86R27909 TSR-D
 
  By: Shine, Guillen, Raney H.B. No. 1198
 
  Substitute the following for H.B. No. 1198:
 
  By:  Holland C.S.H.B. No. 1198
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to companies in which employees have ownership interests
  through employee stock ownership plans.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 301.004, Business Organizations Code, is
  amended to read as follows:
         Sec. 301.004.  AUTHORIZED PERSON. For purposes of this
  title, a person is an authorized person with respect to:
               (1)  a professional association if the person is a
  professional individual; [and]
               (2)  a [professional corporation or a] professional
  limited liability company if the person is a professional
  individual or professional organization; and
               (3)  a professional corporation if the person is:
                     (A)  a professional individual;
                     (B)  a professional organization; or
                     (C)  an employee stock ownership plan, as
  described by Section 303.0015, established by the corporation.
         SECTION 2.  Chapter 303, Business Organizations Code, is
  amended by adding Section 303.0015 to read as follows:
         Sec. 303.0015.  AUTHORIZED PERSON. For purposes of this
  chapter, an employee stock ownership plan, as defined by Section
  4975(e) of the Internal Revenue Code, established by a professional
  corporation, is an authorized person if:
               (1)  all of the voting trustees of the plan are
  professional individuals who are licensed to provide at least one
  category of the professional services described in the
  corporation's certificate of formation; and
               (2)  the ownership interests in the plan are not
  directly issued to any person other than the plan trust or a
  professional individual licensed to provide at least one category
  of the professional services described in the corporation's
  certificate of formation.
         SECTION 3.  Chapter 481, Government Code, is amended by
  adding Subchapter CC to read as follows:
  SUBCHAPTER CC. EMPLOYEE OWNERSHIP ASSISTANCE OFFICE
         Sec. 481.451.  ESTABLISHMENT OF EMPLOYEE OWNERSHIP
  ASSISTANCE OFFICE. The employee ownership assistance office is an
  office within the Texas Economic Development and Tourism Office.
         Sec. 481.452.  DUTIES. (a) The employee ownership
  assistance office shall establish and administer for businesses in
  this state:
               (1)  an outreach and information dissemination program
  to foster increased awareness of employee stock ownership plans;
  and
               (2)  a technical assistance program to assist
  businesses in determining the feasibility of establishing an
  employee stock ownership plan.
         (b)  The employee ownership assistance office shall make
  available to businesses in this state information relating to
  obtaining assistance under the programs established under
  Subsection (a).
         SECTION 4.  Subchapter H, Chapter 2155, Government Code, is
  amended by adding Section 2155.454 to read as follows:
         Sec. 2155.454.  PREFERENCE TO TEXAS EMPLOYEE-OWNED
  COMPANIES. (a) In this section, "employee-owned company" means a
  corporation in which a majority of the stock is held by an employee
  stock ownership plan, as defined by Section 4975(e), Internal
  Revenue Code of 1986.
         (b)  The comptroller and all state agencies purchasing goods
  or services may give preference to an employee-owned company
  domiciled in this state if other considerations are equal.
         SECTION 5.  Section 2161.001, Government Code, is amended by
  amending Subdivision (2) and adding Subdivisions (3-a) and (3-b) to
  read as follows:
               (2)  "Historically underutilized business" means an
  entity with its principal place of business in this state that is:
                     (A)  a corporation formed for the purpose of
  making a profit in which 51 percent or more of all classes of the
  shares of stock or other equitable securities are owned by one or
  more economically disadvantaged persons who have a proportionate
  interest and actively participate in the corporation's control,
  operation, and management;
                     (B)  a sole proprietorship created for the purpose
  of making a profit that is completely owned, operated, and
  controlled by an economically disadvantaged person;
                     (C)  a partnership formed for the purpose of
  making a profit in which 51 percent or more of the assets and
  interest in the partnership are owned by one or more economically
  disadvantaged persons who have a proportionate interest and
  actively participate in the partnership's control, operation, and
  management;
                     (D)  a joint venture in which each entity in the
  venture is a historically underutilized business, as determined
  under another paragraph of this subdivision; [or]
                     (E)  a supplier contract between a historically
  underutilized business as determined under another paragraph of
  this subdivision and a prime contractor under which the
  historically underutilized business is directly involved in the
  manufacture or distribution of the goods or otherwise warehouses
  and ships the goods; or
                     (F)  an employee-owned company in which 51 percent
  or more of the ownership interests in the company, including
  interests determined under Section 2161.0013, are held by
  economically disadvantaged persons who have a proportionate
  interest and actively participate in the company's control,
  operation, and management, including as voting trustees of an
  employee stock ownership plan of the company.
               (3-a)  "Employee-owned company" has the meaning
  assigned by Section 2155.454.
               (3-b)  "Employee stock ownership plan" has the meaning
  assigned by Section 4975(e), Internal Revenue Code of 1986.
         SECTION 6.  Subchapter A, Chapter 2161, Government Code, is
  amended by adding Section 2161.0013 to read as follows:
         Sec. 2161.0013.  DETERMINING OWNERSHIP INTEREST IN
  EMPLOYEE-OWNED COMPANY. For purposes of determining the ownership
  interests in an employee-owned company, the allocated shares of
  stock in the account of a plan participant of an employee stock
  ownership plan of the company are considered to be owned by the plan
  participant.
         SECTION 7.  Subchapter B, Chapter 2161, Government Code, is
  amended by adding Section 2161.0611 to read as follows:
         Sec. 2161.0611.  RETENTION OF STATUS AS HISTORICALLY
  UNDERUTILIZED BUSINESS. If a business described by Section
  2161.001(2)(A), (B), (C), or (D) is certified as a historically
  underutilized business and the business establishes an employee
  stock ownership plan that causes the business to lose status as a
  historically underutilized business or eligibility for
  recertification as a historically underutilized business, the
  business retains that status or eligibility for a period of not more
  than five years after the date the business establishes the plan.
         SECTION 8.  Section 2161.125, Government Code, is amended to
  read as follows:
         Sec. 2161.125.  CATEGORIZATION OF HISTORICALLY
  UNDERUTILIZED BUSINESSES. The comptroller, in cooperation with
  each state agency reporting under this subchapter, shall categorize
  each historically underutilized business included in a report under
  this subchapter by:
               (1)  sex, race, and ethnicity; and
               (2)  [by] whether the business qualifies as a
  historically underutilized business:
                     (A)  because it is owned or owned, operated, and
  controlled, as applicable, wholly or partly by one or more veterans
  as defined by 38 U.S.C. Section 101(2) who have suffered at least a
  20 percent service-connected disability as defined by 38 U.S.C.
  Section 101(16); or
                     (B)  under Section 2161.001(2)(F).
         SECTION 9.  Subchapter Z, Chapter 271, Local Government
  Code, is amended by adding Section 271.909 to read as follows:
         Sec. 271.909.  PREFERENCE TO TEXAS EMPLOYEE-OWNED
  COMPANIES. (a) In this section:
               (1)  "Employee-owned company" has the meaning assigned
  by Section 2155.454, Government Code.
               (2)  "Local government" means a municipality, a county,
  or a special district.
         (b)  In purchasing goods or services, a local government may
  give preference to an employee-owned company domiciled in this
  state if other considerations are equal.
         SECTION 10.  This Act takes effect September 1, 2019.