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INTRODUCED
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HOUSE COMMITTEE
SUBSTITUTE
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SECTION 1. Section 4.152,
Business Organizations Code, is amended.
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SECTION 1. Same as introduced
version.
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SECTION 2. Section 4.159,
Business Organizations Code, is amended.
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SECTION 2. Same as introduced
version.
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SECTION 3. Subchapter D,
Chapter 6, Business Organizations Code, is amended.
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SECTION 3. Same as introduced
version.
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SECTION 4. Section 10.010,
Business Organizations Code, is amended.
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SECTION 4. Same as introduced
version.
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SECTION 5. Section 10.108,
Business Organizations Code, is amended.
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SECTION 5. Same as introduced
version.
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SECTION 6. Section 21.157,
Business Organizations Code, is amended.
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SECTION 6. Same as introduced
version.
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SECTION 7. Section
21.160(d), Business Organizations Code, is amended.
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SECTION 7. Same as introduced
version.
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SECTION 8. Section
21.168(c), Business Organizations Code, is amended.
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SECTION 8. Same as introduced
version.
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SECTION 9. Section
21.218(b), Business Organizations Code, is amended.
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SECTION 9. Same as introduced
version.
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SECTION 10. Section 21.302,
Business Organizations Code, is amended.
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SECTION 10. Same as
introduced version.
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SECTION 11. Section 21.414,
Business Organizations Code, is amended.
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SECTION 11. Same as
introduced version.
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SECTION 12. Section
21.458(a), Business Organizations Code, is amended to read as follows:
(a) Separate voting by a
class or series of shares of a corporation is required for approval of a
plan of merger or conversion if:
(1) that class or series
of shares is, under the plan of merger or conversion, to be converted into
or exchanged for other securities, interests, obligations, rights to
acquire shares, cash, property, or any combination of the items described
by this subdivision;
(2) the plan of
merger or conversion contains a provision that would require approval by
that class or series of shares under Section 21.364 if the provision was
contained in a proposed amendment to the corporation's certificate of
formation; or
(3) [(2)] that
class or series of shares is entitled under the certificate of formation to
vote as a class or series on the plan of merger or conversion.
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SECTION 12. Section
21.458(a), Business Organizations Code, is amended to read as follows:
(a) Separate voting by a
class or series of shares of a corporation is required for approval of a
plan of merger or conversion if:
(1) that class or series
of shares is, under the plan of merger or conversion, to be converted into
or exchanged for other securities, interests, obligations, rights to
acquire shares, interests, or other securities,
cash, property, or any combination of the items described by this
subdivision;
(2) the plan of
merger or conversion contains a provision that would require approval by
that class or series of shares under Section 21.364 if the provision was contained
in a proposed amendment to the corporation's certificate of formation; or
(3) [(2)] that
class or series of shares is entitled under the certificate of formation to
vote as a class or series on the plan of merger or conversion.
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SECTION 13. Section 21.607,
Business Organizations Code, is amended.
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SECTION 13. Same as
introduced version.
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SECTION 14. Section
21.729(c), Business Organizations Code, is amended.
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SECTION 14. Same as
introduced version.
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SECTION 15. Sections
21.901(4), (5), and (8), Business Organizations Code, are amended.
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SECTION 15. Same as
introduced version.
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SECTION 16. Section 21.903,
Business Organizations Code, is amended.
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SECTION 16. Same as
introduced version.
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SECTION 17. Section 21.904,
Business Organizations Code, is amended.
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SECTION 17. Same as
introduced version.
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SECTION 18. Section 21.905,
Business Organizations Code, is amended.
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SECTION 18. Same as
introduced version.
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SECTION 19. Section 21.906,
Business Organizations Code, is amended.
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SECTION 19. Substantially
same as introduced version.
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SECTION 20. Section 21.907,
Business Organizations Code, is amended.
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SECTION 20. Same as
introduced version.
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SECTION 21. Section 21.908,
Business Organizations Code, is amended to read as follows:
Sec. 21.908. CERTIFICATE OF
VALIDATION. (a) If a [the] defective corporate act ratified
under this subchapter would have required under any other provision of the
corporate statute the filing of a filing instrument or other document with
the filing officer, the corporation[, instead of filing the filing
instrument or other document otherwise required by this code,] shall
file a certificate of validation with respect to the defective corporate
act in accordance with Chapter 4, regardless of whether a filing
instrument or other document was previously filed with respect to the
defective corporate act. The filing of another filing instrument or
document is not required.
(a-1) A separate
certificate of validation is required for each defective corporate act for
which a certificate of validation is required under this section, except
that:
(1) two or more defective
corporate acts may be included in a single certificate of validation if the
corporation filed, or to comply with the applicable provisions of this code
could have filed, a single filing instrument or other document under
another provision of this code to effect the acts;
(2) a single certificate
of validation may be filed to amend the certificate of formation of the
corporation to establish a new class or series of shares or to increase the
number of authorized shares of any class or series of shares, in order to
cure multiple previous overissues of the shares of the class or series; and
(3) a single certificate
of validation may be filed to amend the corporation's certificate of
formation to establish two or more new classes or series of shares, to
increase the number of authorized shares of two or more classes or series
of shares, or to establish one or more new classes or series of shares and
increase the number of authorized shares of one or more classes or series
of shares, in order to cure multiple previous overissues of the shares of
all the classes and series that are the subjects of the certificate of
validation.
(a-2) A certificate of validation described by Subsection
(a-1)(2) is effective as of the first overissue of the shares of the class
or series that is the subject of the certificate of validation.
(a-3) A certificate of
validation described by Subsection (a-1)(3) is effective as to each class
or series that is a subject of the certificate of validation as of the
first overissue of the shares of the class or series.
(b) The certificate of
validation must include [set forth]:
(1) each defective
corporate act that is a subject of the certificate of validation,
including:
(A) for a defective
corporate act involving the issuance of putative shares, the number and
type of putative shares issued and the date or dates on which the putative
shares were purported to have been issued;
(B) the date of the
defective corporate act; and
(C) the nature of the
failure of authorization with respect to the defective corporate act [a
copy of the resolution adopted in accordance with Sections 21.903 and
21.904, the date of adoption of the resolution by the board of directors
and, if applicable, the date of adoption by the shareholders, and a
statement that the resolution was adopted in accordance with this
subchapter];
(2) a statement that each
defective corporate act was ratified in accordance with this subchapter,
including:
(A) the date on which the
board of directors ratified each defective corporate act; and
(B) the date, if any, on
which the shareholders approved the ratification of each defective
corporate act; and
(3) as appropriate:
(A) if a filing
instrument [or document] was previously filed with a filing officer
under the corporate statute with [in] respect to [of]
the defective corporate act and no change to the filing instrument is
required to give effect to the defective corporate act as ratified in
accordance with this subchapter:
(i) the name, [the]
title, and filing date [of filing] of the previously
filed [prior] filing instrument and of any certificate of
correction to the filing instrument; and
(ii) a statement that a
copy of the previously filed filing instrument, together with [or
document and] any [articles or] certificate of correction to
the filing instrument, is attached as an exhibit to the certificate
of validation [filing instrument]; [and]
(B) if a filing
instrument was previously filed with a filing officer under the corporate
statute with respect to the defective corporate act and the filing
instrument requires any change to give effect to the defective corporate
act as ratified in accordance with this subchapter, including a change to
the date and time of the effectiveness of the filing instrument:
(i) the name, title, and
filing date of the previously filed filing instrument and of any
certificate of correction to the filing instrument;
(ii) a statement that a
filing instrument containing all the information required to be included
under the applicable provisions of this code to give effect to the ratified
defective corporate act is attached as an exhibit to the certificate of
validation; and
(iii) the date and time
that the attached filing instrument is considered to have become effective
under this subchapter; or
(C) if a filing
instrument was not previously filed with a filing officer under the
corporate statute with respect to the defective corporate act and the
defective corporate act as ratified under this subchapter would have
required under the other applicable provisions of this code the filing of a
filing instrument in accordance with Chapter 4, if the defective corporate
act had occurred when this code was in effect:
(i) a statement that a
filing instrument containing all the information required to be included
under the applicable provisions of this code to give effect to the
defective corporate act, as if the defective corporate act had occurred
when this code was in effect, is attached as an exhibit to the certificate
of validation; and
(ii) the date and time
that the attached filing instrument is considered to have become effective
under this subchapter
[(3) the provisions that
would be required under any other section of this code to be included in
the filing instrument that otherwise would have been required to be filed
with respect to the defective corporate act under this code].
(c) A filing instrument
attached to a certificate of validation under Subsection (b)(3)(B) or (b)(3)(C)
does not need to be executed separately and does not need to include any
statement required by any other provision of this code that the instrument
has been approved and adopted in accordance with that provision.
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SECTION 21. Section 21.908,
Business Organizations Code, is amended to read as follows:
Sec. 21.908. CERTIFICATE OF
VALIDATION. (a) If a [the] defective corporate act ratified
under this subchapter would have required under any other provision of the
corporate statute the filing of a filing instrument or other document with
the filing officer, the corporation[, instead of filing the filing
instrument or other document otherwise required by this code,] shall
file a certificate of validation with respect to the defective corporate
act in accordance with Chapter 4, regardless of whether a filing
instrument or other document was previously filed with respect to the
defective corporate act. The filing of another filing instrument or document
is not required.
(a-1) A separate
certificate of validation is required for each defective corporate act for
which a certificate of validation is required under this section, except
that:
(1) two or more defective
corporate acts may be included in a single certificate of validation if the
corporation filed, or to comply with the applicable provisions of this code
could have filed, a single filing instrument or other document under
another provision of this code to effect the acts;
(2) a single certificate
of validation may be filed to amend the certificate of formation of the
corporation to establish a new class or series of shares or to increase the
number of authorized shares of any class or series of shares, in order to
cure multiple previous overissues of the shares of the class or series; and
(3) a single certificate
of validation may be filed to amend the corporation's certificate of
formation to establish two or more new classes or series of shares, to
increase the number of authorized shares of two or more classes or series
of shares, or to establish one or more new classes or series of shares and
increase the number of authorized shares of one or more classes or series
of shares, in order to cure multiple previous overissues of the shares of
all the classes and series that are the subjects of the certificate of
validation.
(a-2) An amendment effected by a certificate
of validation described by Subsection (a-1)(2)
or (3) is effective as to each class or series that is a subject of
the certificate of validation as of the first overissue of the shares of
the class or series.
(b) The certificate of
validation must include [set forth]:
(1) each defective
corporate act that is a subject of the certificate of validation,
including:
(A) for a defective
corporate act involving the issuance of putative shares, the number and
type of putative shares issued and the date or dates on which the putative
shares were purported to have been issued;
(B) the date of the
defective corporate act; and
(C) the nature of the
failure of authorization with respect to the defective corporate act [a
copy of the resolution adopted in accordance with Sections 21.903 and
21.904, the date of adoption of the resolution by the board of directors
and, if applicable, the date of adoption by the shareholders, and a
statement that the resolution was adopted in accordance with this
subchapter];
(2) a statement that each
defective corporate act was ratified in accordance with this subchapter,
including:
(A) the date on which the
board of directors ratified each defective corporate act; and
(B) the date, if any, on
which the shareholders approved the ratification of each defective
corporate act; and
(3) as appropriate:
(A) if a filing
instrument [or document] was previously filed with a filing officer
under the corporate statute with [in] respect to [of]
the defective corporate act and no change to the filing instrument is
required to give effect to the defective corporate act as ratified in
accordance with this subchapter:
(i) the name, [the]
title, and filing date [of filing] of the previously
filed [prior] filing instrument and of any certificate of
correction to the filing instrument; and
(ii) a statement that a
copy of the previously filed filing instrument, together with [or
document and] any [articles or] certificate of correction to
the filing instrument, is attached as an exhibit to the certificate
of validation [filing instrument]; [and]
(B) if a filing
instrument was previously filed with a filing officer under the corporate
statute with respect to the defective corporate act and the filing
instrument requires any change to give effect to the defective corporate
act as ratified in accordance with this subchapter, including a change to
the date and time of the effectiveness of the filing instrument:
(i) the name, title, and
filing date of the previously filed filing instrument and of any
certificate of correction to the filing instrument;
(ii) a statement that a
filing instrument containing all the information required to be included
under the applicable provisions of this code to give effect to the ratified
defective corporate act is attached as an exhibit to the certificate of
validation; and
(iii) the date and time
that the attached filing instrument is considered to have become effective
under this subchapter; or
(C) if a filing
instrument was not previously filed with a filing officer under the
corporate statute with respect to the defective corporate act and the
defective corporate act as ratified under this subchapter would have
required under the other applicable provisions of this code the filing of a
filing instrument in accordance with Chapter 4, if the defective corporate
act had occurred when this code was in effect:
(i) a statement that a
filing instrument containing all the information required to be included
under the applicable provisions of this code to give effect to the
defective corporate act, as if the defective corporate act had occurred
when this code was in effect, is attached as an exhibit to the certificate
of validation; and
(ii) the date and time
that the attached filing instrument is considered to have become effective
under this subchapter
[(3) the provisions that
would be required under any other section of this code to be included in
the filing instrument that otherwise would have been required to be filed
with respect to the defective corporate act under this code].
(c) A filing instrument
attached to a certificate of validation under Subsection (b)(3)(B) or (C)
does not need to be executed separately and does not need to include any
statement required by any other provision of this code that the instrument
has been approved and adopted in accordance with that provision.
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SECTION 22. Section 21.909,
Business Organizations Code, is amended.
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SECTION 22. Same as
introduced version.
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SECTION 23. Section 21.910,
Business Organizations Code, is amended.
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SECTION 23. Same as
introduced version.
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SECTION 24. The heading to
Section 21.911, Business Organizations Code, is amended.
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SECTION 24. Same as
introduced version.
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SECTION 25. Section 21.911,
Business Organizations Code, is amended by amending Subsections (a), (d),
(e), and (f) and adding Subsection (g) to read as follows:
(a) For each defective
corporate act ratified by the board of directors under Sections 21.903 and
21.904, notice [Notice] of the ratification [adoption
of a resolution under this subchapter] shall be given promptly to:
(1) each holder of valid
shares and putative shares, regardless of whether the shares are voting or
nonvoting, as of the date the board of directors adopted the resolutions
ratifying the defective corporate act [resolution]; or
(2) each holder of valid shares
and putative shares, regardless of whether the shares are voting or
nonvoting, as of a date not later than the 60th day after the date of
adoption [on which the resolution is adopted], as established by
the board of directors.
(d) The notice must contain:
(1) copies [a copy]
of the resolutions adopted by the board of directors under Section
21.903 or the information contained in those resolutions [resolution];
and
(2) a statement that, on
ratification of the defective corporate act or putative shares made in
accordance with this subchapter, the holder's rights to challenge the
defective corporate act or putative shares are limited to an action
claiming [the following must be brought not later than the 120th day
of the validation effective time:
[(A) any claim that the
defective corporate act or putative shares ratified under this subchapter
are void or voidable due to the identified failure of authorization; or
[(B) any claim] that a
[the district] court of appropriate jurisdiction, in its discretion,
should declare:
(A) that the [a]
ratification [made in accordance with this subchapter] not take
effect or that it take effect only on certain conditions, if the action
is filed not later than the 120th day after the later of the applicable
validation effective time or the time at which the notice required by this
section is given; or
(B) that the ratification
was not accomplished in accordance with this subchapter.
(e) Notwithstanding
Subsections (a)-(d):
(1) [,] notice
is not required to be given under this section to a person if notice
of the ratification of the defective corporate act [resolution]
is given to that person in accordance with Section 21.906; and
(2) for a corporation
that has a class of stock listed on a national securities exchange, the
notice required by this section may be considered given if the information
contained in the notice is disclosed in a document publicly filed by the
corporation with the Securities and Exchange Commission under Section 13,
14, or 15(d), Securities Exchange Act of 1934 (15 U.S.C. Section 78m, 78n,
or 78o(d)), and any rules promulgated under that Act.
(f) For purposes of Sections
21.905, [Section] 21.906, and 21.907 and this section,
notice to holders of putative shares and notice to holders of valid shares
and putative shares as of the time of the defective corporate act shall be
treated as notice to holders of valid shares for purposes of Sections
6.051, 6.052, 6.053, 6.201, 6.202, 6.203, 6.204, 6.205, 21.353, and
21.3531.
(g) If the ratification
of a defective corporate act has been approved by shareholders acting under
Section 6.202, the notice required by this section may be included in any
notice required to be given under Section 6.202(d) and, if included:
(1) shall be sent to the
shareholders entitled to the notice under Section 6.202(d); and
(2) is not required to be
sent to shareholders who signed a consent described by Section 6.202(b).
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SECTION 25. Section 21.911,
Business Organizations Code, is amended by amending Subsections (a), (d),
(e), and (f) and adding Subsection (g) to read as follows:
(a) For each defective
corporate act ratified by the board of directors under Sections 21.903 and
21.904, notice [Notice] of the ratification [adoption
of a resolution under this subchapter] shall be given promptly to:
(1) each holder of valid
shares and putative shares, regardless of whether the shares are voting or
nonvoting, as of the date the board of directors adopted the resolutions
ratifying the defective corporate act [resolution]; or
(2) each holder of valid
shares and putative shares, regardless of whether the shares are voting or
nonvoting, as of a date not later than the 60th day after the date of
adoption [on which the resolution is adopted], as established by
the board of directors.
(d) The notice must contain:
(1) copies [a copy]
of the resolutions adopted by the board of directors under Section 21.903
or the information required by Sections 21.903(a)(1)-(5) [resolution];
and
(2) a statement that, on
ratification of the defective corporate act or putative shares made in
accordance with this subchapter, the holder's rights to challenge the
defective corporate act or putative shares are limited to an action
claiming [the following must be brought not later than the 120th day
of the validation effective time:
[(A) any claim that the
defective corporate act or putative shares ratified under this subchapter
are void or voidable due to the identified failure of authorization; or
[(B) any claim] that a
[the district] court of appropriate jurisdiction, in its
discretion, should declare:
(A) that the [a]
ratification [made in accordance with this subchapter] not take
effect or that it take effect only on certain conditions, if the action
is filed not later than the 120th day after the later of the applicable
validation effective time or the time at which the notice required by this
section is given; or
(B) that the ratification
was not accomplished in accordance with this subchapter.
(e) Notwithstanding
Subsections (a)-(d):
(1) [,] notice
is not required to be given under this section to a person if notice
of the ratification of the defective corporate act [resolution]
is given to that person in accordance with Section 21.906; and
(2) for a corporation
that has a class of stock listed on a national securities exchange, the
notice required by this section may be considered given if the information
contained in the notice is disclosed in a document publicly filed by the
corporation with the Securities and Exchange Commission under Section 13,
14, or 15(d), Securities Exchange Act of 1934 (15 U.S.C. Section 78m, 78n,
or 78o(d)), and any rules promulgated under that Act.
(f) For purposes of Sections
21.905, [Section] 21.906, and 21.907 and this section,
notice to holders of putative shares and notice to holders of valid shares
and putative shares as of the time of the defective corporate act shall be
treated as notice to holders of valid shares for purposes of Sections
6.051, 6.052, 6.053, 6.201, 6.202, 6.203, 6.204, 6.205, 21.353, and 21.3531.
(g) If the ratification
of a defective corporate act has been approved by shareholders acting under
Section 6.202, the notice required by this section may be included in any
notice required to be given under Section 6.202(d) and, if included:
(1) shall be sent to the
shareholders entitled to the notice under Section 6.202(d) and all other holders of valid shares and putative
shares otherwise entitled to the notice under Subsection (a) of this
section; and
(2) is not required to be
sent to shareholders or holders of valid
shares or putative shares who signed a consent described by Section
6.202(b).
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SECTION 26. Section
21.913(a), Business Organizations Code, is amended.
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SECTION 26. Same as
introduced version.
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SECTION 27. Section 21.917,
Business Organizations Code, is amended.
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SECTION 27. Same as
introduced version.
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SECTION 28. Section
22.154(a), Business Organizations Code, is amended.
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SECTION 28. Same as
introduced version.
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SECTION 29. Section 22.214,
Business Organizations Code, is amended.
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SECTION 29. Same as
introduced version.
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SECTION 30. Section 22.227,
Business Organizations Code, is amended.
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SECTION 30. Same as
introduced version.
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SECTION 31. Section 200.251,
Business Organizations Code, is amended.
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SECTION 31. Same as introduced
version.
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SECTION 32. Sections
251.354(a) and (b), Business Organizations Code, are amended.
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SECTION 32. Same as
introduced version.
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SECTION 33. Section
252.017(b), Business Organizations Code, is amended.
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SECTION 33. Same as
introduced version.
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SECTION 34. Chapter 252,
Business Organizations Code, is amended.
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SECTION 34. Same as
introduced version.
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SECTION 35. Chapter 402,
Business Organizations Code, is amended.
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SECTION 35. Same as
introduced version.
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SECTION 36. This Act takes
effect September 1, 2017.
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SECTION 36. Same as
introduced version.
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