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79R9010 HLT-F
By: Elkins H.B. No. 1154
Substitute the following for H.B. No. 1154:
By: Elkins C.S.H.B. No. 1154
A BILL TO BE ENTITLED
AN ACT
relating to limited liability companies and partnerships.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections G and H, Article 2.23, Texas Limited
Liability Company Act (Article 1528n, Vernon's Texas Civil
Statutes), are amended to read as follows:
G. Except as provided in the articles of organization or the
regulations, if the limited liability company has no members, has
not received any capital, and has not otherwise commenced business,
a majority of the managers named in the articles of organization may
amend the articles of organization or dissolve the limited
liability company. [Except as provided by the articles of
organization or the regulations, if the limited liability company
has not received any capital, the limited liability company has not
otherwise commenced business, and the management has been reserved
to the members, a majority of the members named in the articles of
organization may amend the articles of organization or dissolve the
limited liability company. In such event, the persons adopting such
amendments to the articles of organization or authorizing such
dissolution shall sign and file with the Secretary of State the
articles of amendment provided for in Articles 3.06 and 3.07 of this
Act and the articles of dissolution provided for in Articles 6.05,
6.07, and 6.08 of this Act, as appropriate.]
H. Except as provided in Section G of this Article, the
articles of organization, or the regulations, [if any capital has
been paid into the limited liability company or the limited
liability company has otherwise commenced business,] the
affirmative vote, approval, or consent of all members is required
to amend the articles of organization.
SECTION 2. Section A, Article 3.06, Texas Limited Liability
Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
amended to read as follows:
A. The articles of amendment shall be executed on behalf of
the limited liability company by an authorized manager or member[,
or in the case of an amendment of the articles of organization by
action of a majority of the initial managers or of a majority of the
initial members as provided in Section 2.23 of this Act, by a
majority of the initial managers or a majority of the initial
members as provided in Section 2.23 of this Act].
SECTION 3. Section D, Article 3.09, Texas Limited Liability
Company Act (Article 1528n, Vernon's Texas Civil Statues), is
amended to read as follows:
D. Restated articles of organization must be executed on
behalf of the limited liability company by an authorized manager or
member [unless capital has not been paid into the limited liability
company and the restated articles of organization have been adopted
by action of a majority of the initial managers or a majority of the
initial members named in the articles of organization as provided
by Article 2.23 of this Act, in which case the restated articles of
organization may be executed on behalf of the limited liability
company by a majority of the persons adopting such restated
articles]. The original and a copy of the restated articles of
organization shall be delivered to the Secretary of State. If the
Secretary of State finds that the restated articles of organization
conform to law, and the appropriate filing fee is paid as required
by law, the Secretary of State shall:
(1) endorse on the original and the copy the word
"Filed" and the month, day, and year of filing;
(2) file the original in the Secretary of State's
office; and
(3) issue a restated certificate of organization and
affix the copy to the restated certificate of organization.
SECTION 4. Section A, Article 6.01, Texas Limited Liability
Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
amended to read as follows:
A. Except as provided by Section B or C of this Article, a
limited liability company shall be dissolved on the first of the
following to occur:
(1) the period, if any, fixed for the duration of the
limited liability company expires;
(2) the occurrence of events specified in the articles
of organization or regulations to cause dissolution;
(3) the action of the members to dissolve the limited
liability company;
(4) if the limited liability company has no members,
no capital has been paid into the limited liability company, and the
limited liability company has not otherwise commenced business, the
act of a majority of the managers [or members] named in the articles
of organization to dissolve the limited liability company as
provided by Section G of Article 2.23 of this Act;
(5) except as otherwise provided in the regulations,
the occurrence of any event that terminates the continued
membership of the last remaining member of the limited liability
company; or
(6) entry of a decree of judicial dissolution under
Section 6.02 of this Act.
SECTION 5. Section A, Article 6.03, Texas Limited Liability
Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
amended to read as follows:
A. On the dissolution of a limited liability company, the
limited liability company's affairs shall be wound up as soon as
reasonably practicable. The winding up shall be accomplished by the
managers or members or by any other person or persons designated by
the articles of organization, by the regulations, or by resolution
of the managers or members. In the case of a dissolution caused by
the termination of the continued membership of the last remaining
member of the limited liability company, the winding up shall be
accomplished by the legal representative or successor of the last
remaining member or by one or more persons designated by the legal
representative or successor. In addition, a court of competent
jurisdiction, on cause shown, may wind up the limited liability
company's affairs on application of any member or the member's legal
representative or assignee and, in connection with the winding up,
may appoint a person to carry out the liquidation and may make all
other orders, directions, and inquiries that the circumstances
require.
SECTION 6. Section A, Article 6.07, Texas Limited Liability
Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
amended to read as follows:
A. If voluntary dissolution proceedings have not been
revoked, then, when all liabilities and obligations of the limited
liability company have been paid or discharged, or adequate
provision has been made therefor, or in case its property and assets
are not sufficient to satisfy and discharge all the limited
liability company's liabilities and obligations, then when all the
property and assets have been applied so far as they will go to the
just and equitable payment of the limited liability company's
liabilities and obligations, and all of the remaining property and
assets of the limited liability have been distributed to its
members according to their respective rights and interest, articles
of dissolution shall be executed on behalf of the limited liability
company by a manager or authorized member, or if the existence of
the last remaining member of the limited liability company has
terminated, by the legal representative or successor of the last
remaining member. The articles of dissolution [in accordance with
Section G, Article 2.23, of this Act, which] shall set forth:
(1) The name of the limited liability company.
(2) The names and respective addresses of its
managers, if any.
(3) That all debts, obligations, and liabilities of
the limited liability company have been paid or discharged or that
adequate provision has been made therefor, or, in case the limited
liability company's property and assets were not sufficient to
satisfy and discharge all its debts, liabilities, and obligations,
that all property and assets have been applied so far as they will
go to the payment thereof in a just and equitable manner and that no
property or assets remain available for distribution among its
members, or, that the limited liability company has not acquired
any debts, obligations, or liabilities.
(4) That all remaining property and assets of the
limited liability company have been distributed among its members
in accordance with their respective rights and interest or that no
property remained for distribution to members after applying it as
far as it would go to the just and equitable payment of the debts,
liabilities, and obligations of the limited liability company, or
that the limited liability company has not acquired any property or
assets and therefore distributions to members were not required.
(5) If the limited liability company has no members,
has not received any capital [has not been paid into the limited
liability company], and has not otherwise commenced business, a
statement that the resolution was adopted [by the act of a majority
of the initial managers or a majority of the initial members named
in the articles of organization] in accordance with Section G,
Article 2.23, of this Act and of the date of adoption.
(6) If the limited liability company elected to
dissolve by action of its members, a statement that the resolution
was adopted in accordance with Section D, Article 2.23, of this Act
or as otherwise provided in the articles of incorporation or the
regulations and of the date of adoption.
SECTION 7. Section B, Article 8.12, Texas Limited Liability
Company Act (Article 1528n, Vernon's Texas Civil Statutes), is
amended to read as follows:
B. Subject to Section C of this Article, Articles 2.05,
[2.03 through] 2.06, [2.09, 2.09A,] 3.01, 7.01 through 7.05, and
7.07, Texas Miscellaneous Corporation Laws Act (Article 1302-1.01
et seq., Vernon's Texas Civil Statutes), as amended, apply to a
limited liability company and its members, managers, and officers.
SECTION 8. Section 2.03, Texas Revised Limited Partnership
Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
amending Subsection (c) and adding Subsection (d) to read as
follows:
(c) If, in the case of merger or conversion, one or more
limited partnerships formed under this Act are not the surviving or
resulting domestic limited partnership or partnerships or other
entity or entities, the certificate of merger or conversion filed
under Subsection (e) [(d)] of Section 2.11 or Subsection (e-1)
[(e)] of Section 2.15 of this Act is sufficient, without a filing
under this section, to cancel the certificate of limited
partnership of those nonsurviving limited partnerships.
(d) Except as provided by Subsection (c) of this section,
the secretary of state shall regard a limited partnership as
continuing in existence until the certificate of cancellation is
filed.
SECTION 9. Article 2, Texas Revised Limited Partnership Act
(Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
adding Section 2.03-A to read as follows:
Sec. 2.03-A. REVOCATION OF VOLUNTARY CANCELLATION. (a)
Unless prohibited by a written partnership agreement, not later
than the 120th day after the date a certificate of cancellation is
filed with the secretary of state, a domestic limited partnership
may revoke the certificate of cancellation by written consent of
all partners.
(b) After revocation of the certificate of cancellation has
been authorized as provided by Subsection (a) of this section, the
limited partnership shall deliver to the secretary of state for
filing not later than the 120th day after the date the certificate
of cancellation is issued, the certificate of revocation of
cancellation executed on behalf of the limited partnership by all
general partners, or by a majority in interest of the limited
partners if there are no general partners.
(c) The certificate of revocation of cancellation shall set
forth:
(1) the name of the limited partnership;
(2) the date the revocation of the cancellation was
authorized and, if the certificate of cancellation has become
effective, the effective date of the certificate of cancellation
that was revoked; and
(3) a statement that the limited partnership elected
to revoke the cancellation of its certificate by written consent of
all partners.
(d) Except as provided by Subsection (e) of this section, if
the secretary of state finds that the certificate of revocation of
cancellation conforms to law and the appropriate filing fee is paid
as required by law, the secretary of state shall file the
certificate of revocation of cancellation in accordance with
Section 2.07 of this Act.
(e) If the limited partnership's name is the same as or
deceptively similar to a name already on file or reserved or
registered as specified in Section 1.03 of this Act, the secretary
of state shall issue to the limited partnership a certificate of
revocation of cancellation only if the limited partnership
contemporaneously amends its certificate of limited partnership to
change its name.
(f) Upon the filing of the certificate of revocation of
cancellation, the limited partnership may:
(1) reconstitute the limited partnership for purposes
of continuing its business as permitted by this Act and its
partnership agreement; or
(2) if the business of the partnership is not to be
continued, complete the process of winding up the affairs of the
partnership as provided by Section 8.04 of this Act.
(g) This section does not apply if the certificate of
cancellation was filed in accordance with Section 2.05 or 2.06 of
this Act.
SECTION 10. Section 2.15, Texas Revised Limited Partnership
Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
adding Subsection (e-1) and amending Subsection (f) to read as
follows:
(e-1) The original and one copy of the articles of
conversion shall be delivered to the secretary of state. Two copies
of the certificate of limited partnership of the domestic limited
partnership, if the converted entity is a domestic limited
partnership, shall also be delivered to the secretary of state with
the articles of conversion. If the secretary of state finds that the
articles of conversion conform to law, has received all filings
required to be received, and has issued any certificates required
to be issued in connection with the incorporation, formation, or
organization of the converted entity, the secretary of state shall,
if all fees and franchise taxes have been paid as required by law or
the articles of conversion provide that the converted entity will
be liable for the payment of all such fees and franchise taxes:
(1) endorse on the original and each copy the word
"Filed" and the month, day, and year of filing;
(2) file the original in the office of the secretary of
state; and
(3) issue a certificate of conversion, with a copy of
the articles affixed on the certificate, to the converted entity or
its representatives.
(f) Except as otherwise provided by Section 2.12 [2.14] of
this Act, on the issuance of the certificate of conversion by the
secretary of state, the conversion of a converting entity shall be
effective.
SECTION 11. Section 2.15(h)(4), Texas Revised Limited
Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
is amended to read as follows:
(4) "Other entity" means any entity, whether organized
for profit or not, that is a corporation, partnership [(other than a
limited partnership or a general partnership (including a joint
venture) governed by the Texas Revised Partnership Act (Article
6132b-1.01 et seq., Vernon's Texas Civil Statutes))], limited
liability company, joint stock company, cooperative, association,
bank, insurance company, or other legal entity organized pursuant
to the laws of this state or any other state or country.
SECTION 12. Section 6.01(b), Texas Revised Partnership Act
(Article 6132b-6.01, Vernon's Texas Civil Statutes), is amended to
read as follows:
(b) Event of Withdrawal. An event of withdrawal of a
partner occurs on:
(1) receipt by the partnership of notice of the
partner's express will to withdraw as a partner on the date of
receipt of the notice or on a later date specified in the notice;
(2) an event specified in the partnership agreement as
causing the partner's withdrawal;
(3) the partner's expulsion as provided in the
partnership agreement;
(4) the partner's expulsion by the vote of a
majority-in-interest of the other partners if:
(A) it is unlawful to carry on the partnership
business with that partner;
(B) there has been a transfer of all or
substantially all of that partner's partnership interest, other
than:
(i) a transfer for security purposes that
has not been foreclosed; or
(ii) the substitution of a successor
trustee or successor personal representative;
(C) within 90 days after the date the partnership
notifies a corporate partner that it will be expelled because it has
filed a certificate of dissolution or the equivalent, its charter
has been revoked, or its right to conduct business has been
suspended by the jurisdiction of its incorporation, the certificate
of dissolution is not revoked or its charter or its right to conduct
business is not reinstated; or
(D) an event requiring a winding up has occurred
with respect to a partnership that is a partner;
(5) the partner's expulsion by judicial decree, on
application by the partnership or another partner for the partner's
expulsion, if the decree determines that:
(A) the partner engaged in wrongful conduct that
adversely and materially affected the partnership business;
(B) the partner wilfully or persistently
committed a material breach of the partnership agreement or of a
duty owed to the partnership or the other partners under Section
4.04; or
(C) the partner engaged in conduct relating to
the partnership business that made it not reasonably practicable to
carry on the business in partnership with that partner;
(6) the partner:
(A) becoming a debtor in bankruptcy;
(B) executing an assignment for the benefit of
creditors;
(C) seeking, consenting to, or acquiescing in the
appointment of a trustee, receiver, or liquidator of that partner
or of all or substantially all of that partner's property; or
(D) failing, within 90 days after the
appointment, to have vacated or stayed the appointment of a
trustee, receiver, or liquidator of the partner or of all or
substantially all of the partner's property obtained without the
partner's consent or acquiescence, or failing within 90 days after
the date of expiration of a stay to have the appointment vacated;
(7) in the case of a partner who is an individual:
(A) the partner's death;
(B) the appointment of a guardian or general
conservator for the partner; or
(C) a judicial determination that the partner has
otherwise become incapable of performing the partner's duties under
the partnership agreement;
(8) termination of a partner's existence;
(9) in the case of a partner that has transferred all
of the partner's partnership interest, redemption of the
transferee's interest under Sections 7.01(n)-(r); or
(10) an agreement to continue the partnership under
Section 8.01(g) if the partnership has received a notice from the
partner under Section 8.01(g) requesting that the partnership be
wound up[; or
[(11) a conversion of the partnership if the partner:
[(A) did not consent to the conversion; and
[(B) failed to notify the partnership in writing
of the partner's desire not to withdraw within 60 days after the
later of:
[(i) the effective date of the conversion;
or
[(ii) the date the partner receives actual
notice of the conversion].
SECTION 13. Section 9.02, Texas Revised Partnership Act
(Article 6132b-9.02, Vernon's Texas Civil Statutes), is amended by
amending Subsection (d) and adding Subsection (i) to read as
follows:
(d) Certificate of Merger. After a plan of merger has been
approved by each of the partnerships or other entities that is a
party to the plan of merger, unless the only parties to the merger
are partnerships, a certificate of merger shall be executed on
behalf of each partnership or other entity by at least one partner
of each domestic partnership that is a party to the plan of merger
and by a general partner, officer, agent or other authorized
representative of each other partnership or other entity that is a
party to the plan of merger and shall set forth:
(1) the plan of merger or a statement certifying:
(A) the name and the state of incorporation,
formation, or organization of each of the parties to the merger and
the organizational form of each new or surviving partnership or
other entity;
(B) that a plan of merger has been approved;
(C) that an executed plan of merger is on file at
the principal place of business of each surviving or new domestic or
foreign partnership or other entity, stating the address of the
partnership or other entity;
(D) that a copy or summary of the plan of merger
has been or is being furnished to each partner of each domestic
partnership that is a party to the merger not later than the 20th
day before the merger is effective, unless waived by that partner,
or that the domestic partnership has complied with the provisions
of its partnership agreement regarding furnishing partners copies
or summaries of the plan of merger or notices regarding the merger;
and
(E) in the case of the merger with multiple
surviving domestic or foreign partnerships or other entities, that
a copy of the plan of merger will be furnished by each new or
surviving domestic or foreign partnership or other entity, on
written request and without cost, to any creditor or obligee of the
parties to the merger at the time of the merger if the obligation is
then outstanding; and
(2) for each domestic or foreign partnership or other
entity that is a party to the plan of merger, a statement that the
plan of merger was duly authorized by all action required by the
laws under which it was formed or organized and by its constituent
documents.
(i) "Merger" means:
(1) the division of a domestic partnership into two or
more domestic partnerships or into a surviving partnership and one
or more new domestic or foreign partnerships or other entities; or
(2) the combination of one or more domestic
partnerships with one or more domestic or foreign partnerships or
other entities resulting in:
(A) one or more surviving domestic or foreign
partnerships or other entities;
(B) the creation of one or more new domestic or
foreign partnerships or other entities; or
(C) one or more surviving domestic or foreign
partnerships or other entities and the creation of one or more new
domestic or foreign partnerships or other entities.
SECTION 14. Sections 9.05(e) and (g), Texas Revised
Partnership Act (Article 6132b-9.05, Vernon's Texas Civil
Statutes), are amended to read as follows:
(e) If a plan of conversion has been approved in accordance
with the preceding provisions of this section and has not been
abandoned, unless the converted entity and the converting entities
are both partnerships:
(1) articles of conversion shall be executed by the
converting entity by a partner, officer, or other duly authorized
representative thereof and shall set forth:
(A) the plan of conversion or a statement
certifying the following:
(i) the name, the state of incorporation,
formation, or organization of the converting entity and the
organizational form of the converted entity;
(ii) that a plan of conversion has been
approved;
(iii) that an executed plan of conversion
is on file at the principal place of business of the converting
entity, stating the address thereof, and that an executed plan of
conversion will be on file, from and after the conversion, at the
principal place of business of the converted entity, stating the
address thereof; and
(iv) that a copy of the plan of conversion
will be furnished by the converting entity (prior to the
conversion) or the converted entity (after the conversion), on
written request and without cost, to any member of the converting
entity or the converted entity; and
(B) a statement that the approval of the plan of
conversion was duly authorized by all action required by the laws
under which the converting entity was incorporated, formed, or
organized and by its constituent documents; and
(2) the original and one copy of the articles of
conversion shall be delivered to the secretary of state[; and
[(3) two copies of the certificate of limited
partnership of the domestic limited partnership, if the converted
entity is a domestic limited partnership, shall also be delivered
to the secretary of state with the articles of conversion].
(g) Except as otherwise provided by Section 9.06, on the
issuance of the certificate of conversion by the secretary of state
(or if a certificate of conversion need not be executed, as provided
in the plan of conversion [merger]), the conversion of a converting
entity shall be effective.
SECTION 15. Section 9.05(i)(6), Texas Revised Partnership
Act (Article 6132b-9.05, Vernon's Texas Civil Statutes), is amended
to read as follows:
(6) "Other entity" means any entity, whether organized
for profit or not, that is a corporation, limited partnership
[(other than a limited partnership formed under the Texas Revised
Limited Partnership Act (Article 6132a-1, Vernon's Texas Civil
Statutes))], limited liability company, joint stock company,
cooperative, association, bank, insurance company, or other legal
entity organized pursuant to the laws of this state or any other
state or country.
SECTION 16. Section 6.01(c), Texas Revised Partnership Act
(Article 6132b-6.01, Vernon's Texas Civil Statutes), and Section
9.01, Texas Revised Partnership Act (Article 6132b-9.01, Vernon's
Texas Civil Statutes), are repealed.
SECTION 17. This Act takes effect September 1, 2005.