By Bosse H.B. No. 327
77R2442 E
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to adoption of the Business Organizations Code; providing
1-3 penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. ADOPTION OF CODE. The Business Organizations Code
1-6 is adopted to read as follows:
1-7 BUSINESS ORGANIZATIONS CODE
1-8 TABLE OF CONTENTS
1-9 Title 1. General Provisions
1-10 Chapter 1. Definitions and Other General Provisions
1-11 Subchapter A. Definitions and Purpose
1-12 Sec. 1.001. Purpose
1-13 Sec. 1.002. Definitions
1-14 Sec. 1.003. Disinterested Person
1-15 Sec. 1.004. Independent Person
1-16 Sec. 1.005. Conspicuous Information
1-17 Sec. 1.006. Synonymous Terms
1-18 Sec. 1.007. Signing of Document or Other Writing
1-19 Sec. 1.008. Short Titles
1-20 Sec. 1.009. Dollars as Monetary Units
1-21 (Sections 1.010-1.050 reserved for expansion)
1-22 Subchapter B. Code Construction
1-23 Sec. 1.051. Construction of Code
1-24 Sec. 1.052. Reference in Law to Statute Revised by Code
2-1 Sec. 1.053. Applicability to Foreign and Interstate Affairs
2-2 Sec. 1.054. Reservation of Power
2-3 (Sections 1.055-1.100 reserved for expansion)
2-4 Subchapter C. Determination of Applicable Law
2-5 Sec. 1.101. Domestic Filing Entities
2-6 Sec. 1.102. Foreign Filing Entities
2-7 Sec. 1.103. Entities Not Formed by Filing Instrument
2-8 Sec. 1.104. Law Applicable to Liability
2-9 Sec. 1.105. Internal Affairs
2-10 Sec. 1.106. Order of Precedence
2-11 Chapter 2. Purposes and Powers of Domestic Entity
2-12 Subchapter A. Purposes of Domestic Entity
2-13 Sec. 2.001. General Scope of Permissible Purposes
2-14 Sec. 2.002. Purposes of Nonprofit Entity
2-15 Sec. 2.003. General Prohibited Purposes
2-16 Sec. 2.004. Limitation on Purposes of Professional Entity
2-17 Sec. 2.005. Limitation in Governing Documents
2-18 Sec. 2.006. Permissible Purpose of For-Profit Corporation
2-19 Related to Railroads
2-20 Sec. 2.007. Additional Prohibited Activities of For-Profit
2-21 Corporation
2-22 Sec. 2.008. Nonprofit Corporations
2-23 Sec. 2.009. Permissible Purpose of NonProfit Corporation
2-24 Related to Organized Labor
2-25 Sec. 2.010. Prohibited Activities of NonProfit
2-26 Corporation
3-1 Sec. 2.011. Purposes of Cooperative Association
3-2 (Sections 2.012-2.100 reserved for expansion)
3-3 Subchapter B. Powers of Domestic Entity
3-4 Sec. 2.101. General Powers
3-5 Sec. 2.102. Additional Powers of Nonprofit Entity or
3-6 Institution
3-7 Sec. 2.103. Power to Incur Indebtedness
3-8 Sec. 2.104. Power to Make Guaranties
3-9 Sec. 2.105. Additional Powers of Certain Pipeline Businesses
3-10 Sec. 2.106. Power of NonProfit Corporation to Serve as
3-11 Trustee
3-12 Sec. 2.107. Standard Tax Provisions for Certain Charitable
3-13 NonProfit Corporations; Power to Exclude
3-14 Sec. 2.108. Powers of Professional Association
3-15 Sec. 2.109. Powers of Professional Corporation
3-16 Sec. 2.110. Powers of Cooperative Association
3-17 Sec. 2.111. Limitation on Powers of Cooperative Association
3-18 Sec. 2.112. Stated Powers in Subchapter Sufficient
3-19 Sec. 2.113. Limitation on Powers
3-20 Sec. 2.114. Certificated Indebtedness; Manner of Issuance;
3-21 Signature and Seal
3-22 Chapter 3. Formation and Governance
3-23 Subchapter A. Formation, Existence, and Certificate of Formation
3-24 Sec. 3.001. Formation and Existence of Filing Entities
3-25 Sec. 3.002. Formation and Existence of Nonfiling Entities
3-26 Sec. 3.003. Duration
3-27 Sec. 3.004. Organizers
4-1 Sec. 3.005. Certificate of Formation
4-2 Sec. 3.006. Filings in Case of Merger or Conversion
4-3 Sec. 3.007. Supplemental Provisions Required in Certificate
4-4 of Formation of For-Profit Corporation
4-5 Sec. 3.008. Supplemental Provisions Required in Certificate
4-6 of Formation of Close Corporation
4-7 Sec. 3.009. Supplemental Provisions Required in Certificate
4-8 of Formation of NonProfit Corporation
4-9 Sec. 3.010. Supplemental Provisions Required in Certificate of
4-10 Formation of Limited Liability Company
4-11 Sec. 3.011. Supplemental Provisions Regarding Certificate of
4-12 Formation of Limited Partnership
4-13 Sec. 3.012. Supplemental Provisions Required in Certificate of
4-14 Formation of Real Estate Investment Trust
4-15 Sec. 3.013. Supplemental Provisions Required in Certificate of
4-16 Formation of Cooperative Association
4-17 Sec. 3.014. Supplemental Provisions Required in Certificate of
4-18 Formation of Professional Entity
4-19 Sec. 3.015. Supplemental Provisions Required in Certificate of
4-20 Formation of Professional Association
4-21 (Sections 3.016-3.050 reserved for expansion)
4-22 Subchapter B. Amendments and Restatements of Certificate of
4-23 Formation
4-24 Sec. 3.051. Right to Amend Certificate of Formation
4-25 Sec. 3.052. Procedures to Amend Certificate of Formation
4-26 Sec. 3.053. Certificate of Amendment
5-1 Sec. 3.054. Supplemental Provisions for Certificate of
5-2 Amendment of For-Profit Corporation
5-3 Sec. 3.055. Supplemental Provisions for Certificate of
5-4 Amendment of Real Estate Investment Trust
5-5 Sec. 3.056. Effect of Filing of Certificate of Amendment
5-6 Sec. 3.057. Right to Restate Certificate of Formation
5-7 Sec. 3.058. Procedures to Restate Certificate of Formation
5-8 Sec. 3.059. Restated Certificate of Formation
5-9 Sec. 3.060. Supplemental Provisions for Restated Certificate
5-10 of Formation For a For-Profit Corporation
5-11 Sec. 3.061. Restated Certificate of Formation for Certain
5-12 Churches
5-13 Sec. 3.062. Supplemental Provisions for Restated Certificate
5-14 of Formation of Real Estate Investment Trust
5-15 Sec. 3.063. Effect of Filing of Restated Certificate of Formation
5-16 (Sections 3.064-3.100 reserved for expansion)
5-17 Subchapter C. Governing Persons and Officers
5-18 Sec. 3.101. Governing Authority
5-19 Sec. 3.102. Rights of Governing Persons in Certain Cases
5-20 Sec. 3.103. Officers
5-21 Sec. 3.104. Removal of Officers
5-22 Sec. 3.105. Rights of Officers in Certain Cases
5-23 (Sections 3.106-3.150 reserved for expansion)
5-24 Subchapter D. RecordKeeping
5-25 Sec. 3.151. Books and Records for All Filing Entities
5-26 Sec. 3.152. Governing Person's Right of Inspection
6-1 Sec. 3.153. Right of Examination by Owner or Member
6-2 (Sections 3.154-3.200 reserved for expansion)
6-3 Subchapter E. Certificates Representing Ownership Interest
6-4 Sec. 3.201. Certificated or Uncertificated Ownership Interest
6-5 Sec. 3.202. Form and Validity of Certificates; Enforcement of
6-6 Entity's Rights
6-7 Sec. 3.203. Signature Requirement
6-8 Sec. 3.204. Delivery Requirement
6-9 Sec. 3.205. Notice for Uncertificated Ownership Interest
6-10 Chapter 4. Filings
6-11 Subchapter A. General Provisions
6-12 Sec. 4.001. Signature and Delivery
6-13 Sec. 4.002. Action by Secretary of State
6-14 Sec. 4.003. Filing or Issuance of Reproduction or Facsimile
6-15 Sec. 4.004. Time for Filing
6-16 Sec. 4.005. Certificates and Certified Copies
6-17 Sec. 4.006. Forms Adopted by Secretary of State
6-18 Sec. 4.007. Liability for False Filing Instruments
6-19 Sec. 4.008. Offense; Penalty
6-20 Sec. 4.009. Filings by Real Estate Investment Trust
6-21 (Sections 4.010-4.050 reserved for expansion)
6-22 Subchapter B. When Filings Take Effect
6-23 Sec. 4.051. General Rule
6-24 Sec. 4.052. Delayed Effectiveness of Certain Filings
6-25 Sec. 4.053. Conditions for Delayed Effectiveness
6-26 Sec. 4.054. Delayed Effectiveness on Future Event or Fact
6-27 Sec. 4.055. Statement of Event or Fact
7-1 Sec. 4.056. Failure to File Statement
7-2 Sec. 4.057. Abandonment before Effectiveness
7-3 Sec. 4.058. Delayed Effectiveness Not Permitted
7-4 Sec. 4.059. Acknowledgment of Filing with Delayed Effectiveness
7-5 (Sections 4.060-4.100 reserved for expansion)
7-6 Subchapter C. Correction and Amendment
7-7 Sec. 4.101. Correction of Filings
7-8 Sec. 4.102. Limitation on Correction of Filings
7-9 Sec. 4.103. Certificate of Correction
7-10 Sec. 4.104. Filing Certificate of Correction
7-11 Sec. 4.105. Effect of Certificate of Correction
7-12 Sec. 4.106. Amendment of Filings
7-13 (Sections 4.107-4.150 reserved for expansion)
7-14 Subchapter D. Filing Fees
7-15 Sec. 4.151. Filing Fees: All Entities
7-16 Sec. 4.152. Filing Fees: For-Profit Corporations
7-17 Sec. 4.153. Filing Fees: Nonprofit Corporations
7-18 Sec. 4.154. Filing Fees: Limited Liability Companies
7-19 Sec. 4.155. Filing Fees: Limited Partnerships
7-20 Sec. 4.156. Filing Fees: Professional Associations
7-21 Sec. 4.157. Filing Fees: Professional Corporations
7-22 Sec. 4.158. Filing Fees: General Partnerships
7-23 Sec. 4.159. Filing Fees: Nonprofit Associations
8-1 Chapter 5. Names of Entities; Registered Agents and
8-2 Registered Offices
8-3 Subchapter A. General Provisions
8-4 Sec. 5.001. Effect on Rights under Other Law
8-5 (Sections 5.002-5.050 reserved for expansion)
8-6 Subchapter B. General Provisions Relating to Names of Entities
8-7 Sec. 5.051. Assumed Name
8-8 Sec. 5.052. Unauthorized Purpose in Name Prohibited
8-9 Sec. 5.053. Identical and Deceptively Similar Names Prohibited
8-10 Sec. 5.054. Name of Corporation, Foreign Corporation, or
8-11 Professional Corporation
8-12 Sec. 5.055. Name of Limited Partnership or Foreign Limited
8-13 Partnership
8-14 Sec. 5.056. Name of Limited Liability Company or Foreign Limited
8-15 Liability Company
8-16 Sec. 5.057. Name of Cooperative Association
8-17 Sec. 5.058. Name of Professional Association
8-18 Sec. 5.059. Name of Professional Limited Liability Company
8-19 Sec. 5.060. Name of Professional Entity; Conflicts with Other Law
8-20 or Ethical Rule
8-21 Sec. 5.061. Name Containing "Lotto" or "Lottery" Prohibited
8-22 Sec. 5.062. Veterans Organizations; Unauthorized Use of Name
8-23 Sec. 5.063. Name of Limited Liability Partnership
8-24 (Sections 5.064-5.100 reserved for expansion)
8-25 Subchapter C. Reservation of Names
8-26 Sec. 5.101. Application for Reservation of Name
8-27 Sec. 5.102. Reservation of Certain Names Prohibited; Exceptions
9-1 Sec. 5.103. Action on Application
9-2 Sec. 5.104. Duration of Reservation of Name
9-3 Sec. 5.105. Renewal of Reservation
9-4 Sec. 5.106. Transfer of Reservation of Name
9-5 (Sections 5.107-5.150 reserved for expansion)
9-6 Subchapter D. Registration of Names
9-7 Sec. 5.151. Application by Certain Entities for Registration of
9-8 Name
9-9 Sec. 5.152. Application for Registration of Name
9-10 Sec. 5.153. Certain Registrations Prohibited; Exceptions
9-11 Sec. 5.154. Duration of Registration of Name
9-12 Sec. 5.155. Renewal of Registration
9-13 (Sections 5.156-5.200 reserved for expansion)
9-14 Subchapter E. Registered Agents and Registered Offices
9-15 Sec. 5.201. Designation and Maintenance of Registered Agent and
9-16 Registered Office
9-17 Sec. 5.202. Change by Entity to Registered Office or Registered
9-18 Agent
9-19 Sec. 5.203. Change by Registered Agent to Name or Address of
9-20 Registered Office
9-21 Sec. 5.204. Resignation of Registered Agent
9-22 (Sections 5.205-5.250 reserved for expansion)
9-23 Subchapter F. Service of Process
9-24 Sec. 5.251. Failure to Designate Registered Agent
9-25 Sec. 5.252. Service on Secretary of State
9-26 Sec. 5.253. Action by Secretary of State
9-27 Sec. 5.254. Required Records of Secretary of State
10-1 Sec. 5.255. Agent for Service of Process, Notice, or Demand as
10-2 Matter of Law
10-3 Sec. 5.256. Other Means of Service Not Precluded
10-4 Sec. 5.257. Service of Process by Political Subdivision
10-5 Chapter 6. Meetings and Voting
10-6 Subchapter A. Meetings
10-7 Sec. 6.001. Location of Meetings
10-8 Sec. 6.002. Alternative Forms of Meetings
10-9 Sec. 6.003. Participation Constitutes Presence
10-10 Sec. 6.004. Ownership or Membership Meeting List for Certain
10-11 Entities
10-12 (Sections 6.005-6.050 reserved for expansion)
10-13 Subchapter B. Notice of Meetings
10-14 Sec. 6.051. General Notice Requirements
10-15 Sec. 6.052. Waiver of Notice
10-16 Sec. 6.053. Exception
10-17 (Sections 6.054-6.100 reserved for expansion)
10-18 Subchapter C. Record Dates
10-19 Sec. 6.101. Record Date for Purpose Other than Written Consent
10-20 to Action
10-21 Sec. 6.102. Record Date for Written Consent to Action
10-22 Sec. 6.103. Record Date for Suspended Distributions
10-23 (Sections 6.104-6.150 reserved for expansion)
10-24 Subchapter D. Voting of Ownership Interests
10-25 Sec. 6.151. Manner of Voting of Interests
10-26 Sec. 6.152. Voting of Interests Owned by Entity
10-27 Sec. 6.153. Voting of Interests Owned by Another Entity
11-1 Sec. 6.154. Voting of Interests in an Estate or Trust
11-2 Sec. 6.155. Voting of Interests by Receiver
11-3 Sec. 6.156. Voting of Pledged Interests
11-4 (Sections 6.157-6.200 reserved for expansion)
11-5 Subchapter E. Action by Written Consent
11-6 Sec. 6.201. Unanimous Written Consent to Action
11-7 Sec. 6.202. Action by Less than Unanimous Written Consent
11-8 Sec. 6.203. Delivery of Less than Unanimous Written Consent
11-9 Sec. 6.204. Advance Notice Not Required
11-10 (Sections 6.205-6.250 reserved for expansion)
11-11 Subchapter F. Voting Trusts and Voting Agreements
11-12 Sec. 6.251. Voting Trusts
11-13 Sec. 6.252. Voting Agreements
11-14 (Sections 6.253-6.300 reserved for expansion)
11-15 Subchapter G. Applicability of Chapter to Partnerships
11-16 Sec. 6.301. Applicability of Chapter to Partnerships
11-17 Chapter 7. Liability
11-18 Sec. 7.001. Domestic Entity as Separate Legal Entity
11-19 Sec. 7.002. Limitation of Liability for Contractual
11-20 or Related Obligations
11-21 Sec. 7.003. Exclusiveness of Limitation of Liability
11-22 Sec. 7.004. Exceptions to Limitation of Liability
11-23 Sec. 7.005. Limitation of Liability of Managerial Officals
11-24 Sec. 7.006. Limitation of Liability for Tort
11-25 Sec. 7.007. Exceptions to Application of Chapter
11-26 Sec. 7.008. Pledgees and Trust Administrators
11-27 Sec. 7.009. Assertions of Claims
12-1 Sec. 7.010. Claim Not Abated by Change in Ownership, Membership,
12-2 or Management
12-3 Sec. 7.011. Effect of Judgment or Order Against
12-4 Domestic Entity
12-5 Sec. 7.012. Limitation of Liability of Governing Person
12-6 Sec. 7.013. Modification of Duties in Partnerships
12-7 and Limited Liability Companies
12-8 Chapter 8. Indemnification and Insurance
12-9 Subchapter A. General Provisions
12-10 Sec. 8.001. Definitions
12-11 Sec. 8.002. Application of Chapter
12-12 (Sections 8.003-8.050 reserved for expansion)
12-13 Subchapter B. Mandatory and Court-Ordered Indemnification
12-14 Sec. 8.051. Mandatory Indemnification
12-15 Sec. 8.052. Court-Ordered Indemnification
12-16 Sec. 8.053. Limitations in Governing Documents
12-17 (Sections 8.054-8.100 reserved for expansion)
12-18 Subchapter C. Permissive Indemnification and Advancement of
12-19 Expenses
12-20 Sec. 8.101. Permissive Indemnification
12-21 Sec. 8.102. General Scope of Permissive Indemnification
12-22 Sec. 8.103. Manner for Determining Permissive Indemnification
12-23 Sec. 8.104. Advancement of Expenses
12-24 Sec. 8.105. Indemnification of and Advancement of Expenses to Persons
12-25 Other than Governing Persons
13-1 Sec. 8.106. Permissive Indemnification of and Reimbursement of
13-2 Expenses to Witnesses
13-3 (Sections 8.107-8.150 reserved for expansion)
13-4 Subchapter D. Liability Insurance; Reporting Requirements
13-5 Sec. 8.151. Insurance and Other Arrangements
13-6 Sec. 8.152. Reports of Indemnification and Advances
13-7 Chapter 9. Foreign Entities
13-8 Subchapter A. Registration
13-9 Sec. 9.001. Foreign Entities Required to Register
13-10 Sec. 9.002. Foreign Entities Not Required to Register
13-11 Sec. 9.003. Permissive Registration
13-12 Sec. 9.004. Registration Procedure
13-13 Sec. 9.005. Supplemental Information Required in Application
13-14 for Registration of Foreign For-Profit
13-15 Corporation
13-16 Sec. 9.006. Supplemental Information Required in Application for
13-17 Registration of Foreign NonProfit Corporation
13-18 Sec. 9.007. Supplemental Information Required in Application
13-19 for Registration of Foreign Limited Liability
13-20 Partnership
13-21 Sec. 9.008. Effect of Registration
13-22 Sec. 9.009. Amendments to Registration
13-23 Sec. 9.010. Name Change of Foreign Entity
13-24 Sec. 9.011. Voluntary Withdrawal of Registration
13-25 (Sections 9.012-9.050 reserved for expansion)
14-1 Subchapter B. Failure to Register
14-2 Sec. 9.051. Transacting Business or Maintaining Court Proceeding
14-3 without Registration
14-4 Sec. 9.052. Civil Penalty
14-5 Sec. 9.053. Venue
14-6 Sec. 9.054. Late Filing Fee
14-7 Sec. 9.055. Requirements of Other Law
14-8 (Sections 9.056-9.100 reserved for expansion)
14-9 Subchapter C. Revocation of Registration by Secretary of State
14-10 Sec. 9.101. Revocation of Registration by Secretary of State
14-11 Sec. 9.102. Certificate of Revocation
14-12 Sec. 9.103. Reinstatement by Secretary of State After Revocation
14-13 Sec. 9.104. Procedures for Reinstatement
14-14 Sec. 9.105. Use of Name Similar to Previously Registered Name
14-15 Sec. 9.106. Reinstatement of Registration Following Tax
14-16 Forfeiture
14-17 (Sections 9.107-9.150 reserved for expansion)
14-18 Subchapter D. Judicial Revocation of Registration
14-19 Sec. 9.151. Revocation of Registration by Court Action
14-20 Sec. 9.152. Notification of Cause by Secretary of State
14-21 Sec. 9.153. Filing of Action by Attorney General
14-22 Sec. 9.154. Cure Before Final Judgment
14-23 Sec. 9.155. Judgment Requiring Revocation
14-24 Sec. 9.156. Stay of Judgment
14-25 Sec. 9.157. Opportunity for Cure after Affirmation of Findings by
14-26 Appeals Court
14-27 Sec. 9.158. Jurisdiction and Venue
15-1 Sec. 9.159. Process in State Action
15-2 Sec. 9.160. Publication of Notice
15-3 Sec. 9.161. Filing of Decree of Revocation against Foreign
15-4 Filing Entity
15-5 (Sections 9.162-9.200 reserved for expansion)
15-6 Subchapter E. Business, Rights, and Obligations
15-7 Sec. 9.201. Business of Foreign Entity
15-8 Sec. 9.202. Rights and Privileges
15-9 Sec. 9.203. Obligations and Liabilities
15-10 Sec. 9.204. Right of Foreign Filing Entity to Participate in
15-11 Business of Certain Domestic Entities
15-12 (Sections 9.205-9.250 reserved for expansion)
15-13 Subchapter F. Determination of Transacting Business in this
15-14 State
15-15 Sec. 9.251. Activities Not Constituting Transacting Business in
15-16 this State
15-17 Sec. 9.252. Other Activities
15-18 (Sections 9.253-9.300 reserved for expansion)
15-19 Subchapter G. Miscellaneous Provisions
15-20 Sec. 9.301. Applicability of Code to Certain Foreign
15-21 Entities
15-22 Chapter 10. Mergers, Interest Exchanges, Conversions, and Sales
15-23 of Assets
15-24 Subchapter A. Mergers
15-25 Sec. 10.001. Adoption of Plan of Merger
15-26 Sec. 10.002. Plan of Merger: Required Provisions
15-27 Sec. 10.003. Contents of Plan of Merger: More than One Successor
16-1 Sec. 10.004. Plan of Merger: Permissive Provisions
16-2 Sec. 10.005. Creation of Holding Company by Merger
16-3 Sec. 10.006. Short Form Merger
16-4 Sec. 10.007. Effectiveness of Merger
16-5 Sec. 10.008. Effect of Merger
16-6 Sec. 10.009. Special Provisions Applying to Partnership Mergers
16-7 Sec. 10.010. Special Provisions Applying to Nonprofit Entity
16-8 Mergers
16-9 (Sections 10.011-10.050 reserved for expansion)
16-10 Subchapter B. Exchanges of Interests
16-11 Sec. 10.051. Interest Exchanges
16-12 Sec. 10.052. Plan of Exchange: Required Provisions
16-13 Sec. 10.053. Plan of Exchange: Permissive Provisions
16-14 Sec. 10.054. Effectiveness of Exchange
16-15 Sec. 10.055. General Effect of Interest Exchange
16-16 Sec. 10.056. Special Provisions Applying to Partnerships
16-17 (Sections 10.057-10.100 reserved for expansion)
16-18 Subchapter C. Conversions
16-19 Sec. 10.101. Conversion of Domestic Entities
16-20 Sec. 10.102. Conversion of Non-Code Organizations
16-21 Sec. 10.103. Plan of Conversion: Required Provisions
16-22 Sec. 10.104. Plan of Conversion: Permissive Provisions
16-23 Sec. 10.105. Effectiveness of Conversion
16-24 Sec. 10.106. General Effect of Conversion
16-25 Sec. 10.107. Special Provisions Applying to Partnership
16-26 Conversions
17-1 Sec. 10.108. Special Provisions Applying to Nonprofit Entity
17-2 Conversions
17-3 (Sections 10.109-10.150 reserved for expansion)
17-4 Subchapter D. Certificate of Merger, Exchange, or Conversion
17-5 Sec. 10.151. Certificate of Merger and Exchange
17-6 Sec. 10.152. Certificate of Merger: Short Form Merger
17-7 Sec. 10.153. Filing of Certificate of Merger or Exchange
17-8 Sec. 10.154. Certificate of Conversion
17-9 Sec. 10.155. Filing of Certificate of Conversion
17-10 Sec. 10.156. Acceptance of Certificate for Filing
17-11 (Sections 10.157-10.200 reserved for expansion)
17-12 Subchapter E. Abandonment of Merger, Exchange, or Conversion
17-13 Sec. 10.201. Abandonment of Plan of Merger, Exchange, or
17-14 Conversion
17-15 Sec. 10.202. Abandonment after Filing
17-16 Sec. 10.203. Abandonment if No Filing Required
17-17 (Sections 10.204-10.250 reserved for expansion)
17-18 Subchapter F. Property Transfers and Dispositions
17-19 Sec. 10.251. General Power of Domestic Entity to Sell, Lease,
17-20 or Convey Property
17-21 Sec. 10.252. No Approval Required for Certain Dispositions of
17-22 Property
17-23 Sec. 10.253. Recording Instrument Conveying Real Property of
17-24 Domestic Entity
17-25 Sec. 10.254. Disposition of Property Not a Merger or Conversion;
17-26 Liability
17-27 (Sections 10.255-10.300 reserved for expansion)
18-1 Subchapter G. Bankruptcy Reorganization
18-2 Sec. 10.301. Reorganization under Bankruptcy and Similar Laws
18-3 Sec. 10.302. Signing of Documents
18-4 Sec. 10.303. Reorganization with Other Entities
18-5 Sec. 10.304. Right of Dissent and Appraisal Excluded
18-6 Sec. 10.305. After Final Decree
18-7 Sec. 10.306. Chapter Cumulative of Other Changes
18-8 (Sections 10.307-10.350 reserved for expansion)
18-9 Subchapter H. Rights of Dissenting Owners
18-10 Sec. 10.351. Applicability of Subchapter
18-11 Sec. 10.352. Definitions
18-12 Sec. 10.353. Form and Validity of Notice
18-13 Sec. 10.354. Rights of Dissent and Appraisal
18-14 Sec. 10.355. Notice of Right of Dissent and Appraisal
18-15 Sec. 10.356. Procedure for Dissent by Owners as to Actions;
18-16 Perfection of Right of Dissent and Appraisal
18-17 Sec. 10.357. Withdrawal of Demand for Fair Value of Ownership
18-18 Interest
18-19 Sec. 10.358. Response by Organization to Notice of Dissent and
18-20 Demand for Fair Value by Dissenting Owner
18-21 Sec. 10.359. Record of Demand for Fair Value of Ownership
18-22 Interest
18-23 Sec. 10.360. Rights of Transferee of Certain Ownership Interest
18-24 Sec. 10.361. Proceeding to Determine Fair Value of Ownership
18-25 Interest and Owners Entitled to Payment;
18-26 Appointment of Appraisers
19-1 Sec. 10.362. Computation and Determination of Fair Value of
19-2 Ownership Interest
19-3 Sec. 10.363. Powers and Duties of Appraiser; Appraisal
19-4 Procedures
19-5 Sec. 10.364. Objection to Appraisal; Hearing
19-6 Sec. 10.365. Court Costs; Compensation for Appraiser
19-7 Sec. 10.366. Status of Ownership Interest Held or Formerly Held
19-8 by Dissenting Owner
19-9 Sec. 10.367. Rights of Owners Following Termination of Right of
19-10 Dissent
19-11 Sec. 10.368. Exclusivity of Remedy of Dissent and Appraisal
19-12 (Sections 10.369-10.900 reserved for expansion)
19-13 Subchapter Z. Miscellaneous Provisions
19-14 Sec. 10.901. Creditors; Antitrust
19-15 Sec. 10.902. Nonexclusivity
19-16 Chapter 11. Winding Up and Termination of Domestic Entity
19-17 Subchapter A. General Provisions
19-18 Sec. 11.001. Definitions
19-19 (Sections 11.002-11.050 reserved for expansion)
19-20 Subchapter B. Winding Up of Domestic Entity
19-21 Sec. 11.051. Event Requiring Winding Up of Domestic Entity
19-22 Sec. 11.052. Winding Up Procedures
19-23 Sec. 11.053. Property Applied to Discharge Liabilities and
19-24 Obligations
19-25 Sec. 11.054. Court Supervision of Winding Up Process
19-26 Sec. 11.055. Court Action or Proceeding during Winding Up
19-27 Sec. 11.056. Supplemental Event Requiring Winding up of
20-1 Limited Liability Company
20-2 Sec. 11.057. Supplemental Events Requiring Winding Up of General
20-3 Partnership
20-4 Sec. 11.058. Supplemental Events Requiring Winding up of
20-5 Limited Partnership
20-6 (Sections 11.059-11.100 reserved for expansion)
20-7 Subchapter C. Termination of Domestic Entity
20-8 Sec. 11.101. Certificate of Termination for Filing Entity
20-9 Sec. 11.102. Effectiveness of Termination of Filing Entity
20-10 Sec. 11.103. Effectiveness of Termination of Nonfiling Entity
20-11 Sec. 11.104. Action by Secretary of State
20-12 Sec. 11.105. Supplemental Information Required by Certificate of
20-13 Termination of NonProfit Corporation
20-14 (Sections 11.106-11.150 reserved for expansion)
20-15 Subchapter D. Revocation and Continuation
20-16 Sec. 11.151. Revocation of Voluntary Winding Up
20-17 Sec. 11.152. Continuation of Business without Winding Up
20-18 (Sections 11.153-11.200 reserved for expansion)
20-19 Subchapter E. Reinstatement of Terminated Entity
20-20 Sec. 11.201. Conditions for Reinstatement
20-21 Sec. 11.202. Procedures for Reinstatement
20-22 Sec. 11.203. Use of Name Similar to Previously Registered Name
20-23 Sec. 11.204. Effectiveness of Reinstatement of Nonfiling Entity
20-24 Sec. 11.205. Effectiveness of Reinstatement of Filing Entity
20-25 Sec. 11.206. Effect of Reinstatement
20-26 (Sections 11.207-11.250 reserved for expansion)
21-1 Subchapter F. Involuntary Termination of Filing Entity by
21-2 Secretary of State
21-3 Sec. 11.251. Termination of Filing Entity by Secretary of
21-4 State
21-5 Sec. 11.252. Certificate of Termination
21-6 Sec. 11.253. Reinstatement by Secretary of State after
21-7 Involuntary Termination
21-8 Sec. 11.254. Reinstatement of Certificate of Formation
21-9 Following Tax Forfeiture
21-10 (Sections 11.255-11.300 reserved for expansion)
21-11 Subchapter G. Judicial Winding Up and Termination
21-12 Sec. 11.301. Involuntary Winding Up and Termination of Filing
21-13 Entity by Court Action
21-14 Sec. 11.302. Notification of Cause by Secretary of State
21-15 Sec. 11.303. Filing of Action by Attorney General
21-16 Sec. 11.304. Cure before Final Judgment
21-17 Sec. 11.305. Judgment Requiring Winding Up and Termination
21-18 Sec. 11.306. Stay of Judgment
21-19 Sec. 11.307. Opportunity for Cure after Affirmation of Findings
21-20 by Appeals Court
21-21 Sec. 11.308. Jurisdiction and Venue
21-22 Sec. 11.309. Process in State Action
21-23 Sec. 11.310. Publication of Notice
21-24 Sec. 11.311. Action Allowed after Expiration of Filing Entity's
21-25 Duration
21-26 Sec. 11.312. Compliance by Terminated Entity
21-27 Sec. 11.313. Timing of Termination
22-1 Sec. 11.314. Involuntary Winding Up and Termination of
22-2 Partnership or Limited Liability Company
22-3 Sec. 11.315. Filing of Decree of Termination against Filing
22-4 Entity
22-5 (Sections 11.316-11.350 reserved for expansion)
22-6 Subchapter H. Claims Resolution on Termination
22-7 Sec. 11.351. Liability of Terminated Entity
22-8 Sec. 11.352. Deposit with Comptroller of Amount Due Owners and
22-9 Creditors who are Unknown or Cannot be Located
22-10 Sec. 11.353. Discharge of Liability of Person Responsible for
22-11 Liquidation
22-12 Sec. 11.354. Payment from Account by Comptroller
22-13 Sec. 11.355. Notice of Escheat; Escheat
22-14 Sec. 11.356. Limited Survival after Termination
22-15 Sec. 11.357. Governing Persons of Entity during Limited
22-16 Survival
22-17 Sec. 11.358. Accelerated Procedure for Existing Claim
22-18 Resolution
22-19 Sec. 11.359. Extinguishment of Existing Claim
22-20 (Sections 11.360-11.400 reserved for expansion)
22-21 Subchapter I. Receivership
22-22 Sec. 11.401. Code Governs
22-23 Sec. 11.402. Jurisdiction to Appoint Receiver
22-24 Sec. 11.403. Appointment of Receiver for Specific Property
22-25 Sec. 11.404. Appointment of Receiver to Rehabilitate Domestic
22-26 Entity
23-1 Sec. 11.405. Appointment of Receiver to Liquidate Domestic
23-2 Entity; Liquidation
23-3 Sec. 11.406. Receivers: Qualifications, Powers, and Duties
23-4 Sec. 11.407. Court-Ordered Filing of Claims
23-5 Sec. 11.408. Supervising Court; Jurisdiction; Authority
23-6 Sec. 11.409. Ancillary Receiverships of Foreign Entities
23-7 Sec. 11.410. Receivership for All Property and Business of
23-8 Foreign Entity
23-9 Sec. 11.411. Governing Persons and Owners Not Necessary Parties
23-10 Defendant
23-11 Sec. 11.412. Decree of Involuntary Termination
23-12 Sec. 11.413. Supplemental Provisions for Application of Proceeds
23-13 from Liquidation of NonProfit Corporation
23-14 Chapter 12. Administrative Powers
23-15 Subchapter A. Secretary of State
23-16 Sec. 12.001. Authority of Secretary of State
23-17 Sec. 12.002. Interrogatories by Secretary of State
23-18 Sec. 12.003. Information Disclosed by Interrogatories
23-19 Sec. 12.004. Appeals from Secretary of State
23-20 (Sections 12.005-12.150 reserved for expansion)
23-21 Subchapter B. Attorney General
23-22 Sec. 12.151. Authority of Attorney General to Examine Books and
23-23 Records
23-24 Sec. 12.152. Request to Examine
23-25 Sec. 12.153. Authority to Examine Management of Entity
23-26 Sec. 12.154. Authority to Disclose Information
23-27 Sec. 12.155. Forfeiture of Business Privileges
24-1 Sec. 12.156. Criminal Penalty
24-2 (Sections 12.157-12.200 reserved for expansion)
24-3 Subchapter C. Enforcement Lien
24-4 Sec. 12.201. Lien for Law Violations
24-5 (Sections 12.202-12.250 reserved for expansion)
24-6 Subchapter D. Enforcement Proceedings
24-7 Sec. 12.251. Receiver
24-8 Sec. 12.252. Foreclosure
24-9 Sec. 12.253. Action against Insolvent Entity
24-10 Sec. 12.254. Suits by District or County Attorney
24-11 Sec. 12.255. Permission to Sue
24-12 Sec. 12.256. Examination and Notice
24-13 Sec. 12.257. Dismissal of Action
24-14 Sec. 12.258. Liquidation of Insolvent Entity
24-15 Sec. 12.259. Extraordinary Remedies; Bond
24-16 Sec. 12.260. Abatement of Suit
24-17 Sec. 12.261. Provisions Cumulative
24-18 Title 2. Corporations
24-19 Chapter 20. General Provisions
24-20 Sec. 20.001. Requirement that Filing Instrument be Signed by
24-21 Officer
24-22 Sec. 20.002. Ultra Vires Acts
24-23 Chapter 21. For-Profit Corporations
24-24 Subchapter A. General Provisions
24-25 Sec. 21.001. Applicability of Chapter
24-26 Sec. 21.002. Definitions
24-27 (Sections 21.003-21.050 reserved for expansion)
25-1 Subchapter B. Formation and Governing Documents
25-2 Sec. 21.051. No Property Right in Certificate of Formation
25-3 Sec. 21.052. Procedures to Adopt Amendment to Certificate of
25-4 Formation
25-5 Sec. 21.053. Adoption of Amendment by Board of Directors
25-6 Sec. 21.054. Adoption of Amendment by Shareholders
25-7 Sec. 21.055. Notice of and Meeting to Consider Proposed
25-8 Amendment
25-9 Sec. 21.056. Restated Certificate of Formation
25-10 Sec. 21.057. Bylaws
25-11 Sec. 21.058. Dual Authority
25-12 Sec. 21.059. Organization Meeting
25-13 (Sections 21.060-21.100 reserved for expansion)
25-14 Subchapter C. Shareholders' Agreements
25-15 Sec. 21.101. Shareholders' Agreement
25-16 Sec. 21.102. Term of Agreement
25-17 Sec. 21.103. Disclosure of Agreement; Recall of Certain
25-18 Certificates
25-19 Sec. 21.104. Effect of Shareholders' Agreement
25-20 Sec. 21.105. Knowledge of Purchaser of Shares
25-21 Sec. 21.106. Agreement Limiting Authority of and Supplanting
25-22 Board of Directors; Liability
25-23 Sec. 21.107. Liability of Shareholder
25-24 Sec. 21.108. Persons Acting in Place of Shareholders
25-25 Sec. 21.109. Agreement Not Effective
25-26 (Sections 21.110-21.150 reserved for expansion)
26-1 Subchapter D. Shares, Options, and Convertible Securities
26-2 Sec. 21.151. Number of Authorized Shares
26-3 Sec. 21.152. Classes and Series of Shares
26-4 Sec. 21.153. Designations, Preferences, Limitations, and Rights
26-5 of a Class or Series
26-6 Sec. 21.154. Certain Optional Characteristics of Shares
26-7 Sec. 21.155. Series of Shares Established by Board of Directors
26-8 Sec. 21.156. Actions with Respect to Series of Shares
26-9 Sec. 21.157. Issuance of Shares
26-10 Sec. 21.158. Issuance of Shares under Plan of Merger or
26-11 Conversion
26-12 Sec. 21.159. Types of Consideration for Shares
26-13 Sec. 21.160. Determination of Consideration for Shares
26-14 Sec. 21.161. Amount of Consideration for Issuance of Certain
26-15 Shares
26-16 Sec. 21.162. Value and Sufficiency of Consideration
26-17 Sec. 21.163. Issuance and Disposition of Fractional Shares
26-18 or Scrip
26-19 Sec. 21.164. Rights of Holders of Fractional Shares or Scrip
26-20 Sec. 21.165. Subscriptions
26-21 Sec. 21.166. Preformation Subscription
26-22 Sec. 21.167. Commitment to Purchase Shares
26-23 Sec. 21.168. Stock Rights, Options, and Convertible
26-24 Indebtedness
26-25 Sec. 21.169. Terms and Conditions of Rights and Options
26-26 Sec. 21.170. Consideration for Rights, Options, and Convertible
26-27 Indebtedness
27-1 Sec. 21.171. Treasury Shares
27-2 Sec. 21.172. Expenses of Organization, Reorganization, and
27-3 Financing of Corporation
27-4 (Sections 21.173-21.200 reserved for expansion)
27-5 Subchapter E. Shareholder Rights and Restrictions
27-6 Sec. 21.201. Registered Holders as Owners
27-7 Sec. 21.202. Definition of Shares
27-8 Sec. 21.203. No Statutory Preemptive Right Unless Provided by
27-9 Certificate of Formation
27-10 Sec. 21.204. Statutory Preemptive Rights
27-11 Sec. 21.205. Waiver of Preemptive Right
27-12 Sec. 21.206. Limitation on Action to Enforce Preemptive Right
27-13 Sec. 21.207. Disposition of Shares Having Preemptive Rights
27-14 Sec. 21.208. Preemptive Right in Existing Corporation
27-15 Sec. 21.209. Transfer of Shares and Other Securities
27-16 Sec. 21.210. Restriction on Transfer of Shares and Other
27-17 Securities
27-18 Sec. 21.211. Valid Restrictions on Transfer
27-19 Sec. 21.212. Bylaw or Agreement Restricting Transfer of Shares
27-20 or Other Securities
27-21 Sec. 21.213. Enforceability of Restriction on Transfer of
27-22 Certain Securities
27-23 Sec. 21.214. Joint Ownership of Shares
27-24 Sec. 21.215. Liability for Designating Owner of Shares
27-25 Sec. 21.216. Liability Regarding Joint Ownership of Shares
27-26 Sec. 21.217. Liability of Assignee or Transferee
27-27 Sec. 21.218. Examination of Records
28-1 Sec. 21.219. Annual and Interim Statements of Corporation
28-2 Sec. 21.220. Penalty for Failure to Prepare Voting List
28-3 Sec. 21.221. Penalty for Failure to Provide Notice of Meeting
28-4 Sec. 21.222. Penalty for Refusal to Permit Examination of Certain
28-5 Records
28-6 (Sections 21.223-21.250 reserved for expansion)
28-7 Subchapter F. Reductions in Stated Capital; Cancellation of
28-8 Treasury Shares
28-9 Sec. 21.251. Reduction of Stated Capital by Redemption or
28-10 Purchase of Redeemable Shares
28-11 Sec. 21.252. Cancellation of Treasury Shares
28-12 Sec. 21.253. Procedures for Reduction of Stated Capital by
28-13 Board of Directors
28-14 Sec. 21.254. Restriction on Reduction of Stated Capital
28-15 (Sections 21.255-21.300 reserved for expansion)
28-16 Subchapter G. Distributions and Share Distributions
28-17 Sec. 21.301. Definitions
28-18 Sec. 21.302. Authority for Distributions
28-19 Sec. 21.303. Limitations on Distributions
28-20 Sec. 21.304. Redemptions
28-21 Sec. 21.305. Notice of Redemption
28-22 Sec. 21.306. Deposit of Money for Redemption
28-23 Sec. 21.307. Payment of Redeemed Shares
28-24 Sec. 21.308. Priority of Distributions
28-25 Sec. 21.309. Reserves, Designations, and Allocations from
28-26 Surplus
28-27 Sec. 21.310. Authority for Share Distributions
29-1 Sec. 21.311. Limitations on Share Distributions
29-2 Sec. 21.312. Value of Shares issued as Share Distributions
29-3 Sec. 21.313. Transfer of Surplus for Share Distributions
29-4 Sec. 21.314. Determination of Solvency, Net Assets, Stated
29-5 Capital, and Surplus
29-6 Sec. 21.315. Date of Determination of Solvency, Net Assets,
29-7 Stated Capital, and Surplus
29-8 Sec. 21.316. Liability of Directors for Wrongful Distributions
29-9 Sec. 21.317. Statute of Limitations on Action for Wrongful
29-10 Distribution
29-11 Sec. 21.318. Contribution from Certain Shareholders and Directors
29-12 (Sections 21.319-21.350 reserved for expansion)
29-13 Subchapter H. Shareholders' Meetings; Voting and Quorum
29-14 Sec. 21.351. Annual Meeting
29-15 Sec. 21.352. Special Meetings
29-16 Sec. 21.353. Notice of Meeting
29-17 Sec. 21.354. Inspection of Voting List
29-18 Sec. 21.355. Closing of Share Transfer Records
29-19 Sec. 21.356. Record Date for Written Consent to Action
29-20 Sec. 21.357. Record Date for Purpose Other than Written
29-21 Consent to Action
29-22 Sec. 21.358. Quorum
29-23 Sec. 21.359. Voting in Election of Directors
29-24 Sec. 21.360. No Cumulative Voting Right Unless Authorized
29-25 Sec. 21.361. Cumulative Voting in Election of Directors
29-26 Sec. 21.362. Cumulative Voting Right in Certain Corporations
29-27 Sec. 21.363. Voting on Matters Other than Election of Directors
30-1 Sec. 21.364. Vote Required to Approve Fundamental Action
30-2 Sec. 21.365. Changes in Vote Required for Certain Matters
30-3 Sec. 21.366. Number of Votes Per Share
30-4 Sec. 21.367. Voting in Person or by Proxy
30-5 Sec. 21.368. Term of Proxy
30-6 Sec. 21.369. Revocability of Proxy
30-7 Sec. 21.370. Enforceability of Proxy
30-8 Sec. 21.371. Procedures in Bylaws Relating to Proxies
30-9 Sec. 21.372. Action by Less than Unanimous Written Consent
30-10 (Sections 21.373-21.400 reserved for expansion)
30-11 Subchapter I. Board of Directors
30-12 Sec. 21.401. Management by Board of Directors
30-13 Sec. 21.402. Board Member Eligibility Requirements
30-14 Sec. 21.403. Number of Directors
30-15 Sec. 21.404. Designation of Initial Board of Directors
30-16 Sec. 21.405. Election of Board of Directors
30-17 Sec. 21.406. Special Voting Rights of Directors
30-18 Sec. 21.407. Term of Office
30-19 Sec. 21.408. Special Terms of Office
30-20 Sec. 21.409. Removal of Directors
30-21 Sec. 21.410. Vacancy
30-22 Sec. 21.411. Notice of Meeting
30-23 Sec. 21.412. Waiver of Notice
30-24 Sec. 21.413. Quorum
30-25 Sec. 21.414. Dissent to Action
30-26 Sec. 21.415. Action by Directors
30-27 Sec. 21.416. Committees of Board of Directors
31-1 Sec. 21.417. Election of Officers
31-2 Sec. 21.418. Contracts or Transactions Involving Interested
31-3 Directors and Officers
31-4 (Sections 21.419-21.450 reserved for expansion)
31-5 Subchapter J. Fundamental Business Transactions
31-6 Sec. 21.451. Definitions
31-7 Sec. 21.452. Approval of Merger
31-8 Sec. 21.453. Approval of Conversion
31-9 Sec. 21.454. Approval of Exchange
31-10 Sec. 21.455. Approval of Sale of All or Substantially All of
31-11 Assets
31-12 Sec. 21.456. General Procedure for Submission to Shareholders of
31-13 Fundamental Business Transaction
31-14 Sec. 21.457. General Vote Requirement for Approval of
31-15 Fundamental Business Transaction
31-16 Sec. 21.458. Class Voting Requirements for Certain Fundamental
31-17 Business Transactions
31-18 Sec. 21.459. No Shareholder Vote Requirement for Certain
31-19 Fundamental Business Transactions
31-20 Sec. 21.460. Rights of Dissent and Appraisal
31-21 Sec. 21.461. Pledge, Mortgage, Deed of Trust, or Trust
31-22 Indenture
31-23 Sec. 21.462. Conveyance by Corporation
31-24 (Sections 21.463-21.500 reserved for expansion)
31-25 Subchapter K. Winding Up and Termination
31-26 Sec. 21.501. Approval of Voluntary Winding Up, Reinstatement, or
31-27 Revocation of Voluntary Winding Up
32-1 Sec. 21.502. Certain Procedures Relating to Winding Up
32-2 Sec. 21.503. Meeting of Shareholders; Notice
32-3 Sec. 21.504. Responsibility for Winding Up
32-4 (Sections 21.505-21.550 reserved for expansion)
32-5 Subchapter L. Derivative Proceedings
32-6 Sec. 21.551. Definitions
32-7 Sec. 21.552. Standing to Bring Proceeding
32-8 Sec. 21.553. Demand
32-9 Sec. 21.554. Determination by Directors or Independent Persons
32-10 Sec. 21.555. Stay of Proceeding
32-11 Sec. 21.556. Discovery
32-12 Sec. 21.557. Tolling of Statute of Limitations
32-13 Sec. 21.558. Dismissal of Derivative Proceeding
32-14 Sec. 21.559. Proceeding Instituted after Demand Rejected
32-15 Sec. 21.560. Discontinuance or Settlement
32-16 Sec. 21.561. Payment of Expenses
32-17 Sec. 21.562. Application to Foreign Corporations
32-18 Sec. 21.563. Closely Held Corporation
32-19 (Sections 21.564-21.600 reserved for expansion)
32-20 Subchapter M. Affiliated Business Combinations
32-21 Sec. 21.601. Definitions
32-22 Sec. 21.602. Affiliated Shareholder
32-23 Sec. 21.603. Beneficial Owner of Shares or Similar Securities
32-24 Sec. 21.604. Business Combination
32-25 Sec. 21.605. Control
32-26 Sec. 21.606. Three-Year Moratorium on Certain Business
32-27 Combinations
33-1 Sec. 21.607. Application of Moratorium
33-2 Sec. 21.608. Effect on Other Actions
33-3 Sec. 21.609. Conflicting Provisions
33-4 Sec. 21.610. Change in Voting Requirements
33-5 (Sections 21.611-21.650 reserved for expansion)
33-6 Subchapter N. Provisions Relating to Investment Companies
33-7 Sec. 21.651. Definition
33-8 Sec. 21.652. Establishing Class or Series of Shares; Change in
33-9 Number of Shares
33-10 Sec. 21.653. Required Statement Relating to Shares
33-11 Sec. 21.654. Term of Office of Directors
33-12 Sec. 21.655. Meetings of Shareholders
33-13 (Sections 21.656-21.700 reserved for expansion)
33-14 Subchapter O. Close Corporation
33-15 Sec. 21.701. Definitions
33-16 Sec. 21.702. Applicability of Subchapter
33-17 Sec. 21.703. Formation of Close Corporation
33-18 Sec. 21.704. Bylaws of Close Corporation
33-19 Sec. 21.705. Adoption of Amendment for Close Corporation Status
33-20 Sec. 21.706. Adoption of Close Corporation Status through
33-21 Merger, Exchange, or Conversion
33-22 Sec. 21.707. Existing Close Corporation
33-23 Sec. 21.708. Termination of Close Corporation Status
33-24 Sec. 21.709. Statement Terminating Close Corporation Status;
33-25 Filing; Notice
33-26 Sec. 21.710. Effect of Termination of Close Corporation Status
33-27 Sec. 21.711. Shareholders' Meeting to Elect Directors
34-1 Sec. 21.712. Term of Office of Directors
34-2 Sec. 21.713. Management
34-3 Sec. 21.714. Shareholders' Agreement
34-4 Sec. 21.715. Execution of Shareholders' Agreement
34-5 Sec. 21.716. Adoption of Amendment of Shareholders' Agreement
34-6 Sec. 21.717. Delivery of Shareholders' Agreement
34-7 Sec. 21.718. Statement of Operation as Close Corporation
34-8 Sec. 21.719. Validity and Enforceability of Shareholders'
34-9 Agreement
34-10 Sec. 21.720. Persons Bound by Shareholders' Agreement
34-11 Sec. 21.721. Delivery of Copy of Shareholders' Agreement to
34-12 Transferee
34-13 Sec. 21.722. Effect of Required Statement on Share Certificate
34-14 and Delivery of Shareholders' Agreement
34-15 Sec. 21.723. Party Not Bound by Shareholders' Agreement on
34-16 Cessation; Liability
34-17 Sec. 21.724. Termination of Shareholders' Agreement
34-18 Sec. 21.725. Consequences of Management by Persons Other than
34-19 Board of Directors
34-20 Sec. 21.726. Shareholders Considered Directors
34-21 Sec. 21.727. Liability of Shareholders
34-22 Sec. 21.728. Mode and Effect of Taking Action by Shareholders
34-23 and Others
34-24 Sec. 21.729. Limitation of Shareholder's Liability
34-25 Sec. 21.730. Lack of Formalities; Treatment as Partnership
34-26 Sec. 21.731. Other Agreements Among Shareholders Permitted
35-1 Sec. 21.732. Close Corporation Share Certificates
35-2 (Sections 21.733-21.750 reserved for expansion)
35-3 Subchapter P. Judicial Proceedings Relating to Close Corporation
35-4 Sec. 21.751. Definitions
35-5 Sec. 21.752. Proceedings Authorized
35-6 Sec. 21.753. Notice; Intervention
35-7 Sec. 21.754. Proceeding Nonexclusive
35-8 Sec. 21.755. Unavailability of Judicial Proceeding
35-9 Sec. 21.756. Judicial Proceeding to Enforce Close Corporation
35-10 Provision
35-11 Sec. 21.757. Liquidation; Involuntary Winding Up and
35-12 Termination; Receivership
35-13 Sec. 21.758. Appointment of Provisional Director
35-14 Sec. 21.759. Rights and Powers of Provisional Director
35-15 Sec. 21.760. Compensation of Provisional Director
35-16 Sec. 21.761. Appointment of Custodian
35-17 Sec. 21.762. Powers and Duties of Custodian
35-18 Sec. 21.763. Termination of Custodianship
35-19 (Sections 21.764-21.800 reserved for expansion)
35-20 Subchapter Q. Miscellaneous Provisions
35-21 Sec. 21.801. Shares and Other Securities are Personal Property
35-22 Sec. 21.802. Delinquent Tax
35-23 Chapter 22. Nonprofit Corporations
35-24 Subchapter A. General Provisions
35-25 Sec. 22.001. Definitions
35-26 Sec. 22.002. Applicability to Certain Insurance Associations
35-27 and Companies
36-1 Sec. 22.003. Meetings by Remote Communications Technology
36-2 (Sections 22.004-22.050 reserved for expansion)
36-3 Subchapter B. Purposes and Powers
36-4 Sec. 22.051. General Purposes
36-5 Sec. 22.052. Dental Health Service Corporation
36-6 Sec. 22.053. Dividends Prohibited
36-7 Sec. 22.054. Authorized Benefits and Distributions
36-8 Sec. 22.055. Power to Assist Employee or Officer
36-9 Sec. 22.056. Health Organization Corporation
36-10 (Sections 22.057-22.100 reserved for expansion)
36-11 Subchapter C. Formation and Governing Documents
36-12 Sec. 22.101. Incorporation of Certain Organizations
36-13 Sec. 22.102. Bylaws
36-14 Sec. 22.103. Inconsistency between Certificate of Formation and
36-15 Bylaw
36-16 Sec. 22.104. Organization Meeting
36-17 Sec. 22.105. Procedures to Adopt Amendment to Certificate of
36-18 Formation by Members Having Voting Rights
36-19 Sec. 22.106. Procedures to Adopt Amendment to Certificate of
36-20 Formation by Managing Members
36-21 Sec. 22.107. Procedures to Adopt Amendment to Certificate of
36-22 Formation by Board of Directors
36-23 Sec. 22.108. Number of Amendments Subject to Vote at meeting
36-24 (Sections 22.109-22.150 reserved for expansion)
36-25 Subchapter D. Members
36-26 Sec. 22.151. Members
36-27 Sec. 22.152. Immunity from Liability
37-1 Sec. 22.153. Annual Meeting
37-2 Sec. 22.154. Failure to Call Annual Meeting
37-3 Sec. 22.155. Special Meetings of Members
37-4 Sec. 22.156. Notice of Meeting
37-5 Sec. 22.157. Special Bylaws Affecting Notice
37-6 Sec. 22.158. Preparation and Inspection of List of Voting
37-7 Members
37-8 Sec. 22.159. Quorum of Members
37-9 Sec. 22.160. Voting of Members
37-10 Sec. 22.161. Election of Directors
37-11 Sec. 22.162. Greater Voting Requirements under Certificate of
37-12 Formation
37-13 Sec. 22.163. Record Date for Determination of Members
37-14 Sec. 22.164. Vote Required to Approve Fundamental Action
37-15 (Sections 22.165-22.200 reserved for expansion)
37-16 Subchapter E. Management
37-17 Sec. 22.201. Management by Board of Directors
37-18 Sec. 22.202. Management by Members
37-19 Sec. 22.203. Board Member Eligibility Requirements
37-20 Sec. 22.204. Number of Directors
37-21 Sec. 22.205. Designation of Initial Board of Directors
37-22 Sec. 22.206. Election or Appointment of Board of Directors
37-23 Sec. 22.207. Election and Control by Certain Entities
37-24 Sec. 22.208. Term of Office
37-25 Sec. 22.209. Classification of Directors
37-26 Sec. 22.210. Ex Officio Member of Board
37-27 Sec. 22.211. Removal of Director
38-1 Sec. 22.212. Vacancy
38-2 Sec. 22.213. Quorum
38-3 Sec. 22.214. Action by Directors
38-4 Sec. 22.215. Voting in Person or by Proxy
38-5 Sec. 22.216. Term and Revocability of Proxy
38-6 Sec. 22.217. Notice of Meeting; Waiver of Notice
38-7 Sec. 22.218. Management Committee
38-8 Sec. 22.219. Other Committees
38-9 Sec. 22.220. Action without Meeting of Directors or Committee
38-10 Sec. 22.221. General Standards for Directors
38-11 Sec. 22.222. Religious Corporation Director's Good Faith Reliance
38-12 on Certain Information
38-13 Sec. 22.223. Not a Trustee
38-14 Sec. 22.224. Delegation of Investment Authority
38-15 Sec. 22.225. Loan to Director Prohibited
38-16 Sec. 22.226. Director Liability for Certain Distributions of Assets
38-17 Sec. 22.227. Dissent to Action
38-18 Sec. 22.228. Reliance on Written Opinion of Attorney
38-19 Sec. 22.229. Right to Contribution
38-20 Sec. 22.230. Contracts or Transactions Involving Interested
38-21 Directors, Officers, and Members
38-22 Sec. 22.231. Officers
38-23 Sec. 22.232. Election or Appointment of Officers
38-24 Sec. 22.233. Application to Church
38-25 Sec. 22.234. Religious Corporation Officer's Good Faith
38-26 Reliance on Certain Information
39-1 Sec. 22.235. Effect of Liability Provisions on Duties Owed
39-2 to Charitable Corporations
39-3 (Sections 22.236-22.250 reserved for expansion)
39-4 Subchapter F. Fundamental Business Transactions
39-5 Sec. 22.251. Approval of Merger
39-6 Sec. 22.252. Approval of Sale of All or Substantially All of
39-7 Assets
39-8 Sec. 22.253. Meeting of Members; Notice
39-9 Sec. 22.254. Pledge, Mortgage, Deed of Trust, or Trust
39-10 Indenture
39-11 Sec. 22.255. Conveyance by Corporation
39-12 (Sections 22.256-22.300 reserved for expansion)
39-13 Subchapter G. Winding Up and Termination
39-14 Sec. 22.301. Approval of Voluntary Winding Up, Reinstatement,
39-15 Revocation of Voluntary Winding Up, or
39-16 Distribution Plan
39-17 Sec. 22.302. Certain Procedures for Approval
39-18 Sec. 22.303. Meeting of Members; Notice
39-19 Sec. 22.304. Application and Distribution of Property
39-20 Sec. 22.305. Distribution Plan
39-21 Sec. 22.306. Limited Survival after Natural Expiration
39-22 Sec. 22.307. Responsibility for Winding Up
39-23 (Sections 22.308-22.350 reserved for expansion)
39-24 Subchapter H. Records and Reports
39-25 Sec. 22.351. Member's Right to Inspect Books and Records
39-26 Sec. 22.352. Financial Records and Annual Reports
40-1 Sec. 22.353. Availability of Financial Information for Public
40-2 Inspection
40-3 Sec. 22.354. Failure to Maintain Financial Record or Prepare
40-4 Annual Report; Offense
40-5 Sec. 22.355. Exemptions from Certain Requirements Relating
40-6 to Financial Records and Annual Reports
40-7 Sec. 22.356. Corporations Assisting State Agencies
40-8 Sec. 22.357. Report of Domestic and Foreign Corporations
40-9 Sec. 22.358. Notice Regarding Report
40-10 Sec. 22.359. Filing of Report
40-11 Sec. 22.360. Failure to File Report
40-12 Sec. 22.361. Notice of Forfeiture
40-13 Sec. 22.362. Effect of Forfeiture
40-14 Sec. 22.363. Revival of Right to Conduct Affairs
40-15 Sec. 22.364. Failure to Revive; Termination or Revocation
40-16 Sec. 22.365. Reinstatement
40-17 (Sections 22.366-22.400 reserved for expansion)
40-18 Subchapter I. Church Benefits Boards
40-19 Sec. 22.401. Definition
40-20 Sec. 22.402. Pensions and Benefits
40-21 Sec. 22.403. Contributions
40-22 Sec. 22.404. Power to Act as Trustee
40-23 Sec. 22.405. Documents and Agreements
40-24 Sec. 22.406. Indemnification
40-25 Sec. 22.407. Protection of Benefits
40-26 Sec. 22.408. Assignment of Benefits
40-27 Sec. 22.409. Insurance Code Not Applicable
41-1 Chapter 23. Special-Purpose Corporations
41-2 Subchapter A. General Provisions
41-3 Sec. 23.001. Determination of Applicable Law
41-4 Sec. 23.002. Applicability of Filing Requirements
41-5 Sec. 23.003. Domestic Corporation Organized under Special
41-6 Statute
41-7 (Sections 23.004-23.050 reserved for expansion)
41-8 Subchapter B. Business Development Corporations
41-9 Sec. 23.051. Definitions
41-10 Sec. 23.052. Incorporators
41-11 Sec. 23.053. Purposes
41-12 Sec. 23.054. Powers
41-13 Sec. 23.055. Statewide Operation
41-14 Sec. 23.056. Certificate of Formation
41-15 Sec. 23.057. Management by Board of Directors; Number of
41-16 Directors
41-17 Sec. 23.058. Election or Appointment of Directors
41-18 Sec. 23.059. Term of Office; Vacancy
41-19 Sec. 23.060. Officers
41-20 Sec. 23.061. Participation as Owner
41-21 Sec. 23.062. Financial Institution as Member of Corporation
41-22 Sec. 23.063. Withdrawal of Member
41-23 Sec. 23.064. Powers of Shareholders and Members
41-24 Sec. 23.065. Voting by Shareholder or Member
41-25 Sec. 23.066. Loan to Corporation
41-26 Sec. 23.067. Prohibited Loan
41-27 Sec. 23.068. Loan Limits
42-1 Sec. 23.069. Surplus
42-2 Sec. 23.070. Depository
42-3 Sec. 23.071. Annual Report; Provision of Required Information
42-4 (Sections 23.072-23.100 reserved for expansion)
42-5 Subchapter C. Grand Lodges
42-6 Sec. 23.101. Formation
42-7 Sec. 23.102. Applicability of Chapter 22
42-8 Sec. 23.103. Duration
42-9 Sec. 23.104. Subordinate Lodges
42-10 Sec. 23.105. Trustees and Directors
42-11 Sec. 23.106. Franchise Taxes
42-12 Sec. 23.107. General Powers
42-13 Sec. 23.108. Authority Regarding Property
42-14 Sec. 23.109. Authority Regarding Loans
42-15 Sec. 23.110. Winding Up and Termination of Subordinate Body
42-16 Title 3. Limited Liability Companies
42-17 Chapter 101. Limited Liability Companies
42-18 Subchapter A. General Provisions
42-19 Sec. 101.001. Definitions
42-20 (Sections 101.002-101.050 reserved for expansion)
42-21 Subchapter B. Formation and Governing Documents
42-22 Sec. 101.051. Certain Provisions Contained in Certificate of
42-23 Formation
42-24 Sec. 101.052. Company Agreement
42-25 Sec. 101.053. Amendment of Company Agreement
43-1 Sec. 101.054. Waiver or Modification of Certain Statutory
43-2 Provisions Prohibited; Exceptions
43-3 (Sections 101.055-101.100 reserved for expansion)
43-4 Subchapter C. Membership
43-5 Sec. 101.101. Members Required
43-6 Sec. 101.102. Qualification for Membership
43-7 Sec. 101.103. Effective Date of Membership
43-8 Sec. 101.104. Classes or Groups of Members or Membership
43-9 Interests
43-10 Sec. 101.105. Issuance of Membership Interests after Formation
43-11 of Company
43-12 Sec. 101.106. Nature of Membership Interest
43-13 Sec. 101.107. Withdrawal or Expulsion of Member Prohibited
43-14 Sec. 101.108. Assignment of Membership Interest
43-15 Sec. 101.109. Rights and Duties of Assignee of Membership
43-16 Interest before Membership
43-17 Sec. 101.110. Rights and Liabilities of Assignee of Membership
43-18 Interest after Becoming Member
43-19 Sec. 101.111. Rights and Duties of Assignor of Membership
43-20 Interest
43-21 Sec. 101.112. Judgment Creditor; Charge of Membership Interest
43-22 Sec. 101.113. Parties to Actions
43-23 Sec. 101.114. Requirements for Enforceable Subscription
43-24 (Sections 101.115-101.150 reserved for expansion)
43-25 Subchapter D. Contributions
43-26 Sec. 101.151. Requirements for Enforceable Promise
44-1 Sec. 101.152. Enforceable Promise Not Affected by Change in
44-2 Circumstances
44-3 Sec. 101.153. Failure to Perform Enforceable Promise;
44-4 Consequences
44-5 Sec. 101.154. Consent Required to Release Enforceable
44-6 Obligation
44-7 Sec. 101.155. Creditor's Right to Enforce Certain Obligations
44-8 Sec. 101.156. Requirements to Enforce Conditional Obligation
44-9 (Sections 101.157-101.200 reserved for expansion)
44-10 Subchapter E. Allocations and Distributions
44-11 Sec. 101.201. Allocation of Profits and Losses
44-12 Sec. 101.202. Distribution in Kind
44-13 Sec. 101.203. Sharing of Distributions
44-14 Sec. 101.204. Interim Distributions
44-15 Sec. 101.205. Distribution on Withdrawal
44-16 Sec. 101.206. Prohibited Distribution; Duty to Return
44-17 Sec. 101.207. Creditor Status with Respect to Distribution
44-18 (Sections 101.208-101.250 reserved for expansion)
44-19 Subchapter F. Management
44-20 Sec. 101.251. Membership
44-21 Sec. 101.252. Management by Governing Authority
44-22 Sec. 101.253. Designation of Committees; Delegation of
44-23 Authority
44-24 Sec. 101.254. Designation of Agents; Binding Acts
44-25 Sec. 101.255. Contracts or Transactions Involving Interested
44-26 Governing Persons or Officers
44-27 (Sections 101.256-101.300 reserved for expansion)
45-1 Subchapter G. Managers
45-2 Sec. 101.301. Applicability of Subchapter
45-3 Sec. 101.302. Number and Qualifications
45-4 Sec. 101.303. Term
45-5 Sec. 101.304. Removal
45-6 Sec. 101.305. Manager Vacancy
45-7 Sec. 101.306. Removal and Replacement of Manager Elected by
45-8 Class or Group
45-9 Sec. 101.307. Methods of Classifying Managers
45-10 (Sections 101.308-101.350 reserved for expansion)
45-11 Subchapter H. Meetings and Voting
45-12 Sec. 101.351. Applicability of Subchapter
45-13 Sec. 101.352. General Notice Requirements
45-14 Sec. 101.353. Quorum
45-15 Sec. 101.354. Equal Voting Rights
45-16 Sec. 101.355. Act of Governing Authority, Members, or
45-17 Committee
45-18 Sec. 101.356. Votes Required to Approve Certain Actions
45-19 Sec. 101.357. Manner of Voting
45-20 Sec. 101.358. Action by Less than Unanimous Written Consent
45-21 Sec. 101.359. Rights of Dissent and Appraisal
45-22 (Sections 101.360-101.400 reserved for expansion)
45-23 Subchapter I. Modification of Duties; Indemnification
45-24 Sec. 101.401. Expansion or Restriction of Duties and
45-25 Liabilities
46-1 Sec. 101.402. Permissive Indemnification, Advancement of
46-2 Expenses, and Insurance or Other Arrangements
46-3 (Sections 101.403-101.450 reserved for expansion)
46-4 Subchapter J. Derivative Proceedings
46-5 Sec. 101.451. Definitions
46-6 Sec. 101.452. Standing to Bring Proceeding
46-7 Sec. 101.453. Demand
46-8 Sec. 101.454. Determination By Governing or Independent
46-9 Persons
46-10 Sec. 101.455. Stay of Proceeding
46-11 Sec. 101.456. Discovery
46-12 Sec. 101.457. Tolling of Statute of Limitations
46-13 Sec. 101.458. Dismissal of Derivative Proceeding
46-14 Sec. 101.459. Allegations if Demand Rejected
46-15 Sec. 101.460. Discontinuance or Settlement
46-16 Sec. 101.461. Payment of Expenses
46-17 Sec. 101.462. Application to Foreign Limited Liability Companies
46-18 Sec. 101.463. Closely Held Limited Liability Company
46-19 (Sections 101.464-101.500 reserved for expansion)
46-20 Subchapter K. Supplemental Recordkeeping Requirements
46-21 Sec. 101.501. Supplemental Records Required for Limited
46-22 Liability Companies
46-23 Sec. 101.502. Right to Examine Records and Certain Other
46-24 Information
46-25 (Sections 101.503-101.550 reserved for expansion)
46-26 Subchapter L. Supplemental Winding Up and Termination Provisions
46-27 Sec. 101.551. Persons Eligible to Wind Up Company
47-1 Sec. 101.552. Approval of Voluntary Winding Up, Revocation,
47-2 Cancellation, or Reinstatement
47-3 Title 4. Partnerships
47-4 Chapter 151. General Provisions
47-5 Sec. 151.001. Definitions
47-6 Sec. 151.002. Knowledge of Fact
47-7 Sec. 151.003. Notice of Fact
47-8 Chapter 152. General Partnerships
47-9 Subchapter A. General Provisions
47-10 Sec. 152.001. Definitions
47-11 Sec. 152.002. Effect of Partnership Agreement; Nonwaivable and
47-12 Variable Provisions
47-13 Sec. 152.003. Supplemental Principles of Law
47-14 Sec. 152.004. Rule of Statutory Construction Not Applicable
47-15 Sec. 152.005. Applicable Interest Rate
47-16 (Sections 152.006-152.050 reserved for expansion)
47-17 Subchapter B. Nature and Creation of Partnership
47-18 Sec. 152.051. Partnership Defined
47-19 Sec. 152.052. Rules for Determining if Partnership Is Created
47-20 Sec. 152.053. Qualifications to be Partner; Nonpartner's
47-21 Liability to Third Person
47-22 Sec. 152.054. False Representation of Partnership or Partner
47-23 Sec. 152.055. Authority of Certain Professionals to Create
47-24 Partnership
47-25 (Sections 152.056-152.100 reserved for expansion)
47-26 Subchapter C. Partnership Property
47-27 Sec. 152.101. Nature of Partnership Property
48-1 Sec. 152.102. Classification as Partnership Property
48-2 (Sections 152.103-152.200 reserved for expansion)
48-3 Subchapter D. Relationship between Partners and between
48-4 Partners and Partnerships
48-5 Sec. 152.201. Admission as Partner
48-6 Sec. 152.202. Credits of and Charges to Partner
48-7 Sec. 152.203. Rights and Duties of Partner
48-8 Sec. 152.204. General Standards of Partner's Conduct
48-9 Sec. 152.205. Partner's Duty of Loyalty
48-10 Sec. 152.206. Partner's Duty of Care
48-11 Sec. 152.207. Standards of Conduct Applicable to Person Winding
48-12 Up Partnership Business
48-13 Sec. 152.208. Amendment to Partnership Agreement
48-14 Sec. 152.209. Decision-Making Requirement
48-15 Sec. 152.210. Partner's Liability to Partnership and Other
48-16 Partners
48-17 Sec. 152.211. Remedies of Partnership and Partners
48-18 Sec. 152.212. Books and Records of Partnership
48-19 Sec. 152.213. Information Regarding Partnership
48-20 Sec. 152.214. Certain Third-Party Obligations Not Affected
48-21 (Sections 152.215-152.300 reserved for expansion)
48-22 Subchapter E. Relationship between Partners and Other Persons
48-23 Sec. 152.301. Partner as Agent
48-24 Sec. 152.302. Binding Effect of Partner's Action
48-25 Sec. 152.303. Liability of Partnership for Conduct of Partner
48-26 Sec. 152.304. Nature of Partner's Liability
48-27 Sec. 152.305. Remedy
49-1 Sec. 152.306. Enforcement of Remedy
49-2 Sec. 152.307. Extension of Credit in Reliance on False
49-3 Representation
49-4 (Sections 152.308-152.400 reserved for expansion)
49-5 Subchapter F. Transfer of Partnership Interests
49-6 Sec. 152.401. Transfer of Partnership Interest
49-7 Sec. 152.402. General Effect of Transfer
49-8 Sec. 152.403. Effect of Transfer on Transferor
49-9 Sec. 152.404. Rights and Duties of Transferee
49-10 Sec. 152.405. Power to Effect Transfer or Grant of Security
49-11 Interest
49-12 Sec. 152.406. Effect of Death or Divorce on Partnership
49-13 Interest
49-14 (Sections 152.407-152.500 reserved for expansion)
49-15 Subchapter G. Withdrawal of Partner
49-16 Sec. 152.501. Events of Withdrawal
49-17 Sec. 152.502. Effect of Event of Withdrawal on Partnership and
49-18 Other Partners
49-19 Sec. 152.503. Wrongful Withdrawal; Liability
49-20 Sec. 152.504. Withdrawn Partner's Power to Bind Partnership
49-21 Sec. 152.505. Effect of Withdrawal on Partner's Existing
49-22 Liability
49-23 Sec. 152.506. Liability of Withdrawn Partner to Third Party
49-24 (Sections 152.507-152.600 reserved for expansion)
49-25 Subchapter H. Redemption of Withdrawing Partner or
49-26 Transferee's Interest
49-27 Sec. 152.601. Redemption if Partnership Not Wound Up
50-1 Sec. 152.602. Redemption Price
50-2 Sec. 152.603. Contribution Obligation
50-3 Sec. 152.604. Setoff for Certain Damages
50-4 Sec. 152.605. Accrual of Interest
50-5 Sec. 152.606. Indemnification for Certain Liability
50-6 Sec. 152.607. Demand or Payment of Estimated Redemption
50-7 Sec. 152.608. Deferred Payment on Wrongful Withdrawal
50-8 Sec. 152.609. Action to Determine Terms of Redemption
50-9 Sec. 152.610. Deferred Payment on Winding Up Partnership
50-10 Sec. 152.611. Redemption of Transferee's Partnership Interest
50-11 Sec. 152.612. Action to Determine Transferee's Redemption Price
50-12 (Sections 152.613-152.700 reserved for expansion)
50-13 Subchapter I. Supplemental Winding Up and Termination Provisions
50-14 Sec. 152.701. Effect of Event Requiring Winding Up
50-15 Sec. 152.702. Persons Eligible to Wind Up Partnership Business
50-16 Sec. 152.703. Rights and Duties of Person Winding Up Partnership
50-17 Business
50-18 Sec. 152.704. Binding Effect of Partner's Action after
50-19 Event Requiring Winding up
50-20 Sec. 152.705. Partner's Liability to Other Partners after
50-21 Event Requiring Winding Up
50-22 Sec. 152.706. Disposition of Assets
50-23 Sec. 152.707. Settlement of Accounts
50-24 Sec. 152.708. Contributions to Discharge Obligations
50-25 Sec. 152.709. Continuation of Partnership
50-26 (Sections 152.710-152.800 reserved for expansion)
51-1 Subchapter J. Limited Liability Partnerships
51-2 Sec. 152.801. Liability of Partner
51-3 Sec. 152.802. Registration
51-4 Sec. 152.803. Name
51-5 Sec. 152.804. Insurance or Financial Responsibility
51-6 Sec. 152.805. Limited Partnership
51-7 (Sections 152.806-152.900 reserved for expansion)
51-8 Subchapter K. Foreign Limited Liability Partnerships
51-9 Sec. 152.901. General
51-10 Sec. 152.902. Name
51-11 Sec. 152.903. Activities Not Constituting Transacting Business
51-12 Sec. 152.904. Registered Agent
51-13 Sec. 152.905. Statement of Foreign Qualification
51-14 Sec. 152.906. Cancellation of Registration
51-15 Sec. 152.907. Effect of Certificate of Cancellation
51-16 Sec. 152.908. Renewal of Registration
51-17 Sec. 152.909. Action by Secretary of State
51-18 Sec. 152.910. Effect of Failure to Qualify
51-19 Sec. 152.911. Amendment
51-20 Sec. 152.912. Execution of Application for Amendment
51-21 Sec. 152.913. Execution of Statement of Change of Registered
51-22 Office or Registered Agent
51-23 Chapter 153. Limited Partnerships
51-24 Subchapter A. General Provisions
51-25 Sec. 153.001. Definition
51-26 Sec. 153.002. Construction
51-27 Sec. 153.003. Applicability of Other Laws
52-1 Sec. 153.004. NonWaivable Title 1 Provisions
52-2 Sec. 153.005. Waiver or Modification of Rights of Third Parties
52-3 (Sections 153.006-153.050 reserved for expansion)
52-4 Subchapter B. Supplemental Provisions Regarding Amendment to
52-5 Certificate of Formation
52-6 Sec. 153.051. Required Amendment to Certificate of Formation
52-7 Sec. 153.052. Discretionary Amendment to Certificate of Formation
52-8 (Sections 153.053-153.100 reserved for expansion)
52-9 Subchapter C. Limited Partners
52-10 Sec. 153.101. Admission of Limited Partners
52-11 Sec. 153.102. Liability to Third Parties
52-12 Sec. 153.103. Actions Not Constituting Participation in Business
52-13 for Liability Purposes
52-14 Sec. 153.104. Enumeration of Actions Not Exclusive
52-15 Sec. 153.105. Creation of Rights
52-16 Sec. 153.106. Erroneous Belief of Contributor Being Limited
52-17 Partner
52-18 Sec. 153.107. Statement Required for Liability Protection
52-19 Sec. 153.108. Requirements for Liability Protection Following
52-20 Expiration of Statement
52-21 Sec. 153.109. Liability of Erroneous Contributor
52-22 Sec. 153.110. Withdrawal of Limited Partner
52-23 Sec. 153.111. Distribution on Withdrawal
52-24 Sec. 153.112. Receipt of Wrongful Distribution
52-25 Sec. 153.113. Powers of Estate of Limited Partner who Is
52-26 Deceased or Incapacitated
52-27 (Sections 153.114-153.150 reserved for expansion)
53-1 Subchapter D. General Partners
53-2 Sec. 153.151. Admission of Additional General Partners
53-3 Sec. 153.152. General Powers and Liabilities of General Partner
53-4 Sec. 153.153. Powers and Liabilities of Person who is both General
53-5 Partner and Limited Partner
53-6 Sec. 153.154. Contributions by and Distributions to General Partner
53-7 Sec. 153.155. Withdrawal of General Partner
53-8 Sec. 153.156. Notice of Event of Withdrawal
53-9 Sec. 153.157. Withdrawal of General Partner in Violation of
53-10 Partnership Agreement
53-11 Sec. 153.158. Effect of Withdrawal
53-12 Sec. 153.159. Conversion of Partnership Interest after
53-13 Withdrawal
53-14 Sec. 153.160. Effect of Conversion of Partnership Interest
53-15 Sec. 153.161. Liability of General Partner for Debt
53-16 Incurred After Event of Withdrawal
53-17 Sec. 153.162. Liability for Wrongful Withdrawal
53-18 (Sections 153.163-153.200 reserved for expansion)
53-19 Subchapter E. Finances
53-20 Sec. 153.201. Form of Contribution
53-21 Sec. 153.202. Enforceability of Promise to Make Contribution
53-22 Sec. 153.203. Release of Obligation to Partnership
53-23 Sec. 153.204. Enforceability of Obligation
53-24 Sec. 153.205. Requirements to Enforce Conditional Obligation
53-25 Sec. 153.206. Allocation of Profits and Losses
53-26 Sec. 153.207. Right to Distribution
53-27 Sec. 153.208. Sharing of Distributions
54-1 Sec. 153.209. Interim Distributions
54-2 Sec. 153.210. Limitation on Distribution
54-3 (Sections 153.211-153.250 reserved for expansion)
54-4 Subchapter F. Partnership Interest
54-5 Sec. 153.251. Assignment of Partnership Interest
54-6 Sec. 153.252. Rights of Assignor
54-7 Sec. 153.253. Rights of Assignee
54-8 Sec. 153.254. Liability of Assignee
54-9 Sec. 153.255. Liability of Assignor
54-10 Sec. 153.256. Charge in Payment of Judgment Creditor
54-11 Sec. 153.257. Exemption Laws Applicable to Partnership Interest
54-12 Not Affected
54-13 (Sections 153.258-153.300 reserved for expansion)
54-14 Subchapter G. Reports, Records, and Information
54-15 Sec. 153.301. Periodic Report
54-16 Sec. 153.302. Form and Contents of Report
54-17 Sec. 153.303. Filing Fee
54-18 Sec. 153.304. Delivery of Report
54-19 Sec. 153.305. Action by Secretary of State
54-20 Sec. 153.306. Effect of Filing Report
54-21 Sec. 153.307. Effect of Failure to File Report
54-22 Sec. 153.308. Notice of Forfeiture of Right to Transact
54-23 Business
54-24 Sec. 153.309. Effect of Forfeiture of Right to Transact
54-25 Business
54-26 Sec. 153.310. Revival of Right to Transact Business
55-1 Sec. 153.311. Cancellation of Certificate or Registration after
55-2 Forfeiture
55-3 Sec. 153.312. Reinstatement of Certificate of Formation or
55-4 Registration
55-5 (Sections 153.313-153.350 reserved for expansion)
55-6 Subchapter H. Limited Partnership as Limited Liability
55-7 Partnership
55-8 Sec. 153.351. Requirements
55-9 Sec. 153.352. Applicability of Other Requirements
55-10 Sec. 153.353. Law Applicable to Partners
55-11 (Sections 153.354-153.400 reserved for expansion)
55-12 Subchapter I. Derivative Actions
55-13 Sec. 153.401. Right to Bring Action
55-14 Sec. 153.402. Proper Plaintiff
55-15 Sec. 153.403. Pleading
55-16 Sec. 153.404. Security for Expenses of Defendants
55-17 Sec. 153.405. Expenses of Plaintiff
55-18 (Sections 153.406-153.450 reserved for expansion)
55-19 Subchapter J. Cancellation of Certificate of Formation
55-20 Sec. 153.451. Certificate of Cancellation
55-21 Sec. 153.452. Contents of Certificate of Cancellation
55-22 (Sections 153.453-153.500 reserved for expansion)
55-23 Subchapter K. Supplemental Winding Up and Termination Provisions
55-24 Sec. 153.501. Continuation without Winding Up
55-25 Sec. 153.502. Winding Up Procedures
55-26 Sec. 153.503. Powers of Person Conducting Wind Up
56-1 Sec. 153.504. Disposition of Assets
56-2 (Sections 153.505-153.550 reserved for expansion)
56-3 Subchapter L. Miscellaneous Provisions
56-4 Sec. 153.551. Records
56-5 Sec. 153.552. Examination of Records and Information
56-6 Sec. 153.553. Execution of Certain Filings
56-7 Sec. 153.554. Execution, Amendment, or Cancellation by Judicial
56-8 Order
56-9 Sec. 153.555. Permitted Transfer in Connection with Racetrack
56-10 License
56-11 Chapter 154. Provisions Applicable to both General and Limited
56-12 Partnerships
56-13 Subchapter A. Partnership Interests
56-14 Sec. 154.001. Nature of Partner's Partnership Interest
56-15 Sec. 154.002. Transfer of Interest in Partnership Property
56-16 Prohibited
56-17 (Sections 154.003-154.100 reserved for expansion)
56-18 Subchapter B. Partnership Agreement
56-19 Sec. 154.101. Class or Group of Partners
56-20 Sec. 154.102. Provisions Relating to Voting
56-21 Sec. 154.103. Notice of Action by Consent without a Meeting
56-22 (Sections 154.104-154.200 reserved for expansion)
56-23 Subchapter C. Partnership Transactions and Relationships
56-24 Sec. 154.201. Business Transactions between Partner and
56-25 Partnership
56-26 Sec. 154.202. Effect of Partner Change on Relationship between
56-27 Partnership and Creditors
57-1 Sec. 154.203. Distributions in Kind
57-2 Title 5. Real Estate Investment Trusts
57-3 Chapter 200. Real Estate Investment Trusts
57-4 Subchapter A. General Provisions
57-5 Sec. 200.001. Definition
57-6 Sec. 200.002. Applicability of Chapter
57-7 Sec. 200.003. Conflict with Other Law
57-8 Sec. 200.004. Ultra Vires Acts
57-9 Sec. 200.005. Supplementary Powers of Real Estate Investment
57-10 Trust
57-11 Sec. 200.006. Requirement that Filing Instrument Be Signed by
57-12 Officer
57-13 (Sections 200.007-200.050 reserved for expansion)
57-14 Subchapter B. Formation and Governing Documents
57-15 Sec. 200.051. Declaration of Trust
57-16 Sec. 200.052. No Property Right in Certificate of Formation
57-17 Sec. 200.053. Procedures to Adopt Amendment to Certificate of
57-18 Formation
57-19 Sec. 200.054. Adoption of Amendment by Trust Managers
57-20 Sec. 200.055. Adoption of Amendment by Shareholders
57-21 Sec. 200.056. Notice of and Meeting to Consider Proposed
57-22 Amendment
57-23 Sec. 200.057. Adoption of Restated Certificate of Formation
57-24 Sec. 200.058. Bylaws
57-25 Sec. 200.059. Dual Authority
57-26 Sec. 200.060. Organization Meeting
57-27 (Sections 200.061-200.100 reserved for expansion)
58-1 Subchapter C. Shares
58-2 Sec. 200.101. Number
58-3 Sec. 200.102. Classification of Shares
58-4 Sec. 200.103. Classes of Shares Established by Trust Managers
58-5 Sec. 200.104. Issuance of Shares
58-6 Sec. 200.105. Types of Consideration for Issuance of Shares
58-7 Sec. 200.106. Determination of Consideration for Shares
58-8 Sec. 200.107. Amount of Consideration for Issuance of Shares
58-9 with Par Value
58-10 Sec. 200.108. Value of Consideration
58-11 Sec. 200.109. Liability of Assignee or Transferee
58-12 Sec. 200.110. Subscriptions
58-13 Sec. 200.111. Preformation Subscription
58-14 Sec. 200.112. Commitment to Purchase Shares
58-15 (Sections 200.113-200.150 reserved for expansion)
58-16 Subchapter D. Shareholder Rights and Restrictions
58-17 Sec. 200.151. Registered Holders as Owners
58-18 Sec. 200.152. No Statutory Preemptive Right Unless Specifically
58-19 Provided by Certificate of Formation
58-20 Sec. 200.153. Transfer of Shares and Other Securities
58-21 Sec. 200.154. Restriction on Transfer of Shares and Other
58-22 Securities
58-23 Sec. 200.155. Valid Restriction on Transfer
58-24 Sec. 200.156. Bylaw or Agreement Restricting Transfer of Shares
58-25 or Other Securities
58-26 Sec. 200.157. Enforceability of Restriction on Transfer of
58-27 Certain Securities
59-1 Sec. 200.158. Joint Ownership of Shares
59-2 Sec. 200.159. Liability for Designating Owner of Shares
59-3 Sec. 200.160. Liability Regarding Joint Ownership of Shares
59-4 (Sections 200.161-200.200 reserved for expansion)
59-5 Subchapter E. Distributions and Share Distributions
59-6 Sec. 200.201. Authority for Distributions
59-7 Sec. 200.202. Limitations on Distributions
59-8 Sec. 200.203. Priority of Distributions
59-9 Sec. 200.204. Reserves, Designations, and Allocations from
59-10 Surplus
59-11 Sec. 200.205. Authority for Share Distributions
59-12 Sec. 200.206. Limitations on Share Distributions
59-13 Sec. 200.207. Value of Shares issued as Share Distributions
59-14 Sec. 200.208. Transfer of Surplus for Share Distributions
59-15 Sec. 200.209. Determination of Solvency, Net Assets, Stated
59-16 Capital, and Surplus
59-17 Sec. 200.210. Date of Determination of Surplus
59-18 Sec. 200.211. Split-Up or Division of Shares
59-19 (Sections 200.212-200.250 reserved for expansion)
59-20 Subchapter F. Shareholders' Meetings; Voting and Quorum
59-21 Sec. 200.251. Annual Meeting
59-22 Sec. 200.252. Special Meeting
59-23 Sec. 200.253. Notice of Meeting
59-24 Sec. 200.254. Closing of Share Transfer Records
59-25 Sec. 200.255. Record Date for Written Consent to Action
59-26 Sec. 200.256. Record Date for Purpose Other than Written
59-27 Consent to Action
60-1 Sec. 200.257. Quorum
60-2 Sec. 200.258. Voting in Election of Trust Managers
60-3 Sec. 200.259. Cumulative Voting in Election of Trust Managers
60-4 Sec. 200.260. Voting on Matters Other than Election of Trust
60-5 Managers
60-6 Sec. 200.261. Vote Required to Approve Fundamental Action
60-7 Sec. 200.262. Changes in Vote Required for Certain Matters
60-8 Sec. 200.263. Number of Votes Per Share
60-9 Sec. 200.264. Voting in Person or by Proxy
60-10 Sec. 200.265. Term of Proxy
60-11 Sec. 200.266. Revocability of Proxy
60-12 Sec. 200.267. Enforceability of Proxy
60-13 Sec. 200.268. Procedures in Bylaws Relating to Proxies
60-14 (Sections 200.269-200.300 reserved for expansion)
60-15 Subchapter G. Trust Managers
60-16 Sec. 200.301. Management by Trust Managers
60-17 Sec. 200.302. Designation of Trust Managers
60-18 Sec. 200.303. Trust Manager Eligibility Requirements
60-19 Sec. 200.304. Number of Trust Managers
60-20 Sec. 200.305. Compensation
60-21 Sec. 200.306. Term of Trust Manager
60-22 Sec. 200.307. Staggered Terms of Trust Managers
60-23 Sec. 200.308. Vacancy
60-24 Sec. 200.309. Notice of Meeting
60-25 Sec. 200.310. Quorum
60-26 Sec. 200.311. Committees of Trust Managers
60-27 Sec. 200.312. Liability of Trust Managers
61-1 Sec. 200.313. Statute of Limitations on Certain Action
61-2 against Trust Managers
61-3 Sec. 200.314. Immunity from Liability for Performance of Duty
61-4 Sec. 200.315. Right of Contribution
61-5 Sec. 200.316. Officers
61-6 Sec. 200.317. Contracts or Transactions Involving Interested
61-7 Trust Managers and Officers
61-8 (Sections 200.318-200.350 reserved for expansion)
61-9 Subchapter H. Investments
61-10 Sec. 200.351. Investments
61-11 (Sections 200.352-200.400 reserved for expansion)
61-12 Subchapter I. Fundamental Business Transactions
61-13 Sec. 200.401. Definitions
61-14 Sec. 200.402. Approval of Merger
61-15 Sec. 200.403. Approval of Conversion
61-16 Sec. 200.404. Approval of Exchange
61-17 Sec. 200.405. Approval of Sale of All or Substantially All of
61-18 Assets
61-19 Sec. 200.406. General Procedure for Submission to Shareholders of
61-20 Fundamental Business Transaction
61-21 Sec. 200.407. General Vote Requirement for Approval of
61-22 Fundamental Business Transaction
61-23 Sec. 200.408. Class Voting Requirements for Certain Fundamental
61-24 Business Transactions
61-25 Sec. 200.409. No Shareholder Vote Requirement for Certain
61-26 Fundamental Business Transactions
62-1 Sec. 200.410. Rights of Dissent and Appraisal
62-2 (Sections 200.411-200.450 reserved for expansion)
62-3 Subchapter J. Supplemental Winding Up and Termination
62-4 Provisions
62-5 Sec. 200.451. Approval of Voluntary Winding Up
62-6 Sec. 200.452. Approval of Reinstatement or Revocation of
62-7 Voluntary Winding Up
62-8 Sec. 200.453. Responsibility for Winding Up
62-9 (Sections 200.454-200.500 reserved for expansion)
62-10 Subchapter K. Miscellaneous Provisions
62-11 Sec. 200.501. Examination of Records
62-12 Sec. 200.502. Joinder of Shareholders Not Required
62-13 Sec. 200.503. Tax Law Requirements
62-14 Title 6. Associations
62-15 Chapter 251. Cooperative Associations
62-16 Subchapter A. General Provisions
62-17 Sec. 251.001. Definitions
62-18 Sec. 251.002. Applicability of Nonprofit Corporation Provisions
62-19 Sec. 251.003. Exemption
62-20 (Sections 251.004-251.050 reserved for expansion)
62-21 Subchapter B. Formation and Governing Documents
62-22 Sec. 251.051. Organization Meeting
62-23 Sec. 251.052. Amendment of Certificate of Formation
62-24 Sec. 251.053. Bylaws
62-25 (Sections 251.054-251.100 reserved for expansion)
62-26 Subchapter C. Management
62-27 Sec. 251.101. Board of Directors
63-1 Sec. 251.102. Officers
63-2 Sec. 251.103. Removal of Directors and Officers
63-3 Sec. 251.104. Referendum
63-4 (Sections 251.105-251.150 reserved for expansion)
63-5 Subchapter D. Membership
63-6 Sec. 251.151. Eligibility and Admission
63-7 Sec. 251.152. Expulsion
63-8 Sec. 251.153. Subscribers
63-9 Sec. 251.154. Liability
63-10 (Sections 251.155-251.200 reserved for expansion)
63-11 Subchapter E. Shares
63-12 Sec. 251.201. Share and Membership Certificates: Issuance and
63-13 Contents
63-14 Sec. 251.202. Transfer of Shares and Membership; Withdrawal
63-15 Sec. 251.203. Share and Membership Certificates; Recall
63-16 Sec. 251.204. Certificates; Attachment
63-17 (Sections 251.205-251.250 reserved for expansion)
63-18 Subchapter F. Meetings and Voting
63-19 Sec. 251.251. Meetings
63-20 Sec. 251.252. Notice of Special Meeting
63-21 Sec. 251.253. Meetings by Units of Membership
63-22 Sec. 251.254. One Member--One Vote
63-23 Sec. 251.255. No Proxy
63-24 Sec. 251.256. Voting by Mail
63-25 Sec. 251.257. Voting by Mail or by Delegates
63-26 (Sections 251.258-251.300 reserved for expansion)
64-1 Subchapter G. Capital and Net Savings
64-2 Sec. 251.301. Limitations on Return on Capital
64-3 Sec. 251.302. Allocation and Distribution of Net Savings
64-4 (Sections 251.303-251.350 reserved for expansion)
64-5 Subchapter H. Reports and Records
64-6 Sec. 251.351. RecordKeeping
64-7 Sec. 251.352. Reports to Members
64-8 Sec. 251.353. Annual Report of Financial Condition
64-9 Sec. 251.354. Failure to File Report
64-10 (Sections 251.355-251.400 reserved for expansion)
64-11 Subchapter I. Winding Up and Termination
64-12 Sec. 251.401. Voluntary Winding Up and Termination
64-13 Sec. 251.402. Execution of Certificate of Termination
64-14 Sec. 251.403. Distribution of Assets
64-15 Sec. 251.404. Involuntary Termination
64-16 (Sections 251.405-251.450 reserved for expansion)
64-17 Subchapter J. Miscellaneous Provisions
64-18 Sec. 251.451. Exemption from Taxes
64-19 Sec. 251.452. Use of Name "Cooperative"
64-20 Chapter 252. Unincorporated Nonprofit Associations
64-21 Sec. 252.001. Definitions
64-22 Sec. 252.002. Supplementary General Principles of Law and Equity
64-23 Sec. 252.003. Territorial Application
64-24 Sec. 252.004. Real and Personal Property; Nonprofit Association
64-25 as Beneficiary
64-26 Sec. 252.005. Statement of Authority as to Real Property
64-27 Sec. 252.006. Liability in Tort and Contract
65-1 Sec. 252.007. Capacity to Assert and Defend; Standing
65-2 Sec. 252.008. Effect of Judgment or Order
65-3 Sec. 252.009. Disposition of Personal Property of Inactive
65-4 Nonprofit Association
65-5 Sec. 252.010. Books and Records
65-6 Sec. 252.011. Appointment of Agent to Receive Service of Process
65-7 Sec. 252.012. Claim Not Abated by Change
65-8 Sec. 252.013. Summons and Complaint; Service
65-9 Sec. 252.014. Uniformity of Application and Construction
65-10 Sec. 252.015. Transition Concerning Real and Personal Property
65-11 Sec. 252.016. Effect on Other Law
65-12 Sec. 252.017. Chapter Controlling
65-13 Chapter 253. Unincorporated Joint Stock Companies or
65-14 Associations
65-15 Sec. 253.001. Applicability of Chapter
65-16 Sec. 253.002. Effect of Chapter
65-17 Sec. 253.003. Cumulative Remedies
65-18 Sec. 253.004. Suit in Name of Joint Stock Association
65-19 Sec. 253.005. Service of Citation
65-20 Sec. 253.006. Liability of Stockholders or Members
65-21 Sec. 253.007. Execution of Judgment
65-22 Title 7. Professional Entities
65-23 Chapter 301. Provisions Relating to Professional Entities
65-24 Sec. 301.001. Applicability of Title
65-25 Sec. 301.002. Conflicts of Law
65-26 Sec. 301.003. Definitions
65-27 Sec. 301.004. Authorized Person
66-1 Sec. 301.005. Application for Registration of Foreign
66-2 Professional Entity
66-3 Sec. 301.006. License Required to Provide Professional Service
66-4 Sec. 301.007. Certain Requirements to be Owner, Governing
66-5 Person, or Officer
66-6 Sec. 301.008. Duties and Powers of Owner or Managerial Official
66-7 who Ceases to be Licensed; Purchase of
66-8 Ownership Interest
66-9 Sec. 301.009. Transfer of Ownership Interest
66-10 Sec. 301.010. Liability
66-11 Sec. 301.011. Exemption from Securities Laws
66-12 Sec. 301.012. Joint Practice by Certain Professionals
66-13 Chapter 302. Provisions Relating to Professional Associations
66-14 Sec. 302.001. Applicability of Certain Provisions Governing
66-15 For-Profit Corporations
66-16 Sec. 302.002. Duration of Professional Association
66-17 Sec. 302.003. Amendment of Certificate of Formation
66-18 Sec. 302.004. Adoption of Bylaws; Delegation of Authority
66-19 Sec. 302.005. Governing Authority
66-20 Sec. 302.006. Members' Voting Rights
66-21 Sec. 302.007. Election of Officers
66-22 Sec. 302.008. Officer and Governing Authority Eligibility
66-23 Requirements
66-24 Sec. 302.009. Employment of Agents and Employees
66-25 Sec. 302.010. Limitation on Member's Power to Bind Association
66-26 Sec. 302.011. Division of Profits
66-27 Sec. 302.012. Annual Statement Required
67-1 Sec. 302.013. Winding Up and Termination; Certificate of
67-2 Termination
67-3 Chapter 303. Provisions Relating to Professional Corporations
67-4 Sec. 303.001. Applicability of Certain Provisions Governing
67-5 For-Profit Corporations
67-6 Sec. 303.002. Authority and Liability of Shareholder
67-7 Sec. 303.003. Notice of Restriction on Transfer of Shares
67-8 Sec. 303.004. Redemption of Shares; Price and Terms
67-9 Sec. 303.005. Existence of Professional Corporation before
67-10 Winding Up and Termination
67-11 Sec. 303.006. Winding Up and Termination of Professional
67-12 Corporation
67-13 Chapter 304. Provisions Relating to Professional Limited
67-14 Liability Companies
67-15 Sec. 304.001. Applicability of Certain Provisions Governing
67-16 Limited Liability Companies
67-17 Title 8. Miscellaneous and Transition Provisions
67-18 Chapter 401. General Provisions
67-19 Sec. 401.001. Definitions
67-20 Chapter 402. Miscellaneous and Transition Provisions
67-21 Sec. 402.001. Applicability upon Effective Date
67-22 Sec. 402.002. Early Effectiveness of Fees
67-23 Sec. 402.003. Early Adoption of Code by Existing Domestic Entity
67-24 Sec. 402.004. Early Adoption of Code by Registered Foreign
67-25 Entity
67-26 Sec. 402.005. Applicability to Existing Entities on Mandatory
67-27 Application Date
68-1 Sec. 402.006. Applicability to Certain Acts, Contracts, and
68-2 Transactions
68-3 Sec. 402.007. Indemnification
68-4 Sec. 402.008. Meetings of Owners and Members; Consents; Voting
68-5 of Interests
68-6 Sec. 402.009. Meetings of Governing Authority and Committees;
68-7 Consents
68-8 Sec. 402.010. Sale of Assets, Mergers, Reorganizations,
68-9 Conversions
68-10 Sec. 402.011. Winding Up and Termination
68-11 Sec. 402.012. Registration of Certain Foreign Entities
68-12 Sec. 402.013. Entities under Suspension for Nonfiling of
68-13 Required Reports or Payment of Taxes;
68-14 Applicability of Prior Law
68-15 Sec. 402.014. Maintenance of Prior Action
68-16 TITLE 1. GENERAL PROVISIONS
68-17 CHAPTER 1. DEFINITIONS AND OTHER GENERAL PROVISIONS
68-18 SUBCHAPTER A. DEFINITIONS AND PURPOSE
68-19 Sec. 1.001. PURPOSE. The purpose of this code is to make the
68-20 law encompassed by this code more accessible and understandable by:
68-21 (1) rearranging the statutes into a more logical
68-22 order;
68-23 (2) employing a format and numbering system designed
68-24 to facilitate citation of the law and to accommodate future
68-25 expansion of the law;
68-26 (3) eliminating repealed, duplicative, expired,
68-27 executed, and other ineffective provisions; and
69-1 (4) restating the law in modern American English to
69-2 the greatest extent possible.
69-3 Sec. 1.002. DEFINITIONS. In this code:
69-4 (1) "Affiliate" means a person who controls, is
69-5 controlled by, or is under common control with another person.
69-6 (2) "Associate," when used to indicate a relationship
69-7 with a person, means:
69-8 (A) a domestic or foreign entity or organization
69-9 for which the person is:
69-10 (i) an officer or governing person; or
69-11 (ii) a beneficial owner of 10 percent or
69-12 more of a class of voting ownership interests or similar securities
69-13 of the entity or organization;
69-14 (B) a trust or estate in which the person has a
69-15 substantial beneficial interest or for which the person serves as
69-16 trustee or in a similar fiduciary capacity;
69-17 (C) the person's spouse or a relative of the
69-18 person related by consanguinity or affinity who resides with the
69-19 person; or
69-20 (D) a governing person or an affiliate or
69-21 officer of the person.
69-22 (3) "Association" means an entity governed as an
69-23 association under Title 6 or 7. The term includes a cooperative
69-24 association, nonprofit association, joint stock association, and
69-25 professional association.
69-26 (4) "Assumed name" means a name adopted for use by a
69-27 person. The term includes an assumed name filed under Chapter 36,
70-1 Business & Commerce Code.
70-2 (5) "Business" means a trade, occupation, profession,
70-3 or other commercial activity.
70-4 (6) "Certificate of formation" means:
70-5 (A) the document required to be filed with the
70-6 secretary of state under Chapter 3 to form a filing entity; and
70-7 (B) if appropriate, a restated certificate of
70-8 formation and all amendments of an original or restated certificate
70-9 of formation.
70-10 (7) "Certificate of ownership" means an instrument
70-11 evidencing an ownership interest or membership interest in an
70-12 entity.
70-13 (8) "Certificated ownership interest" means an
70-14 ownership interest of a domestic entity represented by a
70-15 certificate issued in bearer or registered form.
70-16 (9) "Close corporation" means a for-profit corporation
70-17 that elects to be governed as a close corporation in accordance
70-18 with Subchapter O, Chapter 21.
70-19 (10) "Contribution" means a tangible or intangible
70-20 benefit that a person transfers to an entity in consideration for
70-21 an ownership interest in the entity or otherwise in the person's
70-22 capacity as an owner or a member. The benefit includes cash,
70-23 services rendered, a contract for services to be performed, a
70-24 promissory note or other obligation of a person to pay cash or
70-25 transfer property to the entity, or securities or other interests
70-26 in or obligations of an entity, but does not include cash or
70-27 property received by the entity:
71-1 (A) with respect to a promissory note or other
71-2 obligation to the extent that the agreed value of the note or
71-3 obligation has previously been included as a contribution; or
71-4 (B) that the person intends to be a loan to the
71-5 entity.
71-6 (11) "Conversion" means:
71-7 (A) the continuance of a domestic entity as a
71-8 foreign entity of any type;
71-9 (B) the continuance of a foreign entity as a
71-10 domestic entity of any type; or
71-11 (C) the continuance of a domestic entity of one
71-12 type as a domestic entity of another type.
71-13 (12) "Converted entity" means an entity resulting from
71-14 a conversion.
71-15 (13) "Converting entity" means an entity as the entity
71-16 existed before the entity's conversion.
71-17 (14) "Cooperative" or "cooperative association" means
71-18 an association governed as a cooperative association under
71-19 Chapter 251.
71-20 (15) "Corporation" means an entity governed as a
71-21 corporation under Title 2 or 7. The term includes a for-profit
71-22 corporation, nonprofit corporation, and professional corporation.
71-23 (16) "Debtor in bankruptcy" means a person who is the
71-24 subject of:
71-25 (A) an order for relief under the United States
71-26 bankruptcy laws (Title 11, United States Code); or
71-27 (B) a comparable order under a:
72-1 (i) successor statute of general
72-2 applicability; or
72-3 (ii) federal or state law governing
72-4 insolvency.
72-5 (17) "Digital signature" means an electronic
72-6 identifier intended by the person using it to have the same force
72-7 and effect as the use of a manual signature.
72-8 (18) "Director" means an individual who serves on the
72-9 board of directors of a foreign or domestic corporation.
72-10 (19) "Distribution" means a transfer of property,
72-11 including cash, from an entity to an owner or member of the entity
72-12 in the owner's or member's capacity as an owner or member. The
72-13 term includes a dividend, a redemption or purchase of an ownership
72-14 interest, or a liquidating distribution.
72-15 (20) "Domestic" means, with respect to an entity, that
72-16 the entity is formed under this code or the entity's internal
72-17 affairs are governed by this code.
72-18 (21) "Domestic entity" means an organization formed
72-19 under or the internal affairs of which are governed by this code.
72-20 (22) "Domestic entity subject to dissenters' rights"
72-21 means a domestic entity the owners of which have rights of dissent
72-22 and appraisal under this code or the governing documents of the
72-23 entity.
72-24 (23) "Effective date of this code" means January 1,
72-25 2002. The applicability of this code is governed by Title 8.
72-26 (24) "Entity" means a domestic entity or foreign
72-27 entity.
73-1 (25) "Filing entity" means a domestic entity that is a
73-2 corporation, limited partnership, limited liability company,
73-3 professional association, cooperative, or real estate investment
73-4 trust.
73-5 (26) "Filing instrument" means an instrument,
73-6 document, or statement that is required or authorized by this code
73-7 to be filed by or for an entity with the filing officer in
73-8 accordance with Chapter 4.
73-9 (27) "Filing officer" means:
73-10 (A) with respect to an entity other than a real
73-11 estate investment trust, the secretary of state; or
73-12 (B) with respect to a real estate investment
73-13 trust, the county clerk of the county in which the real estate
73-14 investment trust's principal office is located in this state.
73-15 (28) "For-profit association" means an association
73-16 other than a nonprofit association.
73-17 (29) "For-profit corporation" means a corporation
73-18 other than a nonprofit corporation or professional corporation.
73-19 (30) "For-profit entity" means an entity other than a
73-20 nonprofit entity.
73-21 (31) "Foreign" means, with respect to an entity, that
73-22 the entity is formed under, and the entity's internal affairs are
73-23 governed by, the laws of a jurisdiction other than this state.
73-24 (32) "Foreign entity" means an organization formed
73-25 under, and the internal affairs of which are governed by, the laws
73-26 of a jurisdiction other than this state.
73-27 (33) "Foreign filing entity" means a foreign entity
74-1 that registers or is required to register as a foreign entity under
74-2 Chapter 9.
74-3 (34) "Foreign governmental authority" means a
74-4 governmental official, agency, or instrumentality of a jurisdiction
74-5 other than this state.
74-6 (35) "Foreign nonfiling entity" means a foreign entity
74-7 that is not a foreign filing entity.
74-8 (36) "Fundamental business transaction" means a
74-9 merger, interest exchange, conversion, or sale of all or
74-10 substantially all of an entity's assets.
74-11 (37) "General partner" means:
74-12 (A) each partner in a general partnership; or
74-13 (B) a person who is admitted to a limited
74-14 partnership as a general partner in accordance with the governing
74-15 documents of the limited partnership.
74-16 (38) "General partnership" means a partnership
74-17 governed as a general partnership under Title 4. The term includes
74-18 a limited liability partnership.
74-19 (39) "Governing authority" means a person or group of
74-20 persons who are entitled to manage and direct the affairs of an
74-21 entity under this code and the governing documents of the entity,
74-22 except that if the governing documents of the entity or this code
74-23 divide the authority to manage and direct the affairs of the entity
74-24 among different persons or groups of persons according to different
74-25 matters, "governing authority" means the person or group of persons
74-26 entitled to manage and direct the affairs of the entity with
74-27 respect to a matter under the governing documents of the entity or
75-1 this code. The term includes the board of directors of a
75-2 corporation or other persons authorized to perform the functions of
75-3 the board of directors of a corporation, the general partners of a
75-4 general partnership or limited partnership, the managers of a
75-5 limited liability company that is managed by managers, the members
75-6 of a limited liability company that is managed by members who are
75-7 entitled to manage the company, the board of directors of a
75-8 cooperative association, and the trust managers of a real estate
75-9 investment trust. The term does not include an officer who is
75-10 acting in the capacity of an officer.
75-11 (40) "Governing documents" means:
75-12 (A) in the case of a domestic entity:
75-13 (i) the certificate of formation for a
75-14 domestic filing entity or the document or agreement under which a
75-15 domestic nonfiling entity is formed; and
75-16 (ii) the other documents or agreements
75-17 adopted by the entity under this code to govern the formation or
75-18 the internal affairs of the entity; or
75-19 (B) in the case of a foreign entity, the
75-20 instruments, documents, or agreements adopted under the law of its
75-21 jurisdiction of formation to govern the formation or the internal
75-22 affairs of the entity.
75-23 (41) "Governing person" means a person serving as part
75-24 of the governing authority of an entity.
75-25 (42) "Individual" means a natural person.
75-26 (43) "Insolvency" means the inability of a person to
75-27 pay the person's debts as they become due in the usual course of
76-1 business or affairs.
76-2 (44) "Insolvent" means a person who is unable to pay
76-3 the person's debts as they become due in the usual course of
76-4 business or affairs.
76-5 (45) "Interest exchange" means the acquisition of an
76-6 ownership or membership interest in a domestic entity as provided
76-7 by Subchapter B, Chapter 10. The term does not include a merger or
76-8 conversion.
76-9 (46) "Internal Revenue Code" means the Internal
76-10 Revenue Code of 1986, as amended. The term includes corresponding
76-11 provisions of subsequent federal tax laws.
76-12 (47) "Jurisdiction of formation" means:
76-13 (A) in the case of a domestic filing entity,
76-14 this state;
76-15 (B) in the case of a foreign filing entity, the
76-16 jurisdiction in which the entity's certificate of formation or
76-17 similar organizational instrument is filed; or
76-18 (C) in the case of a foreign or domestic
76-19 nonfiling entity:
76-20 (i) the jurisdiction the laws of which are
76-21 chosen in the entity's governing documents to govern its internal
76-22 affairs if that jurisdiction bears a reasonable relation to the
76-23 owners or members or to the domestic or foreign nonfiling entity's
76-24 business and affairs under the principles of this state that
76-25 otherwise would apply to a contract among the owners or members; or
76-26 (ii) if Subparagraph (i) does not apply,
76-27 the jurisdiction in which the entity has its chief executive
77-1 office.
77-2 (48) "Law" means, unless the context requires
77-3 otherwise, both statutory and common law.
77-4 (49) "License" means a license, certificate of
77-5 registration, or other legal authorization.
77-6 (50) "Limited liability company" means an entity
77-7 governed as a limited liability company under Title 3.
77-8 (51) "Limited liability limited partnership" means a
77-9 partnership governed as a limited liability partnership and a
77-10 limited partnership under Title 4.
77-11 (52) "Limited liability partnership" means a
77-12 partnership governed as a limited liability partnership under
77-13 Title 4.
77-14 (53) "Limited partner" means a person who has been
77-15 admitted to a limited partnership as a limited partner as provided
77-16 by:
77-17 (A) in the case of a domestic limited
77-18 partnership, Chapter 153; or
77-19 (B) in the case of a foreign limited
77-20 partnership, the laws of its jurisdiction of formation.
77-21 (54) "Limited partnership" means a partnership
77-22 governed as a limited partnership under Title 4. The term includes
77-23 a limited liability limited partnership.
77-24 (55) "Manager" means a person designated as a manager
77-25 of a limited liability company that is not managed by members of
77-26 the company.
77-27 (56) "Managerial official" means an officer or a
78-1 governing person.
78-2 (57) "Member" means:
78-3 (A) in the case of a limited liability company,
78-4 a person who has membership rights in the limited liability company
78-5 under its governing documents;
78-6 (B) in the case of a nonprofit corporation, a
78-7 person who has membership rights in the nonprofit corporation under
78-8 its governing documents;
78-9 (C) in the case of a cooperative association, a
78-10 member of a nonshare or share association;
78-11 (D) in the case of a nonprofit association, a
78-12 person who has membership rights in the nonprofit association under
78-13 its governing documents; or
78-14 (E) in the case of a professional association, a
78-15 person who has membership rights in the professional association
78-16 under its governing documents.
78-17 (58) "Membership interest" means a member's interest
78-18 in an entity. With respect to a limited liability company, the
78-19 term includes a member's share of profits and losses or similar
78-20 items and the right to receive distributions, but does not include
78-21 a member's right to participate in management.
78-22 (59) "Merger" means:
78-23 (A) the division of a domestic entity into two
78-24 or more new domestic entities or other organizations or into a
78-25 surviving domestic entity and one or more new domestic or foreign
78-26 entities or non-code organizations; or
78-27 (B) the combination of one or more domestic
79-1 entities with one or more domestic entities or non-code
79-2 organizations resulting in:
79-3 (i) one or more surviving domestic
79-4 entities or non-code organizations;
79-5 (ii) the creation of one or more new
79-6 domestic entities or non-code organizations; or
79-7 (iii) one or more surviving domestic
79-8 entities or non-code organizations and the creation of one or more
79-9 new domestic entities or non-code organizations.
79-10 (60) "Non-code organization" means an organization
79-11 other than a domestic entity.
79-12 (61) "Nonfiling entity" means a domestic entity that
79-13 is not a filing entity. The term includes a domestic general
79-14 partnership, nonprofit association, and joint stock company.
79-15 (62) "Nonprofit association" means an association
79-16 governed as a nonprofit association under Chapter 252.
79-17 (63) "Nonprofit corporation" means a corporation
79-18 governed as a nonprofit corporation under Chapter 22.
79-19 (64) "Nonprofit entity" means an entity that is a
79-20 nonprofit corporation, nonprofit association, or other entity that
79-21 is organized solely for one or more of the purposes specified by
79-22 Section 2.002.
79-23 (65) "Officer" means an individual elected, appointed,
79-24 or designated as an officer of an entity by the entity's governing
79-25 authority or under the entity's governing documents.
79-26 (66) "Organization" means a corporation, limited or
79-27 general partnership, limited liability company, business trust,
80-1 real estate investment trust, joint venture, joint stock company,
80-2 cooperative, association, bank, insurance company, credit union,
80-3 savings and loan association, or other organization, regardless of
80-4 whether the organization is for-profit, nonprofit, domestic, or
80-5 foreign.
80-6 (67) "Owner" means:
80-7 (A) with respect to a foreign or domestic
80-8 for-profit corporation or real estate investment trust, a
80-9 shareholder;
80-10 (B) with respect to a foreign or domestic
80-11 partnership, a partner;
80-12 (C) with respect to a foreign or domestic
80-13 limited liability company or association, a member; or
80-14 (D) with respect to another foreign or domestic
80-15 entity, an owner of an equity interest in that entity.
80-16 (68) "Ownership interest" means an owner's interest in
80-17 an entity. The term includes the owner's share of profits and
80-18 losses or similar items and the right to receive distributions.
80-19 The term does not include an owner's right to participate in
80-20 management.
80-21 (69) "Parent entity" or "parent organization" means an
80-22 entity or organization that:
80-23 (A) owns at least 50 percent of the ownership or
80-24 membership interest of a subsidiary; or
80-25 (B) possesses at least 50 percent of the voting
80-26 power of the owners or members of a subsidiary.
80-27 (70) "Partner" means a limited partner or general
81-1 partner.
81-2 (71) "Partnership" means an entity governed as a
81-3 partnership under Title 4.
81-4 (72) "Partnership interest" means a partner's interest
81-5 in a partnership. The term includes the partner's share of profits
81-6 and losses or similar items and the right to receive distributions.
81-7 The term does not include a partner's right to participate in
81-8 management.
81-9 (73) "Party to the merger" means a domestic entity or
81-10 non-code organization that under a plan of merger is divided or
81-11 combined by a merger. The term does not include a domestic entity
81-12 or non-code organization that is not to be divided or combined into
81-13 or with one or more domestic entities or non-code organizations,
81-14 regardless of whether ownership interests of the entity are to be
81-15 issued under the plan of merger.
81-16 (74) "President" means the:
81-17 (A) individual designated as president of an
81-18 entity under the entity's governing documents; or
81-19 (B) officer or committee of persons authorized
81-20 to perform the functions of the principal executive officer of an
81-21 entity without regard to the designated name of the officer or
81-22 committee.
81-23 (75) "Professional association" has the meaning
81-24 assigned by Section 301.003.
81-25 (76) "Professional corporation" has the meaning
81-26 assigned by Section 301.003.
81-27 (77) "Professional entity" has the meaning assigned by
82-1 Section 301.003.
82-2 (78) "Professional individual" has the meaning
82-3 assigned by Section 301.003.
82-4 (79) "Professional limited liability company" has the
82-5 meaning assigned by Section 301.003.
82-6 (80) "Professional service" has the meaning assigned
82-7 by Section 301.003.
82-8 (81) "Property" includes tangible and intangible
82-9 property and an interest in that property.
82-10 (82) "Real estate investment trust" means an entity
82-11 governed as a real estate investment trust under Title 5.
82-12 (83) "Sale of all or substantially all of the assets"
82-13 means the sale, lease, exchange, or other disposition, other than a
82-14 pledge, mortgage, deed of trust, or trust indenture unless
82-15 otherwise provided by the certificate of formation, of all or
82-16 substantially all of the property and assets of a domestic entity
82-17 that is not made in the usual and regular course of the entity's
82-18 business without regard to whether the disposition is made with the
82-19 goodwill of the business. The term does not include a transaction
82-20 that results in the entity directly or indirectly:
82-21 (A) continuing to engage in one or more
82-22 businesses; or
82-23 (B) applying a portion of the consideration
82-24 received in connection with the transaction to the conduct of a
82-25 business that the entity engages in after the transaction.
82-26 (84) "Secretary" means the:
82-27 (A) individual designated as secretary of an
83-1 entity under the entity's governing documents; or
83-2 (B) officer or committee of persons authorized
83-3 to perform the functions of secretary of an entity without regard
83-4 to the designated name of the officer or committee.
83-5 (85) "Share" means a unit into which the ownership
83-6 interest in a corporation is divided, regardless of whether the
83-7 share is certificated or uncertificated.
83-8 (86) "Shareholder" or "holder of shares" means the
83-9 person in whose name shares issued by a corporation are registered
83-10 in the share transfer records maintained by the corporation.
83-11 (87) "Signature" means any symbol executed or adopted
83-12 by a person with present intention to authenticate a writing.
83-13 Unless the context requires otherwise, the term includes a digital
83-14 signature, an electronic signature, and a facsimile of a signature.
83-15 (88) "Subscriber" means a person who agrees with or
83-16 makes an offer to an entity to purchase by subscription an
83-17 ownership interest in the entity.
83-18 (89) "Subscription" means an agreement between a
83-19 subscriber and an entity, or a written offer made by a subscriber
83-20 to an entity before or after the entity's formation, in which the
83-21 subscriber agrees or offers to purchase a specified ownership
83-22 interest in the entity.
83-23 (90) "Subsidiary" means an entity or organization at
83-24 least 50 percent of:
83-25 (A) the ownership or membership interest of
83-26 which is owned by a parent entity or parent organization; or
83-27 (B) the voting power of which is possessed by a
84-1 parent entity or parent organization.
84-2 (91) "Treasurer" means the:
84-3 (A) individual designated as treasurer of an
84-4 entity under the entity's governing documents; or
84-5 (B) officer or committee of persons authorized
84-6 to perform the functions of treasurer of an entity without regard
84-7 to the designated name of the officer or committee.
84-8 (92) "Trustee" means a person who serves as a trustee
84-9 of a trust, including a real estate investment trust.
84-10 (93) "Uncertificated ownership interest" means an
84-11 ownership interest in a domestic entity that is not represented by
84-12 an instrument and is transferred by:
84-13 (A) amendment of the governing documents of the
84-14 entity; or
84-15 (B) registration on books maintained by or on
84-16 behalf of the entity for the purpose of registering transfers of
84-17 ownership interests.
84-18 (94) "Vice president" means the:
84-19 (A) individual designated as vice president of
84-20 an entity under the governing documents of the entity; or
84-21 (B) officer or committee of persons authorized
84-22 to perform the functions of the president of the entity on the
84-23 death, absence, or resignation of the president or on the inability
84-24 of the president to perform the functions of office without regard
84-25 to the designated name of the officer or committee.
84-26 (95) "Writing" or "written" means an expression of
84-27 words, letters, characters, numbers, symbols, figures, or other
85-1 textual information that is inscribed on a tangible medium or that
85-2 is stored in an electronic or other medium that is retrievable in a
85-3 perceivable form. Unless the context requires otherwise, the term:
85-4 (A) includes stored or transmitted electronic
85-5 data and transmissions and reproductions of writings; and
85-6 (B) does not include sound or video recordings
85-7 of speech other than transcriptions that are otherwise writings.
85-8 Sec. 1.003. DISINTERESTED PERSON. (a) For purposes of this
85-9 code, a person is disinterested with respect to the approval of a
85-10 contract, transaction, or other matter or to the consideration of
85-11 the disposition of a claim or challenge relating to a contract,
85-12 transaction, or particular conduct, if the person or the person's
85-13 associate:
85-14 (1) is not a party to the contract or transaction or
85-15 materially involved in the conduct that is the subject of the claim
85-16 or challenge; and
85-17 (2) does not have a material financial interest in the
85-18 outcome of the contract or transaction or the disposition of the
85-19 claim or challenge.
85-20 (b) For purposes of Subsection (a), a person is not
85-21 materially involved in a contract or transaction that is the
85-22 subject of a claim or challenge and does not have a material
85-23 financial interest in the outcome of a contract or transaction or
85-24 the disposition of a claim or challenge solely because:
85-25 (1) the person was nominated or elected as a governing
85-26 person by a person who is:
85-27 (A) interested in the contract or transaction;
86-1 or
86-2 (B) alleged to have engaged in the conduct that
86-3 is the subject of the claim or challenge;
86-4 (2) the person receives normal fees or customary
86-5 compensation, reimbursement for expenses, or benefits as a
86-6 governing person of the entity;
86-7 (3) the person has a direct or indirect equity
86-8 interest in the entity;
86-9 (4) the entity has, or its subsidiaries have, an
86-10 interest in the contract or transaction or was affected by the
86-11 alleged conduct;
86-12 (5) the person or an associate of the person receives
86-13 ordinary and reasonable compensation for reviewing, making
86-14 recommendations regarding, or deciding on the disposition of the
86-15 claim or challenge; or
86-16 (6) in the case of a review by the person of the
86-17 alleged conduct that is the subject of the claim or challenge:
86-18 (A) the person is named as a defendant in the
86-19 derivative proceeding regarding the matter or as a person who
86-20 engaged in the alleged conduct; or
86-21 (B) the person, acting as a governing person,
86-22 approved, voted for, or acquiesced in the act being challenged if
86-23 the act did not result in a material personal or financial benefit
86-24 to the person and the challenging party fails to allege particular
86-25 facts that, if true, raise a significant prospect that the
86-26 governing person would be held liable to the entity or its owners
86-27 or members as a result of the conduct.
87-1 Sec. 1.004. INDEPENDENT PERSON. (a) For purposes of this
87-2 code, a person is independent with respect to considering the
87-3 disposition of a claim or challenge regarding a contract or
87-4 transaction, or particular or alleged conduct, if the person:
87-5 (1) is disinterested;
87-6 (2) either:
87-7 (A) is not an associate, or member of the
87-8 immediate family, of a party to the contract or transaction or of a
87-9 person who is alleged to have engaged in the conduct that is the
87-10 subject of the claim or challenge; or
87-11 (B) is an associate to a party or person
87-12 described by Paragraph (A) that is an entity if the person is an
87-13 associate solely because the person is a governing person of the
87-14 entity or of the entity's subsidiaries or associates;
87-15 (3) does not have a business, financial, or familial
87-16 relationship with a party to the contract or transaction, or with
87-17 another person who is alleged to have engaged in the conduct, that
87-18 is the subject of the claim or challenge that could reasonably be
87-19 expected to materially and adversely affect the judgment of the
87-20 person in favor of the party or other person with respect to the
87-21 consideration of the matter; and
87-22 (4) is not shown, by a preponderance of the evidence,
87-23 to be under the controlling influence of a party to the contract or
87-24 transaction that is the subject of the claim or challenge or of a
87-25 person who is alleged to have engaged in the conduct that is the
87-26 subject of the claim or challenge.
87-27 (b) For purposes of Subsection (a), a person does not have a
88-1 relationship that could reasonably be expected to materially and
88-2 adversely affect the judgment of the person regarding the
88-3 disposition of a matter that is the subject of a claim or challenge
88-4 and is not otherwise under the controlling influence of a party to
88-5 a contract or transaction that is the subject of a claim or
88-6 challenge or that is alleged to have engaged in the conduct that is
88-7 the subject of a claim or challenge solely because:
88-8 (1) the person has been nominated or elected as a
88-9 governing person by a person who is interested in the contract or
88-10 transaction or alleged to be engaged in the conduct that is the
88-11 subject of the claim or challenge;
88-12 (2) the person receives normal fees or similar
88-13 customary compensation, reimbursement for expenses, or benefits as
88-14 a governing person of the entity;
88-15 (3) the person has a direct or indirect equity
88-16 interest in the entity;
88-17 (4) the entity has, or its subsidiaries have, an
88-18 interest in the contract or transaction or was affected by the
88-19 alleged conduct;
88-20 (5) the person or an associate of the person receives
88-21 ordinary and reasonable compensation for reviewing, making
88-22 recommendations regarding, or deciding on the disposition of the
88-23 claim or challenge; or
88-24 (6) the person, an associate of the person, other than
88-25 the entity or its associates, or an immediate family member has a
88-26 continuing business relationship with the entity that is not
88-27 material to the person, associate, or family member.
89-1 Sec. 1.005. CONSPICUOUS INFORMATION. In this code, required
89-2 information is conspicuous if the information is placed in a manner
89-3 or displayed using a font that provides or is intended to provide
89-4 notice to a reasonable person affected by the information.
89-5 Required information in a document is conspicuous if the font used
89-6 for the information is capitalized, boldfaced, italicized, or
89-7 underlined or larger or of a different color than the remainder of
89-8 the document.
89-9 Sec. 1.006. SYNONYMOUS TERMS. To the extent not inconsistent
89-10 with the provisions of the constitution and other statutes or codes
89-11 wherein such terms may be found, and as the context requires, in
89-12 this code or any other statute or code of this state:
89-13 (1) a reference to "articles of incorporation,"
89-14 "articles of organization," "certificate of limited partnership,"
89-15 and "charter" includes a "certificate of formation";
89-16 (2) a reference to "authorized capital stock" includes
89-17 "authorized shares";
89-18 (3) a reference to "capital stock" includes
89-19 "authorized and issued shares," "issued share," and "stated
89-20 capital";
89-21 (4) a reference to a "certificate of registration,"
89-22 "certificate of authority," and "permit to do business" includes
89-23 "registration";
89-24 (5) a reference to "stock" and "shares of stock"
89-25 includes "shares";
89-26 (6) a reference to "stockholder" includes
89-27 "shareholder"; and
90-1 (7) a reference to "no par stock" includes "shares
90-2 without par value."
90-3 Sec. 1.007. SIGNING OF DOCUMENT OR OTHER WRITING. For
90-4 purposes of this code, a writing has been signed by a person when
90-5 the writing includes the person's signature. A transmission or
90-6 reproduction of a writing signed by a person is considered signed
90-7 by that person for purposes of this code.
90-8 Sec. 1.008. SHORT TITLES. (a) The provisions of this code
90-9 as described by this section may be cited as provided by this
90-10 section.
90-11 (b) The provisions of Title 2 and the provisions of Title 1
90-12 to the extent applicable to corporations may be cited as the "Texas
90-13 Corporation Law."
90-14 (c) The provisions of Chapters 20 and 21 and the provisions
90-15 of Title 1 to the extent applicable to for-profit corporations may
90-16 be cited as the "Texas For-Profit Corporation Law."
90-17 (d) The provisions of Chapters 20 and 22 and the provisions
90-18 of Title 1 to the extent applicable to nonprofit corporations may
90-19 be cited as the "Texas Nonprofit Corporation Law."
90-20 (e) The provisions of Title 3 and the provisions of Title 1
90-21 to the extent applicable to limited liability companies may be
90-22 cited as the "Texas Limited Liability Company Law."
90-23 (f) The provisions of Chapters 151, 152, and 154 and the
90-24 provisions of Title 1 to the extent applicable to general
90-25 partnerships may be cited as the "Texas General Partnership Law."
90-26 (g) The provisions of Chapters 151, 153, and 154 and the
90-27 provisions of Title 1 to the extent applicable to limited
91-1 partnerships may be cited as the "Texas Limited Partnership Law."
91-2 (h) The provisions of Title 5 and the provisions of Title 1
91-3 to the extent applicable to real estate investment trusts may be
91-4 cited as the "Texas Real Estate Investment Trust Law."
91-5 (i) The provisions of Chapter 251 and the provisions of
91-6 Title 1 to the extent applicable to cooperative associations may be
91-7 cited as the "Texas Cooperative Association Law."
91-8 (j) The provisions of Title 7 and the provisions of Titles
91-9 1, 2, and 3 to the extent applicable to professional entities may
91-10 be cited as the "Texas Professional Entities Law."
91-11 (k) The provisions of Chapter 252 may be cited as the
91-12 "Uniform Unincorporated Nonprofit Association Act."
91-13 (l) The provisions of Chapters 301 and 302 and the
91-14 provisions of Chapters 20 and 21 and Title 1 to the extent
91-15 applicable to professional associations may be cited as the "Texas
91-16 Professional Association Law."
91-17 (m) The provisions of Chapters 301 and 303 and the
91-18 provisions of Chapters 20 and 21 and Title 1 to the extent
91-19 applicable to professional corporations may be cited as the "Texas
91-20 Professional Corporation Law."
91-21 (n) The provisions of Chapters 301 and 304 and the
91-22 provisions of Titles 1 and 3 to the extent applicable to
91-23 professional limited liability companies may be cited as the "Texas
91-24 Professional Limited Liability Company Law."
91-25 Sec. 1.009. DOLLARS AS MONETARY UNITS. Unless the context
91-26 requires otherwise, a value or amount that is required by this code
91-27 to be stated in monetary terms must be stated in United States
92-1 dollars. Currency that is not specified is considered to be in
92-2 United States dollars.
92-3 (Sections 1.010-1.050 reserved for expansion)
92-4 SUBCHAPTER B. CODE CONSTRUCTION
92-5 Sec. 1.051. CONSTRUCTION OF CODE. Chapter 311, Government
92-6 Code (Code Construction Act), applies to the construction of each
92-7 provision in this code except as otherwise expressly provided by
92-8 this code.
92-9 Sec. 1.052. REFERENCE IN LAW TO STATUTE REVISED BY CODE. A
92-10 reference in a law to a statute or a part of a statute revised by
92-11 this code is considered to be a reference to the part of this code
92-12 that revises that statute or part of that statute.
92-13 Sec. 1.053. APPLICABILITY TO FOREIGN AND INTERSTATE AFFAIRS.
92-14 This code applies to the conduct of affairs with foreign countries
92-15 and the other states of the United States only to the extent
92-16 permitted under the United States Constitution.
92-17 Sec. 1.054. RESERVATION OF POWER. The legislature at all
92-18 times has the power to amend, repeal, or modify this code and to
92-19 prescribe regulations, provisions, and limitations as the
92-20 legislature considers advisable. The regulations, provisions, and
92-21 limitations are binding on any entity subject to this code.
92-22 (Sections 1.055-1.100 reserved for expansion)
92-23 SUBCHAPTER C. DETERMINATION OF APPLICABLE LAW
92-24 Sec. 1.101. DOMESTIC FILING ENTITIES. The law of this state
92-25 governs the formation and internal affairs of an entity if the
92-26 entity's formation occurs when a certificate of formation filed in
92-27 accordance with Chapter 4 takes effect.
93-1 Sec. 1.102. FOREIGN FILING ENTITIES. If the formation of an
93-2 entity occurs when a certificate of formation or similar instrument
93-3 filed with a foreign governmental authority takes effect, the law
93-4 of the state or other jurisdiction in which that foreign
93-5 governmental authority is located governs the formation and
93-6 internal affairs of the entity.
93-7 Sec. 1.103. ENTITIES NOT FORMED BY FILING INSTRUMENT. If the
93-8 formation of an entity does not occur when a certificate of
93-9 formation or similar instrument filed with the secretary of state
93-10 or with a foreign governmental authority takes effect, the law
93-11 governing the entity's formation and internal affairs is the law of
93-12 the entity's jurisdiction of formation.
93-13 Sec. 1.104. LAW APPLICABLE TO LIABILITY. The law of the
93-14 jurisdiction that governs an entity as determined under Sections
93-15 1.101-1.103 applies to the liability of an owner, a member, or a
93-16 managerial official of the entity in the capacity as an owner, a
93-17 member, or a managerial official for an obligation, including a
93-18 debt or other liability, of the entity for which the owner, member,
93-19 or managerial official is not otherwise liable by contract or under
93-20 provisions of law other than this code.
93-21 Sec. 1.105. INTERNAL AFFAIRS. For purposes of this code, the
93-22 internal affairs of an entity include:
93-23 (1) the rights, powers, and duties of its governing
93-24 authority, governing persons, officers, owners, and members; and
93-25 (2) matters relating to its membership or ownership
93-26 interests.
93-27 Sec. 1.106. ORDER OF PRECEDENCE. (a) This title applies to
94-1 all domestic entities and foreign entities to the extent provided
94-2 by this title.
94-3 (b) Each title of this code, other than this title, applies
94-4 to a different type of entity to the extent provided by that title.
94-5 (c) If a provision of this title conflicts with a provision
94-6 in another title of this code, the provision of the other title
94-7 supersedes the provision of this title.
94-8 CHAPTER 2. PURPOSES AND POWERS
94-9 OF DOMESTIC ENTITY
94-10 SUBCHAPTER A. PURPOSES OF DOMESTIC ENTITY
94-11 Sec. 2.001. GENERAL SCOPE OF PERMISSIBLE PURPOSES. A
94-12 domestic entity has any lawful purpose or purposes, unless
94-13 otherwise provided by this code.
94-14 Sec. 2.002. PURPOSES OF NONPROFIT ENTITY. The purpose or
94-15 purposes of a domestic nonprofit entity may include one or more of
94-16 the following purposes:
94-17 (1) serving charitable, benevolent, religious,
94-18 eleemosynary, patriotic, civic, missionary, educational,
94-19 scientific, social, fraternal, athletic, aesthetic, agricultural,
94-20 and horticultural purposes;
94-21 (2) operating or managing a professional, commercial,
94-22 or trade association or labor union;
94-23 (3) providing animal husbandry; or
94-24 (4) operating on a nonprofit cooperative basis for the
94-25 benefit of its members.
94-26 Sec. 2.003. GENERAL PROHIBITED PURPOSES. A domestic entity
94-27 may not:
95-1 (1) engage in a business or activity that:
95-2 (A) is expressly unlawful or prohibited by a law
95-3 of this state;
95-4 (B) cannot lawfully be engaged in by that entity
95-5 under state law; or
95-6 (C) may not be engaged in by an entity without
95-7 first obtaining a license under the laws of this state to engage in
95-8 that business or activity and a license cannot lawfully be granted
95-9 to the entity; or
95-10 (2) operate as a:
95-11 (A) bank;
95-12 (B) trust company;
95-13 (C) savings association;
95-14 (D) insurance company;
95-15 (E) railroad company;
95-16 (F) cemetery organization; or
95-17 (G) abstract or title company governed by
95-18 Chapter 9, Insurance Code.
95-19 Sec. 2.004. LIMITATION ON PURPOSES OF PROFESSIONAL ENTITY.
95-20 Except as provided in Title 7, a professional entity may engage in
95-21 only:
95-22 (1) one type of professional service, unless the
95-23 entity is expressly authorized to provide more than one type of
95-24 professional service under state law regulating the professional
95-25 services; and
95-26 (2) services ancillary to that type of professional
95-27 service.
96-1 Sec. 2.005. LIMITATION IN GOVERNING DOCUMENTS. The governing
96-2 documents of a domestic entity may contain limitations on the
96-3 entity's purposes.
96-4 Sec. 2.006. PERMISSIBLE PURPOSE OF FOR-PROFIT CORPORATION
96-5 RELATED TO RAILROADS. Notwithstanding Section 2.003(2)(E), a
96-6 for-profit corporation may:
96-7 (1) construct, acquire, maintain, and operate street
96-8 railways, suburban railways, and belt lines of railways in or near
96-9 municipalities to transport freight and passengers;
96-10 (2) construct, own, and operate union depots;
96-11 (3) buy, sell, and convey rights-of-way on which to
96-12 construct railroads;
96-13 (4) construct, acquire, maintain, and operate lines of
96-14 electric, gas, or gasoline, denatured alcohol, or naphtha motor
96-15 railways in and between municipalities, and interurban railways in
96-16 and between municipalities in this state to transport freight or
96-17 passengers;
96-18 (5) build, maintain, and operate a line of railroads
96-19 to mines, gins, quarries, manufacturing plants, or mills;
96-20 (6) construct, maintain, and operate terminal
96-21 railways; or
96-22 (7) operate a railroad passenger service by
96-23 contracting with a railroad corporation or other company that does
96-24 not construct, own, or maintain a railroad track.
96-25 Sec. 2.007. ADDITIONAL PROHIBITED ACTIVITIES OF FOR-PROFIT
96-26 CORPORATION. A for-profit corporation may not:
96-27 (1) operate a cooperative association, limited
97-1 cooperative association, or labor union;
97-2 (2) transact a combination of the businesses of:
97-3 (A) raising cattle and owning land for the
97-4 raising of cattle, other than operating and owning feedlots and
97-5 feeding cattle; and
97-6 (B) operating stockyards and slaughtering,
97-7 refrigerating, canning, curing, or packing meat; or
97-8 (3) engage in a combination of:
97-9 (A) the petroleum oil producing business in this
97-10 state; and
97-11 (B) the oil pipeline business in this state
97-12 other than through stock ownership in a for-profit corporation
97-13 engaged in the oil pipeline business and other than the ownership
97-14 or operation of private pipelines in and about the corporation's
97-15 refineries, fields, or stations.
97-16 Sec. 2.008. NONPROFIT CORPORATIONS. A corporation formed for
97-17 the purpose of operating a nonprofit institution, including an
97-18 institution devoted to a charitable, benevolent, religious,
97-19 patriotic, civic, cultural, missionary, educational, scientific,
97-20 social, fraternal, athletic, or aesthetic purpose, may be formed
97-21 and governed only as a nonprofit corporation under this code and
97-22 not as a for-profit corporation under this code.
97-23 Sec. 2.009. PERMISSIBLE PURPOSE OF NONPROFIT CORPORATION
97-24 RELATED TO ORGANIZED LABOR. Subject to Chapter 101, Labor Code, a
97-25 nonprofit corporation may be formed to organize laborers, workers,
97-26 or wage earners to protect themselves in their various pursuits.
97-27 Sec. 2.010. PROHIBITED ACTIVITIES OF NONPROFIT CORPORATION.
98-1 A nonprofit corporation may not be organized or registered under
98-2 this code to conduct its affairs in this state to:
98-3 (1) engage in or operate as a group hospital service,
98-4 rural credit union, agricultural and livestock pool, mutual loan
98-5 corporation, cooperative association under Chapter 251, cooperative
98-6 credit association, farmers' cooperative society, Co-operative
98-7 Marketing Act corporation, rural electric cooperative corporation,
98-8 telephone cooperative corporation, or fraternal organization
98-9 operating under the lodge system and incorporated under Subchapter
98-10 C, Chapter 23; or
98-11 (2) engage in water supply or sewer service as an
98-12 entity incorporated under Chapter 67, Water Code.
98-13 Sec. 2.011. PURPOSES OF COOPERATIVE ASSOCIATION. (a) A
98-14 person may organize a cooperative association under this code to
98-15 acquire, produce, build, operate, manufacture, furnish, exchange,
98-16 or distribute any type of property, commodities, goods, or services
98-17 for the primary and mutual benefit of the members of the
98-18 cooperative association.
98-19 (b) A cooperative association may not be organized to:
98-20 (1) serve or function as a health maintenance
98-21 organization;
98-22 (2) furnish medical or health care; or
98-23 (3) employ or contract with a health care provider in
98-24 a manner prohibited by the statute under which the provider is
98-25 licensed.
98-26 (c) A cooperative association may not directly or indirectly
98-27 engage in a health maintenance organization or a prepaid legal
99-1 service corporation.
99-2 (Sections 2.012-2.100 reserved for expansion)
99-3 SUBCHAPTER B. POWERS OF DOMESTIC ENTITY
99-4 Sec. 2.101. GENERAL POWERS. Except as otherwise provided by
99-5 this code, a domestic entity has the same powers as an individual
99-6 to take action necessary or convenient to carry out its business
99-7 and affairs. Except as otherwise provided by this code, the powers
99-8 of a domestic entity include the power to:
99-9 (1) sue, be sued, and defend suit in the entity's
99-10 business name;
99-11 (2) have and alter a seal and use the seal or a
99-12 facsimile of it by impressing, affixing, or reproducing it;
99-13 (3) acquire, receive, own, hold, improve, use, and
99-14 deal in and with property or an interest in property;
99-15 (4) sell, convey, mortgage, pledge, lease, exchange,
99-16 and otherwise dispose of property;
99-17 (5) make contracts and guarantees;
99-18 (6) incur liabilities, borrow money, issue notes,
99-19 bonds, or other obligations, which may be convertible into, or
99-20 include the option to purchase, other securities or ownership
99-21 interests in the entity, and secure its obligations by mortgaging
99-22 or pledging its property, franchises, or income;
99-23 (7) lend money, invest its funds, and receive and hold
99-24 property as security for repayment;
99-25 (8) acquire its own bonds, debentures, or other
99-26 evidences of indebtedness or obligations;
99-27 (9) acquire its own ownership interests, regardless of
100-1 whether redeemable, and hold the ownership interests as treasury
100-2 ownership interests or cancel or dispose of the ownership
100-3 interests;
100-4 (10) be a promoter, organizer, owner, partner, member,
100-5 associate, or manager of an organization;
100-6 (11) acquire, receive, own, hold, vote, use, pledge,
100-7 and dispose of ownership interests in or securities issued by
100-8 another person;
100-9 (12) conduct its business, locate its offices, and
100-10 exercise the powers granted by this code to further its purposes,
100-11 in or out of this state;
100-12 (13) lend money to, and otherwise assist, its
100-13 managerial officials, owners, members, or employees as necessary or
100-14 appropriate;
100-15 (14) elect or appoint officers and agents of the
100-16 entity, establish the length of their terms, define their duties,
100-17 and fix their compensation;
100-18 (15) pay pensions and establish pension plans, pension
100-19 trusts, profit-sharing plans, bonus plans, and incentive plans for
100-20 managerial officials, owners, members, or employees or former
100-21 managerial officials, owners, members, or employees;
100-22 (16) indemnify and maintain liability insurance for
100-23 managerial officials, owners, members, employees, and agents of the
100-24 entity or the entity's affiliate;
100-25 (17) adopt and amend governing documents for managing
100-26 the affairs of the entity subject to applicable law;
100-27 (18) make donations for the public welfare or for a
101-1 charitable, scientific, or educational purpose;
101-2 (19) voluntarily wind up its business and activities
101-3 and terminate its existence;
101-4 (20) transact business or take action that will aid
101-5 governmental policy; and
101-6 (21) take other action necessary or appropriate to
101-7 further the purposes of the entity.
101-8 Sec. 2.102. ADDITIONAL POWERS OF NONPROFIT ENTITY OR
101-9 INSTITUTION. To effect its purposes, a domestic nonprofit entity or
101-10 institution formed for a religious, charitable, educational, or
101-11 eleemosynary purpose may acquire, own, hold, mortgage, and dispose
101-12 of and invest its funds in property for the use and benefit of,
101-13 under the discretion of, and in trust for a convention, conference,
101-14 or association organized under the laws of this state or another
101-15 state with which it is affiliated or by which it is controlled.
101-16 Sec. 2.103. POWER TO INCUR INDEBTEDNESS. (a) Unless
101-17 otherwise provided by its governing documents or this code, a
101-18 domestic entity may create indebtedness for any consideration the
101-19 entity considers appropriate, including:
101-20 (1) cash;
101-21 (2) property;
101-22 (3) a contract to receive property;
101-23 (4) a debt or other obligation of the entity or of
101-24 another person;
101-25 (5) services performed or a contract for services to
101-26 be performed; or
101-27 (6) a direct or indirect benefit realized by the
102-1 entity.
102-2 (b) In the absence of fraud in the transaction, the judgment
102-3 of the governing authority of a domestic entity as to the value of
102-4 the consideration received by the entity for indebtedness is
102-5 conclusive.
102-6 (c) For purposes of this section, a domestic entity is
102-7 treated as part of the entity creating indebtedness if the domestic
102-8 entity is directly or indirectly or wholly or partly owned by that
102-9 entity.
102-10 (d) This section does not apply to indebtedness created by a
102-11 for-profit entity that is incurred by reason of the authorization
102-12 or payment of a distribution.
102-13 Sec. 2.104. POWER TO MAKE GUARANTIES. (a) In this section,
102-14 "guaranty" means a mortgage, pledge, security agreement, or other
102-15 agreement making the domestic entity or its assets secondarily
102-16 liable for another person's contract, security, or other
102-17 obligation.
102-18 (b) Unless otherwise provided by its governing documents or
102-19 this code, a domestic entity may:
102-20 (1) make a guaranty on behalf of a parent, subsidiary,
102-21 or affiliate of the entity; or
102-22 (2) make a guaranty of the indebtedness of another
102-23 person if the guaranty may reasonably be expected directly or
102-24 indirectly to benefit the entity.
102-25 (c) For purposes of Subsection (b)(2), a decision by the
102-26 governing authority of the domestic entity that a guaranty may
102-27 reasonably be expected to benefit the entity is conclusive and not
103-1 subject to attack by any person, except:
103-2 (1) a guaranty may not be enforced by a person who
103-3 participated in a fraud on the domestic entity resulting in the
103-4 making of the guaranty or by a person who had notice of that fraud
103-5 at the time the person acquired rights under the guaranty;
103-6 (2) a proposed guaranty may be enjoined at the request
103-7 of an owner of the domestic entity on the ground that the guaranty
103-8 cannot reasonably be expected to benefit the domestic entity; or
103-9 (3) the domestic entity, whether acting directly or
103-10 through a receiver, trustee, or other legal representative, or
103-11 through an owner on behalf of the domestic entity, may bring suit
103-12 for damages against the managerial officials, owners, or members
103-13 who authorized the guaranty on the ground that the guaranty could
103-14 not reasonably be expected to benefit the domestic entity.
103-15 (d) This section does not:
103-16 (1) apply to a domestic entity governed by the
103-17 Insurance Code; or
103-18 (2) authorize a domestic entity that is not governed
103-19 by the Insurance Code to engage in a business or transaction
103-20 regulated by the Insurance Code.
103-21 Sec. 2.105. ADDITIONAL POWERS OF CERTAIN PIPELINE
103-22 BUSINESSES. In addition to the powers provided by the other
103-23 sections of this subchapter, a corporation, general partnership,
103-24 limited partnership, limited liability company, or other
103-25 combination of those entities engaged as a common carrier in the
103-26 pipeline business for the purpose of transporting oil, oil
103-27 products, gas, carbon dioxide, salt brine, fuller's earth, sand,
104-1 clay, liquefied minerals, or other mineral solutions has all the
104-2 rights and powers conferred on a common carrier by Sections
104-3 111.019-111.022, Natural Resources Code.
104-4 Sec. 2.106. POWER OF NONPROFIT CORPORATION TO SERVE AS
104-5 TRUSTEE. (a) A nonprofit corporation that is described by Section
104-6 501(c)(3) or 170(c), Internal Revenue Code, or a corresponding
104-7 provision of a subsequent federal tax law, or a nonprofit
104-8 corporation listed by the Internal Revenue Service in the
104-9 Cumulative List of Organizations Described in Section 170(c) of the
104-10 Internal Revenue Code of 1986, I.R.S. Publication 78, or any
104-11 successor I.R.S. publication, may serve as the trustee of a trust:
104-12 (1) of which the nonprofit corporation is a
104-13 beneficiary; or
104-14 (2) benefiting another organization described by one
104-15 of those sections of the Internal Revenue Code, or a corresponding
104-16 provision of a subsequent federal tax law, or listed by the
104-17 Internal Revenue Service in the Cumulative List of Organizations
104-18 Described in Section 170(c) of the Internal Revenue Code of 1986,
104-19 I.R.S. Publication 78, or any successor I.R.S. publication.
104-20 (b) Any corporation (or person or entity assisting such
104-21 corporation) described in this section shall have immunity from
104-22 suit (including both a defense to liability and the right not to
104-23 bear the cost, burden, and risk of discovery and trial) as to any
104-24 claim alleging that the corporation's role as trustee of a trust
104-25 described in this section constitutes engaging in the trust
104-26 business in a manner requiring a state charter as defined in
104-27 Section 181.002(a)(9), Finance Code. An interlocutory appeal may
105-1 be taken if a court denies or otherwise fails to grant a motion for
105-2 summary judgment that is based on an assertion of the immunity
105-3 provided in this subsection.
105-4 Sec. 2.107. STANDARD TAX PROVISIONS FOR CERTAIN CHARITABLE
105-5 NONPROFIT CORPORATIONS; POWER TO EXCLUDE. (a) Notwithstanding any
105-6 conflicting provision of this chapter, Chapter 3, or the
105-7 certificate of formation and except as provided by Subsection (b),
105-8 the certificate of formation of each corporation that is a private
105-9 foundation as defined by Section 509, Internal Revenue Code, is
105-10 considered to contain the following provisions: "The corporation
105-11 shall make distributions at the time and in the manner as not to
105-12 subject it to tax under Section 4942 of the Internal Revenue Code
105-13 of 1986; the corporation shall not engage in any act of
105-14 self-dealing which would be subject to tax under Section 4941 of
105-15 the Code; the corporation shall not retain any excess business
105-16 holdings which would subject it to tax under Section 4943 of the
105-17 Code; the corporation shall not make any investments which would
105-18 subject it to tax under Section 4944 of the Code; and the
105-19 corporation shall not make any taxable expenditures which would
105-20 subject it to tax under Section 4945 of the Code."
105-21 (b) A nonprofit corporation described by Subsection (a) may
105-22 amend the certificate of formation of the corporation to expressly
105-23 exclude the application of Subsection (a).
105-24 Sec. 2.108. POWERS OF PROFESSIONAL ASSOCIATION. Except as
105-25 provided by Title 7, a professional association has the same
105-26 powers, privileges, duties, restrictions, and liabilities as a
105-27 for-profit corporation.
106-1 Sec. 2.109. POWERS OF PROFESSIONAL CORPORATION. Except as
106-2 provided by Title 7, a professional corporation has the same
106-3 powers, privileges, duties, restrictions, and liabilities as a
106-4 for-profit corporation.
106-5 Sec. 2.110. POWERS OF COOPERATIVE ASSOCIATION. (a) Except
106-6 as provided by Chapter 251, a cooperative association may exercise
106-7 the same powers and privileges and is subject to the same duties,
106-8 restrictions, and liabilities as a nonprofit corporation.
106-9 (b) A cooperative association may:
106-10 (1) own and hold membership in other associations or
106-11 corporations;
106-12 (2) own and hold share capital of other associations
106-13 or corporations;
106-14 (3) own and exercise ownership rights in bonds or
106-15 other obligations;
106-16 (4) make agreements of mutual aid or federation with
106-17 other associations, other groups organized on a cooperative basis,
106-18 or other nonprofit groups; and
106-19 (5) deliver money to a scholarship fund for rural
106-20 students.
106-21 Sec. 2.111. LIMITATION ON POWERS OF COOPERATIVE ASSOCIATION.
106-22 Except for the payment of necessary legal fees or promotion
106-23 expenses, a cooperative association may not directly or indirectly
106-24 use its funds, issue shares, or incur indebtedness for the payment
106-25 of compensation for the organization of the cooperative association
106-26 in excess of five percent of the amount paid for the shares or
106-27 membership certificates involved in the promotion transaction.
107-1 Sec. 2.112. STATED POWERS IN SUBCHAPTER SUFFICIENT. A
107-2 domestic entity is not required to state any of the powers provided
107-3 to the entity by this subchapter in its governing documents.
107-4 Sec. 2.113. LIMITATION ON POWERS. (a) This subchapter does
107-5 not authorize a domestic entity or a managerial official of a
107-6 domestic entity to exercise a power in a manner inconsistent with a
107-7 limitation on the purposes or powers of the entity contained in its
107-8 governing documents, this code, or other law of this state.
107-9 (b) This code does not authorize any action in violation of
107-10 the antitrust laws of this state.
107-11 Sec. 2.114. CERTIFICATED INDEBTEDNESS; MANNER OF ISSUANCE;
107-12 SIGNATURE AND SEAL. (a) Except as otherwise provided by the
107-13 governing documents of the domestic entity, this code, or other
107-14 law, on the issuance by a domestic entity of a bond, debenture, or
107-15 other evidence of indebtedness in certificated form, the seal of
107-16 the entity, if the entity has adopted a seal, may be a facsimile
107-17 that may be engraved or printed on the certificate.
107-18 (b) Except as otherwise provided by the governing documents
107-19 of the domestic entity, this code, or other law, if a security
107-20 described by Subsection (a) is authenticated with the manual
107-21 signature of an authorized officer of the domestic entity or an
107-22 authorized officer or representative, to the extent permitted by
107-23 law, of a transfer agent or trustee appointed or named by an
107-24 indenture of trust or other agreement under which the security is
107-25 issued, the signature of any officer of the domestic entity may be
107-26 a facsimile signature.
107-27 (c) A security described by Subsection (a) that contains the
108-1 manual or facsimile signature of a person who is no longer an
108-2 officer when the security is delivered by the entity may be
108-3 adopted, issued, and delivered by the entity in the same manner and
108-4 to the same extent as if the person had remained an officer of the
108-5 entity.
108-6 CHAPTER 3. FORMATION AND GOVERNANCE
108-7 SUBCHAPTER A. FORMATION, EXISTENCE, AND CERTIFICATE
108-8 OF FORMATION
108-9 Sec. 3.001. FORMATION AND EXISTENCE OF FILING ENTITIES. (a)
108-10 Subject to the other provisions of this code, to form a filing
108-11 entity, a certificate of formation complying with Sections 3.003,
108-12 3.004, and 3.005 must be filed in accordance with Chapter 4.
108-13 (b) The filing of a certificate of formation described by
108-14 Subsection (a) may be included in a filing under Chapter 10.
108-15 (c) The existence of a filing entity commences when the
108-16 filing of the certificate of formation takes effect as provided by
108-17 Chapter 4.
108-18 (d) Except in a proceeding by the state to terminate the
108-19 existence of a filing entity, an acknowledgment of the filing of a
108-20 certificate of formation issued by the filing officer is conclusive
108-21 evidence of:
108-22 (1) the formation and existence of the filing entity;
108-23 (2) the satisfaction of all conditions precedent to
108-24 the formation of the filing entity; and
108-25 (3) the authority of the filing entity to transact
108-26 business in this state.
108-27 Sec. 3.002. FORMATION AND EXISTENCE OF NONFILING ENTITIES.
109-1 The requirements for the formation of and the determination of the
109-2 existence of a nonfiling entity are governed by the title of this
109-3 code that applies to that entity.
109-4 Sec. 3.003. DURATION. A domestic entity exists perpetually
109-5 unless otherwise provided in the governing documents of the entity.
109-6 A domestic entity may be terminated in accordance with this code or
109-7 the Tax Code.
109-8 Sec. 3.004. ORGANIZERS. (a) Any person having the capacity
109-9 to contract for the person or for another may be an organizer of a
109-10 filing entity.
109-11 (b) Each organizer of a filing entity must sign the
109-12 certificate of formation of the filing entity, except that:
109-13 (1) each general partner must sign the certificate of
109-14 formation of a domestic limited partnership; and
109-15 (2) each trust manager must sign and acknowledge
109-16 before an officer who is authorized by law to take acknowledgment
109-17 of a deed the certificate of formation of a domestic real estate
109-18 investment trust.
109-19 Sec. 3.005. CERTIFICATE OF FORMATION. (a) The certificate
109-20 of formation must state:
109-21 (1) the name of the filing entity being formed;
109-22 (2) the type of filing entity being formed;
109-23 (3) for filing entities other than limited
109-24 partnerships, the purpose or purposes for which the filing entity
109-25 is formed, which may be stated to be or include any lawful purpose
109-26 for that type of entity;
109-27 (4) for filing entities other than limited
110-1 partnerships, the period of duration, if the entity is not formed
110-2 to exist perpetually;
110-3 (5) the street address of the initial registered
110-4 office of the filing entity and the name of the initial registered
110-5 agent of the filing entity at the office;
110-6 (6) the name and address of each:
110-7 (A) organizer for the filing entity, unless the
110-8 entity is formed under a plan of conversion or merger;
110-9 (B) general partner, if the filing entity is a
110-10 limited partnership; or
110-11 (C) trust manager, if the filing entity is a
110-12 real estate investment trust;
110-13 (7) if the filing entity is formed under a plan of
110-14 conversion or merger, a statement to that effect and, if formed
110-15 under a plan of conversion, the name, address, date of formation,
110-16 prior form of organization, and jurisdiction of formation of the
110-17 converting entity; and
110-18 (8) any other information required by this code to be
110-19 included in the certificate of formation for the filing entity.
110-20 (b) The certificate of formation may contain other
110-21 provisions not inconsistent with law relating to the organization,
110-22 ownership, governance, business, or affairs of the filing entity.
110-23 (c) Except as provided by Section 3.004, Chapter 4 governs
110-24 the signing and filing of a certificate of formation for a domestic
110-25 entity.
110-26 Sec. 3.006. FILINGS IN CASE OF MERGER OR CONVERSION. (a) If
110-27 a new domestic entity is formed under a plan of conversion or
111-1 merger, the certificate of formation of the entity must be filed
111-2 with the certificate of conversion or merger under Section
111-3 10.155(a) or 10.153(a). The certificate of formation is not
111-4 required to be filed separately under Section 3.001.
111-5 (b) The formation and existence of a domestic filing entity
111-6 that is a converted entity in a conversion or that is to be created
111-7 under a plan of merger takes effect and commences on the
111-8 effectiveness of the conversion or merger, as appropriate.
111-9 Sec. 3.007. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
111-10 OF FORMATION OF FOR-PROFIT CORPORATION. (a) In addition to the
111-11 information required by Section 3.005, the certificate of formation
111-12 of a for-profit corporation must state:
111-13 (1) the aggregate number of shares the corporation is
111-14 authorized to issue;
111-15 (2) if the shares the corporation is authorized to
111-16 issue consist of one class of shares only, the par value of each
111-17 share or a statement that each share is without par value;
111-18 (3) if the corporation is to be managed by a board of
111-19 directors, the number of directors constituting the initial board
111-20 of directors and the name and address of each person who will serve
111-21 as director until the first annual meeting of shareholders and
111-22 until a successor is elected and qualified; and
111-23 (4) if the corporation is to be managed pursuant to a
111-24 shareholders' agreement in a manner other than by a board of
111-25 directors, the name and address of each person who will perform the
111-26 functions required by this code to be performed by the initial
111-27 board of directors.
112-1 (b) If the shares a for-profit corporation is authorized to
112-2 issue consist of more than one class of shares, the certificate of
112-3 formation of the for-profit corporation must, with respect to each
112-4 class, state:
112-5 (1) the designation of the class;
112-6 (2) the aggregate number of shares in the class;
112-7 (3) the par value of each share or a statement that
112-8 each share is without par value;
112-9 (4) the preferences, limitations, and relative rights
112-10 of the shares; and
112-11 (5) if the shares in a class the corporation is
112-12 authorized to issue consist of more than one series, the following
112-13 with respect to each series:
112-14 (A) the designation of the series;
112-15 (B) the aggregate number of shares in the
112-16 series;
112-17 (C) any preferences, limitations, and relative
112-18 rights of the shares to the extent provided in the certificate of
112-19 formation; and
112-20 (D) any authority vested in the board of
112-21 directors to establish the series and set and determine the
112-22 preferences, limitations, and relative rights of the series.
112-23 (c) If the shareholders of a for-profit corporation are to
112-24 have a preemptive right or cumulative voting right, the certificate
112-25 of formation of the for-profit corporation must comply with Section
112-26 21.203 or 21.360, as appropriate.
112-27 Sec. 3.008. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
113-1 OF FORMATION OF CLOSE CORPORATION. (a) In addition to a provision
113-2 required or permitted to be stated in the certificate of formation
113-3 of a for-profit corporation under Section 3.007, the certificate of
113-4 formation of a close corporation, whether original, amended, or
113-5 restated, must include the sentence, "This corporation is a close
113-6 corporation."
113-7 (b) The certificate of formation of the close corporation
113-8 may contain:
113-9 (1) a provision contained or permitted to be contained
113-10 in a shareholders' agreement conforming to Subchapter O, Chapter
113-11 21, that the organizers elect to include in the certificate of
113-12 formation; or
113-13 (2) a copy of a shareholders' agreement that conforms
113-14 to Subchapter O, Chapter 21, and that may be filed in the manner
113-15 provided by Section 21.212.
113-16 (c) A provision contained in the certificate of formation
113-17 under Subsection (b) must be preceded by a statement that the
113-18 provision is subject to the corporation remaining a close
113-19 corporation.
113-20 Sec. 3.009. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
113-21 OF FORMATION OF NONPROFIT CORPORATION. In addition to the
113-22 information required by Section 3.005, the certificate of formation
113-23 of a nonprofit corporation must include:
113-24 (1) if the nonprofit corporation is to have no
113-25 members, a statement to that effect;
113-26 (2) if management of the nonprofit corporation's
113-27 affairs is to be vested in the nonprofit corporation's members, a
114-1 statement to that effect;
114-2 (3) the number of directors constituting the initial
114-3 board of directors and the names and addresses of those directors
114-4 or, if the management of the nonprofit corporation is vested solely
114-5 in the nonprofit corporation's members, a statement to that effect;
114-6 and
114-7 (4) if the nonprofit corporation is to be authorized
114-8 on its winding up to distribute the nonprofit corporation's assets
114-9 in a manner other than as provided by Section 22.304, a statement
114-10 describing the manner of distribution.
114-11 Sec. 3.010. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
114-12 OF FORMATION OF LIMITED LIABILITY COMPANY. In addition to the
114-13 information required by Section 3.005, the certificate of formation
114-14 of a limited liability company must state:
114-15 (1) whether the limited liability company will or will
114-16 not have managers;
114-17 (2) if the limited liability company will have
114-18 managers, the name and address of each initial manager of the
114-19 limited liability company; and
114-20 (3) if the limited liability company will not have
114-21 managers, the name and address of each initial member of the
114-22 limited liability company.
114-23 Sec. 3.011. SUPPLEMENTAL PROVISIONS REGARDING CERTIFICATE OF
114-24 FORMATION OF LIMITED PARTNERSHIP. (a) To form a limited
114-25 partnership, the partners must enter into a partnership agreement
114-26 and file a certificate of formation.
114-27 (b) The partners of a limited partnership formed under
115-1 Section 10.001 or 10.101 may include the partnership agreement
115-2 required under Subsection (a) in the plan of merger or conversion.
115-3 (c) A certificate of formation for a limited partnership
115-4 must include the address of the principal office of the partnership
115-5 in the United States where records are to be kept or made available
115-6 under Section 153.551.
115-7 (d) The fact that a certificate of formation is on file with
115-8 the secretary of state is notice that the partnership is a limited
115-9 partnership and of all other facts contained in the certificate as
115-10 required by Section 3.005.
115-11 Sec. 3.012. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
115-12 OF FORMATION OF REAL ESTATE INVESTMENT TRUST. In addition to the
115-13 information required by Section 3.005, the certificate of formation
115-14 of a real estate investment trust must state:
115-15 (1) that an assumed name certificate stating the name
115-16 of the real estate investment trust has been filed in the manner
115-17 provided by law;
115-18 (2) that the purpose of the real estate investment
115-19 trust is to:
115-20 (A) purchase, hold, lease, manage, sell,
115-21 exchange, develop, subdivide, and improve real property and
115-22 interests in real property, other than severed mineral, oil, or gas
115-23 royalty interests, and carry on any other business and perform any
115-24 other action in connection with a purpose described by this
115-25 paragraph;
115-26 (B) exercise powers conferred by the laws of
115-27 this state on a real estate investment trust; and
116-1 (C) perform any action described by Chapter 200
116-2 or Title 1 to the same extent as an individual;
116-3 (3) the post office address of the initial principal
116-4 office and place of business of the real estate investment trust;
116-5 (4) the aggregate number of shares of beneficial
116-6 interest the real estate investment trust is authorized to issue
116-7 and the par value to be received by the real estate investment
116-8 trust for the issuance of each share;
116-9 (5) if shares described by Subdivision (4) are divided
116-10 into classes as authorized by Section 200.102 or 200.103, a
116-11 description of each class of shares, including any preferences,
116-12 conversion and other rights, voting powers, restrictions,
116-13 limitations as to dividends, qualifications, and terms and
116-14 conditions of redemption; and
116-15 (6) that the trust managers shall manage the money or
116-16 property received for the issuance of shares for the benefit of the
116-17 shareholders of the real estate investment trust.
116-18 Sec. 3.013. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
116-19 OF FORMATION OF COOPERATIVE ASSOCIATION. In addition to the
116-20 information required by Section 3.005, the certificate of formation
116-21 of a cooperative association must state:
116-22 (1) whether the cooperative association is organized
116-23 with or without shares;
116-24 (2) the number of shares or memberships subscribed for
116-25 the cooperative association;
116-26 (3) if the cooperative association is organized with
116-27 shares:
117-1 (A) the amount of authorized capital;
117-2 (B) the number and type of shares;
117-3 (C) par value of the shares, if any; and
117-4 (D) the rights, preferences, and restrictions of
117-5 each type of share; and
117-6 (4) the method of distribution on winding up and
117-7 termination of any surplus of the cooperative association in
117-8 accordance with Section 251.403.
117-9 Sec. 3.014. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
117-10 OF FORMATION OF PROFESSIONAL ENTITY. In addition to the information
117-11 required by Section 3.005, the certificate of formation of a
117-12 professional entity must state:
117-13 (1) the type of professional service to be provided by
117-14 the professional entity as the purpose of the entity; and
117-15 (2) that the professional entity is a:
117-16 (A) professional association;
117-17 (B) professional corporation; or
117-18 (C) professional limited liability company.
117-19 Sec. 3.015. SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE
117-20 OF FORMATION OF PROFESSIONAL ASSOCIATION. (a) In addition to
117-21 containing the information required under Sections 3.005 and 3.014,
117-22 the certificate of formation of a professional association must:
117-23 (1) be signed by each member of the association; and
117-24 (2) state:
117-25 (A) the name and address of each original member
117-26 of the association; and
117-27 (B) that a member of the association may not
118-1 dissolve the association independently of other members of the
118-2 association.
118-3 (b) The certificate of formation of a professional
118-4 association may:
118-5 (1) contain provisions regarding shares or units of
118-6 ownership in the association;
118-7 (2) contain provisions governing the winding up and
118-8 termination of the association's business; and
118-9 (3) contain any other provision consistent with state
118-10 law regulating the internal affairs of a professional association.
118-11 (Sections 3.016-3.050 reserved for expansion)
118-12 SUBCHAPTER B. AMENDMENTS AND RESTATEMENTS OF
118-13 CERTIFICATE OF FORMATION
118-14 Sec. 3.051. RIGHT TO AMEND CERTIFICATE OF FORMATION. (a) A
118-15 filing entity may amend its certificate of formation.
118-16 (b) An amended certificate of formation may contain only
118-17 provisions that:
118-18 (1) would be permitted at the time of the amendment if
118-19 the amended certificate of formation were a newly filed original
118-20 certificate of formation; or
118-21 (2) effect a change, exchange, reclassification, or
118-22 cancellation in the membership or ownership interests or the rights
118-23 of owners or members of the filing entity.
118-24 Sec. 3.052. PROCEDURES TO AMEND CERTIFICATE OF FORMATION.
118-25 (a) The procedure to adopt an amendment to the certificate of
118-26 formation is as provided by the title of this code that applies to
118-27 the entity.
119-1 (b) A filing entity that amends its certificate of formation
119-2 shall sign and file, in the manner required by Chapter 4, a
119-3 certificate of amendment complying with Section 3.053 or a restated
119-4 certificate of formation complying with Section 3.059.
119-5 Sec. 3.053. CERTIFICATE OF AMENDMENT. A certificate of
119-6 amendment for a filing entity must state:
119-7 (1) the name of the filing entity;
119-8 (2) the type of the filing entity;
119-9 (3) for each provision of the certificate of formation
119-10 that is added, altered, or deleted, an identification by reference
119-11 or description of the added, altered, or deleted provision and, if
119-12 the provision is added or altered, a statement of the text of the
119-13 amended or added provision;
119-14 (4) that the amendment or amendments have been
119-15 approved in the manner required by this code and the governing
119-16 documents of the entity; and
119-17 (5) any other matter required by the provisions of
119-18 this code applicable to the filing entity to be in the certificate
119-19 of amendment.
119-20 Sec. 3.054. SUPPLEMENTAL PROVISIONS FOR CERTIFICATE OF
119-21 AMENDMENT OF FOR-PROFIT CORPORATION. (a) In addition to the
119-22 statements required by Section 3.053, a certificate of amendment
119-23 for a for-profit corporation must state:
119-24 (1) if the amendment provides for an exchange,
119-25 reclassification, or cancellation of issued shares, the manner in
119-26 which the exchange, reclassification, or cancellation of the issued
119-27 shares will be effected if the manner is not specified in the
120-1 amendment; and
120-2 (2) if the amendment effects a change in the amount of
120-3 stated capital, the manner in which the change in the amount of
120-4 stated capital is effected and the amount of stated capital
120-5 expressed in dollar terms as changed by the amendment.
120-6 (b) An officer shall sign the certificate of amendment on
120-7 behalf of the for-profit corporation. If shares of the for-profit
120-8 corporation have not been issued and the certificate of amendment
120-9 is adopted by the board of directors, a majority of the directors
120-10 may sign the certificate of amendment on behalf of the for-profit
120-11 corporation.
120-12 Sec. 3.055. SUPPLEMENTAL PROVISIONS FOR CERTIFICATE OF
120-13 AMENDMENT OF REAL ESTATE INVESTMENT TRUST. (a) In addition to the
120-14 statements required by Section 3.053, a certificate of amendment
120-15 for a real estate investment trust must state:
120-16 (1) if the amendment provides for an exchange,
120-17 reclassification, or cancellation of issued shares, the manner in
120-18 which the exchange, reclassification, or cancellation of the issued
120-19 shares will be effected if the manner is not specified in the
120-20 amendment; and
120-21 (2) if the amendment effects a change in the amount of
120-22 stated capital, the manner in which the change in the amount of
120-23 stated capital is effected and the amount of stated capital
120-24 expressed in dollar terms as changed by the amendment.
120-25 (b) If shares of the real estate investment trust have not
120-26 been issued and the certificate of amendment is adopted by the
120-27 trust managers, a majority of the trust managers may execute the
121-1 certificate of amendment on behalf of the real estate investment
121-2 trust.
121-3 Sec. 3.056. EFFECT OF FILING OF CERTIFICATE OF AMENDMENT.
121-4 (a) An amendment to a certificate of formation takes effect when
121-5 the filing of the certificate of amendment takes effect as provided
121-6 by Chapter 4.
121-7 (b) An amendment to a certificate of formation does not
121-8 affect:
121-9 (1) an existing cause of action in favor of or against
121-10 the entity for which the certificate of amendment is sought;
121-11 (2) a pending suit to which the entity is a party; or
121-12 (3) an existing right of a person other than an
121-13 existing owner.
121-14 (c) If the name of an entity is changed by amendment, an
121-15 action brought by or against the entity in the former name of the
121-16 entity does not abate because of the name change.
121-17 Sec. 3.057. RIGHT TO RESTATE CERTIFICATE OF FORMATION. (a)
121-18 A filing entity may restate its certificate of formation.
121-19 (b) An amendment effected by a restated certificate of
121-20 formation must comply with Section 3.051(b).
121-21 Sec. 3.058. PROCEDURES TO RESTATE CERTIFICATE OF FORMATION.
121-22 (a) The procedure to adopt a restated certificate of formation is
121-23 governed by the title of this code that applies to the entity.
121-24 (b) A filing entity that restates its certificate of
121-25 formation shall sign and file, in the manner required by Chapter 4,
121-26 a restated certificate of formation and accompanying statements
121-27 complying with Section 3.059.
122-1 Sec. 3.059. RESTATED CERTIFICATE OF FORMATION. (a) A
122-2 restated certificate of formation must accurately state the text of
122-3 the previous certificate of formation, regardless of whether the
122-4 certificate of formation is an original, corrected, or restated
122-5 certificate, and include:
122-6 (1) each previous amendment to the certificate being
122-7 restated that is carried forward; and
122-8 (2) each new amendment to the certificate being
122-9 restated.
122-10 (b) A restated certificate of formation may omit:
122-11 (1) the name and address of each organizer other than
122-12 the name and address of each general partner of a limited
122-13 partnership or trust manager of a real estate investment trust; and
122-14 (2) any other information that may be omitted under
122-15 the provisions of this code applicable to the filing entity.
122-16 (c) A restated certificate of formation that does not make
122-17 new amendments to the certificate of formation being restated must
122-18 be accompanied by:
122-19 (1) a statement that the restated certificate of
122-20 formation accurately states the text of the certificate of
122-21 formation being restated, as amended, restated, and corrected,
122-22 except for information omitted under Subsection (b); and
122-23 (2) any other information required by other provisions
122-24 of this code applicable to the filing entity.
122-25 (d) A restated certificate of formation that makes new
122-26 amendments to the certificate of formation being restated must:
122-27 (1) be accompanied by a statement that each new
123-1 amendment has been made in accordance with this code;
123-2 (2) identify by reference or description each added,
123-3 altered, or deleted provision;
123-4 (3) be accompanied by a statement that each amendment
123-5 has been approved in the manner required by this code and the
123-6 governing documents of the entity;
123-7 (4) be accompanied by a statement that the restated
123-8 certificate of formation:
123-9 (A) accurately states the text of the
123-10 certificate of formation being restated and each amendment to the
123-11 certificate of formation being restated that is in effect, as
123-12 further amended by the restated certificate of formation; and
123-13 (B) does not contain any other change in the
123-14 certificate of formation being restated except for information
123-15 omitted under Subsection (b); and
123-16 (5) include any other information required by the
123-17 title of this code applicable to the entity.
123-18 Sec. 3.060. SUPPLEMENTAL PROVISIONS FOR RESTATED CERTIFICATE
123-19 OF FORMATION FOR A FOR-PROFIT CORPORATION. (a) In addition to the
123-20 provisions authorized or required by Section 3.059, a restated
123-21 certificate of formation for a for-profit corporation may update
123-22 the current number of directors and the names and addresses of the
123-23 persons serving as directors.
123-24 (b) An officer shall sign the restated certificate of
123-25 formation on behalf of the corporation. If shares of the
123-26 corporation have not been issued and the restated certificate of
123-27 formation is adopted by the board of directors, the majority of the
124-1 directors may sign the restated certificate of formation on behalf
124-2 of the corporation.
124-3 Sec. 3.061. RESTATED CERTIFICATE OF FORMATION FOR CERTAIN
124-4 CHURCHES. If the management of a church that is a nonprofit
124-5 corporation is vested in the church's members under Section 22.202,
124-6 and the original certificate of formation is not required to
124-7 contain a statement to that effect, any restated certificate of
124-8 formation for the church must contain a statement to that effect in
124-9 addition to the information required by Section 3.059.
124-10 Sec. 3.062. SUPPLEMENTAL PROVISIONS FOR RESTATED CERTIFICATE
124-11 OF FORMATION OF REAL ESTATE INVESTMENT TRUST. In addition to the
124-12 provisions authorized or required by Section 3.059, a restated
124-13 certificate of formation for a real estate investment trust may
124-14 update the current number of trust managers and the names and
124-15 addresses of the persons serving as trust managers.
124-16 Sec. 3.063. EFFECT OF FILING OF RESTATED CERTIFICATE OF
124-17 FORMATION. (a) A restated certificate of formation takes effect
124-18 when the filing of the restated certificate of formation takes
124-19 effect as provided by Chapter 4.
124-20 (b) On the date the restated certificate of formation takes
124-21 effect, the original certificate of formation and each prior
124-22 amendment or restatement of the certificate of formation is
124-23 superseded and the restated certificate of formation is the
124-24 effective certificate of formation.
124-25 (c) Sections 3.056(b) and (c) apply to an amendment effected
124-26 by a restated certificate of formation.
124-27 (Sections 3.064-3.100 reserved for expansion)
125-1 SUBCHAPTER C. GOVERNING PERSONS AND OFFICERS
125-2 Sec. 3.101. GOVERNING AUTHORITY. Subject to the title of
125-3 this code that governs the domestic entity and the governing
125-4 documents of the domestic entity, the governing authority of a
125-5 domestic entity manages and directs the business and affairs of the
125-6 domestic entity.
125-7 Sec. 3.102. RIGHTS OF GOVERNING PERSONS IN CERTAIN CASES.
125-8 (a) In discharging a duty or exercising a power, a governing
125-9 person, including a governing person who is a member of a
125-10 committee, may, in good faith and with ordinary care, rely on
125-11 information, opinions, reports, or statements, including financial
125-12 statements and other financial data, concerning a domestic entity
125-13 or another person and prepared or presented by:
125-14 (1) an officer or employee of the entity;
125-15 (2) legal counsel;
125-16 (3) a public accountant;
125-17 (4) an investment banker;
125-18 (5) a person who the governing person reasonably
125-19 believes possesses professional expertise in the matter; or
125-20 (6) a committee of the governing authority of which
125-21 the governing person is not a member.
125-22 (b) A governing person may not in good faith rely on the
125-23 information described by Subsection (a) if the governing person has
125-24 knowledge of a matter that makes the reliance unwarranted.
125-25 Sec. 3.103. OFFICERS. (a) Officers of a domestic entity may
125-26 be elected or appointed in accordance with the governing documents
125-27 of the entity or by the governing authority of the entity unless
126-1 prohibited by the governing documents.
126-2 (b) An officer of an entity shall perform the duties in the
126-3 management of the entity and has the authority as provided by the
126-4 governing documents of the entity or the governing authority that
126-5 elects or appoints the officer.
126-6 (c) A person may simultaneously hold any two or more offices
126-7 of an entity unless prohibited by this code or the governing
126-8 documents of the entity.
126-9 Sec. 3.104. REMOVAL OF OFFICERS. (a) Unless otherwise
126-10 provided by the governing documents of a domestic entity, an
126-11 officer may be removed for or without cause by the governing
126-12 authority or as provided by the governing documents of the entity.
126-13 The removal of an officer does not prejudice any contract rights of
126-14 the person removed.
126-15 (b) Election or appointment of an officer does not by itself
126-16 create contract rights.
126-17 Sec. 3.105. RIGHTS OF OFFICERS IN CERTAIN CASES. (a) In
126-18 discharging a duty or exercising a power, an officer of a domestic
126-19 entity may, in good faith and ordinary care, rely on information,
126-20 opinions, reports, or statements, including financial statements
126-21 and other financial data, concerning the entity or another person
126-22 and prepared or presented by:
126-23 (1) another officer or an employee of the entity;
126-24 (2) legal counsel;
126-25 (3) a public accountant;
126-26 (4) an investment banker; or
126-27 (5) a person who the officer reasonably believes
127-1 possesses professional expertise in the matter.
127-2 (b) An officer may not in good faith rely on the information
127-3 described by Subsection (a) if the officer has knowledge of a
127-4 matter that makes the reliance unwarranted.
127-5 (Sections 3.106-3.150 reserved for expansion)
127-6 SUBCHAPTER D. RECORDKEEPING
127-7 Sec. 3.151. BOOKS AND RECORDS FOR ALL FILING ENTITIES. (a)
127-8 Each filing entity shall keep:
127-9 (1) books and records of accounts;
127-10 (2) minutes of the proceedings of the owners or
127-11 members or governing authority of the filing entity and committees
127-12 of the owners or members or governing authority of the filing
127-13 entity;
127-14 (3) at its registered office or principal place of
127-15 business, or at the office of its transfer agent or registrar, a
127-16 record of:
127-17 (A) the original issuance of ownership or
127-18 membership interests issued by the entity; and
127-19 (B) each transfer of the issued ownership or
127-20 membership interests that have been presented to the entity for
127-21 registration or transfer; and
127-22 (4) other books and records as required by the title
127-23 of this code governing the entity.
127-24 (b) The records required by Subsection (a)(3) must state:
127-25 (1) the name and address of each past and current
127-26 owner or member of the entity;
127-27 (2) the number, amount, or percentage and class or
128-1 series of ownership or membership interests issued by the entity
128-2 held by each past and current owner or member; and
128-3 (3) if different, the number of votes to which each is
128-4 entitled.
128-5 (c) The books, records, minutes, and ownership or membership
128-6 transfer records of any entity may be in written form or another
128-7 form capable of being converted into written form within a
128-8 reasonable time.
128-9 (d) The records required by Subsection (a)(2) need not be
128-10 maintained by a partnership or a limited liability company except
128-11 to the extent those entities are required by the governing
128-12 documents to maintain minutes of proceedings.
128-13 Sec. 3.152. GOVERNING PERSON'S RIGHT OF INSPECTION. (a) A
128-14 governing person of an entity may examine the entity's books and
128-15 records maintained under Section 3.151 and other books and records
128-16 of the entity for a purpose reasonably related to the governing
128-17 person's service as a governing person.
128-18 (b) A court may require an entity to open the books and
128-19 records of the entity, including the books and records maintained
128-20 under Section 3.151, to permit a governing person to inspect, make
128-21 copies of, or take extracts from the books and records on a showing
128-22 by the governing person that:
128-23 (1) the person is a governing person of the entity;
128-24 (2) the person demanded to inspect the entity's books
128-25 and records;
128-26 (3) the person's purpose for inspecting the entity's
128-27 books and records is reasonably related to the person's service as
129-1 a governing person; and
129-2 (4) the entity refused the person's good faith demand
129-3 to inspect the books and records.
129-4 (c) A court may award a governing person attorney's fees and
129-5 any other proper relief in a suit to require an entity to open its
129-6 books and records under Subsection (b).
129-7 Sec. 3.153. RIGHT OF EXAMINATION BY OWNER OR MEMBER. Each
129-8 owner or member of an entity may examine the books and records of
129-9 the entity maintained under Section 3.151 and other books and
129-10 records of the entity to the extent provided by the governing
129-11 documents of the entity and the title of this code governing the
129-12 entity.
129-13 (Sections 3.154-3.200 reserved for expansion)
129-14 SUBCHAPTER E. CERTIFICATES REPRESENTING OWNERSHIP INTEREST
129-15 Sec. 3.201. CERTIFICATED OR UNCERTIFICATED OWNERSHIP
129-16 INTEREST. (a) Ownership interests in a domestic entity may be
129-17 certificated or uncertificated.
129-18 (b) The ownership interests in a for-profit corporation,
129-19 real estate investment trust, or professional corporation must be
129-20 certificated unless the governing documents of the entity or a
129-21 resolution adopted by the governing authority of the entity states
129-22 that the ownership interests are uncertificated. If a domestic
129-23 entity changes the form of its ownership interests from
129-24 certificated to uncertificated, a certificated ownership interest
129-25 subject to the change becomes an uncertificated ownership interest
129-26 only after the certificate is surrendered to the domestic entity.
129-27 (c) Ownership interests in a domestic entity, other than a
130-1 domestic entity described by Subsection (b), are uncertificated
130-2 unless this code or the governing documents of the domestic entity
130-3 state that the interests are certificated.
130-4 Sec. 3.202. FORM AND VALIDITY OF CERTIFICATES; ENFORCEMENT
130-5 OF ENTITY'S RIGHTS. (a) A certificated ownership interest in a
130-6 domestic entity may contain an impression of the seal of the
130-7 entity, if any. A facsimile of the entity's seal may be printed or
130-8 lithographed on the certificate.
130-9 (b) If a domestic entity is authorized to issue ownership
130-10 interests of more than one class or series, each certificate
130-11 representing ownership interests that is issued by the entity must
130-12 conspicuously state on the front or back of the certificate:
130-13 (1) the designations, preferences, limitations, and
130-14 relative rights of the ownership interests of each class or series
130-15 to the extent they have been determined and the authority of the
130-16 governing authority to make those determinations as to subsequent
130-17 series; or
130-18 (2) that the information required by Subdivision (1)
130-19 is stated in the domestic entity's governing documents and that the
130-20 domestic entity, on written request to the entity's principal place
130-21 of business or registered office, will provide a free copy of that
130-22 information to the record holder of the certificate.
130-23 (c) A certificate representing ownership interests must
130-24 state on the front of the certificate:
130-25 (1) that the domestic entity is organized under the
130-26 laws of this state;
130-27 (2) the name of the person to whom the certificate is
131-1 issued;
131-2 (3) the number and class of ownership interests and
131-3 the designation of the series, if any, represented by the
131-4 certificate; and
131-5 (4) if the ownership interests are shares, the par
131-6 value of each share represented by the certificate, or a statement
131-7 that the shares are without par value.
131-8 (d) A certificate representing ownership interests that is
131-9 subject to a restriction, placed by or agreed to by the domestic
131-10 entity under this code, or otherwise contained in its governing
131-11 documents, on the transfer or registration of the transfer of the
131-12 ownership interests must:
131-13 (1) conspicuously state or provide a summary of the
131-14 restriction on the front of the certificate;
131-15 (2) state the restriction on the back of the
131-16 certificate and conspicuously refer to that statement on the front
131-17 of the certificate; or
131-18 (3) conspicuously state on the front or back of the
131-19 certificate that a restriction exists pursuant to a specified
131-20 document and:
131-21 (A) that the domestic entity, on written request
131-22 to the entity's principal place of business, will provide a free
131-23 copy of the document to the certificate record holder; or
131-24 (B) if the document has been filed in accordance
131-25 with this code, that the document:
131-26 (i) is on file with the secretary of state
131-27 or, in the case of a real estate investment trust, with the county
132-1 clerk of the county in which the real estate investment trust's
132-2 principal place of business is located; and
132-3 (ii) contains a complete statement of the
132-4 restriction.
132-5 (e) A domestic entity that fails to provide to the record
132-6 holder of a certificate within a reasonable time a document as
132-7 required by Subsection (d)(3)(A) may not enforce the entity's
132-8 rights under the restriction imposed on the certificated ownership
132-9 interests.
132-10 Sec. 3.203. SIGNATURE REQUIREMENT. (a) The managerial
132-11 official or officials of a domestic entity authorized by the
132-12 governing documents of the entity to sign certificated ownership
132-13 interests of the entity must sign any certificate representing an
132-14 ownership interest in the entity.
132-15 (b) A certificated ownership interest that contains the
132-16 manual or facsimile signature of a person who is no longer a
132-17 managerial official of a domestic entity when the certificate is
132-18 issued may be issued by the entity in the same manner and with the
132-19 same effect as if the person had remained a managerial official.
132-20 Sec. 3.204. DELIVERY REQUIREMENT. A domestic entity shall
132-21 deliver a certificate representing a certificated ownership
132-22 interest to which the owner is entitled.
132-23 Sec. 3.205. NOTICE FOR UNCERTIFICATED OWNERSHIP INTEREST.
132-24 (a) Except as provided by Subsection (c) and in accordance with
132-25 Chapter 8, Business & Commerce Code, after issuing or transferring
132-26 an uncertificated ownership interest, a domestic entity shall
132-27 notify the owner of the ownership interest in writing of any
133-1 information required under this subchapter to be stated on a
133-2 certificate representing the ownership interest.
133-3 (b) Except as otherwise expressly provided by law, the
133-4 rights and obligations of the owner of an uncertificated ownership
133-5 interest are the same as the rights and obligations of the owner of
133-6 a certificated ownership interest of the same class and series.
133-7 (c) A domestic entity is not required to send a notice under
133-8 Subsection (a) if:
133-9 (1) the required information is included in the
133-10 governing documents of the entity; and
133-11 (2) the owner of the uncertificated ownership interest
133-12 is provided with a copy of the governing documents.
133-13 CHAPTER 4. FILINGS
133-14 SUBCHAPTER A. GENERAL PROVISIONS
133-15 Sec. 4.001. SIGNATURE AND DELIVERY. (a) A filing instrument
133-16 must be:
133-17 (1) signed by a person authorized by this code to act
133-18 on behalf of the entity in regard to the filing instrument; and
133-19 (2) delivered to the secretary of state in person or
133-20 by mail, courier, facsimile or electronic transmission, or any
133-21 other comparable form of delivery.
133-22 (b) A person authorized by this code to sign a filing
133-23 instrument for an entity is not required to show evidence of the
133-24 person's authority as a requirement for filing.
133-25 Sec. 4.002. ACTION BY SECRETARY OF STATE. (a) If the
133-26 secretary of state finds that a filing instrument delivered under
133-27 Section 4.001 conforms to the provisions of this code that apply to
134-1 the entity and to applicable rules adopted under Section 12.001 and
134-2 that all required fees have been paid, the secretary of state
134-3 shall:
134-4 (1) file the instrument by accepting it into the
134-5 filing system adopted by the secretary of state and assigning the
134-6 instrument a date of filing; and
134-7 (2) deliver a written or electronic acknowledgment of
134-8 filing to the entity or its representative.
134-9 (b) If a duplicate copy of the filing instrument is
134-10 delivered to the secretary of state, on accepting the filing
134-11 instrument, the secretary of state shall return the duplicate copy,
134-12 endorsed with the word "Filed" and the month, day, and year of
134-13 filing, to the entity or its representative with the acknowledgment
134-14 of filing.
134-15 Sec. 4.003. FILING OR ISSUANCE OF REPRODUCTION OR FACSIMILE.
134-16 (a) A photographic, photostatic, facsimile, electronic, or similar
134-17 reproduction of a filing instrument, signature, acknowledgment of
134-18 filing, or communication may be filed or issued in place of:
134-19 (1) an original filing instrument;
134-20 (2) an original signature on a filing instrument; or
134-21 (3) an original acknowledgment of filing or other
134-22 written communication from the secretary of state relating to a
134-23 filing instrument.
134-24 (b) To the extent any filing or action on a filing conforms
134-25 to this subchapter, a filing instrument or an acknowledgment of
134-26 filing issued by the secretary of state is not required to be on
134-27 paper or to be reduced to printed form.
135-1 Sec. 4.004. TIME FOR FILING. Unless this code prescribes a
135-2 specific period for filing, an entity shall promptly file each
135-3 filing instrument that this code requires the entity to file.
135-4 Sec. 4.005. CERTIFICATES AND CERTIFIED COPIES. (a) A court,
135-5 public office, or official body shall accept a certificate issued
135-6 as provided by this code by the secretary of state or a copy of a
135-7 filing instrument accepted by the secretary of state for filing as
135-8 provided by this code that is certified by the secretary of state
135-9 as prima facie evidence of the facts stated in the certificate or
135-10 instrument.
135-11 (b) A court, public office, or official body may record a
135-12 certificate or certified copy described by Subsection (a).
135-13 (c) A court, public office, or official body shall accept a
135-14 certificate issued under an official seal by the secretary of state
135-15 as to the existence or nonexistence of facts that relate to an
135-16 entity that would not appear from a certified copy of a filing
135-17 instrument as prima facie evidence of the existence or nonexistence
135-18 of the facts stated in the certificate.
135-19 Sec. 4.006. FORMS ADOPTED BY SECRETARY OF STATE. (a) The
135-20 secretary of state may adopt forms for a filing instrument or a
135-21 report authorized or required by this code to be filed with the
135-22 secretary of state.
135-23 (b) A person is not required to use a form adopted by the
135-24 secretary of state unless this code expressly requires use of that
135-25 form.
135-26 Sec. 4.007. LIABILITY FOR FALSE FILING INSTRUMENTS. (a) A
135-27 person may recover damages, court costs, and reasonable attorney's
136-1 fees if the person incurs a loss and:
136-2 (1) the loss is caused by a filed filing instrument
136-3 that constitutes an offense under Section 4.008; or
136-4 (2) the person reasonably relies on:
136-5 (A) a false statement of material fact in a
136-6 filed filing instrument; or
136-7 (B) the omission in a filed filing instrument of
136-8 a material fact required by this code to be included in the
136-9 instrument.
136-10 (b) A person may recover under Subsection (a) from:
136-11 (1) each person who signed the filing instrument and
136-12 knew when the instrument was signed of the false statement or
136-13 omission;
136-14 (2) any managerial official of the entity who directed
136-15 the signing and filing of the filing instrument who knew or should
136-16 have known when the instrument was signed or filed of the false
136-17 statement or omission; or
136-18 (3) the entity that authorizes the filing of the
136-19 filing instrument.
136-20 Sec. 4.008. OFFENSE; PENALTY. (a) A person commits an
136-21 offense if the person signs or directs the filing of a filing
136-22 instrument that the person knows is materially false with intent
136-23 that the filing instrument be delivered on behalf of an entity to
136-24 the secretary of state for filing.
136-25 (b) An offense under this section is a Class A misdemeanor
136-26 unless the actor's intent is to defraud or harm another, in which
136-27 event the offense is a state jail felony.
137-1 Sec. 4.009. FILINGS BY REAL ESTATE INVESTMENT TRUST. (a) A
137-2 filing instrument relating to a real estate investment trust must
137-3 be filed with the county clerk of the county in which the real
137-4 estate investment trust's principal place of business is located.
137-5 (b) Subject to other state law governing the requirements
137-6 for filing instruments with a county clerk, this chapter applies to
137-7 a filing by a real estate investment trust, except that in relation
137-8 to such a filing a reference in this chapter to the secretary of
137-9 state is considered to be a reference to the county clerk of the
137-10 county in which the real estate investment trust's principal place
137-11 of business is located.
137-12 (Sections 4.010-4.050 reserved for expansion)
137-13 SUBCHAPTER B. WHEN FILINGS TAKE EFFECT
137-14 Sec. 4.051. GENERAL RULE. A filing instrument submitted to
137-15 the secretary of state takes effect on filing, except as permitted
137-16 by Section 4.052 or as provided by the provisions of this code that
137-17 apply to the entity making the filing or other law.
137-18 Sec. 4.052. DELAYED EFFECTIVENESS OF CERTAIN FILINGS. Except
137-19 as provided by Section 4.058, a filing instrument may take effect
137-20 after the time the instrument would otherwise take effect as
137-21 provided by this code for the entity filing the instrument and:
137-22 (1) at a specified date and time; or
137-23 (2) on the occurrence of a future event or fact,
137-24 including an act of any person.
137-25 Sec. 4.053. CONDITIONS FOR DELAYED EFFECTIVENESS. (a) The
137-26 date and time at which a filing instrument takes effect is delayed
137-27 if the instrument clearly and expressly states, in addition to any
138-1 other required statement or information:
138-2 (1) the specific date and time at which the instrument
138-3 takes effect; or
138-4 (2) if the instrument takes effect on the occurrence
138-5 of a future event or fact that may occur:
138-6 (A) the manner in which the event or fact will
138-7 cause the instrument to take effect; and
138-8 (B) the date of the 90th day after the date the
138-9 instrument is signed.
138-10 (b) If a filing instrument is to take effect on a specific
138-11 date and time other than that provided by this code:
138-12 (1) the date may not be later than the 90th day after
138-13 the date the instrument is signed; and
138-14 (2) the specific time at which the instrument is to
138-15 take effect may not be specified as "12:00 a.m." or "12:00 p.m."
138-16 Sec. 4.054. DELAYED EFFECTIVENESS ON FUTURE EVENT OR FACT. A
138-17 filing instrument that is to take effect on the occurrence of a
138-18 future event or fact, other than the passage of time, and for which
138-19 the statement required by Section 4.055 is filed within the
138-20 prescribed time, takes effect on the date and time at which the
138-21 last specified event or fact occurs or the date and time at which a
138-22 condition is satisfied or waived.
138-23 Sec. 4.055. STATEMENT OF EVENT OR FACT. An entity that files
138-24 a filing instrument that takes effect on the occurrence of a future
138-25 event or fact, other than the passage of time, must sign and file
138-26 as provided by Subchapter A, not later than the 90th day after the
138-27 date the filing instrument is filed, a statement that:
139-1 (1) confirms that each event or fact on which the
139-2 effect of the instrument is conditioned has been satisfied or
139-3 waived; and
139-4 (2) states the date and time on which the condition
139-5 was satisfied or waived.
139-6 Sec. 4.056. FAILURE TO FILE STATEMENT. (a) If the effect of
139-7 a filing instrument is conditioned on the occurrence of a future
139-8 event or fact, other than the passage of time, and the statement
139-9 required by Section 4.055 is not filed before the expiration of the
139-10 prescribed time, the filing instrument does not take effect. This
139-11 section does not preclude the filing of a subsequent filing
139-12 instrument required by this code to make the event or transaction
139-13 evidenced by the original filing instrument effective.
139-14 (b) If the effect of a filing instrument is conditioned on
139-15 the occurrence of a future event or fact, other than the passage of
139-16 time, and the specified event or fact does not occur and is not
139-17 waived, the parties to the filing instrument must sign and file a
139-18 certificate of abandonment as provided by Section 4.057.
139-19 Sec. 4.057. ABANDONMENT BEFORE EFFECTIVENESS. (a) The
139-20 parties to a filing instrument may abandon the filing instrument if
139-21 the instrument has not taken effect.
139-22 (b) To abandon a filing instrument the parties to the
139-23 instrument must file with the filing officer a certificate of
139-24 abandonment.
139-25 (c) A certificate of abandonment must:
139-26 (1) be signed on behalf of each entity that is a party
139-27 to the action or transaction by the person authorized by this code
140-1 to act on behalf of the entity;
140-2 (2) state the nature of the filing instrument to be
140-3 abandoned, the date of the instrument, and the parties to the
140-4 instrument; and
140-5 (3) state that the filing instrument has been
140-6 abandoned in accordance with the agreement of the parties.
140-7 (d) On the filing of the certificate of abandonment, the
140-8 action or transaction evidenced by the original filing instrument
140-9 is abandoned and may not take effect.
140-10 (e) If in the interim before a certificate of abandonment is
140-11 filed the name of an entity that is a party to the action or
140-12 transaction becomes the same as or deceptively similar to the name
140-13 of another entity already on file or reserved or registered under
140-14 this code, the filing officer may not file the certificate of
140-15 abandonment unless the entity by or for whom the certificate is
140-16 filed changes its name in the manner provided by this code for that
140-17 entity.
140-18 Sec. 4.058. DELAYED EFFECTIVENESS NOT PERMITTED. The effect
140-19 of the following filing instruments may not be delayed:
140-20 (1) a reservation of name as provided by Subchapter C,
140-21 Chapter 5;
140-22 (2) a registration of name as provided by Subchapter
140-23 D, Chapter 5;
140-24 (3) a statement of event or fact as provided by
140-25 Section 4.055; or
140-26 (4) a certificate of abandonment as provided by
140-27 Section 4.057.
141-1 Sec. 4.059. ACKNOWLEDGMENT OF FILING WITH DELAYED
141-2 EFFECTIVENESS. (a) An acknowledgment of filing issued or other
141-3 action taken by the secretary of state affirming the filing of a
141-4 filing instrument that has a specific delayed effective date must
141-5 state the date and time at which the instrument takes effect.
141-6 (b) An acknowledgment of filing issued or other action taken
141-7 by the secretary of state affirming the filing of a filing
141-8 instrument the effect of which is delayed until the occurrence of a
141-9 future event or fact must:
141-10 (1) state that the effective date and time of the
141-11 filing instrument is conditioned on the occurrence of a future
141-12 event or fact as described in the filing instrument; or
141-13 (2) otherwise indicate that the effective date and
141-14 time of the instrument is conditioned on the occurrence of a future
141-15 event or fact.
141-16 (Sections 4.060-4.100 reserved for expansion)
141-17 SUBCHAPTER C. CORRECTION AND AMENDMENT
141-18 Sec. 4.101. CORRECTION OF FILINGS. (a) A filing instrument
141-19 that has been filed with the secretary of state that is an
141-20 inaccurate record of the event or transaction evidenced in the
141-21 instrument, that contains an inaccurate or erroneous statement, or
141-22 that was defectively or erroneously signed, sealed, acknowledged,
141-23 or verified may be corrected by filing a certificate of correction.
141-24 (b) A certificate of correction must be signed by the person
141-25 authorized by this code to act on behalf of the entity.
141-26 Sec. 4.102. LIMITATION ON CORRECTION OF FILINGS. A filing
141-27 instrument may be corrected to contain only those statements that
142-1 this code authorizes or requires to be included in the original
142-2 instrument. A certificate of correction may not alter, add, or
142-3 delete a statement that by its alteration, addition, or deletion
142-4 would have caused the secretary of state to determine the filing
142-5 instrument did not conform to this code at the time of filing.
142-6 Sec. 4.103. CERTIFICATE OF CORRECTION. The certificate of
142-7 correction must:
142-8 (1) state the name of the entity;
142-9 (2) identify the filing instrument to be corrected by
142-10 description and date of filing with the secretary of state;
142-11 (3) identify the inaccuracy, error, or defect to be
142-12 corrected; and
142-13 (4) state in corrected form the portion of the filing
142-14 instrument to be corrected.
142-15 Sec. 4.104. FILING CERTIFICATE OF CORRECTION. The
142-16 certificate of correction shall be filed with and acted on by the
142-17 secretary of state as provided by Subchapter A. On filing, the
142-18 secretary of state shall deliver to the entity or its
142-19 representative an acknowledgment of the filing.
142-20 Sec. 4.105. EFFECT OF CERTIFICATE OF CORRECTION. (a) After
142-21 the secretary of state files the certificate of correction, the
142-22 filing instrument is considered to have been corrected on the date
142-23 the filing instrument was originally filed, except as provided by
142-24 Subsection (b).
142-25 (b) As to a person who is adversely affected by the
142-26 correction, the filing instrument is considered to have been
142-27 corrected on the date the certificate of correction is filed.
143-1 (c) An acknowledgment of filing or a similar instrument
143-2 issued by the secretary of state before a filing instrument is
143-3 corrected, with respect to the effect of filing the original filing
143-4 instrument, applies to the corrected filing instrument as of the
143-5 date the corrected filing instrument is considered to have been
143-6 filed under this section.
143-7 Sec. 4.106. AMENDMENT OF FILINGS. A filing instrument that
143-8 an entity files with the secretary of state may be amended or
143-9 supplemented to the extent permitted by the provisions of this code
143-10 that apply to that entity.
143-11 (Sections 4.107-4.150 reserved for expansion)
143-12 SUBCHAPTER D. FILING FEES
143-13 Sec. 4.151. FILING FEES: ALL ENTITIES. The secretary of
143-14 state shall impose the following fees:
143-15 (1) for filing a certificate of correction, $15;
143-16 (2) for filing an application for reservation or
143-17 registration of a name, $40;
143-18 (3) for filing a notice of transfer of a name
143-19 reservation or registration, $15;
143-20 (4) for filing an application for renewal of
143-21 registration of a name, $40;
143-22 (5) for filing a certificate of merger or conversion,
143-23 other than a filing on behalf of a nonprofit corporation, $300
143-24 plus, with respect to a merger, any fee imposed for filing a
143-25 certificate of formation for each newly created filing entity or,
143-26 with respect to a conversion, the fee imposed for filing a
143-27 certificate of formation for the converted entity; and
144-1 (6) for preclearance of a filing instrument, $50.
144-2 Sec. 4.152. FILING FEES: FOR-PROFIT CORPORATIONS. For a
144-3 filing by or for a for-profit corporation, the secretary of state
144-4 shall impose the following fees:
144-5 (1) for filing a certificate of formation, $300;
144-6 (2) for filing a certificate of amendment, $150;
144-7 (3) for filing an application of a foreign corporation
144-8 for registration to transact business in this state, $750;
144-9 (4) for filing an application of a foreign corporation
144-10 for an amended registration to transact business in this state,
144-11 $150;
144-12 (5) for filing a restated certificate of formation and
144-13 accompanying statement, $300;
144-14 (6) for filing a statement of change of registered
144-15 office, registered agent, or both, $15;
144-16 (7) for filing a statement of change of name or
144-17 address of a registered agent, $15, except that the maximum fee for
144-18 simultaneous filings by a registered agent for more than one
144-19 corporation may not exceed $750;
144-20 (8) for filing a statement of resolution establishing
144-21 one or more series of shares, $15;
144-22 (9) for filing a statement of cancellation of
144-23 redeemable shares, $15;
144-24 (10) for filing a statement of cancellation of
144-25 re-acquired shares, $15;
144-26 (11) for filing a statement of reduction of stated
144-27 capital, $15;
145-1 (12) for filing a certificate of winding up and
145-2 termination, $40;
145-3 (13) for filing a certificate of withdrawal of a
145-4 foreign corporation, $15;
145-5 (14) for filing a certificate from the home state of a
145-6 foreign corporation that the corporation no longer exists in that
145-7 state, $15;
145-8 (15) for filing a bylaw or agreement restricting
145-9 transfer of shares or securities other than as an amendment to the
145-10 certificate of formation, $15;
145-11 (16) for filing an application for reinstatement of a
145-12 certificate of formation or registration as a foreign corporation
145-13 following forfeiture under the Tax Code, $75;
145-14 (17) for filing an application for reinstatement of a
145-15 corporation or registration as a foreign corporation after
145-16 involuntary dissolution or revocation, $75; and
145-17 (18) for filing any instrument as provided by this
145-18 code for which this section does not expressly provide a fee, $15.
145-19 Sec. 4.153. FILING FEES: NONPROFIT CORPORATIONS. For a
145-20 filing by or for a nonprofit corporation, the secretary of state
145-21 shall impose the following fees:
145-22 (1) for filing a certificate of formation, $25;
145-23 (2) for filing a certificate of amendment, $25;
145-24 (3) for filing a certificate of merger or
145-25 consolidation, without regard to whether the surviving or new
145-26 corporation is a domestic or foreign corporation, $50;
145-27 (4) for filing a statement of change of a registered
146-1 office, registered agent, or both, $5;
146-2 (5) for filing a certificate of dissolution, $5;
146-3 (6) for filing an application of a foreign corporation
146-4 for registration to conduct affairs in this state, $25;
146-5 (7) for filing an application of a foreign corporation
146-6 for an amended registration to conduct affairs in this state, $25;
146-7 (8) for filing a certificate of withdrawal of a
146-8 foreign corporation, $5;
146-9 (9) for filing a restated certificate of formation and
146-10 accompanying statement, $50;
146-11 (10) for filing a statement of change of name or
146-12 address of a registered agent, $15, except that the maximum fee for
146-13 simultaneous filings by a registered agent for more than one
146-14 corporation may not exceed $250;
146-15 (11) for filing a report under Chapter 22, $5;
146-16 (12) for filing a report under Chapter 22 to reinstate
146-17 a corporation's right to conduct affairs in this state, $5, plus a
146-18 late fee in the amount of $5 or in the amount of $1 for each month
146-19 or part of a month that the report remains unfiled, whichever
146-20 amount is greater, except that the late fee may not exceed $25;
146-21 (13) for filing a report under Chapter 22 to reinstate
146-22 a corporation or registration following involuntary termination or
146-23 revocation, $25; and
146-24 (14) for filing any instrument of a domestic or
146-25 foreign corporation as provided by this code for which this section
146-26 does not expressly provide a fee, $5.
146-27 Sec. 4.154. FILING FEES: LIMITED LIABILITY COMPANIES. For a
147-1 filing by or for a limited liability company, the secretary of
147-2 state shall impose the same fee as the filing fee for a similar
147-3 instrument under Section 4.152.
147-4 Sec. 4.155. FILING FEES: LIMITED PARTNERSHIPS. For a filing
147-5 by or for a limited partnership, the secretary of state shall
147-6 impose the following fees:
147-7 (1) for filing a certificate of formation or an
147-8 application for registration as a foreign limited partnership,
147-9 $750;
147-10 (2) for filing a certificate of amendment or an
147-11 amendment of registration of a foreign limited partnership, $150;
147-12 (3) for filing a restated certificate of formation,
147-13 $300;
147-14 (4) for filing a statement for change of registered
147-15 office, registered agent, or both, $15;
147-16 (5) for filing a statement of change of name or
147-17 address of a registered agent, $15, except that the maximum fee for
147-18 simultaneous filings by a registered agent for more than one
147-19 limited partnership may not exceed $750;
147-20 (6) for filing a certificate of winding up and
147-21 termination, $40;
147-22 (7) for filing a certificate of withdrawal of a
147-23 foreign limited partnership, $15;
147-24 (8) for filing a certificate of reinstatement of a
147-25 limited partnership or registration as a foreign limited
147-26 partnership after involuntary termination or revocation under
147-27 Chapter 11 or Chapter 9, $75;
148-1 (9) for filing a periodic report required under
148-2 Chapter 153, $50;
148-3 (10) for reviving a limited partnership's right to
148-4 transact business under Chapter 153, $50 plus a late fee in an
148-5 amount equal to the lesser of:
148-6 (A) $25 for each month or part of a month that
148-7 elapses after the date of the notice of forfeiture; or
148-8 (B) $100;
148-9 (11) for reinstatement of a certificate of formation
148-10 or registration under Chapter 153, $50 plus a late fee of $100 and
148-11 a reinstatement fee of $75;
148-12 (12) for filing any document required or permitted to
148-13 be filed for a limited liability partnership, the secretary of
148-14 state shall impose the same fee as the filing fee for a general
148-15 partnership under Section 4.158. For purposes of calculation of
148-16 the filing fee, all references to partners in Section 4.158 as
148-17 applied to limited partnerships mean general partners only; and
148-18 (13) for filing any instrument as provided by this
148-19 code for which this section does not expressly provide a fee, $15.
148-20 Sec. 4.156. FILING FEES: PROFESSIONAL ASSOCIATIONS. For a
148-21 filing by or for a professional association, the secretary of state
148-22 shall impose the following fees:
148-23 (1) for filing a certificate of formation or an
148-24 application for registration as a foreign professional association,
148-25 $750;
148-26 (2) for filing an annual statement, $35; and
148-27 (3) for filing any other instrument, the fee provided
149-1 for the filing of a similar instrument under Section 4.152.
149-2 Sec. 4.157. FILING FEES: PROFESSIONAL CORPORATIONS. For a
149-3 filing by or for a professional corporation, the secretary of state
149-4 shall impose the same fee as the filing fee for a similar
149-5 instrument under Section 4.152.
149-6 Sec. 4.158. FILING FEES: GENERAL PARTNERSHIPS. For a filing
149-7 by or for a general partnership, the secretary of state shall
149-8 impose the following fees:
149-9 (1) for filing a limited liability partnership
149-10 application, $200 for each partner;
149-11 (2) for filing a limited liability partnership renewal
149-12 application, $200 for each partner on the date of renewal;
149-13 (3) for filing a statement of foreign qualification by
149-14 a foreign limited liability partnership, $200 for each partner in
149-15 this state, except that the maximum fee may not exceed $750;
149-16 (4) for filing a renewal of registration by a foreign
149-17 limited liability partnership, $200 for each partner in this state,
149-18 except that the maximum fee may not exceed $750;
149-19 (5) for filing a certificate of amendment for a
149-20 domestic limited liability partnership, $10, plus $200 for each
149-21 partner added by the amendment;
149-22 (6) for filing a certificate of amendment for a
149-23 foreign limited liability partnership, $10, plus $200 for each
149-24 partner in this state added by amendment not to exceed $750; and
149-25 (7) for filing any other filing instrument, the filing
149-26 fee imposed for a similar instrument under Section 4.155.
149-27 Sec. 4.159. FILING FEES: NONPROFIT ASSOCIATIONS. For a
150-1 filing by or for a nonprofit association, the secretary of state
150-2 shall impose the following fees:
150-3 (1) for filing a statement appointing an agent to
150-4 receive service of process, $25;
150-5 (2) for filing an amendment of a statement appointing
150-6 an agent, $5; and
150-7 (3) for filing a cancellation of a statement
150-8 appointing an agent, $5.
150-9 CHAPTER 5. NAMES OF ENTITIES; REGISTERED AGENTS
150-10 AND REGISTERED OFFICES
150-11 SUBCHAPTER A. GENERAL PROVISIONS
150-12 Sec. 5.001. EFFECT ON RIGHTS UNDER OTHER LAW. (a) The
150-13 filing of a certificate of formation by a filing entity under this
150-14 code, an application for registration by a foreign filing entity
150-15 under this code, or an application for reservation or registration
150-16 of a name under this chapter does not authorize the use of a name
150-17 in this state in violation of a right of another under:
150-18 (1) the Trademark Act of 1946, as amended (15 U.S.C.
150-19 Section 1051 et seq.);
150-20 (2) Chapter 16 or 36, Business & Commerce Code; or
150-21 (3) common law.
150-22 (b) The secretary of state shall deliver a notice that
150-23 contains the substance of Subsection (a) to each of the following:
150-24 (1) a filing entity that files a certificate of
150-25 formation under this code;
150-26 (2) a foreign filing entity that registers under this
150-27 code;
151-1 (3) a person that reserves a name under Subchapter C;
151-2 and
151-3 (4) a person that registers a name under Subchapter D.
151-4 (Sections 5.002-5.050 reserved for expansion)
151-5 SUBCHAPTER B. GENERAL PROVISIONS RELATING TO NAMES OF ENTITIES
151-6 Sec. 5.051. ASSUMED NAME. A domestic entity or a foreign
151-7 entity having authority to transact business in this state may
151-8 transact business under an assumed name by filing an assumed name
151-9 certificate in accordance with Chapter 36, Business & Commerce
151-10 Code. The requirements of this subchapter do not apply to an
151-11 assumed name set forth in an assumed name certificate filed under
151-12 that chapter.
151-13 Sec. 5.052. UNAUTHORIZED PURPOSE IN NAME PROHIBITED. A
151-14 filing entity or a foreign filing entity may not have a name that
151-15 contains any word or phrase that indicates or implies that the
151-16 entity is engaged in a business that the entity is not authorized
151-17 by law to pursue.
151-18 Sec. 5.053. IDENTICAL AND DECEPTIVELY SIMILAR NAMES
151-19 PROHIBITED. (a) A filing entity may not have a name, and a foreign
151-20 filing entity may not register to transact business in this state
151-21 under a name, that is the same as, or that the secretary of state
151-22 determines to be deceptively similar or similar to:
151-23 (1) the name of another existing filing entity;
151-24 (2) the name of a foreign filing entity that is
151-25 registered under Chapter 9;
151-26 (3) a name that is reserved under Subchapter C; or
151-27 (4) a name that is registered under Subchapter D.
152-1 (b) Subsection (a) does not apply if the other entity or the
152-2 person for whom the name is reserved or registered, as appropriate,
152-3 consents in writing to the use of the similar name.
152-4 Sec. 5.054. NAME OF CORPORATION, FOREIGN CORPORATION, OR
152-5 PROFESSIONAL CORPORATION. (a) The name of a corporation or foreign
152-6 corporation must contain:
152-7 (1) the word "company," "corporation," "incorporated,"
152-8 or "limited"; or
152-9 (2) an abbreviation of one of those words.
152-10 (b) Subsection (a) does not apply to a nonprofit corporation
152-11 or foreign nonprofit corporation.
152-12 (c) In lieu of a word or abbreviation required by Subsection
152-13 (a), the name of a professional corporation may contain the phrase
152-14 "professional corporation" or an abbreviation of the phrase.
152-15 Sec. 5.055. NAME OF LIMITED PARTNERSHIP OR FOREIGN LIMITED
152-16 PARTNERSHIP. (a) The name of a limited partnership or foreign
152-17 limited partnership must contain:
152-18 (1) the word "limited";
152-19 (2) the phrase "limited partnership"; or
152-20 (3) an abbreviation of that word or phrase.
152-21 (b) The name of the limited partnership may not contain a
152-22 word or phrase that indicates or implies that the partnership is a
152-23 corporation.
152-24 (c) The name of a limited partnership that is a limited
152-25 liability limited partnership must also contain:
152-26 (1) the phrase "limited liability partnership" or
152-27 "limited liability limited partnership"; or
153-1 (2) an abbreviation of one of those phrases.
153-2 Sec. 5.056. NAME OF LIMITED LIABILITY COMPANY OR FOREIGN
153-3 LIMITED LIABILITY COMPANY. (a) The name of a limited liability
153-4 company or a foreign limited liability company doing business in
153-5 this state must contain:
153-6 (1) the phrase "limited liability company" or "limited
153-7 company"; or
153-8 (2) an abbreviation of one of those phrases.
153-9 (b) A limited liability company formed before September 1,
153-10 1993, the name of which complied with the laws of this state on the
153-11 date of formation but does not comply with this section is not
153-12 required to change its name.
153-13 Sec. 5.057. NAME OF COOPERATIVE ASSOCIATION. (a) The name
153-14 of a cooperative association must contain:
153-15 (1) the word "cooperative"; or
153-16 (2) an abbreviation of that word.
153-17 (b) A domestic or foreign entity may use the word
153-18 "cooperative" in its name to the extent permitted by Section
153-19 251.452.
153-20 Sec. 5.058. NAME OF PROFESSIONAL ASSOCIATION. The name of a
153-21 professional association must contain:
153-22 (1) the word "associated," "associates," or
153-23 "association";
153-24 (2) the phrase "professional association"; or
153-25 (3) an abbreviation of one of those words or that
153-26 phrase.
153-27 Sec. 5.059. NAME OF PROFESSIONAL LIMITED LIABILITY COMPANY.
154-1 The name of a professional limited liability company must contain:
154-2 (1) the phrase "professional limited liability
154-3 company"; or
154-4 (2) an abbreviation of that phrase.
154-5 Sec. 5.060. NAME OF PROFESSIONAL ENTITY; CONFLICTS WITH
154-6 OTHER LAW OR ETHICAL RULE. The name of a professional entity must
154-7 be consistent with a statute or regulation that governs a person
154-8 who provides a professional service through the professional
154-9 entity, including a rule of professional ethics.
154-10 Sec. 5.061. NAME CONTAINING "LOTTO" OR "LOTTERY" PROHIBITED.
154-11 A filing entity or a foreign filing entity may not have a name that
154-12 contains the word "lotto" or "lottery."
154-13 Sec. 5.062. VETERANS ORGANIZATIONS; UNAUTHORIZED USE OF
154-14 NAME. (a) Subject to Subsection (b), a filing entity may not have
154-15 a name that:
154-16 (1) reasonably implies that the entity is created by
154-17 or for the benefit of war veterans or their families; and
154-18 (2) contains the word or phrase, or any variation or
154-19 abbreviation of:
154-20 (A) "veteran";
154-21 (B) "legion";
154-22 (C) "foreign";
154-23 (D) "Spanish";
154-24 (E) "disabled";
154-25 (F) "war"; or
154-26 (G) "world war."
154-27 (b) The prohibition in Subsection (a) does not apply to a
155-1 filing entity with a name approved in writing by:
155-2 (1) a congressionally recognized veterans organization
155-3 with a name containing the same word or phrase, or variation or
155-4 abbreviation, contained in the filing entity's name; or
155-5 (2) if a veterans organization described by
155-6 Subdivision (1) does not exist, the state commander of the:
155-7 (A) American Legion;
155-8 (B) Disabled American Veterans of the World War;
155-9 (C) Veterans of Foreign Wars of the United
155-10 States;
155-11 (D) United Spanish War Veterans; or
155-12 (E) Veterans of the Spanish-American War.
155-13 Sec. 5.063. NAME OF LIMITED LIABILITY PARTNERSHIP. (a) The
155-14 name of a domestic or foreign limited liability partnership must
155-15 contain:
155-16 (1) the phrase "limited liability partnership"; or
155-17 (2) an abbreviation of the phrase as the last word or
155-18 letters of its name.
155-19 (b) A domestic or foreign limited liability partnership is
155-20 not a filing entity or subject to Section 5.053.
155-21 (Sections 5.064-5.100 reserved for expansion)
155-22 SUBCHAPTER C. RESERVATION OF NAMES
155-23 Sec. 5.101. APPLICATION FOR RESERVATION OF NAME. (a) Any
155-24 person may file an application with the secretary of state to
155-25 reserve the exclusive use of a name under this chapter.
155-26 (b) The application must be:
155-27 (1) accompanied by any required filing fee; and
156-1 (2) signed by the applicant or by the agent or
156-2 attorney of the applicant.
156-3 Sec. 5.102. RESERVATION OF CERTAIN NAMES PROHIBITED;
156-4 EXCEPTIONS. (a) The secretary of state may not reserve a name that
156-5 is the same as, or that the secretary of state considers
156-6 deceptively similar or similar to:
156-7 (1) the name of an existing filing entity;
156-8 (2) the name of a foreign filing entity that is
156-9 registered under Chapter 9;
156-10 (3) a name that is reserved under this subchapter; or
156-11 (4) a name that is registered under Subchapter D.
156-12 (b) Subsection (a) does not apply if the other entity or
156-13 the person for whom the name is reserved or registered, as
156-14 appropriate, consents in writing to the subsequent reservation of
156-15 the similar name.
156-16 Sec. 5.103. ACTION ON APPLICATION. If the secretary of state
156-17 determines that the name specified in the application is eligible
156-18 for reservation, the secretary shall reserve that name for the
156-19 exclusive use of the applicant.
156-20 Sec. 5.104. DURATION OF RESERVATION OF NAME. The secretary
156-21 of state shall reserve the name for the applicant until the earlier
156-22 of:
156-23 (1) the 121st day after the date the application is
156-24 accepted for filing; or
156-25 (2) the date the applicant files with the secretary
156-26 of state a written notice of withdrawal of the reservation.
156-27 Sec. 5.105. RENEWAL OF RESERVATION. A person may renew the
157-1 person's reservation of a name under this subchapter for successive
157-2 120-day periods if, during the 30-day period preceding the
157-3 expiration of that reservation, the person:
157-4 (1) files a new application to reserve the name; and
157-5 (2) pays the required filing fee.
157-6 Sec. 5.106. TRANSFER OF RESERVATION OF NAME. (a) A person
157-7 may transfer the person's reservation of a name by filing with the
157-8 secretary of state a notice of transfer.
157-9 (b) The notice of transfer must:
157-10 (1) be signed by the person for whom the name is
157-11 reserved; and
157-12 (2) state the name and address of the person to whom
157-13 the reservation is to be transferred.
157-14 (Sections 5.107-5.150 reserved for expansion)
157-15 SUBCHAPTER D. REGISTRATION OF NAMES
157-16 Sec. 5.151. APPLICATION BY CERTAIN ENTITIES FOR REGISTRATION
157-17 OF NAME. An organization that is authorized to do business in this
157-18 state as a bank, trust company, savings association, or insurance
157-19 company, or that is a foreign filing entity not registered to do
157-20 business in this state under this code, may apply to register its
157-21 name under this subchapter.
157-22 Sec. 5.152. APPLICATION FOR REGISTRATION OF NAME. (a) To
157-23 register a name under this subchapter, an organization must file an
157-24 application with the secretary of state.
157-25 (b) The application must:
157-26 (1) state that the organization validly exists and is
157-27 doing business;
158-1 (2) contain a brief statement of the nature of the
158-2 organization's business;
158-3 (3) set out:
158-4 (A) the name of the organization;
158-5 (B) the name of the jurisdiction under whose
158-6 laws the organization is formed; and
158-7 (C) the date the organization was formed; and
158-8 (4) be accompanied by any required filing fee.
158-9 Sec. 5.153. CERTAIN REGISTRATIONS PROHIBITED; EXCEPTIONS.
158-10 (a) The secretary of state may not register a name that is the
158-11 same as, or that the secretary of state determines to be
158-12 deceptively similar or similar to:
158-13 (1) the name of an existing filing entity;
158-14 (2) the name of a foreign filing entity that is
158-15 registered under Chapter 9;
158-16 (3) a name that is reserved under Subchapter C; or
158-17 (4) a name that is registered under this subchapter.
158-18 (b) Subsection (a) does not apply if:
158-19 (1) the other entity or the person for whom the name
158-20 is reserved or registered, as appropriate, consents in writing to
158-21 the registration of the similar name; or
158-22 (2) the applicant is a bank, trust company, savings
158-23 association, or insurance company that has been in continuous
158-24 existence from a date that precedes the date the conflicting name
158-25 is filed with the secretary of state.
158-26 Sec. 5.154. DURATION OF REGISTRATION OF NAME. The
158-27 registration of a name under this subchapter is effective until the
159-1 earlier of:
159-2 (1) the first anniversary of the date the application
159-3 is accepted for filing; or
159-4 (2) the date the entity files with the secretary of
159-5 state a written notice of withdrawal of the registration.
159-6 Sec. 5.155. RENEWAL OF REGISTRATION. A person may renew the
159-7 person's registration of a name under this subchapter for
159-8 successive one-year periods if, during the 90-day period preceding
159-9 the expiration of that registration, the person:
159-10 (1) files a new application to register the name; and
159-11 (2) pays the required filing fee.
159-12 (Sections 5.156-5.200 reserved for expansion)
159-13 SUBCHAPTER E. REGISTERED AGENTS AND REGISTERED OFFICES
159-14 Sec. 5.201. DESIGNATION AND MAINTENANCE OF REGISTERED AGENT
159-15 AND REGISTERED OFFICE. (a) Each filing entity and each foreign
159-16 filing entity shall designate and continuously maintain in this
159-17 state:
159-18 (1) a registered agent; and
159-19 (2) a registered office.
159-20 (b) The registered agent:
159-21 (1) is an agent of the entity on whom may be served
159-22 any process, notice, or demand required or permitted by law to be
159-23 served on the entity;
159-24 (2) may be:
159-25 (A) an individual who is a resident of this
159-26 state; or
159-27 (B) a domestic entity or a foreign entity that
160-1 is registered to do business in this state; and
160-2 (3) must maintain a business office at the same
160-3 address as the entity's registered office.
160-4 (c) The registered office:
160-5 (1) must be located at a street address where process
160-6 may be personally served on the entity's registered agent;
160-7 (2) is not required to be a place of business of the
160-8 filing entity or foreign filing entity; and
160-9 (3) may not be solely a mailbox service or a telephone
160-10 answering service.
160-11 Sec. 5.202. CHANGE BY ENTITY TO REGISTERED OFFICE OR
160-12 REGISTERED AGENT. (a) A filing entity or foreign filing entity may
160-13 change its registered office, its registered agent, or both by
160-14 filing a statement of the change in accordance with Chapter 4.
160-15 (b) The statement must contain:
160-16 (1) the name of the entity;
160-17 (2) the name of the entity's registered agent;
160-18 (3) the street address of the entity's registered
160-19 agent;
160-20 (4) if the change relates to the registered agent, the
160-21 name of the entity's new registered agent;
160-22 (5) if the change relates to the registered office,
160-23 the street address of the entity's new registered office;
160-24 (6) a recitation that the change specified in the
160-25 statement is authorized by the entity; and
160-26 (7) a recitation that the street address of the
160-27 registered office and the street address of the registered agent's
161-1 business are the same.
161-2 (c) On acceptance of the statement by the filing officer,
161-3 the statement is effective as an amendment to the appropriate
161-4 provision of:
161-5 (1) the filing entity's certificate of formation; or
161-6 (2) the foreign filing entity's registration.
161-7 Sec. 5.203. CHANGE BY REGISTERED AGENT TO NAME OR ADDRESS OF
161-8 REGISTERED OFFICE. (a) The registered agent of a filing entity or
161-9 a foreign filing entity may change its name, its address as the
161-10 address of the entity's registered office, or both by filing a
161-11 statement of the change in accordance with Chapter 4.
161-12 (b) The statement must be signed by the registered agent, or
161-13 a person authorized to sign the statement on behalf of the
161-14 registered agent, and must contain:
161-15 (1) the name of the entity represented by the
161-16 registered agent;
161-17 (2) the name of the entity's registered agent and the
161-18 address at which the registered agent maintained the entity's
161-19 registered office;
161-20 (3) if the change relates to the name of the
161-21 registered agent, the new name of that agent;
161-22 (4) if the change relates to the address of the
161-23 registered office, the new address of that office; and
161-24 (5) a recitation that written notice of the change was
161-25 given to the entity at least 10 days before the date the statement
161-26 is filed.
161-27 (c) On acceptance of the statement by the filing officer,
162-1 the statement is effective as an amendment to the appropriate
162-2 provision of:
162-3 (1) the filing entity's certificate of formation; or
162-4 (2) the foreign filing entity's registration.
162-5 (d) A registered agent may file a statement under this
162-6 section that applies to more than one entity.
162-7 Sec. 5.204. RESIGNATION OF REGISTERED AGENT. (a) A
162-8 registered agent of a filing entity or a foreign filing entity may
162-9 resign as the registered agent by giving notice to that entity and
162-10 to the appropriate filing officer.
162-11 (b) Notice to the entity must be given to the entity at the
162-12 address of the entity most recently known by the agent.
162-13 (c) Notice to the filing officer must be given before the
162-14 11th day after the date notice under Subsection (b) is mailed or
162-15 delivered and must include:
162-16 (1) the address of the entity most recently known by
162-17 the agent;
162-18 (2) a statement that written notice of the resignation
162-19 has been given to the entity; and
162-20 (3) the date on which that written notice of
162-21 resignation was given.
162-22 (d) On compliance with Subsections (b) and (c), the
162-23 appointment of the registered agent terminates. The termination is
162-24 effective on the 31st day after the date the secretary of state
162-25 receives the notice.
162-26 (e) If the filing officer finds that a notice of resignation
162-27 received by the filing officer conforms to Subsections (b) and (c),
163-1 the filing officer shall:
163-2 (1) notify the entity of the registered agent's
163-3 resignation; and
163-4 (2) file the resignation in accordance with Chapter 4,
163-5 except that a fee is not required to file the resignation.
163-6 (Sections 5.205-5.250 reserved for expansion)
163-7 SUBCHAPTER F. SERVICE OF PROCESS
163-8 Sec. 5.251. FAILURE TO DESIGNATE REGISTERED AGENT. The
163-9 secretary of state is an agent of an entity for purposes of service
163-10 of process, notice, or demand on the entity if:
163-11 (1) the entity is a filing entity or a foreign filing
163-12 entity and:
163-13 (A) the entity fails to appoint or does not
163-14 maintain a registered agent in this state; or
163-15 (B) the registered agent of the entity cannot
163-16 with reasonable diligence be found at the registered office of the
163-17 entity; or
163-18 (2) the entity is a foreign filing entity and:
163-19 (A) the entity's registration to do business
163-20 under this code is revoked; or
163-21 (B) the entity transacts business in this state
163-22 without being registered as required by Chapter 9.
163-23 Sec. 5.252. SERVICE ON SECRETARY OF STATE. (a) Service on
163-24 the secretary of state under Section 5.251 is effected by:
163-25 (1) delivering to the secretary duplicate copies of
163-26 the process, notice, or demand; and
163-27 (2) accompanying the copies with any fee required by
164-1 law, including this code or the Government Code, for:
164-2 (A) maintenance by the secretary of a record of
164-3 the service; and
164-4 (B) forwarding by the secretary of the process,
164-5 notice, or demand.
164-6 (b) Notice on the secretary of state under Subsection (a) is
164-7 returnable in not less than 30 days.
164-8 Sec. 5.253. ACTION BY SECRETARY OF STATE. (a) After service
164-9 in compliance with Section 5.252, the secretary of state shall
164-10 immediately send one of the copies of the process, notice, or
164-11 demand to the named entity.
164-12 (b) The notice must be:
164-13 (1) addressed to the most recent address of the entity
164-14 on file with the secretary of state; and
164-15 (2) sent by certified mail, with return receipt
164-16 requested.
164-17 Sec. 5.254. REQUIRED RECORDS OF SECRETARY OF STATE. The
164-18 secretary of state shall keep a record of each process, notice, or
164-19 demand served on the secretary under this subchapter and shall
164-20 record:
164-21 (1) the time when each service on the secretary was
164-22 made; and
164-23 (2) each subsequent action of the secretary taken in
164-24 relation to that service.
164-25 Sec. 5.255. AGENT FOR SERVICE OF PROCESS, NOTICE, OR DEMAND
164-26 AS MATTER OF LAW. For the purpose of service of process, notice, or
164-27 demand:
165-1 (1) the president and each vice president of a
165-2 domestic or foreign corporation is an agent of that corporation;
165-3 (2) each general partner of a domestic or foreign
165-4 limited partnership and each partner of a domestic or foreign
165-5 general partnership is an agent of that partnership;
165-6 (3) each manager of a manager-managed domestic or
165-7 foreign limited liability company and each member of a
165-8 member-managed domestic or foreign limited liability company is an
165-9 agent of that limited liability company;
165-10 (4) each person who is a governing person of a
165-11 domestic or foreign entity, other than an entity listed in
165-12 Subdivisions (1)-(3), is an agent of that entity; and
165-13 (5) each member of a committee of a nonprofit
165-14 corporation authorized to perform the chief executive function of
165-15 the corporation is an agent of that corporation.
165-16 Sec. 5.256. OTHER MEANS OF SERVICE NOT PRECLUDED. This
165-17 chapter does not preclude other means of service of process,
165-18 notice, or demand on a domestic or foreign entity as provided by
165-19 other law.
165-20 Sec. 5.257. SERVICE OF PROCESS BY POLITICAL SUBDIVISION. (a)
165-21 A process, notice, or demand required or permitted by law to be
165-22 served by a political subdivision of this state or by a person,
165-23 including another political subdivision or an attorney, acting on
165-24 behalf of a political subdivision in connection with the collection
165-25 of a delinquent ad valorem tax may be served on a domestic or
165-26 foreign corporation whose corporate privileges are forfeited under
165-27 Section 171.251, Tax Code, that is involuntarily terminated under
166-1 Chapter 11, or whose registration is revoked under Chapter 9 by
166-2 delivery of the process, notice, or demand to any officer or
166-3 director of the corporation, as listed in the most recent records
166-4 of the secretary of state.
166-5 (b) If the officers or directors of a corporation are
166-6 unknown or cannot be found, service on the corporation may be made
166-7 in the same manner as service is made on unknown shareholders under
166-8 law.
166-9 (c) Notwithstanding any disability or reinstatement of a
166-10 corporation, service of process under this section is sufficient
166-11 for a judgment against the corporation or a judgment in rem against
166-12 any property to which the corporation holds title.
166-13 CHAPTER 6. MEETINGS AND VOTING
166-14 SUBCHAPTER A. MEETINGS
166-15 Sec. 6.001. LOCATION OF MEETINGS. (a) Meetings of the
166-16 owners or members of a domestic entity may be held at locations in
166-17 or outside the state as:
166-18 (1) provided by or fixed in accordance with the
166-19 governing documents of the domestic entity; or
166-20 (2) agreed to by all persons entitled to notice of the
166-21 meeting.
166-22 (b) If the location of meetings of the owners or members of
166-23 the entity is not established under Subsection (a), the owners or
166-24 members may hold meetings only at the registered office of the
166-25 entity in this state or the principal office of the entity.
166-26 (c) The governing persons of a domestic entity, or a
166-27 committee of the governing persons, may hold meetings in or outside
167-1 the state as:
167-2 (1) provided by or fixed in accordance with:
167-3 (A) the governing documents of the domestic
167-4 entity; or
167-5 (B) the person calling the meeting; or
167-6 (2) agreed to by all persons entitled to notice of the
167-7 meeting.
167-8 Sec. 6.002. ALTERNATIVE FORMS OF MEETINGS. Subject to this
167-9 code and the governing documents of a domestic entity, the owners,
167-10 members, or governing persons of the entity, or a committee of the
167-11 owners, members, or governing persons, may hold meetings by using a
167-12 conference telephone or similar communications equipment, or
167-13 another suitable electronic communications system, including
167-14 videoconferencing technology or the Internet, or any combination,
167-15 if the telephone or other equipment or system permits each person
167-16 participating in the meeting to communicate with all other persons
167-17 participating in the meeting.
167-18 Sec. 6.003. PARTICIPATION CONSTITUTES PRESENCE. A person
167-19 participating in a meeting is considered present at the meeting,
167-20 unless the participation is for the express purpose of objecting to
167-21 the transaction of business at the meeting on the ground that the
167-22 meeting has not been lawfully called or convened.
167-23 Sec. 6.004. OWNERSHIP OR MEMBERSHIP MEETING LIST FOR CERTAIN
167-24 ENTITIES. (a) This section applies to:
167-25 (1) a domestic for-profit corporation;
167-26 (2) a domestic nonprofit corporation; and
167-27 (3) a domestic limited liability company and a
168-1 domestic limited partnership, if the limited liability company or
168-2 partnership has a class of ownership interests registered under
168-3 Section 12(b) or (g), Securities Exchange Act of 1934, as amended
168-4 (15 U.S.C. Section 78l(b) or (g)).
168-5 (b) Not later than the 11th day before the date of each
168-6 meeting of the owners or members of an entity, an officer or agent
168-7 of the entity who is in charge of the entity's ownership or
168-8 membership records shall prepare an alphabetical list of the owners
168-9 or members entitled to vote at the meeting or at any adjournment of
168-10 the meeting. The list of owners or members must:
168-11 (1) state:
168-12 (A) the address of each owner or member;
168-13 (B) the type of ownership or membership interest
168-14 held by each owner or member;
168-15 (C) the number, amount, or percentage of
168-16 ownership or membership interests held by each owner or member; and
168-17 (D) the number of votes that each owner or
168-18 member is entitled to if the number of votes is different from the
168-19 number, amount, or percentage of ownership or membership interests
168-20 stated under Paragraph (C); and
168-21 (2) be kept on file at the registered office or
168-22 principal executive office of the entity for at least 10 days
168-23 before the date of the meeting.
168-24 (c) The original ownership or membership transfer records of
168-25 an entity are prima facie evidence of the owners or members of the
168-26 entity entitled to vote at the meeting.
168-27 (d) Failure to comply with this section does not affect the
169-1 validity of any action taken at a meeting of the owners or members
169-2 of an entity.
169-3 (Sections 6.005-6.050 reserved for expansion)
169-4 SUBCHAPTER B. NOTICE OF MEETINGS
169-5 Sec. 6.051. GENERAL NOTICE REQUIREMENTS. (a) Subject to
169-6 this code and the governing documents of the entity, notice of a
169-7 meeting of the owners, members, or governing persons of a domestic
169-8 entity, or a committee of the owners, members, or governing
169-9 persons, must:
169-10 (1) be given in the manner determined by the governing
169-11 authority of the entity; and
169-12 (2) state:
169-13 (A) the date and time of the meeting; and
169-14 (B) the location of the meeting or, if the
169-15 meeting is held by using a conference telephone or other
169-16 communications system authorized by Section 6.002, the form of
169-17 communication used for the meeting.
169-18 (b) Subject to this code and the governing documents of a
169-19 domestic entity, notice of a meeting that is:
169-20 (1) mailed is considered to be delivered on the date
169-21 notice is deposited in the United States mail with postage paid in
169-22 an envelope addressed to the person at the person's address as it
169-23 appears on the ownership or membership records of the entity; and
169-24 (2) transmitted by facsimile or electronic message is
169-25 considered to be delivered when the facsimile or electronic message
169-26 is successfully transmitted.
169-27 Sec. 6.052. WAIVER OF NOTICE. (a) Notice of a meeting is
170-1 not required to be given to an owner, member, or governing person
170-2 of a domestic entity, or a member of a committee of the owners,
170-3 members, or governing persons, entitled to notice under this code
170-4 or the governing documents of the entity if the person entitled to
170-5 notice signs a written waiver of notice of the meeting, regardless
170-6 of whether the waiver is signed before or after the time of the
170-7 meeting.
170-8 (b) If a person entitled to notice of a meeting participates
170-9 in the meeting, the person's participation constitutes a waiver of
170-10 notice of the meeting unless the person participates in the meeting
170-11 solely to object to the transaction of business at the meeting on
170-12 the ground that the meeting was not lawfully called or convened.
170-13 Sec. 6.053. EXCEPTION. (a) Notice of a meeting is not
170-14 required to be given to an owner or member of a filing entity
170-15 entitled to notice under this code or the governing documents of
170-16 the entity if either of the following is mailed to the person
170-17 entitled to notice of the meeting to the person's address as it
170-18 appears on the ownership or membership transfer records of the
170-19 entity and is returned undeliverable:
170-20 (1) notice of two consecutive annual meetings and
170-21 notice of any meeting held during the period between the two annual
170-22 meetings; or
170-23 (2) all, but in no event less than two, payments of
170-24 distribution or interest on securities during a 12-month period if
170-25 the payments are sent by first class mail.
170-26 (b) Notice of a meeting is not required to be given to an
170-27 owner or member entitled to notice under this code or the governing
171-1 documents of a filing entity the notice requirements of which are
171-2 subject to the Securities Exchange Act of 1934, as amended (15
171-3 U.S.C. Section 78a et seq.), if the person entitled to notice of
171-4 the meeting is considered a lost security holder under that Act and
171-5 the regulations adopted under that Act.
171-6 (c) An action taken or a meeting held without giving notice
171-7 to a person not entitled to notice under this section has the same
171-8 force and effect as if notice had been given to the person.
171-9 (d) A certificate or other document filed with the secretary
171-10 of state as a result of a meeting held or an action taken by a
171-11 filing entity without giving notice of the meeting or action to a
171-12 person not entitled to notice under this section may state that
171-13 notice of the meeting or action was given to each person entitled
171-14 to notice.
171-15 (e) Notice of a meeting must be given to a person not
171-16 entitled to notice of the meeting under this section if the person
171-17 delivers to the entity a written notice of the person's address.
171-18 (Sections 6.054-6.100 reserved for expansion)
171-19 SUBCHAPTER C. RECORD DATES
171-20 Sec. 6.101. RECORD DATE FOR PURPOSE OTHER THAN WRITTEN
171-21 CONSENT TO ACTION. (a) Subject to this code, the governing
171-22 documents of a domestic entity may provide the record date, or the
171-23 manner of determining the record date, for:
171-24 (1) determining the owners or members of the entity
171-25 entitled to:
171-26 (A) receive notice of a meeting of the owners or
171-27 members;
172-1 (B) vote at a meeting of the owners or members
172-2 or at any adjournment of a meeting; or
172-3 (C) receive a distribution from the entity other
172-4 than a distribution involving a purchase or redemption by the
172-5 entity of the entity's own securities; or
172-6 (2) any other proper purpose other than for
172-7 determining the owners or members entitled to consent to action
172-8 without a meeting of the owners or members.
172-9 (b) Subject to this code and the governing documents of a
172-10 domestic entity, the governing authority of the entity, in advance,
172-11 may provide a record date for determining the owners or members of
172-12 the entity, except that the date may not be earlier than the 60th
172-13 day before the date the action requiring the determination of
172-14 owners or members is taken.
172-15 (c) Subject to this code and the governing documents of a
172-16 domestic entity, the governing authority of the entity may provide
172-17 for the closing of the ownership or membership transfer records of
172-18 the entity for a period of not longer than 60 days to determine the
172-19 owners or members of the entity for a purpose described by
172-20 Subsection (a).
172-21 (d) If the owners or members of an entity are not otherwise
172-22 determined under this section, the record date for determining the
172-23 owners or members of an entity is the date on which:
172-24 (1) notice of the meeting is mailed to the owners or
172-25 members entitled to notice of the meeting; or
172-26 (2) with respect to a distribution, other than a
172-27 distribution involving a purchase or redemption by the domestic
173-1 entity of any of its own securities, the governing authority adopts
173-2 the resolution declaring the distribution.
173-3 (e) The record date for a meeting applies to any adjournment
173-4 of the meeting unless:
173-5 (1) the owners or members entitled to vote are
173-6 determined under Subsection (c); and
173-7 (2) the period during which the transfer records are
173-8 closed expires.
173-9 Sec. 6.102. RECORD DATE FOR WRITTEN CONSENT TO ACTION. (a)
173-10 Subject to this code and the governing documents of an entity, the
173-11 governing authority of the entity may provide the record date for
173-12 determining the owners or members of the entity entitled to written
173-13 consent to action without a meeting of the owners or members unless
173-14 a record date is provided under Section 6.101 for that action. The
173-15 record date may not be earlier than the date the governing
173-16 authority adopts the resolution providing for the record date.
173-17 (b) Subject to this code and the governing documents of an
173-18 entity, the record date for determining the owners or members of
173-19 the entity entitled to written consent to action without a meeting
173-20 of the owners or members is the date a signed written consent to
173-21 action stating the action taken or proposed to be taken is first
173-22 delivered to the entity if:
173-23 (1) the governing authority of the entity does not
173-24 provide a record date under Subsection (a); and
173-25 (2) prior action by the governing authority is not
173-26 required under this code.
173-27 (c) Subject to this code or the governing documents of an
174-1 entity, the record date for determining the owners or members of
174-2 the entity entitled to written consent to action without a meeting
174-3 of the owners or members is at the close of business on the date
174-4 the governing authority of the entity adopts a resolution taking
174-5 prior action if:
174-6 (1) the governing authority does not provide a record
174-7 date under Subsection (a); and
174-8 (2) prior action by the governing authority is
174-9 required by this code.
174-10 Sec. 6.103. RECORD DATE FOR SUSPENDED DISTRIBUTIONS. (a) In
174-11 this section, "distribution" includes a distribution that:
174-12 (1) was payable to an owner or member but not paid and
174-13 was held in suspension by the entity making the distribution; or
174-14 (2) is paid or delivered by the entity making the
174-15 distribution into an escrow account or to a trustee or custodian.
174-16 (b) A distribution made by a domestic entity shall be
174-17 payable by the entity, or an escrow agent, trustee, or custodian of
174-18 the distribution, to the owner or member determined on the record
174-19 date for the distribution as provided by this subchapter.
174-20 (c) The right to a distribution under this section may be
174-21 transferred by contract, by operation of law, or under the laws of
174-22 descent and distribution.
174-23 (Sections 6.104-6.150 reserved for expansion)
174-24 SUBCHAPTER D. VOTING OF OWNERSHIP INTERESTS
174-25 Sec. 6.151. MANNER OF VOTING OF INTERESTS. Subject to the
174-26 title governing the domestic entity, voting of interests of a
174-27 domestic entity must be conducted in the manner provided by the
175-1 governing documents of the entity.
175-2 Sec. 6.152. VOTING OF INTERESTS OWNED BY ENTITY. (a) Except
175-3 as provided by Subsection (b), an ownership interest owned by the
175-4 entity that is the issuer of the interest, or by its direct or
175-5 indirect subsidiary, may not be:
175-6 (1) directly or indirectly voted at a meeting; or
175-7 (2) included in determining at any time the total
175-8 number of outstanding ownership interests of the entity.
175-9 (b) This section does not preclude a domestic or foreign
175-10 entity from voting an ownership interest, including an interest in
175-11 the entity, held or controlled by the entity in a fiduciary
175-12 capacity or for which the entity otherwise exercises voting power
175-13 in a fiduciary capacity.
175-14 Sec. 6.153. VOTING OF INTERESTS OWNED BY ANOTHER ENTITY. An
175-15 ownership interest in an entity owned by another entity, whether a
175-16 domestic or foreign entity, may be voted by the officer, agent, or
175-17 proxy as authorized by:
175-18 (1) the governing documents of the entity that owns
175-19 the interest; or
175-20 (2) the governing authority of the entity that owns
175-21 the interest, if the governing documents do not provide for the
175-22 manner of voting.
175-23 Sec. 6.154. VOTING OF INTERESTS IN AN ESTATE OR TRUST. (a)
175-24 An administrator, executor, guardian, or conservator of an estate
175-25 who holds an ownership interest as part of the estate may vote the
175-26 interest without transferring the interest into the person's name.
175-27 (b) An ownership interest in the name of a trust may be
176-1 voted in person or by proxy by:
176-2 (1) the trustee; or
176-3 (2) a person authorized to act on behalf of the trust
176-4 by the trust agreement or the trustee.
176-5 Sec. 6.155. VOTING OF INTERESTS BY RECEIVER. (a) A receiver
176-6 may vote an ownership interest standing in the name of the
176-7 receiver.
176-8 (b) A receiver may vote an ownership interest held by or
176-9 under the control of the receiver without transferring the interest
176-10 into the receiver's name if the court appointing the receiver
176-11 authorizes the receiver to vote the interest.
176-12 Sec. 6.156. VOTING OF PLEDGED INTERESTS. A pledged ownership
176-13 interest may be voted by:
176-14 (1) the owner of the pledged interest until the
176-15 interest is transferred into the pledgee's name; and
176-16 (2) the pledgee after the pledged interest is
176-17 transferred into the pledgee's name.
176-18 (Sections 6.157-6.200 reserved for expansion)
176-19 SUBCHAPTER E. ACTION BY WRITTEN CONSENT
176-20 Sec. 6.201. UNANIMOUS WRITTEN CONSENT TO ACTION. (a) This
176-21 section applies to any action required or authorized to be taken
176-22 under this code or the governing documents of a filing entity at an
176-23 annual or special meeting of the owners or members of the entity or
176-24 at a regular, special, or other meeting of the governing authority
176-25 of the entity or a committee of the governing authority.
176-26 (b) The owners or members or the governing authority of a
176-27 filing entity, or a committee of the governing authority, may take
177-1 action without holding a meeting, providing notice, or taking a
177-2 vote if each person entitled to vote on the action signs a written
177-3 consent or consents stating the action taken.
177-4 (c) A written consent described by Subsection (b) has the
177-5 same effect as a unanimous vote at a meeting.
177-6 (d) A filing instrument filed with the filing officer may
177-7 state that an action approved by written consent or consents has
177-8 the effect of an approval by a unanimous vote at a meeting.
177-9 Sec. 6.202. ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT.
177-10 (a) This section applies to any action required or authorized to
177-11 be taken under this code or the governing documents of a filing
177-12 entity at an annual or special meeting of the owners or members of
177-13 the entity.
177-14 (b) Except as provided by this code, the governing documents
177-15 of a filing entity may authorize the owners or members of the
177-16 entity to take action without holding a meeting, providing notice,
177-17 or taking a vote if owners or members of the entity having at least
177-18 the minimum number of votes that would be necessary to take the
177-19 action that is the subject of the consent at a meeting, in which
177-20 each owner or member entitled to vote on the action is present and
177-21 votes, sign a written consent or consents stating the action taken.
177-22 (c) A written consent or consents described by Subsection
177-23 (b) must include the date each owner or member signed the consent
177-24 and is effective to take the action that is the subject of the
177-25 consent only if the consent or consents are delivered to the entity
177-26 not later than the 60th day after the date the earliest dated
177-27 consent is delivered to the entity as required by Section 6.203.
178-1 (d) The entity shall promptly notify each owner or member
178-2 who did not sign a consent described by Subsection (b) of the
178-3 action that is the subject of the consent.
178-4 Sec. 6.203. DELIVERY OF LESS THAN UNANIMOUS WRITTEN CONSENT.
178-5 (a) A written consent signed by an owner or member of a filing
178-6 entity as provided by Section 6.202, if the consent is not
178-7 solicited on behalf of the entity or its governing authority, must
178-8 be delivered by hand or certified or registered mail, return
178-9 receipt requested, or by other means specified in the governing
178-10 documents, to:
178-11 (1) the entity's registered office or principal
178-12 executive office or place of business; or
178-13 (2) the managerial official or agent of the entity
178-14 having custody of the entity's records of meetings of owners or
178-15 members.
178-16 (b) A consent delivered to an entity's principal executive
178-17 office or place of business under Subsection (a)(1) must be
178-18 addressed to the chief managerial official of the entity or, if the
178-19 entity does not have a chief managerial official, the governing
178-20 authority of the entity.
178-21 Sec. 6.204. ADVANCE NOTICE NOT REQUIRED. Advance notice is
178-22 not required to be given to take an action by written consent as
178-23 provided by this subchapter.
178-24 (Sections 6.205-6.250 reserved for expansion)
178-25 SUBCHAPTER F. VOTING TRUSTS AND VOTING AGREEMENTS
178-26 Sec. 6.251. VOTING TRUSTS. (a) Except as provided by this
178-27 code or the governing documents, any number of owners of an entity
179-1 may enter into a written voting trust agreement to confer on a
179-2 trustee the right to vote or otherwise represent ownership or
179-3 membership interests of the entity.
179-4 (b) An ownership or membership interest that is the subject
179-5 of a voting trust agreement described by Subsection (a) shall be
179-6 transferred to the trustee named in the agreement for purposes of
179-7 the agreement.
179-8 (c) A copy of a voting trust agreement described by
179-9 Subsection (a) shall be deposited with the entity at the entity's
179-10 principal executive office or registered office and is subject to
179-11 examination by:
179-12 (1) an owner, whether in person or by the owner's
179-13 agent or attorney, in the same manner as the owner is entitled to
179-14 examine the books and records of the entity; and
179-15 (2) a holder of a beneficial interest in the voting
179-16 trust, whether in person or by the holder's agent or attorney, at
179-17 any reasonable time for any proper purpose.
179-18 Sec. 6.252. VOTING AGREEMENTS. (a) Except as provided by
179-19 this code or the governing documents, any number of owners of an
179-20 entity, or any number of owners of the entity and the entity
179-21 itself, may enter into a written voting agreement to provide the
179-22 manner of voting of the ownership interests of the entity. A
179-23 voting agreement entered into under this subsection is not part of
179-24 the governing documents of the entity.
179-25 (b) A copy of a voting agreement entered into under
179-26 Subsection (a):
179-27 (1) shall be deposited with the entity at the entity's
180-1 principal executive office or registered office; and
180-2 (2) is subject to examination by an owner, whether in
180-3 person or by the owner's agent or attorney, in the same manner as
180-4 the owner is entitled to examine the books and records of the
180-5 entity.
180-6 (c) A voting agreement entered into under Subsection (a) is
180-7 specifically enforceable against the holder of an ownership
180-8 interest that is the subject of the agreement, and any successor or
180-9 transferee of the holder, if:
180-10 (1) the voting agreement is noted conspicuously on the
180-11 certificate representing the ownership interests; or
180-12 (2) a notation of the voting agreement is contained in
180-13 a notice sent by or on behalf of the entity, if the ownership
180-14 interest is not represented by a certificate.
180-15 (d) Except as provided by Subsection (e), a voting agreement
180-16 entered into under Subsection (a) is specifically enforceable
180-17 against any person, other than a transferee for value, after the
180-18 time the person acquires actual knowledge of the existence of the
180-19 agreement.
180-20 (e) An otherwise enforceable voting agreement entered into
180-21 under Subsection (a) is not enforceable against a transferee for
180-22 value without actual knowledge of the existence of the agreement at
180-23 the time of the transfer, or any subsequent transferee, without
180-24 regard to value, if the voting agreement is not noted as required
180-25 by Subsection (c).
180-26 (f) Section 6.251 does not apply to a voting agreement
180-27 entered into under Subsection (a).
181-1 (Sections 6.253-6.300 reserved for expansion)
181-2 SUBCHAPTER G. APPLICABILITY OF CHAPTER TO PARTNERSHIPS
181-3 Sec. 6.301. APPLICABILITY OF CHAPTER TO PARTNERSHIPS. This
181-4 chapter does not apply to a general partnership or a limited
181-5 partnership except to the extent the partnership agreement
181-6 specifies.
181-7 CHAPTER 7. LIABILITY
181-8 Sec. 7.001. DOMESTIC ENTITY AS SEPARATE LEGAL ENTITY. A
181-9 domestic entity is a separate legal entity from its owners or
181-10 members.
181-11 Sec. 7.002. LIMITATION OF LIABILITY FOR CONTRACTUAL OR
181-12 RELATED OBLIGATIONS. (a) Except as otherwise provided in Sections
181-13 7.004 and 7.007, an owner, member, subscriber, or affiliate of a
181-14 domestic entity shall be under no obligation to the domestic entity
181-15 or to its obligees with respect to any contractual obligation of
181-16 the domestic entity or any matter relating to or arising from a
181-17 contractual obligation on the basis:
181-18 (1) that the owner, member, subscriber, or affiliate
181-19 is or was the alter ego of the domestic entity;
181-20 (2) of an actual or constructive fraud or a sham to
181-21 perpetrate a fraud; or
181-22 (3) of any other similar theory.
181-23 (b) Except as otherwise provided in Sections 7.004, 7.006,
181-24 and 7.007, an owner, member, subscriber, or affiliate of a domestic
181-25 entity shall be under no obligation to the domestic entity or to
181-26 its obligees with respect to any obligation of any kind of the
181-27 domestic entity on the basis of the failure of the domestic entity
182-1 to observe any required formality, including without limitation:
182-2 (1) failure to comply with any requirement of this
182-3 code or the governing documents of the domestic entity; or
182-4 (2) failure of the domestic entity or any owner,
182-5 member, or managerial official of the domestic entity to take any
182-6 action or comply with any requirement of this code or the governing
182-7 documents of the domestic entity.
182-8 Sec. 7.003. EXCLUSIVENESS OF LIMITATION OF LIABILITY. Except
182-9 as otherwise provided in Sections 7.004 and 7.007, the limitations
182-10 on liability of an owner, member, subscriber, or affiliate set
182-11 forth in Section 7.002 are exclusive and preclude the imposition of
182-12 liability for the same obligation under common law or otherwise.
182-13 Sec. 7.004. EXCEPTIONS TO LIMITATION OF LIABILITY. Sections
182-14 7.002 and 7.003 do not limit the liability of an owner, member,
182-15 subscriber, or affiliate of a domestic entity if:
182-16 (1) the obligee demonstrates that the owner, member,
182-17 subscriber, or affiliate caused the domestic entity to be used for
182-18 the purpose of perpetrating and did perpetrate an actual fraud on
182-19 the obligee primarily for the direct personal benefit of the owner,
182-20 member, subscriber, or affiliate;
182-21 (2) the owner, member, subscriber, or affiliate has
182-22 expressly assumed, guaranteed, or agreed to be personally liable to
182-23 the obligee for the obligation;
182-24 (3) the owner, member, subscriber, or affiliate is
182-25 otherwise liable to the obligee under this code or another
182-26 applicable statute; or
182-27 (4) the conduct of the owner, member, subscriber, or
183-1 affiliate constituted a tort or breach of duty actionable under
183-2 other applicable law independent of the contractual obligation.
183-3 Sec. 7.005. LIMITATION OF LIABILITY OF MANAGERIAL OFFICIALS.
183-4 A person is not liable for a domestic entity's debts or obligations
183-5 solely because the person:
183-6 (1) is a managerial official of the domestic entity;
183-7 or
183-8 (2) is authorized to participate in the management of
183-9 the domestic entity.
183-10 Sec. 7.006. LIMITATION OF LIABILITY FOR TORT. (a) An owner,
183-11 member, subscriber, affiliate, or managerial official is not liable
183-12 for a domestic entity's tortious act, omission, or breach of duty
183-13 solely because the person is an owner, member, subscriber,
183-14 affiliate, or managerial official of the domestic entity.
183-15 (b) An owner, member, subscriber, affiliate, or managerial
183-16 official may be liable for a tortious act, omission, or breach of
183-17 duty if liability is imposed under Section 7.004 or other
183-18 applicable law by reason of the person's conduct independent of
183-19 this code.
183-20 (c) Except as otherwise provided in Section 7.004, a
183-21 tortious act or omission of an owner, member, subscriber,
183-22 affiliate, managerial official, or other person for which the
183-23 domestic entity is liable is not imputed to another person solely
183-24 because of the person's relationship with the domestic entity.
183-25 Sec. 7.007. EXCEPTIONS TO APPLICATION OF CHAPTER. (a) The
183-26 liability of (i) partners in a general partnership or limited
183-27 liability partnership, (ii) general or limited partners in a
184-1 limited partnership or limited liability limited partnership, or
184-2 (iii) a stockholder of an unincorporated joint stock company or
184-3 association is governed by Title 4 or Chapter 253, as appropriate,
184-4 not by Sections 7.002-7.006.
184-5 (b) A person who has offered to purchase or subscribe for an
184-6 interest in a domestic entity, and whose offer or subscription has
184-7 been accepted, is obligated to pay to the domestic entity the full
184-8 amount of consideration established by that offer or subscription
184-9 without regard to the provisions of Sections 7.002-7.006.
184-10 (c) An owner may be required to make a capital contribution
184-11 to a domestic entity if required by contract, other provisions of
184-12 this code, or the governing documents of the domestic entity
184-13 without regard to the provisions of Sections 7.002-7.006.
184-14 Sec. 7.008. PLEDGEES AND TRUST ADMINISTRATORS. (a) A
184-15 pledgee or other holder of an interest in the domestic entity or
184-16 its property as collateral is not personally liable as an owner or
184-17 member of the interest.
184-18 (b) An executor, administrator, conservator, guardian,
184-19 trustee, assignee for the benefit of creditors, or receiver is not
184-20 personally liable as a member of the domestic entity or as an owner
184-21 of the interest.
184-22 (c) The property administered by a pledgee, trustee,
184-23 executor, administrator, guardian, trustee, assignee for the
184-24 benefit of creditors, or receiver may be subject to claims against
184-25 an owner or subscriber of an ownership interest.
184-26 Sec. 7.009. ASSERTIONS OF CLAIMS. (a) An owner, member, or
184-27 managerial official of a domestic entity may assert a claim against
185-1 the domestic entity.
185-2 (b) A domestic entity may assert a claim against an owner,
185-3 member, or managerial official.
185-4 Sec. 7.010. CLAIM NOT ABATED BY CHANGE IN OWNERSHIP,
185-5 MEMBERSHIP, OR MANAGEMENT. A claim for relief against a domestic
185-6 entity does not abate solely because of a change in:
185-7 (1) the owners, members, or managerial officials of
185-8 the domestic entity; or
185-9 (2) the persons authorized to manage the domestic
185-10 entity.
185-11 Sec. 7.011. EFFECT OF JUDGMENT OR ORDER AGAINST DOMESTIC
185-12 ENTITY. Unless otherwise provided by the judgment or order, a
185-13 judgment or order of a court or other governmental entity against a
185-14 domestic entity is not a judgment or order against:
185-15 (1) an owner, member, or managerial official of the
185-16 domestic entity; or
185-17 (2) a person authorized to manage the domestic entity.
185-18 Sec. 7.012. LIMITATION OF LIABILITY OF GOVERNING PERSON. (a)
185-19 This section applies to:
185-20 (1) a domestic entity other than a partnership or
185-21 limited liability company;
185-22 (2) an entity, association, or other organization
185-23 incorporated or organized under another law of this state; and
185-24 (3) to the extent permitted by federal law, a
185-25 federally chartered bank, savings and loan association, or credit
185-26 union.
185-27 (b) The certificate of formation of an entity to which this
186-1 section applies may provide that a governing person of the entity
186-2 is not liable, or is liable only to the extent provided by the
186-3 certificate of formation, to the entity or its owners or members
186-4 for monetary damages for an act or omission by the person in the
186-5 person's capacity as a governing person.
186-6 (c) Subsection (b) does not authorize the elimination or
186-7 limitation of the liability of a governing person to the extent the
186-8 person is found liable under applicable law for:
186-9 (1) a breach of the person's duty of loyalty, if any,
186-10 to the entity or its owners or members;
186-11 (2) an act or omission not in good faith that:
186-12 (A) constitutes a breach of duty of the person
186-13 to the entity; or
186-14 (B) involves intentional misconduct or a knowing
186-15 violation of law;
186-16 (3) a transaction from which the person received an
186-17 improper benefit, regardless of whether the benefit resulted from
186-18 an action taken within the scope of the person's duties; or
186-19 (4) an act or omission for which the liability of a
186-20 governing person is expressly provided by an applicable statute.
186-21 Sec. 7.013. MODIFICATION OF DUTIES IN PARTNERSHIPS AND
186-22 LIMITED LIABILITY COMPANIES. The governing documents of a
186-23 partnership or limited liability company may modify the duties of a
186-24 managerial official, owner, or other person to the partnership or
186-25 limited liability company to the extent permitted in Sections
186-26 152.002 and 101.401.
186-27 CHAPTER 8. INDEMNIFICATION AND INSURANCE
187-1 SUBCHAPTER A. GENERAL PROVISIONS
187-2 Sec. 8.001. DEFINITIONS. In this chapter:
187-3 (1) "Delegate" means a person who is serving or who
187-4 has served as a representative of an enterprise at the request of
187-5 that enterprise at another enterprise. A person is a delegate to
187-6 an employee benefit plan if the performance of the person's
187-7 official duties to the enterprise also imposes duties on or
187-8 otherwise involves service by the person to the plan or
187-9 participants in or beneficiaries of the plan.
187-10 (2) "Enterprise" means a domestic entity or an
187-11 organization subject to this chapter, including a predecessor
187-12 domestic entity or organization.
187-13 (3) "Expenses" includes:
187-14 (A) court costs, a judgment, a penalty, a
187-15 settlement, a fine, and an excise or similar tax, including an
187-16 excise tax assessed against the person with respect to an employee
187-17 benefit plan; and
187-18 (B) reasonable attorney's fees.
187-19 (4) "Former governing person" means a person who was a
187-20 governing person of an enterprise.
187-21 (5) "Judgment" includes an arbitration award.
187-22 (6) "Official capacity" means:
187-23 (A) with respect to a governing person, the
187-24 office of the governing person in the enterprise or the exercise of
187-25 authority by or on behalf of the governing person under this code
187-26 or the governing documents of the enterprise; and
187-27 (B) with respect to a person other than a
188-1 governing person, the elective or appointive office, if any, in the
188-2 enterprise held by the person or the relationship undertaken by the
188-3 person on behalf of the enterprise.
188-4 (7) "Predecessor enterprise" means a sole
188-5 proprietorship or organization that is a predecessor to an
188-6 enterprise in:
188-7 (A) a merger, conversion, consolidation, or
188-8 other transaction in which the liabilities of the predecessor
188-9 enterprise are transferred or allocated to the enterprise by
188-10 operation of law; or
188-11 (B) any other transaction in which the
188-12 enterprise assumes the liabilities of the predecessor enterprise
188-13 and the liabilities that are the subject matter of this chapter are
188-14 not specifically excluded.
188-15 (8) "Proceeding" means:
188-16 (A) a threatened, pending, or completed action
188-17 or other proceeding, whether civil, criminal, administrative,
188-18 arbitrative, or investigative;
188-19 (B) an appeal of an action or proceeding
188-20 described by Paragraph (A); and
188-21 (C) an inquiry or investigation that could lead
188-22 to an action or proceeding described by Paragraph (A).
188-23 (9) "Representative" means a person serving as a
188-24 partner, director, officer, venturer, proprietor, trustee,
188-25 employee, or agent of an enterprise or serving a similar function
188-26 for an enterprise.
188-27 (10) "Respondent" means a person named as a respondent
189-1 or defendant in a proceeding.
189-2 Sec. 8.002. APPLICATION OF CHAPTER. (a) Except as provided
189-3 by Subsection (b), this chapter does not apply to a:
189-4 (1) general partnership; or
189-5 (2) limited liability company.
189-6 (b) The governing documents of a general partnership or
189-7 limited liability company may adopt provisions of this chapter or
189-8 may contain enforceable provisions relating to:
189-9 (1) indemnification;
189-10 (2) advancement of expenses; or
189-11 (3) insurance or another arrangement to indemnify or
189-12 hold harmless a governing person.
189-13 (Sections 8.003-8.050 reserved for expansion)
189-14 SUBCHAPTER B. MANDATORY AND COURT-ORDERED INDEMNIFICATION
189-15 Sec. 8.051. MANDATORY INDEMNIFICATION. (a) An enterprise
189-16 shall indemnify a governing person or former governing person
189-17 against reasonable expenses actually incurred by the person in
189-18 connection with a proceeding in which the person is a respondent
189-19 because the person is or was a governing person if the person is
189-20 wholly successful, on the merits or otherwise, in the defense of
189-21 the proceeding.
189-22 (b) A court that determines, in a suit for indemnification,
189-23 that a governing person is entitled to indemnification under this
189-24 section shall order indemnification and award to the person the
189-25 expenses incurred in securing the indemnification.
189-26 Sec. 8.052. COURT-ORDERED INDEMNIFICATION. (a) On
189-27 application of a governing person, former governing person, or
190-1 delegate and after notice is provided as required by the court, a
190-2 court may order an enterprise to indemnify the person to the extent
190-3 the court determines that the person is fairly and reasonably
190-4 entitled to indemnification in view of all the relevant
190-5 circumstances.
190-6 (b) This section applies without regard to whether the
190-7 governing person, former governing person, or delegate applying to
190-8 the court satisfies the requirements of Section 8.101 or has been
190-9 found liable:
190-10 (1) to the enterprise; or
190-11 (2) because the person improperly received a personal
190-12 benefit, without regard to whether the benefit resulted from an
190-13 action taken in the person's official capacity.
190-14 (c) The indemnification ordered by the court under this
190-15 section is limited to reasonable expenses if the governing person,
190-16 former governing person, or delegate is found liable:
190-17 (1) to the enterprise; or
190-18 (2) because the person improperly received a personal
190-19 benefit, without regard to whether the benefit resulted from an
190-20 action taken in the person's official capacity.
190-21 Sec. 8.053. LIMITATIONS IN GOVERNING DOCUMENTS. (a) The
190-22 certificate of formation of an enterprise may restrict the
190-23 circumstances under which the enterprise must or may indemnify a
190-24 person under this subchapter.
190-25 (b) The written partnership agreement of a limited
190-26 partnership may restrict the circumstances in the same manner as
190-27 the certificate of formation under Subsection (a).
191-1 (Sections 8.054-8.100 reserved for expansion)
191-2 SUBCHAPTER C. PERMISSIVE INDEMNIFICATION AND
191-3 ADVANCEMENT OF EXPENSES
191-4 Sec. 8.101. PERMISSIVE INDEMNIFICATION. (a) An enterprise
191-5 may indemnify a governing person, former governing person, or
191-6 delegate who was, is, or is threatened to be made a respondent in a
191-7 proceeding to the extent permitted by Section 8.102 if it is
191-8 determined in accordance with Section 8.103 that:
191-9 (1) the person:
191-10 (A) acted in good faith;
191-11 (B) reasonably believed:
191-12 (i) in the case of conduct in the person's
191-13 official capacity, that the person's conduct was in the
191-14 enterprise's best interests; and
191-15 (ii) in any other case, that the person's
191-16 conduct was not opposed to the enterprise's best interests; and
191-17 (C) in the case of a criminal proceeding, did
191-18 not have a reasonable cause to believe the person's conduct was
191-19 unlawful;
191-20 (2) with respect to expenses, the amount of expenses
191-21 other than a judgment is reasonable; and
191-22 (3) indemnification should be paid.
191-23 (b) Action taken or omitted by a governing person or
191-24 delegate with respect to an employee benefit plan in the
191-25 performance of the person's duties for a purpose reasonably
191-26 believed by the person to be in the interest of the participants
191-27 and beneficiaries of the plan is for a purpose that is not opposed
192-1 to the best interests of the enterprise.
192-2 (c) Action taken or omitted by a delegate to another
192-3 enterprise for a purpose reasonably believed by the delegate to be
192-4 in the interest of the other enterprise or its owners or members is
192-5 for a purpose that is not opposed to the best interests of the
192-6 enterprise.
192-7 (d) A person does not fail to meet the standard under
192-8 Subsection (a)(1) solely because of the termination of a proceeding
192-9 by:
192-10 (1) judgment;
192-11 (2) order;
192-12 (3) settlement;
192-13 (4) conviction; or
192-14 (5) a plea of nolo contendere or its equivalent.
192-15 Sec. 8.102. GENERAL SCOPE OF PERMISSIVE INDEMNIFICATION. (a)
192-16 Except as provided by Subsection (d) and subject to Subsection (b),
192-17 an enterprise may indemnify a governing person, former governing
192-18 person, or delegate against:
192-19 (1) a judgment; and
192-20 (2) expenses, other than a judgment, that are
192-21 reasonable and actually incurred by the person in connection with a
192-22 proceeding.
192-23 (b) Indemnification under this subchapter of a person who is
192-24 found liable to the enterprise or is found liable because the
192-25 person improperly received a personal benefit:
192-26 (1) is limited to reasonable expenses actually
192-27 incurred by the person in connection with the proceeding;
193-1 (2) does not include a judgment, a penalty, a fine,
193-2 and an excise or similar tax, including an excise tax assessed
193-3 against the person with respect to an employee benefit plan; and
193-4 (3) may not be made in relation to a proceeding in
193-5 which the person has been found liable for:
193-6 (A) wilful or intentional misconduct in the
193-7 performance of the person's duty to the enterprise;
193-8 (B) breach of the person's duty of loyalty owed
193-9 to the enterprise; or
193-10 (C) an act or omission not committed in good
193-11 faith that constitutes a breach of a duty owed by the person to the
193-12 enterprise.
193-13 (c) A governing person, former governing person, or delegate
193-14 is considered to have been found liable in relation to a claim,
193-15 issue, or matter only if the liability is established by an order,
193-16 including a judgment or decree of a court, and all appeals of the
193-17 order are exhausted or foreclosed by law.
193-18 (d) Notwithstanding any other provision of this chapter, an
193-19 enterprise may not indemnify or advance expenses to a person if the
193-20 indemnification or advancement conflicts with a restriction in the
193-21 enterprise's governing documents.
193-22 Sec. 8.103. MANNER FOR DETERMINING PERMISSIVE
193-23 INDEMNIFICATION. (a) Except as provided by Subsections (b) and
193-24 (c), the determinations required under Section 8.101(a) must be
193-25 made by:
193-26 (1) a majority vote of a quorum composed of the
193-27 governing persons who at the time of the vote are disinterested and
194-1 independent;
194-2 (2) if a quorum described by Subdivision (1) cannot be
194-3 obtained, a majority vote of a committee of the governing authority
194-4 of the enterprise designated to act in the matter by a majority
194-5 vote of the governing persons and composed of at least one
194-6 governing person who at the time of the vote is disinterested and
194-7 independent;
194-8 (3) special legal counsel selected by the governing
194-9 authority of the enterprise, or selected by a committee of the
194-10 board of directors, by vote in accordance with Subdivision (1) or
194-11 (2) or, if a quorum described by Subdivision (1) cannot be obtained
194-12 and a committee described by Subdivision (2) cannot be established,
194-13 by a majority vote of the governing persons of the enterprise;
194-14 (4) the owners or members of the enterprise in a vote
194-15 that excludes the ownership or membership interests held by each
194-16 governing person who is not disinterested and independent; or
194-17 (5) a unanimous vote of the owners or members of the
194-18 enterprise.
194-19 (b) If special legal counsel determines under Subsection
194-20 (a)(3) that a person meets the standard under Section 8.101(a)(1),
194-21 the special legal counsel shall determine whether the amount of
194-22 expenses other than a judgment is reasonable under Section
194-23 8.101(a)(2) but may not determine whether indemnification should be
194-24 paid under Section 8.101(a)(3). The determination whether
194-25 indemnification should be paid must be made in a manner specified
194-26 by Subsection (a)(1), (2), (4), or (5).
194-27 (c) A provision contained in the governing documents of the
195-1 enterprise, a resolution of the owners, members, or governing
195-2 authority, or an agreement that requires the indemnification of a
195-3 person who meets the standard under Section 8.101(a)(1) constitutes
195-4 a determination under Section 8.101(a)(3) that indemnification
195-5 should be paid even though the provision may not have been adopted
195-6 or authorized in the same manner as the determinations required
195-7 under Section 8.101(a). The determinations required under Sections
195-8 8.101(a)(1) and (2) must be made in a manner provided by Subsection
195-9 (a).
195-10 Sec. 8.104. ADVANCEMENT OF EXPENSES. (a) An enterprise may
195-11 pay or reimburse reasonable expenses incurred by a governing
195-12 person, former governing person, or delegate who was, is, or is
195-13 threatened to be made a respondent in a proceeding in advance of
195-14 the final disposition of the proceeding without making the
195-15 determinations required under Section 8.101(a) after the enterprise
195-16 receives:
195-17 (1) a written affirmation by the person of the
195-18 person's good faith belief that the person has met the standard of
195-19 conduct necessary for indemnification under this chapter; and
195-20 (2) a written undertaking by or on behalf of the
195-21 person to repay the amount paid or reimbursed if the final
195-22 determination is that the person has not met that standard or that
195-23 indemnification is prohibited by Section 8.102.
195-24 (b) A provision in the governing documents of the
195-25 enterprise, a resolution of the owners, members, or governing
195-26 authority, or an agreement that requires the payment or
195-27 reimbursement permitted under this section authorizes that payment
196-1 or reimbursement after the enterprise receives an affirmation and
196-2 undertaking described by Subsection (a).
196-3 (c) The written undertaking required by Subsection (a)(2)
196-4 must be an unlimited general obligation of the person but need not
196-5 be secured and may be accepted by the enterprise without regard to
196-6 the person's ability to make repayment.
196-7 (d) An enterprise may not advance expenses to or reimburse
196-8 expenses of a person if the advancement or reimbursement conflicts
196-9 with a restriction in the enterprise's governing documents.
196-10 Sec. 8.105. INDEMNIFICATION OF AND ADVANCEMENT OF EXPENSES
196-11 TO PERSONS OTHER THAN GOVERNING PERSONS. (a) Notwithstanding any
196-12 other provision of this chapter but subject to Subsection (d) and
196-13 to the extent consistent with other law, an enterprise may
196-14 indemnify and advance expenses to a person who is not a governing
196-15 person, including an officer, employee, agent, or delegate, as
196-16 provided by:
196-17 (1) the enterprise's governing documents;
196-18 (2) general or specific action of the enterprise's
196-19 governing authority;
196-20 (3) resolution of the enterprise's owners or members;
196-21 (4) contract; or
196-22 (5) common law.
196-23 (b) An enterprise shall indemnify and advance expenses to an
196-24 officer to the same extent that indemnification or advancement of
196-25 expenses is required under this chapter for a governing person.
196-26 (c) A person described by Subsection (a) may seek
196-27 indemnification or advancement of expenses from an enterprise to
197-1 the same extent that a governing person may seek indemnification or
197-2 advancement of expenses under this chapter.
197-3 (d) The certificate of formation of an enterprise may
197-4 restrict the circumstances under which the enterprise must or may
197-5 indemnify a person under this section. The written partnership
197-6 agreement of a limited partnership may restrict the circumstances
197-7 in the same manner as the certificate of formation of the limited
197-8 partnership.
197-9 Sec. 8.106. PERMISSIVE INDEMNIFICATION OF AND REIMBURSEMENT
197-10 OF EXPENSES TO WITNESSES. Notwithstanding any other provision of
197-11 this chapter, an enterprise may pay or reimburse reasonable
197-12 expenses incurred by a governing person, officer, employee, agent,
197-13 delegate, or other person in connection with that person's
197-14 appearance as a witness or other participation in a proceeding at a
197-15 time when the person is not a respondent in the proceeding.
197-16 (Sections 8.107-8.150 reserved for expansion)
197-17 SUBCHAPTER D. LIABILITY INSURANCE;
197-18 REPORTING REQUIREMENTS
197-19 Sec. 8.151. INSURANCE AND OTHER ARRANGEMENTS. (a)
197-20 Notwithstanding any other provision of this chapter, an enterprise
197-21 may purchase or procure or establish and maintain insurance or
197-22 another arrangement to indemnify or hold harmless an existing or
197-23 former governing person, delegate, officer, employee, or agent
197-24 against any liability:
197-25 (1) asserted against and incurred by the person in
197-26 that capacity; or
197-27 (2) arising out of the person's status in that
198-1 capacity.
198-2 (b) The insurance or other arrangement established under
198-3 Subsection (a) may insure or indemnify against the liability
198-4 described by Subsection (a) without regard to whether the
198-5 enterprise otherwise would have had the power to indemnify the
198-6 person against that liability under this chapter.
198-7 (c) Insurance or another arrangement that involves
198-8 self-insurance or an agreement to indemnify made with the
198-9 enterprise or a person that is not regularly engaged in the
198-10 business of providing insurance coverage may provide for payment of
198-11 a liability with respect to which the enterprise does not otherwise
198-12 have the power to provide indemnification only if the insurance or
198-13 arrangement is approved by the owners or members of the enterprise.
198-14 (d) For the benefit of persons to be indemnified by the
198-15 enterprise, an enterprise may, in addition to purchasing or
198-16 procuring or establishing and maintaining insurance or another
198-17 arrangement:
198-18 (1) create a trust fund;
198-19 (2) establish any form of self-insurance, including a
198-20 contract to indemnify;
198-21 (3) secure the enterprise's indemnity obligation by
198-22 grant of a security interest or other lien on the assets of the
198-23 enterprise; or
198-24 (4) establish a letter of credit, guaranty, or surety
198-25 arrangement.
198-26 (e) Insurance or another arrangement established under this
198-27 section may be purchased or procured or established and maintained:
199-1 (1) within the enterprise; or
199-2 (2) with any insurer or other person considered
199-3 appropriate by the governing authority, regardless of whether all
199-4 or part of the stock, securities, or other ownership interest in
199-5 the insurer or other person is owned in whole or in part by the
199-6 enterprise.
199-7 (f) The governing authority's decision as to the terms of
199-8 the insurance or other arrangement and the selection of the insurer
199-9 or other person participating in an arrangement is conclusive. The
199-10 insurance or arrangement is not voidable and does not subject the
199-11 governing persons approving the insurance or arrangement to
199-12 liability, on any ground, regardless of whether the governing
199-13 persons participating in approving the insurance or other
199-14 arrangement are beneficiaries of the insurance or arrangement.
199-15 This subsection does not apply in case of actual fraud.
199-16 Sec. 8.152. REPORTS OF INDEMNIFICATION AND ADVANCES. (a) An
199-17 enterprise shall report in writing to the owners or members of the
199-18 enterprise an indemnification of or advance of expenses to a
199-19 governing person.
199-20 (b) Subject to Subsection (c), the report must be made with
199-21 or before the notice or waiver of notice of the next meeting of the
199-22 owners or members of the enterprise and before the next submission
199-23 to the owners or members of a consent to action without a meeting.
199-24 (c) The report must be made not later than the first
199-25 anniversary of the date of the indemnification or advance.
199-26 CHAPTER 9. FOREIGN ENTITIES
199-27 SUBCHAPTER A. REGISTRATION
200-1 Sec. 9.001. FOREIGN ENTITIES REQUIRED TO REGISTER. (a) To
200-2 transact business in this state, a foreign entity must register
200-3 under this chapter if the entity:
200-4 (1) is a foreign corporation, foreign limited
200-5 partnership, foreign limited liability company, foreign business
200-6 trust, foreign real estate investment trust, foreign cooperative,
200-7 foreign public or private limited company, or another foreign
200-8 entity, the formation of which, if formed in this state, would
200-9 require the filing under Chapter 3 of a certificate of formation;
200-10 or
200-11 (2) affords limited liability under the law of its
200-12 jurisdiction of formation for any owner or member.
200-13 (b) A foreign entity described by Subsection (a) must
200-14 maintain the entity's registration while transacting business in
200-15 this state.
200-16 Sec. 9.002. FOREIGN ENTITIES NOT REQUIRED TO REGISTER. (a)
200-17 A foreign entity not described by Section 9.001(a) may transact
200-18 business in this state without registering under this chapter.
200-19 (b) Subsection (a) does not relieve a foreign entity from
200-20 the duty to comply with applicable requirements under other law to
200-21 file or register.
200-22 (c) A foreign entity is not required to register under this
200-23 chapter if other state law authorizes the entity to transact
200-24 business in this state.
200-25 (d) A foreign unincorporated nonprofit association is not
200-26 required to register under this chapter.
200-27 Sec. 9.003. PERMISSIVE REGISTRATION. A foreign entity that
201-1 is eligible under other law of this state to register to transact
201-2 business in this state, but that is not registered under that law,
201-3 may register under this chapter unless that registration is
201-4 prohibited by the other law. The registration under this chapter
201-5 confers only the authority provided by this chapter.
201-6 Sec. 9.004. REGISTRATION PROCEDURE. (a) A foreign filing
201-7 entity registers by filing an application for registration as
201-8 provided by Chapter 4.
201-9 (b) The application must state:
201-10 (1) the entity's name and, if that name would not
201-11 comply with Chapter 5, a name that complies with Chapter 5 under
201-12 which the entity will transact business in this state;
201-13 (2) the entity's type;
201-14 (3) the entity's jurisdiction of formation;
201-15 (4) the date of the entity's formation;
201-16 (5) that the entity exists as a valid foreign filing
201-17 entity of the stated type under the laws of the entity's
201-18 jurisdiction of formation;
201-19 (6) for a foreign entity other than a foreign limited
201-20 partnership:
201-21 (A) each business or activity that the entity
201-22 proposes to pursue in this state, which may be stated to be any
201-23 lawful business or activity under the law of this state; and
201-24 (B) that the entity is authorized to pursue the
201-25 same business or activity under the laws of the entity's
201-26 jurisdiction of formation;
201-27 (7) the date the foreign entity began or will begin to
202-1 transact business in this state;
202-2 (8) the address of the principal office of the foreign
202-3 filing entity;
202-4 (9) the address of the initial registered office and
202-5 the name and the address of the initial registered agent for
202-6 service of process that Chapter 5 requires to be maintained;
202-7 (10) the name and address of each of the entity's
202-8 governing persons; and
202-9 (11) that the secretary of state is appointed the
202-10 agent of the foreign filing entity for service of process under the
202-11 circumstances provided by Section 5.251.
202-12 (c) A foreign filing entity may register regardless of any
202-13 differences between the law of the entity's jurisdiction of
202-14 formation and of this state applicable to the governing of the
202-15 internal affairs or to the liability of an owner, member, or
202-16 managerial official.
202-17 Sec. 9.005. SUPPLEMENTAL INFORMATION REQUIRED IN APPLICATION
202-18 FOR REGISTRATION OF FOREIGN FOR-PROFIT CORPORATION. In addition to
202-19 the information required by Section 9.004, a foreign for-profit
202-20 corporation's application for registration must state the:
202-21 (1) aggregate number of shares the for-profit
202-22 corporation has authority to issue, itemized by classes, par value
202-23 of shares, shares without par value, and any series in a class;
202-24 (2) aggregate number of shares issued by the
202-25 for-profit corporation, itemized by classes, par value of shares,
202-26 shares without par value, and any series in a class; and
202-27 (3) amount of the stated capital of the for-profit
203-1 corporation.
203-2 Sec. 9.006. SUPPLEMENTAL INFORMATION REQUIRED IN APPLICATION
203-3 FOR REGISTRATION OF FOREIGN NONPROFIT CORPORATION. In addition to
203-4 the information required by Section 9.004, a foreign nonprofit
203-5 corporation's application for registration must state:
203-6 (1) the names and addresses of the nonprofit
203-7 corporation's directors and officers;
203-8 (2) whether or not the nonprofit corporation has
203-9 members; and
203-10 (3) any additional information as necessary or
203-11 appropriate to enable the secretary of state to determine whether
203-12 the nonprofit corporation is entitled to register to conduct
203-13 affairs in this state.
203-14 Sec. 9.007. SUPPLEMENTAL INFORMATION REQUIRED IN APPLICATION
203-15 FOR REGISTRATION OF FOREIGN LIMITED LIABILITY PARTNERSHIP. In
203-16 addition to the information required by Section 9.004, a foreign
203-17 limited liability partnership's application for registration must
203-18 state:
203-19 (1) the federal tax identification number of the
203-20 partnership;
203-21 (2) the date of initial registration as a limited
203-22 liability partnership under the laws of the state of formation;
203-23 (3) the number of partners at the date of the
203-24 statement; and
203-25 (4) that the secretary of state is appointed the agent
203-26 of the partnership for service of process under the circumstances
203-27 set forth by Section 152.904.
204-1 Sec. 9.008. EFFECT OF REGISTRATION. (a) The registration of
204-2 a foreign entity is effective when the application filed under
204-3 Chapter 4 takes effect. The registration remains in effect until
204-4 the registration terminates, is withdrawn, or is revoked.
204-5 (b) Except in a proceeding to revoke the registration, the
204-6 secretary of state's issuance of an acknowledgment that the entity
204-7 has filed an application is conclusive evidence of the authority of
204-8 the foreign filing entity to transact business in this state under
204-9 the entity's name or under another name stated in the application,
204-10 in accordance with Section 9.004(b)(1).
204-11 Sec. 9.009. AMENDMENTS TO REGISTRATION. (a) A foreign
204-12 filing entity must amend its registration to change its name or the
204-13 business or activity stated in its application for registration if
204-14 the name or business or activity has changed.
204-15 (b) A foreign filing entity may amend its application for
204-16 registration by filing an application for amendment of registration
204-17 in the manner required by Chapter 4.
204-18 (c) The application for amendment must be filed on or before
204-19 the 91st day following the date of the change.
204-20 Sec. 9.010. NAME CHANGE OF FOREIGN ENTITY. If a foreign
204-21 entity authorized to conduct affairs in this state changes its name
204-22 to a name that would cause the entity to be denied an application
204-23 for registration under this subchapter, the entity's registration
204-24 must be suspended. An entity the registration of which has been
204-25 suspended under this section may conduct affairs in this state only
204-26 after the entity:
204-27 (1) changes its name to a name that is available to it
205-1 under the laws of this state; or
205-2 (2) otherwise complies with this chapter.
205-3 Sec. 9.011. VOLUNTARY WITHDRAWAL OF REGISTRATION. (a) A
205-4 foreign filing entity registered in this state may withdraw the
205-5 entity's registration at any time by filing a certificate of
205-6 withdrawal in the manner required by Chapter 4.
205-7 (b) A certificate of withdrawal must state:
205-8 (1) the name of the foreign filing entity as
205-9 registered in this state;
205-10 (2) the type of entity and the entity's jurisdiction
205-11 of formation;
205-12 (3) the address of the principal office of the foreign
205-13 filing entity;
205-14 (4) that the foreign filing entity no longer is
205-15 transacting business in this state;
205-16 (5) that the foreign filing entity:
205-17 (A) revokes the authority of the entity's
205-18 registered agent in this state to accept service of process; and
205-19 (B) consents that service of process in any
205-20 action, suit, or proceeding stating a cause of action arising in
205-21 this state during the time the foreign filing entity was
205-22 authorized to transact business in this state may be made on the
205-23 foreign filing entity by serving the secretary of state;
205-24 (6) an address to which the secretary of state may
205-25 mail a copy of any process against the foreign filing entity served
205-26 on the secretary of state; and
205-27 (7) that any money due or accrued to the state has
206-1 been paid or that adequate provision has been made for the payment
206-2 of that money.
206-3 (c) A certificate from the comptroller that all franchise
206-4 taxes have been paid must be filed with the certificate of
206-5 withdrawal in accordance with Chapter 4 if the foreign filing
206-6 entity is a foreign professional corporation, foreign for-profit
206-7 corporation, or foreign limited liability company.
206-8 (d) If the existence or separate existence of a foreign
206-9 filing entity registered in this state terminates because of
206-10 dissolution, termination, merger, conversion, or other
206-11 circumstances, a certificate by an authorized governmental official
206-12 of the entity's jurisdiction of formation that evidences the
206-13 termination shall be filed with the secretary of state.
206-14 (e) The registration of the foreign filing entity in this
206-15 state terminates when a certificate of withdrawal under this
206-16 section or a certificate evidencing termination under Subsection
206-17 (d) is filed.
206-18 (f) If the address stated in a certificate of withdrawal
206-19 under Subsection (b)(6) changes, the foreign filing entity must
206-20 promptly amend the certificate of withdrawal to update the address.
206-21 (g) A certificate of withdrawal does not terminate the
206-22 authority of the secretary of state to accept service of process on
206-23 the foreign filing entity with respect to a cause of action arising
206-24 out of business or activity in this state.
206-25 (Sections 9.012-9.050 reserved for expansion)
206-26 SUBCHAPTER B. FAILURE TO REGISTER
206-27 Sec. 9.051. TRANSACTING BUSINESS OR MAINTAINING COURT
207-1 PROCEEDING WITHOUT REGISTRATION. (a) On application by the
207-2 attorney general, a court may enjoin a foreign filing entity or the
207-3 entity's agent from transacting business in this state if:
207-4 (1) the entity is not registered in this state; or
207-5 (2) the entity's registration is obtained on the basis
207-6 of a false or misleading representation.
207-7 (b) A foreign filing entity or the entity's legal
207-8 representative may not maintain an action, suit, or proceeding in a
207-9 court of this state, brought either directly by the entity or in
207-10 the form of a derivative action in the entity's name, on a cause of
207-11 action that arises out of the transaction of business in this state
207-12 unless the foreign filing entity is registered in accordance with
207-13 this chapter. This subsection does not affect the rights of an
207-14 assignee of the foreign filing entity as:
207-15 (1) the holder in due course of a negotiable
207-16 instrument; or
207-17 (2) the bona fide purchaser for value of a warehouse
207-18 receipt, security, or other instrument made negotiable by law.
207-19 (c) The failure of a foreign filing entity to register does
207-20 not:
207-21 (1) affect the validity of any contract or act of the
207-22 foreign filing entity;
207-23 (2) prevent the entity from defending an action, suit,
207-24 or proceeding in a court in this state; or
207-25 (3) except as provided by Subsection (d), cause any
207-26 owner, member, or managerial official of the foreign filing entity
207-27 to become liable for the debts, obligations, or liabilities of the
208-1 foreign filing entity.
208-2 (d) Subsection (c)(3) does not apply to a general partner of
208-3 a foreign limited partnership.
208-4 Sec. 9.052. CIVIL PENALTY. (a) A foreign filing entity that
208-5 transacts business in this state and is not registered under this
208-6 chapter is liable to this state for a civil penalty in an amount
208-7 equal to all:
208-8 (1) fees and taxes that would have been imposed by law
208-9 on the entity had the entity registered when first required and
208-10 filed all reports required by law; and
208-11 (2) penalties and interest imposed by law for failure
208-12 to pay those fees and taxes.
208-13 (b) The attorney general may bring suit to recover amounts
208-14 due to this state under this section.
208-15 Sec. 9.053. VENUE. In addition to any other venue authorized
208-16 by law, a suit under Section 9.051 or 9.052 may be brought in
208-17 Travis County.
208-18 Sec. 9.054. LATE FILING FEE. The secretary of state may
208-19 collect from a foreign filing entity a late filing fee equal to the
208-20 registration fee for the entity for each year of delinquency if the
208-21 entity has transacted business in this state for more than 90 days.
208-22 The secretary may condition the effectiveness of a registration on
208-23 the payment of the late filing fee.
208-24 Sec. 9.055. REQUIREMENTS OF OTHER LAW. This chapter does not
208-25 excuse a foreign entity from complying with duties imposed under
208-26 other law, including other chapters of this code, relating to
208-27 filing or registration requirements.
209-1 (Sections 9.056-9.100 reserved for expansion)
209-2 SUBCHAPTER C. REVOCATION OF REGISTRATION BY SECRETARY OF STATE
209-3 Sec. 9.101. REVOCATION OF REGISTRATION BY SECRETARY OF
209-4 STATE. (a) If it appears to the secretary of state that, with
209-5 respect to a foreign filing entity, a circumstance described by
209-6 Subsection (b) exists, the secretary of state may notify the entity
209-7 of the circumstance by mail or certified mail addressed to the
209-8 foreign filing entity at the entity's registered office or
209-9 principal place of business as shown on the records of the
209-10 secretary of state.
209-11 (b) The secretary of state may revoke a foreign filing
209-12 entity's registration if the secretary of state finds that the
209-13 entity has failed to, and, before the 91st day after the date
209-14 notice was mailed, has not corrected the entity's failure to:
209-15 (1) file a report within the period required by law or
209-16 to pay a fee or penalty prescribed by law when due and payable;
209-17 (2) maintain a registered agent or registered office
209-18 in this state as required by law;
209-19 (3) amend its registration when required by law; or
209-20 (4) pay a fee required in connection with a filing, or
209-21 payment of the fee was dishonored when presented by the state for
209-22 payment.
209-23 Sec. 9.102. CERTIFICATE OF REVOCATION. (a) If revocation of
209-24 a registration is required, the secretary of state shall:
209-25 (1) file a certificate of revocation; and
209-26 (2) deliver a certificate of revocation by regular or
209-27 certified mail to the foreign filing entity at its registered
210-1 office or principal place of business.
210-2 (b) The certificate of revocation must state:
210-3 (1) that the foreign filing entity's registration has
210-4 been revoked; and
210-5 (2) the date and cause of the revocation.
210-6 (c) Except as otherwise provided by this chapter, the
210-7 revocation of a foreign filing entity's registration under this
210-8 subchapter takes effect on the date the certificate of revocation
210-9 is filed.
210-10 Sec. 9.103. REINSTATEMENT BY SECRETARY OF STATE AFTER
210-11 REVOCATION. (a) The secretary of state shall reinstate the
210-12 registration of an entity that has been revoked under this
210-13 subchapter if the entity files an application for reinstatement in
210-14 accordance with Section 9.104, accompanied by each amendment to the
210-15 entity's registration that is required by intervening events,
210-16 including circumstances requiring an amendment to the name of the
210-17 entity or the name under which the entity is registered to transact
210-18 business in this state as described in Section 9.105, and:
210-19 (1) the entity has corrected the circumstances that
210-20 led to the revocation and any other circumstances that may exist of
210-21 the types described by Section 9.101(b), including the payment of
210-22 fees, interest, or penalties; or
210-23 (2) the secretary of state finds that the
210-24 circumstances that led to the revocation did not exist at the time
210-25 of revocation.
210-26 (b) If a foreign filing entity's registration is reinstated
210-27 before the third anniversary of the revocation, the entity is
211-1 considered to have been registered or in existence at all times
211-2 during the period of revocation.
211-3 Sec. 9.104. PROCEDURES FOR REINSTATEMENT. (a) A foreign
211-4 filing entity, to have its registration reinstated, must complete
211-5 the requirements of this section not later than the third
211-6 anniversary of the date the revocation of the entity's registration
211-7 took effect.
211-8 (b) The foreign filing entity shall file a certificate of
211-9 reinstatement in accordance with Chapter 4.
211-10 (c) The certificate of reinstatement must contain:
211-11 (1) the name of the foreign filing entity;
211-12 (2) the filing number assigned by the filing officer
211-13 to the entity;
211-14 (3) the effective date of the revocation of the
211-15 entity's registration; and
211-16 (4) the name of the entity's registered agent and the
211-17 address of the entity's registered office.
211-18 (d) A letter of eligibility from the comptroller stating
211-19 that the foreign filing entity has satisfied all franchise tax
211-20 liabilities and its registration may be reinstated must be filed
211-21 with the certificate of reinstatement if the foreign filing entity
211-22 is a professional corporation, for-profit corporation, or limited
211-23 liability company.
211-24 (e) The registration of a foreign filing entity may not be
211-25 reinstated under this section if the termination occurred as a
211-26 result of:
211-27 (1) an order of a court; or
212-1 (2) forfeiture under the Tax Code.
212-2 Sec. 9.105. USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED
212-3 NAME. If the secretary of state determines that a foreign filing
212-4 entity's name or the name under which it is registered to transact
212-5 business in this state is the same as, deceptively similar to, or
212-6 similar to a name of a filing entity or foreign filing entity as
212-7 provided by or reserved or registered under this code, the
212-8 secretary of state may not accept for filing the certificate of
212-9 reinstatement unless the foreign filing entity amends its
212-10 registration to change its name or obtains consent for the use of
212-11 the similar name.
212-12 Sec. 9.106. REINSTATEMENT OF REGISTRATION FOLLOWING TAX
212-13 FORFEITURE. A foreign filing entity whose registration has been
212-14 revoked under the provisions of the Tax Code must follow the
212-15 procedures in the Tax Code to reinstate its registration.
212-16 (Sections 9.107-9.150 reserved for expansion)
212-17 SUBCHAPTER D. JUDICIAL REVOCATION OF REGISTRATION
212-18 Sec. 9.151. REVOCATION OF REGISTRATION BY COURT ACTION. (a)
212-19 A court may revoke the registration of a foreign filing entity if,
212-20 as a result of an action brought under Section 9.153, the court
212-21 finds that one or more of the following problems exist:
212-22 (1) the entity did not comply with a condition
212-23 precedent to the issuance of the entity's registration or an
212-24 amendment to the registration;
212-25 (2) the entity's registration or any amendment to the
212-26 entity's registration was fraudulently filed;
212-27 (3) a misrepresentation of a material matter was made
213-1 in an application, report, affidavit, or other document the entity
213-2 submitted under this code;
213-3 (4) the entity has continued to transact business
213-4 beyond the scope of the purpose or purposes expressed in the
213-5 entity's registration; or
213-6 (5) public interest requires revocation because:
213-7 (A) the entity has been convicted of a felony or
213-8 a high managerial agent of the entity has been convicted of a
213-9 felony committed in the conduct of the entity's affairs;
213-10 (B) the entity or the high managerial agent has
213-11 engaged in a persistent course of felonious conduct; and
213-12 (C) revocation is necessary to prevent future
213-13 felonious conduct of the same character.
213-14 (b) Sections 9.152-9.157 do not apply to Subsection (a)(5).
213-15 Sec. 9.152. NOTIFICATION OF CAUSE BY SECRETARY OF STATE. (a)
213-16 The secretary of state shall provide to the attorney general:
213-17 (1) the name of a foreign filing entity that has given
213-18 cause under Section 9.151 for revocation of its registration; and
213-19 (2) the facts relating to the cause for revocation.
213-20 (b) When notice is provided under Subsection (a), the
213-21 secretary of state shall send written notice of the circumstances
213-22 to the foreign filing entity at its registered office in this
213-23 state. The notice must state that the secretary of state has given
213-24 notice under Subsection (a) and the grounds for the notification.
213-25 The secretary of state must record the date a notice required by
213-26 this subsection is sent.
213-27 (c) A court shall accept a certificate issued by the
214-1 secretary of state as to the facts relating to the cause for
214-2 judicial revocation of a foreign filing entity's registration and
214-3 the sending of a notice under Subsection (b) as prima facie
214-4 evidence of the facts stated in the certificate and the sending of
214-5 the notice.
214-6 Sec. 9.153. FILING OF ACTION BY ATTORNEY GENERAL. The
214-7 attorney general shall file an action against a foreign filing
214-8 entity in the name of the state seeking the revocation of the
214-9 entity's registration if:
214-10 (1) the entity has not cured the problems for which
214-11 revocation is sought before the 31st day after the date the notice
214-12 under Section 9.152(b) is mailed; and
214-13 (2) the attorney general determines that cause exists
214-14 for judicial revocation of the entity's registration under Section
214-15 9.151.
214-16 Sec. 9.154. CURE BEFORE FINAL JUDGMENT. An action filed by
214-17 the attorney general under Section 9.153 shall be abated if, before
214-18 a district court renders judgment on the action, the foreign filing
214-19 entity:
214-20 (1) cures the problems for which revocation is sought;
214-21 and
214-22 (2) pays the costs of the action.
214-23 Sec. 9.155. JUDGMENT REQUIRING REVOCATION. If a district
214-24 court finds in an action brought under this subchapter that proper
214-25 grounds exist under Section 9.151(a) for revocation of the foreign
214-26 filing entity's registration, the court shall:
214-27 (1) make findings to that effect; and
215-1 (2) subject to Section 9.156, enter a judgment not
215-2 earlier than the fifth day after the date the court makes its
215-3 findings.
215-4 Sec. 9.156. STAY OF JUDGMENT. (a) If, in an action brought
215-5 under this subchapter, a foreign filing entity has proved by a
215-6 preponderance of the evidence and obtained a finding that the
215-7 problems for which the foreign filing entity has been found guilty
215-8 were not wilful or the result of a failure to take reasonable
215-9 precautions, the entity may make a sworn application to the court
215-10 for a stay of entry of the judgment to allow the foreign filing
215-11 entity a reasonable opportunity to cure the problems for which it
215-12 has been found guilty. An application made under this subsection
215-13 must be made not later than the fifth day after the date the court
215-14 makes its findings under Section 9.155.
215-15 (b) After a foreign filing entity has made an application
215-16 under Subsection (a), a court shall stay the entry of the judgment
215-17 if the court is reasonably satisfied after considering the
215-18 application and evidence offered for or against the application
215-19 that the foreign filing entity:
215-20 (1) is able and intends in good faith to cure the
215-21 problems for which it has been found guilty; and
215-22 (2) has not applied for the stay without just cause.
215-23 (c) A court shall stay an entry of judgment under Subsection
215-24 (b) for the period the court determines is reasonably necessary to
215-25 afford the foreign filing entity the opportunity to cure its
215-26 problems if the entity acts with reasonable diligence. The court
215-27 may not stay the entry of the judgment for longer than 60 days
216-1 after the date the court's findings are made.
216-2 (d) The court shall dismiss an action against a foreign
216-3 filing entity that, during the period the action is stayed by the
216-4 court under this section, cures the problems for which revocation
216-5 is sought and pays all costs accrued in the action.
216-6 (e) If a court finds that a foreign filing entity has not
216-7 cured the problems for which revocation is sought within the period
216-8 prescribed by Subsection (c), the court shall enter final judgment
216-9 requiring revocation of the foreign filing entity's registration.
216-10 Sec. 9.157. OPPORTUNITY FOR CURE AFTER AFFIRMATION OF
216-11 FINDINGS BY APPEALS COURT. (a) An appellate court that affirms a
216-12 trial court's findings against a foreign filing entity under this
216-13 subchapter shall remand the case to the trial court with
216-14 instructions to grant the foreign filing entity an opportunity to
216-15 cure the problems for which the entity has been found guilty if:
216-16 (1) the foreign filing entity did not make an
216-17 application to the trial court for stay of the entry of the
216-18 judgment;
216-19 (2) the appellate court is satisfied that the appeal
216-20 was taken in good faith and not for purpose of delay or with no
216-21 sufficient cause;
216-22 (3) the appellate court finds that the problems for
216-23 which the foreign filing entity has been found guilty are capable
216-24 of being cured; and
216-25 (4) the foreign filing entity has prayed for the
216-26 opportunity to cure its problems in the appeal.
216-27 (b) The appellate court shall determine the period, which
217-1 may not be longer than 60 days after the date the case is remanded
217-2 to the trial court, to be afforded to a foreign filing entity to
217-3 enable the foreign filing entity to cure its problems under
217-4 Subsection (a).
217-5 (c) The trial court to which an action against a foreign
217-6 filing entity has been remanded under this section shall dismiss
217-7 the action if, during the period prescribed by the appellate court
217-8 for that conduct, the foreign filing entity cures the problems for
217-9 which revocation is sought and pays all costs accrued in the
217-10 action.
217-11 (d) If a foreign filing entity has not cured the problems
217-12 for which revocation is sought within the period prescribed by the
217-13 appellate court under Subsection (b), the judgment requiring
217-14 revocation shall become final.
217-15 Sec. 9.158. JURISDICTION AND VENUE. (a) The attorney
217-16 general shall bring an action for the revocation of the
217-17 registration of a foreign filing entity under this subchapter in:
217-18 (1) a district court of the county in which the
217-19 registered office or principal place of business of the filing
217-20 entity in this state is located; or
217-21 (2) a district court of Travis County.
217-22 (b) A district court described by Subsection (a) has
217-23 jurisdiction of the action for revocation of the registration of
217-24 the foreign filing entity.
217-25 Sec. 9.159. PROCESS IN STATE ACTION. Citation in an action
217-26 for the involuntary revocation of a foreign filing entity's
217-27 registration under this subchapter shall be issued and served as
218-1 provided by law.
218-2 Sec. 9.160. PUBLICATION OF NOTICE. (a) If process in an
218-3 action under this subchapter is returned not found, the attorney
218-4 general shall publish notice in a newspaper in the county in which
218-5 the registered office of the foreign filing entity in this state is
218-6 located. The notice must contain:
218-7 (1) a statement of the pendency of the action;
218-8 (2) the title of the court;
218-9 (3) the title of the action; and
218-10 (4) the earliest date on which default judgment may be
218-11 entered by the court.
218-12 (b) Notice under this section must be published at least
218-13 once a week for two consecutive weeks beginning at any time after
218-14 the citation has been returned.
218-15 (c) The attorney general may include in one published notice
218-16 the name of each foreign filing entity against which an action for
218-17 involuntary revocation is pending in the same court.
218-18 (d) Not later than the 10th day after the date notice under
218-19 this section is first published, the attorney general shall send a
218-20 copy of the notice to the appropriate foreign filing entity at the
218-21 foreign filing entity's registered office in this state. A
218-22 certificate from the attorney general regarding the sending of the
218-23 notice is prima facie evidence that notice was sent under this
218-24 section.
218-25 (e) Unless a foreign filing entity has been served with
218-26 citation, a default judgment may not be taken against the entity
218-27 before the 31st day after the date the notice is first published.
219-1 Sec. 9.161. FILING OF DECREE OF REVOCATION AGAINST FOREIGN
219-2 FILING ENTITY. (a) The clerk of a court that enters a decree
219-3 revoking the registration of a foreign filing entity shall file a
219-4 certified copy of the decree in accordance with Chapter 4.
219-5 (b) A fee may not be charged for the filing of a decree
219-6 under this section.
219-7 (Sections 9.162-9.200 reserved for expansion)
219-8 SUBCHAPTER E. BUSINESS, RIGHTS, AND OBLIGATIONS
219-9 Sec. 9.201. BUSINESS OF FOREIGN ENTITY. A foreign entity may
219-10 not conduct in this state a business or activity that is not
219-11 permitted by this code to be transacted by the domestic entity to
219-12 which it most closely corresponds, unless other law of this state
219-13 authorizes the entity to conduct the business or activity.
219-14 Sec. 9.202. RIGHTS AND PRIVILEGES. A foreign nonfiling
219-15 entity or a foreign filing entity registered under this chapter
219-16 enjoys the same but no greater rights and privileges as the
219-17 domestic entity to which it most closely corresponds.
219-18 Sec. 9.203. OBLIGATIONS AND LIABILITIES. Subject to this
219-19 code and other laws of this state and except as provided by
219-20 Subchapter C, Chapter 1, in any matter that affects the transaction
219-21 of intrastate business in this state, a foreign entity and each
219-22 member, owner, or managerial official of the entity is subject to
219-23 the same duties, restrictions, penalties, and liabilities imposed
219-24 on a domestic entity to which it most closely corresponds or on a
219-25 member, owner, or managerial official of that domestic entity.
219-26 Sec. 9.204. RIGHT OF FOREIGN FILING ENTITY TO PARTICIPATE IN
219-27 BUSINESS OF CERTAIN DOMESTIC ENTITIES. A vote cast or consent
220-1 provided by a foreign filing entity with respect to its ownership
220-2 or membership interest in a domestic entity of which the foreign
220-3 filing entity is a lawful owner or member, and the foreign filing
220-4 entity's participation in the management and control of the
220-5 business and affairs of the domestic entity to the extent of the
220-6 participation of other owners or members, are not invalidated if
220-7 the foreign filing entity does not register to transact business in
220-8 this state, subject to all law governing a domestic entity,
220-9 including the antitrust law of this state.
220-10 (Sections 9.205-9.250 reserved for expansion)
220-11 SUBCHAPTER F. DETERMINATION OF TRANSACTING BUSINESS IN THIS STATE
220-12 Sec. 9.251. ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS
220-13 IN THIS STATE. For purposes of this chapter, activities that do not
220-14 constitute transaction of business in this state include:
220-15 (1) maintaining or defending an action or suit or an
220-16 administrative or arbitration proceeding, or effecting the
220-17 settlement of:
220-18 (A) such an action, suit, or proceeding; or
220-19 (B) a claim or dispute to which the entity is a
220-20 party;
220-21 (2) holding a meeting of the entity's managerial
220-22 officials, owners, or members or carrying on another activity
220-23 concerning the entity's internal affairs;
220-24 (3) maintaining a bank account;
220-25 (4) maintaining an office or agency for:
220-26 (A) transferring, exchanging, or registering
220-27 securities the entity issues; or
221-1 (B) appointing or maintaining a trustee or
221-2 depositary related to the entity's securities;
221-3 (5) voting the interest of an entity the foreign
221-4 entity has acquired;
221-5 (6) effecting a sale through an independent
221-6 contractor;
221-7 (7) creating, as borrower or lender, or acquiring
221-8 indebtedness or a mortgage or other security interest in real or
221-9 personal property;
221-10 (8) securing or collecting a debt due the entity or
221-11 enforcing a right in property that secures a debt due the entity;
221-12 (9) transacting business in interstate commerce;
221-13 (10) conducting an isolated transaction that:
221-14 (A) is completed within a period of 30 days; and
221-15 (B) is not in the course of a number of
221-16 repeated, similar transactions;
221-17 (11) in a case that does not involve an activity that
221-18 would constitute the transaction of business in this state if the
221-19 activity were one of a foreign entity acting in its own right:
221-20 (A) exercising a power of executor or
221-21 administrator of the estate of a nonresident decedent under
221-22 ancillary letters issued by a court of this state; or
221-23 (B) exercising a power of a trustee under the
221-24 will of a nonresident decedent, or under a trust created by one or
221-25 more nonresidents of this state, or by one or more foreign
221-26 entities;
221-27 (12) regarding a debt secured by a mortgage or lien on
222-1 real or personal property in this state:
222-2 (A) acquiring the debt in a transaction outside
222-3 this state or in interstate commerce;
222-4 (B) collecting or adjusting a principal or
222-5 interest payment on the debt;
222-6 (C) enforcing or adjusting a right or property
222-7 securing the debt;
222-8 (D) taking an action necessary to preserve and
222-9 protect the interest of the mortgagee in the security; or
222-10 (E) engaging in any combination of transactions
222-11 described by this subdivision;
222-12 (13) investing in or acquiring, in a transaction
222-13 outside of this state, a royalty or other nonoperating mineral
222-14 interest; or
222-15 (14) the execution of a division order, contract of
222-16 sale, or other instrument incidental to ownership of a nonoperating
222-17 mineral interest.
222-18 Sec. 9.252. OTHER ACTIVITIES. The list provided by Section
222-19 9.251 is not exclusive of activities that do not constitute
222-20 transacting business in this state for the purposes of this code.
222-21 (Sections 9.253-9.300 reserved for expansion)
222-22 SUBCHAPTER G. MISCELLANEOUS PROVISIONS
222-23 Sec. 9.301. APPLICABILITY OF CODE TO CERTAIN FOREIGN
222-24 ENTITIES. (a) Except as provided by a statute described by this
222-25 subsection, the provisions of this code governing a foreign entity
222-26 apply to a foreign entity registered or granted authority to
222-27 transact business in this state under:
223-1 (1) a special statute that does not contain a
223-2 provision regarding a matter provided for by this code with respect
223-3 to a foreign entity; or
223-4 (2) another statute that specifically provides that
223-5 the general law for the granting of a registration or certificate
223-6 of authority to the foreign entity to transact business in this
223-7 state supplements the special statute.
223-8 (b) Except as provided by a special statute described by
223-9 Subsection (a), a document required to be filed with the secretary
223-10 of state under the special statute must be signed and filed in
223-11 accordance with Chapter 4.
223-12 CHAPTER 10. MERGERS, INTEREST EXCHANGES,
223-13 CONVERSIONS, AND SALES OF ASSETS
223-14 SUBCHAPTER A. MERGERS
223-15 Sec. 10.001. ADOPTION OF PLAN OF MERGER. (a) A domestic
223-16 entity may effect a merger by complying with the applicable
223-17 provisions of this code. A merger must be set forth in a plan of
223-18 merger.
223-19 (b) To effect a merger, each domestic entity that is a party
223-20 to the merger must act on and approve the plan of merger in the
223-21 manner prescribed by this code for the approval of mergers by the
223-22 domestic entity.
223-23 (c) If one or more non-code organizations is a party to the
223-24 merger or is to be created by the plan of merger:
223-25 (1) to effect the merger each non-code organization
223-26 must take all action required by this code and its governing
223-27 documents;
224-1 (2) the merger must be permitted by:
224-2 (A) the law of the state or country under whose
224-3 law each non-code organization is incorporated or organized; or
224-4 (B) the governing documents of each non-code
224-5 organization if the documents are not inconsistent with the law
224-6 under which the non-code organization is incorporated or organized;
224-7 and
224-8 (3) in effecting the merger, each non-code
224-9 organization that is a party to the merger must comply with:
224-10 (A) the applicable laws under which it is
224-11 incorporated or organized; and
224-12 (B) the governing documents of the non-code
224-13 organization.
224-14 (d) An organization may not merge under this subchapter if
224-15 an owner or member of that entity that is a party to the merger
224-16 will, as a result of the merger, become personally liable, without
224-17 that owner's or member's consent, for a liability or other
224-18 obligation of any other person.
224-19 Sec. 10.002. PLAN OF MERGER: REQUIRED PROVISIONS. (a) A
224-20 plan of merger must include:
224-21 (1) the name of each organization that is a party to
224-22 the merger;
224-23 (2) the name of each organization that will survive
224-24 the merger;
224-25 (3) the name of each new organization that is to be
224-26 created by the plan of merger;
224-27 (4) a description of the organizational form of each
225-1 organization that is a party to the merger or that is to be created
225-2 by the plan of merger and the state or country where incorporated
225-3 or organized;
225-4 (5) the manner and basis of converting any of the
225-5 ownership or membership interests of each organization that is a
225-6 party to the merger into:
225-7 (A) ownership interests, membership interests,
225-8 obligations, rights to purchase securities, or other securities of
225-9 one or more of the surviving or new domestic organizations;
225-10 (B) cash;
225-11 (C) other property, including ownership
225-12 interests, membership interests, obligations, rights to purchase
225-13 securities, or other securities of any other person or entity; or
225-14 (D) any combination of the items described by
225-15 Paragraphs (A)-(C);
225-16 (6) the certificate of formation of each new domestic
225-17 entity to be created by the plan of merger;
225-18 (7) the governing documents of each non-code
225-19 organization that:
225-20 (A) is to survive the merger or to be created by
225-21 the plan of merger; and
225-22 (B) is an entity that is not:
225-23 (i) organized under the laws of any state
225-24 or the United States; or
225-25 (ii) required to file its certificate of
225-26 formation or similar document under which the entity is organized
225-27 with the appropriate governmental authority; and
226-1 (8) the address of the registered office and name of
226-2 each registered agent of the surviving or new organizations if a
226-3 registered office or agent is required by the laws under which the
226-4 surviving or new organizations are formed.
226-5 (b) An item required by Subsections (a)(6)-(8) may be
226-6 included in the plan of merger by an attachment or exhibit to the
226-7 plan.
226-8 (c) If the plan of merger provides for a manner and basis of
226-9 converting an ownership or membership interest that may be
226-10 converted in a manner or basis different than any other ownership
226-11 or membership interest of the same class or series of the ownership
226-12 or membership interest, the manner and basis of conversion must be
226-13 included in the plan of merger in the same manner as provided by
226-14 Subsection (a)(5).
226-15 Sec. 10.003. CONTENTS OF PLAN OF MERGER: MORE THAN ONE
226-16 SUCCESSOR. If more than one organization is to survive or to be
226-17 created by the plan of merger, the plan of merger must include:
226-18 (1) the manner and basis of allocating and vesting the
226-19 property of each organization that is a party to the merger among
226-20 one or more of the surviving or new organizations;
226-21 (2) the name of each surviving or new organization
226-22 that is primarily obligated for the payment of the fair value of an
226-23 ownership or membership interest of an owner or member of a
226-24 domestic entity that is a party to the merger and who may have a
226-25 right to, and complies with the requirements for, dissent and
226-26 appraisal under this code applicable to the domestic entity; and
226-27 (3) the manner and basis of allocating each liability
227-1 and obligation of each organization that is a party to the merger,
227-2 or adequate provisions for the payment and discharge of each
227-3 liability and obligation, among one or more of the surviving or new
227-4 organizations.
227-5 Sec. 10.004. PLAN OF MERGER: PERMISSIVE PROVISIONS. A plan
227-6 of merger may include:
227-7 (1) amendments to the governing documents of any
227-8 surviving organization;
227-9 (2) provisions relating to an interest exchange,
227-10 including a plan of exchange; and
227-11 (3) any other provisions relating to the merger that
227-12 are not required by this chapter.
227-13 Sec. 10.005. CREATION OF HOLDING COMPANY BY MERGER. (a) In
227-14 this section:
227-15 (1) "Direct or indirect wholly owned subsidiary"
227-16 means, with respect to a domestic entity, another domestic entity,
227-17 all of the outstanding voting ownership or membership interests of
227-18 which are owned by the domestic entity or by one or more other
227-19 domestic entities or non-code organizations, all of the outstanding
227-20 voting ownership or membership interests of which are owned by the
227-21 domestic entity or one or more other wholly owned domestic entities
227-22 or non-code organizations.
227-23 (2) "Holding company" means a domestic entity that,
227-24 from its organization until a merger takes effect, was at all times
227-25 a direct or indirect wholly owned subsidiary of the domestic entity
227-26 and the ownership or membership interests of which are issued in
227-27 the merger.
228-1 (b) A domestic entity may, without owner approval and
228-2 pursuant to a plan of merger, restructure the ownership structure
228-3 of that entity to create a holding company structure under this
228-4 chapter and the provisions of this code under which the entity was
228-5 formed. The approval of the owners or members of a domestic entity
228-6 of a plan of merger that creates a holding company is not required
228-7 if:
228-8 (1) approval is not otherwise required by the
228-9 governing documents of the domestic entity;
228-10 (2) the domestic entity merges with a direct or
228-11 indirect domestic wholly owned entity;
228-12 (3) after the merger the domestic entity or its
228-13 successor is a direct or indirect wholly owned entity of a holding
228-14 company;
228-15 (4) the domestic entity and the direct or indirect
228-16 wholly owned entity are the only parties to the merger;
228-17 (5) each ownership or membership interest of the
228-18 domestic entity that is outstanding preceding the merger is
228-19 converted in the merger into an ownership or membership interest of
228-20 the holding company having the same designations, preferences,
228-21 limitations, and relative rights as the ownership or membership
228-22 interest held by the owner or member in the domestic entity;
228-23 (6) the holding company is a domestic entity of the
228-24 same organizational form as the merging domestic entity;
228-25 (7) except as provided by Subsections (c) and (d), the
228-26 initial governing documents of the holding company contain
228-27 provisions identical to the governing documents of the domestic
229-1 entity preceding the merger;
229-2 (8) except as provided by Subsections (c) and (d), the
229-3 initial governing documents of the surviving entity contain
229-4 provisions identical to the governing documents of the domestic
229-5 entity preceding the merger;
229-6 (9) the governing persons of the domestic entity
229-7 become or remain the governing persons of the holding company when
229-8 the merger takes effect;
229-9 (10) the owners or members of the domestic entity will
229-10 not recognize gain or loss for United States federal income tax
229-11 purposes or any other tax benefit or attribute as determined by the
229-12 governing authority of the domestic entity; and
229-13 (11) the governing authority of the domestic entity
229-14 adopts a resolution approving the plan of merger.
229-15 (c) Subsections (b)(7) and (8) do not require identical
229-16 provisions regarding the incorporator or incorporators, the entity
229-17 name, the registered office and agent, the initial governing
229-18 persons, and the initial subscribers of ownership interests and
229-19 provisions contained in any amendment to the certificate as are
229-20 necessary to effect a change, exchange, reclassification, or
229-21 cancellation of ownership or membership interests, if the change,
229-22 exchange, reclassification, or cancellation was in effect preceding
229-23 the merger.
229-24 (d) Notwithstanding Subsection (b)(8):
229-25 (1) the governing documents of the surviving entity
229-26 must require that an act or transaction by or involving the
229-27 surviving entity that requires for its approval under this code the
230-1 approval of the owners or members of the merging domestic entity
230-2 must, by specific reference to this section, require the approval
230-3 of the owners or members of the holding company, or any successor
230-4 by merger, by the same vote as is required by this code and the
230-5 governing documents of the surviving entity; and
230-6 (2) the governing documents of the surviving entity
230-7 may change the classes and series of ownership or membership
230-8 interests and the number of ownership or membership interests that
230-9 the surviving entity is authorized to issue.
230-10 (e) To the extent the provisions contained in Section 21.606
230-11 apply to a domestic entity and its owners or members when a merger
230-12 takes effect under this section, those provisions continue to apply
230-13 to the holding company and its owners or members immediately after
230-14 the merger takes effect as though the holding company were the
230-15 domestic entity. All ownership or membership interests of the
230-16 holding company acquired in the merger, for purposes of Section
230-17 21.606, are considered to have been acquired at the time the
230-18 ownership or membership interest of the domestic entity converted
230-19 in the merger was acquired. Any owner or member who, preceding the
230-20 merger, was not an affiliated owner or member as described by
230-21 Section 21.606 does not solely by reason of the merger become an
230-22 affiliated owner or member of the holding company.
230-23 (f) If the name of a holding company immediately following
230-24 the effectiveness of a merger under this section is the same as the
230-25 name of the domestic entity preceding the merger, the ownership or
230-26 membership interests of the holding company into which the
230-27 ownership or membership interests of the domestic entity are merged
231-1 are represented by the certificates, if any, that previously
231-2 represented the ownership or membership interests in the domestic
231-3 entity.
231-4 (g) This section shall not apply to partnerships.
231-5 Sec. 10.006. SHORT FORM MERGER. (a) A parent organization
231-6 that owns at least 90 percent of the outstanding ownership or
231-7 membership interests of each class and series of each of one or
231-8 more subsidiary organizations may merge with one or more of the
231-9 subsidiary organizations as provided by this section if:
231-10 (1) at least one of the parties to the merger is a
231-11 domestic entity and each other party is a domestic entity or
231-12 another non-code organization organized under the laws of a
231-13 jurisdiction that permits a merger of the type authorized by this
231-14 chapter; and
231-15 (2) the resulting organization is the parent
231-16 organization or an existing or new subsidiary organization.
231-17 (b) A merger of one or more subsidiary organizations into
231-18 the parent organization is required to be approved only by a
231-19 resolution adopted by the governing authority of the parent
231-20 organization authorizing the merger.
231-21 (c) If the parent organization is a domestic entity and the
231-22 parent organization will not survive the merger:
231-23 (1) the owners or members of the parent organization
231-24 must approve the merger in the manner under this code that a merger
231-25 by that domestic entity is approved; and
231-26 (2) action to approve the merger by a subsidiary
231-27 organization is not required.
232-1 (d) If the parent organization does not own all of the
232-2 outstanding ownership or membership interests of each class or
232-3 series of ownership or membership interests of each subsidiary
232-4 organization that is a party to the merger, the resolution of the
232-5 parent organization required by this section must describe the
232-6 terms of the merger, including the cash or other property,
232-7 including ownership or membership interests, obligations, rights to
232-8 purchase securities, or other securities of any person or entity or
232-9 any combination of the ownership or membership interests,
232-10 obligations, rights, or other securities, to be used, paid, or
232-11 delivered by the parent organization on surrender of each ownership
232-12 or membership interest of the subsidiary organizations not owned by
232-13 the parent organization.
232-14 (e) An entity is not disqualified from effecting a merger
232-15 under any other provision of this chapter because it qualifies for
232-16 a merger under this section.
232-17 (f) This section shall not apply if the subsidiary
232-18 organization is a partnership.
232-19 Sec. 10.007. EFFECTIVENESS OF MERGER. Except as otherwise
232-20 provided by Subchapter B, Chapter 4, a merger takes effect at the
232-21 time provided by the plan of merger or otherwise agreed to by the
232-22 parties, except that a merger that requires a filing under
232-23 Subchapter D takes effect on the acceptance of the filing of the
232-24 certificate of merger by the secretary of state or county clerk, as
232-25 appropriate.
232-26 Sec. 10.008. EFFECT OF MERGER. (a) When a merger takes
232-27 effect:
233-1 (1) the separate existence of each domestic entity
233-2 that is a party to the merger, other than a surviving or new
233-3 domestic entity, ceases;
233-4 (2) all rights, title, and interests to all real
233-5 estate and other property owned by each organization that is a
233-6 party to the merger is allocated to and vested, subject to any
233-7 existing liens or other encumbrances on the property, in one or
233-8 more of the surviving or new organizations as provided in the plan
233-9 of merger without:
233-10 (A) reversion or impairment;
233-11 (B) any further act or deed; or
233-12 (C) any transfer or assignment having occurred;
233-13 (3) all liabilities and obligations of each
233-14 organization that is a party to the merger are allocated to one or
233-15 more of the surviving or new organizations in the manner provided
233-16 by the plan of merger;
233-17 (4) each surviving or new domestic organization to
233-18 which a liability or obligation is allocated under the plan of
233-19 merger is the primary obligor for the liability or obligation, and,
233-20 except as otherwise provided by the plan of merger or by law or
233-21 contract, no other party to the merger, other than a surviving
233-22 domestic entity or non-code organization liable or otherwise
233-23 obligated at the time of the merger, and no other new domestic
233-24 entity or non-code organization created under the plan of merger is
233-25 liable for the debt or other obligation;
233-26 (5) any proceeding pending by or against any domestic
233-27 entity or by or against any non-code organization that is a party
234-1 to the merger may be continued as if the merger did not occur, or
234-2 the surviving or new domestic entity or entities or the surviving
234-3 or new non-code organization or non-code organizations to which the
234-4 liability, obligation, asset, or right associated with that
234-5 proceeding is allocated to and vested in under the plan of merger
234-6 may be substituted in the proceeding;
234-7 (6) the governing documents of each surviving domestic
234-8 entity are amended to the extent provided by the plan of merger;
234-9 (7) each new filing entity whose certificate of
234-10 formation is included in the plan of merger under this chapter, on
234-11 meeting any additional requirements, if any, of this code for its
234-12 formation, is formed as a domestic entity under this code as
234-13 provided by the plan of merger;
234-14 (8) the ownership or membership interests of each
234-15 organization that is a party to the merger and that are to be
234-16 converted or exchanged, in whole or part, into ownership or
234-17 membership interests, obligations, rights to purchase securities,
234-18 or other securities of one or more of the surviving or new
234-19 organizations, into cash or other property, including ownership or
234-20 membership interests, obligations, rights to purchase securities,
234-21 or other securities of any organization, or into any combination of
234-22 these are converted and exchanged and the former owners or members
234-23 who held ownership or membership interests of each domestic entity
234-24 that is a party to the merger are entitled only to the rights
234-25 provided by the certificate of merger or, if applicable, any rights
234-26 to receive the fair value for the ownership or membership interests
234-27 previously held by them provided under this code; and
235-1 (9) notwithstanding Subdivision (4), the surviving or
235-2 new organization named in the plan of merger as primarily obligated
235-3 to pay the fair value of an ownership or membership interest under
235-4 Section 10.003(2) is the primary obligor for that payment and all
235-5 other surviving or new organizations are secondarily liable for
235-6 that payment.
235-7 (b) If the plan of merger does not provide for the
235-8 allocation and vesting of the right, title, and interest in any
235-9 particular real estate or other property or for the allocation of
235-10 any liability or obligation of any party to the merger, the
235-11 unallocated property is owned in undivided interest by, or the
235-12 liability or obligation is the joint and several liability and
235-13 obligation of, each of the surviving and new organizations, pro
235-14 rata to the total number of surviving and new organizations
235-15 resulting from the merger.
235-16 (c) If a surviving organization in a merger is not a
235-17 domestic entity, the surviving organization is considered to have:
235-18 (1) appointed the secretary of state in this state as
235-19 the organization's agent for service of process in a proceeding to
235-20 enforce any obligation of a domestic entity that is a party to the
235-21 merger; and
235-22 (2) agreed to promptly pay to the dissenting owners or
235-23 members of each domestic entity that is a party to the merger who
235-24 have the right of dissent and appraisal under this code the amount,
235-25 if any, to which they are entitled under this code.
235-26 (d) If the surviving organization in a merger is not a
235-27 domestic entity, the organization shall register to transact
236-1 business in this state if the entity is required to register for
236-2 that purpose by another provision of this code.
236-3 Sec. 10.009. SPECIAL PROVISIONS APPLYING TO PARTNERSHIP
236-4 MERGERS. (a) A partner of a domestic partnership that is a party
236-5 to a merger does not become liable as a result of the merger for
236-6 the liability or obligation of another person that is a party to
236-7 the merger unless the partner consents to becoming personally
236-8 liable by action taken in connection with the specific plan of
236-9 merger approved by the partner.
236-10 (b) A partner of a domestic partnership that is a party to a
236-11 merger who remains in or enters a partnership is treated as an
236-12 incoming partner in the partnership when the merger takes effect
236-13 for purposes of determining the partner's liability for a debt or
236-14 obligation of the partnership or partnerships that are parties to
236-15 the merger or to be created in the merger and in which the partner
236-16 was not a partner.
236-17 (c) If a partnership merges with an organization and,
236-18 because of the merger, no longer exists, a former partner who
236-19 becomes an owner or member of the surviving organization may, until
236-20 the first anniversary of the effective date of the merger, bind the
236-21 surviving organization to a transaction for which the owner or
236-22 member no longer has authority to bind the organization if the
236-23 transaction is one in which the actions by the owner or member as a
236-24 partner would have bound the partnership before the effective date
236-25 of the merger, and the other party to the transaction:
236-26 (1) does not have actual or constructive notice of the
236-27 merger;
237-1 (2) had done business with the terminated partnership
237-2 within one year preceding the effective date of the merger; and
237-3 (3) reasonably believes that the partner who was
237-4 previously an owner or member of the partnership that was merged
237-5 into the surviving organization and is now an owner or member of
237-6 the surviving organization has the authority to bind the surviving
237-7 organization to the transaction at the time of the transaction.
237-8 (d) If a partnership is formed under a plan of merger, the
237-9 existence of the partnership as a partnership begins when the
237-10 merger takes effect, and the persons to be partners become partners
237-11 at that time.
237-12 (e) A partner in a domestic partnership that is a party to
237-13 the merger but does not survive shall be treated as a partner who
237-14 withdrew from the nonsurviving domestic partnership as of the
237-15 effective date of the merger.
237-16 (f) The partnership agreement of each domestic partnership
237-17 that is a party to the merger must contain provisions that
237-18 authorize the merger provided for in the plan of merger adopted by
237-19 the partnership.
237-20 (g) Each domestic partnership that is a party to the merger
237-21 must approve the plan of merger in the manner prescribed in its
237-22 partnership agreement.
237-23 Sec. 10.010. SPECIAL PROVISIONS APPLYING TO NONPROFIT ENTITY
237-24 MERGERS. (a) A domestic nonprofit entity may not merge into
237-25 another entity if the domestic nonprofit entity would, because of
237-26 the merger, lose or impair its charitable status.
237-27 (b) One or more domestic for-profit entities or non-code
238-1 organizations may merge into one or more domestic nonprofit
238-2 entities that continue as the surviving entity or entities.
238-3 (c) A domestic nonprofit entity may not merge into a foreign
238-4 for-profit entity if the domestic entity does not continue as the
238-5 surviving entity.
238-6 (d) One or more domestic nonprofit entities and non-code
238-7 organizations may merge into one or more foreign nonprofit entities
238-8 that continue as the surviving entity or entities.
238-9 (Sections 10.011-10.050 reserved for expansion)
238-10 SUBCHAPTER B. EXCHANGES OF INTERESTS
238-11 Sec. 10.051. INTEREST EXCHANGES. (a) For the purpose of
238-12 acquiring all of the outstanding ownership or membership interests
238-13 of one or more classes or series of one or more domestic entities,
238-14 one or more domestic entities or non-code organizations may adopt a
238-15 plan of exchange.
238-16 (b) To make an interest exchange under this section:
238-17 (1) the governing authority of each domestic entity
238-18 the ownership or membership interests of which are to be acquired
238-19 in the interest exchange must act on a plan of exchange and, if
238-20 otherwise required by this code, the owners or members of the
238-21 domestic entity must approve the plan of exchange in the manner
238-22 provided by this code; and
238-23 (2) each acquiring domestic entity must take all
238-24 action that may otherwise be required by this code and its
238-25 governing documents to effect the exchange.
238-26 (c) If a non-code organization is to acquire ownership or
238-27 membership interests in the exchange, each non-code organization
239-1 must take all action that is required under the laws of the
239-2 organization's jurisdiction of formation and the organization's
239-3 governing documents to effect the exchange.
239-4 (d) If one or more non-code organizations as part of the
239-5 plan of exchange are to issue ownership or membership interests,
239-6 the issuance of the ownership or membership interests must be
239-7 permitted by the laws under which the non-code organizations are
239-8 incorporated or organized or not inconsistent with those laws.
239-9 (e) A plan of exchange may not be effected if any owner or
239-10 member of a domestic entity that is a party to the interest
239-11 exchange will, as a result of the interest exchange, become
239-12 personally liable, without the consent of the owner or member, for
239-13 the liabilities or obligations of any other person or organization.
239-14 Sec. 10.052. PLAN OF EXCHANGE: REQUIRED PROVISIONS. (a) A
239-15 plan of exchange must include:
239-16 (1) the name of each domestic entity the ownership or
239-17 membership interests of which are to be acquired;
239-18 (2) the name of each acquiring organization;
239-19 (3) if there is more than one acquiring organization,
239-20 the ownership or membership interests to be acquired by each
239-21 organization;
239-22 (4) the terms and conditions of the exchange; and
239-23 (5) the manner and basis of exchanging the ownership
239-24 or membership interests to be acquired for:
239-25 (A) ownership or membership interests,
239-26 obligations, rights to purchase securities, or other securities of
239-27 one or more of the acquiring organizations that is a party to the
240-1 plan of exchange;
240-2 (B) cash;
240-3 (C) other property, including ownership or
240-4 membership interests, obligations, rights to purchase securities,
240-5 or other securities of any other person or entity; or
240-6 (D) any combination of those items.
240-7 (b) The manner and basis of exchanging an ownership or
240-8 membership interest of an owner or member that is exchanged in a
240-9 manner or basis different from any other owner or member having
240-10 ownership or membership interests of the same class or series must
240-11 be included in the plan of exchange in the same manner as provided
240-12 by Subsection (a)(5).
240-13 Sec. 10.053. PLAN OF EXCHANGE: PERMISSIVE PROVISIONS. A
240-14 plan of exchange may include any other provisions not required by
240-15 Section 10.052 relating to the interest exchange.
240-16 Sec. 10.054. EFFECTIVENESS OF EXCHANGE. Except as otherwise
240-17 provided by Subchapter B, Chapter 4, an interest exchange takes
240-18 effect at the time provided in the plan of exchange or otherwise
240-19 agreed to by the parties, except that an interest exchange that
240-20 requires a filing under Subchapter D takes effect on the acceptance
240-21 of the filing of the certificate of exchange by the secretary of
240-22 state or county clerk, as appropriate.
240-23 Sec. 10.055. GENERAL EFFECT OF INTEREST EXCHANGE. When an
240-24 interest exchange takes effect:
240-25 (1) the ownership or membership interest of each
240-26 acquired organization is exchanged as provided in the plan of
240-27 exchange, and the former owners whose interests are exchanged under
241-1 the plan of exchange are entitled only to the rights provided in
241-2 the certificate of exchange or, if applicable, a right to receive
241-3 the fair value for the ownership or membership interests provided
241-4 under Subchapter H; and
241-5 (2) the acquiring organization has all rights, title,
241-6 and interests with respect to the ownership or membership interest
241-7 to be acquired by it subject to the provisions of the certificate
241-8 of exchange.
241-9 Sec. 10.056. SPECIAL PROVISIONS APPLYING TO PARTNERSHIPS. To
241-10 effect an interest exchange:
241-11 (1) the partnership agreement of each domestic
241-12 partnership whose partnership interests are to be acquired pursuant
241-13 to the plan of exchange must authorize the partnership interest
241-14 exchange adopted by the partnership;
241-15 (2) each domestic partnership whose partnership
241-16 interests are to be acquired under the plan of exchange must
241-17 approve the plan of exchange in the manner prescribed by its
241-18 partnership agreement; and
241-19 (3) each acquiring domestic partnership must take all
241-20 actions that may be required by its partnership agreement in order
241-21 to effect the exchange.
241-22 (Sections 10.057-10.100 reserved for expansion)
241-23 SUBCHAPTER C. CONVERSIONS
241-24 Sec. 10.101. CONVERSION OF DOMESTIC ENTITIES. (a) A
241-25 domestic entity may convert into a different type of domestic
241-26 entity or a non-code organization by adopting a plan of conversion.
241-27 (b) To effect a conversion, the converting entity must act
242-1 on and the owners or members of the domestic entity must approve a
242-2 plan of conversion in the same manner as prescribed by this code
242-3 for the adoption and approval of a plan of merger by a domestic
242-4 entity.
242-5 (c) A conversion may not take effect if the conversion is
242-6 prohibited by or inconsistent with the laws of the converted
242-7 entity's jurisdiction of formation, and the formation,
242-8 incorporation, or organization of the converted entity under the
242-9 plan of conversion must be effected in compliance with those laws
242-10 pursuant to the plan of conversion.
242-11 (d) At the time a conversion takes effect, each owner of the
242-12 converting entity, other than those who receive payment of their
242-13 ownership or membership interest under any applicable provisions of
242-14 this code relating to dissent and appraisal, has, unless otherwise
242-15 agreed to by that owner or member, an ownership or membership
242-16 interest in, and is the owner or member of, the converted entity.
242-17 (e) A domestic entity may not convert under this section if
242-18 an owner or member of the domestic entity, as a result of the
242-19 conversion, becomes personally liable, without the consent of the
242-20 owner or member, for a liability or other obligation of the
242-21 converted entity.
242-22 Sec. 10.102. CONVERSION OF NON-CODE ORGANIZATIONS. (a) A
242-23 non-code organization may convert into a domestic entity by
242-24 adopting a plan of conversion as provided by this section.
242-25 (b) To effect a conversion, the non-code organization must
242-26 take any action that may be required for a conversion under the
242-27 laws of the organization's jurisdiction of formation and the
243-1 organization's governing documents.
243-2 (c) The conversion must be permitted by the laws under which
243-3 the non-code organization is incorporated or organized or by its
243-4 governing documents, which may not be inconsistent with the laws of
243-5 the jurisdiction in which the non-code organization is incorporated
243-6 or organized.
243-7 Sec. 10.103. PLAN OF CONVERSION: REQUIRED PROVISIONS. (a)
243-8 A plan of conversion must include:
243-9 (1) the name of the converting entity;
243-10 (2) the name of the converted entity;
243-11 (3) a statement that the converting entity is
243-12 continuing its existence in the organizational form of the
243-13 converted entity;
243-14 (4) a statement of the type of entity that the
243-15 converted entity is to be and the converted entity's jurisdiction
243-16 of formation;
243-17 (5) the manner and basis of converting the ownership
243-18 or membership interests of the converting entity into ownership or
243-19 membership interests of the converted entity;
243-20 (6) any certificate of formation required to be filed
243-21 under this code if the converted entity is a filing entity; and
243-22 (7) the certificate of formation or similar
243-23 organizational document of the converted entity if the converted
243-24 entity is not a filing entity.
243-25 (b) An item required by Subsection (a)(6) or (7) may be
243-26 included in the plan of conversion by an attachment or exhibit to
243-27 the plan.
244-1 Sec. 10.104. PLAN OF CONVERSION: PERMISSIVE PROVISIONS. A
244-2 plan of conversion may include other provisions relating to the
244-3 conversion that are not inconsistent with law.
244-4 Sec. 10.105. EFFECTIVENESS OF CONVERSION. Except as
244-5 otherwise provided by Subchapter B, Chapter 4, a conversion takes
244-6 effect at the time provided by the plan of conversion or otherwise
244-7 agreed to by the parties, except that a conversion that requires a
244-8 filing under Subchapter D takes effect on the acceptance of the
244-9 filing of the certificate of conversion by the filing officer.
244-10 Sec. 10.106. GENERAL EFFECT OF CONVERSION. When a conversion
244-11 takes effect:
244-12 (1) the converting entity continues to exist without
244-13 interruption in the organizational form of the converted entity
244-14 rather than in the organizational form of the converting entity;
244-15 (2) all rights, title, and interests to all property
244-16 owned by the converting entity continues to be owned, subject to
244-17 any existing liens or other encumbrances on the property, by the
244-18 converted entity in the new organizational form without:
244-19 (A) reversion or impairment;
244-20 (B) further act or deed; or
244-21 (C) any transfer or assignment having occurred;
244-22 (3) all liabilities and obligations of the converting
244-23 entity continue to be liabilities and obligations of the converted
244-24 entity in the new organizational form without impairment or
244-25 diminution because of the conversion;
244-26 (4) the rights of creditors or other parties with
244-27 respect to or against the previous owners or members of the
245-1 converting entity in their capacities as owners or members in
245-2 existence when the conversion takes effect continue to exist as to
245-3 those liabilities and obligations and may be enforced by the
245-4 creditors and obligees as if a conversion had not occurred;
245-5 (5) a proceeding pending by or against the converting
245-6 entity or by or against any of the converting entity's owners or
245-7 members in their capacities as owners or members may be continued
245-8 by or against the converted entity in the new organizational form
245-9 and by or against the previous owners or members without a need for
245-10 substituting a party;
245-11 (6) the ownership or membership interests of the
245-12 converting entity that are to be converted into ownership or
245-13 membership interests of the converted entity as provided in the
245-14 plan of conversion are converted as provided by the plan, and if
245-15 the converting entity is a domestic entity, the former owners or
245-16 members of the domestic entity are entitled only to the rights
245-17 provided in the plan of conversion or a right of dissent and
245-18 appraisal under this code;
245-19 (7) if, after the conversion takes effect, an owner or
245-20 member of the converted entity as an owner or member is liable for
245-21 the liabilities or obligations of the converted entity, the owner
245-22 or member is liable for the liabilities and obligations of the
245-23 converting entity that existed before the conversion took effect
245-24 only to the extent that the owner or member:
245-25 (A) agrees in writing to be liable for the
245-26 liabilities or obligations;
245-27 (B) was liable, before the conversion took
246-1 effect, for the liabilities or obligations; or
246-2 (C) by becoming an owner or member of the
246-3 converted entity, becomes liable under other applicable law for the
246-4 existing liabilities and obligations of the converted entity; and
246-5 (8) if the converted entity is a non-code
246-6 organization, the converted entity is considered to have:
246-7 (A) appointed the secretary of state in this
246-8 state as its agent for service of process in a proceeding to
246-9 enforce any obligation or the rights of dissenting owners or
246-10 members of the converting domestic entity; and
246-11 (B) agreed that the converted entity will
246-12 promptly pay the dissenting owners or members of the converting
246-13 domestic entity the amount, if any, to which they are entitled
246-14 under this code.
246-15 Sec. 10.107. SPECIAL PROVISIONS APPLYING TO PARTNERSHIP
246-16 CONVERSIONS. If a partnership is formed under a plan of conversion
246-17 under this code, the existence of the partnership as a partnership
246-18 begins when the conversion takes effect, and the owners or members
246-19 designated to become the partners under the plan of conversion
246-20 become the partners at that time.
246-21 Sec. 10.108. SPECIAL PROVISIONS APPLYING TO NONPROFIT ENTITY
246-22 CONVERSIONS. A domestic nonprofit entity may not convert into a
246-23 for-profit entity.
246-24 (Sections 10.109-10.150 reserved for expansion)
246-25 SUBCHAPTER D. CERTIFICATE OF MERGER, EXCHANGE, OR CONVERSION
246-26 Sec. 10.151. CERTIFICATE OF MERGER AND EXCHANGE. (a) After
246-27 approval of a plan of merger or a plan of exchange as provided by
247-1 this code, a certificate of merger, which may also include an
247-2 exchange, or a certificate of exchange, as applicable, must be
247-3 filed for a merger or interest exchange to become effective if:
247-4 (1) for a merger:
247-5 (A) any domestic entity that is a party to the
247-6 merger is a filing entity; or
247-7 (B) any domestic entity to be created under the
247-8 plan of merger is a filing entity; or
247-9 (2) for an exchange, an ownership or membership
247-10 interest in any filing entity is to be acquired in the interest
247-11 exchange.
247-12 (b) If a certificate of merger or exchange is required to be
247-13 filed in connection with an interest exchange or a merger, other
247-14 than a merger under Section 10.006, the certificate must be signed
247-15 on behalf of each domestic entity and non-code organization that is
247-16 a party to the merger or exchange by an officer or other authorized
247-17 representative and must include:
247-18 (1) the plan of merger or exchange or a statement
247-19 certifying:
247-20 (A) the name of each domestic entity or non-code
247-21 organization that is a party to the merger or exchange;
247-22 (B) the name of each domestic entity or non-code
247-23 organization that is to be created by the plan of merger or
247-24 exchange;
247-25 (C) the name of the jurisdiction in which each
247-26 domestic entity or non-code organization named under Paragraph (A)
247-27 or (B) is incorporated or organized;
248-1 (D) for a merger, the amendments or changes to
248-2 the certificate of formation of each filing entity that is a party
248-3 to the merger, or if no amendments are desired to be effected by
248-4 the merger, a statement to that effect;
248-5 (E) that the certificate of formation of each
248-6 new filing entity to be created under the plan of merger or
248-7 exchange is being filed with the certificate of merger or exchange;
248-8 (F) that a signed plan of merger or exchange is
248-9 on file at the principal place of business of each surviving,
248-10 acquiring, or new domestic entity or non-code organization, and the
248-11 address of each principal place of business; and
248-12 (G) that a copy of the plan of merger or
248-13 exchange will be on written request furnished without cost by each
248-14 surviving, acquiring, or new domestic entity or non-code
248-15 organization to any owner or member of any domestic entity that is
248-16 a party to or created by the plan of merger or exchange and, for a
248-17 merger with multiple surviving domestic entities or non-code
248-18 organizations, to any creditor or obligee of the parties to the
248-19 merger at the time of the merger if a liability or obligation is
248-20 then outstanding;
248-21 (2) if approval of the owners or members of any
248-22 domestic entity that was a party to the plan of merger or exchange
248-23 is not required by this code, a statement to that effect; and
248-24 (3) a statement that the plan of merger or exchange
248-25 has been approved as required by the laws of the jurisdiction of
248-26 formation of each organization that is a party to the merger or
248-27 exchange and by the governing documents of those organizations.
249-1 (c) A certificate of merger may also constitute a
249-2 certificate of exchange if it contains the information required for
249-3 a certificate of exchange.
249-4 Sec. 10.152. CERTIFICATE OF MERGER: SHORT FORM MERGER. The
249-5 certificate of merger for a merger under Section 10.006 is required
249-6 to be signed only by an officer or other authorized representative
249-7 of the parent organization described by that section and must
249-8 include:
249-9 (1) the name of the parent organization, the name of
249-10 each subsidiary organization that is a party to the merger, and the
249-11 jurisdiction of formation of each named organization;
249-12 (2) the number of outstanding ownership interests of
249-13 each class or series of each subsidiary organization and the number
249-14 and percentage of ownership interests of each class or series owned
249-15 by the parent organization;
249-16 (3) a copy of the resolution adopted by the governing
249-17 authority of the parent organization authorizing the merger and the
249-18 date of the adoption of the resolution;
249-19 (4) if the surviving organization is not a domestic
249-20 entity, the address, including street number, if any, of its
249-21 registered or principal office in the organization's jurisdiction
249-22 of formation; or
249-23 (5) if the plan of merger is required to be approved
249-24 by the owners or members of the parent organization, the
249-25 information required by Section 10.151(b)(3).
249-26 Sec. 10.153. FILING OF CERTIFICATE OF MERGER OR EXCHANGE.
249-27 (a) If a certificate of merger or exchange is required to be
250-1 filed, the certificate of merger or exchange must be filed in
250-2 accordance with Chapter 4. The certificate of formation of each
250-3 filing entity that is to be formed under a plan of merger must also
250-4 be filed with the certificate of merger in accordance with Chapter
250-5 4. Except as provided by this section, the certificate must be
250-6 filed with the secretary of state.
250-7 (b) If a domestic real estate investment trust is a party to
250-8 the merger or if an ownership interest in a domestic real estate
250-9 investment trust is to be acquired in the interest exchange, the
250-10 certificate of merger or exchange must be filed in accordance with
250-11 Chapter 4 with the county clerk of the county in which the domestic
250-12 real estate investment trust's principal place of business in this
250-13 state is located.
250-14 (c) If a domestic real estate investment trust is to be
250-15 created under the plan of merger, the certificate of formation of
250-16 the domestic real estate investment trust must also be filed with
250-17 the certificate of merger in accordance with Chapter 4 with the
250-18 county clerk of the county in which the domestic real estate
250-19 investment trust's principal place of business in this state is
250-20 located.
250-21 Sec. 10.154. CERTIFICATE OF CONVERSION. (a) After approval
250-22 of a plan of conversion as provided by this code, a certificate of
250-23 conversion must be filed for the conversion to become effective if:
250-24 (1) any domestic entity that is a party to the
250-25 conversion is a filing entity; or
250-26 (2) any domestic entity to be created under the plan
250-27 of conversion is a filing entity.
251-1 (b) If a certificate of conversion is required to be filed
251-2 in connection with a conversion, the certificate must be signed on
251-3 behalf of the converting entity and must include:
251-4 (1) the plan of conversion or a statement certifying
251-5 the following:
251-6 (A) the name and jurisdiction of organization of
251-7 the converting entity;
251-8 (B) the organizational form of the converting
251-9 entity;
251-10 (C) that a signed plan of conversion is on file
251-11 at the principal place of business of the converting entity, and
251-12 the address of the principal place of business;
251-13 (D) that a signed plan of conversion will be on
251-14 file after the conversion at the principal place of business of the
251-15 converted entity, and the address of the principal place of
251-16 business; and
251-17 (E) that a copy of the plan of conversion will
251-18 be on written request furnished without cost by the converting
251-19 entity before the conversion or by the converted entity after the
251-20 conversion to any owner or member of the converting entity or the
251-21 converted entity; and
251-22 (2) a statement that the plan of conversion has been
251-23 approved as required by the laws of the jurisdiction of formation
251-24 and the governing documents of the converting entity.
251-25 Sec. 10.155. FILING OF CERTIFICATE OF CONVERSION. (a) If a
251-26 certificate of conversion is required to be filed, the certificate
251-27 of conversion must be filed in accordance with Chapter 4. If the
252-1 converted entity is a filing entity, the certificate of formation
252-2 of the filing entity must also be filed with the certificate of
252-3 conversion in accordance with Chapter 4. Except as provided by
252-4 this section, the certificate must be filed with the secretary of
252-5 state.
252-6 (b) If the converting entity is a domestic real estate
252-7 investment trust, the certificate of conversion must be filed in
252-8 accordance with Chapter 4 with the county clerk of the county in
252-9 which the converting entity's principal place of business in this
252-10 state is located.
252-11 (c) If the converted entity is a domestic real estate
252-12 investment trust, the certificate of formation of the converted
252-13 entity must also be filed with the certificate of conversion in
252-14 accordance with Chapter 4 with the county clerk of the county in
252-15 which the converted entity's principal place of business in this
252-16 state is located.
252-17 Sec. 10.156. ACCEPTANCE OF CERTIFICATE FOR FILING. The
252-18 filing officer may not accept a certificate of merger, exchange, or
252-19 conversion for filing if:
252-20 (1) the filing officer finds that the certificate of
252-21 merger, exchange, or conversion does not conform to law; or
252-22 (2) the required franchise taxes have not been paid or
252-23 the certificate of merger, exchange, or conversion does not provide
252-24 that one or more of the surviving, new, or acquiring organizations
252-25 or the converted entity is liable for the payment of the required
252-26 franchise taxes.
252-27 (Sections 10.157-10.200 reserved for expansion)
253-1 SUBCHAPTER E. ABANDONMENT OF MERGER, EXCHANGE, OR CONVERSION
253-2 Sec. 10.201. ABANDONMENT OF PLAN OF MERGER, EXCHANGE, OR
253-3 CONVERSION. After a merger, interest exchange, or conversion is
253-4 approved as provided by this code, and at any time before the
253-5 merger, interest exchange, or conversion takes effect, the plan of
253-6 merger, interest exchange, or conversion may be abandoned, subject
253-7 to any contractual rights, by any of the domestic entities that are
253-8 a party to the merger, interest exchange, or conversion, without
253-9 action by the owners or members, under the procedures provided by
253-10 the plan of merger, exchange, or conversion or, if no abandonment
253-11 procedures are provided, in the manner determined by the governing
253-12 authority.
253-13 Sec. 10.202. ABANDONMENT AFTER FILING. (a) If a certificate
253-14 of merger, exchange, or conversion has been filed, the merger,
253-15 interest exchange, or conversion may be abandoned prior to its
253-16 effectiveness in accordance with Section 4.057.
253-17 (b) A filing of a certificate of abandonment under Section
253-18 4.057 is not required for the abandonment of a merger, interest
253-19 exchange, or conversion if no filing is required under Subchapter D
253-20 to make the merger, interest exchange, or conversion effective.
253-21 Sec. 10.203. ABANDONMENT IF NO FILING REQUIRED. If no filing
253-22 is required by this chapter to abandon a merger, interest exchange,
253-23 or conversion, the merger, interest exchange, or conversion is
253-24 abandoned when and on the terms as provided in accordance with the
253-25 procedures provided by the plan of merger, exchange, or conversion
253-26 or, if no procedures are provided by the plan, in the manner
253-27 determined by the governing authority.
254-1 (Sections 10.204-10.250 reserved for expansion)
254-2 SUBCHAPTER F. PROPERTY TRANSFERS AND DISPOSITIONS
254-3 Sec. 10.251. GENERAL POWER OF DOMESTIC ENTITY TO SELL,
254-4 LEASE, OR CONVEY PROPERTY. (a) Subject to any approval required by
254-5 this code or the governing documents of the domestic entity, a
254-6 domestic entity may transfer and convey by sale, lease, assignment,
254-7 or another method an interest in property of the entity, including
254-8 real property. The transfer and conveyance may:
254-9 (1) be made with or without the goodwill of the
254-10 entity;
254-11 (2) be made on any terms and conditions and for any
254-12 consideration, which may consist wholly or partly of money or other
254-13 property, including an ownership interest in a domestic entity or
254-14 non-code organization; and
254-15 (3) be evidenced by a deed, assignment, or other
254-16 instrument of transfer or conveyance, with or without the seal of
254-17 the entity.
254-18 (b) Subject to any approval required by this code or the
254-19 governing documents of the domestic entity, a domestic entity may
254-20 grant a pledge, mortgage, deed of trust, or trust indenture with
254-21 respect to an interest in property of the entity, including real
254-22 property, with or without the seal of the entity.
254-23 Sec. 10.252. NO APPROVAL REQUIRED FOR CERTAIN DISPOSITIONS
254-24 OF PROPERTY. Except as otherwise provided by this code, the
254-25 governing documents of the domestic entity, or specific limitations
254-26 established by the governing authority, a sale, lease, assignment,
254-27 conveyance, pledge, mortgage, deed of trust, trust indenture, or
255-1 other transfer of an interest in real property or other property
255-2 made by a domestic entity does not require the approval of the
255-3 members or owners of the entity.
255-4 Sec. 10.253. RECORDING INSTRUMENT CONVEYING REAL PROPERTY OF
255-5 DOMESTIC ENTITY. (a) A deed or other instrument executed by a
255-6 domestic entity that conveys an interest in real property may be
255-7 recorded in the same manner and with the same effect as other
255-8 similar instruments if the instrument is signed and acknowledged
255-9 by:
255-10 (1) an officer, authorized attorney-in-fact, or other
255-11 authorized person of the entity; or
255-12 (2) in the case of a partnership or limited liability
255-13 company, a governing person of the entity.
255-14 (b) A deed or other instrument executed by a domestic entity
255-15 that conveys an interest in real property and that is recorded and
255-16 signed by an officer, authorized attorney-in-fact, or other
255-17 authorized person of the entity constitutes prima facie evidence
255-18 that the sale or conveyance that is the subject of the instrument
255-19 was authorized under this code and the governing documents of the
255-20 entity.
255-21 Sec. 10.254. DISPOSITION OF PROPERTY NOT A MERGER OR
255-22 CONVERSION; LIABILITY. (a) A disposition of all or part of the
255-23 property of a domestic entity, regardless of whether the
255-24 disposition requires the approval of the entity's owners or
255-25 members, is not a merger or conversion for any purpose.
255-26 (b) Except as otherwise expressly provided by another law, a
255-27 person acquiring property described by this section may not be held
256-1 responsible or liable for a liability or obligation of the
256-2 transferring domestic entity that is not expressly assumed by the
256-3 person.
256-4 (Sections 10.255-10.300 reserved for expansion)
256-5 SUBCHAPTER G. BANKRUPTCY REORGANIZATION
256-6 Sec. 10.301. REORGANIZATION UNDER BANKRUPTCY AND SIMILAR
256-7 LAWS. (a) A trustee appointed for a domestic entity that is being
256-8 reorganized under a federal statute, the designated officers of a
256-9 domestic entity being reorganized under a federal statute, or any
256-10 other individual designated by a court having jurisdiction of a
256-11 domestic entity being reorganized under a federal statute to act on
256-12 behalf of the domestic entity may, without action by or notice to
256-13 the domestic entity's governing authority, owners, or members, in
256-14 order to carry out a plan of reorganization ordered by a court
256-15 under the federal statute:
256-16 (1) amend or restate the domestic entity's certificate
256-17 of formation if the certificate of formation after amendment or
256-18 restatement contains only provisions required or permitted to be
256-19 contained in the certificate of formation;
256-20 (2) merge or exchange an interest with one or more
256-21 domestic entities or non-code organizations under a plan of merger
256-22 or exchange having any provision required or permitted by Sections
256-23 10.002, 10.003, 10.004, 10.005, 10.052, and 10.053;
256-24 (3) change the location of the domestic entity's
256-25 registered office, change its registered agent, and remove or
256-26 appoint any agent to receive service of process;
256-27 (4) alter, amend, or repeal the domestic entity's
257-1 governing documents other than filing instruments;
257-2 (5) constitute or reconstitute and classify or
257-3 reclassify the domestic entity's governing authority and name,
257-4 constitute, or appoint managerial officials in place of or in
257-5 addition to all or some of the managerial officials;
257-6 (6) sell, lease, exchange, or otherwise dispose of
257-7 all, or substantially all, of the domestic entity's property and
257-8 assets;
257-9 (7) authorize and fix the terms, manner, and
257-10 conditions of the issuance of bonds, debentures, or other
257-11 obligations, regardless of whether the obligation is convertible
257-12 into ownership interests of any class or bearing warrants or other
257-13 evidences of optional rights to purchase or subscribe for any
257-14 ownership interests of any class;
257-15 (8) wind up and terminate the entity's existence; or
257-16 (9) effect a conversion.
257-17 (b) An action taken under Subsection (a)(4) or (5) takes
257-18 effect on entry of the order approving the plan of reorganization
257-19 or on another effective date as may be specified, without further
257-20 action of the domestic entity, as and to the extent provided by the
257-21 plan of reorganization or the order approving the plan of
257-22 reorganization.
257-23 Sec. 10.302. SIGNING OF DOCUMENTS. A trustee appointed for a
257-24 domestic entity being reorganized under a federal statute, the
257-25 designated officers of a domestic entity being reorganized under a
257-26 federal statute, or any other individual designated by a court
257-27 having jurisdiction of a domestic entity being reorganized under a
258-1 federal statute may sign on behalf of a domestic entity that is
258-2 being reorganized:
258-3 (1) a certificate of amendment or restated certificate
258-4 of formation containing:
258-5 (A) the name of the domestic entity;
258-6 (B) each amendment or the restatement approved
258-7 by the court;
258-8 (C) the date of the court's order approving the
258-9 certificate of amendment or the restatement;
258-10 (D) the name of the court having jurisdiction,
258-11 file name, and case number of the reorganization case in which the
258-12 order was entered; and
258-13 (E) a statement that the court had jurisdiction
258-14 of the case under a federal statute;
258-15 (2) a certificate of merger or exchange containing:
258-16 (A) the name of the domestic entity;
258-17 (B) the part of the plan of reorganization that
258-18 contains the plan of merger or exchange approved by the court,
258-19 which must include the information required by Section 10.151(b) or
258-20 10.152, as applicable, but which is not required to include the
258-21 resolution of the governing authority referred to in Section
258-22 10.152;
258-23 (C) the date of the court's order approving the
258-24 plan of merger or consolidation;
258-25 (D) the name of the court having jurisdiction,
258-26 file name, and case number of the reorganization case in which the
258-27 order or decree was entered; and
259-1 (E) a statement that the court had jurisdiction
259-2 of the case under a federal statute;
259-3 (3) a certificate of termination containing:
259-4 (A) the name of the domestic entity;
259-5 (B) the information required by Sections
259-6 11.101(c)(1)-(4);
259-7 (C) the date of the court's order approving the
259-8 certificate of termination;
259-9 (D) a statement that the obligations of the
259-10 domestic entity, including debts and liabilities, have been paid or
259-11 discharged as provided by the plan of reorganization and the
259-12 remaining property and assets of the domestic entity have been
259-13 distributed as provided by the plan of reorganization;
259-14 (E) the name of the court having jurisdiction,
259-15 file name, and case number of the reorganization case in which the
259-16 order or decree was entered; and
259-17 (F) a statement that the court had jurisdiction
259-18 of the case under a federal statute;
259-19 (4) a statement of change of registered office or
259-20 registered agent, or both, containing:
259-21 (A) the name of the domestic entity;
259-22 (B) the information required by Section
259-23 5.202(b), as applicable, but not the information included in the
259-24 statement referred to in Section 5.202(b)(6);
259-25 (C) the date of the court's order approving the
259-26 statement of change of registered office or registered agent, or
259-27 both;
260-1 (D) the name of the court having jurisdiction,
260-2 file name, and case number of the reorganization case in which the
260-3 order or decree was entered; and
260-4 (E) a statement that the court had jurisdiction
260-5 of the case under a federal statute; or
260-6 (5) a certificate of conversion containing:
260-7 (A) the name of the domestic entity;
260-8 (B) the part of the plan of reorganization that
260-9 contains the plan of conversion approved by the court, which must
260-10 include the information required by Section 10.103;
260-11 (C) the date of the court's order or decree
260-12 approving the plan of conversion;
260-13 (D) the name of the court having jurisdiction,
260-14 file name, and case number of the reorganization case in which the
260-15 order was entered; and
260-16 (E) a statement that the court had jurisdiction
260-17 of the case under a federal statute.
260-18 Sec. 10.303. REORGANIZATION WITH OTHER ENTITIES. If a
260-19 domestic entity or non-code organization that is not being
260-20 reorganized under a federal statute merges or exchanges an interest
260-21 with a domestic entity that is being reorganized under a plan of
260-22 reorganization under a federal statute:
260-23 (1) Subchapters A, B, D, E, and H apply to the
260-24 domestic entity or non-code organization that is not being
260-25 reorganized to the same extent those subchapters would apply if the
260-26 domestic entity or non-code organization were merging or engaging
260-27 in an interest exchange with a domestic entity that is not being
261-1 reorganized, except as otherwise provided by the plan of
261-2 reorganization ordered by a court under the federal statute;
261-3 (2) Subchapter H applies to a subsidiary organization
261-4 that is not being reorganized to the same extent that subchapter
261-5 would apply if the subsidiary organization were merging with a
261-6 parent organization that is not being reorganized;
261-7 (3) on the receipt of all required authorization for
261-8 all action required by this code for each domestic entity that is a
261-9 party to the plan of merger or exchange that is not being
261-10 reorganized and all action by each domestic entity or non-code
261-11 organization that is a party to the plan of merger or exchange
261-12 required by the laws of the entity's or organization's jurisdiction
261-13 of formation and governing documents, a certificate of merger or
261-14 exchange shall be signed by each domestic entity or non-code
261-15 organization that is a party to the merger or exchange other than
261-16 the domestic entity that is being reorganized as provided by
261-17 Section 10.151 and on behalf of the domestic entity that is being
261-18 reorganized by the persons specified in Section 10.302;
261-19 (4) the certificate of merger or exchange must contain
261-20 the information required by Section 10.302(2);
261-21 (5) the certificate of merger or exchange must be
261-22 filed in the manner provided by Section 10.153; and
261-23 (6) on the acceptance for filing of the certificate of
261-24 merger or exchange in accordance with Subchapter D, the merger or
261-25 interest exchange, when effective, has the same effect as if it had
261-26 been adopted by unanimous action of the governing authority and
261-27 owners or members of the domestic entity being reorganized, and the
262-1 effectiveness of the merger or interest exchange is determined as
262-2 provided by Section 10.007 or 10.054.
262-3 Sec. 10.304. RIGHT OF DISSENT AND APPRAISAL EXCLUDED. An
262-4 owner or member of a domestic entity being reorganized under a
262-5 federal statute does not have a right to dissent and appraisal
262-6 under this code except as provided by the plan of reorganization.
262-7 Sec. 10.305. AFTER FINAL DECREE. This subchapter does not
262-8 apply after the entry of a final decree in a reorganization case
262-9 under a federal statute even though the court that renders the
262-10 decree may retain jurisdiction of the case for limited purposes
262-11 unrelated to consummation of the plan of reorganization.
262-12 Sec. 10.306. CHAPTER CUMULATIVE OF OTHER CHANGES. This
262-13 chapter does not preclude other changes in a domestic entity or its
262-14 ownership or membership interests or securities by a plan of
262-15 reorganization ordered by a court under a federal statute.
262-16 (Sections 10.307-10.350 reserved for expansion)
262-17 SUBCHAPTER H. RIGHTS OF DISSENTING OWNERS
262-18 Sec. 10.351. APPLICABILITY OF SUBCHAPTER. (a) This
262-19 subchapter does not apply to a fundamental business transaction of
262-20 a domestic entity if, immediately before the effective date of the
262-21 fundamental business transaction, all of the ownership interests of
262-22 the entity otherwise entitled to rights to dissent and appraisal
262-23 under this code are held by one owner or only by the owners who
262-24 approved the fundamental business transaction.
262-25 (b) This subchapter applies only to a "domestic entity
262-26 subject to dissenters' rights," as defined in Section 1.002. That
262-27 term includes a domestic for-profit corporation, professional
263-1 corporation, professional association, and real estate investment
263-2 trust.
263-3 Sec. 10.352. DEFINITIONS. In this subchapter:
263-4 (1) "Dissenting owner" means an owner of an ownership
263-5 interest in a domestic entity subject to dissenters' rights who:
263-6 (A) provides notice under Section 10.356; and
263-7 (B) complies with the requirements for
263-8 perfecting that owner's right to dissent under this subchapter.
263-9 (2) "Responsible organization" means:
263-10 (A) the organization responsible for:
263-11 (i) the provision of notices under this
263-12 subchapter; and
263-13 (ii) the primary obligation of paying the
263-14 fair value for an ownership interest held by a dissenting owner;
263-15 (B) with respect to a merger or conversion:
263-16 (i) for matters occurring before the
263-17 merger or conversion, the organization that is merging or
263-18 converting; and
263-19 (ii) for matters occurring after the
263-20 merger or conversion, the surviving or new organization that is
263-21 primarily obligated for the payment of the fair value of the
263-22 dissenting owner's ownership interest in the merger or conversion;
263-23 (C) with respect to an interest exchange, the
263-24 organization the ownership interests of which are being acquired in
263-25 the interest exchange; and
263-26 (D) with respect to the sale of all or
263-27 substantially all of the assets of an organization, the
264-1 organization the assets of which are to be transferred by sale or
264-2 in another manner.
264-3 Sec. 10.353. FORM AND VALIDITY OF NOTICE. (a) Notice
264-4 required under this subchapter:
264-5 (1) must be in writing; and
264-6 (2) may be mailed, hand delivered, or delivered by
264-7 courier or electronic transmission.
264-8 (b) Failure to provide notice as required by this subchapter
264-9 does not invalidate any action taken.
264-10 Sec. 10.354. RIGHTS OF DISSENT AND APPRAISAL. (a) Subject
264-11 to Subsection (b), an owner of an ownership interest in a domestic
264-12 entity subject to dissenters' rights, is entitled to:
264-13 (1) dissent from:
264-14 (A) a plan of merger to which the domestic
264-15 entity is a party if owner approval is required by this code and
264-16 the owner owns in the domestic entity an ownership interest that
264-17 was entitled to vote on the plan of merger;
264-18 (B) a sale of all or substantially all of the
264-19 assets of the domestic entity if owner approval is required by this
264-20 code and the owner owns in the domestic entity an ownership
264-21 interest that was entitled to vote on the sale;
264-22 (C) a plan of exchange in which the ownership
264-23 interest of the owner is to be acquired;
264-24 (D) a plan of conversion in which the domestic
264-25 entity is the converting entity if owner approval is required by
264-26 this code and the owner owns in the domestic entity an ownership
264-27 interest that was entitled to vote on the plan of conversion; or
265-1 (E) a plan of merger effected under Section
265-2 10.006 in which:
265-3 (i) the owner is entitled to vote on the
265-4 plan; or
265-5 (ii) the ownership interest of the owner
265-6 is converted or exchanged; and
265-7 (2) subject to compliance with the procedures set
265-8 forth in this subchapter, obtain the fair value of that ownership
265-9 interest through an appraisal.
265-10 (b) Notwithstanding Subsection (a), an owner may not dissent
265-11 from a plan of merger or conversion in which there is a single
265-12 surviving or new domestic entity or non-code organization, or from
265-13 a plan of exchange, if:
265-14 (1) the ownership interest held by the owner is part
265-15 of a class or series of ownership interests that are, on the record
265-16 date set for purposes of determining which owners are entitled to
265-17 vote on the plan of merger, conversion, or exchange, as
265-18 appropriate:
265-19 (A) listed on a national securities exchange or
265-20 a similar system;
265-21 (B) listed on the Nasdaq Stock Market or a
265-22 successor quotation system;
265-23 (C) designated as a national market security on
265-24 an interdealer quotation system by the National Association of
265-25 Securities Dealers, Inc., or a successor system; or
265-26 (D) held of record by at least 2,000 owners;
265-27 (2) the owner is not required by the terms of the plan
266-1 of merger, conversion, or exchange, as appropriate, to accept for
266-2 the owner's ownership interest any consideration that is different
266-3 from the consideration to be provided to any other holder of an
266-4 ownership interest of the same class or series as the ownership
266-5 interest held by the owner, other than cash instead of fractional
266-6 shares or interests the owner would otherwise be entitled to
266-7 receive; and
266-8 (3) the owner is not required by the terms of the plan
266-9 of merger, conversion, or exchange, as appropriate, to accept for
266-10 the owner's ownership interest any consideration other than:
266-11 (A) ownership interests of a domestic entity or
266-12 non-code organization of the same general organizational type that,
266-13 immediately after the effective date of the merger, conversion, or
266-14 exchange, as appropriate, will be part of a class or series of
266-15 ownership interests that are:
266-16 (i) listed on a national securities
266-17 exchange or authorized for listing on the exchange on official
266-18 notice of issuance;
266-19 (ii) approved for quotation as a national
266-20 market security on an interdealer quotation system by the National
266-21 Association of Securities Dealers, Inc., or a successor entity; or
266-22 (iii) held of record by at least 2,000
266-23 owners;
266-24 (B) cash instead of fractional ownership
266-25 interests the owner would otherwise be entitled to receive; or
266-26 (C) any combination of the ownership interests
266-27 and cash described by Paragraphs (A) and (B).
267-1 Sec. 10.355. NOTICE OF RIGHT OF DISSENT AND APPRAISAL. (a)
267-2 A domestic entity subject to dissenters' rights that takes or
267-3 proposes to take an action regarding which an owner has a right to
267-4 dissent and obtain an appraisal under Section 10.354 shall notify
267-5 each affected owner of the owner's rights under that section if:
267-6 (1) the action or proposed action is submitted to a
267-7 vote of the owners at a meeting; or
267-8 (2) approval of the action or proposed action is
267-9 obtained by written consent of the owners instead of being
267-10 submitted to a vote of the owners.
267-11 (b) If a domestic entity subject to dissenters' rights
267-12 effects or proposes to effect a merger under Section 10.006, the
267-13 responsible organization shall notify the owners who have a right
267-14 to dissent to the merger under Section 10.354 of their rights under
267-15 this subchapter not later than the 10th day after the effective
267-16 date of the merger.
267-17 (c) A notice required to be provided under Subsection (a) or
267-18 (b) must:
267-19 (1) be accompanied by a copy of this subchapter; and
267-20 (2) advise the owner of the location of the
267-21 responsible organization's principal executive offices to which a
267-22 notice required under Section 10.356(b)(2) may be provided.
267-23 (d) In addition to the requirements prescribed by Subsection
267-24 (c), a notice required to be provided under Subsection (a)(1) must
267-25 accompany the notice of the meeting to consider the action, and a
267-26 notice required under Subsection (a)(2) must be provided to:
267-27 (1) each owner who consents in writing to the action
268-1 before the owner delivers the written consent; and
268-2 (2) each owner who is entitled to vote on the action
268-3 and does not consent in writing to the action before the 11th day
268-4 after the date the action takes effect.
268-5 (e) Not later than the 10th day after the date an action
268-6 described by Subsection (a)(1) takes effect, the responsible
268-7 organization shall give notice that the action has been effected to
268-8 each owner who voted against the action and sent notice under
268-9 Section 10.356(b)(2).
268-10 Sec. 10.356. PROCEDURE FOR DISSENT BY OWNERS AS TO ACTIONS;
268-11 PERFECTION OF RIGHT OF DISSENT AND APPRAISAL. (a) An owner of an
268-12 ownership interest of a domestic entity subject to dissenters'
268-13 rights who has the right to dissent and appraisal from any of the
268-14 actions referred to in Section 10.354 may exercise that right to
268-15 dissent and appraisal only by complying with the procedures
268-16 specified in this subchapter. An owner's right of dissent and
268-17 appraisal under Section 10.354 may be exercised by an owner only
268-18 with respect to an ownership interest that is not voted in favor of
268-19 the action.
268-20 (b) To perfect the owner's rights of dissent and appraisal
268-21 under Section 10.354, an owner:
268-22 (1) with respect to the ownership interest for which
268-23 the rights of dissent and appraisal are sought:
268-24 (A) must vote against the action if the owner is
268-25 entitled to vote on the action and the action is approved at a
268-26 meeting of the owners; and
268-27 (B) may not consent to the action if the action
269-1 is approved by written consent; and
269-2 (2) must give to the responsible organization a notice
269-3 dissenting to the action that:
269-4 (A) is addressed to the president and secretary
269-5 of the responsible organization;
269-6 (B) demands payment of the fair value of the
269-7 ownership interests for which the rights of dissent and appraisal
269-8 are sought;
269-9 (C) provides to the responsible organization an
269-10 address to which a notice relating to the dissent and appraisal
269-11 procedures under this subchapter may be sent;
269-12 (D) states the number and class of the ownership
269-13 interests of the domestic entity owned by the owner and the fair
269-14 value of the ownership interests as estimated by the owner; and
269-15 (E) is delivered to the responsible organization
269-16 at its principal executive offices at the following time:
269-17 (i) before the action is considered for
269-18 approval, if the action is to be submitted to a vote of the owners
269-19 at a meeting;
269-20 (ii) not later than the 20th day after the
269-21 date the responsible organization sends to the owner a notice that
269-22 the action was approved by the requisite vote of the owners, if the
269-23 action is to be undertaken on the written consent of the owners; or
269-24 (iii) not later than the 20th day after
269-25 the date the responsible organization sends to the owner a notice
269-26 that the merger was effected, if the action is a merger effected
269-27 under Section 10.006.
270-1 (c) An owner who does not make a demand within the period
270-2 required by Subsection (b)(2)(E) is bound by the action and is not
270-3 entitled to exercise the rights of dissent and appraisal under
270-4 Section 10.354.
270-5 (d) Not later than the 20th day after the date an owner
270-6 makes a demand under this section, the owner must submit to the
270-7 responsible organization any certificates representing the
270-8 ownership interest to which the demand relates for purposes of
270-9 making a notation on the certificates that a demand for the payment
270-10 of the fair value of an ownership interest has been made under this
270-11 section. An owner's failure to submit the certificates within the
270-12 required period has the effect of terminating, at the option of the
270-13 responsible organization, the owner's rights to dissent and
270-14 appraisal under Section 10.354 unless a court, for good cause
270-15 shown, directs otherwise.
270-16 (e) If a domestic entity and responsible organization
270-17 satisfy the requirements of this subchapter relating to the rights
270-18 of owners of ownership interests in the entity to dissent to an
270-19 action and seek appraisal of those ownership interests, an owner of
270-20 an ownership interest who fails to perfect that owner's right of
270-21 dissent in accordance with this subchapter may not bring suit to
270-22 recover the value of the ownership interest or money damages
270-23 relating to the action.
270-24 Sec. 10.357. WITHDRAWAL OF DEMAND FOR FAIR VALUE OF
270-25 OWNERSHIP INTEREST. Unless the responsible organization consents to
270-26 the withdrawal of the demand, an owner may not withdraw a demand
270-27 for the payment of the fair value of an ownership interest made
271-1 under Section 10.356 before:
271-2 (1) payment for the ownership interest has been made
271-3 under Sections 10.358 and 10.361; or
271-4 (2) a petition has been filed under Section 10.361.
271-5 Sec. 10.358. RESPONSE BY ORGANIZATION TO NOTICE OF DISSENT
271-6 AND DEMAND FOR FAIR VALUE BY DISSENTING OWNER. (a) Not later than
271-7 the 20th day after the date a responsible organization receives a
271-8 demand for payment made by a dissenting owner in accordance with
271-9 Section 10.356, the responsible organization shall respond to the
271-10 dissenting owner in writing by:
271-11 (1) accepting the amount claimed in the demand as the
271-12 fair value of the ownership interests specified in the notice; or
271-13 (2) rejecting the demand and including in the response
271-14 the requirements prescribed by Subsection (c).
271-15 (b) If the responsible organization accepts the amount
271-16 claimed in the demand, the responsible organization shall pay the
271-17 amount not later than the 90th day after the date the action that
271-18 is the subject of the demand was effected if the owner delivers to
271-19 the responsible organization:
271-20 (1) endorsed certificates representing the ownership
271-21 interests if the ownership interests are certificated; or
271-22 (2) signed assignments of the ownership interests if
271-23 the ownership interests are uncertificated.
271-24 (c) If the responsible organization rejects the amount
271-25 claimed in the demand, the responsible organization shall provide
271-26 to the owner:
271-27 (1) an estimate by the responsible organization of the
272-1 fair value of the ownership interests; and
272-2 (2) an offer to pay the amount of the estimate
272-3 provided under Subdivision (1).
272-4 (d) An offer made under Subsection (c)(2) must remain open
272-5 for a period of at least 60 days from the date the offer is first
272-6 delivered to the dissenting owner.
272-7 (e) If a dissenting owner accepts an offer made by a
272-8 responsible organization under Subsection (c)(2) or if a dissenting
272-9 owner and a responsible organization reach an agreement on the fair
272-10 value of the ownership interests, the responsible organization
272-11 shall pay the agreed amount not later than the 60th day after the
272-12 date the offer is accepted or the agreement is reached, as
272-13 appropriate, if the dissenting owner delivers to the responsible
272-14 organization:
272-15 (1) endorsed certificates representing the ownership
272-16 interests if the ownership interests are certificated; or
272-17 (2) signed assignments of the ownership interests if
272-18 the ownership interests are uncertificated.
272-19 Sec. 10.359. RECORD OF DEMAND FOR FAIR VALUE OF OWNERSHIP
272-20 INTEREST. (a) A responsible organization shall note in the
272-21 organization's ownership interest records maintained under Section
272-22 3.151 the receipt of a demand for payment from any dissenting owner
272-23 made under Section 10.356.
272-24 (b) If an ownership interest that is the subject of a demand
272-25 for payment made under Section 10.356 is transferred, a new
272-26 certificate representing that ownership interest must contain:
272-27 (1) a reference to the demand; and
273-1 (2) the name of the original dissenting owner of the
273-2 ownership interest.
273-3 Sec. 10.360. RIGHTS OF TRANSFEREE OF CERTAIN OWNERSHIP
273-4 INTEREST. A transferee of an ownership interest that is the subject
273-5 of a demand for payment made under Section 10.356 does not acquire
273-6 additional rights with respect to the responsible organization
273-7 following the transfer. The transferee has only the rights the
273-8 original dissenting owner had with respect to the responsible
273-9 organization after making the demand.
273-10 Sec. 10.361. PROCEEDING TO DETERMINE FAIR VALUE OF OWNERSHIP
273-11 INTEREST AND OWNERS ENTITLED TO PAYMENT; APPOINTMENT OF APPRAISERS.
273-12 (a) If a responsible organization rejects the amount demanded by a
273-13 dissenting owner under Section 10.358 and the dissenting owner and
273-14 responsible organization are unable to reach an agreement relating
273-15 to the fair value of the ownership interests within the period
273-16 prescribed by Section 10.358(d), the dissenting owner or
273-17 responsible organization may file a petition requesting a finding
273-18 and determination of the fair value of the owner's ownership
273-19 interests in a court in:
273-20 (1) the county in which the organization's principal
273-21 office is located in this state; or
273-22 (2) the county in which the organization's registered
273-23 office is located in this state, if the organization does not have
273-24 a business office in this state.
273-25 (b) A petition described by Subsection (a) must be filed not
273-26 later than the 60th day after the expiration of the period required
273-27 by Section 10.358(d).
274-1 (c) On the filing of a petition by an owner under Subsection
274-2 (a), service of a copy of the petition shall be made to the
274-3 responsible organization. Not later than the 10th day after the
274-4 date a responsible organization receives service under this
274-5 subsection, the responsible organization shall file with the clerk
274-6 of the court in which the petition was filed a list containing the
274-7 names and addresses of each owner of the organization who has
274-8 demanded payment for ownership interests under Section 10.356 and
274-9 with whom agreement as to the value of the ownership interests has
274-10 not been reached with the responsible organization. If the
274-11 responsible organization files a petition under Subsection (a), the
274-12 petition must be accompanied by this list.
274-13 (d) The clerk of the court in which a petition is filed
274-14 under this section shall provide by registered mail notice of the
274-15 time and place set for the hearing to:
274-16 (1) the responsible organization; and
274-17 (2) each owner named on the list described by
274-18 Subsection (c) at the address shown for the owner on the list.
274-19 (e) The court shall:
274-20 (1) determine which owners have:
274-21 (A) perfected their rights by complying with
274-22 this subchapter; and
274-23 (B) become subsequently entitled to receive
274-24 payment for the fair value of their ownership interests; and
274-25 (2) appoint one or more qualified appraisers to
274-26 determine the fair value of the ownership interests of the owners
274-27 described by Subdivision (1).
275-1 (f) The court shall approve the form of a notice required to
275-2 be provided under this section. The judgment of the court is final
275-3 and binding on the responsible organization, any other organization
275-4 obligated to make payment under this subchapter for an ownership
275-5 interest, and each owner who is notified as required by this
275-6 section.
275-7 Sec. 10.362. COMPUTATION AND DETERMINATION OF FAIR VALUE OF
275-8 OWNERSHIP INTEREST. (a) For purposes of this subchapter, the fair
275-9 value of an ownership interest of a domestic entity subject to
275-10 dissenters' rights is the value of the ownership interest on the
275-11 date preceding the date of the action that is the subject of the
275-12 appraisal. Any appreciation or depreciation in the value of the
275-13 ownership interest occurring in anticipation of the proposed action
275-14 or as a result of the action must be specifically excluded from the
275-15 computation of the fair value of the ownership interest.
275-16 (b) In computing the fair value of an ownership interest
275-17 under this subchapter, consideration must be given to the value of
275-18 the organization as a going concern without including in the
275-19 computation of value any:
275-20 (1) payment for a control premium or minority discount
275-21 other than a discount attributable to the type of ownership
275-22 interests held by the dissenting owner; and
275-23 (2) limitation placed on the rights and preferences of
275-24 those ownership interests.
275-25 (c) The determination of the fair value of an ownership
275-26 interest made for purposes of this subchapter may not be used for
275-27 purposes of making a determination of the fair value of that
276-1 ownership interest for another purpose or of the fair value of
276-2 another ownership interest, including for purposes of determining
276-3 any minority or liquidity discount that might apply to a sale of an
276-4 ownership interest.
276-5 Sec. 10.363. POWERS AND DUTIES OF APPRAISER; APPRAISAL
276-6 PROCEDURES. (a) An appraiser appointed under Section 10.361 has
276-7 the power and authority that:
276-8 (1) is granted by the court in the order appointing
276-9 the appraiser; and
276-10 (2) may be conferred by a court to a master in
276-11 chancery as provided by Rule 171, Texas Rules of Civil Procedure.
276-12 (b) The appraiser shall:
276-13 (1) determine the fair value of an ownership interest
276-14 of an owner adjudged by the court to be entitled to payment for the
276-15 ownership interest; and
276-16 (2) file with the court a report of that
276-17 determination.
276-18 (c) The appraiser is entitled to examine the books and
276-19 records of a responsible organization and may conduct
276-20 investigations as the appraiser considers appropriate. A
276-21 dissenting owner or responsible organization may submit to an
276-22 appraiser evidence or other information relevant to the
276-23 determination of the fair value of the ownership interest required
276-24 by Subsection (b)(1).
276-25 (d) The clerk of the court appointing the appraiser shall
276-26 provide notice of the filing of the report under Subsection (b) to
276-27 each dissenting owner named in the list filed under Section 10.361
277-1 and the responsible organization.
277-2 Sec. 10.364. OBJECTION TO APPRAISAL; HEARING. (a) A
277-3 dissenting owner or responsible organization may object, based on
277-4 the law or the facts, to all or part of an appraisal report
277-5 containing the fair value of an ownership interest determined under
277-6 Section 10.363(b).
277-7 (b) If an objection to a report is raised under Subsection
277-8 (a), the court shall hold a hearing to determine the fair value of
277-9 the ownership interest that is the subject of the report. After
277-10 the hearing, the court shall require the responsible organization
277-11 to pay to the holders of the ownership interest the amount of the
277-12 determined value with interest, accruing from the 91st day after
277-13 the date the applicable action for which the owner elected to
277-14 dissent was effected until the date of the judgment.
277-15 (c) Interest under Subsection (b) accrues at the same rate
277-16 as is provided for the accrual of prejudgment interest in civil
277-17 cases.
277-18 (d) The responsible organization shall:
277-19 (1) immediately pay the amount of the judgment to a
277-20 holder of an uncertificated ownership interest; and
277-21 (2) pay the amount of the judgment to a holder of a
277-22 certificated ownership interest immediately after the certificate
277-23 holder surrenders to the responsible organization an endorsed
277-24 certificate representing the ownership interest.
277-25 (e) On payment of the judgment, the dissenting owner does
277-26 not have an interest in the:
277-27 (1) ownership interest for which the payment is made;
278-1 or
278-2 (2) responsible organization with respect to that
278-3 ownership interest.
278-4 Sec. 10.365. COURT COSTS; COMPENSATION FOR APPRAISER. (a)
278-5 An appraiser appointed under Section 10.361 is entitled to a
278-6 reasonable fee payable from court costs.
278-7 (b) All court costs shall be allocated between the
278-8 responsible organization and the dissenting owners in the manner
278-9 that the court determines to be fair and equitable.
278-10 Sec. 10.366. STATUS OF OWNERSHIP INTEREST HELD OR FORMERLY
278-11 HELD BY DISSENTING OWNER. (a) An ownership interest of an
278-12 organization acquired by a responsible organization under this
278-13 subchapter:
278-14 (1) in the case of a merger, conversion, or interest
278-15 exchange, shall be held or disposed of as provided in the plan of
278-16 merger, conversion, or interest exchange; and
278-17 (2) in any other case, may be held or disposed of by
278-18 the responsible organization in the same manner as other ownership
278-19 interests acquired by the organization or held in its treasury.
278-20 (b) An owner who has demanded payment for the owner's
278-21 ownership interest under Section 10.356 is not entitled to vote or
278-22 exercise any other rights of another owner with respect to the
278-23 ownership interest except the right to:
278-24 (1) receive payment for the ownership interest under
278-25 this subchapter; and
278-26 (2) bring an appropriate action to obtain relief on
278-27 the ground that the action to which the demand relates would be or
279-1 was fraudulent.
279-2 (c) An ownership interest for which payment has been
279-3 demanded under Section 10.356 may not be considered outstanding for
279-4 purposes of any subsequent vote or action.
279-5 Sec. 10.367. RIGHTS OF OWNERS FOLLOWING TERMINATION OF RIGHT
279-6 OF DISSENT. (a) The rights of a dissenting owner terminate if:
279-7 (1) the owner withdraws the demand under Section
279-8 10.356;
279-9 (2) the owner's right of dissent is terminated under
279-10 Section 10.356;
279-11 (3) a petition is not filed within the period required
279-12 by Section 10.361; or
279-13 (4) after a hearing held under Section 10.361, the
279-14 court adjudges that the owner is not entitled to elect to dissent
279-15 from an action under this subchapter.
279-16 (b) On termination of the right of dissent under this
279-17 section:
279-18 (1) the dissenting owner and all persons claiming a
279-19 right under the owner are conclusively presumed to have approved
279-20 and ratified the action to which the owner dissented and are bound
279-21 by that action;
279-22 (2) the owner's right to be paid the fair value of the
279-23 owner's ownership interests ceases and the owner's status as an
279-24 owner of those ownership interests is restored without prejudice in
279-25 any interim proceeding if the owner's ownership interests were not
279-26 canceled, converted, or exchanged as a result of the action or a
279-27 subsequent fundamental business transaction; and
280-1 (3) the dissenting owner is entitled to receive
280-2 dividends or other distributions made in the interim to owners of
280-3 the same class and series of ownership interests held by the owner
280-4 as if a demand for the payment of the ownership interests had not
280-5 been made under Section 10.356, subject to any change in or
280-6 adjustment to ownership interests because of the cancellation or
280-7 exchange of the ownership interests after the date a demand under
280-8 Section 10.356 was made pursuant to a fundamental business
280-9 transaction.
280-10 Sec. 10.368. EXCLUSIVITY OF REMEDY OF DISSENT AND APPRAISAL.
280-11 In the absence of fraud in the transaction, any right of an owner
280-12 of an ownership interest to dissent from an action and obtain the
280-13 fair value of the ownership interest under this subchapter is the
280-14 exclusive remedy for recovery of:
280-15 (1) the value of the ownership interest or money
280-16 damages to the owner with respect to the ownership interest; and
280-17 (2) the owner's right in the organization with respect
280-18 to a fundamental business transaction.
280-19 (Sections 10.369-10.900 reserved for expansion)
280-20 SUBCHAPTER Z. MISCELLANEOUS PROVISIONS
280-21 Sec. 10.901. CREDITORS; ANTITRUST. This code does not
280-22 affect, nullify, or repeal the antitrust laws or abridge any right
280-23 or rights of any creditor under existing laws.
280-24 Sec. 10.902. NONEXCLUSIVITY. This chapter does not limit the
280-25 power of a domestic entity or non-code organization to acquire all
280-26 or part of the ownership or membership interests of one or more
280-27 classes or series of a domestic entity through a voluntary exchange
281-1 or otherwise.
281-2 CHAPTER 11. WINDING UP AND TERMINATION OF DOMESTIC ENTITY
281-3 SUBCHAPTER A. GENERAL PROVISIONS
281-4 Sec. 11.001. DEFINITIONS. In this chapter:
281-5 (1) "Claim" means a right to payment, damages, or
281-6 property, whether liquidated or unliquidated, accrued or
281-7 contingent, matured or unmatured.
281-8 (2) "Event requiring a winding up" means an event
281-9 specified by Section 11.051.
281-10 (3) "Existing claim" with respect to an entity means:
281-11 (A) a claim against the entity that existed
281-12 before the entity's termination and is not barred by limitations;
281-13 or
281-14 (B) a contractual obligation incurred after
281-15 termination.
281-16 (4) "Terminated entity" means a domestic entity the
281-17 existence of which has been:
281-18 (A) terminated in a manner authorized or
281-19 required by this code, unless the entity has been reinstated in the
281-20 manner provided by this code; or
281-21 (B) forfeited pursuant to the Tax Code, unless
281-22 the forfeiture has been set aside.
281-23 (5) "Voluntary decision to wind up" means the
281-24 determination to wind up a domestic entity made by the domestic
281-25 entity or the owners, members, or governing authority of the
281-26 domestic entity in the manner specified by the title of this code
281-27 governing the domestic entity.
282-1 (6) "Voluntary winding up" means winding up as a
282-2 result of a voluntary decision to wind up.
282-3 (7) "Winding up" means the process of winding up the
282-4 business and affairs of a domestic entity as a result of the
282-5 occurrence of an event requiring winding up.
282-6 (Sections 11.002-11.050 reserved for expansion)
282-7 SUBCHAPTER B. WINDING UP OF DOMESTIC ENTITY
282-8 Sec. 11.051. EVENT REQUIRING WINDING UP OF DOMESTIC ENTITY.
282-9 Winding up of a domestic entity is required on:
282-10 (1) the expiration of the domestic entity's period of
282-11 duration, if not perpetual;
282-12 (2) a voluntary decision to wind up the domestic
282-13 entity;
282-14 (3) an event specified in the governing documents of
282-15 the domestic entity requiring the winding up, dissolution, or
282-16 termination of the domestic entity;
282-17 (4) an event specified in this code requiring the
282-18 winding up or termination of the domestic entity; or
282-19 (5) a decree by a court requiring the winding up or
282-20 dissolution of the domestic entity, rendered under this code or
282-21 other law.
282-22 Sec. 11.052. WINDING UP PROCEDURES. (a) Except as provided
282-23 by the title of this code governing the domestic entity, on the
282-24 occurrence of an event requiring winding up of a domestic entity,
282-25 unless the event requiring winding up is revoked under Section
282-26 11.151 or canceled under Section 11.152, the owners, members,
282-27 managerial officials, or other persons specified in the title of
283-1 this code governing the domestic entity shall, as soon as
283-2 reasonably practicable, wind up the business and affairs of the
283-3 domestic entity. The domestic entity shall:
283-4 (1) cease to carry on its business, except to the
283-5 extent necessary to wind up its business;
283-6 (2) except as provided by Title 4, send a written
283-7 notice of the winding up to each known claimant against the
283-8 domestic entity;
283-9 (3) collect and sell its property to the extent the
283-10 property is not to be distributed in kind to the domestic entity's
283-11 owners or members; and
283-12 (4) perform any other act required to wind up its
283-13 business and affairs.
283-14 (b) During the winding up process, the domestic entity may
283-15 prosecute or defend a civil, criminal or administrative action.
283-16 Sec. 11.053. PROPERTY APPLIED TO DISCHARGE LIABILITIES AND
283-17 OBLIGATIONS. (a) Except as provided by Subsection (b) and the
283-18 title of this code governing the domestic entity, a domestic entity
283-19 in the process of winding up shall apply and distribute its
283-20 property to discharge, or make adequate provision for the discharge
283-21 of, all of the domestic entity's liabilities and obligations.
283-22 (b) Except as provided by the title of this code governing
283-23 the domestic entity, if the property of a domestic entity is not
283-24 sufficient to discharge all of the domestic entity's liabilities
283-25 and obligations, the domestic entity shall:
283-26 (1) apply its property, to the extent possible, to the
283-27 just and equitable discharge of its liabilities and obligations,
284-1 including liabilities and obligations owed to owners or members,
284-2 other than for distributions; or
284-3 (2) make adequate provision for the application of the
284-4 property described by Subdivision (1).
284-5 (c) Except as provided by the title of this code governing
284-6 the domestic entity, after a domestic entity has discharged, or
284-7 made adequate provision for the discharge of, all of its
284-8 liabilities and obligations, the domestic entity shall distribute
284-9 the remainder of its property, in cash or in kind, to the domestic
284-10 entity's owners according to their respective rights and interests.
284-11 (d) A domestic entity may continue its business wholly or
284-12 partly, including delaying the disposition of property of the
284-13 domestic entity, for the limited period necessary to avoid
284-14 unreasonable loss of the entity's property or business.
284-15 Sec. 11.054. COURT SUPERVISION OF WINDING UP PROCESS.
284-16 Subject to the other provisions of this code, on application of a
284-17 domestic entity or an owner or member of a domestic entity, a court
284-18 may:
284-19 (1) supervise the winding up of the domestic entity;
284-20 (2) appoint a person to carry out the winding up of
284-21 the domestic entity; and
284-22 (3) make any other order, direction, or inquiry that
284-23 the circumstances may require.
284-24 Sec. 11.055. COURT ACTION OR PROCEEDING DURING WINDING UP.
284-25 During the winding up process, a domestic entity may continue
284-26 prosecuting or defending a court action or proceeding by or against
284-27 the domestic entity.
285-1 Sec. 11.056. SUPPLEMENTAL EVENT REQUIRING WINDING UP OF
285-2 LIMITED LIABILITY COMPANY. In addition to an event listed under
285-3 Section 11.051, the termination of the continued membership of the
285-4 last remaining member of a limited liability company is an event
285-5 requiring a winding up unless, not later than the 90th day after
285-6 the date of the termination, the legal representative or successor
285-7 of the last remaining member agrees:
285-8 (1) to continue the company; and
285-9 (2) to become a member of the company effective as of
285-10 the date of the termination or to designate another person who
285-11 agrees to become a member of the company effective as of the date
285-12 of the termination.
285-13 Sec. 11.057. SUPPLEMENTAL EVENTS REQUIRING WINDING UP OF
285-14 GENERAL PARTNERSHIP. (a) An event requiring winding up of a
285-15 general partnership includes, in addition to any event specified in
285-16 Section 11.051, the following:
285-17 (1) in a general partnership that is not for a
285-18 definite term or for a particular undertaking or in which the
285-19 partnership agreement does not provide for winding up the
285-20 partnership business on a specified event, the express will of a
285-21 majority-in-interest of the partners who have not assigned their
285-22 interests;
285-23 (2) in a general partnership for a definite term or
285-24 for a particular undertaking, on:
285-25 (A) the express will of all of the partners; or
285-26 (B) the expiration of the term or the completion
285-27 of the undertaking, unless otherwise continued under Section
286-1 152.709;
286-2 (3) in a general partnership in which the partnership
286-3 agreement provides for the winding up of the partnership business
286-4 on a specified event, upon:
286-5 (A) the express will of all of the partners; or
286-6 (B) the occurrence of the specified event,
286-7 unless otherwise continued under Section 152.709;
286-8 (4) an event that makes it illegal for all or
286-9 substantially all of the partnership business to be continued, but
286-10 a cure of illegality before the 91st day after the date of notice
286-11 to the general partnership of the event is effective retroactively
286-12 to the date of the event for purposes of this subsection;
286-13 (5) the sale of all or substantially all of the
286-14 property of the general partnership outside the ordinary course of
286-15 business; and
286-16 (6) if a general partnership is not for a definite
286-17 term or a particular undertaking and its partnership agreement does
286-18 not provide for a specified event requiring a winding up of the
286-19 partnership business, a request for winding up the partnership
286-20 business from a partner, other than a partner who has agreed not to
286-21 withdraw.
286-22 (b) An event described by Subsection (a)(6) requires the
286-23 winding up of a general partnership 60 days after the date on which
286-24 the general partnership receives notice of the request or at a
286-25 later date as specified by the notice, unless a
286-26 majority-in-interest of the partners agree to continue the general
286-27 partnership.
287-1 Sec. 11.058. SUPPLEMENTAL EVENTS REQUIRING WINDING UP OF
287-2 LIMITED PARTNERSHIP. An event requiring the winding up of a limited
287-3 partnership includes, in addition to any event specified in Section
287-4 11.051, the following:
287-5 (1) written consent of all partners to the winding up
287-6 and termination of the limited partnership; and
287-7 (2) an event of withdrawal of a general partner.
287-8 (Sections 11.059-11.100 reserved for expansion)
287-9 SUBCHAPTER C. TERMINATION OF DOMESTIC ENTITY
287-10 Sec. 11.101. CERTIFICATE OF TERMINATION FOR FILING ENTITY.
287-11 (a) On completion of the winding up process under Subchapter B, a
287-12 filing entity must file a certificate of termination in accordance
287-13 with Chapter 4.
287-14 (b) A certificate from the comptroller that all taxes
287-15 administered by the comptroller under Title 2, Tax Code, have been
287-16 paid must be filed with the certificate of termination in
287-17 accordance with Chapter 4 if the filing entity is a professional
287-18 corporation, for-profit corporation, or limited liability company.
287-19 (c) The certificate of termination must contain:
287-20 (1) the name of the filing entity;
287-21 (2) the name and address of each of the filing
287-22 entity's governing persons;
287-23 (3) the entity's file number assigned by the secretary
287-24 of state, unless the entity is a real estate investment trust;
287-25 (4) the nature of the event requiring winding up;
287-26 (5) a statement that the filing entity has complied
287-27 with the provisions of this code governing its winding up; and
288-1 (6) any other information required by this code to be
288-2 included in the certificate of termination for the filing entity.
288-3 Sec. 11.102. EFFECTIVENESS OF TERMINATION OF FILING ENTITY.
288-4 Except as otherwise provided by this chapter, the existence of a
288-5 filing entity terminates on the filing of a certificate of
288-6 termination with the filing officer.
288-7 Sec. 11.103. EFFECTIVENESS OF TERMINATION OF NONFILING
288-8 ENTITY. Except as otherwise provided by this chapter, the existence
288-9 of a nonfiling entity terminates on the completion of the winding
288-10 up of its business and affairs. Notice of the termination must be
288-11 provided by the nonfiling entity in the manner provided in the
288-12 governing documents of the nonfiling entity if notice of
288-13 termination is required under the governing documents.
288-14 Sec. 11.104. ACTION BY SECRETARY OF STATE. The secretary of
288-15 state shall remove from its active records a domestic filing entity
288-16 whose period of duration has expired when the secretary of state
288-17 determines that:
288-18 (1) the entity has failed to file a certificate of
288-19 termination in accordance with Section 11.101; and
288-20 (2) the entity has failed to file an amendment to
288-21 extend its existence in accordance with Section 11.152.
288-22 Sec. 11.105. SUPPLEMENTAL INFORMATION REQUIRED BY
288-23 CERTIFICATE OF TERMINATION OF NONPROFIT CORPORATION. (a) In
288-24 addition to the information required by Section 11.101, the
288-25 certificate of termination filed by a nonprofit corporation that
288-26 has completed its winding up process must contain a statement that:
288-27 (1) any property of the nonprofit corporation has been
289-1 transferred, conveyed, applied, or distributed in accordance with
289-2 this chapter and Chapter 22; and
289-3 (2) there is no suit pending against the nonprofit
289-4 corporation or adequate provision has been made for the
289-5 satisfaction of any judgment, order, or decree that may be entered
289-6 against the nonprofit corporation in a pending suit.
289-7 (b) In addition to the statements required by Subsection
289-8 (a), if the nonprofit corporation received and held property
289-9 permitted to be used only for charitable, religious, eleemosynary,
289-10 benevolent, educational, or similar purposes, but the nonprofit
289-11 corporation did not hold the property on a condition requiring
289-12 return, transfer, or conveyance because of the winding up and
289-13 termination, the certificate of termination must include:
289-14 (1) a copy of the plan of distribution adopted under
289-15 Chapter 22; and
289-16 (2) a statement that distribution has been effected in
289-17 accordance with that plan.
289-18 (Sections 11.106-11.150 reserved for expansion)
289-19 SUBCHAPTER D. REVOCATION AND CONTINUATION
289-20 Sec. 11.151. REVOCATION OF VOLUNTARY WINDING UP. (a) Before
289-21 the termination of the existence of a domestic entity takes effect,
289-22 the domestic entity may revoke a voluntary decision to wind up the
289-23 entity by approval of the revocation in the manner specified in the
289-24 title of this code governing the entity.
289-25 (b) A domestic entity may continue its business following
289-26 the revocation of a voluntary decision to wind up under Subsection
289-27 (a).
290-1 Sec. 11.152. CONTINUATION OF BUSINESS WITHOUT WINDING UP.
290-2 (a) Subject to Subsections (c) and (d), a domestic entity to which
290-3 an event requiring the winding up of the entity occurs as specified
290-4 by Section 11.051(3) or (4) may cancel the event requiring winding
290-5 up in the manner specified in the title of this code governing the
290-6 domestic entity not later than the first anniversary of the date of
290-7 the event requiring winding up or an earlier period prescribed by
290-8 the title of this code governing the domestic entity.
290-9 (b) A domestic entity to which an event requiring winding up
290-10 as specified in Section 11.051(1) occurs may cancel the event
290-11 requiring winding up by amending its governing documents in the
290-12 manner provided by this code, not later than the third anniversary
290-13 of the date of the event requiring winding up or an earlier date
290-14 prescribed by the title of this code governing the domestic entity,
290-15 to extend the period of its duration. The expiration of the period
290-16 of its duration does not by itself create a vested right on the
290-17 part of an owner, member, or creditor of the entity to prevent the
290-18 extension of its existence. An act undertaken or a contract
290-19 entered into by a terminated entity during a period in which the
290-20 entity could have extended its existence under this section is not
290-21 invalidated by the expiration of the period of the entity's
290-22 duration, regardless of whether the entity has taken any action to
290-23 extend its existence.
290-24 (c) A domestic entity may not cancel an event requiring
290-25 winding up specified in Section 11.051(3) and continue its business
290-26 if the action is prohibited by the entity's governing documents or
290-27 the title of this code governing the entity.
291-1 (d) A domestic entity may cancel an event requiring winding
291-2 up specified in Section 11.051(4) and continue its business only if
291-3 the action:
291-4 (1) is not prohibited by the entity's governing
291-5 documents; and
291-6 (2) is expressly authorized by the title of this code
291-7 governing the entity.
291-8 (e) On cancellation of an event requiring winding up under
291-9 this section, the domestic entity may continue its business.
291-10 (Sections 11.153-11.200 reserved for expansion)
291-11 SUBCHAPTER E. REINSTATEMENT OF TERMINATED ENTITY
291-12 Sec. 11.201. CONDITIONS FOR REINSTATEMENT. (a) A terminated
291-13 entity may be reinstated under this subchapter if:
291-14 (1) the termination was by mistake or inadvertent;
291-15 (2) the termination occurred without the approval of
291-16 the entity's governing persons when their approval is required by
291-17 the title of this code governing the terminated entity;
291-18 (3) the process of winding up before termination had
291-19 not been completed by the entity; or
291-20 (4) the legal existence of the entity is necessary to:
291-21 (A) convey or assign property;
291-22 (B) settle or release a claim or liability;
291-23 (C) take an action; or
291-24 (D) sign an instrument or agreement.
291-25 (b) A terminated entity may not be reinstated under this
291-26 section if the termination occurred as a result of:
291-27 (1) an order of a court or the secretary of state;
292-1 (2) an event requiring winding up that is specified in
292-2 the title of this code governing the terminated entity, if that
292-3 title prohibits reinstatement; or
292-4 (3) forfeiture under the Tax Code.
292-5 Sec. 11.202. PROCEDURES FOR REINSTATEMENT. (a) To the
292-6 extent applicable, a terminated entity, to be reinstated, must
292-7 complete the requirements of this section not later than the third
292-8 anniversary of the date the termination of the terminated entity's
292-9 existence took effect.
292-10 (b) The owners, members, governing persons, or other persons
292-11 must approve the reinstatement of the domestic entity in the manner
292-12 provided by the title of this code governing the domestic entity.
292-13 (c) After approval of the reinstatement of a filing entity
292-14 that was terminated, and not later than the third anniversary of
292-15 the date of the filing of the entity's certificate of termination,
292-16 the filing entity shall file a certificate of reinstatement in
292-17 accordance with Chapter 4.
292-18 (d) A certificate of reinstatement filed under Subsection
292-19 (c) must contain:
292-20 (1) the name of the filing entity;
292-21 (2) the filing number assigned by filing officer to
292-22 the entity;
292-23 (3) the effective date of the entity's termination;
292-24 (4) a statement that the reinstatement of the filing
292-25 entity has been approved in the manner required by this code; and
292-26 (5) the name of the entity's registered agent and the
292-27 address of the entity's registered office.
293-1 (e) A letter of eligibility from the comptroller stating
293-2 that the filing entity has satisfied all franchise tax liabilities
293-3 and may be reinstated must be filed with the certificate of
293-4 reinstatement if the filing entity is a professional corporation,
293-5 for-profit corporation, or limited liability company.
293-6 Sec. 11.203. USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED
293-7 NAME. If the secretary of state determines that a filing entity's
293-8 name contained in a certificate of reinstatement filed under
293-9 Section 11.202 is the same as, deceptively similar to, or similar
293-10 to a name of a filing entity or foreign entity on file as provided
293-11 by or reserved or registered under this code, the secretary of
293-12 state may not accept for filing the certificate of reinstatement
293-13 unless the filing entity contemporaneously amends its certificate
293-14 of formation to change its name or obtains consent for the use of
293-15 the similar name.
293-16 Sec. 11.204. EFFECTIVENESS OF REINSTATEMENT OF NONFILING
293-17 ENTITY. The reinstatement of a terminated nonfiling entity takes
293-18 effect on the approval required by Section 11.202(b).
293-19 Sec. 11.205. EFFECTIVENESS OF REINSTATEMENT OF FILING
293-20 ENTITY. The reinstatement of a terminated filing entity that
293-21 previously filed a certificate of termination takes effect on the
293-22 filing of the entity's certificate of reinstatement.
293-23 Sec. 11.206. EFFECT OF REINSTATEMENT. When the reinstatement
293-24 of a terminated entity takes effect:
293-25 (1) the existence of the terminated entity is
293-26 considered to have continued without interruption from the date of
293-27 termination; and
294-1 (2) the terminated entity may carry on its business as
294-2 if the termination of its existence had not occurred.
294-3 (Sections 11.207-11.250 reserved for expansion)
294-4 SUBCHAPTER F. INVOLUNTARY TERMINATION OF FILING
294-5 ENTITY BY SECRETARY OF STATE
294-6 Sec. 11.251. TERMINATION OF FILING ENTITY BY SECRETARY OF
294-7 STATE. (a) If it appears to the secretary of state that, with
294-8 respect to a filing entity, a circumstance described by Subsection
294-9 (b) exists, the secretary of state may notify the entity of the
294-10 circumstance by regular or certified mail addressed to the entity
294-11 at the entity's registered office or principal place of business as
294-12 shown on the records of the secretary of state.
294-13 (b) The secretary of state may terminate a filing entity's
294-14 existence if the secretary finds that the entity has failed to,
294-15 and, before the 91st day after the date notice was mailed has not
294-16 corrected the entity's failure to:
294-17 (1) file a report within the period required by law or
294-18 to pay a fee or penalty prescribed by law when due and payable;
294-19 (2) maintain a registered agent or registered office
294-20 in this state as required by law; or
294-21 (3) pay a fee required in connection with a filing, or
294-22 payment of the fee was dishonored when presented by the state for
294-23 payment.
294-24 Sec. 11.252. CERTIFICATE OF TERMINATION. (a) If termination
294-25 of a filing entity's existence is required, the secretary of state
294-26 shall:
294-27 (1) issue a certificate of termination; and
295-1 (2) deliver a certificate of termination by regular or
295-2 certified mail to the filing entity at its registered office or
295-3 principal place of business.
295-4 (b) The certificate of termination must state:
295-5 (1) that the filing entity has been involuntarily
295-6 terminated; and
295-7 (2) the date and cause of the termination.
295-8 (c) Except as otherwise provided by this chapter, the
295-9 existence of the filing entity is terminated on the issuance of the
295-10 certificate of termination by the secretary of state.
295-11 Sec. 11.253. REINSTATEMENT BY SECRETARY OF STATE AFTER
295-12 INVOLUNTARY TERMINATION. (a) The secretary of state shall
295-13 reinstate a filing entity that has been involuntarily terminated
295-14 under this subchapter if the entity files a certificate of
295-15 reinstatement in accordance with Section 11.202, accompanied by
295-16 each amendment to the entity's certificate of formation that is
295-17 required by intervening events, including circumstances requiring
295-18 an amendment to the filing entity's name as described in Section
295-19 11.203, and
295-20 (1) the entity has corrected the circumstances that
295-21 led to the involuntary termination and any other circumstances that
295-22 may exist of the types described by Section 11.251(b), including
295-23 the payment of fees, interest, or penalties; or
295-24 (2) the secretary of state finds that the
295-25 circumstances that led to the involuntary termination did not exist
295-26 at the time of termination.
295-27 (b) If a filing entity is reinstated before the third
296-1 anniversary of the date of its involuntary termination, the entity
296-2 is considered to have continued in existence without interruption
296-3 from the date of termination.
296-4 Sec. 11.254. REINSTATEMENT OF CERTIFICATE OF FORMATION
296-5 FOLLOWING TAX FORFEITURE. A filing entity whose certificate of
296-6 formation has been forfeited under the provisions of the Tax Code
296-7 must follow the procedures in the Tax Code to reinstate its
296-8 certificate of formation.
296-9 (Sections 11.255-11.300 reserved for expansion)
296-10 SUBCHAPTER G. JUDICIAL WINDING UP AND TERMINATION
296-11 Sec. 11.301. INVOLUNTARY WINDING UP AND TERMINATION OF
296-12 FILING ENTITY BY COURT ACTION. (a) A court may enter a decree
296-13 requiring winding up of a filing entity's business and termination
296-14 of the filing entity's existence if, as the result of an action
296-15 brought under Section 11.303, the court finds that one or more of
296-16 the following problems exist:
296-17 (1) the filing entity or its organizers did not comply
296-18 with a condition precedent to its formation;
296-19 (2) the certificate of formation of the filing entity
296-20 or any amendment to the certificate of formation was fraudulently
296-21 filed;
296-22 (3) a misrepresentation of a material matter has been
296-23 made in an application, report, affidavit, or other document
296-24 submitted by the filing entity under this code;
296-25 (4) the filing entity has continued to transact
296-26 business beyond the scope of the purpose of the filing entity as
296-27 expressed in its certificate of formation; or
297-1 (5) public interest requires winding up and
297-2 termination of the filing entity because:
297-3 (A) the filing entity has been convicted of a
297-4 felony or a high managerial agent of the filing entity has been
297-5 convicted of a felony committed in the conduct of the filing
297-6 entity's affairs;
297-7 (B) the filing entity or high managerial agent
297-8 has engaged in a persistent course of felonious conduct; and
297-9 (C) termination is necessary to prevent future
297-10 felonious conduct of the same character.
297-11 (b) Sections 11.302-11.307 do not apply to Subsection
297-12 (a)(5).
297-13 Sec. 11.302. NOTIFICATION OF CAUSE BY SECRETARY OF STATE.
297-14 (a) The secretary of state shall provide to the attorney general:
297-15 (1) the name of a filing entity that has given cause
297-16 under Section 11.301 for involuntary winding up of the entity's
297-17 business and termination of the entity's existence; and
297-18 (2) the facts relating to the cause for the winding up
297-19 and termination.
297-20 (b) When notice is provided under Subsection (a), the
297-21 secretary of state shall notify the filing entity of the
297-22 circumstances by writing sent to the entity at its registered
297-23 office in this state. The notice must state that the secretary of
297-24 state has given notice under Subsection (a) and the grounds for
297-25 the notification. The secretary of state must record the date a
297-26 notice required by this subsection is sent.
297-27 (c) A court shall accept a certificate issued by the
298-1 secretary of state as to the facts relating to the cause for the
298-2 winding up and termination and the sending of a notice under
298-3 Subsection (b) as prima facie evidence of the facts stated in the
298-4 certificate and the sending of the notice.
298-5 Sec. 11.303. FILING OF ACTION BY ATTORNEY GENERAL. The
298-6 attorney general shall file an action against a filing entity in
298-7 the name of the state seeking termination of the entity's existence
298-8 if:
298-9 (1) the filing entity has not cured the problems for
298-10 which winding up and termination is sought before the 31st day
298-11 after the date the notice under Section 11.302(b) is mailed; and
298-12 (2) the attorney general determines that cause exists
298-13 for the involuntary winding up of a filing entity's business and
298-14 termination of the entity's existence under Section 11.301.
298-15 Sec. 11.304. CURE BEFORE FINAL JUDGMENT. An action filed by
298-16 the attorney general under Section 11.303 shall be abated if,
298-17 before a district court renders judgment on the action, the filing
298-18 entity:
298-19 (1) cures the problems for which winding up and
298-20 termination is sought; and
298-21 (2) pays the costs of the action.
298-22 Sec. 11.305. JUDGMENT REQUIRING WINDING UP AND TERMINATION.
298-23 If a district court finds in an action brought under this
298-24 subchapter that proper grounds exist under Section 11.301(a) for a
298-25 winding up of a filing entity's business and termination of the
298-26 filing entity's existence, the court shall:
298-27 (1) make findings to that effect; and
299-1 (2) subject to Section 11.306, enter a judgment not
299-2 earlier than the fifth day after the date the court makes its
299-3 findings.
299-4 Sec. 11.306. STAY OF JUDGMENT. (a) If, in an action brought
299-5 under this subchapter, a filing entity has proved by a
299-6 preponderance of the evidence and obtained a finding that the
299-7 problems for which the filing entity has been found guilty were not
299-8 wilful or the result of a failure to take reasonable precautions,
299-9 the entity may make a sworn application to the court for a stay of
299-10 entry of the judgment to allow the filing entity a reasonable
299-11 opportunity to cure the problems for which it has been found
299-12 guilty. An application made under this subsection must be made not
299-13 later than the fifth day after the date the court makes its
299-14 findings under Section 11.305.
299-15 (b) After a filing entity has made an application under
299-16 Subsection (a), a court shall stay the entry of the judgment if the
299-17 court is reasonably satisfied after considering the application and
299-18 evidence offered with respect to the application that the filing
299-19 entity:
299-20 (1) is able and intends in good faith to cure the
299-21 problems for which it has been found guilty; and
299-22 (2) has not applied for the stay without just cause.
299-23 (c) A court shall stay an entry of judgment under Subsection
299-24 (b) for the period the court determines is reasonably necessary to
299-25 afford the filing entity the opportunity to cure its problems if
299-26 the entity acts with reasonable diligence. The court may not stay
299-27 the entry of the judgment for longer than 60 days after the date
300-1 the court's findings are made.
300-2 (d) The court shall dismiss an action against a filing
300-3 entity that, during the period the action is stayed by the court
300-4 under this section, cures the problems for which winding up and
300-5 termination is sought and pays all costs accrued in the action.
300-6 (e) If a court finds that a filing entity has not cured the
300-7 problems for which winding up and termination is sought within the
300-8 period prescribed by Subsection (c), the court shall enter final
300-9 judgment requiring a winding up of the filing entity's business.
300-10 Sec. 11.307. OPPORTUNITY FOR CURE AFTER AFFIRMATION OF
300-11 FINDINGS BY APPEALS COURT. (a) An appellate court that affirms a
300-12 trial court's findings against a filing entity under this
300-13 subchapter shall remand the case to the trial court with
300-14 instructions to grant the filing entity an opportunity to cure the
300-15 problems for which the entity has been found guilty if:
300-16 (1) the filing entity did not make an application to
300-17 the trial court for stay of the entry of the judgment;
300-18 (2) the appellate court is satisfied that the appeal
300-19 was taken in good faith and not for purpose of delay or with no
300-20 sufficient cause;
300-21 (3) the appellate court finds that the problems for
300-22 which the filing entity has been found guilty are capable of being
300-23 cured; and
300-24 (4) the filing entity has prayed for the opportunity
300-25 to cure its problems in the appeal.
300-26 (b) The appellate court shall determine the period, which
300-27 may not be longer than 60 days after the date the case is remanded
301-1 to the trial court, to be afforded to a filing entity to enable the
301-2 filing entity to cure its problems under Subsection (a).
301-3 (c) The trial court to which an action against a filing
301-4 entity has been remanded under this section shall dismiss the
301-5 action if, during the period prescribed by the appellate court for
301-6 that conduct, the filing entity cures the problems for which
301-7 winding up and termination is sought and pays all costs accrued in
301-8 the action.
301-9 (d) If a filing entity has not cured the problems for which
301-10 winding up and termination is sought within the period prescribed
301-11 by the appellate court under Subsection (b), the judgment requiring
301-12 winding up and termination shall become final.
301-13 Sec. 11.308. JURISDICTION AND VENUE. (a) The attorney
301-14 general shall bring an action for the involuntary winding up and
301-15 termination of a filing entity under this subchapter in:
301-16 (1) a district court of the county in which the
301-17 registered office or principal place of business of the filing
301-18 entity in this state is located; or
301-19 (2) a district court of Travis County.
301-20 (b) A district court described by Subsection (a) has
301-21 jurisdiction of the action for involuntary winding up and
301-22 termination.
301-23 Sec. 11.309. PROCESS IN STATE ACTION. Citation in an action
301-24 for the involuntary winding up and termination of a filing entity
301-25 under this subchapter shall be issued and served as provided by
301-26 law.
301-27 Sec. 11.310. PUBLICATION OF NOTICE. (a) If process in an
302-1 action under this subchapter is returned not found, the attorney
302-2 general shall publish notice in a newspaper in the county in which
302-3 the registered office of the filing entity in this state is
302-4 located. The notice must contain:
302-5 (1) a statement of the pendency of the action;
302-6 (2) the title of the court;
302-7 (3) the title of the action; and
302-8 (4) the earliest date on which default judgment may be
302-9 entered by the court.
302-10 (b) Notice under this section must be published at least
302-11 once a week for two consecutive weeks beginning at any time after
302-12 the citation has been returned.
302-13 (c) The attorney general may include in one published notice
302-14 the name of each filing entity against which an action for
302-15 involuntary winding up and termination is pending in the same
302-16 court.
302-17 (d) Not later than the 10th day after the date notice under
302-18 this section is first published, the attorney general shall send a
302-19 copy of the notice to the filing entity at the filing entity's
302-20 registered office in this state. A certificate from the attorney
302-21 general regarding the sending of the notice is prima facie evidence
302-22 that notice was sent under this section.
302-23 (e) Unless a filing entity has been served with citation, a
302-24 default judgment may not be taken against the entity before the
302-25 31st day after the date the notice is first published.
302-26 Sec. 11.311. ACTION ALLOWED AFTER EXPIRATION OF FILING
302-27 ENTITY'S DURATION. The expiration of a filing entity's period of
303-1 duration does not, by itself, create a vested right on the part of
303-2 an owner or creditor of the filing entity to prevent an action by
303-3 the attorney general for the involuntary winding up of the filing
303-4 entity's business and termination of the filing entity's existence.
303-5 Sec. 11.312. COMPLIANCE BY TERMINATED ENTITY. On the decree
303-6 of a court requiring winding up of a filing entity's business, the
303-7 filing entity shall comply with:
303-8 (1) the requirements of the decree concerning the
303-9 winding up process; and
303-10 (2) Subchapter B to the extent it does not conflict
303-11 with the decree.
303-12 Sec. 11.313. TIMING OF TERMINATION. A court may enter a
303-13 decree under Section 11.301 terminating the existence of a filing
303-14 entity:
303-15 (1) when the court considers it necessary or
303-16 advisable; or
303-17 (2) on completion of the winding up process.
303-18 Sec. 11.314. INVOLUNTARY WINDING UP AND TERMINATION OF
303-19 PARTNERSHIP OR LIMITED LIABILITY COMPANY. A district court in the
303-20 county in which the registered office or principal place of a
303-21 domestic partnership or limited liability company is located has
303-22 jurisdiction to order the winding up and termination of the
303-23 domestic partnership or limited liability company on application
303-24 by:
303-25 (1) a partner in the partnership if the court
303-26 determines that:
303-27 (A) the economic purpose of the partnership is
304-1 likely to be unreasonably frustrated; or
304-2 (B) another partner has engaged in conduct
304-3 relating to the partnership's business that makes it not reasonably
304-4 practicable to carry on the business in partnership with that
304-5 partner; or
304-6 (2) an owner of the partnership or limited liability
304-7 company if the court determines that it is not reasonably
304-8 practicable to carry on the entity's business in conformity with
304-9 its governing documents.
304-10 Sec. 11.315. FILING OF DECREE OF TERMINATION AGAINST FILING
304-11 ENTITY. (a) The clerk of a court that enters a decree terminating
304-12 the existence of a filing entity shall file a certified copy of the
304-13 decree in accordance with Chapter 4.
304-14 (b) A fee may not be charged for the filing of a decree
304-15 under this section.
304-16 (Sections 11.316-11.350 reserved for expansion)
304-17 SUBCHAPTER H. CLAIMS RESOLUTION ON TERMINATION
304-18 Sec. 11.351. LIABILITY OF TERMINATED ENTITY. A terminated
304-19 entity is liable only for an existing claim.
304-20 Sec. 11.352. DEPOSIT WITH COMPTROLLER OF AMOUNT DUE OWNERS
304-21 AND CREDITORS WHO ARE UNKNOWN OR CANNOT BE LOCATED. (a) On the
304-22 voluntary or involuntary termination of a domestic entity, the
304-23 portion of the entity's assets distributable to creditors or owners
304-24 who are unknown or cannot be found after the exercise of reasonable
304-25 diligence by a person responsible for the distribution in
304-26 liquidation of the domestic entity's assets must be reduced to cash
304-27 and deposited as provided by Subsection (b).
305-1 (b) Money from assets liquidated under Subsection (a) shall
305-2 be deposited with the comptroller in a special account to be
305-3 maintained by the comptroller. The money must be accompanied by a
305-4 statement to the comptroller containing:
305-5 (1) the name and last known address of each person who
305-6 is known to be entitled to all or part of the account;
305-7 (2) the amount of each entitled person's distributive
305-8 portion of the money; and
305-9 (3) other information about each person who is
305-10 entitled to all or part of the money as the comptroller may
305-11 reasonably require.
305-12 (c) The comptroller shall issue a receipt for money received
305-13 under this section.
305-14 Sec. 11.353. DISCHARGE OF LIABILITY OF PERSON RESPONSIBLE
305-15 FOR LIQUIDATION. A person responsible for the distribution in
305-16 liquidation of a filing entity's assets will be released and
305-17 discharged from further liability with respect to money received
305-18 from the liquidation when the person deposits the money with the
305-19 comptroller under Section 11.352.
305-20 Sec. 11.354. PAYMENT FROM ACCOUNT BY COMPTROLLER. (a) To
305-21 claim money deposited in an account under Section 11.352, a person
305-22 must submit to the comptroller satisfactory written proof of the
305-23 person's right to the money not later than the seventh anniversary
305-24 of the date the money was deposited with the comptroller.
305-25 (b) The comptroller shall issue a warrant drawn on the
305-26 account created under Section 11.352 in favor of a person who meets
305-27 the requirements for making a claim under Subsection (a) and in the
306-1 amount to which the person is entitled.
306-2 Sec. 11.355. NOTICE OF ESCHEAT; ESCHEAT. (a) If no claimant
306-3 has made satisfactory proof of a right to the money within the
306-4 period prescribed by Section 11.354(a), the comptroller shall
306-5 publish in one issue of a newspaper of general circulation in
306-6 Travis County a notice of the proposed escheat of the money.
306-7 (b) A notice published under Subsection (a) must contain:
306-8 (1) the name and last known address of any known
306-9 creditor or owner entitled to the money;
306-10 (2) the amount of money deposited with the
306-11 comptroller; and
306-12 (3) the name of the terminated filing entity from
306-13 whose assets the money was derived.
306-14 (c) If no claimant makes satisfactory proof to the
306-15 comptroller of a right to the money before the 61st day after the
306-16 date notice under this section is published, the money
306-17 automatically escheats to and becomes the property of the state and
306-18 shall be deposited in the general revenue fund.
306-19 Sec. 11.356. LIMITED SURVIVAL AFTER TERMINATION. (a)
306-20 Notwithstanding the termination of a domestic entity under this
306-21 chapter, a terminated entity continues in existence until the third
306-22 anniversary of the effective date of the entity's termination only
306-23 for purposes of:
306-24 (1) prosecuting or defending in the terminated
306-25 entity's name an action or proceeding brought by or against the
306-26 terminated entity;
306-27 (2) permitting the survival of an existing claim by or
307-1 against the terminated entity;
307-2 (3) holding title to and liquidating property that
307-3 remained with the terminated entity at the time of termination or
307-4 property that is collected by the terminated entity after
307-5 termination;
307-6 (4) applying or distributing property, or its
307-7 proceeds, as provided by Section 11.053; and
307-8 (5) settling affairs not completed before termination.
307-9 (b) A terminated entity may not continue its existence for
307-10 the purpose of continuing the business or affairs for which the
307-11 terminated entity was formed unless the terminated entity is
307-12 reinstated under Subchapter E.
307-13 (c) If an action on an existing claim by or against a
307-14 terminated entity has been brought before the expiration of the
307-15 three-year period after the date of the entity's termination and
307-16 the claim was not extinguished under Section 11.359, the terminated
307-17 entity continues to survive for purposes of:
307-18 (1) the action until all judgments, orders, and
307-19 decrees have been fully executed; and
307-20 (2) the application or distribution of any property of
307-21 the terminated entity as provided by Section 11.053 until the
307-22 property has been applied or distributed.
307-23 Sec. 11.357. GOVERNING PERSONS OF ENTITY DURING LIMITED
307-24 SURVIVAL. (a) During the three-year period that a terminated
307-25 entity's existence is continued under this section, the governing
307-26 persons of the terminated entity serving at the time of termination
307-27 shall continue to manage the affairs of the terminated entity for
308-1 the limited purposes specified by Section 11.356 and have the
308-2 powers necessary to accomplish those purposes. The number of
308-3 governing persons:
308-4 (1) may be reduced because of the death of a governing
308-5 person; and
308-6 (2) may include successors to governing persons chosen
308-7 by the other governing persons.
308-8 (b) In exercising powers prescribed under Subsection (a), a
308-9 governing person:
308-10 (1) has the same duties to the terminated entity that
308-11 the person had immediately before the termination; and
308-12 (2) is liable to the terminated entity for the
308-13 person's actions taken after the entity's termination to the same
308-14 extent that the person would have been liable had the person taken
308-15 those actions before the termination.
308-16 Sec. 11.358. ACCELERATED PROCEDURE FOR EXISTING CLAIM
308-17 RESOLUTION. (a) A terminated entity may shorten the period for
308-18 resolving a person's existing claim against the entity by giving
308-19 notice by registered or certified mail, return receipt requested,
308-20 to the claimant at the claimant's last known address that the claim
308-21 must be resolved under this section.
308-22 (b) The notice required under Subsection (a) must:
308-23 (1) state the requirements of Subsections (c) and (d)
308-24 for presenting a claim;
308-25 (2) provide the mailing address to which the person's
308-26 claim against the terminated entity must be sent;
308-27 (3) state that the claim will be extinguished if
309-1 written presentation of the claim is not received at the address
309-2 given on or before the date specified in the notice, which may not
309-3 be earlier than the 120th day after the date the notice is mailed
309-4 to the person by the terminated entity; and
309-5 (4) be accompanied by a copy of this section of the
309-6 code.
309-7 (c) To assert a claim, a person who is notified by a
309-8 terminated entity that the person's claim must be resolved under
309-9 this section must present the claim in writing to the terminated
309-10 entity at the address given by the entity in the notice.
309-11 (d) A claim presented under Subsection (c) must:
309-12 (1) contain the:
309-13 (A) identity of the claimant; and
309-14 (B) nature and amount of the claim; and
309-15 (2) be received by the terminated entity not later
309-16 than the date specified in the notice under Subsection (b)(3).
309-17 (e) If a person presents a claim that meets the requirements
309-18 of this section, the terminated entity to whom the claim is
309-19 presented may give written notice to the person that the claim is
309-20 rejected by the terminated entity.
309-21 (f) Notice under Subsection (e) must:
309-22 (1) be sent by registered or certified mail, return
309-23 receipt requested, and addressed to the last known address of the
309-24 person presenting the claim;
309-25 (2) state that the claim has been rejected by the
309-26 terminated entity;
309-27 (3) state that the claim will be extinguished unless
310-1 an action on the claim is brought:
310-2 (A) not later than the 180th day after the date
310-3 the notice of rejection of the claim was mailed to the person; and
310-4 (B) not later than the third anniversary of the
310-5 effective date of the entity's termination; and
310-6 (4) state the date on which notice of the claim's
310-7 rejection was mailed and the effective date of the entity's
310-8 termination.
310-9 Sec. 11.359. EXTINGUISHMENT OF EXISTING CLAIM. (a) Except
310-10 as provided by Subsection (b), an existing claim by or against a
310-11 terminated entity is extinguished unless an action or proceeding is
310-12 brought on the claim not later than the third anniversary of:
310-13 (1) the date of the filing of the entity's certificate
310-14 of termination, if the terminated entity is a filing entity; or
310-15 (2) the date notice is provided to the claimant under
310-16 Section 11.052.
310-17 (b) A person's claim against a terminated entity may be
310-18 extinguished before the period prescribed by Subsection (a) if the
310-19 person is notified under Section 11.358(a) that the claim will be
310-20 resolved under Section 11.358 and the person:
310-21 (1) fails to properly present the claim in writing
310-22 under Sections 11.358(c) and (d); or
310-23 (2) fails to bring an action on a claim rejected under
310-24 Section 11.358(e) before:
310-25 (A) the 180th day after the date the notice
310-26 rejecting the claim was mailed to the person; and
310-27 (B) the third anniversary of the effective date
311-1 of the entity's termination.
311-2 (Sections 11.360-11.400 reserved for expansion)
311-3 SUBCHAPTER I. RECEIVERSHIP
311-4 Sec. 11.401. CODE GOVERNS. A receiver may be appointed for a
311-5 domestic entity or for a domestic entity's property or business
311-6 only as provided for and on the conditions set forth in this code.
311-7 Sec. 11.402. JURISDICTION TO APPOINT RECEIVER. (a) A court
311-8 that has subject matter jurisdiction over specific property of a
311-9 domestic or foreign entity that is located in this state and is
311-10 involved in litigation has jurisdiction to appoint a receiver for
311-11 that property.
311-12 (b) A district court in the county in which the registered
311-13 office or principal place of business of a domestic entity is
311-14 located has jurisdiction to:
311-15 (1) appoint a receiver for the property and business
311-16 of a domestic entity for the purpose of rehabilitating the entity;
311-17 or
311-18 (2) order the liquidation of the property and business
311-19 of a domestic entity and appoint a receiver to effect that
311-20 liquidation.
311-21 Sec. 11.403. APPOINTMENT OF RECEIVER FOR SPECIFIC PROPERTY.
311-22 (a) Subject to Subsection (b), and on the application of a person
311-23 whose right to or interest in any property or fund or the proceeds
311-24 from the property or fund is probable, a court that has
311-25 jurisdiction over specific property of a domestic or foreign entity
311-26 may appoint a receiver in an action:
311-27 (1) by a vendor to vacate a fraudulent purchase of the
312-1 property;
312-2 (2) by a creditor to subject the property or fund to
312-3 the creditor's claim;
312-4 (3) between partners or others jointly owning or
312-5 interested in the property or fund;
312-6 (4) by a mortgagee of the property for the foreclosure
312-7 of the mortgage and sale of the property, when:
312-8 (A) it appears that the mortgaged property is in
312-9 danger of being lost, removed, or materially injured; or
312-10 (B) it appears that the mortgage is in default
312-11 and that the property is probably insufficient to discharge the
312-12 mortgage debt; or
312-13 (5) in which receivers for specific property have been
312-14 previously appointed by courts of equity.
312-15 (b) A court may appoint a receiver for the property or fund
312-16 under Subsection (a) only if:
312-17 (1) with respect to an action brought under Subsection
312-18 (a)(1), (2), or (3), it is shown that the property or fund is in
312-19 danger of being lost, removed, or materially injured;
312-20 (2) circumstances exist that are considered by the
312-21 court to necessitate the appointment of a receiver to conserve the
312-22 property or fund and avoid damage to interested parties;
312-23 (3) all other requirements of law are complied with;
312-24 and
312-25 (4) the court determines that other available legal
312-26 and equitable remedies are inadequate.
312-27 (c) The court appointing a receiver under this section has
313-1 and shall retain exclusive jurisdiction over the specific property
313-2 placed in receivership. The court shall determine the rights of
313-3 the parties in the property or its proceeds.
313-4 (d) If the condition necessitating the appointment of a
313-5 receiver under this section is remedied, the receivership shall be
313-6 terminated immediately, the management of the domestic entity shall
313-7 be restored to its managerial officials, and the receiver shall
313-8 redeliver to the domestic entity all of the property remaining in
313-9 receivership.
313-10 Sec. 11.404. APPOINTMENT OF RECEIVER TO REHABILITATE
313-11 DOMESTIC ENTITY. (a) Subject to Subsection (b), a court that has
313-12 jurisdiction over the property and business of a domestic entity
313-13 under Section 11.402(b) may appoint a receiver for the entity's
313-14 property and business if:
313-15 (1) in an action by an owner or member of the domestic
313-16 entity, it is established that:
313-17 (A) the entity is insolvent or in imminent
313-18 danger of insolvency;
313-19 (B) the governing persons of the entity are
313-20 deadlocked in the management of the entity's affairs, the owners or
313-21 members of the entity are unable to break the deadlock, and
313-22 irreparable injury to the entity is being suffered or is threatened
313-23 because of the deadlock;
313-24 (C) the actions of the governing persons of the
313-25 entity are illegal, oppressive, or fraudulent;
313-26 (D) the property of the entity is being
313-27 misapplied or wasted; or
314-1 (E) with respect to a for-profit corporation,
314-2 the shareholders of the entity are deadlocked in voting power and
314-3 have failed, for a period of at least two years, to elect
314-4 successors to the governing persons of the entity whose terms have
314-5 expired or would have expired on the election and qualification of
314-6 their successors;
314-7 (2) in an action by a creditor of the domestic entity,
314-8 it is established that:
314-9 (A) the entity is insolvent, the claim of the
314-10 creditor has been reduced to judgment, and an execution on the
314-11 judgment was returned unsatisfied; or
314-12 (B) the entity is insolvent and has admitted in
314-13 writing that the claim of the creditor is due and owing; or
314-14 (3) in an action other than an action described by
314-15 Subdivision (1) or (2), courts of equity have traditionally
314-16 appointed a receiver.
314-17 (b) A court may appoint a receiver under Subsection (a) only
314-18 if:
314-19 (1) circumstances exist that are considered by the
314-20 court to necessitate the appointment of a receiver to conserve the
314-21 property and business of the domestic entity and avoid damage to
314-22 interested parties;
314-23 (2) all other requirements of law are complied with;
314-24 and
314-25 (3) the court determines that all other available
314-26 legal and equitable remedies, including the appointment of a
314-27 receiver for specific property of the domestic entity under Section
315-1 11.402, are inadequate.
315-2 (c) If the condition necessitating the appointment of a
315-3 receiver under this section is remedied, the receivership shall be
315-4 terminated immediately, the management of the domestic entity shall
315-5 be restored to its managerial officials, and the receiver shall
315-6 redeliver to the domestic entity all of its property remaining in
315-7 receivership.
315-8 Sec. 11.405. APPOINTMENT OF RECEIVER TO LIQUIDATE DOMESTIC
315-9 ENTITY; LIQUIDATION. (a) Subject to Subsection (b), a court that
315-10 has jurisdiction over the property and business of a domestic
315-11 entity under Section 11.402(b) may order the liquidation of the
315-12 property and business of the domestic entity and may appoint a
315-13 receiver to effect the liquidation:
315-14 (1) when an action has been filed by the attorney
315-15 general under this chapter to terminate the existence of the entity
315-16 and it is established that liquidation of the entity's business and
315-17 affairs should precede the entry of a decree of termination;
315-18 (2) on application of the entity to have its
315-19 liquidation continued under the supervision of the court;
315-20 (3) if the entity is in receivership and the court
315-21 does not find that any plan presented before the first anniversary
315-22 of the date the receiver was appointed is feasible for remedying
315-23 the condition requiring appointment of the receiver;
315-24 (4) on application of a creditor of the entity if it
315-25 is established that irreparable damage will ensue to the unsecured
315-26 creditors of the domestic entity as a class, generally, unless
315-27 there is an immediate liquidation of the property of the domestic
316-1 entity; or
316-2 (5) on application of an owner, member, or governing
316-3 person of the entity if it is not a for-profit corporation and it
316-4 appears the entity is unable to carry on its business in conformity
316-5 with its governing documents.
316-6 (b) A court may order a liquidation and appoint a receiver
316-7 under Subsection (a) only if:
316-8 (1) the circumstances demand liquidation to avoid
316-9 damage to interested persons;
316-10 (2) all other requirements of law are complied with;
316-11 and
316-12 (3) the court determines that all other available
316-13 legal and equitable remedies, including the appointment of a
316-14 receiver for specific property of the domestic entity and
316-15 appointment of a receiver to rehabilitate the domestic entity, are
316-16 inadequate.
316-17 (c) If the condition necessitating the appointment of a
316-18 receiver under this section is remedied, the receivership shall be
316-19 terminated immediately, the management of the domestic entity shall
316-20 be restored to its managerial officials, and the receiver shall
316-21 redeliver to the domestic entity all of its property remaining in
316-22 receivership.
316-23 Sec. 11.406. RECEIVERS: QUALIFICATIONS, POWERS, AND DUTIES.
316-24 (a) A receiver appointed under this chapter:
316-25 (1) must be an individual citizen of the United States
316-26 or an entity authorized to act as receiver;
316-27 (2) shall give a bond in the amount required by the
317-1 court and with any sureties as may be required by the court;
317-2 (3) may sue and be sued in the receiver's name in any
317-3 court;
317-4 (4) has the powers and duties provided by other laws
317-5 applicable to receivers; and
317-6 (5) has the powers and duties that are stated in the
317-7 order appointing the receiver or that the appointing court:
317-8 (A) considers appropriate to accomplish the
317-9 objectives for which the receiver was appointed; and
317-10 (B) may increase or diminish at any time during
317-11 the proceedings.
317-12 (b) To be appointed a receiver under this chapter, a foreign
317-13 entity must be registered to transact business in this state.
317-14 Sec. 11.407. COURT-ORDERED FILING OF CLAIMS. (a) In a
317-15 proceeding involving a receivership of the property or business of
317-16 a domestic entity, the court may require all claimants of the
317-17 domestic entity to file with the clerk of the court or the
317-18 receiver, in the form provided by the court, proof of their
317-19 respective claims under oath.
317-20 (b) A court that orders the filing of claims under
317-21 Subsection (a) shall:
317-22 (1) set a date, which may not be earlier than four
317-23 months after the date of the order, as the last day for the filing
317-24 of those claims; and
317-25 (2) prescribe the notice that shall be given to
317-26 claimants of the date set under Subdivision (1).
317-27 (c) Before the expiration of the period under Subsection (b)
318-1 for the filing of claims, a court may extend the period for the
318-2 filing of claims to a later date.
318-3 (d) A court may bar a claimant who fails to file a proof of
318-4 claim during the period authorized by the court from participating
318-5 in the distribution of the property of the domestic entity unless
318-6 the claimant presents to the court a justifiable excuse for its
318-7 delay in filing. A court may not order or effect a discharge of a
318-8 claim of the claimant described by this subsection.
318-9 Sec. 11.408. SUPERVISING COURT; JURISDICTION; AUTHORITY. (a)
318-10 A court supervising a receivership under this subchapter may, from
318-11 time to time:
318-12 (1) make allowances to a receiver or attorney in the
318-13 proceeding; and
318-14 (2) direct the payment of a receiver or attorney from
318-15 the property of the domestic entity that is within the scope of the
318-16 receivership or the proceeds of any sale or disposition of that
318-17 property.
318-18 (b) A court that appoints a receiver under this subchapter
318-19 for the property or business of a domestic entity has exclusive
318-20 jurisdiction over the domestic entity and all of its property,
318-21 regardless of where the property is located.
318-22 Sec. 11.409. ANCILLARY RECEIVERSHIPS OF FOREIGN ENTITIES.
318-23 (a) Notwithstanding any provision of this code to the contrary, a
318-24 district court in the county in which the registered office of a
318-25 foreign entity doing business in this state is located has
318-26 jurisdiction to appoint an ancillary receiver for the property and
318-27 business of that entity when the court determines that
319-1 circumstances exist to require the appointment of an ancillary
319-2 receiver.
319-3 (b) A receiver appointed under Subsection (a) serves
319-4 ancillary to a receiver acting under orders of an out-of-state
319-5 court that has jurisdiction to appoint a receiver for the entity.
319-6 Sec. 11.410. RECEIVERSHIP FOR ALL PROPERTY AND BUSINESS OF
319-7 FOREIGN ENTITY. (a) A district court may appoint a receiver for
319-8 all of the property, in and outside this state, of a foreign entity
319-9 doing business in this state and its business if the court
319-10 determines, in accordance with the ordinary usages of equity, that
319-11 circumstances exist that necessitate the appointment of a receiver
319-12 even if a receiver has not been appointed by another court.
319-13 (b) The appointing court shall convert a receivership
319-14 created under Subsection (a) into an ancillary receivership if the
319-15 appointing court determines an ancillary receivership is
319-16 appropriate because a court in another state has ordered a
319-17 receivership of all property and business of the entity.
319-18 Sec. 11.411. GOVERNING PERSONS AND OWNERS NOT NECESSARY
319-19 PARTIES DEFENDANT. Governing persons and owners or members of a
319-20 domestic entity are not necessary parties to an action for a
319-21 receivership or liquidation of the property and business of a
319-22 domestic entity unless relief is sought against those persons
319-23 individually.
319-24 Sec. 11.412. DECREE OF INVOLUNTARY TERMINATION. In an action
319-25 to liquidate the property and business of a domestic entity, the
319-26 court shall enter a decree terminating the entity and the existence
319-27 of the entity shall cease:
320-1 (1) when the costs and expenses of the action and all
320-2 obligations and liabilities of the domestic entity have been paid
320-3 and discharged or adequately provided for and all of the entity's
320-4 remaining property has been distributed to its owners and members;
320-5 or
320-6 (2) if the entity's property is not sufficient to
320-7 discharge the costs and other expenses of the action and all
320-8 obligations and liabilities of the entity, when all the property of
320-9 the entity has been applied toward their payment.
320-10 Sec. 11.413. SUPPLEMENTAL PROVISIONS FOR APPLICATION OF
320-11 PROCEEDS FROM LIQUIDATION OF NONPROFIT CORPORATION. (a) In
320-12 proceedings under Section 11.405, the property of a nonprofit
320-13 corporation or the proceeds resulting from a sale, conveyance, or
320-14 other disposition of its property shall be applied to:
320-15 (1) pay, satisfy, and discharge all costs and expenses
320-16 of the court proceedings and all liabilities and obligations of the
320-17 nonprofit corporation; or
320-18 (2) make adequate provision for the payment,
320-19 satisfaction, and discharge of the costs, expenses, liabilities, or
320-20 obligations described by Subdivision (1).
320-21 (b) Any property remaining after application is made under
320-22 this section must be applied and distributed in the manner provided
320-23 by Section 22.304.
320-24 CHAPTER 12. ADMINISTRATIVE POWERS
320-25 SUBCHAPTER A. SECRETARY OF STATE
320-26 Sec. 12.001. AUTHORITY OF SECRETARY OF STATE. (a) The
320-27 secretary of state may adopt procedural rules for the filing of
321-1 instruments, including the filing of instruments by electronic or
321-2 other means, authorized to be filed with the secretary of state
321-3 under this code.
321-4 (b) The secretary of state has the power and authority
321-5 reasonably necessary to enable the secretary to perform the duties
321-6 imposed on the secretary under this code.
321-7 Sec. 12.002. INTERROGATORIES BY SECRETARY OF STATE. (a) As
321-8 necessary and proper for the secretary of state to determine
321-9 whether a filing entity or a foreign filing entity has complied
321-10 with this code, the secretary of state may serve by mail
321-11 interrogatories on the entity or a managerial official.
321-12 (b) An entity or individual to whom an interrogatory is sent
321-13 by the secretary of state shall answer the interrogatory before the
321-14 later of the 31st day after the date the interrogatory is mailed or
321-15 a date set by the secretary of state. Each answer to an
321-16 interrogatory must be complete, in writing, and under oath. An
321-17 interrogatory directed to an individual shall be answered by the
321-18 individual, and an interrogatory directed to an entity shall be
321-19 answered by a managerial official.
321-20 (c) The secretary of state is not required to file any
321-21 instrument to which an interrogatory relates until the
321-22 interrogatory is answered as provided by this section and only if
321-23 the instrument conforms to the requirements of this code. The
321-24 secretary of state shall certify to the attorney general for action
321-25 as the attorney general may consider appropriate an interrogatory
321-26 and answer to the interrogatory that disclose a violation of this
321-27 code.
322-1 Sec. 12.003. INFORMATION DISCLOSED BY INTERROGATORIES. An
322-2 interrogatory sent by the secretary of state and the answer to the
322-3 interrogatory are subject to Chapter 552, Government Code.
322-4 Sec. 12.004. APPEALS FROM SECRETARY OF STATE. (a) If the
322-5 secretary of state does not approve the filing of a filing
322-6 instrument, the secretary of state shall, before the 11th day after
322-7 the date of the delivery of the filing instrument to the secretary
322-8 of state, notify the person delivering the filing instrument of the
322-9 disapproval and specifying each reason for the disapproval. The
322-10 disapproval of a filing instrument by the secretary of state may be
322-11 appealed only to a district court of Travis County by filing with
322-12 the court clerk a petition, a copy of the filing instrument sought
322-13 to be filed, and a copy of any written disapproval by the secretary
322-14 of state of the filing instrument. The court shall try the appeal
322-15 de novo and shall sustain the action of the secretary of state or
322-16 direct the secretary to take any action the court considers to be
322-17 proper.
322-18 (b) A final order or judgment entered by the district court
322-19 under this section in review of any ruling or decision of the
322-20 secretary of state may be appealed as in other civil actions.
322-21 (Sections 12.005-12.150 reserved for expansion)
322-22 SUBCHAPTER B. ATTORNEY GENERAL
322-23 Sec. 12.151. AUTHORITY OF ATTORNEY GENERAL TO EXAMINE BOOKS
322-24 AND RECORDS. Each filing entity and foreign filing entity shall
322-25 permit the attorney general to inspect, examine, and make copies,
322-26 as the attorney general considers necessary in the performance of a
322-27 power or duty of the attorney general, of any record of the entity.
323-1 A record of the entity includes minutes and a book, account,
323-2 letter, memorandum, document, check, voucher, telegram,
323-3 constitution, and bylaw.
323-4 Sec. 12.152. REQUEST TO EXAMINE. To examine the business of
323-5 a filing entity or foreign filing entity, the attorney general
323-6 shall make a written request to a managerial official, who shall
323-7 immediately permit the attorney general to inspect, examine, and
323-8 make copies of the records of the entity.
323-9 Sec. 12.153. AUTHORITY TO EXAMINE MANAGEMENT OF ENTITY. The
323-10 attorney general may investigate the organization, conduct, and
323-11 management of a filing entity or foreign filing entity and
323-12 determine if the entity has been or is engaged in acts or conduct
323-13 in violation of:
323-14 (1) its governing documents; or
323-15 (2) any law of this state.
323-16 Sec. 12.154. AUTHORITY TO DISCLOSE INFORMATION. Information
323-17 held by the attorney general and derived in the course of an
323-18 examination of an entity's records or documents is not public
323-19 information, is not subject to Chapter 552, Government Code, and
323-20 may not be disclosed except:
323-21 (1) in the course of an administrative or judicial
323-22 proceeding in which the state is a party;
323-23 (2) in a suit by the state to:
323-24 (A) revoke the registration of the foreign
323-25 filing entity or terminate the certificate of formation of the
323-26 filing entity; or
323-27 (B) collect penalties for a violation of the law
324-1 of this state; or
324-2 (3) to provide information to any officer of this
324-3 state charged with the enforcement of its laws.
324-4 Sec. 12.155. FORFEITURE OF BUSINESS PRIVILEGES. A foreign
324-5 filing entity or a filing entity that fails or refuses to permit
324-6 the attorney general to examine or make copies of a record, without
324-7 regard to whether the record is located in this or another state,
324-8 forfeits the right of the entity to do business in this state, and
324-9 the entity's registration or certificate of formation shall be
324-10 revoked or terminated.
324-11 Sec. 12.156. CRIMINAL PENALTY. (a) A managerial official or
324-12 other individual having the authority to manage the affairs of a
324-13 filing entity or foreign filing entity commits an offense if the
324-14 official or individual fails or refuses to permit the attorney
324-15 general to make an investigation of the entity or to examine or to
324-16 make copies of a record of the entity.
324-17 (b) An offense under this section is a Class B misdemeanor.
324-18 (Sections 12.157-12.200 reserved for expansion)
324-19 SUBCHAPTER C. ENFORCEMENT LIEN
324-20 Sec. 12.201. LIEN FOR LAW VIOLATIONS. (a) If a filing
324-21 entity or foreign filing entity violates a law of this state,
324-22 including the law against trusts, monopolies, and conspiracies, or
324-23 combinations or contracts in restraint of trade, for the violation
324-24 of which a fine, penalties, or forfeiture is provided, all of the
324-25 entity's property in this state at the time of the violation or
324-26 that after the violation comes into this state is, because of the
324-27 violation, liable for any fine or penalty under this chapter and
325-1 for costs of suit and costs of collection.
325-2 (b) The state has a lien on all property of a filing entity
325-3 or foreign filing entity in this state on the date a suit is
325-4 instituted by or under the direction of the attorney general in a
325-5 court of this state for the purpose of forfeiting the certificate
325-6 of formation or revoking the registration of the entity or for the
325-7 collection of a fine or penalty due to the state.
325-8 (c) The filing of a suit for a fine, penalties, or
325-9 forfeiture is notice of the lien.
325-10 (Sections 12.202-12.250 reserved for expansion)
325-11 SUBCHAPTER D. ENFORCEMENT PROCEEDINGS
325-12 Sec. 12.251. RECEIVER. In a suit filed by this state against
325-13 a filing entity or foreign filing entity for the termination of the
325-14 entity's certificate of formation or registration or for a fine or
325-15 penalty, the court in this state in which the suit is pending:
325-16 (1) shall appoint a receiver for the property and
325-17 business of the entity in this state or that subsequently comes
325-18 into this state during the receivership if the filing entity or
325-19 foreign filing entity commences the process of winding up its
325-20 business in this or another state or a judgment is rendered against
325-21 it in this or another state for the termination of the entity's
325-22 certificate of formation or registration; and
325-23 (2) may appoint a receiver for the entity if the
325-24 interest of the state requires the appointment.
325-25 Sec. 12.252. FORECLOSURE. (a) The attorney general may
325-26 bring suit to foreclose a lien created by this chapter.
325-27 (b) If a filing entity or a foreign filing entity subject to
326-1 this code has commenced the winding up process or has had the
326-2 entity's certificate of formation or registration terminated by a
326-3 judgment, citation in a suit for foreclosure may be served on any
326-4 person in this state who acted and was acting as agent of the
326-5 entity in this state when the entity commenced the winding up
326-6 process or the entity's certificate of formation or registration
326-7 was terminated.
326-8 Sec. 12.253. ACTION AGAINST INSOLVENT ENTITY. When the
326-9 attorney general is convinced that a filing entity or foreign
326-10 filing entity is insolvent, the attorney general shall institute
326-11 quo warranto or other appropriate proceedings to terminate the
326-12 certificate of formation or registration of the filing entity or
326-13 foreign filing entity that is insolvent.
326-14 Sec. 12.254. SUITS BY DISTRICT OR COUNTY ATTORNEY. A
326-15 district or county attorney shall bring and prosecute a proceeding
326-16 under Section 12.252 or 12.253 when directed to do so by the
326-17 attorney general.
326-18 Sec. 12.255. PERMISSION TO SUE. Before a petition may be
326-19 filed by the attorney general or by a district or county attorney
326-20 in a suit authorized by Section 12.252 or 12.253, leave must be
326-21 granted by the judge of the court in which the proceeding is to be
326-22 filed.
326-23 Sec. 12.256. EXAMINATION AND NOTICE. (a) The judge of a
326-24 court in which a proceeding under Section 12.252 or 12.253 is to be
326-25 filed shall carefully examine the petition before granting leave to
326-26 sue. The judge may also require an examination into the facts. If
326-27 it appears with reasonable certainty from the petition or from the
327-1 petition and facts that there is a prima facie showing for the
327-2 relief sought, the judge may grant leave to file.
327-3 (b) On an application for the appointment of a receiver, the
327-4 entity proceeded against is entitled to 10 days' notice before the
327-5 day set for the hearing.
327-6 Sec. 12.257. DISMISSAL OF ACTION. (a) A suit authorized by
327-7 Section 12.253 or 12.258 may not be filed or, if filed, shall be
327-8 dismissed if the entity, through its owners or members, reduces its
327-9 indebtedness so that it is not insolvent.
327-10 (b) The respondent shall pay the costs of a dismissed suit
327-11 under this section.
327-12 Sec. 12.258. LIQUIDATION OF INSOLVENT ENTITY. (a) A court
327-13 hearing a proceeding under Section 12.253 against an insolvent
327-14 entity may, after the entity has been shown to be insolvent,
327-15 appoint one or more receivers for the entity and its property. The
327-16 receiver may settle the affairs of the entity, collect outstanding
327-17 debts, and divide the money and property belonging to the entity
327-18 among its owners after paying the debts of the entity and all
327-19 expenses incidental to the judicial proceedings and receivership.
327-20 (b) The court may continue the existence of the entity for
327-21 three years, and for additional reasonable time as necessary to
327-22 accomplish the purposes of this subchapter.
327-23 Sec. 12.259. EXTRAORDINARY REMEDIES; BOND. The state has a
327-24 right to a writ of attachment, garnishment, sequestration, or
327-25 injunction, without bond, to aid in the enforcement of the state's
327-26 rights created by this chapter.
327-27 Sec. 12.260. ABATEMENT OF SUIT. An action or cause of action
328-1 for a fine, penalty, or forfeiture that this state has or may have
328-2 against a filing entity or foreign filing entity does not abate
328-3 because the entity dissolves, voluntarily or otherwise, or the
328-4 entity's certificate of formation is terminated or the entity's
328-5 registration is revoked.
328-6 Sec. 12.261. PROVISIONS CUMULATIVE. Each right or remedy
328-7 provided by this chapter is cumulative and does not affect any
328-8 other right or remedy for the enforcement, payment, or collection
328-9 of a fine, forfeiture, or penalty or any other means provided by
328-10 law for securing or preserving testimony or inquiring into the
328-11 rights or privileges of an entity.
328-12 TITLE 2. CORPORATIONS
328-13 CHAPTER 20. GENERAL PROVISIONS
328-14 Sec. 20.001. REQUIREMENT THAT FILING INSTRUMENT BE SIGNED BY
328-15 OFFICER. Unless otherwise provided by this title, a filing
328-16 instrument of a corporation must be signed by an officer of the
328-17 corporation.
328-18 Sec. 20.002. ULTRA VIRES ACTS. (a) Lack of capacity of a
328-19 corporation may not be the basis of any claim or defense at law or
328-20 in equity.
328-21 (b) An act of a corporation or a transfer of property by or
328-22 to a corporation is not invalid because the act or transfer was:
328-23 (1) beyond the scope of the purpose or purposes of the
328-24 corporation as expressed in the corporation's certificate of
328-25 formation; or
328-26 (2) inconsistent with a limitation on the authority of
328-27 an officer or director to exercise a statutory power of the
329-1 corporation, as that limitation is expressed in the corporation's
329-2 certificate of formation.
329-3 (c) The fact that an act or transfer is beyond the scope of
329-4 the expressed purpose or purposes of the corporation or is
329-5 inconsistent with an expressed limitation on the authority of an
329-6 officer or director may be asserted in a proceeding:
329-7 (1) by a shareholder or member against the corporation
329-8 to enjoin the performance of an act or the transfer of property by
329-9 or to the corporation;
329-10 (2) by the corporation, acting directly or through a
329-11 receiver, trustee, or other legal representative, or through
329-12 members in a representative suit, against an officer or director or
329-13 former officer or director of the corporation for exceeding that
329-14 person's authority; or
329-15 (3) by the attorney general to:
329-16 (A) terminate the corporation;
329-17 (B) enjoin the corporation from performing an
329-18 unauthorized act; or
329-19 (C) enforce divestment of real property acquired
329-20 or held contrary to the laws of this state.
329-21 (d) If the unauthorized act or transfer sought to be
329-22 enjoined under Subsection (c)(1) is being or is to be performed or
329-23 made under a contract to which the corporation is a party and if
329-24 each party to the contract is a party to the proceeding, the court
329-25 may set aside and enjoin the performance of the contract. The
329-26 court may award to the corporation or to another party to the
329-27 contract, as appropriate, compensation for loss or damage resulting
330-1 from the action of the court in setting aside and enjoining the
330-2 performance of the contract, excluding loss of anticipated profits.
330-3 CHAPTER 21. FOR-PROFIT CORPORATIONS
330-4 SUBCHAPTER A. GENERAL PROVISIONS
330-5 Sec. 21.001. APPLICABILITY OF CHAPTER. This chapter applies
330-6 only to a:
330-7 (1) domestic for-profit corporation formed under this
330-8 code; and
330-9 (2) foreign for-profit corporation that is transacting
330-10 business in this state, regardless of whether the foreign
330-11 corporation is registered to transact business in this state.
330-12 Sec. 21.002. DEFINITIONS. In this chapter:
330-13 (1) "Authorized share" means a share of any class the
330-14 corporation is authorized to issue.
330-15 (2) "Board of directors" includes each person who is
330-16 authorized to perform the functions of the board of directors under
330-17 a shareholders' agreement as authorized by this chapter.
330-18 (3) "Cancel," with respect to an authorized share of a
330-19 corporation, means the restoration of an issued share to the status
330-20 of an authorized but unissued share.
330-21 (4) "Consuming assets corporation" means a corporation
330-22 that:
330-23 (A) is engaged in the business of exploiting
330-24 assets subject to depletion or amortization;
330-25 (B) states in its certificate of formation that
330-26 it is a consuming assets corporation;
330-27 (C) includes the phrase "a consuming assets
331-1 corporation" as part of its official corporate name and gives the
331-2 phrase equal prominence with the rest of the corporate name on the
331-3 financial statements and certificates of ownership of the
331-4 corporation; and
331-5 (D) includes in each of the certificates of
331-6 ownership of the corporation the sentence, "This corporation is
331-7 permitted by law to pay dividends out of reserves that may impair
331-8 its stated capital."
331-9 (5) "Corporation" or "domestic corporation" means a
331-10 domestic for-profit corporation subject to this chapter.
331-11 (6) "Distribution" does not include:
331-12 (A) an amendment to the corporation's
331-13 certificate of formation to change the shares of a class or series,
331-14 with or without par value, into the same or a different number of
331-15 shares of the same or a different class or series, with or without
331-16 par value; or
331-17 (B) a split-up or division of the issued shares
331-18 of a class of a corporation into a larger number of shares within
331-19 the same class that does not increase the stated capital of the
331-20 corporation.
331-21 (7) "Foreign corporation" means a for-profit
331-22 corporation formed under the laws of a jurisdiction other than this
331-23 state.
331-24 (8) "Investment Company Act" means the Investment
331-25 Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), as amended.
331-26 (9) "Net assets" means the amount by which the total
331-27 assets of a corporation exceed the total debts of the corporation.
332-1 (10) "Share distribution" means a distribution by a
332-2 corporation that is payable in authorized but unissued shares or
332-3 treasury shares of the corporation.
332-4 (11) "Stated capital" means the sum of:
332-5 (A) the par value of all shares of the
332-6 corporation with par value that have been issued;
332-7 (B) the consideration, as expressed in terms of
332-8 United States dollars, determined by the corporation in the manner
332-9 provided by Section 21.160 for all shares of the corporation
332-10 without par value that have been issued, except the part of the
332-11 consideration that:
332-12 (i) has been actually received;
332-13 (ii) is less than all of that
332-14 consideration; and
332-15 (iii) the board, by resolution adopted not
332-16 later than the 60th day after the date of issuance of those shares,
332-17 has allocated to surplus; and
332-18 (C) an amount not included in Paragraphs (A) and
332-19 (B) that has been transferred to stated capital of the corporation,
332-20 on the payment of a share distribution or on adoption by the board
332-21 of directors of a resolution directing that all or part of surplus
332-22 be transferred to stated capital, minus each reduction made as
332-23 permitted by law.
332-24 (12) "Surplus" means the amount by which the net
332-25 assets of a corporation exceed the stated capital of the
332-26 corporation.
332-27 (13) "Treasury shares" means shares of a corporation
333-1 that have been issued, and subsequently acquired by the
333-2 corporation, that belong to the corporation and that have not been
333-3 canceled. The term does not include shares held by a corporation
333-4 in a fiduciary capacity, whether directly or through a trust or
333-5 similar arrangement.
333-6 (Sections 21.003-21.050 reserved for expansion)
333-7 SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS
333-8 Sec. 21.051. NO PROPERTY RIGHT IN CERTIFICATE OF FORMATION.
333-9 A shareholder of a corporation does not have a vested property
333-10 right resulting from the certificate of formation, including a
333-11 provision in the certificate of formation relating to the
333-12 management, control, capital structure, dividend entitlement,
333-13 purpose, or duration of the corporation.
333-14 Sec. 21.052. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF
333-15 FORMATION. (a) To adopt an amendment to the certificate of
333-16 formation of a corporation as provided by Subchapter B, Chapter 3,
333-17 the board of directors of the corporation shall:
333-18 (1) adopt a resolution stating the proposed amendment;
333-19 and
333-20 (2) follow the procedures prescribed by Sections
333-21 21.053-21.055.
333-22 (b) The resolution may incorporate the proposed amendment in
333-23 a restated certificate of formation that complies with Section
333-24 3.059.
333-25 (c) The certificate of amendment must be filed in accordance
333-26 with Chapter 4 and takes effect as provided by Subchapter B,
333-27 Chapter 3.
334-1 Sec. 21.053. ADOPTION OF AMENDMENT BY BOARD OF DIRECTORS. If
334-2 a corporation does not have any issued and outstanding shares, the
334-3 board of directors may adopt a proposed amendment to the
334-4 corporation's certificate of formation by resolution without
334-5 shareholder approval.
334-6 Sec. 21.054. ADOPTION OF AMENDMENT BY SHAREHOLDERS. If a
334-7 corporation has issued and outstanding shares:
334-8 (1) a resolution described by Section 21.052 must also
334-9 direct that the proposed amendment be submitted to a vote of the
334-10 shareholders at a meeting; and
334-11 (2) the shareholders must approve the proposed
334-12 amendment in the manner provided by Section 21.055.
334-13 Sec. 21.055. NOTICE OF AND MEETING TO CONSIDER PROPOSED
334-14 AMENDMENT. (a) Each shareholder of record entitled to vote shall
334-15 be given written notice containing the proposed amendment or a
334-16 summary of the changes to be effected within the time and in the
334-17 manner provided by this code for giving notice of meetings to
334-18 shareholders. The proposed amendment or summary may be included in
334-19 the notice required to be provided for an annual meeting.
334-20 (b) At the meeting, the proposed amendment shall be adopted
334-21 only on receiving the affirmative vote of shareholders entitled to
334-22 vote required by Section 21.364.
334-23 (c) An unlimited number of amendments may be submitted for
334-24 adoption by the shareholders at a meeting.
334-25 Sec. 21.056. RESTATED CERTIFICATE OF FORMATION. (a) A
334-26 corporation may adopt a restated certificate of formation as
334-27 provided by Subchapter B, Chapter 3, by following the same
335-1 procedures to amend its certificate of formation under Sections
335-2 21.052-21.055, except that shareholder approval is not required if
335-3 an amendment is not adopted.
335-4 (b) The restated certificate of formation shall be filed in
335-5 accordance with Chapter 4 and takes effect as provided by
335-6 Subchapter B, Chapter 3.
335-7 Sec. 21.057. BYLAWS. (a) The board of directors of a
335-8 corporation shall adopt initial bylaws.
335-9 (b) The bylaws may contain provisions for the regulation and
335-10 management of the affairs of the corporation that are consistent
335-11 with law and the corporation's certificate of formation.
335-12 (c) A corporation's board of directors may amend or repeal
335-13 bylaws or adopt new bylaws unless:
335-14 (1) the corporation's certificate of formation or this
335-15 code wholly or partly reserves the power exclusively to the
335-16 corporation's shareholders; or
335-17 (2) in amending, repealing, or adopting a bylaw, the
335-18 shareholders expressly provide that the board of directors may not
335-19 amend, repeal, or readopt that bylaw.
335-20 Sec. 21.058. DUAL AUTHORITY. Unless the certificate of
335-21 formation or a bylaw adopted by the shareholders provides otherwise
335-22 as to all or a part of a corporation's bylaws, a corporation's
335-23 shareholders may amend, repeal, or adopt the corporation's bylaws
335-24 regardless of whether the bylaws may also be amended, repealed, or
335-25 adopted by the corporation's board of directors.
335-26 Sec. 21.059. ORGANIZATION MEETING. (a) This section does
335-27 not apply to a corporation created as a result of a conversion or
336-1 merger the plan of which states the bylaws and names the officers
336-2 of the corporation.
336-3 (b) After the filing of a certificate of formation takes
336-4 effect, an organization meeting shall be held at the call of the
336-5 majority of the initial board of directors or the persons named in
336-6 the certificate of formation under Section 3.007(a)(4) for the
336-7 purpose of adopting bylaws, electing officers, and transacting
336-8 other business.
336-9 (c) Not later than the third day before the date of the
336-10 meeting, the directors or other persons calling the meeting shall
336-11 send notice of the time and place of the meeting to each other
336-12 director or person named in the certificate of formation.
336-13 (Sections 21.060-21.100 reserved for expansion)
336-14 SUBCHAPTER C. SHAREHOLDERS' AGREEMENTS
336-15 Sec. 21.101. SHAREHOLDERS' AGREEMENT. (a) The shareholders
336-16 of a corporation may enter into an agreement that:
336-17 (1) restricts the discretion or powers of the board of
336-18 directors;
336-19 (2) eliminates the board of directors and authorizes
336-20 the business and affairs of the corporation to be managed, wholly
336-21 or partly, by one or more of its shareholders or other persons;
336-22 (3) establishes the individuals who shall serve as
336-23 directors or officers of the corporation;
336-24 (4) determines the term of office, manner of selection
336-25 or removal, or terms or conditions of employment of a director,
336-26 officer, or other employee of the corporation, regardless of the
336-27 length of employment;
337-1 (5) governs the authorization or making of
337-2 distributions whether in proportion to ownership of shares, subject
337-3 to Section 21.303;
337-4 (6) determines the manner in which profits and losses
337-5 will be apportioned;
337-6 (7) governs, in general or with regard to specific
337-7 matters, the exercise or division of voting power by and between
337-8 the shareholders, directors, or other persons, including use of
337-9 disproportionate voting rights or director proxies;
337-10 (8) establishes the terms of an agreement for the
337-11 transfer or use of property or for the provision of services
337-12 between the corporation and another person, including a
337-13 shareholder, director, officer, or employee of the corporation;
337-14 (9) authorizes arbitration or grants authority to a
337-15 shareholder or other person to resolve any issue about which there
337-16 is a deadlock among the directors, shareholders, or other persons
337-17 authorized to manage the corporation;
337-18 (10) requires winding up and termination of the
337-19 corporation at the request of one or more shareholders or on the
337-20 occurrence of a specified event or contingency, in which case the
337-21 winding up and termination of the corporation will proceed as if
337-22 all of the shareholders had consented in writing to the winding up
337-23 and termination as provided by Subchapter K; or
337-24 (11) otherwise governs the exercise of corporate
337-25 powers, the management of the business and affairs of the
337-26 corporation, or the relationship among the shareholders, the
337-27 directors, and the corporation as if the corporation were a
338-1 partnership or in a manner that would otherwise be appropriate only
338-2 among partners and not contrary to public policy.
338-3 (b) A shareholders' agreement authorized by this section
338-4 must be:
338-5 (1) contained in:
338-6 (A) the certificate of formation or bylaws if
338-7 approved by all of the shareholders at the time of the agreement;
338-8 or
338-9 (B) a written agreement that is:
338-10 (i) signed by all of the shareholders at
338-11 the time of the agreement; and
338-12 (ii) made known to the corporation; and
338-13 (2) amended only by all of the shareholders at the
338-14 time of the amendment, unless the agreement provides otherwise.
338-15 Sec. 21.102. TERM OF AGREEMENT. A shareholders' agreement
338-16 under this subchapter is valid for 10 years, unless the agreement
338-17 provides otherwise.
338-18 Sec. 21.103. DISCLOSURE OF AGREEMENT; RECALL OF CERTAIN
338-19 CERTIFICATES. (a) The existence of an agreement authorized by this
338-20 subchapter shall be noted conspicuously on the front or back of
338-21 each certificate for outstanding shares or on the information
338-22 statement required for uncertificated shares by Section 3.205.
338-23 (b) The disclosure required by this section must include the
338-24 sentence, "These shares are subject to the provisions of a
338-25 shareholders' agreement that may provide for management of the
338-26 corporation in a manner different than in other corporations and
338-27 may subject a shareholder to certain obligations or liabilities not
339-1 otherwise imposed on shareholders in other corporations."
339-2 (c) A corporation that has outstanding shares represented by
339-3 certificates at the time the shareholders of the corporation enter
339-4 into an agreement under this subchapter shall recall the
339-5 outstanding certificates and issue substitute certificates that
339-6 comply with this subchapter.
339-7 (d) The failure to note the existence of the agreement on
339-8 the certificate or information statement does not affect the
339-9 validity of the agreement or an action taken pursuant to the
339-10 agreement.
339-11 Sec. 21.104. EFFECT OF SHAREHOLDERS' AGREEMENT. A
339-12 shareholders' agreement that complies with this subchapter is
339-13 effective among the shareholders and between the shareholders and
339-14 the corporation even if the terms of the agreement are inconsistent
339-15 with this code.
339-16 Sec. 21.105. KNOWLEDGE OF PURCHASER OF SHARES. (a) A
339-17 purchaser of shares who does not have knowledge at the time of
339-18 purchase of the existence of a shareholders' agreement authorized
339-19 by this subchapter is entitled to rescind the purchase.
339-20 (b) A purchaser is considered to have knowledge of the
339-21 existence of the shareholders' agreement for purposes of this
339-22 section if:
339-23 (1) the existence of the agreement is noted on the
339-24 certificate or information statement for the shares as required by
339-25 Section 21.103; and
339-26 (2) with respect to shares that are not represented by
339-27 a certificate, the information statement noting existence of the
340-1 agreement is delivered to the purchaser not later than the time the
340-2 shares are purchased.
340-3 (c) An action to enforce the right of rescission authorized
340-4 by this section must be commenced not later than the earlier of:
340-5 (1) the 90th day after the date the existence of the
340-6 shareholder agreement is discovered; or
340-7 (2) the second anniversary of the purchase date of the
340-8 shares.
340-9 Sec. 21.106. AGREEMENT LIMITING AUTHORITY OF AND SUPPLANTING
340-10 BOARD OF DIRECTORS; LIABILITY. (a) A shareholders' agreement
340-11 authorized by this subchapter that limits the discretion or powers
340-12 of the board of directors or supplants the board of directors
340-13 relieves the directors of, and imposes on a person in whom the
340-14 discretion or powers of the board of directors or the management of
340-15 the business and affairs of the corporation is vested, liability
340-16 for an act or omission of the person.
340-17 (b) A person on whom liability for an act or omission is
340-18 imposed under this section is liable in the same manner and to the
340-19 same extent as a director on whom liability for an act or omission
340-20 is imposed by this code or other law.
340-21 Sec. 21.107. LIABILITY OF SHAREHOLDER. The existence of or a
340-22 performance under a shareholders' agreement authorized by this
340-23 subchapter is not a ground for imposing personal liability on a
340-24 shareholder for an act or obligation of the corporation by
340-25 disregarding the separate existence of the corporation or
340-26 otherwise, even if the agreement or a performance under the
340-27 agreement:
341-1 (1) treats the corporation as if the corporation were
341-2 a partnership or in a manner that otherwise is appropriate only
341-3 among partners;
341-4 (2) results in the corporation being considered a
341-5 partnership for purposes of taxation; or
341-6 (3) results in failure to observe the corporate
341-7 formalities otherwise applicable to the matters governed by the
341-8 agreement.
341-9 Sec. 21.108. PERSONS ACTING IN PLACE OF SHAREHOLDERS. An
341-10 organizer or a subscriber for shares may act as a shareholder with
341-11 respect to a shareholders' agreement authorized by this subchapter
341-12 if no shares have been issued when the agreement is signed.
341-13 Sec. 21.109. AGREEMENT NOT EFFECTIVE. (a) A shareholders'
341-14 agreement authorized by this subchapter ceases to be effective when
341-15 shares of the corporation are:
341-16 (1) listed on a national securities exchange or
341-17 similar system;
341-18 (2) quoted on an interdealer quotation system of a
341-19 national securities association or successor system; or
341-20 (3) regularly traded in a market maintained by one or
341-21 more members of a national or affiliated securities association.
341-22 (b) If a corporation does not have a board of directors and
341-23 an agreement of the shareholders of the corporation entered into
341-24 under this subchapter ceases to be effective, a board of directors
341-25 shall be instituted or reinstated to govern the corporation in the
341-26 manner provided by Section 21.710(c).
341-27 (c) If a shareholders' agreement that ceases to be effective
342-1 is contained in or referred to by the certificate of formation or
342-2 bylaws of a corporation, the board of directors of the corporation
342-3 may adopt an amendment to the certificate of formation or bylaws,
342-4 without shareholder action, to delete the agreement and any
342-5 references to the agreement.
342-6 (Sections 21.110-21.150 reserved for expansion)
342-7 SUBCHAPTER D. SHARES, OPTIONS, AND CONVERTIBLE SECURITIES
342-8 Sec. 21.151. NUMBER OF AUTHORIZED SHARES. A corporation may
342-9 issue the number of authorized shares stated in the corporation's
342-10 certificate of formation.
342-11 Sec. 21.152. CLASSES AND SERIES OF SHARES. (a) A
342-12 corporation's certificate of formation may divide the corporation's
342-13 authorized shares into one or more classes and may divide one or
342-14 more classes into one or more series. The certificate of formation
342-15 must designate each class and series of authorized shares to
342-16 distinguish that class and series from any other class or series.
342-17 (b) Shares of the same class must be of the same par value
342-18 or be without par value, as stated in the certificate of formation.
342-19 (c) Shares of the same class must be identical in all
342-20 respects unless the shares have been divided into one or more
342-21 series. If the shares of a class have been divided into one or
342-22 more series, the shares may vary between series, but all shares of
342-23 the same series will be identical in all respects.
342-24 Sec. 21.153. DESIGNATIONS, PREFERENCES, LIMITATIONS, AND
342-25 RIGHTS OF A CLASS OR SERIES. (a) Each class or series of
342-26 authorized shares of a corporation must have the designations,
342-27 preferences, limitations, and relative rights, including voting
343-1 rights, stated in the corporation's certificate of formation.
343-2 (b) The certificate of formation may limit or deny the
343-3 voting rights of, or provide special voting rights for, the shares
343-4 of a class or series or the shares of a class or series held by a
343-5 person or class of persons to the extent the limitation, denial, or
343-6 provision is not inconsistent with this code.
343-7 (c) A designation, preference, limitation, or relative
343-8 right, including voting right, of a class or series of shares of a
343-9 corporation may be made dependent on facts not contained in the
343-10 certificate of formation, including future acts of the corporation,
343-11 if the manner in which those facts will operate on the designation,
343-12 preference, limitation, or right is clearly and expressly stated
343-13 in the certificate of formation.
343-14 Sec. 21.154. CERTAIN OPTIONAL CHARACTERISTICS OF SHARES. (a)
343-15 Subject to Section 21.153, if authorized by the corporation's
343-16 certificate of formation, a corporation may issue shares that:
343-17 (1) are redeemable, at the option of the corporation,
343-18 shareholder, or other person or on the occurrence of a designated
343-19 event, subject to Sections 21.303 and 21.304;
343-20 (2) entitle the holders of the shares to cumulative,
343-21 noncumulative, or partially cumulative distributions;
343-22 (3) have preferences over any or all other classes or
343-23 series of shares with respect to payment of distributions;
343-24 (4) have preferences over any or all other classes or
343-25 series of shares with respect to the assets of the corporation on
343-26 the voluntary or involuntary winding up and termination of the
343-27 corporation;
344-1 (5) are exchangeable, at the option of the
344-2 corporation, shareholder, or other person or on the occurrence of a
344-3 designated event, for shares, obligations, indebtedness, evidence
344-4 of ownership, rights to purchase securities of the corporation or
344-5 one or more other entities, or other property or for a combination
344-6 of those rights, assets, or obligations, subject to Section 21.303;
344-7 and
344-8 (6) are convertible into shares of any other class or
344-9 series, at the option of the corporation, shareholder, or other
344-10 person or on the occurrence of a designated event.
344-11 (b) Shares without par value may not be converted into
344-12 shares with par value unless:
344-13 (1) at the time of conversion, the part of the
344-14 corporation's stated capital represented by the shares without par
344-15 value is at least equal to the aggregate par value of the shares to
344-16 be converted; or
344-17 (2) the amount of any deficiency computed under
344-18 Subdivision (1) is transferred from surplus to stated capital.
344-19 Sec. 21.155. SERIES OF SHARES ESTABLISHED BY BOARD OF
344-20 DIRECTORS. (a) If expressly authorized by the corporation's
344-21 certificate of formation and subject to the certificate of
344-22 formation, the board of directors of a corporation may establish
344-23 series of unissued shares of any class by setting and determining
344-24 the designations, preferences, limitations, and relative rights,
344-25 including voting rights, of the shares of the series to be
344-26 established to the same extent that the designations, preferences,
344-27 limitations, or relative rights could be stated if fully specified
345-1 in the certificate of formation.
345-2 (b) To establish a series if authorized by the certificate
345-3 of formation, the board of directors must adopt a resolution
345-4 specifying the designations, preferences, limitations, and relative
345-5 rights, including voting rights, of the series to be established or
345-6 specifying any designation, preference, limitation, or relative
345-7 right that is not set and determined by the certificate of
345-8 formation.
345-9 (c) If the certificate of formation does not expressly
345-10 restrict the board of directors from increasing or decreasing the
345-11 number of unissued shares of a series to be established under
345-12 Subsection (a), the board of directors may increase or decrease the
345-13 number of shares in each series to be established, except that the
345-14 board of directors may not decrease the number of shares in a
345-15 particular series to a number that is less than the number of
345-16 shares in that series that are issued at the time of the decrease.
345-17 (d) To increase or decrease the number of shares of a series
345-18 under Subsection (c), the board of directors must adopt a
345-19 resolution setting and determining the new number of shares of each
345-20 series in which the number of shares is increased or decreased. If
345-21 the number of shares of a series is decreased, the shares by which
345-22 the series is decreased will resume the status of authorized but
345-23 unissued shares of the class of shares from which the series was
345-24 established, unless otherwise provided by the certificate of
345-25 formation or the terms of the class or series.
345-26 (e) If no shares of a series established by board resolution
345-27 under Subsection (b) are outstanding because no shares of that
346-1 series have been issued or no issued shares of that series remain
346-2 outstanding, the board of directors by resolution may delete the
346-3 series from the certificate of formation and delete any reference
346-4 to the series contained in the certificate of formation. Unless
346-5 otherwise provided by the certificate of formation, the shares of
346-6 any series deleted from the certificate of formation under this
346-7 section shall resume the status of authorized but unissued shares
346-8 of the class of shares from which the series was established.
346-9 (f) If no shares of a series established by resolution of
346-10 the board of directors under Subsection (b) are outstanding because
346-11 no shares of that series have been issued, the board of directors
346-12 may amend the designations, preferences, limitations, and relative
346-13 rights, including voting rights, of the series or amend any
346-14 designation, preference, limitation, or relative right that is not
346-15 set and determined by the certificate of formation.
346-16 Sec. 21.156. ACTIONS WITH RESPECT TO SERIES OF SHARES. (a)
346-17 To effect an action authorized under Section 21.155, the
346-18 corporation must file with the secretary of state a statement that
346-19 contains:
346-20 (1) the name of the corporation;
346-21 (2) if the statement relates to the establishment of a
346-22 series of shares, a copy of the resolution establishing and
346-23 designating the series and setting and determining the
346-24 designations, preferences, limitations, and relative rights of the
346-25 series;
346-26 (3) if the statement relates to an increase or
346-27 decrease in the number of shares of a series, a copy of the
347-1 resolution setting and determining the new number of shares of each
347-2 series in which the number of shares is increased or decreased;
347-3 (4) if the statement relates to the deletion of a
347-4 series of shares and all references to the series from the
347-5 certificate of formation, a copy of the resolution deleting the
347-6 series and all references to the series from the certificate of
347-7 formation;
347-8 (5) if the statement relates to the amendment of
347-9 designations, preferences, limitations, or relative rights of
347-10 shares of a series that was previously established by resolution of
347-11 the board of directors, a copy of the resolution in which the
347-12 amendment is specified;
347-13 (6) the date of the adoption of the resolution; and
347-14 (7) a statement that the resolution was adopted by all
347-15 necessary action on the part of the corporation.
347-16 (b) On the filing of a statement described by Subsection
347-17 (a), the following resolutions will become an amendment of the
347-18 certificate of formation, as appropriate:
347-19 (1) the resolution establishing and designating the
347-20 series and setting and determining the designations, preferences,
347-21 limitations, and relative rights of the series;
347-22 (2) the resolution setting the new number of shares of
347-23 each series in which the number of shares is increased or
347-24 decreased;
347-25 (3) the resolution deleting a series and all
347-26 references to the series from the certificate of formation; or
347-27 (4) the resolution amending the designations,
348-1 preferences, limitations, and relative rights of a series.
348-2 (c) An amendment of the certificate of formation under this
348-3 section is not subject to the procedure to amend the certificate of
348-4 formation contained in Subchapter B.
348-5 Sec. 21.157. ISSUANCE OF SHARES. (a) Except as provided by
348-6 Section 21.158, a corporation may issue shares for consideration if
348-7 authorized by the board of directors of the corporation.
348-8 (b) Shares may not be issued until the consideration,
348-9 determined in accordance with this subchapter, has been received by
348-10 the corporation. When the consideration is received:
348-11 (1) the shares are considered to be issued;
348-12 (2) the subscriber or other person entitled to receive
348-13 the shares is a shareholder with respect to the shares; and
348-14 (3) the shares are considered fully paid and
348-15 nonassessable.
348-16 Sec. 21.158. ISSUANCE OF SHARES UNDER PLAN OF MERGER OR
348-17 CONVERSION. (a) A converted corporation under a plan of conversion
348-18 or a corporation created by a plan of merger may issue shares for
348-19 consideration if authorized by the plan of conversion or plan of
348-20 merger, as appropriate.
348-21 (b) A corporation may issue shares in the manner provided by
348-22 and for consideration specified under a plan of merger or plan of
348-23 conversion.
348-24 Sec. 21.159. TYPES OF CONSIDERATION FOR SHARES. Shares with
348-25 or without par value may be issued for the following types of
348-26 consideration:
348-27 (1) a tangible or intangible benefit to the
349-1 corporation;
349-2 (2) cash;
349-3 (3) a promissory note;
349-4 (4) services performed or a contract for services to
349-5 be performed;
349-6 (5) a security of the corporation or any other
349-7 organization; and
349-8 (6) any other property of any kind or nature.
349-9 Sec. 21.160. DETERMINATION OF CONSIDERATION FOR SHARES. (a)
349-10 Subject to Subsection (b), consideration to be received for shares
349-11 must be determined:
349-12 (1) by the board of directors;
349-13 (2) by a plan of conversion, if the shares are to be
349-14 issued by a converted corporation under the plan; or
349-15 (3) by a plan of merger, if the shares are to be
349-16 issued under the plan by a corporation created under the plan.
349-17 (b) If the corporation's certificate of formation reserves
349-18 to the shareholders the right to determine the consideration to be
349-19 received for shares without par value, the shareholders shall
349-20 determine the consideration for those shares before the shares are
349-21 issued. The board of directors may not determine the consideration
349-22 for shares under this subsection.
349-23 (c) A corporation may dispose of treasury shares for
349-24 consideration that may be determined by the board of directors.
349-25 Sec. 21.161. AMOUNT OF CONSIDERATION FOR ISSUANCE OF CERTAIN
349-26 SHARES. (a) Consideration to be received by a corporation for the
349-27 issuance of shares with par value may not be less than the par
350-1 value of the shares.
350-2 (b) The part of the surplus of a corporation that is
350-3 transferred to stated capital on the issuance of shares as a share
350-4 distribution is considered to be the consideration for the issuance
350-5 of those shares.
350-6 (c) The consideration received by a corporation for the
350-7 issuance of shares on the conversion or exchange of its
350-8 indebtedness or shares is:
350-9 (1) the principal of, and accrued interest on, the
350-10 indebtedness exchanged or converted, or the stated capital on the
350-11 issuance of the shares;
350-12 (2) the part of surplus, if any, transferred to stated
350-13 capital on the issuance of the shares; and
350-14 (3) any additional consideration paid to the
350-15 corporation on the issuance of the shares.
350-16 (d) The consideration received by a corporation for the
350-17 issuance of shares on the exercise of rights or options is:
350-18 (1) any consideration received by the corporation for
350-19 the rights or options; and
350-20 (2) any consideration received by the corporation for
350-21 the issuance of shares on the exercise of the rights or options.
350-22 Sec. 21.162. VALUE AND SUFFICIENCY OF CONSIDERATION. In the
350-23 absence of fraud in the transaction, the judgment of the board of
350-24 directors, the shareholders, or the party approving the plan of
350-25 conversion or the plan of merger, as appropriate, is conclusive in
350-26 determining the value and sufficiency of the consideration received
350-27 for the shares.
351-1 Sec. 21.163. ISSUANCE AND DISPOSITION OF FRACTIONAL SHARES
351-2 OR SCRIP. (a) A corporation may:
351-3 (1) issue fractions of a share, either certificated or
351-4 uncertificated;
351-5 (2) arrange for the disposition of fractional
351-6 interests by persons entitled to the interests;
351-7 (3) pay cash for the fair value of fractions of a
351-8 share determined when the shareholders entitled to receive the
351-9 fractions are determined; or
351-10 (4) subject to Subsection (b), issue scrip in
351-11 registered or bearer form that entitles the holder to receive a
351-12 certificate for a full share or an uncertificated full share on the
351-13 surrender of the scrip aggregating a full share.
351-14 (b) The board of directors may issue scrip:
351-15 (1) on the condition that the scrip will become void
351-16 if not exchanged for certificated or uncertificated full shares
351-17 before a specified date;
351-18 (2) on the condition that the shares for which the
351-19 scrip is exchangeable may be sold by the corporation and the
351-20 proceeds from the sale of the shares may be distributed to the
351-21 holders of scrip; or
351-22 (3) subject to any other condition the board of
351-23 directors may determine advisable.
351-24 Sec. 21.164. RIGHTS OF HOLDERS OF FRACTIONAL SHARES OR
351-25 SCRIP. (a) A holder of a certificated or uncertificated fractional
351-26 share is entitled to exercise voting rights, receive distributions,
351-27 and make a claim with respect to the assets of the corporation in
352-1 the event of winding up and termination.
352-2 (b) A holder of a certificate for scrip is not entitled to
352-3 exercise voting rights, receive distributions, or make a claim with
352-4 respect to the assets of the corporation in the event of winding up
352-5 and termination unless the scrip provides for those rights.
352-6 Sec. 21.165. SUBSCRIPTIONS. (a) A corporation may accept a
352-7 subscription by notifying the subscriber in writing.
352-8 (b) A subscription to purchase shares in a corporation in
352-9 the process of being formed is irrevocable for six months if the
352-10 subscription is in writing and signed by the subscriber, unless the
352-11 subscription provides for a longer or shorter period or all of the
352-12 other subscribers agree to the revocation of the subscription.
352-13 (c) A written subscription entered into after the
352-14 corporation is formed is a contract between the subscriber and the
352-15 corporation.
352-16 Sec. 21.166. PREFORMATION SUBSCRIPTION. (a) The corporation
352-17 may determine the payment terms of a preformation subscription
352-18 unless the payment terms are specified by the subscription. The
352-19 payment terms may authorize payment in full on acceptance or by
352-20 installments.
352-21 (b) Unless the subscription provides otherwise, a
352-22 corporation shall make calls placed to all subscribers of similar
352-23 interests for payment on preformation subscriptions uniform as far
352-24 as practicable.
352-25 (c) After the corporation is formed, a corporation may:
352-26 (1) collect in the same manner as any other debt the
352-27 amount due on any unpaid preformation subscription; or
353-1 (2) forfeit the subscription on 20 days' written
353-2 notice to the subscriber.
353-3 (d) Although the forfeiture of a subscription terminates all
353-4 the rights and obligations of the subscriber, the corporation may
353-5 retain any amount previously paid on the subscription.
353-6 Sec. 21.167. COMMITMENT TO PURCHASE SHARES. (a) A person
353-7 who contemplates the acquisition of shares in a corporation may
353-8 commit to act in a specified manner with respect to the shares
353-9 after the acquisition, including the voting of the shares or the
353-10 retention or disposition of the shares. To be binding, the
353-11 commitment must be in writing and be signed by the person acquiring
353-12 the shares.
353-13 (b) A written commitment entered into under Subsection (a)
353-14 is a contract between the shareholder and the corporation.
353-15 Sec. 21.168. STOCK RIGHTS, OPTIONS, AND CONVERTIBLE
353-16 INDEBTEDNESS. (a) Except as provided by the corporation's
353-17 certificate of formation and regardless of whether done in
353-18 connection with the issuance and sale of any other share or
353-19 security of the corporation, a corporation may create and issue:
353-20 (1) rights or options that entitle the holders to
353-21 purchase or receive from the corporation shares of any class or
353-22 series or other securities; and
353-23 (2) indebtedness convertible into shares of any class
353-24 or series of the corporation or other securities of the
353-25 corporation.
353-26 (b) A right, option, or indebtedness described by this
353-27 section shall be evidenced in the manner approved by the board of
354-1 directors.
354-2 (c) Subject to the certificate of formation, a right or
354-3 option described by this section must state the terms on which, the
354-4 time within which, and any consideration for which the shares may
354-5 be purchased or received from the corporation on the exercise of
354-6 the right or option.
354-7 (d) Subject to the certificate of formation, convertible
354-8 indebtedness described by this section must state the terms and
354-9 conditions on which, the time within which, and the conversion
354-10 ratio at which the indebtedness may be converted into shares.
354-11 Sec. 21.169. TERMS AND CONDITIONS OF RIGHTS AND OPTIONS. (a)
354-12 The terms and conditions of rights or options may include
354-13 restrictions or conditions that:
354-14 (1) prohibit or limit the exercise, transfer, or
354-15 receipt of the rights or options by certain persons or classes of
354-16 persons, including:
354-17 (A) a person who beneficially owns or offers to
354-18 acquire a specified number or percentage of the outstanding common
354-19 shares, voting power, or other securities of the corporation; or
354-20 (B) a transferee of a person described by
354-21 Paragraph (A); or
354-22 (2) invalidate or void the rights or options held by a
354-23 person or transferee described by Subdivision (1).
354-24 (b) Rights or options created or issued before the effective
354-25 date of this code that comply with this section and are not in
354-26 conflict with other provisions of this code are ratified.
354-27 (c) Unless otherwise provided under the terms of rights or
355-1 options or the agreement or plan under which the rights or options
355-2 are issued, the authority to grant, amend, redeem, extend, or
355-3 replace the rights or options on behalf of a corporation is vested
355-4 exclusively in the board of directors of the corporation. A bylaw
355-5 may not require the board to grant, amend, redeem, extend, or
355-6 replace the rights or options.
355-7 Sec. 21.170. CONSIDERATION FOR RIGHTS, OPTIONS, AND
355-8 CONVERTIBLE INDEBTEDNESS. (a) In the absence of fraud in the
355-9 transaction, the judgment of the board of directors of a
355-10 corporation as to the adequacy of the consideration received for
355-11 rights, options, or convertible indebtedness is conclusive.
355-12 (b) A corporation may issue rights or options to its
355-13 shareholders, officers, consultants, independent contractors,
355-14 employees, or directors without consideration if, in the judgment
355-15 of the board of directors, the issuance of the rights or options is
355-16 in the interests of the corporation.
355-17 (c) The consideration for shares having a par value, other
355-18 than treasury shares, and issued on the exercise of the rights or
355-19 options may not be less than the par value of the shares.
355-20 (d) A privilege of conversion may not be conferred on, or
355-21 altered with respect to, any indebtedness that would result in the
355-22 corporation receiving less than the minimum consideration required
355-23 to be received on issuance of the shares.
355-24 (e) The consideration for shares issued on the exercise of
355-25 rights, options, or convertible indebtedness shall be determined as
355-26 provided by Section 21.161.
355-27 Sec. 21.171. TREASURY SHARES. (a) Treasury shares are
356-1 considered to be issued shares and not outstanding shares.
356-2 (b) Treasury shares may not be included in the total assets
356-3 of a corporation for purposes of determining the net assets of a
356-4 corporation.
356-5 Sec. 21.172. EXPENSES OF ORGANIZATION, REORGANIZATION, AND
356-6 FINANCING OF CORPORATION. A corporation may pay or authorize to be
356-7 paid from the consideration received by the corporation as payment
356-8 for the corporation's shares the reasonable charges and expenses of
356-9 the organization or reorganization of the corporation and the sale
356-10 or underwriting of the shares without rendering the shares not
356-11 fully paid and nonassessable.
356-12 (Sections 21.173-21.200 reserved for expansion)
356-13 SUBCHAPTER E. SHAREHOLDER RIGHTS AND RESTRICTIONS
356-14 Sec. 21.201. REGISTERED HOLDERS AS OWNERS. Except as
356-15 otherwise provided by this code and subject to Chapter 8, Business
356-16 & Commerce Code, a corporation may consider the person registered
356-17 as the owner of a share in the share transfer records of the
356-18 corporation at a particular time, including a record date set under
356-19 Section 6.101 or 6.102, as the owner of that share at that time for
356-20 purposes of:
356-21 (1) voting the share;
356-22 (2) receiving distributions on the share;
356-23 (3) transferring the share;
356-24 (4) receiving notice, exercising rights of dissent,
356-25 exercising or waiving a preemptive right, or giving proxies with
356-26 respect to that share;
356-27 (5) entering into agreements with respect to that
357-1 share in accordance with Section 6.251, 6.252, or 21.210; or
357-2 (6) any other shareholder action.
357-3 Sec. 21.202. DEFINITION OF SHARES. In Sections
357-4 21.203-21.208, "shares" includes a security:
357-5 (1) that is convertible into shares; or
357-6 (2) that carries a right to subscribe for or acquire
357-7 shares.
357-8 Sec. 21.203. NO STATUTORY PREEMPTIVE RIGHT UNLESS PROVIDED
357-9 BY CERTIFICATE OF FORMATION. (a) Except as provided by Section
357-10 21.208, a shareholder of a corporation does not have a preemptive
357-11 right under this subchapter to acquire the corporation's unissued
357-12 or treasury shares except to the extent provided by the
357-13 corporation's certificate of formation.
357-14 (b) If the certificate of formation includes a statement
357-15 that the corporation "elects to have a preemptive right" or a
357-16 similar statement, Section 21.204 applies to a shareholder except
357-17 to the extent the certificate of formation expressly provides
357-18 otherwise.
357-19 Sec. 21.204. STATUTORY PREEMPTIVE RIGHTS. (a) If the
357-20 shareholders of a corporation have a preemptive right under this
357-21 subchapter, the shareholders have a preemptive right to acquire
357-22 proportional amounts of the corporation's unissued or treasury
357-23 shares on the decision of the corporation's board of directors to
357-24 issue the shares. The preemptive right granted under this
357-25 subsection is subject to uniform terms and conditions prescribed by
357-26 the board of directors to provide a fair and reasonable opportunity
357-27 to exercise the preemptive right.
358-1 (b) No preemptive right exists with respect to:
358-2 (1) shares issued or granted as compensation to a
358-3 director, officer, agent, or employee of the corporation or a
358-4 subsidiary or affiliate of the corporation;
358-5 (2) shares issued or granted to satisfy conversion or
358-6 option rights created to provide compensation to a director,
358-7 officer, agent, or employee of the corporation or a subsidiary or
358-8 affiliate of the corporation;
358-9 (3) shares authorized in the corporation's certificate
358-10 of formation that are issued not later than the 180th day after the
358-11 effective date of the corporation's formation; or
358-12 (4) shares sold, issued, or granted by the corporation
358-13 for consideration other than money.
358-14 (c) A holder of a share of a class without general voting
358-15 rights but with a preferential right to distributions of profits,
358-16 income, or assets does not have a preemptive right with respect to
358-17 shares of any class.
358-18 (d) A holder of a share of a class with general voting
358-19 rights but without preferential rights to distributions of profits,
358-20 income, or assets does not have a preemptive right with respect to
358-21 shares of any class with preferential rights to distributions of
358-22 profits, income, or assets unless the shares with preferential
358-23 rights are convertible into or carry a right to subscribe for or
358-24 acquire shares without preferential rights.
358-25 (e) For a one-year period after the date the shares have
358-26 been offered to shareholders, shares subject to preemptive rights
358-27 that are not acquired by a shareholder may be issued to a person at
359-1 a consideration set by the corporation's board of directors that is
359-2 not lower than the consideration set for the exercise of preemptive
359-3 rights. An offer at a lower consideration or after the expiration
359-4 of the period prescribed by this subsection is subject to the
359-5 shareholder's preemptive rights.
359-6 Sec. 21.205. WAIVER OF PREEMPTIVE RIGHT. (a) A shareholder
359-7 may waive a preemptive right granted to the shareholder.
359-8 (b) A written waiver of a preemptive right is irrevocable
359-9 regardless of whether the waiver is supported by consideration.
359-10 Sec. 21.206. LIMITATION ON ACTION TO ENFORCE PREEMPTIVE
359-11 RIGHT. (a) An action brought against a corporation, the board of
359-12 directors or an officer, shareholder, or agent of the corporation,
359-13 or an owner of a beneficial interest in shares of the corporation
359-14 for the violation of a preemptive right of a shareholder must be
359-15 brought not later than the earlier of:
359-16 (1) the first anniversary of the date written notice
359-17 is given to each shareholder whose preemptive right was violated;
359-18 or
359-19 (2) the fourth anniversary of the latest of:
359-20 (A) the date the corporation issued the shares,
359-21 securities, or rights;
359-22 (B) the date the corporation sold the shares,
359-23 securities, or rights; or
359-24 (C) the date the corporation otherwise
359-25 distributed the shares, securities, or rights.
359-26 (b) The notice required by Subsection (a)(1) must:
359-27 (1) be sent to the holder at the address for the
360-1 holder as shown on the appropriate records of the corporation; and
360-2 (2) inform the holder that the issuance, sale, or
360-3 other distribution of shares, securities, or rights violated the
360-4 holder's preemptive right.
360-5 Sec. 21.207. DISPOSITION OF SHARES HAVING PREEMPTIVE RIGHTS.
360-6 The transferee or successor of a share that has been transferred or
360-7 otherwise disposed of by a shareholder of a corporation whose
360-8 preemptive right to acquire shares in the corporation has been
360-9 violated does not acquire the preemptive right, or any right or
360-10 claim based on the violation, unless the previous shareholder has
360-11 assigned the preemptive right to the transferee or successor.
360-12 Sec. 21.208. PREEMPTIVE RIGHT IN EXISTING CORPORATION.
360-13 Subject to the certificate of formation, a shareholder of a
360-14 corporation incorporated before the effective date of this code has
360-15 a preemptive right to acquire unissued or treasury shares of the
360-16 corporation to the extent provided by Sections 21.204, 21.206, and
360-17 21.207. After the effective date of this code, a corporation may
360-18 limit or deny the preemptive right of the shareholders of the
360-19 corporation by amending the corporation's certificate of formation.
360-20 Sec. 21.209. TRANSFER OF SHARES AND OTHER SECURITIES. Except
360-21 as otherwise provided by this code, the shares and other securities
360-22 of a corporation are transferable in accordance with Chapter 8,
360-23 Business & Commerce Code.
360-24 Sec. 21.210. RESTRICTION ON TRANSFER OF SHARES AND OTHER
360-25 SECURITIES. (a) A restriction on the transfer or registration of
360-26 transfer of a security may be imposed by:
360-27 (1) the corporation's certificate of formation;
361-1 (2) the corporation's bylaws;
361-2 (3) a written agreement among two or more holders of
361-3 the securities; or
361-4 (4) a written agreement among one or more holders of
361-5 the securities and the corporation if:
361-6 (A) the corporation files a copy of the
361-7 agreement at the principal place of business or registered office
361-8 of the corporation; and
361-9 (B) the copy of the agreement is subject to the
361-10 same right of examination by a shareholder of the corporation, in
361-11 person or by agent, attorney, or accountant, as the books and
361-12 records of the corporation.
361-13 (b) A restriction imposed under Subsection (a) is not valid
361-14 with respect to a security issued before the restriction has been
361-15 adopted, unless the holder of the security voted in favor of the
361-16 restriction or is a party to the agreement imposing the
361-17 restriction.
361-18 Sec. 21.211. VALID RESTRICTIONS ON TRANSFER. Notwithstanding
361-19 Sections 21.210 and 21.213, a restriction placed on the transfer or
361-20 registration of transfer of a security of a corporation is valid if
361-21 the restriction reasonably:
361-22 (1) obligates the holder of the restricted security to
361-23 offer a person, including the corporation or other holders of
361-24 securities of the corporation, an opportunity to acquire the
361-25 restricted security within a reasonable time before the transfer;
361-26 (2) obligates the corporation, to the extent provided
361-27 by this code, or another person to purchase securities that are the
362-1 subject of an agreement relating to the purchase and sale of the
362-2 restricted security;
362-3 (3) requires the corporation or the holders of a class
362-4 of the corporation's securities to consent to a proposed transfer
362-5 of the restricted security or to approve the proposed transferee of
362-6 the restricted security for the purpose of preventing a violation
362-7 of law;
362-8 (4) prohibits the transfer of the restricted security
362-9 to a designated person or group of persons and the designation is
362-10 not manifestly unreasonable;
362-11 (5) maintains the status of the corporation as an
362-12 electing small business corporation under Subchapter S of the
362-13 Internal Revenue Code;
362-14 (6) maintains a tax advantage to the corporation; or
362-15 (7) maintains the status of the corporation as a close
362-16 corporation under Subchapter O.
362-17 Sec. 21.212. BYLAW OR AGREEMENT RESTRICTING TRANSFER OF
362-18 SHARES OR OTHER SECURITIES. (a) A corporation that has adopted a
362-19 bylaw or is a party to an agreement that restricts the transfer of
362-20 the shares or other securities of the corporation may file with the
362-21 secretary of state, in accordance with Chapter 4, a copy of the
362-22 bylaw or agreement and a statement attached to the copy that:
362-23 (1) contains the name of the corporation;
362-24 (2) states that the attached copy of the bylaw or
362-25 agreement is a true and correct copy of the bylaw or agreement; and
362-26 (3) states that the filing has been authorized by the
362-27 board of directors or, in the case of a corporation that is managed
363-1 in some other manner under a shareholders' agreement, by the person
363-2 empowered by the agreement to manage the corporation's business and
363-3 affairs.
363-4 (b) After a statement described by Subsection (a) is filed
363-5 with the secretary of state, the bylaws or agreement restricting
363-6 the transfer of shares or other securities is a public record, and
363-7 the fact that the statement has been filed may be stated on a
363-8 certificate representing the restricted shares or securities if
363-9 required by Section 3.202.
363-10 (c) A corporation that is a party to an agreement
363-11 restricting the transfer of the shares or other securities of the
363-12 corporation may make the agreement part of the corporation's
363-13 certificate of formation without restating the provisions of the
363-14 agreement in the certificate of formation by amending the
363-15 certificate of formation. If the agreement alters any provision of
363-16 the certificate of formation, the certificate of amendment shall
363-17 identify the altered provision by reference or description. If the
363-18 agreement is an addition to the certificate of formation, the
363-19 certificate of amendment must state that fact.
363-20 (d) The certificate of amendment must:
363-21 (1) include a copy of the agreement restricting the
363-22 transfer of shares or other securities;
363-23 (2) state that the attached copy of the agreement is a
363-24 true and correct copy of the agreement; and
363-25 (3) state that inclusion of the certificate of
363-26 amendment as part of the certificate of formation has been
363-27 authorized in the manner required by this code to amend the
364-1 certificate of formation.
364-2 Sec. 21.213. ENFORCEABILITY OF RESTRICTION ON TRANSFER OF
364-3 CERTAIN SECURITIES. (a) A restriction placed on the transfer or
364-4 registration of the transfer of a security of a corporation is
364-5 specifically enforceable against the holder, or a successor or
364-6 transferee of the holder, if:
364-7 (1) the restriction is reasonable and noted
364-8 conspicuously on the certificate or other instrument representing
364-9 the security; or
364-10 (2) with respect to an uncertificated security, the
364-11 restriction is reasonable and a notation of the restriction is
364-12 contained in the notice sent with respect to the security under
364-13 Section 3.205.
364-14 (b) Unless noted in the manner specified by Subsection (a)
364-15 with respect to a certificate or other instrument or an
364-16 uncertificated security, an otherwise enforceable restriction is
364-17 ineffective against a transferee for value without actual knowledge
364-18 of the restriction at the time of the transfer or against a
364-19 subsequent transferee, regardless of whether the transfer is for
364-20 value. A restriction is specifically enforceable against a person
364-21 other than a transferee for value from the time the person acquires
364-22 actual knowledge of the restriction's existence.
364-23 Sec. 21.214. JOINT OWNERSHIP OF SHARES. (a) If shares are
364-24 registered on the books of a corporation in the names of two or
364-25 more persons as joint owners with the right of survivorship and one
364-26 of the owners dies, the corporation may record on its books and
364-27 effect the transfer of the shares to a person, including the
365-1 surviving joint owner, and pay any distributions made with respect
365-2 to the shares, as if the surviving joint owner was the absolute
365-3 owner of the shares. The recording and distribution authorized by
365-4 this subsection must be made after the death of a joint owner and
365-5 before the corporation receives actual written notice that a party
365-6 other than a surviving joint owner is claiming an interest in the
365-7 shares or distribution.
365-8 (b) The discharge of a corporation from liability under
365-9 Section 21.216 and the transfer of full legal and equitable title
365-10 of the shares does not affect, reduce, or limit any cause of action
365-11 existing in favor of an owner of an interest in the shares or
365-12 distributions against the surviving owner.
365-13 Sec. 21.215. LIABILITY FOR DESIGNATING OWNER OF SHARES. A
365-14 corporation or an officer, director, employee, or agent of the
365-15 corporation may not be held liable for considering a person to be
365-16 the owner of a share for a purpose described by Section 21.201,
365-17 regardless of whether the person possesses a certificate for that
365-18 share.
365-19 Sec. 21.216. LIABILITY REGARDING JOINT OWNERSHIP OF SHARES.
365-20 A corporation that transfers shares or makes a distribution to a
365-21 surviving joint owner under Section 21.214 before the corporation
365-22 has received a written claim for the shares or distribution from
365-23 another person is discharged from liability for the transfer or
365-24 payment.
365-25 Sec. 21.217. LIABILITY OF ASSIGNEE OR TRANSFEREE. An
365-26 assignee or transferee of certificated shares, uncertificated
365-27 shares, or a subscription for shares in good faith and without
366-1 knowledge that full consideration for the shares or subscription
366-2 has not been paid may not be held personally liable to the
366-3 corporation or a creditor of the corporation for an unpaid portion
366-4 of the consideration.
366-5 Sec. 21.218. EXAMINATION OF RECORDS. (a) In this section, a
366-6 holder of a beneficial interest in a voting trust entered into
366-7 under Section 6.251 is a holder of the shares represented by the
366-8 beneficial interest.
366-9 (b) Subject to the governing documents and on written demand
366-10 stating a proper purpose, an owner of outstanding shares of a
366-11 corporation for at least six months immediately preceding the
366-12 owner's demand, or a holder of at least five percent of all of the
366-13 outstanding shares of a corporation, is entitled to examine and
366-14 copy, at a reasonable time, the corporation's relevant books,
366-15 records of account, minutes, and share transfer records. The
366-16 examination may be conducted in person or through an agent,
366-17 accountant, or attorney.
366-18 (c) This section does not impair the power of a court, on
366-19 the presentation of proof of proper purpose by a beneficial or
366-20 record holder of shares, to compel the production for examination
366-21 by the holder of the books and records of accounts, minutes, and
366-22 share transfer records of a corporation, regardless of the period
366-23 during which the holder was a beneficial holder or record holder
366-24 and regardless of the number of shares held by the person.
366-25 Sec. 21.219. ANNUAL AND INTERIM STATEMENTS OF CORPORATION.
366-26 (a) On written request of a shareholder of the corporation, a
366-27 corporation shall mail to the shareholder:
367-1 (1) the annual statements of the corporation for the
367-2 last fiscal year that contain in reasonable detail the
367-3 corporation's assets and liabilities and the results of the
367-4 corporation's operations; and
367-5 (2) the most recent interim statements, if any, that
367-6 have been filed in a public record or other publication.
367-7 (b) The corporation shall be allowed a reasonable time to
367-8 prepare the annual statements.
367-9 Sec. 21.220. PENALTY FOR FAILURE TO PREPARE VOTING LIST. An
367-10 officer or agent of a corporation who is in charge of the
367-11 corporation's share transfer records and who does not prepare the
367-12 list of owners, keep the list on file for a 10-day period, or
367-13 produce and keep the list available for inspection at the annual
367-14 meeting as required by Sections 6.004 and 21.354 is liable to an
367-15 owner who suffers damages because of the failure for the damage
367-16 caused by the failure.
367-17 Sec. 21.221. PENALTY FOR FAILURE TO PROVIDE NOTICE OF
367-18 MEETING. If an officer or agent of a corporation is unable to
367-19 comply with the duties prescribed by Sections 6.004 and 21.354
367-20 because the officer or agent did not receive notice of a meeting of
367-21 owners within a sufficient time before the date of the meeting, the
367-22 corporation, rather than the officer or agent, is liable to an
367-23 owner who suffers damages because of the failure for the extent of
367-24 the damage caused by the failure.
367-25 Sec. 21.222. PENALTY FOR REFUSAL TO PERMIT EXAMINATION OF
367-26 CERTAIN RECORDS. (a) A corporation that refuses to allow a person
367-27 to examine and make copies of account records, minutes, and share
368-1 transfer records under Section 21.218 is liable to the owner for
368-2 any cost or expense, including attorney's fees, incurred in
368-3 enforcing the owner's rights under Section 21.218. The liability
368-4 imposed on a corporation under this subsection is in addition to
368-5 any other damages or remedy afforded to the owner by law.
368-6 (b) It is a defense to an action brought under this section
368-7 that the person suing has within the two years preceding the date
368-8 the action is brought:
368-9 (1) sold or offered for sale a list of owners or of
368-10 holders of voting trust certificates in consideration for shares of
368-11 the corporation or any other corporation;
368-12 (2) aided or abetted a person in procuring a list of
368-13 owners or of holders of voting trust certificates for the purpose
368-14 described by Subdivision (1); or
368-15 (3) improperly used in making its request for
368-16 examination information obtained through a prior examination of the
368-17 books and account records, minutes, or share transfer records of
368-18 the corporation or any other corporation that was not acting in
368-19 good faith or for a proper purpose in making its request for
368-20 examination.
368-21 (Sections 21.223-21.250 reserved for expansion)
368-22 SUBCHAPTER F. REDUCTIONS IN STATED CAPITAL; CANCELLATION OF
368-23 TREASURY SHARES
368-24 Sec. 21.251. REDUCTION OF STATED CAPITAL BY REDEMPTION OR
368-25 PURCHASE OF REDEEMABLE SHARES. (a) At the time a corporation
368-26 redeems or purchases the redeemable shares of the corporation, the
368-27 redemption or purchase has the effect of:
369-1 (1) canceling the shares; and
369-2 (2) restoring the shares to the status of authorized
369-3 but unissued shares, unless the corporation's certificate of
369-4 formation provides that shares may not be reissued after the shares
369-5 are redeemed or purchased by the corporation.
369-6 (b) If the corporation is prohibited from reissuing the
369-7 shares by the certificate of formation following a redemption or
369-8 purchase under Subsection (a), the number of shares of the class
369-9 that the corporation is authorized to issue is reduced by the
369-10 number of shares canceled.
369-11 (c) If shares redeemed or purchased by a corporation under
369-12 Subsection (a) constitute all of the outstanding shares of a
369-13 particular class of shares and the certificate of formation
369-14 provides that the shares of the class, when redeemed and
369-15 repurchased, may not be reissued, the corporation may not issue any
369-16 additional shares of the class of shares.
369-17 Sec. 21.252. CANCELLATION OF TREASURY SHARES. (a) A
369-18 corporation, by resolution of the board of directors of the
369-19 corporation, may cancel all or part of the corporation's treasury
369-20 shares at any time.
369-21 (b) Upon the cancellation of treasury shares, the stated
369-22 capital of the corporation shall be reduced by that part of the
369-23 stated capital that was, at the time of the cancellation,
369-24 represented by the canceled shares, and the canceled shares shall
369-25 be restored to the status of authorized but unissued shares.
369-26 (c) This section does not prohibit a cancellation of shares
369-27 or a reduction of stated capital in any other manner permitted by
370-1 law.
370-2 Sec. 21.253. PROCEDURES FOR REDUCTION OF STATED CAPITAL BY
370-3 BOARD OF DIRECTORS. (a) If all or part of the stated capital of a
370-4 corporation is represented by shares without par value, the stated
370-5 capital of the corporation may be reduced in the manner provided by
370-6 this section.
370-7 (b) The board of directors shall adopt a resolution that:
370-8 (1) states the amount of the proposed reduction of the
370-9 stated capital and the manner in which the reduction will be
370-10 effected; and
370-11 (2) directs that the proposed reduction be submitted
370-12 to a vote of the shareholders at an annual or special meeting.
370-13 (c) Each shareholder of record entitled to vote on the
370-14 reduction of stated capital shall be given written notice stating
370-15 that the purpose or one of the purposes of the meeting is to
370-16 consider the matter of reducing the stated capital of the
370-17 corporation in the amount and manner proposed by the board of
370-18 directors. The notice shall be given in the time and manner
370-19 provided by this code for giving notice of shareholders' meetings.
370-20 (d) The affirmative vote of the holders of at least the
370-21 majority of the shares entitled to vote on the matter is required
370-22 for approval of the resolution proposing the reduction of stated
370-23 capital.
370-24 Sec. 21.254. RESTRICTION ON REDUCTION OF STATED CAPITAL. The
370-25 stated capital of a corporation may not be reduced under this
370-26 subchapter if the amount of the aggregate stated capital of the
370-27 corporation would be reduced to an amount equal to or less than the
371-1 sum of the:
371-2 (1) aggregate preferential amounts payable on all
371-3 issued shares with a preferential right to the assets of the
371-4 corporation in the event of voluntary winding up and termination;
371-5 and
371-6 (2) aggregate par value of all issued shares with par
371-7 value but no preferential right to the assets of the corporation in
371-8 the event of voluntary winding up and termination.
371-9 (Sections 21.255-21.300 reserved for expansion)
371-10 SUBCHAPTER G. DISTRIBUTIONS AND SHARE DISTRIBUTIONS
371-11 Sec. 21.301. DEFINITIONS. In this subchapter:
371-12 (1) "Distribution limit," with respect to a
371-13 distribution made by a corporation, other than a distribution
371-14 described by Subdivision (2), means:
371-15 (A) the net assets of the corporation if the
371-16 distribution:
371-17 (i) is a purchase or redemption of its own
371-18 shares by a corporation that:
371-19 (a) is eliminating fractional
371-20 shares;
371-21 (b) is collecting or compromising
371-22 indebtedness owed by or to the corporation; or
371-23 (c) is paying dissenting
371-24 shareholders entitled to payment for their shares under this code;
371-25 or
371-26 (ii) is not the purchase or redemption of
371-27 its own shares by a consuming assets corporation; or
372-1 (B) the surplus of the corporation for a
372-2 distribution not described by Paragraph (A).
372-3 (2) "Distribution limit," with respect to a
372-4 distribution that is a purchase or redemption of its own shares by
372-5 an investment company the certificate of formation of which
372-6 provides that the company may purchase the company's own shares out
372-7 of stated capital, means the net assets of the investment company
372-8 rather than the surplus of the investment company.
372-9 (3) "Investment company" means a corporation
372-10 registered as an open-end company under the Investment Company Act.
372-11 Sec. 21.302. AUTHORITY FOR DISTRIBUTIONS. The board of
372-12 directors of a corporation may authorize a distribution and the
372-13 corporation may make a distribution, subject to Section 21.303.
372-14 Sec. 21.303. LIMITATIONS ON DISTRIBUTIONS. (a) A
372-15 corporation may not make a distribution that violates the
372-16 corporation's certificate of formation.
372-17 (b) Unless the distribution is made in compliance with
372-18 Chapter 11, a corporation may not make a distribution:
372-19 (1) when the corporation is insolvent;
372-20 (2) that will cause the corporation to become
372-21 insolvent; or
372-22 (3) that exceeds the distribution limit.
372-23 Sec. 21.304. REDEMPTIONS. (a) A distribution by a
372-24 corporation that involves a redemption of outstanding redeemable
372-25 shares of the corporation subject to redemption may be related to
372-26 any or all of those shares.
372-27 (b) If less than all of the outstanding redeemable shares of
373-1 a corporation subject to redemption are to be redeemed, the shares
373-2 to be redeemed shall be selected for redemption:
373-3 (1) in accordance with the corporation's certificate
373-4 of formation; or
373-5 (2) ratably or by lot in the manner prescribed by
373-6 resolution of the corporation's board of directors, if the
373-7 certificate of formation does not specify how shares are to be
373-8 selected for redemption.
373-9 (c) A redemption of redeemable shares takes effect by call
373-10 and written notice of the redemption of the shares.
373-11 Sec. 21.305. NOTICE OF REDEMPTION. (a) A notice of
373-12 redemption of redeemable shares of a corporation must state:
373-13 (1) the class or series of shares or part of the class
373-14 or series of shares to be redeemed;
373-15 (2) the date set for redemption;
373-16 (3) the redemptive price; and
373-17 (4) the place at which the shareholders may obtain
373-18 payment of the redemptive price.
373-19 (b) The notice of redemption shall be sent to each holder of
373-20 redeemable shares being called not later than the 21st day or
373-21 earlier than the 60th day before the date set for redemption.
373-22 (c) A notice that is mailed is considered to have been sent
373-23 when the notice is deposited in the United States mail, with
373-24 postage prepaid, addressed to the shareholder at the shareholder's
373-25 address as it appears on the share transfer records of the
373-26 corporation.
373-27 (d) A corporation may give the transfer agent described by
374-1 Section 21.306 irrevocable instructions to send or complete the
374-2 notice of redemption.
374-3 Sec. 21.306. DEPOSIT OF MONEY FOR REDEMPTION. (a) After the
374-4 date the notice of redemption required by Section 21.305 is sent
374-5 and before the day after the date set for redemption of redeemable
374-6 shares of the corporation, a corporation may deposit with a bank or
374-7 trust company in this or another state of the United States
374-8 appointed and acting as transfer agent for the corporation an
374-9 amount sufficient to redeem the shares called for redemption. The
374-10 amount must be deposited as a trust fund.
374-11 (b) Unless the corporation's certificate of formation
374-12 provides otherwise, if a corporation deposits money and gives
374-13 payment instructions in accordance with Subsection (a) and Section
374-14 21.307(b):
374-15 (1) the shares called for redemption are considered
374-16 redeemed, and distributions on those shares cease to accrue on and
374-17 after the date set for redemption; and
374-18 (2) the deposit constitutes full payment of the shares
374-19 called for redemption to the holders of the shares on and after the
374-20 date set for redemption.
374-21 (c) Unless the certificate of formation provides otherwise,
374-22 after the date a deposit is made and instructions are given under
374-23 this section and Section 21.307(b), the shares called for
374-24 redemption are not considered outstanding, and the holders of the
374-25 shares cease to be shareholders of the shares and have no right
374-26 with respect to the shares other than:
374-27 (1) the right to receive payment of the redemptive
375-1 price of the shares without interest from the bank or trust
375-2 company; and
375-3 (2) any right to convert those shares.
375-4 (d) Unless the certificate of formation provides otherwise,
375-5 a bank or trust company receiving a deposit under this section
375-6 shall pay to the corporation on demand the balance of the amount
375-7 deposited if one or more holders of the shares called for
375-8 redemption do not claim for redemption the amount deposited on or
375-9 before the sixth anniversary of the date of the deposit. After
375-10 making a payment under this subsection, the bank or trust company
375-11 is relieved of all responsibility to the holders with respect to
375-12 the amount deposited.
375-13 Sec. 21.307. PAYMENT OF REDEEMED SHARES. (a) Payment of a
375-14 certificated share shall be made only on the surrender of the
375-15 respective share certificate.
375-16 (b) On or after the date set for redemption of redeemable
375-17 shares, a corporation may give a transfer agent described by
375-18 Section 21.306 irrevocable instructions to pay the redemptive price
375-19 to the respective holders of the shares as evidenced by a list of
375-20 shareholders certified by an officer of the corporation.
375-21 Sec. 21.308. PRIORITY OF DISTRIBUTIONS. (a) Except as
375-22 provided by Subsection (b) or (c), a corporation's indebtedness
375-23 that arises as a result of the declaration of a distribution and a
375-24 corporation's indebtedness issued in a distribution are at parity
375-25 with the corporation's indebtedness to its general, unsecured
375-26 creditors.
375-27 (b) The indebtedness described by Subsection (a) shall be
376-1 subordinated to the extent required by an agreement binding on the
376-2 corporation on the date the indebtedness arises or if agreed to by
376-3 the person to whom the indebtedness is owed or, with respect to
376-4 indebtedness issued in a distribution, as provided by the
376-5 corporation.
376-6 (c) The indebtedness described by Subsection (a) shall be
376-7 secured to the extent required by an agreement binding on the
376-8 corporation.
376-9 Sec. 21.309. RESERVES, DESIGNATIONS, AND ALLOCATIONS FROM
376-10 SURPLUS. (a) A corporation, by resolution of the board of
376-11 directors of the corporation, may:
376-12 (1) create a reserve out of the surplus of the
376-13 corporation; or
376-14 (2) designate or allocate in any manner a part or all
376-15 of the corporation's surplus for a proper purpose.
376-16 (b) A corporation may increase, decrease, or abolish a
376-17 reserve, designation, or allocation in the manner provided by
376-18 Subsection (a).
376-19 Sec. 21.310. AUTHORITY FOR SHARE DISTRIBUTIONS. The board of
376-20 directors of a corporation may authorize a share distribution and
376-21 the corporation may pay a share distribution subject to Section
376-22 21.311.
376-23 Sec. 21.311. LIMITATIONS ON SHARE DISTRIBUTIONS. A
376-24 corporation may not pay a share distribution in authorized but
376-25 unissued shares of any class if:
376-26 (1) the share distribution violates the corporation's
376-27 certificate of formation;
377-1 (2) the surplus of the corporation is less than the
377-2 amount required by Section 21.313 to be transferred to stated
377-3 capital at the time the share distribution is made; or
377-4 (3) the share distribution will be made to a holder of
377-5 shares of any other class or series, unless the:
377-6 (A) corporation's certificate of formation
377-7 provides for the distribution; or
377-8 (B) the share distribution is authorized by the
377-9 holders of at least a majority of the outstanding shares of the
377-10 class or series in which the share distribution is to be made.
377-11 Sec. 21.312. VALUE OF SHARES ISSUED AS SHARE DISTRIBUTIONS.
377-12 (a) A share distribution payable in authorized but unissued shares
377-13 with par value shall be issued at the par value of the respective
377-14 share.
377-15 (b) A share distribution payable in authorized but unissued
377-16 shares without par value shall be issued at the value set by the
377-17 board of directors when the share distribution is authorized.
377-18 Sec. 21.313. TRANSFER OF SURPLUS FOR SHARE DISTRIBUTIONS.
377-19 (a) When a share distribution payable in authorized but unissued
377-20 shares with par value is made by a corporation, an amount of
377-21 surplus designated by the corporation's board of directors that is
377-22 not less than the aggregate par value of the shares issued as a
377-23 share distribution shall be transferred to stated capital.
377-24 (b) When a share distribution payable in authorized but
377-25 unissued shares without par value is made by a corporation, an
377-26 amount of surplus equal to the aggregate value set by the
377-27 corporation's board of directors with respect to shares under
378-1 Section 21.312(b) shall be transferred to stated capital.
378-2 Sec. 21.314. DETERMINATION OF SOLVENCY, NET ASSETS, STATED
378-3 CAPITAL, AND SURPLUS. (a) For purposes of this subchapter, the
378-4 determination of whether a corporation is or would be insolvent and
378-5 the determination of the value of a corporation's net assets,
378-6 stated capital, or surplus and each of the components of net
378-7 assets, stated capital, or surplus may be based on:
378-8 (1) financial statements of the corporation, including
378-9 financial statements that:
378-10 (A) include subsidiary corporations or other
378-11 corporations accounted for on a consolidated basis or on the equity
378-12 method of accounting; or
378-13 (B) present the financial condition of the
378-14 corporation in accordance with generally accepted accounting
378-15 principles;
378-16 (2) financial statements prepared using the method of
378-17 accounting used to file the corporation's federal income tax return
378-18 or using any other accounting practices and principles that are
378-19 reasonable under the circumstances;
378-20 (3) financial information, including condensed or
378-21 summary financial statements, that is prepared on the same basis as
378-22 financial statements described by Subdivision (1) or (2);
378-23 (4) projection, forecast, or other forward-looking
378-24 information relating to the future economic performance, financial
378-25 condition, or liquidity of the corporation that is reasonable under
378-26 the circumstances;
378-27 (5) a fair valuation or information from any other
379-1 method that is reasonable under the circumstances; or
379-2 (6) a combination of a statement, valuation, or
379-3 information authorized by this section.
379-4 (b) Subsection (a) does not apply to the computation of the
379-5 Texas franchise tax or any other tax imposed on a corporation under
379-6 the laws of this state.
379-7 Sec. 21.315. DATE OF DETERMINATION OF SOLVENCY, NET ASSETS,
379-8 STATED CAPITAL, AND SURPLUS. (a) For purposes of this subchapter,
379-9 a determination of whether a corporation is or would be made
379-10 insolvent by a distribution or share distribution or a
379-11 determination of the value of a corporation's net assets, stated
379-12 capital, or surplus, or each component of net assets, stated
379-13 capital, or surplus, shall be made:
379-14 (1) on the date the distribution or share distribution
379-15 is authorized by the corporation's board of directors if the
379-16 distribution or share distribution is made not later than the 120th
379-17 day after the date of authorization; or
379-18 (2) if the distribution or share distribution is made
379-19 more than 120 days after the date of authorization:
379-20 (A) on the date designated by the corporation's
379-21 board of directors if the date so designated is not earlier than
379-22 120 days before the date the distribution or share distribution is
379-23 made; or
379-24 (B) on the date the distribution or share
379-25 distribution is made if the corporation's board of directors does
379-26 not designate a date as described in Subdivision (2)(A).
379-27 (b) For purposes of this section, a distribution that
380-1 involves:
380-2 (1) the incurrence by a corporation of indebtedness or
380-3 a deferred payment obligation is considered to have been made on
380-4 the date the indebtedness or obligation is incurred; or
380-5 (2) a requirement in the corporation's certificate of
380-6 formation or other contract of the corporation to redeem, exchange,
380-7 or otherwise acquire any of its own shares is considered to have
380-8 been made either on the date when the provision or other contract
380-9 is made or takes effect or on the date when the shares to be
380-10 redeemed, exchanged or acquired are redeemed, exchanged or
380-11 acquired, at the option of the corporation.
380-12 Sec. 21.316. LIABILITY OF DIRECTORS FOR WRONGFUL
380-13 DISTRIBUTIONS. (a) Subject to Subsection (c), the directors of a
380-14 corporation who vote for or assent to a distribution by the
380-15 corporation that is prohibited by Section 21.303 are jointly and
380-16 severally liable to the corporation for the amount by which the
380-17 distribution exceeds the amount permitted by that section to be
380-18 distributed.
380-19 (b) A director is not liable for all or part of the excess
380-20 amount if a distribution of that amount would have been permitted
380-21 by Section 21.303 after the date the director authorized the
380-22 distribution.
380-23 (c) A director is not jointly and severally liable under
380-24 Subsection (a) if, in voting for or assenting to the distribution,
380-25 the director:
380-26 (1) relies in good faith and with ordinary care on:
380-27 (A) the statements, valuations, or information
381-1 described by Section 21.314; or
381-2 (B) other information, opinions, reports, or
381-3 statements, including financial statements and other financial
381-4 data, concerning the corporation or another person that are
381-5 prepared or presented by:
381-6 (i) one or more officers or employees of
381-7 the corporation;
381-8 (ii) a legal counsel, public accountant,
381-9 investment banker, or other person relating to a matter the
381-10 director reasonably believes is within the person's professional or
381-11 expert competence; or
381-12 (iii) a committee of the board of
381-13 directors of which the director is not a member;
381-14 (2) acting in good faith and with ordinary care,
381-15 considers the assets of the corporation to be valued at least at
381-16 their book value; or
381-17 (3) in determining whether the corporation made
381-18 adequate provision for payment, satisfaction, or discharge of all
381-19 of the corporation's liabilities and obligations, as provided by
381-20 Sections 11.053 and 11.356, relies in good faith and with ordinary
381-21 care on financial statements of, or other information concerning, a
381-22 person who was or became contractually obligated to pay, satisfy,
381-23 or discharge some or all of the corporation's liabilities or
381-24 obligations.
381-25 (d) The liability imposed under Subsection (a) is the only
381-26 liability of a director to the corporation or its creditors for
381-27 authorizing a distribution that is prohibited by Section 21.303.
382-1 (e) This section and Sections 21.317 and 21.318 do not limit
382-2 any liability imposed under Chapter 24, Business & Commerce Code,
382-3 or the United States Bankruptcy Code.
382-4 Sec. 21.317. STATUTE OF LIMITATIONS ON ACTION FOR WRONGFUL
382-5 DISTRIBUTION. An action may not be brought against a director of a
382-6 corporation under Section 21.316 after the second anniversary of
382-7 the date the alleged act giving rise to the liability occurred.
382-8 Sec. 21.318. CONTRIBUTION FROM CERTAIN SHAREHOLDERS AND
382-9 DIRECTORS. (a) A director who is held liable for a claim asserted
382-10 under Section 21.316 is entitled to receive contributions from
382-11 shareholders who accepted or received the wrongful distribution
382-12 knowing that it was prohibited by Section 21.303 in proportion to
382-13 the amounts received by the shareholders.
382-14 (b) A director who is liable for a claim asserted under
382-15 Section 21.316 is entitled to receive contributions from each of
382-16 the other directors who are liable with respect to that claim in an
382-17 amount appropriate to achieve equity.
382-18 (c) The liability provided by Subsection (a) is the only
382-19 liability of a shareholder to the corporation or a creditor of the
382-20 corporation for accepting or receiving a distribution by the
382-21 corporation that is prohibited by Section 21.303, except for any
382-22 liability under Chapter 24, Business & Commerce Code, or the United
382-23 States Bankruptcy Code.
382-24 (Sections 21.319-21.350 reserved for expansion)
382-25 SUBCHAPTER H. SHAREHOLDERS' MEETINGS; VOTING AND QUORUM
382-26 Sec. 21.351. ANNUAL MEETING. (a) An annual meeting of the
382-27 shareholders of a corporation shall be held at a time that is
383-1 stated in or set in accordance with the corporation's bylaws.
383-2 (b) On the application of a shareholder who has previously
383-3 submitted a written request to the corporation that an annual
383-4 meeting be held, a court in the county in which the principal
383-5 executive office of the corporation is located may order a meeting
383-6 to be held if the annual meeting is not held or written consent
383-7 instead of the annual meeting is not executed within any 13-month
383-8 period, unless the meeting is not required to be held under Section
383-9 21.655.
383-10 (c) The failure to hold an annual meeting at the designated
383-11 time does not result in the winding up or termination of the
383-12 corporation.
383-13 Sec. 21.352. SPECIAL MEETINGS. (a) A special meeting of the
383-14 shareholders of a corporation may be called by:
383-15 (1) the president, the board of directors, or any
383-16 other person authorized to call special meetings by the certificate
383-17 of formation or bylaws of the corporation; or
383-18 (2) the holders of the percentage of shares specified
383-19 in the certificate of formation, not to exceed 50 percent of the
383-20 shares entitled to vote or, if no percentage is specified, at least
383-21 10 percent of all of the shares of the corporation entitled to vote
383-22 at the proposed special meeting.
383-23 (b) Unless stated in or set in accordance with the bylaws,
383-24 the record date for determining which shareholders of the
383-25 corporation are entitled to call a special meeting is the date the
383-26 first shareholder signs the notice of that meeting.
383-27 (c) Other than procedural matters, the only business that
384-1 may be conducted at a special meeting of the shareholders is
384-2 business that is within the purposes described in the notice
384-3 required by Section 21.353.
384-4 Sec. 21.353. NOTICE OF MEETING. (a) Except as provided by
384-5 Section 21.456, written notice of a meeting in accordance with
384-6 Section 6.051 shall be given to each shareholder entitled to vote
384-7 at the meeting not later than the 10th day and not earlier than the
384-8 60th day before the date of the meeting. Notice shall be given at
384-9 the direction of the president, secretary, or other person calling
384-10 the meeting.
384-11 (b) The notice of a special meeting must contain a statement
384-12 regarding the purpose or purposes of the meeting.
384-13 Sec. 21.354. INSPECTION OF VOTING LIST. (a) Subject to the
384-14 corporation's governing documents, the list of shareholders
384-15 entitled to vote at the meeting prepared under Section 6.004 shall
384-16 be:
384-17 (1) subject to inspection by a shareholder during
384-18 regular business hours; and
384-19 (2) produced and kept open at the meeting.
384-20 (b) The original share transfer records are prima facie
384-21 evidence of which shareholders are entitled to inspect the list.
384-22 Sec. 21.355. CLOSING OF SHARE TRANSFER RECORDS. Share
384-23 transfer records that are closed in accordance with Section 6.101
384-24 for the purpose of determining which shareholders are entitled to
384-25 receive notice of a meeting of shareholders shall remain closed for
384-26 at least 10 days immediately preceding the date of the meeting.
384-27 Sec. 21.356. RECORD DATE FOR WRITTEN CONSENT TO ACTION. The
385-1 record date provided in accordance with Section 6.102(a) may not be
385-2 more than 10 days after the date on which the board of directors
385-3 adopts the resolution setting the record date.
385-4 Sec. 21.357. RECORD DATE FOR PURPOSE OTHER THAN WRITTEN
385-5 CONSENT TO ACTION. The record date provided by the directors in
385-6 accordance with Section 6.101 must be at least 10 days before the
385-7 date on which the particular action requiring the determination of
385-8 shareholders is to be taken.
385-9 Sec. 21.358. QUORUM. (a) Subject to Subsection (b), the
385-10 holders of the majority of the shares entitled to vote at a meeting
385-11 of the shareholders of a corporation that are present or
385-12 represented by proxy at the meeting are a quorum for the
385-13 consideration of a matter to be presented at that meeting.
385-14 (b) The certificate of formation of a corporation may
385-15 provide that a quorum is present only if:
385-16 (1) the holders of a specified portion of the shares
385-17 that is greater than the majority of the shares entitled to vote
385-18 are represented at the meeting in person or by proxy; or
385-19 (2) the holders of a specified portion of the shares
385-20 that is less than the majority but not less than one-third of the
385-21 shares entitled to vote are represented at the meeting in person or
385-22 by proxy.
385-23 (c) Unless provided by the certificate of formation or
385-24 bylaws of the corporation, after a quorum is present at a meeting
385-25 of shareholders, the shareholders may conduct business properly
385-26 brought before the meeting until the meeting is adjourned. The
385-27 subsequent withdrawal from the meeting of a shareholder or the
386-1 refusal of a shareholder present at or represented by proxy at the
386-2 meeting to vote does not negate the presence of a quorum at the
386-3 meeting.
386-4 (d) Unless provided by the certificate of formation or
386-5 bylaws, the shareholders of the corporation at a meeting at which a
386-6 quorum is not present may adjourn the meeting until the time and to
386-7 the place as may be determined by a vote of the holders of the
386-8 majority of the shares who are present or represented by proxy at
386-9 the meeting.
386-10 Sec. 21.359. VOTING IN ELECTION OF DIRECTORS. (a) Subject
386-11 to Subsection (b), directors of a corporation shall be elected by a
386-12 plurality of the votes cast by the holders of shares entitled to
386-13 vote in the election of directors at a meeting of shareholders at
386-14 which a quorum is present.
386-15 (b) The certificate of formation or bylaws of a corporation
386-16 may provide that a director of a corporation shall be elected only
386-17 if the director receives:
386-18 (1) the vote of the holders of a specified portion,
386-19 but not less than the majority, of the shares entitled to vote in
386-20 the election of directors;
386-21 (2) the vote of the holders of a specified portion,
386-22 but not less than the majority, of the shares entitled to vote in
386-23 the election of directors and represented in person or by proxy at
386-24 a meeting of shareholders at which a quorum is present; or
386-25 (3) the vote of the holders of a specified portion,
386-26 but not less than the majority, of the votes cast by the holders of
386-27 shares entitled to vote in the election of directors at a meeting
387-1 of shareholders at which a quorum is present.
387-2 Sec. 21.360. NO CUMULATIVE VOTING RIGHT UNLESS AUTHORIZED.
387-3 Except as provided by Section 21.361 or 21.362, a shareholder does
387-4 not have the right to cumulate the shareholder's vote in the
387-5 election of directors.
387-6 Sec. 21.361. CUMULATIVE VOTING IN ELECTION OF DIRECTORS. (a)
387-7 If expressly authorized by a corporation's certificate of formation
387-8 in general or with respect to a specified class or series of shares
387-9 or group of classes or series of shares and subject to Subsections
387-10 (b) and (c), at each election of directors of the corporation each
387-11 shareholder entitled to vote at the election is entitled to:
387-12 (1) vote the number of shares owned by the shareholder
387-13 for as many candidates as there are directors to be elected and for
387-14 whose election the shareholder is entitled to vote; or
387-15 (2) cumulate votes by:
387-16 (A) giving one candidate as many votes as the
387-17 total of the number of the directors to be elected multiplied by
387-18 the shareholder's shares; or
387-19 (B) distributing the votes among one or more
387-20 candidates using the same principle.
387-21 (b) Cumulative voting permitted by the certificate of
387-22 formation is permitted only in an election of directors in which a
387-23 shareholder who intends to cumulate votes has given written notice
387-24 of that intention to the secretary of the corporation on or before
387-25 the day preceding the date of the election at which the shareholder
387-26 intends to cumulate votes.
387-27 (c) All shareholders entitled to vote cumulatively may
388-1 cumulate their votes if a shareholder gives the notice required by
388-2 Subsection (b).
388-3 Sec. 21.362. CUMULATIVE VOTING RIGHT IN CERTAIN
388-4 CORPORATIONS. Except as provided by the corporation's certificate
388-5 of formation, a shareholder of a corporation incorporated before
388-6 the effective date of this code has the right to cumulatively vote
388-7 the number of shares the shareholder owns in the election of
388-8 directors to the extent permitted and in the manner provided by
388-9 Section 21.361. A corporation may limit or deny a shareholder's
388-10 right to cumulatively vote shares at any time after the effective
388-11 date of this code by amending its certificate of formation.
388-12 Sec. 21.363. VOTING ON MATTERS OTHER THAN ELECTION OF
388-13 DIRECTORS. (a) Subject to Subsection (b), with respect to a matter
388-14 other than the election of directors or a matter for which the
388-15 affirmative vote of the holders of a specified portion of the
388-16 shares entitled to vote is required by this code, the affirmative
388-17 vote of the holders of the majority of the shares entitled to vote
388-18 on, and who voted for, against, or expressly abstained with respect
388-19 to, the matter at a shareholders' meeting of a corporation at which
388-20 a quorum is present is the act of the shareholders.
388-21 (b) With respect to a matter other than the election of
388-22 directors or a matter for which the affirmative vote of the holders
388-23 of a specified portion of the shares entitled to vote is required
388-24 by this code, the certificate of formation or bylaws of a
388-25 corporation may provide that the act of the shareholders of the
388-26 corporation is:
388-27 (1) the affirmative vote of the holders of a specified
389-1 portion, but not less than the majority, of the shares entitled to
389-2 vote on that matter;
389-3 (2) the affirmative vote of the holders of a specified
389-4 portion, but not less than the majority, of the shares entitled to
389-5 vote on that matter and represented in person or by proxy at a
389-6 shareholders' meeting at which a quorum is present;
389-7 (3) the affirmative vote of the holders of a specified
389-8 portion, but not less than the majority, of the shares entitled to
389-9 vote on, and who voted for or against, the matter at a
389-10 shareholders' meeting at which a quorum is present; or
389-11 (4) the affirmative vote of the holders of a specified
389-12 portion, but not less than the majority, of the shares entitled to
389-13 vote on, and who voted for, against, or expressly abstained with
389-14 respect to, the matter at a shareholders' meeting at which a quorum
389-15 is present.
389-16 Sec. 21.364. VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.
389-17 (a) In this section, a "fundamental action" means:
389-18 (1) an amendment of a certificate of formation;
389-19 (2) a voluntary winding up under Chapter 11;
389-20 (3) a revocation of a voluntary decision to wind up
389-21 under Section 11.151;
389-22 (4) a cancellation of an event requiring winding up
389-23 under Section 11.152; or
389-24 (5) a reinstatement under Section 11.202.
389-25 (b) Except as otherwise provided by this code or the
389-26 certificate of formation or bylaws of a corporation in accordance
389-27 with Section 21.363, the vote required for approval of a
390-1 fundamental action by the shareholders is the affirmative vote of
390-2 the holders of at least two-thirds of the outstanding shares
390-3 entitled to vote on the fundamental action.
390-4 (c) If a class or series of shares is entitled to vote as a
390-5 class on a fundamental action, the vote required for approval of
390-6 the action by the shareholders is the affirmative vote of the
390-7 holders of at least two-thirds of the outstanding shares in each
390-8 class or series of shares entitled to vote on the action as a class
390-9 and at least two-thirds of the outstanding shares otherwise
390-10 entitled to vote on the action. Shares entitled to vote as a class
390-11 shall be entitled to vote only as a class unless otherwise entitled
390-12 to vote on each matter submitted to the shareholders generally or
390-13 otherwise provided by the certificate of formation.
390-14 (d) Unless an amendment to the certificate of formation is
390-15 undertaken by the board of directors under Section 21.155, separate
390-16 voting by a class or series of shares of a corporation is required
390-17 for approval of an amendment to the certificate of formation that
390-18 would result in:
390-19 (1) the increase or decrease of the aggregate number
390-20 of authorized shares of the class or series;
390-21 (2) the increase or decrease of the par value of the
390-22 shares of the class, including changing shares with par value into
390-23 shares without par value or changing shares without par value into
390-24 shares with par value;
390-25 (3) effecting an exchange, reclassification, or
390-26 cancellation of all or part of the shares of the class or series;
390-27 (4) effecting an exchange or creating a right of
391-1 exchange of all or part of the shares of another class or series
391-2 into the shares of the class or series;
391-3 (5) the change of the designations, preferences,
391-4 limitations, or relative rights of the shares of the class or
391-5 series;
391-6 (6) the change of the shares of the class or series,
391-7 with or without par value, into the same or a different number of
391-8 shares, with or without par value, of the same class or series or
391-9 another class or series;
391-10 (7) the creation of a new class or series of shares
391-11 with rights and preferences equal, prior, or superior to the shares
391-12 of the class or series;
391-13 (8) increasing the rights and preferences of a class
391-14 or series with rights and preferences equal, prior, or superior to
391-15 the shares of the class or series;
391-16 (9) increasing the rights and preferences of a class
391-17 or series with rights or preferences later or inferior to the
391-18 shares of the class or series in such a manner that the rights or
391-19 preferences will be equal, prior, or superior to the shares of the
391-20 class or series;
391-21 (10) dividing the shares of the class into series and
391-22 setting and determining the designation of the series and the
391-23 variations in the relative rights and preferences between the
391-24 shares of the series;
391-25 (11) the limitation or denial of existing preemptive
391-26 rights or cumulative voting rights of the shares of the class or
391-27 series;
392-1 (12) canceling or otherwise affecting the dividends on
392-2 the shares of the class or series that have accrued but have not
392-3 been declared; or
392-4 (13) the inclusion or deletion from the certificate of
392-5 formation of provisions required or permitted to be included in the
392-6 certificate of formation of a close corporation under Subchapter O.
392-7 (e) The vote required under Subsection (d) by a class or
392-8 series of shares of a corporation is required notwithstanding
392-9 shares of that class or series do not otherwise have a right to
392-10 vote under the certificate of formation.
392-11 (f) Unless otherwise provided by the certificate of
392-12 formation, if the holders of the outstanding shares of a class that
392-13 is divided into series are entitled to vote as a class on a
392-14 proposed amendment that would affect equally all series of the
392-15 class, other than a series in which no shares are outstanding or a
392-16 series that is not affected by the amendment, the holders of the
392-17 separate series are not entitled to separate class votes.
392-18 (g) Unless otherwise provided by the certificate of
392-19 formation, a proposed amendment to the certificate of formation
392-20 that would solely effect changes in the designations, preferences,
392-21 limitations, or relative rights, including voting rights, of one or
392-22 more series of shares of the corporation that have been established
392-23 under the authority granted to the board of directors in the
392-24 certificate of formation in accordance with Section 21.155 does not
392-25 require the approval of the holders of the outstanding shares of a
392-26 class or series other than the affected series if, after giving
392-27 effect to the amendment:
393-1 (1) the preferences, limitations, or relative rights
393-2 of the affected series may be set and determined by the board of
393-3 directors with respect to the establishment of a new series of
393-4 shares under the authority granted to the board of directors in the
393-5 certificate of formation in accordance with Section 21.155; or
393-6 (2) any new series established as a result of a
393-7 reclassification of the affected series are within the preferences,
393-8 limitations, and relative rights that are described by Subdivision
393-9 (1).
393-10 Sec. 21.365. CHANGES IN VOTE REQUIRED FOR CERTAIN MATTERS.
393-11 (a) With respect to a matter for which the affirmative vote of the
393-12 holders of a specified portion of the shares entitled to vote is
393-13 required by this code, the certificate of formation of a
393-14 corporation may provide that the affirmative vote of the holders of
393-15 a specified portion, but not less than the majority, of the shares
393-16 entitled to vote on that matter is required for shareholder action
393-17 on that matter.
393-18 (b) With respect to a matter for which the affirmative vote
393-19 of the holders of a specified portion of the shares of a class or
393-20 series is required by this code, the certificate of formation may
393-21 provide that the affirmative vote of the holders of a specified
393-22 portion, but not less than the majority, of the shares of that
393-23 class or series is required for action of the holders of shares of
393-24 that class or series on that matter.
393-25 (c) If a provision of the certificate of formation provides
393-26 that the affirmative vote of the holders of a specified portion
393-27 that is greater than the majority of the shares entitled to vote on
394-1 a matter is required for shareholder action on that matter, the
394-2 provision may not be amended, directly or indirectly, without the
394-3 same affirmative vote unless otherwise provided by the certificate
394-4 of formation.
394-5 (d) If a provision of the certificate of formation provides
394-6 that the affirmative vote of the holders of a specified portion
394-7 that is greater than the majority of the shares of a class or
394-8 series is required for shareholder action on a matter, the
394-9 provision may not be amended, directly or indirectly, without the
394-10 same affirmative vote unless otherwise provided by the certificate
394-11 of formation.
394-12 Sec. 21.366. NUMBER OF VOTES PER SHARE. (a) Except as
394-13 provided by the certificate of formation of a corporation or this
394-14 code, each outstanding share, regardless of class, shall be
394-15 entitled to one vote on each matter submitted to a vote at a
394-16 shareholders' meeting.
394-17 (b) If the certificate of formation provides for more or
394-18 less than one vote per share on a matter for all of the outstanding
394-19 shares or for the shares of a class or series, each reference in
394-20 this code or in the certificate of formation or bylaws, unless
394-21 expressly stated otherwise, to a specified portion of the shares
394-22 with respect to that matter refers to the portion of the votes
394-23 entitled to be cast with respect to those shares under the
394-24 certificate of formation.
394-25 Sec. 21.367. VOTING IN PERSON OR BY PROXY. (a) A
394-26 shareholder may vote in person or by proxy executed in writing by
394-27 the shareholder.
395-1 (b) A telegram, telex, cablegram, or other form of
395-2 electronic transmission, including telephonic transmission, by the
395-3 shareholder, or a photographic, photostatic, facsimile, or similar
395-4 reproduction of a writing executed by the shareholder, is
395-5 considered an execution in writing for purposes of this section.
395-6 Any electronic transmission must contain or be accompanied by
395-7 information from which it can be determined that the transmission
395-8 was authorized by the shareholder.
395-9 Sec. 21.368. TERM OF PROXY. A proxy is not valid after 11
395-10 months after the date the proxy is executed unless otherwise
395-11 provided by the proxy.
395-12 Sec. 21.369. REVOCABILITY OF PROXY. (a) In this section, a
395-13 "proxy coupled with an interest" includes the appointment as proxy
395-14 of:
395-15 (1) a pledgee;
395-16 (2) a person who purchased or agreed to purchase the
395-17 shares subject to the proxy;
395-18 (3) a person who owns or holds an option to purchase
395-19 the shares subject to the proxy;
395-20 (4) a creditor of the corporation who extended the
395-21 corporation credit under terms requiring the appointment;
395-22 (5) an employee of the corporation whose employment
395-23 contract requires the appointment; or
395-24 (6) a party to a voting agreement created under
395-25 Section 6.252 or a shareholders' agreement created under Section
395-26 21.101.
395-27 (b) A proxy is revocable unless:
396-1 (1) the proxy form conspicuously states that the proxy
396-2 is irrevocable; and
396-3 (2) the proxy is coupled with an interest.
396-4 Sec. 21.370. ENFORCEABILITY OF PROXY. (a) An irrevocable
396-5 proxy is specifically enforceable against the holder of shares or
396-6 any successor or transferee of the holder if:
396-7 (1) the proxy is noted conspicuously on the
396-8 certificate representing the shares subject to the proxy; or
396-9 (2) in the case of uncertificated shares, notation of
396-10 the proxy is contained in the notice sent under Section 3.205 with
396-11 respect to the shares subject to the proxy.
396-12 (b) An irrevocable proxy that is otherwise enforceable is
396-13 ineffective against a transferee for value without actual knowledge
396-14 of the existence of the irrevocable proxy at the time of the
396-15 transfer or against a subsequent transferee, regardless of whether
396-16 the transfer is for value, unless the proxy is:
396-17 (1) noted conspicuously on the certificate
396-18 representing the shares subject to the proxy; or
396-19 (2) in the case of uncertificated shares, notation of
396-20 the proxy is contained in the notice sent under Section 3.205 with
396-21 respect to the shares subject to the proxy.
396-22 (c) An irrevocable proxy shall be specifically enforceable
396-23 against a person who is not a transferee for value from the time
396-24 the person acquires actual knowledge of the existence of the
396-25 irrevocable proxy.
396-26 Sec. 21.371. PROCEDURES IN BYLAWS RELATING TO PROXIES. A
396-27 corporation may establish in the corporation's bylaws procedures
397-1 consistent with this code for determining the validity of proxies
397-2 and determining whether shares that are held of record by a bank,
397-3 broker, or other nominee are represented at a meeting of
397-4 shareholders. The procedures may incorporate rules of and
397-5 determinations made by a stock exchange or self-regulatory
397-6 organization regulating the corporation or that bank, broker, or
397-7 other nominee.
397-8 Sec. 21.372. ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT.
397-9 The shareholders of a corporation may act with less than unanimous
397-10 written consent in the manner provided by Section 6.202 if action
397-11 by less than unanimous written consent is authorized by the
397-12 corporation's certificate of formation or a bylaw adopted by the
397-13 corporation's shareholders.
397-14 (Sections 21.373-21.400 reserved for expansion)
397-15 SUBCHAPTER I. BOARD OF DIRECTORS
397-16 Sec. 21.401. MANAGEMENT BY BOARD OF DIRECTORS. (a) Except
397-17 as provided by Section 21.101 or Subchapter O, the board of
397-18 directors of a corporation shall:
397-19 (1) exercise or authorize the exercise of the powers
397-20 of the corporation; and
397-21 (2) direct the management of the business and affairs
397-22 of the corporation.
397-23 (b) In discharging the duties of director under this code or
397-24 otherwise and in considering the best interests of the corporation,
397-25 a director may consider the long-term and short-term interests of
397-26 the corporation and the shareholders of the corporation, including
397-27 the possibility that those interests may be best served by the
398-1 continued independence of the corporation.
398-2 Sec. 21.402. BOARD MEMBER ELIGIBILITY REQUIREMENTS. Unless
398-3 the certificate of formation or bylaws of a corporation provide
398-4 otherwise, a person is not required to be a resident of this state
398-5 or a shareholder of the corporation to serve as a director. The
398-6 certificate of formation or bylaws may prescribe other
398-7 qualifications for directors.
398-8 Sec. 21.403. NUMBER OF DIRECTORS. (a) The board of
398-9 directors of a corporation may consist of one or more directors.
398-10 (b) If the corporation is to be managed by a board of
398-11 directors, the corporation's certificate of formation may set the
398-12 number constituting the initial board of directors. The
398-13 certificate of formation or bylaws of the corporation shall set the
398-14 number constituting each subsequent board of directors or provide
398-15 for the manner in which the number of directors is determined.
398-16 (c) The number of directors may be increased or decreased by
398-17 amendment to, or as provided by, the certificate of formation or
398-18 bylaws. A decrease in the number of directors may not shorten the
398-19 term of an incumbent director.
398-20 (d) If the certificate of formation or bylaws do not set the
398-21 number constituting the board of directors or provide for the
398-22 manner in which the number of directors must be determined, the
398-23 number of directors is the same as the number constituting the
398-24 initial board of directors as set by the certificate of formation.
398-25 Sec. 21.404. DESIGNATION OF INITIAL BOARD OF DIRECTORS. If
398-26 the corporation is to be managed by a board of directors, the
398-27 certificate of formation of a corporation must state the names and
399-1 addresses of the persons constituting the initial board of
399-2 directors of the corporation.
399-3 Sec. 21.405. ELECTION OF BOARD OF DIRECTORS. (a) At the
399-4 first annual meeting of shareholders of a corporation and at each
399-5 subsequent annual meeting of shareholders, the holders of shares
399-6 entitled to vote in the election of directors shall elect directors
399-7 for the term provided under Section 21.407, except as provided by
399-8 Section 21.408.
399-9 (b) A corporation's certificate of formation may provide
399-10 that the holders of a class or series of shares or a group of
399-11 classes or series of shares are entitled to elect one or more
399-12 directors of the corporation.
399-13 Sec. 21.406. SPECIAL VOTING RIGHTS OF DIRECTORS. (a) The
399-14 certificate of formation of a corporation may provide that
399-15 directors elected by the holders of a class or series of shares or
399-16 by a group of classes or series of shares entitled to elect one or
399-17 more directors, as provided by Section 21.405, are entitled to cast
399-18 more or less than one vote on specified matters.
399-19 (b) Unless expressly stated otherwise, each reference in
399-20 this code or in a corporation's certificate of formation or bylaws
399-21 to a specified portion of the directors means the portion of the
399-22 votes entitled to be cast by the directors to which the reference
399-23 applies.
399-24 Sec. 21.407. TERM OF OFFICE. Unless otherwise provided by
399-25 this subchapter or removed in accordance with Section 21.409, the
399-26 term of office of a director extends from the date the director is
399-27 elected and qualified or named in the corporation's certificate of
400-1 formation until the next annual meeting of shareholders and until
400-2 the director's successor is elected and qualified.
400-3 Sec. 21.408. SPECIAL TERMS OF OFFICE. (a) The certificate
400-4 of formation or bylaws of a corporation may provide that all or
400-5 some of the board of directors may be divided into two or three
400-6 classes that shall include the same or a similar number of
400-7 directors as each other class and that have staggered terms of
400-8 office.
400-9 (b) The terms of office of the initial directors
400-10 constituting the first class expire at the first annual meeting of
400-11 shareholders after the election of those directors. The terms of
400-12 office of the initial directors constituting the second class
400-13 expire at the second annual meeting of shareholders after election
400-14 of those directors. The terms of office of the initial directors
400-15 constituting the third class, if any, expire at the third annual
400-16 meeting of shareholders after election of those directors.
400-17 (c) If the certificate of formation or bylaws provide for
400-18 staggered terms of directors, the shareholders, at each annual
400-19 meeting, shall elect a number of directors equal to the number of
400-20 the class of directors whose terms expire at the time of the
400-21 meeting. The directors elected at an annual meeting shall hold
400-22 office until the second succeeding annual meeting, if there are two
400-23 classes, or until the third succeeding annual meeting, if there are
400-24 three classes.
400-25 (d) Unless provided by the certificate of formation or a
400-26 bylaw adopted by the shareholders, staggered terms for directors
400-27 must be effected at a meeting of shareholders at which directors
401-1 are elected. Staggered terms for directors may not be effected if
401-2 any shareholder has the right to cumulate votes for the election of
401-3 directors and the board of directors consists of fewer than nine
401-4 members.
401-5 (e) Directors elected by the holders of a class or series of
401-6 shares or a group of classes or series of shares in accordance with
401-7 the certificate of formation shall hold office for the terms
401-8 specified by the certificate of formation.
401-9 Sec. 21.409. REMOVAL OF DIRECTORS. (a) Except as otherwise
401-10 provided by the certificate of formation or bylaws of a corporation
401-11 or this subchapter, the shareholders of the corporation may remove
401-12 a director or the entire board of directors of the corporation,
401-13 with or without cause, at a meeting called for that purpose, by a
401-14 vote of the holders of a specified portion, but not less than the
401-15 majority, of the shares entitled to vote at an election of
401-16 directors.
401-17 (b) If the certificate of formation entitles the holders of
401-18 a class or series of shares or a group of classes or series of
401-19 shares to elect one or more directors, only the holders of shares
401-20 of that class, series, or group may vote on the removal of a
401-21 director elected by the holders of shares of that class, series, or
401-22 group.
401-23 (c) If the certificate of formation permits cumulative
401-24 voting and less than the entire board is to be removed, a director
401-25 may not be removed if the votes cast against the removal would be
401-26 sufficient to elect the director if cumulatively voted at an
401-27 election of the entire board of directors, or if there are classes
402-1 of directors, at an election of the class of directors of which the
402-2 director is a part.
402-3 (d) In the case of a corporation the directors of which
402-4 serve staggered terms, a director may not be removed except for
402-5 cause unless the certificate of formation provides otherwise.
402-6 Sec. 21.410. VACANCY. (a) A vacancy occurring in the
402-7 initial board of directors before the issuance of shares may be
402-8 filled by the affirmative vote or written consent of the majority
402-9 of the incorporators or by the affirmative vote of the majority of
402-10 the remaining directors, even if the majority of the remaining
402-11 directors constitutes less than a quorum of the board of directors.
402-12 (b) Except as provided by Subsection (e), a vacancy
402-13 occurring in the board of directors after the issuance of shares
402-14 may be filled by election at an annual or special meeting of
402-15 shareholders called for that purpose or by the affirmative vote of
402-16 the majority of the remaining directors, even if the majority of
402-17 directors constitutes less than a quorum of the board of directors.
402-18 (c) The term of a director elected to fill a vacancy
402-19 occurring in the board of directors, including the initial
402-20 directors, is the unexpired term of the director's predecessor in
402-21 office.
402-22 (d) Except as provided by Subsection (e), a vacancy to be
402-23 filled because of an increase in the number of directors may be
402-24 filled by election at an annual or special meeting of shareholders
402-25 called for that purpose or by the board of directors for a term of
402-26 office continuing only until the next election of one or more
402-27 directors by the shareholders. During a period between two
403-1 successive annual meetings of shareholders, the board of directors
403-2 may not fill more than two vacancies created by an increase in the
403-3 number of directors.
403-4 (e) Unless otherwise authorized by a corporation's
403-5 certificate of formation, a vacancy or a newly created vacancy in a
403-6 director position that the certificate of formation entitles the
403-7 holders of a class or series of shares or group of classes or
403-8 series of shares to elect may be filled only (i) by the affirmative
403-9 vote of the majority of the directors then in office elected by the
403-10 class, series, or group, (ii) by the sole remaining director
403-11 elected in that manner, or (iii) by the affirmative vote of the
403-12 holders of the outstanding shares of the class, series, or group.
403-13 Sec. 21.411. NOTICE OF MEETING. (a) Regular meetings of the
403-14 board of directors of a corporation may be held with or without
403-15 notice as prescribed by the corporation's bylaws.
403-16 (b) Special meetings of the board of directors shall be held
403-17 with notice as prescribed by the bylaws.
403-18 (c) A notice of a board meeting is not required to specify
403-19 the business to be transacted at the meeting or the purpose of the
403-20 meeting, unless required by the bylaws.
403-21 Sec. 21.412. WAIVER OF NOTICE. (a) If the bylaws of a
403-22 corporation require notice of a meeting to be given to a director,
403-23 a written waiver of the notice signed by the director entitled to
403-24 the notice, before or after the meeting, is equivalent to the
403-25 giving of the notice.
403-26 (b) The attendance of a director at a board meeting
403-27 constitutes a waiver of notice of the meeting, unless the director
404-1 attends the meeting for the express purpose of objecting to the
404-2 transaction of business at the meeting because the meeting has not
404-3 been lawfully called or convened.
404-4 (c) A waiver of notice of a board meeting is not required to
404-5 specify the business to be transacted at the meeting or the purpose
404-6 of the meeting, unless required by the bylaws.
404-7 Sec. 21.413. QUORUM. (a) A quorum of the board of directors
404-8 is the majority of the number of directors set or established in
404-9 the manner provided by the certificate of formation or bylaws of a
404-10 corporation unless the laws of this state, the certificate of
404-11 formation, or the bylaws require a different number or portion.
404-12 (b) Neither the certificate of formation nor the bylaws may
404-13 provide that less than one-third of the number of directors
404-14 constitutes a quorum.
404-15 Sec. 21.414. DISSENT TO ACTION. (a) A director of a
404-16 corporation who is present at a meeting of the board of directors
404-17 at which action has been taken is presumed to have assented to the
404-18 action taken unless:
404-19 (1) the director's dissent has been entered in the
404-20 minutes of the meeting;
404-21 (2) the director has filed a written dissent to the
404-22 action with the person acting as the secretary of the meeting
404-23 before the meeting is adjourned; or
404-24 (3) the director has sent a written dissent by
404-25 registered mail to the secretary of the corporation immediately
404-26 after the meeting has been adjourned.
404-27 (b) A director who voted in favor of an action may not
405-1 dissent to the action.
405-2 Sec. 21.415. ACTION BY DIRECTORS. (a) The act of a majority
405-3 of the directors present at a meeting at which a quorum is present
405-4 is the act of the board of directors of a corporation, unless the
405-5 act of a greater number is required by the certificate of formation
405-6 or bylaws of the corporation or by this code.
405-7 (b) Unless otherwise provided by the certificate of
405-8 formation or bylaws, a written consent stating the action taken and
405-9 signed by all members of the board of directors also is an act of
405-10 the board of directors.
405-11 Sec. 21.416. COMMITTEES OF BOARD OF DIRECTORS. (a) If
405-12 authorized by the certificate of formation or bylaws of a
405-13 corporation, the board of directors of the corporation, by
405-14 resolution adopted by the majority of the entire board of
405-15 directors, may designate:
405-16 (1) committees composed of one or more directors; or
405-17 (2) directors as alternate members of committees to
405-18 replace absent or disqualified committee members at a committee
405-19 meeting, subject to any limitations imposed by the board of
405-20 directors.
405-21 (b) To the extent provided by the resolution designating a
405-22 committee or the certificate of formation or bylaws and subject to
405-23 Subsection (c), the committee has the authority of the board of
405-24 directors.
405-25 (c) A committee of the board of directors may not:
405-26 (1) amend the certificate of formation, except to:
405-27 (A) establish series of shares;
406-1 (B) increase or decrease the number of shares in
406-2 a series; or
406-3 (C) eliminate a series of shares as authorized
406-4 by Section 21.155;
406-5 (2) propose a reduction of stated capital under
406-6 Sections 21.253 and 21.254;
406-7 (3) approve a plan of merger, share exchange, or
406-8 conversion of the corporation;
406-9 (4) recommend to shareholders the sale, lease, or
406-10 exchange of all or substantially all of the property and assets of
406-11 the corporation not made in the usual and regular course of its
406-12 business;
406-13 (5) recommend to the shareholders a voluntary winding
406-14 up and termination or a revocation of a voluntary winding up and
406-15 termination;
406-16 (6) amend, alter, or repeal the bylaws or adopt new
406-17 bylaws;
406-18 (7) fill vacancies on the board of directors;
406-19 (8) fill vacancies on or designate alternate members
406-20 of a committee of the board of directors;
406-21 (9) fill a vacancy to be filled because of an increase
406-22 in the number of directors;
406-23 (10) elect or remove officers of the corporation or
406-24 members or alternate members of a committee of the board of
406-25 directors;
406-26 (11) set the compensation of the members or alternate
406-27 members of a committee of the board of directors; or
407-1 (12) alter or repeal a resolution of the board of
407-2 directors that states that it may not be amended or repealed by a
407-3 committee of the board of directors.
407-4 (d) A committee of the board of directors may authorize a
407-5 distribution or the issuance of shares if authorized by the
407-6 resolution designating the committee or the certificate of
407-7 formation or bylaws.
407-8 (e) The board of directors may remove a member of a
407-9 committee appointed by the board if the board determines the
407-10 removal is in the best interests of the corporation. The removal
407-11 of the member is without prejudice to any contract rights of the
407-12 person removed. Appointment of a member of a committee does not
407-13 create contract rights.
407-14 (f) The designation and delegation of authority to a
407-15 committee of the board of directors does not relieve the board of
407-16 directors or a director of responsibility imposed by law.
407-17 Sec. 21.417. ELECTION OF OFFICERS. The board of directors of
407-18 a corporation shall elect a president and a secretary at the time
407-19 and in the manner prescribed by the corporation's bylaws. Other
407-20 officers of the board of directors shall be elected in accordance
407-21 with Section 3.103.
407-22 Sec. 21.418. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED
407-23 DIRECTORS AND OFFICERS. (a) This section applies only to a
407-24 contract or transaction between a corporation and:
407-25 (1) one or more of the corporation's directors or
407-26 officers; or
407-27 (2) an entity or other organization in which one or
408-1 more of the corporation's directors or officers:
408-2 (A) is a managerial official; or
408-3 (B) has a financial interest.
408-4 (b) An otherwise valid contract or transaction is valid
408-5 notwithstanding that a director or officer of the corporation is
408-6 present at or participates in the meeting of the board of
408-7 directors, or of a committee of the board that authorizes the
408-8 contract or transaction, or votes to authorize the contract or
408-9 transaction, if:
408-10 (1) the material facts as to the relationship or
408-11 interest and as to the contract or transaction are disclosed to or
408-12 known by:
408-13 (A) the corporation's board of directors or a
408-14 committee of the board of directors and the board of directors or
408-15 committee in good faith authorizes the contract or transaction by
408-16 the affirmative vote of the majority of the disinterested directors
408-17 or committee members, regardless of whether the disinterested
408-18 directors or committee members constitute a quorum; or
408-19 (B) the shareholders entitled to vote on the
408-20 authorization of the contract or transaction, and the contract or
408-21 transaction is specifically approved in good faith by a vote of the
408-22 shareholders; or
408-23 (2) the contract or transaction is fair to the
408-24 corporation when the contract or transaction is authorized,
408-25 approved, or ratified by the board of directors, a committee of the
408-26 board of directors, or the shareholders.
408-27 (c) Common or interested directors of a corporation may be
409-1 included in determining the presence of a quorum at a meeting of
409-2 the corporation's board of directors, or a committee of the board
409-3 of directors, that authorizes the contract or transaction.
409-4 (Sections 21.419-21.450 reserved for expansion)
409-5 SUBCHAPTER J. FUNDAMENTAL BUSINESS TRANSACTIONS
409-6 Sec. 21.451. DEFINITIONS. In this subchapter:
409-7 (1) "Participating shares" means shares that entitle
409-8 the holders of the shares to participate without limitation in
409-9 distributions.
409-10 (2) "Shares" includes a receipt or other instrument
409-11 issued by a depository representing an interest in one or more
409-12 shares or fractions of shares of a domestic or foreign corporation
409-13 that are deposited with the depository.
409-14 (3) "Voting shares" means shares that entitle the
409-15 holders of the shares to vote unconditionally in elections of
409-16 directors.
409-17 Sec. 21.452. APPROVAL OF MERGER. (a) A corporation that is
409-18 a party to the merger under Chapter 10 must approve the merger by
409-19 complying with this section.
409-20 (b) The board of directors of the corporation shall adopt a
409-21 resolution that:
409-22 (1) approves the plan of merger; and
409-23 (2) if shareholder approval of the merger is required
409-24 by this subchapter:
409-25 (A) recommends that the plan of merger be
409-26 approved by the shareholders of the corporation; or
409-27 (B) directs that the plan of merger be submitted
410-1 to the shareholders for approval without recommendation if the
410-2 board of directors determines for any reason not to recommend
410-3 approval of the plan of merger.
410-4 (c) Except as otherwise provided by this subchapter or
410-5 Chapter 10, the plan of merger shall be submitted to the
410-6 shareholders of the corporation for approval as provided by this
410-7 subchapter. The board of directors may place conditions on the
410-8 submission of the plan of merger to the shareholders.
410-9 (d) If the board of directors approves a plan of merger
410-10 required to be approved by the shareholders of the corporation but
410-11 does not adopt a resolution recommending that the plan of merger be
410-12 approved by the shareholders, the board of directors shall
410-13 communicate to the shareholders the reason for the board's
410-14 determination to submit the plan of merger without a
410-15 recommendation.
410-16 (e) Except as provided by Chapter 10 or Sections
410-17 21.457-21.459, the shareholders of the corporation shall approve
410-18 the plan of merger as provided by this subchapter.
410-19 Sec. 21.453. APPROVAL OF CONVERSION. (a) A corporation must
410-20 approve a conversion under Chapter 10 by complying with this
410-21 section.
410-22 (b) The board of directors of the corporation shall adopt a
410-23 resolution that approves the plan of conversion and:
410-24 (1) recommends that the plan of conversion be approved
410-25 by the shareholders of the corporation; or
410-26 (2) directs that the plan of conversion be submitted
410-27 to the shareholders for approval without recommendation if the
411-1 board of directors determines for any reason not to recommend
411-2 approval of the plan of conversion.
411-3 (c) The plan of conversion shall be submitted to the
411-4 shareholders of the corporation for approval as provided by this
411-5 subchapter. The board of directors may place conditions on the
411-6 submission of the plan of conversion to the shareholders.
411-7 (d) If the board of directors approves a plan of conversion
411-8 but does not adopt a resolution recommending that the plan of
411-9 conversion be approved by the shareholders of the corporation, the
411-10 board of directors shall communicate to the shareholders the reason
411-11 for the board's determination to submit the plan of conversion
411-12 without a recommendation.
411-13 (e) Except as provided by Sections 21.457-21.459, the
411-14 shareholders of the corporation shall approve the plan of
411-15 conversion as provided by this subchapter.
411-16 Sec. 21.454. APPROVAL OF EXCHANGE. (a) A corporation the
411-17 shares of which are to be acquired in an exchange under Chapter 10
411-18 must approve the exchange by complying with this section.
411-19 (b) The board of directors shall adopt a resolution that
411-20 approves the plan of exchange and:
411-21 (1) recommends that the plan of exchange be approved
411-22 by the shareholders of the corporation; or
411-23 (2) directs that the plan of exchange be submitted to
411-24 the shareholders for approval without recommendation if the board
411-25 of directors determines for any reason not to recommend approval of
411-26 the plan of exchange.
411-27 (c) The plan of exchange shall be submitted to the
412-1 shareholders of the corporation for approval as provided by this
412-2 subchapter. The board of directors may place conditions on the
412-3 submission of the plan of exchange to the shareholders.
412-4 (d) If the board of directors approves a plan of exchange
412-5 but does not adopt a resolution recommending that the plan of
412-6 exchange be approved by the shareholders of the corporation, the
412-7 board of directors shall communicate to the shareholders the reason
412-8 for the board's determination to submit the plan of exchange to
412-9 shareholders without a recommendation.
412-10 (e) Except as provided by Sections 21.457-21.459, the
412-11 shareholders of the corporation shall approve the plan of exchange
412-12 as provided by this subchapter.
412-13 Sec. 21.455. APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF
412-14 ASSETS. (a) Except as provided by the certificate of formation of
412-15 a domestic corporation, a sale, lease, pledge, mortgage,
412-16 assignment, transfer, or other conveyance of an interest in real
412-17 property or other assets of the corporation does not require the
412-18 approval or consent of the shareholders of the corporation unless
412-19 the transaction constitutes a sale of all or substantially all of
412-20 the assets of the corporation.
412-21 (b) A corporation must approve the sale of all or
412-22 substantially all of its assets by complying with this section.
412-23 (c) The board of directors of the corporation shall adopt a
412-24 resolution that approves the sale of all or substantially all of
412-25 the assets of the corporation and:
412-26 (1) recommends that the sale of all or substantially
412-27 all of the assets of the corporation be approved by the
413-1 shareholders of the corporation; or
413-2 (2) directs that the sale of all or substantially all
413-3 of the assets of the corporation be submitted to the shareholders
413-4 for approval without recommendation if the board of directors
413-5 determines for any reason not to recommend approval of the sale.
413-6 (d) The resolution proposing the sale of all or
413-7 substantially all of the assets of the corporation shall be
413-8 submitted to the shareholders of the corporation for approval as
413-9 provided by this subchapter. The board of directors may place
413-10 conditions on the submission of the proposed sale to the
413-11 shareholders.
413-12 (e) If the board of directors approves the sale of all or
413-13 substantially all of the assets of the corporation but does not
413-14 adopt a resolution recommending that the proposed sale be approved
413-15 by the shareholders of the corporation, the board of directors
413-16 shall communicate to the shareholders the reason for the board's
413-17 determination to submit the proposed sale to shareholders without a
413-18 recommendation.
413-19 (f) The shareholders of the corporation shall approve the
413-20 sale of all or substantially all of the assets of the corporation
413-21 as provided by this subchapter. After the approval of the sale by
413-22 the shareholders, the board of directors may abandon the sale of
413-23 all or substantially all of the assets of the corporation, subject
413-24 to the rights of a third party under a contract relating to the
413-25 assets, without further action or approval by the shareholders.
413-26 Sec. 21.456. GENERAL PROCEDURE FOR SUBMISSION TO
413-27 SHAREHOLDERS OF FUNDAMENTAL BUSINESS TRANSACTION. (a) If a
414-1 fundamental business transaction involving a corporation is
414-2 required to be submitted to the shareholders of the corporation
414-3 under this subchapter, the corporation shall notify each
414-4 shareholder of the corporation that the fundamental business
414-5 transaction is being submitted to the shareholders for approval as
414-6 required by this subchapter, regardless of whether the shareholder
414-7 is entitled to vote on the matter.
414-8 (b) If the fundamental business transaction is a merger,
414-9 conversion, or interest exchange, the notice required by Subsection
414-10 (a) shall contain or be accompanied by a copy or summary of the
414-11 plan of merger, conversion, or interest exchange, as appropriate.
414-12 (c) If the fundamental business transaction is to be
414-13 considered at a meeting of the shareholders of the corporation, the
414-14 notice of the meeting must:
414-15 (1) be given not later than the 21st day before the
414-16 date of the meeting; and
414-17 (2) state that the purpose, or one of the purposes, of
414-18 the meeting is to consider the fundamental business transaction.
414-19 (d) If the fundamental business transaction is being
414-20 submitted to shareholders by written consent, the notice required
414-21 by Subsection (a) must:
414-22 (1) be given not later than the 21st day before the
414-23 date the fundamental business transaction takes effect; and
414-24 (2) state that the purpose, or one of the purposes, of
414-25 the solicitation of written consents from the shareholders is to
414-26 receive approval for the fundamental business transaction.
414-27 Sec. 21.457. GENERAL VOTE REQUIREMENT FOR APPROVAL OF
415-1 FUNDAMENTAL BUSINESS TRANSACTION. (a) Except as provided by this
415-2 code or the certificate of formation of a corporation in accordance
415-3 with Section 21.365, the affirmative vote of the holders of at
415-4 least two-thirds of the outstanding shares of the corporation
415-5 entitled to vote on a fundamental business transaction is required
415-6 to approve the transaction.
415-7 (b) Unless provided by the certificate of formation or
415-8 Section 21.458, shares of a class or series that are not otherwise
415-9 entitled to vote on matters submitted to shareholders generally are
415-10 not entitled to vote for the approval of a fundamental business
415-11 transaction.
415-12 (c) Except as provided by this code, if a class or series of
415-13 shares of a corporation is entitled to vote on a fundamental
415-14 business transaction as a class or series, in addition to the vote
415-15 required under Subsection (a), the affirmative vote of the holders
415-16 of at least two-thirds of the outstanding shares in each class or
415-17 series of shares entitled to vote on the fundamental business
415-18 transaction as a class or series is required to approve the
415-19 transaction. Shares entitled to vote as a class or series shall
415-20 only be entitled to vote as a class or series on the fundamental
415-21 business transaction unless that class or series is otherwise
415-22 entitled to vote on each matter submitted to the shareholders
415-23 generally or is otherwise entitled to vote under the certificate of
415-24 formation.
415-25 (d) Unless required by the certificate of formation,
415-26 approval of a merger by shareholders is not required under this
415-27 code for a corporation that is a party to the plan of merger unless
416-1 that corporation is also a party to the merger.
416-2 Sec. 21.458. CLASS VOTING REQUIREMENTS FOR CERTAIN
416-3 FUNDAMENTAL BUSINESS TRANSACTIONS. (a) Separate voting by a class
416-4 or series of shares of a corporation is required for approval of a
416-5 plan of merger or conversion if:
416-6 (1) the plan of merger or conversion contains a
416-7 provision that would require approval by that class or series of
416-8 shares under Section 21.364 if the provision was contained in a
416-9 proposed amendment to the corporation's certificate of formation;
416-10 or
416-11 (2) that class or series of shares is entitled under
416-12 the certificate of formation to vote as a class on the plan of
416-13 merger or conversion.
416-14 (b) Separate voting by a class or series of shares of a
416-15 corporation is required for approval of a plan of exchange if:
416-16 (1) shares of that class or series are to be exchanged
416-17 under the terms of the plan of exchange; or
416-18 (2) that class or series is entitled under the
416-19 certificate of formation to vote as a class on the plan of
416-20 exchange.
416-21 (c) Separate voting by a class or series of shares of a
416-22 corporation is required for approval of a sale of all or
416-23 substantially all of the assets of a corporation if that class or
416-24 series of shares is entitled under the certificate of formation to
416-25 vote as a class on the sale of the corporation's assets. Shares
416-26 entitled to vote as a class or series shall only be entitled to
416-27 vote as a class or series on the sale of all or substantially all
417-1 of the assets of a corporation unless that class or series is
417-2 otherwise entitled to vote on each matter submitted to the
417-3 shareholders generally or is otherwise entitled to vote under the
417-4 certificate of formation.
417-5 Sec. 21.459. NO SHAREHOLDER VOTE REQUIREMENT FOR CERTAIN
417-6 FUNDAMENTAL BUSINESS TRANSACTIONS. (a) Unless required by the
417-7 corporation's certificate of formation, a plan of merger is not
417-8 required to be approved by the shareholders of a corporation if:
417-9 (1) the corporation is the sole surviving corporation
417-10 in the merger;
417-11 (2) the certificate of formation of the corporation
417-12 following the merger will not differ from the corporation's
417-13 certificate of formation before the merger;
417-14 (3) immediately after the effective date of the
417-15 merger, each shareholder of the corporation whose shares were
417-16 outstanding immediately before the effective date of the merger
417-17 will hold the same number of shares, with identical designations,
417-18 preferences, limitations, and relative rights;
417-19 (4) the sum of the voting power of the number of
417-20 voting shares outstanding immediately after the merger and the
417-21 voting power of securities that may be acquired on the conversion
417-22 or exercise of securities issued under the merger does not exceed
417-23 by more than 20 percent the voting power of the total number of
417-24 voting shares of the corporation that are outstanding immediately
417-25 before the merger; and
417-26 (5) the sum of the number of participating shares that
417-27 are outstanding immediately after the merger and the number of
418-1 participating shares that may be acquired on the conversion or
418-2 exercise of securities issued under the merger does not exceed by
418-3 more than 20 percent the total number of participating shares of
418-4 the corporation that are outstanding immediately before the merger.
418-5 (b) Unless required by the certificate of formation, a plan
418-6 of merger effected under Section 10.005 or 10.006 does not require
418-7 the approval of the shareholders of the corporation.
418-8 Sec. 21.460. RIGHTS OF DISSENT AND APPRAISAL. A shareholder
418-9 of a domestic corporation has the rights of dissent and appraisal
418-10 under Subchapter H, Chapter 10, with respect to a fundamental
418-11 business transaction.
418-12 Sec. 21.461. PLEDGE, MORTGAGE, DEED OF TRUST, OR TRUST
418-13 INDENTURE. Except as provided by the corporation's certificate of
418-14 formation:
418-15 (1) the board of directors of a corporation may
418-16 authorize a pledge, mortgage, deed of trust, or trust indenture;
418-17 and
418-18 (2) an authorization or consent of shareholders is not
418-19 required for the validity of the transaction or for any sale under
418-20 the terms of the transaction.
418-21 Sec. 21.462. CONVEYANCE BY CORPORATION. A corporation may
418-22 convey real property of the corporation when authorized by
418-23 appropriate resolution of the board of directors.
418-24 (Sections 21.463-21.500 reserved for expansion)
418-25 SUBCHAPTER K. WINDING UP AND TERMINATION
418-26 Sec. 21.501. APPROVAL OF VOLUNTARY WINDING UP,
418-27 REINSTATEMENT, OR REVOCATION OF VOLUNTARY WINDING UP. A corporation
419-1 must approve a voluntary winding up in accordance with Chapter 11,
419-2 a reinstatement in accordance with Section 11.202, or revocation of
419-3 a voluntary winding up in accordance with Section 11.151 by
419-4 complying with one of the procedures prescribed by this subchapter.
419-5 Sec. 21.502. CERTAIN PROCEDURES RELATING TO WINDING UP. To
419-6 approve a voluntary winding up, a reinstatement, or a revocation of
419-7 a voluntary winding up, a corporation must follow one of the
419-8 following procedures:
419-9 (1) all shareholders of the corporation must consent
419-10 in writing to the winding up, the reinstatement, or the revocation
419-11 of voluntary winding up of the corporation;
419-12 (2) if the corporation has not commenced business and
419-13 has not issued any shares, a majority of the incorporators or the
419-14 board of directors of the corporation must adopt a resolution to
419-15 wind up, to reinstate or to revoke a voluntary winding up; or
419-16 (3)(A) the board of directors of the corporation must
419-17 adopt a resolution:
419-18 (i) recommending the winding up,
419-19 reinstatement, or revocation of a voluntary winding up of the
419-20 corporation; and
419-21 (ii) directing that the winding up,
419-22 reinstatement, or revocation of a voluntary winding up of the
419-23 corporation be submitted to the shareholders for approval at an
419-24 annual or special meeting of shareholders; and
419-25 (B) the shareholders must approve the action
419-26 described by Paragraph (A) in accordance with Section 21.503.
419-27 Sec. 21.503. MEETING OF SHAREHOLDERS; NOTICE. (a) Each
420-1 shareholder of record entitled to vote at a meeting described by
420-2 Section 21.502(3)(A)(ii) must be given written notice stating that
420-3 the purpose or one of the purposes of the meeting is to consider
420-4 the winding up, reinstatement, or revocation of the voluntary
420-5 winding up of the corporation. The notice must be given in the
420-6 time and manner provided by Chapter 6 and this chapter for the
420-7 giving of notice of shareholders' meetings.
420-8 (b) A vote of shareholders entitled to vote at the meeting
420-9 shall be taken on the resolution to wind up, reinstate, or revoke
420-10 the winding up of the corporation. The shareholders must approve
420-11 the resolution by the affirmative vote required by Section 21.364.
420-12 Sec. 21.504. RESPONSIBILITY FOR WINDING UP. If a corporation
420-13 determines or is required to wind up, the directors of the
420-14 corporation shall manage the process of winding up the business or
420-15 affairs of the corporation.
420-16 (Sections 21.505-21.550 reserved for expansion)
420-17 SUBCHAPTER L. DERIVATIVE PROCEEDINGS
420-18 Sec. 21.551. DEFINITIONS. In this subchapter:
420-19 (1) "Derivative proceeding" means a civil suit in the
420-20 right of a domestic corporation or, to the extent provided by
420-21 Section 21.562, in the right of a foreign corporation.
420-22 (2) "Shareholder" includes a beneficial owner whose
420-23 shares are held in a voting trust or by a nominee on the beneficial
420-24 owner's behalf.
420-25 Sec. 21.552. STANDING TO BRING PROCEEDING. A shareholder may
420-26 not institute or maintain a derivative proceeding unless:
420-27 (1) the shareholder:
421-1 (A) was a shareholder of the corporation at the
421-2 time of the act or omission complained of; or
421-3 (B) became a shareholder by operation of law
421-4 from a person that was a shareholder at the time of the act or
421-5 omission complained of; and
421-6 (2) the shareholder fairly and adequately represents
421-7 the interests of the corporation in enforcing the right of the
421-8 corporation.
421-9 Sec. 21.553. DEMAND. (a) A shareholder may not institute a
421-10 derivative proceeding until the 91st day after the date a written
421-11 demand is filed with the corporation stating with particularity the
421-12 act, omission, or other matter that is the subject of the claim or
421-13 challenge and requesting that the corporation take suitable action.
421-14 (b) The waiting period required by Subsection (a) before a
421-15 derivative proceeding may be instituted is not required if:
421-16 (1) the shareholder has been previously notified that
421-17 the demand has been rejected by the corporation;
421-18 (2) the corporation is suffering irreparable injury;
421-19 or
421-20 (3) irreparable injury to the corporation would result
421-21 by waiting for the expiration of the 90-day period.
421-22 Sec. 21.554. DETERMINATION BY DIRECTORS OR INDEPENDENT
421-23 PERSONS. (a) A determination of how to proceed on allegations made
421-24 in a demand or petition relating to a derivative proceeding must be
421-25 made by an affirmative vote of the majority of:
421-26 (1) the independent and disinterested directors of the
421-27 corporation present at a meeting of the board of directors of the
422-1 corporation at which interested directors are not present at the
422-2 time of the vote if the independent and disinterested directors
422-3 constitute a quorum of the board of directors;
422-4 (2) a committee consisting of two or more independent
422-5 and disinterested directors appointed by an affirmative vote of the
422-6 majority of one or more independent and disinterested directors
422-7 present at a meeting of the board of directors, regardless of
422-8 whether the independent and disinterested directors constitute a
422-9 quorum of the board of directors; or
422-10 (3) a panel of one or more independent and
422-11 disinterested persons appointed by the court on a motion by the
422-12 corporation listing the names of the persons to be appointed and
422-13 stating that, to the best of the corporation's knowledge, the
422-14 persons to be appointed are disinterested and qualified to make the
422-15 determinations contemplated by Section 21.558.
422-16 (b) The court shall appoint a panel under Subsection (a)(3)
422-17 if the court finds that the persons recommended by the corporation
422-18 are independent and disinterested and are otherwise qualified with
422-19 respect to expertise, experience, independent judgment, and other
422-20 factors considered appropriate by the court under the circumstances
422-21 to make the determinations. A person appointed by the court to a
422-22 panel under this section may not be held liable to the corporation
422-23 or the corporation's shareholders for an action taken or omission
422-24 made by the person in that capacity, except for an act or omission
422-25 constituting fraud or wilful misconduct.
422-26 Sec. 21.555. STAY OF PROCEEDING. (a) If the domestic or
422-27 foreign corporation that is the subject of a derivative proceeding
423-1 commences an inquiry into the allegations made in a demand or
423-2 petition and the person or group of persons described by Section
423-3 21.554 is conducting an active review of the allegations in good
423-4 faith, the court shall stay a derivative proceeding until the
423-5 review is completed and a determination is made by the person or
423-6 group regarding what further action, if any, should be taken.
423-7 (b) To obtain a stay, the domestic or foreign corporation
423-8 shall provide the court with a written statement agreeing to advise
423-9 the court and the shareholder making the demand of the
423-10 determination promptly on the completion of the review of the
423-11 matter. A stay, on application, may be reviewed every 60 days for
423-12 the continued necessity of the stay.
423-13 (c) If the review and determination made by the person or
423-14 group is not completed before the 61st day after the stay is
423-15 ordered by the court, the stay may be renewed for one or more
423-16 additional 60-day periods if the domestic or foreign corporation
423-17 provides the court and the shareholder with a written statement of
423-18 the status of the review and the reasons why a continued extension
423-19 of the stay is necessary.
423-20 Sec. 21.556. DISCOVERY. (a) If a domestic or foreign
423-21 corporation proposes to dismiss a derivative proceeding under
423-22 Section 21.558, discovery by a shareholder after the filing of the
423-23 derivative proceeding in accordance with this subchapter shall be
423-24 limited to:
423-25 (1) facts relating to whether the person or group of
423-26 persons described by Section 21.558 is independent and
423-27 disinterested;
424-1 (2) the good faith of the inquiry and review by the
424-2 person or group; and
424-3 (3) the reasonableness of the procedures followed by
424-4 the person or group in conducting the review.
424-5 (b) Discovery described by Subsection (a) may not be
424-6 expanded to include a fact or substantive matter regarding the act,
424-7 omission, or other matter that is the subject matter of the
424-8 derivative proceeding. The scope of discovery may be expanded if
424-9 the court determines after notice and hearing that a good faith
424-10 review of the allegations for purposes of Section 21.558 has not
424-11 been made by an independent and disinterested person or group in
424-12 accordance with that section.
424-13 Sec. 21.557. TOLLING OF STATUTE OF LIMITATIONS. A written
424-14 demand filed with the corporation under Section 21.553 tolls the
424-15 statute of limitations on the claim on which demand is made until
424-16 the earlier of:
424-17 (1) the 91st day after the date of the demand; or
424-18 (2) the 31st day after the date the corporation
424-19 advises the shareholder that the demand has been rejected or the
424-20 review has been completed.
424-21 Sec. 21.558. DISMISSAL OF DERIVATIVE PROCEEDING. (a) A
424-22 court shall dismiss a derivative proceeding on a motion by the
424-23 corporation if the person or group of persons described by Section
424-24 21.554 determines in good faith, after conducting a reasonable
424-25 inquiry and based on factors the person or group considers
424-26 appropriate under the circumstances, that continuation of the
424-27 derivative proceeding is not in the best interests of the
425-1 corporation.
425-2 (b) In determining whether the requirements of Subsection
425-3 (a) have been met, the burden of proof shall be on:
425-4 (1) the plaintiff shareholder if:
425-5 (A) the majority of the board of directors
425-6 consists of independent and disinterested directors at the time the
425-7 determination is made;
425-8 (B) the determination is made by a panel of one
425-9 or more independent and disinterested persons appointed under
425-10 Section 21.554(a)(3); or
425-11 (C) the corporation presents prima facie
425-12 evidence that demonstrates that the directors appointed under
425-13 Section 21.554(a)(2) are independent and disinterested; or
425-14 (2) the corporation in any other circumstance.
425-15 Sec. 21.559. PROCEEDING INSTITUTED AFTER DEMAND REJECTED. If
425-16 a derivative proceeding is instituted after a demand is rejected,
425-17 the petition must allege with particularity facts that establish
425-18 that the rejection was not made in accordance with the requirements
425-19 of Sections 21.554 and 21.558.
425-20 Sec. 21.560. DISCONTINUANCE OR SETTLEMENT. (a) A derivative
425-21 proceeding may not be discontinued or settled without court
425-22 approval.
425-23 (b) The court shall direct that notice be given to the
425-24 affected shareholders if the court determines that a proposed
425-25 discontinuance or settlement may substantially affect the interests
425-26 of other shareholders.
425-27 Sec. 21.561. PAYMENT OF EXPENSES. (a) In this section,
426-1 "expenses" means reasonable expenses incurred by a party in a
426-2 derivative proceeding, including:
426-3 (1) attorney's fees;
426-4 (2) costs in pursuing an investigation of the matter
426-5 that was the subject of the derivative proceeding; or
426-6 (3) expenses for which the domestic or foreign
426-7 corporation or a corporate defendant may be required to indemnify
426-8 another person.
426-9 (b) On termination of a derivative proceeding, the court may
426-10 order:
426-11 (1) the domestic or foreign corporation to pay the
426-12 expenses the plaintiff incurred in the proceeding if the court
426-13 finds the proceeding has resulted in a substantial benefit to the
426-14 domestic or foreign corporation;
426-15 (2) the plaintiff to pay the expenses the domestic or
426-16 foreign corporation or other defendant incurred in investigating
426-17 and defending the proceeding if the court finds the proceeding has
426-18 been instituted or maintained without reasonable cause or for an
426-19 improper purpose; or
426-20 (3) a party to pay the expenses incurred by another
426-21 party relating to the filing of a pleading, motion, or other paper
426-22 if the court finds the pleading, motion, or other paper:
426-23 (A) was not well grounded in fact after
426-24 reasonable inquiry;
426-25 (B) was not warranted by existing law or a good
426-26 faith argument for the extension, modification, or reversal of
426-27 existing law; or
427-1 (C) was interposed for an improper purpose, such
427-2 as to harass, cause unnecessary delay, or cause a needless increase
427-3 in the cost of litigation.
427-4 Sec. 21.562. APPLICATION TO FOREIGN CORPORATIONS. (a) In a
427-5 derivative proceeding brought in the right of a foreign
427-6 corporation, the matters covered by this subchapter are governed by
427-7 the laws of the jurisdiction of incorporation of the foreign
427-8 corporation, except for Sections 21.555, 21.560, and 21.561, which
427-9 are procedural provisions and do not relate to the internal affairs
427-10 of the foreign corporation.
427-11 (b) In the case of matters relating to a foreign corporation
427-12 under Section 21.554, a reference to a person or group of persons
427-13 described by that section refers to a person or group entitled
427-14 under the laws of the jurisdiction of incorporation of the foreign
427-15 corporation to review and dispose of a derivative proceeding. The
427-16 standard of review of a decision made by the person or group to
427-17 dismiss the derivative proceeding shall be governed by the laws of
427-18 the jurisdiction of incorporation of the foreign corporation.
427-19 Sec. 21.563. CLOSELY HELD CORPORATION. (a) In this section,
427-20 "closely held corporation" means a corporation that has:
427-21 (1) fewer than 35 shareholders; and
427-22 (2) no shares listed on a national securities exchange
427-23 or regularly quoted in an over-the-counter market by one or more
427-24 members of a national securities association.
427-25 (b) Subject to Subsection (c), Sections 21.552-21.559 do not
427-26 apply to a closely held corporation.
427-27 (c) If justice requires:
428-1 (1) a derivative proceeding brought by a shareholder
428-2 of a closely held corporation may be treated by a court as a direct
428-3 action brought by the shareholder for the shareholder's own
428-4 benefit; and
428-5 (2) a recovery in a direct or derivative proceeding by
428-6 a shareholder may be paid directly to the plaintiff or to the
428-7 corporation if necessary to protect the interests of creditors or
428-8 other shareholders of the corporation.
428-9 (Sections 21.564-21.600 reserved for expansion)
428-10 SUBCHAPTER M. AFFILIATED BUSINESS COMBINATIONS
428-11 Sec. 21.601. DEFINITIONS. In this subchapter:
428-12 (1) "Issuing public corporation" means a domestic
428-13 corporation that has:
428-14 (A) 100 or more shareholders of record as shown
428-15 by the share transfer records of the corporation;
428-16 (B) a class or series of the corporation's
428-17 voting shares registered under the Securities Exchange Act of 1934
428-18 (15 U.S.C. Section 77b et seq.), as amended; or
428-19 (C) a class or series of the corporation's
428-20 voting shares qualified for trading in a national market system.
428-21 (2) "Person" includes two or more persons acting as a
428-22 partnership, limited partnership, syndicate, or other group under
428-23 an agreement, arrangement, or understanding, regardless of whether
428-24 in writing, to acquire, hold, vote, or dispose of a corporation's
428-25 shares.
428-26 (3) "Share acquisition date" means the date a person
428-27 initially becomes an affiliated shareholder of an issuing public
429-1 corporation.
429-2 (4) "Subsidiary" means a domestic or foreign
429-3 corporation or other entity of which a majority of the outstanding
429-4 voting shares are owned, directly or indirectly, by an issuing
429-5 public corporation.
429-6 (5) "Voting share" means a share of capital stock of a
429-7 corporation that entitles the holder of the share to vote generally
429-8 in the election of directors.
429-9 Sec. 21.602. AFFILIATED SHAREHOLDER. (a) For purposes of
429-10 this subchapter, a person, other than the issuing public
429-11 corporation or a wholly owned subsidiary of the issuing public
429-12 corporation, is an affiliated shareholder if the person:
429-13 (1) is the beneficial owner of 20 percent or more of
429-14 the outstanding voting shares of the issuing public corporation; or
429-15 (2) during the preceding three-year period, was the
429-16 beneficial owner of 20 percent or more of the outstanding voting
429-17 shares of the issuing public corporation.
429-18 (b) To determine whether a person is an affiliated
429-19 shareholder, the number of voting shares of the issuing public
429-20 corporation considered outstanding includes shares considered
429-21 beneficially owned by that person under Section 21.603, but does
429-22 not include other unissued voting shares of the issuing public
429-23 corporation that may be issuable under an agreement, arrangement,
429-24 or understanding, or on exercise of conversion rights, warrants, or
429-25 options.
429-26 Sec. 21.603. BENEFICIAL OWNER OF SHARES OR SIMILAR
429-27 SECURITIES. (a) For purposes of this subchapter, a person is a
430-1 beneficial owner of shares or similar securities if the person
430-2 individually, or through an affiliate or associate, beneficially
430-3 owns, directly or indirectly, shares or similar securities.
430-4 (b) A beneficial owner of shares or similar securities is
430-5 entitled, individually or through an affiliate or associate, to:
430-6 (1) acquire shares or similar securities that may be
430-7 exercised immediately or after the passage of a certain amount of
430-8 time according to an oral or written agreement, arrangement, or
430-9 understanding, or on the exercise of conversion rights, exchange
430-10 rights, warrants, or options;
430-11 (2) vote the shares or similar securities according to
430-12 an oral or written agreement, arrangement, or understanding; or
430-13 (3) subject to Subsection (c), acquire, hold or
430-14 dispose of, or vote shares or similar securities with another
430-15 person who individually, or through an affiliate or associate,
430-16 beneficially owns, directly or indirectly, the shares or similar
430-17 securities.
430-18 (c) A person is not considered a beneficial owner of shares
430-19 or similar securities if:
430-20 (1) the shares or similar securities are:
430-21 (A) tendered under a tender or exchange offer
430-22 made by the person or an affiliate or associate of the person
430-23 before the tendered shares or securities are accepted for purchase
430-24 or exchange; or
430-25 (B) subject to an agreement, arrangement, or
430-26 understanding that expressly conditions the acquisition or purchase
430-27 of shares or securities on the approval of the acquisition or
431-1 purchase under Section 21.606 if the person has no direct or
431-2 indirect rights of ownership or voting with respect to the shares
431-3 or securities until the time the approval is obtained; or
431-4 (2) the agreement, arrangement, or understanding to
431-5 vote the shares:
431-6 (A) arises solely from an immediately revocable
431-7 proxy that authorizes the person named in the proxy to vote at a
431-8 meeting of the shareholders that has been called when the proxy is
431-9 delivered or at an adjournment of the meeting; and
431-10 (B) is not reportable on a Schedule 13D under
431-11 the Securities Exchange Act of 1934 (15 U.S.C. Section 77b et
431-12 seq.), as amended, or a comparable or successor report.
431-13 Sec. 21.604. BUSINESS COMBINATION. A business combination
431-14 is:
431-15 (1) a merger, share exchange, or conversion of an
431-16 issuing public corporation or a subsidiary with:
431-17 (A) an affiliated shareholder;
431-18 (B) a foreign or domestic corporation or other
431-19 entity that is, or after the merger, share exchange, or conversion
431-20 would be, an affiliate or associate of the affiliated shareholder;
431-21 or
431-22 (C) another domestic or foreign corporation or
431-23 other entity, if the merger, share exchange, or conversion is
431-24 caused by an affiliated shareholder, or an affiliate or associate
431-25 of an affiliated shareholder, and as a result of the merger, share
431-26 exchange, or conversion this subchapter does not apply to the
431-27 surviving corporation or other entity;
432-1 (2) a sale, lease, exchange, mortgage, pledge,
432-2 transfer, or other disposition, in one transaction or a series of
432-3 transactions, including an allocation of assets under a merger, to
432-4 or with the affiliated shareholder, or an affiliate or associate of
432-5 the affiliated shareholder, of assets of the issuing public
432-6 corporation or a subsidiary that:
432-7 (A) has an aggregate market value equal to 10
432-8 percent or more of the aggregate market value of all of the assets,
432-9 determined on a consolidated basis, of the issuing public
432-10 corporation;
432-11 (B) has an aggregate market value equal to 10
432-12 percent or more of the aggregate market value of all of the
432-13 outstanding common stock of the issuing public corporation; or
432-14 (C) represents 10 percent or more of the earning
432-15 power or net income, determined on a consolidated basis, of the
432-16 issuing public corporation;
432-17 (3) the issuance or transfer by an issuing public
432-18 corporation or a subsidiary to an affiliated shareholder or an
432-19 affiliate or associate of the affiliated shareholder, in one
432-20 transaction or a series of transactions, of shares of the issuing
432-21 public corporation or a subsidiary, except by the exercise of
432-22 warrants or rights to purchase shares of the issuing public
432-23 corporation offered, or a share dividend paid, pro rata to all
432-24 shareholders of the issuing public corporation after the affiliated
432-25 shareholder's share acquisition date;
432-26 (4) the adoption of a plan or proposal for the
432-27 liquidation or dissolution of an issuing public corporation
433-1 proposed by or under any agreement, arrangement, or understanding,
433-2 regardless of whether in writing, with an affiliated shareholder or
433-3 an affiliate or associate of the affiliated shareholder;
433-4 (5) a reclassification of securities, including a
433-5 reverse share split or a share split-up, share dividend, or other
433-6 distribution of shares, a recapitalization of the issuing public
433-7 corporation, a merger of the issuing public corporation with a
433-8 subsidiary or pursuant to which the assets and liabilities of the
433-9 issuing public corporation are allocated among two or more
433-10 surviving or new domestic or foreign corporations or other
433-11 entities, or any other transaction proposed by or under an
433-12 agreement, arrangement, or understanding, regardless of whether in
433-13 writing, with an affiliated shareholder or an affiliate or
433-14 associate of the affiliated shareholder that has the effect,
433-15 directly or indirectly, of increasing the proportionate ownership
433-16 percentage of the outstanding shares of a class or series of voting
433-17 shares or securities convertible into voting shares of the issuing
433-18 public corporation that is beneficially owned by the affiliated
433-19 shareholder or an affiliate or associate of the affiliated
433-20 shareholder, except as a result of immaterial changes due to
433-21 fractional share adjustments; or
433-22 (6) the direct or indirect receipt by an affiliated
433-23 shareholder or an affiliate or associate of the affiliated
433-24 shareholder of the benefit of a loan, advance, guarantee, pledge,
433-25 or other financial assistance or a tax credit or other tax
433-26 advantage provided by or through the issuing public corporation,
433-27 except proportionately as a shareholder of the issuing public
434-1 corporation.
434-2 Sec. 21.605. CONTROL. (a) For purposes of this subchapter,
434-3 a person has control of another person if the person has
434-4 possession, directly or indirectly, of the power to direct or cause
434-5 the direction of the management and policies of the other person,
434-6 through the ownership of equity securities, by contract, or in
434-7 another manner.
434-8 (b) A person's beneficial ownership of 10 percent or more of
434-9 a person's outstanding voting shares or similar interests creates a
434-10 presumption that the person has control of the other person, but a
434-11 person is not considered to have control of another person who
434-12 holds the voting shares or similar interests in good faith and not
434-13 to circumvent this part, as an agent, bank, broker, nominee,
434-14 custodian, or trustee for one or more beneficial owners who do not
434-15 individually or as a group have control of the person.
434-16 Sec. 21.606. THREE-YEAR MORATORIUM ON CERTAIN BUSINESS
434-17 COMBINATIONS. An issuing public corporation may not, directly or
434-18 indirectly, enter into or engage in a business combination with an
434-19 affiliated shareholder, or any affiliate or associate of the
434-20 affiliated shareholder, during the three-year period immediately
434-21 following the affiliated shareholder's share acquisition date
434-22 unless:
434-23 (1) the business combination or the purchase or
434-24 acquisition of shares made by the affiliated shareholder on the
434-25 affiliated shareholder's share acquisition date is approved by the
434-26 board of directors of the issuing public corporation before the
434-27 affiliated shareholder's share acquisition date; or
435-1 (2) the business combination is approved, by the
435-2 affirmative vote of the holders of at least two-thirds of the
435-3 outstanding voting shares of the issuing public corporation not
435-4 beneficially owned by the affiliated shareholder or an affiliate or
435-5 associate of the affiliated shareholder, at a meeting of
435-6 shareholders called for that purpose not less than six months after
435-7 the affiliated shareholder's share acquisition date. Approval may
435-8 not be by written consent.
435-9 Sec. 21.607. APPLICATION OF MORATORIUM. Section 21.606 does
435-10 not apply to:
435-11 (1) a business combination of an issuing public
435-12 corporation if:
435-13 (A) the original articles of incorporation or
435-14 original bylaws of the corporation contain a provision expressly
435-15 electing not to be governed by this subchapter;
435-16 (B) before December 31, 1997, the corporation
435-17 adopted an amendment to the articles of incorporation or bylaws of
435-18 the corporation expressly electing not to be governed by this
435-19 subchapter; or
435-20 (C) after December 31, 1997, the corporation
435-21 adopts an amendment to the articles of incorporation or bylaws of
435-22 the corporation, approved by the affirmative vote of the holders,
435-23 other than an affiliated shareholder or an affiliate or associate
435-24 of the affiliated shareholder, of at least two-thirds of the
435-25 outstanding voting shares of the issuing public corporation,
435-26 expressly electing not to be governed by this subchapter, except
435-27 that the amendment to the articles of incorporation or bylaws takes
436-1 effect 18 months after the date of the vote and does not apply to a
436-2 business combination of the issuing public corporation with an
436-3 affiliated shareholder whose share acquisition date is on or before
436-4 the effective date of the amendment;
436-5 (2) a business combination of an issuing public
436-6 corporation with an affiliated shareholder who became an affiliated
436-7 shareholder inadvertently, if the affiliated shareholder:
436-8 (A) as soon as practicable divests itself of a
436-9 sufficient number of the voting shares of the issuing public
436-10 corporation so that the affiliated shareholder no longer is the
436-11 beneficial owner, directly or indirectly, of 20 percent or more of
436-12 the outstanding voting shares of the issuing public corporation;
436-13 and
436-14 (B) would not at any time within the three-year
436-15 period preceding the announcement date of the business combination
436-16 have been an affiliated shareholder except for the inadvertent
436-17 acquisition;
436-18 (3) a business combination with an affiliated
436-19 shareholder who was the beneficial owner of 20 percent or more of
436-20 the outstanding voting shares of the issuing public corporation on
436-21 December 31, 1996, and continuously until the announcement date of
436-22 the business combination;
436-23 (4) a business combination with an affiliated
436-24 shareholder who became an affiliated shareholder through a transfer
436-25 of shares of the issuing public corporation by will or intestate
436-26 succession and continuously was an affiliated shareholder until the
436-27 announcement date of the business combination; or
437-1 (5) a business combination of an issuing public
437-2 corporation with a domestic wholly owned subsidiary if the domestic
437-3 subsidiary is not an affiliate or associate of the affiliated
437-4 shareholder for a reason other than the affiliated shareholder's
437-5 beneficial ownership of voting shares in the issuing public
437-6 corporation.
437-7 Sec. 21.608. EFFECT ON OTHER ACTIONS. (a) This subchapter
437-8 does not affect, directly or indirectly, the validity of another
437-9 action by the board of directors of an issuing public corporation.
437-10 (b) This subchapter does not preclude the board of directors
437-11 of an issuing public corporation from taking other action in
437-12 accordance with law.
437-13 (c) The board of directors of an issuing public corporation
437-14 does not incur liability for an election made or not made under
437-15 this subchapter.
437-16 Sec. 21.609. CONFLICTING PROVISIONS. If this subchapter
437-17 conflicts with another provision of this code, this subchapter
437-18 controls.
437-19 Sec. 21.610. CHANGE IN VOTING REQUIREMENTS. The affirmative
437-20 vote or concurrence of shareholders required for approval of an
437-21 action that is required to be submitted to a vote of the
437-22 shareholders under this subchapter may be increased but not
437-23 decreased under Section 21.365.
437-24 (Sections 21.611-21.650 reserved for expansion)
437-25 SUBCHAPTER N. PROVISIONS RELATING TO INVESTMENT COMPANIES
437-26 Sec. 21.651. DEFINITION. In this subchapter, "investment
437-27 company" means a corporation registered as an open-end company
438-1 under the Investment Company Act.
438-2 Sec. 21.652. ESTABLISHING CLASS OR SERIES OF SHARES; CHANGE
438-3 IN NUMBER OF SHARES. (a) In addition to the actions the board may
438-4 undertake under Subchapters D, E, and F, the board of directors of
438-5 an investment company may:
438-6 (1) establish classes of shares and series of unissued
438-7 shares of a class by setting and determining the designations,
438-8 preferences, limitations, and relative rights, including voting
438-9 rights, of the shares of the class or series established under this
438-10 subdivision to the same extent that the designations, preferences,
438-11 limitations, and relative rights could be stated if fully stated in
438-12 the certificate of formation; and
438-13 (2) increase or decrease the aggregate number of
438-14 shares or the number of shares of, or delete from the investment
438-15 company's certificate of formation, a class or series of shares the
438-16 corporation has authority to issue, unless a provision has been
438-17 included in the certificate of formation of the corporation after
438-18 September 1, 1993, expressly prohibiting those actions by the board
438-19 of directors.
438-20 (b) The board of directors of an investment company may not:
438-21 (1) decrease the number of shares in a class or series
438-22 to a number that is less than the number of shares of that class or
438-23 series that are outstanding at the time; or
438-24 (2) delete from the certificate of formation a
438-25 reference to a class or series that has shares outstanding at the
438-26 time.
438-27 (c) To establish a class or series under this section, the
439-1 board of directors must adopt a resolution stating the designation
439-2 of the class or series and setting and determining the
439-3 designations, preferences, limitations, and relative rights,
439-4 including voting rights, of the class or series.
439-5 (d) To increase or decrease the number of shares of a class
439-6 or series of shares or to delete from the certificate of formation
439-7 a reference to a class or series of shares, the board of directors
439-8 of an investment company must adopt a resolution setting and
439-9 determining the new number of shares of each class or series in
439-10 which the number of shares is increased or decreased or deleting
439-11 the class or series and any reference to the class or series from
439-12 the certificate of formation. The shares of a series removed from
439-13 the certificate of formation shall resume the status of authorized
439-14 but unissued shares of the class of shares from which the series
439-15 was established unless otherwise provided by the resolution or the
439-16 certificate of formation of the investment company.
439-17 Sec. 21.653. REQUIRED STATEMENT RELATING TO SHARES. (a)
439-18 Before the first issuance of shares of a class or series
439-19 established or increased or decreased by resolution adopted by the
439-20 board of directors of an investment company under Section 21.652,
439-21 and to delete from the investment company's certificate of
439-22 formation a class or series of shares and all references to the
439-23 class or series contained in the certificate of formation, the
439-24 investment company shall file with the secretary of state a
439-25 statement that contains:
439-26 (1) the name of the investment company;
439-27 (2) if the statement relates to the establishment of a
440-1 class or series of shares, a copy of the resolution establishing
440-2 and designating the class or series or establishing and designating
440-3 the class or series and setting and determining the preferences,
440-4 limitations, and relative rights of the class or series;
440-5 (3) if the statement relates to an increase or
440-6 decrease in the number of shares of a class or series, a copy of
440-7 the resolution setting and determining the new number of shares of
440-8 each class or series in which the number of shares is increased or
440-9 decreased;
440-10 (4) if the statement relates to the deletion of a
440-11 class or series of shares and all references to the class or series
440-12 from the certificate of formation, a copy of the resolution
440-13 deleting the class or series and all references to the class or
440-14 series from the certificate of formation;
440-15 (5) the date of adoption of the resolution; and
440-16 (6) a statement that the resolution was adopted by all
440-17 necessary action on the part of the investment company.
440-18 (b) After the statement described by Subsection (a) is
440-19 filed, a resolution adopted under Section 21.652 becomes an
440-20 amendment of the certificate of formation. An amendment of the
440-21 certificate of formation described under this section is not
440-22 subject to the procedure to amend the certificate of formation
440-23 contained in Subchapter B.
440-24 Sec. 21.654. TERM OF OFFICE OF DIRECTORS. Unless removed in
440-25 accordance with the certificate of formation or bylaws of the
440-26 investment company, a director of an investment company shall serve
440-27 as director for the term for which the director is elected and
441-1 holds office until a successor is elected and qualifies.
441-2 Sec. 21.655. MEETINGS OF SHAREHOLDERS. (a) If provided by
441-3 the certificate of formation or bylaws of an investment company,
441-4 the investment company is not required to hold an annual meeting of
441-5 shareholders or elect directors in a year in which an election of
441-6 directors is not required under the Investment Company Act.
441-7 (b) If an investment company is required to hold a meeting
441-8 of shareholders to elect directors under the Investment Company
441-9 Act, the meeting shall be designated as the annual meeting of
441-10 shareholders for that year.
441-11 (Sections 21.656-21.700 reserved for expansion)
441-12 SUBCHAPTER O. CLOSE CORPORATION
441-13 Sec. 21.701. DEFINITIONS. In this subchapter:
441-14 (1) "Close corporation" means a domestic corporation
441-15 formed under this subchapter.
441-16 (2) "Close corporation provision" means a provision in
441-17 the certificate of formation of a close corporation or in a
441-18 shareholders' agreement of a close corporation.
441-19 (3) "Ordinary corporation" means a domestic
441-20 corporation that is not a close corporation.
441-21 (4) "Shareholders' agreement" means a written
441-22 agreement regulating an aspect of the business and affairs of or
441-23 the relationship among the shareholders of a close corporation that
441-24 has been executed under this subchapter.
441-25 Sec. 21.702. APPLICABILITY OF SUBCHAPTER. (a) This
441-26 subchapter applies only to a close corporation.
441-27 (b) This chapter applies to a close corporation to the
442-1 extent not inconsistent with this subchapter.
442-2 Sec. 21.703. FORMATION OF CLOSE CORPORATION. A close
442-3 corporation shall be formed in accordance with Chapter 3.
442-4 Sec. 21.704. BYLAWS OF CLOSE CORPORATION. (a) A close
442-5 corporation does not need to adopt bylaws if provisions required by
442-6 law to be contained in the bylaws are contained in the certificate
442-7 of formation or a shareholders' agreement.
442-8 (b) A close corporation that does not have bylaws when it
442-9 terminates its status as a close corporation under Section 21.708
442-10 shall immediately adopt bylaws that comply with Section 21.057.
442-11 Sec. 21.705. ADOPTION OF AMENDMENT FOR CLOSE CORPORATION
442-12 STATUS. (a) An ordinary corporation may become a close corporation
442-13 by amending its certificate of formation in accordance with Chapter
442-14 3 to conform with Section 3.008.
442-15 (b) An amendment adopting close corporation status must be
442-16 approved by the affirmative vote of the holders of all of the
442-17 outstanding shares of each class established by the close
442-18 corporation, regardless of whether a class is entitled to vote on
442-19 the amendment by the certificate of formation of the ordinary
442-20 corporation.
442-21 Sec. 21.706. ADOPTION OF CLOSE CORPORATION STATUS THROUGH
442-22 MERGER, EXCHANGE, OR CONVERSION. (a) A surviving or new
442-23 corporation resulting from a merger or conversion or a corporation
442-24 that acquires a corporation under an exchange under Chapter 10 may
442-25 become a close corporation if, as part of the plan of merger,
442-26 exchange, or conversion, the certificate of formation conforms with
442-27 Section 3.008.
443-1 (b) A plan of merger, exchange, or conversion adopting close
443-2 corporation status must be approved by the affirmative vote of the
443-3 holders of all of the outstanding ownership or membership
443-4 interests, and of each class or series of ownership or membership
443-5 interests, of each entity or non-code organization that is party to
443-6 the merger, exchange, or conversion, regardless of whether a class
443-7 or series of ownership or membership interests is entitled to vote
443-8 on the plan by the certificate of formation of the corporation.
443-9 Sec. 21.707. EXISTING CLOSE CORPORATION. (a) This section
443-10 applies to an existing corporation that elected to become a close
443-11 corporation before the effective date of this code and has not
443-12 terminated that status.
443-13 (b) A close corporation existing before the effective date
443-14 of this code is considered to be a close corporation under this
443-15 code.
443-16 (c) A provision in the articles of incorporation of a close
443-17 corporation authorized under former law is valid and enforceable if
443-18 the corporation's status as a close corporation has not been
443-19 terminated.
443-20 (d) An agreement among the shareholders of a close
443-21 corporation in conformance with former law and Sections
443-22 21.714-21.725 before the effective date of this code is considered
443-23 to be a shareholders' agreement.
443-24 (e) A certificate representing the shares issued or
443-25 delivered by the close corporation after the effective date of this
443-26 code, whether in connection with the original issue of shares or a
443-27 transfer of shares, must conform with Section 21.732.
444-1 Sec. 21.708. TERMINATION OF CLOSE CORPORATION STATUS. A
444-2 close corporation may terminate its status as a close corporation
444-3 by:
444-4 (1) filing a statement terminating close corporation
444-5 status under Section 21.709;
444-6 (2) amending the close corporation's certificate of
444-7 formation under Chapter 3 by deleting from the certificate of
444-8 formation the statement that it is a close corporation;
444-9 (3) engaging in a merger, interest exchange, or
444-10 conversion under Chapter 10, unless the plan of merger, exchange,
444-11 or conversion provides that the surviving or new corporation will
444-12 continue as or become a close corporation and the plan has been
444-13 approved by the affirmative vote or consent of the holders of all
444-14 of the outstanding shares, and of each class and series of shares,
444-15 of the close corporation, regardless of whether a class or series
444-16 of shares is entitled to vote on the plan by the certificate of
444-17 formation; or
444-18 (4) instituting a judicial proceeding to enforce a
444-19 close corporation provision providing for the termination.
444-20 Sec. 21.709. STATEMENT TERMINATING CLOSE CORPORATION STATUS;
444-21 FILING; NOTICE. (a) If a close corporation provision specifies a
444-22 time or event requiring the termination of close corporation
444-23 status, regardless of whether the provision is identifiable by a
444-24 person dealing with the close corporation, the termination of the
444-25 close corporation status takes effect on the occurrence of the
444-26 specified time or event and the filing of a statement terminating
444-27 close corporation status under this section.
445-1 (b) Promptly after the time or occurrence of an event
445-2 requiring termination of close corporation status, a statement
445-3 terminating close corporation status shall be signed by an officer
445-4 on behalf of the close corporation. A copy of the applicable close
445-5 corporation provision must be included in or attached to the
445-6 statement. The statement and any attachment shall be filed with
445-7 the secretary of state in accordance with Chapter 4.
445-8 (c) The statement terminating close corporation status must
445-9 contain:
445-10 (1) the name of the corporation;
445-11 (2) a statement that the corporation has terminated
445-12 its status as a close corporation in accordance with the included
445-13 or attached close corporation provision; and
445-14 (3) the time or event that caused the termination and,
445-15 in the case of an event, the approximate date of the event.
445-16 (d) After a statement terminating close corporation status
445-17 has been filed under this section, the certificate of formation of
445-18 the close corporation is considered to be amended to delete from
445-19 the certificate the statement that the corporation is a close
445-20 corporation, and the corporation's status as a close corporation is
445-21 terminated.
445-22 (e) The corporation shall personally deliver or mail a copy
445-23 of the statement to each shareholder of the corporation. A copy of
445-24 the statement is considered to have been delivered by mail under
445-25 this section when the copy is deposited in the United States mail,
445-26 with postage prepaid, addressed to the shareholder at the
445-27 shareholder's address as it appears on the share transfer records
446-1 of the corporation. The failure to deliver the copy of the
446-2 statement does not affect the validity of the termination.
446-3 Sec. 21.710. EFFECT OF TERMINATION OF CLOSE CORPORATION
446-4 STATUS. (a) A close corporation that terminates its status as a
446-5 close corporation and becomes an ordinary corporation is subject to
446-6 this chapter as if the corporation had not elected close
446-7 corporation status under this subchapter.
446-8 (b) The effect of termination of close corporation status on
446-9 a shareholders' agreement is governed by Section 21.724.
446-10 (c) When the termination of close corporation status takes
446-11 effect, if the close corporation's business and affairs have been
446-12 managed by an entity other than a board of directors as provided by
446-13 Section 21.725, governance by a board of directors is instituted or
446-14 reinstated:
446-15 (1) if provided by a shareholders' agreement, in the
446-16 manner stated in the agreement or by the persons named in the
446-17 agreement to serve as the interim board of directors; or
446-18 (2) if each party to a shareholders' agreement agrees
446-19 to elect a board of directors at a shareholders' meeting.
446-20 Sec. 21.711. SHAREHOLDERS' MEETING TO ELECT DIRECTORS. A
446-21 shareholders' meeting required by Section 21.710(c)(2) shall be
446-22 promptly called after the termination of close corporation status
446-23 takes effect. If a meeting is not called before the 31st day after
446-24 the date the termination takes effect, a shareholder may call a
446-25 shareholders' meeting on the provision of notice required by
446-26 Section 21.353, regardless of whether the shareholder is entitled
446-27 to call a shareholders' meeting or vote at the meeting. At the
447-1 meeting, the shareholders shall elect the number of directors
447-2 specified in the certificate of formation or bylaws of the
447-3 corporation or, in the absence of any specification, three
447-4 directors.
447-5 Sec. 21.712. TERM OF OFFICE OF DIRECTORS. A director
447-6 succeeding to the management of the corporation under Section
447-7 21.710(c) shall have a term of office as set forth in Section
447-8 21.408. Until a board of directors is elected, the shareholders of
447-9 the corporation shall act as the corporation's board of directors,
447-10 and the business and affairs of the corporation shall be conducted
447-11 under Section 21.726.
447-12 Sec. 21.713. MANAGEMENT. A close corporation shall be
447-13 managed:
447-14 (1) by a board of directors in the same manner an
447-15 ordinary corporation would be managed under this chapter; or
447-16 (2) in the manner provided by the close corporation's
447-17 certificate of formation or by a shareholders' agreement of the
447-18 close corporation.
447-19 Sec. 21.714. SHAREHOLDERS' AGREEMENT. (a) The shareholders
447-20 of a close corporation may enter into one or more shareholders'
447-21 agreements.
447-22 (b) The business and affairs of a close corporation or the
447-23 relationships among the shareholders that may be regulated by a
447-24 shareholders' agreement include:
447-25 (1) the management of the business and affairs of the
447-26 close corporation by its shareholders, with or without a board of
447-27 directors;
448-1 (2) the management of the business and affairs of the
448-2 close corporation wholly or partly by one or more of its
448-3 shareholders or other persons;
448-4 (3) buy-sell, first option, first refusal, or similar
448-5 arrangements with respect to the close corporation's shares or
448-6 other securities, and restrictions on the transfer of the shares or
448-7 other securities, including more restrictions than those permitted
448-8 by Section 21.211;
448-9 (4) the declaration and payment of dividends or other
448-10 distributions in amounts authorized by Subchapter G, regardless of
448-11 whether the distribution is in proportion to ownership of shares;
448-12 (5) the manner in which profits or losses shall be
448-13 apportioned;
448-14 (6) restrictions placed on the rights of a transferee
448-15 or assignee of shares to participate in the management or
448-16 administration of the close corporation's business and affairs
448-17 during the term of the shareholders' agreement;
448-18 (7) the right of one or more shareholders to cause the
448-19 winding up and termination of the close corporation at will or on
448-20 the occurrence of a specified event or contingency, in which case
448-21 the winding up and termination of the close corporation shall
448-22 proceed as if all of the shareholders of the close corporation had
448-23 consented in writing to winding up and termination as provided by
448-24 Chapter 11;
448-25 (8) the exercise or division of voting power either in
448-26 general or with regard to specified matters by or among the
448-27 shareholders of the close corporation or other persons, including:
449-1 (A) voting agreements and voting trusts that do
449-2 not conform with Section 6.251 or 6.252;
449-3 (B) requiring the vote or consent of the holders
449-4 of a larger or smaller number of shares than is otherwise required
449-5 by this chapter or other law, including an action for termination
449-6 of close corporation status;
449-7 (C) granting one or some other specified number
449-8 of votes for each shareholder; and
449-9 (D) permitting an action for which this chapter
449-10 requires approval by the vote of the board of directors or the
449-11 shareholders of an ordinary corporation, or both, to be taken
449-12 without a vote, in the manner provided by the shareholders'
449-13 agreement;
449-14 (9) the terms and conditions of employment of a
449-15 shareholder, director, officer, or other employee of the close
449-16 corporation, regardless of the length of the period of employment;
449-17 (10) the individuals who will serve as directors, if
449-18 any, and officers of the close corporation;
449-19 (11) the arbitration or mediation of issues about
449-20 which the shareholders may become deadlocked in voting or about
449-21 which the directors or those empowered to manage the close
449-22 corporation may become deadlocked and the shareholders are unable
449-23 to break the deadlock;
449-24 (12) the termination of close corporation status,
449-25 including a right of dissent or other rights that may be granted to
449-26 shareholders who object to the termination;
449-27 (13) qualifications of persons who are or are not
450-1 entitled to be shareholders of the close corporation;
450-2 (14) amendments to or termination of the shareholders'
450-3 agreement; and
450-4 (15) any provision required or permitted to be
450-5 contained in the bylaws by this chapter.
450-6 Sec. 21.715. EXECUTION OF SHAREHOLDERS' AGREEMENT. A
450-7 shareholders' agreement shall be executed:
450-8 (1) in the case of an existing close corporation, by
450-9 each shareholder at the time of execution, regardless of whether
450-10 the shareholder has voting power;
450-11 (2) in the case of an existing ordinary corporation
450-12 that will adopt close corporation status under Section 21.705, by
450-13 each shareholder at the time of execution, regardless of whether
450-14 the shareholder has voting power; or
450-15 (3) in the case of a close corporation that is being
450-16 formed under Section 21.703, by each person who is a subscriber to
450-17 the corporation's shares or agrees to become a holder of the
450-18 corporation's shares under the shareholders' agreement of the close
450-19 corporation.
450-20 Sec. 21.716. ADOPTION OF AMENDMENT OF SHAREHOLDERS'
450-21 AGREEMENT. Unless otherwise provided by a shareholders' agreement,
450-22 an amendment to the shareholders' agreement of a close corporation
450-23 may be adopted only by the written consent of each person who would
450-24 be required to execute the shareholders' agreement if it were being
450-25 executed originally at the time of adoption of the amendment,
450-26 regardless of whether the person has voting power in the close
450-27 corporation.
451-1 Sec. 21.717. DELIVERY OF SHAREHOLDERS' AGREEMENT. (a) The
451-2 close corporation shall deliver a complete copy of a shareholders'
451-3 agreement to:
451-4 (1) each person who is bound by the shareholders'
451-5 agreement;
451-6 (2) each person who is or will become a shareholder in
451-7 the close corporation as provided by Section 21.715 when a
451-8 certificate representing shares in the close corporation is
451-9 delivered to the person; and
451-10 (3) each person to whom a certificate representing
451-11 shares is issued and who has not received a complete copy of the
451-12 agreement.
451-13 (b) The failure to deliver a complete copy of a
451-14 shareholders' agreement as required by this section does not affect
451-15 the validity or enforceability of the shareholders' agreement.
451-16 Sec. 21.718. STATEMENT OF OPERATION AS CLOSE CORPORATION.
451-17 (a) On or after the formation of a close corporation or adoption
451-18 of close corporation status, a close corporation that begins to
451-19 conduct its business and affairs under a shareholders' agreement
451-20 that has become effective shall promptly execute and file with the
451-21 secretary of state a statement of operation as a close corporation
451-22 in accordance with Chapter 4.
451-23 (b) The statement required by Subsection (a) must:
451-24 (1) contain the name of the close corporation;
451-25 (2) state that the close corporation is being operated
451-26 and its business and affairs are being conducted under the terms of
451-27 a shareholders' agreement under this subchapter; and
452-1 (3) contain the date the operation of the corporation
452-2 began.
452-3 (c) A statement of operation as a close corporation shall be
452-4 executed by an officer on behalf of the corporation.
452-5 (d) On the filing of the statement of operation as a close
452-6 corporation, the fact that the close corporation is being operated
452-7 and its business and affairs are being conducted under the terms of
452-8 a shareholders' agreement becomes a matter of public record.
452-9 Sec. 21.719. VALIDITY AND ENFORCEABILITY OF SHAREHOLDERS'
452-10 AGREEMENT. (a) A shareholders' agreement executed in accordance
452-11 with Section 21.715 is valid and enforceable notwithstanding:
452-12 (1) the elimination of a board of directors;
452-13 (2) any restriction imposed on the discretion or
452-14 powers of the board of directors or other person empowered to
452-15 manage the close corporation; and
452-16 (3) that the effect of the shareholders' agreement is
452-17 to treat the business and affairs of the close corporation as if
452-18 the close corporation were a partnership or in a manner that would
452-19 otherwise be appropriate only among partners.
452-20 (b) A close corporation, a shareholder of the close
452-21 corporation, or a party to a shareholders' agreement may initiate a
452-22 proceeding to enforce the shareholders' agreement in accordance
452-23 with Section 21.756.
452-24 Sec. 21.720. PERSONS BOUND BY SHAREHOLDERS' AGREEMENT. (a)
452-25 A shareholders' agreement executed in accordance with Section
452-26 21.715 is:
452-27 (1) considered to be an agreement among all of the
453-1 shareholders of the close corporation; and
453-2 (2) binding on and enforceable against each
453-3 shareholder of the close corporation, regardless of whether:
453-4 (A) a particular shareholder acquired shares in
453-5 the close corporation by purchase, gift, bequest, or otherwise; or
453-6 (B) the shareholder had actual knowledge of the
453-7 existence of the shareholders' agreement at the time of acquiring
453-8 shares.
453-9 (b) A transferee or assignee of shares of a close
453-10 corporation in which there is a shareholders' agreement is bound by
453-11 the agreement for all purposes, regardless of whether the
453-12 transferee or assignee executed or was aware of the agreement.
453-13 Sec. 21.721. DELIVERY OF COPY OF SHAREHOLDERS' AGREEMENT TO
453-14 TRANSFEREE. (a) Before the transfer of shares of a close
453-15 corporation in which there is a shareholders' agreement, the
453-16 transferor shall deliver a complete copy of the shareholders'
453-17 agreement to the transferee.
453-18 (b) If the transferor fails to deliver a complete copy of
453-19 the shareholders' agreement:
453-20 (1) the validity and enforceability of the
453-21 shareholders' agreement against each shareholder of the
453-22 corporation, including the transferee, is not affected;
453-23 (2) the right, title, or interest of the transferee in
453-24 the transferred shares is not adversely affected; and
453-25 (3) the transferee is entitled to obtain on demand
453-26 from the transferor or from the close corporation a complete copy
453-27 of the shareholders' agreement at the transferor's expense.
454-1 Sec. 21.722. EFFECT OF REQUIRED STATEMENT ON SHARE
454-2 CERTIFICATE AND DELIVERY OF SHAREHOLDERS' AGREEMENT. If a
454-3 certificate representing shares of a close corporation contains the
454-4 statement required by Section 21.732, and a complete copy of each
454-5 shareholders' agreement has been delivered as required by Section
454-6 21.717, each holder, transferee, or other person claiming an
454-7 interest in the shares of the close corporation is conclusively
454-8 presumed to have knowledge of a close corporation provision in
454-9 effect at the time of the transfer.
454-10 Sec. 21.723. PARTY NOT BOUND BY SHAREHOLDERS' AGREEMENT ON
454-11 CESSATION; LIABILITY. (a) Notwithstanding the person's signature,
454-12 a person ceases to be a party to, and bound by, a shareholders'
454-13 agreement when the person ceases to be a shareholder of the close
454-14 corporation unless:
454-15 (1) the person's attempted cessation was in violation
454-16 of Section 21.721 or the shareholders' agreement; or
454-17 (2) the shareholders' agreement provides to the
454-18 contrary.
454-19 (b) Cessation as a party to a shareholders' agreement or as
454-20 a shareholder does not relieve a person of liability the person may
454-21 have incurred for breach of the shareholders' agreement.
454-22 Sec. 21.724. TERMINATION OF SHAREHOLDERS' AGREEMENT. (a)
454-23 Except as provided by Subsection (b), a shareholders' agreement
454-24 terminates when the close corporation terminates its status as a
454-25 close corporation.
454-26 (b) If provided by the shareholders' agreement, all or part
454-27 of the agreement is valid and enforceable to the extent permitted
455-1 for an ordinary corporation by this chapter or other law.
455-2 Sec. 21.725. CONSEQUENCES OF MANAGEMENT BY PERSONS OTHER
455-3 THAN BOARD OF DIRECTORS. Sections 21.726-21.729 apply only to a
455-4 close corporation the business and affairs of which are managed
455-5 wholly or partly by the shareholders of the close corporation or
455-6 any other person as provided by a shareholders' agreement rather
455-7 than solely by a board of directors.
455-8 Sec. 21.726. SHAREHOLDERS CONSIDERED DIRECTORS. (a) When
455-9 required by the context of this chapter, the shareholders of a
455-10 close corporation described by Section 21.725 are considered to be
455-11 directors of the close corporation for purposes of applying a
455-12 provision of this chapter, other than a provision relating to the
455-13 election and removal of directors.
455-14 (b) A requirement that an instrument filed with a
455-15 governmental agency contain a statement that a specified action has
455-16 been taken by the board of directors is satisfied by a statement
455-17 that:
455-18 (1) the corporation is a close corporation with no
455-19 board of directors; and
455-20 (2) the action was approved by the shareholders of the
455-21 close corporation or the persons empowered to manage the business
455-22 and affairs of the close corporation under a shareholders'
455-23 agreement.
455-24 Sec. 21.727. LIABILITY OF SHAREHOLDERS. The shareholders of
455-25 a close corporation described by Section 21.725 are subject to any
455-26 liability imposed on a director of a corporation by this chapter or
455-27 other law for a managerial act of or omission made by the
456-1 shareholders or any other person empowered to manage the business
456-2 and affairs of the close corporation under a shareholders'
456-3 agreement and relating to the business and affairs of the close
456-4 corporation, if the action is required by law to be undertaken by
456-5 the board of directors.
456-6 Sec. 21.728. MODE AND EFFECT OF TAKING ACTION BY
456-7 SHAREHOLDERS AND OTHERS. (a) An action that shall or may be taken
456-8 by the board of directors of an ordinary corporation as required or
456-9 authorized by this chapter shall or may be taken by action of the
456-10 shareholders of a close corporation described by Section 21.725 at
456-11 a meeting of the shareholders or, in the manner permitted by a
456-12 shareholders' agreement, this subchapter, or this chapter, without
456-13 a meeting.
456-14 (b) Unless otherwise provided by the certificate of
456-15 formation of the close corporation or a shareholders' agreement of
456-16 the close corporation, an action is binding on a close corporation
456-17 if the action is taken after:
456-18 (1) the affirmative vote of the holders of the
456-19 majority of all outstanding shares entitled to vote on the action;
456-20 or
456-21 (2) the consent of all of the shareholders of the
456-22 close corporation, which may be proven by:
456-23 (A) the full knowledge of the action by all of
456-24 the shareholders and the shareholders' failure to object to the
456-25 action in a timely manner;
456-26 (B) written consent to the action in accordance
456-27 with Section 6.201 or this chapter or any other writing executed by
457-1 or on behalf of all of the shareholders reasonably evidencing the
457-2 consent; or
457-3 (C) any other means reasonably evidencing the
457-4 consent.
457-5 Sec. 21.729. LIMITATION OF SHAREHOLDER'S LIABILITY. (a) A
457-6 shareholder of a close corporation described by Section 21.725 is
457-7 not liable because of a shareholders' vote or shareholder action
457-8 without a vote unless the shareholder had the right to vote or
457-9 consent to the action.
457-10 (b) A shareholder of a close corporation, without regard to
457-11 the right to vote or consent, may not be held liable for an action
457-12 taken by the shareholders or a person empowered to manage the
457-13 business and affairs of the close corporation under a shareholders'
457-14 agreement if the shareholder dissents from and has not voted for or
457-15 consented to the action.
457-16 (c) The dissent of a shareholder may be proven by:
457-17 (1) an entry in the minutes of the meeting of
457-18 shareholders;
457-19 (2) a written dissent filed with the secretary of the
457-20 meeting before the adjournment of the meeting;
457-21 (3) a written dissent sent by registered mail to the
457-22 secretary of the close corporation promptly after the meeting or
457-23 after a written consent was obtained from the other shareholders;
457-24 or
457-25 (4) any other means reasonably evidencing the dissent.
457-26 Sec. 21.730. LACK OF FORMALITIES; TREATMENT AS PARTNERSHIP.
457-27 The failure of a close corporation under this subchapter to observe
458-1 a usual formality or requirement prescribed for an ordinary
458-2 corporation by this chapter relating to the exercise of corporate
458-3 powers or the management of a corporation's business and affairs
458-4 and the performance of a shareholders' agreement that treats the
458-5 close corporation as if the corporation were a partnership or in a
458-6 manner that otherwise is appropriate only among partners may not:
458-7 (1) be a factor in determining whether to impose
458-8 personal liability on the shareholders for the close corporation's
458-9 obligations by disregarding the separate entity of the close
458-10 corporation or otherwise;
458-11 (2) be grounds for invalidating an otherwise valid
458-12 shareholders' agreement; or
458-13 (3) affect the status of the close corporation as a
458-14 corporation under this chapter or other law.
458-15 Sec. 21.731. OTHER AGREEMENTS AMONG SHAREHOLDERS PERMITTED.
458-16 Sections 21.713-21.730 do not prohibit or impair any other
458-17 agreement between two or more shareholders of an ordinary
458-18 corporation permitted by this chapter or other law.
458-19 Sec. 21.732. CLOSE CORPORATION SHARE CERTIFICATES. (a) In
458-20 addition to a matter required or authorized by law to be stated on
458-21 a certificate representing shares, each certificate representing
458-22 shares issued by a close corporation must conspicuously state on
458-23 the front or back of the certificate: "These shares are issued by
458-24 a close corporation as defined by the Texas Business Organizations
458-25 Code. Under Chapter 21 of that code, a shareholders' agreement may
458-26 provide for management of a close corporation by the shareholders
458-27 or in other ways different from an ordinary corporation. This may
459-1 subject the holder of this certificate to certain obligations and
459-2 liabilities not otherwise imposed on shareholders of an ordinary
459-3 corporation. On a sale or transfer of these shares, the transferor
459-4 is required to deliver to the transferee a complete copy of any
459-5 shareholders' agreement."
459-6 (b) Notwithstanding this chapter and Section 3.202, the
459-7 status of a corporation as a close corporation is not affected by
459-8 the failure of a share certificate to contain the statement
459-9 required by Subsection (a).
459-10 (Sections 21.733-21.750 reserved for expansion)
459-11 SUBCHAPTER P. JUDICIAL PROCEEDINGS RELATING TO
459-12 CLOSE CORPORATION
459-13 Sec. 21.751. DEFINITIONS. In this subchapter:
459-14 (1) "Court" means a district court in the county in
459-15 which the principal office of the close corporation is located.
459-16 (2) "Custodian" means a person appointed by a court
459-17 under Section 21.761.
459-18 (3) "Provisional director" means a person appointed by
459-19 a court under Section 21.758.
459-20 (4) "Shareholder" means a record or beneficial owner
459-21 of shares in a close corporation, including:
459-22 (A) a person holding a beneficial interest in
459-23 the shares under an inter vivos, testamentary, or voting trust; or
459-24 (B) the personal representative, as defined by
459-25 the Texas Probate Code, of a record or beneficial owner.
459-26 Sec. 21.752. PROCEEDINGS AUTHORIZED. In addition to any
459-27 other judicial proceeding pertaining to an ordinary corporation
460-1 provided for by this chapter or other law, a close corporation or
460-2 shareholder may institute a proceeding in a district court in the
460-3 county in which the principal office of the close corporation is
460-4 located to:
460-5 (1) enforce a close corporation provision;
460-6 (2) appoint a provisional director; or
460-7 (3) appoint a custodian.
460-8 Sec. 21.753. NOTICE; INTERVENTION. (a) Notice of the
460-9 institution of a proceeding shall be given to the close
460-10 corporation, if the corporation is not a plaintiff, and to each
460-11 shareholder who is not a plaintiff in the manner prescribed by law
460-12 and consistent with due process of law as directed by the court.
460-13 (b) The close corporation or a shareholder of the close
460-14 corporation may intervene in the proceeding.
460-15 Sec. 21.754. PROCEEDING NONEXCLUSIVE. Except as provided by
460-16 Section 21.755, the right of a close corporation or a shareholder
460-17 to institute a proceeding under Section 21.752 is in addition to
460-18 another right or remedy the plaintiff is entitled to under law.
460-19 Sec. 21.755. UNAVAILABILITY OF JUDICIAL PROCEEDING. (a) A
460-20 shareholder may not institute a proceeding before exhausting any
460-21 nonjudicial remedy contained in a close corporation provision for
460-22 resolution of an issue that is in dispute unless the shareholder
460-23 proves that the close corporation, the shareholders as a whole, or
460-24 the shareholder will suffer irreparable harm before the nonjudicial
460-25 remedy is exhausted.
460-26 (b) A shareholder may not institute a proceeding to seek
460-27 damages or other monetary relief if the shareholder is entitled to
461-1 dissent from a proposed action and receive the fair value of the
461-2 shareholder's shares under this code or a shareholders' agreement.
461-3 Sec. 21.756. JUDICIAL PROCEEDING TO ENFORCE CLOSE
461-4 CORPORATION PROVISION. (a) In a judicial proceeding under this
461-5 section, a court shall enforce a close corporation provision
461-6 without regard to whether there is an adequate remedy at law.
461-7 (b) The court may enforce a close corporation provision by
461-8 injunction, specific performance, or other relief the court
461-9 determines to be fair and equitable under the circumstances,
461-10 including:
461-11 (1) damages instead of or in addition to specific
461-12 enforcement;
461-13 (2) the appointment of a provisional director or
461-14 custodian;
461-15 (3) the appointment of a receiver for specific assets
461-16 of the close corporation in accordance with Section 11.403;
461-17 (4) the appointment of a receiver to rehabilitate the
461-18 close corporation in accordance with Section 11.404;
461-19 (5) subject to Section 21.757, the liquidation of the
461-20 assets and business and involuntary termination of the close
461-21 corporation and appointment of a receiver to effect the liquidation
461-22 in accordance with Section 11.405; and
461-23 (6) the termination of close corporation status.
461-24 (c) The court may not order termination of close corporation
461-25 status under Subsection (b)(6) unless the court determines that:
461-26 (1) any other remedy in law or equity, including
461-27 appointment of a provisional director, custodian, or other type of
462-1 receiver, is inadequate; and
462-2 (2) the size, the nature of the business, or the
462-3 number of shareholders of the close corporation, or their
462-4 relationship to one another or other similar factors, make it
462-5 wholly impractical to continue close corporation status.
462-6 Sec. 21.757. LIQUIDATION; INVOLUNTARY WINDING UP AND
462-7 TERMINATION; RECEIVERSHIP. Except as provided by Section 21.756, in
462-8 a case in which a shareholder is entitled to wind up and terminate
462-9 a close corporation under a shareholders' agreement, a court may
462-10 not order liquidation, involuntary termination, or receivership
462-11 under that section unless the court determines that any other
462-12 remedy in law or equity, including appointment of a provisional
462-13 director, custodian, or other type of receiver, is inadequate.
462-14 Sec. 21.758. APPOINTMENT OF PROVISIONAL DIRECTOR. (a) In a
462-15 judicial proceeding under this section, a court shall appoint a
462-16 provisional director for a close corporation on presentation of
462-17 proof that the directors or the persons empowered to manage the
462-18 business and affairs of the close corporation under a shareholders'
462-19 agreement are so divided with respect to the management of the
462-20 business and affairs of the close corporation that the required
462-21 votes or consent to take action on behalf of the close corporation
462-22 cannot be obtained, resulting in the business and affairs being
462-23 conducted in a manner that is not to the general advantage of the
462-24 shareholders.
462-25 (b) The provisional director must be an impartial person who
462-26 is not a shareholder, a party to a shareholders' agreement, a
462-27 person empowered to manage the close corporation under a
463-1 shareholders' agreement, or a creditor of the close corporation or
463-2 of a subsidiary or affiliate of the close corporation. The court
463-3 shall determine any further qualifications.
463-4 (c) A provisional director shall serve until removed by
463-5 court order or by a vote of the majority of the directors or the
463-6 holders of the majority of the shares with voting power, or by a
463-7 vote of a different number, not fewer than the majority, of
463-8 shareholders or directors if a close corporation provision requires
463-9 the concurrence of a larger or different majority for action by the
463-10 directors or shareholders.
463-11 Sec. 21.759. RIGHTS AND POWERS OF PROVISIONAL DIRECTOR. A
463-12 provisional director has all the rights and powers of an elected
463-13 director of the close corporation, or the rights of vote or consent
463-14 of a shareholder and other rights and powers of shareholders or
463-15 other persons who have been empowered to manage the business and
463-16 affairs of the close corporation under a shareholders' agreement
463-17 with the voting power provided by court order, including the right
463-18 to notice of, and to vote at, meetings of directors or
463-19 shareholders.
463-20 Sec. 21.760. COMPENSATION OF PROVISIONAL DIRECTOR. (a) The
463-21 compensation of a provisional director shall be determined by an
463-22 agreement between the provisional director and the close
463-23 corporation, subject to court approval.
463-24 (b) The court may set the compensation in the absence of an
463-25 agreement or in the event of a disagreement between the provisional
463-26 director and the close corporation.
463-27 Sec. 21.761. APPOINTMENT OF CUSTODIAN. (a) In a judicial
464-1 proceeding under this section, a court shall appoint a custodian
464-2 for a close corporation on presentation of proof that:
464-3 (1) at a meeting held for the election of directors,
464-4 the shareholders are so divided that the shareholders have failed
464-5 to elect successors to directors whose terms have expired or would
464-6 have expired on qualification of a successor;
464-7 (2) the business of the close corporation is suffering
464-8 or is threatened with irreparable injury because the directors, or
464-9 the shareholders or the persons empowered to manage the business
464-10 and affairs of the close corporation under a shareholders'
464-11 agreement, are so divided with respect to the management of the
464-12 business and affairs of the close corporation that the required
464-13 vote or consent to take action on behalf of the close corporation
464-14 cannot be obtained and a remedy with respect to the deadlock in a
464-15 close corporation provision has failed; or
464-16 (3) the plaintiff or intervenor has the right to wind
464-17 up and terminate the close corporation under a shareholders'
464-18 agreement as provided by Section 21.714.
464-19 (b) To be eligible to serve as a custodian, a person must
464-20 comply with all the qualifications required to serve as a receiver
464-21 under Section 11.406.
464-22 Sec. 21.762. POWERS AND DUTIES OF CUSTODIAN. A person who
464-23 qualifies as a custodian has all of the powers and duties and the
464-24 title of a receiver appointed under Sections 11.404-11.406. The
464-25 custodian shall continue the business of the close corporation and
464-26 may not liquidate the affairs or distribute the assets of the close
464-27 corporation, except as provided by court order or Section
465-1 21.761(a)(3).
465-2 Sec. 21.763. TERMINATION OF CUSTODIANSHIP. If the condition
465-3 requiring the appointment of a custodian is remedied other than by
465-4 liquidation or winding up and termination, the court shall
465-5 terminate the custodianship immediately and management of the close
465-6 corporation shall be restored to the directors or shareholders of
465-7 the close corporation or to the persons empowered to manage the
465-8 business and affairs of the close corporation under a shareholders'
465-9 agreement.
465-10 (Sections 21.764-21.800 reserved for expansion)
465-11 SUBCHAPTER Q. MISCELLANEOUS PROVISIONS
465-12 Sec. 21.801. SHARES AND OTHER SECURITIES ARE PERSONAL
465-13 PROPERTY. Except as otherwise provided by this code, the shares and
465-14 other securities of a corporation are personal property.
465-15 Sec. 21.802. DELINQUENT TAX. A corporation that is
465-16 delinquent in the payment of any tax owed under Chapter 171, Tax
465-17 Code, may not be:
465-18 (1) awarded a contract by the state; or
465-19 (2) granted a license or permit by the state.
465-20 CHAPTER 22. NONPROFIT CORPORATIONS
465-21 SUBCHAPTER A. GENERAL PROVISIONS
465-22 Sec. 22.001. DEFINITIONS. In this chapter:
465-23 (1) "Board of directors" means the group of persons
465-24 vested with the management of the affairs of the corporation,
465-25 regardless of the name used to designate the group.
465-26 (2) "Bylaws" means the rules adopted to regulate or
465-27 manage the corporation, regardless of the name used to designate
466-1 the rules.
466-2 (3) "Corporation" or "domestic corporation" means a
466-3 domestic nonprofit corporation subject to this chapter.
466-4 (4) "Foreign corporation" means a foreign nonprofit
466-5 corporation.
466-6 (5) "Nonprofit corporation" means a corporation no
466-7 part of the income of which is distributable to a member, director,
466-8 or officer of the corporation.
466-9 (6) "Ordinary care" means the care that an ordinarily
466-10 prudent person in a similar position would exercise under similar
466-11 circumstances.
466-12 Sec. 22.002. APPLICABILITY TO CERTAIN INSURANCE ASSOCIATIONS
466-13 AND COMPANIES. To the extent consistent with the Insurance Code,
466-14 this chapter applies to a local mutual aid association, statewide
466-15 mutual assessment company, burial association as defined by Article
466-16 14.37, Insurance Code, and county mutual insurance company, except
466-17 that:
466-18 (1) a mutual insurance association or company may pay
466-19 dividends to its members on advance approval of the commissioner of
466-20 insurance; and
466-21 (2) a power granted to or duty required of the
466-22 secretary of state under this chapter is, with respect to a mutual
466-23 insurance association or company, granted to or required of the
466-24 commissioner of insurance.
466-25 Sec. 22.003. MEETINGS BY REMOTE COMMUNICATIONS TECHNOLOGY.
466-26 Subject to the provisions of this code and the certificate of
466-27 formation and bylaws of a corporation, a meeting of the members of
467-1 a corporation, the board of directors of a corporation, or any
467-2 committee designated by the board of directors of a corporation may
467-3 be held by means of a remote electronic communications system,
467-4 including videoconferencing technology or the Internet, only if:
467-5 (1) each person entitled to participate in the meeting
467-6 consents to the meeting being held by means of that system; and
467-7 (2) the system provides access to the meeting in a
467-8 manner or using a method by which each person participating in the
467-9 meeting can communicate concurrently with each other participant.
467-10 (Sections 22.004-22.050 reserved for expansion)
467-11 SUBCHAPTER B. PURPOSES AND POWERS
467-12 Sec. 22.051. GENERAL PURPOSES. A nonprofit corporation may
467-13 be formed for any lawful purpose or purposes not expressly
467-14 prohibited under this chapter or Chapter 2, including any purpose
467-15 described by Section 2.002.
467-16 Sec. 22.052. DENTAL HEALTH SERVICE CORPORATION. (a) A
467-17 charitable corporation may be formed to operate a dental health
467-18 service corporation that manages and coordinates the relationship
467-19 between a dentist who contracts to perform dental services and a
467-20 patient who will receive the services as a member of a group that
467-21 contracted with the dental health service corporation to provide
467-22 dental care to group members.
467-23 (b) The certificate of formation for a charitable
467-24 corporation formed under this section must have attached as an
467-25 exhibit:
467-26 (1) an affidavit of the organizer or organizers
467-27 stating:
468-1 (A) that not less than 30 percent of the
468-2 dentists legally engaged in the practice of dentistry in this state
468-3 have signed a contract to perform the required dental services for
468-4 a period of at least one year after incorporation; and
468-5 (B) the names and addresses of those dentists;
468-6 and
468-7 (2) a certification by the State Board of Dental
468-8 Examiners that:
468-9 (A) the applicants are reputable residents of
468-10 this state of good moral character; and
468-11 (B) the corporation will be in the best interest
468-12 of the public health.
468-13 (c) A corporation formed under this section must have at
468-14 least 12 directors, including 9 directors who are licensed to
468-15 practice dentistry in this state and are actively engaged in the
468-16 practice of dentistry in this state.
468-17 (d) A corporation formed under this section shall maintain
468-18 as participating or contracting dentists at least 30 percent of the
468-19 number of dentists actually engaged in the practice of dentistry in
468-20 this state. The corporation shall file annually in September with
468-21 the State Board of Dental Examiners the name and address of each
468-22 participating or contracting dentist.
468-23 (e) A corporation formed under this section may not:
468-24 (1) prevent a patient from selecting the licensed
468-25 dentist of the patient's choice to provide dental services to the
468-26 patient;
468-27 (2) deny a licensed dentist the right to participate
469-1 as a contracting dentist to perform the dental services contracted
469-2 for by the patient;
469-3 (3) discriminate among patients or licensed dentists
469-4 regarding payment or reimbursement for the cost of performing
469-5 dental services; or
469-6 (4) authorize any person to regulate, interfere with,
469-7 or intervene in any manner in the diagnosis or treatment provided
469-8 by a licensed dentist to a patient.
469-9 (f) A corporation formed under this section may require the
469-10 attending dentist to provide a narrative oral or written
469-11 description of the dental services provided to determine benefits
469-12 or provide proof of treatment. The corporation may request but may
469-13 not require diagnostic aids used in the course of treatment.
469-14 Sec. 22.053. DIVIDENDS PROHIBITED. A dividend may not be
469-15 paid to, and no part of the income of a corporation may be
469-16 distributed to, the corporation's members, directors, or officers.
469-17 Sec. 22.054. AUTHORIZED BENEFITS AND DISTRIBUTIONS. A
469-18 corporation may:
469-19 (1) pay compensation in a reasonable amount to the
469-20 members, directors, or officers of the corporation for services
469-21 provided;
469-22 (2) confer benefits on the corporation's members in
469-23 conformity with the corporation's purposes; and
469-24 (3) make distributions to the corporation's members on
469-25 winding up and termination to the extent authorized by this
469-26 chapter.
469-27 Sec. 22.055. POWER TO ASSIST EMPLOYEE OR OFFICER. (a) A
470-1 corporation may lend money to or otherwise assist an employee or
470-2 officer of the corporation, but not a director, if the loan or
470-3 assistance may reasonably be expected to directly or indirectly
470-4 benefit the corporation.
470-5 (b) A loan made to an officer must be:
470-6 (1) made for the purpose of financing the officer's
470-7 principal residence; or
470-8 (2) set in an original principal amount that does not
470-9 exceed:
470-10 (A) 100 percent of the officer's annual salary,
470-11 if the loan is made before the first anniversary of the officer's
470-12 employment; or
470-13 (B) 50 percent of the officer's annual salary,
470-14 if the loan is made in any subsequent year.
470-15 Sec. 22.056. HEALTH ORGANIZATION CORPORATION. (a) Doctors
470-16 of medicine and osteopathy licensed by the Texas State Board of
470-17 Medical Examiners and podiatrists licensed by the Texas State Board
470-18 of Podiatric Medical Examiners may form a corporation that is
470-19 jointly owned, managed, and controlled by those practitioners to
470-20 perform a professional service that falls within the scope of
470-21 practice of those practitioners and consists of:
470-22 (1) carrying out research in the public interest in
470-23 medical science, medical economics, public health, sociology, or a
470-24 related field;
470-25 (2) supporting medical education in medical schools
470-26 through grants or scholarships;
470-27 (3) developing the capabilities of individuals or
471-1 institutions studying, teaching, or practicing medicine, including
471-2 podiatric medicine;
471-3 (4) delivering health care to the public; or
471-4 (5) instructing the public regarding medical science,
471-5 public health, hygiene, or a related matter.
471-6 (b) When doctors of medicine, osteopathy, and podiatry form
471-7 a corporation that is jointly owned by those practitioners, the
471-8 authority of each of the practitioners is limited by the scope of
471-9 practice of the respective practitioners and none can exercise
471-10 control over the other's clinical authority granted by their
471-11 respective licenses, either through agreements, the certificate of
471-12 formation or bylaws of the corporation, directives, financial
471-13 incentives, or other arrangements that would assert control over
471-14 treatment decisions made by the practitioner. The Texas State
471-15 Board of Medical Examiners and the Texas State Board of Podiatric
471-16 Medical Examiners continue to exercise regulatory authority over
471-17 their respective licenses.
471-18 (Sections 22.057-22.100 reserved for expansion)
471-19 SUBCHAPTER C. FORMATION AND GOVERNING DOCUMENTS
471-20 Sec. 22.101. INCORPORATION OF CERTAIN ORGANIZATIONS. A
471-21 religious society, a charitable, benevolent, literary, or social
471-22 association, or a church may incorporate as a corporation governed
471-23 by this chapter with the consent of a majority of its members.
471-24 Those members shall authorize the organizers to execute the
471-25 certificate of formation.
471-26 Sec. 22.102. BYLAWS. (a) The initial bylaws of a
471-27 corporation shall be adopted by the corporation's board of
472-1 directors or, if the management of the corporation is vested in the
472-2 corporation's members, by the members.
472-3 (b) The bylaws may contain provisions for the regulation and
472-4 management of the affairs of the corporation that are consistent
472-5 with law and the certificate of formation.
472-6 (c) The board of directors may amend or repeal the bylaws,
472-7 or adopt new bylaws, unless:
472-8 (1) this chapter or the corporation's certificate of
472-9 formation wholly or partly reserves the power exclusively to the
472-10 corporation's members;
472-11 (2) the management of the corporation is vested in the
472-12 corporation's members; or
472-13 (3) in amending, repealing, or adopting a bylaw, the
472-14 members expressly provide that the board of directors may not amend
472-15 or repeal the bylaw.
472-16 Sec. 22.103. INCONSISTENCY BETWEEN CERTIFICATE OF FORMATION
472-17 AND BYLAW. (a) A provision of a certificate of formation of a
472-18 corporation that is inconsistent with a bylaw controls over the
472-19 bylaw, except as provided by Subsection (b).
472-20 (b) A change in the number of directors by amendment to the
472-21 bylaws controls over the number stated in the certificate of
472-22 formation, unless the certificate of formation provides that a
472-23 change in the number of directors may be made only by amendment to
472-24 the certificate.
472-25 Sec. 22.104. ORGANIZATION MEETING. (a) After the
472-26 certificate of formation is filed, the board of directors named in
472-27 the certificate of formation of a corporation shall hold an
473-1 organization meeting of the board, either in or out of this state,
473-2 at the call of the incorporators or a majority of the directors to
473-3 adopt bylaws and elect officers and for other purposes determined
473-4 by the board at the meeting. The incorporators or directors
473-5 calling the meeting shall send notice of the time and place of the
473-6 meeting to each director named in the certificate of formation not
473-7 later than the third day before the date of the meeting.
473-8 (b) A first meeting of the members may be held at the call
473-9 of the majority of the directors on notice provided not later than
473-10 the third day before the date of the meeting. The notice must
473-11 state the purposes of the meeting.
473-12 (c) If the management of a corporation is vested in the
473-13 corporation's members, the members shall hold the organization
473-14 meeting on the call of an incorporator. An incorporator who calls
473-15 the meeting shall:
473-16 (1) send notice of the time and place of the meeting
473-17 to each member not later than the third day before the date of the
473-18 meeting;
473-19 (2) if the corporation is a church, make an oral
473-20 announcement of the time and place of the meeting at a regularly
473-21 scheduled worship service before the meeting; or
473-22 (3) send notice of the meeting in the manner provided
473-23 by the certificate of formation.
473-24 Sec. 22.105. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF
473-25 FORMATION BY MEMBERS HAVING VOTING RIGHTS. (a) Except as provided
473-26 by Section 22.107(b), to amend the certificate of formation of a
473-27 corporation with members having voting rights, the board of
474-1 directors of the corporation must adopt a resolution specifying the
474-2 proposed amendment and directing that the amendment be submitted to
474-3 a vote at an annual or special meeting of the members having voting
474-4 rights.
474-5 (b) Written notice containing the proposed amendment or a
474-6 summary of the changes to be effected by the amendment shall be
474-7 given to each member entitled to vote at the meeting within the
474-8 time and in the manner provided by this chapter for giving notice
474-9 of a meeting of members.
474-10 (c) The proposed amendment shall be adopted on receiving the
474-11 vote required by Section 22.164.
474-12 Sec. 22.106. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF
474-13 FORMATION BY MANAGING MEMBERS. (a) To be approved, a proposed
474-14 amendment to the certificate of formation of a corporation the
474-15 management of the affairs of which is vested in the corporation's
474-16 members under Section 22.202 must be submitted to a vote at an
474-17 annual, regular, or special meeting of the members.
474-18 (b) Except as otherwise provided by the certificate of
474-19 formation or bylaws, notice containing the proposed amendment or a
474-20 summary of the changes to be effected by the amendment shall be
474-21 given to the members within the time and in the manner provided by
474-22 this chapter for giving notice of a meeting of members.
474-23 (c) The proposed amendment shall be adopted on receiving the
474-24 vote required by Section 22.164.
474-25 Sec. 22.107. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF
474-26 FORMATION BY BOARD OF DIRECTORS. (a) If a corporation has no
474-27 members or has no members with voting rights, or in the case of an
475-1 amendment under Subsection (b), an amendment to the corporation's
475-2 certificate of formation shall be adopted at a meeting of the board
475-3 of directors on receiving the vote of directors required by
475-4 Section 22.164.
475-5 (b) Except as otherwise provided by the certificate of
475-6 formation, the board of directors of a corporation with members
475-7 having voting rights may, without member approval, adopt amendments
475-8 to the certificate of formation to:
475-9 (1) extend the duration of the corporation if the
475-10 corporation was incorporated when limited duration was required by
475-11 law;
475-12 (2) delete the names and addresses of the initial
475-13 directors;
475-14 (3) delete the name and address of the initial
475-15 registered agent or registered office, if a statement of change is
475-16 on file with the secretary of state; or
475-17 (4) change the corporate name by:
475-18 (A) substituting the word "corporation,"
475-19 "incorporated," "company," or "limited," or the abbreviation
475-20 "corp.," "inc.," "co.," or "ltd.," for a similar word or
475-21 abbreviation in the name; or
475-22 (B) adding, deleting, or changing a geographical
475-23 attribution to the name.
475-24 Sec. 22.108. NUMBER OF AMENDMENTS SUBJECT TO VOTE AT
475-25 MEETING. Any number of amendments to the corporation's certificate
475-26 of formation may be submitted to and voted on by a corporation's
475-27 members at any one meeting of the members.
476-1 (Sections 22.109-22.150 reserved for expansion)
476-2 SUBCHAPTER D. MEMBERS
476-3 Sec. 22.151. MEMBERS. (a) A corporation may have one or
476-4 more classes of members or may have no members.
476-5 (b) If the corporation has one or more classes of members,
476-6 the corporation's certificate of formation or bylaws must include:
476-7 (1) a designation of each class;
476-8 (2) the manner of the election or appointment of the
476-9 members of each class; and
476-10 (3) the qualifications and rights of the members of
476-11 each class.
476-12 (c) A corporation may issue a certificate, card, or other
476-13 instrument evidencing membership rights, voting rights, or
476-14 ownership rights as authorized by the certificate of formation or
476-15 bylaws.
476-16 Sec. 22.152. IMMUNITY FROM LIABILITY. The members of a
476-17 corporation are not personally liable for a debt, liability, or
476-18 obligation of the corporation.
476-19 Sec. 22.153. ANNUAL MEETING. (a) Except as provided by
476-20 Subsection (b), a corporation shall hold an annual meeting of the
476-21 members at a time that is stated in or determined in accordance
476-22 with the corporation's bylaws.
476-23 (b) If the bylaws provide for more than one regular meeting
476-24 of members each year, an annual meeting is not required. If an
476-25 annual meeting is not required, directors may be elected at a
476-26 meeting as provided by the bylaws.
476-27 Sec. 22.154. FAILURE TO CALL ANNUAL MEETING. (a) If the
477-1 board of directors of a corporation fails to call the annual
477-2 meeting of members at the designated time, a member of the
477-3 corporation may demand that the meeting be held within a reasonable
477-4 time. The demand must be made in writing and sent to an officer of
477-5 the corporation by registered mail.
477-6 (b) If the annual meeting is not called before the 61st day
477-7 after the date of demand, a member of the corporation may compel
477-8 the holding of the meeting by legal action directed against the
477-9 board of directors, and each of the extraordinary writs of common
477-10 law and of courts of equity are available to the member to compel
477-11 the holding of the meeting. Each member has a justiciable interest
477-12 sufficient to enable the member to institute and prosecute the
477-13 legal proceedings.
477-14 (c) Failure to hold the annual meeting at the designated
477-15 time does not result in the winding up and termination of the
477-16 corporation.
477-17 Sec. 22.155. SPECIAL MEETINGS OF MEMBERS. A special meeting
477-18 of the members of a corporation may be called by:
477-19 (1) the president;
477-20 (2) the board of directors;
477-21 (3) members having not less than one-tenth of the
477-22 votes entitled to be cast at the meeting; or
477-23 (4) other officers or persons as provided by the
477-24 certificate of formation or bylaws of the corporation.
477-25 Sec. 22.156. NOTICE OF MEETING. (a) A corporation other
477-26 than a church shall provide written notice of the place, date, and
477-27 time of a meeting of the members of the corporation and, if the
478-1 meeting is a special meeting, the purpose or purposes for which the
478-2 meeting is called. The notice shall be delivered to each member
478-3 entitled to vote at the meeting not later than the 10th day and not
478-4 earlier than the 60th day before the date of the meeting. Notice
478-5 may be delivered personally or in accordance with Section 6.051(b).
478-6 (b) Notice of a meeting of the members of a corporation that
478-7 is a church is considered sufficient if given by oral announcement
478-8 at a regularly scheduled worship service before the meeting or as
478-9 otherwise provided by the certificate of formation or bylaws of the
478-10 corporation.
478-11 Sec. 22.157. SPECIAL BYLAWS AFFECTING NOTICE. (a) A
478-12 corporation may provide in the corporation's bylaws that notice of
478-13 an annual or regular meeting is not required.
478-14 (b) A corporation having more than 1,000 members at the time
478-15 a meeting is scheduled or called may provide notice of a meeting by
478-16 publication in a newspaper of general circulation in the community
478-17 in which the principal office of the corporation is located, if the
478-18 corporation provides for that notice in its bylaws.
478-19 Sec. 22.158. PREPARATION AND INSPECTION OF LIST OF VOTING
478-20 MEMBERS. (a) After setting a record date for the notice of a
478-21 meeting, a corporation shall prepare the list of voting members
478-22 required by Section 6.004. The list must identify the members who
478-23 are entitled to notice and the members who are not entitled to
478-24 notice of the meeting.
478-25 (b) Not later than the second business day after the date
478-26 notice is given of a meeting for which a list was prepared in
478-27 accordance with Section 6.004, and continuing through the meeting,
479-1 the list of voting members must be available at the corporation's
479-2 principal office or at a reasonable place in the municipality in
479-3 which the meeting will be held, as identified in the notice of the
479-4 meeting, for inspection by members entitled to vote at the meeting
479-5 for the purpose of communication with other members concerning the
479-6 meeting.
479-7 (c) A voting member or voting member's agent or attorney is
479-8 entitled on written demand to inspect and, at the member's expense
479-9 and subject to Section 22.351, copy the list at a reasonable time
479-10 during the period the list is available for inspection.
479-11 (d) The corporation shall make the list of voting members
479-12 available at the meeting. A voting member or voting member's agent
479-13 or attorney is entitled to inspect the list at any time during the
479-14 meeting or an adjournment of the meeting.
479-15 Sec. 22.159. QUORUM OF MEMBERS. (a) Unless otherwise
479-16 provided by the certificate of formation or bylaws of a
479-17 corporation, members of the corporation holding one-tenth of the
479-18 votes entitled to be cast, in person or by proxy, constitute a
479-19 quorum.
479-20 (b) The vote of the majority of the votes entitled to be
479-21 cast by the members present or represented by proxy at a meeting at
479-22 which a quorum is present is the act of the members meeting, unless
479-23 the vote of a greater number is required by law or the certificate
479-24 of formation or bylaws.
479-25 (c) Unless otherwise provided by the certificate of
479-26 formation or bylaws, a church incorporated before May 12, 1959, is
479-27 considered to have provided in the certificate of formation or
480-1 bylaws that members present at a meeting for which notice has been
480-2 given constitute a quorum.
480-3 Sec. 22.160. VOTING OF MEMBERS. (a) Each member of a
480-4 corporation, regardless of class, is entitled to one vote on each
480-5 matter submitted to a vote of the corporation's members, except to
480-6 the extent that the voting rights of members of a class are
480-7 limited, enlarged, or denied by the certificate of formation or
480-8 bylaws of the corporation.
480-9 (b) A member may vote in person or, unless otherwise
480-10 provided by the certificate of formation or bylaws, by proxy
480-11 executed in writing by the member or the member's attorney-in-fact.
480-12 (c) Unless otherwise provided by the proxy, a proxy is
480-13 revocable and expires 11 months after the date of its execution. A
480-14 proxy may not be irrevocable for longer than 11 months.
480-15 (d) If authorized by the certificate of formation or bylaws
480-16 of the corporation, a member vote on any matter may be conducted by
480-17 mail, by facsimile transmission, by electronic message, or by any
480-18 combination of those methods.
480-19 Sec. 22.161. ELECTION OF DIRECTORS. (a) A member entitled
480-20 to vote at an election of directors is entitled to vote, in person
480-21 or by proxy, for as many persons as there are directors to be
480-22 elected and for whose election the member has a right to vote.
480-23 (b) If expressly authorized by the corporation's certificate
480-24 of formation, the member may cumulate the member's vote by:
480-25 (1) giving one candidate a number of votes equal to
480-26 the number of the directors to be elected multiplied by the
480-27 member's vote; or
481-1 (2) distributing the votes on the same principle among
481-2 any number of the candidates.
481-3 (c) A member who intends to cumulate votes under Subsection
481-4 (b) shall give written notice of the member's intention to the
481-5 secretary of the corporation not later than the day preceding the
481-6 date of the election.
481-7 Sec. 22.162. GREATER VOTING REQUIREMENTS UNDER CERTIFICATE
481-8 OF FORMATION. If the corporation's certificate of formation
481-9 requires the vote or concurrence of a greater proportion of the
481-10 members of a corporation than is required by this chapter with
481-11 respect to an action to be taken by the members, the certificate of
481-12 formation controls.
481-13 Sec. 22.163. RECORD DATE FOR DETERMINATION OF MEMBERS. (a)
481-14 The record date for determining members of a corporation may be set
481-15 as provided by Section 6.101.
481-16 (b) If a record date is not set under Section 6.101:
481-17 (1) members on the date of the meeting who are
481-18 otherwise eligible to vote are entitled to vote at the meeting;
481-19 (2) members at the close of business on the business
481-20 day preceding the date notice is given, or if notice is waived, at
481-21 the close of business on the business day preceding the date of the
481-22 meeting, are entitled to notice of a meeting of members; and
481-23 (3) members at the close of business on the later of
481-24 the day the board of directors adopts the resolution relating to
481-25 the action or the 60th day before the date of the action are
481-26 entitled to exercise any rights regarding any other lawful action.
481-27 (c) The board of directors of a corporation may set a new
482-1 date for determining the right to notice of or to vote at any
482-2 adjournment of a members' meeting. The board shall set a new date
482-3 if the meeting is adjourned to a date more than 90 days after the
482-4 record date for determining members entitled to notice of the
482-5 original meeting.
482-6 Sec. 22.164. VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.
482-7 (a) In this section, "fundamental action" means:
482-8 (1) an amendment of a certificate of formation;
482-9 (2) a voluntary winding up under Chapter 11;
482-10 (3) a revocation of a voluntary decision to wind up
482-11 under Section 11.151;
482-12 (4) a cancellation of an event requiring winding up
482-13 under Section 11.152;
482-14 (5) a reinstatement under Section 11.202;
482-15 (6) a distribution plan under Section 22.305;
482-16 (7) a plan of merger under Subchapter F; or
482-17 (8) a sale of all or substantially all of the assets
482-18 of a corporation under Subchapter F.
482-19 (b) Except as otherwise provided by Subsection (c) or the
482-20 certificate of formation in accordance with Section 22.162, the
482-21 vote required for approval of a fundamental action is:
482-22 (1) at least two-thirds of the votes that members
482-23 present in person or by proxy are entitled to cast at the meeting
482-24 at which the action is submitted for a vote, if the corporation has
482-25 members with voting rights;
482-26 (2) at least two-thirds of the votes of members
482-27 present at the meeting at which the action is submitted for a vote,
483-1 if the management of the affairs of the corporation is vested in
483-2 the corporation's members under Section 22.202; or
483-3 (3) the affirmative vote of the majority of the
483-4 directors in office, if the corporation has no members or has no
483-5 members with voting rights.
483-6 (c) If any class of members is entitled to vote on the
483-7 fundamental action as a class by the terms of the certificate of
483-8 formation or the bylaws, the vote required for the approval of the
483-9 fundamental action is the vote required by Subsection (b)(1) and at
483-10 least two-thirds of the votes that the members of each class in
483-11 person or by proxy are entitled to cast at the meeting at which the
483-12 action is submitted for a vote.
483-13 (Sections 22.165-22.200 reserved for expansion)
483-14 SUBCHAPTER E. MANAGEMENT
483-15 Sec. 22.201. MANAGEMENT BY BOARD OF DIRECTORS. Except as
483-16 provided by Section 22.202, the affairs of a corporation are
483-17 managed by a board of directors. The board of directors may be
483-18 designated by any name appropriate to the customs, usages, or
483-19 tenets of the corporation.
483-20 Sec. 22.202. MANAGEMENT BY MEMBERS. (a) The certificate of
483-21 formation of a corporation may vest the management of the affairs
483-22 of the corporation in the members of the corporation. If the
483-23 corporation has a board of directors, the corporation may limit the
483-24 authority of the board to the extent provided by the certificate of
483-25 formation or bylaws.
483-26 (b) A corporation is considered to have vested the
483-27 management of the corporation's affairs in the board of directors
484-1 of the corporation in the absence of a provision to the contrary in
484-2 the certificate of formation, unless the corporation is a church
484-3 organized and operating under a congregational system that:
484-4 (1) was incorporated before January 1, 1994; and
484-5 (2) has the management of its affairs vested in the
484-6 corporation's members.
484-7 Sec. 22.203. BOARD MEMBER ELIGIBILITY REQUIREMENTS. A
484-8 director of a corporation is not required to be a resident of this
484-9 state or a member of the corporation unless the certificate of
484-10 formation or a bylaw of the corporation imposes that requirement.
484-11 The certificate of formation or bylaws may prescribe other
484-12 qualifications for directors.
484-13 Sec. 22.204. NUMBER OF DIRECTORS. (a) If the corporation
484-14 has a board of directors, a corporation may not have fewer than
484-15 three directors. The number of directors shall be set by, or in
484-16 the manner provided by, the certificate of formation or bylaws of
484-17 the corporation, except that the number of directors on the initial
484-18 board of directors must be set by the certificate of formation.
484-19 (b) The number of directors may be increased or decreased by
484-20 amendment to, or in the manner provided by, the certificate of
484-21 formation or bylaws. A decrease in the number of directors may not
484-22 shorten the term of an incumbent director.
484-23 (c) In the absence of a provision of the certificate of
484-24 formation or a bylaw setting the number of directors or providing
484-25 for the manner in which the number of directors shall be
484-26 determined, the number of directors is the same as the number
484-27 constituting the initial board of directors.
485-1 Sec. 22.205. DESIGNATION OF INITIAL BOARD OF DIRECTORS. If
485-2 the corporation is to be managed by a board of directors, the
485-3 certificate of formation of a corporation must state the names of
485-4 the members of the initial board of directors of the corporation.
485-5 Sec. 22.206. ELECTION OR APPOINTMENT OF BOARD OF DIRECTORS.
485-6 Directors other than the initial directors are elected, appointed,
485-7 or designated in the manner provided by the certificate of
485-8 formation or bylaws. If the method of election, designation, or
485-9 appointment is not provided by the certificate of formation or
485-10 bylaws, directors other than the initial directors are elected by
485-11 the board of directors.
485-12 Sec. 22.207. ELECTION AND CONTROL BY CERTAIN ENTITIES. (a)
485-13 The board of directors of a religious, charitable, educational, or
485-14 eleemosynary corporation may be affiliated with, elected, and
485-15 controlled by an incorporated or unincorporated convention,
485-16 conference, or association organized under the laws of this or
485-17 another state, the membership of which is composed of
485-18 representatives, delegates, or messengers from a church or other
485-19 religious association.
485-20 (b) The board of directors of a corporation may be wholly or
485-21 partly elected by one or more associations or corporations
485-22 organized under the laws of this or another state if:
485-23 (1) the certificate of formation or bylaws of the
485-24 corporation provide for that election; and
485-25 (2) the corporation has no members with voting rights.
485-26 Sec. 22.208. TERM OF OFFICE. (a) A director on the initial
485-27 board of directors of a corporation holds office until the first
486-1 annual election of directors or for the period specified in the
486-2 certificate of formation or bylaws of the corporation. Directors
486-3 other than the initial directors are elected, appointed, or
486-4 designated for the terms provided by the certificate of formation
486-5 or bylaws.
486-6 (b) In the absence of a provision in the certificate of
486-7 formation or bylaws setting the term of office for directors, a
486-8 director holds office until the next annual election of directors
486-9 and until a successor is elected, appointed, or designated and
486-10 qualified.
486-11 Sec. 22.209. CLASSIFICATION OF DIRECTORS. Directors may be
486-12 divided into classes. The terms of office of the several classes
486-13 are not required to be uniform.
486-14 Sec. 22.210. EX OFFICIO MEMBER OF BOARD. (a) The
486-15 certificate of formation or bylaws of a corporation may provide
486-16 that a person may be an ex officio member of the board of directors
486-17 of the corporation.
486-18 (b) A person designated as an ex officio member of the board
486-19 is entitled to receive notice of and to attend board meetings.
486-20 (c) An ex officio member is not entitled to vote unless the
486-21 certificate of formation or bylaws authorize the member to vote.
486-22 An ex officio member of the board who is not entitled to vote does
486-23 not have the duties or liabilities of a director provided by this
486-24 chapter.
486-25 Sec. 22.211. REMOVAL OF DIRECTOR. (a) A director of a
486-26 corporation may be removed from office under any procedure provided
486-27 by the certificate of formation or bylaws of the corporation.
487-1 (b) In the absence of a provision for removal in the
487-2 certificate of formation or bylaws, a director may be removed from
487-3 office, with or without cause, by the persons entitled to elect,
487-4 designate, or appoint the director. If the director was elected to
487-5 office, removal requires an affirmative vote equal to the vote
487-6 necessary to elect the director.
487-7 Sec. 22.212. VACANCY. (a) Unless otherwise provided by the
487-8 certificate of formation or bylaws of the corporation, a vacancy in
487-9 the board of directors of a corporation shall be filled by the
487-10 affirmative vote of the majority of the remaining directors,
487-11 regardless of whether that majority is less than a quorum. A
487-12 director elected to fill a vacancy is elected for the unexpired
487-13 term of the member's predecessor in office.
487-14 (b) A vacancy in the board occurring because of an increase
487-15 in the number of directors shall be filled by election at an annual
487-16 meeting or at a special meeting of members called for that purpose.
487-17 If a corporation has no members or has no members with the right to
487-18 vote on the vacancy, the vacancy shall be filled as provided by the
487-19 certificate of formation or bylaws.
487-20 Sec. 22.213. QUORUM. (a) A quorum for the transaction of
487-21 business by the board of directors of a corporation is the lesser
487-22 of:
487-23 (1) the majority of the number of directors set by the
487-24 corporation's bylaws or, in the absence of a bylaw setting the
487-25 number of directors, a majority of the number of directors stated
487-26 in the corporation's certificate of formation; or
487-27 (2) any number, not less than three, set as a quorum
488-1 by the certificate of formation or bylaws.
488-2 (b) A director present by proxy at a meeting may not be
488-3 counted toward a quorum.
488-4 Sec. 22.214. ACTION BY DIRECTORS. The act of a majority of
488-5 the directors present in person or by proxy at a meeting at which a
488-6 quorum is present is the act of the board of directors of a
488-7 corporation, unless the act of a greater number is required by the
488-8 certificate of formation or bylaws of the corporation.
488-9 Sec. 22.215. VOTING IN PERSON OR BY PROXY. A director of a
488-10 corporation may vote in person or, if authorized by the certificate
488-11 of formation or bylaws of the corporation, by proxy executed in
488-12 writing by the director.
488-13 Sec. 22.216. TERM AND REVOCABILITY OF PROXY. (a) A proxy
488-14 expires three months after the date the proxy is executed.
488-15 (b) A proxy is revocable unless otherwise provided by the
488-16 proxy or made irrevocable by law.
488-17 Sec. 22.217. NOTICE OF MEETING; WAIVER OF NOTICE. (a)
488-18 Regular meetings of the board of directors of a corporation may be
488-19 held with or without notice as prescribed by the corporation's
488-20 bylaws.
488-21 (b) Special meetings of the board of directors shall be held
488-22 with notice as prescribed by the bylaws. Attendance of a director
488-23 at a meeting constitutes a waiver of notice, unless the director
488-24 attends a meeting for the express purpose of objecting to the
488-25 transaction of any business on the ground that the meeting is not
488-26 lawfully called or convened.
488-27 (c) Unless required by the bylaws, the business to be
489-1 transacted at, or the purpose of, a regular or special meeting of
489-2 the board of directors is not required to be specified in the
489-3 notice or waiver of notice of the meeting.
489-4 (d) Notice may be delivered personally or in accordance with
489-5 Section 6.051(b).
489-6 Sec. 22.218. MANAGEMENT COMMITTEE. (a) If authorized by the
489-7 certificate of formation or bylaws of the corporation, the board of
489-8 directors of a corporation, by resolution adopted by the majority
489-9 of the directors in office, may designate one or more committees to
489-10 have and exercise the authority of the board in the management of
489-11 the corporation to the extent provided by:
489-12 (1) the resolution;
489-13 (2) the certificate of formation; or
489-14 (3) the bylaws.
489-15 (b) A committee designated under this section must consist
489-16 of at least two persons. The majority of the persons on the
489-17 committee must be directors. If provided by the certificate of
489-18 formation or bylaws, the remaining persons on the committee are not
489-19 required to be directors.
489-20 (c) The designation of a committee and the delegation of
489-21 authority to the committee does not operate to relieve the board of
489-22 directors, or an individual director, of any responsibility imposed
489-23 on the board or director by law. A committee member who is not a
489-24 director has the same responsibility with respect to the committee
489-25 as a committee member who is a director.
489-26 Sec. 22.219. OTHER COMMITTEES. (a) The board of directors
489-27 of a corporation, by resolution adopted by the majority of the
490-1 directors at a meeting at which a quorum is present, or the
490-2 president, if authorized by a similar resolution of the board of
490-3 directors or by the certificate of formation or bylaws of the
490-4 corporation, may designate and appoint one or more committees that
490-5 do not have the authority of the board of directors in the
490-6 management of the corporation.
490-7 (b) The membership on a committee designated under this
490-8 section may be limited to directors.
490-9 Sec. 22.220. ACTION WITHOUT MEETING OF DIRECTORS OR
490-10 COMMITTEE. (a) The certificate of formation of a corporation may
490-11 provide that an action required by this chapter to be taken at a
490-12 meeting of the corporation's directors or an action that may be
490-13 taken at a meeting of the directors or a committee may be taken
490-14 without a meeting if a written consent, stating the action to be
490-15 taken, is signed by the number of directors or committee members
490-16 necessary to take that action at a meeting at which all of the
490-17 directors or committee members are present and voting. The consent
490-18 must state the date of each director's or committee member's
490-19 signature.
490-20 (b) A written consent signed by less than all of the
490-21 directors or committee members is not effective to take the action
490-22 that is the subject of the consent unless, not later than the 60th
490-23 day after the date of the earliest dated consent delivered to the
490-24 corporation in the manner required by this section, a consent or
490-25 consents signed by the required number of directors or committee
490-26 members are delivered to the corporation:
490-27 (1) at the registered office or principal place of
491-1 business of the corporation; or
491-2 (2) through the corporation's registered agent,
491-3 transfer agent, registrar, or exchange agent or an officer or agent
491-4 of the corporation having custody of the books in which proceedings
491-5 of meetings of directors or committees are recorded.
491-6 (c) Delivery under Subsection (b) must be by hand or by
491-7 certified or registered mail, return receipt requested. Delivery to
491-8 the corporation's principal place of business must be addressed to
491-9 the president or principal executive officer of the corporation.
491-10 (d) Prompt notice of the taking of an action by directors or
491-11 a committee without a meeting by less than unanimous written
491-12 consent shall be given to each director or committee member who did
491-13 not consent in writing to the action.
491-14 Sec. 22.221. GENERAL STANDARDS FOR DIRECTORS. (a) A
491-15 director shall discharge the director's duties, including duties as
491-16 a committee member, in good faith, with ordinary care, and in a
491-17 manner the director reasonably believes to be in the best interest
491-18 of the corporation.
491-19 (b) A director is not liable to the corporation, a member,
491-20 or another person for an action taken or not taken as a director if
491-21 the director acted in compliance with this section. A person
491-22 seeking to establish liability of a director must prove that the
491-23 director did not act:
491-24 (1) in good faith;
491-25 (2) with ordinary care; and
491-26 (3) in a manner the director reasonably believed to be
491-27 in the best interest of the corporation.
492-1 Sec. 22.222. RELIGIOUS CORPORATION DIRECTOR'S GOOD FAITH
492-2 RELIANCE ON CERTAIN INFORMATION. A director of a religious
492-3 corporation, in the discharge of a duty imposed or power conferred
492-4 on the director, including a duty imposed or power conferred as a
492-5 committee member, may rely in good faith on information or on an
492-6 opinion, report, or statement, including a financial statement or
492-7 other financial data, concerning the corporation or another person
492-8 that was prepared or presented by:
492-9 (1) a religious authority; or
492-10 (2) a minister, priest, rabbi, or other person whose
492-11 position or duties in the corporation the director believes justify
492-12 reliance and confidence and whom the director believes to be
492-13 reliable and competent in the matters presented.
492-14 Sec. 22.223. NOT A TRUSTEE. A director of a corporation is
492-15 not considered to have the duties of a trustee of a trust with
492-16 respect to the corporation or with respect to property held or
492-17 administered by the corporation, including property subject to
492-18 restrictions imposed by the donor or transferor of the property.
492-19 Sec. 22.224. DELEGATION OF INVESTMENT AUTHORITY. (a) The
492-20 board of directors of a corporation may:
492-21 (1) contract with an advisor who is an investment
492-22 counsel or a trust company, bank, investment advisor, or investment
492-23 manager; and
492-24 (2) confer on that advisor the authority to:
492-25 (A) purchase or otherwise acquire a stock, bond,
492-26 security, or other investment on behalf of the corporation; and
492-27 (B) sell, transfer, or otherwise dispose of an
493-1 asset or property of the corporation at a time and for a
493-2 consideration the advisor considers appropriate.
493-3 (b) The board of directors may:
493-4 (1) confer on an advisor described by Subsection (a)
493-5 other powers regarding the corporation's investments as the board
493-6 considers appropriate; and
493-7 (2) authorize the advisor to hold title to an asset or
493-8 property of the corporation, in the advisor's own name or in the
493-9 name of a nominee, for the benefit of the corporation.
493-10 (c) The board of directors is not liable for an action taken
493-11 or not taken by an advisor under this section if the board acted in
493-12 good faith and with ordinary care in selecting the advisor. The
493-13 board of directors may remove or replace the advisor, with or
493-14 without cause, if the board considers that action appropriate or
493-15 necessary.
493-16 Sec. 22.225. LOAN TO DIRECTOR PROHIBITED. (a) A corporation
493-17 may not make a loan to a director.
493-18 (b) The directors of a corporation who vote for or assent to
493-19 the making of a loan to a director, and any officer who
493-20 participates in making the loan, are jointly and severally liable
493-21 to the corporation for the amount of the loan until the loan is
493-22 repaid.
493-23 Sec. 22.226. DIRECTOR LIABILITY FOR CERTAIN DISTRIBUTIONS OF
493-24 ASSETS. (a) In addition to any other liability imposed by law on
493-25 the directors of a corporation, the directors who vote for or
493-26 assent to a distribution of assets other than in payment of the
493-27 corporation's debts, when the corporation is insolvent or when
494-1 distribution would render the corporation insolvent, or during the
494-2 liquidation of the corporation, without the payment and discharge
494-3 of or making adequate provisions for any known debt, obligation, or
494-4 liability of the corporation, are jointly and severally liable to
494-5 the corporation for the value of the assets distributed, to the
494-6 extent that the debt, obligation, or liability is not paid and
494-7 discharged.
494-8 (b) A director is not liable under this section if, in
494-9 voting for or assenting to a distribution, the director relied in
494-10 good faith and with ordinary care on information or an opinion,
494-11 report, or statement in accordance with Section 3.102.
494-12 Sec. 22.227. DISSENT TO ACTION. (a) A director of a
494-13 corporation who is present at a meeting of the board of directors
494-14 at which action is taken on a corporate matter described by Section
494-15 22.226(a) is presumed to have assented to the action unless:
494-16 (1) the director's dissent has been entered in the
494-17 minutes of the meeting;
494-18 (2) the director has filed a written dissent to the
494-19 action with the person acting as the secretary of the meeting
494-20 before the meeting is adjourned; or
494-21 (3) the director has sent a written dissent by
494-22 registered mail to the secretary of the corporation immediately
494-23 after the meeting has been adjourned.
494-24 (b) The right to dissent under this section does not apply
494-25 to a director who voted in favor of the action.
494-26 Sec. 22.228. RELIANCE ON WRITTEN OPINION OF ATTORNEY. A
494-27 director is not liable under Section 22.226 or 22.227 if, in the
495-1 exercise of ordinary care, the director acted in good faith and in
495-2 reliance on the written opinion of an attorney for the corporation.
495-3 Sec. 22.229. RIGHT TO CONTRIBUTION. A director against whom
495-4 a claim is asserted under Section 22.226 or 22.227 and who is held
495-5 liable on the claim is entitled to contribution from persons who
495-6 accepted or received the distribution knowing the distribution to
495-7 have been made in violation of that section, in proportion to the
495-8 amounts received by those persons.
495-9 Sec. 22.230. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED
495-10 DIRECTORS, OFFICERS, AND MEMBERS. (a) This section applies only to
495-11 a contract or transaction between a corporation and:
495-12 (1) one or more of the corporation's directors,
495-13 officers, or members; or
495-14 (2) an entity or other organization in which one or
495-15 more of the corporation's directors, officers, or members:
495-16 (A) is a managerial official or a member; or
495-17 (B) has a financial interest.
495-18 (b) An otherwise valid contract or transaction is valid
495-19 notwithstanding that a director, officer, or member of the
495-20 corporation is present at or participates in the meeting of the
495-21 board of directors, of a committee of the board, or of the members
495-22 that authorizes the contract or transaction, or votes to authorize
495-23 the contract or transaction, if:
495-24 (1) the material facts as to the relationship or
495-25 interest and as to the contract or transaction are disclosed to or
495-26 known by:
495-27 (A) the corporation's board of directors, a
496-1 committee of the board of directors, or the members, and the board,
496-2 the committee, or the members in good faith and with ordinary care
496-3 authorize the contract or transaction by the affirmative vote of
496-4 the majority of the disinterested directors, committee members or
496-5 members, regardless of whether the disinterested directors,
496-6 committee members or members constitute a quorum; or
496-7 (B) the members entitled to vote on the
496-8 authorization of the contract or transaction, and the contract or
496-9 transaction is specifically approved in good faith and with
496-10 ordinary care by a vote of the members; or
496-11 (2) the contract or transaction is fair to the
496-12 corporation when the contract or transaction is authorized,
496-13 approved, or ratified by the board of directors, a committee of the
496-14 board of directors, or the members.
496-15 (c) Common or interested directors or members of a
496-16 corporation may be included in determining the presence of a quorum
496-17 at a meeting of the board, a committee of the board, or members
496-18 that authorizes the contract or transaction.
496-19 Sec. 22.231. OFFICERS. (a) The officers of a corporation
496-20 shall include a president and a secretary and may include one or
496-21 more vice presidents, a treasurer, and other officers and assistant
496-22 officers as considered necessary. Any two or more offices, other
496-23 than the offices of president and secretary, may be held by the
496-24 same person.
496-25 (b) A properly designated committee may perform the
496-26 functions of an officer. A single committee may perform the
496-27 functions of any two or more officers, including the functions of
497-1 president and secretary.
497-2 (c) The officers of a corporation may be designated by other
497-3 or additional titles as provided by the certificate of formation or
497-4 bylaws of the corporation.
497-5 Sec. 22.232. ELECTION OR APPOINTMENT OF OFFICERS. (a) An
497-6 officer of a corporation shall be elected or appointed at the time,
497-7 in the manner, and for the terms prescribed by the certificate of
497-8 formation or bylaws of the corporation. The term of an officer may
497-9 not exceed three years.
497-10 (b) If the certificate of formation or bylaws do not include
497-11 provisions for the election or appointment of officers, the
497-12 officers shall be elected or appointed annually by the board of
497-13 directors or, if the management of the corporation is vested in the
497-14 corporation's members, by the members.
497-15 Sec. 22.233. APPLICATION TO CHURCH. A corporation that is a
497-16 church is not required to have officers as provided by this
497-17 subchapter. The duties and responsibilities of the officers may be
497-18 vested in the corporation's board of directors or other designated
497-19 body in any manner provided for by the certificate of formation or
497-20 bylaws of the corporation.
497-21 Sec. 22.234. RELIGIOUS CORPORATION OFFICER'S GOOD FAITH
497-22 RELIANCE ON CERTAIN INFORMATION. An officer of a religious
497-23 corporation, in the discharge of a duty imposed or power conferred
497-24 on the officer, may rely in good faith and with ordinary care on
497-25 information or on an opinion, report, or statement concerning the
497-26 corporation or another person that was prepared or presented by:
497-27 (1) a religious authority or another religious
498-1 corporation; or
498-2 (2) a minister, priest, rabbi, or other person whose
498-3 position or duties in the religious authority or religious
498-4 corporation the officer believes justify reliance and confidence
498-5 and whom the officer believes to be reliable and competent in the
498-6 matters presented.
498-7 Sec. 22.235. EFFECT OF LIABILITY PROVISIONS ON DUTIES OWED
498-8 TO CHARITABLE CORPORATIONS. Sections 7.002 and 7.003 do not affect,
498-9 limit, or eliminate any duty owed to a charitable corporation by a
498-10 director, officer, or managing member of the corporation.
498-11 (Sections 22.236-22.250 reserved for expansion)
498-12 SUBCHAPTER F. FUNDAMENTAL BUSINESS TRANSACTIONS
498-13 Sec. 22.251. APPROVAL OF MERGER. (a) A domestic corporation
498-14 that is a party to the merger under Chapter 10 must approve the
498-15 merger by complying with this section.
498-16 (b) If the corporation that is a party to the merger has no
498-17 members or has no members with voting rights, the plan of merger
498-18 must be approved by the vote of directors required by
498-19 Section 22.164.
498-20 (c) If the management of the affairs of the corporation that
498-21 is a party to the merger is vested in its members under Section
498-22 22.202, the plan of merger:
498-23 (1) must be submitted to a vote at an annual, regular,
498-24 or special meeting of the members; and
498-25 (2) must be approved by the members by the vote
498-26 required by Section 22.164.
498-27 (d) If the corporation that is a party to the merger has
499-1 members with voting rights:
499-2 (1) the board of directors must adopt a resolution
499-3 that:
499-4 (A) approves the plan of merger; and
499-5 (B) directs that the plan be submitted to a vote
499-6 at an annual or special meeting of the members having voting
499-7 rights; and
499-8 (2) the members must approve the plan of merger by the
499-9 vote required by Section 22.164.
499-10 Sec. 22.252. APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF
499-11 ASSETS. (a) A corporation must approve the sale of all or
499-12 substantially all of its assets by complying with this section.
499-13 (b) If the corporation has no members or has no members with
499-14 voting rights, the sale of all or substantially all of the assets
499-15 of the corporation must be authorized by the vote of directors
499-16 required by Section 22.164.
499-17 (c) If the management of the affairs of the corporation is
499-18 vested in its members under Section 22.202, a resolution
499-19 authorizing a sale of all or substantially all of the assets of the
499-20 corporation:
499-21 (1) must be submitted to a vote at an annual, regular,
499-22 or special meeting of the members; and
499-23 (2) must be approved by the members by the vote
499-24 required by Section 22.164.
499-25 (d) If the corporation has members with voting rights:
499-26 (1) the board of directors of the corporation must
499-27 adopt a resolution that:
500-1 (A) recommends the sale; and
500-2 (B) directs that the resolution be submitted to
500-3 a vote at an annual or special meeting of the members having voting
500-4 rights; and
500-5 (2) the members must approve the resolution by the
500-6 vote required by Section 22.164.
500-7 (e) At the meeting required by Subsection (c) or (d), in
500-8 addition to approving the resolution authorizing the sale, the
500-9 members may set, or authorize the board of directors to set, the
500-10 terms and conditions of the sale and the consideration to be
500-11 received by the corporation for the sale by the same vote of
500-12 members.
500-13 (f) After the members authorize a sale under Subsection (d),
500-14 the board of directors may abandon the sale, subject to the rights
500-15 of third parties under any contracts relating to the sale, without
500-16 further action or approval by members.
500-17 (g) Notwithstanding Subsection (d), if a corporation is
500-18 insolvent, a sale of all or substantially all of the assets of the
500-19 corporation may be authorized on receiving the affirmative vote of
500-20 the majority of the directors in office.
500-21 Sec. 22.253. MEETING OF MEMBERS; NOTICE. (a) The
500-22 corporation must give to each member entitled to vote at a meeting
500-23 described by Section 22.251(c) or (d) or Section 22.252(c) or (d) a
500-24 written notice stating that the purpose or one of the purposes of
500-25 the meeting is to consider the plan of merger or the sale of all or
500-26 substantially all of the assets of the corporation. The notice
500-27 must be given in the time and manner provided by Chapter 6 and this
501-1 chapter for giving notice of a meeting to members.
501-2 (b) A vote of members entitled to vote at the meeting shall
501-3 be taken on the plan of merger or the resolution authorizing the
501-4 sale of all or substantially all of the assets of the corporation.
501-5 The members must approve the plan or resolution by the vote
501-6 required by Section 22.164.
501-7 (c) For a meeting to vote on a plan of merger, the notice of
501-8 the meeting must contain the plan of merger or a summary of the
501-9 plan of merger.
501-10 (d) For a corporation the management of the affairs of which
501-11 is vested in its members under Section 22.202, the notice of the
501-12 meeting is subject to the provisions of the certificate of
501-13 formation or bylaws of the corporation.
501-14 Sec. 22.254. PLEDGE, MORTGAGE, DEED OF TRUST, OR TRUST
501-15 INDENTURE. (a) Except as otherwise provided by Subsection (b) or
501-16 by the corporation's certificate of formation:
501-17 (1) the board of directors of a corporation may
501-18 authorize a pledge, mortgage, deed of trust, or trust indenture;
501-19 and
501-20 (2) an authorization or consent of members is not
501-21 required for the validity of the transaction or for any sale under
501-22 the terms of the transaction.
501-23 (b) If the management of the affairs of a corporation is
501-24 vested in the corporation's members under Section 22.202:
501-25 (1) the members may authorize a pledge, mortgage, deed
501-26 of trust, or trust indenture in the manner provided by Section
501-27 22.252(c) for a sale of all or substantially all of the assets of a
502-1 corporation; and
502-2 (2) an authorization by the board of directors is not
502-3 required for the validity of the transaction or for any sale under
502-4 the terms of the transaction.
502-5 Sec. 22.255. CONVEYANCE BY CORPORATION. A corporation may
502-6 convey real property of the corporation when authorized by
502-7 appropriate resolution of the board of directors or members.
502-8 (Sections 22.256-22.300 reserved for expansion)
502-9 SUBCHAPTER G. WINDING UP AND TERMINATION
502-10 Sec. 22.301. APPROVAL OF VOLUNTARY WINDING UP,
502-11 REINSTATEMENT, REVOCATION OF VOLUNTARY WINDING UP, OR DISTRIBUTION
502-12 PLAN. A corporation must approve a voluntary winding up in
502-13 accordance with Chapter 11, a reinstatement in accordance with
502-14 Section 11.202, a revocation of a voluntary winding up in
502-15 accordance with Section 11.151, or a distribution plan in
502-16 accordance with Section 22.305 by complying with the procedures
502-17 prescribed by this subchapter.
502-18 Sec. 22.302. CERTAIN PROCEDURES FOR APPROVAL. To approve a
502-19 voluntary winding up, a reinstatement, a revocation of a voluntary
502-20 winding up, or a distribution plan, a corporation must follow the
502-21 following procedures:
502-22 (1) if the corporation has no members or has no
502-23 members with voting rights, the corporation's board of directors
502-24 must adopt a resolution to wind up, to reinstate, to revoke a
502-25 voluntary winding up, or to effect the distribution plan by the
502-26 vote of directors required by Section 22.164;
502-27 (2) if the management of the affairs of the
503-1 corporation is vested in the corporation's members under Section
503-2 22.202, the winding up, reinstatement, revocation of voluntary
503-3 winding up, or distribution plan:
503-4 (A) must be submitted to a vote at an annual,
503-5 regular, or special meeting of members; and
503-6 (B) must be approved by the members by the vote
503-7 required by Section 22.164; or
503-8 (3) if the corporation has members with voting rights:
503-9 (A) the corporation's board of directors must
503-10 approve a resolution:
503-11 (i) recommending the winding up,
503-12 reinstatement, revocation of a voluntary winding up, or
503-13 distribution plan; and
503-14 (ii) directing that the winding up,
503-15 reinstatement, revocation of a voluntary winding up, or
503-16 distribution plan of the corporation be submitted to a vote at an
503-17 annual or special meeting of members; and
503-18 (B) the members must approve the action
503-19 described by Paragraph (A) in accordance with Section 22.303.
503-20 Sec. 22.303. MEETING OF MEMBERS; NOTICE. (a) The
503-21 corporation must give to each member entitled to vote at a meeting
503-22 described by Section 22.302(2) or (3) a written notice stating that
503-23 the purpose or one of the purposes of the meeting is to consider
503-24 the winding up, reinstatement, revocation of the voluntary winding
503-25 up, or distribution plan of the corporation. The notice must be
503-26 given in the time and manner provided by Chapter 6 and this chapter
503-27 for the giving of notice of a meeting to members.
504-1 (b) A vote of members entitled to vote at the meeting shall
504-2 be taken on the resolution to wind up, reinstate, revoke the
504-3 voluntary winding up, or effect the distribution plan of the
504-4 corporation. The members must approve the resolution by the vote
504-5 required under Section 22.164.
504-6 (c) For a meeting to vote on a distribution plan, the notice
504-7 of the meeting must contain the proposed plan of distribution or a
504-8 summary of the plan.
504-9 (d) For a corporation the management of the affairs of which
504-10 is vested in its members under Section 22.202, the notice of the
504-11 meeting is subject to the provisions of the certificate of
504-12 formation or bylaws of the corporation.
504-13 Sec. 22.304. APPLICATION AND DISTRIBUTION OF PROPERTY. (a)
504-14 After all liabilities and obligations of a corporation in the
504-15 process of winding up are paid, satisfied, and discharged in
504-16 accordance with Section 11.053, the property of the corporation
504-17 shall be applied and distributed as follows:
504-18 (1) property held by the corporation on a condition
504-19 requiring return, transfer, or conveyance because of the winding up
504-20 or termination shall be returned, transferred, or conveyed in
504-21 accordance with that requirement; and
504-22 (2) unless otherwise provided by the corporation's
504-23 certificate of formation, the remaining property of the corporation
504-24 shall be distributed only for tax-exempt purposes to one or more
504-25 organizations that are exempt under Section 501(c)(3), Internal
504-26 Revenue Code, or described by Section 170(c)(1) or (2), Internal
504-27 Revenue Code, under a plan of distribution adopted under this
505-1 chapter.
505-2 (b) A district court of the county in which the
505-3 corporation's principal office is located shall distribute to one
505-4 or more organizations exempt under Section 501(c)(3), Internal
505-5 Revenue Code, or described by Section 170(c)(1) or (2), Internal
505-6 Revenue Code, the property of the corporation remaining after a
505-7 distribution of property under the plan of distribution. The court
505-8 shall make the distribution in the manner the court determines will
505-9 best accomplish the general purposes for which the corporation was
505-10 organized.
505-11 Sec. 22.305. DISTRIBUTION PLAN. A plan providing for the
505-12 distribution of property may be adopted by a corporation in the
505-13 process of winding up, and shall be adopted by a corporation to
505-14 authorize a transfer or conveyance of assets for which this chapter
505-15 requires a plan of distribution, in the manner provided by this
505-16 subchapter.
505-17 Sec. 22.306. LIMITED SURVIVAL AFTER NATURAL EXPIRATION. (a)
505-18 A corporation that was terminated by the expiration of the period
505-19 of its duration may, during the three-year period following the
505-20 date of termination, amend the corporation's certificate of
505-21 formation by following the procedures prescribed by Chapter 11 and
505-22 this chapter to extend or perpetuate the corporation's period of
505-23 duration. The expiration of a corporation's period of duration
505-24 does not give a member or creditor of the corporation a vested
505-25 right to prevent the corporation from taking action under this
505-26 subsection.
505-27 (b) An act or contract of a terminated corporation during a
506-1 period within which the corporation could have extended the
506-2 corporation's existence under this section, regardless of whether
506-3 the corporation has taken action to extend its existence, is not
506-4 invalidated by the expiration of the period of duration.
506-5 Sec. 22.307. RESPONSIBILITY FOR WINDING UP. If a corporation
506-6 determines or is required to wind up, the winding up of the
506-7 corporation's affairs shall be managed by:
506-8 (1) the directors if management of the affairs is not
506-9 vested in the corporation's members under Section 22.202; or
506-10 (2) the members if management of the affairs is vested
506-11 in the corporation's members under Section 22.202.
506-12 (Sections 22.308-22.350 reserved for expansion)
506-13 SUBCHAPTER H. RECORDS AND REPORTS
506-14 Sec. 22.351. MEMBER'S RIGHT TO INSPECT BOOKS AND RECORDS. A
506-15 member of a corporation, on written demand stating the purpose of
506-16 the demand, is entitled to examine and copy at the member's
506-17 expense, in person or by agent, accountant, or attorney, at any
506-18 reasonable time and for a proper purpose, the books and records of
506-19 the corporation relevant to that purpose.
506-20 Sec. 22.352. FINANCIAL RECORDS AND ANNUAL REPORTS. (a) A
506-21 corporation shall maintain current and accurate financial records
506-22 with complete entries as to each financial transaction of the
506-23 corporation, including income and expenditures, in accordance with
506-24 generally accepted accounting practices.
506-25 (b) Based on the records maintained under Subsection (a),
506-26 the board of directors of the corporation shall annually prepare or
506-27 approve a financial report for the corporation for the preceding
507-1 year. The report must conform to accounting standards as adopted
507-2 by the American Institute of Certified Public Accountants and must
507-3 include:
507-4 (1) a statement of support, revenue, and expenses;
507-5 (2) a statement of changes in fund balances;
507-6 (3) a statement of functional expenses; and
507-7 (4) a balance sheet for each fund.
507-8 Sec. 22.353. AVAILABILITY OF FINANCIAL INFORMATION FOR
507-9 PUBLIC INSPECTION. (a) A corporation shall keep records, books,
507-10 and annual reports of the corporation's financial activity at the
507-11 corporation's registered or principal office in this state for at
507-12 least three years after the close of the fiscal year.
507-13 (b) The corporation shall make the records, books, and
507-14 reports available to the public for inspection and copying at the
507-15 corporation's registered or principal office during regular
507-16 business hours. The corporation may charge a reasonable fee for
507-17 preparing a copy of a record or report.
507-18 Sec. 22.354. FAILURE TO MAINTAIN FINANCIAL RECORD OR PREPARE
507-19 ANNUAL REPORT; OFFENSE. (a) A corporation commits an offense if
507-20 the corporation fails to maintain a financial record, prepare an
507-21 annual report, or make the record or report available to the public
507-22 in the manner required by Section 22.353.
507-23 (b) An offense under this section is a Class B misdemeanor.
507-24 Sec. 22.355. EXEMPTIONS FROM CERTAIN REQUIREMENTS RELATING
507-25 TO FINANCIAL RECORDS AND ANNUAL REPORTS. Sections 22.352, 22.353,
507-26 and 22.354 do not apply to:
507-27 (1) a corporation that solicits funds only from
508-1 members of the corporation;
508-2 (2) a corporation that does not intend to solicit and
508-3 receive and does not actually raise or receive during a fiscal year
508-4 contributions in an amount exceeding $10,000 from a source other
508-5 than its own membership;
508-6 (3) a proprietary school that has received a
508-7 certificate of approval from the commissioner of education, a
508-8 public institution of higher education or a foundation chartered
508-9 for the benefit of the institution or any component part of the
508-10 institution, a private institution of higher education authorized
508-11 to grant degrees under a certificate of authority issued by the
508-12 Texas Higher Education Coordinating Board, or an elementary or
508-13 secondary school;
508-14 (4) a religious institution that is a church, an
508-15 ecclesiastical or denominational organization, or another
508-16 established physical place for worship at which religious services
508-17 are the primary activity and are regularly conducted;
508-18 (5) a trade association or professional society the
508-19 income of which is principally derived from membership dues and
508-20 assessments, sales, or services;
508-21 (6) an insurer licensed and regulated by the Texas
508-22 Department of Insurance;
508-23 (7) an organization the charitable activities of which
508-24 relate to public concern in the conservation and protection of
508-25 wildlife, fisheries, and allied natural resources; or
508-26 (8) an alumni association of a public or private
508-27 institution of higher education in this state that is recognized
509-1 and acknowledged as the official alumni association by the
509-2 institution.
509-3 Sec. 22.356. CORPORATIONS ASSISTING STATE AGENCIES. (a) In
509-4 this section, "state agency" means:
509-5 (1) a board, commission, department, office, or other
509-6 entity that is in the executive branch of state government and that
509-7 was created by the constitution or a statute of this state,
509-8 including an institution of higher education as defined by Section
509-9 61.003, Education Code;
509-10 (2) the legislature or a legislative agency; or
509-11 (3) the supreme court, the court of criminal appeals,
509-12 a court of appeals, the state bar, or another state judicial
509-13 agency.
509-14 (b) The books and records of a corporation other than a bona
509-15 fide alumni association are subject to audit at the discretion of
509-16 the state auditor if:
509-17 (1) the corporation's charter specifically dedicates
509-18 the corporation's activities to the benefit of a particular state
509-19 agency; and
509-20 (2) a board member, officer, or employee of that state
509-21 agency sits on the board of directors of the corporation in other
509-22 than an ex officio capacity.
509-23 (c) If the corporation's charter specifically dedicates the
509-24 corporation's activities to the benefit of a particular state
509-25 agency but the conditions described by Subsection (b)(2) do not
509-26 exist, a corporation shall file with the secretary of state a copy
509-27 of the report required by Section 22.352(b) for the preceding
510-1 fiscal year not later than the 89th day after the last day of the
510-2 corporation's fiscal year.
510-3 Sec. 22.357. REPORT OF DOMESTIC AND FOREIGN CORPORATIONS.
510-4 (a) The secretary of state may require a domestic corporation or a
510-5 foreign corporation registered to conduct affairs in this state to
510-6 file a report in accordance with Chapter 4 not more than once every
510-7 four years as required by this subchapter. The report must state:
510-8 (1) the name of the corporation;
510-9 (2) the state or country under the laws of which the
510-10 corporation is incorporated;
510-11 (3) the address of the registered office of the
510-12 corporation in this state and the name of the registered agent at
510-13 that address;
510-14 (4) if the corporation is a foreign corporation, the
510-15 address of the principal office of the corporation in the state or
510-16 country under the laws of which the corporation is incorporated;
510-17 and
510-18 (5) the names and addresses of the directors and
510-19 officers of the corporation.
510-20 (b) A corporation required to prepare a report under this
510-21 section shall prepare the report on a form adopted by the secretary
510-22 of state for that purpose and shall include in the report
510-23 information that is accurate as of the date the report is executed.
510-24 An officer or, if the corporation is in the hands of a receiver or
510-25 trustee, the receiver or trustee shall sign the report on behalf of
510-26 the corporation.
510-27 Sec. 22.358. NOTICE REGARDING REPORT. (a) The secretary of
511-1 state shall send written notice that the report required by Section
511-2 22.357 is due. The notice must be:
511-3 (1) addressed to the corporation; and
511-4 (2) mailed to the corporation's registered agent or to
511-5 the corporation at:
511-6 (A) the last known address of the corporation as
511-7 it appears on record in the office of the secretary of state; or
511-8 (B) any other known place of business of the
511-9 corporation.
511-10 (b) The secretary of state shall include with the notice a
511-11 report form to be prepared and filed as provided by this
511-12 subchapter.
511-13 Sec. 22.359. FILING OF REPORT. A copy of the report must be
511-14 filed with the secretary of state in accordance with Chapter 4 not
511-15 later than the 30th day after the date notice is mailed under
511-16 Section 22.358.
511-17 Sec. 22.360. FAILURE TO FILE REPORT. (a) A domestic or
511-18 foreign corporation that fails to file a report under Sections
511-19 22.357 and 22.359 when the report is due forfeits the corporation's
511-20 right to conduct affairs in this state.
511-21 (b) The forfeiture takes effect, without judicial action,
511-22 when the secretary of state enters on the record of the corporation
511-23 kept in the office of the secretary of state:
511-24 (1) the words "right to conduct affairs forfeited";
511-25 and
511-26 (2) the date of forfeiture.
511-27 Sec. 22.361. NOTICE OF FORFEITURE. Notice of forfeiture
512-1 under Section 22.360 shall be mailed to the corporation's
512-2 registered agent at the registered office or to the corporation at:
512-3 (1) the address of the principal place of business of
512-4 the corporation as it appears in the certificate of formation;
512-5 (2) the last known address of the corporation as it
512-6 appears on record in the office of the secretary of state; or
512-7 (3) any other known place of business of the
512-8 corporation.
512-9 Sec. 22.362. EFFECT OF FORFEITURE. (a) Unless the right of
512-10 the corporation to conduct affairs in this state is revived under
512-11 Section 22.363:
512-12 (1) the corporation may not maintain an action, suit,
512-13 or proceeding in a court of this state; and
512-14 (2) a successor or assignee of the corporation may not
512-15 maintain an action, suit, or proceeding in a court of this state on
512-16 a right, claim, or demand arising from the conduct of affairs by
512-17 the corporation in this state.
512-18 (b) This section does not affect the right of an assignee of
512-19 the corporation as:
512-20 (1) the holder in due course of a negotiable
512-21 promissory note, check, or bill of exchange; or
512-22 (2) the bona fide purchaser for value of a warehouse
512-23 receipt, stock certificate, or other instrument negotiable by law.
512-24 (c) The forfeiture of the right to conduct affairs in this
512-25 state does not:
512-26 (1) impair the validity of a contract or act of the
512-27 corporation; or
513-1 (2) prevent the corporation from defending an action,
513-2 suit, or proceeding in a court of this state.
513-3 Sec. 22.363. REVIVAL OF RIGHT TO CONDUCT AFFAIRS. (a) A
513-4 corporation may be relieved from a forfeiture under Section 22.360
513-5 by filing the required report, accompanied by the revival fee, not
513-6 later than the 120th day after the date of mailing of the notice of
513-7 forfeiture under Section 22.361.
513-8 (b) If a corporation complies with Subsection (a), the
513-9 secretary of state shall:
513-10 (1) revive the right of the corporation to conduct
513-11 affairs in this state;
513-12 (2) cancel the words regarding the forfeiture on the
513-13 record of the corporation; and
513-14 (3) endorse on that record the word "revived" and the
513-15 date of revival.
513-16 Sec. 22.364. FAILURE TO REVIVE; TERMINATION OR REVOCATION.
513-17 (a) The failure of a corporation that has forfeited its right to
513-18 conduct affairs in this state to revive that right under Section
513-19 22.363 is grounds for:
513-20 (1) the involuntary termination of the domestic
513-21 corporation; or
513-22 (2) the revocation of the foreign corporation's
513-23 registration to transact business in this state.
513-24 (b) The termination or revocation takes effect, without
513-25 judicial action, when the secretary of state enters on the record
513-26 of the corporation filed in the office of the secretary of state
513-27 the word "forfeited" and the date of forfeiture and cites this
514-1 chapter as authority for that forfeiture.
514-2 Sec. 22.365. REINSTATEMENT. (a) A corporation that is
514-3 terminated or the registration of which has been revoked as
514-4 provided by Section 22.364 may be relieved of the termination or
514-5 revocation by filing the report required by Section 22.357,
514-6 accompanied by the filing fee for the report, if the corporation
514-7 has paid:
514-8 (1) all fees, taxes, penalties, and interest due and
514-9 accruing before the termination or revocation; and
514-10 (2) an amount equal to the total taxes from the date
514-11 of termination or revocation to the date of reinstatement that
514-12 would have been payable if the corporation had not been terminated
514-13 or had its registration revoked.
514-14 (b) When the report is filed and the filing fee is paid to
514-15 the secretary of state, the secretary of state shall:
514-16 (1) reinstate the certificate of formation or
514-17 registration without judicial action;
514-18 (2) cancel the word "forfeited" on the record; and
514-19 (3) endorse on the record kept in the secretary's
514-20 office relating to the corporation the words "set aside" and the
514-21 date of the reinstatement.
514-22 (c) If a termination or revocation is set aside under this
514-23 section, the corporation shall determine from the secretary of
514-24 state whether the name of the corporation is available. If the
514-25 name of the corporation is not available at the time of
514-26 reinstatement, the corporation shall amend its corporate name under
514-27 this code.
515-1 (Sections 22.366-22.400 reserved for expansion)
515-2 SUBCHAPTER I. CHURCH BENEFITS BOARDS
515-3 Sec. 22.401. DEFINITION. In this chapter, "church benefits
515-4 board" means an organization described by Section 414(e)(3)(A),
515-5 Internal Revenue Code, that:
515-6 (1) has the principal purpose or function of
515-7 administering or funding a plan or program to provide retirement
515-8 benefits, welfare benefits, or both for the ministers or employees
515-9 of a church or a conference, convention, or association of
515-10 churches; and
515-11 (2) is controlled by or affiliated with a church or a
515-12 conference, convention, or association of churches.
515-13 Sec. 22.402. PENSIONS AND BENEFITS. When authorized by the
515-14 corporation's members or as otherwise provided by law, a domestic
515-15 or foreign nonprofit corporation formed for a religious purpose may
515-16 provide, directly or through a separate church benefits board, for
515-17 the support and payment of benefits and pensions to:
515-18 (1) the ministers, teachers, employees, trustees,
515-19 directors, or other functionaries of the corporation;
515-20 (2) the ministers, teachers, employees, trustees,
515-21 directors, or other functionaries of organizations controlled by or
515-22 affiliated with a church or a conference, convention, or
515-23 association of churches under the jurisdiction and control of the
515-24 corporation; and
515-25 (3) the spouse, children, dependents, or other
515-26 beneficiaries of the persons described by Subdivisions (1) and (2).
515-27 Sec. 22.403. CONTRIBUTIONS. (a) A church benefits board may
516-1 provide for:
516-2 (1) the collection of contributions and other payments
516-3 to assist in providing pensions and benefits under this subchapter;
516-4 and
516-5 (2) the creation, maintenance, investment, management,
516-6 and disbursement of necessary annuities, endowments, reserves, or
516-7 other funds for a purpose under Subdivision (1).
516-8 (b) A church benefits board may receive payments from a
516-9 trust fund or corporation that funds a church plan as defined by
516-10 Section 414(e), Internal Revenue Code.
516-11 Sec. 22.404. POWER TO ACT AS TRUSTEE. A church benefits
516-12 board may act as:
516-13 (1) a trustee under a lawful trust committed to the
516-14 board by contract, will, or otherwise; and
516-15 (2) an agent for the performance of a lawful act
516-16 relating to the purposes of the trust.
516-17 Sec. 22.405. DOCUMENTS AND AGREEMENTS. A church benefits
516-18 board may provide to a program participant a certificate or
516-19 agreement of participation, a debenture, or an indemnification
516-20 agreement, as appropriate to accomplish the purposes of the board.
516-21 Sec. 22.406. INDEMNIFICATION. A church benefits board, or an
516-22 affiliate wholly owned by the board, may agree to indemnify against
516-23 damage or risk of loss:
516-24 (1) a minister, teacher, employee, trustee,
516-25 functionary, or director affiliated with the board or a family
516-26 member, dependent, or beneficiary of one of those persons;
516-27 (2) a church or a convention, conference, or
517-1 association of churches; or
517-2 (3) an organization that is controlled by or
517-3 affiliated with the board or with a church or a convention,
517-4 conference, or association of churches.
517-5 Sec. 22.407. PROTECTION OF BENEFITS. (a) Money or other
517-6 benefits that have been or will be provided to a participant or a
517-7 beneficiary under a plan or program provided by or through a church
517-8 benefits board under this subchapter are not subject to execution,
517-9 attachment, garnishment, or other process and may not be
517-10 appropriated or applied as part of a judicial, legal, or equitable
517-11 process or operation of a law other than a constitution to pay a
517-12 debt or liability of the participant or beneficiary.
517-13 (b) This section does not apply to a qualified domestic
517-14 relations order or an amount required by the church benefits board
517-15 to recover costs or expenses incurred in the plan or program.
517-16 Sec. 22.408. ASSIGNMENT OF BENEFITS. An assignment or
517-17 transfer or an attempt to make an assignment or transfer by a
517-18 beneficiary of money, benefits, or other rights under a plan or
517-19 program under this subchapter is void if:
517-20 (1) the plan or program contains a provision
517-21 prohibiting the assignment or other transfer without the written
517-22 consent of the church benefits board; and
517-23 (2) the beneficiary assigns or transfers or attempts
517-24 to make an assignment or transfer without that consent.
517-25 Sec. 22.409. INSURANCE CODE NOT APPLICABLE. The Insurance
517-26 Code does not apply to a church benefits board or a program, plan,
517-27 benefit, or activity of the board or a person affiliated with the
518-1 board.
518-2 CHAPTER 23. SPECIAL-PURPOSE CORPORATIONS
518-3 SUBCHAPTER A. GENERAL PROVISIONS
518-4 Sec. 23.001. DETERMINATION OF APPLICABLE LAW. (a) A
518-5 corporation created under this chapter or under a special statute
518-6 outside this code, to the extent not inconsistent with a special
518-7 statute regarding a particular corporation, is governed by:
518-8 (1) Title 1 and Chapter 21, if the corporation is
518-9 organized for profit; and
518-10 (2) Title 1 and Chapter 22, if the corporation is
518-11 organized not for profit.
518-12 (b) If a special statute does not contain any provision
518-13 regarding a matter provided for in Title 1 or Chapter 21 or 22, or
518-14 if the special statute specifically provides that the general laws
518-15 for corporations supplement the statute, to the extent consistent
518-16 with the special statute:
518-17 (1) Title 1 and Chapter 21 apply to a corporation
518-18 organized for profit; and
518-19 (2) Title 1 and Chapter 22 apply to a corporation
518-20 organized not for profit.
518-21 Sec. 23.002. APPLICABILITY OF FILING REQUIREMENTS. Except as
518-22 otherwise provided by the special statute, a document to be filed
518-23 with the secretary of state under a special statute shall be
518-24 executed and filed in accordance with Chapter 4.
518-25 Sec. 23.003. DOMESTIC CORPORATION ORGANIZED UNDER SPECIAL
518-26 STATUTE. A corporation organized under a special statute other than
518-27 this code is not considered a "domestic corporation" formed under
519-1 this code, although this code may apply to the corporation.
519-2 (Sections 23.004-23.050 reserved for expansion)
519-3 SUBCHAPTER B. BUSINESS DEVELOPMENT CORPORATIONS
519-4 Sec. 23.051. DEFINITIONS. In this subchapter:
519-5 (1) "Corporation" means a business development
519-6 corporation organized under this subchapter.
519-7 (2) "Financial institution" means a banking
519-8 corporation or trust company, savings and loan association,
519-9 governmental agency, insurance company, or related corporation,
519-10 partnership, foundation, or other institution engaged primarily in
519-11 lending or investing funds.
519-12 (3) "Loan limit" means the maximum amount permitted to
519-13 be outstanding at one time on loans made by a member to a
519-14 corporation.
519-15 (4) "Member" means a financial institution authorized
519-16 to do business in this state that undertakes to lend money to a
519-17 corporation.
519-18 Sec. 23.052. INCORPORATORS. Subject to The Securities Act
519-19 (Article 581-1 et seq., Vernon's Texas Civil Statutes), 25 or more
519-20 persons, the majority of whom must be residents of this state, may
519-21 form a business development corporation to promote, develop, and
519-22 advance the prosperity and economic welfare of this state.
519-23 Sec. 23.053. PURPOSES. (a) A business development
519-24 corporation may be organized as a:
519-25 (1) for-profit corporation under Chapter 21; or
519-26 (2) nonprofit corporation under Chapter 22.
519-27 (b) The business development corporation must be organized
520-1 to:
520-2 (1) promote, stimulate, develop, and advance the
520-3 business prosperity and economic welfare of this state and the
520-4 residents of this state;
520-5 (2) encourage and assist, through loans, investments,
520-6 or other business transactions, new business and industry in this
520-7 state;
520-8 (3) rehabilitate and assist existing industry in this
520-9 state;
520-10 (4) stimulate and assist in the expansion of business
520-11 activity that will tend to promote the business development and
520-12 maintain the economic stability of this state, provide maximum
520-13 opportunities for employment, encourage thrift, and improve the
520-14 standard of living of the residents of this state;
520-15 (5) cooperate and act in conjunction with other public
520-16 or private organizations in the promotion and advancement of
520-17 industrial, commercial, agricultural, and recreational developments
520-18 in this state; or
520-19 (6) provide financing for the promotion, development,
520-20 and conduct of business activity in this state.
520-21 Sec. 23.054. POWERS. (a) The powers of a corporation
520-22 include, in addition to the powers conferred on the corporation by
520-23 Chapters 2 and 21 or 22, as applicable, the power to:
520-24 (1) elect, appoint, and employ officers, agents, and
520-25 employees;
520-26 (2) make contracts and incur liabilities for a purpose
520-27 of the corporation;
521-1 (3) borrow money on a secured or unsecured basis to
521-2 carry out a purpose of the corporation;
521-3 (4) issue for the purpose of borrowing money a bond,
521-4 debenture, note, or other evidence of indebtedness, whether secured
521-5 or unsecured;
521-6 (5) secure an evidence of indebtedness by mortgage,
521-7 pledge, deed of trust, or other lien on a property, franchise,
521-8 right, or privilege of the corporation, or any part of or interest
521-9 in those items, without securing shareholder or member approval;
521-10 (6) make a secured or unsecured loan and establish and
521-11 regulate the terms and conditions of that loan and the charges for
521-12 interest or service connected with that loan;
521-13 (7) purchase, receive, hold, lease, or otherwise
521-14 acquire, and sell, convey, transfer, lease, or otherwise dispose
521-15 of, property and exercise those rights and privileges incidental
521-16 and appurtenant to the acquisition or disposal of the property and
521-17 to the use of the property, including any property acquired by the
521-18 corporation periodically in the satisfaction of a debt or
521-19 enforcement of an obligation;
521-20 (8) acquire improved or unimproved real property to
521-21 construct an industrial plant or other business establishment on
521-22 the property or dispose of the real property for the construction
521-23 of an industrial plant or other business establishment;
521-24 (9) acquire, construct or reconstruct, alter, repair,
521-25 maintain, operate, sell, convey, transfer, lease, or otherwise
521-26 dispose of an industrial plant or business establishment;
521-27 (10) protect the corporation's position as creditor by
522-1 acquiring the goodwill, business, rights, property, including a
522-2 share, bond, debenture, note, other evidence of indebtedness, other
522-3 asset, or any part of an asset or interest in an asset, of a person
522-4 to whom the corporation loaned money and assume, undertake, or pay
522-5 an obligation, debt, or liability of the person;
522-6 (11) mortgage, pledge, or otherwise encumber any
522-7 property, right, or thing of value, acquired under Subdivision (7),
522-8 (8), (9), or (10), as security for the payment of a part of the
522-9 purchase price;
522-10 (12) promote the establishment of local development
522-11 corporations in the various communities of this state, enter into
522-12 agreements with those local development corporations, and cooperate
522-13 with, assist, or otherwise encourage the local foundations; and
522-14 (13) participate with a properly authorized federal
522-15 lending agency in the making of loans.
522-16 (b) A corporation may approve an application for a loan
522-17 under Subsection (a)(6) only if the applicant demonstrates that:
522-18 (1) the applicant applied for the loan through
522-19 ordinary banking channels; and
522-20 (2) the loan has been refused by at least two banks or
522-21 other financial institutions.
522-22 Sec. 23.055. STATEWIDE OPERATION. A corporation organized
522-23 under this subchapter is a state development company as defined by
522-24 Section 103, Small Business Investment Act of 1958 (15 U.S.C.
522-25 Section 662), as amended, or similar federal legislation, and may
522-26 operate on a statewide basis.
522-27 Sec. 23.056. CERTIFICATE OF FORMATION. (a) The certificate
523-1 of formation of a corporation must state:
523-2 (1) the name of the corporation;
523-3 (2) the purpose or purposes for which the corporation
523-4 is organized as required by Section 23.053; and
523-5 (3) any other information required by:
523-6 (A) Chapter 4; and
523-7 (B) Chapter 21 or 22, as applicable.
523-8 (b) The name of a corporation must include the words
523-9 "Business Development Corporation."
523-10 Sec. 23.057. MANAGEMENT BY BOARD OF DIRECTORS; NUMBER OF
523-11 DIRECTORS. (a) The organization, control, and management of a
523-12 corporation are vested in a board of directors. The board must
523-13 consist of not fewer than 15 and not more than 21 directors.
523-14 (b) The board of directors may exercise any power of the
523-15 corporation not conferred on the shareholders or members by law or
523-16 by the corporation's bylaws.
523-17 Sec. 23.058. ELECTION OR APPOINTMENT OF DIRECTORS. (a) The
523-18 incorporators of a corporation shall name the directors
523-19 constituting the initial board of directors of the corporation.
523-20 Directors other than the initial directors shall be elected at each
523-21 annual meeting of the corporation. If an annual meeting is not
523-22 held at the time designated by the bylaws of the corporation, the
523-23 directors shall be elected at a special meeting held in lieu of the
523-24 annual meeting.
523-25 (b) At an annual meeting or special meeting held in lieu of
523-26 the annual meeting, the members of the corporation shall elect
523-27 two-thirds of the directors, and the shareholders of the
524-1 corporation shall elect the remaining directors.
524-2 Sec. 23.059. TERM OF OFFICE; VACANCY. (a) A director of a
524-3 corporation holds office until the next annual election of
524-4 directors and until a successor is elected and qualified, unless
524-5 the director is removed at an earlier date in accordance with the
524-6 corporation's bylaws.
524-7 (b) A vacancy in the office of a director elected by the
524-8 members shall be filled by the directors elected by the members,
524-9 and a vacancy in the office of a director elected by the
524-10 shareholders shall be filled by the directors elected by the
524-11 shareholders.
524-12 Sec. 23.060. OFFICERS. The board of directors of a
524-13 corporation shall appoint a president, a treasurer, and any other
524-14 agent or officer of the corporation and shall fill each vacancy
524-15 other than a vacancy on the board.
524-16 Sec. 23.061. PARTICIPATION AS OWNER. (a) An individual,
524-17 corporation, or other organization authorized to conduct business
524-18 in this state, including a public utility company, insurance and
524-19 casualty company, or foreign corporation licensed to do business in
524-20 this state, or a trust may acquire, purchase, hold, sell, assign,
524-21 transfer, mortgage, pledge, or otherwise dispose of a bond,
524-22 security, or other evidence of indebtedness created by, or shares
524-23 of, the corporation.
524-24 (b) An owner of shares of the corporation may exercise any
524-25 right, power, or privilege of that ownership, including the right
524-26 to vote.
524-27 Sec. 23.062. FINANCIAL INSTITUTION AS MEMBER OF CORPORATION.
525-1 (a) A financial institution may become a member of a corporation
525-2 and may make loans to the corporation as provided by this chapter.
525-3 (b) A financial institution may request membership in the
525-4 corporation by applying to the corporation's board of directors in
525-5 the manner prescribed by the board. Membership in the corporation
525-6 takes effect on the board's acceptance of the application.
525-7 (c) A financial institution that is a member of a
525-8 corporation may acquire, purchase, hold, sell, assign, transfer,
525-9 mortgage, pledge, or otherwise dispose of a bond, security, or
525-10 other evidence of indebtedness created by, or a share of, the
525-11 corporation. As owner of shares of the corporation, a financial
525-12 institution may exercise any right, power, or privilege of that
525-13 ownership, including the right to vote. A member of a corporation
525-14 may not acquire shares of the corporation in an amount greater than
525-15 10 percent of the member's loan limit. The amount of shares of the
525-16 corporation that a member may acquire is in addition to the amount
525-17 of shares of corporations that the member may otherwise acquire.
525-18 (d) A financial institution that is not a member of the
525-19 corporation may not acquire any shares of the corporation.
525-20 Sec. 23.063. WITHDRAWAL OF MEMBER. (a) On written notice to
525-21 the corporation's board of directors, a member may withdraw from a
525-22 corporation on the date stated in the notice. The date of a
525-23 member's withdrawal must be at least six months after the date
525-24 notice is given under this subsection.
525-25 (b) A member is not obligated to make a loan to the
525-26 corporation pursuant to a call made after the date of the member's
525-27 withdrawal from the corporation, but a member shall fulfill any
526-1 obligation that has accrued or for which a commitment has been made
526-2 before the withdrawal date.
526-3 Sec. 23.064. POWERS OF SHAREHOLDERS AND MEMBERS. The
526-4 shareholders and members of a corporation may:
526-5 (1) determine the number of directors and elect the
526-6 directors as provided by Section 23.058;
526-7 (2) make, amend, and repeal bylaws of the corporation;
526-8 or
526-9 (3) exercise any other power of the corporation that
526-10 is conferred on the shareholders and members by the bylaws.
526-11 Sec. 23.065. VOTING BY SHAREHOLDER OR MEMBER. (a) Each
526-12 shareholder of a corporation has one vote, in person or by proxy,
526-13 for each share held by the shareholder.
526-14 (b) Each member of a corporation has one vote in person or
526-15 by proxy.
526-16 (c) A member with a loan limit that exceeds $1,000 has one
526-17 additional vote, in person or by proxy, for each additional $1,000
526-18 the member may have outstanding on loans to the corporation at any
526-19 one time as determined under Section 23.068.
526-20 Sec. 23.066. LOAN TO CORPORATION. (a) When called on by a
526-21 corporation to make a loan to the corporation, a member of the
526-22 corporation shall make the loan on those terms and conditions
526-23 periodically approved by the board of directors.
526-24 (b) A loan made to the corporation by a member shall be
526-25 evidenced by a bond, debenture, note, or other evidence of
526-26 indebtedness of the corporation that:
526-27 (1) is freely transferable at any time; and
527-1 (2) accrues interest at a rate of not less than
527-2 one-fourth of one percent more than the rate of interest determined
527-3 by the board of directors to be the prime rate prevailing on the
527-4 date of issuance on unsecured commercial loans.
527-5 Sec. 23.067. PROHIBITED LOAN. (a) A member may not make a
527-6 loan to a corporation if, immediately after the loan would be made,
527-7 the total amount of the obligations of the corporation would exceed
527-8 50 times the capital of the corporation.
527-9 (b) For purposes of this section, the capital of the
527-10 corporation includes the amount of the outstanding shares of the
527-11 corporation, whether common or preferred, and the earned or paid-in
527-12 surplus of the corporation.
527-13 Sec. 23.068. LOAN LIMITS. (a) A loan limit shall be
527-14 established at the $1,000 amount nearest to the amount computed in
527-15 accordance with this section.
527-16 (b) The total amount outstanding on loans made to a
527-17 corporation by a member at any one time, when added to the amount
527-18 of the investment in the shares of the corporation then held by the
527-19 member, may not exceed:
527-20 (1) 20 percent of the total amount then outstanding on
527-21 loans to the corporation by all members, including outstanding
527-22 amounts validly called for a loan but not yet loaned; or
527-23 (2) the following limit, to be determined as of the
527-24 time the member becomes a member of the corporation, or at any time
527-25 requested by a member on the basis of the audited balance sheet of
527-26 the member at the close of its fiscal year immediately preceding
527-27 its application for membership or, in the case of an insurance
528-1 company, its last annual statement to the Texas Department of
528-2 Insurance:
528-3 (A) an amount equal to the lesser of $750,000 or
528-4 two percent of the capital and surplus of a commercial bank or
528-5 trust company;
528-6 (B) an amount equal to one percent of the total
528-7 outstanding loans made by a savings and loan association;
528-8 (C) an amount equal to one percent of the
528-9 capital and unassigned surplus of a stock insurance company other
528-10 than a fire insurance company;
528-11 (D) an amount equal to one percent of the
528-12 unassigned surplus of a mutual insurance company other than a fire
528-13 insurance company;
528-14 (E) an amount equal to one-tenth of one percent
528-15 of the assets of a fire insurance company; or
528-16 (F) the limits approved by the board of
528-17 directors of the corporation for a government pension fund or other
528-18 financial institution.
528-19 (c) Subject to Subsection (b), each call made by the
528-20 corporation shall be prorated among the members of the corporation
528-21 in substantially the same proportion that the adjusted loan limit
528-22 of each member bears to the aggregate of the adjusted loan limits
528-23 of all members.
528-24 (d) For purposes of Subsection (c), the adjusted loan limit
528-25 of a member is the amount of the member's loan limit, reduced by
528-26 the balance of outstanding loans made by the member to the
528-27 corporation and the investment in shares of the corporation held by
529-1 the member at the time of the call.
529-2 Sec. 23.069. SURPLUS. (a) A corporation shall set apart as
529-3 earned surplus not less than 10 percent of the corporation's net
529-4 earnings each year until the surplus, with any unimpaired surplus
529-5 paid in, is equal to one-half of the amount paid in on the shares
529-6 then outstanding. The surplus shall be kept to secure against
529-7 losses and contingencies. If the surplus becomes impaired, the
529-8 surplus shall be reimbursed in the manner provided for its
529-9 accumulation.
529-10 (b) Net earnings and surplus shall be determined by the
529-11 board of directors after providing for the required reserves as the
529-12 directors consider advisable. A good faith determination of net
529-13 earnings and surplus by the directors under this subsection is
529-14 conclusive.
529-15 Sec. 23.070. DEPOSITORY. (a) A corporation may deposit the
529-16 corporation's funds in a banking institution that has been
529-17 designated as a depository by a vote of the majority of the
529-18 directors present at an authorized meeting of the board of
529-19 directors of the corporation, excluding a director who is an
529-20 officer or director of the designated depository.
529-21 (b) The corporation may not receive money on deposit.
529-22 Sec. 23.071. ANNUAL REPORT; PROVISION OF REQUIRED
529-23 INFORMATION. (a) A corporation shall annually make a report of its
529-24 condition to the banking commissioner and the Texas Department of
529-25 Insurance.
529-26 (b) A corporation shall provide any information that is
529-27 required by the secretary of state.
530-1 (Sections 23.072-23.100 reserved for expansion)
530-2 SUBCHAPTER C. GRAND LODGES
530-3 Sec. 23.101. FORMATION. (a) An institution or order, by
530-4 resolution or other consent of its members, may incorporate under
530-5 this subchapter if the institution or order is:
530-6 (1) the grand lodge of Texas, Ancient, Free and
530-7 Accepted Masons;
530-8 (2) the Grand Royal Arch Chapter of Texas;
530-9 (3) the Grand Commandery of Knights Templars of Texas;
530-10 (4) the grand lodge of the Independent Order of Odd
530-11 Fellows of Texas; or
530-12 (5) another similar institution or order organized for
530-13 charitable or benevolent purposes.
530-14 (b) A corporation formed under this subchapter shall file a
530-15 certificate of formation in accordance with Chapter 4 that complies
530-16 with this subchapter.
530-17 Sec. 23.102. APPLICABILITY OF CHAPTER 22. If this subchapter
530-18 does not contain any provision regarding a matter provided for in
530-19 Chapter 22, to the extent consistent with this subchapter, Chapter
530-20 22 applies to a corporation formed under this subchapter.
530-21 Sec. 23.103. DURATION. A grand body that incorporates under
530-22 this subchapter may provide in the grand body's certificate of
530-23 formation for the expiration of its corporate powers at the end of
530-24 a stated number of years. If the certificate of formation does not
530-25 provide for the duration of the grand body, the grand body has
530-26 perpetual existence. The grand body may by its corporate name have
530-27 perpetual succession of its officers and members.
531-1 Sec. 23.104. SUBORDINATE LODGES. (a) The incorporation of a
531-2 grand body includes each of its subordinate lodges or bodies
531-3 holding a warrant or charter under the grand body.
531-4 (b) A subordinate body has all of the rights of other
531-5 corporations under and by the name given to the grand body in the
531-6 warrant or charter issued to the grand body to which it is
531-7 attached. Those rights shall be provided for in the charter of the
531-8 grand body.
531-9 (c) A subordinate body is subject to the jurisdiction and
531-10 control of its respective grand body, and the warrant or charter of
531-11 the subordinate body may be revoked by the grand body.
531-12 Sec. 23.105. TRUSTEES AND DIRECTORS. A grand body and a
531-13 subordinate of the grand body may elect trustees and directors or
531-14 may appoint trustees or directors from among their officers.
531-15 Sec. 23.106. FRANCHISE TAXES. A corporation formed under
531-16 this subchapter is not subject to or required to pay a franchise
531-17 tax, except that a corporation is exempt from the franchise tax
531-18 imposed by Chapter 171, Tax Code, only if the corporation is
531-19 exempted by that chapter.
531-20 Sec. 23.107. GENERAL POWERS. A grand body and a subordinate
531-21 of the grand body may take action as directed or provided by law in
531-22 the case of other corporations and may make constitutions and
531-23 bylaws to govern their affairs.
531-24 Sec. 23.108. AUTHORITY REGARDING PROPERTY. (a) A grand body
531-25 or subordinate body may acquire and hold property as necessary or
531-26 convenient for a site on which to erect a building for the use and
531-27 occupancy of the body and to erect homes and schools for members'
532-1 widows or orphans or elderly, disabled, or indigent members and may
532-2 sell or mortgage the property.
532-3 (b) A conveyance must be executed by the presiding officer
532-4 and attested to by the secretary with the seal.
532-5 (c) The authority of a subordinate body to sell or to
532-6 mortgage property is subject to the conditions periodically
532-7 prescribed or established by the grand body to which the
532-8 subordinate is attached.
532-9 Sec. 23.109. AUTHORITY REGARDING LOANS. (a) A grand body
532-10 incorporated under this subchapter may:
532-11 (1) loan money held and owned by the grand body for
532-12 charitable purposes, for the endowment of any of the institutions
532-13 of the grand body, or otherwise; and
532-14 (2) secure loans by taking and receiving liens on real
532-15 property or by another method elected by the grand body.
532-16 (b) On sale of real property secured by a lien, a grand body
532-17 may become the purchaser of the real property and hold title to the
532-18 property.
532-19 Sec. 23.110. WINDING UP AND TERMINATION OF SUBORDINATE BODY.
532-20 (a) On the winding up and termination of a subordinate body
532-21 attached to a grand body, all property and rights existing in the
532-22 subordinate body pass to and vest in the grand body to which it was
532-23 attached, subject to the payment of any debt owed by the
532-24 subordinate body.
532-25 (b) Notwithstanding a grand body's liability for the debt of
532-26 a subordinate body under Subsection (a), the grand body is not
532-27 liable for an amount greater than the actual cash value of the
533-1 subordinate body's effects or authority.
533-2 TITLE 3. LIMITED LIABILITY COMPANIES
533-3 CHAPTER 101. LIMITED LIABILITY COMPANIES
533-4 SUBCHAPTER A. GENERAL PROVISIONS
533-5 Sec. 101.001. DEFINITIONS. In this title:
533-6 (1) "Assignee" means a person who, before the person
533-7 is admitted as a member of a limited liability company, is assigned
533-8 or transferred a membership interest in the company.
533-9 (2) "Company agreement" means any agreement, written
533-10 or oral, of the members concerning the affairs or the conduct of
533-11 the business of a limited liability company. A company agreement
533-12 of a limited liability company having only one member is not
533-13 unenforceable because only one person is a party to the company
533-14 agreement.
533-15 (3) "Foreign limited liability company" or "foreign
533-16 company" means a limited liability company formed under the laws of
533-17 a jurisdiction other than this state.
533-18 (4) "Limited liability company" or "company" means a
533-19 domestic limited liability company subject to this title.
533-20 (Sections 101.002-101.050 reserved for expansion)
533-21 SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS
533-22 Sec. 101.051. CERTAIN PROVISIONS CONTAINED IN CERTIFICATE OF
533-23 FORMATION. (a) A provision that may be contained in the company
533-24 agreement of a limited liability company may alternatively be
533-25 included in the certificate of formation of the company as provided
533-26 by Section 3.005(b).
533-27 (b) A reference in this title to the company agreement of a
534-1 limited liability company includes any provision contained in the
534-2 company's certificate of formation instead of the company agreement
534-3 as provided by Subsection (a).
534-4 Sec. 101.052. COMPANY AGREEMENT. (a) Except as provided by
534-5 Section 101.054, the company agreement of a limited liability
534-6 company governs:
534-7 (1) the relations among members, managers, and
534-8 officers of the company, assignees of membership interests in the
534-9 company, and the company itself; and
534-10 (2) other internal affairs of the company.
534-11 (b) To the extent that the company agreement of a limited
534-12 liability company does not otherwise provide, this title and the
534-13 provisions of Title 1 applicable to a limited liability company
534-14 govern the internal affairs of the company.
534-15 (c) Except as provided by Section 101.054, a provision of
534-16 this title or Title 1 that is applicable to a limited liability
534-17 company may be waived or modified in the company agreement of a
534-18 limited liability company.
534-19 Sec. 101.053. AMENDMENT OF COMPANY AGREEMENT. The company
534-20 agreement of a limited liability company may be amended only if
534-21 each member of the company consents to the amendment.
534-22 Sec. 101.054. WAIVER OR MODIFICATION OF CERTAIN STATUTORY
534-23 PROVISIONS PROHIBITED; EXCEPTIONS. (a) Except as provided by this
534-24 section, the following provisions may not be waived or modified in
534-25 the company agreement of a limited liability company:
534-26 (1) this section;
534-27 (2) Section 101.101(b), 101.206, 101.501, or 101.502;
535-1 (3) Chapter 1, if the provision is used to interpret a
535-2 provision or define a word or phrase contained in a section listed
535-3 in this subsection;
535-4 (4) Chapter 2, except that Section 2.104(c)(2),
535-5 2.104(c)(3), or 2.113 may be waived or modified in the company
535-6 agreement;
535-7 (5) Chapter 3, except that Subchapters C and E may be
535-8 waived or modified in the company agreement; or
535-9 (6) Chapter 4, 5, 7, 10, 11, or 12, other than Section
535-10 11.056.
535-11 (b) A provision listed in Subsection (a) may be waived or
535-12 modified in the company agreement if the provision that is waived
535-13 or modified authorizes the limited liability company to waive or
535-14 modify the provision in the company's governing documents.
535-15 (c) A provision listed in Subsection (a) may be modified in
535-16 the company agreement if the provision that is modified specifies:
535-17 (1) the person or group of persons entitled to approve
535-18 a modification; or
535-19 (2) the vote or other method by which a modification
535-20 is required to be approved.
535-21 (d) A provision in this title or in that part of Title 1
535-22 applicable to a limited liability company that grants a right to a
535-23 person, other than a member, manager, officer, or assignee of a
535-24 membership interest in a limited liability company, may be waived
535-25 or modified in the company agreement of the company only if the
535-26 person consents in writing to the waiver or modification.
535-27 (Sections 101.055-101.100 reserved for expansion)
536-1 SUBCHAPTER C. MEMBERSHIP
536-2 Sec. 101.101. MEMBERS REQUIRED. (a) A limited liability
536-3 company may have one or more members. Except as provided by this
536-4 section, a limited liability company must have at least one member.
536-5 (b) A limited liability company that has managers is not
536-6 required to have any members during a reasonable period between the
536-7 date the company is formed and the date the first member is
536-8 admitted to the company.
536-9 (c) A limited liability company is not required to have any
536-10 members during the period between the date the continued membership
536-11 of the last remaining member of the company is terminated and the
536-12 date the agreement to continue the company described by Section
536-13 11.056 is executed.
536-14 Sec. 101.102. QUALIFICATION FOR MEMBERSHIP. (a) A person
536-15 may be a member of or acquire a membership interest in a limited
536-16 liability company unless the person lacks capacity apart from this
536-17 code.
536-18 (b) A person is not required, as a condition to becoming a
536-19 member of or acquiring a membership interest in a limited liability
536-20 company, to:
536-21 (1) make a contribution to the company;
536-22 (2) otherwise pay cash or transfer property to the
536-23 company; or
536-24 (3) assume an obligation to make a contribution or
536-25 otherwise pay cash or transfer property to the company.
536-26 Sec. 101.103. EFFECTIVE DATE OF MEMBERSHIP. (a) A person
536-27 who acquires a membership interest in a limited liability company
537-1 in connection with the formation of the company becomes a member of
537-2 the company on the date the company is formed if the person is
537-3 named as an initial member in the company's certificate of
537-4 formation.
537-5 (b) A person who acquires a membership interest in a limited
537-6 liability company during the formation of the company but who is
537-7 not named as an initial member in the company's certificate of
537-8 formation becomes a member of the company on the latest of:
537-9 (1) the date the company is formed;
537-10 (2) the date stated in the company's records as the
537-11 date the person becomes a member of the company; or
537-12 (3) if the company's records do not state a date
537-13 described by Subdivision (2), the date the person's admission to
537-14 the company is first reflected in the company's records.
537-15 (c) A person who, after the formation of a limited liability
537-16 company, acquires directly or is assigned a membership interest in
537-17 the company becomes a member of the company on approval or consent
537-18 of all of the company's members.
537-19 Sec. 101.104. CLASSES OR GROUPS OF MEMBERS OR MEMBERSHIP
537-20 INTERESTS. (a) The company agreement of a limited liability
537-21 company may:
537-22 (1) establish within the company classes or groups of
537-23 one or more members or membership interests each of which has
537-24 certain expressed relative rights, powers, and duties, including
537-25 voting rights; and
537-26 (2) provide for the manner of establishing within the
537-27 company additional classes or groups of one or more members or
538-1 membership interests each of which has certain expressed relative
538-2 rights, powers, and duties, including voting rights.
538-3 (b) The rights, powers, and duties of a class or group of
538-4 members or membership interests described by Subsection (a)(2) may
538-5 be stated in the company agreement or stated at the time the class
538-6 or group is established.
538-7 (c) If the company agreement of a limited liability company
538-8 does not provide for the manner of establishing classes or groups
538-9 of members or membership interests under Subsection (a)(2),
538-10 additional classes or groups of members or membership interests may
538-11 be established only by the adoption of an amendment to the company
538-12 agreement.
538-13 (d) The rights, powers, or duties of any class or group of
538-14 members or membership interests of a limited liability company may
538-15 be senior to the rights, powers, or duties of any other class or
538-16 group of members or membership interests in the company, including
538-17 a previously established class or group.
538-18 Sec. 101.105. ISSUANCE OF MEMBERSHIP INTERESTS AFTER
538-19 FORMATION OF COMPANY. A limited liability company, after the
538-20 formation of the company, may:
538-21 (1) issue membership interests in the company to any
538-22 person with the approval of all of the members of the company; and
538-23 (2) if the issuance of a membership interest requires
538-24 the establishment of a new class or group of members or membership
538-25 interests, establish a new class or group as provided by Sections
538-26 101.104(a)(2), (b), and (c).
538-27 Sec. 101.106. NATURE OF MEMBERSHIP INTEREST. (a) A
539-1 membership interest in a limited liability company is personal
539-2 property.
539-3 (b) A member of a limited liability company or an assignee
539-4 of a membership interest in a limited liability company does not
539-5 have an interest in any specific property of the company.
539-6 Sec. 101.107. WITHDRAWAL OR EXPULSION OF MEMBER PROHIBITED.
539-7 A member of a limited liability company may not withdraw or be
539-8 expelled from the company.
539-9 Sec. 101.108. ASSIGNMENT OF MEMBERSHIP INTEREST. (a) A
539-10 membership interest in a limited liability company may be wholly or
539-11 partly assigned.
539-12 (b) An assignment of a membership interest in a limited
539-13 liability company:
539-14 (1) is not an event requiring the winding up of the
539-15 company; and
539-16 (2) does not entitle the assignee to:
539-17 (A) participate in the management and affairs of
539-18 the company;
539-19 (B) become a member of the company; or
539-20 (C) exercise any rights of a member of the
539-21 company.
539-22 Sec. 101.109. RIGHTS AND DUTIES OF ASSIGNEE OF MEMBERSHIP
539-23 INTEREST BEFORE MEMBERSHIP. (a) A person who is assigned a
539-24 membership interest in a limited liability company is entitled to:
539-25 (1) receive any allocation of income, gain, loss,
539-26 deduction, credit, or a similar item that the assignor is entitled
539-27 to receive if the allocation of the item is assigned;
540-1 (2) receive any distribution the assignor is entitled
540-2 to receive if the distribution is assigned;
540-3 (3) require, for any proper purpose, reasonable
540-4 information or a reasonable account of the transactions of the
540-5 company; and
540-6 (4) make, for any proper purpose, reasonable
540-7 inspections of the books and records of the company.
540-8 (b) An assignee of a membership interest in a limited
540-9 liability company is entitled to become a member of the company on
540-10 the approval of all of the company's members.
540-11 (c) An assignee of a membership interest in a limited
540-12 liability company is not liable as a member of the company until
540-13 the assignee becomes a member of the company.
540-14 Sec. 101.110. RIGHTS AND LIABILITIES OF ASSIGNEE OF
540-15 MEMBERSHIP INTEREST AFTER BECOMING MEMBER. (a) An assignee of a
540-16 membership interest in a limited liability company, after becoming
540-17 a member of the company, is:
540-18 (1) entitled, to the extent assigned, to the same
540-19 rights and powers granted or provided to a member of the company by
540-20 the company agreement or this code;
540-21 (2) subject to the same restrictions and liabilities
540-22 placed or imposed on a member of the company by the company
540-23 agreement or this code; and
540-24 (3) except as provided by Subsection (b), liable for
540-25 the assignor's obligation to make contributions to the company.
540-26 (b) An assignee of a membership interest in a limited
540-27 liability company, after becoming a member of the company, is not
541-1 obligated for a liability of the assignor that:
541-2 (1) the assignee did not have knowledge of on the date
541-3 the assignee became a member of the company; and
541-4 (2) could not be ascertained from the company
541-5 agreement.
541-6 Sec. 101.111. RIGHTS AND DUTIES OF ASSIGNOR OF MEMBERSHIP
541-7 INTEREST. (a) An assignor of a membership interest in a limited
541-8 liability company continues to be a member of the company and is
541-9 entitled to exercise any unassigned rights or powers of a member of
541-10 the company until the assignee becomes a member of the company.
541-11 (b) An assignor of a membership interest in a limited
541-12 liability company is not released from the assignor's liability to
541-13 the company, regardless of whether the assignee of the membership
541-14 interest becomes a member of the company.
541-15 Sec. 101.112. JUDGMENT CREDITOR; CHARGE OF MEMBERSHIP
541-16 INTEREST. (a) On application by a judgment creditor of a member of
541-17 a limited liability company or an assignee of a membership interest
541-18 in a limited liability company, a court may charge the membership
541-19 interest of the member or assignee, as appropriate, with payment of
541-20 the unsatisfied amount of the judgment.
541-21 (b) If a court charges a membership interest with payment of
541-22 a judgment as provided by Subsection (a), the judgment creditor has
541-23 only the rights of an assignee of the membership interest.
541-24 (c) This section may not be construed to deprive a member of
541-25 a limited liability company or an assignee of a membership interest
541-26 in a limited liability company of the benefit of any exemption laws
541-27 applicable to the membership interest of the member or assignee.
542-1 Sec. 101.113. PARTIES TO ACTIONS. A member of a limited
542-2 liability company may be named as a party in an action by or
542-3 against the limited liability company only if the action is brought
542-4 to enforce a right or liability of the member relating to the
542-5 company.
542-6 Sec. 101.114. REQUIREMENTS FOR ENFORCEABLE SUBSCRIPTION. A
542-7 subscription to purchase a membership interest in a limited
542-8 liability company is enforceable only if the subscription is:
542-9 (1) in writing; and
542-10 (2) signed by the person making the subscription.
542-11 (Sections 101.115-101.150 reserved for expansion)
542-12 SUBCHAPTER D. CONTRIBUTIONS
542-13 Sec. 101.151. REQUIREMENTS FOR ENFORCEABLE PROMISE. A
542-14 promise to make a contribution or otherwise pay cash or transfer
542-15 property to a limited liability company is enforceable only if the
542-16 promise is:
542-17 (1) in writing; and
542-18 (2) signed by the person making the promise.
542-19 Sec. 101.152. ENFORCEABLE PROMISE NOT AFFECTED BY CHANGE IN
542-20 CIRCUMSTANCES. A member of a limited liability company is
542-21 obligated to perform an enforceable promise to make a contribution
542-22 or otherwise pay cash or transfer property to the company without
542-23 regard to the death, disability, or other change in circumstances
542-24 of the member.
542-25 Sec. 101.153. FAILURE TO PERFORM ENFORCEABLE PROMISE;
542-26 CONSEQUENCES. (a) A member of a limited liability company, or the
542-27 member's legal representative or successor, who does not perform an
543-1 enforceable promise to make a contribution, including a previously
543-2 made contribution, or to otherwise pay cash or transfer property to
543-3 the company is obligated, at the request of the company, to pay in
543-4 cash the agreed value of the contribution, as stated in the company
543-5 agreement or the company's records required under Sections 3.151
543-6 and 101.501, less:
543-7 (1) any amount already paid for the contribution; and
543-8 (2) the value of any property already transferred.
543-9 (b) The company agreement of a limited liability company may
543-10 provide that the membership interest of a member who fails to
543-11 perform an enforceable promise to make a payment of cash or
543-12 transfer property to the company, whether as a contribution or in
543-13 connection with a contribution already made, may be:
543-14 (1) reduced;
543-15 (2) subordinated to other membership interests of
543-16 nondefaulting members;
543-17 (3) redeemed or sold at a value determined by
543-18 appraisal or other formula; or
543-19 (4) made the subject of:
543-20 (A) a forced sale;
543-21 (B) forfeiture;
543-22 (C) a loan from other members of the company in
543-23 an amount necessary to satisfy the enforceable promise; or
543-24 (D) another penalty or consequence.
543-25 Sec. 101.154. CONSENT REQUIRED TO RELEASE ENFORCEABLE
543-26 OBLIGATION. The obligation of a member of a limited liability
543-27 company, or of the member's legal representative or successor, to
544-1 make a contribution or otherwise pay cash or transfer property to
544-2 the company, or to return cash or property to the company paid or
544-3 distributed to the member in violation of this code or the company
544-4 agreement, may be released or settled only by consent of each
544-5 member of the company.
544-6 Sec. 101.155. CREDITOR'S RIGHT TO ENFORCE CERTAIN
544-7 OBLIGATIONS. A creditor of a limited liability company who extends
544-8 credit or otherwise acts in reasonable reliance on an enforceable
544-9 obligation of a member of the company that is released or settled
544-10 as provided by Section 101.154 may enforce the original obligation
544-11 if the obligation is stated in a document that is:
544-12 (1) signed by the member; and
544-13 (2) not amended or canceled to evidence the release or
544-14 settlement of the obligation.
544-15 Sec. 101.156. REQUIREMENTS TO ENFORCE CONDITIONAL
544-16 OBLIGATION. (a) An obligation of a member of a limited liability
544-17 company that is subject to a condition may be enforced by the
544-18 company or a creditor described by Section 101.155 only if the
544-19 condition is satisfied or waived by or with respect to the member.
544-20 (b) A conditional obligation of a member of a limited
544-21 liability company under this section includes a contribution
544-22 payable on a discretionary call of the limited liability company
544-23 before the time the call occurs.
544-24 (Sections 101.157-101.200 reserved for expansion)
544-25 SUBCHAPTER E. ALLOCATIONS AND DISTRIBUTIONS
544-26 Sec. 101.201. ALLOCATION OF PROFITS AND LOSSES. The profits
544-27 and losses of a limited liability company shall be allocated to
545-1 each member of the company in accordance with the member's
545-2 percentage or other interest in the company on the date of the
545-3 allocation as stated in the company's records required under
545-4 Sections 3.151 and 101.501.
545-5 Sec. 101.202. DISTRIBUTION IN KIND. A member of a limited
545-6 liability company is entitled to receive or demand a distribution
545-7 from the company only in the form of cash, regardless of the form
545-8 of the member's contribution to the company.
545-9 Sec. 101.203. SHARING OF DISTRIBUTIONS. Distributions of
545-10 cash and other assets of a limited liability company shall be made
545-11 to each member of the company according to the agreed value of the
545-12 member's contribution to the company as stated in the company's
545-13 records required under Sections 3.151 and 101.501.
545-14 Sec. 101.204. INTERIM DISTRIBUTIONS. A member of a limited
545-15 liability company, before the winding up of the company, is not
545-16 entitled to receive and may not demand a distribution from the
545-17 company until the company's governing authority declares a
545-18 distribution to:
545-19 (1) each member of the company; or
545-20 (2) a class or group of members that includes the
545-21 member.
545-22 Sec. 101.205. DISTRIBUTION ON WITHDRAWAL. A member of a
545-23 limited liability company who validly exercises the member's right
545-24 to withdraw from the company granted under the company agreement is
545-25 entitled to receive, within a reasonable time after the date of
545-26 withdrawal, the fair value of the member's interest in the company
545-27 as determined on the date of withdrawal.
546-1 Sec. 101.206. PROHIBITED DISTRIBUTION; DUTY TO RETURN.
546-2 (a) A limited liability company may not make a distribution to a
546-3 member of the company if, immediately after making the
546-4 distribution, the company's total liabilities, other than
546-5 liabilities described by Subsection (b), exceed the fair value of
546-6 the company's total assets.
546-7 (b) For purposes of Subsection (a), the liabilities of a
546-8 limited liability company do not include:
546-9 (1) a liability related to the member's membership
546-10 interest; or
546-11 (2) except as provided by Subsection (c), a liability
546-12 for which the recourse of creditors is limited to specified
546-13 property of the company.
546-14 (c) For purposes of Subsection (a), the assets of a limited
546-15 liability company include the fair value of property subject to a
546-16 liability for which recourse of creditors is limited to specified
546-17 property of the company only if the fair value of that property
546-18 exceeds the liability.
546-19 (d) A member of a limited liability company who receives a
546-20 distribution from the company in violation of this section is
546-21 required to return the distribution to the company if the member
546-22 had knowledge of the violation.
546-23 (e) This section may not be construed to affect the
546-24 obligation of a member of a limited liability company to return a
546-25 distribution to the company under the company agreement or other
546-26 state or federal law.
546-27 Sec. 101.207. CREDITOR STATUS WITH RESPECT TO DISTRIBUTION.
547-1 Subject to Sections 11.053 and 101.206, when a member of a limited
547-2 liability company is entitled to receive a distribution from the
547-3 company, the member, with respect to the distribution, has the same
547-4 status as a creditor of the company and is entitled to any remedy
547-5 available to a creditor of the company.
547-6 (Sections 101.208-101.250 reserved for expansion)
547-7 SUBCHAPTER F. MANAGEMENT
547-8 Sec. 101.251. MEMBERSHIP. The governing authority of a
547-9 limited liability company consists of:
547-10 (1) the managers of the company, if the company's
547-11 certificate of formation states that the company will have one or
547-12 more managers; or
547-13 (2) the members of the company, if the company's
547-14 certificate of formation states that the company will not have
547-15 managers.
547-16 Sec. 101.252. MANAGEMENT BY GOVERNING AUTHORITY. The
547-17 governing authority of a limited liability company shall manage the
547-18 business and affairs of the company as provided by:
547-19 (1) the company agreement; and
547-20 (2) this title and the provisions of Title 1
547-21 applicable to a limited liability company to the extent that the
547-22 company agreement does not provide for the management of the
547-23 company.
547-24 Sec. 101.253. DESIGNATION OF COMMITTEES; DELEGATION OF
547-25 AUTHORITY. (a) The governing authority of a limited liability
547-26 company by resolution may designate:
547-27 (1) one or more committees of the governing authority
548-1 consisting of one or more governing persons of the company; and
548-2 (2) subject to any limitation imposed by the governing
548-3 authority, a governing person to serve as an alternate member of a
548-4 committee designated under Subdivision (1) at a committee meeting
548-5 from which a member of the committee is absent or disqualified.
548-6 (b) A committee of the governing authority of a limited
548-7 liability company may exercise the authority of the governing
548-8 authority as provided by the resolution designating the committee.
548-9 (c) The designation of a committee under this section does
548-10 not relieve the governing authority of any responsibility imposed
548-11 by law.
548-12 Sec. 101.254. DESIGNATION OF AGENTS; BINDING ACTS. (a)
548-13 Except as provided by this title and Title 1, each governing person
548-14 of a limited liability company and each officer or agent of a
548-15 limited liability company vested with actual or apparent authority
548-16 by the governing authority of the company is an agent of the
548-17 company for purposes of carrying out the company's business.
548-18 (b) An act committed by an agent of a limited liability
548-19 company described by Subsection (a) for the purpose of apparently
548-20 carrying out the ordinary course of business of the company,
548-21 including the execution of an instrument in the name of the
548-22 company, binds the company unless:
548-23 (1) the agent does not have actual authority to act
548-24 for the company; and
548-25 (2) the person with whom the agent is dealing has
548-26 knowledge of the agent's lack of actual authority.
548-27 (c) An act committed by an agent of a limited liability
549-1 company described by Subsection (a) that is not apparently for
549-2 carrying out the ordinary course of business of the company binds
549-3 the company only if the act is authorized in accordance with this
549-4 title.
549-5 Sec. 101.255. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED
549-6 GOVERNING PERSONS OR OFFICERS. (a) This section applies only to a
549-7 contract or transaction between a limited liability company and:
549-8 (1) one or more of the company's governing persons or
549-9 officers; or
549-10 (2) an entity or other organization in which one or
549-11 more of the company's governing persons or officers:
549-12 (A) is a managerial official; or
549-13 (B) has a financial interest.
549-14 (b) An otherwise valid contract or transaction is valid
549-15 notwithstanding that a governing person or officer of the company
549-16 is present at or participates in the meeting of the governing
549-17 authority, or of a committee of the governing person's authority,
549-18 that authorizes the contract or transaction or votes to authorize
549-19 the contract or transaction, if:
549-20 (1) the material facts as to the relationship or
549-21 interest and as to the contract or transaction are disclosed to or
549-22 known by:
549-23 (A) the company's governing authority or a
549-24 committee of the governing authority and the governing authority or
549-25 committee in good faith authorizes the contract or transaction by
549-26 the affirmative vote of the majority of the disinterested governing
549-27 persons or committee members, regardless of whether the
550-1 disinterested governing persons or committee members constitute a
550-2 quorum; or
550-3 (B) if the company has managers, the members of
550-4 the company, and the members in good faith approve the contract or
550-5 transaction by a majority vote of all of the members; or
550-6 (2) the contract or transaction is fair to the company
550-7 when the contract or transaction is authorized, approved, or
550-8 ratified by the governing authority, a committee of the governing
550-9 authority, or the members of the company.
550-10 (c) Common or interested governing persons of a limited
550-11 liability company may be included in determining the presence of a
550-12 quorum at a meeting of the company's governing authority, or of a
550-13 committee of the governing authority that authorizes the contract
550-14 or transaction.
550-15 (Sections 101.256-101.300 reserved for expansion)
550-16 SUBCHAPTER G. MANAGERS
550-17 Sec. 101.301. APPLICABILITY OF SUBCHAPTER. This subchapter
550-18 applies only to a limited liability company that has one or more
550-19 managers.
550-20 Sec. 101.302. NUMBER AND QUALIFICATIONS. (a) The managers
550-21 of a limited liability company may consist of one or more persons.
550-22 (b) Except as provided by Subsection (c), the number of
550-23 managers of a limited liability company consists of the number of
550-24 initial managers listed in the company's certificate of formation.
550-25 (c) The number of managers of a limited liability company
550-26 may be increased or decreased by amendment to, or as provided by,
550-27 the company agreement, except that a decrease in the number of
551-1 managers may not shorten the term of an incumbent manager.
551-2 (d) A manager of a limited liability company is not required
551-3 to be a:
551-4 (1) resident of this state; or
551-5 (2) member of the company.
551-6 Sec. 101.303. TERM. A manager of a limited liability company
551-7 serves:
551-8 (1) for the term, if any, for which the manager is
551-9 elected and until the manager's successor is elected; or
551-10 (2) until the earlier resignation, removal or death of
551-11 the manager.
551-12 Sec. 101.304. REMOVAL. Subject to Section 101.306(a), a
551-13 manager of a limited liability company may be removed, with or
551-14 without cause, at a meeting of the company's members called for
551-15 that purpose.
551-16 Sec. 101.305. MANAGER VACANCY. (a) Subject to Section
551-17 101.306(b), a vacancy in the position of a manager of a limited
551-18 liability company may be filled by:
551-19 (1) the affirmative vote of the majority of the
551-20 remaining managers of the company, without regard to whether the
551-21 remaining managers constitute a quorum; or
551-22 (2) if the vacancy is a result of an increase in the
551-23 number of managers, an election at an annual or special meeting of
551-24 the company's members called for that purpose.
551-25 (b) A person elected to fill a vacancy in the position of a
551-26 manager serves for the unexpired term of the person's predecessor.
551-27 Sec. 101.306. REMOVAL AND REPLACEMENT OF MANAGER ELECTED BY
552-1 CLASS OR GROUP. (a) If a class or group of the members of a
552-2 limited liability company is entitled by the company agreement of
552-3 the company to elect one or more managers of the company, a manager
552-4 may be removed from office only by the class or group that elected
552-5 the manager.
552-6 (b) A vacancy in the position of a manager elected as
552-7 provided by Subsection (a) may be filled only by:
552-8 (1) a majority vote of the managers serving on the
552-9 date the vacancy occurs who were elected by the class or group of
552-10 members; or
552-11 (2) a majority vote of the members of the class or
552-12 group.
552-13 Sec. 101.307. METHODS OF CLASSIFYING MANAGERS. Other methods
552-14 of classifying managers of a limited liability company, including
552-15 providing for managers who serve for staggered terms of office or
552-16 terms that are not uniform, may be established in the company
552-17 agreement.
552-18 (Sections 101.308-101.350 reserved for expansion)
552-19 SUBCHAPTER H. MEETINGS AND VOTING
552-20 Sec. 101.351. APPLICABILITY OF SUBCHAPTER. This subchapter
552-21 applies only to a meeting of and voting by:
552-22 (1) the governing authority of a limited liability
552-23 company;
552-24 (2) the members of a limited liability company if the
552-25 members do not constitute the governing authority of the company;
552-26 and
552-27 (3) a committee of the governing authority of a
553-1 limited liability company.
553-2 Sec. 101.352. GENERAL NOTICE REQUIREMENTS. (a) Except as
553-3 provided by Subsection (b), notice of a regular or special meeting
553-4 of the governing authority or members of a limited liability
553-5 company, or a committee of the company's governing authority, shall
553-6 be given in writing to each governing person, member, or committee
553-7 member, as appropriate, and as provided by Section 6.051.
553-8 (b) If the members of a limited liability company do not
553-9 constitute the governing authority of the company, notice required
553-10 by Subsection (a) shall be given by or at the direction of the
553-11 governing authority not later than the 10th day or earlier than the
553-12 60th day before the date of the meeting. Notice of a meeting
553-13 required under this subsection must state the business to be
553-14 transacted at the meeting or the purpose of the meeting if:
553-15 (1) the meeting is a special meeting; or
553-16 (2) a purpose of the meeting is to consider a matter
553-17 described by Section 101.356.
553-18 Sec. 101.353. QUORUM. A majority of all of the governing
553-19 persons, members, or committee members of a limited liability
553-20 company constitutes a quorum for the purpose of transacting
553-21 business at a meeting of the governing authority, members, or
553-22 committee of the company, as appropriate.
553-23 Sec. 101.354. EQUAL VOTING RIGHTS. Each governing person,
553-24 member, or committee member of a limited liability company has an
553-25 equal vote at a meeting of the governing authority, members, or
553-26 committee of the company, as appropriate.
553-27 Sec. 101.355. ACT OF GOVERNING AUTHORITY, MEMBERS, OR
554-1 COMMITTEE. Except as provided by this title or Title 1, the
554-2 affirmative vote of the majority of the governing persons, members,
554-3 or committee members of a limited liability company present at a
554-4 meeting at which a quorum is present constitutes an act of the
554-5 governing authority, members, or committee of the company, as
554-6 appropriate.
554-7 Sec. 101.356. VOTES REQUIRED TO APPROVE CERTAIN ACTIONS. (a)
554-8 Except as provided in this section or any other section in this
554-9 title, an action of a limited liability company may be approved by
554-10 the company's governing authority as provided by Section 101.355.
554-11 (b) Except as provided by Subsection (c), (d), or (e) or any
554-12 other section in this title, an action of a limited liability
554-13 company not apparently for carrying out the ordinary course of
554-14 business of the company must be approved by the affirmative vote of
554-15 the majority of all of the company's governing persons.
554-16 (c) Except as provided by Subsection (d) or (e) or any other
554-17 section in this title, a fundamental business transaction of a
554-18 limited liability company, or an action that would make it
554-19 impossible for a limited liability company to carry out the
554-20 ordinary business of the company, must be approved by the
554-21 affirmative vote of the majority of all of:
554-22 (1) the company's members; and
554-23 (2) if the company has managers, the company's
554-24 managers.
554-25 (d) Except as provided by Subsection (e) or any other
554-26 section of this title, an amendment to the certificate of formation
554-27 of a limited liability company must be approved by the affirmative
555-1 vote of:
555-2 (1) all of the company's members; and
555-3 (2) if the company has managers, a majority of all of
555-4 the company's managers.
555-5 (e) A requirement that an action of a limited liability
555-6 company must be approved by the company's members does not apply
555-7 during the period prescribed by Section 101.101(b).
555-8 Sec. 101.357. MANNER OF VOTING. (a) A member of a limited
555-9 liability company may vote:
555-10 (1) in person; or
555-11 (2) by a proxy executed in writing by the member.
555-12 (b) A manager or committee member of a limited liability
555-13 company, if authorized by the company agreement, may vote:
555-14 (1) in person; or
555-15 (2) by a proxy executed in writing by the manager or
555-16 committee member, as appropriate.
555-17 Sec. 101.358. ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT.
555-18 (a) This section applies only to an action required or authorized
555-19 to be taken at an annual or special meeting of the governing
555-20 authority, the members, or a committee of the governing authority
555-21 of a limited liability company under this title, Title 1, or the
555-22 governing documents of the company.
555-23 (b) Notwithstanding Sections 6.201 and 6.202, an action may
555-24 be taken without holding a meeting, providing notice, or taking a
555-25 vote if a written consent or consents stating the action to be
555-26 taken is signed by the number of governing persons, members, or
555-27 committee members of a limited liability company, as appropriate,
556-1 necessary to have at least the minimum number of votes that would
556-2 be necessary to take the action at a meeting at which each
556-3 governing person, member, or committee member, as appropriate,
556-4 entitled to vote on the action is present and votes.
556-5 Sec. 101.359. RIGHTS OF DISSENT AND APPRAISAL. (a) Except
556-6 as provided by Subsection (b), a limited liability company is not a
556-7 domestic entity subject to dissenters' rights, as defined by
556-8 Section 1.002, and the members of a limited liability company are
556-9 not entitled to the rights of dissent and appraisal provided by
556-10 Subchapter H, Chapter 10, with respect to an action of the company
556-11 described by this title or Title 1.
556-12 (b) A limited liability company is a domestic entity subject
556-13 to dissenters' rights and the members of the limited liability
556-14 company are entitled to the rights of dissent and appraisal
556-15 provided by Subchapter H, Chapter 10, if the rights of dissent and
556-16 appraisal are conferred by a company agreement.
556-17 (Sections 101.360-101.400 reserved for expansion)
556-18 SUBCHAPTER I. MODIFICATION OF DUTIES; INDEMNIFICATION
556-19 Sec. 101.401. EXPANSION OR RESTRICTION OF DUTIES AND
556-20 LIABILITIES. The company agreement of a limited liability company
556-21 may expand or restrict any duties, including fiduciary duties, and
556-22 related liabilities that a member, manager, officer, or other
556-23 person has to the company or to a member or manager of the company.
556-24 Sec. 101.402. PERMISSIVE INDEMNIFICATION, ADVANCEMENT OF
556-25 EXPENSES, AND INSURANCE OR OTHER ARRANGEMENTS. (a) A limited
556-26 liability company may:
556-27 (1) indemnify a person;
557-1 (2) pay in advance or reimburse expenses incurred by a
557-2 person; and
557-3 (3) purchase or procure or establish and maintain
557-4 insurance or another arrangement to indemnify or hold harmless a
557-5 person.
557-6 (b) In this section, "person" includes a member, manager, or
557-7 officer of a limited liability company or an assignee of a
557-8 membership interest in the company.
557-9 (Sections 101.403-101.450 reserved for expansion)
557-10 SUBCHAPTER J. DERIVATIVE PROCEEDINGS
557-11 Sec. 101.451. DEFINITIONS. In this subchapter:
557-12 (1) "Derivative proceeding" means a civil suit in the
557-13 right of a domestic limited liability company or, to the extent
557-14 provided by Section 101.462, in the right of a foreign limited
557-15 liability company.
557-16 (2) "Member" includes a beneficial owner whose shares
557-17 are held in a voting trust or by a nominee on the beneficial
557-18 owner's behalf.
557-19 Sec. 101.452. STANDING TO BRING PROCEEDING. A member may not
557-20 institute or maintain a derivative proceeding unless:
557-21 (1) the member:
557-22 (A) was a member of the limited liability
557-23 company at the time of the act or omission complained of; or
557-24 (B) became a member by operation of law from a
557-25 person that was a member at the time of the act or omission
557-26 complained of; and
557-27 (2) the member fairly and adequately represents the
558-1 interests of the limited liability company in enforcing the right
558-2 of the limited liability company.
558-3 Sec. 101.453. DEMAND. (a) A member may not institute a
558-4 derivative proceeding until the 91st day after the date a written
558-5 demand is filed with the limited liability company stating with
558-6 particularity the act, omission, or other matter that is the
558-7 subject of the claim or challenge and requesting that the limited
558-8 liability company take suitable action.
558-9 (b) The waiting period required by Subsection (a) before a
558-10 derivative proceeding may be instituted is not required if:
558-11 (1) the member has been previously notified that the
558-12 demand has been rejected by the limited liability company;
558-13 (2) the limited liability company is suffering
558-14 irreparable injury; or
558-15 (3) irreparable injury to the limited liability
558-16 company would result by waiting for the expiration of the 90-day
558-17 period.
558-18 Sec. 101.454. DETERMINATION BY GOVERNING OR INDEPENDENT
558-19 PERSONS. (a) The determination of how to proceed on allegations
558-20 made in a demand or petition relating to a derivative proceeding
558-21 must be made by an affirmative vote of the majority of:
558-22 (1) the independent and disinterested governing
558-23 persons present at a meeting of the governing authority at which
558-24 interested governing persons are not present at the time of the
558-25 vote if the independent and disinterested governing persons
558-26 constitute a quorum of the governing authority;
558-27 (2) a committee consisting of two or more independent
559-1 and disinterested governing persons appointed by the majority of
559-2 one or more independent and disinterested governing persons present
559-3 at a meeting of the governing authority, regardless of whether the
559-4 independent and disinterested governing persons constitute a quorum
559-5 of the governing authority; or
559-6 (3) a panel of one or more independent and
559-7 disinterested persons appointed by the court on a motion by the
559-8 limited liability company listing the names of the persons to be
559-9 appointed and stating that, to the best of the limited liability
559-10 company's knowledge, the persons to be appointed are disinterested
559-11 and qualified to make the determinations contemplated by Section
559-12 101.458.
559-13 (b) The court shall appoint a panel under Subsection (a)(3)
559-14 if the court finds that the persons recommended by the limited
559-15 liability company are independent and disinterested and are
559-16 otherwise qualified with respect to expertise, experience,
559-17 independent judgment, and other factors considered appropriate by
559-18 the court under the circumstances to make the determinations. A
559-19 person appointed by the court to a panel under this section may not
559-20 be held liable to the limited liability company or the limited
559-21 liability company's members for an action taken or omission made by
559-22 the person in that capacity, except for acts or omissions
559-23 constituting fraud or wilful misconduct.
559-24 Sec. 101.455. STAY OF PROCEEDING. (a) If the domestic or
559-25 foreign limited liability company that is the subject of a
559-26 derivative proceeding commences an inquiry into the allegations
559-27 made in a demand or petition and the person or group of persons
560-1 described by Section 101.454 is conducting an active review of the
560-2 allegations in good faith, the court shall stay a derivative
560-3 proceeding until the review is completed and a determination is
560-4 made by the person or group regarding what further action, if any,
560-5 should be taken.
560-6 (b) To obtain a stay, the domestic or foreign limited
560-7 liability company shall provide the court with a written statement
560-8 agreeing to advise the court and the member making the demand of
560-9 the determination promptly on the completion of the review of the
560-10 matter. A stay, on motion, may be reviewed every 60 days for the
560-11 continued necessity of the stay.
560-12 (c) If the review and determination made by the person or
560-13 group is not completed before the 61st day after the date on which
560-14 the court orders the stay, the stay may be renewed for one or more
560-15 additional 60-day periods if the domestic or foreign limited
560-16 liability company provides the court and the member with a written
560-17 statement of the status of the review and the reasons why a
560-18 continued extension of the stay is necessary.
560-19 Sec. 101.456. DISCOVERY. (a) If a domestic or foreign
560-20 limited liability company proposes to dismiss a derivative
560-21 proceeding under Section 101.458, discovery by a member after the
560-22 filing of the derivative proceeding in accordance with this
560-23 subchapter shall be limited to:
560-24 (1) facts relating to whether the person or group of
560-25 persons described by Section 101.458 is independent and
560-26 disinterested;
560-27 (2) the good faith of the inquiry and review by the
561-1 person or group; and
561-2 (3) the reasonableness of the procedures followed by
561-3 the person or group in conducting the review.
561-4 (b) Discovery described by Subsection (a) may not be
561-5 expanded to include a fact or substantive matter regarding the act,
561-6 omission, or other matter that is the subject matter of the
561-7 derivative proceeding. The scope of discovery may be expanded if
561-8 the court determines after notice and hearing that a good faith
561-9 review of the allegations for purposes of Section 101.458 has not
561-10 been made by an independent and disinterested person or group in
561-11 accordance with that section.
561-12 Sec. 101.457. TOLLING OF STATUTE OF LIMITATIONS. A written
561-13 demand filed with the limited liability company under Section
561-14 101.453 tolls the statute of limitations on the claim on which
561-15 demand is made until the earlier of:
561-16 (1) the 91st day after the date of the demand; or
561-17 (2) the 31st day after the date the limited liability
561-18 company advises the member that the demand has been rejected or the
561-19 review has been completed.
561-20 Sec. 101.458. DISMISSAL OF DERIVATIVE PROCEEDING. (a) A
561-21 court shall dismiss a derivative proceeding on a motion by the
561-22 limited liability company if the person or group of persons
561-23 described by Section 101.454 determines in good faith, after
561-24 conducting a reasonable inquiry and based on factors the person or
561-25 group considers appropriate under the circumstances, that
561-26 continuation of the derivative proceeding is not in the best
561-27 interests of the limited liability company.
562-1 (b) In determining whether the requirements of Subsection
562-2 (a) have been met, the burden of proof shall be on:
562-3 (1) the plaintiff member if:
562-4 (A) the majority of the governing authority
562-5 consists of independent and disinterested persons at the time the
562-6 determination is made;
562-7 (B) the determination is made by a panel of one
562-8 or more independent and disinterested persons appointed under
562-9 Section 101.454(a)(3); or
562-10 (C) the limited liability company presents prima
562-11 facie evidence that demonstrates that the persons appointed under
562-12 Section 101.454(a)(2) are independent and disinterested; or
562-13 (2) the limited liability company in any other
562-14 circumstance.
562-15 Sec. 101.459. ALLEGATIONS IF DEMAND REJECTED. If a
562-16 derivative proceeding is instituted after a demand is rejected, the
562-17 petition must allege with particularity facts that establish that
562-18 the rejection was not made in accordance with the requirements of
562-19 Sections 101.454 and 101.458.
562-20 Sec. 101.460. DISCONTINUANCE OR SETTLEMENT. (a) A
562-21 derivative proceeding may not be discontinued or settled without
562-22 court approval.
562-23 (b) The court shall direct that notice be given to the
562-24 affected members if the court determines that a proposed
562-25 discontinuance or settlement may substantially affect the interests
562-26 of other members.
562-27 Sec. 101.461. PAYMENT OF EXPENSES. (a) In this section,
563-1 "expenses" means reasonable expenses incurred by a party in a
563-2 derivative proceeding, including:
563-3 (1) attorney's fees;
563-4 (2) costs of pursuing an investigation of the matter
563-5 that was the subject of the derivative proceeding; or
563-6 (3) expenses for which the domestic or foreign limited
563-7 liability company may be required to indemnify another person.
563-8 (b) On termination of a derivative proceeding, the court may
563-9 order:
563-10 (1) the domestic or foreign limited liability company
563-11 to pay the expenses the plaintiff incurred in the proceeding if the
563-12 court finds the proceeding has resulted in a substantial benefit to
563-13 the domestic or foreign limited liability company;
563-14 (2) the plaintiff to pay the expenses the domestic or
563-15 foreign limited liability company or other defendant incurred in
563-16 investigating and defending the proceeding if the court finds the
563-17 proceeding has been instituted or maintained without reasonable
563-18 cause or for an improper purpose; or
563-19 (3) a party to pay the expenses incurred by another
563-20 party relating to the filing of a pleading, motion, or other paper
563-21 if the court finds the pleading, motion, or other paper:
563-22 (A) was not well grounded in fact after
563-23 reasonable inquiry;
563-24 (B) was not warranted by existing law or a good
563-25 faith argument for the extension, modification, or reversal of
563-26 existing law; or
563-27 (C) was interposed for an improper purpose, such
564-1 as to harass, cause unnecessary delay, or cause a needless increase
564-2 in the cost of litigation.
564-3 Sec. 101.462. APPLICATION TO FOREIGN LIMITED LIABILITY
564-4 COMPANIES. (a) In a derivative proceeding brought in the right of
564-5 a foreign limited liability company, the matters covered by this
564-6 subchapter are governed by the laws of the jurisdiction of
564-7 organization of the foreign limited liability company, except for
564-8 Sections 101.455, 101.460, and 101.461, which are procedural
564-9 provisions and do not relate to the internal affairs of the foreign
564-10 limited liability company.
564-11 (b) In the case of matters relating to a foreign limited
564-12 liability company under Section 101.454, a reference to a person or
564-13 group of persons described by that section refers to a person or
564-14 group entitled under the laws of the jurisdiction of organization
564-15 of the foreign limited liability company to review and dispose of a
564-16 derivative proceeding. The standard of review of a decision made
564-17 by the person or group to dismiss the derivative proceeding shall
564-18 be governed by the laws of the jurisdiction of organization of the
564-19 foreign limited liability company.
564-20 Sec. 101.463. CLOSELY HELD LIMITED LIABILITY COMPANY. (a)
564-21 In this section, "closely held limited liability company" means a
564-22 limited liability company that has:
564-23 (1) fewer than 35 members; and
564-24 (2) no membership interests listed on a national
564-25 securities exchange or regularly quoted in an over-the-counter
564-26 market by one or more members of a national securities association.
564-27 (b) Subject to Subsection (c), Sections 101.452-101.459 do
565-1 not apply to a closely held limited liability company.
565-2 (c) If justice requires:
565-3 (1) a derivative proceeding brought by a member of a
565-4 closely held limited liability company may be treated by a court as
565-5 a direct action brought by the member for the member's own benefit;
565-6 and
565-7 (2) a recovery in a direct or derivative proceeding by
565-8 a member may be paid directly to the plaintiff or to the limited
565-9 liability company if necessary to protect the interests of
565-10 creditors or other members of the limited liability company.
565-11 (Sections 101.464-101.500 reserved for expansion)
565-12 SUBCHAPTER K. SUPPLEMENTAL RECORDKEEPING REQUIREMENTS
565-13 Sec. 101.501. SUPPLEMENTAL RECORDS REQUIRED FOR LIMITED
565-14 LIABILITY COMPANIES. (a) In addition to the books and records
565-15 required to be kept under Section 3.151, a limited liability
565-16 company shall keep at its principal office in the United States, or
565-17 make available to a person at its principal office in the United
565-18 States not later than the fifth day after the date the person
565-19 submits a written request to examine the books and records of the
565-20 company under Section 3.152(a) or 101.502:
565-21 (1) a current list of each member of a class or group
565-22 of membership interests in the company;
565-23 (2) a copy of the company's federal, state, and local
565-24 tax information or income tax returns for each of the six preceding
565-25 tax years;
565-26 (3) a copy of the company's certificate of formation,
565-27 including any amendments to or restatements of the certificate of
566-1 formation;
566-2 (4) if the company agreement is in writing, a copy of
566-3 the company agreement, including any amendments to or restatements
566-4 of the company agreement;
566-5 (5) an executed copy of any powers of attorney;
566-6 (6) a copy of any document that establishes a class or
566-7 group of members of the company as provided by the company
566-8 agreement; and
566-9 (7) except as provided by Subsection (b), a written
566-10 statement of:
566-11 (A) the amount of a cash contribution and a
566-12 description and statement of the agreed value of any other
566-13 contribution made or agreed to be made by each member;
566-14 (B) the dates any additional contributions are
566-15 to be made by a member;
566-16 (C) any event the occurrence of which requires a
566-17 member to make additional contributions;
566-18 (D) any event the occurrence of which requires
566-19 the winding up of the company; and
566-20 (E) the date each member became a member of the
566-21 company.
566-22 (b) A limited liability company is not required to keep or
566-23 make available at its principal office in the United States a
566-24 written statement of the information required by Subsection (a)(7)
566-25 if that information is stated in the company agreement.
566-26 (c) A limited liability company shall keep at its registered
566-27 office located in this state and make available to a member of the
567-1 company on reasonable request the street address of the company's
567-2 principal office in the United States in which the records required
567-3 by this section and Section 3.151 are maintained or made
567-4 available.
567-5 Sec. 101.502. RIGHT TO EXAMINE RECORDS AND CERTAIN OTHER
567-6 INFORMATION. (a) A member of a limited liability company or an
567-7 assignee of a membership interest in a limited liability company,
567-8 or a representative of the member or assignee, on written request
567-9 and for a proper purpose, may examine and copy at any reasonable
567-10 time and at the member's or assignee's expense:
567-11 (1) records required under Sections 3.151 and 101.501;
567-12 and
567-13 (2) other information regarding the business, affairs,
567-14 and financial condition of the company that is reasonable for the
567-15 person to examine and copy.
567-16 (b) A limited liability company shall provide to a member of
567-17 the company or an assignee of a membership interest in the company,
567-18 on written request by the member or assignee sent to the company's
567-19 principal office in the United States or, if different, the person
567-20 and address designated in the company agreement, a free copy of:
567-21 (1) the company's certificate of formation, including
567-22 any amendments to or restatements of the certificate of formation;
567-23 (2) if in writing, the company agreement, including
567-24 any amendments to or restatements of the company agreement; and
567-25 (3) any tax returns described by Section
567-26 101.501(a)(2).
567-27 (Sections 101.503-101.550 reserved for expansion)
568-1 SUBCHAPTER L. SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS
568-2 Sec. 101.551. PERSONS ELIGIBLE TO WIND UP COMPANY. After an
568-3 event requiring the winding up of a limited liability company
568-4 unless a revocation as provided by Section 11.151 or a cancellation
568-5 as provided by Section 11.152 occurs, the winding up of the company
568-6 must be carried out by:
568-7 (1) the company's governing authority or one or more
568-8 persons, including a governing person, designated by the governing
568-9 authority;
568-10 (2) if the event requiring the winding up of the
568-11 company is the termination of the continued membership of the last
568-12 remaining member of the company, the legal representative or
568-13 successor of the last remaining member or one or more persons
568-14 designated by the legal representative or successor; or
568-15 (3) a person appointed by the court to carry out the
568-16 winding up of the company under Section 11.054, 11.405, 11.409, or
568-17 11.410.
568-18 Sec. 101.552. APPROVAL OF VOLUNTARY WINDING UP, REVOCATION,
568-19 CANCELLATION, OR REINSTATEMENT. A majority vote of all of the
568-20 governing persons of a limited liability company and, if the
568-21 limited liability company has managers, a majority vote of all of
568-22 the members of the company is required to approve:
568-23 (1) a voluntary winding up of the company under
568-24 Chapter 11;
568-25 (2) a revocation of a voluntary decision to wind up
568-26 the company under Section 11.151;
568-27 (3) a cancellation of an event requiring the winding
569-1 up of the company under Section 11.152; or
569-2 (4) a reinstatement of a terminated company under
569-3 Section 11.202.
569-4 TITLE 4. PARTNERSHIPS
569-5 CHAPTER 151. GENERAL PROVISIONS
569-6 Sec. 151.001. DEFINITIONS. In this title:
569-7 (1) "Capital account" means the amount computed by:
569-8 (A) adding the amount of a partner's original
569-9 and additional contributions of cash to a partnership, the agreed
569-10 value of any other property that that partner originally or
569-11 additionally contributed to the partnership, and allocations of
569-12 partnership profits to that partner; and
569-13 (B) subtracting the amount of distributions to
569-14 that partner and allocations of partnership losses to that partner.
569-15 (2) "Foreign limited partnership" means a partnership
569-16 formed under the laws of another state that has one or more general
569-17 partners and one or more limited partners.
569-18 (3) "Majority-in-interest," with respect to all or a
569-19 specified group of partners, means partners who own more than 50
569-20 percent of the current percentage or other interest in the profits
569-21 of the partnership that is owned by all of the partners or by the
569-22 partners in the specified group, as appropriate.
569-23 (4) "Partnership agreement" means any agreement,
569-24 written or oral, of the partners concerning a partnership.
569-25 Sec. 151.002. KNOWLEDGE OF FACT. For purposes of this title,
569-26 a person has knowledge of a fact only if the person has actual
569-27 knowledge of the fact.
570-1 Sec. 151.003. NOTICE OF FACT. (a) For purposes of this
570-2 title, a person has notice of a fact if the person:
570-3 (1) has knowledge of the fact;
570-4 (2) has received a communication of the fact as
570-5 provided by Subsection (c); or
570-6 (3) reasonably should have concluded, from all facts
570-7 then known to that person, that the fact exists.
570-8 (b) A person notifies or gives notice to another person of a
570-9 fact by taking actions reasonably required to inform the other
570-10 person of the fact in the ordinary course of business, regardless
570-11 of whether the other person actually has knowledge of the fact.
570-12 (c) A person is notified or receives notice of a fact when
570-13 the fact is communicated to:
570-14 (1) the person;
570-15 (2) the person's place of business; or
570-16 (3) another place held out by the person as the place
570-17 for receipt of communications.
570-18 (d) Receipt of notice by a partner of a fact relating to the
570-19 partnership is effective immediately as notice to the partnership
570-20 unless fraud against the partnership is committed by or with the
570-21 consent of the partner receiving the notice.
570-22 CHAPTER 152. GENERAL PARTNERSHIPS
570-23 SUBCHAPTER A. GENERAL PROVISIONS
570-24 Sec. 152.001. DEFINITIONS. In this chapter:
570-25 (1) "Event of withdrawal" or "withdrawal" means an
570-26 event specified by Section 152.501(b).
570-27 (2) "Event requiring a winding up" means an event
571-1 specified by Section 11.051 or 11.057.
571-2 (3) "Foreign limited liability partnership" means a
571-3 partnership that:
571-4 (A) is foreign; and
571-5 (B) has the status of a limited liability
571-6 partnership pursuant to the laws of the jurisdiction of formation.
571-7 (4) "Other partnership provisions" means the
571-8 provisions of Chapters 151 and 154 and Title 1 to the extent
571-9 applicable to partnerships.
571-10 (5) "Transfer" includes:
571-11 (A) an assignment;
571-12 (B) a conveyance;
571-13 (C) a lease;
571-14 (D) a mortgage;
571-15 (E) a deed;
571-16 (F) an encumbrance; and
571-17 (G) the creation of a security interest.
571-18 (6) "Withdrawn partner" means a partner with respect
571-19 to whom an event of withdrawal has occurred.
571-20 Sec. 152.002. EFFECT OF PARTNERSHIP AGREEMENT; NONWAIVABLE
571-21 AND VARIABLE PROVISIONS. (a) Except as provided by Subsection (b),
571-22 a partnership agreement governs the relations of the partners and
571-23 between the partners and the partnership. To the extent that the
571-24 partnership agreement does not otherwise provide, this chapter and
571-25 the other partnership provisions govern the relationship of the
571-26 partners and between the partners and the partnership.
571-27 (b) A partnership agreement or the partners may not:
572-1 (1) unreasonably restrict a partner's right of access
572-2 to books and records under Section 152.212;
572-3 (2) eliminate the duty of loyalty under Section
572-4 152.205, except that the partners by agreement may identify
572-5 specific types of activities or categories of activities that do
572-6 not violate the duty of loyalty if the types or categories are not
572-7 manifestly unreasonable;
572-8 (3) eliminate the duty of care under Section 152.206,
572-9 except that the partners by agreement may determine the standards
572-10 by which the performance of the obligation is to be measured if the
572-11 standards are not manifestly unreasonable;
572-12 (4) eliminate the obligation of good faith under
572-13 Section 152.204(b), except that the partners by agreement may
572-14 determine the standards by which the performance of the obligation
572-15 is to be measured if the standards are not manifestly unreasonable;
572-16 (5) vary the power to withdraw as a partner under
572-17 Section 152.501(b)(1), (7), or (8), except for the requirement that
572-18 notice be in writing;
572-19 (6) vary the right to expel a partner by a court in an
572-20 event specified by Section 152.501(b)(5);
572-21 (7) restrict rights of a third party under this
572-22 chapter or the other partnership provisions, except for a
572-23 limitation on an individual partner's liability in a limited
572-24 liability partnership as provided by this chapter;
572-25 (8) select a governing law not permitted under
572-26 Sections 1.103 and 1.002(47)(C); or
572-27 (9) except as provided in Subsections (c) and (d),
573-1 waive or modify the following provisions of Title 1:
573-2 (A) Chapter 1, if the provision is used to
573-3 interpret a provision or to define a word or phrase contained in a
573-4 section listed in this subsection;
573-5 (B) Chapter 2, other than Sections 2.104(c)(2),
573-6 2.104(c)(3), and 2.113;
573-7 (C) Chapter 3, other than Subchapters C and E
573-8 thereof and Section 3.152 (provided, that a partner's right of
573-9 access to books and records shall in all events be governed by
573-10 Sections 152.002(b)(1) and 152.212); or
573-11 (D) Chapters 4, 5, 7, 10, 11, and 12, other than
573-12 Sections 11.057(a)(1), (2), (5), and (6) and 11.057(b).
573-13 (c) A provision listed in Subsection (b)(9) may be waived or
573-14 modified in a partnership agreement if the provision that is waived
573-15 or modified authorizes the partnership to waive or modify the
573-16 provision in the partnership's governing documents.
573-17 (d) A provision listed in Subsection (b)(9) may be waived or
573-18 modified in the partnership agreement if the provision that is
573-19 modified specifies:
573-20 (1) the person or group of persons entitled to approve
573-21 a modification; or
573-22 (2) the vote or other method by which a modification
573-23 is required to be approved.
573-24 Sec. 152.003. SUPPLEMENTAL PRINCIPLES OF LAW. The
573-25 principles of law and equity and the other partnership provisions
573-26 supplement this chapter unless otherwise provided by this chapter
573-27 or the other partnership provisions.
574-1 Sec. 152.004. RULE OF STATUTORY CONSTRUCTION NOT APPLICABLE.
574-2 The rule that a statute in derogation of the common law is to be
574-3 strictly construed does not apply to this chapter or the other
574-4 partnership provisions.
574-5 Sec. 152.005. APPLICABLE INTEREST RATE. If an obligation to
574-6 pay interest arises under this chapter and the rate is not
574-7 specified, the interest rate is the rate specified by Section
574-8 302.002, Finance Code.
574-9 (Sections 152.006-152.050 reserved for expansion)
574-10 SUBCHAPTER B. NATURE AND CREATION OF PARTNERSHIP
574-11 Sec. 152.051. PARTNERSHIP DEFINED. (a) In this section,
574-12 "association" does not have the meaning of the term "association"
574-13 under Section 1.002.
574-14 (b) Except as provided by Subsection (c) and Section
574-15 152.053(a), an association of two or more persons to carry on a
574-16 business for profit as owners creates a partnership, regardless of
574-17 whether:
574-18 (1) the persons intend to create a partnership; or
574-19 (2) the association is called a "partnership," "joint
574-20 venture," or other name.
574-21 (c) An association or organization is not a partnership if
574-22 it was created under a statute other than:
574-23 (1) this title and the provisions of Title 1
574-24 applicable to partnerships and limited partnerships;
574-25 (2) a predecessor to a statute referred to in
574-26 Subdivision (1); or
574-27 (3) a comparable statute of another jurisdiction.
575-1 (d) The provisions of this chapter govern limited
575-2 partnerships only to the extent provided by Sections 153.003 and
575-3 153.152 and Subchapter H, Chapter 153.
575-4 Sec. 152.052. RULES FOR DETERMINING IF PARTNERSHIP IS
575-5 CREATED. (a) Factors indicating that persons have created a
575-6 partnership include the persons':
575-7 (1) receipt or right to receive a share of profits of
575-8 the business;
575-9 (2) expression of an intent to be partners in the
575-10 business;
575-11 (3) participation or right to participate in control
575-12 of the business;
575-13 (4) agreement to share or sharing:
575-14 (A) losses of the business; or
575-15 (B) liability for claims by third parties
575-16 against the business; and
575-17 (5) agreement to contribute or contributing money or
575-18 property to the business.
575-19 (b) One of the following circumstances, by itself, does not
575-20 indicate that a person is a partner in the business:
575-21 (1) the receipt or right to receive a share of profits
575-22 as payment:
575-23 (A) of a debt, including repayment by
575-24 installments;
575-25 (B) of wages or other compensation to an
575-26 employee or independent contractor;
575-27 (C) of rent;
576-1 (D) to a former partner, surviving spouse or
576-2 representative of a deceased or disabled partner, or transferee of
576-3 a partnership interest;
576-4 (E) of interest or other charge on a loan,
576-5 regardless of whether the amount varies with the profits of the
576-6 business, including a direct or indirect present or future
576-7 ownership interest in collateral or rights to income, proceeds, or
576-8 increase in value derived from collateral; or
576-9 (F) of consideration for the sale of a business
576-10 or other property, including payment by installments;
576-11 (2) co-ownership of property, regardless of whether
576-12 the co-ownership is:
576-13 (A) a joint tenancy, tenancy in common, tenancy
576-14 by the entirety, joint property, community property, or part
576-15 ownership; or
576-16 (B) combined with sharing of profits from the
576-17 property;
576-18 (3) the right to share or sharing gross returns or
576-19 revenues, regardless of whether the persons sharing the gross
576-20 returns or revenues have a common or joint interest in the property
576-21 from which the returns or revenues are derived; or
576-22 (4) ownership of mineral property under a joint
576-23 operating agreement.
576-24 (c) An agreement by the owners of a business to share losses
576-25 is not necessary to create a partnership.
576-26 Sec. 152.053. QUALIFICATIONS TO BE PARTNER; NONPARTNER'S
576-27 LIABILITY TO THIRD PERSON. (a) A person may be a partner unless
577-1 the person lacks capacity apart from this chapter.
577-2 (b) Except as provided by Section 152.307, a person who is
577-3 not a partner in a partnership under Section 152.051 is not a
577-4 partner as to a third person and is not liable to a third person
577-5 under this chapter.
577-6 Sec. 152.054. FALSE REPRESENTATION OF PARTNERSHIP OR
577-7 PARTNER. (a) A false representation or other conduct falsely
577-8 indicating that a person is a partner with another person does not
577-9 of itself create a partnership.
577-10 (b) A representation or other conduct indicating that a
577-11 person is a partner in an existing partnership, if that is not the
577-12 case, does not of itself make that person a partner in the
577-13 partnership.
577-14 Sec. 152.055. AUTHORITY OF CERTAIN PROFESSIONALS TO CREATE
577-15 PARTNERSHIP. (a) Persons licensed as doctors of medicine and
577-16 persons licensed as doctors of osteopathy by the Texas State Board
577-17 of Medical Examiners and persons licensed as podiatrists by the
577-18 Texas State Board of Podiatric Medical Examiners may create a
577-19 partnership that is jointly owned by those practitioners to perform
577-20 a professional service that falls within the scope of practice of
577-21 those practitioners.
577-22 (b) When doctors of medicine, osteopathy, and podiatry
577-23 create a partnership that is jointly owned by those practitioners,
577-24 the authority of each of the practitioners is limited by the scope
577-25 of practice of the respective practitioners and none can exercise
577-26 control over the other's clinical authority granted by their
577-27 respective licenses, either through agreements, bylaws, directives,
578-1 financial incentives, or other arrangements that would assert
578-2 control over treatment decisions made by the practitioner.
578-3 (c) The Texas State Board of Medical Examiners and the Texas
578-4 State Board of Podiatric Medical Examiners continue to exercise
578-5 regulatory authority over their respective licenses.
578-6 (Sections 152.056-152.100 reserved for expansion)
578-7 SUBCHAPTER C. PARTNERSHIP PROPERTY
578-8 Sec. 152.101. NATURE OF PARTNERSHIP PROPERTY. Partnership
578-9 property is not property of the partners. A partner or a partner's
578-10 spouse does not have an interest in partnership property.
578-11 Sec. 152.102. CLASSIFICATION AS PARTNERSHIP PROPERTY. (a)
578-12 Property is partnership property if acquired in the name of:
578-13 (1) the partnership; or
578-14 (2) one or more partners, regardless of whether or not
578-15 the name of the partnership is indicated, if the instrument
578-16 transferring title to the property indicates:
578-17 (A) the person's capacity as a partner; or
578-18 (B) the existence of a partnership.
578-19 (b) Property is presumed to be partnership property if
578-20 acquired with partnership property, regardless of whether the
578-21 property is acquired as provided by Subsection (a).
578-22 (c) Property acquired in the name of one or more partners is
578-23 presumed to be the partner's property, regardless of whether the
578-24 property is used for partnership purposes, if the instrument
578-25 transferring title to the property does not indicate the person's
578-26 capacity as a partner or the existence of a partnership, and if the
578-27 property is not acquired with partnership property.
579-1 (d) For purposes of this section, property is acquired in
579-2 the name of the partnership by a transfer to:
579-3 (1) the partnership in its name; or
579-4 (2) one or more partners in the partners' capacity as
579-5 partners in the partnership, if the name of the partnership is
579-6 indicated in the instrument transferring title to the property.
579-7 (Sections 152.103-152.200 reserved for expansion)
579-8 SUBCHAPTER D. RELATIONSHIP BETWEEN PARTNERS AND BETWEEN
579-9 PARTNERS AND PARTNERSHIPS
579-10 Sec. 152.201. ADMISSION AS PARTNER. A person may become a
579-11 partner only with the consent of all partners.
579-12 Sec. 152.202. CREDITS OF AND CHARGES TO PARTNER. (a) Each
579-13 partner is credited with an amount equal to:
579-14 (1) the cash and the value of property the partner
579-15 contributes to a partnership; and
579-16 (2) the partner's share of the partnership's profits.
579-17 (b) Each partner is charged with an amount equal to:
579-18 (1) the cash and the value of other property
579-19 distributed by the partnership to the partner; and
579-20 (2) the partner's share of the partnership's losses.
579-21 (c) Each partner is entitled to be credited with an equal
579-22 share of the partnership's profits and is chargeable with a share
579-23 of the partnership's capital or operating losses in proportion to
579-24 the partner's share of the profits.
579-25 Sec. 152.203. RIGHTS AND DUTIES OF PARTNER. (a) Each
579-26 partner has equal rights in the management and conduct of the
579-27 business of a partnership. A partner's right to participate in the
580-1 management and conduct of the business is not community property.
580-2 (b) A partner may use or possess partnership property only
580-3 on behalf of the partnership.
580-4 (c) A partner is not entitled to receive compensation for
580-5 services performed for a partnership other than reasonable
580-6 compensation for services rendered in winding up the business of
580-7 the partnership.
580-8 (d) A partner who, in the proper conduct of the business of
580-9 the partnership or for the preservation of its business or
580-10 property, reasonably makes a payment or advance beyond the amount
580-11 the partner agreed to contribute, or who reasonably incurs a
580-12 liability, is entitled to be repaid and to receive interest from
580-13 the date of the:
580-14 (1) payment or advance; or
580-15 (2) incurrence of the liability.
580-16 Sec. 152.204. GENERAL STANDARDS OF PARTNER'S CONDUCT. (a) A
580-17 partner owes to the partnership and the other partners:
580-18 (1) a duty of loyalty; and
580-19 (2) a duty of care.
580-20 (b) A partner shall discharge the partner's duties to the
580-21 partnership and the other partners under this code or under the
580-22 partnership agreement and exercise any rights and powers in the
580-23 conduct or winding up of the partnership business:
580-24 (1) in good faith; and
580-25 (2) in a manner the partner reasonably believes to be
580-26 in the best interest of the partnership.
580-27 (c) A partner does not violate a duty or obligation under
581-1 this chapter or under the partnership agreement merely because the
581-2 partner's conduct furthers the partner's own interest.
581-3 (d) A partner, in the partner's capacity as partner, is not
581-4 a trustee and is not held to the standards of a trustee.
581-5 Sec. 152.205. PARTNER'S DUTY OF LOYALTY. A partner's duty of
581-6 loyalty includes:
581-7 (1) accounting to and holding for the partnership
581-8 property, profit, or benefit derived by the partner:
581-9 (A) in the conduct and winding up of the
581-10 partnership business; or
581-11 (B) from use by the partner of partnership
581-12 property;
581-13 (2) refraining from dealing with the partnership on
581-14 behalf of a person who has an interest adverse to the partnership;
581-15 and
581-16 (3) refraining from competing or dealing with the
581-17 partnership in a manner adverse to the partnership.
581-18 Sec. 152.206. PARTNER'S DUTY OF CARE. (a) A partner's duty
581-19 of care to the partnership and the other partners is to act in the
581-20 conduct and winding up of the partnership business with the care an
581-21 ordinarily prudent person would exercise in similar circumstances.
581-22 (b) An error in judgment does not by itself constitute a
581-23 breach of the duty of care.
581-24 (c) A partner is presumed to satisfy the duty of care if the
581-25 partner acts on an informed basis and in compliance with Section
581-26 152.204(b).
581-27 Sec. 152.207. STANDARDS OF CONDUCT APPLICABLE TO PERSON
582-1 WINDING UP PARTNERSHIP BUSINESS. Sections 152.204-152.206 apply to
582-2 a person winding up the partnership business as the personal or
582-3 legal representative of the last surviving partner to the same
582-4 extent as those sections apply to a partner.
582-5 Sec. 152.208. AMENDMENT TO PARTNERSHIP AGREEMENT. A
582-6 partnership agreement may be amended only with the consent of all
582-7 partners.
582-8 Sec. 152.209. DECISION-MAKING REQUIREMENT. (a) A difference
582-9 arising in a matter in the ordinary course of the partnership
582-10 business may be decided by a majority-in-interest of the partners.
582-11 (b) An act outside the ordinary course of business of a
582-12 partnership may be undertaken only with the consent of all
582-13 partners.
582-14 Sec. 152.210. PARTNER'S LIABILITY TO PARTNERSHIP AND OTHER
582-15 PARTNERS. A partner is liable to a partnership and the other
582-16 partners for:
582-17 (1) a breach of the partnership agreement; or
582-18 (2) a violation of a duty to the partnership or other
582-19 partners under this chapter that causes harm to the partnership or
582-20 the other partners.
582-21 Sec. 152.211. REMEDIES OF PARTNERSHIP AND PARTNERS. (a) A
582-22 partnership may maintain an action against a partner for a breach
582-23 of the partnership agreement or for the violation of a duty to the
582-24 partnership causing harm to the partnership.
582-25 (b) A partner may maintain an action against the partnership
582-26 or another partner for legal or equitable relief, including an
582-27 accounting of partnership business, to:
583-1 (1) enforce a right under the partnership agreement;
583-2 (2) enforce a right under this chapter, including:
583-3 (A) the partner's rights under Sections
583-4 152.201-152.209, 152.212, and 152.213;
583-5 (B) the partner's right on withdrawal to have
583-6 the partner's interest in the partnership redeemed under Subchapter
583-7 H or to enforce any other right under Subchapters G and H; and
583-8 (C) the partner's rights under Subchapter I;
583-9 (3) enforce the rights and otherwise protect the
583-10 interests of the partner, including rights and interests arising
583-11 independently of the partnership relationship; or
583-12 (4) enforce a right under Chapter 11.
583-13 (c) The accrual of and a time limitation on a right of
583-14 action for a remedy under this section is governed by other
583-15 applicable law.
583-16 (d) A right to an accounting does not revive a claim barred
583-17 by law.
583-18 Sec. 152.212. BOOKS AND RECORDS OF PARTNERSHIP. (a) In this
583-19 section, "access" includes the opportunity to inspect and copy
583-20 books and records during ordinary business hours.
583-21 (b) A partnership shall keep its books and records, if any,
583-22 at its chief executive office.
583-23 (c) A partnership shall provide access to its books and
583-24 records to a partner or an agent or attorney of a partner.
583-25 (d) The partnership shall provide a former partner or an
583-26 agent or attorney of a former partner access to books and records
583-27 pertaining to the period during which the former partner was a
584-1 partner or for any other proper purpose with respect to another
584-2 period.
584-3 (e) A partnership may impose a reasonable charge, covering
584-4 the costs of labor and material, for copies of documents furnished
584-5 under this section.
584-6 Sec. 152.213. INFORMATION REGARDING PARTNERSHIP. (a) On
584-7 request and to the extent just and reasonable, each partner and the
584-8 partnership shall furnish complete and accurate information
584-9 concerning the partnership to:
584-10 (1) a partner;
584-11 (2) the legal representative of a deceased partner or
584-12 a partner who has a legal disability; or
584-13 (3) an assignee.
584-14 (b) A legal representative of a deceased partner or a
584-15 partner who has a legal disability and an assignee are subject to
584-16 the duties of a partner with respect to information made available.
584-17 Sec. 152.214. CERTAIN THIRD-PARTY OBLIGATIONS NOT AFFECTED.
584-18 Sections 152.203, 152.208, and 152.209 do not limit a partnership's
584-19 obligations to another person under Sections 152.301 and 152.302.
584-20 (Sections 152.215-152.300 reserved for expansion)
584-21 SUBCHAPTER E. RELATIONSHIP BETWEEN PARTNERS
584-22 AND OTHER PERSONS
584-23 Sec. 152.301. PARTNER AS AGENT. Each partner is an agent of
584-24 the partnership for the purpose of its business.
584-25 Sec. 152.302. BINDING EFFECT OF PARTNER'S ACTION. (a)
584-26 Unless a partner does not have authority to act for the partnership
584-27 in a particular matter and the person with whom the partner is
585-1 dealing knows that the partner lacks authority, an act of a
585-2 partner, including the execution of an instrument in the
585-3 partnership name, binds the partnership if the act is apparently
585-4 for carrying on in the ordinary course:
585-5 (1) the partnership business; or
585-6 (2) business of the kind carried on by the
585-7 partnership.
585-8 (b) An act of a partner that is not apparently for carrying
585-9 on in the ordinary course a business described by Subsection (a)
585-10 binds the partnership only if authorized by the other partners.
585-11 (c) A conveyance of real property by a partner on behalf of
585-12 the partnership not otherwise binding on the partnership binds the
585-13 partnership if the property has been conveyed by the grantee or a
585-14 person claiming through the grantee to be a holder for value
585-15 without knowledge that the partner exceeded that partner's
585-16 authority in making the conveyance.
585-17 Sec. 152.303. LIABILITY OF PARTNERSHIP FOR CONDUCT OF
585-18 PARTNER. (a) A partnership is liable for loss or injury to a
585-19 person, including a partner, or for a penalty caused by or incurred
585-20 as a result of a wrongful act or omission or other actionable
585-21 conduct of a partner acting:
585-22 (1) in the ordinary course of business of the
585-23 partnership; or
585-24 (2) with the authority of the partnership.
585-25 (b) A partnership is liable for the loss of money or
585-26 property of a person who is not a partner that is:
585-27 (1) received in the course of the partnership's
586-1 business; and
586-2 (2) misapplied by a partner while in the custody of
586-3 the partnership.
586-4 Sec. 152.304. NATURE OF PARTNER'S LIABILITY. (a) Except as
586-5 provided by Subsection (b) or Section 152.801(b), all partners are
586-6 liable jointly and severally for a debt or obligation of the
586-7 partnership unless otherwise:
586-8 (1) agreed by the claimant; or
586-9 (2) provided by law.
586-10 (b) A person who is admitted as a partner into an existing
586-11 partnership does not have personal liability under Subsection (a)
586-12 for an obligation of the partnership that:
586-13 (1) arises before the partner's admission to the
586-14 partnership;
586-15 (2) relates to an action taken or omission occurring
586-16 before the partner's admission to the partnership; or
586-17 (3) arises before or after the partner's admission to
586-18 the partnership under a contract or commitment entered into before
586-19 the partner's admission.
586-20 Sec. 152.305. REMEDY. An action may be brought against a
586-21 partnership and any or all of the partners in the same action or in
586-22 separate actions.
586-23 Sec. 152.306. ENFORCEMENT OF REMEDY. (a) A judgment against
586-24 a partnership is not by itself a judgment against a partner. A
586-25 judgment may be entered against a partner who has been served with
586-26 process in a suit against the partnership.
586-27 (b) Except as provided by Subsection (c), a creditor may
587-1 proceed against one or more partners or the property of the
587-2 partners to satisfy a judgment based on a claim against the
587-3 partnership only if a judgment:
587-4 (1) is also obtained against the partner; and
587-5 (2) based on the same claim:
587-6 (A) is obtained against the partnership;
587-7 (B) has not been reversed or vacated; and
587-8 (C) remains unsatisfied for 90 days after:
587-9 (i) the date on which the judgment is
587-10 entered; or
587-11 (ii) the date on which the stay expires,
587-12 if the judgment is contested by appropriate proceedings and
587-13 execution on the judgment is stayed.
587-14 (c) Subsection (b) does not prohibit a creditor from
587-15 proceeding directly against one or more partners or the property of
587-16 the partners without first seeking satisfaction from partnership
587-17 property if:
587-18 (1) the partnership is a debtor in bankruptcy;
587-19 (2) the creditor and the partnership agreed that the
587-20 creditor is not required to comply with Subsection (b);
587-21 (3) a court orders otherwise, based on a finding that
587-22 partnership property subject to execution in the state is clearly
587-23 insufficient to satisfy the judgment or that compliance with
587-24 Subsection (b) is excessively burdensome; or
587-25 (4) liability is imposed on the partner by law
587-26 independently of the person's status as a partner.
587-27 (d) This section does not limit the effect of Section
588-1 152.801 with respect to a limited liability partnership.
588-2 Sec. 152.307. EXTENSION OF CREDIT IN RELIANCE ON FALSE
588-3 REPRESENTATION. (a) The rights of a person extending credit in
588-4 reliance on a representation described by Section 152.054 are
588-5 determined by applicable law other than this chapter and the other
588-6 partnership provisions, including the law of estoppel, agency,
588-7 negligence, fraud, and unjust enrichment.
588-8 (b) The rights and duties of a person held liable under
588-9 Subsection (a) are also determined by law other than the law
588-10 described by Subsection (a).
588-11 (Sections 152.308-152.400 reserved for expansion)
588-12 SUBCHAPTER F. TRANSFER OF PARTNERSHIP INTERESTS
588-13 Sec. 152.401. TRANSFER OF PARTNERSHIP INTEREST. A partner
588-14 may transfer all or part of the partner's partnership interest.
588-15 Sec. 152.402. GENERAL EFFECT OF TRANSFER. A transfer of all
588-16 or part of a partner's partnership interest:
588-17 (1) is not an event of withdrawal;
588-18 (2) does not by itself cause a winding up of the
588-19 partnership business; and
588-20 (3) against the other partners or the partnership,
588-21 does not entitle the transferee, during the continuance of the
588-22 partnership, to participate in the management or conduct of the
588-23 partnership business.
588-24 Sec. 152.403. EFFECT OF TRANSFER ON TRANSFEROR. After
588-25 transfer, the transferor continues to have the rights and duties of
588-26 a partner other than the interest transferred.
588-27 Sec. 152.404. RIGHTS AND DUTIES OF TRANSFEREE. (a) A
589-1 transferee of a partner's partnership interest is entitled to
589-2 receive, to the extent transferred, distributions to which the
589-3 transferor otherwise would be entitled.
589-4 (b) If an event requires a winding up of partnership
589-5 business under Subchapter I, a transferee is entitled to receive,
589-6 to the extent transferred, the net amount otherwise distributable
589-7 to the transferor.
589-8 (c) Until a transferee becomes a partner, the transferee
589-9 does not have liability as a partner solely as a result of the
589-10 transfer.
589-11 (d) For a proper purpose the transferee may require
589-12 reasonable information or an account of a partnership transaction
589-13 and make reasonable inspection of the partnership books. In a
589-14 winding up of partnership business, a transferee may require an
589-15 accounting only from the date of the latest account agreed to by
589-16 all of the partners.
589-17 (e) Until receipt of notice of a transfer, a partnership is
589-18 not required to give effect to a transferee's rights under this
589-19 section and Sections 152.401-152.403.
589-20 Sec. 152.405. POWER TO EFFECT TRANSFER OR GRANT OF SECURITY
589-21 INTEREST. A partnership is not required to give effect to a
589-22 transfer prohibited by a partnership agreement.
589-23 Sec. 152.406. EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP
589-24 INTEREST. (a) For purposes of this code:
589-25 (1) on the divorce of a partner, the partner's spouse,
589-26 to the extent of the spouse's partnership interest, is a
589-27 transferee of the partnership interest from the partner;
590-1 (2) on the death of a partner, the partner's surviving
590-2 spouse, if any, and an heir, legatee, or personal representative of
590-3 the partner, to the extent of their respective partnership
590-4 interest, is a transferee of the partnership interest from the
590-5 partner; and
590-6 (3) on the death of a partner's spouse, an heir,
590-7 legatee, or personal representative of the spouse, to the extent of
590-8 their respective partnership interest, is a transferee of the
590-9 partnership interest from the partner.
590-10 (b) An event of the type described by Section 152.501
590-11 occurring with respect to a partner's spouse is not an event of
590-12 withdrawal.
590-13 (c) This chapter does not impair an agreement for the
590-14 purchase or sale of a partnership interest at any time, including
590-15 the death of an owner of the partnership interest.
590-16 (Sections 152.407-152.500 reserved for expansion)
590-17 SUBCHAPTER G. WITHDRAWAL OF PARTNER
590-18 Sec. 152.501. EVENTS OF WITHDRAWAL. (a) A person ceases to
590-19 be a partner on the occurrence of an event of withdrawal.
590-20 (b) An event of withdrawal of a partner occurs on:
590-21 (1) receipt by the partnership of notice of the
590-22 partner's express will to withdraw as a partner on:
590-23 (A) the date on which the notice is received; or
590-24 (B) a later date specified by the notice;
590-25 (2) an event specified in the partnership agreement as
590-26 causing the partner's withdrawal;
590-27 (3) the partner's expulsion as provided by the
591-1 partnership agreement;
591-2 (4) the partner's expulsion by vote of a
591-3 majority-in-interest of the other partners if:
591-4 (A) it is unlawful to carry on the partnership
591-5 business with that partner;
591-6 (B) there has been a transfer of all or
591-7 substantially all of that partner's partnership interest, other
591-8 than:
591-9 (i) a transfer for security purposes that
591-10 has not been foreclosed; or
591-11 (ii) the substitution of a successor
591-12 trustee or successor personal representative;
591-13 (C) not later than the 90th day after the date
591-14 on which the partnership notifies an entity partner, other than a
591-15 nonfiling entity or foreign nonfiling entity partner, that it will
591-16 be expelled because it has filed a certificate of termination or
591-17 the equivalent, its existence has been involuntarily terminated or
591-18 its charter has been revoked, or its right to conduct business has
591-19 been terminated or suspended by the jurisdiction of its formation,
591-20 if the certificate of termination or the equivalent is not revoked
591-21 or its existence, charter, or right to conduct business is not
591-22 reinstated; or
591-23 (D) an event requiring a winding up has occurred
591-24 with respect to a nonfiling entity or foreign nonfiling entity that
591-25 is a partner;
591-26 (5) application by the partnership or another partner
591-27 for the partner's expulsion by judicial decree because the partner:
592-1 (A) engaged in wrongful conduct that adversely
592-2 and materially affected the partnership business;
592-3 (B) wilfully or persistently committed a
592-4 material breach of:
592-5 (i) the partnership agreement; or
592-6 (ii) a duty owed to the partnership or the
592-7 other partners under Sections 152.204-152.206; or
592-8 (C) engaged in conduct relating to the
592-9 partnership business that made it not reasonably practicable to
592-10 carry on the business in partnership with that partner;
592-11 (6) the partner's:
592-12 (A) becoming a debtor in bankruptcy;
592-13 (B) executing an assignment for the benefit of a
592-14 creditor;
592-15 (C) seeking, consenting to, or acquiescing in
592-16 the appointment of a trustee, receiver, or liquidator of that
592-17 partner or of all or substantially all of that partner's property;
592-18 or
592-19 (D) failing, not later than the 90th day after
592-20 the appointment, to have vacated or stayed the appointment of a
592-21 trustee, receiver, or liquidator of the partner or of all or
592-22 substantially all of the partner's property obtained without the
592-23 partner's consent or acquiescence, or not later than the 90th day
592-24 after the date of expiration of a stay, failing to have the
592-25 appointment vacated;
592-26 (7) if a partner is an individual:
592-27 (A) the partner's death;
593-1 (B) the appointment of a guardian or general
593-2 conservator for the partner; or
593-3 (C) a judicial determination that the partner
593-4 has otherwise become incapable of performing the partner's duties
593-5 under the partnership agreement;
593-6 (8) termination of a partner's existence;
593-7 (9) if a partner has transferred all of the partner's
593-8 partnership interest, redemption of the transferee's interest under
593-9 Section 152.611; or
593-10 (10) an agreement to continue the partnership under
593-11 Section 11.057(b) if the partnership has received a notice from the
593-12 partner under Section 11.057(a)(6) requesting that the partnership
593-13 be wound up.
593-14 Sec. 152.502. EFFECT OF EVENT OF WITHDRAWAL ON PARTNERSHIP
593-15 AND OTHER PARTNERS. A partnership continues after an event of
593-16 withdrawal. The event of withdrawal affects the relationships
593-17 among the withdrawn partner, the partnership, and the continuing
593-18 partners as provided by Sections 152.503-152.506 and Subchapter H.
593-19 Sec. 152.503. WRONGFUL WITHDRAWAL; LIABILITY. (a) At any
593-20 time before the occurrence of an event requiring a winding up of
593-21 partnership business, a partner may withdraw from the partnership
593-22 and cease to be a partner as provided by Section 152.501.
593-23 (b) A partner's withdrawal is wrongful only if:
593-24 (1) the withdrawal breaches an express provision of
593-25 the partnership agreement;
593-26 (2) in the case of a partnership for a definite term
593-27 or particular undertaking or for which the partnership agreement
594-1 provides for winding up on a specified event, before the expiration
594-2 of the term, the completion of the undertaking, or the occurrence
594-3 of the event, as appropriate:
594-4 (A) the partner withdraws by express will;
594-5 (B) the partner withdraws by becoming a debtor
594-6 in bankruptcy; or
594-7 (C) in the case of a partner that is not an
594-8 individual, a trust other than a business trust, or an estate, the
594-9 partner is expelled or otherwise withdraws because the partner
594-10 wilfully dissolved or terminated; or
594-11 (3) the partner is expelled by judicial decree under
594-12 Section 152.501(b)(5).
594-13 (c) In addition to other liability of the partner to the
594-14 partnership or to the other partners, a wrongfully withdrawing
594-15 partner is liable to the partnership and to the other partners for
594-16 damages caused by the withdrawal.
594-17 Sec. 152.504. WITHDRAWN PARTNER'S POWER TO BIND PARTNERSHIP.
594-18 (a) The action of a withdrawn partner occurring not later than the
594-19 first anniversary of the date of the person's withdrawal binds the
594-20 partnership if the transaction would bind the partnership before
594-21 the person's withdrawal and the other party to the transaction:
594-22 (1) does not have notice of the person's withdrawal as
594-23 a partner;
594-24 (2) had done business with the partnership within one
594-25 year preceding the date of withdrawal; and
594-26 (3) reasonably believed that the withdrawn partner was
594-27 a partner at the time of the transaction.
595-1 (b) A withdrawn partner is liable to the partnership for
595-2 loss caused to the partnership arising from an obligation incurred
595-3 by the withdrawn partner after the withdrawal date and for which
595-4 the partnership is liable under Subsection (a).
595-5 Sec. 152.505. EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING
595-6 LIABILITY. (a) Withdrawal of a partner does not by itself
595-7 discharge the partner's liability for an obligation of the
595-8 partnership incurred before the date of withdrawal.
595-9 (b) The estate of a deceased partner is liable for an
595-10 obligation of the partnership incurred while the deceased was a
595-11 partner to the same extent that a withdrawn partner is liable for
595-12 an obligation of the partnership incurred before the date of
595-13 withdrawal.
595-14 (c) A withdrawn partner is discharged from liability
595-15 incurred before the date of withdrawal by an agreement to that
595-16 effect between the partner and a partnership creditor.
595-17 (d) If a creditor of a partnership has notice of a partner's
595-18 withdrawal and without the consent of the withdrawn partner agrees
595-19 to a material alteration in the nature or time of payment of an
595-20 obligation of the partnership incurred before the date of
595-21 withdrawal, the withdrawn partner is discharged from the
595-22 obligation.
595-23 Sec. 152.506. LIABILITY OF WITHDRAWN PARTNER TO THIRD PARTY.
595-24 A person who withdraws as a partner in a circumstance that is not
595-25 an event requiring a winding up of partnership business under
595-26 Section 11.051 or 11.057 is liable to another party as a partner in
595-27 a transaction entered into by the partnership or a surviving
596-1 partnership under Section 10.001 not later than the second
596-2 anniversary of the date of the partner's withdrawal only if the
596-3 other party to the transaction:
596-4 (1) does not have notice of the partner's withdrawal;
596-5 and
596-6 (2) reasonably believed that the withdrawn partner was
596-7 a partner at the time of the transaction.
596-8 (Sections 152.507-152.600 reserved for expansion)
596-9 SUBCHAPTER H. REDEMPTION OF WITHDRAWING PARTNER OR
596-10 TRANSFEREE'S INTEREST
596-11 Sec. 152.601. REDEMPTION IF PARTNERSHIP NOT WOUND UP. The
596-12 partnership interest of a withdrawn partner automatically is
596-13 redeemed by the partnership as of the date of withdrawal in
596-14 accordance with this subchapter if:
596-15 (1) the event of withdrawal occurs under Sections
596-16 152.501(b)(1)-(9) and an event requiring a winding up of
596-17 partnership business does not occur before the 61st day after the
596-18 date of the withdrawal; or
596-19 (2) the event of a withdrawal occurs under Section
596-20 152.501(b)(10).
596-21 Sec. 152.602. REDEMPTION PRICE. (a) Except as provided by
596-22 Subsection (b), the redemption price of a withdrawn partner's
596-23 partnership interest is the fair value of the interest on the date
596-24 of withdrawal.
596-25 (b) The redemption price of the partnership interest of a
596-26 partner who wrongfully withdraws before the expiration of a
596-27 definite term, the completion of a particular undertaking, or the
597-1 occurrence of a specified event requiring a winding up of
597-2 partnership business is the lesser of:
597-3 (1) the fair value of the withdrawn partner's
597-4 partnership interest on the date of withdrawal; or
597-5 (2) the amount that the withdrawn partner would have
597-6 received if an event requiring a winding up of partnership business
597-7 had occurred at the time of the partner's withdrawal.
597-8 (c) Interest is payable on the amount owed under this
597-9 section.
597-10 Sec. 152.603. CONTRIBUTION OBLIGATION. If a wrongfully
597-11 withdrawing partner would have been required to make contributions
597-12 to the partnership under Section 152.707 or 152.708 if an event
597-13 requiring winding up of the partnership business had occurred at
597-14 the time of withdrawal, the withdrawn partner is liable to the
597-15 partnership to make contributions to the partnership in that amount
597-16 and pay interest on the amount owed.
597-17 Sec. 152.604. SETOFF FOR CERTAIN DAMAGES. The partnership
597-18 may set off against the redemption price payable to the withdrawn
597-19 partner the damages for wrongful withdrawal under Section
597-20 152.503(b) and all other amounts owed by the withdrawn partner to
597-21 the partnership, whether currently due, including interest.
597-22 Sec. 152.605. ACCRUAL OF INTEREST. Interest payable under
597-23 Sections 152.602-152.604 accrues from the date of the withdrawal to
597-24 the date of payment.
597-25 Sec. 152.606. INDEMNIFICATION FOR CERTAIN LIABILITY. (a) A
597-26 partnership shall indemnify a withdrawn partner against a
597-27 partnership liability incurred before the date of withdrawal,
598-1 except for a liability:
598-2 (1) that is unknown to the partnership at the time; or
598-3 (2) incurred by an act of the withdrawn partner under
598-4 Section 152.504.
598-5 (b) For purposes of this section, a liability is unknown to
598-6 the partnership if it is not known to a partner other than the
598-7 withdrawn partner.
598-8 Sec. 152.607. DEMAND OR PAYMENT OF ESTIMATED REDEMPTION. (a)
598-9 If a deferred payment is not authorized under Section 152.608 and
598-10 an agreement on the redemption price of a withdrawn partner's
598-11 interest is not reached before the 121st day after the date of a
598-12 written demand for payment is made by either party, not later than
598-13 the 30th day after the expiration of the period, the partnership
598-14 shall:
598-15 (1) pay to the withdrawn partner in cash the amount
598-16 the partnership estimates to be the redemption price and any
598-17 accrued interest, reduced by any setoffs and accrued interest under
598-18 Section 152.604; or
598-19 (2) make written demand for payment of its estimate of
598-20 the amount owed by the withdrawn partner to the partnership, minus
598-21 any amount owed to the withdrawn partner by the partnership.
598-22 (b) If a deferred payment is authorized under Section
598-23 152.608 or a contribution or other amount is owed by the withdrawn
598-24 partner to the partnership, the partnership may offer in writing to
598-25 pay, or deliver a written statement of demand for, the amount it
598-26 estimates to be the net amount owed, stating the amount and other
598-27 terms of the obligation.
599-1 (c) On request of the other party, the payment, tender,
599-2 offer, or demand required or allowed by Subsection (a) or (b) must
599-3 be accompanied or followed promptly by:
599-4 (1) if payment, tender, offer, or demand is made or
599-5 delivered by the partnership, a statement of partnership property
599-6 and liabilities from the date of the partner's withdrawal and the
599-7 most recent available partnership balance sheet and income
599-8 statement, if any; and
599-9 (2) an explanation of the computation of the estimated
599-10 payment obligation.
599-11 (d) The terms of a payment, tender, offer, or demand under
599-12 Subsection (a) or (b) govern a redemption if:
599-13 (1) accompanied by written notice that:
599-14 (A) the payment or tendered amount, if made,
599-15 fully satisfies a party's obligations relating to the redemption of
599-16 the withdrawn partner's partnership interest; and
599-17 (B) an action to determine the redemption price,
599-18 a contribution obligation or setoff under Section 152.603 or
599-19 152.604, or other terms of the redemption obligation must be
599-20 commenced not later than the first anniversary of the later of:
599-21 (i) the date on which the written notice
599-22 is given; or
599-23 (ii) the date on which the information
599-24 required by Subsection (c) is delivered; and
599-25 (2) the party receiving the payment, tender, offer, or
599-26 demand does not commence an action in the period described by
599-27 Subdivision (1)(B).
600-1 Sec. 152.608. DEFERRED PAYMENT ON WRONGFUL WITHDRAWAL. (a)
600-2 A partner who wrongfully withdraws before the expiration of a
600-3 definite term, the completion of a particular undertaking, or the
600-4 occurrence of a specified event requiring a winding up of
600-5 partnership business is not entitled to receive any portion of the
600-6 redemption price until the expiration of the term, the completion
600-7 of the undertaking, or the occurrence of the specified event, as
600-8 appropriate, unless the partner establishes to the satisfaction of
600-9 a court that earlier payment will not cause undue hardship to the
600-10 partnership.
600-11 (b) A deferred payment accrues interest.
600-12 (c) The withdrawn partner may seek to demonstrate to the
600-13 satisfaction of the court that security for a deferred payment is
600-14 appropriate.
600-15 Sec. 152.609. ACTION TO DETERMINE TERMS OF REDEMPTION. (a)
600-16 A withdrawn partner or the partnership may maintain an action
600-17 against the other party under Section 152.211 to determine:
600-18 (1) the terms of redemption of that partner's
600-19 interest, including a contribution obligation or setoff under
600-20 Section 152.603 or 152.604; or
600-21 (2) other terms of the redemption obligations of
600-22 either party.
600-23 (b) The action must be commenced not later than the first
600-24 anniversary of the later of:
600-25 (1) the date of delivery of information required by
600-26 Section 152.607(c); or
600-27 (2) the date written notice is given under Section
601-1 152.607(d).
601-2 (c) The court shall determine the terms of the redemption of
601-3 the withdrawn partner's interest, any contribution obligation or
601-4 setoff due under Section 152.603 or 152.604, and accrued interest
601-5 and shall enter judgment for an additional payment or refund.
601-6 (d) If deferred payment is authorized under Section 152.608,
601-7 the court shall also determine the security for payment if
601-8 requested to consider whether security is appropriate.
601-9 (e) If the court finds that a party failed to tender payment
601-10 or make an offer to pay or to comply with the requirements of
601-11 Section 152.607(c) or otherwise acted arbitrarily, vexatiously, or
601-12 not in good faith, the court may assess damages against the party,
601-13 including, if appropriate, in an amount the court finds equitable:
601-14 (1) a share of the profits of the continuing business;
601-15 (2) reasonable attorney's fees; and
601-16 (3) fees and expenses of appraisers or other experts
601-17 for a party to the action.
601-18 Sec. 152.610. DEFERRED PAYMENT ON WINDING UP PARTNERSHIP. If
601-19 a partner withdraws under Section 152.501 and not later than the
601-20 60th day after the date of withdrawal an event requiring winding up
601-21 occurs under Section 11.051 or 11.057:
601-22 (1) the partnership may defer paying the redemption
601-23 price to the withdrawn partner until the partnership makes a
601-24 winding up distribution to the remaining partners; and
601-25 (2) the redemption price or contribution obligation is
601-26 the amount the withdrawn partner would have received or contributed
601-27 if the event requiring winding up had occurred at the time of the
602-1 partner's withdrawal.
602-2 Sec. 152.611. REDEMPTION OF TRANSFEREE'S PARTNERSHIP
602-3 INTEREST. (a) A partnership must redeem the partnership interest
602-4 of a transferee for its fair value if:
602-5 (1) the interest was transferred when:
602-6 (A) the partnership was for a definite term not
602-7 yet expired;
602-8 (B) the partnership was for a particular
602-9 undertaking not yet completed; or
602-10 (C) the partnership agreement provided for
602-11 winding up of the partnership business on a specified event that
602-12 had not yet occurred;
602-13 (2) the definite term of the partnership has expired,
602-14 the particular undertaking has been completed, or the specified
602-15 event has occurred; and
602-16 (3) the transferee makes a written demand for
602-17 redemption.
602-18 (b) If an agreement for the redemption price of a
602-19 transferee's interest is not reached before the 121st day after the
602-20 date a written demand for redemption is made, the partnership must
602-21 pay to the transferee in cash the amount the partnership estimates
602-22 to be the redemption price and any accrued interest from the date
602-23 of demand not later than the 30th day after the expiration of the
602-24 period.
602-25 (c) On request of the transferee, the payment required by
602-26 Subsection (b) must be accompanied or followed by:
602-27 (1) a statement of partnership property and
603-1 liabilities from the date of the demand for redemption;
603-2 (2) the most recent available partnership balance
603-3 sheet and income statement, if any; and
603-4 (3) an explanation of the computation of the estimated
603-5 payment obligation.
603-6 (d) If the payment required by Subsection (b) is accompanied
603-7 by written notice that the payment is in full satisfaction of the
603-8 partnership's obligations relating to the redemption of the
603-9 transferee's interest, the payment, less interest, is the
603-10 redemption price unless the transferee, not later than the first
603-11 anniversary of the written notice, commences an action to determine
603-12 the redemption price.
603-13 Sec. 152.612. ACTION TO DETERMINE TRANSFEREE'S REDEMPTION
603-14 PRICE. (a) A transferee may maintain an action against a
603-15 partnership to determine the redemption price of the transferee's
603-16 interest.
603-17 (b) The court shall determine the redemption price of the
603-18 transferee's interest and accrued interest and enter judgment for
603-19 payment or refund.
603-20 (c) If the court finds that the partnership failed to make
603-21 payment or otherwise acted arbitrarily, vexatiously, or not in good
603-22 faith, the court may assess against the partnership in an amount
603-23 the court finds equitable:
603-24 (1) reasonable attorney's fees; and
603-25 (2) fees and expenses of appraisers or other experts
603-26 for a party to the action.
603-27 (d) The redemption of a transferee's interest under Sections
604-1 152.611(a) and (b) may be deferred as determined by the court if
604-2 the partnership establishes to the satisfaction of the court that
604-3 failure to defer redemption will cause undue hardship to the
604-4 partnership business.
604-5 (Sections 152.613-152.700 reserved for expansion)
604-6 SUBCHAPTER I. SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS
604-7 Sec. 152.701. EFFECT OF EVENT REQUIRING WINDING UP. On the
604-8 occurrence of an event requiring winding up of a partnership
604-9 business under Section 11.051 or 11.057:
604-10 (1) the partnership continues until the winding up of
604-11 its business is completed, at which time the partnership is
604-12 terminated; and
604-13 (2) the relationship among the partners is changed as
604-14 provided by this subchapter.
604-15 Sec. 152.702. PERSONS ELIGIBLE TO WIND UP PARTNERSHIP
604-16 BUSINESS. (a) After the occurrence of an event requiring a winding
604-17 up of a partnership business, the partnership business may be wound
604-18 up by:
604-19 (1) the partners who have not withdrawn;
604-20 (2) the legal representative of the last surviving
604-21 partner; or
604-22 (3) a person appointed by the court to carry out the
604-23 winding up under Subsection (b).
604-24 (b) On application of a partner, a partner's legal
604-25 representative or transferee, or a withdrawn partner whose interest
604-26 is not redeemed under Section 152.608, a court, for good cause, may
604-27 appoint a person to carry out the winding up and may make an order,
605-1 direction, or inquiry that the circumstances require.
605-2 Sec. 152.703. RIGHTS AND DUTIES OF PERSON WINDING UP
605-3 PARTNERSHIP BUSINESS. (a) To the extent appropriate for winding
605-4 up, as soon as reasonably practicable, and in the name of and for
605-5 and on behalf of the partnership, a person winding up a
605-6 partnership's business may take the actions specified in Sections
605-7 11.052, 11.053, and 11.055.
605-8 (b) Section 11.052(a)(2) shall not be applicable to a
605-9 partnership.
605-10 Sec. 152.704. BINDING EFFECT OF PARTNER'S ACTION AFTER EVENT
605-11 REQUIRING WINDING UP. After the occurrence of an event requiring
605-12 winding up of the partnership business, a partnership is bound by a
605-13 partner's act that:
605-14 (1) is appropriate for winding up; or
605-15 (2) would bind the partnership under Sections 152.301
605-16 and 152.302 before the occurrence of the event requiring winding
605-17 up, if the other party to the transaction does not have notice that
605-18 an event requiring winding up has occurred.
605-19 Sec. 152.705. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER
605-20 EVENT REQUIRING WINDING UP. (a) Except as provided by Subsection
605-21 (b), after occurrence of an event requiring winding up of the
605-22 partnership business the losses with respect to which a partner
605-23 must contribute under Section 152.708(a) include losses from a
605-24 liability incurred under Section 152.704.
605-25 (b) A partner who incurs, with notice that an event
605-26 requiring a winding up of the partnership business has occurred, a
605-27 partnership liability under Section 152.704(2) by an act that is
606-1 not appropriate for winding up is liable to the partnership for a
606-2 loss caused to the partnership arising from that liability.
606-3 Sec. 152.706. DISPOSITION OF ASSETS. (a) In winding up the
606-4 partnership business, the property of the partnership, including
606-5 any required contributions of the partners under Sections 152.707
606-6 and 152.708, shall be applied to discharge its obligations to
606-7 creditors, including partners who are creditors other than in the
606-8 partners' capacities as partners.
606-9 (b) A surplus shall be applied to pay in cash the net amount
606-10 distributable to partners in accordance with their right to
606-11 distributions under Section 152.707.
606-12 Sec. 152.707. SETTLEMENT OF ACCOUNTS. (a) Each partner is
606-13 entitled to a settlement of all partnership accounts on winding up
606-14 the partnership business.
606-15 (b) In settling accounts among the partners, the partnership
606-16 interest of a withdrawn partner that is not redeemed under
606-17 Subchapter H is credited with a share of any profits for the period
606-18 after the partner's withdrawal but is charged with a share of
606-19 losses for that period only to the extent of profits credited for
606-20 that period.
606-21 (c) The profits and losses that result from the liquidation
606-22 of the partnership property must be credited and charged to the
606-23 partners' capital accounts.
606-24 (d) The partnership shall make a distribution to a partner
606-25 in an amount equal to that partner's positive balance in the
606-26 partner's capital account. Except as provided by Section
606-27 152.304(b) or 152.801, a partner shall contribute to the
607-1 partnership an amount equal to that partner's negative balance in
607-2 the partner's capital account.
607-3 Sec. 152.708. CONTRIBUTIONS TO DISCHARGE OBLIGATIONS. (a)
607-4 Except as provided by Sections 152.304(b) and 152.801, to the
607-5 extent not taken into account in settling the accounts among
607-6 partners under Section 152.707:
607-7 (1) each partner shall contribute, in the proportion
607-8 in which the partner shares partnership losses, the amount
607-9 necessary to satisfy partnership obligations, excluding liabilities
607-10 that creditors have agreed may be satisfied only with partnership
607-11 property without recourse to individual partners;
607-12 (2) if a partner fails to contribute, the other
607-13 partners shall contribute the additional amount necessary to
607-14 satisfy the partnership obligations in the proportions in which the
607-15 partners share partnership losses; and
607-16 (3) a partner or partner's legal representative may
607-17 enforce or recover from the other partners, or from the estate of a
607-18 deceased partner, contributions the partner or estate makes to the
607-19 extent the amount contributed exceeds that partner's or the
607-20 estate's share of the partnership obligations.
607-21 (b) The estate of a deceased partner is liable for the
607-22 partner's obligation to contribute to the partnership.
607-23 (c) The following persons may enforce the obligation of a
607-24 partner or the estate of a deceased partner to contribute to a
607-25 partnership:
607-26 (1) the partnership;
607-27 (2) an assignee for the benefit of creditors of a
608-1 partnership or a partner; or
608-2 (3) a person appointed by a court to represent
608-3 creditors of a partnership or a partner.
608-4 Sec. 152.709. CONTINUATION OF PARTNERSHIP. (a) If all the
608-5 partners in a partnership for a definite term or for a particular
608-6 undertaking or for which the partnership agreement provides for
608-7 winding up on a specified event agree to continue the partnership
608-8 business notwithstanding the expiration of the term, the completion
608-9 of the undertaking, or the occurrence of the event, as appropriate,
608-10 other than the withdrawal of a partner, the partnership is
608-11 continued and the partnership agreement is considered amended to
608-12 provide that the expiration, the completion, or the occurrence of
608-13 the event did not result in an event requiring the winding up of
608-14 the partnership business.
608-15 (b) A continuation of the business for 90 days by the
608-16 partners or those who habitually acted in the business during the
608-17 term or undertaking or preceding the event, without a settlement or
608-18 liquidation of the partnership business and without objection from
608-19 a partner, is prima facie evidence of agreement by all partners to
608-20 continue the business under Subsection (a).
608-21 (c) The continuation of the business by the other partners
608-22 or by those who habitually acted in the business before the notice
608-23 under Section 11.057(b), other than the partner giving the notice,
608-24 without any settlement or liquidation of the partnership business,
608-25 is prima facie evidence of an agreement to continue the partnership
608-26 under Section 11.057(b).
608-27 (Sections 152.710-152.800 reserved for expansion)
609-1 SUBCHAPTER J. LIMITED LIABILITY PARTNERSHIPS
609-2 Sec. 152.801. LIABILITY OF PARTNER. (a) Except as provided
609-3 by Subsection (b), a partner in a limited liability partnership is
609-4 not personally liable, directly or indirectly, by contribution,
609-5 indemnity, or otherwise, for a debt or obligation of the
609-6 partnership incurred while the partnership is a limited liability
609-7 partnership.
609-8 (b) A partner in a limited liability partnership is not
609-9 personally liable for a debt or obligation of the partnership
609-10 arising from an error, omission, negligence, incompetence, or
609-11 malfeasance committed by another partner or representative of the
609-12 partnership while the partnership is a limited liability
609-13 partnership and in the course of the partnership business unless
609-14 the first partner:
609-15 (1) was supervising or directing the other partner or
609-16 representative when the error, omission, negligence, incompetence,
609-17 or malfeasance was committed by the other partner or
609-18 representative;
609-19 (2) was directly involved in the specific activity in
609-20 which the error, omission, negligence, incompetence, or malfeasance
609-21 was committed by the other partner or representative; or
609-22 (3) had notice or knowledge of the error, omission,
609-23 negligence, incompetence, or malfeasance by the other partner or
609-24 representative at the time of the occurrence and then failed to
609-25 take reasonable action to prevent or cure the error, omission,
609-26 negligence, incompetence, or malfeasance.
609-27 (c) Sections 2.101(1), 152.305, and 152.306 do not limit the
610-1 effect of Subsection (a) in a limited liability partnership.
610-2 (d) In this section, "representative" includes an agent,
610-3 servant, or employee of a limited liability partnership.
610-4 (e) Subsections (a) and (b) do not affect:
610-5 (1) the liability of a partnership to pay its debts
610-6 and obligations from partnership property;
610-7 (2) the liability of a partner, if any, imposed by law
610-8 or contract independently of the partner's status as a partner; or
610-9 (3) the manner in which service of citation or other
610-10 civil process may be served in an action against a partnership.
610-11 (f) This section controls over the other parts of Chapter
610-12 152 and the other partnership provisions regarding the liability of
610-13 partners of a limited liability partnership, the chargeability of
610-14 the partners for the debts and obligations of the partnership, and
610-15 the obligations of the partners regarding contributions and
610-16 indemnity.
610-17 Sec. 152.802. REGISTRATION. (a) In addition to complying
610-18 with Sections 152.803 and 152.804, a partnership, to become a
610-19 limited liability partnership, must file an application with the
610-20 secretary of state in accordance with Chapter 4 and this section.
610-21 The application must:
610-22 (1) set out:
610-23 (A) the name of the partnership;
610-24 (B) the federal tax identification number of the
610-25 partnership;
610-26 (C) the street address of the partnership's
610-27 principal office in this state or outside of this state, as
611-1 applicable; and
611-2 (D) the number of partners at the date of
611-3 application; and
611-4 (2) contain a brief statement of the partnership's
611-5 business.
611-6 (b) The application must be signed by:
611-7 (1) a majority-in-interest of the partners; or
611-8 (2) one or more partners authorized by a
611-9 majority-in-interest of the partners.
611-10 (c) A partnership is registered as a limited liability
611-11 partnership by the secretary of state on:
611-12 (1) the date on which a completed initial or renewal
611-13 application is filed in accordance with Chapter 4; or
611-14 (2) a later date specified in the application.
611-15 (d) A registration is not affected by subsequent changes in
611-16 the partners of the partnership.
611-17 (e) The registration of a limited liability partnership is
611-18 effective until the first anniversary of the date of registration
611-19 or a later effective date, unless the application is:
611-20 (1) withdrawn or revoked at an earlier time; or
611-21 (2) renewed in accordance with Subsection (g).
611-22 (f) A registration may be withdrawn by filing a withdrawal
611-23 notice with the secretary of state in accordance with Chapter 4. A
611-24 withdrawal notice terminates the status of the partnership as a
611-25 limited liability partnership from the date on which the notice is
611-26 filed or a later date specified in the notice, but not later than
611-27 the expiration date under Subsection (e). A withdrawal notice
612-1 must:
612-2 (1) contain:
612-3 (A) the name of the partnership;
612-4 (B) the federal tax identification number of the
612-5 partnership;
612-6 (C) the date of registration of the
612-7 partnership's last application under this subchapter; and
612-8 (D) the current street address of the
612-9 partnership's principal office in this state and outside this
612-10 state, if applicable; and
612-11 (2) be signed by:
612-12 (A) a majority-in-interest of the partners; or
612-13 (B) one or more partners authorized by a
612-14 majority-in-interest of the partners.
612-15 (g) An effective registration may be renewed before its
612-16 expiration by filing an application with the secretary of state in
612-17 accordance with Chapter 4. A renewal application filed under this
612-18 subsection continues an effective registration for one year after
612-19 the date the registration would otherwise expire. The renewal
612-20 application must contain:
612-21 (1) current information required for an initial
612-22 application; and
612-23 (2) the most recent date of registration of the
612-24 partnership.
612-25 (h) The secretary of state may remove from its active
612-26 records the registration of a partnership the registration of which
612-27 has:
613-1 (1) been withdrawn or revoked; or
613-2 (2) expired and not been renewed.
613-3 (i) The secretary of state is not responsible for
613-4 determining whether a partnership is in compliance with the
613-5 requirements of Section 152.804(a).
613-6 (j) A document filed under this subchapter may be amended by
613-7 filing an application for amendment of registration with the
613-8 secretary of state in accordance with Chapter 4 and this
613-9 subsection. The application for amendment must:
613-10 (1) contain:
613-11 (A) the name of the partnership;
613-12 (B) the tax identification number of the
613-13 partnership;
613-14 (C) the identity of the document being amended;
613-15 (D) the date on which the document being amended
613-16 was filed;
613-17 (E) a reference to the part of the document
613-18 being amended; and
613-19 (F) the amendment or correction; and
613-20 (2) be signed by:
613-21 (A) a majority-in-interest of the partners; or
613-22 (B) one or more partners authorized by a
613-23 majority-in-interest of the partners.
613-24 Sec. 152.803. NAME. The name of a limited liability
613-25 partnership must comply with Section 5.063.
613-26 Sec. 152.804. INSURANCE OR FINANCIAL RESPONSIBILITY. (a) A
613-27 limited liability partnership must:
614-1 (1) carry at least $100,000 of liability insurance of
614-2 a kind that is designed to cover the kind of error, omission,
614-3 negligence, incompetence, or malfeasance for which liability is
614-4 limited by Section 152.801(b); or
614-5 (2) provide $100,000 specifically designated and
614-6 segregated for the satisfaction of judgments against the
614-7 partnership for the kind of error, omission, negligence,
614-8 incompetence, or malfeasance for which liability is limited by
614-9 Section 152.801(b) by:
614-10 (A) deposit of cash, bank certificates of
614-11 deposit, or United States Treasury obligations in trust or bank
614-12 escrow;
614-13 (B) a bank letter of credit; or
614-14 (C) insurance company bond.
614-15 (b) If the limited liability partnership is in compliance
614-16 with Subsection (a), the requirements of this section may not be
614-17 admissible or be made known to the jury in determining an issue of
614-18 liability for or extent of:
614-19 (1) the debt or obligation in question; or
614-20 (2) damages in question.
614-21 (c) If compliance with Subsection (a) is disputed:
614-22 (1) compliance must be determined separately from the
614-23 trial or proceeding to determine:
614-24 (A) the partnership debt or obligation in
614-25 question;
614-26 (B) the amount of the debt or obligation; or
614-27 (C) partner liability for the debt or
615-1 obligation; and
615-2 (2) the burden of proof of compliance is on the person
615-3 claiming limitation of liability under Section 152.801(b).
615-4 Sec. 152.805. LIMITED PARTNERSHIP. A limited partnership may
615-5 become a limited liability partnership by complying with applicable
615-6 provisions of Chapter 153.
615-7 (Sections 152.806-152.900 reserved for expansion)
615-8 SUBCHAPTER K. FOREIGN LIMITED LIABILITY PARTNERSHIPS
615-9 Sec. 152.901. GENERAL. (a) A foreign limited liability
615-10 partnership is subject to Section 2.101 with respect to its
615-11 activities in this state to the same extent as a domestic limited
615-12 liability partnership.
615-13 (b) A foreign limited liability partnership may not be
615-14 denied registration because of a difference between the laws of the
615-15 state under which the partnership is formed and the laws of this
615-16 state.
615-17 Sec. 152.902. NAME. The name of a foreign limited liability
615-18 partnership must:
615-19 (1) satisfy the requirements of the state of
615-20 formation; and
615-21 (2) comply with Section 5.063.
615-22 Sec. 152.903. ACTIVITIES NOT CONSTITUTING TRANSACTING
615-23 BUSINESS. Without excluding other activities that do not constitute
615-24 transacting business in this state, a foreign limited liability
615-25 partnership is not considered to be transacting business in this
615-26 state for purposes of this code because it carries on in this state
615-27 one or more of the activities listed by Section 9.251.
616-1 Sec. 152.904. REGISTERED AGENT. (a) A foreign limited
616-2 liability partnership subject to this chapter shall maintain a
616-3 registered office and registered agent in this state.
616-4 (b) For purposes of a registered office and registered
616-5 agent, a foreign limited liability partnership is subject to
616-6 Sections 5.201 through 5.209 to the same extent as a foreign filing
616-7 entity.
616-8 Sec. 152.905. STATEMENT OF FOREIGN QUALIFICATION. (a)
616-9 Before transacting business in this state, a foreign limited
616-10 liability partnership must file an application for registration in
616-11 accordance with Chapters 4 and 9 as though it were a foreign filing
616-12 entity and this section.
616-13 (b) The application must be signed by:
616-14 (1) a majority-in-interest of the partners; or
616-15 (2) one or more partners authorized by a
616-16 majority-in-interest of the partners.
616-17 (c) A partnership is registered as a foreign limited
616-18 liability partnership on:
616-19 (1) the date on which a completed initial or renewal
616-20 statement of foreign qualification is filed with the secretary of
616-21 state in accordance with Chapter 4; or
616-22 (2) a later date specified in the statement.
616-23 (d) A registration is not affected by subsequent changes in
616-24 the partners of the partnership.
616-25 (e) The registration of a foreign limited liability
616-26 partnership is effective until the first anniversary of the date
616-27 after the date of registration or a later effective date, unless
617-1 the statement is:
617-2 (1) withdrawn or revoked at an earlier time; or
617-3 (2) renewed in accordance with Section 152.908.
617-4 Sec. 152.906. CANCELLATION OF REGISTRATION. (a) A
617-5 registration may be canceled by filing a certificate of
617-6 cancellation.
617-7 (b) The certificate of cancellation must:
617-8 (1) contain:
617-9 (A) the federal tax identification number of the
617-10 partnership; and
617-11 (B) the date of effectiveness of the
617-12 partnership's last application for registration under this section;
617-13 and
617-14 (2) be signed by:
617-15 (A) a majority-in-interest of the partners; or
617-16 (B) one or more partners authorized by a
617-17 majority-in-interest of the partners.
617-18 Sec. 152.907. EFFECT OF CERTIFICATE OF CANCELLATION. A
617-19 certificate of cancellation terminates the registration of the
617-20 partnership as a foreign limited liability partnership as of the
617-21 date on which the notice is filed or a later date specified in the
617-22 notice, but not later than the expiration date under Section
617-23 152.905(e).
617-24 Sec. 152.908. RENEWAL OF REGISTRATION. (a) An effective
617-25 registration may be renewed before its expiration by filing a
617-26 renewal application for registration with the secretary of state in
617-27 accordance with Chapter 9.
618-1 (b) The renewal application must contain:
618-2 (1) current information required for an initial
618-3 statement of qualification; and
618-4 (2) the most recent date of registration of the
618-5 partnership.
618-6 (c) An application for registration filed under this section
618-7 continues an effective registration for one year after the date the
618-8 registration would otherwise expire.
618-9 Sec. 152.909. ACTION BY SECRETARY OF STATE. The secretary of
618-10 state may remove from its active records the registration of a
618-11 foreign limited liability partnership the registration of which
618-12 has:
618-13 (1) been withdrawn or revoked; or
618-14 (2) expired and not been renewed.
618-15 Sec. 152.910. EFFECT OF FAILURE TO QUALIFY. (a) A foreign
618-16 limited liability partnership that transacts business in this state
618-17 without being registered is subject to Subchapter B, Chapter 9, to
618-18 the same extent as a foreign filing entity.
618-19 (b) A partner of a foreign limited liability partnership is
618-20 not liable for a debt or obligation of the partnership solely
618-21 because the partnership transacted business in this state without
618-22 being registered.
618-23 Sec. 152.911. AMENDMENT. (a) A document filed under this
618-24 subchapter may be amended by filing with the secretary of state an
618-25 application for amendment of registration in accordance with
618-26 Chapter 4.
618-27 (b) The application for amendment must contain:
619-1 (1) the name of the partnership;
619-2 (2) the tax identification number of the partnership;
619-3 (3) the identity of the document being amended;
619-4 (4) a reference to the date on which the document
619-5 being amended was filed;
619-6 (5) the part of the document being amended; and
619-7 (6) the amendment or correction.
619-8 Sec. 152.912. EXECUTION OF APPLICATION FOR AMENDMENT. The
619-9 application for amendment must be signed by:
619-10 (1) a majority-in-interest of the partners; or
619-11 (2) one or more partners authorized by a
619-12 majority-in-interest of the partners.
619-13 Sec. 152.913. EXECUTION OF STATEMENT OF CHANGE OF REGISTERED
619-14 OFFICE OR REGISTERED AGENT. A statement filed by a foreign limited
619-15 liability partnership in accordance with Section 5.202 must be
619-16 signed by:
619-17 (1) a majority-in-interest of the partners; or
619-18 (2) one or more partners authorized by a
619-19 majority-in-interest of the partners.
619-20 CHAPTER 153. LIMITED PARTNERSHIPS
619-21 SUBCHAPTER A. GENERAL PROVISIONS
619-22 Sec. 153.001. DEFINITION. In this chapter, "other limited
619-23 partnership provisions" means the provisions of Title 1 and
619-24 Chapters 151 and 154, to the extent applicable to limited
619-25 partnerships.
619-26 Sec. 153.002. CONSTRUCTION. (a) This chapter and the other
619-27 limited partnership provisions shall be applied and construed to
620-1 effect its general purpose to make uniform the law with respect to
620-2 limited partnerships among states that have similar laws.
620-3 (b) The rule that a statute in derogation of the common law
620-4 is to be strictly construed does not apply to this chapter and the
620-5 other limited partnership provisions.
620-6 Sec. 153.003. APPLICABILITY OF OTHER LAWS. (a) Except as
620-7 provided by Subsection (b), in a case not provided for by this
620-8 chapter and the other limited partnership provisions, the
620-9 provisions of Chapter 152 governing partnerships that are not
620-10 limited partnerships and the rules of law and equity govern.
620-11 (b) The powers and duties of a limited partner shall not be
620-12 governed by a provision of Chapter 152 that would be inconsistent
620-13 with the nature and role of a limited partner as contemplated by
620-14 this chapter.
620-15 (c) A limited partner shall not have any obligation or duty
620-16 of a general partner solely by reason of being a limited partner.
620-17 Sec. 153.004. NONWAIVABLE TITLE 1 PROVISIONS. (a) Except as
620-18 provided by this section, the following provisions of Title 1 may
620-19 not be waived or modified in the partnership agreement of a limited
620-20 partnership:
620-21 (1) Chapter 1, if the provision is used to interpret a
620-22 provision or define a word or phrase contained in a section listed
620-23 in this subsection;
620-24 (2) Chapter 2, other than Section 2.104(c)(2),
620-25 2.104(c)(3), or 2.113;
620-26 (3) Chapter 3, other than Subchapters C and E thereof
620-27 and Sections 3.151 and 3.152 (provided, that in all events a
621-1 partnership agreement may not validly waive or modify Sections
621-2 153.551 and 153.552); or
621-3 (4) Chapter 4, 5, 7, 10, 11, or 12, other than Section
621-4 11.058.
621-5 (b) A provision listed in Subsection (a) may be waived or
621-6 modified in the partnership agreement if the provision that is
621-7 waived or modified authorizes the limited partnership to waive or
621-8 modify the provision in the limited partnership's governing
621-9 documents.
621-10 (c) A provision listed in Subsection (a) may be modified in
621-11 the partnership agreement if the provision that is modified
621-12 specifies:
621-13 (1) the person or group or persons who are entitled to
621-14 approve a modification; or
621-15 (2) the vote or other method by which a modification
621-16 is required to be approved.
621-17 Sec. 153.005. WAIVER OR MODIFICATION OF RIGHTS OF THIRD
621-18 PARTIES. A provision in this title or in that part of Title 1
621-19 applicable to a limited partnership that grants a right to a
621-20 person, other than a general partner, a limited partner, or
621-21 assignee of a partnership interest in a limited partnership, may be
621-22 waived or modified in the partnership agreement of the limited
621-23 partnership only if the person consents in writing to the waiver or
621-24 modification.
621-25 (Sections 153.006-153.050 reserved for expansion)
621-26 SUBCHAPTER B. SUPPLEMENTAL PROVISIONS REGARDING AMENDMENT TO
621-27 CERTIFICATE OF FORMATION
622-1 Sec. 153.051. REQUIRED AMENDMENT TO CERTIFICATE OF
622-2 FORMATION. (a) A general partner shall file a certificate of
622-3 amendment reflecting the occurrence of one or more of the following
622-4 events not later than the 30th day after the date on which the
622-5 event occurred:
622-6 (1) the admission of a new general partner;
622-7 (2) the withdrawal of a general partner;
622-8 (3) a change in the name of the limited partnership;
622-9 or
622-10 (4) except as provided by Section 5.202, a change in:
622-11 (A) the address of the registered office; or
622-12 (B) the name or address of the registered agent
622-13 of the limited partnership.
622-14 (b) A general partner who becomes aware that a statement in
622-15 a certificate of formation was false when made or that a matter
622-16 described in the certificate has changed, making the certificate
622-17 false in any material respect, shall promptly amend the certificate
622-18 to make it accurate.
622-19 Sec. 153.052. DISCRETIONARY AMENDMENT TO CERTIFICATE OF
622-20 FORMATION. (a) A certificate of formation may be amended at any
622-21 time for a proper purpose as determined by the general partners.
622-22 (b) A certificate of formation may be amended to state the
622-23 name, mailing address, and street address of the business or
622-24 residence of each person winding up the limited partnership's
622-25 affairs if, after an event requiring the winding up of a limited
622-26 partnership but before the limited partnership is reconstituted or
622-27 a certificate of cancellation is filed as provided by Section
623-1 153.451:
623-2 (1) the certificate of formation has been amended to
623-3 reflect the withdrawal of all general partners; or
623-4 (2) a person who is not shown on the certificate of
623-5 formation as a general partner is carrying out the winding up of a
623-6 limited partnership's affairs.
623-7 (c) If the certificate of formation is amended under
623-8 Subsection (b), each person winding up the limited partnership's
623-9 affairs shall execute and file the certificate of amendment. A
623-10 person winding up the partnership's affairs is not subject to
623-11 liability as a general partner because of the filing of the
623-12 certificate of amendment.
623-13 (d) A general partner who is not winding up the limited
623-14 partnership's affairs is not required to execute and file a
623-15 certificate of amendment as provided by this section.
623-16 (Sections 153.053-153.100 reserved for expansion)
623-17 SUBCHAPTER C. LIMITED PARTNERS
623-18 Sec. 153.101. ADMISSION OF LIMITED PARTNERS. (a) In
623-19 connection with the formation of a limited partnership, a person
623-20 acquiring a limited partnership interest becomes a limited partner
623-21 on the later of:
623-22 (1) the date on which the limited partnership is
623-23 formed; or
623-24 (2) the date stated in the records of the limited
623-25 partnership as the date on which the person becomes a limited
623-26 partner or, if that date is not stated in those records, the date
623-27 on which the person's admission is first reflected in the records
624-1 of the limited partnership.
624-2 (b) After a limited partnership is formed, a person who
624-3 acquires a partnership interest directly from the limited
624-4 partnership becomes a new limited partner on:
624-5 (1) compliance with the provisions of the partnership
624-6 agreement governing admission of new limited partners; or
624-7 (2) if the partnership agreement does not contain
624-8 relevant admission provisions, the written consent of all partners.
624-9 (c) After formation of a limited partnership, an assignee of
624-10 a partnership interest becomes a new limited partner as provided by
624-11 Section 153.253(a).
624-12 (d) A person may be a limited partner unless the person
624-13 lacks capacity apart from this chapter and the other limited
624-14 partnership provisions.
624-15 Sec. 153.102. LIABILITY TO THIRD PARTIES. (a) Except as
624-16 provided by Subsection (c), a limited partner is not liable for the
624-17 obligations of a limited partnership unless:
624-18 (1) the limited partner is also a general partner; or
624-19 (2) in addition to the exercise of the limited
624-20 partner's rights and powers as a limited partner, the limited
624-21 partner participates in the control of the business.
624-22 (b) If the limited partner participates in the control of
624-23 the business, the limited partner is liable only to a person who
624-24 transacts business with the limited partnership reasonably
624-25 believing, based on the limited partner's conduct, that the limited
624-26 partner is a general partner.
624-27 (c) A limited partner who knowingly permits the limited
625-1 partner's name to be used in the name of the limited partnership,
625-2 except under a circumstance permitted by Section 5.055(c), is
625-3 liable to a creditor who extends credit to the limited partnership
625-4 without actual knowledge that the limited partner is not a general
625-5 partner.
625-6 Sec. 153.103. ACTIONS NOT CONSTITUTING PARTICIPATION IN
625-7 BUSINESS FOR LIABILITY PURPOSES. For purposes of this section and
625-8 Sections 153.102, 153.104, and 153.105, a limited partner does not
625-9 participate in the control of the business because the limited
625-10 partner has or has acted in one or more of the following capacities
625-11 or possesses or exercises one or more of the following powers:
625-12 (1) acting as a contractor for or an agent or employee
625-13 of:
625-14 (A) the limited partnership;
625-15 (B) a general partner;
625-16 (C) an officer, director, or stockholder of a
625-17 corporate general partner;
625-18 (D) a partner of a partnership that is a general
625-19 partner of the limited partnership; or
625-20 (E) a member or manager of a limited liability
625-21 company that is a general partner of the limited partnership;
625-22 (2) acting in a capacity similar to that described in
625-23 Subdivision (1) with any other person that is a general partner of
625-24 the limited partnership;
625-25 (3) consulting with or advising a general partner on
625-26 any matter, including the business of the limited partnership;
625-27 (4) acting as surety, guarantor, or endorser for the
626-1 limited partnership, guaranteeing or assuming one or more specific
626-2 obligations of the limited partnership, or providing collateral for
626-3 borrowings of the limited partnership;
626-4 (5) calling, requesting, attending, or participating
626-5 in a meeting of the partners or the limited partners;
626-6 (6) winding up the business of a limited partnership
626-7 under Chapter 11 and Subchapter K of this chapter;
626-8 (7) taking an action required or permitted by law to
626-9 bring, pursue, settle, or otherwise terminate a derivative action
626-10 in the right of the limited partnership;
626-11 (8) serving on a committee of the limited partnership
626-12 or the limited partners; or
626-13 (9) proposing, approving, or disapproving, by vote or
626-14 otherwise, one or more of the following matters:
626-15 (A) the dissolution or winding up of the limited
626-16 partnership;
626-17 (B) an election to reconstitute the limited
626-18 partnership or continue the business of the limited partnership;
626-19 (C) the sale, exchange, lease, mortgage,
626-20 assignment, pledge, or other transfer of, or granting of a security
626-21 interest in, an asset of the limited partnership;
626-22 (D) the incurring, renewal, refinancing, or
626-23 payment or other discharge of indebtedness by the limited
626-24 partnership;
626-25 (E) a change in the nature of the business of
626-26 the limited partnership;
626-27 (F) the admission, removal, or retention of a
627-1 general partner;
627-2 (G) the admission, removal, or retention of a
627-3 limited partner;
627-4 (H) a transaction or other matter involving an
627-5 actual or potential conflict of interest;
627-6 (I) an amendment to the partnership agreement or
627-7 certificate of formation;
627-8 (J) if the limited partnership is qualified as
627-9 an investment company under the federal Investment Company Act of
627-10 1940 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter
627-11 required by that Act or the rules and regulations of the Securities
627-12 and Exchange Commission under that Act, to be approved by the
627-13 holders of beneficial interests in an investment company,
627-14 including:
627-15 (i) electing directors or trustees of the
627-16 investment company;
627-17 (ii) approving or terminating an
627-18 investment advisory or underwriting contract;
627-19 (iii) approving an auditor; and
627-20 (iv) acting on another matter that that
627-21 Act requires to be approved by the holders of beneficial interests
627-22 in the investment company;
627-23 (K) indemnification of a general partner under
627-24 Chapter 8 or otherwise;
627-25 (L) any other matter stated in the partnership
627-26 agreement;
627-27 (M) the exercising of a right or power granted
628-1 or permitted to limited partners under this code and not
628-2 specifically enumerated in this section; or
628-3 (N) the merger or conversion of a limited
628-4 partnership.
628-5 Sec. 153.104. ENUMERATION OF ACTIONS NOT EXCLUSIVE. The
628-6 enumeration in Section 153.103 does not mean that a limited partner
628-7 who has acted or acts in another capacity or possesses or exercises
628-8 another power constitutes participation by that limited partner in
628-9 the control of the business of the limited partnership.
628-10 Sec. 153.105. CREATION OF RIGHTS. Sections 153.103 and
628-11 153.104 do not create rights of limited partners. Rights of
628-12 limited partners may be created only by:
628-13 (1) the certificate of formation;
628-14 (2) the partnership agreement;
628-15 (3) other sections of this chapter; or
628-16 (4) the other limited partnership provisions.
628-17 Sec. 153.106. ERRONEOUS BELIEF OF CONTRIBUTOR BEING LIMITED
628-18 PARTNER. Except as provided by Section 153.109, a person who
628-19 erroneously but in good faith believes that the person has made a
628-20 contribution to and has become a limited partner in a limited
628-21 partnership is not liable as a general partner or otherwise
628-22 obligated because of making or attempting to make the contribution,
628-23 receiving distributions from the partnership, or exercising the
628-24 rights of a limited partner if, within a reasonable time after
628-25 ascertaining the mistake, the person:
628-26 (1) causes an appropriate certificate of formation or
628-27 certificate of amendment to be signed and filed;
629-1 (2) files or causes to be filed with the secretary of
629-2 state a written statement in accordance with Section 153.107; or
629-3 (3) withdraws from participation in future profits of
629-4 the enterprise by executing and filing with the secretary of state
629-5 a certificate declaring the person's withdrawal under this section.
629-6 Sec. 153.107. STATEMENT REQUIRED FOR LIABILITY PROTECTION.
629-7 (a) A written statement filed under Section 153.106(2) must be
629-8 entitled "Filing under Section 153.106(2), Business Organizations
629-9 Code," and contain:
629-10 (1) the name of the partnership;
629-11 (2) the name and mailing address of the person signing
629-12 the written statement; and
629-13 (3) a statement that:
629-14 (A) the person signing the written statement
629-15 acquired a limited partnership interest in the partnership;
629-16 (B) the person signing the written statement has
629-17 made an effort to cause a general partner of the partnership to
629-18 file an accurate certificate of formation required by the code and
629-19 the general partner has failed or refused to file the certificate;
629-20 and
629-21 (C) the statement is being filed under Section
629-22 153.106(2) and the person signing the written statement is claiming
629-23 status as a limited partner of the partnership named in the
629-24 document.
629-25 (b) The statement is effective for 180 days.
629-26 (c) A statement filed under Section 153.106(2) may be signed
629-27 by more than one person claiming limited partnership status under
630-1 this section and Sections 153.106, 153.108, and 153.109.
630-2 Sec. 153.108. REQUIREMENTS FOR LIABILITY PROTECTION
630-3 FOLLOWING EXPIRATION OF STATEMENT. (a) If a certificate described
630-4 by Section 153.106(1) has not been filed before the expiration of
630-5 the 180-day period described by Section 153.107(b), the person
630-6 filing the statement has no further protection from liability under
630-7 Section 153.106(2) unless the person complies with this section.
630-8 To be protected under Section 153.106 the person must, not later
630-9 than the 10th day after the date of expiration of the 180-day
630-10 period:
630-11 (1) withdraw under Section 153.106(3); or
630-12 (2) bring an action under Section 153.554 to compel
630-13 the execution and filing of a certificate of formation or
630-14 amendment.
630-15 (b) If an action is brought within the applicable period and
630-16 is diligently prosecuted to conclusion, the person bringing the
630-17 action continues to be protected from liability under Section
630-18 153.106(2) until the action is finally decided adversely to that
630-19 person.
630-20 (c) This section and Sections 153.106, 153.107, and 153.109
630-21 do not protect a person from liability that arises under Sections
630-22 153.102-153.105.
630-23 Sec. 153.109. LIABILITY OF ERRONEOUS CONTRIBUTOR. Regardless
630-24 of whether Sections 153.106, 153.107, and 153.108 apply, a person
630-25 who makes a contribution in the circumstances described by Section
630-26 153.106 is liable as a general partner to a third party who
630-27 transacts business with the partnership before an action taken
631-1 under Section 153.106 if:
631-2 (1) the contributor has knowledge or notice that no
631-3 certificate has been filed or that the certificate inaccurately
631-4 referred to the contributor as a general partner; and
631-5 (2) the third party reasonably believed, based on the
631-6 contributor's conduct, that the contributor was a general partner
631-7 at the time of the transaction and extended credit to the
631-8 partnership in reasonable reliance on the credit of the
631-9 contributor.
631-10 Sec. 153.110. WITHDRAWAL OF LIMITED PARTNER. A limited
631-11 partner may withdraw from a limited partnership only at the time or
631-12 on the occurrence of an event specified in a written partnership
631-13 agreement. The withdrawal of the partner must be made in
631-14 accordance with that agreement.
631-15 Sec. 153.111. DISTRIBUTION ON WITHDRAWAL. Except as
631-16 otherwise provided by Section 153.210 or the partnership agreement,
631-17 on withdrawal a withdrawing limited partner is entitled to receive,
631-18 not later than a reasonable time after withdrawal, the fair value
631-19 of that limited partner's interest in the limited partnership as of
631-20 the date of withdrawal.
631-21 Sec. 153.112. RECEIPT OF WRONGFUL DISTRIBUTION. A limited
631-22 partner who receives a distribution that is not permitted under
631-23 Section 153.210 is not required to return the distribution unless
631-24 the limited partner knew that the distribution violated the
631-25 prohibition of Section 153.210. This section does not affect an
631-26 obligation of the limited partner under the partnership agreement
631-27 or other applicable law to return the distribution.
632-1 Sec. 153.113. POWERS OF ESTATE OF LIMITED PARTNER WHO IS
632-2 DECEASED OR INCAPACITATED. If a limited partner who is an
632-3 individual dies or a court adjudges the limited partner to be
632-4 incapacitated in managing the limited partner's person or property,
632-5 the limited partner's executor, administrator, guardian,
632-6 conservator, or other legal representative may exercise all of the
632-7 limited partner's rights and powers to settle the limited partner's
632-8 estate or administer the limited partner's property, including the
632-9 power of an assignee to become a limited partner under the
632-10 partnership agreement.
632-11 (Sections 153.114-153.150 reserved for expansion)
632-12 SUBCHAPTER D. GENERAL PARTNERS
632-13 Sec. 153.151. ADMISSION OF ADDITIONAL GENERAL PARTNERS. (a)
632-14 After a limited partnership is formed, additional general partners
632-15 may be admitted:
632-16 (1) in the manner provided by a written partnership
632-17 agreement; or
632-18 (2) if a written partnership agreement does not
632-19 provide for the admission of additional general partners, with the
632-20 written consent of all partners.
632-21 (b) A person may be a general partner unless the person
632-22 lacks capacity apart from this chapter.
632-23 Sec. 153.152. GENERAL POWERS AND LIABILITIES OF GENERAL
632-24 PARTNER. (a) Except as provided by this chapter, the other limited
632-25 partnership provisions, or a partnership agreement, a general
632-26 partner of a limited partnership:
632-27 (1) has the rights and powers and is subject to the
633-1 restrictions of a partner in a partnership without limited
633-2 partners; and
633-3 (2) has the liabilities of a partner in a partnership
633-4 without limited partners to the partnership and to the other
633-5 partners.
633-6 (b) Except as provided by this chapter or the other limited
633-7 partnership provisions, a general partner of a limited partnership
633-8 has the liabilities of a partner in a partnership without limited
633-9 partners to a person other than the partnership and the other
633-10 partners.
633-11 Sec. 153.153. POWERS AND LIABILITIES OF PERSON WHO IS BOTH
633-12 GENERAL PARTNER AND LIMITED PARTNER. A person who is both a general
633-13 partner and a limited partner:
633-14 (1) has the rights and powers and is subject to the
633-15 restrictions and liabilities of a general partner; and
633-16 (2) except as otherwise provided by the partnership
633-17 agreement, this chapter, or the other limited partnership
633-18 provisions, has the rights and powers and is subject to the
633-19 restrictions and liabilities, if any, of a limited partner to the
633-20 extent of the general partner's participation in the partnership as
633-21 a limited partner.
633-22 Sec. 153.154. CONTRIBUTIONS BY AND DISTRIBUTIONS TO GENERAL
633-23 PARTNER. A general partner of a limited partnership may make a
633-24 contribution to, be allocated profits and losses of, and receive a
633-25 distribution from the limited partnership as a general partner, a
633-26 limited partner, or both.
633-27 Sec. 153.155. WITHDRAWAL OF GENERAL PARTNER. (a) A person
634-1 ceases to be a general partner of a limited partnership on the
634-2 occurrence of one or more of the following events of withdrawal:
634-3 (1) the general partner withdraws as a general partner
634-4 from the limited partnership as provided by Subsection (b);
634-5 (2) the general partner ceases to be a general partner
634-6 of the limited partnership as provided by Section 153.252(b);
634-7 (3) the general partner is removed as a general
634-8 partner in accordance with the partnership agreement;
634-9 (4) unless otherwise provided by a written partnership
634-10 agreement, or with the written consent of all partners, the general
634-11 partner:
634-12 (A) makes a general assignment for the benefit
634-13 of creditors;
634-14 (B) files a voluntary bankruptcy petition;
634-15 (C) becomes the subject of an order for relief
634-16 or is declared insolvent in a federal or state bankruptcy or
634-17 insolvency proceeding;
634-18 (D) files a petition or answer seeking for the
634-19 general partner a reorganization, arrangement, composition,
634-20 readjustment, liquidation, dissolution, or similar relief under
634-21 law;
634-22 (E) files a pleading admitting or failing to
634-23 contest the material allegations of a petition filed against the
634-24 general partner in a proceeding of the type described by Paragraphs
634-25 (A)-(D); or
634-26 (F) seeks, consents to, or acquiesces in the
634-27 appointment of a trustee, receiver, or liquidator of the general
635-1 partner or of all or a substantial part of the general partner's
635-2 properties;
635-3 (5) unless otherwise provided by a written partnership
635-4 agreement or with the written consent of all partners, the
635-5 expiration of:
635-6 (A) 120 days after the date of the commencement
635-7 of a proceeding against the general partner seeking reorganization,
635-8 arrangement, composition, readjustment, liquidation, dissolution,
635-9 or similar relief under law if the proceeding has not been
635-10 previously dismissed;
635-11 (B) 90 days after the date of the appointment,
635-12 without the general partner's consent, of a trustee, receiver, or
635-13 liquidator of the general partner or of all or a substantial part
635-14 of the general partner's properties if the appointment has not
635-15 previously been vacated or stayed; or
635-16 (C) 90 days after the date of expiration of a
635-17 stay, if the appointment has not previously been vacated;
635-18 (6) the death of a general partner;
635-19 (7) a court adjudicating a general partner who is an
635-20 individual mentally incompetent to manage the general partner's
635-21 person or property;
635-22 (8) unless otherwise provided by a written partnership
635-23 agreement or with the written consent of all partners, the
635-24 commencement of winding up activities intended to conclude in the
635-25 termination of a trust that is a general partner, but not merely
635-26 the substitution of a new trustee;
635-27 (9) unless otherwise provided by a written partnership
636-1 agreement or with the written consent of all partners, the
636-2 commencement of winding up activities of a separate partnership
636-3 that is a general partner;
636-4 (10) unless otherwise provided by a written
636-5 partnership agreement or with the written consent of all partners,
636-6 the:
636-7 (A) filing of a certificate of termination or
636-8 its equivalent for an entity, other than a nonfiling entity or a
636-9 foreign nonfiling entity, that is a general partner; or
636-10 (B) termination or revocation of the certificate
636-11 of formation or its equivalent of an entity, other than a nonfiling
636-12 entity or a foreign nonfiling entity, that is a general partner and
636-13 the expiration of 90 days after the date of notice to the entity of
636-14 termination or revocation without a reinstatement of its
636-15 certificate of formation or its equivalent; or
636-16 (11) the distribution by the fiduciary of an estate
636-17 that is a general partner of the estate's entire interest in the
636-18 limited partnership.
636-19 (b) A general partner may withdraw at any time from a
636-20 limited partnership and cease to be a general partner under
636-21 Subsection (a) by giving written notice to the other partners.
636-22 Sec. 153.156. NOTICE OF EVENT OF WITHDRAWAL. A general
636-23 partner who is subject to an event that with the passage of the
636-24 specified period becomes an event of withdrawal under Section
636-25 153.155(a)(4) or (5) shall notify the other partners of the event
636-26 not later than the 30th day after the date on which the event
636-27 occurred.
637-1 Sec. 153.157. WITHDRAWAL OF GENERAL PARTNER IN VIOLATION OF
637-2 PARTNERSHIP AGREEMENT. Unless otherwise provided by the partnership
637-3 agreement, a withdrawal by a general partner of a partnership for a
637-4 definite term or particular undertaking before the expiration of
637-5 that term or completion of that undertaking is a breach of the
637-6 partnership agreement.
637-7 Sec. 153.158. EFFECT OF WITHDRAWAL. (a) Unless otherwise
637-8 provided by a written partnership agreement and subject to the
637-9 liability created under Section 153.162, if a general partner
637-10 ceases to be a general partner under Section 153.155, the remaining
637-11 general partner or partners, or, if there are no remaining general
637-12 partners, a majority-in-interest of the limited partners in a vote
637-13 that excludes any limited partnership interest held by the
637-14 withdrawing general partner, may:
637-15 (1) convert that general partner's partnership
637-16 interest to that of a limited partner; or
637-17 (2) pay to the withdrawn general partner in cash, or
637-18 secure by bond approved by a court of competent jurisdiction, the
637-19 value of that partner's partnership interest minus the damages
637-20 caused if the withdrawal constituted a breach of the partnership
637-21 agreement.
637-22 (b) Until an action described by Subsection (a) is taken,
637-23 the owner of the partnership interest of the withdrawn general
637-24 partner has the status of an assignee under Subchapter F, Section
637-25 153.113, and Section 153.555.
637-26 (c) If there are no remaining general partners following the
637-27 withdrawal of a general partner, the partnership may be
638-1 reconstituted.
638-2 Sec. 153.159. CONVERSION OF PARTNERSHIP INTEREST AFTER
638-3 WITHDRAWAL. If the partners convert the partnership interest under
638-4 Section 153.158(a)(1), the limited partnership interest may be
638-5 reduced pro rata with all other partners to provide compensation,
638-6 an interest in the partnership, or both, to a replacement general
638-7 partner.
638-8 Sec. 153.160. EFFECT OF CONVERSION OF PARTNERSHIP INTEREST.
638-9 (a) After an amendment to the certificate of formation reflecting
638-10 the general partner's withdrawal as a general partner is filed
638-11 under Section 153.051, the withdrawing general partner:
638-12 (1) may vote as a limited partner in all matters, to
638-13 the same extent as the members of the class of limited partners
638-14 having the least voting rights with respect to the matter on which
638-15 the vote is taken; and
638-16 (2) may not vote on the admission and compensation of
638-17 a general partner who replaces the withdrawing general partner.
638-18 (b) If the general partner's withdrawal violates the
638-19 partnership agreement, the general partner does not have voting
638-20 rights.
638-21 Sec. 153.161. LIABILITY OF GENERAL PARTNER FOR DEBT INCURRED
638-22 AFTER EVENT OF WITHDRAWAL. (a) Unless otherwise provided by a
638-23 written partnership agreement and subject to the liability created
638-24 under Section 153.162, a general partner who ceases to be a general
638-25 partner under Section 153.155 is not personally liable in the
638-26 partner's capacity as a general partner for partnership debt
638-27 incurred after that partner ceases to be a general partner unless
639-1 the applicable creditor at the time the debt was incurred
639-2 reasonably believed that the partner remained a general partner.
639-3 (b) A creditor of the partnership has reason to believe that
639-4 a partner remains a general partner if:
639-5 (1) the creditor had no knowledge or notice of the
639-6 general partner's withdrawal and:
639-7 (A) was a creditor of the partnership at the
639-8 time of the general partner's withdrawal; or
639-9 (B) had extended credit to the partnership
639-10 within two years before the date of withdrawal; or
639-11 (2) the creditor had known that the partner was a
639-12 general partner in the partnership before the general partner's
639-13 withdrawal and had no knowledge or notice of the withdrawal and the
639-14 general partner's withdrawal had not been advertised in a
639-15 newspaper of general circulation in each place at which the
639-16 partnership business was regularly conducted.
639-17 Sec. 153.162. LIABILITY FOR WRONGFUL WITHDRAWAL. (a) If a
639-18 general partner's withdrawal from a limited partnership violates
639-19 the partnership agreement, the partnership may recover damages from
639-20 the withdrawing general partner for breach of the partnership
639-21 agreement, including the reasonable cost of obtaining replacement
639-22 of the services the withdrawn partner was obligated to perform.
639-23 (b) In addition to pursuing any remedy available under
639-24 applicable law, the partnership may effect the recovery of damages
639-25 under Subsection (a) by offsetting those damages against the
639-26 amount otherwise distributable to the withdrawing general partner,
639-27 reducing the limited partner interest into which the withdrawing
640-1 general partner's interest may be converted under Section
640-2 153.158(a)(1), or both.
640-3 (Sections 153.163-153.200 reserved for expansion)
640-4 SUBCHAPTER E. FINANCES
640-5 Sec. 153.201. FORM OF CONTRIBUTION. The contribution of a
640-6 limited partner may consist of a tangible or intangible benefit to
640-7 the limited partnership or other property of any kind or nature,
640-8 including:
640-9 (1) cash;
640-10 (2) a promissory note;
640-11 (3) services performed;
640-12 (4) a contract for services to be performed; and
640-13 (5) another interest in or security of the limited
640-14 partnership, another domestic or foreign limited partnership, or
640-15 other entity.
640-16 Sec. 153.202. ENFORCEABILITY OF PROMISE TO MAKE
640-17 CONTRIBUTION. (a) A promise by a limited partner to make a
640-18 contribution to, or pay cash or transfer other property to, a
640-19 limited partnership is not enforceable unless the promise is in
640-20 writing and signed by the limited partner.
640-21 (b) Except as otherwise provided by the partnership
640-22 agreement, a partner or the partner's legal representative or
640-23 successor is obligated to the limited partnership to perform an
640-24 enforceable promise to make a contribution to or pay cash or
640-25 transfer other property to a limited partnership, notwithstanding
640-26 the partner's death, disability, or other change in circumstances.
640-27 (c) If a partner or a partner's legal representative or
641-1 successor does not make a contribution or other payment of cash or
641-2 transfer of other property required by the enforceable promise,
641-3 whether as a contribution or with respect to a contribution
641-4 previously made, that partner or the partner's legal representative
641-5 or successor is obligated, at the option of the limited
641-6 partnership, to pay to the partnership an amount of cash equal to
641-7 the portion of the agreed value, as stated in the partnership
641-8 agreement or in the partnership records required to be kept under
641-9 Sections 153.551 and 153.552, of the contribution represented by
641-10 the amount of cash that has not been paid or the value of the
641-11 property that has not been transferred.
641-12 (d) A partnership agreement may provide that the partnership
641-13 interest of a partner who fails to make a payment of cash or
641-14 transfer of other property to the partnership, whether as a
641-15 contribution or with respect to a contribution previously made,
641-16 required by an enforceable promise is subject to specified
641-17 consequences, which may include:
641-18 (1) a reduction of the defaulting partner's percentage
641-19 or other interest in the limited partnership;
641-20 (2) subordination of the partner's partnership
641-21 interest to the interest of nondefaulting partners;
641-22 (3) a forced sale of the partner's partnership
641-23 interest;
641-24 (4) forfeiture of the partner's partnership interest;
641-25 (5) the lending of money to the defaulting partner by
641-26 other partners of the amount necessary to meet the defaulting
641-27 partner's commitment;
642-1 (6) a determination of the value of the defaulting
642-2 partner's partnership interest by appraisal or by formula and
642-3 redemption or sale of the partnership interest at that value; or
642-4 (7) another penalty or consequence.
642-5 Sec. 153.203. RELEASE OF OBLIGATION TO PARTNERSHIP. Unless
642-6 otherwise provided by the partnership agreement, the obligation of
642-7 a partner or the legal representative or successor of a partner to
642-8 make a contribution, pay cash, transfer other property, or return
642-9 cash or property paid or distributed to the partner in violation of
642-10 this chapter or the partnership agreement may be compromised or
642-11 released only by consent of all of the partners.
642-12 Sec. 153.204. ENFORCEABILITY OF OBLIGATION. (a)
642-13 Notwithstanding a compromise or release under Section 153.203, a
642-14 creditor of a limited partnership who extends credit or otherwise
642-15 acts in reasonable reliance on an obligation described by Section
642-16 153.203 may enforce the original obligation if:
642-17 (1) the obligation is reflected in a document signed
642-18 by the partner; and
642-19 (2) the document is not amended or canceled to reflect
642-20 the compromise or release.
642-21 (b) Notwithstanding the compromise or release, a general
642-22 partner remains liable to persons other than the partnership and
642-23 the other partners, as provided by Sections 153.152(a)(2) and
642-24 153.152(b).
642-25 Sec. 153.205. REQUIREMENTS TO ENFORCE CONDITIONAL
642-26 OBLIGATION. (a) An obligation of a limited partner of a limited
642-27 partnership that is subject to a condition may be enforced by the
643-1 partnership creditor described by Section 153.204 only if the
643-2 condition is satisfied or waived by or with respect to the limited
643-3 partner.
643-4 (b) A conditional obligation of a limited partner of a
643-5 limited partnership includes a contribution payable on a
643-6 discretionary call of the limited partnership before the time the
643-7 call occurs.
643-8 Sec. 153.206. ALLOCATION OF PROFITS AND LOSSES. (a) The
643-9 profits and losses of a limited partnership shall be allocated
643-10 among the partners in the manner provided by a written partnership
643-11 agreement.
643-12 (b) If a written partnership agreement does not provide for
643-13 the allocation of profits and losses, the profits and losses shall
643-14 be allocated:
643-15 (1) in accordance with the current percentage or other
643-16 interest in the partnership stated in partnership records of the
643-17 kind described by Section 153.551(a); or
643-18 (2) if the allocation of profits and losses is not
643-19 provided for in partnership records of the kind described by
643-20 Section 153.551(a), in proportion to capital accounts.
643-21 Sec. 153.207. RIGHT TO DISTRIBUTION. Subject to Section
643-22 153.210, when a partner becomes entitled to receive a distribution,
643-23 the partner has with respect to the distribution the status of and
643-24 is entitled to all remedies available to a creditor of the limited
643-25 partnership.
643-26 Sec. 153.208. SHARING OF DISTRIBUTIONS. (a) A distribution
643-27 of cash or another asset of a limited partnership shall be made to
644-1 a partner in the manner provided by a written partnership
644-2 agreement.
644-3 (b) If a written partnership agreement does not provide
644-4 otherwise, a distribution that is a return of capital shall be made
644-5 on the basis of the agreed value, as stated in the partnership
644-6 records required to be maintained under Section 153.551(a), of the
644-7 contribution made by each partner to the extent that the
644-8 contribution has not been returned. A distribution that is not a
644-9 return of capital shall be made in proportion to the allocation of
644-10 profits as determined under Section 153.206.
644-11 (c) Unless otherwise defined by a written partnership
644-12 agreement, in this section, "return of capital" means a
644-13 distribution to a partner to the extent that the partner's capital
644-14 account, immediately after the distribution, is less than the
644-15 amount of that partner's contribution to the partnership as reduced
644-16 by a prior distribution that was a return of capital.
644-17 Sec. 153.209. INTERIM DISTRIBUTIONS. Except as otherwise
644-18 provided by this section and Section 153.210, a partner is entitled
644-19 to receive a distribution from a limited partnership to the extent
644-20 and at the time or on the occurrence of an event specified in the
644-21 partnership agreement before:
644-22 (1) the partner withdraws from the partnership; and
644-23 (2) the winding up of the partnership business.
644-24 Sec. 153.210. LIMITATION ON DISTRIBUTION. A limited
644-25 partnership may not make a distribution to a partner if immediately
644-26 after giving effect to the distribution and despite any compromise
644-27 of a claim referred to by Sections 153.203 and 153.204, all
645-1 liabilities of the limited partnership, other than liabilities to
645-2 partners with respect to their partnership interests and
645-3 liabilities for which the recourse of creditors is limited to
645-4 specified property of the limited partnership, exceed the fair
645-5 value of the partnership assets. The fair value of property that
645-6 is subject to a liability for which recourse of creditors is
645-7 limited shall be included in the partnership assets for purposes of
645-8 this subsection only to the extent that the fair value of that
645-9 property exceeds that liability.
645-10 (Sections 153.211-153.250 reserved for expansion)
645-11 SUBCHAPTER F. PARTNERSHIP INTEREST
645-12 Sec. 153.251. ASSIGNMENT OF PARTNERSHIP INTEREST. (a)
645-13 Except as otherwise provided by the partnership agreement, a
645-14 partnership interest is assignable wholly or partly.
645-15 (b) Except as otherwise provided by the partnership
645-16 agreement, an assignment of a partnership interest:
645-17 (1) does not dissolve a limited partnership;
645-18 (2) does not entitle the assignee to become, or to
645-19 exercise rights or powers of, a partner; and
645-20 (3) entitles the assignee to be allocated income,
645-21 gain, loss, deduction, credit, or similar items and to receive
645-22 distributions to which the assignor was entitled to the extent
645-23 those items are assigned.
645-24 Sec. 153.252. RIGHTS OF ASSIGNOR. (a) Except as otherwise
645-25 provided by the partnership agreement, until the assignee becomes a
645-26 partner, the assignor partner continues to be a partner in the
645-27 limited partnership. The assignor partner may exercise any rights
646-1 or powers of a partner, except to the extent those rights or powers
646-2 are assigned.
646-3 (b) Except as otherwise provided by the partnership
646-4 agreement, on the assignment by a general partner of all of the
646-5 general partner's rights as a general partner, the general
646-6 partner's status as a general partner may be terminated by the
646-7 affirmative vote of a majority-in-interest of the limited partners.
646-8 Sec. 153.253. RIGHTS OF ASSIGNEE. (a) An assignee of a
646-9 partnership interest, including the partnership interest of a
646-10 general partner, may become a limited partner if and to the extent
646-11 that:
646-12 (1) the partnership agreement provides; or
646-13 (2) all partners consent.
646-14 (b) An assignee who becomes a limited partner, to the extent
646-15 of the rights and powers assigned, has the rights and powers and is
646-16 subject to the restrictions and liabilities of a limited partner
646-17 under a partnership agreement and this code.
646-18 Sec. 153.254. LIABILITY OF ASSIGNEE. (a) Until an assignee
646-19 of the partnership interest in a limited partnership becomes a
646-20 partner, the assignee does not have liability as a partner solely
646-21 as a result of the assignment.
646-22 (b) Unless otherwise provided by a written partnership
646-23 agreement, an assignee who becomes a limited partner:
646-24 (1) is liable for the obligations of the assignor to
646-25 make contributions as provided by Sections 153.202-153.204;
646-26 (2) is not obligated for liabilities unknown to the
646-27 assignee at the time the assignee became a limited partner and that
647-1 could not be ascertained from a written partnership agreement; and
647-2 (3) is not liable for the obligations of the assignor
647-3 under Sections 153.105, 153.112, and 153.162.
647-4 Sec. 153.255. LIABILITY OF ASSIGNOR. Regardless of whether
647-5 an assignee of a partnership interest becomes a limited partner,
647-6 the assignor is not released from the assignor's liability to the
647-7 limited partnership under Subchapter E and Sections 153.105,
647-8 153.112, and 153.162.
647-9 Sec. 153.256. CHARGE IN PAYMENT OF JUDGMENT CREDITOR. (a)
647-10 On application to a court by a judgment creditor of a partner or
647-11 other owner of a partnership interest, the court may:
647-12 (1) charge the partnership interest of the partner or
647-13 other owner with payment of the unsatisfied amount of the judgment,
647-14 with interest;
647-15 (2) appoint a receiver for the debtor partner's share
647-16 of the partnership's profits and other money payable or that
647-17 becomes payable to the debtor partner with respect to the limited
647-18 partnership; and
647-19 (3) make other orders, directions, and inquiries that
647-20 the circumstances of the case require.
647-21 (b) To the extent that the partnership interest is charged
647-22 in the manner provided by Subsection (a), the judgment creditor has
647-23 only the rights of an assignee of the partnership interest.
647-24 (c) The partnership interest charged may be:
647-25 (1) redeemed at any time before foreclosure; or
647-26 (2) in case of a sale directed by the court, and
647-27 without constituting an event requiring winding up, purchased:
648-1 (A) by one or more of the general partners with
648-2 separate property of any general partner; or
648-3 (B) with respect to partnership property, by one
648-4 or more of the general partners whose interests are not charged, on
648-5 the consent of all general partners whose interests are not charged
648-6 and a majority in interest of the limited partners, excluding
648-7 limited partnership interests held by a general partner whose
648-8 interest is charged.
648-9 (d) The remedies provided by Subsection (a) are exclusive
648-10 of other remedies that may exist, including remedies under laws of
648-11 this state applicable to partnerships without limited partners.
648-12 Sec. 153.257. EXEMPTION LAWS APPLICABLE TO PARTNERSHIP
648-13 INTEREST NOT AFFECTED. Section 153.256 does not deprive a partner
648-14 of the benefit of an exemption law applicable to that partner's
648-15 partnership interest.
648-16 (Sections 153.258-153.300 reserved for expansion)
648-17 SUBCHAPTER G. REPORTS, RECORDS, AND INFORMATION
648-18 Sec. 153.301. PERIODIC REPORT. The secretary of state may
648-19 require a domestic limited partnership or a foreign limited
648-20 partnership registered to transact business in this state to file a
648-21 report not more than once every four years as required by this
648-22 subchapter.
648-23 Sec. 153.302. FORM AND CONTENTS OF REPORT. (a) The report
648-24 must:
648-25 (1) include:
648-26 (A) the name of the limited partnership;
648-27 (B) the state or territory under the laws of
649-1 which the limited partnership is formed;
649-2 (C) the address of the registered office of the
649-3 limited partnership in this state and the name of the registered
649-4 agent at that address;
649-5 (D) the address of the principal office in the
649-6 United States where records are to be kept or made available under
649-7 Sections 153.551 and 153.552; and
649-8 (E) the name, mailing address, and street
649-9 address of the business or residence of each general partner;
649-10 (2) be made on a form adopted by the secretary of
649-11 state for that purpose; and
649-12 (3) be signed on behalf of the limited partnership by
649-13 at least one general partner.
649-14 (b) The information contained in the report must be given as
649-15 of the date of the execution of the report.
649-16 Sec. 153.303. FILING FEE. The filing fee for the report is
649-17 as provided by Chapter 4.
649-18 Sec. 153.304. DELIVERY OF REPORT. The report must be
649-19 delivered to the secretary of state not later than the 30th day
649-20 after the date on which notice is mailed under Section 153.305.
649-21 Sec. 153.305. ACTION BY SECRETARY OF STATE. (a) The
649-22 secretary of state shall send a notice that the report required by
649-23 Section 153.301 is due.
649-24 (b) The notice must be:
649-25 (1) addressed to the limited partnership; and
649-26 (2) mailed to:
649-27 (A) the registered office of the limited
650-1 partnership;
650-2 (B) the last known address of the limited
650-3 partnership as it appears on record in the office of the secretary
650-4 of state; or
650-5 (C) any other known place of business of the
650-6 limited partnership.
650-7 (c) The secretary of state shall include with the notice a
650-8 copy of a report form to be prepared and filed as provided by this
650-9 subchapter.
650-10 Sec. 153.306. EFFECT OF FILING REPORT. (a) If the secretary
650-11 of state finds that the report complies with this subchapter, the
650-12 secretary shall:
650-13 (1) accept the report for filing;
650-14 (2) acknowledge to the limited partnership of the
650-15 filing of the report; and
650-16 (3) update the records of the secretary of state's
650-17 office to reflect:
650-18 (A) a reported change in the address of the
650-19 registered office, principal office, or the business or residence
650-20 address of a general partner; and
650-21 (B) a reported change in the name of the
650-22 registered agent.
650-23 (b) The filing of a report under Section 153.301 does not
650-24 relieve the limited partnership of the requirement to file an
650-25 amendment to the certificate of formation required under Section
650-26 153.051 or 153.052, except that the limited partnership is not
650-27 required to file an amendment to change the information specified
651-1 in Subsection (a)(3).
651-2 Sec. 153.307. EFFECT OF FAILURE TO FILE REPORT. (a) A
651-3 domestic or foreign limited partnership that fails to file a report
651-4 under Section 153.301 when the report is due forfeits the limited
651-5 partnership's right to transact business in this state. A
651-6 forfeiture under this section takes effect without judicial
651-7 ascertainment.
651-8 (b) When the right to transact business has been forfeited
651-9 under this section, the secretary of state shall note that the
651-10 right to transact business has been forfeited and the date of
651-11 forfeiture on the record kept in the secretary's office relating to
651-12 the limited partnership.
651-13 Sec. 153.308. NOTICE OF FORFEITURE OF RIGHT TO TRANSACT
651-14 BUSINESS. Notice of the forfeiture under Section 153.307 shall be
651-15 mailed to the limited partnership at:
651-16 (1) the registered office of the limited partnership;
651-17 (2) the last known address of the limited partnership;
651-18 or
651-19 (3) any other place of business of the limited
651-20 partnership.
651-21 Sec. 153.309. EFFECT OF FORFEITURE OF RIGHT TO TRANSACT
651-22 BUSINESS. (a) Unless the right of the limited partnership to
651-23 transact business is revived in accordance with Section 153.310:
651-24 (1) the limited partnership may not maintain an
651-25 action, suit, or proceeding in a court of this state; and
651-26 (2) a successor or assignee of the limited partnership
651-27 may not maintain an action, suit, or proceeding in a court of this
652-1 state on a right, claim, or demand arising from the transaction of
652-2 business by the limited partnership in this state.
652-3 (b) The forfeiture of the right to transact business in this
652-4 state does not:
652-5 (1) impair the validity of a contract or act of the
652-6 limited partnership; or
652-7 (2) prevent the limited partnership from defending an
652-8 action, suit, or proceeding in a court of this state.
652-9 (c) This section and Sections 153.307 and 153.308 do not
652-10 affect the liability of a limited partner to the limited
652-11 partnership.
652-12 Sec. 153.310. REVIVAL OF RIGHT TO TRANSACT BUSINESS. (a) A
652-13 limited partnership that forfeits the right to transact business in
652-14 this state as provided by Section 153.309 may be relieved from the
652-15 forfeiture by filing the required report not later than the 120th
652-16 day after the date of mailing of the notice of forfeiture under
652-17 Section 153.308, accompanied by the filing fees as provided by
652-18 Chapter 4.
652-19 (b) If a limited partnership complies with Subsection (a),
652-20 the secretary of state shall:
652-21 (1) revive the right of the limited partnership to
652-22 transact business in this state;
652-23 (2) cancel the note regarding the forfeiture; and
652-24 (3) note the revival and the date of revival on the
652-25 record kept in the secretary's office relating to the limited
652-26 partnership.
652-27 Sec. 153.311. CANCELLATION OF CERTIFICATE OR REGISTRATION
653-1 AFTER FORFEITURE. (a) The secretary of state may cancel the
653-2 certificate of formation of a domestic limited partnership, or the
653-3 registration of a foreign limited partnership, if the limited
653-4 partnership:
653-5 (1) forfeits its right to transact business in this
653-6 state under Section 153.307; and
653-7 (2) fails to revive that right under Section 153.310.
653-8 (b) Cancellation of the certificate or registration takes
653-9 effect without judicial ascertainment.
653-10 (c) The secretary of state shall note the cancellation and
653-11 the date of cancellation on the record kept in the secretary's
653-12 office relating to the limited partnership.
653-13 (d) On cancellation, the status of the limited partnership
653-14 is changed to inactive according to the records of the secretary of
653-15 state. The change to inactive status does not affect the liability
653-16 of a limited partner to the limited partnership.
653-17 Sec. 153.312. REINSTATEMENT OF CERTIFICATE OF FORMATION OR
653-18 REGISTRATION. (a) A limited partnership the certificate of
653-19 formation or registration of which has been canceled as provided by
653-20 Section 153.311 may be relieved of the cancellation by filing the
653-21 report required by Section 153.301, accompanied by the filing fees
653-22 provided by Chapter 4.
653-23 (b) If the limited partnership pays the fees required by
653-24 Subsection (a), the secretary of state shall:
653-25 (1) reinstate the certificate or registration of the
653-26 limited partnership without judicial ascertainment;
653-27 (2) change the status of the limited partnership to
654-1 active; and
654-2 (3) note the reinstatement on the record kept in the
654-3 secretary's office relating to the limited partnership.
654-4 (c) If the name of the limited partnership is not available
654-5 at the time of reinstatement, the secretary of state shall require
654-6 the limited partnership as a precondition to reinstatement to:
654-7 (1) file an amendment to the partnership's certificate
654-8 of formation; or
654-9 (2) in the case of a foreign limited partnership,
654-10 amend its application for registration to adopt an assumed name for
654-11 use in this state.
654-12 (Sections 153.313-153.350 reserved for expansion)
654-13 SUBCHAPTER H. LIMITED PARTNERSHIP AS LIMITED LIABILITY PARTNERSHIP
654-14 Sec. 153.351. REQUIREMENTS. A limited partnership is a
654-15 limited liability partnership and a limited partnership if the
654-16 partnership:
654-17 (1) registers as a limited liability partnership:
654-18 (A) as permitted by its partnership agreement;
654-19 or
654-20 (B) if its partnership agreement does not
654-21 include a provision for becoming a limited liability partnership,
654-22 with the consent of partners required to amend its partnership
654-23 agreement;
654-24 (2) complies with Subchapter J, Chapter 152; and
654-25 (3) complies with Chapter 5.
654-26 Sec. 153.352. APPLICABILITY OF OTHER REQUIREMENTS. For
654-27 purposes of applying Section 152.802 to a limited partnership:
655-1 (1) an application to become a limited liability
655-2 partnership or to withdraw a registration must be signed by at
655-3 least one general partner; and
655-4 (2) other references to a partner mean a general
655-5 partner only.
655-6 Sec. 153.353. LAW APPLICABLE TO PARTNERS. If a limited
655-7 partnership is a limited liability partnership, Section 152.801
655-8 applies to a general partner and to a limited partner who is liable
655-9 under other provisions of this chapter for the debts or obligations
655-10 of the limited partnership.
655-11 (Sections 153.354-153.400 reserved for expansion)
655-12 SUBCHAPTER I. DERIVATIVE ACTIONS
655-13 Sec. 153.401. RIGHT TO BRING ACTION. A limited partner may
655-14 bring an action in a court on behalf of the limited partnership to
655-15 recover a judgment in the limited partnership's favor if:
655-16 (1) all general partners with authority to bring the
655-17 action have refused to bring the action; or
655-18 (2) an effort to cause those general partners to bring
655-19 the action is not likely to succeed.
655-20 Sec. 153.402. PROPER PLAINTIFF. In a derivative action, the
655-21 plaintiff must be a limited partner when the action is brought and:
655-22 (1) must have been a limited partner at the time of
655-23 the transaction that is the subject of the action; or
655-24 (2) the person's status as a limited partner must have
655-25 arisen by operation of law or under the terms of the partnership
655-26 agreement from a person who was a limited partner at the time of
655-27 the transaction.
656-1 Sec. 153.403. PLEADING. In a derivative action, the
656-2 complaint must contain with particularity:
656-3 (1) the effort, if any, of the plaintiff to secure
656-4 initiation of the action by a general partner; or
656-5 (2) the reasons for not making the effort.
656-6 Sec. 153.404. SECURITY FOR EXPENSES OF DEFENDANTS. (a) In a
656-7 derivative action, the court may require the plaintiff to give
656-8 security for the reasonable expenses incurred or expected to be
656-9 incurred by a defendant in the action, including reasonable
656-10 attorney's fees.
656-11 (b) The court may increase or decrease at any time the
656-12 amount of the security on a showing that the security provided is
656-13 inadequate or excessive.
656-14 (c) If a plaintiff is unable to give security, the plaintiff
656-15 may file an affidavit in accordance with the Texas Rules of Civil
656-16 Procedure.
656-17 (d) Except as provided by Subsection (c), if a plaintiff
656-18 fails to give the security within a reasonable time set by the
656-19 court, the court shall dismiss the suit without prejudice.
656-20 (e) The court, on final judgment for a defendant and on a
656-21 finding that suit was brought without reasonable cause against the
656-22 defendant, may require the plaintiff to pay reasonable expenses,
656-23 including reasonable attorney's fees, to the defendant, regardless
656-24 of whether security has been required.
656-25 Sec. 153.405. EXPENSES OF PLAINTIFF. If a derivative action
656-26 is successful, wholly or partly, or if anything is received by the
656-27 plaintiff because of a judgment, compromise, or settlement of the
657-1 action or claim constituting a part of the action, the court may
657-2 award the plaintiff reasonable expenses, including reasonable
657-3 attorney's fees, and shall direct the plaintiff to remit to a party
657-4 identified by the court the remainder of the proceeds received by
657-5 the plaintiff.
657-6 (Sections 153.406-153.450 reserved for expansion)
657-7 SUBCHAPTER J. CANCELLATION OF CERTIFICATE OF FORMATION
657-8 Sec. 153.451. CERTIFICATE OF CANCELLATION. (a) A
657-9 certificate of formation shall be canceled by filing a certificate
657-10 of cancellation with the secretary of state in accordance with
657-11 Chapter 4:
657-12 (1) on the completion of the winding up of the
657-13 partnership business;
657-14 (2) when there are no limited partners; or
657-15 (3) subject to Subsection (b), on a merger or
657-16 conversion as provided by Chapter 10.
657-17 (b) If a limited partnership formed under this code is not
657-18 one of the surviving or resulting domestic limited partnerships or
657-19 other entities in a merger or conversion, the certificate of merger
657-20 or conversion filed under Chapter 10 is sufficient, without a
657-21 filing under this section, to cancel the certificate of formation
657-22 of the nonsurviving limited partnership.
657-23 Sec. 153.452. CONTENTS OF CERTIFICATE OF CANCELLATION. A
657-24 certificate of cancellation must contain:
657-25 (1) the name of the limited partnership;
657-26 (2) the date of the filing of the partnership's
657-27 certificate of formation;
658-1 (3) the reason for filing the certificate of
658-2 cancellation;
658-3 (4) the future effective date or a certain time of
658-4 cancellation if cancellation is not effective on the filing of the
658-5 certificate; and
658-6 (5) other proper information as determined by the
658-7 person filing the certificate of cancellation.
658-8 (Sections 153.453-153.500 reserved for expansion)
658-9 SUBCHAPTER K. SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS
658-10 Sec. 153.501. CONTINUATION WITHOUT WINDING UP. (a) The
658-11 limited partnership may cancel an event requiring winding up as
658-12 specified in Section 11.051(1) or (3) if, not later than the 90th
658-13 day after the event, all remaining partners, or another group or
658-14 percentage of partners as specified by the partnership agreement,
658-15 agree in writing to continue the business of the limited
658-16 partnership.
658-17 (b) The limited partnership may revoke an event requiring
658-18 winding up as specified in Section 11.058(2) if:
658-19 (1) there remains at least one general partner and the
658-20 partnership agreement permits the business of the limited
658-21 partnership to be carried on by the remaining general partners and
658-22 those remaining general partners carry on the business; or
658-23 (2) not later than one year after the event, all
658-24 remaining partners, or another group or percentage of partners
658-25 specified in the partnership agreement:
658-26 (A) agree in writing to continue the business of
658-27 the limited partnership in writing; and
659-1 (B) to the extent that they desire or if there
659-2 are no remaining general partners, agree to the appointment of one
659-3 or more new general partners.
659-4 (c) The appointment of one or more new general partners
659-5 under Subsection (b)(2)(B) is effective from the date of
659-6 withdrawal.
659-7 Sec. 153.502. WINDING UP PROCEDURES. (a) Except as provided
659-8 by the partnership agreement, the winding up of the partnership's
659-9 affairs shall be accomplished by:
659-10 (1) the general partners;
659-11 (2) if there are no general partners, the limited
659-12 partners or a person chosen by the limited partners; or
659-13 (3) a person appointed by the court to carry out the
659-14 winding up under Subsection (b).
659-15 (b) On application of a partner or a partner's legal
659-16 representative or transferee, a court, on cause shown, may wind up
659-17 the limited partnership's affairs and, in connection with the
659-18 winding up, may appoint a person to carry out the liquidation and
659-19 may make all other orders, directions, and inquiries that the
659-20 circumstances require.
659-21 (c) Section 11.052(a)(2) shall not be applicable to a
659-22 limited partnership.
659-23 Sec. 153.503. POWERS OF PERSON CONDUCTING WIND UP. (a)
659-24 After an event requiring the winding up of a limited partnership
659-25 and until the filing of a certificate of cancellation as provided
659-26 by Sections 153.451 and 153.452, unless a written partnership
659-27 agreement provides otherwise, a person winding up the limited
660-1 partnership's business in the name of and on behalf of the limited
660-2 partnership may take the actions specified in Sections 11.052 and
660-3 11.053.
660-4 (b) The acts described by Subsection (a) do not create a
660-5 liability for a limited partner that did not exist before an action
660-6 to wind up the business of the partnership was taken.
660-7 Sec. 153.504. DISPOSITION OF ASSETS. On the winding up of a
660-8 limited partnership, its assets shall be paid or transferred as
660-9 follows:
660-10 (1) to the extent otherwise permitted by law, to
660-11 creditors, including partners who are creditors other than solely
660-12 because of the application of Section 153.207 for the payment or
660-13 the making of reasonable provision for payment to satisfy the
660-14 liabilities of the limited partnership;
660-15 (2) unless otherwise provided by the partnership
660-16 agreement, to partners and former partners to satisfy the
660-17 partnership's liability for distributions under Section 153.111 or
660-18 153.209; and
660-19 (3) unless otherwise provided by the partnership
660-20 agreement, to partners first for the return of their capital and
660-21 second with respect to their partnership interests, in the
660-22 proportions provided by Sections 153.208(a) and (b).
660-23 (Sections 153.505-153.550 reserved for expansion)
660-24 SUBCHAPTER L. MISCELLANEOUS PROVISIONS
660-25 Sec. 153.551. RECORDS. (a) A domestic limited partnership
660-26 shall maintain the following records in its principal office in the
660-27 United States or make the records available in that office not
661-1 later than the fifth day after the date on which a written request
661-2 under Section 153.552(a) is received:
661-3 (1) a current list that states:
661-4 (A) the name and mailing address of each
661-5 partner, separately identifying in alphabetical order the general
661-6 partners and the limited partners;
661-7 (B) the last known street address of the
661-8 business or residence of each general partner;
661-9 (C) the percentage or other interest in the
661-10 partnership owned by each partner; and
661-11 (D) if one or more classes or groups are
661-12 established under the partnership agreement, the names of the
661-13 partners who are members of each specified class or group;
661-14 (2) a copy of:
661-15 (A) the limited partnership's federal, state,
661-16 and local information or income tax returns for each of the
661-17 partnership's six most recent tax years;
661-18 (B) the partnership agreement and certificate of
661-19 formation; and
661-20 (C) all amendments or restatements;
661-21 (3) copies of any document that creates, in the manner
661-22 provided by the partnership agreement, classes or groups of
661-23 partners;
661-24 (4) an executed copy of any powers of attorney under
661-25 which the partnership agreement, certificate of formation, and all
661-26 amendments or restatements to the agreement and certificate have
661-27 been executed;
662-1 (5) unless contained in the written partnership
662-2 agreement, a written statement of:
662-3 (A) the amount of the cash contribution and a
662-4 description and statement of the agreed value of any other
662-5 contribution made by each partner;
662-6 (B) the amount of the cash contribution and a
662-7 description and statement of the agreed value of any other
662-8 contribution that the partner has agreed to make in the future as
662-9 an additional contribution;
662-10 (C) the date on which additional contributions
662-11 are to be made or the date of events requiring additional
662-12 contributions to be made;
662-13 (D) events requiring the limited partnership to
662-14 be dissolved and its affairs wound up; and
662-15 (E) the date on which each partner in the
662-16 limited partnership became a partner; and
662-17 (6) books and records of the accounts of the limited
662-18 partnership.
662-19 (b) A limited partnership shall maintain its records in
662-20 written form or in another form capable of being converted to
662-21 written form in a reasonable time.
662-22 (c) A limited partnership shall keep in its registered
662-23 office in this state and make available to a partner on reasonable
662-24 request the street address of its principal office in the United
662-25 States in which the records required by this section are
662-26 maintained.
662-27 Sec. 153.552. EXAMINATION OF RECORDS AND INFORMATION. (a)
663-1 On written request stating a proper purpose, a partner or an
663-2 assignee of a partnership interest may examine and copy, in person
663-3 or through a representative, records required to be kept under
663-4 Section 153.551 and other information regarding the business,
663-5 affairs, and financial condition of the limited partnership as is
663-6 just and reasonable for the person to examine and copy.
663-7 (b) The records requested under Subsection (a) may be
663-8 examined and copied at a reasonable time and at the partner's sole
663-9 expense.
663-10 (c) On written request by a partner or an assignee of a
663-11 partnership interest, the partnership shall provide to the
663-12 requesting partner or assignee without charge copies of:
663-13 (1) the partnership agreement and certificate of
663-14 formation and all amendments or restatements; and
663-15 (2) any tax return described by Section 153.551(a)(2).
663-16 (d) A request made under Subsection (c) must be made to:
663-17 (1) the person who is designated to receive the
663-18 request in the partnership agreement at the address designated in
663-19 the partnership agreement; or
663-20 (2) if there is no designation, a general partner at
663-21 the partnership's principal office in the United States.
663-22 Sec. 153.553. EXECUTION OF CERTAIN FILINGS. (a) Each
663-23 certificate required by this code to be filed by a limited
663-24 partnership with the secretary of state shall be executed as
663-25 follows:
663-26 (1) an initial certificate of formation must be signed
663-27 as provided in Section 3.004(b)(1), except for an initial
664-1 certificate of formation signed by a person under Section
664-2 153.106(1);
664-3 (2) a certificate of amendment or restated certificate
664-4 of formation must be signed by at least one general partner and by
664-5 each other general partner designated in the certificate of
664-6 amendment as a new general partner, unless signed and filed by a
664-7 person under Section 153.052(b), 153.052(c), or 153.106(1), but the
664-8 certificate of amendment need not be signed by a withdrawing
664-9 general partner;
664-10 (3) a certificate of cancellation must be signed by
664-11 all general partners participating in the winding up of the limited
664-12 partnership's business or, if no general partners are winding up
664-13 the limited partnership's business, by all nonpartner liquidators
664-14 or, if the limited partners are winding up the limited
664-15 partnership's business, by a majority-in-interest of the limited
664-16 partners;
664-17 (4) a certificate of merger filed on behalf of a
664-18 domestic limited partnership must be signed as provided by Chapter
664-19 10;
664-20 (5) a certificate filed under Section 10.251 must be
664-21 signed by the person designated by the court; and
664-22 (6) a certificate of correction must be signed by at
664-23 least one general partner.
664-24 (b) Any person may sign a certificate or partnership
664-25 agreement or amendment or restated certificate by an attorney in
664-26 fact. A power of attorney relating to the signing of a certificate
664-27 or partnership agreement or amendment or restated certificate by an
665-1 attorney in fact:
665-2 (1) is not required to be sworn to, verified, or
665-3 acknowledged;
665-4 (2) is not required to be filed with the secretary of
665-5 state; and
665-6 (3) shall be retained with the partnership records
665-7 under Sections 153.551 and 153.552.
665-8 (c) The execution of a certificate by a general partner or
665-9 the execution of a written statement by a person under Section
665-10 153.106(2) is an oath or affirmation, under a penalty of perjury,
665-11 that, to the best of the executing party's knowledge and belief,
665-12 the facts stated in the certificate or statement are true.
665-13 Sec. 153.554. EXECUTION, AMENDMENT, OR CANCELLATION BY
665-14 JUDICIAL ORDER. (a) If a person fails or refuses to execute or
665-15 file a certificate as required by this chapter or Title 1 or to
665-16 execute a partnership agreement, another person adversely affected
665-17 by the failure or refusal may petition a court to direct the
665-18 execution or filing of the certificate or the execution of the
665-19 partnership agreement, as appropriate.
665-20 (b) If the court finds that the execution or filing of the
665-21 certificate is proper and that a person required to execute or file
665-22 the certificate has failed or refused to execute or file the
665-23 certificate, the court shall order the secretary of state to record
665-24 an appropriate certificate.
665-25 (c) The judicial remedy described by Subsection (b) is not a
665-26 limit on the rights of a person to file a written statement under
665-27 Section 153.106(2).
666-1 (d) If the court finds that the partnership agreement should
666-2 be executed and that a person required to execute the partnership
666-3 agreement has failed or refused to execute the agreement, the court
666-4 shall enter an order granting appropriate relief.
666-5 (e) If a court enters an order in favor of the adversely
666-6 affected person requesting relief under this section, the court
666-7 shall award to that person reasonable expenses, including
666-8 reasonable attorney's fees.
666-9 Sec. 153.555. PERMITTED TRANSFER IN CONNECTION WITH
666-10 RACETRACK LICENSE. The following transfer relating to a limited
666-11 partnership is not a prohibited transfer that violates Section
666-12 6.12(a), Texas Racing Act (Article 179e, Vernon's Texas Civil
666-13 Statutes):
666-14 (1) a transfer by a general partnership of its assets
666-15 to a limited partnership, the corporate general partner of which is
666-16 controlled by the partners of the general partnership; or
666-17 (2) a transfer by a limited partnership of the
666-18 beneficial use of or interest in any of its rights, privileges, or
666-19 assets to a local development corporation incorporated before
666-20 January 31, 1993, under Subchapter D, Chapter 431, Transportation
666-21 Code.
666-22 CHAPTER 154. PROVISIONS APPLICABLE TO BOTH GENERAL
666-23 AND LIMITED PARTNERSHIPS
666-24 SUBCHAPTER A. PARTNERSHIP INTERESTS
666-25 Sec. 154.001. NATURE OF PARTNER'S PARTNERSHIP INTEREST. (a)
666-26 A partner's partnership interest is personal property for all
666-27 purposes.
667-1 (b) A partner's partnership interest may be community
667-2 property under applicable law.
667-3 (c) A partner is not a co-owner of partnership property.
667-4 Sec. 154.002. TRANSFER OF INTEREST IN PARTNERSHIP PROPERTY
667-5 PROHIBITED. A partner does not have an interest that can be
667-6 transferred, voluntarily or involuntarily, in partnership property.
667-7 (Sections 154.003-154.100 reserved for expansion)
667-8 SUBCHAPTER B. PARTNERSHIP AGREEMENT
667-9 Sec. 154.101. CLASS OR GROUP OF PARTNERS. (a) A written
667-10 partnership agreement may establish or provide for the future
667-11 creation of additional classes or groups of one or more partners
667-12 that have certain express relative rights, powers, and duties,
667-13 including voting rights. The future creation of additional classes
667-14 or groups may be expressed in the partnership agreement or at the
667-15 time of creation of the class or group.
667-16 (b) The rights, powers, or duties of a class or group of
667-17 partners may be senior to those partners of an existing class or
667-18 group.
667-19 Sec. 154.102. PROVISIONS RELATING TO VOTING. A written
667-20 partnership agreement that grants or provides for granting a right
667-21 to vote to a partner may contain a provision relating to:
667-22 (1) giving notice of the time, place, or purpose of a
667-23 meeting at which a matter is to be voted on by the partners;
667-24 (2) waiver of notice;
667-25 (3) action by consent without a meeting;
667-26 (4) the establishment of a record date;
667-27 (5) quorum requirements;
668-1 (6) voting in person or by proxy; or
668-2 (7) other matters relating to the exercise of the
668-3 right to vote.
668-4 Sec. 154.103. NOTICE OF ACTION BY CONSENT WITHOUT A MEETING.
668-5 (a) Prompt notice of the taking of an action under a partnership
668-6 agreement that may be taken without a meeting by consent of fewer
668-7 than all of the partners shall be given to a partner who has not
668-8 given written consent to the action.
668-9 (b) For purposes of this section, the "taking of an action"
668-10 includes:
668-11 (1) amending the partnership agreement; or
668-12 (2) creating under the partnership agreement a class
668-13 of partners that did not previously exist.
668-14 (Sections 154.104-154.200 reserved for expansion)
668-15 SUBCHAPTER C. PARTNERSHIP TRANSACTIONS AND RELATIONSHIPS
668-16 Sec. 154.201. BUSINESS TRANSACTIONS BETWEEN PARTNER AND
668-17 PARTNERSHIP. Except as otherwise provided by the partnership
668-18 agreement, a partner may lend money to and transact other business
668-19 with the partnership. Subject to other applicable law, a partner
668-20 has the same rights and obligations with respect to those matters
668-21 as a person who is not a partner.
668-22 Sec. 154.202. EFFECT OF PARTNER CHANGE ON RELATIONSHIP
668-23 BETWEEN PARTNERSHIP AND CREDITORS. The relationships between a
668-24 partnership and its creditors are not affected by the:
668-25 (1) withdrawal of a partner; or
668-26 (2) addition of a new partner.
668-27 Sec. 154.203. DISTRIBUTIONS IN KIND. (a) Except as provided
669-1 by the partnership agreement, a partner, regardless of the nature
669-2 of the partner's contribution, is not entitled to demand or receive
669-3 from a partnership a distribution in any form other than cash.
669-4 (b) Except as provided by the partnership agreement, a
669-5 partner may not be compelled to accept a disproportionate
669-6 distribution of an asset in kind from a partnership to the extent
669-7 that the percentage portion of assets distributed to the partner
669-8 exceeds the percentage of those assets that equals the percentage
669-9 in which the partner shares in distributions from the partnership.
669-10 TITLE 5. REAL ESTATE INVESTMENT TRUSTS
669-11 CHAPTER 200. REAL ESTATE INVESTMENT TRUSTS
669-12 SUBCHAPTER A. GENERAL PROVISIONS
669-13 Sec. 200.001. DEFINITION. In this chapter, "real estate
669-14 investment trust" means an unincorporated trust:
669-15 (1) formed by one or more trust managers under this
669-16 chapter and Chapter 3; and
669-17 (2) managed under this chapter.
669-18 Sec. 200.002. APPLICABILITY OF CHAPTER. (a) The provisions
669-19 of Chapters 20 and 21 govern a matter to the extent that this
669-20 chapter or Title 1 does not govern the matter.
669-21 (b) An unincorporated trust that does not meet the
669-22 requirements of this chapter is an unincorporated association under
669-23 Chapter 253.
669-24 Sec. 200.003. CONFLICT WITH OTHER LAW. In case of conflict
669-25 between this chapter and Chapters 20 and 21, this chapter controls.
669-26 Chapters 20 and 21 do not control over this chapter merely because
669-27 a provision of Chapter 20 or 21 is more or less extensive,
670-1 restrictive, or detailed than a similar provision of this chapter.
670-2 Sec. 200.004. ULTRA VIRES ACTS. (a) Lack of capacity of a
670-3 real estate investment trust may not be the basis of any claim or
670-4 defense at law or in equity.
670-5 (b) An act of a real estate investment trust or a transfer
670-6 of property by or to a real estate investment trust is not invalid
670-7 because the act or transfer was:
670-8 (1) beyond the scope of the purpose or purposes of the
670-9 real estate investment trust as expressed in the real estate
670-10 investment trust's certificate of formation; or
670-11 (2) inconsistent with a limitation on the authority of
670-12 an officer or trust manager to exercise a statutory power of the
670-13 real estate investment trust, as that limitation is expressed in
670-14 the real estate investment trust's certificate of formation.
670-15 (c) The fact that an act or transfer is beyond the scope of
670-16 the expressed purpose or purposes of the real estate investment
670-17 trust or is inconsistent with an expressed limitation on the
670-18 authority of an officer or trust manager may be asserted in a
670-19 proceeding:
670-20 (1) by a shareholder against the real estate
670-21 investment trust to enjoin the performance of an act or the
670-22 transfer of property by or to the real estate investment trust; or
670-23 (2) by the real estate investment trust, acting
670-24 directly or through a receiver, trustee, or other legal
670-25 representative, or through shareholders in a representative suit,
670-26 against an officer or trust manager or former officer or trust
670-27 manager of the real estate investment trust for exceeding that
671-1 person's authority.
671-2 (d) If the unauthorized act or transfer sought to be
671-3 enjoined under Subsection (c)(1) is being or is to be performed or
671-4 made under a contract to which the real estate investment trust is
671-5 a party and if each party to the contract is a party to the
671-6 proceeding, the court may set aside and enjoin the performance of
671-7 the contract. The court may award to the real estate investment
671-8 trust or to another party to the contract, as appropriate,
671-9 compensation for loss or damage resulting from the action of the
671-10 court in setting aside and enjoining the performance of the
671-11 contract, excluding loss of anticipated profits.
671-12 Sec. 200.005. SUPPLEMENTARY POWERS OF REAL ESTATE INVESTMENT
671-13 TRUST. (a) Subject to Section 2.113(a) and in addition to the
671-14 powers specified in Section 2.101, a real estate investment trust
671-15 may engage in activities mandated or authorized by:
671-16 (1) provisions of the Internal Revenue Code that are
671-17 related to or govern real estate investment trusts; and
671-18 (2) regulations adopted under the Internal Revenue
671-19 Code.
671-20 (b) This section does not authorize a real estate investment
671-21 trust or an officer or trust manager of a real estate investment
671-22 trust to exercise a power in a manner inconsistent with a
671-23 limitation on the purposes or powers of the real estate investment
671-24 trust contained in:
671-25 (1) the trust's certificate of formation;
671-26 (2) this code; or
671-27 (3) another law of this state.
672-1 Sec. 200.006. REQUIREMENT THAT FILING INSTRUMENT BE SIGNED
672-2 BY OFFICER. Unless otherwise provided by this chapter, a filing
672-3 instrument of a real estate investment trust may be signed by an
672-4 officer of the real estate investment trust.
672-5 (Sections 200.007-200.050 reserved for expansion)
672-6 SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS
672-7 Sec. 200.051. DECLARATION OF TRUST. For purposes of this
672-8 code, the certificate of formation of a real estate investment
672-9 trust is a declaration of trust. The certificate of formation may
672-10 be titled "declaration of trust" or "certificate of formation."
672-11 Sec. 200.052. NO PROPERTY RIGHT IN CERTIFICATE OF FORMATION.
672-12 A shareholder of a real estate investment trust does not have a
672-13 vested property right resulting from the certificate of formation,
672-14 including a provision in the certificate of formation relating to
672-15 the management, control, capital structure, dividend entitlement,
672-16 purpose, or duration of the real estate investment trust.
672-17 Sec. 200.053. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE
672-18 OF FORMATION. (a) To adopt an amendment to the certificate of
672-19 formation of a real estate investment trust as provided by
672-20 Subchapter B, Chapter 3, the trust managers shall:
672-21 (1) adopt a resolution stating the proposed amendment;
672-22 and
672-23 (2) follow the procedures prescribed by Sections
672-24 200.054-200.056.
672-25 (b) The resolution may incorporate the proposed amendment in
672-26 a restated certificate of formation that complies with Section
672-27 3.059.
673-1 Sec. 200.054. ADOPTION OF AMENDMENT BY TRUST MANAGERS. If a
673-2 real estate investment trust does not have any issued and
673-3 outstanding shares, the trust managers may adopt a proposed
673-4 amendment to the real estate investment trust's certificate of
673-5 formation by resolution without shareholder approval.
673-6 Sec. 200.055. ADOPTION OF AMENDMENT BY SHAREHOLDERS. If a
673-7 real estate investment trust has issued and outstanding shares:
673-8 (1) a resolution described by Section 200.053 must
673-9 also direct that the proposed amendment be submitted to a vote of
673-10 the shareholders at a meeting; and
673-11 (2) the shareholders must approve the proposed
673-12 amendment in the manner provided by Section 200.056.
673-13 Sec. 200.056. NOTICE OF AND MEETING TO CONSIDER PROPOSED
673-14 AMENDMENT. (a) Each shareholder of record entitled to vote shall
673-15 be given written notice containing the proposed amendment or a
673-16 summary of the changes to be effected within the time and in the
673-17 manner provided by this code for giving notice of meetings to
673-18 shareholders. If the proposed amendment is to be considered at an
673-19 annual meeting, the proposed amendment or summary may be included
673-20 in the notice required to be provided for an annual meeting.
673-21 (b) At the meeting, the proposed amendment shall be adopted
673-22 only on receiving the affirmative vote of shareholders entitled to
673-23 vote required by Section 200.261.
673-24 (c) An unlimited number of amendments may be submitted for
673-25 adoption by the shareholders at a meeting.
673-26 Sec. 200.057. ADOPTION OF RESTATED CERTIFICATE OF FORMATION.
673-27 (a) A real estate investment trust may adopt a restated
674-1 certificate of formation as provided by Subchapter B, Chapter 3, by
674-2 following the same procedures to amend its certificate of formation
674-3 under Sections 200.053-200.056, except that shareholder approval is
674-4 not required if an amendment is not adopted.
674-5 (b) If shares of the real estate investment trust have not
674-6 been issued and the restated certificate of formation is adopted by
674-7 the trust managers, the majority of the trust managers may sign the
674-8 restated certificate of formation on behalf of the real estate
674-9 investment trust.
674-10 Sec. 200.058. BYLAWS. (a) The trust managers of a real
674-11 estate investment trust shall adopt initial bylaws.
674-12 (b) The bylaws may contain provisions for the regulation and
674-13 management of the affairs of the real estate investment trust that
674-14 are consistent with law and the real estate investment trust's
674-15 certificate of formation.
674-16 (c) The trust managers of a real estate investment trust may
674-17 amend or repeal bylaws or adopt new bylaws unless:
674-18 (1) the real estate investment trust's certificate of
674-19 formation or this chapter wholly or partly reserves the power
674-20 exclusively to the real estate investment trust's shareholders; or
674-21 (2) in amending, repealing, or adopting a bylaw, the
674-22 shareholders expressly provide that the trust managers may not
674-23 amend, repeal, or readopt that bylaw.
674-24 Sec. 200.059. DUAL AUTHORITY. Unless the certificate of
674-25 formation or a bylaw adopted by the shareholders provides otherwise
674-26 as to all or a part of a real estate investment trust's bylaws, the
674-27 shareholders of a real estate investment trust may amend, repeal,
675-1 or adopt the bylaws of the real estate investment trust even if the
675-2 bylaws may also be amended, repealed, or adopted by the trust
675-3 managers of the real estate investment trust.
675-4 Sec. 200.060. ORGANIZATION MEETING. (a) After the real
675-5 estate investment trust has been formed, the initial trust managers
675-6 of the real estate investment trust shall hold an organization
675-7 meeting, at the call of a majority of those trust managers, for the
675-8 purpose of adopting bylaws, electing officers, and transacting
675-9 other business.
675-10 (b) Not later than the third day before the date of the
675-11 meeting, the initial trust managers calling the meeting shall send
675-12 notice of the time and place of the meeting to the other initial
675-13 trust managers named in the certificate of formation.
675-14 (Sections 200.061-200.100 reserved for expansion)
675-15 SUBCHAPTER C. SHARES
675-16 Sec. 200.101. NUMBER. A real estate investment trust may
675-17 issue the number of shares stated in the real estate investment
675-18 trust's certificate of formation.
675-19 Sec. 200.102. CLASSIFICATION OF SHARES. A real estate
675-20 investment trust may provide in the real estate investment trust's
675-21 certificate of formation:
675-22 (1) that a specified class of shares is preferred over
675-23 another class of shares as to its distributive share of the assets
675-24 on voluntary or involuntary liquidation of the real estate
675-25 investment trust;
675-26 (2) the amount of a preference described by
675-27 Subdivision (1);
676-1 (3) that a specified class of shares may be redeemed
676-2 at the option of the real estate investment trust or of the holders
676-3 of the shares;
676-4 (4) the terms and conditions of a redemption of shares
676-5 described by Subdivision (3), including the time and price of
676-6 redemption;
676-7 (5) that a specified class of shares may be converted
676-8 into shares of one or more other classes;
676-9 (6) the terms and conditions of a conversion described
676-10 by Subdivision (5);
676-11 (7) that a holder of a specified security issued or to
676-12 be issued by the real estate investment trust has voting or other
676-13 rights authorized by law; and
676-14 (8) for other preferences, rights, restrictions,
676-15 including restrictions on transferability, and qualifications
676-16 consistent with law.
676-17 Sec. 200.103. CLASSES OF SHARES ESTABLISHED BY TRUST
676-18 MANAGERS. (a) A real estate investment trust may provide in the
676-19 real estate investment trust's certificate of formation that the
676-20 trust managers may classify or reclassify any unissued shares by
676-21 setting or changing the preferences, conversion or other rights,
676-22 voting powers, restrictions, limitations as to dividends,
676-23 qualifications, or terms or conditions of redemption of the shares.
676-24 (b) Before issuing shares, the trust managers who perform as
676-25 authorized by the certificate of formation an action described by
676-26 Subsection (a) must file with the county clerk of the county of
676-27 the principal place of business of the real estate investment trust
677-1 a statement of designation that contains:
677-2 (1) a description of the shares, including the
677-3 preferences, conversion and other rights, voting powers,
677-4 restrictions, limitations as to dividends, qualifications, and
677-5 terms and conditions of redemption, as set or changed by the trust
677-6 managers; and
677-7 (2) a statement that the shares have been classified
677-8 or reclassified by the trust managers as authorized by the
677-9 certificate of formation.
677-10 Sec. 200.104. ISSUANCE OF SHARES. (a) A real estate
677-11 investment trust may issue shares for consideration if authorized
677-12 by the trust managers.
677-13 (b) Shares may not be issued until the consideration,
677-14 determined in accordance with this subchapter, has been received by
677-15 the real estate investment trust or by a corporation the
677-16 outstanding shares of each class of capital stock of which are
677-17 directly or indirectly owned by the real estate investment trust.
677-18 When the consideration is received:
677-19 (1) the shares are considered to be issued;
677-20 (2) the shareholder entitled to receive the shares is
677-21 a shareholder with respect to the shares; and
677-22 (3) the shares are considered fully paid and
677-23 nonassessable.
677-24 Sec. 200.105. TYPES OF CONSIDERATION FOR ISSUANCE OF SHARES.
677-25 Shares with or without par value may be issued by a real estate
677-26 investment trust for the following types of consideration:
677-27 (1) a tangible or intangible benefit to the real
678-1 estate investment trust;
678-2 (2) cash;
678-3 (3) a promissory note;
678-4 (4) services performed or a contract for services to
678-5 be performed;
678-6 (5) a security of the real estate investment trust or
678-7 any other organization; and
678-8 (6) any other property of any kind or nature.
678-9 Sec. 200.106. DETERMINATION OF CONSIDERATION FOR SHARES.
678-10 Consideration to be received by a real estate investment trust for
678-11 shares shall be determined by the trust managers.
678-12 Sec. 200.107. AMOUNT OF CONSIDERATION FOR ISSUANCE OF SHARES
678-13 WITH PAR VALUE. Consideration to be received by a real estate
678-14 investment trust for the issuance of shares with par value may not
678-15 be less than the par value of the shares.
678-16 Sec. 200.108. VALUE OF CONSIDERATION. In the absence of
678-17 fraud in the transaction, the judgment of the trust managers is
678-18 conclusive in determining the value of the consideration received
678-19 for the shares.
678-20 Sec. 200.109. LIABILITY OF ASSIGNEE OR TRANSFEREE. An
678-21 assignee or transferee of certificated shares, uncertificated
678-22 shares, or a subscription for shares in good faith and without
678-23 knowledge that full consideration for the shares or subscription
678-24 has not been paid may not be held personally liable to the real
678-25 estate investment trust or a creditor of the real estate investment
678-26 trust for an unpaid portion of the consideration.
678-27 Sec. 200.110. SUBSCRIPTIONS. (a) A real estate investment
679-1 trust may accept a subscription by notifying the subscriber in
679-2 writing.
679-3 (b) A subscription to purchase shares in a real estate
679-4 investment trust that is in the process of being formed is
679-5 irrevocable for six months if the subscription is in writing and
679-6 signed by the subscriber unless the subscription provides for a
679-7 longer or shorter period or all of the other subscribers agree to
679-8 the revocation of the subscription.
679-9 (c) A written subscription entered into after the real
679-10 estate investment trust is formed is a contract between the
679-11 subscriber and the real estate investment trust.
679-12 Sec. 200.111. PREFORMATION SUBSCRIPTION. (a) A real estate
679-13 investment trust may determine the payment terms of a preformation
679-14 subscription unless the payment terms are specified by the
679-15 subscription. The payment terms may authorize payment in full on
679-16 acceptance or by installments.
679-17 (b) Unless the subscription provides otherwise, a real
679-18 estate investment trust shall make calls placed to all subscribers
679-19 of similar interests for payment on preformation subscriptions
679-20 uniform as far as practicable.
679-21 (c) After the real estate investment trust is formed, the
679-22 real estate investment trust may:
679-23 (1) collect as any other debt the amount due on any
679-24 unpaid preformation subscription; or
679-25 (2) forfeit the subscription on 20 days' written
679-26 notice to the subscriber.
679-27 (d) Although the forfeiture of a subscription terminates all
680-1 the rights and obligations of the subscriber, the real estate
680-2 investment trust may retain any amount previously paid on the
680-3 subscription.
680-4 Sec. 200.112. COMMITMENT TO PURCHASE SHARES. (a) A person
680-5 who contemplates the acquisition of shares in a real estate
680-6 investment trust may commit to act in a specified manner with
680-7 respect to the shares after the acquisition, including the voting
680-8 of the shares or the retention or disposition of the shares. To be
680-9 binding, the commitment must be in writing and be signed by the
680-10 person acquiring the shares.
680-11 (b) A written commitment entered into under Subsection (a)
680-12 is a contract between the shareholder and the real estate
680-13 investment trust.
680-14 (Sections 200.113-200.150 reserved for expansion)
680-15 SUBCHAPTER D. SHAREHOLDER RIGHTS AND RESTRICTIONS
680-16 Sec. 200.151. REGISTERED HOLDERS AS OWNERS. Except as
680-17 otherwise provided by this code and subject to Chapter 8, Business
680-18 & Commerce Code, a real estate investment trust may consider the
680-19 person registered as the owner of a share in the share transfer
680-20 records of the real estate investment trust at a particular time,
680-21 including a record date set under Section 6.102, as the owner of
680-22 that share at that time for purposes of:
680-23 (1) voting the share;
680-24 (2) receiving distributions on the share;
680-25 (3) transferring the share;
680-26 (4) receiving notice, exercising rights of dissent and
680-27 appraisal, exercising or waiving a preemptive right, or giving
681-1 proxies with respect to that share; or
681-2 (5) entering into agreements with respect to that
681-3 share in accordance with Section 6.251 or 6.252 or with this
681-4 subchapter.
681-5 Sec. 200.152. NO STATUTORY PREEMPTIVE RIGHT UNLESS
681-6 SPECIFICALLY PROVIDED BY CERTIFICATE OF FORMATION. A shareholder of
681-7 a real estate investment trust does not have a preemptive right to
681-8 acquire securities except to the extent specifically provided by
681-9 the certificate of formation.
681-10 Sec. 200.153. TRANSFER OF SHARES AND OTHER SECURITIES.
681-11 Except as otherwise provided by this code, the shares and other
681-12 securities of a real estate investment trust are transferable in
681-13 accordance with Chapter 8, Business & Commerce Code.
681-14 Sec. 200.154. RESTRICTION ON TRANSFER OF SHARES AND OTHER
681-15 SECURITIES. (a) A restriction on the transfer or registration of
681-16 transfer of a security may be imposed by:
681-17 (1) the real estate investment trust's certificate of
681-18 formation;
681-19 (2) the real estate investment trust's bylaws;
681-20 (3) a written agreement among two or more holders of
681-21 the securities; or
681-22 (4) a written agreement among one or more holders of
681-23 the securities and the real estate investment trust if:
681-24 (A) the real estate investment trust files a
681-25 copy of the agreement at the principal place of business or
681-26 registered office of the real estate investment trust; and
681-27 (B) the copy of the agreement is subject to the
682-1 same right of examination by a shareholder of the real estate
682-2 investment trust, in person or by agent, attorney, or accountant,
682-3 as the books and records of the real estate investment trust.
682-4 (b) A restriction imposed under Subsection (a) is not valid
682-5 with respect to a security issued before the restriction has been
682-6 adopted, unless the holder of the security voted in favor of the
682-7 restriction or is a party to the agreement imposing the
682-8 restriction.
682-9 Sec. 200.155. VALID RESTRICTION ON TRANSFER. Notwithstanding
682-10 Sections 200.154 and 200.157, a restriction placed on the transfer
682-11 or registration of transfer of a security of a real estate
682-12 investment trust is valid if the restriction reasonably:
682-13 (1) obligates the holder of the restricted security to
682-14 offer a person, including the real estate investment trust or other
682-15 holders of securities of the real estate investment trust, an
682-16 opportunity to acquire the restricted security within a reasonable
682-17 time before the transfer;
682-18 (2) obligates the real estate investment trust, to the
682-19 extent provided by this code, or another person to purchase a
682-20 security that is the subject of an agreement relating to the
682-21 purchase and sale of the restricted security;
682-22 (3) requires the real estate investment trust or the
682-23 holders of a class of the real estate investment trust's securities
682-24 to consent to a proposed transfer of the restricted security or to
682-25 approve the proposed transferee of the restricted security for the
682-26 purpose of preventing a violation of law;
682-27 (4) prohibits the transfer of the restricted security
683-1 to a designated person or group of persons and the designation is
683-2 not manifestly unreasonable; or
683-3 (5) maintains a tax advantage to the real estate
683-4 investment trust, including maintaining its status as a real estate
683-5 investment trust under the relevant provisions of the Internal
683-6 Revenue Code and regulations adopted under the Internal Revenue
683-7 Code.
683-8 Sec. 200.156. BYLAW OR AGREEMENT RESTRICTING TRANSFER OF
683-9 SHARES OR OTHER SECURITIES. (a) A real estate investment trust
683-10 that has adopted a bylaw or is a party to an agreement that
683-11 restricts the transfer of the shares or other securities of the
683-12 real estate investment trust may file with the county clerk of the
683-13 county of the principal place of business of the real estate
683-14 investment trust a copy of the bylaw or agreement and a statement
683-15 attached to the copy that:
683-16 (1) contains the name of the real estate investment
683-17 trust;
683-18 (2) states that the attached copy of the bylaw or
683-19 agreement is a true and correct copy of the bylaw or agreement; and
683-20 (3) states that the filing has been authorized by the
683-21 trust managers or shareholders, as appropriate.
683-22 (b) After the statement is filed with the county clerk, the
683-23 bylaws or agreement restricting the transfer of shares or other
683-24 securities is a public record, and the fact that the statement has
683-25 been filed must be stated on a certificate representing the
683-26 restricted shares or securities if required by Section 3.202.
683-27 (c) A real estate investment trust that is a party to an
684-1 agreement restricting the transfer of the shares or other
684-2 securities of the real estate investment trust may make the
684-3 agreement part of the real estate investment trust's certificate of
684-4 formation without restating the provisions of the agreement in the
684-5 certificate of formation by complying with this code or amending
684-6 the certificate of formation. If the agreement alters the original
684-7 or amended certificate of formation, the altered provision must be
684-8 identified by reference or description in the certificate of
684-9 amendment. If the agreement is an addition to the original or
684-10 amended certificate of formation, the certificate of amendment must
684-11 state that fact.
684-12 (d) The certificate of amendment must:
684-13 (1) include a copy of the agreement restricting the
684-14 transfer of shares or other securities;
684-15 (2) state that the attached copy of the agreement is a
684-16 true and correct copy of the agreement; and
684-17 (3) state that inclusion of the certificate of
684-18 amendment as part of the certificate of formation has been
684-19 authorized in the manner required by this code to amend the
684-20 certificate of formation.
684-21 Sec. 200.157. ENFORCEABILITY OF RESTRICTION ON TRANSFER OF
684-22 CERTAIN SECURITIES. (a) A restriction placed on the transfer or
684-23 registration of the transfer of a security of a real estate
684-24 investment trust is specifically enforceable against the holder, or
684-25 a successor or transferee of the holder, if:
684-26 (1) the restriction is reasonable and noted
684-27 conspicuously on the certificate or other instrument representing
685-1 the security; or
685-2 (2) with respect to an uncertificated security, the
685-3 restriction is reasonable and a notation of the restriction is
685-4 contained in the notice sent with respect to the security under
685-5 Section 3.205.
685-6 (b) Unless noted in the manner specified by Subsection (a)
685-7 with respect to a certificate or other instrument or an
685-8 uncertificated security, an otherwise enforceable restriction is
685-9 ineffective against a transferee for value without actual knowledge
685-10 of the restriction at the time of the transfer or against a
685-11 subsequent transferee, regardless of whether the transfer is for
685-12 value. A restriction is specifically enforceable against a person
685-13 other than a transferee for value from the time the person acquires
685-14 actual knowledge of the restriction's existence.
685-15 Sec. 200.158. JOINT OWNERSHIP OF SHARES. (a) If shares are
685-16 registered on the books of a real estate investment trust in the
685-17 names of two or more persons as joint owners with the right of
685-18 survivorship and one of the owners dies, the real estate investment
685-19 trust may record on its books and effect the transfer of the shares
685-20 to a person, including the surviving joint owner, and pay any
685-21 distributions made with respect to the shares, as if the surviving
685-22 joint owner was the sole owner of the shares. The recording and
685-23 distribution authorized by this subsection must be made after the
685-24 death of a joint owner and before the real estate investment trust
685-25 receives actual written notice that a party other than a surviving
685-26 joint owner is claiming an interest in the shares or distribution.
685-27 (b) The discharge of a real estate investment trust from
686-1 liability under Section 200.160 and the transfer of full legal and
686-2 equitable title of the shares does not affect, reduce, or limit any
686-3 cause of action existing in favor of an owner of an interest in the
686-4 shares or distribution against the surviving owner.
686-5 Sec. 200.159. LIABILITY FOR DESIGNATING OWNER OF SHARES. A
686-6 real estate investment trust or an officer, trust manager,
686-7 employee, or agent of the real estate investment trust may not be
686-8 held liable for considering a person to be the owner of a share for
686-9 a purpose described by Section 200.151, regardless of whether the
686-10 person possesses a certificate for those shares.
686-11 Sec. 200.160. LIABILITY REGARDING JOINT OWNERSHIP OF SHARES.
686-12 A real estate investment trust that transfers shares or makes a
686-13 distribution to a surviving joint owner under Section 200.158
686-14 before the real estate investment trust has received a written
686-15 claim for the shares or distribution from another person is
686-16 discharged from liability for the transfer or payment.
686-17 (Sections 200.161-200.200 reserved for expansion)
686-18 SUBCHAPTER E. DISTRIBUTIONS AND SHARE DISTRIBUTIONS
686-19 Sec. 200.201. AUTHORITY FOR DISTRIBUTIONS. The trust
686-20 managers of a real estate investment trust may authorize a
686-21 distribution and the real estate investment trust may make a
686-22 distribution, subject to Section 200.202 and any restriction in the
686-23 certificate of formation.
686-24 Sec. 200.202. LIMITATIONS ON DISTRIBUTIONS. (a) A real
686-25 estate investment trust may not make a distribution:
686-26 (1) when the real estate investment trust is
686-27 insolvent;
687-1 (2) that will cause the real estate investment trust
687-2 to become insolvent; or
687-3 (3) that is more than the surplus of the real estate
687-4 investment trust.
687-5 (b) Notwithstanding Subsection (a)(3), if the net assets of
687-6 a real estate investment trust are not less than the amount of the
687-7 proposed distribution, the real estate investment trust may make a
687-8 distribution involving a purchase or redemption of its own shares
687-9 if the purchase or redemption is made by the real estate investment
687-10 trust to:
687-11 (1) eliminate fractional shares;
687-12 (2) collect or settle indebtedness owed by or to the
687-13 real estate investment trust;
687-14 (3) pay dissenting shareholders entitled to receive
687-15 payment for their shares under this chapter; or
687-16 (4) effect the purchase or redemption of redeemable
687-17 shares in accordance with this code.
687-18 Sec. 200.203. PRIORITY OF DISTRIBUTIONS. A real estate
687-19 investment trust's indebtedness that arises as a result of the
687-20 declaration of a distribution and a real estate investment trust's
687-21 indebtedness issued in a distribution are at parity with the real
687-22 estate investment trust's indebtedness to its general, unsecured
687-23 creditors, except to the extent the indebtedness is subordinated,
687-24 or payment of that indebtedness is secured, by agreement.
687-25 Sec. 200.204. RESERVES, DESIGNATIONS, AND ALLOCATIONS FROM
687-26 SURPLUS. (a) A real estate investment trust, by resolution of the
687-27 trust managers of the real estate investment trust, may:
688-1 (1) create a reserve out of the surplus of the real
688-2 estate investment trust; or
688-3 (2) designate or allocate in any manner a part or all
688-4 of the real estate investment trust's surplus for a proper purpose.
688-5 (b) A real estate investment trust may increase, decrease,
688-6 or abolish a reserve, designation, or allocation in the manner
688-7 provided by Subsection (a).
688-8 Sec. 200.205. AUTHORITY FOR SHARE DISTRIBUTIONS. The trust
688-9 managers of a real estate investment trust may authorize a share
688-10 distribution, and the real estate investment trust may pay a share
688-11 distribution subject to Section 200.206 and any restriction in the
688-12 certificate of formation.
688-13 Sec. 200.206. LIMITATIONS ON SHARE DISTRIBUTIONS. (a) A
688-14 real estate investment trust may not pay a share distribution in
688-15 authorized but unissued shares of any class if the surplus of the
688-16 real estate investment trust is less than the amount required by
688-17 Section 200.208 to be transferred to stated capital at the time the
688-18 share distribution is made.
688-19 (b) A share distribution in shares of any class may not be
688-20 made to a holder of shares of any other class unless:
688-21 (1) the real estate investment trust's certificate of
688-22 formation provides for the distribution; or
688-23 (2) the share distribution is authorized by the
688-24 affirmative vote or the written consent of the holders of at least
688-25 a majority of the outstanding shares of the class in which the
688-26 share distribution is to be made.
688-27 Sec. 200.207. VALUE OF SHARES ISSUED AS SHARE DISTRIBUTIONS.
689-1 (a) A share distribution payable in authorized but unissued shares
689-2 with par value shall be issued at the par value of the shares.
689-3 (b) A share distribution payable in authorized but unissued
689-4 shares without par value shall be issued at the value set by the
689-5 trust managers when the share distribution is authorized.
689-6 Sec. 200.208. TRANSFER OF SURPLUS FOR SHARE DISTRIBUTIONS.
689-7 (a) When a share distribution payable in authorized but unissued
689-8 shares with par value is made by a real estate investment trust, an
689-9 amount of surplus designated by the trust managers that is not less
689-10 than the aggregate par value of the shares issued as a share
689-11 distribution shall be transferred to stated capital.
689-12 (b) When a share distribution payable in authorized but
689-13 unissued shares without par value is made by a real estate
689-14 investment trust, an amount of surplus equal to the aggregate value
689-15 set by the trust managers with respect to the shares under Section
689-16 200.207(b) shall be transferred to stated capital.
689-17 Sec. 200.209. DETERMINATION OF SOLVENCY, NET ASSETS, STATED
689-18 CAPITAL, AND SURPLUS. (a) The determination of whether a real
689-19 estate investment trust is or would be insolvent and the
689-20 determination of the value of a real estate investment trust's net
689-21 assets, stated capital, or surplus and each of the components of
689-22 net assets, stated capital, or surplus may be based on:
689-23 (1) financial statements of the real estate investment
689-24 trust that present the financial condition of the real estate
689-25 investment trust in accordance with generally accepted accounting
689-26 principles, including financial statements that include subsidiary
689-27 entities or other entities accounted for on a consolidated basis or
690-1 on the equity method of accounting;
690-2 (2) financial statements prepared using the method of
690-3 accounting used to file the real estate investment trust's federal
690-4 income tax return or using any other accounting practices and
690-5 principles that are reasonable under the circumstances;
690-6 (3) financial information, including condensed or
690-7 summary financial statements, that is prepared on the same basis as
690-8 financial statements described by Subdivision (1) or (2);
690-9 (4) a projection, forecast, or other forward-looking
690-10 information relating to the future economic performance, financial
690-11 condition, or liquidity of the real estate investment trust that is
690-12 reasonable under the circumstances;
690-13 (5) a fair valuation or information from any other
690-14 method that is reasonable under the circumstances; or
690-15 (6) a combination of a statement, valuation, or
690-16 information authorized by this section.
690-17 (b) Subsection (a) does not apply to the computation of any
690-18 tax imposed under the laws of this state.
690-19 Sec. 200.210. DATE OF DETERMINATION OF SURPLUS. (a) For
690-20 purposes of this subchapter, a determination of whether a real
690-21 estate investment trust is or would be made insolvent by a
690-22 distribution or share distribution or a determination of the value
690-23 of a real estate investment trust's surplus shall be made:
690-24 (1) on the date the distribution or share distribution
690-25 is authorized by the trust managers of the real estate investment
690-26 trust if the distribution or the share distribution is made not
690-27 later than the 120th day after the date of authorization; or
691-1 (2) if the distribution or the share distribution is
691-2 made more than 120 days after the date of authorization:
691-3 (A) on the date designated by the trust managers
691-4 if the date so designated is not earlier than 120 days before the
691-5 date the distribution or the share distribution is made; or
691-6 (B) on the date the distribution or the share
691-7 distribution is made if the trust managers do not designate a date
691-8 as described in Paragraph (A).
691-9 (b) For purposes of this section, a distribution that
691-10 involves:
691-11 (1) the incurrence by a real estate investment trust
691-12 of indebtedness or a deferred payment obligation is considered to
691-13 have been made on the date the indebtedness or obligation is
691-14 incurred; or
691-15 (2) a contract by the real estate investment trust to
691-16 acquire any of its own shares is considered to have been made on
691-17 the date when the contract is made or takes effect or on the date
691-18 the shares are acquired, at the option of the real estate
691-19 investment trust.
691-20 Sec. 200.211. SPLIT-UP OR DIVISION OF SHARES. The trust
691-21 managers of a real estate investment trust may authorize the real
691-22 estate investment trust to carry out any split-up or division of
691-23 the issued shares of a class of the real estate investment trust
691-24 into a larger number of shares within the same class that does not
691-25 increase the stated capital of the real estate investment trust
691-26 because the split-up or division of issued shares is not a share
691-27 dividend or a distribution.
692-1 (Sections 200.212-200.250 reserved for expansion)
692-2 SUBCHAPTER F. SHAREHOLDERS' MEETINGS; VOTING AND QUORUM
692-3 Sec. 200.251. ANNUAL MEETING. (a) An annual meeting of the
692-4 shareholders of a real estate investment trust shall be held at a
692-5 time that is stated in or set in accordance with the bylaws of the
692-6 real estate investment trust.
692-7 (b) If the annual meeting is not held at the designated
692-8 time, a shareholder may by certified or registered mail make a
692-9 written request to an officer or trust manager of the real estate
692-10 investment trust that the meeting be held within a reasonable time.
692-11 If the annual meeting is not called before the 61st day after the
692-12 date the request calling for a meeting is made, any shareholder may
692-13 bring suit at law or in equity to compel the meeting to be held.
692-14 (c) Each shareholder has a justifiable interest sufficient
692-15 to enable the shareholder to institute and prosecute a legal
692-16 proceeding described by this section.
692-17 (d) The failure to hold an annual meeting at the designated
692-18 time does not result in the winding up or termination of the real
692-19 estate investment trust.
692-20 Sec. 200.252. SPECIAL MEETINGS. A special meeting of the
692-21 shareholders of a real estate investment trust may be called by:
692-22 (1) a trust manager, an officer of the real estate
692-23 investment trust, or any other person authorized to call special
692-24 meetings by the certificate of formation or bylaws of the real
692-25 estate investment trust; or
692-26 (2) the holders of at least 10 percent of all of the
692-27 shares of the real estate investment trust entitled to vote at the
693-1 proposed special meeting unless a quarter percentage of shares is
693-2 specified in the certificate of formation, not to exceed 50 percent
693-3 of the shares entitled to vote.
693-4 Sec. 200.253. NOTICE OF MEETING. (a) Written notice of a
693-5 meeting in accordance with Section 6.051 shall be given to each
693-6 shareholder entitled to vote at the meeting not later than the 10th
693-7 day and not earlier than the 60th day before the date of the
693-8 meeting. Notice shall be given in person or by mail by or at the
693-9 direction of a trust manager, officer, or other person calling the
693-10 meeting.
693-11 (b) The notice of a special meeting must contain a statement
693-12 regarding the purpose or purposes of the meeting.
693-13 Sec. 200.254. CLOSING OF SHARE TRANSFER RECORDS. Share
693-14 transfer records that are closed in accordance with Section 6.101
693-15 for the purpose of determining which shareholders are entitled to
693-16 receive notice of a meeting of shareholders shall remain closed for
693-17 at least 10 days immediately preceding the date of the meeting.
693-18 Sec. 200.255. RECORD DATE FOR WRITTEN CONSENT TO ACTION. The
693-19 record date provided in accordance with Section 6.102(a) may not be
693-20 more than 10 days after the date on which the trust managers adopt
693-21 the resolution setting the record date.
693-22 Sec. 200.256. RECORD DATE FOR PURPOSE OTHER THAN WRITTEN
693-23 CONSENT TO ACTION. The record date provided by the trust managers
693-24 in accordance with Section 6.101 must be at least 10 days before
693-25 the date on which the particular action requiring the determination
693-26 of shareholders is to be taken.
693-27 Sec. 200.257. QUORUM. (a) Subject to Subsection (b), the
694-1 holders of the majority of the shares entitled to vote at a meeting
694-2 of the shareholders of a real estate investment trust that are
694-3 present or represented by proxy at the meeting are a quorum for the
694-4 consideration of a matter to be presented at that meeting.
694-5 (b) The certificate of formation of a real estate investment
694-6 trust may provide that a quorum is present only if:
694-7 (1) the holders of a specified portion of the shares
694-8 that is greater than the majority of the shares entitled to vote
694-9 are represented at the meeting in person or by proxy; or
694-10 (2) the holders of a specified portion of the shares
694-11 that is less than the majority but not less than one-third of the
694-12 shares entitled to vote are represented at the meeting in person or
694-13 by proxy.
694-14 (c) Unless provided by the certificate of formation or
694-15 bylaws of the real estate investment trust, after a quorum is
694-16 present at a meeting of shareholders, the shareholders may conduct
694-17 business properly brought before the meeting until the meeting is
694-18 adjourned. The subsequent withdrawal from the meeting of a
694-19 shareholder or the refusal of a shareholder present at or
694-20 represented by proxy at the meeting to vote does not negate the
694-21 presence of a quorum at the meeting.
694-22 (d) Unless provided by the certificate of formation or
694-23 bylaws, the shareholders of the real estate investment trust at a
694-24 meeting at which a quorum is not present may adjourn the meeting
694-25 until the time and to the place as may be determined by a vote of
694-26 the holders of the majority of the shares who are present or
694-27 represented by proxy at the meeting.
695-1 Sec. 200.258. VOTING IN ELECTION OF TRUST MANAGERS. (a)
695-2 Subject to Subsection (b), trust managers of a real estate
695-3 investment trust shall be elected by two-thirds of the votes cast
695-4 by the holders of shares entitled to vote in the election of trust
695-5 managers at a meeting of shareholders at which a quorum is present.
695-6 (b) The certificate of formation or bylaws of a real estate
695-7 investment trust may provide that a trust manager of the real
695-8 estate investment trust shall be elected only if the trust manager
695-9 receives:
695-10 (1) the vote of the holders of a specified portion,
695-11 but not less than the majority, of the shares entitled to vote in
695-12 the election of trust managers;
695-13 (2) the vote of the holders of a specified portion,
695-14 but not less than the majority, of the shares entitled to vote in
695-15 the election of trust managers and represented in person or by
695-16 proxy at a meeting of shareholders at which a quorum is present; or
695-17 (3) the vote of the holders of a specified portion,
695-18 but not less than the majority, of the votes cast by the holders of
695-19 shares entitled to vote in the election of trust managers at a
695-20 meeting of shareholders at which a quorum is present.
695-21 (c) Subject to Section 200.259, at each election of trust
695-22 managers of a real estate investment trust, each shareholder
695-23 entitled to vote at the election is entitled to vote, in person or
695-24 by proxy, the number of shares owned by the shareholder for as many
695-25 candidates as there are trust managers to be elected and for whose
695-26 election the shareholder is entitled to vote.
695-27 Sec. 200.259. CUMULATIVE VOTING IN ELECTION OF TRUST
696-1 MANAGERS. (a) Cumulative voting is allowed only if specifically
696-2 authorized by the certificate of formation of a real estate
696-3 investment trust.
696-4 (b) Cumulative voting occurs when a shareholder:
696-5 (1) gives one candidate as many votes as the total of
696-6 the number of the trust managers to be elected multiplied by the
696-7 shareholder's shares; or
696-8 (2) distributes the votes among one or more candidates
696-9 using the same principle.
696-10 (c) If cumulative voting is specifically authorized by the
696-11 certificate of formation, a shareholder who intends to cumulate
696-12 votes must give written notice of that intention to the trust
696-13 managers on or before the day preceding the date of the election at
696-14 which the shareholder intends to cumulate votes.
696-15 Sec. 200.260. VOTING ON MATTERS OTHER THAN ELECTION OF TRUST
696-16 MANAGERS. (a) Subject to Subsection (b), with respect to a matter
696-17 other than the election of trust managers or a matter for which the
696-18 affirmative vote of the holders of a specified portion of the
696-19 shares entitled to vote is required by this code, the affirmative
696-20 vote of the holders of the majority of the shares entitled to vote
696-21 on, and who voted for, against, or expressly abstained with respect
696-22 to, the matter at a shareholders' meeting of a real estate
696-23 investment trust at which a quorum is present is the act of the
696-24 shareholders.
696-25 (b) With respect to a matter other than the election of
696-26 trust managers or a matter for which the affirmative vote of the
696-27 holders of a specified portion of the shares entitled to vote is
697-1 required by this code, the certificate of formation or bylaws of a
697-2 real estate investment trust may provide that the act of the
697-3 shareholders of the real estate investment trust is:
697-4 (1) the affirmative vote of the holders of a specified
697-5 portion, but not less than the majority, of the shares entitled to
697-6 vote on that matter;
697-7 (2) the affirmative vote of the holders of a specified
697-8 portion, but not less than the majority, of the shares entitled to
697-9 vote on that matter and represented in person or by proxy at a
697-10 shareholders' meeting at which a quorum is present;
697-11 (3) the affirmative vote of the holders of a specified
697-12 portion, but not less than the majority, of the shares entitled to
697-13 vote on, and who voted for or against, the matter at a
697-14 shareholders' meeting at which a quorum is present; or
697-15 (4) the affirmative vote of the holders of a specified
697-16 portion, but not less than the majority, of the shares entitled to
697-17 vote on, and who voted for, against, or expressly abstained with
697-18 respect to, the matter at a shareholders' meeting at which a quorum
697-19 is present.
697-20 Sec. 200.261. VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.
697-21 (a) In this section, a "fundamental action" means:
697-22 (1) an amendment of a certificate of formation;
697-23 (2) a voluntary winding up under Chapter 11;
697-24 (3) a revocation of a voluntary decision to wind up
697-25 under Section 11.151;
697-26 (4) a cancellation of an event requiring winding up
697-27 under Section 11.152; or
698-1 (5) a reinstatement under Section 11.202.
698-2 (b) Except as otherwise provided by this code or the
698-3 certificate of formation or bylaws of a real estate investment
698-4 trust in accordance with Section 200.260, the vote required for
698-5 approval of a fundamental action by the shareholders is the
698-6 affirmative vote of the holders of at least two-thirds of the
698-7 outstanding shares entitled to vote on the fundamental action.
698-8 (c) If a class or series of shares is entitled to vote as a
698-9 class on a fundamental action, the vote required for approval of
698-10 the action by the shareholders is the affirmative vote of the
698-11 holders of at least two-thirds of the outstanding shares in each
698-12 class or series of shares entitled to vote on the action as a class
698-13 and at least two-thirds of the outstanding shares otherwise
698-14 entitled to vote on the action. Shares entitled to vote as a class
698-15 shall be entitled to vote only as a class unless otherwise entitled
698-16 to vote on each matter generally or otherwise provided by the
698-17 certificate of formation.
698-18 (d) Unless an amendment to the certificate of formation is
698-19 undertaken by the trust managers under Section 200.103, separate
698-20 voting by a class or series of shares of a real estate investment
698-21 trust is required for approval of an amendment to the certificate
698-22 of formation that would result in:
698-23 (1) the increase or decrease of the aggregate number
698-24 of authorized shares of the class or series;
698-25 (2) the increase or decrease of the par value of the
698-26 shares of the class, including changing shares with par value into
698-27 shares without par value or changing shares without par value into
699-1 shares with par value;
699-2 (3) effecting an exchange, reclassification, or
699-3 cancellation of all or part of the shares of the class or series;
699-4 (4) effecting an exchange or creating a right of
699-5 exchange of all or part of the shares of another class or series
699-6 into the shares of the class or series;
699-7 (5) the change of the designations, preferences,
699-8 limitations, or relative rights of the shares of the class or
699-9 series;
699-10 (6) the change of the shares of the class or series,
699-11 with or without par value, into the same or a different number of
699-12 shares, with or without par value, of the same class or series or
699-13 another class or series;
699-14 (7) the creation of a new class or series of shares
699-15 with rights and preferences equal, prior, or superior to the shares
699-16 of the class or series;
699-17 (8) increasing the rights and preferences of a class
699-18 or series with rights and preferences equal, prior or superior to
699-19 the shares of the class or series;
699-20 (9) increasing the rights and preferences of a class
699-21 or series with rights or preferences later or inferior to the
699-22 shares of the class or series in such a manner that the rights or
699-23 preferences will be equal, prior, or superior to the shares of the
699-24 class or series;
699-25 (10) dividing the shares of the class into series and
699-26 setting and determining the designation of the series and the
699-27 variations in the relative rights and preferences between the
700-1 shares of the series;
700-2 (11) the limitation or denial of existing preemptive
700-3 rights or cumulative voting rights of the shares of the class or
700-4 series; or
700-5 (12) canceling or otherwise affecting the dividends on
700-6 the shares of the class or series that have accrued but have not
700-7 been declared.
700-8 (e) Unless otherwise provided by the certificate of
700-9 formation, if the holders of the outstanding shares of a class that
700-10 is divided into series are entitled to vote as a class on a
700-11 proposed amendment that would affect equally all series of the
700-12 class, other than a series in which no shares are outstanding or a
700-13 series that is not affected by the amendment, the holders of the
700-14 separate series are not entitled to separate class votes.
700-15 (f) Unless otherwise provided by the certificate of
700-16 formation, a proposed amendment to the certificate of formation
700-17 that would solely effect changes in the designations, preferences,
700-18 limitations, or relative rights, including voting rights, of one or
700-19 more series of shares of the real estate investment trust that have
700-20 been established under the authority granted to the trust managers
700-21 in the certificate of formation in accordance with Section 200.103
700-22 does not require the approval of the holders of the outstanding
700-23 shares of a class or series other than the affected series if,
700-24 after giving effect to the amendment:
700-25 (1) the preferences, limitations, or relative rights
700-26 of the affected series may be set and determined by the trust
700-27 managers with respect to the establishment of a new series of
701-1 shares under the authority granted to the trust managers in the
701-2 certificate of formation in accordance with Section 200.103; or
701-3 (2) any new series established as a result of a
701-4 reclassification of the affected series are within the preferences,
701-5 limitations, and relative rights that are described by
701-6 Subdivision (1).
701-7 Sec. 200.262. CHANGES IN VOTE REQUIRED FOR CERTAIN MATTERS.
701-8 (a) With respect to a matter for which the affirmative vote of the
701-9 holders of a specified portion of the shares entitled to vote is
701-10 required by this code, the certificate of formation of a real
701-11 estate investment trust may provide that the affirmative vote of
701-12 the holders of a specified portion, but not less than the majority,
701-13 of the shares entitled to vote on that matter is required for
701-14 shareholder action on that matter.
701-15 (b) With respect to a matter for which the affirmative vote
701-16 of the holders of a specified portion of the shares of a class or
701-17 series is required by this code, the certificate of formation may
701-18 provide that the affirmative vote of the holders of a specified
701-19 portion, but not less than the majority, of the shares of that
701-20 class or series is required for action of the holders of shares of
701-21 that class or series on that matter.
701-22 (c) If a provision of the certificate of formation provides
701-23 that the affirmative vote of the holders of a specified portion
701-24 that is greater than the majority of the shares entitled to vote on
701-25 a matter is required for shareholder action on that matter, the
701-26 provision may not be amended, directly or indirectly, without the
701-27 same affirmative vote unless otherwise provided by the certificate
702-1 of formation.
702-2 (d) If a provision of the certificate of formation provides
702-3 that the affirmative vote of the holders of a specified portion
702-4 that is greater than the majority of the shares of a class or
702-5 series is required for shareholder action on a matter, the
702-6 provision may not be amended, directly or indirectly, without the
702-7 same affirmative vote unless otherwise provided by the certificate
702-8 of formation.
702-9 Sec. 200.263. NUMBER OF VOTES PER SHARE. (a) Except as
702-10 provided by the certificate of formation of a real estate
702-11 investment trust or this title or Title 1, each outstanding share,
702-12 regardless of class, is entitled to one vote on each matter
702-13 submitted to a vote at a shareholders' meeting.
702-14 (b) If the certificate of formation provides for more or
702-15 less than one vote per share on a matter for all of the outstanding
702-16 shares or for the shares of a class or series, each reference in
702-17 this code or in the certificate of formation or bylaws, unless
702-18 expressly stated otherwise, to a specified portion of the shares
702-19 with respect to that matter refers to the portion of the votes
702-20 entitled to be cast with respect to those shares under the
702-21 certificate of formation.
702-22 Sec. 200.264. VOTING IN PERSON OR BY PROXY. (a) A
702-23 shareholder may vote in person or by proxy executed in writing by
702-24 the shareholder.
702-25 (b) A telegram, telex, cablegram, electronic message, or
702-26 similar transmission by the shareholder, or a photographic,
702-27 photostatic, facsimile, or similar reproduction of a writing
703-1 executed by the shareholder, is considered an execution in writing
703-2 for purposes of this section.
703-3 Sec. 200.265. TERM OF PROXY. A proxy is not valid after 11
703-4 months after the date the proxy is executed unless otherwise
703-5 provided by the proxy.
703-6 Sec. 200.266. REVOCABILITY OF PROXY. (a) In this section, a
703-7 "proxy coupled with an interest" includes the appointment as proxy
703-8 of:
703-9 (1) a pledgee;
703-10 (2) a person who purchased or agreed to purchase the
703-11 shares subject to the proxy;
703-12 (3) a person who owns or holds an option to purchase
703-13 the shares subject to the proxy;
703-14 (4) a creditor of the real estate investment trust who
703-15 extended the real estate investment trust credit under terms
703-16 requiring the appointment;
703-17 (5) an employee of the real estate investment trust
703-18 whose employment contract requires the appointment; or
703-19 (6) a party to a voting agreement created under
703-20 Section 6.252.
703-21 (b) A proxy is revocable unless:
703-22 (1) the proxy form conspicuously states that the proxy
703-23 is irrevocable; and
703-24 (2) the proxy is coupled with an interest.
703-25 Sec. 200.267. ENFORCEABILITY OF PROXY. (a) An irrevocable
703-26 proxy is specifically enforceable against the holder of shares or
703-27 any successor or transferee of the holder if:
704-1 (1) the proxy is noted conspicuously on the
704-2 certificate representing the shares subject to the proxy; or
704-3 (2) in the case of uncertificated shares, notation of
704-4 the proxy is contained in the notice sent under Section 3.205 with
704-5 respect to the shares subject to the proxy.
704-6 (b) An irrevocable proxy that is otherwise enforceable is
704-7 ineffective against a transferee for value without actual knowledge
704-8 of the existence of the irrevocable proxy at the time of the
704-9 transfer or against a subsequent transferee, regardless of whether
704-10 the transfer is for value, unless the proxy is:
704-11 (1) noted conspicuously on the certificate
704-12 representing the shares subject to the proxy; or
704-13 (2) in the case of uncertificated shares, notation of
704-14 the proxy is contained in the notice sent under Section 3.205 with
704-15 respect to the shares subject to the proxy.
704-16 (c) An irrevocable proxy shall be specifically enforceable
704-17 against a person who is not a transferee for value from the time
704-18 the person acquires actual knowledge of the existence of the
704-19 irrevocable proxy.
704-20 Sec. 200.268. PROCEDURES IN BYLAWS RELATING TO PROXIES. A
704-21 real estate investment trust may establish in the bylaws of the
704-22 real estate investment trust procedures consistent with this code
704-23 for determining the validity of proxies and determining whether
704-24 shares held of record by a bank, broker, or other nominee are
704-25 represented at a meeting of shareholders. The procedures may
704-26 incorporate rules of and determinations made by a self-regulatory
704-27 organization regulating that bank, broker, or other nominee.
705-1 (Sections 200.269-200.300 reserved for expansion)
705-2 SUBCHAPTER G. TRUST MANAGERS
705-3 Sec. 200.301. MANAGEMENT BY TRUST MANAGERS. The control,
705-4 operation, disposition, investment, and management of the trust
705-5 estate and the powers necessary or appropriate to effect any
705-6 purpose for which a real estate investment trust is organized are
705-7 vested in one or more trust managers.
705-8 Sec. 200.302. DESIGNATION OF TRUST MANAGERS. (a) The
705-9 certificate of formation of a real estate investment trust must
705-10 contain the name of each trust manager.
705-11 (b) A successor trust manager must be selected in accordance
705-12 with the certificate of formation. The selection of a successor
705-13 trust manager is considered an amendment to the certificate of
705-14 formation of a real estate investment trust.
705-15 Sec. 200.303. TRUST MANAGER ELIGIBILITY REQUIREMENTS. A
705-16 trust manager of a real estate investment trust must be an
705-17 individual. Unless the certificate of formation or bylaws of a
705-18 real estate investment trust provide otherwise, a person is not
705-19 required to be a resident of this state or a shareholder of the
705-20 real estate investment trust to serve as a trust manager. The
705-21 certificate of formation or bylaws may prescribe other
705-22 qualifications for trust managers.
705-23 Sec. 200.304. NUMBER OF TRUST MANAGERS. (a) The certificate
705-24 of formation of a real estate investment trust shall set the number
705-25 constituting the initial trust managers. The certificate of
705-26 formation or bylaws of the real estate investment trust shall set
705-27 the number of successor trust managers or provide for the manner of
706-1 determining the number of successor trust managers.
706-2 (b) The number of trust managers may be increased or
706-3 decreased by amendment to, or as provided by, the certificate of
706-4 formation or bylaws. A decrease in the number of trust managers may
706-5 not shorten the term of an incumbent trust manager.
706-6 Sec. 200.305. COMPENSATION. A trust manager or officer of a
706-7 real estate investment trust is entitled to receive compensation
706-8 set by or in the manner provided by the certificate of formation or
706-9 bylaws of the real estate investment trust. If the certificate of
706-10 formation or bylaws do not provide for compensation to trust
706-11 managers and officers, the trust managers of the real estate
706-12 investment trust must determine the compensation.
706-13 Sec. 200.306. TERM OF TRUST MANAGER. (a) Except as provided
706-14 by the certificate of formation or bylaws of a real estate
706-15 investment trust, a trust manager of the real estate investment
706-16 trust serves until the trust manager's successor is elected.
706-17 (b) A trust manager may succeed himself or herself in
706-18 office.
706-19 (c) If a successor trust manager is not elected, the trust
706-20 manager in office continues to serve as trust manager until the
706-21 trust manager's successor is elected.
706-22 Sec. 200.307. STAGGERED TERMS OF TRUST MANAGERS. (a) A
706-23 governing document of a real estate investment trust may provide
706-24 that all or some of the board of trust managers may be divided into
706-25 two or three classes. Each class must include the same or a
706-26 similar number of trust managers as each other class.
706-27 (b) The terms of office of trust managers constituting the
707-1 first class expire on the election of successors at the first
707-2 annual meeting of shareholders after the election of those trust
707-3 managers. The terms of office of trust managers constituting the
707-4 second class expire on the election of successors at the second
707-5 annual meeting of shareholders after election of those trust
707-6 managers. The terms of office of trust managers constituting the
707-7 third class, if any, expire on the election of successors at the
707-8 third annual meeting of shareholders after election of those trust
707-9 managers.
707-10 (c) If a governing document of the real estate investment
707-11 trust provides for the classification of trust managers, an annual
707-12 election for trust managers as a whole is not necessary. At each
707-13 annual meeting held after the classification of trust managers, an
707-14 election shall be held to elect the number of trust managers equal
707-15 to the number of trust managers in the class the term of which
707-16 expires on the date of the meeting, and those trust managers serve
707-17 until:
707-18 (1) the second succeeding annual meeting if there are
707-19 two classes; or
707-20 (2) the third succeeding annual meeting if there are
707-21 three classes.
707-22 (d) Unless provided by the certificate of formation or a
707-23 bylaw adopted by shareholders, staggered terms for trust managers
707-24 do not take effect until the next annual meeting of shareholders at
707-25 which trust managers are elected. Staggered terms for trust
707-26 managers may not be effected if any shareholder has the right to
707-27 cumulate votes for the election of trust managers and the number of
708-1 trust managers is fewer than nine trust managers.
708-2 Sec. 200.308. VACANCY. (a) Except as provided by Subsection
708-3 (b), a vacancy occurring in the office of a trust manager of a real
708-4 estate investment trust may be filled by the affirmative vote of
708-5 the majority of the remaining trust managers, even if the majority
708-6 of trust managers constitutes less than a quorum of the trust
708-7 managers.
708-8 (b) The certificate of formation or bylaws of the real
708-9 estate investment trust may provide an alternative procedure for
708-10 filling a vacancy occurring in the office of a trust manager,
708-11 including filling vacancies by simple majority or super majority
708-12 votes of the shareholders.
708-13 (c) The term of a trust manager elected to fill a vacancy
708-14 occurring in the office of a trust manager is the unexpired term of
708-15 the trust manager's predecessor in office and until the trust
708-16 manager's successor is elected and has qualified.
708-17 Sec. 200.309. NOTICE OF MEETING. (a) Regular meetings of
708-18 the trust managers of a real estate investment trust may be held
708-19 with or without notice as prescribed by the real estate investment
708-20 trust's bylaws.
708-21 (b) Special meetings of the trust managers shall be held
708-22 with notice as prescribed by the bylaws.
708-23 (c) A notice of a board meeting is not required to specify
708-24 the business to be transacted at the meeting or the purpose of the
708-25 meeting, unless required by the bylaws.
708-26 Sec. 200.310. QUORUM. A quorum of the board of trust
708-27 managers of a real estate investment trust is the majority of the
709-1 number of trust managers unless the certificate of formation or
709-2 bylaws require a greater number.
709-3 Sec. 200.311. COMMITTEES OF TRUST MANAGERS. (a) If
709-4 authorized by the certificate of formation or bylaws, the trust
709-5 managers of a real estate investment trust, by resolution adopted
709-6 by a majority of the trust managers, may designate:
709-7 (1) committees composed of one or more trust managers;
709-8 or
709-9 (2) trust managers as alternate committee members to
709-10 replace absent or disqualified committee members at a committee
709-11 meeting, subject to any limitations imposed by the trust managers.
709-12 (b) To the extent provided by the resolution designating a
709-13 committee or the certificate of formation or bylaws and subject to
709-14 Subsection (c), the committee has the authority of the trust
709-15 managers.
709-16 (c) A committee of the trust managers may not:
709-17 (1) amend the certificate of formation, except to
709-18 classify or reclassify shares in accordance with Section 200.103 if
709-19 authorized by the resolution designating the committee, certificate
709-20 of formation, or bylaws;
709-21 (2) propose a reduction of stated capital of the real
709-22 estate investment trust;
709-23 (3) approve a plan of merger or share exchange of the
709-24 real estate investment trust;
709-25 (4) recommend to shareholders the sale, lease, or
709-26 exchange of all or substantially all of the property and assets of
709-27 the real estate investment trust not made in the usual and regular
710-1 course of its business;
710-2 (5) recommend to the shareholders a voluntary winding
710-3 up and termination or a revocation of the real estate investment
710-4 trust;
710-5 (6) amend, alter, or repeal the bylaws or adopt new
710-6 bylaws;
710-7 (7) fill vacancies in the offices of the trust
710-8 managers;
710-9 (8) fill vacancies in or designate alternate members
710-10 of a committee of the trust managers;
710-11 (9) fill a vacancy to be filled because of an increase
710-12 in the number of trust managers;
710-13 (10) elect or remove officers of the real estate
710-14 investment trust or members or alternate members of a committee of
710-15 the trust managers;
710-16 (11) set the compensation of the members or alternate
710-17 members of a committee of the trust managers; or
710-18 (12) alter or repeal a resolution of the trust
710-19 managers that states that it may not be amended or repealed.
710-20 (d) A committee of the trust managers may authorize a
710-21 distribution or the issuance of shares if authorized by the
710-22 resolution designating the committee or by the certificate of
710-23 formation or bylaws.
710-24 (e) The designation of and delegation of authority to a
710-25 committee of the trust managers does not relieve a trust manager of
710-26 responsibility imposed by law.
710-27 Sec. 200.312. LIABILITY OF TRUST MANAGERS. (a) A trust
711-1 manager of a real estate investment trust who votes for or assents
711-2 to a distribution of assets made by the real estate investment
711-3 trust to its shareholders during the liquidation of the real estate
711-4 investment trust without the payment and discharge of or the making
711-5 of adequate provision for the payment of all of the known debts,
711-6 liabilities, and other obligations of the real estate investment
711-7 trust is jointly and severally liable to the real estate investment
711-8 trust for the value of the distributed assets to the extent the
711-9 debts, liabilities, and other obligations are not paid and
711-10 discharged.
711-11 (b) A trust manager of a real estate investment trust who
711-12 votes for or assents to the making of a loan to another trust
711-13 manager or officer of the real estate investment trust or to the
711-14 making of a loan secured by shares of the real estate investment
711-15 trust is jointly and severally liable to the real estate investment
711-16 trust for the loan amount until the loan is repaid.
711-17 (c) A trust manager is not jointly and severally liable
711-18 under Subsection (a) if, in determining the amount available for
711-19 the distribution, the trust manager, acting in good faith and with
711-20 ordinary care:
711-21 (1) relied on information, opinions, reports, or
711-22 statements in accordance with Section 3.102; or
711-23 (2) considered the assets of the real estate
711-24 investment trust to be valued at least at book value.
711-25 Sec. 200.313. STATUTE OF LIMITATIONS ON CERTAIN ACTION
711-26 AGAINST TRUST MANAGERS. An action may not be brought against a
711-27 trust manager of a real estate investment trust under Section
712-1 200.312 after the second anniversary of the date the alleged act
712-2 giving rise to the liability occurred.
712-3 Sec. 200.314. IMMUNITY FROM LIABILITY FOR PERFORMANCE OF
712-4 DUTY. A trust manager of a real estate investment trust may not be
712-5 held liable to the real estate investment trust for an act,
712-6 omission, loss, damage, or expense arising from the performance of
712-7 the trust manager's duties under the trust, except for liability
712-8 arising from the wilful misfeasance, wilful malfeasance, or gross
712-9 negligence of the trust manager.
712-10 Sec. 200.315. RIGHT OF CONTRIBUTION. A trust manager who is
712-11 liable for a claim asserted under Section 200.312 is entitled to
712-12 receive contribution for each of the other trust managers who are
712-13 liable with respect to that claim in an amount appropriate to
712-14 achieve equity.
712-15 Sec. 200.316. OFFICERS. (a) An officer of a real estate
712-16 investment trust designated by a trust manager under Section 3.103
712-17 may exercise all of the powers of a trust manager relating to the
712-18 business and affairs of the real estate investment trust, unless
712-19 action by a trust manager is specified by this code or another
712-20 applicable law.
712-21 (b) A designation of or delegation of authority to an
712-22 officer of a real estate investment trust described by this section
712-23 does not relieve a trust manager of responsibility imposed by law.
712-24 Sec. 200.317. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED
712-25 TRUST MANAGERS AND OFFICERS. (a) This section applies only to a
712-26 contract or transaction between a real estate investment trust and:
712-27 (1) one or more of the trust's trust managers or
713-1 officers; or
713-2 (2) an entity or other organization in which one or
713-3 more of the trust's trust managers or officers:
713-4 (A) is a managerial official; or
713-5 (B) has a financial interest.
713-6 (b) An otherwise valid contract or transaction is valid
713-7 notwithstanding that a trust manager or officer of the trust is
713-8 present at or participates in the meeting of the trust managers or
713-9 of a committee of the trust managers that authorizes the contract
713-10 or transaction, or votes to authorize the contract or transaction,
713-11 if:
713-12 (1) the material facts as to the relationship or
713-13 interest and as to the contract or transaction are disclosed to or
713-14 known by:
713-15 (A) the trust managers or a committee of the
713-16 trust managers, and the trust managers or committee of the trust
713-17 managers in good faith authorize the contract or transaction by the
713-18 affirmative vote of the majority of disinterested trust managers or
713-19 committee members, regardless of whether the disinterested trust
713-20 managers or committee members constitute a quorum; or
713-21 (B) the shareholders entitled to vote on the
713-22 authorization of the contract or transaction, and the contract or
713-23 transaction is specifically approved in good faith by a vote of the
713-24 shareholders; or
713-25 (2) the contract or transaction is fair to the real
713-26 estate investment trust when the contract or transaction is
713-27 authorized, approved, or ratified by the trust managers, a
714-1 committee of the trust managers, or the shareholders.
714-2 (c) Common or interested trust managers may be included in
714-3 determining the presence of a quorum at a meeting of the trust
714-4 managers, or a committee of the trust managers, that authorizes the
714-5 contract or transaction.
714-6 (Sections 200.318-200.350 reserved for expansion)
714-7 SUBCHAPTER H. INVESTMENTS
714-8 Sec. 200.351. INVESTMENTS. A trust manager or officer of a
714-9 real estate investment trust has complete discretion with respect
714-10 to the investment of the trust estate unless the investment is
714-11 contrary to or inconsistent with:
714-12 (1) this chapter;
714-13 (2) a provision of the Internal Revenue Code relating
714-14 to or governing real estate investment trusts; or
714-15 (3) regulations adopted under a provision of the
714-16 Internal Revenue Code relating to or governing real estate
714-17 investment trusts.
714-18 (Sections 200.352-200.400 reserved for expansion)
714-19 SUBCHAPTER I. FUNDAMENTAL BUSINESS TRANSACTIONS
714-20 Sec. 200.401. DEFINITIONS. In this subchapter:
714-21 (1) "Participating shares" means shares that entitle
714-22 the holders of the shares to participate without limitation in
714-23 distributions.
714-24 (2) "Shares" includes a receipt or other instrument
714-25 issued by a depository representing an interest in one or more
714-26 shares or fractions of shares of a domestic or foreign real estate
714-27 investment trust that are deposited with the depository.
715-1 (3) "Voting shares" means shares that entitle the
715-2 holders of the shares to vote unconditionally in elections of trust
715-3 managers.
715-4 Sec. 200.402. APPROVAL OF MERGER. (a) A real estate
715-5 investment trust that is a party to the merger under Chapter 10
715-6 must approve the merger by complying with this section.
715-7 (b) The trust managers of the real estate investment trust
715-8 shall adopt a resolution that:
715-9 (1) approves the plan of merger; and
715-10 (2) if shareholder approval of the merger is required
715-11 by this subchapter:
715-12 (A) recommends that the plan of merger be
715-13 approved by the shareholders of the real estate investment trust;
715-14 or
715-15 (B) directs that the plan of merger be submitted
715-16 to the shareholders for approval without recommendation if the
715-17 trust managers determine for any reason not to recommend approval
715-18 of the plan of merger.
715-19 (c) Except as provided by this subchapter or Chapter 10, the
715-20 plan of merger shall be submitted to the shareholders of the real
715-21 estate investment trust for approval as provided by this
715-22 subchapter. The trust managers may place conditions on the
715-23 submission of the plan of merger to the shareholders.
715-24 (d) If the trust managers approve a plan of merger required
715-25 to be approved by the shareholders of the real estate investment
715-26 trust but do not adopt a resolution recommending that the plan of
715-27 merger be approved by the shareholders, the trust managers shall
716-1 communicate to the shareholders the reason for the trust managers'
716-2 determination to submit the plan of merger without a
716-3 recommendation.
716-4 (e) Except as provided by Chapter 10 or Sections
716-5 200.407-200.409, the shareholders of the real estate investment
716-6 trust shall approve the plan of merger as provided by this
716-7 subchapter.
716-8 Sec. 200.403. APPROVAL OF CONVERSION. (a) A real estate
716-9 investment trust must approve a conversion under Chapter 10 by
716-10 complying with this section.
716-11 (b) The trust managers of the real estate investment trust
716-12 shall adopt a resolution that approves the plan of conversion and:
716-13 (1) recommends that the plan of conversion be approved
716-14 by the shareholders of the real estate investment trust; or
716-15 (2) directs that the plan of conversion be submitted
716-16 to the shareholders for approval without recommendation if the
716-17 trust managers determine for any reason not to recommend approval
716-18 of the plan of conversion.
716-19 (c) The plan of conversion shall be submitted to the
716-20 shareholders of the real estate investment trust for approval as
716-21 provided by this subchapter. The trust managers may place
716-22 conditions on the submission of the plan of conversion to the
716-23 shareholders.
716-24 (d) If the trust managers approve a plan of conversion but
716-25 do not adopt a resolution recommending that the plan of conversion
716-26 be approved by the shareholders of the real estate investment
716-27 trust, the trust managers shall communicate to the shareholders the
717-1 reason for the trust managers' determination to submit the plan of
717-2 conversion without a recommendation.
717-3 (e) Except as provided by Sections 200.407-200.409, the
717-4 shareholders of the real estate investment trust must approve the
717-5 plan of conversion as provided by this subchapter.
717-6 Sec. 200.404. APPROVAL OF EXCHANGE. (a) A real estate
717-7 investment trust the shares of which are to be acquired in an
717-8 exchange under Chapter 10 must approve the exchange by complying
717-9 with this section.
717-10 (b) The trust managers shall adopt a resolution that
717-11 approves the plan of exchange and:
717-12 (1) recommends that the plan of exchange be approved
717-13 by the shareholders of the real estate investment trust; or
717-14 (2) directs that the plan of exchange be submitted to
717-15 the shareholders for approval without recommendation if the trust
717-16 managers determine for any reason not to recommend approval of the
717-17 plan of exchange.
717-18 (c) The plan of exchange shall be submitted to the
717-19 shareholders of the real estate investment trust for approval as
717-20 provided by this subchapter. The trust managers may place
717-21 conditions on the submission of the plan of exchange to the
717-22 shareholders.
717-23 (d) If the trust managers approve a plan of exchange but do
717-24 not adopt a resolution recommending that the plan of exchange be
717-25 approved by the shareholders of the real estate investment trust,
717-26 the trust managers shall communicate to the shareholders the reason
717-27 for the trust managers' determination to submit the plan of
718-1 exchange to shareholders without a recommendation.
718-2 (e) Except as provided by Sections 200.407-200.409, the
718-3 shareholders of the real estate investment trust shall approve the
718-4 plan of exchange as provided by this subchapter.
718-5 Sec. 200.405. APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL
718-6 OF ASSETS. (a) Except as provided by the certificate of formation
718-7 of a domestic real estate investment trust, a sale, lease, pledge,
718-8 mortgage, assignment, transfer, or other conveyance of an interest
718-9 in real property or other assets of the real estate investment
718-10 trust does not require the approval or consent of the shareholders
718-11 of the real estate investment trust unless the transaction
718-12 constitutes a sale of all or substantially all of the assets of the
718-13 real estate investment trust.
718-14 (b) A real estate investment trust must approve the sale of
718-15 all or substantially all of its assets by complying with this
718-16 section.
718-17 (c) The trust managers of the real estate investment trust
718-18 shall adopt a resolution that approves the sale of all or
718-19 substantially all of the assets of the real estate investment trust
718-20 and:
718-21 (1) recommends that the sale of all or substantially
718-22 all of the assets of the real estate investment trust be approved
718-23 by the shareholders of the real estate investment trust; or
718-24 (2) directs that the sale of all or substantially all
718-25 of the assets of the real estate investment trust be submitted to
718-26 the shareholders for approval without recommendation if the trust
718-27 managers determine for any reason not to recommend approval of the
719-1 sale.
719-2 (d) The sale of all or substantially all of the assets of
719-3 the real estate investment trust shall be submitted to the
719-4 shareholders of the real estate investment trust for approval as
719-5 provided by this subchapter. The trust managers may place
719-6 conditions on the submission of the proposed sale to the
719-7 shareholders.
719-8 (e) If the trust managers approve the sale of all or
719-9 substantially all of the assets of the real estate investment trust
719-10 but do not adopt a resolution recommending that the proposed sale
719-11 be approved by the shareholders of the real estate investment
719-12 trust, the trust managers shall communicate to the shareholders the
719-13 reason for the trust managers' determination to submit the proposed
719-14 sale to shareholders without a recommendation.
719-15 (f) The shareholders of the real estate investment trust
719-16 shall approve the sale of all or substantially all of the assets of
719-17 the real estate investment trust as provided by this subchapter.
719-18 (g) After the approval of the sale by the shareholders, the
719-19 trust managers may abandon the sale of all or substantially all of
719-20 the assets of the real estate investment trust, subject to the
719-21 rights of a third party under a contract relating to the assets,
719-22 without further action or approval by the shareholders.
719-23 Sec. 200.406. GENERAL PROCEDURE FOR SUBMISSION TO
719-24 SHAREHOLDERS OF FUNDAMENTAL BUSINESS TRANSACTION. (a) If a
719-25 fundamental business transaction involving a real estate investment
719-26 trust is required to be submitted to the shareholders of the real
719-27 estate investment trust under this subchapter, the real estate
720-1 investment trust shall notify each shareholder of the real estate
720-2 investment trust that the fundamental business transaction is being
720-3 submitted to the shareholders for approval as required by this
720-4 subchapter, regardless of whether the shareholder is entitled to
720-5 vote on the matter.
720-6 (b) If the fundamental business transaction is a merger,
720-7 conversion, or interest exchange, the notice required by Subsection
720-8 (a) shall contain or be accompanied by a copy or summary of the
720-9 plan of merger, conversion, or interest exchange, as appropriate.
720-10 (c) If the fundamental business transaction is to be
720-11 considered at a meeting of the shareholders of the real estate
720-12 investment trust, the notice of the meeting must:
720-13 (1) be given not later than the 21st day before the
720-14 date of the meeting; and
720-15 (2) state that the purpose, or one of the purposes, of
720-16 the meeting is to consider the fundamental business transaction.
720-17 (d) If the fundamental business transaction is being
720-18 submitted to shareholders by written consent, the notice required
720-19 by Subsection (a) must:
720-20 (1) be given not later than the 21st day before the
720-21 date the fundamental business transaction takes effect; and
720-22 (2) state that the purpose, or one of the purposes, of
720-23 the solicitation of written consents from the shareholders is to
720-24 receive approval for the fundamental business transaction.
720-25 Sec. 200.407. GENERAL VOTE REQUIREMENT FOR APPROVAL OF
720-26 FUNDAMENTAL BUSINESS TRANSACTION. (a) Except as provided by this
720-27 code or the certificate of formation or bylaws of a real estate
721-1 investment trust in accordance with Section 200.261, the
721-2 affirmative vote of the holders of at least two-thirds of the
721-3 outstanding shares of the real estate investment trust entitled to
721-4 vote on a fundamental business transaction is required to approve
721-5 the transaction.
721-6 (b) Unless provided by the certificate of formation or
721-7 Section 200.408, shares of a class or series that are not otherwise
721-8 entitled to vote on matters submitted to shareholders generally
721-9 will not be entitled to vote for the approval of a fundamental
721-10 business transaction.
721-11 (c) Except as provided by this code, if a class or series of
721-12 shares of a real estate investment trust is entitled to vote on a
721-13 fundamental business transaction as a class or series, in addition
721-14 to the vote required under Subsection (a), the affirmative vote of
721-15 the holders of at least two-thirds of the outstanding shares in
721-16 each class or series of shares entitled to vote on the fundamental
721-17 business transaction as a class or series is required to approve
721-18 the transaction.
721-19 (d) Unless required by the certificate of formation,
721-20 approval of a merger by shareholders is not required under this
721-21 code for a real estate investment trust that is a party to the plan
721-22 of merger unless that real estate investment trust is also a party
721-23 to the merger.
721-24 Sec. 200.408. CLASS VOTING REQUIREMENTS FOR CERTAIN
721-25 FUNDAMENTAL BUSINESS TRANSACTIONS. (a) Separate voting by a class
721-26 or series of shares of a real estate investment trust is required
721-27 for approval of a plan of merger or conversion if:
722-1 (1) the plan of merger or conversion contains a
722-2 provision that would require approval by that class or series of
722-3 shares under Section 200.262 if the provision was contained in a
722-4 proposed amendment to the real estate investment trust's
722-5 certificate of formation; or
722-6 (2) that class or series of shares is entitled under
722-7 the certificate of formation to vote as a class on the plan of
722-8 merger or conversion.
722-9 (b) Separate voting by a class or series of shares of a real
722-10 estate investment trust is required for approval of a plan of
722-11 exchange if:
722-12 (1) shares of that class or series are to be exchanged
722-13 under the terms of the plan of exchange; or
722-14 (2) that class or series is entitled under the
722-15 certificate of formation to vote as a class on the plan of
722-16 exchange.
722-17 (c) Separate voting by a class or series of shares of a real
722-18 estate investment trust is required for approval of a sale of all
722-19 or substantially all of the assets of the real estate investment
722-20 trust if that class or series of shares is entitled under the
722-21 certificate of formation to vote as a class on the sale of the real
722-22 estate investment trust's assets.
722-23 Sec. 200.409. NO SHAREHOLDER VOTE REQUIREMENT FOR CERTAIN
722-24 FUNDAMENTAL BUSINESS TRANSACTIONS. (a) Unless required by the real
722-25 estate investment trust's certificate of formation, a plan of
722-26 merger is not required to be approved by the shareholders of a real
722-27 estate investment trust if:
723-1 (1) the real estate investment trust is the sole
723-2 surviving real estate investment trust in the merger;
723-3 (2) the certificate of formation of the real estate
723-4 investment trust following the merger will not differ from the real
723-5 estate investment trust's certificate of formation before the
723-6 merger;
723-7 (3) immediately after the effective date of the
723-8 merger, each shareholder of the real estate investment trust whose
723-9 shares were outstanding immediately before the effective date of
723-10 the merger will hold the same number of shares, with identical
723-11 designations, preferences, limitations, and relative rights;
723-12 (4) the sum of the voting power of the number of
723-13 voting shares outstanding immediately after the merger and the
723-14 voting power of securities that may be acquired on the conversion
723-15 or exercise of securities issued under the merger does not exceed
723-16 by more than 20 percent the voting power of the total number of
723-17 voting shares of the real estate investment trust that are
723-18 outstanding immediately before the merger; and
723-19 (5) the sum of the number of participating shares that
723-20 are outstanding immediately after the merger and the number of
723-21 participating shares that may be acquired on the conversion or
723-22 exercise of securities issued under the merger does not exceed by
723-23 more than 20 percent the total number of participating shares of
723-24 the real estate investment trust that are outstanding immediately
723-25 before the merger.
723-26 (b) Unless required by the certificate of formation, a plan
723-27 of merger effected under Section 10.005 or 10.006 does not require
724-1 the approval of the shareholders of the real estate investment
724-2 trust.
724-3 Sec. 200.410. RIGHTS OF DISSENT AND APPRAISAL. A shareholder
724-4 of a domestic real estate investment trust has the rights of
724-5 dissent and appraisal under Subchapter H, Chapter 10, with respect
724-6 to a fundamental business transaction.
724-7 (Sections 200.411-200.450 reserved for expansion)
724-8 SUBCHAPTER J. SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS
724-9 Sec. 200.451. APPROVAL OF VOLUNTARY WINDING UP. A real
724-10 estate investment trust must approve a voluntary winding up under
724-11 Chapter 11 by the affirmative vote of the shareholders in
724-12 accordance with Section 200.261.
724-13 Sec. 200.452. APPROVAL OF REINSTATEMENT OR REVOCATION OF
724-14 VOLUNTARY WINDING UP. A real estate investment trust may reinstate
724-15 its existence under Section 11.202, revoke a voluntary decision to
724-16 wind up under Section 11.151 or cancel an event requiring winding
724-17 up under Section 11.152 by the affirmative vote of the shareholders
724-18 in accordance with Section 200.261.
724-19 Sec. 200.453. RESPONSIBILITY FOR WINDING UP. If a real
724-20 estate investment trust determines or is required to wind up, the
724-21 trust managers shall manage the winding up of the business or
724-22 affairs of the real estate investment trust.
724-23 (Sections 200.454-200.500 reserved for expansion)
724-24 SUBCHAPTER K. MISCELLANEOUS PROVISIONS
724-25 Sec. 200.501. EXAMINATION OF RECORDS. (a) On written demand
724-26 stating a proper purpose, a shareholder of record of a real estate
724-27 investment trust for at least six months immediately preceding the
725-1 shareholder's demand, or a holder of record of at least five
725-2 percent of all of the outstanding shares of a real estate
725-3 investment trust, is entitled to examine and copy, at a reasonable
725-4 time the real estate investment trust's relevant books, records of
725-5 account, minutes, and share transfer records. The examination may
725-6 be conducted in person or through an agent or attorney.
725-7 (b) This section does not impair the power of a court, on
725-8 the presentation of proof of proper purpose by a shareholder, to
725-9 compel the production for examination by the shareholder of the
725-10 books and records of accounts, minutes, and share transfer records
725-11 of a real estate investment trust, regardless of the period during
725-12 which the shareholder was a record holder and regardless of the
725-13 number of shares held by the person.
725-14 Sec. 200.502. JOINDER OF SHAREHOLDERS NOT REQUIRED. The
725-15 joinder of shareholders of a real estate investment trust is not
725-16 required for any sale, lease, mortgage, or other disposition of all
725-17 or part of the assets of the real estate investment trust.
725-18 Sec. 200.503. TAX LAW REQUIREMENTS. In connection with a
725-19 real estate investment trust qualifying or attempting to qualify as
725-20 a real estate investment trust under the Internal Revenue Code and
725-21 the regulations adopted under the Internal Revenue Code, a
725-22 provision of this chapter is subject to the provisions of the
725-23 Internal Revenue Code or the regulations relating to or governing
725-24 real estate investment trusts adopted under those provisions if:
725-25 (1) the provision of this chapter is contrary to or
725-26 inconsistent with the federal provisions or regulations;
725-27 (2) the federal provisions or regulations require a
726-1 real estate investment trust to take any action required to secure
726-2 or maintain its status as a real estate investment trust under the
726-3 federal provisions or regulations; or
726-4 (3) the federal provisions or regulations prohibit the
726-5 real estate investment trust from taking any action required to
726-6 secure or maintain its status as a real estate investment trust
726-7 under the federal provision or regulation.
726-8 TITLE 6. ASSOCIATIONS
726-9 CHAPTER 251. COOPERATIVE ASSOCIATIONS
726-10 SUBCHAPTER A. GENERAL PROVISIONS
726-11 Sec. 251.001. DEFINITIONS. In this chapter:
726-12 (1) "Cooperative basis" means that net savings, after
726-13 payment of any investment dividends or after provision for separate
726-14 funds has been made as required or authorized by law, the
726-15 certificate of formation, or bylaws, are:
726-16 (A) allocated or distributed to a member patron
726-17 or to each patron in proportion to patronage; or
726-18 (B) retained by the entity for:
726-19 (i) actual or potential expansion of the
726-20 entity's services;
726-21 (ii) the reduction of charges to patrons;
726-22 or
726-23 (iii) any other purpose consistent with
726-24 the entity's nonprofit character.
726-25 (2) "Invested capital" means funds invested in a
726-26 cooperative association by an investor with the expectation of
726-27 receiving an investment dividend.
727-1 (3) "Investment dividend" means the return on invested
727-2 capital or on membership capital derived from the net savings of
727-3 the cooperative association.
727-4 (4) "Membership capital" means the funds of a
727-5 cooperative association derived from members of the cooperative
727-6 association generally as a requirement of membership or in lieu of
727-7 patronage dividends. The term does not include deposits or loans
727-8 from members.
727-9 (5) "Net savings" means the total income of a
727-10 cooperative association less the costs of operation.
727-11 (6) "Patronage dividend" means a share of the net
727-12 savings distributed among members of the cooperative association on
727-13 the basis of patronage, as provided by the certificate of
727-14 formation.
727-15 (7) "Savings returns" means the amount returned by a
727-16 cooperative association to patrons of a cooperative association in
727-17 proportion to patronage or otherwise.
727-18 Sec. 251.002. APPLICABILITY OF NONPROFIT CORPORATION
727-19 PROVISIONS. (a) A provision of Title 1 and Chapters 20 and 22
727-20 governing nonprofit corporations applies to a cooperative
727-21 association.
727-22 (b) Notwithstanding Subsection (a), this chapter controls
727-23 over any conflicting provision of Title 1 and Chapters 20 and 22
727-24 governing nonprofit corporations.
727-25 Sec. 251.003. EXEMPTION. This chapter does not apply to a
727-26 corporation or association organized under or having a purpose
727-27 prohibited under Title 2.
728-1 (Sections 251.004-251.050 reserved for expansion)
728-2 SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS
728-3 Sec. 251.051. ORGANIZATION MEETING. After a cooperative
728-4 association's certificate of formation is issued, the cooperative
728-5 association shall hold an organization meeting in accordance with
728-6 Section 22.104.
728-7 Sec. 251.052. AMENDMENT OF CERTIFICATE OF FORMATION. (a)
728-8 The board of directors of a cooperative association may propose an
728-9 amendment to the cooperative association's certificate of formation
728-10 by a two-thirds vote of the board members. The members of a
728-11 cooperative association may petition to amend the certificate of
728-12 formation as provided by the bylaws.
728-13 (b) Not later than the 31st day before the date of the
728-14 meeting, the secretary shall:
728-15 (1) send notice of a meeting to consider a proposed
728-16 amendment to each member of the cooperative association at the
728-17 member's last known address; or
728-18 (2) post notice of a meeting to consider a proposed
728-19 amendment in a conspicuous place in all principal places of
728-20 activity of the cooperative association.
728-21 (c) The notice required by Subsection (b) must include the
728-22 full text of the proposed amendment and the text of the part of the
728-23 certificate of formation to be amended.
728-24 (d) To be approved, an amendment must be adopted by the
728-25 affirmative vote of two-thirds of the members voting on the
728-26 amendment.
728-27 (e) Not later than the 30th day after the date an amendment
729-1 is adopted by the members of a cooperative association, the
729-2 cooperative association shall file a certificate of amendment with
729-3 the secretary of state in accordance with Chapter 4. The
729-4 certificate of amendment must be:
729-5 (1) signed by an authorized officer of the cooperative
729-6 association; and
729-7 (2) in the form required by Section 3.052.
729-8 Sec. 251.053. BYLAWS. (a) Unless the certificate of
729-9 formation or bylaws of a cooperative association require a greater
729-10 majority, the bylaws may be adopted, amended, or repealed by a
729-11 majority vote of the cooperative association's members voting on
729-12 the matter.
729-13 (b) Except as provided by this code, the bylaws may contain:
729-14 (1) requirements for admission to membership;
729-15 (2) requirements for disposal of a member's interest
729-16 on cessation of membership;
729-17 (3) the time, place, and manner of calling and
729-18 conducting meetings;
729-19 (4) the number or percentage of the members
729-20 constituting a quorum;
729-21 (5) the number, qualifications, powers, duties, and
729-22 term of directors and officers;
729-23 (6) the method of electing, removing, and filling a
729-24 vacancy of directors and officers;
729-25 (7) the division or classification, if any, of
729-26 directors to provide for staggered terms;
729-27 (8) the compensation, if any, of the directors;
730-1 (9) the number of directors necessary to constitute a
730-2 quorum;
730-3 (10) the method for distributing the net savings;
730-4 (11) a requirement that each officer or employee of
730-5 the cooperative association who handles funds or securities be
730-6 bonded;
730-7 (12) other discretionary provisions of this chapter,
730-8 Title 1, and Chapters 20 and 22; and
730-9 (13) any other provision incident to a purpose or
730-10 activity of the cooperative association.
730-11 (Sections 251.054-251.100 reserved for expansion)
730-12 SUBCHAPTER C. MANAGEMENT
730-13 Sec. 251.101. BOARD OF DIRECTORS. (a) Except as provided by
730-14 Subsections (b) and (c), a cooperative association is managed by a
730-15 board of directors in accordance with Chapter 22.
730-16 (b) The board shall contain at least five directors elected
730-17 by and from the cooperative association's members. A director:
730-18 (1) serves a term not to exceed three years as
730-19 provided by the bylaws; and
730-20 (2) holds office until the director is removed or the
730-21 director's successor is elected.
730-22 (c) The bylaws of a cooperative association may:
730-23 (1) apportion the number of directors among the units
730-24 into which the cooperative association may be divided; and
730-25 (2) provide for the election of the directors by the
730-26 respective units to which the directors are apportioned.
730-27 (d) An executive committee of the board of directors may be
731-1 elected in the manner and with the powers and duties specified by
731-2 the certificate of formation or bylaws.
731-3 Sec. 251.102. OFFICERS. (a) The directors of a cooperative
731-4 association shall annually elect, unless otherwise provided by the
731-5 bylaws, the following officers for the cooperative association:
731-6 (1) a president;
731-7 (2) one or more vice presidents; and
731-8 (3) a secretary and treasurer or a
731-9 secretary-treasurer.
731-10 (b) Any two or more offices, other than the offices of
731-11 president and secretary, may be held by the same person.
731-12 (c) The officers of a cooperative association may be
731-13 designated by other titles as provided by the certificate of
731-14 formation or the bylaws of the cooperative association.
731-15 Sec. 251.103. REMOVAL OF DIRECTORS AND OFFICERS. (a) A
731-16 director or officer of a cooperative association may be removed
731-17 from office in the manner provided by the certificate of formation
731-18 or bylaws of the cooperative association.
731-19 (b) If the certificate of formation or bylaws do not provide
731-20 for the person's removal, a director or officer may be removed with
731-21 cause by a vote of a majority of the members voting at a regular or
731-22 special meeting. The director or officer who is to be removed is
731-23 entitled to be heard at the meeting.
731-24 (c) Except as provided by the certificate of formation or
731-25 bylaws, a vacancy on the board of directors caused by removal shall
731-26 be filled by a director elected in the same manner provided by the
731-27 bylaws for the election of directors.
732-1 Sec. 251.104. REFERENDUM. (a) The certificate of formation
732-2 or bylaws of a cooperative association may provide for a referendum
732-3 on any action undertaken by the cooperative association's board of
732-4 directors if the referendum is:
732-5 (1) requested by petition of 10 percent or more of all
732-6 of the members of the cooperative association; or
732-7 (2) requested and approved by the vote of at least a
732-8 majority of the directors of the cooperative association.
732-9 (b) The proposition to be voted on in a referendum
732-10 authorized under Subsection (a) must be submitted to the members of
732-11 the cooperative association for consideration within the time
732-12 specified in the document authorizing the referendum.
732-13 (c) A right of a third party that has vested between the
732-14 time of the action and the time of the referendum is not impaired
732-15 by the referendum results.
732-16 (Sections 251.105-251.150 reserved for expansion)
732-17 SUBCHAPTER D. MEMBERSHIP
732-18 Sec. 251.151. ELIGIBILITY AND ADMISSION. A person, an
732-19 unincorporated group or other person organized on a cooperative
732-20 basis or a nonprofit group may be admitted to membership in a
732-21 cooperative association only if the person meets the qualifications
732-22 for eligibility stated in the certificate of formation or bylaws of
732-23 the cooperative association.
732-24 Sec. 251.152. EXPULSION. (a) A member of a cooperative
732-25 association may be expelled by the vote of a majority of the
732-26 cooperative association's members voting at a regular or special
732-27 meeting.
733-1 (b) Not later than the 11th day before the date of the
733-2 meeting, the cooperative association shall give the member written
733-3 notice of the charges. The member is entitled to be heard at the
733-4 meeting in person or by counsel.
733-5 (c) If the cooperative association votes to expel a member,
733-6 the cooperative association's board of directors must purchase the
733-7 member's capital holdings at par value if the purchase does not
733-8 jeopardize the cooperative association's solvency.
733-9 Sec. 251.153. SUBSCRIBERS. (a) A person is a subscriber of
733-10 a cooperative association only if the person is:
733-11 (1) eligible for membership in the cooperative
733-12 association under Section 251.151; and
733-13 (2) legally obligated to purchase a share or
733-14 membership in the cooperative association.
733-15 (b) The certificate of formation or bylaws of a cooperative
733-16 association may state whether and the conditions under which voting
733-17 rights or other membership rights are granted to a subscriber of
733-18 the cooperative association.
733-19 Sec. 251.154. LIABILITY. (a) Except as provided by
733-20 Subsection (b), a member or subscriber of a cooperative association
733-21 is not jointly or severally liable for a debt of the cooperative
733-22 association. A subscriber is liable for any unpaid amount on the
733-23 subscriber's membership certificates or invested capital
733-24 certificates.
733-25 (b) A subscriber who assigns the subscriber's interest in
733-26 membership certificates or invested capital certificates is jointly
733-27 and severally liable with the assignee until the appropriate
734-1 certificates are fully paid.
734-2 (Sections 251.155-251.200 reserved for expansion)
734-3 SUBCHAPTER E. SHARES
734-4 Sec. 251.201. SHARE AND MEMBERSHIP CERTIFICATES: ISSUANCE
734-5 AND CONTENTS. (a) A cooperative association may not issue a
734-6 certificate for membership capital or for invested capital until
734-7 any par value of the certificate has been paid in full.
734-8 (b) Each certificate for membership capital issued by a
734-9 cooperative association must contain a statement of the
734-10 requirements of Sections 251.202, 251.254, and 251.255.
734-11 (c) Each certificate for invested capital issued by a
734-12 cooperative association must contain a statement of the
734-13 restrictions on transferability as provided by the cooperative
734-14 association's bylaws.
734-15 Sec. 251.202. TRANSFER OF SHARES AND MEMBERSHIP; WITHDRAWAL.
734-16 (a) A member who decides to withdraw from a cooperative
734-17 association shall make a written offer to sell the member's
734-18 membership certificates to the cooperative association's board of
734-19 directors.
734-20 (b) Not later than the 90th day after the date the directors
734-21 receive an offer under Subsection (a), the directors may purchase
734-22 the holdings by paying the member the par value of the certificates
734-23 and shall reissue or cancel the shares after purchasing the
734-24 holdings. The directors shall purchase the shares if a majority of
734-25 the cooperative association's members voting at a regular or
734-26 special meeting vote to require the purchase.
734-27 (c) An investor owning investor certificates must sell,
735-1 assign, or convey the certificates in accordance with the
735-2 cooperative association's bylaws. If an investor fails to sell,
735-3 assign, or convey investor certificates in accordance with the
735-4 bylaws, the cooperative association on written notice to its
735-5 directors shall repurchase the certificates by paying the investor
735-6 the par value of the certificate plus all accrued investment
735-7 dividends. The certificates must be repurchased not later than the
735-8 90th day after the date the cooperative association receives notice
735-9 of the failure.
735-10 Sec. 251.203. SHARE AND MEMBERSHIP CERTIFICATES; RECALL. (a)
735-11 The bylaws of a cooperative association may authorize the
735-12 cooperative association's board of directors to recall during a
735-13 specified time and in accordance with the bylaws the membership
735-14 certificates of a member who fails to patronize the cooperative
735-15 association. The board may use the reserve funds to recall, at par
735-16 value, the membership certificates of any member in excess of the
735-17 amount required for membership.
735-18 (b) After the board of directors of a cooperative
735-19 association recalls a membership certificate under Subsection (a),
735-20 membership in the cooperative association is terminated and the
735-21 board shall reissue or cancel the certificate. The board of
735-22 directors may not recall membership certificates if recalling the
735-23 certificates would jeopardize the cooperative association's
735-24 solvency.
735-25 (c) The board of directors may use the reserve funds to
735-26 recall and repurchase the investment certificates of an investor at
735-27 par value plus any investment dividends due.
736-1 (d) The bylaws of a cooperative association may establish
736-2 specific procedures, terms, and conditions for recalls and
736-3 repurchases of investment certificates.
736-4 Sec. 251.204. CERTIFICATES; ATTACHMENT. The minimum amount
736-5 necessary for membership in a cooperative association, not to
736-6 exceed $50, is exempt from attachment, execution, or garnishment
736-7 for the debts of a member of a cooperative association. If a
736-8 member's holdings are subject to attachment, execution, or
736-9 garnishment, the directors of the cooperative association may admit
736-10 the purchaser to membership or may purchase the holdings at par
736-11 value.
736-12 (Sections 251.205-251.250 reserved for expansion)
736-13 SUBCHAPTER F. MEETINGS AND VOTING
736-14 Sec. 251.251. MEETINGS. (a) Regular meetings of members of
736-15 a cooperative association shall be held at least once a year as
736-16 prescribed by the cooperative association's bylaws.
736-17 (b) A special meeting of the members of a cooperative
736-18 association may be requested by a majority vote of the directors or
736-19 by written petition of at least one-tenth of the membership of the
736-20 cooperative association. The secretary shall call a special
736-21 meeting to be held 30 days after receipt of the request for a
736-22 special meeting.
736-23 Sec. 251.252. NOTICE OF SPECIAL MEETING. The notice of a
736-24 special meeting of the members of a cooperative association shall
736-25 state the purpose of the meeting.
736-26 Sec. 251.253. MEETINGS BY UNITS OF MEMBERSHIP. (a) The
736-27 certificate of formation or bylaws of a cooperative association may
737-1 provide for the holding of meetings by units of the membership of
737-2 the cooperative association and may provide for:
737-3 (1) a method of transmitting the votes cast at unit
737-4 meetings to the central meeting;
737-5 (2) a method of representation of units of the
737-6 membership by the election of delegates to the central meeting; or
737-7 (3) a combination of both methods.
737-8 (b) Except as otherwise provided by the bylaws, a meeting by
737-9 a unit of the membership shall be called and held in the same
737-10 manner as a regular meeting of the members.
737-11 Sec. 251.254. ONE MEMBER--ONE VOTE. (a) Except as provided
737-12 by Subsection (b), a member of a cooperative association has one
737-13 vote.
737-14 (b) If a cooperative association includes among its
737-15 membership another cooperative association or a group that is
737-16 organized on a cooperative basis, the voting rights of the
737-17 cooperative association member or group member may be prescribed by
737-18 the certificate of formation or bylaws of the cooperative
737-19 association.
737-20 (c) Any voting agreement or other device that is made to
737-21 evade the one-member-one-vote rule is not enforceable.
737-22 Sec. 251.255. NO PROXY. A member is not entitled to vote by
737-23 proxy.
737-24 Sec. 251.256. VOTING BY MAIL. (a) The certificate of
737-25 formation or bylaws of a cooperative association may contain the
737-26 procedures in Subsection (b) or (c), or both, for voting by mail.
737-27 (b) With notice of a meeting sent to members of the
738-1 cooperative association, the secretary may include a copy of a
738-2 proposal to be offered at the meeting. If a mail vote is returned
738-3 to the cooperative association within the specified number of days,
738-4 the mail vote shall be counted with the votes cast at the meeting.
738-5 (c) The secretary may send to a member of the cooperative
738-6 association who is absent from a meeting an exact copy of the
738-7 proposal considered at the meeting. If the vote is returned to the
738-8 cooperative association within the specified number of days, the
738-9 mail vote is counted with the votes cast at the meeting.
738-10 (d) The certificate of formation or bylaws may state whether
738-11 and to what extent mail votes are counted in computing a quorum.
738-12 Sec. 251.257. VOTING BY MAIL OR BY DELEGATES. (a) If a
738-13 cooperative association has provided for voting by mail or by
738-14 delegates, a provision of this chapter referring to votes cast by
738-15 members of the cooperative association applies to votes cast by
738-16 mail or by delegates.
738-17 (b) A delegate may not vote by mail.
738-18 (Sections 251.258-251.300 reserved for expansion)
738-19 SUBCHAPTER G. CAPITAL AND NET SAVINGS
738-20 Sec. 251.301. LIMITATIONS ON RETURN ON CAPITAL. (a) Except
738-21 as otherwise provided by the cooperative association's bylaws, an
738-22 investment dividend of a cooperative association may not be
738-23 cumulative and may not exceed eight percent of investment capital.
738-24 (b) Total investment dividends distributed for a fiscal
738-25 year may not exceed 50 percent of the net savings for the period.
738-26 Sec. 251.302. ALLOCATION AND DISTRIBUTION OF NET SAVINGS.
738-27 (a) At least once each year the members or directors of a
739-1 cooperative association, as provided by the certificate of
739-2 formation or bylaws of the cooperative association, shall apportion
739-3 the net savings of the cooperative association in the following
739-4 order:
739-5 (1) subject to Section 251.301, investment dividends
739-6 payable from the surplus of the total assets over total liabilities
739-7 may be paid on invested capital or, if authorized by the bylaws,
739-8 may be paid on the membership certificates;
739-9 (2) a portion of the remainder, as determined by the
739-10 certificate of formation or bylaws, may be allocated to an
739-11 educational fund to be used in teaching cooperation;
739-12 (3) a portion of the remainder may be allocated to
739-13 funds for the general welfare of the members of the cooperative
739-14 association;
739-15 (4) a portion of the remainder may be allocated to
739-16 retained earnings; and
739-17 (5) the remainder shall be allocated at the same
739-18 uniform rate to each patron of the cooperative association in
739-19 proportion to individual patronage as follows:
739-20 (A) for a member patron, the proportionate
739-21 amount of savings return distributed to the member may be any
739-22 combination of cash, property, membership certificates, or
739-23 investment certificates; and
739-24 (B) for a subscriber patron, the patron's
739-25 proportionate amount of savings returns as provided by the
739-26 certificate of formation or bylaws may be distributed to the
739-27 subscriber patron or credited to the subscriber patron's account
740-1 until the amount of capital subscribed for has been fully paid.
740-2 (b) This section does not prevent a cooperative association
740-3 engaged in rendering services from disposing of the net savings
740-4 from the rendering of services in a manner that lowers the fees
740-5 charged for services or furthers the common benefit of the members.
740-6 (c) A cooperative association may adopt a system in which:
740-7 (1) the payment of savings returns that would
740-8 otherwise be distributed are deferred for a fixed period; or
740-9 (2) the savings returns distributed are partly in cash
740-10 or partly in shares, to be retired at a fixed future date, in the
740-11 order of the shares' serial numbers or issuance dates.
740-12 (Sections 251.303-251.350 reserved for expansion)
740-13 SUBCHAPTER H. REPORTS AND RECORDS
740-14 Sec. 251.351. RECORDKEEPING. A cooperative association shall
740-15 keep books and records relating to the cooperative association's
740-16 business operation in accordance with standard accounting
740-17 practices.
740-18 Sec. 251.352. REPORTS TO MEMBERS. (a) A cooperative
740-19 association shall submit a written report to its members at the
740-20 annual meeting of the cooperative association. The annual report
740-21 must contain:
740-22 (1) a balance sheet;
740-23 (2) an income and expense statement;
740-24 (3) the amount and nature of the cooperative
740-25 association's authorized, subscribed, and paid-in capital;
740-26 (4) the total number of shareholders;
740-27 (5) the number of shareholders who were admitted to or
741-1 withdrew from the association during the year;
741-2 (6) the par value of the shares;
741-3 (7) the rate at which any investment dividends have
741-4 been paid; and
741-5 (8) if the cooperative association does not issue
741-6 shares:
741-7 (A) the total number of members;
741-8 (B) the number of members who were admitted to
741-9 or withdrew from the association during the year; and
741-10 (C) the amount of membership fees received.
741-11 (b) The directors shall appoint a committee composed of
741-12 members who are not principal bookkeepers, accountants, or
741-13 employees of the cooperative association to review the cooperative
741-14 association.
741-15 (c) The committee appointed under Subsection (b) shall
741-16 report on the quality of the annual report required by this section
741-17 and the bookkeeping system of the cooperative association at the
741-18 annual meeting.
741-19 Sec. 251.353. ANNUAL REPORT OF FINANCIAL CONDITION. (a)
741-20 This section applies only to a cooperative association that has at
741-21 least 100 members or at least $20,000 in annual business.
741-22 (b) Not later than the 120th day after the date on which the
741-23 association closes its business each year, a cooperative
741-24 association shall file in the association's registered office a
741-25 report of the association's financial condition stating:
741-26 (1) the name of the association;
741-27 (2) the address of the association's principal office;
742-1 (3) the name, address, occupation, and date of
742-2 expiration of the term of office of each officer and director;
742-3 (4) any compensation paid by the association to each
742-4 officer or director of the association;
742-5 (5) the amount and nature of the authorized,
742-6 subscribed, and paid-in capital;
742-7 (6) the total number of shareholders;
742-8 (7) the number of shareholders who were admitted to or
742-9 withdrew from the association during the year;
742-10 (8) the par value of the association's shares;
742-11 (9) the rate at which any investment dividends have
742-12 been paid; and
742-13 (10) if the association has no shares:
742-14 (A) the total number of members;
742-15 (B) the number of members who were admitted to
742-16 or withdrew from the association during the year; and
742-17 (C) the amount of membership fees received.
742-18 (c) The report required by Subsection (b) must:
742-19 (1) include a balance sheet and income and expense
742-20 statement of the cooperative association; and
742-21 (2) be signed by the president and secretary.
742-22 (d) A cooperative association that has at least 3,000
742-23 members or at least $750,000 in annual business shall file a copy
742-24 of the report required by this section with the secretary of state.
742-25 (e) A person commits an offense if the person signs a report
742-26 that is required by this section and contains a materially false
742-27 statement that the person knows is false. An offense under this
743-1 subsection is a misdemeanor punishable by:
743-2 (1) a fine of not less than $25 or more than $200;
743-3 (2) confinement in county jail for a term of not less
743-4 than 30 days or more than one year; or
743-5 (3) both the fine and confinement.
743-6 Sec. 251.354. FAILURE TO FILE REPORT. (a) If a cooperative
743-7 association required by Section 251.353 to file a copy of a report
743-8 with the secretary of state does not file the report within the
743-9 prescribed time, the secretary of state shall send written notice
743-10 of the requirement to the cooperative association. The notice must
743-11 be sent to the cooperative association's principal office not later
743-12 than the 60th day after the date the report becomes due.
743-13 (b) If a cooperative association is required by Section
743-14 251.353 to file a report at its registered office but not with the
743-15 secretary of state and fails to file the report within the
743-16 prescribed time, the secretary of state or any member of the
743-17 cooperative association may send written notice of the requirement
743-18 to the cooperative association's principal office.
743-19 (c) If the cooperative association does not file the report
743-20 before the 61st day after the date notice is sent under Subsection
743-21 (a) or (b), a member of the cooperative association or the attorney
743-22 general may seek a writ of mandamus against the cooperative
743-23 association and the appropriate officer or officers to compel the
743-24 filing of the report. The court shall require the cooperative
743-25 association or the officer who is determined to be at fault to pay
743-26 the expenses of the proceeding, including attorney's fees.
743-27 (Sections 251.355-251.400 reserved for expansion)
744-1 SUBCHAPTER I. WINDING UP AND TERMINATION
744-2 Sec. 251.401. VOLUNTARY WINDING UP AND TERMINATION. (a) A
744-3 cooperative association may wind up and terminate its affairs in
744-4 accordance with Chapter 11 and Sections 22.301-22.303.
744-5 (b) If a cooperative association is directed to wind up and
744-6 liquidate its affairs, three members of the cooperative association
744-7 elected by a vote of at least a majority of the members voting
744-8 shall be designated as trustees on behalf of the cooperative
744-9 association to:
744-10 (1) pay debts;
744-11 (2) liquidate the cooperative association's assets
744-12 within the time set in the trustees' designation or any extension
744-13 of time; and
744-14 (3) distribute the cooperative association's assets in
744-15 the manner provided by Section 251.403.
744-16 Sec. 251.402. EXECUTION OF CERTIFICATE OF TERMINATION. An
744-17 officer of a cooperative association or one or more of the persons
744-18 designated as a liquidating trustee under Section 251.401 shall
744-19 execute the certificate of termination on behalf of the cooperative
744-20 association.
744-21 Sec. 251.403. DISTRIBUTION OF ASSETS. Subject to Section
744-22 11.052, the trustees designated under Section 251.401 shall
744-23 distribute the cooperative association's assets in the following
744-24 order:
744-25 (1) by returning the par value of the investors'
744-26 capital to investors;
744-27 (2) by returning the amounts paid on subscriptions to
745-1 subscribers who invested capital;
745-2 (3) by returning the amount of patronage dividends
745-3 credited to patrons' accounts to the patrons;
745-4 (4) by returning the membership capital to members;
745-5 and
745-6 (5) by distributing any surplus in the manner provided
745-7 by the certificate of formation:
745-8 (A) among the patrons who have been members or
745-9 subscribers of the cooperative association during the six years
745-10 preceding the date of dissolution, on the basis of patronage during
745-11 that period;
745-12 (B) as a gift to any cooperative association or
745-13 other nonprofit enterprise designated in the certificate of
745-14 formation; or
745-15 (C) a combination of both methods of
745-16 distribution.
745-17 Sec. 251.404. INVOLUNTARY TERMINATION. A suit for
745-18 involuntary termination of a cooperative association organized
745-19 under this chapter may be instituted for the causes and prosecuted
745-20 in the manner provided by Section 11.251. The assets of a
745-21 cooperative association that is involuntarily terminated shall be
745-22 distributed in accordance with Section 251.403.
745-23 (Sections 251.405-251.450 reserved for expansion)
745-24 SUBCHAPTER J. MISCELLANEOUS PROVISIONS
745-25 Sec. 251.451. EXEMPTION FROM TAXES. A cooperative
745-26 association organized under this chapter is exempt from the
745-27 franchise tax and license fees imposed by the state or a political
746-1 subdivision of the state, except that a cooperative association is
746-2 exempt from the franchise tax imposed by Chapter 171, Tax Code,
746-3 only if the cooperative association is exempt under that chapter.
746-4 Sec. 251.452. USE OF NAME "COOPERATIVE." (a) Only a
746-5 cooperative association governed by this chapter, a group organized
746-6 on a cooperative basis under another law of this state, or a
746-7 foreign entity operating on a cooperative basis and authorized to
746-8 do business in this state may use the term "cooperative" or any
746-9 abbreviation or derivation of the term "cooperative" as part of its
746-10 business name or represent itself, in advertising or otherwise, as
746-11 conducting business on a cooperative basis.
746-12 (b) A person commits an offense if the person violates
746-13 Subsection (a). An offense under this subsection is a misdemeanor
746-14 punishable by:
746-15 (1) a fine of not less than $25 or more than $200 for
746-16 the first month in which the violation occurs;
746-17 (2) a fine of not more than $200 for each month during
746-18 which a violation occurs after the first month;
746-19 (3) confinement in the county jail for not less than
746-20 30 days or more than one year; or
746-21 (4) a combination of those punishments.
746-22 (c) The attorney general may sue to enjoin a violation of
746-23 this section.
746-24 (d) If a court renders a judgment that a person who used the
746-25 term "cooperative" before September 1, 1975, is not organized on a
746-26 cooperative basis but is authorized to continue to use the term,
746-27 the business shall place immediately after its name the words "does
747-1 not comply with the cooperative association law of Texas" in the
747-2 same kind of type and in letters not less than two-thirds the size
747-3 of the letters used in the word "cooperative."
747-4 (e) Notwithstanding this section, The University Cooperative
747-5 Society, a domestic nonprofit corporation related to The University
747-6 of Texas, may continue to use the word "cooperative" in its name.
747-7 CHAPTER 252. UNINCORPORATED NONPROFIT ASSOCIATIONS
747-8 Sec. 252.001. DEFINITIONS. In this chapter:
747-9 (1) "Member" means a person who, under the rules or
747-10 practices of a nonprofit association, may participate in the
747-11 selection of persons authorized to manage the affairs of the
747-12 nonprofit association or in the development of policy of the
747-13 nonprofit association.
747-14 (2) "Nonprofit association" means an unincorporated
747-15 organization, other than one created by a trust, consisting of
747-16 three or more members joined by mutual consent for a common,
747-17 nonprofit purpose. A form of joint tenancy, tenancy in common, or
747-18 tenancy by the entirety does not by itself establish a nonprofit
747-19 association, regardless of whether the co-owners share use of the
747-20 property for a nonprofit purpose.
747-21 Sec. 252.002. SUPPLEMENTARY GENERAL PRINCIPLES OF LAW AND
747-22 EQUITY. Principles of law and equity supplement this chapter unless
747-23 displaced by a particular provision of this chapter.
747-24 Sec. 252.003. TERRITORIAL APPLICATION. Real and personal
747-25 property in this state may be acquired, held, encumbered, and
747-26 transferred by a nonprofit association, regardless of whether the
747-27 nonprofit association or a member has any other relationship to
748-1 this state.
748-2 Sec. 252.004. REAL AND PERSONAL PROPERTY; NONPROFIT
748-3 ASSOCIATION AS BENEFICIARY. (a) A nonprofit association in its
748-4 name may acquire, hold, encumber, or transfer an estate or interest
748-5 in real or personal property.
748-6 (b) A nonprofit association may be a beneficiary of a trust,
748-7 contract, or will.
748-8 Sec. 252.005. STATEMENT OF AUTHORITY AS TO REAL PROPERTY.
748-9 (a) A nonprofit association may execute and record a statement of
748-10 authority to transfer an estate or interest in real property in the
748-11 name of the nonprofit association.
748-12 (b) An estate or interest in real property in the name of a
748-13 nonprofit association may be transferred by a person so authorized
748-14 in a statement of authority recorded in the county clerk's office
748-15 in the county in which a transfer of the property would be
748-16 recorded.
748-17 (c) A statement of authority must contain:
748-18 (1) the name of the nonprofit association;
748-19 (2) the address in this state, including the street
748-20 address, if any, of the nonprofit association, or, if the nonprofit
748-21 association does not have an address in this state, its address out
748-22 of state; and
748-23 (3) the name or title of a person authorized to
748-24 transfer an estate or interest in real property held in the name of
748-25 the nonprofit association.
748-26 (d) A statement of authority must be executed in the same
748-27 manner as a deed by a person who is not the person authorized to
749-1 transfer the estate or interest.
749-2 (e) The county clerk may collect a fee for recording a
749-3 statement of authority in the amount authorized for recording a
749-4 transfer of real property.
749-5 (f) An amendment, including a cancellation, of a statement
749-6 of authority must meet the requirements for execution and recording
749-7 of an original statement. Unless canceled earlier, a recorded
749-8 statement of authority or its most recent amendment is canceled by
749-9 operation of law on the fifth anniversary of the date of the most
749-10 recent recording.
749-11 (g) If the record title to real property is in the name of a
749-12 nonprofit association and the statement of authority is recorded in
749-13 the county clerk's office of the county in which a transfer of real
749-14 property would be recorded, the authority of the person named in a
749-15 statement of authority is conclusive in favor of a person who gives
749-16 value without notice that the person lacks authority.
749-17 Sec. 252.006. LIABILITY IN TORT AND CONTRACT. (a) A
749-18 nonprofit association is a legal entity separate from its members
749-19 for the purposes of determining and enforcing rights, duties, and
749-20 liabilities in contract and tort.
749-21 (b) A person is not liable for a breach of a nonprofit
749-22 association's contract or for a tortious act or omission for which
749-23 a nonprofit association is liable merely because the person is a
749-24 member, is authorized to participate in the management of the
749-25 affairs of the nonprofit association, or is a person considered as
749-26 a member by the nonprofit association.
749-27 (c) A tortious act or omission of a member or other person
750-1 for which a nonprofit association is liable is not imputed to a
750-2 person merely because the person is a member of the nonprofit
750-3 association, is authorized to participate in the management of the
750-4 affairs of the nonprofit association, or is a person considered as
750-5 a member by the nonprofit association.
750-6 (d) A member of, or a person considered as a member by, a
750-7 nonprofit association may assert a claim against the nonprofit
750-8 association. A nonprofit association may assert a claim against a
750-9 member or a person considered as a member by the nonprofit
750-10 association.
750-11 Sec. 252.007. CAPACITY TO ASSERT AND DEFEND; STANDING. (a)
750-12 A nonprofit association, in its name, may institute, defend,
750-13 intervene, or participate in a judicial, administrative, or other
750-14 governmental proceeding or in an arbitration, mediation, or any
750-15 other form of alternative dispute resolution.
750-16 (b) A nonprofit association may assert a claim in its name
750-17 on behalf of members of the nonprofit association if:
750-18 (1) one or more of the nonprofit association's members
750-19 have standing to assert a claim in their own right;
750-20 (2) the interests the nonprofit association seeks to
750-21 protect are germane to its purposes; and
750-22 (3) neither the claim asserted nor the relief
750-23 requested requires the participation of a member.
750-24 Sec. 252.008. EFFECT OF JUDGMENT OR ORDER. A judgment or
750-25 order against a nonprofit association is not by itself a judgment
750-26 or order against a member or a person considered as a member by the
750-27 nonprofit association.
751-1 Sec. 252.009. DISPOSITION OF PERSONAL PROPERTY OF INACTIVE
751-2 NONPROFIT ASSOCIATION. (a) If a nonprofit association has been
751-3 inactive for three years or longer, or a shorter period as
751-4 specified in a document of the nonprofit association, a person in
751-5 possession or control of personal property of the nonprofit
751-6 association may transfer the custody of the property:
751-7 (1) if a document of a nonprofit association specifies
751-8 a person to whom transfer is to be made under these circumstances,
751-9 to that person; or
751-10 (2) if no person is specified, to a nonprofit
751-11 association or nonprofit corporation pursuing broadly similar
751-12 purposes, or to a government or governmental subdivision, agency,
751-13 or instrumentality.
751-14 (b) Notwithstanding the above, if a nonprofit association is
751-15 classified under the Internal Revenue Code as a 501(c)(3)
751-16 organization or is or holds itself out to be established or
751-17 operating for a charitable, religious, or educational purpose, as
751-18 defined by Section 501(c)(3), Internal Revenue Code, then any
751-19 distribution must be made to another nonprofit association or
751-20 nonprofit corporation with similar charitable, religious, or
751-21 educational purposes.
751-22 Sec. 252.010. BOOKS AND RECORDS. (a) A nonprofit
751-23 association shall keep correct and complete books and records of
751-24 account for at least three years after the end of each fiscal year
751-25 and shall make the books and records available on request to
751-26 members of the association for inspection and copying.
751-27 (b) The attorney general may inspect, examine, and make
752-1 copies of the books, records, and other documents the attorney
752-2 general considers necessary and may investigate the association to
752-3 determine if a violation of any law of this state has occurred.
752-4 Sec. 252.011. APPOINTMENT OF AGENT TO RECEIVE SERVICE OF
752-5 PROCESS. (a) A nonprofit association may file in the office of the
752-6 secretary of state a statement appointing an agent authorized to
752-7 receive service of process.
752-8 (b) A statement appointing an agent must contain:
752-9 (1) the name of the nonprofit association;
752-10 (2) the federal tax identification number of the
752-11 nonprofit association, if applicable;
752-12 (3) the address in this state, including the street
752-13 address, if any, of the nonprofit association, or, if the nonprofit
752-14 association does not have an address in this state, its address out
752-15 of state; and
752-16 (4) the name of the person in this state authorized to
752-17 receive service of process and the person's address, including the
752-18 street address, in this state.
752-19 (c) A statement appointing an agent must be signed by a
752-20 person authorized to manage the affairs of the nonprofit
752-21 association. The statement must also be signed by the person
752-22 appointed agent, who by signing accepts the appointment. The
752-23 appointed agent may resign by filing a resignation in the office of
752-24 the secretary of state and giving notice to the nonprofit
752-25 association.
752-26 (d) The secretary of state may collect a fee for filing a
752-27 statement appointing an agent to receive service of process, an
753-1 amendment, a cancellation, or a resignation in the amount charged
753-2 for filing similar documents.
753-3 (e) An amendment to a statement appointing an agent to
753-4 receive service of process must meet the requirements for execution
753-5 of an original statement.
753-6 (f) A statement appointing an agent may be canceled by
753-7 filing with the secretary of state a written notice of cancellation
753-8 executed by a person authorized to manage the affairs of the
753-9 nonprofit association. A notice of cancellation must contain:
753-10 (1) the name of the nonprofit association;
753-11 (2) the federal tax identification number of the
753-12 nonprofit association, if applicable;
753-13 (3) the date of filing of the nonprofit association's
753-14 statement appointing the agent; and
753-15 (4) a current street address, if any, of the nonprofit
753-16 association in this state, or if the nonprofit association does not
753-17 have an address in this state, its address out of state.
753-18 (g) The secretary of state may adopt forms and procedural
753-19 rules for filing documents under this section.
753-20 Sec. 252.012. CLAIM NOT ABATED BY CHANGE. A claim for relief
753-21 against a nonprofit association does not abate merely because of a
753-22 change in the members or persons authorized to manage the affairs
753-23 of the nonprofit association.
753-24 Sec. 252.013. SUMMONS AND COMPLAINT; SERVICE. (a) In an
753-25 action or proceeding against a nonprofit association, a summons and
753-26 complaint must be served on an agent authorized by appointment to
753-27 receive service of process, an officer, a managing or general
754-1 agent, or a person authorized to participate in the management of
754-2 its affairs, in accordance with the Civil Practice and Remedies
754-3 Code.
754-4 (b) Not later than the 10th day after the date of a request
754-5 by the attorney general to an officer or board member of a
754-6 nonprofit association or to the nonprofit association, the
754-7 nonprofit association shall provide to the attorney general the
754-8 names, current addresses, and telephone numbers of:
754-9 (1) each agent authorized to receive service of
754-10 process on behalf of the nonprofit association; and
754-11 (2) each officer, managing or general agent, and other
754-12 person authorized to participate in the management of the affairs
754-13 of the nonprofit association.
754-14 Sec. 252.014. UNIFORMITY OF APPLICATION AND CONSTRUCTION.
754-15 This chapter shall be applied and construed to make uniform the law
754-16 with respect to the subject of this chapter among states enacting
754-17 it.
754-18 Sec. 252.015. TRANSITION CONCERNING REAL AND PERSONAL
754-19 PROPERTY. If, before September 1, 1995, an estate or interest in
754-20 real or personal property was by the terms of the transfer
754-21 purportedly transferred to a nonprofit association, but under the
754-22 law the estate or interest was vested in a fiduciary such as
754-23 officers of the nonprofit association to hold the estate or
754-24 interest for members of the nonprofit association, on or after
754-25 September 1, 1995, the fiduciary may transfer the estate or
754-26 interest to the nonprofit association in its name, or the nonprofit
754-27 association, by appropriate proceedings, may require that the
755-1 estate or interest be transferred to it in its name.
755-2 Sec. 252.016. EFFECT ON OTHER LAW. This chapter replaces
755-3 existing law with respect to matters covered by this chapter but
755-4 does not affect other law covering unincorporated nonprofit
755-5 associations.
755-6 Sec. 252.017. CHAPTER CONTROLLING. (a) Except as provided
755-7 by Subsection (b), only this chapter governs a nonprofit
755-8 association.
755-9 (b) Chapters 1 and 4 and, if a nonprofit association
755-10 designates an agent for service of process, Subchapter E, Chapter
755-11 5, apply to a nonprofit association.
755-12 CHAPTER 253. UNINCORPORATED JOINT STOCK COMPANIES OR ASSOCIATIONS
755-13 Sec. 253.001. APPLICABILITY OF CHAPTER. This chapter applies
755-14 to an action by or against an unincorporated joint stock company or
755-15 association or to an action for the enforcement of the liability of
755-16 a stockholder of the company or association.
755-17 Sec. 253.002. EFFECT OF CHAPTER. This chapter does not
755-18 affect or impair the right of an unincorporated joint stock company
755-19 or association to sue in the individual names of its stockholders
755-20 or members or the right of a person to sue the individual
755-21 stockholders or members.
755-22 Sec. 253.003. CUMULATIVE REMEDIES. Each remedy provided by
755-23 this chapter is cumulative of other remedies in law.
755-24 Sec. 253.004. SUIT IN NAME OF JOINT STOCK ASSOCIATION. A
755-25 domestic or foreign unincorporated joint stock company or
755-26 association doing business in this state may sue or be sued in the
755-27 name of the company or association. An individual stockholder or
756-1 member of the company or association does not need to be a named
756-2 party to the suit.
756-3 Sec. 253.005. SERVICE OF CITATION. In an action against a
756-4 joint stock company or association, citation may be served in the
756-5 manner provided by Section 17.023, Civil Practice and Remedies
756-6 Code. Service of citation may also be provided to a stockholder or
756-7 member of the company or association.
756-8 Sec. 253.006. LIABILITY OF STOCKHOLDERS OR MEMBERS. A
756-9 stockholder of an unincorporated joint stock company or association
756-10 is liable to the same extent as a partner in a general partnership
756-11 under this code.
756-12 Sec. 253.007. EXECUTION OF JUDGMENT. (a) In a suit against
756-13 a joint stock company or association, if service is only made on an
756-14 officer or agent of the company or association specified by Section
756-15 17.023, Civil Practice and Remedies Code, a judgment rendered
756-16 against the company or association is binding on the joint property
756-17 of all of the stockholders or members of the company or association
756-18 and may be enforced by execution against the joint property. The
756-19 judgment is not binding on the individual property of the
756-20 stockholders or members of the company or association and does not
756-21 authorize execution against the property of a stockholder or
756-22 member.
756-23 (b) A judgment against a joint stock company or association
756-24 is binding on the individual property of a stockholder or member of
756-25 the company or association who is served with citation. The
756-26 judgment may be executed against the individual property of the
756-27 stockholder only after execution against the joint property has
757-1 been returned unsatisfied.
757-2 TITLE 7. PROFESSIONAL ENTITIES
757-3 CHAPTER 301. PROVISIONS RELATING TO PROFESSIONAL ENTITIES
757-4 Sec. 301.001. APPLICABILITY OF TITLE. (a) This title
757-5 applies only to a professional entity or foreign professional
757-6 entity.
757-7 (b) This title does not affect:
757-8 (1) the professional relationship between a person who
757-9 provides a professional service and the recipient of that service,
757-10 including any privilege of confidentiality arising from that
757-11 relationship under state law; or
757-12 (2) a person's legal remedies against another person
757-13 who commits an error, omission, negligent or incompetent act, or
757-14 malfeasance while providing a professional service.
757-15 Sec. 301.002. CONFLICTS OF LAW. This title prevails over a
757-16 conflicting provision of Title 1, 2, 3, or 4.
757-17 Sec. 301.003. DEFINITIONS. In this title:
757-18 (1) "Licensed mental health professional" means a
757-19 person, other than a physician, who is licensed by the state to
757-20 engage in the practice of psychology or psychiatric nursing or to
757-21 provide professional therapy or counseling services.
757-22 (2) "Professional association" means an association,
757-23 as distinguished from either a partnership or a corporation, that
757-24 is:
757-25 (A) formed for the purpose of providing the
757-26 professional service rendered by a doctor of medicine, doctor of
757-27 osteopathy, doctor of podiatry, dentist, optometrist, therapeutic
758-1 optometrist, or licensed mental health professional; and
758-2 (B) governed as a professional entity under this
758-3 title.
758-4 (3) "Professional corporation" means a corporation
758-5 that is:
758-6 (A) formed for the purpose of providing a
758-7 professional service that by law a corporation governed by Title 2
758-8 is prohibited from rendering; and
758-9 (B) governed as a professional entity under this
758-10 title.
758-11 (4) "Professional entity" means a professional
758-12 association, professional corporation, or professional limited
758-13 liability company.
758-14 (5) "Professional individual," with respect to a
758-15 professional entity, means an individual who is licensed to provide
758-16 in this state or another jurisdiction the same professional service
758-17 as rendered by that professional entity.
758-18 (6) "Professional limited liability company" means a
758-19 limited liability company formed for the purpose of providing a
758-20 professional service and governed as a professional entity under
758-21 this title.
758-22 (7) "Professional organization," with respect to a
758-23 professional corporation or a professional limited liability
758-24 company, means a person other than an individual, whether
758-25 nonprofit, for-profit, domestic, or foreign and including a
758-26 nonprofit corporation or nonprofit association, that renders the
758-27 same professional service as the professional corporation or
759-1 professional limited liability company only through owners,
759-2 members, managerial officials, employees, or agents, each of whom
759-3 is a professional individual or professional organization.
759-4 (8) "Professional service" means any type of service
759-5 that requires, as a condition precedent to the rendering of the
759-6 service, the obtaining of a license in this state, including the
759-7 personal service rendered by an architect, attorney, certified
759-8 public accountant, dentist, physician, public accountant, or
759-9 veterinarian.
759-10 Sec. 301.004. AUTHORIZED PERSON. For purposes of this title,
759-11 a person is an authorized person with respect to:
759-12 (1) a professional association if the person is a
759-13 professional individual; and
759-14 (2) a professional corporation or a professional
759-15 limited liability company if the person is a professional
759-16 individual or professional organization.
759-17 Sec. 301.005. APPLICATION FOR REGISTRATION OF FOREIGN
759-18 PROFESSIONAL ENTITY. (a) When required by Chapter 9, a foreign
759-19 professional entity must file an application for registration to
759-20 transact business in this state.
759-21 (b) The secretary of state may accept an application filed
759-22 under Subsection (a) only if:
759-23 (1) the name and purpose of the foreign professional
759-24 entity stated in the application comply with this title and
759-25 Chapters 2 and 5; and
759-26 (2) the application states that the jurisdiction of
759-27 formation of the foreign professional entity permits reciprocal
760-1 admission of an entity formed under this code.
760-2 Sec. 301.006. LICENSE REQUIRED TO PROVIDE PROFESSIONAL
760-3 SERVICE. (a) A professional association or foreign professional
760-4 association may provide a professional service in this state only
760-5 through owners, managerial officials, employees, or agents, each of
760-6 whom:
760-7 (1) is a professional individual; and
760-8 (2) is licensed in this state to provide the same
760-9 professional service provided by the entity.
760-10 (b) A professional entity, other than a professional
760-11 association, may provide a professional service in this state only
760-12 through owners, managerial officials, employees, or agents, each of
760-13 whom is an authorized person.
760-14 (c) An individual may not, under the guise of employment,
760-15 provide a professional service in this state unless the individual
760-16 is licensed to provide the professional service under the laws of
760-17 this state.
760-18 (d) This section may not be construed to prohibit a
760-19 professional entity or foreign professional entity from employing
760-20 individuals who do not, according to general custom and practice,
760-21 ordinarily provide a professional service, including clerks,
760-22 secretaries, bookkeepers, technicians, nurses, or assistants.
760-23 Sec. 301.007. CERTAIN REQUIREMENTS TO BE OWNER, GOVERNING
760-24 PERSON, OR OFFICER. (a) A person may be an owner of a professional
760-25 entity or a governing person of a professional limited liability
760-26 company only if the person is an authorized person.
760-27 (b) An individual may be an officer of a professional entity
761-1 or a governing person of a professional association or professional
761-2 corporation only if the individual is a professional individual.
761-3 Sec. 301.008. DUTIES AND POWERS OF OWNER OR MANAGERIAL
761-4 OFFICIAL WHO CEASES TO BE LICENSED; PURCHASE OF OWNERSHIP INTEREST.
761-5 (a) A managerial official of a professional entity who ceases to
761-6 satisfy the requirements of Section 301.007 shall promptly resign
761-7 the person's position and employment with the entity.
761-8 (b) An owner of a professional entity who ceases to be an
761-9 authorized person as required by Section 301.007 shall promptly
761-10 relinquish the person's ownership interest in the entity.
761-11 (c) A person who becomes an owner of a professional entity
761-12 by succeeding to the ownership interest of another owner of the
761-13 entity shall promptly relinquish the person's financial interest in
761-14 the entity if the person is not an authorized person as required by
761-15 Section 301.007.
761-16 (d) A professional entity shall purchase or cause to be
761-17 purchased the ownership interest in the entity of a person who is
761-18 required to relinquish the person's financial interest in the
761-19 entity under this section. The price and terms of a purchase of an
761-20 ownership interest required under this subsection may be provided
761-21 by the governing documents of the entity or an applicable
761-22 agreement.
761-23 (e) A person who owns all of the outstanding ownership
761-24 interests in a professional entity but is required under this
761-25 section to relinquish the person's financial interest in the entity
761-26 may act as a managerial official or owner of the entity only for
761-27 the purpose of winding up the affairs of the entity, including
762-1 selling the outstanding ownership interests and other assets of the
762-2 entity.
762-3 Sec. 301.009. TRANSFER OF OWNERSHIP INTEREST. Except as
762-4 limited by the governing documents of the professional entity or an
762-5 applicable agreement, an ownership interest in a professional
762-6 entity may be transferred only to:
762-7 (1) an owner of the entity;
762-8 (2) the entity itself; or
762-9 (3) an authorized person.
762-10 Sec. 301.010. LIABILITY. (a) A professional entity is
762-11 jointly and severally liable for an error, omission, negligent or
762-12 incompetent act, or malfeasance committed by a person who:
762-13 (1) is an owner, managerial official, employee, or
762-14 agent of the entity; and
762-15 (2) commits the error, omission, negligent or
762-16 incompetent act, or malfeasance while providing a professional
762-17 service for the entity or during the course of the person's
762-18 employment.
762-19 (b) An owner, managerial official, employee, or agent of a
762-20 professional entity other than an owner, managerial official,
762-21 employee, or agent liable under Subsection (a) is not subject to
762-22 the same liability imposed on the professional entity under this
762-23 section.
762-24 (c) If a person described by Subsection (a) is a
762-25 professional organization, the professional organization and the
762-26 professional entity are jointly and severally liable for the error,
762-27 omission, negligent or incompetent act, or malfeasance committed by
763-1 the person, or the person's owner, member, managerial official,
763-2 employee, or agent, while providing a professional service for the
763-3 professional entity.
763-4 Sec. 301.011. EXEMPTION FROM SECURITIES LAWS. (a) A sale,
763-5 issuance, or offer for sale of an ownership interest in a
763-6 professional entity to a person authorized under this title to own
763-7 an ownership interest in the professional entity is exempt from any
763-8 state law, other than this code, that regulates the sale, issuance,
763-9 or offer for sale of securities.
763-10 (b) A transaction described by Subsection (a) does not
763-11 require the approval of or other action by a state official or
763-12 regulatory agency authorized to regulate the sale, issuance, or
763-13 offer for sale of securities.
763-14 Sec. 301.012. JOINT PRACTICE BY CERTAIN PROFESSIONALS.
763-15 (a) Persons licensed as doctors of medicine and persons licensed
763-16 as doctors of osteopathy by the Texas State Board of Medical
763-17 Examiners and persons licensed as podiatrists by the Texas State
763-18 Board of Podiatric Medical Examiners may jointly form and own a
763-19 professional association or a professional limited liability
763-20 company to perform professional services that fall within the scope
763-21 of practice of those practitioners.
763-22 (b) Professionals, other than physicians, engaged in related
763-23 mental health fields such as psychology, clinical social work,
763-24 licensed professional counseling, and licensed marriage and family
763-25 therapy may form a professional entity that is jointly owned by
763-26 those practitioners to perform professional services that fall
763-27 within the scope of practice of those practitioners.
764-1 (c) Persons licensed as doctors of medicine and persons
764-2 licensed as doctors of osteopathy by the Texas State Board of
764-3 Medical Examiners and persons licensed as optometrists or
764-4 therapeutic optometrists by the Texas Optometry Board may, subject
764-5 to the provisions regulating those professionals, jointly form and
764-6 own a professional association or a professional limited liability
764-7 company to perform professional services that fall within the scope
764-8 of practice of those practitioners.
764-9 (d) Only a physician, optometrist, or therapeutic
764-10 optometrist may have an ownership interest in a professional
764-11 association or professional limited liability company formed under
764-12 Subsection (c).
764-13 (e) An entity formed under Subsection (c) is not prohibited
764-14 from making one or more payments to an owner's estate following the
764-15 owner's death under an agreement with the owner or as otherwise
764-16 authorized or required by law.
764-17 (f) When doctors of medicine, osteopathy, and podiatry, or
764-18 doctors of medicine, osteopathy, and optometry or therapeutic
764-19 optometry, or mental health professionals form a professional
764-20 entity as provided by Subsections (a), (b) and (c), the authority
764-21 of each of the practitioners is limited by the scope of practice of
764-22 the respective practitioners and none can exercise control over the
764-23 other's clinical authority granted by their respective licenses,
764-24 either through agreements, bylaws, directives, financial
764-25 incentives, or other arrangements that would assert control over
764-26 treatment decisions made by the practitioner.
764-27 (g) The state agencies exercising regulatory control over
765-1 professions to which this section applies continue to exercise
765-2 regulatory authority over their respective licenses.
765-3 CHAPTER 302. PROVISIONS RELATING TO PROFESSIONAL ASSOCIATIONS
765-4 Sec. 302.001. APPLICABILITY OF CERTAIN PROVISIONS GOVERNING
765-5 FOR-PROFIT CORPORATIONS. The provisions of Chapters 20 and 21
765-6 governing a for-profit corporation apply to a professional
765-7 association, unless there is a conflict with this title.
765-8 Sec. 302.002. DURATION OF PROFESSIONAL ASSOCIATION. A
765-9 professional association continues:
765-10 (1) for all purposes as a separate entity independent
765-11 of the association's members until:
765-12 (A) the expiration of the period of duration
765-13 stated in the certificate of formation; or
765-14 (B) the association is wound up and terminated
765-15 in the manner provided by the certificate of formation or, if the
765-16 certificate of formation does not provide a manner for winding up
765-17 and termination, by a two-thirds vote of the association's members;
765-18 and
765-19 (2) in existence notwithstanding:
765-20 (A) the death, insanity, incompetency, felony
765-21 conviction, resignation, withdrawal, transfer of ownership
765-22 interest, or expulsion of a member other than the last surviving
765-23 member of the association;
765-24 (B) the admission of a new member or the
765-25 transfer of ownership interest to a new or existing member; or
765-26 (C) the occurrence of an event that would
765-27 require the winding up of a partnership under state law or similar
766-1 circumstances.
766-2 Sec. 302.003. AMENDMENT OF CERTIFICATE OF FORMATION. (a) A
766-3 professional association may amend the association's certificate of
766-4 formation as provided by:
766-5 (1) Chapter 3;
766-6 (2) the procedure for amendment stated in the
766-7 certificate of formation; or
766-8 (3) if the certificate of formation does not provide a
766-9 procedure for amending the certificate, two-thirds vote of the
766-10 association's members.
766-11 (b) A professional association is not required to amend the
766-12 association's certificate of formation to reflect a change in
766-13 membership or a transfer of ownership interests in the association.
766-14 Sec. 302.004. ADOPTION OF BYLAWS; DELEGATION OF AUTHORITY.
766-15 (a) The members of a professional association may adopt bylaws for
766-16 the association.
766-17 (b) The authority to adopt bylaws of a professional
766-18 association granted under Subsection (a) may be delegated under
766-19 the certificate of formation to the governing authority of the
766-20 association.
766-21 Sec. 302.005. GOVERNING AUTHORITY. (a) A professional
766-22 association shall be governed by:
766-23 (1) a board of directors; or
766-24 (2) an executive committee.
766-25 (b) The governing authority of a professional association
766-26 shall be elected by the members of the association.
766-27 Sec. 302.006. MEMBERS' VOTING RIGHTS. A member of a
767-1 professional association is entitled to cast a vote at a meeting of
767-2 the members as provided by the certificate of formation of the
767-3 association.
767-4 Sec. 302.007. ELECTION OF OFFICERS. The governing authority
767-5 of a professional association shall elect officers of the
767-6 association.
767-7 Sec. 302.008. OFFICER AND GOVERNING AUTHORITY ELIGIBILITY
767-8 REQUIREMENTS. (a) Only a member of the professional association is
767-9 eligible to serve as an officer or governing person of a
767-10 professional association.
767-11 (b) Except as provided by Subsection (c), a person is not
767-12 required to be a governing person of a professional association to
767-13 serve as an officer of the association.
767-14 (c) Only a governing person of a professional association is
767-15 eligible to serve as the president of the professional association.
767-16 Sec. 302.009. EMPLOYMENT OF AGENTS AND EMPLOYEES. The
767-17 officers of a professional association may employ agents or
767-18 employees for the association as the officers consider advisable.
767-19 Sec. 302.010. LIMITATION ON MEMBER'S POWER TO BIND
767-20 ASSOCIATION. A member of a professional association is not entitled
767-21 to bind the association within the scope of the association's
767-22 business or profession merely by virtue of being a member of the
767-23 professional association.
767-24 Sec. 302.011. DIVISION OF PROFITS. The members of a
767-25 professional association shall divide the profits derived from the
767-26 association in the manner provided by the governing documents of
767-27 the association.
768-1 Sec. 302.012. ANNUAL STATEMENT REQUIRED. (a) In June of
768-2 each year, a professional association shall file with the secretary
768-3 of state a statement that:
768-4 (1) lists:
768-5 (A) the name and address of each member of the
768-6 association; and
768-7 (B) the name of each officer and governing
768-8 person of the association; and
768-9 (2) states that each member of the association is
768-10 licensed to provide the same type of professional service provided
768-11 by the association.
768-12 (b) The statement required by this section must be executed
768-13 by an officer of the association on behalf of the association.
768-14 Sec. 302.013. WINDING UP AND TERMINATION; CERTIFICATE OF
768-15 TERMINATION. (a) A professional association may wind up and
768-16 terminate the association's business as provided by:
768-17 (1) the association's certificate of formation; or
768-18 (2) if the certificate of formation does not provide
768-19 for the winding up and termination of the association, two-thirds
768-20 vote of the association's members.
768-21 (b) Except as provided by Subsection (c), a certificate of
768-22 termination must be executed by an officer of the professional
768-23 association on behalf of the association.
768-24 (c) If a professional association does not have any living
768-25 officer, the certificate of termination must be executed by the
768-26 legal representative of the last surviving officer of the
768-27 association.
769-1 CHAPTER 303. PROVISIONS RELATING TO PROFESSIONAL CORPORATIONS
769-2 Sec. 303.001. APPLICABILITY OF CERTAIN PROVISIONS GOVERNING
769-3 FOR-PROFIT CORPORATIONS. The provisions of Chapters 20 and 21
769-4 governing a for-profit corporation apply to a professional
769-5 corporation, unless there is a conflict with this title.
769-6 Sec. 303.002. AUTHORITY AND LIABILITY OF SHAREHOLDER. (a) A
769-7 shareholder of a professional corporation is not required to
769-8 supervise the performance of duties by an officer or employee of
769-9 the corporation.
769-10 (b) A shareholder of a professional corporation is subject
769-11 to the same liability imposed on a shareholder of a for-profit
769-12 corporation.
769-13 Sec. 303.003. NOTICE OF RESTRICTION ON TRANSFER OF SHARES.
769-14 Any restriction on the transfer of shares in a professional
769-15 corporation that is imposed by the governing documents of the
769-16 corporation or an applicable agreement must be:
769-17 (1) noted on each certificate representing the shares;
769-18 or
769-19 (2) incorporated by reference in the manner provided
769-20 by Chapter 21.
769-21 Sec. 303.004. REDEMPTION OF SHARES; PRICE AND TERMS. (a) A
769-22 professional corporation may redeem shares of a shareholder,
769-23 including a deceased shareholder.
769-24 (b) The price and other terms of a redemption of shares may
769-25 be:
769-26 (1) agreed to between the board of directors or
769-27 executive committee of the professional corporation and the
770-1 shareholder or the shareholder's personal representative; or
770-2 (2) specified in the governing documents of the
770-3 professional corporation or an applicable agreement.
770-4 Sec. 303.005. EXISTENCE OF PROFESSIONAL CORPORATION BEFORE
770-5 WINDING UP AND TERMINATION. A professional corporation continues to
770-6 exist until the winding up and termination of the corporation as
770-7 provided by Chapter 11 without regard to:
770-8 (1) the death, incompetency, bankruptcy, resignation,
770-9 withdrawal, retirement, or expulsion of any shareholder of the
770-10 corporation;
770-11 (2) the transfer of shares to a new shareholder; or
770-12 (3) the occurrence of an event requiring the winding
770-13 up of a partnership.
770-14 Sec. 303.006. WINDING UP AND TERMINATION OF PROFESSIONAL
770-15 CORPORATION. A shareholder of a professional corporation may not
770-16 independently of other shareholders of the corporation wind up the
770-17 affairs of and terminate the corporation.
770-18 CHAPTER 304. PROVISIONS RELATING TO PROFESSIONAL LIMITED
770-19 LIABILITY COMPANIES
770-20 Sec. 304.001. APPLICABILITY OF CERTAIN PROVISIONS GOVERNING
770-21 LIMITED LIABILITY COMPANIES. Title 3 applies to a professional
770-22 limited liability company, unless there is a conflict with this
770-23 title.
770-24 TITLE 8. MISCELLANEOUS AND TRANSITION PROVISIONS
770-25 CHAPTER 401. GENERAL PROVISIONS
770-26 Sec. 401.001. DEFINITIONS. In this title:
770-27 (1) "Mandatory application date" means:
771-1 (A) for an entity subject to this code under
771-2 Section 402.001, January 1, 2002;
771-3 (B) for an entity subject to this code under
771-4 Section 402.003 or 402.004, the date of completion of the action
771-5 required by that section but no earlier than January 1, 2002; and
771-6 (C) for any other entity, January 1, 2006.
771-7 (2) "Prior law" means the applicable law in effect
771-8 before January 1, 2002.
771-9 CHAPTER 402. MISCELLANEOUS AND TRANSITION PROVISIONS
771-10 Sec. 402.001. APPLICABILITY UPON EFFECTIVE DATE. At the
771-11 effective date of this code, this code applies to:
771-12 (1) a domestic entity formed on or after the effective
771-13 date of this code;
771-14 (2) a foreign filing entity or other foreign entity
771-15 that has not registered with the secretary of state to transact
771-16 business in this state before the effective date of this code; and
771-17 (3) a foreign non-filing entity.
771-18 Sec. 402.002. EARLY EFFECTIVENESS OF FEES. On or after the
771-19 effective date of this code, the fees required by Chapter 4 apply
771-20 to all filings made with the secretary of state, including
771-21 comparable filings under prior law regardless of whether an entity
771-22 is subject to or has adopted this code. The intent of this section
771-23 is to:
771-24 (1) require a filing fee for all documents filed under
771-25 either this code or the prior law without regard to the difference
771-26 in designation of the document; and
771-27 (2) make the filing fees described by Subdivision (1)
772-1 uniform from the effective date of this code.
772-2 Sec. 402.003. EARLY ADOPTION OF CODE BY EXISTING DOMESTIC
772-3 ENTITY. (a) A domestic entity formed before the effective date of
772-4 this code may voluntarily elect to adopt and become subject to this
772-5 code by:
772-6 (1) complying with the procedures to amend its
772-7 governing documents to adopt this code and, if necessary, to cause
772-8 its governing documents to comply with this code; and
772-9 (2) if the domestic entity is a filing entity, filing
772-10 with the secretary of state in accordance with Chapter 4:
772-11 (A) a statement that the filing entity is
772-12 electing to adopt this code; and
772-13 (B) if necessary, a certificate of amendment
772-14 that would cause its certificate of formation to comply with this
772-15 code.
772-16 (b) If amendments to the governing documents of a domestic
772-17 entity that are necessary to conform the governing documents to
772-18 this code would not require, under prior law, the vote or consent
772-19 of the owners or members of the entity, this code and any amendment
772-20 to the governing documents required by this section may be adopted
772-21 by the governing authority only in the manner provided for an
772-22 amendment of the particular governing document.
772-23 Sec. 402.004. EARLY ADOPTION OF CODE BY REGISTERED FOREIGN
772-24 ENTITY. A foreign filing entity registered with the secretary of
772-25 state to transact business in this state before the effective date
772-26 of this code may voluntarily elect to adopt and become subject to
772-27 this code by filing with the secretary of state in accordance with
773-1 Chapter 4:
773-2 (1) a statement that the foreign filing entity is
773-3 electing to adopt this code; and
773-4 (2) an amendment to its application for registration
773-5 that would cause its application for registration to comply with
773-6 this code.
773-7 Sec. 402.005. APPLICABILITY TO EXISTING ENTITIES ON
773-8 MANDATORY APPLICATION DATE. On January 1, 2006, if a domestic
773-9 filing entity formed before the effective date of this code or a
773-10 foreign filing entity registered with the secretary of state to
773-11 transact business in this state before the effective date of this
773-12 code has not taken the actions specified by Section 402.003(a) or
773-13 402.004 to elect to adopt this code:
773-14 (1) this code applies to the entity and all actions
773-15 taken by the managerial officials, owners, or members of the
773-16 entity, except as otherwise expressly provided by this title;
773-17 (2) the entity is not considered to have failed to
773-18 comply with this code if the entity's certificate of formation or
773-19 application for registration, as appropriate, does not comply with
773-20 this code;
773-21 (3) if the entity is a domestic filing entity, the
773-22 entity shall conform its certificate of formation to the
773-23 requirements of this code when it next files an amendment to its
773-24 certificate of formation; and
773-25 (4) if the entity is a foreign filing entity, the
773-26 entity shall conform its application for registration to the
773-27 requirements of this code when it next files an amendment to its
774-1 application for registration.
774-2 Sec. 402.006. APPLICABILITY TO CERTAIN ACTS, CONTRACTS, AND
774-3 TRANSACTIONS. (a) Except as otherwise expressly provided by this
774-4 title, all of the provisions of this code govern acts, contracts,
774-5 or other transactions by an entity subject to this code or its
774-6 managerial officials, owners, or members that occur on or after the
774-7 mandatory application date. The prior law governs the acts,
774-8 contracts, or transactions of the entity or its managerial
774-9 officials, owners or members that occur before the mandatory
774-10 application date.
774-11 (b) No requirement under Subchapter E, Chapter 3, with
774-12 respect to matters to be set forth on certificates evidencing
774-13 ownership interests of partnerships shall apply to or affect
774-14 certificates outstanding when the requirement first becomes
774-15 applicable to the certificates, but the requirement applies to all
774-16 subsequently issued certificates whether in connection with an
774-17 original issue of ownership interests, a transfer of ownership
774-18 interests, or otherwise.
774-19 Sec. 402.007. INDEMNIFICATION. Chapter 8 governs any
774-20 proposed indemnification by a domestic entity after the mandatory
774-21 application date, regardless of whether the events on which the
774-22 indemnification is based occurred before or after the mandatory
774-23 application date. A statement relating to indemnification
774-24 contained in the governing documents of a domestic entity on the
774-25 mandatory application date may not be construed as limiting the
774-26 indemnification authorized by Chapter 8 unless it expressly states
774-27 that is the intent.
775-1 Sec. 402.008. MEETINGS OF OWNERS AND MEMBERS; CONSENTS;
775-2 VOTING OF INTERESTS. (a) Except as provided by Subsection (b) and
775-3 regardless of whether a proxy or consent was executed by an owner
775-4 or member before the mandatory application date, Chapter 6 and any
775-5 other applicable provision of this code apply to:
775-6 (1) a meeting of owners or members held on or after
775-7 the mandatory application date;
775-8 (2) an action undertaken by owners or members under a
775-9 written consent that takes effect on or after the mandatory
775-10 application date;
775-11 (3) a vote cast at a meeting described by Subdivision
775-12 (1); and
775-13 (4) consent given for an action described by
775-14 Subdivision (2).
775-15 (b) Prior law applies to a meeting of owners or members and
775-16 to any vote cast at a meeting described by this subsection if the
775-17 meeting was initially called for a date before the mandatory
775-18 application date and notice of the meeting was given to owners or
775-19 members entitled to vote at the meeting.
775-20 Sec. 402.009. MEETINGS OF GOVERNING AUTHORITY AND
775-21 COMMITTEES; CONSENTS. (a) Except as provided by Subsection (b),
775-22 Chapter 6 and any other applicable provision of this code apply to:
775-23 (1) a meeting of the governing authority or a
775-24 committee of the governing authority held on or after the mandatory
775-25 application date;
775-26 (2) an action undertaken by the governing authority or
775-27 a committee of the governing authority under a written consent that
776-1 takes effect on or after the mandatory application date;
776-2 (3) a vote cast at a meeting described by Subdivision
776-3 (1); and
776-4 (4) consent given for an action described by
776-5 Subdivision (2).
776-6 (b) Prior law applies to a meeting of the governing
776-7 authority or a committee of the governing authority and to any vote
776-8 cast at a meeting described by this subsection if the meeting was
776-9 initially called for a date before the mandatory application date
776-10 and notice of the meeting was given to governing persons entitled
776-11 to vote at the meeting.
776-12 Sec. 402.010. SALE OF ASSETS, MERGERS, REORGANIZATIONS,
776-13 CONVERSIONS. Chapter 10 and any other applicable provisions of this
776-14 code apply to a transaction consummated by an entity after the
776-15 mandatory application date, except that if a required approval of
776-16 the owners or members of the entity has been given before the
776-17 mandatory application date or has been given after the mandatory
776-18 application date but at a meeting of owners or members initially
776-19 called for a date before the mandatory application date, the
776-20 transaction shall be governed by the prior law.
776-21 Sec. 402.011. WINDING UP AND TERMINATION. (a) Chapter 11
776-22 applies to:
776-23 (1) an action for involuntary or judicial winding up
776-24 and termination commenced after the mandatory application date; or
776-25 (2) a voluntary winding up and termination proceeding
776-26 initiated after the mandatory application date by:
776-27 (A) the governing authority;
777-1 (B) the terms of the governing documents; or
777-2 (C) applicable law.
777-3 (b) The prior law governs:
777-4 (1) an action described by Subsection (a)(1) that is
777-5 pending on the mandatory application date; or
777-6 (2) a proceeding described by Subsection (a)(2)
777-7 initiated before the mandatory application date.
777-8 Sec. 402.012. REGISTRATION OF CERTAIN FOREIGN ENTITIES. A
777-9 foreign entity that has transacted intrastate business in this
777-10 state before the mandatory application date and that is required by
777-11 Chapter 9 to register to transact business is not subject to a
777-12 direct or indirect penalty as a result of failure to register under
777-13 Chapter 9 if the application for registration is filed not later
777-14 than the 30th day after the mandatory application date.
777-15 Sec. 402.013. ENTITIES UNDER SUSPENSION FOR NONFILING OF
777-16 REQUIRED REPORTS OR PAYMENT OF TAXES; APPLICABILITY OF PRIOR LAW.
777-17 (a) If the rights, privileges, and powers of a domestic filing
777-18 entity have been suspended and are still suspended immediately
777-19 before the mandatory application date under the prior law, this
777-20 code applies to the entity on the mandatory application date.
777-21 (b) If the rights, privileges, and powers of a domestic
777-22 filing entity have been suspended and are still suspended under the
777-23 Tax Code immediately before the mandatory application date, the
777-24 suspension continues to apply to the entity until the rights,
777-25 privileges, and powers are restored by the secretary of state under
777-26 that code.
777-27 Sec. 402.014. MAINTENANCE OF PRIOR ACTION. Except as
778-1 expressly provided by this title, this code does not apply to an
778-2 action or proceeding commenced before the mandatory application
778-3 date. Prior law applies to the action or proceeding.
778-4 SECTION 2. CONFORMING AMENDMENT. Part Eleven, Texas Business
778-5 Corporation Act, is amended by adding Article 11.02 to read as
778-6 follows:
778-7 Art. 11.02. APPLICABILITY; EXPIRATION. A. Except as
778-8 provided by Title 8, Business Organizations Code, this Act does not
778-9 apply to a corporation to which the Business Organizations Code
778-10 applies.
778-11 B. This Act expires January 1, 2006.
778-12 SECTION 3. CONFORMING AMENDMENT. Part Seven, Texas
778-13 Miscellaneous Corporation Laws Act (Article 1302-7.01 et seq.,
778-14 Vernon's Texas Civil Statutes), is amended by adding Article 7.09
778-15 to read as follows:
778-16 Art. 7.09. APPLICABILITY; EXPIRATION. A. Except as provided
778-17 by Title 8, Business Organizations Code, this Act does not apply to
778-18 a corporation to which the Business Organizations Code applies.
778-19 B. This Act expires January 1, 2006.
778-20 SECTION 4. CONFORMING AMENDMENT. The Texas Non-Profit
778-21 Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
778-22 Statutes) is amended by adding Article 11.02 to read as follows:
778-23 Art. 11.02. APPLICABILITY; EXPIRATION. A. Except as
778-24 provided by Title 8, Business Organizations Code, this Act does not
778-25 apply to a corporation to which the Business Organizations Code
778-26 applies.
778-27 B. This Act expires January 1, 2006.
779-1 SECTION 5. CONFORMING AMENDMENT. The Cooperative Association
779-2 Act (Article 1396-50.01, Vernon's Texas Civil Statutes) is amended
779-3 by adding Section 47 to read as follows:
779-4 Sec. 47. APPLICABILITY; EXPIRATION. (a) Except as provided
779-5 by Title 8, Business Organizations Code, this Act does not apply to
779-6 an association to which the Business Organizations Code applies.
779-7 (b) This Act expires January 1, 2006.
779-8 SECTION 6. CONFORMING AMENDMENT. The Texas Uniform
779-9 Unincorporated Nonprofit Association Act (Article 1396-70.01,
779-10 Vernon's Texas Civil Statutes) is amended by adding Section 19 to
779-11 read as follows:
779-12 Sec. 19. APPLICABILITY; EXPIRATION. (a) Except as provided
779-13 by Title 8, Business Organizations Code, this Act does not apply
779-14 to a nonprofit association to which the Business Organizations Code
779-15 applies.
779-16 (b) This Act expires January 1, 2006.
779-17 SECTION 7. CONFORMING AMENDMENT. The Texas Professional
779-18 Corporation Act (Article 1528e, Vernon's Texas Civil Statutes) is
779-19 amended by adding Section 21 to read as follows:
779-20 Sec. 21. APPLICABILITY; EXPIRATION. (a) Except as provided
779-21 by Title 8, Business Organizations Code, this Act does not apply
779-22 to a professional corporation to which the Business Organizations
779-23 Code applies.
779-24 (b) This Act expires January 1, 2006.
779-25 SECTION 8. CONFORMING AMENDMENT. The Texas Professional
779-26 Association Act (Article 1528f, Vernon's Texas Civil Statutes) is
779-27 amended by adding Section 27 to read as follows:
780-1 Sec. 27. APPLICABILITY; EXPIRATION. (A) Except as provided
780-2 by Title 8, Business Organizations Code, this Act does not apply to
780-3 a professional association to which the Business Organizations Code
780-4 applies.
780-5 (B) This Act expires January 1, 2006.
780-6 SECTION 9. CONFORMING AMENDMENT. Part Eight, Texas Limited
780-7 Liability Company Act (Article 1528n, Vernon's Texas Civil
780-8 Statutes), is amended by adding Article 8.13 to read as follows:
780-9 Art. 8.13. APPLICABILITY; EXPIRATION. A. Except as provided
780-10 by Title 8, Business Organizations Code, this Act does not apply to
780-11 a limited liability company to which the Business Organizations
780-12 Code applies.
780-13 B. This Act expires January 1, 2006.
780-14 SECTION 10. CONFORMING AMENDMENT. Article 13, Texas Revised
780-15 Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
780-16 Statutes), is amended by adding Section 13.10 to read as follows:
780-17 Sec. 13.10. APPLICABILITY; EXPIRATION. (a) Except as
780-18 provided by Title 8, Business Organizations Code, this Act does not
780-19 apply to a limited partnership to which the Business Organizations
780-20 Code applies.
780-21 (b) This Act expires January 1, 2006.
780-22 SECTION 11. CONFORMING AMENDMENT. Article XI, Texas Revised
780-23 Partnership Act (Article 6132b-11.01 et seq., Vernon's Texas Civil
780-24 Statutes), is amended by adding Section 11.05 to read as follows:
780-25 Sec. 11.05. APPLICABILITY; EXPIRATION. (a) Except as
780-26 provided by Title 8, Business Organizations Code, this Act does not
780-27 apply to a partnership to which the Business Organizations Code
781-1 applies.
781-2 (b) This Act expires January 1, 2006.
781-3 SECTION 12. CONFORMING AMENDMENT. The Texas Real Estate
781-4 Investment Trust Act (Article 6138A, Vernon's Texas Civil Statutes)
781-5 is amended by adding Section 29.10 to read as follows:
781-6 Sec. 29.10. APPLICABILITY; EXPIRATION. (A) Except as
781-7 provided by Title 8, Business Organizations Code, this Act does not
781-8 apply to a real estate investment trust to which the Business
781-9 Organizations Code applies.
781-10 (B) This Act expires January 1, 2006.
781-11 SECTION 13. CONFORMING AMENDMENT. Article 1399, Revised
781-12 Statutes, is amended to read as follows:
781-13 Art. 1399. LODGES. The grand lodge of Texas, Ancient, Free
781-14 and Accepted Masons, the Grand Royal Arch Chapter of Texas, the
781-15 Grand Commandery of Knights Templars of Texas (Masonic); the grand
781-16 lodge of the Independent Order of Odd Fellows of Texas, and other
781-17 like institutions and orders organized for charitable or benevolent
781-18 purposes may, by the consent of their respective bodies expressed
781-19 by a resolution or otherwise, become bodies corporate under this
781-20 title. Except as provided by Title 8, Business Organizations Code,
781-21 this article and Articles 1400-1407, Revised Statutes, do not apply
781-22 to a grand body to which the Business Organizations Code applies.
781-23 SECTION 14. CONFORMING AMENDMENT. Chapter 963, Acts of the
781-24 70th Legislature, Regular Session, 1987 (Article 1407a, Vernon's
781-25 Texas Civil Statutes), is amended by adding Section 9 to read as
781-26 follows:
781-27 Sec. 9. APPLICABILITY. Except as provided by Title 8,
782-1 Business Organizations Code, this Act does not apply to a church
782-2 benefits board to which the Business Organizations Code applies.
782-3 SECTION 15. CONFORMING AMENDMENT. Chapter 853, Acts of the
782-4 62nd Legislature, Regular Session, 1971 (Article 1528g, Vernon's
782-5 Texas Civil Statutes), is amended by adding Section 13 to read as
782-6 follows:
782-7 Sec. 13. APPLICABILITY. Except as provided by Title 8,
782-8 Business Organizations Code, this Act does not apply to a business
782-9 development corporation to which the Business Organizations Code
782-10 applies.
782-11 SECTION 16. REPEALER. (a) The following Acts and articles
782-12 as compiled in Vernon's Texas Civil Statutes are repealed:
782-13 Articles 1525, 1526, 1527, 1527a, 1528, 1528a, and 1528h.
782-14 (b) The following Acts and articles as compiled in Vernon's
782-15 Texas Civil Statutes are repealed on January 1, 2006: Articles
782-16 1399, 1400, 1401, 1402, 1403, 1404, 1405, 1406, 1407, 1407a, and
782-17 1528g.
782-18 SECTION 17. EFFECTIVE DATE. This Act takes effect January 1,
782-19 2002.
782-20 COMMITTEE AMENDMENT NO. 1
782-21 Amend H.B. No. 327 as follows:
782-22 (1) In Section 1.002(2), Business Organizations Code, as
782-23 added by SECTION 1 of the bill (Introduced Version, page 69, lines
782-24 8-13), strike Paragraph (A) and substitute:
782-25 (A) a domestic or foreign entity or organization
782-26 for which the person:
782-27 (i) is an officer or governing person; or
783-1 (ii) beneficially owns, directly or
783-2 indirectly, either individually or through an affiliate, 10 percent
783-3 or more of a class of voting ownership interests or similar
783-4 securities of the entity or organization;
783-5 (2) In Section 1.002(67), Business Organizations Code, as
783-6 added by SECTION 1 of the bill (Introduced Version, page 80, line
783-7 6), between "Owner" and "means", insert ", for purposes of Title 1,
783-8 7, or 8,".
783-9 (3) In Section 21.603(a), Business Organizations Code, as
783-10 added by SECTION 1 of the bill (Introduced Version, page 429, line
783-11 27), strike "subchapter" and substitute "chapter".
783-12 (4) In Section 101.451, Business Organizations Code, as
783-13 added by SECTION 1 of the bill (Introduced Version, page 557, lines
783-14 16-18), strike Subdivision (2) and substitute:
783-15 (2) "Member" includes a person who beneficially owns a
783-16 membership interest through a voting trust or a nominee on the
783-17 person's behalf.
783-18 (5) In Section 153.102(a), Business Organizations Code, as
783-19 added by SECTION 1 of the bill (Introduced Version, page 624, lines
783-20 15 and 16), strike "Except as provided by Subsection (c), a" and
783-21 substitute "A".
783-22 (6) Strike Section 153.102(c), Business Organizations Code,
783-23 as added by SECTION 1 of the bill (Introduced Version, page 624,
783-24 line 27, through page 625, line 5).
783-25 (7) In Section 301.008, Business Organizations Code, as
783-26 added by SECTION 1 of the bill (Introduced Version, page 761, lines
783-27 11-15), strike Subsection (c) and substitute:
784-1 (c) A person who succeeds to the ownership interest of an
784-2 owner shall promptly relinquish the person's financial interest in
784-3 the entity if the person is not an authorized person as required by
784-4 Section 301.007.
784-5 77R13157 CLG-D Brimer
784-6 COMMITTEE AMENDMENT NO. 2
784-7 Amend H.B. 327 in SECTION 1 of the bill (Introduced version)
784-8 as follows:
784-9 (1) Strike page 11, line 18, through page 12, line 7, and
784-10 substitute:
784-11 Sec. 7.001. LIMITATION OF LIABILITY OF GOVERNING PERSON
784-12 (2) On page 28, strike line 6 and substitute:
784-13 Sec. 21.223. LIMITATION OF LIABILITY FOR OBLIGATIONS
784-14 Sec. 21.224. PREEMPTION OF LIABILITY
784-15 Sec. 21.225. EXCEPTIONS TO LIMITATIONS
784-16 Sec. 21.226. PLEDGEES AND TRUST ADMINISTRATORS
784-17 (Sections 21.227-21.250 reserved for expansion)
784-18 (3) On page 39, strike lines 1-3 and substitute:
784-19 (Sections 22.235-22.250 reserved for expansion)
784-20 (4) On page 43, strike line 24 and substitute:
784-21 Sec. 101.115. LIABILITY FOR OBLIGATIONS
784-22 (Sections 101.116-101.150 reserved for expansion)
784-23 (5) On page 47, strike line 25 and substitute:
784-24 Sec. 152.056. PARTNERSHIP AS ENTITY
784-25 (Sections 152.057-152.100 reserved for expansion)
784-26 (6) On page 59, strike line 4 and substitute:
784-27 Sec. 200.161. LIMITATION OF LIABILITY FOR OBLIGATIONS
785-1 Sec. 200.162. PREEMPTION OF LIABILITY
785-2 Sec. 200.163. EXCEPTIONS TO LIMITATIONS
785-3 Sec. 200.164. PLEDGEES AND TRUST ADMINISTRATORS
785-4 (Sections 200.165-200.200 reserved for expansion)
785-5 (7) Strike page 181, line 8, through page 185, line 17.
785-6 (8) On page 185, line 18, strike "7.012" and substitute
785-7 "7.001".
785-8 (9) On page 186, strike lines 21-26.
785-9 (10) On page 368, strike line 21 and substitute:
785-10 Sec. 21.223. LIMITATION OF LIABILITY FOR OBLIGATIONS. (a) A
785-11 holder of shares, an owner of any beneficial interest in shares, or
785-12 a subscriber for shares whose subscription has been accepted, or
785-13 any affiliate of such a holder, owner, or subscriber of the
785-14 corporation, may not be held liable to the corporation or its
785-15 obligees with respect to:
785-16 (1) the shares, other than the obligation to pay to
785-17 the corporation the full amount of consideration, fixed in
785-18 compliance with Sections 21.157-21.162, for which the shares were
785-19 or are to be issued;
785-20 (2) any contractual obligation of the corporation or
785-21 any matter relating to or arising from the obligation on the basis
785-22 that the holder, beneficial owner, subscriber, or affiliate is or
785-23 was the alter ego of the corporation or on the basis of actual or
785-24 constructive fraud, a sham to perpetrate a fraud, or other similar
785-25 theory; or
785-26 (3) any obligation of the corporation on the basis of
785-27 the failure of the corporation to observe any corporate formality,
786-1 including the failure to:
786-2 (A) comply with this code or the articles of
786-3 incorporation or bylaws of the corporation; or
786-4 (B) observe any requirement prescribed by this
786-5 code or the articles of incorporation or bylaws of the corporation
786-6 for acts to be taken by the corporation or its directors or
786-7 shareholders.
786-8 (b) Subsection (a)(2) does not prevent or limit the
786-9 liability of a holder, beneficial owner, subscriber, or affiliate
786-10 if the obligee demonstrates that the holder, beneficial owner,
786-11 subscriber, or affiliate caused the corporation to be used for the
786-12 purpose of perpetrating and did perpetrate an actual fraud on the
786-13 obligee primarily for the direct personal benefit of the holder,
786-14 beneficial owner, subscriber, or affiliate.
786-15 Sec. 21.224. PREEMPTION OF LIABILITY. The liability of a
786-16 holder, beneficial owner, or subscriber of shares of a corporation,
786-17 or any affiliate of such a holder, owner, or subscriber of the
786-18 corporation, for an obligation that is limited by Section 21.223 is
786-19 exclusive and preempts any other liability imposed for that
786-20 obligation under common law or otherwise.
786-21 Sec. 21.225. EXCEPTIONS TO LIMITATIONS. Section 21.223 or
786-22 21.224 does not limit the obligation of a holder, beneficial owner,
786-23 subscriber, or affiliate to the obligee of the corporation if that
786-24 person:
786-25 (1) expressly assumes, guarantees, or agrees to be
786-26 personally liable to the obligee for the obligation; or
786-27 (2) is otherwise liable to the obligee for the
787-1 obligation under this code or other applicable statute.
787-2 Sec. 21.226. PLEDGEES AND TRUST ADMINISTRATORS. (a) A
787-3 pledgee or other holder of shares as collateral security is not
787-4 personally liable as a shareholder.
787-5 (b) An executor, administrator, conservator, guardian,
787-6 trustee, assignee for the benefit of creditors, or receiver is not
787-7 personally liable as a holder of or subscriber to shares of a
787-8 corporation.
787-9 (c) The estate and funds administered by a trustee,
787-10 executor, administrator, guardian, trustee, assignee for the
787-11 benefit of creditors, or receiver are liable for the full amount of
787-12 the consideration for which the shares were or are to be issued.
787-13 (Sections 21.227-21.250 reserved for expansion)
787-14 (11) On page 498, strike lines 7-11 and substitute:
787-15 (Sections 22.235-22.250 reserved for expansion)
787-16 (12) On page 542, strike line 11 and substitute:
787-17 Sec. 101.115. LIABILITY FOR OBLIGATIONS. Except as and to
787-18 the extent the company agreement specifically provides otherwise, a
787-19 member or manager is not liable for a debt, obligation, or
787-20 liability of a limited liability company, including a debt,
787-21 obligation, or liability under a judgment, decree, or order of a
787-22 court.
787-23 (Sections 101.116-101.150 reserved for expansion)
787-24 (13) On page 578, strike line 6 and substitute:
787-25 Sec. 152.056. PARTNERSHIP AS ENTITY. A partnership is an
787-26 entity distinct from its partners.
787-27 (Sections 152.057-152.100 reserved for expansion)
788-1 (14) On page 686, strike line 17 and substitute:
788-2 Sec. 200.161. LIMITATION OF LIABILITY FOR OBLIGATIONS. (a)
788-3 A holder of shares, an owner of any beneficial interest in shares,
788-4 or a subscriber for shares whose subscription has been accepted is
788-5 not under an obligation to the real estate investment trust or its
788-6 obligees with respect to:
788-7 (1) the shares, other than the obligation to pay to
788-8 the real estate investment trust the full amount of consideration,
788-9 fixed in compliance with Sections 200.104-200.108, for which the
788-10 shares were or are to be issued;
788-11 (2) any contractual obligation of the real estate
788-12 investment trust on the basis that the holder, beneficial owner, or
788-13 subscriber is or was the alter ego of the real estate investment
788-14 trust or on the basis of actual or constructive fraud, a sham to
788-15 perpetrate a fraud, or other similar theory; or
788-16 (3) any obligation of the real estate investment trust
788-17 on the basis of the failure of the real estate investment trust to
788-18 observe any formality, including the failure to:
788-19 (A) comply with this code or the declaration of
788-20 trust or bylaws of the real estate investment trust; or
788-21 (B) observe any requirement prescribed by this
788-22 code or the declaration of trust or bylaws of the real estate
788-23 investment trust for acts to be taken by the real estate investment
788-24 trust or its trust managers or shareholders.
788-25 (b) Subsection (a)(2) does not prevent or limit the
788-26 liability of a holder, beneficial owner, or subscriber if the
788-27 obligee demonstrates that the holder, beneficial owner, or
789-1 subscriber caused the real estate investment trust to be used for
789-2 the purpose of perpetrating and did perpetrate an actual fraud on
789-3 the obligee primarily for the direct personal benefit of the
789-4 holder, beneficial owner, or subscriber.
789-5 Sec. 200.162. PREEMPTION OF LIABILITY. The liability of a
789-6 holder, beneficial owner, or subscriber of shares of a real estate
789-7 investment trust for an obligation that is limited by Section
789-8 200.161 is exclusive and preempts any other liability imposed for
789-9 that obligation under common law or otherwise.
789-10 Sec. 200.163. EXCEPTIONS TO LIMITATIONS. Section 200.161 or
789-11 200.162 does not limit the obligation of a holder, beneficial
789-12 owner, or subscriber to the obligee of the real estate investment
789-13 trust if that person:
789-14 (1) expressly assumes, guarantees, or agrees to be
789-15 personally liable to the obligee for the obligation; or
789-16 (2) is otherwise liable to the obligee for the
789-17 obligation under this code or other applicable statute.
789-18 Sec. 200.164. PLEDGEES AND TRUST ADMINISTRATORS. (a) A
789-19 pledgee or other holder of shares as collateral security is not
789-20 personally liable as a shareholder.
789-21 (b) An executor, administrator, conservator, guardian,
789-22 trustee, assignee for the benefit of creditors, or receiver is not
789-23 personally liable as a holder of or subscriber to shares of a real
789-24 estate investment trust.
789-25 (c) The estate and funds administered by a trustee,
789-26 executor, administrator, guardian, trustee, assignee for the
789-27 benefit of creditors, or receiver are liable for the full amount of
790-1 the consideration for which the shares were or are to be issued.
790-2 (Sections 200.165-200.200 reserved for expansion)
790-3 77R13160 DWS-F Brimer
790-4 COMMITTEE AMENDMENT NO. 3
790-5 Amend H.B. No. 327 as follows:
790-6 (1) On page 125, line 16, between "a" and "public
790-7 accountant", insert "certified".
790-8 (2) On page 126, line 25, between "a" and "public
790-9 accountant", insert "certified".
790-10 (3) On page 506, line 24, strike "practices" and substitute
790-11 "principles".
790-12 (4) On page 508, strike lines 6 through 13 and substitute:
790-13 (3) a private institution of higher education
790-14 described by Section 61.003(15), Education Code, accredited by a
790-15 recognized accrediting agency as defined by Section 61.003(13),
790-16 Education Code, or authorized to grant degrees under a certificate
790-17 of authority issued by the Texas Higher Education Coordinating
790-18 Board, a proprietary school that has received a certificate of
790-19 approval from the commissioner of education, a public institution
790-20 of higher education or a foundation chartered for the benefit of
790-21 the institution or any component part of the institution, or an
790-22 elementary or secondary school;
790-23 77R13152 CLG-D Brimer
790-24 COMMITTEE AMENDMENT NO. 4
790-25 Amend H.B. No. 327 on page 508, line 12, between "Board" and
790-26 the comma, by inserting "or a foundation chartered for the benefit
790-27 of the institution or any component part of the institution".
791-1 77R13156 CLG-D Brimer
791-2 COMMITTEE AMENDMENT NO. 5
791-3 Amend H.B. No. 327 as follows:
791-4 (1) On page 625, lines 12 and 13, strike "a contractor for
791-5 or an agent or employee of".
791-6 (2) On page 625, line 14, between "(A)" and "the", insert "a
791-7 contractor for or an agent or employee of".
791-8 (3) On page 625, line 15, between "(B)" and "a", insert "a
791-9 contractor for or an agent or employee of".
791-10 77R13159 DWS-D Brimer