82R1154 JXC-F

By: King of Zavala H.B. No. 310

A BILL TO BE ENTITLED

AN ACT

relating to election procedures and qualifications of members of

boards of directors for water supply or sewer service corporations.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter A, Chapter 67, Water Code, is amended

by adding Sections 67.0051, 67.0052, 67.0053, and 67.0054 to read

as follows:

Sec. 67.0051. QUALIFICATIONS FOR ELECTION OR APPOINTMENT AS

DIRECTOR. (a) To be qualified for election or appointment as a

director, a person must be:

(1) 18 years of age or older on the first day of the

term to be filled at the election or on the date of appointment, as

applicable; and

(2) a member or shareholder of the corporation.

(b) In addition to the qualifications prescribed by

Subsection (a), a person is not qualified to serve as a director if

the person:

(1) has been determined by a final judgment of a court

exercising probate jurisdiction to be:

(A) totally mentally incapacitated; or

(B) partially mentally incapacitated without the

right to vote; or

(2) has been finally convicted of a felony from which

the person has not been pardoned or otherwise released from the

resulting disabilities.

(c) If the board determines that a person serving as a

director does not have the qualifications prescribed by Subsections

(a) and (b), the board shall, not later than the 60th day after the

date the board makes that determination, remove the director and

fill the vacancy by appointing a person who has the qualifications

prescribed by those subsections.

Sec. 67.0052. BALLOT APPLICATION. (a) To be listed on the

ballot as a candidate for a director's position, a person must file

an application with the corporation that includes:

(1) the director's position sought, including any

position number or other distinguishing number;

(2) a petition signed by the lesser of 25 members or

shareholders or five percent of the members or shareholders,

requesting that the person's name be placed on the ballot as a

candidate for that position;

(3) the person's written consent to serve, if elected;

(4) biographical information about the person; and

(5) a statement of the person's qualifications,

including a statement that the person has the qualifications

prescribed by Section 67.0051.

(b) The application must be filed with the corporation not

later than the 45th day before the date of the annual meeting.

(c) The corporation shall make available director candidate

application forms at the corporation's main office and shall

provide application forms by mail or electronically on request.

Sec. 67.0053. BALLOT. (a) Not later than the 30th day

before the date of an annual meeting, the corporation shall mail to

each member or shareholder of record:

(1) written notice of the meeting;

(2) the election ballot; and

(3) a statement of each candidate's qualifications,

including biographical information as provided in each candidate's

application.

(b) The election ballot must include:

(1) the number of directors to be elected; and

(2) the names of the candidates for each position.

Sec. 67.0054. ELECTION PROCEDURES. (a) A member or

shareholder may vote:

(1) in person at the annual meeting;

(2) by mailing a completed ballot to the office of the

independent election auditor selected under Section 67.007(d) or to

the corporation's main office, which ballot must be received by the

corporation not later than noon on the business day before the date

of the annual meeting; or

(3) by delivering a completed ballot to the office of

the independent election auditor or to the corporation's main

office not later than noon on the business day before the date of

the annual meeting.

(b) The independent election auditor shall receive and

count the ballots before the annual meeting is adjourned.

(c) For each director's position, the candidate who

receives the highest number of votes is elected.

(d) If two or more candidates for the same position tie for

the highest number of votes for that position, those candidates

shall draw lots to determine who is elected.

(e) The independent election auditor shall provide the

board with a written report of the election results.

(f) The board may adopt necessary rules or bylaws to

implement this section, including rules or bylaws to ensure the

fairness, integrity, and openness of the voting process.

SECTION 2. Section 67.007, Water Code, is amended by adding

Subsections (a-1) and (d) and amending Subsections (b) and (c) to

read as follows:

(a-1) A quorum for the transaction of business at a meeting

of the members or shareholders is a majority of the members and

shareholders present. In determining whether a quorum is present,

all members and shareholders who mailed or delivered ballots to the

independent election auditor or the corporation on a matter

submitted to a vote at the meeting are counted as present.

(b) The board shall adopt written procedures for conducting

an annual or special meeting of the members or shareholders in

accordance with this section and Sections 67.0052, 67.0053, and

67.0054. The procedures [, which] shall include the following:

(1) notification to eligible members or shareholders

of the proposed agenda, location, and date of the meeting;

(2) director [establishment of a quorum consisting of

proxies and the votes of members or shareholders present;

[(3) nomination and] election procedures, including

candidate application procedures;

(3) [(4)] approval of the [proxy and] ballot form to

be used; and

(4) [(5)] validation of eligible voters, [proxies,]

ballots, and election results.

(c) The board shall adopt an official [proxy and] ballot

form to be used in conducting the business of the corporation at any

annual or special meeting. No other [proxy or] ballot form will be

valid. Ballots [Proxies and ballots] from members or shareholders

are confidential and are exempted from disclosure by the

corporation until after the date of the relevant election.

(d) The board shall select an independent election auditor

not later than the 30th day before the scheduled date of the annual

meeting. The independent election auditor is not required to be an

experienced election judge or auditor and may serve as an unpaid

volunteer. At the time of selection and while serving in the

capacity of an independent election auditor, the independent

election auditor may not be associated with the corporation as:

(1) an employee;

(2) a director or candidate for director; or

(3) an independent contractor engaged by the

corporation as part of the corporation's regular course of

business.

SECTION 3. The changes in law made by this Act in the

qualifications of directors of a water supply or sewer service

corporation do not affect the entitlement of a director serving on

the board of directors immediately before the effective date of

this Act to continue to carry out the board's functions for the

remainder of the director's term. The changes in law apply only to

a director elected or appointed on or after the effective date of

this Act. This Act does not prohibit a person who is a member of the

board of directors on the effective date of this Act from being

reelected or reappointed to the board of directors if the person has

the qualifications required for a director under Section 67.0051,

Water Code, as added by this Act.

SECTION 4. This Act takes effect September 1, 2011.