containing current information
269-6 of the kind required in an initial statement of qualification and
269-7 the most recent date of registration of the partnership. The
269-8 renewal statement of qualification must be accompanied by a fee of
269-9 $200 for each partner in this state on the date of renewal, not to
269-10 exceed $750. A renewal statement of foreign qualification filed
269-11 under this section continues an effective registration for one year
269-12 after the date the effective registration would otherwise expire.
269-13 (h) The secretary of state may remove from its active
269-14 records the registration of a foreign limited liability partnership
269-15 whose registration has been withdrawn or revoked or has expired and
269-16 not been renewed.
269-17 (i) The secretary of state may revoke the filing of a
269-18 document filed under this section if the secretary of state
269-19 determines that the filing fee for the document was paid by an
269-20 instrument that was dishonored when presented by the state for
269-21 payment. The secretary of state shall return the document and give
269-22 notice of revocation to the filing party by regular mail. Failure
269-23 to give or receive notice does not affect an earlier filing.
269-24 (j) The secretary of state may provide forms for the
269-25 statement of foreign qualification or renewal of registration.
270-1 (k) A document filed under this section may be amended or
270-2 corrected by filing in duplicate with the secretary of state
270-3 articles of amendment executed by a majority-in-interest of the
270-4 partners or by one or more partners authorized by a
270-5 majority-in-interest of the partners. The articles of amendment
270-6 must contain the name of the partnership, the tax identification
270-7 number of the partnership, the identity of the document being
270-8 amended, the date on which the document being amended was filed,
270-9 the part of the document being amended, and the amendment or
270-10 correction. Two copies of the articles of amendment must be filed,
270-11 accompanied by a fee of $10 and, if the amendment increases the
270-12 number of partners, a fee of $200 for each partner in this state
270-13 added by amendment, not to exceed $750.
270-14 (l) A document filed under this section may be a
270-15 photographic, facsimile, or similar reproduction of a signed
270-16 document. A signature on a document filed under this section may
270-17 be a facsimile.
270-18 (m) A person commits an offense if the person signs a
270-19 document the person knows is false in any material respect with the
270-20 intent that the document be delivered on behalf of the partnership
270-21 to the secretary of state for filing. An offense under this
270-22 subsection is a Class A misdemeanor.
270-23 (n) The secretary of state may adopt procedural rules on
270-24 filing documents under this section.
270-25 Sec. 10.03. EFFECT OF FAILURE TO QUALIFY. (a) A foreign
271-1 limited liability partnership transacting business in Texas may not
271-2 maintain an action, suit, or proceeding in Texas unless it has
271-3 registered in Texas and paid to the secretary of state all amounts
271-4 owing under Section 10.02.
271-5 (b) The failure of a foreign limited liability partnership
271-6 to register in Texas does not impair:
271-7 (1) the validity of a contract or act of the foreign
271-8 limited liability partnership;
271-9 (2) the right of any other party to the contract to
271-10 maintain any action, suit, or proceeding on the contract; or
271-11 (3) defense by the foreign limited liability
271-12 partnership of any action, suit, or proceeding in any Texas court.
271-13 (c) A partner of a foreign limited liability partnership is
271-14 not liable for the debts and obligations of the foreign limited
271-15 liability partnership solely because the foreign limited liability
271-16 partnership transacted business in Texas without registration.
271-17 Sec. 10.04. ACTIVITIES NOT CONSTITUTING TRANSACTING
271-18 BUSINESS. Without excluding other activities that do not
271-19 constitute transacting business in Texas, a foreign limited
271-20 liability partnership is not considered to be transacting business
271-21 in Texas for purposes of this Act because it carries on in Texas
271-22 any one or more of the following activities:
271-23 (1) maintaining or defending any action, suit, or
271-24 administrative or arbitration proceeding, effecting settlement of
271-25 the action, suit, or proceeding, or settling claims or disputes to
272-1 which it is a party;
272-2 (2) holding meetings of its partners or carrying on
272-3 other activities concerning its internal affairs;
272-4 (3) maintaining bank accounts;
272-5 (4) maintaining offices or agencies for the transfer,
272-6 exchange, and registration of partnership interests issued by it or
272-7 appointing or maintaining trustees or depositories with relation to
272-8 ownership interests in it;
272-9 (5) effecting sales through independent contractors;
272-10 (6) creating as borrower or lender or acquiring
272-11 indebtedness or mortgages or other security interests in real or
272-12 personal property;
272-13 (7) securing or collecting debts due to it or
272-14 enforcing rights in property securing such debts;
272-15 (8) transacting business in interstate commerce;
272-16 (9) conducting an isolated transaction completed
272-17 within 30 days of the date of initiation of the transaction and not
272-18 in the course of a number of repeated similar transactions;
272-19 (10) exercising the powers of executor or
272-20 administrator of the estate of a nonresident decedent under
272-21 ancillary letters issued by a Texas court, or exercising the powers
272-22 of trustee under the will of a nonresident decedent, or under a
272-23 trust created by one or more nonresidents of Texas or by one or
272-24 more foreign corporations or limited partnerships, if the exercise
272-25 of those powers in any of these cases will not involve activities
273-1 that would be considered to constitute the transacting of business
273-2 in Texas in the case of a foreign corporation or foreign limited
273-3 partnership acting in its own right;
273-4 (11) acquiring, in transactions outside Texas or in
273-5 interstate commerce, debts secured by mortgages or liens on real or
273-6 personal property in Texas, collecting or adjusting principal and
273-7 interest payments on those debts, enforcing or adjusting rights in
273-8 property securing those debts, taking any actions necessary to
273-9 preserve and protect the interest of the mortgagee in that
273-10 security, or a combination of these transactions; or
273-11 (12) investing in or acquiring, in transactions
273-12 outside Texas, royalties and other nonoperating mineral interests,
273-13 and the execution of division orders, contracts of sale, and other
273-14 instruments incidental to the ownership of nonoperating mineral
273-15 interests.
273-16 Sec. 10.05. REGISTERED AGENT. (a) A foreign limited
273-17 liability partnership subject to this Act shall have and maintain
273-18 in Texas:
273-19 (1) a registered office, which need not be a place of
273-20 its business in Texas; and
273-21 (2) a registered agent for service of process on the
273-22 foreign limited liability partnership, which may be:
273-23 (A) an individual who is a resident of Texas and
273-24 whose business office is the same as the foreign limited liability
273-25 partnership's registered office; or
274-1 (B) a domestic corporation or a foreign
274-2 corporation that has a certificate of authority to transact
274-3 business in Texas and a business office the same as the foreign
274-4 limited liability partnership's registered office.
274-5 (b) A foreign limited liability partnership subject to this
274-6 Act may change its registered office, its registered agent, or
274-7 both, by paying the filing fee and filing with the secretary of
274-8 state a statement and a duplicate copy of the statement, which need
274-9 not be an executed original or a photocopy of an executed original.
274-10 The statement must contain:
274-11 (1) the name of the foreign limited liability
274-12 partnership;
274-13 (2) the street address of its registered office;
274-14 (3) the street address to which its registered office
274-15 is to be changed, if applicable;
274-16 (4) the name of its registered agent;
274-17 (5) the name of its successor registered agent, if
274-18 applicable;
274-19 (6) a provision that the street address of its
274-20 registered office and the street address of the business office of
274-21 its registered agent, as changed, will be the same; and
274-22 (7) a provision that the change was authorized by the
274-23 foreign limited liability partnership.
274-24 (c) The statement required by Subsection (b) must be
274-25 executed on behalf of the foreign limited liability partnership by
275-1 a majority-in-interest of the partners or by one or more partners
275-2 authorized by a majority-in-interest of the partners. If the
275-3 secretary of state finds that the statement conforms to this
275-4 section, the secretary of state, on receipt of all applicable
275-5 filing fees, shall file it in accordance with Section 10.02(k) as
275-6 if it were an amendment to the statement of foreign qualification.
275-7 (d) On the filing of the statement by the secretary of
275-8 state, the change of address of the registered office, the
275-9 appointment of a new registered agent, or both, as the case may be,
275-10 become effective.
275-11 (e) Filing of the statement amends the statement of foreign
275-12 qualification regarding the information required by Section
275-13 10.02(a)(5).
275-14 (f) A registered agent of a foreign limited liability
275-15 partnership may resign by giving written notice to the foreign
275-16 limited liability partnership and to the secretary of state.
275-17 Notice must be given to the foreign limited liability partnership
275-18 at its last known address and to the last known address of the
275-19 attorney or other individual at whose request the registered agent
275-20 was appointed for the foreign limited liability partnership.
275-21 Notice, together with a duplicate copy, which need not be an
275-22 executed original or a photocopy of an executed original, must be
275-23 given to the secretary of state within 10 days after the date of
275-24 mailing or delivery of the notice to the foreign limited liability
275-25 partnership and attorney or individual. The notice to the
276-1 secretary of state must include the last known address of the
276-2 foreign limited liability partnership, the statement that written
276-3 notice of resignation has been given to the foreign limited
276-4 liability partnership, and the date that the notice was given.
276-5 (g) On compliance with the requirements for giving written
276-6 notice under Subsection (f), the appointment of an agent terminates
276-7 on the 31st day after the date of receipt of the notice by the
276-8 secretary of state. If the secretary of state finds that the
276-9 written notice conforms to this section, the secretary of state
276-10 shall file it in accordance with Section 10.02(k) as if it were an
276-11 amendment to the statement of foreign qualification. A fee is not
276-12 required for the filing of a resignation under Subsection (f).
276-13 (h) The location of the registered office in Texas for a
276-14 foreign limited liability partnership may be changed from one
276-15 address to another by paying the filing fee to the secretary of
276-16 state and filing with the secretary of state a statement and a
276-17 duplicate copy, which need not be an executed original or a
276-18 photocopy of an executed original. The statement must contain:
276-19 (1) the name of the foreign limited liability
276-20 partnership represented by the registered agent;
276-21 (2) the address at which the registered agent has
276-22 maintained the registered office;
276-23 (3) the new address at which the registered agent will
276-24 maintain the registered office; and
276-25 (4) a statement that written notice of the change has
277-1 been given to the foreign limited liability partnership at least 10
277-2 days before the date of the filing.
277-3 (i) The statement required by Subsection (h) must be signed
277-4 and verified by the registered agent or, if the registered agent is
277-5 a corporation, by an officer of the corporation. If the registered
277-6 agent is simultaneously filing statements for more than one foreign
277-7 limited liability partnership, each statement may contain a
277-8 facsimile signature in the execution. If the secretary of state
277-9 finds that the statement conforms to this section, the secretary of
277-10 state, on receipt of the filing fee, shall file it in accordance
277-11 with Section 10.02(k) as if it were an amendment to the statement
277-12 of foreign qualification. The address of the registered office of
277-13 the foreign limited liability partnership is changed on the filing
277-14 of the statement by the secretary of state. Filing of the
277-15 statement amends the statement of foreign qualification regarding
277-16 the information required by Section 10.02(a)(5) and no further
277-17 action is required under Section 10.02(k).
277-18 (j) Each partner and the registered agent of a foreign
277-19 limited liability partnership registered in Texas are agents of the
277-20 foreign limited liability partnership on whom may be served any
277-21 process, notice, or demand required or permitted by law to be
277-22 served on the foreign limited liability partnership.
277-23 (k) The secretary of state is an agent of the foreign
277-24 limited liability partnership on whom any process, notice, or
277-25 demand may be served if:
278-1 (1) a foreign limited liability partnership registered
278-2 in Texas fails to appoint or maintain a registered agent in Texas;
278-3 (2) its registered agent cannot with reasonable
278-4 diligence be found at the registered office;
278-5 (3) its registration is canceled; or
278-6 (4) a foreign limited liability partnership transacts
278-7 business in Texas without having registered under Section 10.02.
278-8 (l) Service on the secretary of state of any process,
278-9 notice, or demand shall be made by delivering duplicate copies of
278-10 the process, notice, or demand to the secretary of state, assistant
278-11 secretary of state, or any clerk having charge of the corporation
278-12 department of the secretary of state's office. If any process,
278-13 notice, or demand is served on the secretary of state, the
278-14 secretary of state shall immediately forward one of the copies by
278-15 registered mail addressed to the foreign limited liability
278-16 partnership at its principal office in the state under which the
278-17 foreign limited liability partnership is formed as shown on the
278-18 statement of foreign qualification. Service had in this manner on
278-19 the secretary of state is returnable in not less than 30 days.
278-20 (m) The secretary of state shall keep a record of all
278-21 processes, notices, and demands served on the secretary of state
278-22 under this section and shall record the time of the service and the
278-23 action taken with reference to each.
278-24 (n) This section does not limit or affect the right to serve
278-25 any process, notice, or demand required or permitted by law to be
279-1 served on a foreign limited liability partnership in another manner
279-2 permitted by law.
279-3 ARTICLE XI [X]. MISCELLANEOUS PROVISIONS
279-4 Sec. 11.01 [10.01]. SHORT TITLE. This Act may be cited as
279-5 the "Texas Revised Partnership Act."
279-6 Sec. 11.02 [10.02]. SEVERABILITY. If a provision of this
279-7 Act or its application to a person or circumstance is held invalid,
279-8 the invalidity does not affect other provisions or applications of
279-9 this Act that can be given effect without the invalid provision or
279-10 application, and to this end the provisions of this Act are
279-11 severable.
279-12 Sec. 11.03 [10.03]. APPLICATION. (a) Before January 1,
279-13 1999. Except as provided by Subsection (b), before January 1,
279-14 1999, this Act applies only to a partnership formed:
279-15 (1) on or after January 1, 1994, unless that
279-16 partnership is continuing the business of a dissolved partnership
279-17 under Section 41, Texas Uniform Partnership Act (Article 6132b,
279-18 Vernon's Texas Civil Statutes), and its subsequent amendments; and
279-19 (2) before January 1, 1994, that elects, as provided
279-20 by Subsection (d), to be governed by this Act.
279-21 (b) Registered Limited Liability Partnership. Section 3.08
279-22 of this Act, including the fee provisions, applies to a registered
279-23 limited liability partnership, regardless of the date of formation
279-24 and regardless of whether the partnership elects to be governed by
279-25 this Act, except that a registered limited liability partnership
280-1 formed before January 1, 1994, is subject to Sections 2, 15(2)-(4),
280-2 45-A, 45-B, and 45-C, Texas Uniform Partnership Act (Article 6132b,
280-3 Vernon's Texas Civil Statutes), for purposes of determining
280-4 liability for errors, omissions, negligence, incompetence, or
280-5 malfeasance occurring before January 1, 1994.
280-6 (c) After December 31, 1998. After December 31, 1998, this
280-7 Act applies to all partnerships.
280-8 (d) Voluntary Application Early. Before January 1, 1999, a
280-9 partnership formed before January 1, 1994, voluntarily may elect,
280-10 by complying with the procedures provided in its partnership
280-11 agreement for amending the partnership agreement, to adopt this
280-12 Act. The provisions of this Act relating to the liability of the
280-13 partnership's partners to third parties apply to limit those
280-14 partners' liability to a third party who had done business with the
280-15 partnership within one year preceding the partnership's election to
280-16 adopt this Act only if the partnership gives notice to the third
280-17 party of the partnership's election to adopt this Act.
280-18 Sec. 11.04 [10.04]. APPLICATION TO EXISTING RELATIONSHIPS.
280-19 (a) This Act does not impair the obligations of a contract
280-20 existing when this Act takes effect or affect an action or
280-21 proceeding begun or right accrued before this Act takes effect.
280-22 (b) A judgment against a partnership or a partner in an
280-23 action commenced before the effective date of this Act may be
280-24 enforced in the same manner as a judgment rendered before the
280-25 effective date of this Act.
281-1 SECTION 124. Section 8.03, Texas Revised Limited Partnership
281-2 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is repealed.
281-3 SECTION 125. (a) This Act takes effect September 1, 1997,
281-4 and except as provided by this section, applies to all entities
281-5 affected regardless of the date of formation or incorporation.
281-6 (b) The change to Section 6.03, Texas Revised Limited
281-7 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
281-8 made by this Act, does not apply to domestic limited partnerships
281-9 formed before September 1, 1997, if:
281-10 (1) as of September 1, 1997, the partnership agreement
281-11 of the limited partnership does not specify a time at which or an
281-12 event on the occurrence of which a limited partner may withdraw
281-13 from the limited partnership or a definite time for the dissolution
281-14 and winding up of the limited partnership, and
281-15 (2) either:
281-16 (A) the general partners notify all the limited
281-17 partners in writing on or before December 31, 1997, of the change
281-18 to Section 6.03 and of their right to object to this application to
281-19 the limited partnership, and at least one limited partner notifies
281-20 the general partners in writing on or before the 30th day following
281-21 receipt of the notice from the general partners that the limited
281-22 partner objects to the application of the change to the limited
281-23 partnership; or
281-24 (B) the general partners do not notify all
281-25 limited partners on or before December 31, 1997, of the matters
282-1 described in Paragraph (A) of this subdivision.
282-2 (c) A domestic limited partnership to which the change in
282-3 Section 6.03, Texas Revised Limited Partnership Act (Article
282-4 6132a-1, Vernon's Texas Civil Statutes), does not apply is governed
282-5 by Section 6.03 as it existed before amendment by this Act, and
282-6 that provision remains in effect for that limited purpose.
282-7 (d) The change to Article 3.08, Texas Revised Partnership
282-8 Act (Article 6132b-3.08, Vernon's Texas Civil Statutes), made by
282-9 this Act shall not impair the obligations of a contract existing
282-10 before the effective date of this Act.
282-11 (e) This Act shall not affect any action or proceeding
282-12 commenced before the effective date of this Act.
282-13 SECTION 126. The importance of this legislation and the
282-14 crowded condition of the calendars in both houses create an
282-15 emergency and an imperative public necessity that the
282-16 constitutional rule requiring bills to be read on three several
282-17 days in each house be suspended, and this rule is hereby suspended.