By: Giddings (Senate Sponsor - Fraser) H.B. No. 1319
(In the Senate - Received from the House March 31, 2005;
April 5, 2005, read first time and referred to Committee on
Business and Commerce; April 25, 2005, reported favorably by the
following vote: Yeas 7, Nays 0; April 25, 2005, sent to printer.)
A BILL TO BE ENTITLED
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.
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