1-1 By: Sibley S.B. No. 555
1-2 (In the Senate - Filed February 12, 1997; February 17, 1997,
1-3 read first time and referred to Committee on Jurisprudence;
1-4 February 20, 1997, rereferred to Committee on Economic Development;
1-5 April 22, 1997, reported adversely, with favorable Committee
1-6 Substitute by the following vote: Yeas 8, Nays 0; April 22, 1997,
1-7 sent to printer.)
1-8 COMMITTEE SUBSTITUTE FOR S.B. No. 555 By: Sibley
1-9 A BILL TO BE ENTITLED
1-10 AN ACT
1-11 relating to certain business organizations; providing penalties.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section A, Article 1.02, Texas Business
1-14 Corporation Act, is amended to read as follows:
1-15 A. As used in this Act, unless the context otherwise
1-16 requires, the term:
1-17 (1) "Articles of incorporation" means the original or
1-18 restated articles of incorporation and all amendments thereto.
1-19 (2) "Associate," when used to indicate a relationship
1-20 with a person, means:
1-21 (a) a domestic or foreign corporation or other
1-22 entity of which the person is an officer or partner or is the
1-23 beneficial owner of 10 percent or more of a class of voting shares
1-24 or similar securities of that corporation or other entity;
1-25 (b) a trust or estate in which the person has a
1-26 substantial beneficial interest or as to which the person serves as
1-27 trustee or in a similar fiduciary capacity; or
1-28 (c) a spouse of the person or a relative of the
1-29 person, or of the person's spouse, who has the same home as the
1-30 person or who is a director or officer of such person or any of its
1-31 affiliates.
1-32 (3) "Authorized shares" means the shares of all
1-33 classes which the corporation is authorized to issue.
1-34 (4) [(3)] "Cancel" means to restore issued shares to
1-35 the status of authorized but unissued shares.
1-36 (5) [(4)] "Certificated shares" means shares
1-37 represented by instruments in bearer or registered form.
1-38 (6) [(5)] "Conspicuous" or "conspicuously," when
1-39 prescribed for information appearing on a certificate for shares or
1-40 other securities, means the location of such information or use of
1-41 type of sufficient size, color, or character that a reasonable
1-42 person against whom such information may operate should notice it.
1-43 For example, a printed or typed statement in capitals, or boldface
1-44 or underlined type, or in type that is larger than or that
1-45 contrasts in color with that used for other statements on the same
1-46 certificate, is "conspicuous."
1-47 (7) [(6)] "Consuming assets corporation" means a
1-48 corporation which is engaged in the business of exploiting assets
1-49 subject to depletion or amortization and which elects to state in
1-50 its articles of incorporation that it is a consuming assets
1-51 corporation and includes as a part of its official corporate name
1-52 the phrase "a consuming assets corporation," giving such phrase
1-53 equal prominence with the rest of the corporate name on its
1-54 financial statements and certificates representing shares. All its
1-55 certificates representing shares shall also contain a further
1-56 sentence: "This corporation is permitted by law to pay dividends
1-57 out of reserves which may impair its stated capital."
1-58 (8) "Conversion" means:
1-59 (a) the continuance of a domestic corporation
1-60 as, and in the organizational form of, a foreign corporation or
1-61 other entity; or
1-62 (b) the continuance of a foreign corporation or
1-63 other entity as, and in the organizational form of, a domestic
1-64 corporation.
2-1 (9) "Converted entity" means any domestic or foreign
2-2 corporation or other entity to which a converting entity has
2-3 converted or intends to convert as permitted by Article 5.17 of
2-4 this Act.
2-5 (10) "Converting entity" means any domestic or foreign
2-6 corporation or other entity that has converted or intends to
2-7 convert as permitted by Article 5.17 of this Act.
2-8 (11) [(7)] "Corporation" or "domestic corporation"
2-9 means a corporation for profit subject to the provisions of this
2-10 Act, except a foreign corporation.
2-11 (12) "Disinterested," when used to indicate a director
2-12 or other person is disinterested in a contract, transaction, or
2-13 other matter for purposes of approval of a contract or transaction
2-14 under Article 2.35-1 of this Act and for purposes of considering
2-15 the disposition of a claim or challenge with respect to a
2-16 particular contract or transaction or to particular conduct means
2-17 the director or other person, or an associate of the director
2-18 (other than the corporation and its associates) or other person, is
2-19 not a party to the contract or transaction or is not materially
2-20 involved in the conduct that is subject to the claim or challenge
2-21 and does not otherwise have a material financial interest in the
2-22 outcome of the contract or transaction or the disposition of the
2-23 claim or challenge. A director or other person is not to be
2-24 considered to be materially involved in conduct that is subject to
2-25 a claim or challenge or to otherwise have a material financial
2-26 interest in the outcome of a contract or transaction or the
2-27 disposition of the claim or challenge solely by reason of the
2-28 existence of one or more of the following circumstances:
2-29 (a) the person was nominated or elected as a
2-30 director by persons who are interested in the contract or
2-31 transaction or who are alleged to have engaged in the conduct that
2-32 is subject to the claim or challenge;
2-33 (b) the person receives normal director's fees
2-34 or similar customary compensation, expense reimbursement, and
2-35 benefits as a director of the corporation;
2-36 (c) the person has a direct or indirect equity
2-37 interest in the corporation;
2-38 (d) the corporation or its subsidiaries has an
2-39 interest in the contract or transaction or was affected by the
2-40 alleged conduct;
2-41 (e) the person or an associate or affiliate of
2-42 the person receives ordinary and reasonable compensation for
2-43 services rendered to review, make recommendations, or decide on the
2-44 disposition of the claim or challenge; or
2-45 (f) in the case of a review by the person of
2-46 alleged conduct that is the subject to a claim or challenge:
2-47 (i) the person is named as a defendant in
2-48 the derivative proceeding with respect to such matter or as a
2-49 person who engaged in the alleged conduct; or
2-50 (ii) the person approved of, voted for, or
2-51 acquiesced in, as a director, the act being challenged if the act
2-52 resulted in no material personal or financial benefit to the person
2-53 and the challenging party fails to allege with particularity facts
2-54 that, if true, raise a significant prospect that the director would
2-55 be adjudged liable to the corporation or its shareholders by reason
2-56 of that conduct.
2-57 (13) [(8)] "Distribution" means a transfer of money or
2-58 other property (except its own shares or rights to acquire its own
2-59 shares), or issuance of indebtedness, by a corporation to its
2-60 shareholders in the form of:
2-61 (a) a dividend on any class or series of the
2-62 corporation's outstanding shares;
2-63 (b) a purchase, redemption, or other acquisition
2-64 by the corporation, directly or indirectly, of any of its own
2-65 shares; or
2-66 (c) a payment by the corporation in liquidation
2-67 of all or a portion of its assets.
2-68 (14) [(9)] "Foreign corporation" means a corporation
2-69 for profit organized under laws other than the laws of this State.
3-1 (15) "Independent," when used to indicate a director
3-2 or other person is independent for purposes of considering the
3-3 disposition of a claim or challenge with respect to a particular
3-4 contract or transaction or to particular conduct or alleged conduct
3-5 means:
3-6 (a) the director or other person is
3-7 disinterested;
3-8 (b) the director or other person is not an
3-9 associate (other than by reason of being a director of the
3-10 corporation or one more of its subsidiaries or associates) or
3-11 member of the immediate family of a party to the contract or
3-12 transaction that is the subject of the claim or challenge or that
3-13 is alleged to have engaged in the conduct that is subject to the
3-14 claim or challenge;
3-15 (c) the director or other person, or an
3-16 associate or member of the immediate family of the director or
3-17 other person, does not have a business, financial, or familial
3-18 relationship with a party to the contract or transaction that is
3-19 the subject of the claim or challenge or that is alleged to have
3-20 engaged in conduct that is subject to the claim or challenge,
3-21 which, in each case, could reasonably be expected to materially and
3-22 adversely affect the director's or other person's judgment with
3-23 respect to the consideration of the disposition of the matter
3-24 subject to the claim or challenge in the interests of the
3-25 corporation; and
3-26 (d) the director or other person is not
3-27 otherwise shown, by a preponderance of the evidence by the person
3-28 challenging the independence of the director or other person, to be
3-29 under the controlling influence of a party to the contract or
3-30 transaction that is the subject of the claim or challenge or that
3-31 is alleged to have engaged in conduct that is subject to the claim
3-32 or challenge.
3-33 A director or other person is not considered to have a
3-34 relationship that could be expected to materially and adversely
3-35 affect the director's or other person's judgment with respect to
3-36 the consideration of the disposition of a matter subject to a claim
3-37 or challenge or to otherwise be under the controlling influence of
3-38 a party to a contract or transaction that is the subject of the
3-39 claim or challenge or that is alleged to have engaged in conduct
3-40 that is subject to a claim or challenge solely by reason of the
3-41 existence of one or more of the following circumstances:
3-42 (a) the person has been nominated or elected as
3-43 a director by persons who are interested in the contract or
3-44 transaction or who are alleged to have engaged in the conduct that
3-45 is subject to the claim or challenge;
3-46 (b) the person receives normal director's fees
3-47 or similar customary compensation, expense reimbursement, and
3-48 benefits as a director of the corporation;
3-49 (c) the person has a direct or indirect equity
3-50 interest in the corporation;
3-51 (d) the corporation or its subsidiaries has an
3-52 interest in the contract or transaction or was affected by the
3-53 alleged conduct;
3-54 (e) the person or an associate or affiliate of
3-55 such person receives ordinary and reasonable compensation for
3-56 services rendered to review, make recommendations, or decide on the
3-57 disposition of the claim or challenge; or
3-58 (f) the person or an associate (other than the
3-59 corporation and its associates), immediate family, member or
3-60 affiliate of the person has an ongoing business relationship with
3-61 the corporation that is not material to that person, associate,
3-62 family member, or affiliate.
3-63 (16) [(10)] "Insolvency" means inability of a
3-64 corporation to pay its debts as they become due in the usual course
3-65 of its business.
3-66 (17) [(11)] "Investment Company Act" means the
3-67 Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.);
3-68 (18) [(12)] "Merger" means (a) the division of a
3-69 domestic corporation into two or more new domestic corporations or
4-1 into a surviving corporation and one or more new domestic or
4-2 foreign corporations or other entities, or (b) the combination of
4-3 one or more domestic corporations with one or more domestic or
4-4 foreign corporations or other entities resulting in (i) one or more
4-5 surviving domestic or foreign corporations or other entities, (ii)
4-6 the creation of one or more new domestic or foreign corporations or
4-7 other entities, or (iii) one or more surviving domestic or foreign
4-8 corporations or other entities and the creation of one or more new
4-9 domestic or foreign corporations or other entities.
4-10 (19) [(13)] "Net assets" means the amount by which the
4-11 total assets of a corporation exceed the total debts of the
4-12 corporation.
4-13 (20) [(14)] "Other entity" means any entity, whether
4-14 organized for profit or not, that is a corporation (other than a
4-15 domestic or foreign corporation), limited or general partnership,
4-16 limited liability company, real estate investment trust, joint
4-17 venture, joint stock company, cooperative, association, bank,
4-18 trust, insurance company or other legal entity organized pursuant
4-19 to the laws of this state or any other state or country [to the
4-20 extent such laws or the constituent documents of that entity, not
4-21 inconsistent with such laws, permit that entity to enter into a
4-22 merger or share exchange as permitted by Article 5.03 of this Act].
4-23 (21) [(15)] "Share dividend" means a dividend by a
4-24 corporation that is payable in its own authorized but unissued
4-25 shares or in treasury shares. An amendment to a corporation's
4-26 articles of incorporation to change the shares of any class or
4-27 series, whether with or without par value, into the same or a
4-28 different number of shares, either with or without par value, of
4-29 the same class or series or another class or series does not
4-30 constitute a share dividend.
4-31 (22) [(16)] "Shareholder" or "holder of shares" means
4-32 the person in whose name shares issued by a corporation are
4-33 registered at the relevant time in the share transfer records
4-34 maintained by the corporation pursuant to Article 2.44 of this Act.
4-35 (23) [(17)] "Shares" means the units into which the
4-36 proprietary interests in a corporation are divided, whether
4-37 certificated or uncertificated shares.
4-38 (24) [(18)] "Stated capital" means, at any particular
4-39 time, the sum of:
4-40 (a) the par value of all shares of the
4-41 corporation having a par value that have been issued;
4-42 (b) the consideration fixed by the corporation
4-43 in the manner provided by Article 2.15 of this Act for all shares
4-44 of the corporation without par value that have been issued, except
4-45 such part of the consideration that is actually received therefor
4-46 (which part must be less than all of that consideration) that the
4-47 board by resolution adopted no later than sixty (60) days after the
4-48 issuance of those shares may have allocated to surplus; and
4-49 (c) such amounts not included in paragraphs (a)
4-50 and (b) of this subsection as have been transferred to stated
4-51 capital of the corporation, whether upon the payment of a share
4-52 dividend or upon adoption by the board of directors of a resolution
4-53 directing that all or part of surplus be transferred to stated
4-54 capital, minus all reductions from such sum as have been effected
4-55 in a manner permitted by law.
4-56 (25) [(19)] "Subscriber" means the offeror in a
4-57 subscription.
4-58 (26) [(20)] "Subscription" means a memorandum in
4-59 writing, executed before or after incorporation, wherein an offer
4-60 is made to purchase and pay for a specified number of theretofore
4-61 unissued shares of a corporation.
4-62 (27) [(21)] "Surplus" means the excess of the net
4-63 assets of a corporation over its stated capital.
4-64 (28) [(22)] "Treasury shares" means shares of a
4-65 corporation which have been issued, have been subsequently acquired
4-66 by and belong to the corporation, and have not been canceled and
4-67 restored to the status of authorized but unissued shares. Treasury
4-68 shares do not include shares held by a corporation, either directly
4-69 or through a trust or similar arrangement, in a fiduciary capacity.
5-1 Treasury shares shall be deemed to be "issued" shares but not
5-2 "outstanding" shares, and shall not be included in the total assets
5-3 of a corporation for purposes of determining its "net assets."
5-4 (29) [(23)] "Uncertificated shares" means shares not
5-5 represented by instruments and the transfers of which are
5-6 registered upon books maintained for that purpose by or on behalf
5-7 of the issuing corporation.
5-8 SECTION 2. Sections A, P, R, and T, Article 2.02-1, Texas
5-9 Business Corporation Act, are amended to read as follows:
5-10 A. In this article:
5-11 (1) "Corporation" includes any domestic or foreign
5-12 predecessor entity of the corporation in a merger, conversion
5-13 [consolidation], or other transaction in which some or all of the
5-14 liabilities of the predecessor are transferred to the corporation
5-15 by operation of law and in any other transaction in which the
5-16 corporation assumes the liabilities of the predecessor but does not
5-17 specifically exclude liabilities that are the subject matter of
5-18 this article.
5-19 (2) "Director" means any person who is or was a
5-20 director of the corporation and any person who, while a director of
5-21 the corporation, is or was serving at the request of the
5-22 corporation as a director, officer, partner, venturer, proprietor,
5-23 trustee, employee, agent, or similar functionary of another foreign
5-24 or domestic corporation, [partnership, joint venture, sole
5-25 proprietorship, trust,] employee benefit plan, [or] other
5-26 enterprise, or other entity.
5-27 (3) "Expenses" include court costs and attorneys'
5-28 fees.
5-29 (4) "Official capacity" means
5-30 (a) when used with respect to a director, the
5-31 office of director in the corporation, and
5-32 (b) when used with respect to a person other
5-33 than a director, the elective or appointive office in the
5-34 corporation held by the officer or the employment or agency
5-35 relationship undertaken by the employee or agent in behalf of the
5-36 corporation, but
5-37 (c) in both Paragraphs (a) and (b) does not
5-38 include service for any other foreign or domestic corporation or
5-39 any [partnership, joint venture, sole proprietorship, trust,]
5-40 employee benefit plan, [or] other enterprise, or other entity.
5-41 (5) "Proceeding" means any threatened, pending, or
5-42 completed action, suit, or proceeding, whether civil, criminal,
5-43 administrative, arbitrative, or investigative, any appeal in such
5-44 an action, suit, or proceeding, and any inquiry or investigation
5-45 that could lead to such an action, suit, or proceeding.
5-46 P. A corporation may indemnify and advance expenses to
5-47 persons who are not or were not officers, employees, or agents of
5-48 the corporation but who are or were serving at the request of the
5-49 corporation as a director, officer, partner, venturer, proprietor,
5-50 trustee, employee, agent, or similar functionary of another foreign
5-51 or domestic corporation, [partnership, joint venture, sole
5-52 proprietorship, trust,] employee benefit plan, [or] other
5-53 enterprise, or other entity to the same extent that it may
5-54 indemnify and advance expenses to directors under this article.
5-55 R. A corporation may purchase and maintain insurance or
5-56 another arrangement on behalf of any person who is or was a
5-57 director, officer, employee, or agent of the corporation or who is
5-58 or was serving at the request of the corporation as a director,
5-59 officer, partner, venturer, proprietor, trustee, employee, agent,
5-60 or similar functionary of another foreign or domestic corporation,
5-61 [partnership, joint venture, sole proprietorship, trust,] employee
5-62 benefit plan, [or] other enterprise, or other entity, against any
5-63 liability asserted against him and incurred by him in such a
5-64 capacity or arising out of his status as such a person, whether or
5-65 not the corporation would have the power to indemnify him against
5-66 that liability under this article. If the insurance or other
5-67 arrangement is with a person or entity that is not regularly
5-68 engaged in the business of providing insurance coverage, the
5-69 insurance or arrangement may provide for payment of a liability
6-1 with respect to which the corporation would not have the power to
6-2 indemnify the person only if including coverage for the additional
6-3 liability has been approved by the shareholders of the corporation.
6-4 Without limiting the power of the corporation to procure or
6-5 maintain any kind of insurance or other arrangement, a corporation
6-6 may, for the benefit of persons indemnified by the corporation, (1)
6-7 create a trust fund; (2) establish any form of self-insurance; (3)
6-8 secure its indemnity obligation by grant of a security interest or
6-9 other lien on the assets of the corporation; or (4) establish a
6-10 letter of credit, guaranty, or surety arrangement. The insurance
6-11 or other arrangement may be procured, maintained, or established
6-12 within the corporation or with any insurer or other person deemed
6-13 appropriate by the board of directors regardless of whether all or
6-14 part of the stock or other securities of the insurer or other
6-15 person are owned in whole or part by the corporation. In the
6-16 absence of fraud, the judgment of the board of directors as to the
6-17 terms and conditions of the insurance or other arrangement and the
6-18 identity of the insurer or other person participating in an
6-19 arrangement shall be conclusive and the insurance or arrangement
6-20 shall not be voidable and shall not subject the directors approving
6-21 the insurance or arrangement to liability, on any ground,
6-22 regardless of whether directors participating in the approval are
6-23 beneficiaries of the insurance or arrangement.
6-24 T. For purposes of this article, the corporation is deemed
6-25 to have requested a director to serve as a trustee, employee,
6-26 agent, or similar functionary of an employee benefit plan whenever
6-27 the performance by him of his duties to the corporation also
6-28 imposes duties on or otherwise involves services by him to the plan
6-29 or participants or beneficiaries of the plan. Excise taxes
6-30 assessed on a director with respect to an employee benefit plan
6-31 pursuant to applicable law are deemed fines. Action taken or
6-32 omitted by a director [him] with respect to an employee benefit
6-33 plan in the performance of his duties for a purpose reasonably
6-34 believed by him to be in the interest of the participants and
6-35 beneficiaries of the plan is deemed to be for a purpose which is
6-36 not opposed to the best interests of the corporation.
6-37 SECTION 3. Section A, Article 2.05, Texas Business
6-38 Corporation Act, is amended to read as follows:
6-39 A. The Corporate name shall conform to the following
6-40 requirements:
6-41 (1) It shall contain the word "corporation,"
6-42 "company," or "incorporated," or shall contain an abbreviation of
6-43 one of such words, and shall contain such additional words as may
6-44 be required by law.
6-45 (2) It shall not contain any word or phrase which
6-46 indicates or implies that it is organized for any purpose other
6-47 than one or more of the purposes contained in its articles of
6-48 incorporation.
6-49 (3) It shall not be the same as, or deceptively
6-50 similar to, the name of any domestic corporation, limited
6-51 partnership, or limited liability company existing under the laws
6-52 of this State, or the name of any foreign corporation, non-profit
6-53 corporation, limited partnership, or limited liability company
6-54 authorized to transact business in this State, or a name the
6-55 exclusive right to which is, at the time, reserved in the manner
6-56 provided in this Act or any other statute providing for reservation
6-57 of names by a limited partnership or limited liability company, or
6-58 the name of a corporation, limited partnership, or limited
6-59 liability company which has in effect a registration of its company
6-60 [corporate] name as provided in this Act or any other applicable
6-61 law; provided that a name may be similar if written consent is
6-62 obtained from the existing corporation, limited partnership, or
6-63 limited liability company having the name deemed to be similar or
6-64 the person[, or corporation,] for whom the name deemed to be
6-65 similar is reserved in the office of the Secretary of State.
6-66 (4) It shall not contain the word "lottery."
6-67 SECTION 4. Article 2.06, Texas Business Corporation Act, is
6-68 amended by adding Section D to read as follows:
6-69 D. Any person for whom a specified corporate name has been
7-1 reserved pursuant to Section B of this article may, during the
7-2 period for which such name is reserved, terminate such reservation
7-3 by filing with the Secretary of State an application for
7-4 cancellation of reservation of corporate name, together with the
7-5 applicable fee.
7-6 SECTION 5. Sections A and B, Article 2.15, Texas Business
7-7 Corporation Act, are amended to read as follows:
7-8 A. Shares having a par value may be issued for such
7-9 consideration, [expressed in dollars,] not less than the par value
7-10 thereof, as shall be fixed from time to time by the board of
7-11 directors or, in the case of shares issued by a converted entity,
7-12 in the plan of conversion or, in the case of a corporation created
7-13 by a merger, in the plan of merger.
7-14 B. Shares without par value may be issued for such
7-15 consideration, [expressed in dollars,] as may be fixed:
7-16 (1) [from time to time] by the board of directors from
7-17 time to time, unless the articles of incorporation reserve to the
7-18 shareholders the right to fix the consideration, in which case,
7-19 prior to the issuance of such[. In the event that such right be
7-20 reserved as to any] shares, the shareholders shall[, prior to the
7-21 issuance of such shares,] fix the consideration to be received for
7-22 such shares, by a vote of the holders of a majority of all shares
7-23 entitled to vote thereon;
7-24 (2) by a plan of conversion, in the case of shares to
7-25 be issued pursuant to the plan of conversion by a corporation that
7-26 is a converted entity; or
7-27 (3) by a plan of merger, in the case of shares to be
7-28 issued pursuant to the plan of merger by a corporation created
7-29 pursuant to the plan of merger.
7-30 SECTION 6. Article 2.16, Texas Business Corporation Act, is
7-31 amended to read as follows:
7-32 Art. 2.16. PAYMENT FOR SHARES. A. The [Subject to any
7-33 provision of the Constitution of the State of Texas to the
7-34 contrary, the] board of directors or, in the case of shares to be
7-35 issued pursuant to a plan of conversion by a corporation that is a
7-36 converted entity, the plan of conversion, or, in the case of shares
7-37 to be issued pursuant to a plan of merger by a corporation created
7-38 pursuant to the plan of merger, the plan of merger may authorize
7-39 shares to be issued for consideration consisting of any tangible or
7-40 intangible benefit to the corporation or other property of any kind
7-41 or nature, including cash, promissory notes, services performed,
7-42 contracts for services to be performed, [or] other securities of
7-43 the corporation, or securities of any other corporation, domestic
7-44 or foreign, or other entity. In addition, shares may be issued
7-45 pursuant to a plan of conversion or plan of merger in the manner
7-46 and for such consideration as may be provided for in the plan of
7-47 conversion or plan of merger. Shares may not be issued until the
7-48 full amount of the consideration, fixed as provided by law, has
7-49 been paid or delivered as required in connection with the
7-50 authorization of the shares. When such consideration shall have
7-51 been so paid or delivered [to the corporation or to a corporation
7-52 of which all of the outstanding shares of each class are owned by
7-53 the corporation], the shares shall be deemed to have been issued
7-54 and the subscriber or shareholder entitled to receive such issue
7-55 shall be a shareholder with respect to such shares, and the shares
7-56 shall be considered fully paid and non-assessable.
7-57 B. In the absence of fraud in the transaction, the judgment
7-58 of the board of directors or the shareholders or the party or
7-59 parties approving the plan of conversion or the plan of merger, as
7-60 the case may be, as to the value and sufficiency of the
7-61 consideration received for shares shall be conclusive.
7-62 SECTION 7. Sections A and B, Article 2.21, Texas Business
7-63 Corporation Act, are amended to read as follows:
7-64 A. A holder of shares, an owner of any beneficial interest
7-65 in shares, or a subscriber for shares whose subscription has been
7-66 accepted, or any affiliate thereof or of the corporation, shall be
7-67 under no obligation to the corporation or to its obligees with
7-68 respect to:
7-69 (1) such shares other than the obligation, if any, of
8-1 such person to pay to the corporation the full amount of the
8-2 consideration, fixed in compliance with Article 2.15 of this Act,
8-3 for which such shares were or are to be issued;
8-4 (2) any contractual obligation of the corporation or
8-5 any matter relating to or arising from the obligation on the basis
8-6 that the holder, owner, [or] subscriber, or affiliate is or was the
8-7 alter ego of the corporation, or on the basis of actual fraud or
8-8 constructive fraud, a sham to perpetrate a fraud, or other similar
8-9 theory, unless the obligee demonstrates that the holder, owner,
8-10 [or] subscriber, or affiliate caused the corporation to be used for
8-11 the purpose of perpetrating and did perpetrate an actual fraud on
8-12 the obligee primarily for the direct personal benefit of the
8-13 holder, owner, [or] subscriber, or affiliate; or
8-14 (3) any [contractual] obligation of the corporation on
8-15 the basis of the failure of the corporation to observe any
8-16 corporate formality, including without limitation: (a) the failure
8-17 to comply with any requirement of this Act or of the articles of
8-18 incorporation or bylaws of the corporation; or (b) the failure to
8-19 observe any requirement prescribed by this Act or by the articles
8-20 of incorporation or bylaws for acts to be taken by the corporation,
8-21 its board of directors, or its shareholders.
8-22 B. The liability of a holder, owner, or subscriber of shares
8-23 of a corporation or any affiliate thereof or of the corporation for
8-24 an obligation that is limited by Section A of this article is
8-25 exclusive and preempts any other liability imposed on a holder,
8-26 owner, or subscriber of shares of a corporation or any affiliate
8-27 thereof or of the corporation for that obligation under common law
8-28 or otherwise, except that nothing contained in this article shall
8-29 limit the obligation of a holder, owner, [or] subscriber, or
8-30 affiliate to an obligee of the corporation when:
8-31 (1) the holder, owner, [or] subscriber, or affiliate
8-32 has expressly assumed, guaranteed, or agreed to be personally
8-33 liable to the obligee for the obligation; or
8-34 (2) the holder, owner, [or] subscriber, or affiliate
8-35 is otherwise liable to the obligee for the obligation under this
8-36 Act or another applicable statute.
8-37 SECTION 8. Article 2.28, Texas Business Corporation Act, is
8-38 amended by amending Sections A and B and adding Section E to read
8-39 as follows:
8-40 A. Quorum. With respect to any meeting of shareholders
8-41 [matter], a quorum shall be present for any matter to be presented
8-42 at that [a] meeting [of shareholders] if the holders of a majority
8-43 of the shares entitled to vote at the meeting [on that matter] are
8-44 represented at the meeting in person or by proxy, unless otherwise
8-45 provided in the articles of incorporation in accordance with this
8-46 section. The articles of incorporation may provide:
8-47 (1) That a quorum shall be present at a meeting of
8-48 shareholders only if the holders of a specified greater portion of
8-49 the shares entitled to vote are represented at the meeting in
8-50 person or by proxy; or
8-51 (2) That a quorum shall be present at a meeting of
8-52 shareholders if the holders of a specified lesser portion, but not
8-53 less than one-third (1/3), of the shares entitled to vote are
8-54 represented at the meeting in person or by proxy.
8-55 Unless otherwise provided in the articles of incorporation or
8-56 the bylaws, once a quorum is present at a meeting of shareholders,
8-57 the shareholders represented in person or by proxy at the meeting
8-58 may conduct such business as may be properly brought before the
8-59 meeting until it is adjourned, and the subsequent withdrawal from
8-60 the meeting of any shareholder or the refusal of any shareholder
8-61 represented in person or by proxy to vote shall not affect the
8-62 presence of a quorum at the meeting. Unless otherwise provided in
8-63 the articles of incorporation or the bylaws, the shareholders
8-64 represented in person or by proxy at a meeting of shareholders at
8-65 which a quorum is not present may adjourn the meeting until such
8-66 time and to such place as may be determined by a vote of the
8-67 holders of a majority of the shares represented in person or by
8-68 proxy at that meeting.
8-69 B. Voting on Matters Other Than the Election of Directors.
9-1 With respect to any matter, other than the election of directors or
9-2 a matter for which the affirmative vote of the holders of a
9-3 specified portion of the shares entitled to vote is required by
9-4 this Act, the affirmative vote of the holders of a majority of the
9-5 shares entitled to vote on, and that voted for or against or
9-6 expressly abstained with respect to, that matter [and represented
9-7 in person or by proxy] at a meeting of shareholders at which a
9-8 quorum is present shall be the act of the shareholders, unless
9-9 otherwise provided in the articles of incorporation or the bylaws
9-10 in accordance with this section. With respect to any matter, other
9-11 than the election of directors or a matter for which the
9-12 affirmative vote of the holders of a specified portion of the
9-13 shares entitled to vote is required by this Act, the articles of
9-14 incorporation or the bylaws may provide:
9-15 (1) That the act of the shareholders shall be the
9-16 affirmative vote of the holders of a specified portion, but not
9-17 less than a majority, of the shares entitled to vote on that
9-18 matter;
9-19 (2) That the act of the shareholders shall be the
9-20 affirmative vote of the holders of a specified portion, but not
9-21 less than a majority, of the shares entitled to vote on that matter
9-22 and represented in person or by proxy at a meeting of shareholders
9-23 at which a quorum is present; [or]
9-24 (3) That the act of the shareholders shall be the
9-25 affirmative vote of the holders of a specified portion, but not
9-26 less than a majority, of the shares entitled to vote on, and voted
9-27 for or against, that matter at a meeting of shareholders at which a
9-28 quorum is present; or
9-29 (4) That the act of the shareholders shall be the
9-30 affirmative vote of the holders of a specified portion, but not
9-31 less than a majority, of the shares entitled to vote on, and that
9-32 voted for or against or expressly abstained with respect to, that
9-33 matter at a meeting of shareholders at which a quorum is present.
9-34 E. A corporation may establish procedures in its bylaws, not
9-35 inconsistent with this Act, for determining the validity of proxies
9-36 and whether shares that are held of record by a bank, broker, or
9-37 other nominee are represented at a meeting of shareholders with
9-38 respect to any matter. The procedures may incorporate or look to
9-39 rules and determinations of any stock exchange or self-regulatory
9-40 organization regulating the corporation or that bank, broker, or
9-41 other nominee.
9-42 SECTION 9. Section B, Article 2.29, Texas Business
9-43 Corporation Act, is amended to read as follows:
9-44 B. Shares [Treasury shares, shares] of its own stock owned
9-45 by a corporation or by another domestic or foreign corporation or
9-46 other entity, if a [the] majority of the voting stock or voting
9-47 interest of the other corporation or other entity [which] is owned
9-48 or controlled by the [it, and shares of its own stock held by a]
9-49 corporation, [in a fiduciary capacity] shall not be voted, directly
9-50 or indirectly, at any meeting, and shall not be counted in
9-51 determining the total number of outstanding shares at any given
9-52 time. Nothing in this section shall be construed as limiting the
9-53 right of any domestic or foreign corporation or other entity to
9-54 vote stock, including but not limited to its own stock, held or
9-55 controlled by it in a fiduciary capacity, or with respect to which
9-56 it otherwise exercises voting power in a fiduciary capacity.
9-57 SECTION 10. Part Two, Texas Business Corporation Act, is
9-58 amended by adding Article 2.30-1 to read as follows:
9-59 Art. 2.30-1. SHAREHOLDER AGREEMENTS. A. Scope of
9-60 Agreement. An agreement among the shareholders of a corporation
9-61 that complies with this article is effective among the shareholders
9-62 and the corporation even though it is inconsistent with one or more
9-63 provisions of this Act in that it:
9-64 (1) restricts the discretion or powers of the board of
9-65 directors;
9-66 (2) eliminates the board of directors and permits
9-67 management of the business and affairs of the corporation by its
9-68 shareholders, or in whole or in part by one or more of its
9-69 shareholders, or by one or more persons not shareholders;
10-1 (3) establishes the natural persons who shall be the
10-2 directors or officers of the corporation, their term of office or
10-3 manner of selection or removal, or terms or conditions of
10-4 employment of any director, officer, or other employee of the
10-5 corporation, regardless of the length of employment;
10-6 (4) governs the authorization or making of
10-7 distributions whether in proportion to ownership of shares, subject
10-8 to the limitations in Article 2.38 of this Act, or determines the
10-9 manner in which profits and losses shall be apportioned;
10-10 (5) governs, in general or in regard to specific
10-11 matters, the exercise or division of voting power by and between
10-12 the shareholders, directors (if any), or other persons or by or
10-13 among any of them, including use of disproportionate voting rights
10-14 or director proxies;
10-15 (6) establishes the terms and conditions of any
10-16 agreement for the transfer or use of property or the provision of
10-17 services between the corporation and any shareholder, director,
10-18 officer, or employee of the corporation, or other person or among
10-19 any of them;
10-20 (7) authorizes arbitration or grants authority to any
10-21 shareholder or other person as to any issue about which there is a
10-22 deadlock among the directors, shareholders, or other person or
10-23 persons empowered to manage the corporation to resolve that issue;
10-24 (8) requires dissolution of the corporation at the
10-25 request of one or more of the shareholders or on the occurrence of
10-26 a specified event or contingency, in which case the dissolution of
10-27 the corporation shall proceed as if all the shareholders had
10-28 consented in writing to dissolution of the corporation as provided
10-29 in Article 6.02 of this Act; or
10-30 (9) otherwise governs the exercise of corporate
10-31 powers, the management of the business and affairs of the
10-32 corporation, or the relationship among the shareholders, the
10-33 directors, and the corporation, or among any of them, as if the
10-34 corporation were a partnership or in a manner that would otherwise
10-35 be appropriate only among partners, and is not contrary to public
10-36 policy.
10-37 B. Procedures Required. An agreement authorized by this
10-38 article shall be:
10-39 (1) set forth (a) in the articles of incorporation or
10-40 bylaws and approved by all persons who are shareholders at the time
10-41 of the agreement, or (b) in a written agreement that is signed by
10-42 all the persons who are shareholders at the time of the agreement
10-43 and is made known to the corporation;
10-44 (2) subject to amendment only by all persons who are
10-45 shareholders at the time of the amendment, unless the agreement
10-46 provides otherwise; and
10-47 (3) valid for 10 years, unless the agreement provides
10-48 otherwise.
10-49 C. Notation of Existence. The existence of an agreement
10-50 authorized by this article shall be noted conspicuously on the
10-51 front or back of each certificate for outstanding shares or on the
10-52 information statement required for uncertificated shares by Article
10-53 2.19 of this Act and shall include the following: "These shares
10-54 are subject to the provisions of a shareholders' agreement that may
10-55 provide for management of the corporation in a manner different
10-56 than in other corporations and may subject a shareholder to certain
10-57 obligations or liabilities not otherwise imposed on shareholders in
10-58 other corporations." If at the time of the agreement the
10-59 corporation has shares outstanding represented by certificates, the
10-60 corporation shall recall the outstanding certificates and issue
10-61 substitute certificates that comply with this section. The failure
10-62 to note the existence of the agreement on the certificate or
10-63 information statement shall not affect the validity of the
10-64 agreement or any action taken pursuant to it.
10-65 D. Right of Rescission. Any purchaser of shares who, at the
10-66 time of purchase, did not have knowledge of the existence of an
10-67 agreement authorized by this article shall be entitled to
10-68 rescission of the purchase. A purchaser shall be deemed to have
10-69 knowledge of the existence of the agreement if its existence is
11-1 noted on the certificate or information statement for the shares in
11-2 compliance with Section C of this article and, if the shares are
11-3 not represented by a certificate, the information statement noting
11-4 existence of the agreement is delivered to the purchaser at or
11-5 prior to the time of purchase of the shares. An action to enforce
11-6 the right of rescission authorized by this section must be
11-7 commenced within the earlier of 90 days after discovery of the
11-8 existence of the agreement or two years after time of the purchase
11-9 of the shares.
11-10 E. Cessation. An agreement authorized by this article shall
11-11 cease to be effective when shares of the corporation are listed on
11-12 a national securities exchange, quoted on an interdealer quotation
11-13 system of a national securities association, or regularly traded in
11-14 a market maintained by one or more members of a national or
11-15 affiliated securities association. If the agreement ceases to be
11-16 effective for any reason and the corporation does not have a board
11-17 of directors, governance by a board of directors shall be
11-18 instituted or reinstated in the manner provided in Section C,
11-19 Article 12.23, of this Act. If the agreement is contained or
11-20 referred to in the corporation's articles of incorporation or
11-21 bylaws, the board of directors may adopt an amendment to the
11-22 articles of incorporation or bylaws, without shareholder action, to
11-23 delete the agreement and any references to it.
11-24 F. Managerial Liabilities. An agreement authorized by this
11-25 article that limits the discretion or powers of the board of
11-26 directors or supplants the board of directors shall relieve the
11-27 directors of, and impose on the person or persons in whom such
11-28 discretion or powers or management of the business and affairs of
11-29 the corporation are vested, liability for action or omissions
11-30 imposed by this Act or other law on directors to the extent that
11-31 the discretion or powers of the directors are limited or supplanted
11-32 by the agreement.
11-33 G. Limitation of Liability. The existence or performance of
11-34 an agreement authorized by this article shall not be grounds for
11-35 imposing personal liability on any shareholder for the acts or
11-36 obligations of the corporation by disregarding the separate entity
11-37 of the corporation or otherwise, even if the agreement or its
11-38 performance:
11-39 (1) treats the corporation as if it were a partnership
11-40 or in a manner that otherwise is appropriate only among partners;
11-41 (2) results in the corporation being considered a
11-42 partnership for purposes of taxation; or
11-43 (3) results in failure to observe the corporate
11-44 formalities otherwise applicable to the matters governed by the
11-45 agreement.
11-46 H. If No Shares Issued. Incorporators or subscribers for
11-47 the shares may act as shareholders with respect to an agreement
11-48 authorized by this article if no shares have been issued when the
11-49 agreement is signed.
11-50 SECTION 11. Article 2.31, Texas Business Corporation Act, is
11-51 amended to read as follows:
11-52 Art. 2.31. BOARD OF DIRECTORS. A. Except as provided by
11-53 Article 2.30-1 and Part Twelve of this Act, the [The] powers of a
11-54 corporation shall be exercised by or under the authority of, and
11-55 the business and affairs of a corporation shall be managed under
11-56 the direction of, the board of directors of the corporation.
11-57 Directors need not be residents of this State or shareholders of
11-58 the corporation unless the articles of incorporation or bylaws so
11-59 require. The articles of incorporation or bylaws may prescribe
11-60 other qualifications for directors.
11-61 SECTION 12. Article 2.32, Texas Business Corporation Act, is
11-62 amended to read as follows:
11-63 Art. 2.32. NUMBER AND ELECTION OF DIRECTORS. A. The board
11-64 of directors of a corporation shall consist of one or more members.
11-65 The number of directors shall be fixed by, or in the manner
11-66 provided in, the articles of incorporation or the bylaws, except as
11-67 to the number constituting the initial board of directors, which
11-68 number shall be fixed by the articles of incorporation. The number
11-69 of directors may be increased or decreased from time to time by
12-1 amendment to, or in the manner provided in, the articles of
12-2 incorporation or the bylaws, but no decrease shall have the effect
12-3 of shortening the term of any incumbent director. In the absence
12-4 of a bylaw or a provision of the articles of incorporation fixing
12-5 the number of directors or providing for the manner in which the
12-6 number of directors shall be fixed, the number of directors shall
12-7 be the same as the number constituting the initial board of
12-8 directors as fixed by the articles of incorporation. The names and
12-9 addresses of the members of the initial board of directors shall be
12-10 stated in the articles of incorporation. Unless removed in
12-11 accordance with the provisions of the bylaws or the articles of
12-12 incorporation, such persons shall hold office until the first
12-13 annual meeting of shareholders, and until their successors shall
12-14 have been elected and qualified. At the first annual meeting of
12-15 shareholders and at each annual meeting thereafter, the holders of
12-16 shares entitled to vote in the election of directors shall elect
12-17 directors to hold office until the next succeeding annual meeting,
12-18 except in case of the classification of directors as permitted by
12-19 this Act.
12-20 B. The articles of incorporation may provide that the
12-21 holders of any class or series of shares or any group of classes or
12-22 series of shares shall be entitled to elect one or more directors,
12-23 who shall hold office for such terms as shall be stated in the
12-24 articles of incorporation. The articles of incorporation may
12-25 provide that any directors elected by the holders of any such class
12-26 or series of shares or any such group shall be entitled to more or
12-27 less than one vote on all or any specified matters, in which case
12-28 every reference in this Act (or in the articles of incorporation or
12-29 bylaws, unless expressly stated otherwise therein) to a specified
12-30 portion of the directors shall mean such portion of the votes
12-31 entitled to be cast by the directors to which such reference is
12-32 applicable. Unless removed in accordance with provisions of the
12-33 bylaws or the articles of incorporation, each director shall hold
12-34 office for the term for which he is elected and until his successor
12-35 shall have been elected and qualified.
12-36 C. Except as otherwise provided in this Article, the [The]
12-37 bylaws or the articles of incorporation may provide that at any
12-38 meeting of shareholders called expressly for that purpose any
12-39 director or the entire board of directors may be removed, with or
12-40 without cause, by a vote of the holders of a specified portion, but
12-41 not less than a majority, of the shares then entitled to vote at an
12-42 election of directors, subject to any further restrictions on
12-43 removal that may be contained in the bylaws. Whenever the holders
12-44 of any class or series of shares or any such group are entitled to
12-45 elect one or more directors by the provisions of the articles of
12-46 incorporation, only the holders of shares of that class or series
12-47 or group shall be entitled to vote for or against the removal of
12-48 any director elected by the holders of shares of that class or
12-49 series or group. In the case of a corporation having cumulative
12-50 voting, if less than the entire board is to be removed, no one of
12-51 the directors may be removed if the votes cast against his removal
12-52 would be sufficient to elect him if then cumulatively voted at an
12-53 election of the entire board of directors, or if there be classes
12-54 of directors, at an election of the class of directors of which he
12-55 is a part. In the case of a corporation whose directors have been
12-56 classified as permitted by this Act, unless the articles of
12-57 incorporation otherwise provide, a director may not be removed
12-58 except for cause.
12-59 D. [B.] Notwithstanding Section B [A] of this Article, a
12-60 director of a corporation registered under the Investment Company
12-61 Act, unless removed in accordance with the provisions of the
12-62 articles of incorporation or bylaws, holds office for the term for
12-63 which the director is elected and until the director's successor
12-64 has been elected and qualified.
12-65 SECTION 13. Section A, Article 2.35-1, Texas Business
12-66 Corporation Act, is amended to read as follows:
12-67 A. An otherwise valid [No] contract or transaction between a
12-68 corporation and one or more of its directors or officers, or
12-69 between a corporation and any other domestic or foreign
13-1 corporation[, partnership, association,] or other entity
13-2 [organization] in which one or more of its directors or officers
13-3 are directors or officers or have a financial interest, shall be
13-4 valid notwithstanding whether [void or voidable solely for this
13-5 reason, solely because] the director or officer is present at or
13-6 participates in the meeting of the board or committee thereof which
13-7 authorizes the contract or transaction, or solely because his or
13-8 their votes are counted for such purpose, if any one of the
13-9 following is satisfied:
13-10 (1) The material facts as to his relationship or
13-11 interest and as to the contract or transaction are disclosed or are
13-12 known to the board of directors or the committee, and the board or
13-13 committee in good faith authorizes the contract or transaction by
13-14 the affirmative vote of a majority of the disinterested directors,
13-15 even though the disinterested directors be less than a quorum; or
13-16 (2) The material facts as to his relationship or
13-17 interest and as to the contract or transaction are disclosed or are
13-18 known to the shareholders entitled to vote thereon, and the
13-19 contract or transaction is specifically approved in good faith by
13-20 vote of the shareholders; or
13-21 (3) The contract or transaction is fair as to the
13-22 corporation as of the time it is authorized, approved, or ratified
13-23 by the board of directors, a committee thereof, or the
13-24 shareholders.
13-25 SECTION 14. Section B, Article 2.36, Texas Business
13-26 Corporation Act, is amended to read as follows:
13-27 B. No committee of the board of directors shall have the
13-28 authority of the board of directors in reference to:
13-29 (1) amending the articles of incorporation, except
13-30 that a committee may, to the extent provided in the resolution
13-31 designating that committee or in the articles of incorporation or
13-32 the bylaws, exercise the authority of the board of directors vested
13-33 in it in accordance with Article 2.13 of this Act;
13-34 (2) proposing a reduction of the stated capital of the
13-35 corporation in the manner permitted by Article 4.12 of this Act;
13-36 (3) approving a plan of merger, [or] share exchange,
13-37 or conversion of the corporation;
13-38 (4) recommending to the shareholders the sale, lease,
13-39 or exchange of all or substantially all of the property and assets
13-40 of the corporation otherwise than in the usual and regular course
13-41 of its business;
13-42 (5) recommending to the shareholders a voluntary
13-43 dissolution of the corporation or a revocation thereof;
13-44 (6) amending, altering, or repealing the bylaws of the
13-45 corporation or adopting new bylaws of the corporation;
13-46 (7) filling vacancies in the board of directors;
13-47 (8) filling vacancies in or designating alternate
13-48 members of any such committee;
13-49 (9) filling any directorship to be filled by reason of
13-50 an increase in the number of directors;
13-51 (10) electing or removing officers of the corporation
13-52 or members or alternate members of any such committee;
13-53 (11) fixing the compensation of any member or
13-54 alternate members of such committee; or
13-55 (12) altering or repealing any resolution of the board
13-56 of directors that by its terms provides that it shall not be so
13-57 amendable or repealable.
13-58 SECTION 15. Section B, Article 2.38-4, Texas Business
13-59 Corporation Act, is amended to read as follows:
13-60 B. For the purposes of this Article, a distribution that
13-61 involves the incurrence by a corporation of any indebtedness or
13-62 deferred payment obligation or that involves a requirement in the
13-63 corporation's articles of incorporation or other contract by the
13-64 corporation to redeem, exchange, or otherwise acquire any of its
13-65 own shares is deemed to have been made on the date the indebtedness
13-66 or obligation is incurred or, in the case of a provision in the
13-67 articles of incorporation of a corporation or other contract to
13-68 purchase, redeem, exchange, or otherwise acquire shares, at the
13-69 option of the corporation, is deemed to have been made on either
14-1 the date the provision or other contract is made or takes effect or
14-2 the date on which the shares to be redeemed, exchanged, or acquired
14-3 are redeemed, exchanged, or acquired.
14-4 SECTION 16. Article 3.01, Texas Business Corporation Act, is
14-5 amended to read as follows:
14-6 Art. 3.01. INCORPORATORS. A. Any natural person of the age
14-7 of eighteen (18) years or more, or any domestic or foreign
14-8 corporation, estate, or other entity [partnership, corporation,
14-9 association, trust, or estate (without regard to place of
14-10 residence, domicile, or organization)] may act as an incorporator
14-11 of a corporation by signing the articles of incorporation for such
14-12 corporation and by delivering the original and a copy of the
14-13 articles of incorporation to the Secretary of State.
14-14 SECTION 17. Section A, Article 3.02, Texas Business
14-15 Corporation Act, is amended to read as follows:
14-16 A. The articles of incorporation shall set forth:
14-17 (1) The name of the corporation;
14-18 (2) The period of duration, which may be perpetual;
14-19 (3) The purpose or purposes for which the corporation
14-20 is organized which may be stated to be, or to include, the
14-21 transaction of any or all lawful business for which corporations
14-22 may be incorporated under this Act;
14-23 (4) The aggregate number of shares which the
14-24 corporation shall have authority to issue; if such shares are to
14-25 consist of one class only, the par value of each of such shares, or
14-26 a statement that all of such shares are without par value; or, if
14-27 such shares are to be divided into classes, the number of shares of
14-28 each class, and a statement of the par value of the shares of each
14-29 class or that such shares are to be without par value;
14-30 (5) If the shares are to be divided into classes, the
14-31 designation of each class and statement of the preferences,
14-32 limitations, and relative rights in respect of the shares of each
14-33 class;
14-34 (6) If the corporation is to issue the shares of any
14-35 class in series, then the designation of each series and a
14-36 statement of the variations in the preferences, limitations and
14-37 relative rights as between series insofar as the same are to be
14-38 fixed in the articles of incorporation, and a statement of any
14-39 authority to be vested in the board of directors to establish
14-40 series and fix and determine the preferences, limitations and
14-41 relative rights of each series;
14-42 (7) A statement that the corporation will not commence
14-43 business until it has received for the issuance of shares
14-44 consideration of the value of a stated sum which shall be at least
14-45 One Thousand Dollars ($1,000.00)[, consisting of money, labor done,
14-46 or property actually received];
14-47 (8) Any provision limiting or denying to shareholders
14-48 the preemptive right to acquire additional or treasury shares of
14-49 the corporation;
14-50 (9) If a corporation elects to become a close
14-51 corporation in conformance with Part Twelve of this Act, any
14-52 provision (a) required or permitted by this Act to be stated in the
14-53 articles of incorporation of a close corporation, but not in the
14-54 articles of incorporation of an ordinary corporation, (b) contained
14-55 or permitted to be contained in a shareholders' agreement in
14-56 conformance with Part Twelve of this Act which the incorporators
14-57 elect to set forth in articles of incorporation, or (c) that makes
14-58 a shareholders' agreement in conformance with Part Twelve of this
14-59 Act part of the articles of incorporation of a close corporation in
14-60 the manner prescribed in Section F, Article 2.22 of this Act, but
14-61 any such provision, other than the statement required by Section A,
14-62 Article 12.11 of this Act, shall be preceded by a statement that
14-63 the provision shall be subject to the corporation remaining a close
14-64 corporation in conformance with Part Twelve of this Act;
14-65 (10) Any provision, not inconsistent with law,
14-66 including any provision which under this Act is required or
14-67 permitted to be set forth in the bylaws or which is permitted to be
14-68 included pursuant to Article 2.30-1 of this Act, providing [which
14-69 the incorporators elect to set forth in the articles of
15-1 incorporation] for the regulation of the internal affairs of the
15-2 corporation;
15-3 (11) The street address of its initial registered
15-4 office and the name of its initial registered agent at such
15-5 address;
15-6 (12) Subject to Article 2.30-1 of this Act, the [The]
15-7 number of directors constituting the initial board of directors and
15-8 the names and addresses of the person or persons who are to serve
15-9 as directors until the first annual meeting of shareholders or
15-10 until their successors be elected and qualify, or, in the case of a
15-11 close corporation that, in conformance with Part Twelve of this
15-12 Act, is to be managed in some other manner pursuant to a
15-13 shareholders' agreement by the shareholders or by the persons
15-14 empowered by the agreement to manage its business and affairs, the
15-15 names and addresses of the person or persons who, pursuant to the
15-16 shareholders' agreement, will perform the functions of the initial
15-17 board of directors provided for by this Act;
15-18 (13) The name and address of each incorporator, unless
15-19 the corporation is being incorporated pursuant to a plan of
15-20 conversion or a plan of merger, in which case the articles need not
15-21 include such information; and
15-22 (14) If the corporation is being incorporated pursuant
15-23 to a plan of conversion or a plan of merger, a statement to that
15-24 effect, and in the case of a plan of conversion, the name, address,
15-25 date of formation, and prior form of organization and jurisdiction
15-26 of incorporation or organization of the converting entity.
15-27 SECTION 18. Article 3.03, Texas Business Corporation Act, is
15-28 amended by amending Section A and adding Section C to read as
15-29 follows:
15-30 A. Except as provided by Section C of this Article, the
15-31 [The] original and a copy of the articles of incorporation shall be
15-32 delivered to the Secretary of State. If the Secretary of State
15-33 finds that the articles of incorporation conform to law, he shall,
15-34 when all fees have been paid as required by law:
15-35 (1) Endorse on the original and the copy the word
15-36 "Filed," and the month, day, and year of the filing thereof.
15-37 (2) File the original in his office.
15-38 (3) Issue a certificate of incorporation to which he
15-39 shall affix the copy.
15-40 C. In the case of a new domestic corporation being
15-41 incorporated pursuant to a plan of conversion or a plan of merger
15-42 pursuant to Part Five of this Act, the articles of incorporation of
15-43 the corporation shall be filed with the Secretary of State with the
15-44 articles of conversion or merger and need not be filed separately
15-45 pursuant to Section A of this Article. If the Secretary of State
15-46 finds that the articles of incorporation conform to the law, he
15-47 shall file the articles of incorporation in his office and issue a
15-48 certificate of incorporation, to which he shall affix a copy of the
15-49 articles of incorporation, and deliver the same to the party or
15-50 parties filing the articles of conversion or merger, or their
15-51 representatives, with the certificate of conversion or merger that
15-52 is issued in connection with the conversion or merger. In the case
15-53 of a conversion or a merger, the certificate of incorporation of a
15-54 domestic corporation that is a converted entity or that is to be
15-55 created pursuant to the plan of merger shall become effective on
15-56 the effectiveness of the conversion or the merger, as the case may
15-57 be.
15-58 SECTION 19. Article 3.04, Texas Business Corporation Act, is
15-59 amended to read as follows:
15-60 Art. 3.04. EFFECT OF ISSUANCE OF CERTIFICATE OF
15-61 INCORPORATION. A. Except as provided by Section B of this
15-62 Article, on [Upon] the issuance of the certificate of
15-63 incorporation, the corporate existence of the corporation being
15-64 incorporated shall begin.
15-65 B. In the case of a new domestic corporation being
15-66 incorporated pursuant to a plan of conversion or a plan of merger
15-67 pursuant to Part Five of this Act, the corporate existence of the
15-68 corporation shall begin upon the effectiveness of the conversion or
15-69 the merger, as the case may be.
16-1 C. The[, and such] certificate of incorporation on
16-2 effectiveness shall be conclusive evidence that all conditions
16-3 precedent required to be performed for the valid incorporation of
16-4 the corporation [by the incorporators] have been complied with and
16-5 that the corporation has been duly incorporated under this Act,
16-6 except as against the State in a proceeding for involuntary
16-7 dissolution.
16-8 SECTION 20. Article 3.05, Texas Business Corporation Act, is
16-9 amended to read as follows:
16-10 Art. 3.05. REQUIREMENT BEFORE COMMENCING BUSINESS. A. A
16-11 corporation shall not transact any business or incur any
16-12 indebtedness, except such as shall be incidental to its
16-13 organization or to obtaining subscriptions to or payment for its
16-14 shares, until it has received for the issuance of shares
16-15 consideration of the value of at least One Thousand Dollars
16-16 ($1,000.00)[, consisting of money, labor done, or property actually
16-17 received].
16-18 SECTION 21. Article 3.06, Texas Business Corporation Act, is
16-19 amended to read as follows:
16-20 Art. 3.06. ORGANIZATION MEETING OF DIRECTORS. A. Except as
16-21 provided by Section B of this Article, after [After] the issuance
16-22 of the certificate of incorporation, an organization meeting of the
16-23 initial board of directors named in the articles of incorporation
16-24 (or of the person or persons who, in conformance with Section
16-25 A(12), Article 3.02 of this Act, are named in the articles of
16-26 incorporation as the person or persons who will perform the
16-27 functions of the initial board of directors provided for by this
16-28 Act) shall be held, either within or without this State, at the
16-29 call of a majority of the directors named in the articles of
16-30 incorporation, for the purpose of adopting bylaws, electing
16-31 officers, and transacting such other business as may come before
16-32 the meeting. The directors calling the meeting shall give at least
16-33 three (3) days notice thereof by mail to each director so named,
16-34 stating the time and place of the meeting.
16-35 B. The provisions of Section A of this Article shall not
16-36 apply to a corporation that is a converted entity or a corporation
16-37 that is created pursuant to a plan of merger if the plan of
16-38 conversion or the plan of merger, as the case may be, sets forth
16-39 the bylaws and officers of the corporation.
16-40 SECTION 22. Section A, Article 4.03, Texas Business
16-41 Corporation Act, is amended to read as follows:
16-42 A. The holders of the outstanding shares of a class shall be
16-43 entitled to vote as a class upon a proposed amendment, and the
16-44 holders of the outstanding shares of a series shall be entitled to
16-45 vote as a class upon a proposed amendment, whether or not entitled
16-46 to vote thereon by the provisions of the articles of incorporation,
16-47 if the amendment would accomplish any of the following, unless the
16-48 amendment is undertaken pursuant to authority granted to the board
16-49 of directors in the articles of incorporation in accordance with
16-50 [Section B of] Article 2.13 of this Act:
16-51 (1) Increase or decrease the aggregate number of
16-52 authorized shares of such class or series.
16-53 (2) Increase or decrease the par value of the shares
16-54 of such class, including changing shares having a par value into
16-55 shares without par value, or shares without par value into shares
16-56 with par value.
16-57 (3) Effect an exchange, reclassification, or
16-58 cancellation of all or part of the shares of such class or series.
16-59 (4) Effect an exchange, or create a right of exchange,
16-60 of all or any part of the shares of another class into the shares
16-61 of such class or series.
16-62 (5) Change the designations, preferences, limitations,
16-63 or relative rights of the shares of such class or series.
16-64 (6) Change the shares of such class or series, whether
16-65 with or without par value, into the same or a different number of
16-66 shares, either with or without par value, of the same class or
16-67 series or another class or series.
16-68 (7) Create a new class or series of shares having
16-69 rights and preferences equal, prior, or superior to the shares of
17-1 such class or series, or increase the rights and preferences of any
17-2 class or series having rights and preferences equal, prior, or
17-3 superior to the shares of such class or series, or increase the
17-4 rights and preferences of any class or series having rights or
17-5 preferences later or inferior to the shares of such class or series
17-6 in such a manner as to become equal, prior, or superior to the
17-7 shares of such class or series.
17-8 (8) Divide the shares of such class into series and
17-9 fix and determine the designation of such series and the variations
17-10 in the relative rights and preferences between the shares of such
17-11 series.
17-12 (9) Limit or deny the existing preemptive rights of
17-13 the shares of such class or series.
17-14 (10) Cancel or otherwise affect dividends on the
17-15 shares of such class or series which had accrued but had not been
17-16 declared.
17-17 (11) Include in or delete from the articles of
17-18 incorporation any provisions required or permitted to be included
17-19 in the articles of incorporation of a close corporation in
17-20 conformance with Part Twelve of this Act.
17-21 SECTION 23. Article 4.14, Texas Business Corporation Act, is
17-22 amended to read as follows:
17-23 Art. 4.14. REORGANIZATION UNDER A FEDERAL STATUTE; AMENDMENT
17-24 OF ARTICLES, MERGER, SHARE EXCHANGE, CONVERSION, AND DISSOLUTION
17-25 PURSUANT TO FEDERAL REORGANIZATION PROCEEDINGS. A. Authorization.
17-26 Notwithstanding any other provision of this Act to the contrary, a
17-27 trustee appointed for a corporation being reorganized under a
17-28 federal statute, the designated officers of the corporation, or any
17-29 other individual or individuals designated by the court to act on
17-30 behalf of the corporation may do any of the following without
17-31 action by or notice to its board of directors or shareholders in
17-32 order to carry out a plan of reorganization ordered or decreed by a
17-33 court of competent jurisdiction under the federal statute:
17-34 (1) amend or restate its articles of incorporation if
17-35 the articles after amendment or restatement contain only provisions
17-36 required or permitted in articles;
17-37 (2) merge or engage in a share exchange with one or
17-38 more domestic or foreign corporations or other entities pursuant to
17-39 a plan of merger or exchange having such terms and provisions as
17-40 required or permitted by Articles 5.01 and 5.02 of this Act;
17-41 (3) change the location of its registered office,
17-42 change its registered agent, and remove or appoint any agent to
17-43 receive service of process;
17-44 (4) alter, amend, or repeal its bylaws;
17-45 (5) constitute or reconstitute and classify or
17-46 reclassify its board of directors, and name, constitute, or appoint
17-47 directors and officers in place of or in addition to all or some of
17-48 the officers or directors then in place;
17-49 (6) sell, lease, exchange or otherwise dispose of all,
17-50 or substantially all, of its property and assets;
17-51 (7) authorize and fix the terms, manner, and
17-52 conditions of the issuance of bonds, debentures, or other
17-53 obligations, whether or not convertible into shares of any class or
17-54 bearing warrants or other evidences of optional rights to purchase
17-55 or subscribe for any shares of any class; [or]
17-56 (8) dissolve; or
17-57 (9) effect a conversion.
17-58 Actions taken under Subsection (4) or (5) of this section are
17-59 effective on entry of the order or decree approving the plan of
17-60 reorganization or on another effective date as may be specified,
17-61 without further action of the corporation, as and to the extent set
17-62 forth in the plan of reorganization or the order or decree
17-63 approving the plan of reorganization.
17-64 B. Authority to Sign Documents. A trustee appointed for a
17-65 corporation being reorganized under a federal statute, the
17-66 designated officers of the corporation, or any other individual or
17-67 individuals designated by the court may sign on behalf of a
17-68 corporation that is being reorganized:
17-69 (1) articles of amendment or restated articles of
18-1 incorporation setting forth:
18-2 (a) the name of the corporation;
18-3 (b) the text of each amendment or the
18-4 restatement approved by the court;
18-5 (c) the date of the court's order or decree
18-6 approving the articles of amendment or restatement;
18-7 (d) the court, file name, and case number of the
18-8 reorganization case in which the order or decree was entered; and
18-9 (e) a statement that the court had jurisdiction
18-10 of the case under federal statute; or
18-11 (2) articles of merger or exchange setting forth:
18-12 (a) the name of the corporation;
18-13 (b) the text of the part of the plan of
18-14 reorganization that contains the plan of merger or exchange
18-15 approved by the court, which shall include the information required
18-16 by Article 5.04A or 5.16B of this Act, as applicable, but need not
18-17 include the resolution of the board of directors referred to in
18-18 Article 5.16B(3) of this Act;
18-19 (c) the date of the court's order or decree
18-20 approving the plan of merger or consolidation;
18-21 (d) the court, file name, and case number of the
18-22 reorganization case in which the order or decree was entered; and
18-23 (e) a statement that the court had jurisdiction
18-24 of the case under federal statute; or
18-25 (3) articles of dissolution setting forth:
18-26 (a) the name of the corporation;
18-27 (b) the information required by Articles
18-28 6.06A(1)(2) and (3) of this Act;
18-29 (c) the date of the court's order or decree
18-30 approving the articles of dissolution;
18-31 (d) that the debts, obligations and liabilities
18-32 of the corporation have been paid or discharged as provided in the
18-33 plan of reorganization and that the remaining property and assets
18-34 of the corporation have been distributed as provided in the plan of
18-35 reorganization;
18-36 (e) the court, file name, and case number of the
18-37 reorganization case in which the order or decree was entered; and
18-38 (f) a statement that the court had jurisdiction
18-39 of the case under federal statute; or
18-40 (4) a statement of change of registered office or
18-41 registered agent, or both, setting forth:
18-42 (a) the name of the corporation;
18-43 (b) the information required by Article 2.10A of
18-44 this Act, as applicable, but not the information included in the
18-45 statement referred to in Article 2.10A(7) of this Act;
18-46 (c) the date of the court's order or decree
18-47 approving the statement of change of registered office or
18-48 registered agent, or both;
18-49 (d) the court, file name, and case number of the
18-50 reorganization case in which the order or decree was entered; and
18-51 (e) a statement that the court had jurisdiction
18-52 of the case under federal statute; or
18-53 (5) articles of conversion setting forth:
18-54 (a) the name of the corporation;
18-55 (b) the text of the part of the plan of
18-56 reorganization that contains the plan of conversion approved by the
18-57 court, which shall include the information required by Article 5.18
18-58 of this Act;
18-59 (c) the date of the court's order or decree
18-60 approving the plan of conversion;
18-61 (d) the court, file name, and case number of the
18-62 reorganization case in which the order or decree was entered; and
18-63 (e) a statement that the court had jurisdiction
18-64 of the case under federal statute.
18-65 C. Procedure for Merger or Share Exchange. When a domestic
18-66 or foreign corporation or other entity that is not being
18-67 reorganized merges or engages in a share exchange with a
18-68 corporation that is being reorganized pursuant to a plan of
18-69 reorganization:
19-1 (1) Articles 5.01, 5.02, 5.03, 5.11, 5.12, and 5.13 of
19-2 this Act shall apply to the domestic or foreign corporation or
19-3 other entity that is not being reorganized to the same extent they
19-4 would apply if it were merging or engaging in a share exchange with
19-5 a corporation that is not being reorganized;
19-6 (2) Article 5.06 of this Act shall apply to the
19-7 domestic or foreign corporation or other entity that is not being
19-8 reorganized to the same extent it would apply if that domestic or
19-9 foreign corporation or other entity were merging or engaging in a
19-10 share exchange with a corporation that is not being reorganized,
19-11 except as otherwise provided in the plan of reorganization ordered
19-12 or decreed by a court of competent jurisdiction under the federal
19-13 statute;
19-14 (3) Article 5.16E of this Act shall apply to a
19-15 subsidiary corporation that is not being reorganized to the same
19-16 extent it would apply if that corporation were merging with a
19-17 parent corporation that is not being reorganized;
19-18 (4) Upon the receipt of all required authorization for
19-19 all action required by this Act for each corporation that is a
19-20 party to the plan of merger or exchange that is not being
19-21 reorganized and all action by each corporation, foreign
19-22 corporation, or other entity that is a party to the plan of merger
19-23 or exchange required by the laws under which it is incorporated or
19-24 organized and its constituent documents, articles of merger or
19-25 exchange shall be signed by each domestic or foreign corporation or
19-26 other entity that is a party to the merger or exchange other than
19-27 the corporation that is being reorganized as provided in Article
19-28 5.04 of this Act and on behalf of the corporation that is being
19-29 reorganized by the persons specified in Section B of this Article;
19-30 (5) The articles of merger or exchange shall set forth
19-31 the information required in Section B(2) of this Article;
19-32 (6) The articles of merger or exchange shall be filed
19-33 with the Secretary of State in the manner and with such number of
19-34 copies as is provided in Article 5.04B of this Act; and
19-35 (7) Upon the issuance of the certificate of merger or
19-36 share exchange by the Secretary of State as provided in Article
19-37 5.04 of this Act, the merger or share exchange shall become
19-38 effective with the same effect as if it had been adopted by
19-39 unanimous action of the directors and shareholders of the
19-40 corporation being reorganized. The effectiveness of the merger or
19-41 share exchange shall be determined as provided in Article 5.05 of
19-42 this Act.
19-43 D. Dissenters' Rights. Shareholders of a corporation being
19-44 reorganized under a federal statute do not have a right to dissent
19-45 under Article 5.11, [or] 5.16E, or 5.20 of this Act, except as the
19-46 plan of reorganization may provide.
19-47 E. When Applicable. This Article shall not apply after the
19-48 entry of a final decree in the reorganization case even though the
19-49 court may retain jurisdiction of the case for limited purposes
19-50 unrelated to consummation of the plan of reorganization.
19-51 F. Nonexclusivity. This Article shall not preclude other
19-52 changes in a corporation or its securities by a plan of
19-53 reorganization ordered or decreed by a court of competent
19-54 jurisdiction under federal statute.
19-55 SECTION 24. Section B, Article 5.01, Texas Business
19-56 Corporation Act, is amended to read as follows:
19-57 B. A plan of merger shall set forth:
19-58 (1) the name of each domestic or foreign corporation
19-59 or other entity that is a party to the merger and the name of each
19-60 domestic or foreign corporation or other entity, if any, that shall
19-61 survive the merger, which may be one or more of the domestic or
19-62 foreign corporations or other entities party to the merger, and the
19-63 name of each new domestic or foreign corporation or other entity,
19-64 if any, that may be created by the terms of the plan of merger;
19-65 (2) the terms and conditions of the merger including,
19-66 if more than one domestic or foreign corporation or other entity is
19-67 to survive or to be created by the terms of the plan of merger, (a)
19-68 the manner and basis of allocating and vesting the real estate and
19-69 other property of each domestic or foreign corporation and of each
20-1 other entity that is a party to the merger among one or more of the
20-2 surviving or new domestic or foreign corporations and other
20-3 entities, (b) the name of the surviving or new domestic or foreign
20-4 corporation or other entity that is to be obligated for the payment
20-5 of the fair value of any shares held by a shareholder of any
20-6 domestic corporation that is a party to the merger who has complied
20-7 with the requirements of Article 5.12 of this Act for the recovery
20-8 of the fair value of his shares, and (c) the manner and basis of
20-9 allocating all other liabilities and obligations of each domestic
20-10 or foreign corporation and other entity that is a party to the
20-11 merger (or making adequate provision for the payment and discharge
20-12 thereof) among one or more of the surviving or new domestic or
20-13 foreign corporations and other entities;
20-14 (3) the manner and basis of converting any of the
20-15 shares or other evidences of ownership of each domestic or foreign
20-16 corporation and other entity that is a party to the merger into
20-17 shares, obligations, evidences of ownership, rights to purchase
20-18 securities or other securities of one or more of the surviving or
20-19 new domestic or foreign corporations or other entities, into cash
20-20 or other property, including shares, obligations, evidences of
20-21 ownership, rights to purchase securities or other securities of any
20-22 other person or entity, or into any combination of the foregoing,
20-23 and if any shares or other evidences of ownership of any holder of
20-24 a class or series of shares or other evidence of ownership is to be
20-25 converted in a manner or basis different than any other holder of
20-26 shares of such class or series or other evidence of ownership, the
20-27 manner and basis applicable to such holder;
20-28 (4) as an exhibit or attachment, the articles of
20-29 incorporation of any new domestic corporation to be created by the
20-30 terms of the plan of merger; and
20-31 (5) the articles of incorporation or other
20-32 organizational documents of each other entity that is a party to
20-33 the merger and that is to survive the merger or is to be created by
20-34 the terms of the plan of merger.
20-35 SECTION 25. Sections A and B, Article 5.02, Texas Business
20-36 Corporation Act, are amended to read as follows:
20-37 A. One or more domestic or foreign corporations or other
20-38 entities may acquire all of the outstanding shares of one or more
20-39 classes or series of one or more domestic corporations if:
20-40 (1) the board of directors of each domestic
20-41 corporation that is a party to the plan of exchange acts on a plan
20-42 of exchange in the manner prescribed by Article 5.03 of this Act
20-43 and its shareholders (if required by Article 5.03 of this Act [or
20-44 the laws under which it was incorporated or organized]) approve the
20-45 plan of exchange;
20-46 (2) one or more foreign corporations or other entities
20-47 is to issue shares or other interests as part of the plan of
20-48 exchange, the issuance of such shares or interests is either
20-49 permitted by the laws under which such foreign corporation or other
20-50 entity is incorporated, organized, or not inconsistent with such
20-51 laws; and
20-52 (3) each acquiring domestic or foreign corporation or
20-53 other entity takes all action that may be required by the laws of
20-54 the state or country under which it was incorporated or organized
20-55 and by its constituent documents to effect the exchange.
20-56 B. A plan of exchange must set forth:
20-57 (1) the name of the corporation or corporations whose
20-58 shares will be acquired and the name of each acquiring domestic or
20-59 foreign corporation and other entity;
20-60 (2) the terms and conditions of the exchange
20-61 including, if there is more than one acquiring domestic or foreign
20-62 corporation or other entity, the shares to be acquired by each such
20-63 corporation or other entity; and
20-64 (3) the manner and basis of exchanging the shares to
20-65 be acquired for shares, obligations, evidences of ownership, rights
20-66 to purchase securities or other securities of one or more of the
20-67 acquiring domestic or foreign corporations or other entities that
20-68 is a party to the plan of exchange, or for cash or other property,
20-69 including shares, obligations, evidences of ownership, rights to
21-1 purchase securities or other securities of any other person or
21-2 entity, or for any combination of the foregoing, and if any shares
21-3 or other evidences of ownership of any holder of a class or series
21-4 of shares or other evidence of ownership is to be exchanged in a
21-5 manner or basis different than any other holder of shares of such
21-6 class or series or other evidence of ownership, the manner and
21-7 basis applicable to such holder.
21-8 SECTION 26. Article 5.03, Texas Business Corporation Act, is
21-9 amended to read as follows:
21-10 Art. 5.03. ACTION ON PLAN OF MERGER OR EXCHANGE. A. Except
21-11 as provided by Sections [Section] G and H of this Article, after
21-12 acting on a plan of merger or exchange in the manner prescribed by
21-13 Subsection (1) of Section B of this Article, the board of directors
21-14 of each domestic corporation that is a party to the merger, and the
21-15 board of directors of each domestic corporation whose shares are to
21-16 be acquired in the share exchange, shall submit the plan of merger
21-17 or exchange for approval by its shareholders. Unless the articles
21-18 of incorporation otherwise require, no approval by shareholders of
21-19 a plan of merger is required under this Article for any corporation
21-20 that is a party to the plan of merger unless that corporation is
21-21 also a party to the merger.
21-22 B. Except as provided by Sections [Section] G and H of this
21-23 Article, for a plan of merger or exchange to be approved:
21-24 (1) the board of directors of the corporation shall
21-25 [may] adopt a resolution recommending that the plan of merger or
21-26 exchange be approved by the shareholders of the corporation, unless
21-27 the board of directors determines that for any reason it should not
21-28 make that recommendation, in which case the board of directors
21-29 shall [may] adopt a resolution directing that the plan of merger or
21-30 exchange be submitted to shareholders for approval without
21-31 recommendation and, in connection with the submission, communicate
21-32 the basis for its determination that the plan be submitted to
21-33 shareholders without any recommendation; and
21-34 (2) the shareholders entitled to vote on the plan of
21-35 merger or exchange must approve the plan.
21-36 C. The board of directors may condition its submission to
21-37 shareholders of a plan of merger or exchange on any basis.
21-38 D. The corporation shall notify each shareholder, whether or
21-39 not entitled to vote, of the meeting of shareholders at which the
21-40 plan of merger or exchange is to be submitted for approval in
21-41 accordance with Article 2.25 of this Act. The notice shall be
21-42 given at least 20 days before the meeting and shall state that the
21-43 purpose, or one of the purposes, of the meeting is to consider the
21-44 plan of merger or exchange and shall contain or be accompanied by a
21-45 copy or summary of the plan.
21-46 E. Unless the board of directors (acting pursuant to Section
21-47 C of this Article) requires a greater vote or a vote by class or
21-48 series, the vote of shareholders required for approval of a plan of
21-49 merger or exchange shall be the affirmative vote of the holders of
21-50 at least two-thirds of the outstanding shares of each corporation
21-51 entitled to vote thereon, unless any class or series of shares of
21-52 any such corporation is entitled to vote as a class thereon, in
21-53 which event the vote required for approval by the shareholders of
21-54 such corporation shall be the affirmative vote of the holders of at
21-55 least two-thirds of the outstanding shares within each class or
21-56 series of shares entitled to vote thereon as a class and at least
21-57 two-thirds of the outstanding shares otherwise entitled to vote
21-58 thereon. Shares entitled to vote as a class shall be entitled to
21-59 vote only as a class unless otherwise entitled to vote on each
21-60 matter submitted to the shareholders generally or provided in the
21-61 articles of incorporation.
21-62 F. Separate voting by a class or series of shares of a
21-63 corporation shall be required:
21-64 (1) for approval of a plan of merger if (a) the plan
21-65 contains a provision that if contained in a proposed amendment to
21-66 the articles of incorporation would require approval by that class
21-67 or series of shares under Article 4.03 of this Act, or (b) that
21-68 class or series of shares is entitled under the articles of
21-69 incorporation to vote as a class thereon; and
22-1 (2) on a plan of exchange if (a) shares of that class
22-2 or series are to be exchanged pursuant to the terms of the plan, or
22-3 (b) that class or series is entitled under the articles of
22-4 incorporation to vote as a class thereon.
22-5 G. Unless the articles of incorporation otherwise require,
22-6 approval by the shareholders of a corporation on a plan of merger
22-7 shall not be required and the provisions of Sections A, B, C, D, E,
22-8 and F of this Article do not apply if:
22-9 (1) the corporation is the sole surviving corporation
22-10 in the merger;
22-11 (2) the articles of incorporation of the corporation
22-12 will not differ from its articles of incorporation before the
22-13 merger;
22-14 (3) each shareholder of the corporation whose shares
22-15 were outstanding immediately before the effective date of the
22-16 merger will hold the same number of shares, with identical
22-17 designations, preferences, limitations, and relative rights,
22-18 immediately after the effective date of the merger;
22-19 (4) the voting power of the number of voting shares
22-20 outstanding immediately after the merger, plus the voting power of
22-21 the number of voting shares issuable as a result of the merger
22-22 (either by the conversion of securities issued pursuant to the
22-23 merger or the exercise of rights to purchase securities issued
22-24 pursuant to the merger), will not exceed by more than 20 percent
22-25 the voting power of the total number of voting shares of the
22-26 corporation outstanding immediately before the merger;
22-27 (5) the number of participating shares outstanding
22-28 immediately after the merger, plus the number of participating
22-29 shares issuable as a result of the merger (either by the conversion
22-30 of securities issued pursuant to the merger or the exercise of
22-31 rights to purchase securities issued pursuant to the merger), will
22-32 not exceed by more than 20 percent the total number of
22-33 participating shares of the corporation outstanding immediately
22-34 before the merger; and
22-35 (6) the board of directors of the corporation adopts a
22-36 resolution approving the plan of merger.
22-37 H. Unless the articles of incorporation otherwise require,
22-38 approval by the shareholders of a corporation of a plan of merger
22-39 shall not be required and Sections A, B, C, D, E, and F of this
22-40 Article do not apply if:
22-41 (1) the merger is a merger of the corporation with or
22-42 into a direct or indirect wholly owned subsidiary of the
22-43 corporation and after the merger the corporation or its successor
22-44 is a direct or indirect wholly owned subsidiary of a holding
22-45 company;
22-46 (2) the corporation and the direct or indirect wholly
22-47 owned subsidiary of the corporation are the only parties to the
22-48 merger;
22-49 (3) each share or a fraction of a share of stock of
22-50 the corporation outstanding immediately prior to the effectiveness
22-51 of the merger is converted in the merger into a share or fraction
22-52 of share of capital stock of the holding company having the same
22-53 designations, preferences, limitations, and relative rights as a
22-54 share of stock of the corporation being converted in the merger;
22-55 (4) the holding company and the corporation are
22-56 domestic corporations;
22-57 (5) the articles of incorporation and bylaws of the
22-58 holding company immediately following the effective time of the
22-59 merger contain provisions identical to the articles of
22-60 incorporation and bylaws of the corporation immediately prior to
22-61 the effective time of the merger (other than provisions, if any,
22-62 regarding the incorporator or incorporators, the corporate name,
22-63 the registered office and agent, the initial board of directors,
22-64 and the initial subscribers of shares and such provisions contained
22-65 in any amendment to the certificate as were necessary to effect a
22-66 change, exchange, reclassification, or cancellation of shares, if
22-67 such change, exchange, reclassification, or cancellation has become
22-68 effective);
22-69 (6) the articles of incorporation and bylaws of the
23-1 surviving corporation immediately following the effective time of
23-2 the merger contain provisions identical to the articles of
23-3 incorporation and bylaws of the corporation immediately prior to
23-4 the effective time of the merger (other than provisions, if any,
23-5 regarding the incorporator or incorporators, the corporate name,
23-6 the registered office and agent, the initial board of directors,
23-7 and the initial subscribers of shares and such provisions contained
23-8 in any amendment to the certificate as were necessary to effect a
23-9 change, exchange, reclassification, or cancellation of shares, if
23-10 such change, exchange, reclassification, or cancellation has become
23-11 effective); provided, however, that:
23-12 (a) the articles of incorporation of the
23-13 surviving corporation shall be amended in the merger to contain a
23-14 provision requiring that any act or transaction by or involving a
23-15 surviving corporation that requires for its approval under this Act
23-16 or the corporation's articles of incorporation the approval of
23-17 shareholders of the surviving corporation shall, by specific
23-18 reference to this section, require the approval of the shareholders
23-19 of the holding company (or any successor by merger) by the same
23-20 vote as is required by this Act and the articles of incorporation
23-21 of the surviving corporation; and
23-22 (b) the articles of incorporation of the
23-23 surviving corporation may be amended in the merger to change the
23-24 classes and series of shares and the number of shares that the
23-25 surviving corporation is authorized to issue;
23-26 (7) the directors of the corporation become or remain
23-27 directors of the holding company on the effective time of the
23-28 merger;
23-29 (8) the shareholders of the corporation will not
23-30 recognize gain or loss for United States federal income tax
23-31 purposes as determined by the board of directors of the
23-32 corporation; and
23-33 (9) the board of directors of the corporation adopts a
23-34 resolution approving the plan of merger.
23-35 I. As used in this Article:
23-36 (1) "Direct or indirect wholly owned subsidiary"
23-37 means, with respect to any corporation, another corporation, all of
23-38 the outstanding voting stock of which is owned by the corporation
23-39 or by one or more other domestic or foreign corporations or other
23-40 entities, all of the outstanding voting stock or interests of which
23-41 is owned by the corporation or one or more of such other wholly
23-42 owned domestic or foreign corporations or other entities.
23-43 (2) "Holding company" means a corporation which, from
23-44 its incorporation until the effectiveness of a merger pursuant to
23-45 Section H of this Article, was at all times a direct or indirect
23-46 wholly owned subsidiary of the corporation and whose stock is
23-47 issued in the merger permitted by Section H of this Article.
23-48 (3) "Participating shares" means shares that entitle
23-49 the holders thereof to participate without limitation in
23-50 distributions.
23-51 (4) "Party to the merger" means:
23-52 (a) a domestic corporation that is to be divided
23-53 into two or more new domestic corporations or into a surviving
23-54 corporation and one or more new domestic or foreign corporations or
23-55 other entities pursuant to a plan of merger; or
23-56 (b) a domestic or foreign corporation or other
23-57 entity that is to be combined with one or more domestic or foreign
23-58 corporations or other entities pursuant to a plan of merger
23-59 resulting in (i) one or more surviving domestic or foreign
23-60 corporations or other entities, (ii) the creation of one or more
23-61 new domestic or foreign corporations or other entities, or
23-62 (iii) one or more surviving domestic or foreign corporations or
23-63 other entities and the creation of one or more new domestic or
23-64 foreign corporations or other entities. A domestic or foreign
23-65 corporation or other entity that is a party to a plan of merger
23-66 that is not to be divided or combined into or with one or more
23-67 domestic or foreign corporations or other entities is not
23-68 considered to be a party to the merger even if shares, securities,
23-69 or other property of such party is to be issued pursuant to the
24-1 plan of merger.
24-2 (5) [(2)] "Voting shares" means shares that entitle
24-3 the holders thereof to vote unconditionally in elections of
24-4 directors.
24-5 (6) "Shares" means, without limitation, a receipt or
24-6 other instrument issued by a depositary representing an interest in
24-7 one or more shares of stock, or fractions thereof, solely of a
24-8 domestic or foreign corporation, which stock is deposited with a
24-9 depositary.
24-10 J. To the extent the provisions contained in Part Thirteen
24-11 of this Act apply to the corporation and its shareholders at the
24-12 effective time of a merger pursuant to Section H of this Article,
24-13 those provisions shall continue to apply to the holding company and
24-14 its shareholders immediately after the effective time of the merger
24-15 as though it were the corporation, and all shares of the holding
24-16 company acquired in the merger shall, for purposes of Part
24-17 Thirteen, be deemed to have been acquired at the time that the
24-18 shares of stock of the corporation converted in the merger were
24-19 acquired, and any shareholder who, immediately prior to the
24-20 effective time of the merger, was not an affiliated shareholder
24-21 within the meaning of Article 13.02 of this Act shall not solely
24-22 by reason of the merger become an affiliated shareholder of the
24-23 holding company.
24-24 K. If the corporate name of a holding company immediately
24-25 following the effective time of a merger pursuant to Section H of
24-26 this Article is the same as the corporate name of the corporation
24-27 immediately prior to the effective time of the merger, the shares
24-28 of the holding company into which the shares of the corporation are
24-29 converted in the merger shall be represented by the stock
24-30 certificates that previously represented the shares of the
24-31 corporation.
24-32 L. [I.] After a merger or share exchange is approved, and at
24-33 any time before the merger or share exchange has become effective,
24-34 the plan of merger or share exchange may be abandoned (subject to
24-35 any contractual rights) by any of the corporations that are a party
24-36 to the merger, without shareholder action, in accordance with the
24-37 procedures set forth in the plan of merger or exchange or, if no
24-38 such procedures are set forth in the plan, in the manner determined
24-39 by the board of directors. If articles of merger or exchange have
24-40 been filed with the Secretary of State but the merger or share
24-41 exchange has not yet become effective, the merger or share exchange
24-42 may be abandoned [as provided in this Section I] if a statement,
24-43 executed on behalf of each domestic corporation and foreign
24-44 corporation or other entity that is a party to the merger or share
24-45 exchange by an officer or other duly authorized representative,
24-46 stating that the plan of merger or exchange has been abandoned in
24-47 accordance with applicable law [the plan and this Section] is filed
24-48 with the Secretary of State prior to the effectiveness of the
24-49 merger or share exchange. If the Secretary of State finds that
24-50 such statement conforms to law, he shall, when all fees have been
24-51 paid as required by law:
24-52 (1) Endorse on the original and each copy the word
24-53 "Filed" and the month, day, and year the filing thereof.
24-54 (2) File the original in his office.
24-55 (3) Issue a certificate of abandonment to each
24-56 domestic or foreign corporation or other entity that is a party to
24-57 the [plan of] merger or exchange.
24-58 Upon the filing of such statement by the Secretary of State, the
24-59 merger or share exchange shall be deemed abandoned and shall not
24-60 become effective.
24-61 SECTION 27. Article 5.04, Texas Business Corporation Act, is
24-62 amended to read as follows:
24-63 Art. 5.04. ARTICLES OF MERGER OR EXCHANGE. A. If a plan of
24-64 merger or exchange has been approved in accordance with Article
24-65 5.03 of this Act and has not been abandoned, or approved by the
24-66 board of directors if shareholder approval is not required under
24-67 that Article, articles of merger or exchange shall be executed on
24-68 behalf of each domestic or foreign corporation or other entity that
24-69 is a party to the [plan of] merger or exchange by an officer or
25-1 other duly authorized representative thereof and shall set forth:
25-2 (1) The plan of merger or exchange or statement
25-3 certifying the following:
25-4 (a) the name and state of incorporation or
25-5 organization of each domestic or foreign corporation or other
25-6 entity that is a party to the plan of merger or exchange or that is
25-7 to be created thereby;
25-8 (b) that a plan of merger or exchange has been
25-9 approved;
25-10 (c) in the case of a merger, such amendments or
25-11 changes in the articles of incorporation of each domestic surviving
25-12 corporation, or if no such amendments are desired to be effected by
25-13 the merger, a statement to that effect;
25-14 (d) that the articles of incorporation of each
25-15 new domestic corporation to be created pursuant to the terms of the
25-16 plan of merger are being filed with the Secretary of State with the
25-17 articles of merger or exchange;
25-18 (e) that an executed plan of merger or exchange
25-19 is on file at the principal place of business of each surviving,
25-20 acquiring, or new domestic or foreign corporation or other entity,
25-21 stating the address thereof; and
25-22 (f) that a copy of the plan of merger or
25-23 exchange will be furnished by each surviving, acquiring, or new
25-24 domestic or foreign corporation or other entity, on written request
25-25 and without cost, to any shareholder of each domestic corporation
25-26 that is a party to or created by the plan of merger or exchange
25-27 and, in the case of a merger with multiple surviving domestic or
25-28 foreign corporations or other entities, to any creditor or obligee
25-29 of the parties to the merger at the time of the merger if such
25-30 obligation is then outstanding.
25-31 (2) If shareholder approval is not required by Article
25-32 5.03 of this Act, a statement to that effect.
25-33 (3) As to each corporation the approval of whose
25-34 shareholders is required, the number of shares outstanding, and, if
25-35 the shares of any class or series are entitled to vote as a class,
25-36 the designation and number of outstanding shares of each such class
25-37 or series.
25-38 (4) As to each corporation the approval of whose
25-39 shareholders is required, the number of shares, not entitled to
25-40 vote only as a class, voted for and against the plan, respectively,
25-41 and, if the shares of any class or series are entitled to vote as a
25-42 class, the number of shares of each such class or series voted for
25-43 and against the plan, respectively.
25-44 (5) As to each acquiring domestic or foreign
25-45 corporation or other entity in a plan of exchange, a statement that
25-46 the plan and performance of its terms were duly authorized by all
25-47 action required by the laws under which it was incorporated or
25-48 organized and by its constituent documents.
25-49 (6) As to each foreign corporation or other entity
25-50 that is a party to the [plan of] merger, a statement that the
25-51 approval of the plan of merger was duly authorized by all action
25-52 required by the laws under which it was incorporated or organized
25-53 and by its constituent documents.
25-54 B. The original of the articles of merger or exchange, and
25-55 such number of copies of the articles equal to the number of
25-56 surviving, new, and acquiring domestic or foreign corporations and
25-57 other entities that are a party to the [plan of] merger or exchange
25-58 or that will be created by the terms thereof, shall be delivered to
25-59 the Secretary of State. An equal number of copies of the articles
25-60 of incorporation of each domestic corporation that is to be
25-61 incorporated pursuant to the plan of merger shall also be delivered
25-62 to the Secretary of State with the articles of merger.
25-63 C. If the Secretary of State finds that the articles of
25-64 merger or exchange conform to law, he shall, when all fees and
25-65 franchise taxes have been paid as required by law, or if the plan
25-66 of merger or exchange (or statement provided in lieu thereof)
25-67 provides that one or more of the surviving, new, or acquiring
25-68 domestic or foreign corporations or other entities will be
25-69 responsible for the payment of all such fees and franchise taxes
26-1 and that all of such surviving, new, or acquiring domestic or
26-2 foreign corporations and other entities will be obligated to pay
26-3 such fees and franchise taxes if the same are not timely paid:
26-4 (1) Endorse on the original and each copy the word
26-5 "Filed," and the month, day, and year of the filing thereof.
26-6 (2) File the original in his office.
26-7 (3) Issue a certificate of merger or exchange,
26-8 together with a copy of the articles affixed thereto, to each
26-9 surviving, new, and acquiring domestic or foreign corporation or
26-10 other entity that is a party to the [plan of] merger or exchange or
26-11 that is created thereby, or its or their respective
26-12 representatives.
26-13 SECTION 28. Section B, Article 5.10, Texas Business
26-14 Corporation Act, is amended to read as follows:
26-15 B. A disposition of any, all, or substantially all, of the
26-16 property and assets of a corporation, whether or not it requires
26-17 the special authorization of the shareholders of the corporation,
26-18 effected under Section A of this article or under Article 5.09 of
26-19 this Act or otherwise:
26-20 (1) is not considered to be a merger or conversion
26-21 pursuant to this Act or otherwise; and
26-22 (2) except as otherwise expressly provided by another
26-23 statute, does not make the acquiring corporation, foreign
26-24 corporation, or other entity responsible or liable for any
26-25 liability or obligation of the selling corporation that the
26-26 acquiring corporation, foreign corporation, or other entity did not
26-27 expressly assume.
26-28 SECTION 29. Article 5.11, Texas Business Corporation Act, is
26-29 amended to read as follows:
26-30 Art. 5.11. RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF
26-31 CERTAIN CORPORATE ACTIONS. A. Any shareholder of a domestic
26-32 corporation shall have the right to dissent from any of the
26-33 following corporate actions:
26-34 (1) Any plan of merger to which the corporation is a
26-35 party if shareholder approval is required by Article 5.03 or 5.16
26-36 of this Act and the shareholder holds shares of a class or series
26-37 that was entitled to vote thereon as a class or otherwise;
26-38 (2) Any sale, lease, exchange or other disposition
26-39 (not including any pledge, mortgage, deed of trust or trust
26-40 indenture unless otherwise provided in the articles of
26-41 incorporation) of all, or substantially all, the property and
26-42 assets, with or without good will, of a corporation if [requiring
26-43 the] special authorization of the shareholders is required by this
26-44 Act and the shareholders hold shares of a class or series that was
26-45 entitled to vote thereon as a class or otherwise [as provided by
26-46 this Act];
26-47 (3) Any plan of exchange pursuant to Article 5.02 of
26-48 this Act in which the shares of the corporation of the class or
26-49 series held by the shareholder are to be acquired.
26-50 B. Notwithstanding the provisions of Section A of this
26-51 Article, a shareholder shall not have the right to dissent from any
26-52 plan of merger in which there is a single surviving or new domestic
26-53 or foreign corporation, or from any plan of exchange, if:
26-54 (1) the shares held by the shareholder are part of a
26-55 class or series, shares of which are [listed on a national
26-56 securities exchange, or are held of record by not less than 2,000
26-57 holders,] on the record date fixed to determine the shareholders
26-58 entitled to vote on the plan of merger or [the] plan of exchange:
26-59 (a) listed on a national securities exchange;
26-60 (b) listed on the Nasdaq Stock Market (or
26-61 successor quotation system) or designated as a national market
26-62 security on an interdealer quotation system by the National
26-63 Association of Securities Dealers, Inc., or successor entity; or
26-64 (c) held of record by not less than 2,000
26-65 holders;[, and]
26-66 (2) the shareholder is not required by the terms of
26-67 the plan of merger or plan of exchange to accept for the
26-68 shareholder's shares any consideration that is different than the
26-69 consideration (other than cash in lieu of fractional shares that
27-1 the shareholder would otherwise be entitled to receive) to be
27-2 provided to any other holder of shares of the same class or series
27-3 of shares held by such shareholder; and
27-4 (3) the shareholder is not required by the terms of
27-5 the plan of merger or the plan of exchange to accept for the
27-6 shareholder's [his] shares any consideration other than:
27-7 (a) shares of a domestic or foreign corporation
27-8 that, immediately after the effective time of the merger or
27-9 exchange, will be part of a class or series, [of] shares of which
27-10 are:
27-11 (i) listed, or authorized for listing upon
27-12 official notice of issuance, on a national securities exchange;[,
27-13 or]
27-14 (ii) approved for quotation as a national
27-15 market security on an interdealer quotation system by the National
27-16 Association of Securities Dealers, Inc., or successor entity; or
27-17 (iii) held of record by not less than
27-18 2,000 holders;[, and]
27-19 (b) cash in lieu of fractional shares otherwise
27-20 entitled to be received; or
27-21 (c) any combination of the securities and cash
27-22 described in Subdivisions (a) and (b) of this subsection.
27-23 SECTION 30. Article 5.14, Texas Business Corporation Act, is
27-24 amended to read as follows:
27-25 Art. 5.14. DERIVATIVE PROCEEDINGS [SUITS]. A. Certain
27-26 Definitions. For purposes of this Article:
27-27 (1) "Derivative proceeding" means a civil suit in the
27-28 right of a domestic corporation or, to the extent provided in
27-29 Section K of this Article, in the right of a foreign corporation.
27-30 (2) "Shareholder" includes a beneficial owner whose
27-31 shares are held in a voting trust or by a nominee on the beneficial
27-32 owner's behalf.
27-33 B. Standing. A shareholder may not commence or maintain a
27-34 derivative proceeding unless the shareholder:
27-35 (1) was a shareholder of the corporation at the time
27-36 of the act or omission complained of or became a shareholder by
27-37 operation of law from a person that was a shareholder at that time;
27-38 and
27-39 (2) fairly and adequately represents the interests of
27-40 the corporation in enforcing the right of the corporation.
27-41 C. Demand. No shareholder may commence a derivative
27-42 proceeding until:
27-43 (1) a written demand is filed with the corporation
27-44 setting forth with particularity the act, omission, or other matter
27-45 that is the subject of the claim or challenge and requesting that
27-46 the corporation take suitable action; and
27-47 (2) 90 days have expired from the date the demand was
27-48 made, unless the shareholder has earlier been notified that the
27-49 demand has been rejected by the corporation or unless irreparable
27-50 injury to the corporation is being suffered or would result by
27-51 waiting for the expiration of the 90-day period.
27-52 D. Stay; Discovery. (1) If the domestic or foreign
27-53 corporation commences an inquiry into the allegations made in a
27-54 demand or petition and the person or group described in Section H
27-55 of this Article is conducting an active review of the allegations
27-56 in good faith, the court shall stay a derivative proceeding until
27-57 the review is completed and a determination is made by the person
27-58 or group as to what further action, if any, should be taken. To
27-59 obtain a stay, the domestic or foreign corporation must provide the
27-60 court with a written statement containing an undertaking to advise
27-61 the court and the shareholder making the demand of the
27-62 determination promptly on the completion of the review of the
27-63 matter. A stay shall, on motion, be reviewed as to its continued
27-64 necessity every 60 days thereafter. If the review and
27-65 determination by the person or group described in Section H of this
27-66 Article is not completed within 60 days, the stay may be renewed
27-67 for one or more additional 60-day periods on the domestic or
27-68 foreign corporation providing the court and the shareholder making
27-69 the demand with a written statement of the status of the review and
28-1 the reasons a continued extension of the stay is necessary.
28-2 (2) If a domestic or foreign corporation proposes to
28-3 dismiss a derivative proceeding pursuant to Section F of this
28-4 Article, discovery by a shareholder following the filing of the
28-5 derivative proceeding in accordance with the provisions of this
28-6 Article shall be limited to facts relating to whether the person or
28-7 group described in Section H of this Article is independent and
28-8 disinterested, the good faith of the inquiry and review by such
28-9 person or group, and the reasonableness of the procedures followed
28-10 by such person or group in conducting its review and will not
28-11 extend to any facts or substantive matters with respect to the act,
28-12 omission, or other matter that is the subject matter of the action
28-13 in the derivative proceeding. The scope of discovery may be
28-14 expanded if the court determines after notice and hearing that a
28-15 good faith review of the allegations for purposes of Section F of
28-16 this Article has not been made by an independent and disinterested
28-17 person or group in accordance with Section F of this Article.
28-18 E. Tolling of the Statute of Limitations. A written demand
28-19 filed with the corporation under Section C of this Article tolls
28-20 the statute of limitations on the claim on which demand is made
28-21 until the earlier of (1) 90 days or (2) 30 days after the
28-22 corporation advises the shareholder that the demand has been
28-23 rejected or the review has been completed.
28-24 F. Dismissal of Derivative Proceeding. A court shall
28-25 dismiss a derivative proceeding on a motion by the corporation if
28-26 the person or group described in Section H of this Article
28-27 determines in good faith, after conducting a reasonable inquiry and
28-28 based on the factors as the person or group deems appropriate under
28-29 the circumstances, that the continuation of the derivative
28-30 proceeding is not in the best interests of the corporation. In
28-31 determining whether the requirements of the previous sentence have
28-32 been met, the burden of proof shall be on:
28-33 (1) the plaintiff shareholder, if a majority of the
28-34 board of directors consists of independent and disinterested
28-35 directors at the time the determination is made or if the
28-36 determination is made by a panel of one or more independent and
28-37 disinterested persons appointed under Section H(3) of this Article;
28-38 or
28-39 (2) the corporation, in all other circumstances;
28-40 provided that if the corporation presents prima facie evidence that
28-41 demonstrates that the directors appointed pursuant to Section H(2)
28-42 of this Article are independent and disinterested, the burden of
28-43 proof is on the plaintiff shareholder.
28-44 G. Commencement of Proceeding After Rejection of Demand. If
28-45 a derivative proceeding is commenced after a demand is rejected,
28-46 the petition must allege with particularity facts that establish
28-47 that the rejection was not made in accordance with the requirements
28-48 of Sections F and H of this Article.
28-49 H. Determination by Directors or Independent Persons. The
28-50 determination described in Section F of this Article must be made
28-51 by:
28-52 (1) a majority vote of independent and disinterested
28-53 directors present at a meeting of the board of directors at which
28-54 interested directors are not present (at the time of the vote) if
28-55 the independent and disinterested directors constitute a quorum of
28-56 the board of directors;
28-57 (2) a majority vote of a committee consisting of two
28-58 or more independent and disinterested directors appointed by a
28-59 majority vote of one or more independent and disinterested
28-60 directors present at a meeting of the board of directors, whether
28-61 or not the independent and disinterested directors so acting
28-62 constitute a quorum of the board of directors; or
28-63 (3) a panel of one or more independent and
28-64 disinterested persons appointed by the court on a motion by the
28-65 corporation setting forth the names of the persons to be so
28-66 appointed together with a statement that to the best of its
28-67 knowledge the persons so proposed are disinterested persons and
28-68 qualified to make the determinations contemplated by Section F of
28-69 this Article. Such panel shall be appointed if the court finds
29-1 that such persons are independent and disinterested persons and are
29-2 otherwise qualified in regard to expertise, experience, independent
29-3 judgment, and other factors deemed appropriate by the court under
29-4 the circumstances to make such determinations. Persons appointed
29-5 by the court shall have no liability to the corporation or its
29-6 shareholders for any action or omission taken by them in that
29-7 capacity, absent fraud or wilful misconduct.
29-8 I. Discontinuance or Settlement. A derivative proceeding
29-9 may not be discontinued or settled without the approval of the
29-10 court. If the court determines that a proposed discontinuance or
29-11 settlement may substantially affect the interest of other
29-12 shareholders, it shall direct that notice be given to the affected
29-13 shareholders.
29-14 J. Payment of Expenses. (1) On termination of a derivative
29-15 proceeding, the court may order:
29-16 (a) the domestic or foreign corporation to pay
29-17 the expenses of the plaintiff incurred in the proceeding if it
29-18 finds that the proceeding has resulted in a substantial benefit to
29-19 the domestic or foreign corporation;
29-20 (b) the plaintiff to pay the expenses of the
29-21 domestic or foreign corporation or any defendant incurred in
29-22 investigating and defending the proceeding if it finds that the
29-23 proceeding was commenced or maintained without reasonable cause or
29-24 for an improper purpose; or
29-25 (c) a party to pay the expenses incurred by
29-26 another party (including the domestic or foreign corporation)
29-27 because of the filing of a pleading, motion, or other paper, if it
29-28 finds that the pleading, motion, or other paper (i) was not well
29-29 grounded in fact after reasonable inquiry, (ii) was not warranted
29-30 by existing law or a good faith argument for the extension,
29-31 modification, or reversal of existing law, or (iii) was interposed
29-32 for an improper purpose, such as to harass or to cause unnecessary
29-33 delay or needless increase in the cost of litigation.
29-34 (2) For purposes of this section, "expenses" mean
29-35 reasonable expenses incurred in the defense of a derivative
29-36 proceeding, including without limitation:
29-37 (a) attorney's fees;
29-38 (b) costs in pursuing an investigation of the
29-39 matter that was the subject of the derivative proceeding; and
29-40 (c) expenses for which the domestic or foreign
29-41 corporation or a corporate defendant may be required to indemnify
29-42 another person.
29-43 K. Application to Foreign Corporations. In any derivative
29-44 proceeding brought in the right of a foreign corporation, the
29-45 matters covered by this Article are governed by the laws of the
29-46 jurisdiction of incorporation of the foreign corporation, except
29-47 for Sections D, I, and J of this Article, which are procedural and
29-48 not matters relating to the internal affairs of the foreign
29-49 corporation. In the case of matters relating to a foreign
29-50 corporation under Section D of this Article, references to a person
29-51 or group described in Section H of this Article are to be deemed to
29-52 refer to a person or group entitled under the laws of the
29-53 jurisdiction of incorporation of the foreign corporation to review
29-54 and dispose of a derivative proceeding, and the standard of review
29-55 of a decision by the person or group to dismiss the derivative
29-56 proceeding is to be governed by the laws of the jurisdiction of
29-57 incorporation of the foreign corporation.
29-58 L. Closely Held Corporations. (1) The provisions of
29-59 Sections B through H of this Article are not applicable to a
29-60 closely held corporation. If justice requires:
29-61 (a) a derivative proceeding brought by a
29-62 shareholder of a closely held corporation may be treated by a court
29-63 as a direct action brought by the shareholder for his own benefit;
29-64 and
29-65 (b) a recovery in a direct or derivative
29-66 proceeding by a shareholder may be paid either directly to the
29-67 plaintiff or to the corporation if necessary to protect the
29-68 interests of creditors or other shareholders of the corporation.
29-69 (2) For purposes of this section, a "closely held
30-1 corporation" means a corporation:
30-2 (a) with less than 35 shareholders; and
30-3 (b) that has no shares listed on a national
30-4 securities exchange or regularly quoted in an over-the-counter
30-5 market by one or more members of a national securities association.
30-6 [Definitions. In this Article:]
30-7 [(1) A "derivative suit" is a suit brought in the
30-8 right of a domestic or foreign corporation.]
30-9 [(2) "Expenses" are reasonable expenses, incurred in
30-10 the defense of a derivative suit, including:]
30-11 [(a) Fees of attorneys, and]
30-12 [(b) Expenses for which a corporate defendant
30-13 may be required to indemnify another defendant.]
30-14 [B. Prerequisites. A derivative suit may be brought in this
30-15 State only if:]
30-16 [(1) The plaintiff was a record or beneficial owner of
30-17 shares, or of an interest in a voting trust for shares, at the time
30-18 of the transaction of which he complains, or his shares or interest
30-19 thereafter devolved upon him by operation of law from a person who
30-20 was such an owner at that time, and]
30-21 [(2) The initial pleading in the suit states:]
30-22 [(a) The ownership required by Subsection (1),
30-23 and]
30-24 [(b) With particularity, the efforts of the
30-25 plaintiff to have suit brought for the corporation by the board of
30-26 directors, or the reasons for not making any such efforts.]
30-27 [C. Security for expenses. The court having jurisdiction in
30-28 a derivative suit may, in its discretion, require the plaintiff or
30-29 plaintiffs to give security for the expenses incurred or expected
30-30 to be incurred by one or more of the defendants. The court may, in
30-31 its discretion, at any time increase or decrease the amount of the
30-32 security on a showing that the security provided is then inadequate
30-33 or excessive.]
30-34 [D. Inability to give security. If plaintiff is unable to
30-35 give security, he may file an affidavit in accordance with the
30-36 Texas Rules of Civil Procedure, and those rules shall control.]
30-37 [E. Failure to give security. If plaintiff fails to give
30-38 the security within a reasonable time set by the court, the court
30-39 shall (except as provided in Section D of this Article) dismiss the
30-40 suit without prejudice.]
30-41 [F. Judgment for expenses. The court having jurisdiction in
30-42 a derivative suit may, upon final judgment for one or more
30-43 defendants and a finding that the suit was brought without
30-44 reasonable cause against such defendants, require the plaintiff to
30-45 pay expenses to such defendants, whether or not security has been
30-46 required.]
30-47 SECTION 31. Article 5.16, Texas Business Corporation Act, is
30-48 amended to read as follows:
30-49 Art. 5.16. MERGER WITH [OF] SUBSIDIARY ENTITIES [OR
30-50 SUBSIDIARIES INTO PARENT CORPORATION]. A. In any case in which at
30-51 least ninety (90%) per cent of the outstanding shares of each class
30-52 and series of shares, membership interests, or other ownership
30-53 interests of one or more [a] domestic or foreign [corporation or]
30-54 corporations or other entities is owned by another domestic or
30-55 foreign corporation or other entity, and at least one of the parent
30-56 or subsidiary entities [such corporations] is a domestic
30-57 corporation and the other or others are domestic corporations, [or]
30-58 foreign corporations, or other entities organized under the laws of
30-59 a jurisdiction that permit such a merger or whose organizational
30-60 documents or other constituent documents not inconsistent with
30-61 those laws permit such a merger, the corporation or other entity
30-62 having such share ownership may (1) merge such other domestic or
30-63 foreign corporation or corporations or other entities into itself,
30-64 (2) merge itself into any one or more of such other corporations or
30-65 other entities [corporation], or (3) merge itself and any one or
30-66 more of such entities or corporations into one or more [another] of
30-67 the other entities [such domestic or foreign corporations]:
30-68 (a) in the event that the corporation or other entity
30-69 having at least 90 percent [such share] ownership will be a
31-1 surviving entity [corporation] in the merger, by executing and
31-2 filing articles of merger in accordance with Section B of this
31-3 Article; or
31-4 (b) in the event that the corporation or other entity
31-5 having at least 90 percent [such share] ownership will not be a
31-6 surviving entity [corporation] in the merger, by the entity
31-7 [corporation] having such [share] ownership adopting a plan of
31-8 merger in the manner required by the laws [Article 5.03] of its
31-9 jurisdiction of organization or formation and its organizational or
31-10 other constituent documents [this Act], except that no action under
31-11 Section 5.03 shall be required to be taken by the corporation or
31-12 corporations whose shares are so owned, and executing and filing
31-13 articles of merger in accordance with Section B of this Article.
31-14 B. The articles of merger shall be signed on behalf of the
31-15 parent entity [corporation] by an officer or other duly authorized
31-16 representative of the parent entity and shall set forth:
31-17 (1) The name of the parent entity [corporation,] and
31-18 the name [or names] of each [the] subsidiary entity [corporations]
31-19 and the type of entity and respective jurisdiction under which each
31-20 subsidiary entity [such corporation] is organized.
31-21 (2) The total number or percentage of outstanding
31-22 shares, membership interests, or other ownership interests,
31-23 identified by [of each] class, series, or group, [of each
31-24 subsidiary corporation] and the number or percentage of [such]
31-25 shares, membership interests, or other ownership interests in [of]
31-26 each class, series, or group owned by the parent entity
31-27 [corporation].
31-28 (3) A copy of the resolution or merger adopted by the
31-29 [board of directors of the] parent entity in accordance with the
31-30 laws of its jurisdiction of organization or formation and its
31-31 organizational or other constituent documents together with a
31-32 statement that the resolution was so adopted [corporation to so
31-33 merge] and the date of the adoption thereof. If the parent entity
31-34 [corporation] does not own all the outstanding shares, membership
31-35 interests, or other ownership interests of each class of each
31-36 subsidiary entity [corporation] that is a party to the merger, the
31-37 resolution shall state the terms and conditions of the merger,
31-38 including the cash or other property, including shares,
31-39 obligations, evidences of ownership, rights to purchase securities,
31-40 or other securities of any person or entity or any combination of
31-41 the shares, obligations, evidences of ownership, rights, or other
31-42 securities, to be used, paid or delivered by the surviving entity
31-43 [corporation] upon surrender of each share, membership interest, or
31-44 other ownership interest of the subsidiary entity or entities
31-45 [corporation or corporations] not owned by the parent entity
31-46 [corporation].
31-47 (4) If the surviving entity [corporation] is a foreign
31-48 corporation or other entity, the address, including street number
31-49 if any, of its registered or principal office in the jurisdiction
31-50 under whose laws it is governed. If the surviving entity
31-51 [corporation] is a foreign corporation or other entity, on the
31-52 merger taking effect the surviving entity [foreign corporation] is
31-53 deemed to (a) appoint the Secretary of State of this state as its
31-54 agent for service of process to enforce an obligation or the rights
31-55 of dissenting shareholders of each domestic corporation that is a
31-56 party to the merger, and (b) agree that it will promptly pay to the
31-57 dissenting shareholders of each domestic corporation that is a
31-58 party to the merger the amount, if any, to which they are entitled
31-59 under this Article.
31-60 (5) If a plan of merger is required by Section A of
31-61 this Article to be adopted in the manner required by Article 5.03
31-62 of this Act, the information required by Section A of Article 5.04
31-63 of this Act.
31-64 C. The [original and a copy of the] articles of merger shall
31-65 be delivered to the Secretary of State and filed[. If the
31-66 Secretary of State finds that such articles conform to law, he
31-67 shall, when all fees and franchise taxes have been paid] as
31-68 provided [required] by Sections B and C of Article 5.04 of this Act
31-69 [law:]
32-1 [(1) Endorse on the original and the copy the word
32-2 "Filed," and the month, day and year of the filing thereof.]
32-3 [(2) File the original in his office.]
32-4 [(3) Issue a certificate of merger to which he shall
32-5 affix the copy and deliver them to the surviving corporation or its
32-6 representative].
32-7 D. The effective date and the effect of such merger shall be
32-8 the same as provided in Articles 5.05 and 5.06 of this Act if the
32-9 surviving entity [corporation] is a domestic corporation. If the
32-10 surviving entity [corporation] is a foreign corporation or other
32-11 entity, the effective date and the effect of such merger shall be
32-12 the same as in the case of the merger of domestic corporations
32-13 except in so far as the laws of such other jurisdiction provide
32-14 otherwise.
32-15 E. In the event all of the shares of a subsidiary domestic
32-16 corporation that is a party to a merger effected under this Article
32-17 are not owned by the parent entity [corporation] immediately prior
32-18 to the merger, the surviving parent entity [corporation (foreign or
32-19 domestic)] shall, within ten (10) days after the effective date of
32-20 the merger, mail to each shareholder of record of each subsidiary
32-21 domestic corporation a copy of the articles of merger and notify
32-22 the shareholder that the merger has become effective. Any such
32-23 shareholder who holds shares of a class or series that would have
32-24 been entitled to vote on the merger if it had been effected
32-25 pursuant to Article 5.03 of this Act shall have the right to
32-26 dissent from the merger and demand payment of the fair value for
32-27 the shareholder's [his] shares in lieu of the cash or other
32-28 property to be used, paid or delivered to such shareholder upon the
32-29 surrender of such shareholder's shares pursuant to the terms and
32-30 conditions of the merger, with the following procedure:
32-31 (1) Such shareholder shall within twenty (20) days
32-32 after the mailing of the notice and copy of the articles of merger
32-33 make written demand on the surviving parent entity [corporation,
32-34 domestic or foreign,] for payment of the fair value of the
32-35 shareholder's [his] shares. The fair value of the shares shall be
32-36 the value thereof as of the day before the effective date of the
32-37 merger, excluding any appreciation or depreciation in anticipation
32-38 of such act. The demand shall state the number and class of the
32-39 shares owned by the dissenting shareholder and the fair value of
32-40 such shares as estimated by the shareholder [him]. Any shareholder
32-41 failing to make demand within the twenty (20) day period shall be
32-42 bound by the corporate action.
32-43 (2) Within ten (10) days after receipt by the
32-44 surviving entity [corporation] of a demand for payment by the
32-45 dissenting shareholder of the fair value of the shareholder's [his]
32-46 shares in accordance with Subsection (1) of this section, the
32-47 surviving entity [corporation (foreign or domestic)] shall deliver
32-48 or mail to the dissenting shareholder a written notice which shall
32-49 either set out that the surviving entity [corporation (foreign or
32-50 domestic)] accepts the amount claimed in the demand and agrees to
32-51 pay such amount within ninety (90) days after the date on which the
32-52 corporate action was effected and, in the case of shares
32-53 represented by certificates, upon the surrender of the shares
32-54 certificates duly endorsed, or shall contain an estimate by the
32-55 surviving parent entity [corporation] of the fair value of such
32-56 shares, together with an offer to pay the amount of that estimate
32-57 within ninety (90) days after the date on which such corporate
32-58 action was effected, upon receipt of notice within sixty (60) days
32-59 after that date from the shareholder that the shareholder agrees to
32-60 accept that amount and, in the case of shares represented by
32-61 certificates, upon the surrender of the shares certificates duly
32-62 endorsed.
32-63 (3) If, within sixty (60) days after the date on which
32-64 the corporate action was effected, the value of the shares is
32-65 agreed upon between the dissenting shareholder and the surviving
32-66 entity [corporation (foreign or domestic)], payment for the shares
32-67 shall be made within ninety (90) days after the date on which the
32-68 corporate action was effected and, in the case of shares
32-69 represented by certificates, upon surrender of the [his]
33-1 certificate or certificates representing such shares. Upon payment
33-2 of the agreed value, the dissenting shareholder shall cease to have
33-3 any interest in such shares or in the corporation.
33-4 (4) If, within sixty (60) days after the date on which
33-5 such corporate action was effected, the shareholder and the
33-6 surviving entity [corporation (foreign or domestic)] do not so
33-7 agree, then the dissenting shareholder or the surviving entity
33-8 [corporation (foreign or domestic)] may, within sixty (60) days
33-9 after the expiration of the sixty (60) day period, file a petition
33-10 in any court of competent jurisdiction in the county in which the
33-11 principal office of the corporation is located, asking for a
33-12 finding and determination of the fair value of the shareholder's
33-13 shares as provided in Section B of Article 5.12 of this Act and
33-14 thereupon the parties shall have the rights and duties and follow
33-15 the procedure set forth in Sections B to D inclusive of Article
33-16 5.12.
33-17 (5) In the absence of fraud in the transaction, the
33-18 remedy provided by this Article to a shareholder objecting to the
33-19 corporate action is the exclusive remedy for the recovery of the
33-20 value of the shareholder's [his] shares or money damages to the
33-21 shareholder with respect to the corporate action. If the surviving
33-22 entity [corporation (foreign or domestic)] complies with the
33-23 requirements of this Article, any such shareholder who fails to
33-24 comply with the requirements of this Article shall not be entitled
33-25 to bring suit for the recovery of the value of the shareholder's
33-26 [his] shares or money damages to such shareholder with respect to
33-27 such corporate action.
33-28 F. If a plan of merger is required by Section A of this
33-29 Article to be adopted in the manner required by Article 5.03 of
33-30 this Act, the provisions of Articles 5.11 and 5.12 of this Act
33-31 shall apply to the rights of the shareholders of a [the] parent
33-32 corporation to dissent from such merger. Except as otherwise
33-33 provided in this Article, the provisions of Articles 5.11 and 5.12
33-34 of this Act shall not be applicable to a merger effected under the
33-35 provisions of this Article. The provisions of Article 5.13 of this
33-36 Act shall be applicable to any merger effected under the provisions
33-37 of this Article to the extent provided in Article 5.13 of this Act.
33-38 SECTION 32. Part Five, Texas Business Corporation Act, is
33-39 amended by adding Articles 5.17 through 5.20 to read as follows:
33-40 Art. 5.17. CONVERSION. A. A domestic corporation may adopt
33-41 a plan of conversion and convert to a foreign corporation or any
33-42 other entity if:
33-43 (1) the converting entity acts on and its shareholders
33-44 approve a plan of conversion in the manner prescribed by Article
33-45 5.03 of this Act as if the conversion were a merger to which the
33-46 converting entity were a party and not the survivor;
33-47 (2) the conversion (a) is permitted by, or not
33-48 inconsistent with, the laws of the state or country in which the
33-49 converted entity is to be incorporated, formed, or organized, and
33-50 (b) the incorporation, formation, or organization of the converted
33-51 entity is effected in compliance with such laws;
33-52 (3) at the time the conversion becomes effective, each
33-53 shareholder of the converting entity (other than those who receive
33-54 payment of their shares under Article 5.12 of this Act) will,
33-55 unless otherwise agreed to by that shareholder, own an equity
33-56 interest or other ownership or security interest in, and be a
33-57 shareholder, partner, member, owner, or other security holder of,
33-58 the converted entity;
33-59 (4) no shareholder of the domestic corporation will,
33-60 as a result of the conversion, become personally liable, without
33-61 the shareholder's consent, for the liabilities or obligations of
33-62 the converted entity; and
33-63 (5) the converted entity shall be incorporated,
33-64 formed, or organized as part of or pursuant to the plan of
33-65 conversion.
33-66 B. Any foreign corporation or other entity may adopt a plan
33-67 of conversion and convert to a domestic corporation if:
33-68 (1) the conversion is permitted by the laws of the
33-69 state or country in which the foreign corporation is incorporated,
34-1 if a foreign corporation is converting;
34-2 (2) the conversion is either permitted by the laws
34-3 under which the other entity is formed or organized or by the
34-4 constituent documents of the other entity that are not inconsistent
34-5 with the laws of the state or country in which the other entity is
34-6 formed or organized, if another entity is converting; and
34-7 (3) the converting entity takes all action that may be
34-8 required by the laws of the state or country under which it is
34-9 incorporated, formed, or organized and by its constituent documents
34-10 to effect the conversion.
34-11 C. A plan of conversion shall set forth:
34-12 (1) the name of the converting entity and the
34-13 converted entity;
34-14 (2) a statement that the converting entity is
34-15 continuing its existence in the organizational form of the
34-16 converted entity;
34-17 (3) a statement as to the type of entity that the
34-18 converted entity is to be and the state or country under the laws
34-19 of which the converted entity is to be incorporated, formed, or
34-20 organized;
34-21 (4) the manner and basis of converting the shares or
34-22 other evidences of ownership of the converting entity into shares
34-23 or other evidences of ownership or securities of the converted
34-24 entity, or any combination thereof;
34-25 (5) in an attachment or exhibit, the articles of
34-26 incorporation of the domestic corporation, if the converted entity
34-27 is a domestic corporation; and
34-28 (6) in an attachment or exhibit, the articles of
34-29 incorporation or other organizational documents of the converted
34-30 entity, if the converted entity is not a domestic corporation.
34-31 D. A plan of conversion may set forth such other provisions
34-32 relating to the conversion not inconsistent with law, including the
34-33 initial bylaws and officers of the converted entity.
34-34 E. After a conversion of a corporation is approved, and at
34-35 any time before the conversion has become effective, the plan of
34-36 conversion may be abandoned (subject to any contractual rights) by
34-37 the converting entity, without shareholder action, in accordance
34-38 with the procedures set forth in the plan of conversion or, if any
34-39 such procedures are not set forth in the plan, in the manner
34-40 determined by the board of directors. If articles of conversion
34-41 have been filed with the Secretary of State but the conversion has
34-42 not become effective, the conversion may be abandoned if a
34-43 statement, executed on behalf of the converting entity by an
34-44 officer or other duly authorized representative and stating that
34-45 the plan of conversion has been abandoned in accordance with
34-46 applicable law, is filed with the Secretary of State prior to the
34-47 effectiveness of the conversion. If the Secretary of State finds
34-48 that such statement conforms to law, the Secretary of State shall,
34-49 when all fees have been paid as required by law:
34-50 (1) endorse on the original and each copy the word
34-51 "Filed" and the month, day, and year of the filing;
34-52 (2) file the original in his office; and
34-53 (3) issue a certificate of abandonment to the
34-54 converting entity or its representatives.
34-55 F. On the filing of the statement described by Section E of
34-56 this Article by the Secretary of State, the conversion shall be
34-57 deemed abandoned and shall not become effective.
34-58 Art. 5.18. ARTICLES OF CONVERSION. A. If a plan of
34-59 conversion has been approved in accordance with Article 5.17 of
34-60 this Act and has not been abandoned, articles of conversion shall
34-61 be executed by the converting entity by an officer or other duly
34-62 authorized representative and shall set forth:
34-63 (1) the plan of conversion or a statement certifying
34-64 the following:
34-65 (a) the name, state or country of incorporation,
34-66 formation, and organization of the converting entity, and
34-67 organizational form of the converting entity;
34-68 (b) that a plan of conversion has been approved;
34-69 (c) that an executed plan of conversion is on
35-1 file at the principal place of business of the converting entity,
35-2 stating the address thereof, and that an executed plan of
35-3 conversion will be on file, from and after the conversion, at the
35-4 principal place of business of the converted entity, stating the
35-5 address thereof; and
35-6 (d) that a copy of the plan of conversion will
35-7 be furnished by the converting entity (prior to the conversion) or
35-8 the converted entity (after the conversion), on written request and
35-9 without cost, to any shareholder of the converting entity or the
35-10 converted entity;
35-11 (2) if the converting entity is a domestic
35-12 corporation, the number of shares outstanding and, if the shares of
35-13 any class or series are entitled to vote as a class, the
35-14 designation and number of outstanding shares of each such class or
35-15 series;
35-16 (3) if the converting entity is a domestic
35-17 corporation, the number of outstanding shares, not entitled to vote
35-18 only as a class, voted for and against the plan, respectively, and,
35-19 if the shares of any class or series are entitled to vote as a
35-20 class, the number of shares of each such class or series voted for
35-21 and against the plan, respectively; and
35-22 (4) if the converting entity is a foreign corporation
35-23 or other entity, a statement that the approval of the plan of
35-24 conversion was duly authorized by all action required by the laws
35-25 under which it was incorporated, formed, or organized and by its
35-26 constituent documents.
35-27 B. The original and one copy of the articles of conversion
35-28 shall be delivered to the Secretary of State. Two copies of the
35-29 articles of incorporation of the domestic corporation, if the
35-30 converted entity is a domestic corporation, shall also be delivered
35-31 to the Secretary of State with the articles of conversion.
35-32 C. If the Secretary of State finds that the articles of
35-33 conversion conform to law, has received all filings required to be
35-34 received, and has issued all certificates required to be issued in
35-35 connection with the incorporation, formation, or organization of
35-36 the converted entity, if any, the Secretary of State shall, when
35-37 all fees and franchise taxes have been paid as required by law or
35-38 if the articles of conversion provide that the converted entity
35-39 will be liable for the payment of all such fees and franchise
35-40 taxes:
35-41 (1) endorse on the original and each copy the word
35-42 "Filed" and the month, day, and year of the filing;
35-43 (2) file the original in his office; and
35-44 (3) issue a certificate of conversion, together with a
35-45 copy of the articles affixed thereto, to the converted entity or
35-46 its representatives.
35-47 Art. 5.19. EFFECTIVE DATE OF CONVERSION. A. Except as
35-48 otherwise provided by Article 10.03 of this Act, on the issuance of
35-49 the certificate of conversion by the Secretary of State, the
35-50 conversion of a converting entity shall be effective.
35-51 Art. 5.20. EFFECT OF CONVERSION. A. When a conversion of a
35-52 converting entity takes effect:
35-53 (1) the converting entity shall continue to exist,
35-54 without interruption, but in the organizational form of the
35-55 converted entity rather than in its prior organizational form;
35-56 (2) all rights, title, and interests to all real
35-57 estate and other property owned by the converting entity shall
35-58 continue to be owned by the converted entity in its new
35-59 organizational form without reversion or impairment, without
35-60 further act or deed, and without any transfer or assignment having
35-61 occurred, but subject to any existing liens or other encumbrances
35-62 thereon;
35-63 (3) all liabilities and obligations of the converting
35-64 entity shall continue to be liabilities and obligations of the
35-65 converted entity in its new organizational form without impairment
35-66 or diminution by reason of the conversion;
35-67 (4) all rights of creditors or other parties with
35-68 respect to or against the prior interest holders or other owners of
35-69 the converting entity in their capacities as such in existence as
36-1 of the effective time of the conversion will continue in existence
36-2 as to those liabilities and obligations and may be pursued by such
36-3 creditors and obligees as if the conversion had not occurred;
36-4 (5) a proceeding pending by or against the converting
36-5 entity or by or against any of the converting entity's interest
36-6 holders or owners in their capacities as such may be continued by
36-7 or against the converted entity in its new organizational form and
36-8 by or against the prior interest holders or owners, as the case may
36-9 be, without any need for substitution of parties;
36-10 (6) the shares and other evidences of ownership in the
36-11 converting entity that are to be converted into shares, evidences
36-12 of ownership or other securities in the converted entity as
36-13 provided in the plan of conversion shall be so converted, and if
36-14 the converting entity is a domestic corporation, the former holders
36-15 of shares in the domestic corporation shall be entitled only to the
36-16 rights provided in the plan of conversion or to their rights under
36-17 Article 5.11 of this Act;
36-18 (7) if, after the effectiveness of the conversion, a
36-19 shareholder, partner, member, or other owner of the converted
36-20 entity would be liable under applicable law, in such capacity, for
36-21 the debts or obligations of the converted entity, such shareholder,
36-22 partner, member, or other owner of the converted entity shall be
36-23 liable for the debts and obligations of the converting entity that
36-24 existed before the conversion takes effect only to the extent that
36-25 such shareholder, partner, member, or other owner: M(a) agreed in
36-26 writing to be liable for such debts or obligations, (b) was liable
36-27 under applicable law, prior to the effectiveness of the conversion,
36-28 for such debts or obligations, or (c) by becoming a shareholder,
36-29 partner, member, or other owner of the converted entity, becomes
36-30 liable under applicable law for existing debts and obligations of
36-31 the converted entity;
36-32 (8) if the converted entity is a foreign corporation
36-33 or other entity, such converted entity shall be deemed to:
36-34 (a) appoint the Secretary of State in this state as its agent for
36-35 service of process in a proceeding to enforce any obligation or the
36-36 rights of dissenting shareholders of the converting domestic
36-37 corporation, and (b) agree that it will promptly pay the dissenting
36-38 shareholders of the converting domestic corporation the amount, if
36-39 any, to which they are entitled under Article 5.11 of this Act; and
36-40 (9) if the converting corporation is a domestic
36-41 corporation, the provisions of Articles 5.11, 5.12, and 5.13 of
36-42 this Act shall apply as if the converted entity were the survivor
36-43 of a merger with the converting entity.
36-44 SECTION 33. Section A, Article 6.03, Texas Business
36-45 Corporation Act, is amended to read as follows:
36-46 A. A corporation may be dissolved by the act of the
36-47 corporation when authorized in the following manner:
36-48 (1) The board of directors shall adopt a resolution
36-49 recommending that the corporation be dissolved, and directing that
36-50 the question of such dissolution be submitted to a vote at a
36-51 meeting of shareholders, which may be either an annual or a special
36-52 meeting.
36-53 (2) Written or printed notice shall be given to each
36-54 shareholder of record entitled to vote at such meeting within the
36-55 time and in the manner provided in this Act for the giving of
36-56 notice of meetings of shareholders, and, whether the meeting be an
36-57 annual or special meeting, shall state that the purpose, or one of
36-58 the purposes, of such meeting is to consider the advisability of
36-59 dissolving the corporation.
36-60 (3) At such meeting a vote of shareholders entitled to
36-61 vote thereat shall be taken on a resolution to dissolve the
36-62 corporation. Such resolution shall be adopted on receiving the
36-63 affirmative vote of the holders of at least two-thirds of the
36-64 outstanding shares [Each outstanding share] of the corporation
36-65 [shall be] entitled to vote thereon[, whether or not entitled to
36-66 vote thereon by the provisions of the articles of incorporation.
36-67 Such resolution shall be adopted upon receiving the affirmative
36-68 vote of the holders of at least two-thirds of the outstanding
36-69 shares of the corporation,] unless any class or series of shares is
37-1 entitled to vote as a class thereon, in which event the resolution
37-2 shall require for its adoption the affirmative vote of the holders
37-3 of at least two-thirds of the outstanding shares within [of] each
37-4 class or series of shares entitled to vote as a class thereon and
37-5 at least[, as well as the affirmative vote of] two-thirds of the
37-6 [total] outstanding shares otherwise entitled to vote thereon.
37-7 Shares entitled to vote as a class shall be entitled to vote only
37-8 as a class unless otherwise entitled to vote on each matter
37-9 generally as provided in the articles of incorporation.
37-10 SECTION 34. Sections A and B, Article 6.05, Texas Business
37-11 Corporation Act, are amended to read as follows:
37-12 A. At any time prior to the issuance of a certificate of
37-13 dissolution by the Secretary of State, or within 120 days
37-14 thereafter, a corporation may revoke voluntary dissolution
37-15 proceedings:
37-16 (1) By the written consent of all of its shareholders.
37-17 (2) By the act of the corporation in the following
37-18 manner:
37-19 (a) The board of directors shall adopt a
37-20 resolution recommending that the question of such revocation be
37-21 submitted to a vote at a special meeting of shareholders.
37-22 (b) Written or printed notice, stating that the
37-23 purpose or one of the purposes of such meeting is to consider the
37-24 advisability of revoking the voluntary dissolution proceedings,
37-25 shall be given to each shareholder of record entitled to vote at
37-26 such meeting within the time and in the manner provided in this Act
37-27 for the giving of notice of special meetings of shareholders.
37-28 (c) At such meeting a vote of the shareholders
37-29 entitled to vote thereat shall be taken on a resolution to revoke
37-30 the voluntary dissolution proceedings. [Each outstanding share of
37-31 the corporation shall be entitled to vote thereon, whether or not
37-32 entitled to vote thereon by the provisions of the articles of
37-33 incorporation.] Such resolution shall be adopted upon receiving
37-34 the affirmative vote of the holders of at least two-thirds of the
37-35 outstanding shares of the corporation entitled to vote thereon[,]
37-36 unless any class or series of shares is entitled to vote [thereon]
37-37 as a class thereon, in which event the resolution shall require for
37-38 its adoption the affirmative vote of the holders of at least
37-39 two-thirds of the outstanding shares within [of] each class or
37-40 series of shares entitled to vote as a class thereon and at least
37-41 [, as well as] two-thirds of the [total] outstanding shares
37-42 otherwise entitled to vote thereon. Shares entitled to vote as a
37-43 class shall be entitled to vote only as a class unless otherwise
37-44 entitled to vote on each matter generally as provided in the
37-45 articles of incorporation.
37-46 B. After revocation of voluntary dissolution is authorized
37-47 as provided in Section A of this Article, the corporation shall, if
37-48 a certificate of dissolution of the corporation has been issued by
37-49 the Secretary of State, deliver to the Secretary of State for
37-50 filing within 120 days after such issuance the original and a copy
37-51 of articles of revocation of dissolution executed on behalf of the
37-52 corporation by an officer, that set forth:
37-53 (1) the name of the corporation;
37-54 (2) the date that the revocation of dissolution was
37-55 authorized and, if the dissolution has become effective, the
37-56 effective date of the dissolution that was revoked; and
37-57 (3) if the corporation elected to revoke voluntary
37-58 dissolution proceedings by the written consent of all of its
37-59 shareholders, a copy of the consent, together with a statement that
37-60 the consent was signed by all shareholders of the corporation or
37-61 was signed in their names by their attorneys thereunto duly
37-62 authorized; or
37-63 (4) if the corporation elected to revoke voluntary
37-64 dissolution proceedings by act of the corporation:
37-65 (a) a [copy of the resolution to revoke,
37-66 together with a] statement that a [such] resolution revoking the
37-67 voluntary dissolution was adopted by the shareholders of the
37-68 corporation and of the date of the adoption thereof;
37-69 (b) the number of shares outstanding and
38-1 entitled to vote on the resolution, and, if the shares of any class
38-2 or series were entitled to vote as a class, the designation and
38-3 number of outstanding shares of each such class or series; and
38-4 (c) the number of shares entitled to vote on the
38-5 resolution generally that voted for and against such resolution,
38-6 respectively, and if the shares of any class or series were
38-7 entitled to vote as a class, the number of shares of each such
38-8 class or series voted for and against such resolution,
38-9 respectively.
38-10 SECTION 35. Article 6.06, Texas Business Corporation Act, is
38-11 amended to read as follows:
38-12 Art. 6.06. ARTICLES OF DISSOLUTION. A. If voluntary
38-13 dissolution proceedings have been taken and have not been revoked,
38-14 then when all debts, liabilities, and obligations of the
38-15 corporation have been paid, satisfied, or discharged or adequate
38-16 provision has been made for payment, satisfaction, or discharge
38-17 thereof or, if the properties and assets of the corporation are not
38-18 sufficient to pay, satisfy, or discharge all the corporation's
38-19 debts, liabilities, and obligations, then when all properties and
38-20 assets of the corporation have been applied so far as they will go
38-21 to the just and equitable payment of the corporation's debts,
38-22 liabilities, and obligations or when adequate provision has been
38-23 made for such application, and the remainder of its properties and
38-24 assets have been distributed to its shareholders according to their
38-25 respective rights and interests, articles of dissolution shall be
38-26 executed on behalf of the corporation by an officer, which shall
38-27 set forth:
38-28 (1) The name of the corporation.
38-29 (2) The names and respective addresses of its
38-30 officers.
38-31 (3) The names and respective addresses of its
38-32 directors.
38-33 (4) That all debts, liabilities, and obligations of
38-34 the corporation have been paid, satisfied, or discharged or that
38-35 adequate provision has been made for payment, satisfaction, or
38-36 discharge thereof or, if the properties and assets of the
38-37 corporation were not sufficient to pay, satisfy, or discharge all
38-38 the corporation's debts, liabilities, and obligations, that all
38-39 properties and assets of the corporation have been applied so far
38-40 as they would go to the just and equitable payment of those debts,
38-41 liabilities, and obligations or that adequate provision has been
38-42 made for such application.
38-43 (5) That the remainder of the properties and assets of
38-44 the corporation have been distributed to its shareholders according
38-45 to their respective rights and interests or that no properties or
38-46 assets of the corporation remained for distribution to shareholders
38-47 after applying the properties and assets of the corporation so far
38-48 as they would go to the just and equitable payment of the debts,
38-49 liabilities, and obligations of the corporation or making adequate
38-50 provision for such application.
38-51 (6) If the corporation elected to dissolve by the
38-52 written consent of all of its shareholders, a [copy of the consent,
38-53 together with a] statement that a [the] consent approving a
38-54 dissolution of the corporation was signed by all shareholders of
38-55 the corporation or was signed in their names by their attorneys
38-56 thereunto duly authorized.
38-57 (7) If the corporation elected to dissolve by act of
38-58 the corporation:
38-59 (a) A [copy of the resolution to dissolve,
38-60 together with a] statement that a [such] resolution approving a
38-61 dissolution of the corporation was adopted by the shareholders of
38-62 the corporation and of the date of adoption.
38-63 (b) The number of shares outstanding and
38-64 entitled to vote on the resolution, and, if the shares of any class
38-65 or series were entitled to vote as a class, the designation and
38-66 number of outstanding shares of each such class or series.
38-67 (c) The number of shares entitled to vote on the
38-68 resolution generally that voted for and against such resolution,
38-69 respectively, and if the shares of any class or series were
39-1 entitled to vote as a class, the number of shares of each such
39-2 class or series voted for and against such resolution,
39-3 respectively.
39-4 SECTION 36. Section E, Article 7.01, Texas Business
39-5 Corporation Act, is amended to read as follows:
39-6 E. Any corporation dissolved by the Secretary of State under
39-7 the provisions of Section B of this article may be reinstated by
39-8 the Secretary of State at any time within a period of 36 [12]
39-9 months from the date of such dissolution, upon approval of an
39-10 application for reinstatement signed by an officer or director of
39-11 the dissolved corporation. Such application shall be filed by the
39-12 Secretary of State whenever it is established to the Secretary's
39-13 [his] satisfaction that in fact there was no cause for the
39-14 dissolution, or whenever the neglect, omission or delinquency
39-15 resulting in dissolution has been corrected and payment of all
39-16 fees, taxes, penalties and interest due thereon which accrued
39-17 before the dissolution plus an amount equal to the total taxes from
39-18 the date of dissolution to the date of reinstatement which would
39-19 have been payable had the corporation not been dissolved. A
39-20 reinstatement filing fee of $50 shall accompany the application for
39-21 reinstatement.
39-22 Reinstatement shall not be authorized if the corporate name
39-23 is the same as or deceptively similar to a corporate, limited
39-24 partnership, or limited liability company name already on file or
39-25 reserved or registered, unless the corporation being reinstated
39-26 contemporaneously amends the articles of incorporation to change
39-27 its name.
39-28 When the application for reinstatement is approved and filed
39-29 by the Secretary of State, the corporate existence shall be deemed
39-30 to have continued without interruption from the date of dissolution
39-31 except the reinstatement shall have no effect upon any issue of
39-32 personal liability of the directors, officers, or agents of the
39-33 corporation during the period between dissolution and
39-34 reinstatement.
39-35 SECTION 37. Article 8.03, Texas Business Corporation Act, is
39-36 amended to read as follows:
39-37 Art. 8.03. CORPORATE NAME OF FOREIGN CORPORATION. A. No
39-38 certificate of authority shall be issued to a foreign corporation
39-39 unless the corporate name of such corporation:
39-40 (1) Shall contain the word "corporation," "company,"
39-41 "incorporated," or "limited," or shall contain an abbreviation of
39-42 one (1) of such words, or such corporation shall, for use in this
39-43 state, add at the end of its name one (1) of such words or an
39-44 abbreviation thereof.
39-45 (2) Shall not be the same as, or deceptively similar
39-46 to, the name of any domestic corporation, limited partnership, or
39-47 limited liability company existing under the laws of this state or
39-48 of any foreign corporation, limited partnership, or limited
39-49 liability company authorized to transact business in this state, or
39-50 a name the exclusive right to which is, at the time, reserved or
39-51 registered in the manner provided in this Act or any other statute
39-52 providing for the reservation or registration of names by a limited
39-53 partnership or limited liability company; provided that a name may
39-54 be similar if written consent is obtained from the existing
39-55 corporation, limited partnership, or limited liability company
39-56 having the name deemed to be similar or the person[, or
39-57 corporation,] for whom the name deemed to be similar is reserved or
39-58 registered in the office of the Secretary of State. A certificate
39-59 of authority shall be issued as provided in this Act to any foreign
39-60 corporation having a name the same as, deceptively similar to, or,
39-61 if no consent is given, similar to the name of any domestic
39-62 corporation, limited partnership, or limited liability company
39-63 existing under the laws of this state or of any foreign
39-64 corporation, limited partnership, or limited liability company
39-65 authorized to transact business in this state, or a name the
39-66 exclusive right to which is, at the time, reserved or registered in
39-67 accordance with this Act or any other applicable law, provided such
39-68 foreign corporation qualifies and does business under a name that
39-69 meets the requirements of this article. The foreign corporation
40-1 shall set forth in the application for a certificate of authority
40-2 the name under which it is qualifying and shall file an assumed
40-3 name certificate in accordance with Chapter 36, Business & Commerce
40-4 Code, as amended.
40-5 SECTION 38. Sections A and C, Article 8.14, Texas Business
40-6 Corporation Act, are amended to read as follows:
40-7 A. A foreign corporation authorized to transact business in
40-8 this state may withdraw from this state upon procuring from the
40-9 Secretary of State a certificate of withdrawal. In order to
40-10 procure such certificate of withdrawal, such foreign corporation
40-11 shall deliver to the Secretary of State an application for
40-12 withdrawal, which shall set forth:
40-13 (1) The name of the corporation and the state or
40-14 country under the laws of which it is incorporated;
40-15 (2) That the corporation is not transacting business
40-16 in this state;
40-17 (3) That the corporation surrenders its authority to
40-18 transact business in this state;
40-19 (4) That the corporation revokes the authority of its
40-20 registered agent in this state to accept service of process and
40-21 consents that service of process in any action, suit, or proceeding
40-22 based upon any cause of action arising in this state during the
40-23 time the corporation was authorized to transact business in this
40-24 state may thereafter be made on such corporation by service thereof
40-25 on the Secretary of State;
40-26 (5) A post office address to which the Secretary of
40-27 State may mail a copy of any process against the corporation that
40-28 may be served on him; and
40-29 (6) A statement that all sums due, or accrued, to this
40-30 state have been paid, or that adequate provision has been made for
40-31 the payment thereof[; and]
40-32 [(7) A statement that all known creditors or claimants
40-33 have been paid or provided for].
40-34 C. When the existence of a foreign corporation terminates
40-35 because of dissolution, merger, conversion, or otherwise, a
40-36 certificate from the proper officer in the jurisdiction of the
40-37 corporation's incorporation evidencing the termination shall be
40-38 filed with the Secretary of State.
40-39 SECTION 39. Section A, Article 8.15, Texas Business
40-40 Corporation Act, is amended to read as follows:
40-41 A. The original and a copy of such application for
40-42 withdrawal, along with a certificate from the Comptroller of Public
40-43 Accounts that all franchise taxes have been paid, shall be
40-44 delivered to the Secretary of State. If the Secretary of State
40-45 finds that such application conforms to the provisions of this Act,
40-46 the Secretary of State [he] shall, when the appropriate filing fee
40-47 is [all fees and franchise taxes have been] paid as required by
40-48 law:
40-49 (1) Endorse on the original and the copy the word
40-50 "Filed," and the month, day, and year of the filing thereof.
40-51 (2) File the original in the [his] office of the
40-52 Secretary of State.
40-53 (3) Issue a certificate of withdrawal to which [he]
40-54 shall be affixed [affix] the copy.
40-55 SECTION 40. Section E, Article 8.16, Texas Business
40-56 Corporation Act, is amended to read as follows:
40-57 E. Any corporation whose certificate of authority has been
40-58 revoked by the Secretary of State under the provisions of Section B
40-59 of this article may be reinstated by the Secretary of State at any
40-60 time within a period of 36 [12] months from the date of such
40-61 revocation [dissolution], upon approval of an application for
40-62 reinstatement signed by an officer or director of the corporation.
40-63 Such application shall be filed by the Secretary of State whenever
40-64 it is established to the Secretary's [his] satisfaction that in
40-65 fact there was no cause for the revocation, or whenever the
40-66 neglect, omission or delinquency resulting in revocation has been
40-67 corrected and payment made of all fees, taxes, penalties and
40-68 interest due thereon which accrued before the revocation plus an
40-69 amount equal to the total taxes from the date of revocation to the
41-1 date of reinstatement which would have been payable had the
41-2 corporation's certificate not been revoked. A reinstatement filing
41-3 fee of $50 shall accompany the application for reinstatement.
41-4 Reinstatement shall not be authorized if the corporate name
41-5 is the same as or deceptively similar to a corporate, limited
41-6 partnership, or limited liability company name already on file or
41-7 reserved or registered, unless the corporation being reinstated
41-8 contemporaneously amends its certificate of authority to change its
41-9 name.
41-10 When the application for reinstatement is approved and filed
41-11 by the Secretary of State, the corporate authority to do business
41-12 in Texas shall be deemed to have continued without interruption
41-13 from the date of revocation, except that reinstatement shall have
41-14 no effect upon any issue of personal liability of the directors,
41-15 officers, or agents of the corporation during the period between
41-16 revocation and reinstatement.
41-17 SECTION 41. Section A, Article 9.04, Texas Business
41-18 Corporation Act, is amended to read as follows:
41-19 A. If the Secretary of State shall fail to approve any
41-20 articles of incorporation, application for certificate of authority
41-21 to transact business in this State, amendment, merger, share
41-22 exchange, conversion [consolidation], or dissolution, or any other
41-23 document required by this Act to be approved by the Secretary of
41-24 State before the same shall be filed in his office, he shall,
41-25 within ten days after the delivery thereof to him, give written
41-26 notice of his disapproval to the person, [or] corporation, or other
41-27 entity, domestic or foreign, delivering the same, specifying in
41-28 such notice the reasons therefor. From such disapproval such
41-29 person, [or] corporation, or other entity may appeal to any
41-30 district court of Travis County by filing with the clerk of such
41-31 court a petition setting forth a copy of the articles or other
41-32 document sought to be filed and a copy of the written disapproval
41-33 thereof by the Secretary of State; whereupon the matter shall be
41-34 tried de novo by the court, and the court shall either sustain the
41-35 action of the Secretary of State or direct him to take such action
41-36 as the court may deem proper.
41-37 SECTION 42. Article 9.10, Texas Business Corporation Act, is
41-38 amended by adding Section D to read as follows:
41-39 D. If action is taken with respect to a particular matter by
41-40 the holders of shares of a class or series by means of a written
41-41 consent in compliance with Section A of this Article, any provision
41-42 of this Act that requires advance notice of a meeting or of the
41-43 proposed action will not apply as to that class or series for such
41-44 action.
41-45 SECTION 43. Section A, Article 10.01, Texas Business
41-46 Corporation Act, is amended to read as follows:
41-47 A. The Secretary of State is authorized and required to
41-48 collect for the use of the State the following fees:
41-49 (1) Filing articles of incorporation of a domestic
41-50 corporation and issuing a certificate of incorporation, Three
41-51 Hundred Dollars ($300.00).
41-52 (2) Filing articles of amendment of a domestic
41-53 corporation and issuing a certificate of amendment, One Hundred
41-54 Fifty Dollars ($150.00).
41-55 (3) Filing articles of merger [or consolidation],
41-56 whether the surviving or new corporation be a domestic or foreign
41-57 corporation, or articles of exchange, Three Hundred Dollars
41-58 ($300.00).
41-59 (4) Filing an application of a foreign corporation for
41-60 a certificate of authority to transact business in this State and
41-61 issuing such a certificate of authority, Seven Hundred Fifty
41-62 Dollars ($750.00).
41-63 (5) Filing an application of a foreign corporation for
41-64 an amended certificate of authority to transact business in this
41-65 State and issuing such an amended certificate of authority, One
41-66 Hundred Fifty Dollars ($150.00).
41-67 (6) Filing restated articles of incorporation of a
41-68 domestic corporation, Three Hundred Dollars ($300.00).
41-69 (7) Filing application for reservation of corporate
42-1 name and issuing a certificate therefor, Forty Dollars ($40.00).
42-2 (8) Filing notice of transfer of reserved corporate
42-3 name and issuing a certificate therefor, Fifteen Dollars ($15.00).
42-4 (9) Filing application for registration of corporate
42-5 name and issuing a certificate therefor, Seventy-Five Dollars
42-6 ($75.00).
42-7 (10) Filing application for renewal of registration of
42-8 corporate name and issuing a certificate therefor, Seventy-Five
42-9 Dollars ($75.00).
42-10 (11) Filing statement of change of registered office
42-11 or registered agent, or both, Fifteen Dollars ($15.00).
42-12 (12) Filing statement of change of address of
42-13 registered agent, Fifteen Dollars ($15.00); provided, however, that
42-14 the maximum fee for simultaneous filings by a registered agent for
42-15 more than one corporation shall not exceed Seven Hundred Fifty
42-16 Dollars ($750.00).
42-17 (13) Filing statement of resolution establishing
42-18 series of shares, Fifteen Dollars ($15.00).
42-19 (14) Filing statement of cancellation of redeemable
42-20 shares, Fifteen Dollars ($15.00).
42-21 (15) Filing statement of cancellation of re-acquired
42-22 shares, Fifteen Dollars ($15.00).
42-23 (16) Filing statement of reduction of stated capital,
42-24 Fifteen Dollars ($15.00).
42-25 (17) Filing articles of dissolution and issuing
42-26 certificate therefor, Forty Dollars ($40.00).
42-27 (18) Filing application for withdrawal and issuing
42-28 certificate therefor, Fifteen Dollars ($15.00).
42-29 (19) Filing certificate from home state that foreign
42-30 corporation is no longer in existence in said state, Fifteen
42-31 Dollars ($15.00).
42-32 (20) Maintaining a record of service of any process,
42-33 notice or demand upon the Secretary of State as agent for foreign
42-34 and domestic corporations and for any foreign association, joint
42-35 stock company, partnership, or nonresident natural person, Forty
42-36 Dollars ($40.00).
42-37 (21) Filing a bylaw or agreement restricting transfer
42-38 of shares or securities other than as an amendment to the articles
42-39 of incorporation, Fifteen Dollars ($15.00).
42-40 (22) Filing any instrument pursuant to this Act not
42-41 expressly provided for above, Fifteen Dollars ($15.00).
42-42 (23) Filing application for reinstatement of corporate
42-43 charter or certificate of authority following forfeiture under the
42-44 Tax Code, Seventy-Five Dollars ($75.00).
42-45 (24) Filing articles of conversion and issuing a
42-46 certificate of conversion, Three Hundred Dollars ($300.00).
42-47 SECTION 44. Section A, Article 10.03, Texas Business
42-48 Corporation Act, is amended to read as follows:
42-49 A. The effectiveness of (i) the incorporation of a
42-50 corporation under this Act, (ii) an amendment to a corporation's
42-51 articles of incorporation, including an amendment effected pursuant
42-52 to a statement of resolution establishing a series of shares,
42-53 (iii) the restatement of articles of incorporation of a
42-54 corporation, (iv) a merger or share exchange, (v) a cancellation of
42-55 redeemable or reacquired shares or a reduction in stated capital,
42-56 (vi) a voluntary dissolution, (vii) the authorization or withdrawal
42-57 of a foreign corporation to transact business in this State,
42-58 (viii) an amendment to the certificate of authority of a foreign
42-59 corporation, (ix) a bylaw or agreement restricting the transfer of
42-60 shares or securities of a corporation pursuant to this Act, (x) a
42-61 change in registered office or registered agent, [or] (xi) a change
42-62 of address of a registered agent (each such act or document being a
42-63 "Permitted Act"), or (xii) a conversion may be made effective as of
42-64 a time and date after the time and date otherwise provided in this
42-65 Act or may be made effective upon the occurrence of events or facts
42-66 that may occur in the future, which events or facts may include
42-67 future acts of any person or entity, if:
42-68 (1) the articles, statement, application, or other
42-69 filing that is required by this Act to be filed with the Secretary
43-1 of State to make effective such Permitted Act clearly and expressly
43-2 set forth, in addition to any other statement or information
43-3 required to be set forth therein, (i) the time and date on which
43-4 such Permitted Act is to become effective or (ii) if such Permitted
43-5 Act is to become effective upon the occurrence of events or facts
43-6 that may occur in the future, (a) the manner in which such events
43-7 or facts shall operate to cause such Permitted Act to become
43-8 effective and (b) the date of the 90th day after the date of the
43-9 filing of such articles, statement, application or other filing;
43-10 (2) in the case of a Permitted Act that is to become
43-11 effective as of a time or date after the time and date otherwise
43-12 provided in this Act, (i) such subsequent time and date is not more
43-13 than 90 days after the date of the filing of the articles,
43-14 statement, application, or other filing that is otherwise required
43-15 by this Act to be filed with the Secretary of State to make
43-16 effective such Permitted Act and (ii) the time on which the
43-17 Permitted Act is to become effective is not midnight or 12:00 p.m.;
43-18 and
43-19 (3) in the case of a Permitted Act that is to be made
43-20 effective upon the occurrence of events or facts that may occur in
43-21 the future, other than the mere passage of time, a statement that
43-22 all such events or facts upon which the effectiveness of such
43-23 Permitted Act is conditioned have been satisfied or waived, and of
43-24 the date on which such condition was satisfied or waived, is filed
43-25 with the Secretary of State within 90 days of the date of the
43-26 filing of the articles, statement, application or other filing that
43-27 is otherwise required by this Act for such Permitted Act to become
43-28 effective.
43-29 SECTION 45. Section B, Article 12.13, Texas Business
43-30 Corporation Act, is amended to read as follows:
43-31 B. Through Merger, Conversion, or Share Exchange. A
43-32 surviving or new corporation resulting from a merger, a corporation
43-33 incorporated as part of a conversion, or a corporation that
43-34 acquires a corporation pursuant to a share exchange in conformance
43-35 with Part Five of this Act may become a close corporation if as
43-36 part of the plan of merger, conversion, or exchange its articles of
43-37 incorporation conform with Article 12.11 of this Act. Any plan of
43-38 merger, conversion, or exchange adopting close corporation status
43-39 must be approved by the affirmative vote of the holders of all the
43-40 outstanding shares, and of each class or series of shares, of each
43-41 corporation that is party to the merger, conversion, or share
43-42 exchange, whether or not entitled to vote on the plan by the
43-43 articles of incorporation of the corporation.
43-44 SECTION 46. Article 12.21, Texas Business Corporation Act,
43-45 is amended to read as follows:
43-46 Art. 12.21. TERMINATION OF CLOSE CORPORATION STATUS. A. In
43-47 General. A close corporation terminates its status as a close
43-48 corporation:
43-49 (1) on filing a statement of termination in
43-50 conformance with Article 12.22 of this Act;
43-51 (2) by amending its articles of incorporation in
43-52 conformance with Part Four of this Act to delete from its articles
43-53 the statement that it is a close corporation;
43-54 (3) through a merger, conversion, or share exchange in
43-55 conformance with Part Five of this Act unless the plan of merger,
43-56 conversion, or exchange provides that the surviving or new
43-57 corporation will continue as or become a close corporation and the
43-58 plan has been approved by the affirmative vote or consent of the
43-59 holders of all the outstanding shares, and of each class and series
43-60 of shares, of the close corporation, whether or not entitled to
43-61 vote on the plan by the articles of incorporation; or
43-62 (4) when termination is decreed in a judicial
43-63 proceeding to enforce a close corporation provision providing for
43-64 the termination.
43-65 SECTION 47. The Texas Business Corporation Act is amended by
43-66 adding Part Thirteen to read as follows:
43-67 PART THIRTEEN
43-68 Art. 13.01. SHORT TITLE. A. This part may be cited as the
43-69 Business Combination Law.
44-1 Art. 13.02. DEFINITIONS. A. In this part:
44-2 (1) "Affiliate" means a person who directly or
44-3 indirectly through one or more intermediaries controls, is
44-4 controlled by, or is under common control with a specified person.
44-5 (2) "Affiliated shareholder" means a person, other
44-6 than the issuing public corporation or a wholly owned subsidiary of
44-7 the issuing public corporation, that is the beneficial owner of 20
44-8 percent or more of the outstanding voting shares of the issuing
44-9 public corporation or that, within the preceding three-year period,
44-10 was the beneficial owner of 20 percent or more of the then
44-11 outstanding voting shares of the issuing public corporation. For
44-12 the purpose of determining whether a person is an affiliated
44-13 shareholder, the number of voting shares of the issuing public
44-14 corporation considered outstanding includes shares considered
44-15 beneficially owned by that person under Subdivision (3) of this
44-16 Article, but does not include other unissued voting shares of the
44-17 issuing public corporation that may be issuable pursuant to an
44-18 agreement, arrangement, or understanding, or on exercise of
44-19 conversion rights, warrants, or options, or otherwise.
44-20 (3) "Beneficial owner" means a person who:
44-21 (a) individually, or with or through an
44-22 affiliate or associate, beneficially owns shares or similar
44-23 securities, directly or indirectly;
44-24 (b) individually, or with or through an
44-25 affiliate or associate, has the right to:
44-26 (i) acquire shares or similar securities,
44-27 whether the right may be exercised immediately or only after the
44-28 passage of time, pursuant to an agreement, arrangement, or
44-29 understanding, whether or not in writing, or on the exercise of
44-30 conversion rights, exchange rights, warrants, or options, or
44-31 otherwise, except that a person is not considered the beneficial
44-32 owner of shares or similar securities (A) tendered pursuant to a
44-33 tender or exchange offer made by the person or an affiliate or
44-34 associate until the tendered shares or similar securities are
44-35 accepted for purchase or exchange, or (B) that may be subject to an
44-36 agreement, arrangement, or understanding that expressly conditions
44-37 the acquisition or purchase on the approval of the acquisition or
44-38 purchase pursuant to Article 13.03 of this Act as long as such
44-39 person has no direct or indirect rights of ownership or voting with
44-40 respect to such shares until such time that such approval is
44-41 obtained, at which time such person shall be considered the
44-42 beneficial owner of such shares; or
44-43 (ii) vote the shares or similar securities
44-44 pursuant to an agreement, arrangement, or understanding, whether or
44-45 not in writing, except that a person is not considered the
44-46 beneficial owner of shares or similar securities for purposes of
44-47 this subparagraph if the agreement, arrangement, or understanding
44-48 to vote the shares: (A) arises solely from an immediately
44-49 revocable proxy that authorizes the person named in the proxy to
44-50 vote at a meeting of shareholders that has been called when the
44-51 proxy is delivered or at any adjournment of the meeting, and (B) is
44-52 not then reportable on a Schedule 13D under the Securities Exchange
44-53 Act of 1934 (15 U.S.C. Section 78a et seq.) or a comparable or
44-54 successor report; or
44-55 (c) has an agreement, arrangement, or
44-56 understanding, whether or not in writing, to acquire, hold, or
44-57 dispose (except pursuant to an agreement, arrangement, or
44-58 understanding permitted by Paragraph (b)(i) of this subdivision) or
44-59 to vote (except under an immediately revocable proxy under
44-60 Paragraph (b)(ii) of this subdivision) shares or similar securities
44-61 with another person who beneficially owns, or whose affiliate or
44-62 associate beneficially owns, directly or indirectly, the shares or
44-63 similar securities.
44-64 (4) "Business combination" means:
44-65 (a) any merger, share exchange, or conversion of
44-66 an issuing public corporation or a subsidiary with:
44-67 (i) an affiliated shareholder;
44-68 (ii) a foreign or domestic corporation or
44-69 other entity that is, or after the merger, share exchange, or
45-1 conversion would be, an affiliate or associate of the affiliated
45-2 shareholder; or
45-3 (iii) another domestic or foreign
45-4 corporation or other entity, if the merger, share exchange, or
45-5 conversion is caused by an affiliated shareholder, or an affiliate
45-6 or associate of an affiliated shareholder, and as a result of the
45-7 merger, share exchange, or conversion this part does not apply to
45-8 the surviving corporation or other entity;
45-9 (b) a sale, lease, exchange, mortgage, pledge,
45-10 transfer, or other disposition, in one transaction or a series of
45-11 transactions, including an allocation of assets pursuant to a
45-12 merger, to or with the affiliated shareholder, or an affiliate or
45-13 associate of the affiliated shareholder, of assets of the issuing
45-14 public corporation or any subsidiary that:
45-15 (i) have an aggregate market value equal
45-16 to 10 percent or more of the aggregate market value of all the
45-17 assets, determined on a consolidated basis, of the issuing public
45-18 corporation;
45-19 (ii) have an aggregate market value equal
45-20 to 10 percent or more of the aggregate market value of all the
45-21 outstanding common stock of the issuing public corporation; or
45-22 (iii) represent 10 percent or more of the
45-23 earning power or net income, determined on a consolidated basis, of
45-24 the issuing public corporation;
45-25 (c) the issuance or transfer by an issuing
45-26 public corporation or a subsidiary to an affiliated shareholder or
45-27 an affiliate or associate of the affiliated shareholder, in one
45-28 transaction or a series of transactions, of shares of the issuing
45-29 public corporation or a subsidiary, except by the exercise of
45-30 warrants or rights to purchase shares of the issuing public
45-31 corporation offered, or a share dividend paid, pro rata to all
45-32 shareholders of the issuing public corporation after the affiliated
45-33 shareholder's share acquisition date;
45-34 (d) the adoption of a plan or proposal for the
45-35 liquidation or dissolution of an issuing public corporation
45-36 proposed by, or pursuant to any agreement, arrangement, or
45-37 understanding, whether or not in writing, with an affiliated
45-38 shareholder or an affiliate or associate of the affiliated
45-39 shareholder;
45-40 (e) a reclassification of securities, including
45-41 a reverse share split or a share split-up, share dividend, or other
45-42 distribution of shares, a recapitalization of the issuing public
45-43 corporation, a merger of the issuing public corporation with a
45-44 subsidiary or pursuant to which the assets and liabilities of the
45-45 issuing public corporation are allocated among two or more
45-46 surviving or new domestic or foreign corporations or other
45-47 entities, or any other transaction, whether or not with, into, or
45-48 otherwise involving the affiliated shareholder, proposed by, or
45-49 pursuant to an agreement, arrangement, or understanding, whether or
45-50 not in writing, with an affiliated shareholder or an affiliate or
45-51 associate of the affiliated shareholder that has the effect,
45-52 directly or indirectly, of increasing the proportionate ownership
45-53 percentage of the outstanding shares of a class or series of voting
45-54 shares or securities convertible into voting shares of the issuing
45-55 public corporation that is beneficially owned by the affiliated
45-56 shareholder or an affiliate or associate of the affiliated
45-57 shareholder, except as a result of immaterial changes due to
45-58 fractional share adjustments; or
45-59 (f) the direct or indirect receipt by an
45-60 affiliated shareholder or an affiliate or associate of the
45-61 affiliated shareholder of the benefit of a loan, advance,
45-62 guarantee, pledge, or other financial assistance or a tax credit or
45-63 other tax advantage provided by or through the issuing public
45-64 corporation, except proportionately as a shareholder of the issuing
45-65 public corporation.
45-66 (5) "Control" means the possession, directly or
45-67 indirectly, of the power to direct or cause the direction of the
45-68 management and policies of a person, whether through the ownership
45-69 of equity securities, by contract, or otherwise. A person's
46-1 beneficial ownership of 10 percent or more of a person's
46-2 outstanding voting shares or similar interests creates a
46-3 presumption that the person has control of such other person, but a
46-4 person is not considered to have control of another person if the
46-5 person holds such voting shares or similar interests in good faith
46-6 and not for the purpose of circumventing this part, as an agent,
46-7 bank, broker, nominee, custodian, or trustee for one or more
46-8 beneficial owners who do not individually or as a group have
46-9 control of the person.
46-10 (6) "Issuing public corporation" means a domestic
46-11 corporation that has: (a) 100 or more shareholders, (b) any class
46-12 or series of its voting shares registered under the Securities
46-13 Exchange Act of 1934, as amended, or similar or successor statute,
46-14 or (c) any class or series of its voting shares qualified for
46-15 trading in a national market system. For the purposes of this
46-16 definition of issuing public corporation, a shareholder is a
46-17 shareholder of record as shown by the share transfer records of the
46-18 corporation.
46-19 (7) "Person" means an individual, trust, domestic or
46-20 foreign corporation or other entity, or a government, or a
46-21 political subdivision, agency, or instrumentality of a government.
46-22 If two or more persons act as a partnership, limited partnership,
46-23 syndicate, or other group under an agreement, arrangement, or other
46-24 understanding, whether or not in writing, to acquire, hold, vote,
46-25 or dispose of shares of a corporation, all members of the
46-26 partnership, limited partnership, syndicate, or other group are
46-27 considered to be a person.
46-28 (8) "Share acquisition date" means the date that a
46-29 person first becomes an affiliated shareholder of an issuing public
46-30 corporation.
46-31 (9) "Subsidiary" means a domestic or foreign
46-32 corporation or other entity of which a majority of the outstanding
46-33 voting shares are owned, directly or indirectly, by an issuing
46-34 public corporation.
46-35 (10) "Voting share" means a share of capital stock of
46-36 a corporation entitled to vote generally in the election of
46-37 directors.
46-38 Art. 13.03. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
46-39 COMBINATIONS. A. An issuing public corporation shall not,
46-40 directly or indirectly, enter into or engage in a business
46-41 combination with an affiliated shareholder, or any affiliate or
46-42 associate of the affiliated shareholder, during the three-year
46-43 period immediately following the affiliated shareholder's share
46-44 acquisition date unless:
46-45 (1) the business combination or the purchase or
46-46 acquisition of shares made by the affiliated shareholder on the
46-47 affiliated shareholder's share acquisition date is approved by the
46-48 board of directors of the issuing public corporation before the
46-49 affiliated shareholder's share acquisition date; or
46-50 (2) the business combination is approved, by the
46-51 affirmative vote of the holders of at least two-thirds of the
46-52 outstanding voting shares of the issuing public corporation not
46-53 beneficially owned by the affiliated shareholder or an affiliate or
46-54 associate of the affiliated shareholder, at a meeting of
46-55 shareholders and not by written consent, duly called for that
46-56 purpose not less than six months after the affiliated shareholder's
46-57 share acquisition date.
46-58 Art. 13.04. APPLICATION. A. Article 13.03 of this Act does
46-59 not apply to:
46-60 (1) a business combination of an issuing public
46-61 corporation:
46-62 (a) the original articles of incorporation or
46-63 original bylaws of which contain a provision expressly electing not
46-64 to be governed by this part;
46-65 (b) that adopts an amendment to its articles of
46-66 incorporation or bylaws before December 31, 1997, expressly
46-67 electing not to be governed by this part; or
46-68 (c) that after December 31, 1997, adopts an
46-69 amendment to its articles of incorporation or bylaws, approved by
47-1 the affirmative vote of the shareholders, other than affiliated
47-2 shareholders and their affiliates and associates, of at least
47-3 two-thirds of the outstanding voting shares of the issuing public
47-4 corporation, expressly electing not to be governed by this part,
47-5 except that the amendment to the articles of incorporation or
47-6 bylaws takes effect 18 months after the date of the vote and does
47-7 not apply to a business combination of the issuing public
47-8 corporation with an affiliated shareholder whose share acquisition
47-9 date is on or before the effective date of the amendment;
47-10 (2) a business combination of an issuing public
47-11 corporation with an affiliated shareholder that became an
47-12 affiliated shareholder inadvertently, if the affiliated
47-13 shareholder:
47-14 (a) as soon as practicable divests itself of a
47-15 sufficient number of the voting shares of the issuing public
47-16 corporation so that it no longer is the beneficial owner, directly
47-17 or indirectly, of 20 percent or more of the outstanding voting
47-18 shares of the issuing public corporation; and
47-19 (b) would not at any time within the three-year
47-20 period preceding the announcement date of the business combination
47-21 have been an affiliated shareholder but for the inadvertent
47-22 acquisition;
47-23 (3) a business combination with an affiliated
47-24 shareholder that was the beneficial owner of 20 percent or more of
47-25 the outstanding voting shares of the issuing public corporation on
47-26 December 31, 1996, and continuously until the announcement date of
47-27 the business combination;
47-28 (4) a business combination with an affiliated
47-29 shareholder who became an affiliated shareholder through a transfer
47-30 of shares of the issuing public corporation by will or intestate
47-31 succession and continuously was such an affiliated shareholder
47-32 until the announcement date of the business combination; or
47-33 (5) a business combination of an issuing public
47-34 corporation with a domestic wholly owned subsidiary if the domestic
47-35 subsidiary is not an affiliate or associate of the affiliated
47-36 shareholder other than by reason of the affiliated shareholder's
47-37 beneficial ownership of voting shares in the issuing public
47-38 corporation.
47-39 Art. 13.05. NO EFFECT ON OTHER ACTIONS. A. This part does
47-40 not affect, directly or indirectly, the validity of another action
47-41 by the board of directors of an issuing public corporation, nor
47-42 does it preclude the board of directors from taking other action in
47-43 accordance with law, nor does the board of directors incur
47-44 liability for elections made or not made under this part.
47-45 Art. 13.06. DUTIES OF DIRECTOR. A. In discharging the
47-46 duties of director under this Act or otherwise, a director, in
47-47 considering the best interests of the corporation, may consider the
47-48 long-term as well as the short-term interests of the corporation
47-49 and its shareholders, including the possibility that those
47-50 interests may be best served by the continued independence of the
47-51 corporation.
47-52 Art. 13.07. RELATIONSHIP WITH OTHER PARTS OF ACT. A. If a
47-53 provision of this part conflicts with another provision of this
47-54 Act, the provision of this part controls.
47-55 B. The affirmative vote or concurrence of shareholders
47-56 required for approval of an action required or permitted to be
47-57 submitted for shareholder vote may be increased, but not decreased,
47-58 under Article 2.28 of this Act.
47-59 Art. 13.08. SEVERABILITY. A. If any provision or clause of
47-60 this part or application thereof to any person or circumstance is
47-61 held invalid, such invalidity shall not affect other provisions or
47-62 applications of this part that can be given effect without the
47-63 invalid provision or application and without being inconsistent
47-64 with the intent of this part, and to this end the provisions of
47-65 this part are declared to be severable.
47-66 SECTION 48. Article 2.06, Texas Miscellaneous Corporation
47-67 Laws Act (Article 1302-2.06, Vernon's Texas Civil Statutes), is
47-68 amended to read as follows:
47-69 Art. 2.06. CONSIDERATION FOR INDEBTEDNESS; GUARANTIES.
48-1 A. A corporation may incur indebtedness for such consideration as
48-2 it may deem appropriate, including, without limitation, cash, real
48-3 property, personal property, intangible property, contracts to
48-4 receive real, personal, or intangible property, debt and other
48-5 obligations of [No corporation shall create any indebtedness
48-6 whatever except for money paid, labor done, which is reasonably
48-7 worth at least the sum at which it was taken by] the corporation or
48-8 any other domestic or foreign corporation, person, or other entity,
48-9 services performed, contracts for services to be performed, debt or
48-10 equity securities of [by a corporation of which all of the
48-11 outstanding shares of each class are owned by the corporation, or
48-12 property actually received, reasonably worth at least the sum at
48-13 which it was taken by] the corporation or of any other domestic or
48-14 foreign corporation, person, or other entity, and any direct or
48-15 indirect benefit realized by the corporation. Such consideration
48-16 may be received either directly or indirectly, including by direct
48-17 or indirect wholly owned or partially owned domestic or foreign
48-18 corporations or other entities. In addition, a corporation may
48-19 issue and incur indebtedness without the receipt of any
48-20 consideration by reason of the authorization or payment of a
48-21 distribution [by a corporation of which all of the outstanding
48-22 shares of each class are owned by the corporation, subject to the
48-23 provisions of Sections B, C, and D of this Article]. In the
48-24 absence of fraud in the transaction, the judgment of the Board of
48-25 Directors or the shareholders, as the case may be, as to the value,
48-26 type, and sufficiency of the consideration received for any such
48-27 indebtedness shall be conclusive.
48-28 B. Any [Notwithstanding Section A of this Article, any]
48-29 corporation shall have the power and authority to make a guaranty
48-30 if the guaranty reasonably may be expected to benefit, directly or
48-31 indirectly, the guarantor corporation. For purposes of this
48-32 section [and Section C of this Article], "guaranty" means a
48-33 guaranty, mortgage, pledge, security agreement, or other agreement
48-34 making the guarantor corporation or its assets responsible
48-35 respecting the contracts, securities, or other obligations of any
48-36 person (including, but not limited to, any domestic or foreign
48-37 corporation, person, or other entity [partnership, association,
48-38 joint venture, trust], or any officer, director, or employee of
48-39 such guarantor corporation). The decision of, or a decision made
48-40 pursuant to authority granted by, the Board of Directors that the
48-41 guaranty may reasonably be expected to benefit, directly or
48-42 indirectly, the guarantor corporation shall be binding upon the
48-43 guarantor corporation, and no guaranty made by a corporation in
48-44 accordance with the provisions of this Section B shall be invalid
48-45 or unenforceable as against such corporation, unless such guaranty
48-46 is sought to be enforced by a person who participated in a fraud on
48-47 the guarantor corporation resulting in the making of the guaranty
48-48 or by a person who had notice of such fraud before he acquired his
48-49 rights under the guaranty. Nothing herein contained shall prevent
48-50 a suit (1) prior to the making of a guaranty by a corporation, by a
48-51 shareholder in a representative suit against the guarantor
48-52 corporation, to enjoin the making of such guaranty on the ground
48-53 that such guaranty could not reasonably be expected to benefit,
48-54 directly or indirectly, the guarantor corporation, or (2) after the
48-55 making of a guaranty by a corporation, by the guarantor
48-56 corporation, whether acting directly or through a receiver,
48-57 trustee, or other legal representative or through a shareholder in
48-58 a representative suit, against the directors who voted for or
48-59 assented to the making of such guaranty for damages or other
48-60 appropriate relief on the ground that such guaranty could not
48-61 reasonably have been expected to benefit, directly or indirectly,
48-62 the guarantor corporation, but such directors shall be entitled to
48-63 assert any defenses which they may have under law.
48-64 C. A guaranty will be considered to benefit a guarantor
48-65 corporation for purposes of Section B of this Article if the
48-66 guaranty is of a contract, security, or other obligation of a
48-67 subsidiary or an affiliated corporation or other entity [In
48-68 addition to the power and authority granted in Section B of this
48-69 Article, any corporation has the power and authority to make a
49-1 guaranty respecting any subsidiary, parent, or affiliated
49-2 corporation if the action is approved by, or pursuant to authority
49-3 granted by, the Board of Directors of the guarantor corporation].
49-4 For the purposes of this section only:
49-5 (1) "subsidiary [corporation]" means a domestic or
49-6 foreign corporation or other entity, 50 [100] percent or more of
49-7 the [whose] outstanding voting interests or other ownership
49-8 interest of which is [shares are] owned at the time of the action:
49-9 (a) by the guarantor corporation itself;
49-10 (b) by one or more of the guarantor
49-11 corporation's subsidiaries [subsidiary corporations]; or
49-12 (c) by the guarantor corporation and one or more
49-13 of its subsidiaries [subsidiary corporations];
49-14 (2) "parent [corporation]" means a domestic or foreign
49-15 corporation or other entity that at the time of the action owns 50
49-16 [100] percent or more of the outstanding voting interests or other
49-17 ownership interest [shares] of the guarantor corporation:
49-18 (a) by itself;
49-19 (b) through one or more of its subsidiaries
49-20 [subsidiary corporations]; or
49-21 (c) with one or more of its subsidiaries
49-22 [subsidiary corporations]; and
49-23 (3) "affiliated corporation or other entity" means a
49-24 domestic or foreign corporation or other entity, 50 [100] percent
49-25 or more of the [whose] outstanding shares or other ownership
49-26 interest of which is [are] owned at the time of the action:
49-27 (a) by the parent [corporation] of the guarantor
49-28 corporation;
49-29 (b) by one or more of the parent's subsidiaries
49-30 [parent corporation's subsidiary corporations]; or
49-31 (c) by the parent [corporation] and one or more
49-32 of its subsidiaries [subsidiary corporations].
49-33 D. [The limitations set forth in Section A of this Article
49-34 shall not apply to indebtedness of a corporation that is incurred
49-35 by reason of the authorization or payment of a dividend or other
49-36 distribution.]
49-37 [E.] Nothing contained in [Section B, C, or D of] this
49-38 Article is intended or shall be construed to limit or deny to any
49-39 corporation the right or power to do or perform any act which it is
49-40 or may be empowered or authorized to do or perform under any other
49-41 laws of the State of Texas now in force or hereafter enacted.
49-42 Provided, however, Sections B and[,] C[, and D] of this Article
49-43 shall not apply to nor enlarge the powers of any corporation that
49-44 does business pursuant to any provision of the Insurance Code of
49-45 Texas, whether licensed in Texas or not, nor shall those sections
49-46 allow or permit any corporation, not licensed under the Insurance
49-47 Code of Texas, to engage in any character, type, class, or kind of
49-48 fidelity, surety, or guaranty business or transaction subject to
49-49 regulation under the Insurance Code.
49-50 SECTION 49. Article 7.07, Texas Miscellaneous Corporation
49-51 Laws Act (Article 1302-7.07, Vernon's Texas Civil Statutes), is
49-52 amended to read as follows:
49-53 Art. 7.07. ELECTRONIC FILINGS AND [OF] REPRODUCTIONS.
49-54 A. If permitted by the rules of the Secretary of State, any
49-55 instrument required or authorized to be filed with the Secretary of
49-56 State under this Act or under any provision of the Texas Business
49-57 Corporation Act, the Texas Non-Profit Corporation Act, the Texas
49-58 Limited Liability Company Act, or any special statute of this State
49-59 pertaining to a particular type of corporation or entity to which
49-60 the general corporate laws are applicable, may be transmitted for
49-61 filing electronically. If the instrument conforms to law and the
49-62 rules promulgated by the Secretary of State, the Secretary shall
49-63 file the instrument by acceptance into the filing system adopted by
49-64 the Secretary and assigning to the instrument a date of filing. An
49-65 electronic acknowledgment or certification of the filing, as
49-66 applicable, shall be provided by the Secretary of State to the
49-67 corporation or entity or its representative. The Secretary of
49-68 State may promulgate rules and adopt practices and procedures for
49-69 the transmission, filing, and retention of instruments filed
50-1 electronically or by use of other technological means.
50-2 B. Any original instrument required or authorized to be
50-3 filed with the Secretary of State under any provision of the Texas
50-4 Business Corporation Act, the Texas Non-Profit Corporation Act, the
50-5 Texas Limited Liability Company Act or any special Statute of this
50-6 State pertaining to a particular type of corporation or entity to
50-7 which the general corporate laws are applicable, may be a
50-8 photographic, photostatic, facsimile, or similar reproduction of a
50-9 signed instrument. [Any signature on any instrument required or
50-10 authorized to be filed with the Secretary of State may be a
50-11 facsimile.]
50-12 C. For purposes of this article, any signature on any
50-13 instrument required or authorized to be filed with the Secretary of
50-14 State may be a facsimile, the mark made by a person unable to
50-15 write, in an electronic format permitted by the rules of the
50-16 Secretary of State, or any symbol executed or adopted by a person
50-17 with the intent to authenticate a writing.
50-18 D. This article does not require any instrument authorized
50-19 or required to be filed with the Secretary of State under any
50-20 provision of the Texas Business Corporation Act, the Texas
50-21 Non-Profit Corporation Act, the Texas Limited Liability Company
50-22 Act, or any special Statute of this State pertaining to a
50-23 particular type of corporation or entity to which the general
50-24 corporate laws are applicable or any certificate issued by the
50-25 Secretary of State concerning any such instrument to be on paper or
50-26 reduced to printed form.
50-27 E. All electronic acknowledgments and certificates required
50-28 to be issued by the Secretary of State under this Act, or under any
50-29 provision of the Texas Business Corporation Act, the Texas
50-30 Non-Profit Corporation Act, the Texas Limited Liability Act, or any
50-31 special Statute of this State pertaining to a particular type of
50-32 corporation or entity to which the general corporate laws are
50-33 applicable, shall be considered issued or provided by the Secretary
50-34 of State on the initial transmission by the Secretary of State of
50-35 the acknowledgment or certificate required to be issued.
50-36 SECTION 50. Part Seven, Texas Miscellaneous Corporation Laws
50-37 Act (Article 1302-7.01 et seq., Vernon's Texas Civil Statutes), is
50-38 amended by adding Article 7.08 to read as follows:
50-39 Art. 7.08. DUTIES OF THE SECRETARY OF STATE; FAILURE TO
50-40 PROVIDE ACKNOWLEDGMENT COPY. The Secretary of State shall not fail
50-41 to approve the filing of any instrument required or authorized to
50-42 be filed in duplicate with the Secretary of State under this Act or
50-43 under any provision of the Texas Business Corporation Act, the
50-44 Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
50-45 Vernon's Texas Civil Statutes), the Texas Limited Liability Company
50-46 Act (Article 1528n, Vernon's Texas Civil Statutes), or any special
50-47 statute of this state pertaining to a particular type of
50-48 corporation or entity to which the general corporate laws are
50-49 applicable, solely for the failure to provide a duplicate copy of
50-50 the instrument to be filed. If the Secretary of State finds that
50-51 such instrument otherwise conforms to law, the Secretary of State
50-52 shall return to the person submitting the instrument or to the
50-53 person's designated representative any certificate required to be
50-54 issued by the Secretary of State without affixing a file-stamped
50-55 copy of the instrument to which the certificate relates.
50-56 SECTION 51. SUBSECTION (A), Section 9, Texas Professional
50-57 Association Act (Article 1528f, Vernon's Texas Civil Statutes), is
50-58 amended to read as follows:
50-59 (A) Board or committee. A professional association
50-60 organized pursuant to the provisions of this Act shall be governed
50-61 by, and the business and affairs of a professional association
50-62 shall be managed under the direction of, a Board of Directors or an
50-63 Executive Committee elected by the members, and represented by
50-64 officers elected by the Board of Directors or Executive Committee,
50-65 so that centralization of management will be assured.
50-66 SECTION 52. Section A, Article 1.02, Texas Limited Liability
50-67 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
50-68 amended by amending Subsection (4) and adding Subsections (11)
50-69 through (14) to read as follows:
51-1 (4) "Person" includes an individual, corporation,
51-2 business trust, estate, trust, custodian, trustee, executor,
51-3 administrator, nominee, partnership, registered limited liability
51-4 partnership, limited partnership, association, limited liability
51-5 company, government, governmental subdivision, governmental agency,
51-6 governmental instrumentality, and any other legal or commercial
51-7 entity, in its own or representative capacity. Any of the
51-8 foregoing entities may be formed under the laws of this state or
51-9 any other jurisdiction [partnership, limited partnership, limited
51-10 liability company, foreign limited liability company, trust,
51-11 estate, corporation, custodian, trustee, executor, administrator,
51-12 nominee or entity in a representative capacity].
51-13 (11) "Conversion" means:
51-14 (a) the continuance of a domestic limited
51-15 liability company as, and in the organizational form of, a foreign
51-16 limited liability company or other entity; or
51-17 (b) the continuance of a foreign limited
51-18 liability company or other entity as, and in the organizational
51-19 form of, a domestic limited liability company.
51-20 (12) "Converted entity" means any domestic or foreign
51-21 limited liability company or other entity to which a converting
51-22 entity has converted or intends to convert as permitted by Article
51-23 10.08 of this Act.
51-24 (13) "Converting entity" means any domestic or foreign
51-25 limited liability company or other entity that has converted or
51-26 intends to convert as permitted by Article 10.08 of this Act.
51-27 (14) "Other entity" means any entity, whether
51-28 organized for profit or not, that is a corporation, limited or
51-29 general partnership, limited liability company (other than a
51-30 domestic or foreign limited liability company), real estate
51-31 investment trust, joint venture, joint stock company, cooperative,
51-32 association, bank, trust, insurance company, or other legal entity
51-33 organized pursuant to the laws of this state or any other state or
51-34 country.
51-35 SECTION 53. Article 2.09, Texas Limited Liability Company
51-36 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
51-37 read as follows:
51-38 Art. 2.09. REGULATIONS OF LIMITED LIABILITY COMPANY.
51-39 A. The members of a limited liability company have the power to
51-40 adopt, alter, amend, or repeal the regulations of a limited
51-41 liability company [shall be vested in the members of the company
51-42 unless vested in whole or part in the manager or managers of the
51-43 company by the articles of organization or regulations]. The
51-44 articles of organization or regulations may provide that the
51-45 manager or managers also have the power to adopt, alter, amend, or
51-46 repeal the regulations, in whole or in part. Regulations [adopted
51-47 by the members or by the managers may be repealed or altered; new
51-48 regulations may be adopted by the members; and regulations] may
51-49 provide that they may not, in whole or specified part, be altered,
51-50 amended, or repealed by the managers. The regulations may contain
51-51 any provisions for the regulation and management of the affairs of
51-52 the limited liability company not inconsistent with law or the
51-53 articles of organization. [Unless otherwise provided in the
51-54 articles of organization, the initial regulations of the limited
51-55 liability company shall be adopted by the manager or managers named
51-56 in the articles of organization, if any, or by the member or
51-57 members named in the articles of organization, if any.] Any
51-58 provision of this Act subject to variation or modification by the
51-59 regulations of a limited liability company is also subject to
51-60 variation or modification by the articles of organization of the
51-61 limited liability company.
51-62 B. Unless otherwise provided in the articles of organization
51-63 or regulations, adoption, alteration, amendment, or repeal of the
51-64 regulations of a limited liability company requires the affirmative
51-65 vote, approval, or consent of all the members or, if the manager or
51-66 managers have the power to adopt, alter, amend, or repeal the
51-67 regulations of a limited liability company, the affirmative vote,
51-68 approval, or consent of all the managers.
51-69 C. Unless otherwise provided in the articles of organization
52-1 or regulations adopted with the affirmative vote, approval, or
52-2 consent needed to approve an action listed in Section D, G, or H,
52-3 Article 2.23, of this Act, no regulation that effects an action
52-4 listed in Section D, G, or H, Article 2.23, of this Act may be
52-5 indirectly effected through the adoption, alteration, amendment, or
52-6 repeal of regulations of a limited liability company without the
52-7 affirmative vote, approval, or consent required by Section D, G, or
52-8 H, Article 2.23, of this Act.
52-9 SECTION 54. Article 2.13, Texas Limited Liability Company
52-10 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
52-11 read as follows:
52-12 Art. 2.13. NUMBER AND ELECTION OF MANAGERS. A. The
52-13 managers of a limited liability company, if any, shall consist of
52-14 one or more persons. The number of managers shall be fixed by, or
52-15 in the manner provided in, the regulations, except as to the number
52-16 constituting the initial managers, which number shall be fixed by
52-17 the articles of organization. The number of managers may be
52-18 increased or decreased from time to time by amendment to, or in the
52-19 manner provided in, the regulations, but, unless provided otherwise
52-20 in the articles of organization or the regulations, no decrease
52-21 shall have the effect of shortening the term of any incumbent
52-22 manager. In the absence of a regulation fixing the number of
52-23 managers or providing for the manner in which the number of
52-24 managers shall be fixed, the number of managers shall be the same
52-25 as the number constituting the initial managers. The names and
52-26 addresses of the initial managers, if any, shall be stated in the
52-27 articles of organization. Unless otherwise provided in the
52-28 regulations or in any resolution of the managers or members
52-29 appointing that manager in accordance with the regulations or
52-30 articles of organization, each manager shall hold office for the
52-31 term for which elected, if any term is specified, and until that
52-32 manager's successor has been elected, or until that manager's
52-33 earlier death, resignation, or removal. The regulations may
52-34 provide for the time or times at which the members entitled to vote
52-35 in the election of managers shall elect managers and the term for
52-36 which the managers shall hold office. The regulations may provide
52-37 that any class or group of members shall be entitled to elect one
52-38 or more managers, who shall hold office for such terms as shall be
52-39 stated in the regulations. The regulations may provide that at any
52-40 meeting of members called expressly for that purpose any managers
52-41 may be removed, with or without cause, as provided therein;
52-42 however, if any class or group of members is entitled to elect one
52-43 or more managers by the provisions of the regulations, only the
52-44 members of that class or group shall be entitled to vote for or
52-45 against the removal of any managers elected by the members of that
52-46 class or group.
52-47 SECTION 55. Sections A and B, Article 2.15, Texas Limited
52-48 Liability Company Act (Article 1528n, Vernon's Texas Civil
52-49 Statutes), are amended to read as follows:
52-50 A. Unless otherwise provided in the articles of organization
52-51 or the regulations, any [Any] vacancy occurring in the managers may
52-52 be filled in accordance with Section B of this Article or may be
52-53 filled by the affirmative vote of a majority of the remaining
52-54 managers though less than a quorum of the managers. Unless
52-55 otherwise provided in the articles of organization or the
52-56 regulations, a [A] manager elected to fill a vacancy shall be
52-57 elected for the unexpired term of the predecessor in office.
52-58 B. Unless otherwise provided in the articles of organization
52-59 or the regulations, any [Any] vacancy occurring in the managers to
52-60 be filled by reason of an increase in the number of managers may be
52-61 filled by election at an annual or special meeting of members
52-62 called for that purpose.
52-63 SECTION 56. Article 2.17, Texas Limited Liability Company
52-64 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
52-65 read as follows:
52-66 Art. 2.17. INTERESTED MANAGERS. A. Unless otherwise
52-67 provided in the articles of organization or the regulations, an
52-68 otherwise valid [No] contract or transaction between a limited
52-69 liability company and one or more of its managers or officers, or
53-1 between a limited liability company and any other domestic or
53-2 foreign limited liability company[, corporation, partnership,
53-3 association,] or other entity [organization] in which one or more
53-4 of its managers or officers are managers, directors or officers or
53-5 have a financial interest, shall be valid notwithstanding [void or
53-6 voidable solely for this reason, solely because] the manager or
53-7 officer is present at or participates in the meeting of managers or
53-8 of a committee of managers which authorizes the contract or
53-9 transaction, or solely because such manager's or managers' votes
53-10 are counted for such purpose, if any of the following is satisfied:
53-11 (1) The material facts as to the relationship or
53-12 interest and as to the contract or transaction are disclosed or are
53-13 known to the managers or the committee, and the managers or
53-14 committee in good faith authorizes the contract or transaction by
53-15 the affirmative vote of a majority of the disinterested managers,
53-16 even though the disinterested managers be less than a quorum; or
53-17 (2) The material facts as to the relationship or
53-18 interest and as to the contract or transaction are disclosed or are
53-19 known to the members entitled to vote thereon, and the contract or
53-20 transaction is specifically approved in good faith by vote of the
53-21 members; or
53-22 (3) The contract or transaction is fair as to the
53-23 limited liability company as of the time it is authorized,
53-24 approved, or ratified by the managers, a committee thereof, or the
53-25 members.
53-26 B. Unless otherwise provided in the articles of organization
53-27 or the regulations, common [Common] or interested managers may be
53-28 counted in determining the presence of a quorum at a meeting of the
53-29 managers or of a committee which authorizes the contract or
53-30 transaction.
53-31 SECTION 57. Article 2.19, Texas Limited Liability Company
53-32 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
53-33 read as follows:
53-34 Art. 2.19. PLACE AND NOTICE OF MANAGERS' MEETINGS.
53-35 A. Except as otherwise provided in the articles of organization or
53-36 the regulations, regular or special meetings [Meetings] of the
53-37 members, managers, or any committee [regular or special,] may be
53-38 held either within or without this State.
53-39 B. Regular meetings of the managers or committees may be
53-40 held with or without notice as prescribed in the regulations.
53-41 Special meetings of the managers or committees shall be held upon
53-42 such notice as is prescribed in the regulations.
53-43 C. Except as otherwise provided in the articles of
53-44 organization or the regulations, if the limited liability company
53-45 is without managers, regular meetings of members may be held with
53-46 or without notice as prescribed in the regulations and special
53-47 meetings of members may be held with or without notice as
53-48 prescribed in the regulations, unless any such meeting is to
53-49 consider any of those matters set forth in Section D, Article 2.23,
53-50 of this Act. Except as otherwise provided in the articles of
53-51 organization or the regulations, for any meeting of the members at
53-52 which any of the matters set forth in Section D, Article 2.23, of
53-53 this Act are to be considered, written or printed notice stating
53-54 the place, day, and hour of the meeting and describing the purpose
53-55 or purposes of such meeting shall be delivered to the members not
53-56 less than 10 or more than 60 days before the meeting, either
53-57 personally or by mail.
53-58 D. Except as otherwise provided in the articles of
53-59 organization or the regulations, if the limited liability company
53-60 has managers, meetings of members shall be held on written or
53-61 printed notice, stating the place, day, and hour of the meeting
53-62 and, in the case of a special meeting, the purpose or purposes for
53-63 which the meeting is called, which notice shall be delivered to the
53-64 members not less than 10 or more than 60 days before the meeting,
53-65 either personally or by mail.
53-66 E. If mailed, such notice to a member shall be deemed to be
53-67 delivered when deposited in the United States mail addressed to the
53-68 member at the member's address that appears on the records of the
53-69 limited liability company, with postage prepaid.
54-1 F. Attendance of a member, manager, or committee member at a
54-2 meeting shall constitute a waiver of notice of such meeting, except
54-3 where that member, [a] manager, or committee member attends a
54-4 meeting for the express purpose of objecting to the transaction of
54-5 any business on the ground that the meeting is not lawfully called
54-6 or convened.
54-7 G. The articles of organization and regulations may contain
54-8 provisions relating to giving notice of the time, place, or purpose
54-9 of a meeting at which a matter is to be voted on by any members or
54-10 managers, waiver of notice, action by consent without a meeting,
54-11 the establishment of a record date, quorum requirements, voting in
54-12 person or by proxy, or any other matter relating to the exercise of
54-13 the right to vote. [Neither the business to be transacted at, nor
54-14 the purpose of, any regular or special meeting of the managers need
54-15 be specified in the notice or waiver of notice of such meeting,
54-16 unless required by the regulations.]
54-17 SECTION 58. Article 2.20, Texas Limited Liability Company
54-18 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
54-19 read as follows:
54-20 Art. 2.20. INDEMNIFICATION. A. Subject to such standards
54-21 and restrictions, if any, as are set forth in its articles of
54-22 organization or in its regulations, a [A] limited liability company
54-23 shall have power to indemnify members and managers, officers,
54-24 [employees, agents] and other persons and purchase and maintain
54-25 liability insurance for such persons [others to the same extent a
54-26 corporation may indemnify directors, employees, agents and others
54-27 under the TBCA and shall, to the extent indemnification is required
54-28 under the TBCA for directors, employees, agents and others,
54-29 indemnify managers, officers, employees, agents and others to the
54-30 same extent].
54-31 B. To the extent that at law or in equity, a member,
54-32 manager, officer, or other person has duties (including fiduciary
54-33 duties) and liabilities relating thereto to a limited liability
54-34 company or to another member or manager, such duties and
54-35 liabilities may be expanded or restricted by provisions in the
54-36 regulations.
54-37 SECTION 59. Sections A and B, Article 2.22, Texas Limited
54-38 Liability Company Act (Article 1528n, Vernon's Texas Civil
54-39 Statutes), are amended to read as follows:
54-40 A. A domestic limited liability company shall keep and
54-41 maintain the following records in its principal office in the
54-42 United States or make them available in that office within five
54-43 days after the date of receipt of a written request under Section E
54-44 of this Article:
54-45 (1) a current list that states:
54-46 (a) the name and mailing address of each member;
54-47 (b) the percentage or other interest in the
54-48 limited liability company owned by each member; and
54-49 (c) if one or more classes or groups are
54-50 established in or under the articles of organization or
54-51 regulations, the names of the members who are members of each
54-52 specified class or group;
54-53 (2) copies of the federal, state, and local
54-54 information or income tax returns for each of the limited liability
54-55 company's six most recent tax years;
54-56 (3) a copy of the articles of organization and, if the
54-57 regulations of the limited liability company are in writing, a copy
54-58 of the regulations, copies of all amendments or restatements of the
54-59 articles of organization or regulations, executed copies of any
54-60 powers of attorney, and copies of any document that creates, in the
54-61 manner provided by the articles of organization or regulations,
54-62 classes or groups of members;
54-63 (4) unless contained in the articles of organization
54-64 or regulations, a written statement of:
54-65 (a) the amount of the cash contribution and a
54-66 description and statement of the agreed value of any other
54-67 contribution made by each member, and the amount of the cash
54-68 contribution and a description and statement of the agreed value of
54-69 any other contribution that the member has agreed to make in the
55-1 future as an additional contribution;
55-2 (b) the times at which additional contributions
55-3 are to be made or events requiring additional contributions to be
55-4 made;
55-5 (c) events requiring the limited liability
55-6 company to be dissolved and its affairs wound up; and
55-7 (d) the date on which each member in the limited
55-8 liability company became a member; and
55-9 (5) correct and complete books and records of account
55-10 of the limited liability company.
55-11 B. A limited liability company shall maintain such [its]
55-12 records in written form or in another form capable of conversion
55-13 into written form within a reasonable time.
55-14 SECTION 60. Article 2.23, Texas Limited Liability Company
55-15 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
55-16 amending Sections A and D and adding Sections G and H to read as
55-17 follows:
55-18 A. Except as otherwise provided in this Act [Article], in
55-19 the articles of organization, or in the regulations, a majority of
55-20 the members, managers, or members of any committee constitutes a
55-21 quorum for the transaction of business at any meeting of the
55-22 members, the managers, or the committee. Except as otherwise
55-23 provided in the articles of organization or the regulations, an
55-24 [An] act of a majority of the members entitled to vote, the
55-25 managers, or the members of a committee, who are present at a
55-26 meeting of the members, the managers, or the committee at which a
55-27 quorum is present is the act of the members, the managers, or the
55-28 committee. Except as otherwise provided in the articles of
55-29 organization or the regulations, any member may vote either in
55-30 person or by proxy executed in writing by the member.
55-31 D. Except as provided in the articles of organization or the
55-32 regulations, the affirmative vote, approval, or consent of a
55-33 majority of all the members is required to:
55-34 (1) [amend the articles of organization or
55-35 regulations;]
55-36 [(2)] change the status of the limited liability
55-37 company from one in which management is reserved to the members to
55-38 one in which management is vested in one or more managers, or vice
55-39 versa;
55-40 (2) [(3)] issue any additional membership interests in
55-41 the limited liability company subsequent to the issuance of
55-42 membership interests to the initial members of the limited
55-43 liability company;
55-44 (3) [(4)] approve any merger, consolidation, share or
55-45 interest exchange, or other transaction authorized by or subject to
55-46 the provisions of Part Ten of this Act;
55-47 (4) [(5)] voluntarily cause the dissolution of the
55-48 limited liability company;
55-49 (5) [(6)] authorize any transaction, agreement, or
55-50 action on behalf of the limited liability company that is unrelated
55-51 to its purpose as set forth in the regulations or articles of
55-52 organization or that otherwise contravenes the regulations; or
55-53 (6) [(7)] authorize any act that would make it
55-54 impossible to carry on the ordinary business of the limited
55-55 liability company.
55-56 G. Except as provided in the articles of organization or the
55-57 regulations, if no capital has been paid into the limited liability
55-58 company, a majority of the managers named in the articles of
55-59 organization may amend the articles of organization or dissolve the
55-60 limited liability company or if the management has been reserved to
55-61 the members, a majority of the members named in the articles of
55-62 organization may amend the articles of organization or dissolve the
55-63 limited liability company. In such event, the persons adopting
55-64 such amendments to the articles of organization or authorizing such
55-65 dissolution shall sign and file with the Secretary of State the
55-66 articles of amendment provided for in Articles 3.06 and 3.07 of
55-67 this Act and the articles of dissolution provided for in Articles
55-68 6.05, 6.07, and 6.08 of this Act, as appropriate.
55-69 H. Except as provided in the articles of organization or the
56-1 regulations, if any capital has been paid into the limited
56-2 liability company, the affirmative vote, approval, or consent of
56-3 all members is required to amend the articles of organization.
56-4 SECTION 61. Section A, Article 3.02, Texas Limited Liability
56-5 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
56-6 amended to read as follows:
56-7 A. The initial Articles of Organization shall set forth:
56-8 (1) The name of the limited liability company;
56-9 (2) The period of duration, which may be perpetual;
56-10 (3) The purpose for which the limited liability
56-11 company is organized which may be stated to be, or to include, the
56-12 transaction of any or all lawful business for which limited
56-13 liability companies may be organized under this Act;
56-14 (4) The address of its initial registered office and
56-15 the name of its initial registered agent at that address;
56-16 (5) If the limited liability company is to have a
56-17 manager or managers, a statement to that effect and the names and
56-18 the addresses of the initial manager or managers, or if[. If] the
56-19 limited liability company will not have managers, a statement to
56-20 that effect and the names [name] and the addresses of the initial
56-21 members;
56-22 (6) The name and the address of each organizer, unless
56-23 the limited liability company is being organized pursuant to a plan
56-24 of conversion or a plan of merger, in which case the articles need
56-25 not include such information;
56-26 (7) Any provision required by Part Eleven of this Act,
56-27 if the limited liability company is a professional limited
56-28 liability company; [and]
56-29 (8) If the limited liability company is being
56-30 organized pursuant to a plan of conversion or a plan of merger, a
56-31 statement to that effect, and in the case of a plan of conversion,
56-32 the name, address, prior form of organization, date of
56-33 incorporation, formation, or organization, and jurisdiction of
56-34 incorporation, formation, or organization of the converting entity;
56-35 and
56-36 (9) Any other provisions, not inconsistent with law,
56-37 that [which] the members elect to set out in the articles of
56-38 organization for the regulation of the internal affairs of the
56-39 limited liability company, including any provisions that [which]
56-40 under this Act are permitted to be set out in the regulations of
56-41 the limited liability company.
56-42 SECTION 62. Article 3.03, Texas Limited Liability Company
56-43 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended by
56-44 amending Section A and adding Section C to read as follows:
56-45 A. Except as provided by Section C of this Article, the
56-46 [The] original and a copy of the articles of organization shall be
56-47 delivered to the Secretary of State. If the Secretary of State
56-48 finds that the articles of organization conform to law, the
56-49 Secretary of State shall, when all fees have been paid as required
56-50 by law:
56-51 (1) Endorse on the original and the copy the word
56-52 "filed," and the month, day, and year of the filing thereof.
56-53 (2) File the original in the office of the Secretary
56-54 of State.
56-55 (3) Issue a certificate of organization to which shall
56-56 be affixed the copy.
56-57 C. In the case of a new domestic limited liability company
56-58 being organized pursuant to a plan of conversion or a plan of
56-59 merger pursuant to Part Ten of this Act, the articles of
56-60 organization of the limited liability company shall be filed with
56-61 the Secretary of State with the articles of conversion or merger
56-62 and need not be filed separately pursuant to Section A of this
56-63 Article. If the Secretary of State finds that the articles of
56-64 organization conform to the law, the Secretary of State shall file
56-65 the articles of organization in the office of the Secretary of
56-66 State and issue a certificate of organization, to which the
56-67 Secretary of State shall affix a copy of the articles of
56-68 organization, and deliver the same to the party or parties filing
56-69 the articles of conversion or merger or their representatives with
57-1 the certificate of conversion or merger that is issued in
57-2 connection with the conversion or merger. In the case of a
57-3 conversion or a merger, the certificate of organization of a
57-4 domestic limited liability company that is a converted entity or
57-5 that is to be created pursuant to the plan of merger shall become
57-6 effective on the effectiveness of the conversion or the merger, as
57-7 the case may be.
57-8 SECTION 63. Article 3.04, Texas Limited Liability Company
57-9 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
57-10 read as follows:
57-11 Art. 3.04. EFFECT OF THE ISSUANCE OF CERTIFICATE OF
57-12 ORGANIZATION. A. Except as provided by Section B of this Article,
57-13 on [Upon] the issuance of the certificate of organization, the
57-14 limited liability company's [company] existence shall begin[, and
57-15 such certificate of organization shall be conclusive evidence that
57-16 all conditions precedents required to be performed by the
57-17 organizers have been complied with and that the limited liability
57-18 company has been organized under this Act, except as against the
57-19 state in proceedings for involuntary dissolution].
57-20 B. In the case of a new domestic limited liability company
57-21 being organized pursuant to a plan of conversion or a plan of
57-22 merger pursuant to Part Ten of this Act, the existence of the
57-23 limited liability company as such shall begin on the effectiveness
57-24 of the conversion or the merger, as the case may be.
57-25 C. On the issuance of the certificate of organization or the
57-26 effectiveness of the merger or conversion, the certificate of
57-27 organization shall be conclusive evidence that all conditions
57-28 precedent required to be performed for the valid organization of
57-29 the limited liability company have been complied with and that the
57-30 limited liability company has been duly organized under this Act,
57-31 except as against the state in a proceeding for involuntary
57-32 dissolution.
57-33 SECTION 64. Article 3.06, Texas Limited Liability Company
57-34 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
57-35 read as follows:
57-36 Art. 3.06. ARTICLES OF AMENDMENT. A. The articles of
57-37 amendment shall be executed on behalf of the limited liability
57-38 company by an authorized manager or member, or in the case of an
57-39 amendment of the articles of organization by action of a majority
57-40 of the initial managers or of a majority of the initial members as
57-41 provided in Section 2.23 of this Act, by a majority of the initial
57-42 managers or a majority of the initial members as provided in
57-43 Section 2.23 of this Act.
57-44 B. The articles of amendment shall set forth:
57-45 (1) The name of the limited liability company.
57-46 (2) If the amendment alters any provision of the
57-47 original or amended articles of organization an identification by
57-48 reference or description of the altered provision and a statement
57-49 of its text as it is amended to read. If the amendment is an
57-50 addition to the original or amended articles of organization a
57-51 statement of that fact and the text of each provision added.
57-52 (3) A statement that the amendment was approved in
57-53 accordance with Section D or G of Article 2.23 of this Act or as
57-54 otherwise provided in the articles of organization or regulations
57-55 and the date of the approval.
57-56 SECTION 65. Article 5.01, Texas Limited Liability Company
57-57 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
57-58 read as follows:
57-59 Art. 5.01. FORM OF CONTRIBUTION. A. The contribution of a
57-60 member may consist of any tangible or intangible benefit to the
57-61 limited liability company or other property of any kind or nature,
57-62 including [be in] cash, [property, or services rendered, or] a
57-63 promissory note, services performed, a contract for services to be
57-64 performed, or other interests in or securities or other obligations
57-65 of any other [or other obligation to pay cash or transfer property
57-66 to the] limited liability company, domestic or foreign, or other
57-67 entity.
57-68 SECTION 66. Section D, Article 5.02, Texas Limited Liability
57-69 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
58-1 amended to read as follows:
58-2 D. Unless otherwise provided by the regulations, the
58-3 obligation of a member or a member's legal representative or
58-4 successor to make a contribution or otherwise pay cash or transfer
58-5 property or to return cash or property paid or distributed to the
58-6 member in violation of this Act or the regulations may be
58-7 compromised or released only by consent of all of the members.
58-8 Notwithstanding the compromise or release, a creditor of a limited
58-9 liability company who extends credit or otherwise acts in
58-10 reasonable reliance on that obligation, after the member signs a
58-11 writing that reflects the obligation and before the writing is
58-12 amended or canceled to reflect the compromise or release, may
58-13 enforce the original obligation. A conditional obligation may not
58-14 be enforced unless the conditions of the obligation have been
58-15 satisfied or waived as to or by the applicable member. Conditional
58-16 obligations include contributions payable on a discretionary call
58-17 of a limited liability company, prior to the time the call occurs.
58-18 SECTION 67. Article 5.08, Texas Limited Liability Company
58-19 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
58-20 read as follows:
58-21 Art. 5.08. RIGHT TO DISTRIBUTION. A. Subject to Articles
58-22 5.09 and 6.04 of this act, at the time that a member becomes
58-23 entitled to receive a distribution, with respect to the [a]
58-24 distribution, that member has the status of and is entitled to all
58-25 remedies available to a creditor of the limited liability company.
58-26 SECTION 68. Section A, Article 6.01, Texas Limited Liability
58-27 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
58-28 amended to read as follows:
58-29 A. Except as provided by Section B of this Article, a
58-30 limited liability company shall be dissolved on the first of the
58-31 following to occur:
58-32 (1) the period, if any, fixed for the duration of the
58-33 limited liability company expires;
58-34 (2) the occurrence of events specified in the articles
58-35 of organization or regulations to cause dissolution;
58-36 (3) the action of the members to dissolve the limited
58-37 liability company;
58-38 (4) if no capital has been paid into the limited
58-39 liability company, the act of a majority of [the organizer or] the
58-40 managers or members named in the articles of organization [of the
58-41 limited company] to dissolve the limited liability company;
58-42 (5) except as otherwise provided in the regulations,
58-43 upon the death, expulsion, withdrawal pursuant to or as provided in
58-44 the articles of organization or regulations, bankruptcy, or
58-45 dissolution of a member or the occurrence of any other event which
58-46 terminates the continued membership of a member in the limited
58-47 liability company; or
58-48 (6) entry of a decree of judicial dissolution under
58-49 Section 6.02 of this Act.
58-50 SECTION 69. Article 6.04, Texas Limited Liability Company
58-51 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
58-52 read as follows:
58-53 Art. 6.04. TRANSFER OF ASSETS. A. On the winding up of a
58-54 limited liability company, its assets shall be paid or transferred
58-55 as follows:
58-56 (1) To the extent otherwise permitted by law, to
58-57 creditors, including members who are creditors in satisfaction of
58-58 liabilities (other than for distributions) of the limited liability
58-59 company, whether by payment or by establishment of reserves;
58-60 (2) Unless otherwise provided by the articles of
58-61 organization or regulations, to members and former members in
58-62 satisfaction of the company's liability for distributions; and
58-63 (3) Unless otherwise provided by the articles of
58-64 organization or regulations, to members in the manner provided in
58-65 Article 6.05 [5.04].
58-66 SECTION 70. Section A, Article 6.08, Texas Limited Liability
58-67 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
58-68 amended to read as follows:
58-69 A. The original and a copy of such articles of dissolution,
59-1 along with a certificate from the comptroller that all franchise
59-2 taxes have been paid, shall be delivered to the Secretary of State.
59-3 If the Secretary of State finds that such articles of dissolution
59-4 conform to law, the Secretary of State shall, when the appropriate
59-5 filing fee is paid as required by law:
59-6 (1) Endorse on the original and copy the word "Filed,"
59-7 and the month, day, and year of the filing thereof.
59-8 (2) File the original in the Secretary of State's
59-9 office.
59-10 (3) Issue a certificate of dissolution to which there
59-11 shall be affixed the copy.
59-12 SECTION 71. Section A, Article 7.10, Texas Limited Liability
59-13 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
59-14 amended to read as follows:
59-15 A. The original and a copy of such application for
59-16 withdrawal, along with a certificate from the comptroller that all
59-17 franchise taxes have been paid, shall be delivered to the Secretary
59-18 of State. If the Secretary of State finds that such application
59-19 conforms to the provisions of this Act, the Secretary of State
59-20 shall, when the appropriate filing fee is [all fees and any taxes
59-21 have been] paid as required by law:
59-22 (1) Endorse on the original and the copy the word
59-23 "Filed," and the month, day, and year of the filing thereof.
59-24 (2) File the original in the Secretary of State's
59-25 office.
59-26 (3) Issue a certificate of withdrawal to which there
59-27 shall be affixed the copy.
59-28 SECTION 72. Section E, Article 7.11, Texas Limited Liability
59-29 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
59-30 amended to read as follows:
59-31 E. Any foreign limited liability company whose certificate
59-32 of authority has been revoked by the Secretary of State under the
59-33 provisions of Section B of this article may be reinstated by the
59-34 Secretary of State at any time within a period of 24 [12] months
59-35 from the date of revocation [dissolution], upon approval of an
59-36 application for reinstatement signed by a manager or member of the
59-37 foreign limited liability company. Such application shall be filed
59-38 by the Secretary of State whenever it is established to the
59-39 Secretary of State's satisfaction that in fact there was no cause
59-40 for the revocation, or whenever the neglect, omission or
59-41 delinquency resulting in revocation has been corrected and payment
59-42 made of all fees, taxes, penalties and interest due thereon which
59-43 accrued before the revocation plus an amount equal to the total
59-44 taxes from the date of revocation to the date of reinstatement
59-45 which would have been payable had the foreign limited liability
59-46 company certificate not been revoked. A reinstatement filing fee
59-47 of $50 shall accompany the application for reinstatement.
59-48 Reinstatement shall not be authorized if the foreign limited
59-49 liability company name is the same as or deceptively similar to a
59-50 foreign limited liability company, corporation or limited
59-51 partnership name already on file or reserved or registered, unless
59-52 the foreign limited liability company being reinstated
59-53 contemporaneously amends its certificate of authority to change its
59-54 name.
59-55 When the application for reinstatement is approved and filed
59-56 by the Secretary of State, the foreign limited liability company's
59-57 [company] authority to do business in Texas shall be deemed to have
59-58 continued without interruption from the date of revocation, except
59-59 that reinstatement shall have no effect upon any issue of personal
59-60 liability of the manager or member, or agents of the foreign
59-61 limited liability company during the period between revocation and
59-62 reinstatement.
59-63 SECTION 73. Section B, Article 7.13, Texas Limited Liability
59-64 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
59-65 amended to read as follows:
59-66 B. The failure of a foreign limited liability company to
59-67 obtain a certificate of authority to transact business in this
59-68 State shall not impair the validity of any contract or act of such
59-69 foreign limited liability company, shall not cause any member or
60-1 manager of such foreign limited liability company to become liable
60-2 for the debts, obligations, or liabilities of such foreign limited
60-3 liability company, and shall not prevent such foreign limited
60-4 liability company from defending any action, suit or proceeding in
60-5 any court of this State.
60-6 SECTION 74. Sections B and C, Article 8.12, Texas Limited
60-7 Liability Company Act (Article 1528n, Vernon's Texas Civil
60-8 Statutes), are amended to read as follows:
60-9 B. Subject to Section C of this Article, Articles 2.03
60-10 through 2.06, 2.09, 2.09A, 3.01, [and] 7.01 through 7.05, and 7.07,
60-11 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
60-12 seq., Vernon's Texas Civil Statutes), as amended, apply to a
60-13 limited liability company and its members, managers, and officers.
60-14 C. For purposes of the application of the articles of the
60-15 TBCA and the Texas Miscellaneous Corporation Laws Act as provided
60-16 by Sections A and B of this Article, as context requires:
60-17 (1) a reference to a corporation includes a limited
60-18 liability company;
60-19 (2) a reference to a share includes a membership
60-20 interest;
60-21 (3) a reference to a shareholder includes a member;
60-22 (4) a reference to a director includes a manager or,
60-23 to the extent that the management of the limited liability company
60-24 is reserved in whole or in part to the members, a member who
60-25 manages the limited liability company;
60-26 (5) a reference to articles of incorporation includes
60-27 articles of organization; and
60-28 (6) a reference to bylaws includes regulations.
60-29 SECTION 75. Section A, Article 9.01, Texas Limited Liability
60-30 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
60-31 amended to read as follows:
60-32 A. The Secretary of State is authorized and required to
60-33 collect for the use of the State the following fees:
60-34 (1) Filing articles of organization of a domestic
60-35 limited liability company and issuing the certificate of
60-36 organization, Two Hundred Dollars ($200.00).
60-37 (2) Filing articles of amendment of a domestic limited
60-38 liability company and issuing the certificate of amendment, One
60-39 Hundred Dollars ($100.00).
60-40 (3) Filing articles of merger or articles of
60-41 conversion involving one or more domestic or foreign limited
60-42 liability companies,[:]
60-43 [(a)] Two Hundred Dollars ($200.00), provided that any other
60-44 filing fee paid under the corporation, partnership, or other entity
60-45 statutes of this State for the filing of articles of merger or
60-46 articles of conversion with respect to entities organized under
60-47 those statutes shall be credited against the filing fee provided by
60-48 this subsection [if another type of domestic entity is not a party
60-49 to the merger; or]
60-50 [(b) the greater of Two Hundred Dollars ($200.00) or the
60-51 highest filing fee for articles of merger under the applicable
60-52 Texas statute under which the other domestic entity or entities are
60-53 incorporated or organized, if another type of domestic entity is
60-54 party to the merger].
60-55 (4) Filing an application of a foreign limited
60-56 liability company for certificate of authority to transact business
60-57 in this state and issuing such a certificate of authority, Five
60-58 Hundred Dollars ($500.00).
60-59 (5) Filing an application of a foreign limited
60-60 liability company for an amended certificate of authority to
60-61 transact business in this state and issuing such an amended
60-62 certificate of authority, One Hundred Dollars ($100.00).
60-63 (6) Filing restated articles of organization of a
60-64 domestic limited liability company, Two Hundred Dollars ($200.00).
60-65 (7) Filing application for reservations of a limited
60-66 liability company name and issuing certificate thereof, Twenty-Five
60-67 Dollars ($25.00).
60-68 (8) Filing notice of transfer of reserved limited
60-69 liability company name and issuing a certificate therefor, Ten
61-1 Dollars ($10.00).
61-2 (9) Filing statement of change of registered office or
61-3 registered agent, or both, Ten Dollars ($10.00).
61-4 (10) Filing statement of change of address of
61-5 registered agent, Ten Dollars ($10.00); provided, however, that the
61-6 maximum fee for simultaneous filings by a registered agent for more
61-7 than one limited liability company shall not exceed Five Hundred
61-8 Dollars ($500.00).
61-9 (11) Filing articles of dissolution and issuing
61-10 certificate therefor, Twenty-Five Dollars ($25.00).
61-11 (12) Filing application for withdrawal and issuing
61-12 certificate therefor, Ten Dollars ($10.00).
61-13 (13) Filing certificate from home state that foreign
61-14 limited liability company is no longer existent in said state, Ten
61-15 Dollars ($10.00).
61-16 (14) Maintaining the record of service of any process,
61-17 notice or demand upon the Secretary of State as agent for foreign
61-18 and domestic limited liability companies, Twenty-Five Dollars
61-19 ($25.00).
61-20 (15) Filing any instrument pursuant to this act not
61-21 expressly provided for above, Ten Dollars ($10.00).
61-22 (16) Filing an application for reinstatement of the
61-23 limited liability company charter or certificate of authority
61-24 following forfeiture under the Tax Code, Seventy-Five Dollars
61-25 ($75.00).
61-26 SECTION 76. Subsection (1), Section A, Article 9.03, Texas
61-27 Limited Liability Company Act (Article 1528n, Vernon's Texas Civil
61-28 Statutes), is amended to read as follows:
61-29 (1) For purposes of this Article, "permitted act"
61-30 means a filing with the Secretary of State under this Act for:
61-31 (a) the articles of organization of a limited
61-32 liability company under this Act;
61-33 (b) an amendment to or restatement of the
61-34 articles of organization;
61-35 (c) a merger or conversion;
61-36 (d) the application of a foreign limited
61-37 liability company to procure a certificate of authority to transact
61-38 business in this state or to withdraw from doing business in this
61-39 state;
61-40 (e) an amendment to the certificate of authority
61-41 of a foreign limited liability company to transact business in this
61-42 state;
61-43 (f) a change in registered office or registered
61-44 agent;
61-45 (g) a change of address of a registered agent;
61-46 or
61-47 (h) a voluntary dissolution.
61-48 SECTION 77. Section F, Article 9.03, Texas Limited Liability
61-49 Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
61-50 amended to read as follows:
61-51 F. If articles of organization, articles of amendment or
61-52 restatement, articles of merger, articles of conversion, an
61-53 application, or any other document permitted to be filed pursuant
61-54 to this Act with the Secretary of State have been filed but the
61-55 event or transaction evidenced by the filing has not become
61-56 effective, the filing may be abandoned in accordance with the
61-57 agreement of the parties to the filing by filing a certificate of
61-58 abandonment with the Secretary of State before the effectiveness of
61-59 the event or transaction in accordance with the terms of the
61-60 document so filed. The certificate of abandonment must be signed
61-61 on behalf of each domestic or foreign limited liability company or
61-62 other entity that is a party to the event or transaction by a
61-63 member, manager, officer, or other authorized representative and
61-64 must state the nature of the filing to be abandoned, the date of
61-65 the filing to be abandoned, the parties to the filing to be
61-66 abandoned, and that the event or transaction has been abandoned in
61-67 accordance with the agreement of the parties. On the filing of the
61-68 certificate [statement] of abandonment with the Secretary of State,
61-69 the event or transaction evidenced by the original filing shall be
62-1 considered abandoned and may not become effective.
62-2 SECTION 78. Section B, Article 10.03, Texas Limited
62-3 Liability Company Act (Article 1528n, Vernon's Texas Civil
62-4 Statutes), is amended to read as follows:
62-5 B. The original of the articles of merger and a number of
62-6 copies equal to the number of surviving and new domestic or foreign
62-7 limited liability companies and other entities that are a party to
62-8 the plan of merger or that will be created by its terms shall be
62-9 delivered to the Secretary of State. Unless the Secretary of State
62-10 finds that the articles of merger do not conform to law, on receipt
62-11 of all applicable filing fees and franchise taxes, if any, required
62-12 by law or if the plan of merger provides that one or more of the
62-13 surviving, new, or acquiring domestic or foreign limited liability
62-14 companies or other entities will be responsible for the payment of
62-15 all of such fees and franchise taxes and that all of such
62-16 surviving, new, or acquiring domestic or foreign limited liability
62-17 companies and other entities will be obligated to pay such fees and
62-18 franchise taxes if the same are not timely paid, the Secretary of
62-19 State shall:
62-20 (1) certify that the articles of merger have been
62-21 filed in the Secretary of State's office by endorsing on the
62-22 original the word "Filed" and the date of the filing;
62-23 (2) file and index the endorsed articles of merger;
62-24 and
62-25 (3) issue a certificate of merger, together with a
62-26 copy of the articles affixed to the certificate, to each surviving
62-27 or new domestic or foreign limited liability company or other
62-28 entity that is a party to the plan of merger or that is created by
62-29 the merger, or to its respective representatives.
62-30 SECTION 79. Part Ten, Texas Limited Liability Act (Article
62-31 1528n, Vernon's Texas Civil Statutes), is amended by adding
62-32 Articles 10.08 through 10.11 to read as follows:
62-33 Art. 10.08. CONVERSION. A. A domestic limited liability
62-34 company may adopt a plan of conversion and convert to a foreign
62-35 limited liability company or any other entity if:
62-36 (1) the converting entity acts on and its members
62-37 approve a plan of conversion in the manner prescribed by Article
62-38 10.01 of this Act as if the conversion were a merger to which the
62-39 converting entity were a party and not the survivor;
62-40 (2) the conversion is permitted by, or not
62-41 inconsistent with, the laws of the state or country in which the
62-42 converted entity is to be incorporated, formed, or organized, and
62-43 the incorporation, formation, or organization of the converted
62-44 entity is effected in compliance with such laws;
62-45 (3) at the time the conversion becomes effective, each
62-46 member of the converting entity will, unless otherwise agreed to by
62-47 that member, own an equity interest or other ownership or security
62-48 interest in, and be a shareholder, partner, member, owner, or other
62-49 security holder of, the converted entity;
62-50 (4) no member of the domestic limited liability
62-51 company will, as a result of the conversion, become personally
62-52 liable, without the member's consent, for the liabilities or
62-53 obligations of the converted entity; and
62-54 (5) the converted entity shall be incorporated,
62-55 formed, or organized as part of or pursuant to the plan of
62-56 conversion.
62-57 B. Any foreign limited liability company or other entity may
62-58 adopt a plan of conversion and convert to a domestic limited
62-59 liability company if:
62-60 (1) the conversion is permitted by the laws of the
62-61 state or country in which the foreign limited liability company is
62-62 incorporated, formed, or organized, if a foreign limited liability
62-63 company is converting;
62-64 (2) the conversion is either permitted by the laws
62-65 under which the other entity is incorporated, formed, or organized
62-66 or by the constituent documents of the other entity that are not
62-67 inconsistent with the laws of the state or country in which the
62-68 other entity is incorporated, formed, or organized, if another
62-69 entity is converting; and
63-1 (3) the converting entity takes all action that may be
63-2 required by the laws of the state or country under which it is
63-3 incorporated, formed, or organized and by its constituent documents
63-4 to effect the conversion.
63-5 C. A plan of conversion shall set forth:
63-6 (1) the name of the converting entity and the
63-7 converted entity;
63-8 (2) a statement that the converting entity is
63-9 continuing its existence in the organizational form of the
63-10 converted entity;
63-11 (3) a statement as to the type of entity that the
63-12 converted entity is to be and the state or country under the laws
63-13 of which the converted entity is to be incorporated, formed, or
63-14 organized;
63-15 (4) the manner and basis of converting the membership
63-16 interests or other evidences of ownership of the converting entity
63-17 into membership interests or other evidences of ownership or
63-18 securities of the converted entity, or any combination thereof;
63-19 (5) in an attachment or exhibit, the articles of
63-20 organization of the domestic limited liability company, if the
63-21 converted entity is a domestic limited liability company; and
63-22 (6) in an attachment or exhibit, the articles of
63-23 organization or other organizational documents of the converted
63-24 entity, if the converted entity is not a domestic limited liability
63-25 company.
63-26 D. A plan of conversion may set forth such other provisions
63-27 relating to the conversion not inconsistent with law, including the
63-28 initial regulations of the converted entity.
63-29 Art. 10.09. ARTICLES OF CONVERSION. A. If a plan of
63-30 conversion has been approved in accordance with Article 10.08 of
63-31 this Act and has not been abandoned, articles of conversion shall
63-32 be executed by the converting entity by a manager (or, if none, by
63-33 a member) or other duly authorized representative thereof and shall
63-34 set forth:
63-35 (1) the plan of conversion or a statement certifying
63-36 the following:
63-37 (a) the name, the state of incorporation,
63-38 formation, or organization of the converting entity, and the
63-39 organizational form of the converting entity;
63-40 (b) that a plan of conversion has been approved;
63-41 (c) that an executed plan of conversion is on
63-42 file at the principal place of business of the converting entity,
63-43 stating the address thereof, and that an executed plan of
63-44 conversion will be on file, from and after the conversion, at the
63-45 principal place of business of the converted entity, stating the
63-46 address thereof; and
63-47 (d) that a copy of the plan of conversion will
63-48 be furnished by the converting entity (prior to the conversion) or
63-49 the converted entity (after the conversion), on written request and
63-50 without cost, to any shareholder, partner, or member of the
63-51 converting entity or the converted entity;
63-52 (2) a statement that the approval of the plan of
63-53 conversion was duly authorized by all action required by the laws
63-54 under which the converting entity was incorporated, formed, or
63-55 organized and by its constituent documents; and
63-56 (3) any other statements or information that may be
63-57 required by any law or rule to which the converting entity or
63-58 converted entity is subject or that the converting entity or the
63-59 converted entity chooses to include in the articles.
63-60 B. The original and one copy of the articles of conversion
63-61 shall be delivered to the Secretary of State. Two copies of the
63-62 articles of organization of the domestic limited liability company,
63-63 if the converted entity is a domestic limited liability company,
63-64 shall also be delivered to the Secretary of State with the articles
63-65 of conversion.
63-66 C. If the Secretary of State finds that the articles of
63-67 conversion conform to law, has received all filings required to be
63-68 received, and has issued all certificates required to be issued in
63-69 connection with the incorporation, formation, or organization of
64-1 the converted entity, if any, the Secretary of State shall, when
64-2 all fees and franchise taxes have been paid as required by law or
64-3 if the articles of conversion provide that the converted entity
64-4 will be liable for the payment of all such fees and franchise
64-5 taxes:
64-6 (1) Endorse on the original and each copy the word
64-7 "Filed" and the month, day, and year of the filing.
64-8 (2) File the original in the office of the Secretary
64-9 of State.
64-10 (3) Issue a certificate of conversion, together with a
64-11 copy of the articles affixed thereto, to the converted entity or
64-12 its representatives.
64-13 Art. 10.10. EFFECTIVE DATE OF CONVERSION. A. Except as
64-14 otherwise provided by Article 9.03 of this Act, on the issuance of
64-15 the certificate of conversion by the Secretary of State, the
64-16 conversion of a converting entity shall be effective.
64-17 Art. 10.11. EFFECT OF CONVERSION. A. When a conversion of
64-18 a converting entity takes effect:
64-19 (1) the converting entity shall continue to exist,
64-20 without interruption, but in the organizational form of the
64-21 converted entity rather than in its prior organizational form;
64-22 (2) all rights, title, and interests to all real
64-23 estate and other property owned by the converting entity shall
64-24 continue to be owned by the converted entity in its new
64-25 organizational form without reversion or impairment, without
64-26 further act or deed, and without any transfer or assignment having
64-27 occurred, but subject to any existing liens or other encumbrances
64-28 thereon;
64-29 (3) all liabilities and obligations of the converting
64-30 entity shall continue to be liabilities and obligations of the
64-31 converted entity in its new organizational form without impairment
64-32 or diminution by reason of the conversion;
64-33 (4) all rights of creditors or other parties with
64-34 respect to or against the prior interest holders or other owners of
64-35 the converting entity in their capacities as such in existence as
64-36 of the effective time of the conversion will continue in existence
64-37 as to those liabilities and obligations and may be pursued by such
64-38 creditors and obligees as if such conversion shall not have
64-39 occurred;
64-40 (5) a proceeding pending by or against the converting
64-41 entity or by or against any of the converting entity's interest
64-42 holders or owners in their capacities as such may be continued by
64-43 or against the converted entity in its new organizational form and
64-44 by or against the prior interest holders or owners, as the case may
64-45 be, without any need for substitution of parties;
64-46 (6) the membership interests and other evidences of
64-47 ownership in the converting entity that are to be converted into
64-48 membership interests, evidences of ownership, or other securities
64-49 in the converted entity as provided in the plan of conversion shall
64-50 be so converted, and if the converting entity is a domestic limited
64-51 liability company, the former holders of membership interests in
64-52 the domestic limited liability company shall be entitled only to
64-53 the rights provided in the plan of conversion;
64-54 (7) if, after the effectiveness of the conversion, a
64-55 shareholder, partner, member, or other owner of the converted
64-56 entity would be liable under applicable law, in such capacity, for
64-57 the debts or obligations of the converted entity, such shareholder,
64-58 partner, member, or other owner of the converted entity shall be
64-59 liable for the debts and obligations of the converting entity that
64-60 existed before the conversion takes effect only to the extent that
64-61 such shareholder, partner, member, or other owner:
64-62 (a) agreed in writing to be liable for such
64-63 debts or obligations;
64-64 (b) was liable under applicable law, prior to
64-65 the effectiveness of the conversion, for such debts or obligations;
64-66 or
64-67 (c) by becoming a shareholder, partner, member,
64-68 or other owner of the converted entity, becomes liable under
64-69 applicable law for existing debts and obligations of the converted
65-1 entity; and
65-2 (8) if the converted entity is a foreign limited
65-3 liability company or other entity, such converted entity shall be
65-4 deemed to appoint the Secretary of State in this state as its agent
65-5 for service of process in a proceeding to enforce any obligation or
65-6 the rights of dissenting members of the converting domestic limited
65-7 liability company.
65-8 SECTION 80. Section B, Article 11.01, Texas Limited
65-9 Liability Company Act (Article 1528n, Vernon's Texas Civil
65-10 Statutes), is amended by amending Subsection (2) and adding
65-11 Subsections (3) and (4) to read as follows:
65-12 (2) "Professional limited liability company" means a
65-13 limited liability company that is organized under this Act for the
65-14 sole and specific purpose of rendering professional service and
65-15 that has as its members only professional individuals or
65-16 professional entities [individuals licensed or otherwise authorized
65-17 within this state to render the same professional service as the
65-18 limited liability company].
65-19 (3) "Professional individual," with respect to any
65-20 professional limited liability company, means an individual who is
65-21 licensed or otherwise authorized to render the same professional
65-22 service as such professional limited liability company, either
65-23 within this state or in any other jurisdiction.
65-24 (4) "Professional entity," with respect to any
65-25 professional limited liability company, means a person (other than
65-26 an individual), whether organized for profit or not, including
65-27 corporations organized under the Texas Non-Profit Corporation Act
65-28 (Article 1396-1.01, Vernon's Texas Civil Statutes), and
65-29 unincorporated associations governed by the Texas Uniform
65-30 Unincorporated Nonprofit Association Act (Article 1396-70.01,
65-31 Vernon's Texas Civil Statutes), that renders the same professional
65-32 service as such professional limited liability company only through
65-33 partners, members, shareholders, managers, directors, associates,
65-34 officers, employees, or agents who are professional individuals or
65-35 professional entities.
65-36 SECTION 81. Article 11.03, Texas Limited Liability Company
65-37 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
65-38 read as follows:
65-39 Art. 11.03. RESTRICTIONS ON MEMBERS, MANAGERS, AND OFFICERS.
65-40 A. A person who is not a professional individual or professional
65-41 entity [licensed or otherwise authorized to render the professional
65-42 service of the professional limited liability company] may not be a
65-43 member, manager, or officer of the professional limited liability
65-44 company. A membership interest in the professional limited
65-45 liability company may not be transferred to a person who is not a
65-46 professional individual or professional entity [licensed or
65-47 otherwise authorized to render the professional service of the
65-48 professional limited liability company].
65-49 B. If a member, manager, or officer of a professional
65-50 limited liability company ceases to be a professional individual or
65-51 professional entity, [or an agent or employee of the company who
65-52 has been rendering professional service for or with the company of
65-53 the same type for which the professional limited liability company
65-54 was organized to render, becomes legally disqualified to render the
65-55 professional service,] the person shall sever all employment with
65-56 the professional limited liability company and immediately
65-57 terminate all financial interest in the company. The professional
65-58 limited liability company shall purchase or cause to be purchased
65-59 from the person all membership interests owned by the person in the
65-60 professional limited liability company, at a price and on terms as
65-61 may be provided in the articles of organization, the regulations,
65-62 or any applicable agreement among the members and the professional
65-63 limited liability company. If the person is the sole member of the
65-64 professional limited liability company, the person may continue to
65-65 act as member, manager, or officer only for the purposes of winding
65-66 up the affairs of the professional limited liability company and
65-67 effecting its dissolution, including selling the assets of or
65-68 outstanding membership interests in the professional limited
65-69 liability company, but not including rendering professional
66-1 service.
66-2 C. If a person who is not a professional individual or a
66-3 professional entity [licensed or authorized to render the
66-4 professional service that a professional limited liability company
66-5 was organized to render] succeeds to the interest of a member of
66-6 the professional limited liability company, the person holding the
66-7 interest shall immediately terminate all financial interest in the
66-8 professional limited liability company, and the professional
66-9 limited liability company shall purchase or cause to be purchased
66-10 from the person all membership interests owned by the person in the
66-11 professional limited liability company, at a price and on terms as
66-12 may be provided in the articles of organization, the regulations,
66-13 or any applicable agreement among the members and the professional
66-14 limited liability company. If the person succeeded to all of the
66-15 membership interests in the professional limited liability company,
66-16 the person may continue to act as member, manager, or officer only
66-17 for the purposes of winding up the affairs of the professional
66-18 limited liability company and effecting its dissolution, including
66-19 selling the assets of or the outstanding membership interests in
66-20 the professional limited liability company, but not including
66-21 rendering professional service.
66-22 SECTION 82. Section A, Article 11.04, Texas Limited
66-23 Liability Company Act (Article 1528n, Vernon's Texas Civil
66-24 Statutes), is amended to read as follows:
66-25 A. A professional limited liability company may render
66-26 professional service in this state only through a[:]
66-27 [(1) an individual] member, manager, officer,
66-28 employee, or agent who is:
66-29 (1) a professional individual licensed or otherwise
66-30 authorized to render the professional service in this state; or
66-31 (2) a professional entity that renders the
66-32 professional service in this state only through partners, members,
66-33 shareholders, managers, directors, associates, officers, employees,
66-34 or agents who are professional individuals or professional entities
66-35 licensed or otherwise authorized to render the professional service
66-36 in this state[; or]
66-37 [(2) an agent of the professional limited liability
66-38 company that is a professional limited liability company,
66-39 professional corporation, or professional association that is
66-40 authorized in this state to render the professional service of the
66-41 professional limited liability company and that renders the
66-42 professional service only through a licensed individual member,
66-43 manager, officer, or employee].
66-44 SECTION 83. Article 11.05, Texas Limited Liability Company
66-45 Act (Article 1528n, Vernon's Texas Civil Statutes), is amended to
66-46 read as follows:
66-47 Art. 11.05. PROFESSIONAL RELATIONSHIPS NOT AFFECTED.
66-48 A. Notwithstanding anything contained in Article 4.03 of this Act
66-49 to the contrary, this Act does not alter or affect the professional
66-50 relationship between a person rendering professional service and a
66-51 person receiving the service, and a confidential relationship
66-52 enjoyed in this state between those persons remains unchanged.
66-53 This Act does not remove or diminish any rights at law that a
66-54 person receiving professional service has against a person
66-55 rendering the service for an error, an omission, negligence,
66-56 incompetence, or malfeasance. A professional limited liability
66-57 company, but not the other [individual] members, managers, [or]
66-58 officers, employees, or agents of such professional limited
66-59 liability company (or their respective members, managers, officers,
66-60 employees, or agents), is jointly and severally liable with a
66-61 member, manager, officer, employee, or agent rendering professional
66-62 service for an error, omission, negligence, incompetence, or
66-63 malfeasance on the part of the member, manager, officer, employee,
66-64 or agent when the member, manager, officer, employee, or agent is
66-65 rendering professional service in the course of employment for the
66-66 professional limited liability company. If the member, manager,
66-67 officer, employee, or agent rendering such professional service in
66-68 such circumstances is itself a professional entity, then the
66-69 professional limited liability company and such professional entity
67-1 are jointly and severally liable with the partner, member,
67-2 shareholder, manager, director, associate, officer, employee, or
67-3 agent of such professional entity through which such professional
67-4 entity renders such professional service for an error, omission,
67-5 negligence, incompetence, or malfeasance on the part of such
67-6 partner, member, shareholder, manager, director, associate,
67-7 officer, employee, or agent of such professional entity.
67-8 SECTION 84. Section A, Article 11.07, Texas Limited
67-9 Liability Company Act (Article 1528n, Vernon's Texas Civil
67-10 Statutes), is amended to read as follows:
67-11 A. A foreign professional limited liability company may
67-12 apply for a certificate of authority to perform professional
67-13 service in this state by filing an application in accordance with
67-14 Part Seven of this Act. The Secretary of State may not issue the
67-15 certificate unless the name of the foreign professional limited
67-16 liability company or the name it [the limited liability company]
67-17 elects in this state meets the requirements of Article 11.02 of
67-18 this Act. A foreign professional limited liability company may
67-19 render professional service in this state only through a member,
67-20 manager, officer, employee, or agent described in Section A of
67-21 Article 11.04 of this Act [member, manager, officer, employee, or
67-22 agent of the limited liability company who renders professional
67-23 service in this state on behalf of the limited liability company
67-24 must be licensed or otherwise authorized to render that
67-25 professional service in this state].
67-26 SECTION 85. Section 1.03, Texas Revised Limited Partnership
67-27 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
67-28 read as follows:
67-29 Sec. 1.03. PARTNERSHIP NAME. Except as provided by Section
67-30 2.14(a)(3) of this Act, the name of a limited partnership as stated
67-31 in its certificate of limited partnership, a reserved or registered
67-32 name, or the name under which a foreign limited partnership is
67-33 permitted to register to do business in Texas as contained in its
67-34 application for registration as a foreign limited partnership must
67-35 contain the words "Limited Partnership," "Limited," or the
67-36 abbreviation "L.P." or "Ltd." as the last words or letters of its
67-37 name and may not:
67-38 (1) contain the name of a limited partner unless:
67-39 (A) that name is also the name of a general
67-40 partner; or
67-41 (B) the business of the limited partnership or
67-42 foreign limited partnership had been carried on under that name
67-43 before the admission of that limited partner;
67-44 (2) contain a word or phrase indicating or implying
67-45 that it is organized other than for a purpose stated in its
67-46 partnership agreement;
67-47 (3) be the same as or deceptively similar to the name
67-48 of a corporation, limited liability company, or limited partnership
67-49 that exists under the laws of Texas, that has a certificate of
67-50 authority to transact business as a foreign corporation or limited
67-51 liability company in Texas, or that is registered as a foreign
67-52 limited partnership in Texas, or a name that has been reserved or
67-53 registered for a corporation, limited liability company, limited
67-54 partnership, or foreign limited partnership under the laws of
67-55 Texas, except that a limited partnership or foreign limited
67-56 partnership may adopt, reserve, or register, as appropriate, a name
67-57 that is similar if written consent is obtained from the
67-58 corporation, limited liability company, limited partnership, or
67-59 foreign limited partnership having the name considered similar or
67-60 from the person for whom the name considered similar is reserved or
67-61 registered in the office of the secretary of state; or
67-62 (4) contain a word or phrase indicating or implying
67-63 that it is a corporation.
67-64 SECTION 86. Section 1.04, Texas Revised Limited Partnership
67-65 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
67-66 amending Subsection (b) and adding Subsection (c) to read as
67-67 follows:
67-68 (b) A specified name may be reserved by filing with the
67-69 secretary of state an application executed by the applicant or an
68-1 attorney or agent of the applicant, together with a duplicate copy
68-2 of the application, which need not be an executed original or a
68-3 photocopy of an executed original, and paying the applicable filing
68-4 fee. If the secretary of state finds that the name is available
68-5 for use by a domestic or foreign limited partnership, the secretary
68-6 of state shall reserve the name for the exclusive use of the
68-7 applicant for a period of 120 days. An applicant may reserve the
68-8 same name for one or more successive 120-day periods by filing a
68-9 new application and paying the applicable filing fee [before the
68-10 effective 120-day reservation period expires]. The right to the
68-11 exclusive use of a reserved name may be transferred to another
68-12 person by filing with the secretary of state a notice of the
68-13 transfer executed by the applicant for whom the name was reserved
68-14 that specifies the name and address of the transferee and paying
68-15 the applicable filing fee.
68-16 (c) A person for whom a specified limited partnership name
68-17 has been reserved pursuant to Subsection (b) of this section may,
68-18 during the period for which the name is reserved, terminate the
68-19 reservation by filing with the secretary of state an application
68-20 for cancellation of reservation of limited partnership name, and
68-21 paying the applicable fee.
68-22 SECTION 87. Section 2.01, Texas Revised Limited Partnership
68-23 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
68-24 read as follows:
68-25 Sec. 2.01. CERTIFICATE OF LIMITED PARTNERSHIP. (a) To form
68-26 a limited partnership, the partners must enter into a partnership
68-27 agreement (which, in the case of a limited partnership formed under
68-28 a plan of merger or a plan of conversion under Section 2.11 or 2.15
68-29 of this Act, may be included in the plan of merger or plan of
68-30 conversion) and one or more partners, including all of the general
68-31 partners, must execute a certificate of limited partnership. The
68-32 filing fee and the certificate shall be filed with the secretary of
68-33 state. The certificate must contain:
68-34 (1) the name of the limited partnership;
68-35 (2) the address of the registered office and the name
68-36 and address of the registered agent for service of process required
68-37 to be maintained by Section 1.06 of this Act;
68-38 (3) the address of the principal office in the United
68-39 States where records are to be kept or made available under Section
68-40 1.07 of this Act;
68-41 (4) the name, the mailing address, and the street
68-42 address of the business or residence of each general partner; [and]
68-43 (5) if the limited partnership is being formed
68-44 pursuant to a plan of merger or a plan of conversion under Section
68-45 2.11 or 2.15 of this Act, a statement to that effect;
68-46 (6) if the limited partnership is being formed
68-47 pursuant to a plan of conversion under Section 2.15 of this Act,
68-48 the name, the address, the date of formation, and the prior form of
68-49 organization and jurisdiction of incorporation or organization of
68-50 the converting entity; and
68-51 (7) other matters that the general partners determine
68-52 to include.
68-53 (b) Except in the case of a limited partnership formed under
68-54 a plan of merger or a plan of conversion under Section 2.11 or 2.15
68-55 of this Act, a [A] limited partnership is formed at the time of the
68-56 filing of the initial certificate of limited partnership with the
68-57 secretary of state or at a later date or time specified in the
68-58 certificate if there has been substantial compliance with the
68-59 requirements of this section. In the case of a limited partnership
68-60 being formed under a plan of merger or a plan of conversion under
68-61 Section 2.11 or 2.15 of this Act, the existence of the limited
68-62 partnership as a limited partnership begins on the effectiveness of
68-63 the merger or the conversion, as applicable, and the persons to be
68-64 partners shall become general or limited partners, as applicable,
68-65 as of that time.
68-66 SECTION 88. Subsections (a) and (c), Section 2.03, Texas
68-67 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
68-68 Civil Statutes), are amended to read as follows:
68-69 (a) A certificate of limited partnership shall be canceled
69-1 by paying the filing fee and filing a certificate of cancellation
69-2 with the secretary of state:
69-3 (1) on the completion of the winding up of the
69-4 partnership;
69-5 (2) when there are no limited partners; or
69-6 (3) subject to Subsection (c) of this section, on a
69-7 merger or conversion [consolidation] as provided by Subsection (b)
69-8 of Section 2.11 of this Act or Subsection (c) of Section 2.15 of
69-9 this Act.
69-10 (c) If, in the case of merger or conversion [consolidation],
69-11 one or more limited partnerships formed [or registered] under this
69-12 Act are not the surviving or resulting domestic limited partnership
69-13 or partnerships or other entity or entities, the certificate of
69-14 merger or conversion filed under Subsection (d) [(b)] of Section
69-15 2.11 or Subsection (e) of Section 2.15 of this Act is sufficient,
69-16 without a filing under this section, to cancel the certificate of
69-17 limited partnership of those nonsurviving limited partnerships.
69-18 SECTION 89. Subsection (a), Section 2.04, Texas Revised
69-19 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
69-20 Statutes), is amended to read as follows:
69-21 (a) Each certificate required by this article to be filed
69-22 with the secretary of state shall be executed in the following
69-23 manner:
69-24 (1) an initial certificate of limited partnership or a
69-25 certificate of conversion must be signed by all general partners,
69-26 except for an initial certificate of limited partnership [unless]
69-27 signed and filed by a person under Subdivision (1) of Subsection
69-28 (a) of Section 3.04 of this Act;
69-29 (2) a certificate of amendment or restated certificate
69-30 must be signed by at least one general partner and by each other
69-31 general partner designated in the certificate of amendment as a new
69-32 general partner, unless signed and filed by a person under
69-33 Subsection (f) of Section 2.02 of this Act or under Subdivision (1)
69-34 of Subsection (a) of Section 3.04 of this Act, but the certificate
69-35 of amendment need not be signed by a withdrawing general partner;
69-36 (3) a certificate of cancellation must be signed by
69-37 all general partners participating in the winding up of the limited
69-38 partnership's affairs or, if no general partners are winding up the
69-39 limited partnership's affairs, then by all non-partner liquidators,
69-40 or, if the limited partners are winding up the limited
69-41 partnership's affairs, by a majority in interest of the limited
69-42 partners;
69-43 (4) a certificate of merger filed on behalf of a
69-44 domestic limited partnership must be signed as provided in
69-45 Subsection (d), Section 2.11 of this Act;
69-46 (5) a certificate filed under Section 2.06 of this Act
69-47 must be signed by the person designated by the court; and
69-48 (6) a certificate of correction must be signed by at
69-49 least one general partner.
69-50 SECTION 90. Subsections (a) through (d), Section 2.06, Texas
69-51 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
69-52 Civil Statutes), are amended to read as follows:
69-53 (a) Notwithstanding any other provisions of this Act to the
69-54 contrary, to carry out a plan of reorganization ordered or decreed
69-55 by a court of competent jurisdiction under federal statute, a
69-56 domestic limited partnership being reorganized under a federal
69-57 statute may without action by or notice to its partners:
69-58 (1) amend or restate its certificate if the
69-59 certificate after amendment or restatement contains only provisions
69-60 of the type required or permitted in the certificate;
69-61 (2) merge or engage in a conversion or an interest
69-62 exchange with one or more other domestic or foreign limited
69-63 partnerships or other entities pursuant to this Act;
69-64 (3) sell, lease, exchange or otherwise dispose of all
69-65 or substantially all, of its property and assets; or
69-66 (4) cancel its certificate on completion of winding up
69-67 of the limited partnership.
69-68 (b) The individual or individuals designated by the court,
69-69 on behalf of a limited partnership that is being reorganized, may
70-1 execute:
70-2 (1) an amendment or restatement of the certificate
70-3 containing:
70-4 (A) the name of the limited partnership;
70-5 (B) the text of each amendment or restatement
70-6 approved by the court;
70-7 (C) the date of the court's order or decree
70-8 approving the amendment or restatement; [and]
70-9 (D) the court, file name, and case number of the
70-10 reorganization case [proceeding] in which the order or decree was
70-11 entered; and
70-12 (E) a statement that the court had jurisdiction
70-13 of the case under a federal statute; [or]
70-14 (2) a certificate of merger containing:
70-15 (A) the name of the limited partnership;
70-16 (B) the information required by Subsection (b)
70-17 of Section 2.11 of this Act;
70-18 (C) the date of the court's order or decree
70-19 approving the merger; [and]
70-20 (D) the court, file name, and case number of the
70-21 reorganization case [proceeding] in which the order or decree was
70-22 entered; and
70-23 (E) a statement that the court had jurisdiction
70-24 of the case under a federal statute; [or]
70-25 (3) a certificate of cancellation containing:
70-26 (A) the name of the limited partnership;
70-27 (B) the information required by Section 2.03 of
70-28 this Act and any other information permitted by Section 2.03 that
70-29 the court's order requires or permits to be included;
70-30 (C) the date of the court's order or decree
70-31 approving the certificate of cancellation; [and]
70-32 (D) the court, file name, and case number of the
70-33 reorganization case [proceeding] in which the order or decree was
70-34 entered; and
70-35 (E) a statement that the court had jurisdiction
70-36 of the case under a federal statute; or
70-37 (4) a certificate of conversion containing:
70-38 (A) the name of the limited partnership;
70-39 (B) the information required by Subsection (c)
70-40 of Section 2.15 of this Act;
70-41 (C) the date of the court's order or decree
70-42 approving the conversion;
70-43 (D) the court, file name, and case number of the
70-44 reorganization case in which the order or decree was entered; and
70-45 (E) a statement that the court had jurisdiction
70-46 of the case under a federal statute.
70-47 (c) If a domestic or foreign limited partnership that is not
70-48 being reorganized merges or engages in a conversion or an interest
70-49 exchange pursuant to a plan of reorganization with a domestic or
70-50 foreign limited partnership or other entity that is being
70-51 reorganized, Section 2.11 or 2.15 of this Act applies to the
70-52 domestic or foreign limited partnership or other entity that is not
70-53 being reorganized to the same extent that that section would apply
70-54 if the domestic or foreign limited partnership were merging with a
70-55 limited partnership that is not being reorganized except as
70-56 otherwise provided in the plan of reorganization ordered or decreed
70-57 by a court of competent jurisdiction under federal statute.
70-58 Subject to satisfaction of the requirements [the requirement] of
70-59 Section 2.11 or 2.15 of this Act and any other requirements of the
70-60 plan of merger, a certificate of merger or conversion shall be
70-61 signed on behalf of the entities that [which] are parties to the
70-62 merger or conversion and shall be filed with the secretary of state
70-63 [Secretary of State] as required by Section 2.11 or 2.15 of this
70-64 Act.
70-65 (d) On endorsement of the certificate by the secretary of
70-66 state under Section 2.07 of this Act, the certificate of amendment,
70-67 merger, conversion, or cancellation or restated certificate becomes
70-68 effective and has the same effect as if it had been adopted by
70-69 unanimous action of the general and the limited partners of the
71-1 limited partnership being reorganized except as otherwise provided
71-2 by this section or by the plan of reorganization ordered or decreed
71-3 by a court of competent jurisdiction under federal statute.
71-4 SECTION 91. Section 2.07, Texas Revised Limited Partnership
71-5 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
71-6 adding Subsection (c) to read as follows:
71-7 (c) Notwithstanding the provisions of Subsection (a) of this
71-8 section, the secretary of state shall not provide a filed stamped
71-9 duplicate acknowledgment copy of any document required or
71-10 authorized to be filed with the secretary of state that is
71-11 delivered to the secretary of state without a duplicate copy of the
71-12 document attached. If the secretary of state finds that the
71-13 document otherwise conforms to law, the original shall be filed and
71-14 indexed in the manner provided by Subsection (a) of this section
71-15 and a letter acknowledging the filing shall be sent to the person
71-16 who filed the document or to the person's designated
71-17 representative.
71-18 SECTION 92. Subsection (a), Section 2.08, Texas Revised
71-19 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
71-20 Statutes), is amended to read as follows:
71-21 (a) If a certificate of limited partnership or a certificate
71-22 of amendment, merger, or cancellation contains a materially false
71-23 statement, [or] fails to state any material fact required to be
71-24 included in the certificate by this Act, or is forged or signed by
71-25 a person not authorized by the limited partnership to execute the
71-26 certificate, a person who did not authorize the certificate or
71-27 other document that purports to have been authorized or a person
71-28 who suffers loss by reasonable reliance on the statement or from an
71-29 omission may recover damages arising from the filing of the false,
71-30 forged, or unauthorized certificate [for the loss] from:
71-31 (1) any partner or other person who executed the
71-32 certificate and knew or, in the case of a general partner, should
71-33 have known of the forgery, lack of authorization, or false
71-34 statement or of the omission when the certificate was executed; and
71-35 (2) any general partner who after execution of the
71-36 certificate knows that any arrangement or other fact described in
71-37 the certificate is false in a material respect or has changed,
71-38 making the statement false in a material respect, or that the
71-39 certificate fails to state a material fact required to be included
71-40 in the certificate by this Act, if that general partner had
71-41 sufficient time to amend or cancel the certificate or to file a
71-42 petition for its amendment or cancellation before the statement was
71-43 reasonably relied on.
71-44 SECTION 93. Subsections (b), (d), (e), (g), and (h), Section
71-45 2.11, Texas Revised Limited Partnership Act (Article 6132a-1,
71-46 Vernon's Texas Civil Statutes), are amended to read as follows:
71-47 (b) A plan of merger must set forth:
71-48 (1) the name and state of domicile of each domestic or
71-49 foreign limited partnership or other entity that is a party to the
71-50 merger and the name of each domestic or foreign limited partnership
71-51 or other entity, if any, that shall survive the merger, which may
71-52 be one or more of the domestic or foreign limited partnerships or
71-53 other entities party to the merger, and the name and state of
71-54 domicile of each new domestic or foreign limited partnership or
71-55 other entity, if any, that may be created by the terms of the plan
71-56 of merger;
71-57 (2) the terms and conditions of the merger including,
71-58 if more than one domestic or foreign limited partnership or other
71-59 entity is to survive or to be created by the terms of the plan of
71-60 merger, (i) the manner and basis of allocating and vesting the real
71-61 estate and other property of each domestic or foreign limited
71-62 partnership and of each other entity that is a party to the merger
71-63 among one or more of the surviving or new domestic or foreign
71-64 limited partnerships and other entities, and (ii) the manner and
71-65 basis of allocating all liabilities and obligations of each
71-66 domestic or foreign limited partnership and other entity that is a
71-67 party to the merger (or making adequate provision for the payment
71-68 and discharge thereof) among one or more of the surviving or new
71-69 domestic or foreign limited partnerships and other entities;
72-1 (3) the manner and basis of converting any of the
72-2 partnership interests or other evidences of ownership of each
72-3 domestic or foreign limited partnership and other entity that is a
72-4 party to the merger into partnership interests, shares,
72-5 obligations, evidences of ownership, rights to purchase securities
72-6 or other securities of one or more of the surviving or new domestic
72-7 or foreign limited partnerships or other entities, into cash or
72-8 other property including shares, obligations, evidences of
72-9 ownership, rights to purchase securities or other securities of any
72-10 other person or entity or into any combination of the foregoing;
72-11 (4) as an exhibit or attachment, the certificate of
72-12 limited partnership of any new domestic limited partnership to be
72-13 created by the terms of the plan of merger; and
72-14 (5) the certificate of limited partnership or other
72-15 organizational documents of each other entity that is a party to
72-16 the merger and that is to be created by the terms of the plan of
72-17 merger.
72-18 (d) After a plan of merger has been approved by each of the
72-19 limited partnerships or other entities that is a party to the plan
72-20 of merger, a certificate of merger shall be executed on behalf of
72-21 each limited partnership or other entity by at least one general
72-22 partner of each domestic limited partnership that is a party to the
72-23 plan of merger and by a general partner, officer, agent or other
72-24 authorized representative of each other limited partnership or
72-25 other entity that is a party to the plan of merger and shall set
72-26 forth:
72-27 (1) the plan of merger or a statement certifying the
72-28 following:
72-29 (A) the name and the state of incorporation,
72-30 formation, or organization of each of the parties to the merger and
72-31 the organizational form of each new or surviving limited
72-32 partnership or other entity;
72-33 (B) that a plan of merger has been approved;
72-34 (C) any amendments or changes in the certificate
72-35 of limited partnership of each surviving domestic limited
72-36 partnership, or if no such amendments are desired to be effected by
72-37 the merger, a statement to that effect;
72-38 (D) the certificate of limited partnership of
72-39 each new domestic limited partnership to be formed under the plan
72-40 of merger;
72-41 (E) that an executed plan of merger is on file
72-42 at the principal place of business of each surviving or new
72-43 domestic or foreign limited partnership or other entity, stating
72-44 the address thereof;
72-45 (F) that a copy or summary of the plan of merger
72-46 has been or is being furnished to each partner in each domestic
72-47 limited partnership that is a party to the merger at least 20 days
72-48 before the merger is effective, unless waived by that partner, or
72-49 that the domestic limited partnership has complied with the
72-50 provisions of its partnership agreement regarding furnishing
72-51 partners copies or summaries of the plan of merger or notices
72-52 regarding the merger; and
72-53 (G) in the case of a merger with multiple
72-54 surviving domestic or foreign limited partnerships or other
72-55 entities, that a copy of the plan of merger will be furnished by
72-56 each new or surviving domestic or foreign limited partnership or
72-57 other entity, on written request and without cost, to any creditor
72-58 or obligee of the parties to the merger at the time of the merger
72-59 if the obligation is then outstanding; and
72-60 (2) as to each domestic or foreign limited partnership
72-61 or other entity that is a party to the plan of merger, a statement
72-62 that the plan of merger was duly authorized by all action required
72-63 by the laws under which it was formed or organized and by its
72-64 constituent documents.
72-65 (e) The original of the certificate of merger and such
72-66 number of copies of the certificate equal to the number of
72-67 surviving and new domestic or foreign limited partnerships and
72-68 other entities that are a party to the plan of merger or that will
72-69 be created by the terms thereof, shall be delivered to the
73-1 secretary of state. An equal number of copies of the certificate
73-2 of limited partnership of each domestic limited partnership that is
73-3 to be formed pursuant to the plan of merger shall also be delivered
73-4 to the secretary of state with the articles of merger. Unless the
73-5 secretary of state finds that a certificate of merger does not
73-6 conform to law, on receipt of all applicable filing fees and
73-7 franchise taxes, if any, required by law, or if the plan of merger
73-8 (or a statement provided in lieu thereof) provides that one or more
73-9 of the surviving or new domestic or foreign limited partnerships or
73-10 other entities will be responsible for the payment of all fees and
73-11 franchise taxes and that all of the surviving or new domestic or
73-12 foreign limited partnerships and other entities will be obligated
73-13 to pay the fees and franchise taxes if they are not timely paid,
73-14 the secretary of state shall certify that the certificate of merger
73-15 has been filed in the secretary of state's office by endorsing on
73-16 the original the word "Filed" and the date of the filing, file and
73-17 index the endorsed certificate of merger, and return the copy,
73-18 similarly endorsed, to each surviving or new domestic or foreign
73-19 limited partnership or other entity that is a party to the plan of
73-20 merger or that is created thereby, or its or their respective
73-21 representatives.
73-22 (g) When a merger takes effect:
73-23 (1) the separate existence of every domestic limited
73-24 partnership that is a party to the merger, except any surviving or
73-25 new domestic limited partnership, shall cease;
73-26 (2) all rights, title, and interests to all real
73-27 estate and other property owned by each domestic or foreign limited
73-28 partnership and by each other entity that is a party to the merger
73-29 shall be allocated to and vested in one or more of the surviving or
73-30 resulting entities as provided in the plan of merger without
73-31 reversion or impairment, without further act or deed, and without
73-32 any transfer or assignment having occurred, but subject to any
73-33 existing liens or other encumbrances thereon;
73-34 (3) all liabilities and obligations of each domestic
73-35 or foreign limited partnership and other entity that is a party to
73-36 the merger shall be allocated to one or more of the surviving or
73-37 new domestic or foreign limited partnerships and other entities in
73-38 the manner set forth in the plan of merger, and each surviving or
73-39 new domestic foreign limited partnership, and each surviving or new
73-40 other entity to which a liability or obligation shall have been
73-41 allocated pursuant to the plan of merger, shall be the primary
73-42 obligor therefor and, except as otherwise set forth in the plan of
73-43 merger or as otherwise provided by law or contract, no other party
73-44 to the merger, other than a surviving domestic or foreign limited
73-45 partnership or other entity liable thereon at the time of the
73-46 merger and no other new domestic or foreign limited partnership or
73-47 other entity created thereby, shall be liable therefor;
73-48 (4) a proceeding pending by or against any domestic or
73-49 foreign limited partnership or by or against any other entity that
73-50 is a party to the merger may be continued as if the merger did not
73-51 occur, or the surviving or new domestic or foreign limited
73-52 partnership or limited partnerships or the surviving or new other
73-53 entity or other entities to which the liability, obligation, asset
73-54 or right associated with such proceeding is allocated to and vested
73-55 in pursuant to the plan of merger may be substituted in the
73-56 proceeding;
73-57 (5) the certificate of limited partnership of each
73-58 surviving domestic limited partnership shall be amended to the
73-59 extent provided in the plan of merger;
73-60 (6) each new domestic limited partnership, the
73-61 certificate of limited partnership of which is set forth in the
73-62 plan of merger under Subdivision (4) of Subsection (b) of this
73-63 section, shall be formed as a limited partnership under this Act;
73-64 and each other entity to be formed or organized under the laws of
73-65 this State, the organizational documents of which are set forth in
73-66 the plan of merger, shall, upon an executed copy of the certificate
73-67 of merger being delivered to or filed with any required
73-68 governmental entity with which organizational documents of such
73-69 another entity are required to be delivered or filed, and upon
74-1 meeting such additional requirements, if any, of law for its
74-2 formation or organization, shall be formed or organized as provided
74-3 in the plan of merger; [and]
74-4 (7) the partnership interests of each domestic or
74-5 foreign limited partnership and the partnership interests, shares
74-6 or evidences of ownership in each other entity that is a party to
74-7 the merger that are to be converted or exchanged, in whole or in
74-8 part, into partnership interests, shares, obligations, evidences of
74-9 ownership, rights to purchase securities or other securities of one
74-10 or more of the surviving or new domestic or foreign limited
74-11 partnerships or other entities, into cash or other property,
74-12 including shares, obligations, evidences of ownership, rights to
74-13 purchase securities or other securities of any other person or
74-14 entity, or into any combination of the foregoing, shall be so
74-15 converted and exchanged and the former partners of each domestic
74-16 limited partnership that is a party to the merger shall be entitled
74-17 only to the rights provided in the plan of merger; [and]
74-18 (8) if the plan of merger shall fail to provide for
74-19 the allocation and vesting of the right, title, and interest in any
74-20 particular item of real estate or other property or for the
74-21 allocation of any liability or obligation of any party to the
74-22 merger, such item of real estate or other property shall be owned
74-23 in undivided interest by, or such liability or obligation shall be
74-24 a joint and several liability and obligation of, each of the
74-25 surviving and new domestic and foreign limited partnerships and
74-26 other entities, pro rata to the total number of surviving and new
74-27 domestic and foreign limited partnerships and other entities
74-28 resulting from the merger; and
74-29 (9) a partner of a domestic or foreign limited
74-30 partnership that is a party to a merger does not become personally
74-31 liable as a result of the merger for a liability or obligation of
74-32 another person that is a party to the merger unless the party
74-33 consents to becoming personally liable by action taken in
74-34 connection with the specific plan of merger approved by the
74-35 partner; and for purposes of determining the liability of partners
74-36 in a domestic limited partnership that is a party to the merger for
74-37 the debts and obligations of other parties to the merger in which
74-38 that partner otherwise was not or is not a partner or other owner
74-39 of an interest:
74-40 (A) a partner who remains in or enters a
74-41 domestic or foreign limited partnership or other entity that
74-42 survives a merger or that enters a domestic or foreign limited
74-43 partnership or other entity created by the terms of the plan of
74-44 merger shall be treated as an incoming partner in the new or
74-45 surviving partnership as of the effective date of the merger for
74-46 the purpose of determining the partner's liability for a debt or
74-47 obligation of the other partnership or other entities that are
74-48 parties to the merger and in which the partner was not associated;
74-49 and
74-50 (B) a partner in a domestic partnership that is
74-51 a party to the merger but that does not survive shall be treated as
74-52 a partner who withdrew from the nonsurviving domestic partnership
74-53 as of the effective date of the merger.
74-54 (h) One or more domestic or foreign limited partnerships or
74-55 other entities may adopt a plan of exchange by which a domestic or
74-56 foreign limited partnership or other [an] entity acquires all of
74-57 the outstanding partnership interests of one or more domestic
74-58 limited partnerships in exchange for cash, [and/or] securities, or
74-59 other property of the acquiring domestic or foreign limited
74-60 partnership or other entity, if:
74-61 (1) the partnership agreement of each domestic limited
74-62 partnership the partnership interests of which are to be acquired
74-63 pursuant to the plan of exchange contains provisions that authorize
74-64 the partnership interest exchange provided for in the plan of
74-65 exchange adopted by the limited partnership, and if one or more
74-66 foreign limited partnerships or other entities are to issue shares
74-67 or other interests as part of the plan of exchange, the issuance of
74-68 those shares or other interests is either permitted by the laws
74-69 under which that foreign limited partnership or other entity is
75-1 formed or not inconsistent with those laws;
75-2 (2) each domestic limited partnership the partnership
75-3 interests of which are to be acquired pursuant to the plan of
75-4 exchange approves the plan of exchange in the manner prescribed in
75-5 its partnership agreement; and
75-6 (3) each acquiring domestic or foreign limited
75-7 partnership or other entity takes all action that may be required
75-8 by the laws of the state or country under which it was formed or
75-9 incorporated and as required by its partnership agreement or other
75-10 constituent documents in order to effect the exchange. No filing
75-11 with the secretary of state shall be necessary in order to evidence
75-12 or effect such interest exchange with respect to a domestic limited
75-13 partnership that is a party to such interest exchange. When an
75-14 interest exchange takes effect as provided in the plan of exchange,
75-15 the partnership interests of each domestic limited partnership that
75-16 are to be acquired pursuant to the plan of exchange shall be deemed
75-17 to have been exchanged as provided in the plan of exchange and the
75-18 former holders of the partnership interests exchanged pursuant to
75-19 the plan of exchange shall be entitled only to the exchange rights
75-20 provided in the plan of exchange and the acquiring domestic or
75-21 foreign limited partnership or other entity or entities shall be
75-22 entitled to all rights, title, and interests with respect to the
75-23 partnership interests so acquired and exchanged subject to the
75-24 provisions in the plan of exchange.
75-25 SECTION 94. Sections A and F, Section 2.12, Texas Revised
75-26 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
75-27 Statutes), are amended to read as follows:
75-28 A. The effectiveness of (i) the certificate of limited
75-29 partnership of a limited partnership under this Act, (ii) an
75-30 amendment to a certificate of limited partnership, (iii) the
75-31 restatement of a certificate of limited partnership, (iv) a merger,
75-32 (v) a certificate of cancellation, (vi) the registration or
75-33 cancellation of registration of a foreign limited partnership to
75-34 transact business in this State, (vii) an amendment to the
75-35 registration of a foreign limited partnership, (viii) a change in
75-36 registered office or registered agent, [and] (ix) a change of
75-37 address of a registered agent (each such act or document being a
75-38 "Permitted Act"), and (x) a conversion may be made effective as of
75-39 a time and date after the time and date otherwise provided in this
75-40 Act or may be made effective upon the occurrence of events or facts
75-41 that may occur in the future, which events or facts may include
75-42 future acts of any person or entity, if:
75-43 (1) the certificate, statement, application, or other
75-44 filing that is required by this Act to be filed with the Secretary
75-45 of State to make effective such Permitted Act clearly and expressly
75-46 sets forth, in addition to any other statement or information
75-47 required to be set forth therein, (i) the time and date on which
75-48 such Permitted Act is to become effective or (ii) if such Permitted
75-49 Act is to become effective upon the occurrence of events or facts
75-50 that may occur in the future, (a) the manner in which such events
75-51 or facts shall operate to cause such Permitted Act to become
75-52 effective and (b) the date of the 90th day after the date of the
75-53 filing of such certificate, statement, application or other filing;
75-54 and either
75-55 (2) If in the case of a Permitted Act that is to
75-56 become effective as of a time or date after the time and date
75-57 otherwise provided in this Act, such subsequent time and date is
75-58 not more than 90 days after the date of the filing of the
75-59 certificate, statement, application, or other filing that is
75-60 otherwise required by this Act to be filed with the Secretary of
75-61 State to make effective such Permitted Act and (iii) the time on
75-62 which the Permitted Act is to become effective is not midnight or
75-63 12:00 p.m.; and
75-64 (3) Permitted Act that is to be made effective upon
75-65 the occurrence of events or facts that may occur in the future,
75-66 other than the mere passage of time, a statement that all such
75-67 events or facts upon which the effectiveness of such Permitted Act
75-68 is conditioned have been satisfied or waived, and of the date on
75-69 which such condition was satisfied or waived is filed with the
76-1 Secretary of State within 90 days of the date of the filing of the
76-2 certificate, statement, application or other filing that is
76-3 otherwise required by this Act for such Permitted Act to become
76-4 effective.
76-5 F. If a certificate of limited partnership, a certificate of
76-6 amendment or cancellation, a judicial decree of amendment or
76-7 cancellation, a certificate of merger, a certificate of conversion,
76-8 a restated certificate or any other document permitted to be filed
76-9 pursuant to this Act with the Secretary of State has been filed but
76-10 the event or transaction evidenced thereby has not become
76-11 effective, such filing may be abandoned in accordance with the
76-12 agreement of the parties thereto and, if so abandoned, a
76-13 certificate of abandonment, signed on behalf of each domestic and
76-14 foreign limited partnership or other entity that is a party to the
76-15 event or transaction by any general partner, an officer or other
76-16 duly authorized representative, stating the nature, date of filing
76-17 and parties to the filing to be abandoned and that the event or
76-18 transaction has been abandoned in accordance with the agreement of
76-19 the parties, is filed with the Secretary of State prior to the
76-20 effectiveness of the event or transaction in accordance with the
76-21 terms of the document so filed. Upon the filing of such statement
76-22 by the Secretary of State, the event or transaction evidenced by
76-23 the original filing shall be deemed abandoned and shall not become
76-24 effective.
76-25 SECTION 95. Article 2, Texas Revised Limited Partnership Act
76-26 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
76-27 adding Section 2.15 to read as follows:
76-28 Sec. 2.15. CONVERSION. (a) A domestic limited partnership
76-29 may adopt a plan of conversion and convert to a foreign limited
76-30 partnership or any other entity if:
76-31 (1) the converting entity acts on and its partners
76-32 approve a plan of conversion in the manner prescribed by Section
76-33 2.11 of this Act as if the conversion were a merger to which the
76-34 converting entity were a party and not the survivor;
76-35 (2) the conversion is permitted by, or not
76-36 inconsistent with, the laws of the state or country in which the
76-37 converted entity is to be incorporated, formed, or organized and
76-38 the incorporation, formation, or organization of the converted
76-39 entity is effected in compliance with such laws;
76-40 (3) at the time the conversion becomes effective, each
76-41 partner of the converting entity will, unless otherwise agreed to
76-42 by that partner, own an equity interest or other ownership or
76-43 security interest in, and be a shareholder, partner, member, owner
76-44 or other security holder of, the converted entity;
76-45 (4) no limited partner of the domestic limited
76-46 partnership will, as a result of the conversion, become personally
76-47 liable, without the limited partner's consent, for the liabilities
76-48 or obligations of the converted entity; and
76-49 (5) the converted entity shall be incorporated,
76-50 formed, or organized as part of or pursuant to the plan of
76-51 conversion.
76-52 (b) Any foreign limited partnership or other entity may
76-53 adopt a plan of conversion and convert to a domestic limited
76-54 partnership if:
76-55 (1) the conversion is permitted by the laws of the
76-56 state or country in which the foreign limited partnership is
76-57 formed, if a foreign limited partnership is converting;
76-58 (2) the conversion is either permitted by the laws
76-59 under which the other entity is formed or organized or by the
76-60 constituent documents of the other entity that are not inconsistent
76-61 with the laws of the state or country in which the other entity is
76-62 formed or organized, if another entity is converting; and
76-63 (3) the converting entity takes all action that may be
76-64 required by the laws of the state or country under which it is
76-65 incorporated, formed, or organized and by its constituent documents
76-66 to effect the conversion.
76-67 (c) A plan of conversion shall set forth:
76-68 (1) the name of the converting entity and the
76-69 converted entity;
77-1 (2) a statement that the converting entity is
77-2 continuing its existence in the organizational form of the
77-3 converted entity;
77-4 (3) a statement as to the type of entity that the
77-5 converted entity is to be and the state or country under the laws
77-6 of which the converted entity is to be incorporated, formed, or
77-7 organized;
77-8 (4) the manner and basis of converting the partnership
77-9 interests, shares, or other evidences of ownership of the
77-10 converting entity into partnership interests, shares, or other
77-11 evidences of ownership or securities of the converted entity, or
77-12 any combination thereof;
77-13 (5) in an attachment or exhibit, the certificate of
77-14 limited partnership of the domestic limited partnership, if the
77-15 converted entity is a domestic limited partnership; and
77-16 (6) in an attachment or exhibit, the certificate of
77-17 limited partnership, articles of incorporation, or other
77-18 organizational documents of the converted entity, if the converted
77-19 entity is not a domestic limited partnership.
77-20 (d) A plan of conversion may set forth such other provisions
77-21 relating to the conversion not inconsistent with law, including the
77-22 initial partnership agreement of the converted entity if the
77-23 converted entity is a partnership.
77-24 (e) If a plan of conversion has been approved in accordance
77-25 with the preceding provisions of this section and has not been
77-26 abandoned, articles of conversion shall be executed by the
77-27 converting entity by a partner, officer, or other duly authorized
77-28 representative thereof and shall set forth:
77-29 (1) the plan of conversion or a statement certifying
77-30 the following:
77-31 (A) the name, the state or country of
77-32 incorporation, formation, or organization of the converting entity
77-33 and the organizational form of the converting entity;
77-34 (B) that a plan of conversion has been approved;
77-35 (C) that an executed plan of conversion is on
77-36 file at the principal place of business of the converting entity,
77-37 stating the address thereof, and that an executed plan of
77-38 conversion will be on file, from and after the conversion, at the
77-39 principal place of business of the converting entity, stating the
77-40 address thereof; and
77-41 (D) that a copy of the plan of conversion will
77-42 be furnished by the converting entity (prior to the conversion) or
77-43 the converted entity (after the conversion), on written request and
77-44 without cost, to any member of the converting entity or the
77-45 converted entity; and
77-46 (2) a statement that the approval of the plan of
77-47 conversion was duly authorized by all action required by the laws
77-48 under which the converting entity was incorporated, formed, or
77-49 organized and by its constituent documents.
77-50 (f) Except as otherwise provided by Section 2.14 of this
77-51 Act, on the issuance of the certificate of conversion by the
77-52 secretary of state, the conversion of a converting entity shall be
77-53 effective.
77-54 (g) When a conversion of a converting entity takes effect:
77-55 (1) the converting entity shall continue to exist,
77-56 without interruption, but in the organizational form of the
77-57 converted entity rather than in its prior organizational form;
77-58 (2) all rights, title, and interests to all real
77-59 estate and other property owned by the converting entity shall
77-60 continue to be owned by the converted entity in its new
77-61 organizational form without reversion or impairment, without
77-62 further act or deed, and without any transfer or assignment having
77-63 occurred, but subject to any existing liens or other encumbrances
77-64 thereon;
77-65 (3) all liabilities and obligations of the converting
77-66 entity shall continue to be liabilities and obligations of the
77-67 converted entity in its new organizational form without impairment
77-68 or diminution by reason of the conversion;
77-69 (4) all rights of creditors or other parties with
78-1 respect to or against the prior interest holders or other owners of
78-2 the converting entity in their capacities as such in existence as
78-3 of the effective time of the conversion will continue in existence
78-4 as to those liabilities and obligations and may be pursued by such
78-5 creditors and obligees as if the conversion did not occur;
78-6 (5) a proceeding pending by or against the converting
78-7 entity or by or against any of the converting entity's interest
78-8 holders or owners in their capacities as such may be continued by
78-9 or against the converted entity in its new organizational form and
78-10 by or against the prior interest holders or owners, as the case may
78-11 be, without any need for substitution of parties;
78-12 (6) the partnership interests, shares, and other
78-13 evidences of ownership in the converting entity that are to be
78-14 converted into partnership interests, shares, evidences of
78-15 ownership, or other securities in the converted entity as provided
78-16 in the plan of conversion shall be so converted, and if the
78-17 converting entity is a domestic limited partnership, the former
78-18 holders of shares in the domestic limited partnership shall be
78-19 entitled only to the rights provided in the plan of conversion;
78-20 (7) if, after the effectiveness of the conversion, a
78-21 shareholder, partner, member, or other owner of the converted
78-22 entity would be liable under applicable law in such capacity for
78-23 the debts or obligations of the converted entity, such shareholder,
78-24 partner, member, or other owner of the converted entity shall be
78-25 liable for the debts and obligations of the converting entity that
78-26 existed before the conversion takes effect only to the extent that
78-27 such shareholder, partner, member, or other owner:
78-28 (A) agreed in writing to be liable for such
78-29 debts or obligations;
78-30 (B) was liable under applicable law, prior to
78-31 the effectiveness of the conversion, for such debts or obligations;
78-32 or
78-33 (C) by becoming a shareholder, partner, member,
78-34 or other owner of the converted entity, becomes liable under
78-35 applicable law for existing debts and obligations of the converted
78-36 entity;
78-37 (8) if the converted entity is a foreign limited
78-38 partnership or other entity, such converted entity shall be deemed
78-39 to appoint the secretary of state as its agent for service of
78-40 process in a proceeding to enforce any obligation or the rights of
78-41 dissenting members of the converting domestic limited partnership;
78-42 and
78-43 (9) if the converting limited partnership is a
78-44 domestic limited partnership, the provisions of Section 2.11 of
78-45 this Act shall apply as if the converted entity were the survivor
78-46 of a merger with the converting entity.
78-47 (h) For purposes of this section:
78-48 (1) "Conversion" means the continuance of:
78-49 (A) a domestic limited partnership as, and in
78-50 the organizational form of, a foreign limited partnership or other
78-51 entity; or
78-52 (B) a foreign limited partnership or other
78-53 entity as, and in the organizational form of, a domestic limited
78-54 partnership.
78-55 (2) "Converted entity" means any domestic or foreign
78-56 limited partnership or other entity to which a converting entity
78-57 has converted or intends to convert as permitted by this section.
78-58 (3) "Converting entity" means any domestic or foreign
78-59 limited partnership or other entity that has converted or intends
78-60 to convert as permitted by this section.
78-61 (4) "Other entity" means any entity, whether organized
78-62 for profit or not, that is a corporation, partnership (other than a
78-63 limited partnership or a general partnership (including a joint
78-64 venture) governed by the Texas Revised Partnership Act (Article
78-65 6132b-1.01 et seq., Vernon's Texas Civil Statutes)), limited
78-66 liability company, joint stock company, cooperative, association,
78-67 bank, insurance company, or other legal entity organized pursuant
78-68 to the laws of this state or any other state or country.
78-69 SECTION 96. Subsection (b), Section 3.03, Texas Revised
79-1 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
79-2 Statutes), is amended to read as follows:
79-3 (b) For the purposes of this section, a limited partner does
79-4 not participate in the control of the business by virtue of the
79-5 limited partner's having or acting in one or more of the following
79-6 capacities or possessing or exercising one or more of the following
79-7 powers:
79-8 (1) acting as a contractor for or an agent or employee
79-9 of the limited partnership or of a general partner, an officer,
79-10 director, or stockholder of a corporate general partner, [or] a
79-11 partner of a partnership that is a general partner of the limited
79-12 partnership, a member or manager of a limited liability company
79-13 that is a general partner of the limited partnership, or in a
79-14 similar capacity with any other person that is a general partner;
79-15 (2) consulting with or advising a general partner on
79-16 any matter, including the business of the limited partnership;
79-17 (3) acting as surety, guarantor, or endorser for the
79-18 limited partnership, to guarantee or assume one or more specific
79-19 obligations of the limited partnership, or to provide collateral
79-20 for borrowings of the limited partnership;
79-21 (4) calling, requesting, attending, or participating
79-22 in a meeting of the partners or the limited partners;
79-23 (5) winding up a limited partnership under Section
79-24 8.04 of this Act;
79-25 (6) taking any action required or permitted by law to
79-26 bring, or pursue, or settle or otherwise terminate a derivative
79-27 action in the right of the limited partnership;
79-28 (7) serving on a committee of the limited partnership
79-29 or the limited partners; or
79-30 (8) proposing, approving, or disapproving, by vote or
79-31 otherwise, one or more of the following matters:
79-32 (A) the dissolution and winding up of the
79-33 limited partnership or an election to reconstitute the limited
79-34 partnership or an election to continue the business of the limited
79-35 partnership;
79-36 (B) the sale, exchange, lease, mortgage,
79-37 assignment, pledge, or other transfer of, or granting of a security
79-38 interest in, an asset or assets of the limited partnership;
79-39 (C) the incurring, renewal, refinancing, or
79-40 payment or other discharge of indebtedness by the limited
79-41 partnership;
79-42 (D) a change in the nature of the business of
79-43 the limited partnership;
79-44 (E) the admission, removal, or retention of a
79-45 general partner;
79-46 (F) the admission, removal, or retention of a
79-47 limited partner;
79-48 (G) a transaction or other matter involving an
79-49 actual or potential conflict of interest;
79-50 (H) an amendment to the partnership agreement or
79-51 certificate of limited partnership;
79-52 (I) if the limited partnership is qualified as
79-53 an investment company under the federal Investment Company Act of
79-54 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter
79-55 required by the Investment Company Act of 1940, as amended, or the
79-56 rules and regulations of the Securities and Exchange Commission
79-57 thereunder, to be approved by the holders of beneficial interests
79-58 in an investment company including:
79-59 (i) electing directors or trustees of the
79-60 investment company;
79-61 (ii) approving or terminating investment
79-62 advisory or underwriting contracts;
79-63 (iii) approving auditors; and
79-64 (iv) acting on any other matters that the
79-65 Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.)
79-66 requires to be approved by the holders of beneficial interests in
79-67 the investment company;
79-68 (J) indemnification of a general partner under
79-69 Article 11 of this Act;
80-1 (K) any other matter stated in the partnership
80-2 agreement;
80-3 (L) exercising a right or power granted or
80-4 permitted to limited partners under this Act and not specifically
80-5 enumerated in this subsection; or
80-6 (M) the merger of a limited partnership.
80-7 SECTION 97. Section 5.01, Texas Revised Limited Partnership
80-8 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
80-9 read as follows:
80-10 Sec. 5.01. FORM OF CONTRIBUTION. The contribution of a
80-11 limited partner may consist of any tangible or intangible benefit
80-12 [be in cash, property, or services rendered, or a promissory note
80-13 or other obligation to pay cash or transfer property] to the
80-14 limited partnership or other property of any kind or nature,
80-15 including cash, a promissory note, services performed, a contract
80-16 for services to be performed, other interests in or securities of
80-17 the limited partnership, or interests in or securities of any other
80-18 limited partnership, domestic or foreign, or other entity.
80-19 SECTION 98. Subsection (d), Section 5.02, Texas Revised
80-20 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
80-21 Statutes), is amended to read as follows:
80-22 (d) Unless otherwise provided by the partnership agreement,
80-23 the obligation of a partner or a partner's legal representative or
80-24 successor to make a contribution or otherwise pay cash or transfer
80-25 property or to return cash or property paid or distributed to the
80-26 partner in violation of this Act or the partnership agreement may
80-27 be compromised or released only by consent of all of the partners.
80-28 Notwithstanding the compromise or release, a creditor of a limited
80-29 partnership who extends credit or otherwise acts in reasonable
80-30 reliance on that obligation, after the partner signs a writing that
80-31 reflects the obligation and before the writing is amended or
80-32 canceled to reflect the compromise or release, may enforce the
80-33 original obligation. A general partner, however, remains liable to
80-34 persons other than the partnership and the other partners, as
80-35 provided by Subsection (b) of Section 4.03 of this Act,
80-36 notwithstanding the compromise or release. A conditional
80-37 obligation may not be enforced unless the conditions of the
80-38 obligation have been satisfied or waived as to or by the applicable
80-39 limited partner. Conditional obligations include contributions
80-40 payable upon a discretionary call of a limited partnership before
80-41 the time the call occurs.
80-42 SECTION 99. Subsection (b), Section 6.02, Texas Revised
80-43 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
80-44 Statutes), is amended to read as follows:
80-45 (b) Unless otherwise provided by a written partnership
80-46 agreement and subject to the liability created under Subsection (a)
80-47 of this section, if a general partner [who] ceases to be a general
80-48 partner under Section 4.02 of this Act, then [shall, at the option
80-49 of] the remaining general partner or partners or, if there are no
80-50 remaining general partners, then the limited partners, at the
80-51 option of a majority in interest of the limited partners in a vote
80-52 that excludes any limited partner's [partnership] interest held by
80-53 the withdrawing general partner, may:
80-54 (1) convert [the interest in] that general partner's
80-55 partnership interest [capital account, profits, losses, and
80-56 distributions] to that of a limited partner; or
80-57 (2) pay to the withdrawn general partner in cash, or
80-58 secure by bond approved by a court of competent jurisdiction, the
80-59 value of that partner's partnership interest less the damages
80-60 caused if the withdrawal constituted a breach of the partnership
80-61 agreement.
80-62 Until one of the actions under Subdivision (1) or (2) of this
80-63 subsection is taken, the owner of the partnership interest of the
80-64 withdrawn general partner has the status of an assignee under
80-65 Article VII of this Act.
80-66 SECTION 100. Section 6.03, Texas Revised Limited Partnership
80-67 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
80-68 read as follows:
80-69 Sec. 6.03. WITHDRAWAL OF LIMITED PARTNER. A limited partner
81-1 may withdraw from a limited partnership only at the time or on the
81-2 occurrence of events specified in a [written] partnership agreement
81-3 and in accordance with that [written] partnership agreement. [If
81-4 the partnership agreement does not specify such a time or event or
81-5 a definite time for the dissolution and winding up of the limited
81-6 partnership, a limited partner may withdraw on giving written
81-7 notice not less than six months before the date of withdrawal to
81-8 each general partner at that general partner's address as set forth
81-9 in the certificate of limited partnership.]
81-10 SECTION 101. Section 8.01, Texas Revised Limited Partnership
81-11 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
81-12 read as follows:
81-13 Sec. 8.01. DISSOLUTION. A limited partnership is dissolved
81-14 and its affairs shall be wound up only on the first of the
81-15 following to occur:
81-16 (1) [on] the occurrence of events specified in the
81-17 partnership agreement to cause dissolution unless within 90 days
81-18 after the event causing the dissolution, all remaining partners (or
81-19 another group or percentage of partners as specified by the
81-20 partnership agreement) agree in writing to continue the business of
81-21 the limited partnership;
81-22 (2) written consent of all partners to dissolution;
81-23 (3) an event of withdrawal of a general partner,
81-24 unless:
81-25 (A) there remains at least one general partner
81-26 and the partnership agreement permits the business of the limited
81-27 partnership to be carried on by the remaining general partner or
81-28 general partners, and that general partner or those general
81-29 partners do so; or
81-30 (B) within 90 days after the event of
81-31 withdrawal, all remaining partners (or another group or percentage
81-32 of partners as specified by the partnership agreement) agree in
81-33 writing to continue the business of the limited partnership and, to
81-34 the extent that they desire or if there are no remaining general
81-35 partners, agree to the appointment, effective as of the date of
81-36 withdrawal, of one or more new general partners; or
81-37 (4) entry of a decree of judicial dissolution under
81-38 Section 8.02 of this Act.
81-39 SECTION 102. Section 8.02, Texas Revised Limited Partnership
81-40 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
81-41 read as follows:
81-42 Sec. 8.02. JUDICIAL DISSOLUTION. On application by or for a
81-43 partner, a court of competent jurisdiction may decree dissolution
81-44 of a limited partnership if the court determines that:
81-45 (1) the economic purpose of the limited partnership is
81-46 likely to be unreasonably frustrated;
81-47 (2) another partner has engaged in conduct relating to
81-48 the limited partnership business that makes it not reasonably
81-49 practicable to carry on the business in limited partnership with
81-50 that partner; or
81-51 (3) it is not reasonably practicable to carry on the
81-52 business of the limited partnership in conformity with the
81-53 partnership agreement.
81-54 SECTION 103. Subsection (a), Section 8.04, Texas Revised
81-55 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
81-56 Statutes), is amended to read as follows:
81-57 (a) Except as provided in the partnership agreement, on [On]
81-58 the dissolution of a limited partnership, [unless it is
81-59 reconstituted in accordance with Section 8.03 of this Act,] the
81-60 partnership's affairs shall be wound up as soon as reasonably
81-61 practicable, and the[. The] winding up shall be accomplished by
81-62 the general partners who have not wrongfully dissolved a limited
81-63 partnership or, if there are none who have not wrongfully dissolved
81-64 the partnership, by the limited partners or a person chosen by the
81-65 limited partners. In addition, a court of competent jurisdiction,
81-66 on cause shown, may wind up the limited partnership's affairs on
81-67 application of any partner or the partner's legal representative or
81-68 assignee and, in connection with the winding up, may appoint a
81-69 person to carry out the liquidation and may make all other orders,
82-1 directions, and inquiries that the circumstances require.
82-2 SECTION 104. Section 12.01, Texas Revised Limited
82-3 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
82-4 is amended to read as follows:
82-5 Sec. 12.01. FEES. The secretary of state shall collect for
82-6 the use of the state:
82-7 (1) for filing a certificate of limited partnership
82-8 under Section 2.01 of this Act, or an application for registration
82-9 as a foreign limited partnership under Section 9.02 of this Act, a
82-10 fee of $750;
82-11 (2) for filing a certificate of amendment under
82-12 Section 2.02 of this Act, a certificate of cancellation under
82-13 Section 2.03 of this Act, a restated certificate of limited
82-14 partnership under Section 2.10 of this Act, a certificate of merger
82-15 under Section 2.11 of this Act, a certificate of correction under
82-16 Section 2.12 of this Act, a certificate of conversion under Section
82-17 2.15 of this Act, a certificate under Section 9.05 of this Act, or
82-18 a certificate of cancellation under Section 9.06 of this Act[, or
82-19 an election to adopt this Act, whether by the filing of a
82-20 certificate of limited partnership, an application for registration
82-21 as a foreign limited partnership or a certificate of amendment,
82-22 under Section 13.02 of this Act], a fee of $200;
82-23 (3) for filing [an application for reservation of
82-24 name, an application for renewal of reservation, a notice of
82-25 transfer of reservation under Subsection (b) of Section 1.04 of
82-26 this Act, or] an application for registration of name or an
82-27 application for renewal of registration of name under Section 1.05
82-28 of this Act, a fee of $75;
82-29 (4) for filing a statement for change of registered
82-30 office, registered agent, or both, under Subsection (b) of Section
82-31 1.06 of this Act, or a statement for change of location of
82-32 registered office under Subsection (h) of Section 1.06 of this Act,
82-33 a fee of $50, except that the maximum fee for simultaneous filings
82-34 by a registered agent for more than one limited partnership may not
82-35 exceed $2,500;
82-36 (5) for the filing of an application for reservation
82-37 of name under Subsection (b) of Section 1.04 of this Act, a notice
82-38 of transfer of reservation under Subsection (b) of Section 1.04 of
82-39 this Act, or for preclearance of any document for filing, a fee of
82-40 $50; and
82-41 (6) for filing any instrument under this Act not
82-42 expressly provided for above, a fee of $25.
82-43 SECTION 105. Section 13.04, Texas Revised Limited
82-44 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
82-45 is amended to read as follows:
82-46 Sec. 13.04. FILINGS BY FACSIMILE OR ELECTRONIC [SIMILAR]
82-47 MEANS. (a) Any original certificate, instrument, or other
82-48 document required or authorized to be filed with the secretary of
82-49 state under this Act may be a photographic, photostatic, facsimile,
82-50 or similar reproduction of a signed certificate, instrument, or
82-51 other document.
82-52 (b) Any signature or the mark made by a person unable to
82-53 write on any certificate, instrument, or other document required or
82-54 authorized to be filed with the secretary of state may be a
82-55 facsimile in an electronic format permitted by the rules of the
82-56 secretary of state or any symbol executed or adopted by a person
82-57 with the intent to authenticate a writing.
82-58 (c) If permitted by the rules of the secretary of state, any
82-59 certificate, instrument, or other document required or authorized
82-60 to be filed with the secretary of state under this Act may be
82-61 transmitted for filing electronically. If the certificate,
82-62 instrument, or other document conforms to law and the rules
82-63 promulgated by the secretary of state, the secretary shall file the
82-64 instrument by acceptance into the filing system adopted by the
82-65 secretary and assigning to the instrument a date of filing. An
82-66 electronic acknowledgment or certification of the filing, as
82-67 applicable, shall be provided by the secretary of state to the
82-68 partnership or its representative. The secretary of state may
82-69 promulgate rules and adopt practices and procedures for the
83-1 transmission, filing, and retention of instruments filed
83-2 electronically or by use of other technological means.
83-3 (d) This section does not require any certificate,
83-4 instrument, or other document authorized or required to be filed
83-5 with the secretary of state under this Act or any certificate
83-6 issued by the secretary of state concerning any other instrument to
83-7 be on paper or reduced to printed form.
83-8 SECTION 106. Section 1.01, Texas Revised Partnership Act
83-9 (Article 6132b-1.01, Vernon's Texas Civil Statutes), is amended to
83-10 read as follows:
83-11 Sec. 1.01. GENERAL DEFINITIONS. In this Act:
83-12 (1) "Business" means a trade, occupation, profession,
83-13 or other commercial activity.
83-14 (2) "Capital account" means the amount of a partner's
83-15 original contribution to a partnership, which consists of cash and
83-16 the agreed value of any other contribution to the partnership,
83-17 increased by the amount of additional contributions made by that
83-18 partner and by profits credited to that partner under Section
83-19 4.01(b), and decreased by the amount of distributions to that
83-20 partner and by losses charged to that partner under Section
83-21 4.01(b).
83-22 (3) "Court" means a court and judge having
83-23 jurisdiction in the case.
83-24 (4) "Debtor in bankruptcy" means a person who is the
83-25 subject of:
83-26 (A) an order for relief under Title 11 of the
83-27 United States Code or a comparable order under a successor statute
83-28 of general application; or
83-29 (B) a comparable order under federal, [or]
83-30 state, or foreign law governing insolvency.
83-31 (5) "Distribution" means a transfer of cash or other
83-32 property from a partnership to:
83-33 (A) a partner in the partner's capacity as a
83-34 partner; or
83-35 (B) the partner's transferee.
83-36 (6) "Event of withdrawal" or "withdrawal" means an
83-37 event specified by Section 6.01(b).
83-38 (7) "Event requiring a winding up" means an event
83-39 specified by Section 8.01.
83-40 (8) "Foreign limited partnership" means a partnership
83-41 formed under the laws of another state and having as partners one
83-42 or more general partners and one or more limited partners.
83-43 (9) "Foreign limited liability partnership" means a
83-44 partnership that:
83-45 (A) is formed under laws other than the laws of
83-46 Texas; and
83-47 (B) has the status of a registered limited
83-48 liability partnership under those laws.
83-49 (10) "Majority-in-interest" means, as to all of or a
83-50 specified group of partners, partners owning more than 50 percent
83-51 of the current interest in the profits of the partnership owned by
83-52 all of the partners or by the partners in the specified group, as
83-53 appropriate.
83-54 (11) [(10)] "Partnership" means an entity created as
83-55 described by Section 2.02(a). The term includes a registered
83-56 limited liability partnership formed under Section 3.08 or under
83-57 the Texas Uniform Partnership Act (Article 6132b, Vernon's Texas
83-58 Civil Statutes) and its subsequent amendments.
83-59 (12) [(11)] "Partnership agreement" means any
83-60 agreement, written or oral, of the partners concerning a
83-61 partnership.
83-62 (13) [(12)] "Partnership interest" means a partner's
83-63 interest in a partnership, including the partner's share of profits
83-64 and losses or similar items, and the right to receive
83-65 distributions. A partnership interest does not include a partner's
83-66 right to participate in management.
83-67 (14) [(13)] "Person" includes an individual,
83-68 corporation, business trust, estate, trust, custodian, trustee,
83-69 executor, administrator, nominee, partnership (including a
84-1 registered limited liability partnership and a limited
84-2 partnership), association, limited liability company, government,
84-3 governmental subdivision, governmental agency, governmental
84-4 instrumentality, and any other legal or commercial entity, in its
84-5 own or representative capacity.
84-6 (15) [(14)] "Property" means all property, real,
84-7 personal, or mixed, tangible or intangible, or an interest in that
84-8 property.
84-9 (16) [(15)] "Registered limited liability partnership"
84-10 means a partnership registered under Section 3.08(b) and complying
84-11 with Sections 3.08(c) and (d)(1).
84-12 (17) [(16)] "State" means a state of the United
84-13 States, the District of Columbia, the Commonwealth of Puerto Rico,
84-14 or any territory or insular possession subject to the jurisdiction
84-15 of the United States.
84-16 (18) [(17)] "Transfer" includes:
84-17 (A) an assignment;
84-18 (B) a conveyance;
84-19 (C) a lease;
84-20 (D) a mortgage;
84-21 (E) a deed;
84-22 (F) an encumbrance; and
84-23 (G) the creation of a security interest.
84-24 (19) [(18)] "Withdrawn partner" means a partner with
84-25 respect to whom an event of withdrawal has occurred. A partner
84-26 withdraws if an event of withdrawal has occurred with respect to
84-27 that partner under Section 6.01.
84-28 SECTION 107. Subsection (b), Section 1.03, Texas Revised
84-29 Partnership Act (Article 6132b-1.03, Vernon's Texas Civil
84-30 Statutes), is amended to read as follows:
84-31 (b) Statutory Provisions that may not be Varied by
84-32 Agreement. A partnership agreement or the partners may not:
84-33 (1) unreasonably restrict a partner's right of access
84-34 to books and records under Section 4.03(b);
84-35 (2) eliminate the duty of loyalty under Section
84-36 4.04(b), but the partners may by agreement identify specific types
84-37 or categories of activities that do not violate the duty of
84-38 loyalty, if not manifestly unreasonable;
84-39 (3) eliminate the duty of care under Section 4.04(c),
84-40 but the partners may by agreement determine the standards by which
84-41 the performance of the obligation is to be measured, if the
84-42 standards are not manifestly unreasonable;
84-43 (4) eliminate the obligation of good faith under
84-44 Section 4.04(d), but the partners may by agreement determine the
84-45 standards by which the performance of the obligation is to be
84-46 measured, if the standards are not manifestly unreasonable;
84-47 (5) vary the power to withdraw as a partner under
84-48 Section 6.01(b)(1), (7), or (8), except to require the notice to be
84-49 in writing;
84-50 (6) vary the right to expel a partner by a court in
84-51 the events specified by Section 6.01(b)(5);
84-52 (7) vary the requirement to wind up the partnership
84-53 business in the events specified by Section 8.01(c), (d), or (e);
84-54 (8) restrict rights of third parties under this Act,
84-55 except for limitations on individual partners' liability in a
84-56 registered limited liability partnership as provided or permitted
84-57 by Section 3.08; or
84-58 (9) select a governing law not permitted under Section
84-59 1.05(a)(1).
84-60 SECTION 108. Subsection (a), Section 1.05, Texas Revised
84-61 Partnership Act (Article 6132b-1.05, Vernon's Texas Civil
84-62 Statutes), is amended to read as follows:
84-63 (a) Internal Affairs. The determination whether a
84-64 partnership has been formed, a [A] partnership's internal affairs,
84-65 and the relations of the partners to one another are governed by:
84-66 (1) the law of the state chosen by the partners to
84-67 govern if that state bears a reasonable relation to the partners or
84-68 to the partnership business and affairs under principles that apply
84-69 to a contract among the partners other than the partnership
85-1 agreement; or
85-2 (2) if the partners do not choose a governing law
85-3 under Subdivision (1), the law of the state in which the
85-4 partnership has its chief executive office.
85-5 SECTION 109. Section 2.02, Texas Revised Partnership Act
85-6 (Article 6132b-2.02, Vernon's Texas Civil Statutes), is amended by
85-7 adding Subsection (d) to read as follows:
85-8 (d) Partnership Resulting from Merger or Conversion. In
85-9 the case of a new partnership being formed pursuant to a plan of
85-10 merger or a plan of conversion under Article IX of this Act, the
85-11 existence of the partnership as a partnership shall begin on the
85-12 effectiveness of the merger or the conversion, as the case may be,
85-13 and the persons to be partners shall become partners as of that
85-14 time.
85-15 SECTION 110. Subsections (a) and (b), Section 3.02, Texas
85-16 Revised Partnership Act (Article 6132b-3.02, Vernon's Texas Civil
85-17 Statutes), are amended to read as follows:
85-18 (a) Partner Agent of Partnership as to Partnership Business.
85-19 Each partner is an agent of the partnership for the purpose of its
85-20 business. Unless the partner does not have authority to act for
85-21 the partnership in the particular matter and the person with whom
85-22 the partner is dealing knows that the partner lacks authority, an
85-23 act of a partner, including the execution of an instrument in the
85-24 partnership name, binds the partnership if the act is for
85-25 apparently carrying on in the ordinary course [usual way]:
85-26 (1) the partnership business; or
85-27 (2) business of the kind carried on by the
85-28 partnership.
85-29 (b) Act Outside Scope of Business. An act of a partner
85-30 binds [does not bind] the partnership only if [unless] authorized
85-31 by the other partners if the act is not apparently for carrying on
85-32 in the ordinary course [usual way]:
85-33 (1) the partnership business; or
85-34 (2) business of the kind carried on by the
85-35 partnership.
85-36 SECTION 111. Section 3.04, Texas Revised Partnership Act
85-37 (Article 6132b-3.04, Vernon's Texas Civil Statutes), is amended to
85-38 read as follows:
85-39 Sec. 3.04. [NATURE OF] PARTNER'S LIABILITY [PARTNERSHIP].
85-40 Except as provided by Section 3.07 or 3.08(a) [ for a registered
85-41 limited liability partnership], all partners are liable jointly and
85-42 severally for all debts and obligations of the partnership unless
85-43 otherwise agreed by the claimant or provided by law.
85-44 SECTION 112. Section 3.05, Texas Revised Partnership Act
85-45 (Article 6132b-3.05, Vernon's Texas Civil Statutes), is amended by
85-46 adding Subsection (f) to read as follows:
85-47 (f) Registered Limited Liability Partnership. This section
85-48 does not limit the effect of Section 3.08(a) in the case of a
85-49 registered limited liability partnership.
85-50 SECTION 113. Subsections (a) and (d), Section 3.08, Texas
85-51 Revised Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
85-52 Statutes), are amended to read as follows:
85-53 (a) Liability of Partner. (1) Except as provided in
85-54 Subsection (a)(2), a partner in a registered limited liability
85-55 partnership is not individually liable, directly or indirectly, by
85-56 contribution, indemnity, or otherwise, for debts and obligations of
85-57 the partnership incurred while the partnership is a registered
85-58 limited liability partnership.
85-59 (2) A partner in a registered limited liability
85-60 partnership is not individually liable, directly or indirectly, by
85-61 contribution, indemnity, or otherwise, for debts and obligations of
85-62 the partnership arising from errors, omissions, negligence,
85-63 incompetence, or malfeasance committed while the partnership is a
85-64 registered limited liability partnership and in the course of the
85-65 partnership business by another partner or a representative of the
85-66 partnership not working under the supervision or direction of the
85-67 first partner unless the first partner:
85-68 (A) was directly involved in the specific
85-69 activity in which the errors, omissions, negligence, incompetence,
86-1 or malfeasance were committed by the other partner or
86-2 representative; or
86-3 (B) had notice or knowledge of the errors,
86-4 omissions, negligence, incompetence, or malfeasance by the other
86-5 partner or representative at the time of occurrence and then failed
86-6 to take reasonable steps to prevent or cure the errors, omissions,
86-7 negligence, incompetence, or malfeasance.
86-8 (3) Subsections [(2) Subsection] (a)(1) and (a)(2) do
86-9 [does] not affect:
86-10 (A) [the joint and several liability of a
86-11 partner for debts and obligations of the partnership arising from a
86-12 cause other than the causes specified by Subsection (a)(1);]
86-13 [(B)] the liability of a partnership to pay its
86-14 debts and obligations out of partnership property; [or]
86-15 (B) the liability of a partner, if any, imposed
86-16 by law or contract independently of the partner's status as a
86-17 partner; or
86-18 (C) the manner in which service of citation or
86-19 other civil process may be served in an action against a
86-20 partnership.
86-21 (4) [(3)] In this subsection, "representative"
86-22 includes an agent, servant, or employee of a registered limited
86-23 liability partnership.
86-24 (5) In the case of a registered limited liability
86-25 partnership, Subsection (a) prevails over the other parts of this
86-26 Act regarding the liability of partners, their chargeability for
86-27 the debts and obligations of the partnership, and their obligations
86-28 regarding contributions and indemnity.
86-29 (d) Insurance or Financial Responsibility. (1) A
86-30 registered limited liability partnership must:
86-31 (A) carry at least $100,000 of liability
86-32 insurance of a kind that is designed to cover the kinds of errors,
86-33 omissions, negligence, incompetence, or malfeasance for which
86-34 liability is limited by Subsection (a)(2) [(a)(1)]; or
86-35 (B) provide $100,000 of funds specifically
86-36 designated and segregated for the satisfaction of judgments against
86-37 the partnership based on the kinds of errors, omissions,
86-38 negligence, incompetence, or malfeasance for which liability is
86-39 limited by Subsection (a)(2) [(a)(1)] by:
86-40 (i) deposit in trust or in bank escrow of
86-41 cash, bank certificates of deposit, or United States Treasury
86-42 obligations; or
86-43 (ii) a bank letter of credit or insurance
86-44 company bond.
86-45 (2) If the registered limited liability partnership is
86-46 in compliance with Subdivision (1), the requirements of this
86-47 subsection shall not be admissible or in any way be made known to
86-48 the jury in determining an issue of liability for or extent of the
86-49 debt or obligation or damages in question.
86-50 (3) If compliance with Subdivision (1) is disputed:
86-51 (A) compliance must be determined separately
86-52 from the trial or proceeding to determine the partnership debt or
86-53 obligation in question, its amount, or partner liability for the
86-54 debt or obligation; and
86-55 (B) the burden of proof of compliance is on the
86-56 person claiming limitation of liability under Subsection (a)(2)
86-57 [(a)(1)].
86-58 SECTION 114. Subsection (b), Section 3.08, Texas Revised
86-59 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
86-60 Statutes), is amended by amending Subdivision (12) and adding
86-61 Subdivisions (16), (17), and (18) to read as follows:
86-62 (12) A document filed under this subsection may be a
86-63 photographic, facsimile, or similar reproduction of a signed
86-64 document. A signature on a document filed under this section may
86-65 be a facsimile, the mark made by a person unable to write, in
86-66 electronic format permitted by the rules of the secretary of state
86-67 or any symbol executed or adopted by a person with the intent to
86-68 authenticate a writing.
86-69 (16) If permitted by the rules of the secretary of
87-1 state, any document authorized to be filed with the secretary of
87-2 state under this subsection may be transmitted for filing
87-3 electronically. If the document conforms to the requirements of
87-4 this subsection and the rules promulgated by the secretary of
87-5 state, the secretary shall file the document by acceptance into the
87-6 filing system adopted by the secretary and assigning to the
87-7 document a date of filing. An electronic acknowledgment of the
87-8 filing, together with an electronically transmitted confirmation
87-9 copy of the document, shall be provided by the secretary of state
87-10 to the partnership or its representative.
87-11 (17) This subsection does not require any document
87-12 authorized to be filed with the secretary of state under this
87-13 subsection or any certificate issued by the secretary of state
87-14 concerning any such document to be on paper or reduced to printed
87-15 form.
87-16 (18) All electronic acknowledgments and certificates
87-17 required to be issued by the secretary of state under this Act
87-18 shall be considered issued or provided by the secretary of state on
87-19 the initial transmission by the secretary of state of the
87-20 acknowledgment or certificate required to be issued.
87-21 SECTION 115. Subsections (b) and (c), Section 4.01, Texas
87-22 Revised Partnership Act (Article 6132b-4.01, Vernon's Texas Civil
87-23 Statutes), are amended to read as follows:
87-24 (b) Profits and Losses. Each partner is entitled to be
87-25 credited with an equal share of the partnership's profits and [of a
87-26 partnership. Each partner] is chargeable [charged] with a share of
87-27 the partnership's losses, whether capital or operating, [of the
87-28 partnership] in proportion to the partner's share of the profits.
87-29 (c) Disproportionate Payment or Advance. A partner who, in
87-30 the proper conduct of the business of the partnership or for the
87-31 preservation of its business or property, reasonably makes a
87-32 payment or advance beyond the amount the partner agreed to
87-33 contribute, or who reasonably incurs a liability, is entitled to be
87-34 repaid by the partnership and to receive interest from the
87-35 partnership from the date of the payment or advance or the
87-36 incurrence of the liability.
87-37 SECTION 116. Subsection (b), Section 4.06, Texas Revised
87-38 Partnership Act (Article 6132b-4.06, Vernon's Texas Civil
87-39 Statutes), is amended to read as follows:
87-40 (b) Action by partner. A partner may maintain an action
87-41 against the partnership or another partner for legal or equitable
87-42 relief, with or without [including] an accounting as to partnership
87-43 business, to:
87-44 (1) enforce a right under the partnership agreement;
87-45 (2) enforce a right under this Act, including:
87-46 (A) the partner's rights under Sections 4.01,
87-47 4.03, and 4.04;
87-48 (B) the partner's right on withdrawal to have
87-49 the partner's interest in the partnership redeemed under Section
87-50 7.01 or enforce any other right under Article 6 or 7; and
87-51 (C) the partner's rights under Article 8; or
87-52 (3) enforce the rights and otherwise protect the
87-53 interests of the partner, including rights and interests arising
87-54 independently of the partnership relationship.
87-55 SECTION 117. Subsection (b), Section 6.02, Texas Revised
87-56 Partnership Act (Article 6132b-6.02, Vernon's Texas Civil
87-57 Statutes), is amended to read as follows:
87-58 (b) Wrongful Withdrawal. A partner's withdrawal is wrongful
87-59 only if:
87-60 (1) it is in breach of an express provision of the
87-61 partnership agreement;
87-62 (2) in the case of a partnership for a definite term
87-63 or particular undertaking or for which the partnership agreement
87-64 provides for winding up on a specified event, before the expiration
87-65 of the term, the completion of the undertaking, or the occurrence
87-66 of the event:
87-67 (A) the partner withdraws by express will; [or]
87-68 (B) the partner withdraws by becoming a debtor
87-69 in bankruptcy; or
88-1 (C) in the case of a partner that is not an
88-2 individual, a trust other than a business trust, or an estate, the
88-3 partner is expelled or otherwise withdraws because the partner
88-4 wilfully dissolved or terminated; or
88-5 (3) the partner is expelled by judicial decree under
88-6 Section 6.01(b)(5).
88-7 SECTION 118. Subsections (a), (b), and (c), Section 8.06,
88-8 Texas Revised Partnership Act (Article 6132b-8.06, Vernon's Texas
88-9 Civil Statutes), are amended to read as follows:
88-10 (a) Application of Property to Obligations. In winding up
88-11 the partnership business, the property of the partnership,
88-12 including the contributions of the partners required by this
88-13 section, must be applied to discharge its obligations to creditors,
88-14 including, to the extent permitted by other applicable law,
88-15 partners who are creditors other than in their capacities as
88-16 partners. Any [A] surplus must be applied to pay in cash the net
88-17 amount distributable to partners in accordance with their right to
88-18 distributions under Subsection (b).
88-19 (b) Settlement of Accounts Among Partners. Each partner is
88-20 entitled to a settlement of all partnership accounts on winding up
88-21 the partnership business. In settling accounts among the partners,
88-22 the partnership interest of a withdrawn partner that is not
88-23 redeemed under Section 7.01 is credited with a share of any profits
88-24 for the period after the partner's withdrawal but is charged with a
88-25 share of losses for that period only to the extent of profits
88-26 credited for that period, and the profits and losses that result
88-27 from the liquidation of the partnership property must be credited
88-28 and charged to the partners' capital accounts. The partnership
88-29 shall make a distribution to a partner in an amount equal to that
88-30 partner's positive balance in the partner's capital account.
88-31 Except as provided by Section 3.07 or 3.08(a), a [A] partner shall
88-32 contribute to the partnership an amount equal to that partner's
88-33 negative balance in the partner's capital account.
88-34 (c) Contribution to Satisfy Obligations. Except as provided
88-35 by Section 3.07 or 3.08(a), to [To] the extent not taken into
88-36 account in settling the accounts among partners under Subsection
88-37 (b):
88-38 (1) [,] each partner must contribute, in the
88-39 proportion in which the partner shares partnership losses, the
88-40 amount necessary to satisfy partnership obligations, excluding
88-41 liabilities that creditors have agreed may be satisfied only with
88-42 partnership property without recourse to individual partners;
88-43 (2) if[. If] a partner fails to contribute, the other
88-44 partners shall contribute, in the proportions in which the partners
88-45 share partnership losses, the additional amount necessary to
88-46 satisfy the partnership obligations; and
88-47 (3) a[. A] partner or partner's legal representative
88-48 may enforce or recover from the other partners, or from the estate
88-49 of a deceased partner, contributions the partner or estate makes to
88-50 the extent the amount contributed exceeds that partner's or the
88-51 estate's share of the partnership obligations.
88-52 SECTION 119. Subsection (b), Section 9.01, Texas Revised
88-53 Partnership Act (Article 6132b-9.01, Vernon's Texas Civil
88-54 Statutes), is amended to read as follows:
88-55 (b) Limited to General. A domestic or foreign limited
88-56 partnership may convert, on the affirmative vote of a
88-57 majority-in-interest of the partners, to a partnership that is not
88-58 a limited partnership by:
88-59 (1) cancelling its certificate of limited partnership
88-60 in the state of formation or otherwise complying with the
88-61 provisions for terminating the existence of the limited partnership
88-62 under [of] that state's law as of the date that partnership's
88-63 existence as a limited partnership is to cease [terminated];
88-64 (2) amending its partnership agreement to reflect its
88-65 change in status and any change in name required to comply with
88-66 this Act; and
88-67 (3) stating the effective date of the conversion in
88-68 the partnership agreement if different from the date of the
88-69 cancellation of the limited partnership certificate.
89-1 If a limited partnership converts to a partnership that is
89-2 not a limited partnership, a partner who did not consent to the
89-3 conversion is considered to be a partner who has withdrawn from the
89-4 limited partnership effective immediately before the effective date
89-5 of the conversion unless, within 60 days after the later of the
89-6 effective date of the conversion or the date the partner receives
89-7 actual notice of the conversion, the partner notifies the
89-8 partnership in writing of the partner's desire not to withdraw. A
89-9 withdrawal under the described circumstances is not a wrongful
89-10 withdrawal.
89-11 SECTION 120. Section 9.02, Texas Revised Partnership Act
89-12 (Article 6132b-9.02, Vernon's Texas Civil Statutes), is amended to
89-13 read as follows:
89-14 Sec. 9.02. MERGERS. (a) Adoption of Plan. A domestic
89-15 partnership may adopt a plan of merger and one or more domestic
89-16 partnerships may merge with one or more domestic or foreign
89-17 partnerships or other entities if:
89-18 (1) the partnership agreement of each domestic [or
89-19 foreign] partnership that is a party to the plan of merger contains
89-20 provisions that authorize the merger provided for in the plan of
89-21 merger adopted by the partnership;
89-22 (2) each domestic partnership that is a party to the
89-23 plan of merger approves the plan of merger in the manner prescribed
89-24 [ for mergers] in its partnership agreement; and
89-25 (3) [or constituent documents or by applicable law.
89-26 If] one or more foreign partnerships or other entities is a party
89-27 to the merger or is to be created by the terms of the plan of
89-28 merger:
89-29 (A) [(1)] the merger is [must be] permitted
89-30 either by[:]
89-31 [(A)] the laws under which each foreign
89-32 partnership and each other entity that is a party to the merger is
89-33 formed or organized[;] or by
89-34 [(B)] the partnership agreement or other
89-35 constituent documents of the foreign [partnership or other entity
89-36 not inconsistent with those laws; and]
89-37 [(2) each foreign] partnership or other entity that
89-38 are not inconsistent with those laws; and
89-39 (B) each foreign partnership or other entity
89-40 that is a party to the merger complies [must comply] with those
89-41 [the] laws or documents in effecting the merger.
89-42 (b) Contents of Plan [of Merger]. A [If a partnership
89-43 merges with one or more domestic or foreign limited partnerships or
89-44 other entities, other than another partnership that is not a
89-45 limited partnership, a] plan of merger must set forth [be adopted.
89-46 The plan must include]:
89-47 (1) the name and state of formation of [organization
89-48 of:]
89-49 [(A)] each domestic or foreign partnership or
89-50 other entity that is a party to the merger and the name of[;]
89-51 [(B)] each domestic or foreign partnership or
89-52 other entity, if any, that shall [will] survive the merger, which
89-53 may be one or more of the domestic or foreign partnerships or other
89-54 entities [who are a] party to the merger, and the name and state of
89-55 domicile or formation of[; and]
89-56 [(C)] each new domestic or foreign partnership
89-57 or other entity, if any, that may be created by the terms of the
89-58 plan of merger;
89-59 (2) the terms and conditions of the merger[,]
89-60 including, if more than one domestic or foreign partnership or
89-61 other entity is to survive or to be created by the terms of the
89-62 plan of merger:[,]
89-63 (A) the manner and basis of[:]
89-64 [(A)] allocating and vesting the real estate and
89-65 other property of each domestic or foreign partnership and of each
89-66 other entity that is a party to the merger among one or more of the
89-67 surviving or new domestic or foreign partnerships and [or] other
89-68 entities; and
89-69 (B) the manner and basis of allocating all
90-1 liabilities and obligations of each domestic or foreign partnership
90-2 and other entity that is a party to the merger[,] (or making
90-3 adequate provisions [provision] for the payment and discharge
90-4 thereof) [of the liabilities and obligations,] among one or more of
90-5 the surviving or new domestic or foreign partnerships and [or]
90-6 other entities;
90-7 (3) the manner and basis of converting any of the
90-8 partnership interests or other evidences of ownership of each
90-9 domestic or foreign partnership and other entity that is a party to
90-10 the merger into[:]
90-11 [(A)] partnership interests, shares,
90-12 obligations, evidences of ownership, rights to purchase securities,
90-13 or other securities of one or more of the surviving or new domestic
90-14 or foreign partnerships or other entities, into[;]
90-15 [(B)] cash[;] or
90-16 [(C)] other property[,] including shares,
90-17 obligations, evidences of ownership, rights to purchase securities,
90-18 or other securities of any [another] person or entity[;] or into
90-19 [(D)] any combination of the foregoing [those
90-20 items]; and
90-21 (4) as an exhibit or attachment, the [certificate of
90-22 limited partnership, articles of incorporation, articles of
90-23 organization, or other] organizational documents of each
90-24 partnership or other entity that is a party to the merger and that
90-25 is to be created [or will act as a surviving entity] by the terms
90-26 of the plan of merger[;]
90-27 [(5) the names of the principal officer of the
90-28 surviving entities and the registered office and registered agent
90-29 of the surviving entities if a registered office or agent is
90-30 required by the laws under which the surviving entities are formed;]
90-31 [(6) a statement describing whether the surviving
90-32 entity is a partnership, limited partnership, corporation, limited
90-33 liability company, or other entity; and]
90-34 [(7) other provisions relating to the merger].
90-35 (c) Optional Provisions. The plan of merger may state:
90-36 (1) any amendments to the partnership agreement of any
90-37 surviving domestic partnership; and
90-38 (2) any other provisions relating to the merger.
90-39 (d) Certificate of Merger. After a plan of merger has been
90-40 approved by each of the partnerships or other entities that is a
90-41 party to the plan of merger, unless the only parties to the merger
90-42 are partnerships [and a partnership merges with one or more
90-43 domestic or foreign limited partnerships or other entities], a
90-44 certificate of merger shall be executed on behalf of each
90-45 partnership or other entity by at least one [general] partner of
90-46 each domestic partnership that is a party to the plan of merger and
90-47 by a general partner, [an authorized] officer, agent[,] or other
90-48 authorized representative of each other partnership or other entity
90-49 that is a party to the plan of merger and shall set forth[. The
90-50 certificate must include]:
90-51 (1) the plan of merger; and
90-52 (2) for each domestic or foreign partnership or other
90-53 entity that is a party to the plan of merger, a statement that the
90-54 plan of merger was duly authorized by all action [actions] required
90-55 by the laws under which it was formed or organized and by its
90-56 constituent documents.
90-57 (e) [(d)] Filing. If a [The] certificate of merger must be
90-58 executed, the original of the certificate of merger and the number
90-59 of copies of the certificate equal to the number of [filed for
90-60 each] surviving and new domestic or foreign partnerships and other
90-61 entities that are [partnership or other entity and for each other
90-62 entity that is] a party to the plan of merger or that will be
90-63 created by its terms, shall be[. The filing must be with the
90-64 secretary of state or other authority with which the entity must
90-65 file organizational or related documents and must comply with that
90-66 authority's filing requirements.]
90-67 [(e) Effective Date of Merger. If a certificate of merger
90-68 is] delivered to the secretary of state. Unless the secretary of
90-69 state finds that a[, the merger is effective on the date of the
91-1 issuance of the] certificate of merger does not conform to law,
91-2 then on receipt of all applicable filing fees and franchise taxes,
91-3 if any, required by law, or if [by the secretary of state or on a
91-4 later date stated in the certificate of merger. If a certificate
91-5 of merger is not required to be filed with the secretary of state,
91-6 the merger is effective on the date agreed to by the parties to the
91-7 merger as set out in] the plan of merger (or a statement provided
91-8 in lieu thereof) provides that one or more of the surviving or new
91-9 domestic or foreign partnerships or other entities that will be
91-10 responsible for the payment of all the fees and franchise taxes and
91-11 that all of the surviving or new domestic or foreign partnerships
91-12 and other entities will be obligated to pay the fees and franchise
91-13 taxes if they are not timely paid, the secretary of state shall
91-14 certify that the certificate of merger has been filed in the
91-15 secretary of state's office by endorsing on the original the word
91-16 "Filed" and the date of the filing, file and index the endorsed
91-17 certificate of merger, and return the copy, similarly endorsed, to
91-18 each surviving or new domestic or foreign partnership or other
91-19 entity that is a party to the plan of merger or that is created
91-20 thereby, or its or their respective representatives [or as
91-21 otherwise agreed to by the parties].
91-22 (f) Effective Date. Except as provided by Section 9.06, the
91-23 merger shall be effective on the issuance of the certificate of
91-24 merger by the secretary of state or, if a certificate of merger
91-25 need not be executed, as provided in the plan of merger.
91-26 (g) Effect. When a merger takes effect:
91-27 (1) the [Effect of Merger. (1) A partner of a
91-28 partnership that is a party to a merger does not become personally
91-29 liable as a result of the merger for a liability or obligation of
91-30 another person that is a party to the merger unless the partner
91-31 consents to becoming personally liable by action taken in
91-32 connection with the specific plan of merger approved by the
91-33 partner. A partner who remains in or enters a domestic or foreign
91-34 partnership or other entity that survives a merger or that enters a
91-35 domestic or foreign partnership or other entity created by the
91-36 terms of the plan of merger shall be treated as an incoming partner
91-37 in the new or surviving partnership as of the effective date of the
91-38 merger for the purpose of determining the partner's liability for a
91-39 debt or obligation of the other partnerships or entities that are
91-40 parties to the merger and in which the partner was not associated.]
91-41 [(2) The] separate existence of every domestic
91-42 partnership [or other entity] that is a party to the [a] merger,
91-43 except any [a] surviving or new domestic partnership, shall cease;
91-44 (2) all [or other entity, ceases when a merger takes
91-45 effect.]
91-46 [(3) All] rights, title, and interests [interest] to
91-47 all real estate and other property owned by each domestic or
91-48 foreign partnership and by each other entity that is a party to the
91-49 merger shall be [are] allocated to and vested in one or more of the
91-50 surviving or resulting entities as provided in the [a] plan of
91-51 merger without reversion or impairment, without further act or
91-52 deed, and without any transfer or assignment having occurred, but
91-53 subject to any existing liens or other encumbrances thereon;
91-54 (3) [on the property, when a merger takes effect.]
91-55 [(4) When a merger takes effect,] all liabilities and
91-56 obligations of each domestic or foreign partnership and other
91-57 entity that is a party to the merger shall be [are] allocated to
91-58 one or more of the surviving or new domestic or foreign
91-59 partnerships and [or] other entities in the manner set forth in
91-60 [prescribed by] the plan of merger, and each surviving or new
91-61 domestic or foreign partnership, and each surviving or new other
91-62 entity to which a liability or obligation shall have been [is]
91-63 allocated pursuant to [under] the plan of merger, shall be
91-64 [becomes] the primary obligor therefor and, except [for the
91-65 liability or obligation. Except] as otherwise set forth in
91-66 [provided by] the plan of merger or as otherwise provided by law or
91-67 contract, no other [a] party to the merger, other than a surviving
91-68 domestic or foreign partnership or other entity liable thereon
91-69 [with liability] at the time of the merger and no other new[, or
92-1 another] domestic or foreign partnership or other entity created
92-2 thereby, shall be liable therefor;
92-3 (4) [by the merger does not become liable for the debt
92-4 or obligation.]
92-5 [(5) After a merger,] a proceeding pending by or
92-6 against any [a] domestic or foreign partnership or by or against
92-7 any other [another] entity that is a party to the merger may be
92-8 continued as if the merger did not occur [and the partnership or
92-9 other entity that has been allocated the liabilities, obligations,
92-10 asset, or rights associated with the proceeding under the terms of
92-11 the plan of merger remains the primary obligor], or the surviving
92-12 or new domestic or foreign partnership or the surviving or new
92-13 other entity or other entities to which the liability, obligation,
92-14 asset[,] or right associated with such [the] proceeding is
92-15 allocated to and vested in pursuant to [under] the plan of merger
92-16 may be substituted in the proceeding;
92-17 (5) the[.]
92-18 [(6) The] partnership agreement of each surviving
92-19 domestic partnership shall be[, certificate of limited partnership,
92-20 and other constituent documents of each other entity that will act
92-21 as a surviving entity by the terms of a plan of merger is
92-22 considered] amended to the extent provided in the plan of merger;
92-23 (6) each [when the merger takes effect.]
92-24 [(7) Each] new domestic partnership to be formed under
92-25 the plan of merger shall be formed as a partnership under this Act,
92-26 [named in a plan of merger under Subsection (b)(1), each new
92-27 domestic limited partnership for which a certificate of limited
92-28 partnership is included in a plan of merger under Subsection
92-29 (b)(4),] and each other entity to be formed or organized under the
92-30 laws of this state, the [state for which] organizational documents
92-31 of which are set forth [are included in a plan of merger under
92-32 Subsection (b)(4) are formed or organized as provided] in the plan
92-33 of merger, upon [on:]
92-34 [(A) delivering] an executed copy of the
92-35 certificate of merger being delivered to or filed with any required
92-36 [to, or filing the certificate with, the] governmental entity with
92-37 which organizational documents of such [the partnership or] other
92-38 entity are required to be delivered or filed, [if any;] and upon
92-39 [(B)] meeting the additional requirements, if
92-40 any, of law for its formation or organization, shall be formed or
92-41 organized as provided in the plan of merger;
92-42 (7) the[.]
92-43 [(8) The] partnership interests [interest] of each
92-44 domestic or foreign partnership and the partnership interests
92-45 [interest], shares, or evidences of ownership in each other entity
92-46 that is a party to the merger that are to be converted or
92-47 exchanged, in whole or in part, into [(i)] partnership interests,
92-48 shares, obligations, evidences of ownership, rights to purchase
92-49 securities, or other securities of one or more of the surviving or
92-50 new domestic or foreign partnerships or other entities, into
92-51 [(ii)] cash, or [(iii)] other property, including shares,
92-52 obligations, evidences of ownership, rights to purchase securities,
92-53 or other securities of any other person or entity, or into any
92-54 combination of the foregoing, shall be so [those items, are]
92-55 converted and exchanged and [when a merger takes effect. After the
92-56 merger] the former partners of each domestic partnership [and
92-57 owners of shares or evidences of ownership in each other domestic
92-58 entity] that is a party to the merger are entitled [only] to the
92-59 rights provided in the plan of merger;
92-60 (8) if the[.]
92-61 [(9) If a] plan of merger fails to provide for the
92-62 allocation and vesting of the right, title, and interest in a
92-63 particular item of real estate or other property or for the
92-64 allocation of a liability or obligation of a party to the merger,
92-65 then the [when the merger takes effect the] item of real estate or
92-66 other property shall be owned in undivided interest [interests] by,
92-67 or the liability or obligation shall be a joint and several
92-68 liability and obligation of, each of the surviving and new domestic
92-69 and foreign partnerships and other entities, pro rata to the total
93-1 number of surviving and new domestic and foreign partnerships and
93-2 other entities resulting from the merger;
93-3 (9) a partner of a partnership that is a party to a
93-4 merger does not become personally liable as a result of the merger
93-5 for a liability or obligation of another person that is a party to
93-6 the merger unless the partner consents to becoming personally
93-7 liable by action taken in connection with the specific plan of
93-8 merger approved by the partner; and for purposes of determining the
93-9 liability of partners in a domestic partnership that is a party to
93-10 the merger for the debts and obligations of other parties to the
93-11 merger in which that partner otherwise was not or is not a partner
93-12 or other owner of an interest:
93-13 (A) a partner who remains in or enters a
93-14 domestic or foreign partnership or other entity that survives a
93-15 merger or that enters a domestic or foreign partnership or other
93-16 entity created by the terms of the plan of merger shall be treated
93-17 as an incoming partner in the new or surviving partnership as of
93-18 the effective date of the merger; and
93-19 (B) a partner in a domestic partnership that is
93-20 a party to the merger but that does not survive shall be treated as
93-21 a partner who withdrew from the nonsurviving domestic partnership
93-22 as of the effective date of the merger; and[.]
93-23 (10) if [If] a domestic or foreign partnership merges
93-24 with another domestic or foreign partnership or other entity and
93-25 through the merger process no longer exists, a person who becomes a
93-26 member of the surviving domestic or foreign partnership or other
93-27 entity, for a period of one year after the effective date of the
93-28 merger, may bind the surviving entity to a transaction for which it
93-29 no longer has authority to bind the entity if the transaction is
93-30 one in which the partner's actions would bind the foreign or
93-31 domestic partnership before the effective date of the merger and
93-32 the other party to the transaction:
93-33 (A) does not have notice of the merger;
93-34 (B) had done business with the partnership which
93-35 no longer exists within one year preceding the effective date of
93-36 the merger; and
93-37 (C) reasonably believes that the partner who was
93-38 previously a member of the partnership which was merged into the
93-39 surviving entity and is now a partner of the surviving entity was a
93-40 partner with authority to bind the partnership to the transaction
93-41 at the time of the transaction.
93-42 (h) Other Entity. [(g) Definition of "Other Entity."] For
93-43 purposes of this section, the term "other entity" means any entity,
93-44 whether organized for profit or not, that is a corporation, limited
93-45 partnership, limited liability company, [joint venture,] joint
93-46 stock company, cooperative, association, bank, insurance company,
93-47 or other legal entity organized pursuant to [under] the laws of
93-48 this state or any other [another] state or country to the extent
93-49 such [the] laws or the constituent documents of that entity, not
93-50 inconsistent with such laws [law], permit that entity to enter into
93-51 a merger or partnership interest exchange as permitted by this
93-52 section.
93-53 SECTION 121. Subsection (a), Section 9.03, Texas Revised
93-54 Partnership Act (Article 6132b-9.03, Vernon's Texas Civil
93-55 Statutes), is amended to read as follows:
93-56 (a) One or more domestic or foreign partnerships may adopt a
93-57 plan of exchange by which a domestic or foreign partnership or
93-58 other entity acquires all of the outstanding partnership interests
93-59 of one or more domestic partnerships in exchange for cash or
93-60 securities of the acquiring domestic or foreign partnership or
93-61 other entity, if:
93-62 (1) the partnership agreement of each domestic
93-63 partnership whose partnership interests are to be acquired pursuant
93-64 to the plan of exchange authorizes the partnership interest
93-65 exchange adopted by the partnership, and if one or more foreign
93-66 partnerships or other entities is to issue shares or other
93-67 interests as part of the plan of exchange, the issuance of those
93-68 shares or other interests is either permitted by the laws under
93-69 which that foreign partnership or other entity is formed or not
94-1 inconsistent with those laws;
94-2 (2) each domestic or foreign partnership, the
94-3 partnership interests of which are to be acquired under the plan of
94-4 exchange, approves the plan of exchange in the manner prescribed in
94-5 its partnership agreement; and
94-6 (3) [(2)] each acquiring domestic or foreign
94-7 partnership or other entity takes all action that may be required
94-8 by the laws of the state under which it was formed or incorporated
94-9 and as required by its partnership agreement or other constituent
94-10 documents in order to effect the exchange.
94-11 SECTION 122. Article IX, Texas Revised Partnership Act
94-12 (Article 6132b-9.01 et seq., Vernon's Texas Civil Statutes), is
94-13 amended by adding Sections 9.05 and 9.06 to read as follows:
94-14 Sec. 9.05. CONVERSION. (a) A domestic partnership may
94-15 adopt a plan of conversion and convert to a foreign partnership or
94-16 any other entity if:
94-17 (1) the converting entity acts on and its partners
94-18 approve a plan of conversion in the manner prescribed by Section
94-19 9.02 as if the conversion were a merger to which the converting
94-20 entity were a party and not the survivor;
94-21 (2) the conversion is permitted by, or not
94-22 inconsistent with, the laws of the state or country in which the
94-23 converted entity is to be incorporated, formed, or organized and
94-24 the incorporation, formation, or organization of the converted
94-25 entity is effected in compliance with such laws;
94-26 (3) at the time the conversion becomes effective, each
94-27 partner of the converting entity will, unless otherwise agreed to
94-28 by that partner, own an equity interest or other ownership or
94-29 security interest in, and be a shareholder, partner, member, owner,
94-30 or other security holder of, the converted entity; and
94-31 (4) the converted entity shall be incorporated,
94-32 formed, or organized as part of or pursuant to the plan of
94-33 conversion.
94-34 (b) Any foreign partnership or other entity may adopt a plan
94-35 of conversion and convert to a domestic partnership if:
94-36 (1) the conversion is permitted by the laws of the
94-37 state or country in which the foreign partnership is incorporated,
94-38 if a foreign partnership is converting;
94-39 (2) the conversion is either permitted by the laws
94-40 under which the other entity is formed or organized or by the
94-41 constituent documents of the other entity that are not inconsistent
94-42 with the laws of the state or country in which the other entity is
94-43 formed or organized, if another entity is converting; and
94-44 (3) the converting entity takes all action that may be
94-45 required by the laws of the state or country under which it is
94-46 incorporated, formed, or organized and by its constituent documents
94-47 to effect the conversion.
94-48 (c) A plan of conversion shall set forth:
94-49 (1) the name of the converting entity and the
94-50 converted entity;
94-51 (2) a statement that the converting entity is
94-52 continuing its existence in the organizational form of the
94-53 converted entity;
94-54 (3) a statement as to the type of entity that the
94-55 converted entity is to be and the state or country under the laws
94-56 of which the converted entity is to be incorporated, formed, or
94-57 organized;
94-58 (4) the manner and basis of converting the partnership
94-59 interests, shares, or other evidences of ownership of the
94-60 converting entity into partnership interests, shares, or other
94-61 evidences of ownership or securities of the converted entity, or
94-62 any combination thereof; and
94-63 (5) in an attachment or exhibit, the certificate of
94-64 limited partnership, articles of incorporation, or other
94-65 organizational documents of the converted entity, if the converted
94-66 entity is not a domestic partnership.
94-67 (d) A plan of conversion may set forth such other provisions
94-68 relating to the conversion not inconsistent with law, including the
94-69 initial partnership agreement of the converted entity if the
95-1 converted entity is a partnership.
95-2 (e) If a plan of conversion has been approved in accordance
95-3 with the preceding provisions of this section and has not been
95-4 abandoned, unless the converted entity and the converting entities
95-5 are both partnerships:
95-6 (1) articles of conversion shall be executed by the
95-7 converting entity by a partner, officer, or other duly authorized
95-8 representative thereof and shall set forth:
95-9 (A) the plan of conversion or a statement
95-10 certifying the following:
95-11 (i) the name, the state of incorporation,
95-12 formation, or organization of the converting entity and the
95-13 organizational form of the converted entity;
95-14 (ii) that a plan of conversion has been
95-15 approved;
95-16 (iii) that an executed plan of conversion
95-17 is on file at the principal place of business of the converting
95-18 entity, stating the address thereof, and that an executed plan of
95-19 conversion will be on file, from and after the conversion, at the
95-20 principal place of business of the converted entity, stating the
95-21 address thereof; and
95-22 (iv) that a copy of the plan of conversion
95-23 will be furnished by the converting entity (prior to the
95-24 conversion) or the converted entity (after the conversion), on
95-25 written request and without cost, to any member of the converting
95-26 entity or the converted entity; and
95-27 (B) a statement that the approval of the plan of
95-28 conversion was duly authorized by all action required by the laws
95-29 under which the converting entity was incorporated, formed, or
95-30 organized and by its constituent documents;
95-31 (2) the original and one copy of the articles of
95-32 conversion shall be delivered to the secretary of state; and
95-33 (3) two copies of the certificate of limited
95-34 partnership of the domestic limited partnership, if the converted
95-35 entity is a domestic limited partnership, shall also be delivered
95-36 to the secretary of state with the articles of conversion.
95-37 (f) If the secretary of state finds that the articles of
95-38 conversion conform to law, has received all filings required to be
95-39 received, and has issued all certificates required to be issued in
95-40 connection with the incorporation, formation, or organization of
95-41 the converted entity, if any, the secretary of state shall, when
95-42 all fees and franchise taxes have been paid as required by law or
95-43 if the articles of conversion provide that the converted entity
95-44 will be liable for the payment of all such fees and franchise
95-45 taxes:
95-46 (1) endorse on the original and each copy the word
95-47 "Filed" and the month, day, and year of the filing;
95-48 (2) file the original in his office; and
95-49 (3) issue a certificate of conversion, together with a
95-50 copy of the articles affixed thereto, to the converted entity or
95-51 its representatives.
95-52 (g) Except as otherwise provided by Section 9.06, on the
95-53 issuance of the certificate of conversion by the secretary of state
95-54 (or if a certificate of conversion need not be executed, as
95-55 provided in the plan of merger), the conversion of a converting
95-56 entity shall be effective.
95-57 (h) When a conversion of a converting entity takes effect:
95-58 (1) the converting entity shall continue to exist,
95-59 without interruption, but in the organizational form of the
95-60 converted entity rather than in its prior organizational form;
95-61 (2) all rights, title, and interests to all real
95-62 estate and other property owned by the converting entity shall
95-63 continue to be owned by the converted entity in its new
95-64 organizational form without reversion or impairment, without
95-65 further act or deed, and without any transfer or assignment having
95-66 occurred, but subject to any existing liens or other encumbrances
95-67 thereon;
95-68 (3) all liabilities and obligations of the converting
95-69 entity shall continue to be liabilities and obligations of the
96-1 converted entity in its new organizational form without impairment
96-2 or diminution by reason of the conversion;
96-3 (4) all rights of creditors or other parties with
96-4 respect to or against the prior interest holders or other owners of
96-5 the converting entity in their capacities as such in existence as
96-6 of the effective time of the conversion will continue in existence
96-7 as to those liabilities and obligations and may be pursued by such
96-8 creditors and obligees as if such conversion shall not have
96-9 occurred;
96-10 (5) a proceeding pending by or against the converting
96-11 entity or by or against any of the converting entity's interest
96-12 holders or owners in their capacities as such may be continued by
96-13 or against the converted entity in its new organizational form and
96-14 by or against the prior interest holders or owners, as the case may
96-15 be, without any need for substitution of parties;
96-16 (6) the partnership interests, shares, and other
96-17 evidences of ownership in the converting entity that are to be
96-18 converted into partnership interests, shares, evidences of
96-19 ownership, or other securities in the converted entity as provided
96-20 in the plan of conversion shall be so converted, and if the
96-21 converting entity is a domestic partnership, the former holders of
96-22 shares in the domestic partnership shall be entitled only to the
96-23 rights provided in the plan of conversion;
96-24 (7) if, after the effectiveness of the conversion, a
96-25 shareholder, partner, member, or other owner of the converted
96-26 entity would be liable under applicable law in such capacity for
96-27 the debts or obligations of the converted entity, such shareholder,
96-28 partner, member, or other owner of the converted entity shall be
96-29 liable for the debts and obligations of the converting entity that
96-30 existed before the conversion takes effect only to the extent that
96-31 such shareholder, partner, member or other owner:
96-32 (A) agreed in writing to be liable for such
96-33 debts or obligations;
96-34 (B) was liable under applicable law, prior to
96-35 the effectiveness of the conversion, for such debts or obligations;
96-36 or
96-37 (C) by becoming a shareholder, partner, member,
96-38 or other owner of the converted entity, becomes liable under
96-39 applicable law for existing debts and obligations of the converted
96-40 entity;
96-41 (8) if the converted entity is a foreign partnership
96-42 or other entity, such converted entity shall be deemed to appoint
96-43 the secretary of state as its agent for service of process in a
96-44 proceeding to enforce any obligation or the rights of dissenting
96-45 shareholders of the converting domestic partnership; and
96-46 (9) if the converting partnership is a domestic
96-47 partnership, the provisions of Section 9.02 of this Act shall apply
96-48 as if the converted entity were the survivor of a merger with the
96-49 converting entity.
96-50 (i) For purposes of this section:
96-51 (1) "Conversion" means:
96-52 (A) the continuance of a domestic partnership
96-53 as, and in the organizational form of, a foreign partnership or
96-54 other entity; or
96-55 (B) the continuance of a foreign partnership or
96-56 other entity as, and in the organizational form of, a domestic
96-57 partnership.
96-58 (2) "Converted entity" means any domestic or foreign
96-59 partnership or other entity to which a converting entity has
96-60 converted or intends to convert as permitted by this section.
96-61 (3) "Converting entity" means any domestic or foreign
96-62 partnership or other entity that has converted or intends to
96-63 convert as permitted by this section.
96-64 (4) "Domestic partnership" means a partnership the
96-65 internal affairs of which are governed by this Act.
96-66 (5) "Foreign partnership" means a partnership, other
96-67 than a limited partnership, the internal affairs of which are
96-68 governed by the law of another state comparable to this Act or the
96-69 Texas Uniform Partnership Act (Article 6132b, Vernon's Texas Civil
97-1 Statutes).
97-2 (6) "Other entity" means any entity, whether organized
97-3 for profit or not, that is a corporation, limited partnership
97-4 (other than a limited partnership formed under the Texas Revised
97-5 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
97-6 Statutes)), limited liability company, joint stock company,
97-7 cooperative, association, bank, insurance company, or other legal
97-8 entity organized pursuant to the laws of this state or any other
97-9 state or country.
97-10 Sec. 9.06. FILINGS AND FEES. Sections 2.12 and 12.01, Texas
97-11 Revised Limited Partnership Act (Article 6132a-1, Vernon's Texas
97-12 Civil Statutes), apply to filings made with the secretary of state
97-13 under this article as if those filings related to limited
97-14 partnerships.
97-15 SECTION 123. The Texas Revised Partnership Act (Article
97-16 6132b-1.01 et seq., Vernon's Texas Civil Statutes) is amended by
97-17 redesignating existing Article X as Article XI and adding a new
97-18 Article X to read as follows:
97-19 ARTICLE X. FOREIGN LIMITED LIABILITY PARTNERSHIP
97-20 Sec. 10.01. LAW GOVERNING FOREIGN LIMITED LIABILITY
97-21 PARTNERSHIP. (a) The laws of the state under which a foreign
97-22 limited liability partnership is formed govern its organization and
97-23 internal affairs and the liability of partners for obligations of
97-24 the partnership.
97-25 (b) A foreign limited liability partnership may not be
97-26 denied a statement of foreign qualification by reason of any
97-27 difference between the laws of the state under which it is formed
97-28 and the laws of Texas.
97-29 (c) With respect to its activities in Texas, a foreign
97-30 limited liability partnership is subject to Section 3.01 as if it
97-31 were a domestic registered limited liability partnership.
97-32 Sec. 10.02. STATEMENT OF FOREIGN QUALIFICATION. (a) Before
97-33 transacting business in Texas, a foreign limited liability
97-34 partnership must file with the secretary of state a statement of
97-35 foreign qualification. The statement must contain:
97-36 (1) the name of the foreign limited liability
97-37 partnership which satisfies the requirements of the state under
97-38 whose laws it is formed and ends with "Registered Limited Liability
97-39 Partnership," "Limited Liability Partnership," "R.L.L.P.,"
97-40 "L.L.P.," "RLLP," or "LLP";
97-41 (2) the federal tax identification number of the
97-42 partnership;
97-43 (3) the state where it is formed, the date of initial
97-44 registration as a limited liability partnership under the laws of
97-45 the state of formation, and a statement that, as of the date of
97-46 filing, the foreign limited liability partnership exists as a valid
97-47 limited liability partnership under the laws of the state of its
97-48 formation;
97-49 (4) the street address of the partnership's chief
97-50 executive office and, if different, the street address of any other
97-51 office of the partnership in Texas;
97-52 (5) the address of the registered office and the name
97-53 and address of the registered agent for service of process required
97-54 to be maintained by Section 10.05;
97-55 (6) a statement that the secretary of state is
97-56 appointed the agent of the foreign limited liability partnership
97-57 for service of process under the circumstances set forth in Section
97-58 10.05(k);
97-59 (7) the number of partners at the date of the
97-60 statement; and
97-61 (8) in brief, the partnership's business.
97-62 (b) The statement of qualification must be executed by a
97-63 majority-in-interest of the partners or by one or more partners
97-64 authorized by a majority-in-interest of the partners.
97-65 (c) Two copies of the statement of foreign qualification
97-66 must be filed accompanied by a fee of $200 for each partner in this
97-67 state, not to exceed $750.
97-68 (d) A partnership is registered as a foreign limited
97-69 liability partnership on filing a completed initial or renewal
98-1 statement of foreign qualification, in duplicate with the required
98-2 fee, or on a later date specified in the statement. A registration
98-3 is not affected by later changes in the partners of the
98-4 partnership.
98-5 (e) An initial statement of foreign qualification filed
98-6 under this subsection and registered by the secretary of state
98-7 expires one year after the date of registration or later effective
98-8 date unless earlier withdrawn or revoked or unless renewed in
98-9 accordance with Subsection (g).
98-10 (f) A registration may be withdrawn by filing in duplicate
98-11 with the secretary of state a written withdrawal notice executed by
98-12 a majority-in-interest of the partners or by one or more partners
98-13 authorized by a majority-in-interest of partners. A withdrawal
98-14 notice must include the name of the partnership, the federal tax
98-15 identification number of the partnership, the date of registration
98-16 of the partnership's last statement of foreign qualification under
98-17 this section, and a current street address of the partnership's
98-18 principal office in this state or outside this state, if
98-19 applicable. A withdrawal notice terminates the status of the
98-20 partnership as a foreign limited liability partnership as of the
98-21 date of filing the notice or a later date specified in the notice,
98-22 but not later than the expiration date under Subsection (e).
98-23 (g) An effective registration may be renewed before its
98-24 expiration by filing in duplicate with the secretary of state a
98-25 statement of foreign qualification containing current information
98-26 of the kind required in an initial statement of qualification and
98-27 the most recent date of registration of the partnership. The
98-28 renewal statement of qualification must be accompanied by a fee of
98-29 $200 for each partner in this state on the date of renewal, not to
98-30 exceed $750. A renewal statement of foreign qualification filed
98-31 under this section continues an effective registration for one year
98-32 after the date the effective registration would otherwise expire.
98-33 (h) The secretary of state may remove from its active
98-34 records the registration of a foreign limited liability partnership
98-35 whose registration has been withdrawn or revoked or has expired and
98-36 not been renewed.
98-37 (i) The secretary of state may revoke the filing of a
98-38 document filed under this section if the secretary of state
98-39 determines that the filing fee for the document was paid by an
98-40 instrument that was dishonored when presented by the state for
98-41 payment. The secretary of state shall return the document and give
98-42 notice of revocation to the filing party by regular mail. Failure
98-43 to give or receive notice does not affect an earlier filing.
98-44 (j) The secretary of state may provide forms for the
98-45 statement of foreign qualification or renewal of registration.
98-46 (k) A document filed under this section may be amended or
98-47 corrected by filing in duplicate with the secretary of state
98-48 articles of amendment executed by a majority-in-interest of the
98-49 partners or by one or more partners authorized by a
98-50 majority-in-interest of the partners. The articles of amendment
98-51 must contain the name of the partnership, the tax identification
98-52 number of the partnership, the identity of the document being
98-53 amended, the date on which the document being amended was filed,
98-54 the part of the document being amended, and the amendment or
98-55 correction. Two copies of the articles of amendment must be filed,
98-56 accompanied by a fee of $10 and, if the amendment increases the
98-57 number of partners, a fee of $200 for each partner in this state
98-58 added by amendment, not to exceed $750.
98-59 (l) A document filed under this section may be a
98-60 photographic, facsimile, or similar reproduction of a signed
98-61 document. A signature on a document filed under this section may
98-62 be a facsimile.
98-63 (m) A person commits an offense if the person signs a
98-64 document the person knows is false in any material respect with the
98-65 intent that the document be delivered on behalf of the partnership
98-66 to the secretary of state for filing. An offense under this
98-67 subsection is a Class A misdemeanor.
98-68 (n) The secretary of state may adopt procedural rules on
98-69 filing documents under this section.
99-1 Sec. 10.03. EFFECT OF FAILURE TO QUALIFY. (a) A foreign
99-2 limited liability partnership transacting business in Texas may not
99-3 maintain an action, suit, or proceeding in Texas unless it has
99-4 registered in Texas and paid to the secretary of state all amounts
99-5 owing under Section 10.02.
99-6 (b) The failure of a foreign limited liability partnership
99-7 to register in Texas does not impair:
99-8 (1) the validity of a contract or act of the foreign
99-9 limited liability partnership;
99-10 (2) the right of any other party to the contract to
99-11 maintain any action, suit, or proceeding on the contract; or
99-12 (3) defense by the foreign limited liability
99-13 partnership of any action, suit, or proceeding in any Texas court.
99-14 (c) A partner of a foreign limited liability partnership is
99-15 not liable for the debts and obligations of the foreign limited
99-16 liability partnership solely because the foreign limited liability
99-17 partnership transacted business in Texas without registration.
99-18 Sec. 10.04. ACTIVITIES NOT CONSTITUTING TRANSACTING
99-19 BUSINESS. Without excluding other activities that do not
99-20 constitute transacting business in Texas, a foreign limited
99-21 liability partnership is not considered to be transacting business
99-22 in Texas for purposes of this Act because it carries on in Texas
99-23 any one or more of the following activities:
99-24 (1) maintaining or defending any action, suit, or
99-25 administrative or arbitration proceeding, effecting settlement of
99-26 the action, suit, or proceeding, or settling claims or disputes to
99-27 which it is a party;
99-28 (2) holding meetings of its partners or carrying on
99-29 other activities concerning its internal affairs;
99-30 (3) maintaining bank accounts;
99-31 (4) maintaining offices or agencies for the transfer,
99-32 exchange, and registration of partnership interests issued by it or
99-33 appointing or maintaining trustees or depositories with relation to
99-34 ownership interests in it;
99-35 (5) effecting sales through independent contractors;
99-36 (6) creating as borrower or lender or acquiring
99-37 indebtedness or mortgages or other security interests in real or
99-38 personal property;
99-39 (7) securing or collecting debts due to it or
99-40 enforcing rights in property securing such debts;
99-41 (8) transacting business in interstate commerce;
99-42 (9) conducting an isolated transaction completed
99-43 within 30 days of the date of initiation of the transaction and not
99-44 in the course of a number of repeated similar transactions;
99-45 (10) exercising the powers of executor or
99-46 administrator of the estate of a nonresident decedent under
99-47 ancillary letters issued by a Texas court, or exercising the powers
99-48 of trustee under the will of a nonresident decedent, or under a
99-49 trust created by one or more nonresidents of Texas or by one or
99-50 more foreign corporations or limited partnerships, if the exercise
99-51 of those powers in any of these cases will not involve activities
99-52 that would be considered to constitute the transacting of business
99-53 in Texas in the case of a foreign corporation or foreign limited
99-54 partnership acting in its own right;
99-55 (11) acquiring, in transactions outside Texas or in
99-56 interstate commerce, debts secured by mortgages or liens on real or
99-57 personal property in Texas, collecting or adjusting principal and
99-58 interest payments on those debts, enforcing or adjusting rights in
99-59 property securing those debts, taking any actions necessary to
99-60 preserve and protect the interest of the mortgagee in that
99-61 security, or a combination of these transactions; or
99-62 (12) investing in or acquiring, in transactions
99-63 outside Texas, royalties and other nonoperating mineral interests,
99-64 and the execution of division orders, contracts of sale, and other
99-65 instruments incidental to the ownership of nonoperating mineral
99-66 interests.
99-67 Sec. 10.05. REGISTERED AGENT. (a) A foreign limited
99-68 liability partnership subject to this Act shall have and maintain
99-69 in Texas:
100-1 (1) a registered office, which need not be a place of
100-2 its business in Texas; and
100-3 (2) a registered agent for service of process on the
100-4 foreign limited liability partnership, which may be:
100-5 (A) an individual who is a resident of Texas and
100-6 whose business office is the same as the foreign limited liability
100-7 partnership's registered office; or
100-8 (B) a domestic corporation or a foreign
100-9 corporation that has a certificate of authority to transact
100-10 business in Texas and a business office the same as the foreign
100-11 limited liability partnership's registered office.
100-12 (b) A foreign limited liability partnership subject to this
100-13 Act may change its registered office, its registered agent, or
100-14 both, by paying the filing fee and filing with the secretary of
100-15 state a statement and a duplicate copy of the statement, which need
100-16 not be an executed original or a photocopy of an executed original.
100-17 The statement must contain:
100-18 (1) the name of the foreign limited liability
100-19 partnership;
100-20 (2) the street address of its registered office;
100-21 (3) the street address to which its registered office
100-22 is to be changed, if applicable;
100-23 (4) the name of its registered agent;
100-24 (5) the name of its successor registered agent, if
100-25 applicable;
100-26 (6) a provision that the street address of its
100-27 registered office and the street address of the business office of
100-28 its registered agent, as changed, will be the same; and
100-29 (7) a provision that the change was authorized by the
100-30 foreign limited liability partnership.
100-31 (c) The statement required by Subsection (b) must be
100-32 executed on behalf of the foreign limited liability partnership by
100-33 a majority-in-interest of the partners or by one or more partners
100-34 authorized by a majority-in-interest of the partners. If the
100-35 secretary of state finds that the statement conforms to this
100-36 section, the secretary of state, on receipt of all applicable
100-37 filing fees, shall file it in accordance with Section 10.02(k) as
100-38 if it were an amendment to the statement of foreign qualification.
100-39 (d) On the filing of the statement by the secretary of
100-40 state, the change of address of the registered office, the
100-41 appointment of a new registered agent, or both, as the case may be,
100-42 become effective.
100-43 (e) Filing of the statement amends the statement of foreign
100-44 qualification regarding the information required by Section
100-45 10.02(a)(5).
100-46 (f) A registered agent of a foreign limited liability
100-47 partnership may resign by giving written notice to the foreign
100-48 limited liability partnership and to the secretary of state. Notice
100-49 must be given to the foreign limited liability partnership at its
100-50 last known address and to the last known address of the attorney or
100-51 other individual at whose request the registered agent was
100-52 appointed for the foreign limited liability partnership. Notice,
100-53 together with a duplicate copy, which need not be an executed
100-54 original or a photocopy of an executed original, must be given to
100-55 the secretary of state within 10 days after the date of mailing or
100-56 delivery of the notice to the foreign limited liability partnership
100-57 and attorney or individual. The notice to the secretary of state
100-58 must include the last known address of the foreign limited
100-59 liability partnership, the statement that written notice of
100-60 resignation has been given to the foreign limited liability
100-61 partnership, and the date that the notice was given.
100-62 (g) On compliance with the requirements for giving written
100-63 notice under Subsection (f), the appointment of an agent terminates
100-64 on the 31st day after the date of receipt of the notice by the
100-65 secretary of state. If the secretary of state finds that the
100-66 written notice conforms to this section, the secretary of state
100-67 shall file it in accordance with Section 10.02(k) as if it were an
100-68 amendment to the statement of foreign qualification. A fee is not
100-69 required for the filing of a resignation under Subsection (f).
101-1 (h) The location of the registered office in Texas for a
101-2 foreign limited liability partnership may be changed from one
101-3 address to another by paying the filing fee to the secretary of
101-4 state and filing with the secretary of state a statement and a
101-5 duplicate copy, which need not be an executed original or a
101-6 photocopy of an executed original. The statement must contain:
101-7 (1) the name of the foreign limited liability
101-8 partnership represented by the registered agent;
101-9 (2) the address at which the registered agent has
101-10 maintained the registered office;
101-11 (3) the new address at which the registered agent will
101-12 maintain the registered office; and
101-13 (4) a statement that written notice of the change has
101-14 been given to the foreign limited liability partnership at least 10
101-15 days before the date of the filing.
101-16 (i) The statement required by Subsection (h) must be signed
101-17 and verified by the registered agent or, if the registered agent is
101-18 a corporation, by an officer of the corporation. If the registered
101-19 agent is simultaneously filing statements for more than one foreign
101-20 limited liability partnership, each statement may contain a
101-21 facsimile signature in the execution. If the secretary of state
101-22 finds that the statement conforms to this section, the secretary of
101-23 state, on receipt of the filing fee, shall file it in accordance
101-24 with Section 10.02(k) as if it were an amendment to the statement
101-25 of foreign qualification. The address of the registered office of
101-26 the foreign limited liability partnership is changed on the filing
101-27 of the statement by the secretary of state. Filing of the
101-28 statement amends the statement of foreign qualification regarding
101-29 the information required by Section 10.02(a)(5) and no further
101-30 action is required under Section 10.02(k).
101-31 (j) Each partner and the registered agent of a foreign
101-32 limited liability partnership registered in Texas are agents of the
101-33 foreign limited liability partnership on whom may be served any
101-34 process, notice, or demand required or permitted by law to be
101-35 served on the foreign limited liability partnership.
101-36 (k) The secretary of state is an agent of the foreign
101-37 limited liability partnership on whom any process, notice, or
101-38 demand may be served if:
101-39 (1) a foreign limited liability partnership registered
101-40 in Texas fails to appoint or maintain a registered agent in Texas;
101-41 (2) its registered agent cannot with reasonable
101-42 diligence be found at the registered office;
101-43 (3) its registration is canceled; or
101-44 (4) a foreign limited liability partnership transacts
101-45 business in Texas without having registered under Section 10.02.
101-46 (l) Service on the secretary of state of any process,
101-47 notice, or demand shall be made by delivering duplicate copies of
101-48 the process, notice, or demand to the secretary of state, assistant
101-49 secretary of state, or any clerk having charge of the corporation
101-50 department of the secretary of state's office. If any process,
101-51 notice, or demand is served on the secretary of state, the
101-52 secretary of state shall immediately forward one of the copies by
101-53 registered mail addressed to the foreign limited liability
101-54 partnership at its principal office in the state under which the
101-55 foreign limited liability partnership is formed as shown on the
101-56 statement of foreign qualification. Service had in this manner on
101-57 the secretary of state is returnable in not less than 30 days.
101-58 (m) The secretary of state shall keep a record of all
101-59 processes, notices, and demands served on the secretary of state
101-60 under this section and shall record the time of the service and the
101-61 action taken with reference to each.
101-62 (n) This section does not limit or affect the right to serve
101-63 any process, notice, or demand required or permitted by law to be
101-64 served on a foreign limited liability partnership in another manner
101-65 permitted by law.
101-66 ARTICLE XI [X]. MISCELLANEOUS PROVISIONS
101-67 Sec. 11.01 [10.01]. SHORT TITLE. This Act may be cited as
101-68 the "Texas Revised Partnership Act."
101-69 Sec. 11.02 [10.02]. SEVERABILITY. If a provision of this
102-1 Act or its application to a person or circumstance is held invalid,
102-2 the invalidity does not affect other provisions or applications of
102-3 this Act that can be given effect without the invalid provision or
102-4 application, and to this end the provisions of this Act are
102-5 severable.
102-6 Sec. 11.03 [10.03]. APPLICATION. (a) Before January 1,
102-7 1999. Except as provided by Subsection (b), before January 1, 1999,
102-8 this Act applies only to a partnership formed:
102-9 (1) on or after January 1, 1994, unless that
102-10 partnership is continuing the business of a dissolved partnership
102-11 under Section 41, Texas Uniform Partnership Act (Article 6132b,
102-12 Vernon's Texas Civil Statutes), and its subsequent amendments; and
102-13 (2) before January 1, 1994, that elects, as provided
102-14 by Subsection (d), to be governed by this Act.
102-15 (b) Registered Limited Liability Partnership. Section 3.08
102-16 of this Act, including the fee provisions, applies to a registered
102-17 limited liability partnership, regardless of the date of formation
102-18 and regardless of whether the partnership elects to be governed by
102-19 this Act, except that a registered limited liability partnership
102-20 formed before January 1, 1994, is subject to Sections 2, 15(2)-(4),
102-21 45-A, 45-B, and 45-C, Texas Uniform Partnership Act (Article 6132b,
102-22 Vernon's Texas Civil Statutes), for purposes of determining
102-23 liability for errors, omissions, negligence, incompetence, or
102-24 malfeasance occurring before January 1, 1994.
102-25 (c) After December 31, 1998. After December 31, 1998, this
102-26 Act applies to all partnerships.
102-27 (d) Voluntary Application Early. Before January 1, 1999, a
102-28 partnership formed before January 1, 1994, voluntarily may elect,
102-29 by complying with the procedures provided in its partnership
102-30 agreement for amending the partnership agreement, to adopt this
102-31 Act. The provisions of this Act relating to the liability of the
102-32 partnership's partners to third parties apply to limit those
102-33 partners' liability to a third party who had done business with the
102-34 partnership within one year preceding the partnership's election to
102-35 adopt this Act only if the partnership gives notice to the third
102-36 party of the partnership's election to adopt this Act.
102-37 Sec. 11.04 [10.04]. APPLICATION TO EXISTING RELATIONSHIPS.
102-38 (a) This Act does not impair the obligations of a contract
102-39 existing when this Act takes effect or affect an action or
102-40 proceeding begun or right accrued before this Act takes effect.
102-41 (b) A judgment against a partnership or a partner in an
102-42 action commenced before the effective date of this Act may be
102-43 enforced in the same manner as a judgment rendered before the
102-44 effective date of this Act.
102-45 SECTION 124. Section 8.03, Texas Revised Limited Partnership
102-46 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is repealed.
102-47 SECTION 125. (a) This Act takes effect September 1, 1997,
102-48 and except as provided by this section, applies to all entities
102-49 affected regardless of the date of formation or incorporation.
102-50 (b) The change to Section 6.03, Texas Revised Limited
102-51 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
102-52 made by this Act, does not apply to domestic limited partnerships
102-53 formed before September 1, 1997, if:
102-54 (1) as of September 1, 1997, the partnership agreement
102-55 of the limited partnership does not specify a time at which or an
102-56 event on the occurrence of which a limited partner may withdraw
102-57 from the limited partnership or a definite time for the dissolution
102-58 and winding up of the limited partnership, and
102-59 (2) either:
102-60 (A) the general partners notify all the limited
102-61 partners in writing on or before December 31, 1997, of the change
102-62 to Section 6.03 and of their right to object to this application to
102-63 the limited partnership, and at least one limited partner notifies
102-64 the general partners in writing on or before the 30th day following
102-65 receipt of the notice from the general partners that the limited
102-66 partner objects to the application of the change to the limited
102-67 partnership; or
102-68 (B) the general partners do not notify all
102-69 limited partners on or before December 31, 1997, of the matters
103-1 described in Paragraph (A) of this subdivision.
103-2 (c) A domestic limited partnership to which the change in
103-3 Section 6.03, Texas Revised Limited Partnership Act (Article
103-4 6132a-1, Vernon's Texas Civil Statutes), does not apply is governed
103-5 by Section 6.03 as it existed before amendment by this Act, and
103-6 that provision remains in effect for that limited purpose.
103-7 (d) The change to Article 3.08, Texas Revised Partnership
103-8 Act (Article 6132b-3.08, Vernon's Texas Civil Statutes), made by
103-9 this Act shall not impair the obligations of a contract existing
103-10 before the effective date of this Act.
103-11 (e) This Act shall not affect any action or proceeding
103-12 commenced before the effective date of this Act.
103-13 SECTION 126. The importance of this legislation and the
103-14 crowded condition of the calendars in both houses create an
103-15 emergency and an imperative public necessity that the
103-16 constitutional rule requiring bills to be read on three several
103-17 days in each house be suspended, and this rule is hereby suspended.
103-18 * * * * *