H.B. No. 1319




AN ACT
relating to business entities and associations. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 1.002, Business Organizations Code, is amended by adding Subdivision (20-a) and by amending Subdivisions (29), (34), (50), and (89) to read as follows: (20-a) "Electronic transmission" means a form of communication that: (A) does not directly involve the physical transmission of paper; (B) creates a record that may be retained, retrieved, and reviewed by the recipient; and (C) may be directly reproduced in paper form by the recipient through an automated process. (29) "Foreign filing entity" means a foreign entity, other than a foreign limited liability partnership, that registers or is required to register as a foreign entity under Chapter 9. (34) "General partnership" means a partnership governed as a general partnership under Chapter 152. The term includes a general partnership registered as a limited liability partnership. (50) "Limited partnership" means a partnership that is governed as a limited partnership under Title 4 and that has one or more general partners and one or more limited partners. The term includes a limited partnership registered as a limited liability limited partnership. (89) "Writing" or "written" means an expression of words, letters, characters, numbers, symbols, figures, or other textual information that is inscribed on a tangible medium or that is stored in an electronic or other medium that is retrievable in a perceivable form. Unless the context requires otherwise, the term: (A) includes stored or transmitted electronic data, electronic [and] transmissions, and reproductions of writings; and (B) does not include sound or video recordings of speech other than transcriptions that are otherwise writings. SECTION 2. Section 1.006, Business Organizations Code, is amended to read as follows: Sec. 1.006. SYNONYMOUS TERMS. To the extent not inconsistent with the provisions of the constitution and other statutes or codes wherein such terms may be found, and as the context requires, in this code or any other statute or code of this state: (1) a reference to "articles of incorporation," "articles of organization," "articles of association," "certificate of limited partnership," and "charter" includes a "certificate of formation"; (2) a reference to "authorized capital stock" includes "authorized shares"; (3) a reference to "capital stock" includes "authorized and issued shares," "issued share," and "stated capital"; (4) a reference to a "certificate of registration," "certificate of authority," and "permit to do business" includes "registration"; (5) a reference to "stock" and "shares of stock" includes "shares"; (6) a reference to "stockholder" includes "shareholder"; (7) a reference to "no par stock" includes "shares without par value"; [and] (8) a reference to "paid-up capital" includes "stated capital[.]"; (9) a reference to "articles of merger" includes a "certificate of merger"; (10) a reference to "articles of exchange" includes a "certificate of exchange"; (11) a reference to "articles of conversion" includes a "certificate of conversion"; (12) a reference to "articles of amendment" includes a "certificate of amendment"; and (13) a reference to "articles of dissolution" includes a "certificate of termination." SECTION 3. Section 1.007, Business Organizations Code, is amended to read as follows: Sec. 1.007. SIGNING OF DOCUMENT OR OTHER WRITING. For purposes of this code, a writing has been signed by a person when the writing includes, bears, or incorporates the person's signature. A transmission or reproduction of a writing signed by a person is considered signed by that person for purposes of this code. SECTION 4. Section 2.010, Business Organizations Code, is amended to read as follows: Sec. 2.010. PROHIBITED ACTIVITIES OF NONPROFIT CORPORATION. A nonprofit corporation may not be organized or registered under this code to conduct its affairs in this state to: (1) engage in or operate as a group hospital service, rural credit union, agricultural and livestock pool, mutual loan corporation, cooperative association under Chapter 251, cooperative credit association, farmers' cooperative society, Co-operative Marketing Act corporation, rural electric cooperative corporation, telephone cooperative corporation, or fraternal organization operating under the lodge system and incorporated under Subchapter C, Chapter 23; or (2) engage in water supply or sewer service except as an entity incorporated under Chapter 67, Water Code. SECTION 5. Section 2.101, Business Organizations Code, is amended to read as follows: Sec. 2.101. GENERAL POWERS. Except as otherwise provided by this code, a domestic entity has the same powers as an individual to take action necessary or convenient to carry out its business and affairs. Except as otherwise provided by this code, the powers of a domestic entity include the power to: (1) sue, be sued, and defend suit in the entity's business name; (2) have and alter a seal and use the seal or a facsimile of it by impressing, affixing, or reproducing it; (3) acquire, receive, own, hold, improve, use, and deal in and with property or an interest in property; (4) sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of property; (5) make contracts and guarantees; (6) incur liabilities, borrow money, issue notes, bonds, or other obligations, which may be convertible into, or include the option to purchase, other securities or ownership interests in the entity, and secure its obligations by mortgaging or pledging its property, franchises, or income; (7) lend money, invest its funds, and receive and hold property as security for repayment if the loan or assistance reasonably may be expected to benefit, directly or indirectly, the entity; (8) acquire its own bonds, debentures, or other evidences of indebtedness or obligations; (9) acquire its own ownership interests, regardless of whether redeemable, and hold the ownership interests as treasury ownership interests or cancel or dispose of the ownership interests; (10) be a promoter, organizer, owner, partner, member, associate, or manager of an organization; (11) acquire, receive, own, hold, vote, use, pledge, and dispose of ownership interests in or securities issued by another person; (12) conduct its business, locate its offices, and exercise the powers granted by this code to further its purposes, in or out of this state; (13) lend money to, and otherwise assist, its managerial officials, owners, members, or employees as necessary or appropriate; (14) elect or appoint officers and agents of the entity, establish the length of their terms, define their duties, and fix their compensation; (15) pay pensions and establish pension plans, pension trusts, profit-sharing plans, bonus plans, and incentive plans for managerial officials, owners, members, or employees or former managerial officials, owners, members, or employees; (16) indemnify and maintain liability insurance for managerial officials, owners, members, employees, and agents of the entity or the entity's affiliate; (17) adopt and amend governing documents for managing the affairs of the entity subject to applicable law; (18) make donations for the public welfare or for a charitable, scientific, or educational purpose; (19) voluntarily wind up its business and activities and terminate its existence; (20) transact business or take action that will aid governmental policy; [and] (21) renounce, in its certificate of formation or by action of its governing authority, an interest or expectancy of the entity in, or an interest or expectancy of the entity in being offered an opportunity to participate in, specified business opportunities or a specified class or category of business opportunities presented to the entity or one or more of its managerial officials or owners; and (22) take other action necessary or appropriate to further the purposes of the entity. SECTION 6. Section 3.051(b), Business Organizations Code, is amended to read as follows: (b) An amended certificate of formation may contain only provisions that: (1) would be permitted at the time of the amendment if the amended certificate of formation were a newly filed original certificate of formation; or (2) effect a change, exchange, reclassification, subdivision, combination, or cancellation in the membership or ownership interests or the rights of owners or members of the filing entity. SECTION 7. Section 3.054, Business Organizations Code, is amended to read as follows: Sec. 3.054. EXECUTION OF [SUPPLEMENTAL PROVISIONS FOR] CERTIFICATE OF AMENDMENT OF FOR-PROFIT CORPORATION. [(a) In addition to the statements required by Section 3.053, a certificate of amendment for a for-profit corporation must state: [(1) if the amendment provides for an exchange, reclassification, or cancellation of issued shares, the manner in which the exchange, reclassification, or cancellation of the issued shares will be effected if the manner is not specified in the amendment; and [(2) if the amendment effects a change in the amount of stated capital, the manner in which the change in the amount of stated capital is effected and the amount of stated capital expressed in dollar terms as changed by the amendment. [(b)] An officer shall sign the certificate of amendment on behalf of the for-profit corporation. If shares of the for-profit corporation have not been issued and the certificate of amendment is adopted by the board of directors, a majority of the directors may sign the certificate of amendment on behalf of the for-profit corporation. SECTION 8. Section 3.151(b), Business Organizations Code, is amended to read as follows: (b) The books, records, minutes, and ownership or membership records of any filing entity, including those described in Subsection (a)(4), may be in written paper form or another form capable of being converted into written paper form within a reasonable time. SECTION 9. Section 4.002(a), Business Organizations Code, is amended to read as follows: (a) If the secretary of state finds that a filing instrument delivered under Section 4.001 conforms to the provisions of this code that apply to the entity and to applicable rules adopted under Section 12.001 and that all required fees have been paid, the secretary of state shall: (1) file the instrument by accepting it into the filing system adopted by the secretary of state and assigning the instrument a date of filing; and (2) deliver a written [or electronic] acknowledgment of filing to the entity or its representative. SECTION 10. Section 4.152, Business Organizations Code, is amended to read as follows: Sec. 4.152. FILING FEES: FOR-PROFIT CORPORATIONS. For a filing by or for a for-profit corporation, the secretary of state shall impose the following fees: (1) for filing a certificate of formation, $300; (2) for filing a certificate of amendment, $150; (3) for filing an application of a foreign corporation for registration to transact business in this state, $750; (4) for filing an application of a foreign corporation for an amended registration to transact business in this state, $150; (5) for filing a restated certificate of formation and accompanying statement, $300; (6) for filing a statement of change of registered office, registered agent, or both, $15; (7) for filing a statement of change of name or address of a registered agent, $15, except that the maximum fee for simultaneous filings by a registered agent for more than one corporation may not exceed $750; (8) for filing a statement of resolution establishing one or more series of shares, $15; (9) for filing a certificate of [winding up and] termination, $40; (10) for filing a certificate of withdrawal of a foreign corporation, $15; (11) for filing a certificate from the home state of a foreign corporation that the corporation no longer exists in that state, $15; (12) for filing a bylaw or agreement restricting transfer of shares or securities other than as an amendment to the certificate of formation, $15; (13) for filing an application for reinstatement of a certificate of formation or registration as a foreign corporation following forfeiture under the Tax Code, $75; (14) for filing an application for reinstatement of a corporation or registration as a foreign corporation after involuntary dissolution or revocation, $75; and (15) for filing any instrument as provided by this code for which this section does not expressly provide a fee, $15. SECTION 11. Section 4.153, Business Organizations Code, is amended to read as follows: Sec. 4.153. FILING FEES: NONPROFIT CORPORATIONS. For a filing by or for a nonprofit corporation, the secretary of state shall impose the following fees: (1) for filing a certificate of formation, $25; (2) for filing a certificate of amendment, $25; (3) for filing a certificate of merger, conversion, or consolidation, without regard to whether the surviving or new corporation is a domestic or foreign corporation, $50; (4) for filing a statement of change of a registered office, registered agent, or both, $5; (5) for filing a certificate of termination [dissolution], $5; (6) for filing an application of a foreign corporation for registration to conduct affairs in this state, $25; (7) for filing an application of a foreign corporation for an amended registration to conduct affairs in this state, $25; (8) for filing a certificate of withdrawal of a foreign corporation, $5; (9) for filing a restated certificate of formation and accompanying statement, $50; (10) for filing a statement of change of name or address of a registered agent, $15, except that the maximum fee for simultaneous filings by a registered agent for more than one corporation may not exceed $250; (11) for filing a report under Chapter 22, $5; (12) for filing a report under Chapter 22 to reinstate a corporation's right to conduct affairs in this state, $5, plus a late fee in the amount of $5 or in the amount of $1 for each month or part of a month that the report remains unfiled, whichever amount is greater, except that the late fee may not exceed $25; (13) for filing a report under Chapter 22 to reinstate a corporation or registration following involuntary termination or revocation, $25; and (14) for filing any instrument of a domestic or foreign corporation as provided by this code for which this section does not expressly provide a fee, $5. SECTION 12. Section 4.155, Business Organizations Code, is amended to read as follows: Sec. 4.155. FILING FEES: LIMITED PARTNERSHIPS. For a filing by or for a limited partnership, the secretary of state shall impose the following fees: (1) for filing a certificate of formation or an application for registration as a foreign limited partnership, $750; (2) for filing a certificate of amendment or an amendment of registration of a foreign limited partnership, $150; (3) for filing a restated certificate of formation, $300; (4) for filing a statement for change of registered office, registered agent, or both, $15; (5) for filing a statement of change of name or address of a registered agent, $15, except that the maximum fee for simultaneous filings by a registered agent for more than one limited partnership may not exceed $750; (6) for filing a certificate of [winding up and] termination, $40; (7) for filing a certificate of withdrawal of a foreign limited partnership, $15; (8) for filing a certificate of reinstatement of a limited partnership or registration as a foreign limited partnership after involuntary termination or revocation under Chapter 11 or Chapter 9, $75; (9) for filing a periodic report required under Chapter 153, $50; (10) for reviving a limited partnership's right to transact business under Chapter 153, $50 plus a late fee in an amount equal to the lesser of: (A) $25 for each month or part of a month that elapses after the date of the notice of forfeiture; or (B) $100; (11) for reinstatement of a certificate of formation or registration under Chapter 153, $50 plus a late fee of $100 and a reinstatement fee of $75; (12) for filing any document required or permitted to be filed for a limited liability partnership, the secretary of state shall impose the same fee as the filing fee for a general partnership under Section 4.158. For purposes of calculation of the filing fee, all references to partners in Section 4.158 as applied to limited partnerships mean general partners only; and (13) for filing any instrument as provided by this code for which this section does not expressly provide a fee, $15. SECTION 13. Subchapter D, Chapter 4, Business Organizations Code, is amended by adding Section 4.161 to read as follows: Sec. 4.161. FILING FEES: COOPERATIVE ASSOCIATIONS. For a filing by or for a cooperative association, the secretary of state shall impose the same fee as the filing fee for a similar instrument under Section 4.153. SECTION 14. Section 5.063(b), Business Organizations Code, is amended to read as follows: (b) A domestic or foreign limited liability partnership is not subject to Section 5.053. SECTION 15. Subchapter C, Chapter 5, Business Organizations Code, is amended by adding Section 5.1041 to read as follows: Sec. 5.1041. PROHIBITION ON FEE FOR WITHDRAWAL OF RESERVATION OF NAME. The secretary of state may not impose a fee for the filing of a written notice of withdrawal of a reservation of name. SECTION 16. Section 6.051(a), Business Organizations Code, is amended to read as follows: (a) Subject to this code and the governing documents of the entity, notice of a meeting of the owners, members, or governing persons of a domestic entity, or a committee of the owners, members, or governing persons, must: (1) be given in the manner determined by the governing authority of the entity; and (2) state[: [(A)] the date and time of the meeting[;] and: (A) [(B) the location of the meeting or,] if the meeting is not held solely by using a conference telephone or other communications system authorized by Section 6.002, the location of the meeting; or (B) if the meeting is held solely or in part by using a conference telephone or other communications system authorized by Section 6.002, the form of communications system to be [communication] used for the meeting and the means of accessing the communications system. SECTION 17. Section 6.052, Business Organizations Code, is amended by amending Subsection (b) and adding Subsection (c) to read as follows: (b) If a person entitled to notice of a meeting participates in or attends the meeting, the person's participation or attendance constitutes a waiver of notice of the meeting unless the person participates in or attends the meeting solely to object to the transaction of business at the meeting on the ground that the meeting was not lawfully called or convened. (c) Unless required by the certificate of formation or the governing documents, the business to be transacted at a meeting of the owners, members, or governing persons of a domestic entity, or the members of a committee of the governing persons, or the purpose of such a meeting, is not required to be specified in a written waiver of notice of the meeting. SECTION 18. Subchapter E, Chapter 6, Business Organizations Code, is amended by adding Section 6.205 to read as follows: Sec. 6.205. REPRODUCTION OF CONSENT. Any photographic, photostatic, facsimile, or similarly reliable reproduction of a consent in writing signed by an owner, member, or governing person of a filing entity may be substituted or used instead of the original writing for any purpose for which the original writing could be used, if the reproduction is a complete reproduction of the entire original writing. SECTION 19. The heading to Subchapter G, Chapter 6, Business Organizations Code, is amended to read as follows:
SUBCHAPTER G. APPLICABILITY OF CHAPTER [TO PARTNERSHIPS]
SECTION 20. Sections 8.001(1) and (9), Business Organizations Code, are amended to read as follows: (1) "Delegate" means a person who, while serving as a governing person of an enterprise, is or was serving [or who has served] as a representative of the [an] enterprise at the request of that enterprise at another enterprise or another organization or to an employee benefit plan. A person is a delegate to an employee benefit plan if the performance of the person's official duties to the enterprise also imposes duties on or otherwise involves service by the person to the plan or participants in or beneficiaries of the plan. (9) "Representative" means a person who is: (A) serving as a partner, director, officer, venturer, proprietor, trustee, employee, administrator, or agent of an enterprise or other organization or of an employee benefit plan; or (B) serving a similar function for an enterprise or other organization or for an employee benefit plan. SECTION 21. Section 8.051, Business Organizations Code, is amended to read as follows: Sec. 8.051. MANDATORY INDEMNIFICATION. (a) An enterprise shall indemnify a governing person, [or] former governing person, or delegate against reasonable expenses actually incurred by the person in connection with a proceeding in which the person is a respondent because the person is or was a governing person or delegate if the person is wholly successful, on the merits or otherwise, in the defense of the proceeding. (b) A court that determines, in a suit for indemnification, that a governing person, former governing person, or delegate is entitled to indemnification under this section shall order indemnification and award to the person the expenses incurred in securing the indemnification. SECTION 22. Section 8.103(a), Business Organizations Code, is amended to read as follows: (a) Except as provided by Subsections (b) and (c), the determinations required under Section 8.101(a) must be made by: (1) a majority vote of [a quorum composed of] the governing persons who at the time of the vote are disinterested and independent, regardless of whether the governing persons who are disinterested and independent constitute a quorum; (2) [if a quorum described by Subdivision (1) cannot be obtained,] a majority vote of a committee of the governing authority of the enterprise if the committee: (A) is designated [to act in the matter] by a majority vote of the governing persons who at the time of the vote are disinterested and independent, regardless of whether the governing persons who are disinterested and independent constitute a quorum; and (B) is composed solely of one or more governing persons who [at the time of the vote] are disinterested and independent; (3) special legal counsel selected by the governing authority of the enterprise, or selected by a committee of the board of directors, by vote in accordance with Subdivision (1) or (2) [or, if a quorum described by Subdivision (1) cannot be obtained and a committee described by Subdivision (2) cannot be established, by a majority vote of the governing persons of the enterprise]; (4) the owners or members of the enterprise in a vote that excludes the ownership or membership interests held by each governing person who is not disinterested and independent; or (5) a unanimous vote of the owners or members of the enterprise. SECTION 23. The heading to Section 8.104, Business Organizations Code, is amended to read as follows: Sec. 8.104. ADVANCEMENT OF EXPENSES TO PRESENT GOVERNING PERSONS OR DELEGATES. SECTION 24. Section 8.104(a), Business Organizations Code, is amended to read as follows: (a) An enterprise may pay or reimburse reasonable expenses incurred by a present governing person[, former governing person,] or delegate who was, is, or is threatened to be made a respondent in a proceeding in advance of the final disposition of the proceeding without making the determinations required under Section 8.101(a) after the enterprise receives: (1) a written affirmation by the person of the person's good faith belief that the person has met the standard of conduct necessary for indemnification under this chapter; and (2) a written undertaking by or on behalf of the person to repay the amount paid or reimbursed if the final determination is that the person has not met that standard or that indemnification is prohibited by Section 8.102. SECTION 25. Section 8.105, Business Organizations Code, is amended by amending Subsection (a) and adding Subsections (d) and (e) to read as follows: (a) Notwithstanding any other provision of this chapter but subject to Section [Sections] 8.003 [and 8.004] and to the extent consistent with other law, an enterprise may indemnify and advance expenses to a person who is not a governing person, including an officer, employee, or agent, [or delegate,] as provided by: (1) the enterprise's governing documents; (2) general or specific action of the enterprise's governing authority; (3) resolution of the enterprise's owners or members; (4) contract; or (5) common law. (d) Notwithstanding any authorization or determination specified in this chapter, an enterprise may pay or reimburse, in advance of the final disposition of a proceeding and on terms the enterprise considers appropriate, reasonable expenses incurred by a former managerial official or delegate, or a present or former employee or agent, of the enterprise who was, is, or is threatened to be made a respondent in the proceeding. (e) A determination of indemnification for a person who is not a governing person of an enterprise, including an officer, employee, or agent, is not required to be made in accordance with Section 8.103. SECTION 26. Section 9.007, Business Organizations Code, is amended to read as follows: Sec. 9.007. [SUPPLEMENTAL INFORMATION REQUIRED IN] APPLICATION FOR REGISTRATION OF FOREIGN LIMITED LIABILITY PARTNERSHIP. (a) A foreign limited liability partnership registers by filing an application for registration under this section as provided by Chapter 4. (b) The [In addition to the information required by Section 9.004, a foreign limited liability partnership's] application for registration must state: (1) the partnership's name [federal tax identification number of the partnership]; (2) the federal tax identification number of the [date of initial registration as a limited liability] partnership [under the laws of the state of formation]; (3) the partnership's jurisdiction of formation [number of partners at the date of the statement]; [and] (4) the date of initial registration as a limited liability partnership under the laws of the state of formation; (5) the date the foreign entity began or will begin to transact business in this state; (6) that the partnership exists as a valid limited liability partnership under the laws of the state of its formation; (7) the number of partners at the date of the statement; (8) each business or activity that the partnership proposes to pursue in this state, which may be stated to be any lawful business or activity under the laws of this state; (9) the address of the principal office of the partnership; (10) the address of the initial registered office and the name and address of the initial registered agent for service of process required to be maintained under Section 152.904; and (11) that the secretary of state is appointed the agent of the partnership for service of process under the same circumstances as set forth by Section 5.251 for a foreign filing entity. (c) Subchapter K, Chapter 152, governs the registration of a foreign limited liability partnership to transact business in this state. SECTION 27. Section 9.008, Business Organizations Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows: (a) The registration of a foreign entity other than a foreign limited liability partnership is effective when the application filed under Chapter 4 takes effect. The registration remains in effect until the registration terminates, is withdrawn, or is revoked. (c) Subchapter K, Chapter 152, governs the effect of registration of a foreign limited liability partnership to transact business in this state. SECTION 28. Section 9.009, Business Organizations Code, is amended by adding Subsection (a-1) to read as follows: (a-1) A foreign filing entity may amend the entity's application for registration to disclose a change that results from: (1) a conversion from one type of foreign filing entity to another type of foreign filing entity with the foreign filing entity making the amendment succeeding to the registration of the original foreign filing entity; or (2) a merger into another foreign filing entity with the foreign filing entity making the amendment succeeding to the registration of the original foreign filing entity. SECTION 29. Section 9.010, Business Organizations Code, is amended to read as follows: Sec. 9.010. NAME CHANGE OF FOREIGN FILING ENTITY. If a foreign filing entity authorized to conduct affairs in this state changes its name to a name that would cause the entity to be denied an application for registration under this subchapter, the entity's registration must be suspended. An entity the registration of which has been suspended under this section may conduct affairs in this state only after the entity: (1) changes its name to a name that is available to it under the laws of this state; or (2) otherwise complies with this chapter. SECTION 30. Sections 9.011(a), (b), (d), (f), and (g), Business Organizations Code, are amended to read as follows: (a) A foreign filing entity or foreign limited liability partnership registered in this state may withdraw the entity's or partnership's registration at any time by filing a certificate of withdrawal in the manner required by Chapter 4. (b) A certificate of withdrawal must state: (1) the name of the foreign filing entity or foreign limited liability partnership as registered in this state; (2) the type of foreign filing entity and the entity's or partnership's jurisdiction of formation; (3) the address of the principal office of the foreign filing entity or foreign limited liability partnership; (4) that the foreign filing entity or foreign limited liability partnership no longer is transacting business in this state; (5) that the foreign filing entity or foreign limited liability partnership: (A) revokes the authority of the entity's or partnership's registered agent in this state to accept service of process; and (B) consents that service of process in any action, suit, or proceeding stating a cause of action arising in this state during the time the foreign filing entity or foreign limited liability partnership was authorized to transact business in this state may be made on the foreign filing entity or foreign limited liability partnership by serving the secretary of state; (6) an address to which the secretary of state may mail a copy of any process against the foreign filing entity or foreign limited liability partnership served on the secretary of state; and (7) that any money due or accrued to the state has been paid or that adequate provision has been made for the payment of that money. (d) If the existence or separate existence of a foreign filing entity or foreign limited liability partnership registered in this state terminates because of dissolution, termination, merger, conversion, or other circumstances, a certificate by an authorized governmental official of the entity's jurisdiction of formation that evidences the termination shall be filed with the secretary of state. (f) If the address stated in a certificate of withdrawal under Subsection (b)(6) changes, the foreign filing entity or foreign limited liability partnership must promptly amend the certificate of withdrawal to update the address. (g) A certificate of withdrawal does not terminate the authority of the secretary of state to accept service of process on the foreign filing entity or foreign limited liability partnership with respect to a cause of action arising out of business or activity in this state. SECTION 31. Subchapter D, Chapter 9, Business Organizations Code, is amended by adding Section 9.162 to read as follows: Sec. 9.162. APPLICABILITY OF SUBCHAPTER TO FOREIGN LIMITED LIABILITY PARTNERSHIPS. This subchapter applies to a partnership registered as a foreign limited liability partnership to the same extent as it applies to a foreign filing entity. SECTION 32. Section 9.204, Business Organizations Code, is amended to read as follows: Sec. 9.204. RIGHT OF FOREIGN [FILING] ENTITY TO PARTICIPATE IN BUSINESS OF CERTAIN DOMESTIC ENTITIES. A vote cast or consent provided by a foreign [filing] entity with respect to its ownership or membership interest in a domestic entity of which the foreign [filing] entity is a lawful owner or member, and the foreign [filing] entity's participation in the management and control of the business and affairs of the domestic entity to the extent of the participation of other owners or members, are not invalidated if the foreign [filing] entity does not register to transact business in this state in accordance with this chapter, subject to all law governing a domestic entity, including the antitrust law of this state. SECTION 33. Section 10.005, Business Organizations Code, is amended to read as follows: Sec. 10.005. CREATION OF HOLDING COMPANY BY MERGER. (a) In this section: (1) "Direct or indirect wholly owned subsidiary" means, with respect to a domestic entity, another domestic entity, all of the outstanding voting ownership or membership interests of which are owned by the domestic entity or by one or more other domestic entities or non-code organizations, all of the outstanding voting ownership or membership interests of which are owned by the domestic entity or one or more other wholly owned domestic entities or non-code organizations. (2) "Holding company" means a domestic entity that, from its organization until a merger takes effect, was at all times a direct or indirect wholly owned subsidiary of the merging domestic entity and the ownership or membership interests of which are issued to the members or owners of the merging domestic entity in the merger. (3) "Merging domestic entity" means the original domestic entity that is a party to a merger that is intended to create a holding company structure under a plan of merger that satisfies the requirements of this section and whose members or owners are not required to approve the plan of merger under Subsection (b). (4) "Surviving entity subsidiary" means the surviving entity in a merger of a merging domestic entity and a direct or indirect wholly owned subsidiary of the merging domestic entity, which immediately following the merger is a direct or indirect wholly owned subsidiary of the holding company. (b) A domestic entity may, without owner approval and pursuant to a plan of merger, restructure the ownership structure of that entity to create a holding company structure under this chapter and the provisions of this code under which the entity was formed. The approval of the owners or members of a merging domestic entity that is a party to a merger under [of] a plan of merger that creates a holding company is not required if: (1) the holding company is a domestic entity of the same organizational form as the merging domestic entity; (2) approval is not otherwise required by the governing documents of the merging domestic entity; (3) [(2)] the merging domestic entity merges with a direct or indirect [domestic] wholly owned subsidiary [entity]; (4) [(3)] after the merger the merging domestic entity or its successor is a direct or indirect wholly owned subsidiary [entity] of a holding company; (5) [(4)] the merging domestic entity and the direct or indirect wholly owned subsidiary [entity] are the only parties to the merger; (6) [(5)] each ownership or membership interest of the merging domestic entity that is outstanding preceding the merger is converted in the merger into an ownership or membership interest of the holding company having the same designations, preferences, limitations, and relative rights and corresponding obligations in respect of the ownership or membership interest as the ownership or membership interest held by the owner or member in the merging domestic entity; [(6) the holding company is a domestic entity of the same organizational form as the merging domestic entity;] (7) except as provided by Subsection [Subsections] (c) [and (d)], the [initial] governing documents of the holding company immediately following the merger contain provisions substantively identical to the governing documents of the merging domestic entity immediately preceding the merger; (8) except as provided by Subsections (c) and (d), the [initial] governing documents of the surviving entity subsidiary immediately following the merger contain provisions substantively identical to the governing documents of the merging domestic entity immediately preceding the merger; (9) the governing persons of the merging domestic entity become or remain the governing persons of the holding company when the merger takes effect; (10) the owners or members of the merging domestic entity will not recognize gain or loss for United States federal income tax purposes, the United States federal tax classification of the holding company will be the same as that of the merging domestic entity, and the merger will not result in the loss of [or] any [other] tax benefit or attribute of the merging domestic entity, each as determined by the governing authority of the merging domestic entity; and (11) the governing authority of the merging domestic entity adopts a resolution approving the plan of merger. (c) Subsections (b)(7) and (8) do not require identical provisions regarding the organizer [incorporator] or organizers [incorporators], the entity name, the registered office and agent, the initial governing persons, and the initial subscribers of ownership interests and provisions contained in any amendment to the governing documents [certificate] as were [are] necessary to effect a change, exchange, reclassification, or cancellation of ownership or membership interests, if the change, exchange, reclassification, or cancellation was in effect preceding the merger. (d) Notwithstanding Subsection (b)(8): (1) the governing documents of the surviving entity subsidiary must require that an act or transaction by or involving the surviving entity subsidiary, other than the election or removal of the governing persons of the surviving entity subsidiary, that requires for its approval under this code or the governing documents of the surviving entity subsidiary the approval of the owners or members of the surviving [merging domestic] entity subsidiary must, by specific reference to this section, require the approval of the owners or members of the holding company, or any successor by merger, by the same vote as is required by this code and the governing documents of the surviving entity subsidiary; [and] (2) if the surviving entity subsidiary is not of the same organizational form as the merging domestic entity, the governing documents of the surviving entity subsidiary may differ from the governing documents of the merging domestic entity to the minimum extent necessary to make a change that takes into account the differences between the types of entities, including a change in reference to the types of owners, members, ownership interests, membership interests, governing persons, or governing authority, each as determined by the governing authority of the merging domestic entity; (3) if the surviving entity subsidiary is not of the same organizational form as the merging domestic entity, the governing documents of the surviving entity subsidiary must require that: (A) the surviving entity subsidiary obtain the approval of the owners or members of the holding company for any act or transaction by or involving the surviving entity subsidiary, other than the election or removal of the governing persons of the surviving entity subsidiary, that would require the approval of the owners or members of the surviving entity subsidiary if the surviving entity subsidiary were of the same organizational form as the merging domestic entity; (B) any amendment to the governing documents of the surviving entity subsidiary that would, if adopted by an entity of the same organizational form as the merging domestic entity, be required to be included in the certificate of formation of the entity also require, by specific reference to this section, the approval of the owners or members of the holding company, or any successor by merger, by the same vote as is required by this code or by the governing documents of the surviving entity subsidiary; and (C) the business affairs of the surviving entity subsidiary be managed by or under the direction of governing persons who are: (i) subject to the same fiduciary duties applicable to the governing persons of an entity of the same organizational form as the merging domestic entity subject to this code; and (ii) liable for the breach of any duties to the same extent as governing persons of that form of entity; (4) the governing documents of the surviving entity subsidiary may change the classes and series of ownership or membership interests and the number of ownership or membership interests that the surviving entity subsidiary is authorized to issue; and (5) this subsection or a provision of a surviving entity subsidiary's governing documents required by this subsection may not be construed as requiring the approval of the owners or members of the holding company to elect or remove governing persons of the surviving entity subsidiary. (e) To the extent the provisions contained in Section 21.606 apply to a merging domestic entity and its owners or members when a merger takes effect under this section, those provisions continue to apply to the holding company and its owners or members immediately after the merger takes effect as though the holding company were the merging domestic entity. All ownership or membership interests of the holding company acquired in the merger, for purposes of Section 21.606, are considered to have been acquired at the time the ownership or membership interest of the merging domestic entity converted in the merger was acquired. Any owner or member who, preceding the merger, was not an affiliated owner or member as described by Section 21.606 does not solely by reason of the merger become an affiliated owner or member of the holding company. (f) If the name of a holding company immediately following the effectiveness of a merger under this section is the same as the name of the merging domestic entity preceding the merger, the ownership or membership interests of the holding company into which the ownership or membership interests of the merging domestic entity are converted pursuant to the merger will be [merged are] represented by the certificates, if any, that previously represented the ownership or membership interests in the merging domestic entity. (g) This section shall not apply to a merger of a partnership with or into a domestic entity without the approval of the owners or members of the partnership and domestic entity as provided by this code [partnerships]. SECTION 34. Section 10.006(i), Business Organizations Code, is amended to read as follows: (i) This section shall not apply if a subsidiary organization that is a party to the merger is: (1) a partnership; or (2) a domestic entity that has in its governing documents the provision required by Section 10.005(d)(1) and of which there are outstanding ownership or membership interests that would be entitled to vote on the merger absent this section. SECTION 35. Section 10.008(a), Business Organizations Code, is amended to read as follows: (a) When a merger takes effect: (1) the separate existence of each domestic entity that is a party to the merger, other than a surviving or new domestic entity, ceases; (2) all rights, title, and interests to all real estate and other property owned by each organization that is a party to the merger is allocated to and vested, subject to any existing liens or other encumbrances on the property, in one or more of the surviving or new organizations as provided in the plan of merger without: (A) reversion or impairment; (B) any further act or deed; or (C) any transfer or assignment having occurred; (3) all liabilities and obligations of each organization that is a party to the merger are allocated to one or more of the surviving or new organizations in the manner provided by the plan of merger; (4) each surviving or new domestic organization to which a liability or obligation is allocated under the plan of merger is the primary obligor for the liability or obligation, and, except as otherwise provided by the plan of merger or by law or contract, no other party to the merger, other than a surviving domestic entity or non-code organization liable or otherwise obligated at the time of the merger, and no other new domestic entity or non-code organization created under the plan of merger is liable for the debt or other obligation; (5) any proceeding pending by or against any domestic entity or by or against any non-code organization that is a party to the merger may be continued as if the merger did not occur, or the surviving or new domestic entity or entities or the surviving or new non-code organization or non-code organizations to which the liability, obligation, asset, or right associated with that proceeding is allocated to and vested in under the plan of merger may be substituted in the proceeding; (6) the governing documents of each surviving domestic entity are amended to the extent provided by the plan of merger; (7) each new filing entity whose certificate of formation is included in the plan of merger under this chapter, on meeting any additional requirements, if any, of this code for its formation, is formed as a domestic entity under this code as provided by the plan of merger; (8) the ownership or membership interests of each organization that is a party to the merger and that are to be converted or exchanged, in whole or part, into ownership or membership interests, obligations, rights to purchase securities, or other securities of one or more of the surviving or new organizations, into cash or other property, including ownership or membership interests, obligations, rights to purchase securities, or other securities of any organization, or into any combination of these are converted and exchanged and the former owners or members who held ownership or membership interests of each domestic entity that is a party to the merger are entitled only to the rights provided by the plan [certificate] of merger or, if applicable, any rights to receive the fair value for the ownership or membership interests previously held by them provided under this code; and (9) notwithstanding Subdivision (4), the surviving or new organization named in the plan of merger as primarily obligated to pay the fair value of an ownership or membership interest under Section 10.003(2) is the primary obligor for that payment and all other surviving or new organizations are secondarily liable for that payment. SECTION 36. Section 10.107(c), Business Organizations Code, is amended to read as follows: (c) A domestic partnership that is converting must approve the plan of conversion in the manner [merger] provided in its partnership agreement. SECTION 37. Section 10.202, Business Organizations Code, is amended to read as follows: Sec. 10.202. ABANDONMENT AFTER FILING. [(a)] If a certificate of merger, exchange, or conversion has been filed, the merger, interest exchange, or conversion may be abandoned before its effectiveness in accordance with Sections 4.057 and 10.201. [(b) A filing of a certificate of abandonment under Section 4.057 is not required for the abandonment of a merger, interest exchange, or conversion if no filing is required under Subchapter D to make the merger, interest exchange, or conversion effective.] SECTION 38. Subchapter E, Chapter 10, Business Organizations Code, is amended by adding Section 10.203 to read as follows: Sec. 10.203. ABANDONMENT IF NO FILING REQUIRED. (a) If no filing is required by this chapter for the abandonment of a merger, interest exchange, or conversion, the merger, interest exchange, or conversion is abandoned: (1) as provided by the procedures in the plan of merger, exchange, or conversion; or (2) if no abandonment procedures are provided by the plan, in the manner determined by the governing authority of the abandoning entity. (b) A filing of a certificate of abandonment under Section 4.057 is not required for the abandonment of a merger, interest exchange, or conversion if no filing is required under Subchapter D to make the merger, interest exchange, or conversion effective. SECTION 39. Section 10.354(b), Business Organizations Code, is amended to read as follows: (b) Notwithstanding Subsection (a), subject to Subsection (c), an owner may not dissent from a plan of merger or conversion in which there is a single surviving or new domestic entity or non-code organization, or from a plan of exchange, if: (1) the ownership interest, or a depository receipt in respect of the ownership interest, held by the owner is part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are, on the record date set for purposes of determining which owners are entitled to vote on the plan of merger, conversion, or exchange, as appropriate: (A) listed on a national securities exchange or a similar system; (B) listed on the Nasdaq Stock Market or a successor quotation system; (C) designated as a national market security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or a successor system; or (D) held of record by at least 2,000 owners; (2) the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner's ownership interest any consideration that is different from the consideration to be provided to any other holder of an ownership interest of the same class or series as the ownership interest held by the owner, other than cash instead of fractional shares or interests the owner would otherwise be entitled to receive; and (3) the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner's ownership interest any consideration other than: (A) ownership interests, or depository receipts in respect of ownership interests, of a domestic entity or non-code organization of the same general organizational type that, immediately after the effective date of the merger, conversion, or exchange, as appropriate, will be part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are: (i) listed on a national securities exchange or authorized for listing on the exchange on official notice of issuance; (ii) approved for quotation as a national market security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or a successor entity; or (iii) held of record by at least 2,000 owners; (B) cash instead of fractional ownership interests the owner would otherwise be entitled to receive; or (C) any combination of the ownership interests and cash described by Paragraphs (A) and (B). SECTION 40. Subchapter D, Chapter 11, Business Organizations Code, is amended by adding Section 11.153 to read as follows: Sec. 11.153. COURT REVOCATION OF FRAUDULENT TERMINATION. Notwithstanding any provision of this code to the contrary, a court may order the revocation of termination of an entity's existence that was terminated as a result of actual or constructive fraud. In an action under this section, any limitation period provided by law is tolled in accordance with the discovery rule. The secretary of state shall take any action necessary to implement an order under this section. SECTION 41. Section 11.315, Business Organizations Code, is amended by adding Subsection (c) to read as follows: (c) Subject to Section 11.356, the existence of the filing entity ceases when the certified copy of the decree is filed in accordance with Chapter 4. SECTION 42. Subchapter I, Chapter 11, Business Organizations Code, is amended by adding Section 11.414 to read as follows: Sec. 11.414. FILING OF DECREE OF INVOLUNTARY TERMINATION AGAINST FILING ENTITY. (a) The clerk of a court that enters a decree terminating the existence of a filing entity under this subchapter shall file a certified copy of the decree in accordance with Chapter 4. (b) A fee may not be charged for the filing of a decree under this section. (c) Subject to Section 11.356, the existence of the filing entity ceases when the certified copy of the decree is filed in accordance with Chapter 4. SECTION 43. Section 21.052, Business Organizations Code, is amended by adding Subsection (b-1) to read as follows: (b-1) The resolution may provide that at any time before the filing of a certificate of amendment takes effect as provided by Subchapter B, Chapter 3, the board of directors may abandon the proposed amendment to the certificate of formation without further action by the shareholders of the corporation, notwithstanding authorization of the proposed amendment by the shareholders. SECTION 44. Section 21.053, Business Organizations Code, is amended to read as follows: Sec. 21.053. ADOPTION OF AMENDMENT BY BOARD OF DIRECTORS. (a) If a corporation does not have any issued and outstanding shares, the board of directors may adopt a proposed amendment to the corporation's certificate of formation by resolution without shareholder approval. (b) Notwithstanding Section 21.054, the board of directors may adopt a proposed amendment without shareholder approval in the manner provided by Section 21.155 if the amendment to the corporation's certificate of formation relates to a series of shares established by the board under authority granted to the board in the certificate of formation as provided by Section 21.155. SECTION 45. Section 21.168(c), Business Organizations Code, is amended to read as follows: (c) Subject to the certificate of formation, a right or option described by this section must state the terms on which, the time within which, and any consideration, including a formula by which the consideration may be determined, for which the shares may be purchased or received from the corporation on the exercise of the right or option. SECTION 46. Section 21.169, Business Organizations Code, is amended by adding Subsections (d) and (e) to read as follows: (d) The terms of rights or options or the agreement or plan under which the rights or options are issued may provide that the board of directors by resolution may authorize one or more officers of the corporation to: (1) designate officers and employees of the corporation or of any subsidiary of the corporation to receive rights or options created by the corporation; or (2) determine the number of rights or options to be received under Subdivision (1). (e) A resolution adopted under Subsection (d)(1) must specify the total number of rights or options the authorized officer or officers may award. An officer may not be designated as a recipient of any rights or options that the officer is authorized to award under Subsection (d)(1). SECTION 47. Section 21.208, Business Organizations Code, is amended to read as follows: Sec. 21.208. PREEMPTIVE RIGHT IN EXISTING CORPORATION. Subject to the certificate of formation, a shareholder of a corporation incorporated before September 1, 2003, [the effective date of this code] has a preemptive right to acquire unissued or treasury shares of the corporation to the extent provided by Sections 21.204, 21.206, and 21.207. After September 1, 2003 [the effective date of this code], a corporation may limit or deny the preemptive right of the shareholders of the corporation by amending the corporation's certificate of formation. SECTION 48. Section 21.210(a), Business Organizations Code, is amended to read as follows: (a) A restriction on the transfer or registration of transfer of a security, or on the amount of a corporation's securities that may be owned by a person or group of persons, may be imposed by: (1) the corporation's certificate of formation; (2) the corporation's bylaws; (3) a written agreement among two or more holders of the securities; or (4) a written agreement among one or more holders of the securities and the corporation if: (A) the corporation files a copy of the agreement at the principal place of business or registered office of the corporation; and (B) the copy of the agreement is subject to the same right of examination by a shareholder of the corporation, in person or by agent, attorney, or accountant, as the books and records of the corporation. SECTION 49. Section 21.211, Business Organizations Code, is amended to read as follows: Sec. 21.211. VALID RESTRICTIONS ON TRANSFER. (a) Notwithstanding Sections 21.210 and 21.213, a restriction placed on the transfer or registration of transfer of a security of a corporation is valid if the restriction reasonably: (1) obligates the holder of the restricted security to offer a person, including the corporation or other holders of securities of the corporation, an opportunity to acquire the restricted security within a reasonable time before the transfer; (2) obligates the corporation, to the extent provided by this code, or another person to purchase securities that are the subject of an agreement relating to the purchase and sale of the restricted security; (3) requires the corporation or the holders of a class of the corporation's securities to consent to a proposed transfer of the restricted security or to approve the proposed transferee of the restricted security for the purpose of preventing a violation of law; (4) prohibits the transfer of the restricted security to a designated person or group of persons and the designation is not manifestly unreasonable; (5) maintains the status of the corporation as an electing small business corporation under Subchapter S of the Internal Revenue Code; (6) maintains a tax advantage to the corporation; [or] (7) maintains the status of the corporation as a close corporation under Subchapter O; (8) obligates the holder of the restricted securities to sell or transfer an amount of restricted securities to a person or group of persons, including the corporation or other holders of securities of the corporation; or (9) causes or results in the automatic sale or transfer of an amount of restricted securities to a person or group of persons, including the corporation or other holders of securities of the corporation. (b) A restriction placed on the transfer or registration of transfer of a security of a corporation, on the amount of the corporation's securities, or on the amount of the corporation's securities that may be owned by a person or group of persons is conclusively presumed to be for a reasonable purpose if the restriction: (1) maintains a local, state, federal, or foreign tax advantage to the corporation or its shareholders, including: (A) maintaining the corporation's status as an electing small business corporation under Subchapter S of the Internal Revenue Code; (B) maintaining or preserving any tax attribute, including net operating losses; or (C) qualifying or maintaining the qualification of the corporation as a real estate investment trust under the Internal Revenue Code or regulations adopted under the Internal Revenue Code; or (2) maintains a statutory or regulatory advantage or complies with a statutory or regulatory requirement under applicable local, state, federal, or foreign law. SECTION 50. The heading to Subchapter H, Chapter 21, Business Organizations Code, is amended to read as follows:
SUBCHAPTER H. SHAREHOLDERS' MEETINGS; NOTICE TO SHAREHOLDERS; VOTING AND QUORUM
SECTION 51. Section 21.353, Business Organizations Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows: (a) Except as provided by Section 21.456 and subject to Section 21.3531, written notice of a meeting in accordance with Section 6.051 shall be given to each shareholder entitled to vote at the meeting not later than the 10th day and not earlier than the 60th day before the date of the meeting. Notice shall be given at the direction of the president, secretary, or other person calling the meeting. (c) If a meeting is held by means of remote communication, the notice of the meeting must include information on how to access the list of shareholders entitled to vote at the meeting required by Section 21.372. SECTION 52. Subchapter H, Chapter 21, Business Organizations Code, is amended by adding Section 21.3531 to read as follows: Sec. 21.3531. NOTICE BY ELECTRONIC TRANSMISSION. (a) On consent of a shareholder, notice from a corporation under this code, the certificate of formation, or the bylaws may be provided to the shareholder by electronic transmission. The shareholder may specify the form of electronic transmission to be used to communicate notice. (b) Notice is considered provided under this section when the notice is: (1) transmitted to a facsimile number provided by the shareholder for the purpose of receiving notice; (2) transmitted to an electronic mail address provided by the shareholder for the purpose of receiving notice; (3) posted on an electronic network and a message is sent to the shareholder at the address provided by the shareholder for the purpose of alerting the shareholder of a posting; or (4) communicated to the shareholder by any other form of electronic transmission consented to by the shareholder. (c) A shareholder may revoke the shareholder's consent to receive notice by electronic transmission by providing written notice to the corporation. The shareholder's consent is considered revoked for purposes of Subsection (a) if the corporation is unable to deliver by electronic transmission two consecutive notices, and the secretary, assistant secretary, or transfer agent of the corporation, or another person responsible for delivering notice on behalf of the corporation, knows that delivery of those two electronic transmissions was unsuccessful. Inadvertent failure to treat the unsuccessful transmissions as a revocation of the shareholder's consent does not affect the validity of a meeting or other action. (d) An affidavit of the secretary, assistant secretary, transfer agent, or other agent of a corporation stating that notice has been provided to a shareholder of the corporation by electronic transmission is, in the absence of fraud, prima facie evidence that the notice was provided under this section. SECTION 53. Section 21.354, Business Organizations Code, is amended by adding Subsection (a-1) to read as follows: (a-1) If a meeting of the shareholders is held by means of remote communication, the list must be open to inspection by a shareholder during the meeting on a reasonably accessible electronic network. SECTION 54. Section 21.362, Business Organizations Code, is amended to read as follows: Sec. 21.362. CUMULATIVE VOTING RIGHT IN CERTAIN CORPORATIONS. Except as provided by the corporation's certificate of formation, a shareholder of a corporation incorporated before September 1, 2003, [the effective date of this code] has the right to cumulatively vote the number of shares the shareholder owns in the election of directors to the extent permitted and in the manner provided by Section 21.361. A corporation may limit or deny a shareholder's right to cumulatively vote shares at any time after September 1, 2003, [the effective date of this code] by amending its certificate of formation. SECTION 55. Section 21.372, Business Organizations Code, is amended by adding Subsection (a-1) to read as follows: (a-1) Instead of being kept on file, the list required by Subsection (a) may be kept on a reasonably accessible electronic network if the information required to gain access to the list is provided with notice of the meeting. Section 21.353(c), Section 21.354(a-1), and this subsection may not be construed to require a corporation to include any electronic contact information of a shareholder on the list. A corporation that elects to make the list available on an electronic network must take reasonable measures to ensure the information is available only to shareholders of the corporation. SECTION 56. Section 21.407, Business Organizations Code, is amended to read as follows: Sec. 21.407. TERM OF OFFICE. Except as [Unless] otherwise provided by this subchapter [or removed in accordance with Section 21.409], the term of office of a director extends from the date the director is elected and qualified or named in the corporation's certificate of formation until the next annual meeting of shareholders and until the director's successor is elected and qualified. SECTION 57. Section 21.409(a), Business Organizations Code, is amended to read as follows: (a) Except as otherwise provided by the certificate of formation or bylaws of a corporation or this subchapter, the shareholders of the corporation may remove a director or the entire board of directors of the corporation, with or without cause, at a meeting called for that purpose, by a vote of the holders of a [specified portion, but not less than the] majority[,] of the shares entitled to vote at an election of the director or directors. SECTION 58. Subchapter I, Chapter 21, Business Organizations Code, is amended by adding Section 21.4091 to read as follows: Sec. 21.4091. RESIGNATION OF DIRECTORS. Except as otherwise provided by the certificate of formation or bylaws, a director of a corporation may resign at any time by providing written notice to the corporation. SECTION 59. Section 21.411, Business Organizations Code, is amended by adding Subsections (d), (e), (f), and (g) to read as follows: (d) Notice of the date, time, place, or purpose of a regular or special meeting of the board of directors may be provided to a director by electronic transmission on consent of the director. The director may specify the form of electronic transmission to be used to communicate notice. (e) Notice is considered provided under Subsection (d) when the notice is: (1) transmitted to a facsimile number provided by the director for the purpose of receiving notice; (2) transmitted to an electronic mail address provided by the director for the purpose of receiving notice; (3) posted on an electronic network and a message is sent to the director at the address provided by the director for the purpose of alerting the director of a posting; or (4) communicated to the director by any other form of electronic transmission consented to by the director. (f) A director may revoke the director's consent to receive notice by electronic transmission by providing written notice to the corporation. The director's consent is considered revoked for purposes of Subsection (d) if the corporation is unable to deliver by electronic transmission two consecutive notices, and the secretary, assistant secretary, or transfer agent of the corporation, or another person responsible for delivering notice on behalf of the corporation, knows that delivery of those two electronic transmissions was unsuccessful. Inadvertent failure to treat the unsuccessful transmissions as a revocation of the director's consent does not affect the validity of a meeting or other action. (g) An affidavit of the secretary, assistant secretary, transfer agent, or other agent of a corporation stating that notice has been provided to a director of the corporation by electronic transmission is, in the absence of fraud, prima facie evidence that notice was provided under Subsections (d) and (e). SECTION 60. Sections 21.416(a) and (b), Business Organizations Code, are amended to read as follows: (a) If authorized by the certificate of formation or bylaws of a corporation, the board of directors of the corporation[, by resolution adopted by the majority of the entire board of directors,] may designate: (1) committees composed of one or more directors; or (2) directors as alternate members of committees to replace absent or disqualified committee members at a committee meeting, subject to any limitations imposed by the board of directors. (b) To the extent provided by a [the] resolution of the board of directors designating a committee or by the certificate of formation or bylaws and subject to Subsection (c), the committee has the authority of the board of directors. SECTION 61. Section 21.452, Business Organizations Code, is amended by adding Subsections (f) and (g) to read as follows: (f) If after adoption of a resolution under Subsection (b)(2) the board of directors of the corporation determines that the plan of merger is not advisable, the plan of merger may be submitted to the shareholders of the corporation with a recommendation that the shareholders not approve the plan of merger. (g) A plan of merger for a corporation may include a provision requiring that the plan of merger be submitted to the shareholders of the corporation regardless of whether the board of directors determines, after adopting a resolution or making a determination under this section, that the plan of merger is not advisable and recommends that the shareholders not approve the plan of merger. SECTION 62. Section 21.454, Business Organizations Code, is amended by adding Subsections (f) and (g) to read as follows: (f) If after the adoption of a resolution under Subsection (b)(2) the board of directors of the corporation determines that the plan of exchange is not advisable, the plan of exchange may be submitted to the shareholders of the corporation with a recommendation that the shareholders not approve the plan of exchange. (g) A plan of exchange for a corporation may include a provision requiring that the plan of exchange be submitted to the shareholders of the corporation regardless of whether the board of directors determines, after adopting a resolution or making a determination under this section, that the plan of exchange is not advisable and recommends that the shareholders not approve the plan of exchange. SECTION 63. Section 21.552, Business Organizations Code, is amended to read as follows: Sec. 21.552. STANDING TO BRING PROCEEDING. (a) A shareholder may not institute or maintain a derivative proceeding unless: (1) the shareholder: (A) was a shareholder of the corporation at the time of the act or omission complained of; or (B) became a shareholder by operation of law from a person that was a shareholder at the time of the act or omission complained of; and (2) the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation. (b) To the extent a shareholder of a corporation has standing to institute or maintain a derivative proceeding on behalf of the corporation immediately before a merger, Subchapter J or Chapter 10 may not be construed to limit or terminate the shareholder's standing after the merger. SECTION 64. Section 21.604, Business Organizations Code, is amended to read as follows: Sec. 21.604. BUSINESS COMBINATION. A business combination is: (1) a merger, share exchange, or conversion of an issuing public corporation or a subsidiary with: (A) an affiliated shareholder; (B) a foreign or domestic corporation or other entity that is, or after the merger, share exchange, or conversion would be, an affiliate or associate of the affiliated shareholder; or (C) another domestic or foreign corporation or other entity, if the merger, share exchange, or conversion is caused by an affiliated shareholder, or an affiliate or associate of an affiliated shareholder, and as a result of the merger, share exchange, or conversion this subchapter does not apply to the surviving corporation or other entity; (2) a sale, lease, exchange, mortgage, pledge, transfer, or other disposition, in one transaction or a series of transactions, including an allocation of assets under a merger, to or with the affiliated shareholder, or an affiliate or associate of the affiliated shareholder, of assets of the issuing public corporation or a subsidiary that: (A) has an aggregate market value equal to 10 percent or more of the aggregate market value of all of the assets, determined on a consolidated basis, of the issuing public corporation; (B) has an aggregate market value equal to 10 percent or more of the aggregate market value of all of the outstanding voting shares [common stock] of the issuing public corporation; or (C) represents 10 percent or more of the earning power or net income, determined on a consolidated basis, of the issuing public corporation; (3) the issuance or transfer by an issuing public corporation or a subsidiary to an affiliated shareholder or an affiliate or associate of the affiliated shareholder, in one transaction or a series of transactions, of shares of the issuing public corporation or a subsidiary, except by the exercise of warrants or rights to purchase shares of the issuing public corporation offered, or a share dividend paid, pro rata to all shareholders of the issuing public corporation after the affiliated shareholder's share acquisition date; (4) the adoption of a plan or proposal for the liquidation or dissolution of an issuing public corporation proposed by or under any agreement, arrangement, or understanding, regardless of whether in writing, with an affiliated shareholder or an affiliate or associate of the affiliated shareholder; (5) a reclassification of securities, including a reverse share split or a share split-up, share dividend, or other distribution of shares, a recapitalization of the issuing public corporation, a merger of the issuing public corporation with a subsidiary or pursuant to which the assets and liabilities of the issuing public corporation are allocated among two or more surviving or new domestic or foreign corporations or other entities, or any other transaction proposed by or under an agreement, arrangement, or understanding, regardless of whether in writing, with an affiliated shareholder or an affiliate or associate of the affiliated shareholder that has the effect, directly or indirectly, of increasing the proportionate ownership percentage of the outstanding shares of a class or series of voting shares or securities convertible into voting shares of the issuing public corporation that is beneficially owned by the affiliated shareholder or an affiliate or associate of the affiliated shareholder, except as a result of immaterial changes due to fractional share adjustments; or (6) the direct or indirect receipt by an affiliated shareholder or an affiliate or associate of the affiliated shareholder of the benefit of a loan, advance, guarantee, pledge, or other financial assistance or a tax credit or other tax advantage provided by or through the issuing public corporation, except proportionately as a shareholder of the issuing public corporation. SECTION 65. Section 21.654, Business Organizations Code, is amended to read as follows: Sec. 21.654. TERM OF OFFICE OF DIRECTORS. Unless the director resigns or is removed in accordance with the certificate of formation or bylaws of the investment company, a director of an investment company shall serve as director for the term for which the director is elected and holds office until a successor is elected and qualifies. SECTION 66. Sections 22.104(a) and (c), Business Organizations Code, are amended to read as follows: (a) After the certificate of formation is filed, the board of directors named in the certificate of formation of a corporation shall hold an organization meeting of the board, either in or out of this state, at the call of the organizers [incorporators] or a majority of the directors to adopt bylaws and elect officers and for other purposes determined by the board at the meeting. The organizers [incorporators] or directors calling the meeting shall send notice of the time and place of the meeting to each director named in the certificate of formation not later than the third day before the date of the meeting. (c) If the management of a corporation is vested in the corporation's members, the members shall hold the organization meeting on the call of an organizer [incorporator]. An organizer [incorporator] who calls the meeting shall: (1) send notice of the time and place of the meeting to each member not later than the third day before the date of the meeting; (2) if the corporation is a church, make an oral announcement of the time and place of the meeting at a regularly scheduled worship service before the meeting; or (3) send notice of the meeting in the manner provided by the certificate of formation. SECTION 67. Subchapter C, Chapter 22, Business Organizations Code, is amended by adding Section 22.109 to read as follows: Sec. 22.109. RESTATED CERTIFICATE OF FORMATION. (a) The board of directors of a corporation may adopt a restated certificate of formation as provided by Subchapter B, Chapter 3, by following the same procedure to amend the corporation's certificate of formation provided by Sections 22.104-22.107, except that member approval is required only if the restated certificate of formation contains an amendment. (b) A person shall file a restated certificate of formation as provided by Chapter 4, and the restated certificate of formation takes effect as provided by Subchapter B, Chapter 3. SECTION 68. Section 22.208(a), Business Organizations Code, is amended to read as follows: (a) Unless the director resigns or is removed, a [A] director on the initial board of directors of a corporation holds office until the first annual election of directors or for the period specified in the certificate of formation or bylaws of the corporation. Directors other than the initial directors are elected, appointed, or designated for the terms provided by the certificate of formation or bylaws. SECTION 69. Subchapter E, Chapter 22, Business Organizations Code, is amended by adding Section 22.2111 to read as follows: Sec. 22.2111. RESIGNATION OF DIRECTOR. Except as provided by the certificate of formation or bylaws, a director of a corporation may resign at any time by providing written notice to the corporation. SECTION 70. Section 22.355, Business Organizations Code, is amended to read as follows: Sec. 22.355. EXEMPTIONS FROM CERTAIN REQUIREMENTS RELATING TO FINANCIAL RECORDS AND ANNUAL REPORTS. Sections 22.352, 22.353, and 22.354 do not apply to: (1) a corporation that solicits funds only from members of the corporation; (2) a corporation that does not intend to solicit and receive and does not actually raise or receive during a fiscal year contributions in an amount exceeding $10,000 from a source other than its own membership; (3) a private or independent institution of higher education described by Section 61.003[(15)], Education Code, accredited by a recognized accrediting agency as defined by Section 61.003[(13)], Education Code, a postsecondary educational institution [or] authorized to grant degrees under a certificate of authority issued by the Texas Higher Education Coordinating Board or a foundation chartered for the benefit of the institution or any component part of the institution, a career [proprietary] school or college that has received a certificate of approval from the Texas Workforce Commission [commissioner of education], a public institution of higher education or a foundation chartered for the benefit of the institution or any component part of the institution, or an elementary or secondary school; (4) a religious institution that is a church, an ecclesiastical or denominational organization, or another established physical place for worship at which religious services are the primary activity and are regularly conducted; (5) a trade association or professional society the income of which is principally derived from membership dues and assessments, sales, or services; (6) an insurer licensed and regulated by the Texas Department of Insurance; or (7) [an organization the charitable activities of which relate to public concern in the conservation and protection of wildlife, fisheries, and allied natural resources; or [(8)] an alumni association of a public or private institution of higher education in this state that is recognized and acknowledged as the official alumni association by the institution. SECTION 71. Section 101.102, Business Organizations Code, is amended by adding Subsection (c) to read as follows: (c) If one or more persons own a membership interest in a limited liability company, the company agreement may provide for a person to be admitted to the company as a member without acquiring a membership interest in the company. SECTION 72. Section 101.103, Business Organizations Code, is amended to read as follows: Sec. 101.103. EFFECTIVE DATE OF MEMBERSHIP. (a) In connection with the formation of a company, a [A] person [who acquires a membership interest in a limited liability company in connection with the formation of the company] becomes a member of the company on the date the company is formed if the person is named as an initial member in the company's certificate of formation. (b) In connection with the formation of a company, a [A] person being admitted as a member of the company but [who acquires a membership interest in a limited liability company during the formation of the company but who is] not named as an initial member in the company's certificate of formation becomes a member of the company on the latest of: (1) the date the company is formed; (2) the date stated in the company's records as the date the person becomes a member of the company; or (3) if the company's records do not state a date described by Subdivision (2), the date the person's admission to the company is first reflected in the company's records. (c) A person who, after the formation of a limited liability company, acquires directly or is assigned a membership interest in the company or is admitted as a member of the company without acquiring a membership interest becomes a member of the company on approval or consent of all of the company's members. SECTION 73. Section 101.201, Business Organizations Code, is amended to read as follows: Sec. 101.201. ALLOCATION OF PROFITS AND LOSSES. The profits and losses of a limited liability company shall be allocated to each member of the company on the basis of the agreed value of the contributions made by each member, [in accordance with the member's percentage or other interest in the company on the date of the allocation] as stated in the company's records required under Section [Sections 3.151 and] 101.501. SECTION 74. Section 101.356, Business Organizations Code, is amended by amending Subsection (d) and adding Subsection (f) to read as follows: (d) Except as provided by Subsection (e) or any other section of this title, the company's members must approve by an affirmative vote of all the members: (1) an amendment to the certificate of formation of a limited liability company; or (2) a restated certificate of formation that contains an amendment to the certificate of formation of a limited liability company [must be approved by the affirmative vote of all of the company's members]. (f) Approval of a restated certificate of formation by a limited liability company's members is required only if the restated certificate contains an amendment. SECTION 75. Subchapter H, Chapter 101, Business Organizations Code, is amended by adding Section 101.359 to read as follows: Sec. 101.359. EFFECTIVE ACTION BY MEMBERS OR MANAGERS WITH OR WITHOUT MEETING. Members or managers of a limited liability company may take action at a meeting of the members or managers or without a meeting in any manner permitted by this title, Title 1, or the governing documents of the company. Unless otherwise provided by the governing documents, an action is effective if it is taken: (1) by an affirmative vote of those persons having at least the minimum number of votes that would be necessary to take the action at a meeting at which each member or manager, as appropriate, entitled to vote on the action is present and votes; or (2) with the consent of each member of the limited liability company, which may be established by: (A) the member's failure to object to the action in a timely manner, if the member has full knowledge of the action; (B) consent to the action in writing signed by the member; or (C) any other means reasonably evidencing consent. SECTION 76. Section 151.001, Business Organizations Code, is amended to read as follows: Sec. 151.001. DEFINITIONS. In this title: (1) "Capital account" means the amount computed by: (A) adding the amount of a partner's original and additional contributions of cash to a partnership, the agreed value of any other property that that partner originally or additionally contributed to the partnership, and allocations of partnership profits to that partner; and (B) subtracting the amount of distributions to that partner and allocations of partnership losses to that partner. (2) "Distribution" means a transfer of property, including cash, from a partnership to: (A) a partner in the partner's capacity as a partner; or (B) a partner's transferee. (3) "Foreign limited partnership" means a partnership formed under the laws of another state that has one or more general partners and one or more limited partners. (4) [(3)] "Majority-in-interest," with respect to all or a specified group of partners, means partners who own more than 50 percent of the current percentage or other interest in the profits of the partnership that is owned by all of the partners or by the partners in the specified group, as appropriate. (5) [(4)] "Partnership agreement" means any agreement, written or oral, of the partners concerning a partnership. SECTION 77. Section 152.204(a), Business Organizations Code, is amended to read as follows: (a) A partner owes to the partnership, [and] the other partners, and a transferee of a deceased partner's partnership interest as designated in Section 152.406(a)(2): (1) a duty of loyalty; and (2) a duty of care. SECTION 78. Section 152.501(b), Business Organizations Code, is amended to read as follows: (b) 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: (A) the date on which the notice is received; or (B) a later date specified by the notice; (2) an event specified in the partnership agreement as causing the partner's withdrawal; (3) the partner's expulsion as provided by the partnership agreement; (4) the partner's expulsion by 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) not later than the 90th day after the date on which the partnership notifies an entity partner, other than a nonfiling entity or foreign nonfiling entity partner, that it will be expelled because it has filed a certificate of termination or the equivalent, its existence has been involuntarily terminated or its charter has been revoked, or its right to conduct business has been terminated or suspended by the jurisdiction of its formation, if the certificate of termination or the equivalent is not revoked or its existence, charter, or right to conduct business is not reinstated; or (D) an event requiring a winding up has occurred with respect to a nonfiling entity or foreign nonfiling entity that is a partner; (5) the partner's expulsion by judicial decree, on application by the partnership or another partner, if the judicial decree determines that [for the partner's expulsion by judicial decree because] the partner: (A) engaged in wrongful conduct that adversely and materially affected the partnership business; (B) wilfully or persistently committed a material breach of: (i) the partnership agreement; or (ii) a duty owed to the partnership or the other partners under Sections 152.204-152.206; or (C) 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's: (A) becoming a debtor in bankruptcy; (B) executing an assignment for the benefit of a creditor; (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, not later than the 90th day 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 not later than the 90th day after the date of expiration of a stay, failing to have the appointment vacated; (7) if a partner 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) if a partner has transferred all of the partner's partnership interest, redemption of the transferee's interest under Section 152.611; (10) an agreement to continue the partnership under Section 11.057(b) if the partnership has received a notice from the partner under Section 11.057(a)(6) 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 79. Section 152.904, Business Organizations Code, is amended to read as follows: Sec. 152.904. REGISTERED AGENT AND REGISTERED OFFICE. A foreign limited liability partnership subject to this chapter shall maintain a registered office and registered agent in this state in the same manner and to the same extent as if the partnership were a foreign filing entity. Subchapters E and F, Chapter 5, apply to a foreign limited liability partnership to the same extent those subchapters apply to a foreign filing entity [accordance with Chapter 5]. SECTION 80. Section 152.906, Business Organizations Code, is amended to read as follows: Sec. 152.906. WITHDRAWAL [CANCELLATION] OF REGISTRATION. (a) A registration may be voluntarily withdrawn [canceled] by filing a certificate of withdrawal in accordance with this section and Section 9.011 [cancellation]. (b) In addition to the information required by Section 9.011, the [The] certificate of withdrawal [cancellation] must: (1) contain: (A) the federal tax identification number of the partnership; and (B) the date of effectiveness of the partnership's last application for registration under this subchapter; and (2) be signed by: (A) a majority-in-interest of the partners; or (B) one or more partners authorized by a majority-in-interest of the partners. SECTION 81. Section 152.907, Business Organizations Code, is amended to read as follows: Sec. 152.907. EFFECT OF CERTIFICATE OF WITHDRAWAL [CANCELLATION]. A certificate of withdrawal [cancellation] terminates the registration of the partnership as a foreign limited liability partnership as of the date on which the notice is filed or a later date specified in the notice, but not later than the expiration date under Section 152.905(e). SECTION 82. Section 152.910(a), Business Organizations Code, is amended to read as follows: (a) A foreign limited liability partnership that transacts business in this state without being registered is subject to Subchapter B, Chapter 9, to the same extent as a foreign filing entity. SECTION 83. Section 152.911(a), Business Organizations Code, is amended to read as follows: (a) A document filed under this subchapter or an application for registration filed under Section 9.007 may be amended by filing with the secretary of state an application for amendment of registration in accordance with Chapter 4. SECTION 84. Subchapter K, Chapter 152, Business Organizations Code, is amended by adding Section 152.914 to read as follows: Sec. 152.914. REVOCATION OF REGISTRATION BY SECRETARY OF STATE. (a) The secretary of state may revoke the registration of a foreign limited liability partnership for the partnership's failure to: (1) file a report within the period required by law or pay a fee or penalty prescribed by law when due and payable; (2) maintain a registered agent or registered office address in this state as required by law; or (3) pay a fee required in connection with a filing, or payment of the fee was dishonored when presented by the state for payment. (b) If it appears to the secretary of state that, with respect to a foreign limited liability partnership, a circumstance described by Subsection (a) exists, the secretary of state shall provide notice to the partnership in the same manner and to the same extent as notice is required to be provided to a foreign filing entity under Sections 9.101(a) and 9.102(a). (c) The secretary of state shall reinstate the registration of a foreign limited liability partnership if the partnership files an application for reinstatement in accordance with Subsection (e), accompanied by each amendment of the partnership's registration that is required by intervening events, and: (1) the foreign limited liability partnership has corrected the circumstances that led to the revocation and any other circumstances described by Subsection (a) that may exist, including the payment of fees, interest, or penalties; or (2) the secretary of state finds that the circumstances that led to the revocation did not exist at the time of revocation. (d) A foreign limited liability partnership, to have its registration reinstated, must comply with the requirements of this section not later than the date the registration would have expired under Section 152.905(e) had the registration not been revoked under this section. (e) The foreign limited liability partnership shall file a certificate of reinstatement in accordance with Chapter 4. The certificate of reinstatement must contain: (1) the name of the partnership; (2) the filing number assigned by the filing officer to the partnership; (3) the effective date of the revocation of the partnership's registration; and (4) the name of the partnership's registered agent and the address of the partnership's registered office. SECTION 85. Section 153.052(b), Business Organizations Code, is amended to read as follows: (b) A certificate of formation may be amended to state the name, mailing address, and street address of the business or residence of each person winding up the limited partnership's affairs if, after an event requiring the winding up of a limited partnership but before the limited partnership is reconstituted or a certificate of termination [cancellation] is filed as provided by Section 153.451: (1) the certificate of formation has been amended to reflect the withdrawal of all general partners; or (2) a person who is not shown on the certificate of formation as a general partner is carrying out the winding up of a limited partnership's affairs. SECTION 86. Subchapter B, Chapter 153, Business Organizations Code, is amended by adding Section 153.053 to read as follows: Sec. 153.053. RESTATED CERTIFICATE OF FORMATION. (a) The general partners may adopt at any time a restated certificate of formation that does not contain an amendment to the certificate of formation. (b) A restated certificate of formation that contains an amendment to the certificate of formation may be adopted at any time for a proper purpose as determined by the general partners. SECTION 87. The heading to Section 153.151, Business Organizations Code, is amended to read as follows: Sec. 153.151. ADMISSION OF [ADDITIONAL] GENERAL PARTNERS. SECTION 88. Section 153.151, Business Organizations Code, is amended by adding Subsections (c), (d), and (e) to read as follows: (c) A written partnership agreement may provide that a person may be admitted as a general partner in a limited partnership, including as a sole general partner, and may acquire a partnership interest in the limited partnership without: (1) making a contribution to the limited partnership; or (2) assuming an obligation to make a contribution to the limited partnership. (d) A written partnership agreement may provide that a person may be admitted as a general partner in a limited partnership, including as the sole general partner, without acquiring a partnership interest in the limited partnership. (e) This section is not a limitation of or does not otherwise affect Section 153.152. SECTION 89. Section 153.201, Business Organizations Code, is amended to read as follows: Sec. 153.201. FORM OF CONTRIBUTION. The contribution of a [limited] partner may consist of a tangible or intangible benefit to the limited partnership or other property of any kind or nature, including: (1) cash; (2) a promissory note; (3) services performed; (4) a contract for services to be performed; and (5) another interest in or security of the limited partnership, another domestic or foreign limited partnership, or other entity. SECTION 90. The heading to Section 153.451, Business Organizations Code, is amended to read as follows: Sec. 153.451. CERTIFICATE OF TERMINATION [CANCELLATION]. SECTION 91. Section 153.451(a), Business Organizations Code, is amended to read as follows: (a) A certificate of formation shall be canceled by filing a certificate of termination [cancellation] with the secretary of state in accordance with Chapter 4: (1) on the completion of the winding up of the partnership business; (2) when there are no limited partners; or (3) subject to Subsection (b), on a merger or conversion as provided by Chapter 10. SECTION 92. Section 153.452, Business Organizations Code, is amended to read as follows: Sec. 153.452. CONTENTS OF CERTIFICATE OF TERMINATION [CANCELLATION]. A certificate of termination [cancellation] must contain: (1) the name of the limited partnership; (2) the date of the filing of the partnership's certificate of formation; (3) the reason for filing the certificate of termination [cancellation]; (4) the future effective date or a certain time of termination [cancellation] if termination [cancellation] is not effective on the filing of the certificate; and (5) other proper information as determined by the person filing the certificate of termination [cancellation]. SECTION 93. Section 153.501(d), Business Organizations Code, is amended to read as follows: (d) To approve a revocation under Section 11.151 by a limited partnership of a voluntary decision to wind up as specified in Section 11.058(1), prior to filing the certificate of termination [cancellation] required by Section 153.451, all remaining partners, or another group or percentage of partners as specified by the partnership agreement, must agree in writing to revoke the voluntary decision to wind up and continue the business of the limited partnership. SECTION 94. Section 153.503(a), Business Organizations Code, is amended to read as follows: (a) After an event requiring the winding up of a limited partnership and until the filing of a certificate of termination [cancellation] as provided by Sections 153.451 and 153.452, unless a written partnership agreement provides otherwise, a person winding up the limited partnership's business in the name of and on behalf of the limited partnership may take the actions specified in Sections 11.052 and 11.053. SECTION 95. Section 153.553(a), Business Organizations Code, is amended to read as follows: (a) Each certificate required by this code to be filed by a limited partnership with the secretary of state shall be executed as follows: (1) an initial certificate of formation must be signed as provided in Section 3.004(b)(1), except for an initial certificate of formation signed by a person under Section 153.106(1); (2) a certificate of amendment or restated certificate of formation must be signed by at least one general partner and by each other general partner designated in the certificate of amendment as a new general partner, unless signed and filed by a person under Section 153.052(b), 153.052(c), or 153.106(1), but the certificate of amendment need not be signed by a withdrawing general partner; (3) a certificate of termination [cancellation] must be signed by all general partners participating in the winding up of the limited partnership's business or, if no general partners are winding up the limited partnership's business, by all nonpartner liquidators or, if the limited partners are winding up the limited partnership's business, by a majority-in-interest of the limited partners; (4) a certificate of merger filed on behalf of a domestic limited partnership must be signed as provided by Chapter 10; (5) a certificate filed under Section 10.251 must be signed by the person designated by the court; and (6) a certificate of correction must be signed by at least one general partner. SECTION 96. Subchapter B, Chapter 251, Business Organizations Code, is amended by adding Section 251.054 to read as follows: Sec. 251.054. RESTATED CERTIFICATE OF FORMATION. (a) The board of directors of a cooperative association may adopt a restated certificate of formation as provided by Subchapter B, Chapter 3, by following the procedure to amend the association's certificate of formation provided by Section 251.052, except that member approval is required if the restated certificate of formation contains an amendment. (b) A person shall file a restated certificate of formation as provided by Chapter 4, and the restated certificate of formation takes effect as provided by Subchapter B, Chapter 3. SECTION 97. Section 301.003(2), Business Organizations Code, is amended to read as follows: (2) "Professional association" means an association, as distinguished from either a partnership or a corporation, that is: (A) formed for the purpose of providing the professional service rendered by a doctor of medicine, doctor of osteopathy, doctor of podiatry, dentist, chiropractor, optometrist, therapeutic optometrist, veterinarian, or licensed mental health professional; and (B) governed as a professional entity under this title. SECTION 98. Section 301.006(d), Business Organizations Code, is amended to read as follows: (d) This section may not be construed to prohibit a professional entity or foreign professional entity from employing nurses or from employing individuals who do not, according to general custom and practice, ordinarily provide a professional service, including clerks, secretaries, bookkeepers, technicians, [nurses,] or assistants. To the extent this subsection conflicts with any other law, this subsection controls. SECTION 99. Section 302.003(a), Business Organizations Code, is amended to read as follows: (a) A professional association may amend the association's certificate of formation as provided by Chapter 3 and: (1) by [Chapter 3; [(2)] the procedure for amendment stated in the certificate of formation; or (2) [(3)] if the certificate of formation does not provide a procedure for amending the certificate, by a two-thirds vote of the association's members. SECTION 100. Section 402.001, Business Organizations Code, is amended to read as follows: Sec. 402.001. APPLICABILITY UPON EFFECTIVE DATE. (a) On or after [At] the effective date of this code, this code applies to: (1) a domestic entity formed on or after the effective date of this code; (2) a foreign filing entity, or other foreign entity, that is [has] not registered with the secretary of state to transact business in this state before the effective date of this code; and (3) a foreign nonfiling entity, including a foreign limited liability partnership. (b) The registration of a domestic limited liability partnership or foreign limited liability partnership under prior law and in effect on the effective date of this code continues to be governed by the prior law until expiration of the current term of registration, unless earlier withdrawn or revoked. (c) Notwithstanding Subsections (a) and (b), after the effective date of this code, Sections 152.802 and 152.803, instead of prior law, govern a renewal of registration or other filing with the secretary of state made on behalf of a domestic limited liability partnership registered under prior law. (d) Notwithstanding Subsection (a), a domestic partnership that files an initial application for registration as a limited liability partnership after the effective date of this code is governed by Subchapter J, Chapter 152. (e) Except as provided by Subsection (b), on or after the effective date of this code, Subchapter K, Chapter 152, applies to the registration of a foreign limited liability partnership registered under prior law. SECTION 101. The heading to Section 402.004, Business Organizations Code, is amended to read as follows: Sec. 402.004. EARLY ADOPTION OF CODE BY REGISTERED FOREIGN FILING ENTITY. SECTION 102. Section 402.005, Business Organizations Code, is amended to read as follows: Sec. 402.005. APPLICABILITY TO EXISTING ENTITIES [ON MANDATORY APPLICATION DATE]. (a) On or after January 1, 2010, if a domestic [filing] entity formed before January 1, 2006, [the effective date of this code] or a foreign filing entity registered with the secretary of state to transact business in this state before January 1, 2006, [the effective date of this code] has not taken the actions specified by Section 402.003(a) or 402.004 to elect to adopt this code: (1) this code applies to the entity and all actions taken by the managerial officials, owners, or members of the entity, except as otherwise expressly provided by this title; (2) if the entity is a domestic or foreign filing entity, the entity is not considered to have failed to comply with this code if the entity's certificate of formation or application for registration, as appropriate, does not comply with this code; (3) if the entity is a domestic filing entity, the entity shall conform its certificate of formation to the requirements of this code when it next files an amendment to its certificate of formation; and (4) if the entity is a foreign filing entity, the entity shall conform its application for registration to the requirements of this code when it next files an amendment to its application for registration. (b) On or after January 1, 2010, and to the extent provided in Subchapter A, Chapter 23, this code applies to a corporation created under a special statute of this state outside this code before January 1, 2006. The corporation, if its certificate of formation, or equivalent governing document, is filed with the secretary of state, may elect for this code to apply to the corporation at any time on or after January 1, 2006, and prior to January 1, 2010, to the extent provided in Subchapter A, Chapter 23, by filing a statement and taking other actions in a manner similar to a domestic filing entity under Section 402.003. SECTION 103. Section 402.006, Business Organizations Code, is amended to read as follows: Sec. 402.006. APPLICABILITY TO CERTAIN ACTS, CONTRACTS, AND TRANSACTIONS. [(a)] Except as otherwise expressly provided by this title, all of the provisions of this code govern acts, contracts, or other transactions by an entity subject to this code or its managerial officials, owners, or members that occur on or after the mandatory application date. The prior law governs the acts, contracts, or transactions of the entity or its managerial officials, owners, or members that occur before the mandatory application date. [(b) No requirement under Subchapter E, Chapter 3, with respect to matters to be set forth on certificates evidencing ownership interests of partnerships shall apply to or affect certificates outstanding when the requirement first becomes applicable to the certificates, but the requirement applies to all subsequently issued certificates whether in connection with an original issue of ownership interests, a transfer of ownership interests, or otherwise.] SECTION 104. Section 402.007, Business Organizations Code, is amended to read as follows: Sec. 402.007. INDEMNIFICATION. Chapter 8 governs any proposed indemnification by a domestic entity after the mandatory application date, regardless of whether the events on which the indemnification is based occurred before or after the mandatory application date. In a case in which indemnification is permitted but not required under Chapter 8, a provision [A statement] relating to indemnification contained in the governing documents of a domestic entity on the mandatory application date that would otherwise have the effect of limiting the nature or type of indemnification permitted by Chapter 8 may not be construed after the mandatory application date as limiting the indemnification authorized by Chapter 8 unless the provision is intended to limit or restrict permissive indemnification under applicable law [it expressly states that is the intent]. SECTION 105. Section 402.013, Business Organizations Code, is amended to read as follows: Sec. 402.013. REINSTATEMENT OF ENTITIES CANCELED, REVOKED, INVOLUNTARILY DISSOLVED, SUSPENDED, OR FORFEITED UNDER [SUSPENSION FOR NONFILING OF REQUIRED REPORTS OR PAYMENT OF TAXES; APPLICABILITY OF] PRIOR LAW. (a) On or after January 1, 2006, and before January 1, 2010, [If the rights, privileges, and powers of] a domestic filing entity whose certificate of formation or equivalent governing document has been canceled, revoked, involuntarily dissolved, [have been] suspended, or forfeited [and are still suspended immediately before the mandatory application date] under [the] prior law may reinstate its certificate of formation or equivalent governing document in accordance with: (1) prior law; or (2) [,] this code if it also complies with Section 402.003 [applies to the entity on the mandatory application date]. (b) On or after January 1, 2006, and before January 1, 2010, a foreign filing entity whose registration to do business has been canceled, revoked, involuntarily dissolved, suspended, or forfeited under prior law may reinstate its registration in accordance with: (1) prior law; or (2) this code if it also complies with Section 402.004. (c) If the certificate of formation [rights, privileges, and powers] of a domestic filing entity or the registration to do business of a foreign filing entity is forfeited [have been suspended and are still suspended] under the Tax Code, the entity must revive the certificate of formation or registration in accordance with [immediately before the mandatory application date, the suspension continues to apply to the entity until the rights, privileges, and powers are restored by the secretary of state under] that code. SECTION 106. Section 9.005, Business Organizations Code, as enacted by Chapter 182, Acts of the 78th Legislature, Regular Session, 2003, is repealed. SECTION 107. This Act takes effect January 1, 2006. ______________________________ ______________________________ President of the Senate Speaker of the House I certify that H.B. No. 1319 was passed by the House on March 30, 2005, by a non-record vote. ______________________________ Chief Clerk of the House I certify that H.B. No. 1319 was passed by the Senate on May 3, 2005, by the following vote: Yeas 31, Nays 0. ______________________________ Secretary of the Senate APPROVED: _____________________ Date _____________________ Governor