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A BILL TO BE ENTITLED
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AN ACT
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relating to the formation, governance, and internal management of |
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domestic entities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1.002(55-a), Business Organizations |
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Code, is amended to read as follows: |
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(55-a) "National securities exchange" means: |
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(A) an exchange registered as a national |
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securities exchange under Section 6, Securities Exchange Act of |
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1934 (15 U.S.C. Section 78f); or |
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(B) a stock exchange that: |
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(i) has its principal office in this state; |
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and |
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(ii) has received approval by the |
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securities commissioner under Subchapter C, Chapter 4005, |
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Government Code. |
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SECTION 2. Subchapter B, Chapter 1, Business Organizations |
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Code, is amended by adding Section 1.056 to read as follows: |
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Sec. 1.056. LAWS GOVERNING FORMATION, INTERNAL AFFAIRS, AND |
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GOVERNANCE OF DOMESTIC ENTITY. The managerial officials of a |
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domestic entity, in exercising their powers with respect to the |
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domestic entity, may consider the laws and judicial decisions of |
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other states and the practices observed by entities formed in those |
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other states. The failure or refusal of a managerial official to |
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consider, or to conform the exercise of the managerial official's |
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powers to, the laws, judicial decisions, or practices of another |
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state does not constitute or imply a breach of this code or of any |
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duty existing under the laws of this state. |
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SECTION 3. Section 2.115(b), Business Organizations Code, |
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is amended to read as follows: |
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(b) The governing documents of a domestic entity [may |
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require], consistent with applicable state and federal |
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jurisdictional requirements, may require: |
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(1) that any internal entity claims shall be brought |
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only in a court in this state; and |
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(2) that one or more courts in this state having |
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jurisdiction shall serve as the exclusive forum and venue for any |
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internal entity claims. |
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SECTION 4. Subchapter B, Chapter 2, Business Organizations |
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Code, is amended by adding Section 2.116 to read as follows: |
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Sec. 2.116. WAIVER OF TRIAL BY JURY. (a) In this section, |
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"internal entity claim" has the meaning assigned by Section 2.115. |
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(b) The governing documents of a domestic entity may contain |
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a waiver of the right to a jury trial concerning any internal entity |
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claim. |
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(c) In a lawsuit asserting an internal entity claim, a |
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waiver of the right to a jury trial contained in the governing |
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documents of a domestic entity is enforceable, regardless of |
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whether the applicable governing document is signed by the members, |
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owners, officers, or governing persons. |
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(d) A person asserting an internal entity claim is |
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considered to have been informed of the waiver of the right to a |
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|
jury trial contained in the governing documents and to have |
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knowingly waived the right in the action if the person: |
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(1) voted for or affirmatively ratified the governing |
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document containing the waiver; or |
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(2) acquired an equity security of the domestic entity |
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or a predecessor to the entity at a time at which the waiver was |
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included in the governing documents of the domestic entity or a |
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predecessor to the entity, as applicable. |
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(e) Nothing in this section prevents an entity from showing |
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that a person asserting an internal entity claim knowingly and |
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informedly waived the right to a jury trial by any evidence |
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satisfactory to the court having jurisdiction, including by the |
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person's consent or acquiescence to the waiver contained in the |
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governing documents. |
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SECTION 5. Section 21.218, Business Organizations Code, is |
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amended by amending Subsection (b) and adding Subsections (b-2) and |
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(b-3) to read as follows: |
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(b) On written demand stating a proper purpose, a holder of |
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shares of a corporation for at least six months immediately |
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preceding the holder's demand, or a holder of at least five percent |
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of all of the outstanding shares of a corporation, is entitled to |
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examine and copy, at a reasonable time at the corporation's |
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principal place of business or other location approved by the |
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|
corporation and the holder, the corporation's books, records of |
|
|
account, minutes, share transfer records, and other records, |
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|
whether in written or other tangible form, if the records are |
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|
[record is] reasonably related to and appropriate to examine and |
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|
copy for that proper purpose. For purposes of this subsection, the |
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records of the corporation shall not include e-mails, text messages |
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or similar electronic communications, or information from social |
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media accounts unless the particular e-mail, communication, or |
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social media information effectuates an action by the corporation. |
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(b-2) This subsection applies only to a corporation that has |
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a class or series of voting shares listed on a national securities |
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exchange or that has made an affirmative election to be governed by |
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Section 21.419. For purposes of Subsection (b), a written demand |
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|
shall not be for a proper purpose if the corporation reasonably |
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|
determines that the demand is in connection with: |
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(1) an active or pending derivative proceeding in the |
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right of the corporation under Subchapter L that is or is expected |
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to be instituted or maintained by the holder or the holder's |
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affiliate; or |
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(2) an active or pending civil lawsuit to which the |
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corporation, or its affiliate, and the holder, or the holder's |
|
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affiliate, are or are expected to be adversarial named parties. |
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(b-3) Subsection (b-2) does not impair any rights of: |
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(1) the holder or the holder's affiliate to obtain |
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discovery of records from the corporation in: |
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(A) a civil lawsuit described by Subsection |
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|
(b-2)(2); or |
|
|
(B) the derivative proceeding subject to Section |
|
|
21.556; or |
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(2) the holder to obtain a court order to compel |
|
|
production of records of the corporation for examination by the |
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|
holder as provided by Subsection (c). |
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|
SECTION 6. Section 21.416, Business Organizations Code, is |
|
|
amended by adding Subsection (g) to read as follows: |
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|
(g) This subsection applies only to a corporation that has a |
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|
class or series of voting shares listed on a national securities |
|
|
exchange or that has made an affirmative election to be governed by |
|
|
Section 21.419. The board of directors may adopt resolutions that |
|
|
authorize the formation of a committee of independent and |
|
|
disinterested directors to review and approve transactions, |
|
|
whether or not contemplated at the time of the committee's |
|
|
formation or a petition under Section 21.4161, involving the |
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|
corporation or any of its subsidiaries and a controlling |
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|
shareholder, director, or officer. |
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SECTION 7. Subchapter I, Chapter 21, Business Organizations |
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|
Code, is amended by adding Section 21.4161 to read as follows: |
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|
Sec. 21.4161. DETERMINATION OF INDEPENDENT AND |
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|
DISINTERESTED DIRECTORS. (a) A corporation that adopts a |
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|
resolution to authorize the formation of a committee of independent |
|
|
and disinterested directors under Section 21.416(g) may petition a |
|
|
court having jurisdiction to hold an evidentiary hearing to |
|
|
determine whether the directors appointed to the committee are |
|
|
independent and disinterested with respect to any transactions |
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|
involving the corporation or any of its subsidiaries and a |
|
|
controlling shareholder, director, or officer. |
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|
(b) A petition under Subsection (a) shall be filed in the |
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|
business court unless the corporation's principal place of business |
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|
in this state is located in a county not contained within an |
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|
operating division of the business court, in which case the |
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petition may be filed in a district court in the county in which the |
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|
corporation's principal place of business in this state is located. |
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(c) In the petition, the corporation shall designate legal |
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|
counsel to act on behalf of the corporation and its shareholders, |
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|
other than the controlling shareholder, director, or officer |
|
|
involved in the transaction. |
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(d) The corporation shall give notice to the corporation's |
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|
shareholders that: |
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(1) a petition has been filed under this section; |
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|
(2) identifies the court in which the petition is |
|
|
filed and provides the case number for the proceeding; |
|
|
(3) identifies counsel designated to act on behalf of |
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|
the corporation and its shareholders, other than the controlling |
|
|
shareholder, director, or officer involved in the transaction; and |
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|
(4) the shareholders, other than the controlling |
|
|
shareholder, director, or officer involved in the transaction, have |
|
|
the right to participate in the proceeding in person or through |
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|
counsel. |
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|
(e) If the corporation has a class of its shares listed on a |
|
|
national securities exchange, the notice required by Subsection (d) |
|
|
may be provided through the filing of a current report with the |
|
|
United States Securities and Exchange Commission in accordance with |
|
|
the requirements of the Securities Exchange Act of 1934 (15 U.S.C. |
|
|
Section 78a et seq.), and any rules promulgated under that Act. |
|
|
(f) Not earlier than the 10th day after the date the notice |
|
|
required under Subsection (d) is given, the court shall hold a |
|
|
preliminary hearing to determine the appropriate legal counsel to |
|
|
represent the corporation and its shareholders, other than the |
|
|
controlling shareholder, director, or officer involved in the |
|
|
transaction, whether or not the same as the legal counsel |
|
|
identified in the petition. Any other legal counsel representing a |
|
|
shareholder, other than the controlling shareholder, director, or |
|
|
officer involved in the transaction, may participate in the hearing |
|
|
to: |
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|
(1) object to counsel designated by the corporation in |
|
|
the petition on the ground that the designated counsel is |
|
|
insufficiently independent and disinterested; or |
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|
(2) request designation by the court as the |
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appropriate legal counsel. |
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|
(g) After the court determines the appropriate legal |
|
|
counsel under Subsection (f), the court shall promptly hold an |
|
|
evidentiary hearing as to whether the directors on the committee |
|
|
are independent and disinterested with respect to transactions |
|
|
involving the corporation or any of its subsidiaries and a |
|
|
controlling shareholder, director, or officer. The appropriate |
|
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legal counsel determined under Subsection (f) and legal counsel for |
|
|
the corporation may participate in the hearing. After hearing and |
|
|
reviewing the evidence presented, the court shall make its |
|
|
determination as to whether the directors on the committee are |
|
|
independent and disinterested. |
|
|
(h) The court's determination that the directors are |
|
|
independent and disinterested under Subsection (g) shall be |
|
|
dispositive in the absence of facts, not presented to the court, |
|
|
constituting evidence sufficient to prove that one or more of those |
|
|
directors is not independent and disinterested with respect to a |
|
|
particular transaction involving the corporation or any of its |
|
|
subsidiaries and a controlling shareholder, director, or officer. |
|
|
SECTION 8. Section 21.418, Business Organizations Code, is |
|
|
amended by adding Subsection (f) to read as follows: |
|
|
(f) This subsection applies only to a corporation that has a |
|
|
class or series of voting shares listed on a national securities |
|
|
exchange or has made an affirmative election to be governed by |
|
|
Section 21.419. Regardless of whether the conditions of Subsection |
|
|
(b) are satisfied, neither the corporation nor any of the |
|
|
corporation's shareholders will have a cause of action against any |
|
|
director or officer for breach of duty with respect to the making, |
|
|
authorization, or performance of the contract or transaction |
|
|
because the director or officer had the relationship or interest |
|
|
described by Subsection (a) or took any of the actions authorized by |
|
|
Subsection (d) unless the cause of action is permitted by Section |
|
|
21.419. |
|
|
SECTION 9. Subchapter I, Chapter 21, Business Organizations |
|
|
Code, is amended by adding Section 21.419 to read as follows: |
|
|
Sec. 21.419. PRESUMPTIONS FOR DIRECTORS AND OFFICERS OF |
|
|
CERTAIN CORPORATIONS. (a) This section applies only to a |
|
|
corporation that has: |
|
|
(1) a class or series of voting shares listed on a |
|
|
national securities exchange; or |
|
|
(2) included in its governing documents a statement |
|
|
affirmatively electing to be governed by this section. |
|
|
(b) In taking or declining to take any action on any matters |
|
|
of a corporation's business, a director or officer is presumed to |
|
|
act: |
|
|
(1) in good faith; |
|
|
(2) on an informed basis; |
|
|
(3) in furtherance of the interests of the |
|
|
corporation; and |
|
|
(4) in obedience to the law and the corporation's |
|
|
governing documents. |
|
|
(c) Neither a corporation nor any of the corporation's |
|
|
shareholders has a cause of action against a director or officer of |
|
|
the corporation as a result of any act or omission in the person's |
|
|
capacity as a director or officer unless: |
|
|
(1) the claimant rebuts one or more of the |
|
|
presumptions established by Subsection (b); and |
|
|
(2) it is proven by the claimant that: |
|
|
(A) the director's or officer's act or omission |
|
|
constituted a breach of one or more of the person's duties as a |
|
|
director or officer; and |
|
|
(B) the breach involved fraud, intentional |
|
|
misconduct, an ultra vires act, or a knowing violation of law. |
|
|
(d) The presumptions established by this section: |
|
|
(1) are in addition to any legal presumption arising |
|
|
under common law or this code, in favor of any managerial official |
|
|
of a corporation to which this section applies; and |
|
|
(2) do not abrogate, preempt, or lessen any other |
|
|
defense, presumption, immunity, or privilege under other |
|
|
constitutional, statutory, case, or common law or rule provisions, |
|
|
in favor of any managerial official of any domestic entity, |
|
|
including any corporation to which this section does not apply. |
|
|
(e) In alleging fraud, intentional misconduct, an ultra |
|
|
vires act, or a knowing violation of the law under Subsection |
|
|
(c)(2)(B), a party must state with particularity the circumstances |
|
|
constituting the fraud, intentional misconduct, ultra vires act, or |
|
|
knowing violation of law. |
|
|
(f) This section does not limit the effectiveness or |
|
|
applicability of a provision contained in the certificate of |
|
|
formation or similar instrument of a corporation limiting monetary |
|
|
liability of a governing person. |
|
|
SECTION 10. Section 21.551(2), Business Organizations |
|
|
Code, is amended to read as follows: |
|
|
(2) "Shareholder" includes: |
|
|
(A) a shareholder as defined by Section 1.002; |
|
|
(B) [or] a beneficial owner whose shares are held |
|
|
in a voting trust or by a nominee on the beneficial owner's behalf; |
|
|
or |
|
|
(C) two or more shareholders acting in concert |
|
|
under an informal or formal agreement or understanding with respect |
|
|
to a derivative proceeding. |
|
|
SECTION 11. Section 21.552(a), Business Organizations |
|
|
Code, is amended to read as follows: |
|
|
(a) Subject to Subsection (b), 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 |
|
|
originating 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; and |
|
|
(3) for a corporation with common shares listed on a |
|
|
national securities exchange or a corporation that has made an |
|
|
affirmative election to be governed by Section 21.419 and has 500 or |
|
|
more shareholders, at the time the derivative proceeding is |
|
|
instituted, the shareholder beneficially owns a number of the |
|
|
common shares sufficient to meet the required ownership threshold |
|
|
to institute a derivative proceeding in the right of the |
|
|
corporation identified in the corporation's certificate of |
|
|
formation or bylaws, provided that the required ownership threshold |
|
|
does not exceed three percent of the outstanding shares of the |
|
|
corporation. |
|
|
SECTION 12. Section 21.554, Business Organizations Code, is |
|
|
amended by amending Subsection (b) and adding Subsections (c), (d), |
|
|
(e), (f), (g), (h), and (i) to read as follows: |
|
|
(b) The court shall appoint a panel under Subsection (a)(3) |
|
|
if the court finds that the individuals recommended by the |
|
|
corporation are independent and disinterested and are otherwise |
|
|
qualified with respect to expertise, experience, independent |
|
|
judgment, and other factors considered appropriate by the court |
|
|
under the circumstances to make the determinations. An individual |
|
|
appointed by the court to a panel under this section may be a |
|
|
director. An individual appointed by the court to a panel under |
|
|
this section may not be held liable to the corporation or the |
|
|
corporation's shareholders for an action taken or omission made by |
|
|
the individual in that capacity, except for an act or omission |
|
|
constituting fraud or wilful misconduct. |
|
|
(c) Before the corporation's determination of how to |
|
|
proceed on the allegations under Subsection (a), the corporation |
|
|
may petition the court having jurisdiction to make a finding as to |
|
|
whether the directors identified or appointed under Subsection |
|
|
(a)(1) or (2) are independent and disinterested with respect to the |
|
|
allegations made in the demand. |
|
|
(d) If a derivative proceeding has been instituted, a |
|
|
petition under Subsection (c) shall be filed in the court in which |
|
|
the proceeding was instituted. If no derivative proceeding has |
|
|
been instituted, a petition under Subsection (c) shall be filed in |
|
|
the business court unless the corporation's principal place of |
|
|
business in this state is located in a county not contained within |
|
|
an operating division of the business court, in which case the |
|
|
petition may be filed in a district court in the county in which the |
|
|
corporation's principal place of business in this state is located. |
|
|
(e) The corporation must serve a copy of the petition on the |
|
|
shareholder filing the derivative proceeding or making the demand. |
|
|
(f) Unless extended for good cause, a court in which a |
|
|
petition under Subsection (c) is filed must conduct an evidentiary |
|
|
hearing on the petition on or before the 45th day after the date the |
|
|
petition is filed. |
|
|
(g) A shareholder on whom a petition is served under |
|
|
Subsection (e) is entitled to be served with all notices and papers |
|
|
filed in the action and to intervene in the action to challenge the |
|
|
petition. Unless good cause is shown, a shareholder who is not |
|
|
already a party to the action must intervene not later than the |
|
|
seventh day before the date the petition is heard by the court. |
|
|
(h) Unless extended for good cause, not later than the 75th |
|
|
day after the date the petition is filed, the court shall sign an |
|
|
order stating whether the directors are independent and |
|
|
disinterested. |
|
|
(i) A court's finding that the directors or individuals are |
|
|
independent and disinterested under this section shall be |
|
|
dispositive in the absence of discovery of facts, not presented to |
|
|
the court, constituting evidence sufficient to prove that one or |
|
|
more of those directors or individuals are not independent and |
|
|
disinterested. |
|
|
SECTION 13. Section 21.561, Business Organizations Code, is |
|
|
amended by adding Subsection (c) to read as follows: |
|
|
(c) For purposes of Subsection (b), a substantial benefit to |
|
|
the corporation does not include additional or amended disclosures |
|
|
made to the shareholders, regardless of materiality. |
|
|
SECTION 14. Section 21.562(a), Business Organizations |
|
|
Code, is amended to read as follows: |
|
|
(a) In a derivative proceeding brought in the right of a |
|
|
foreign corporation, the matters covered by this subchapter are |
|
|
governed by the laws of the jurisdiction of formation of the foreign |
|
|
corporation, except for Sections 21.555, 21.560, and 21.561, which |
|
|
with respect to foreign corporations are procedural provisions and |
|
|
do not relate to the internal affairs of the foreign corporation, |
|
|
unless applying the laws of the jurisdiction of formation of the |
|
|
foreign corporation requires otherwise with respect to Section |
|
|
21.555. |
|
|
SECTION 15. Subchapter F, Chapter 101, Business |
|
|
Organizations Code, is amended by adding Section 101.256 to read as |
|
|
follows: |
|
|
Sec. 101.256. PRESUMPTIONS FOR GOVERNING PERSONS OF CERTAIN |
|
|
LIMITED LIABILITY COMPANIES. (a) This section applies only to a |
|
|
limited liability company that has: |
|
|
(1) a class or series of voting membership interests |
|
|
listed on a national securities exchange; or |
|
|
(2) included in its company agreement a statement |
|
|
affirmatively electing to be governed by this section. |
|
|
(b) In taking or declining to take any action on any matters |
|
|
of a limited liability company's business, a governing person or |
|
|
officer, and each affiliate or associate of a governing person or |
|
|
officer, is presumed to act: |
|
|
(1) in good faith; |
|
|
(2) on an informed basis; |
|
|
(3) in furtherance of the interests of the limited |
|
|
liability company; and |
|
|
(4) in obedience to the law and the limited liability |
|
|
company's company agreement. |
|
|
(c) Neither a limited liability company nor any of the |
|
|
company's members has a cause of action against a governing person |
|
|
or officer or any affiliate or associate of a governing person or |
|
|
officer of the company as a result of any act or omission in the |
|
|
person's capacity as a governing person or officer of the company |
|
|
unless: |
|
|
(1) the claimant rebuts one or more of the |
|
|
presumptions established by Subsection (b); and |
|
|
(2) it is proven by the claimant that: |
|
|
(A) the act or omission of the governing person |
|
|
or officer or affiliate or associate of a governing person or |
|
|
officer constituted a breach of one or more of the person's duties |
|
|
as a governing person or officer; and |
|
|
(B) the breach involved fraud, intentional |
|
|
misconduct, an ultra vires act, or a knowing violation of law. |
|
|
(d) The presumptions established by this section: |
|
|
(1) are in addition to any legal presumption arising |
|
|
under common law or this code, in favor of any governing person or |
|
|
officer to which this section applies; and |
|
|
(2) do not abrogate, preempt, or lessen any other |
|
|
defense, presumption, immunity, or privilege under other |
|
|
constitutional, statutory, case, or common law or rule provisions, |
|
|
in favor of any governing person or officer of any domestic entity, |
|
|
including any limited liability company to which this section does |
|
|
not apply. |
|
|
(e) In alleging fraud, intentional misconduct, an ultra |
|
|
vires act, or a knowing violation of the law under Subsection |
|
|
(c)(2)(B), a party must state with particularity the circumstances |
|
|
constituting the fraud, intentional misconduct, ultra vires act, or |
|
|
knowing violation of law. |
|
|
(f) This section does not limit the effectiveness or |
|
|
applicability of a provision contained in the certificate of |
|
|
formation or company agreement or similar instrument of a limited |
|
|
liability company limiting monetary liability of a governing person |
|
|
or officer. |
|
|
SECTION 16. Section 101.401, Business Organizations Code, |
|
|
is amended to read as follows: |
|
|
Sec. 101.401. EXPANSION, [OR] RESTRICTION, OR ELIMINATION |
|
|
OF DUTIES AND LIABILITIES. The company agreement of a limited |
|
|
liability company may expand, [or] restrict, or eliminate any |
|
|
duties, including fiduciary duties, and related liabilities that a |
|
|
member, manager, officer, or other person has to the company or to a |
|
|
member or manager of the company. |
|
|
SECTION 17. Section 101.451(3), Business Organizations |
|
|
Code, is amended to read as follows: |
|
|
(3) "Member" includes: |
|
|
(A) a person who is a member or is an assignee of |
|
|
a membership interest or a person who beneficially owns a |
|
|
membership interest through a voting trust or a nominee on the |
|
|
person's behalf; and |
|
|
(B) two or more members described by Paragraph |
|
|
(A) acting in concert under an informal or formal agreement or |
|
|
understanding with respect to a derivative proceeding. |
|
|
SECTION 18. Section 101.452(a), Business Organizations |
|
|
Code, is amended to read as follows: |
|
|
(a) Subject to Subsection (b), a member may not institute or |
|
|
maintain a derivative proceeding unless: |
|
|
(1) the member: |
|
|
(A) was a member of the limited liability company |
|
|
at the time of the act or omission complained of; or |
|
|
(B) became a member by operation of law |
|
|
originating from a person that was a member at the time of the act or |
|
|
omission complained of; [and] |
|
|
(2) the member fairly and adequately represents the |
|
|
interests of the limited liability company in enforcing the right |
|
|
of the limited liability company; and |
|
|
(3) for a limited liability company with membership |
|
|
interests listed on a national securities exchange or that has made |
|
|
an affirmative election to be governed by Section 101.256 and has |
|
|
500 or more members, at the time the derivative proceeding is |
|
|
instituted, the member beneficially owns a number of the membership |
|
|
interests sufficient to meet the required ownership threshold to |
|
|
institute a derivative proceeding in the right of the limited |
|
|
liability company identified in the limited liability company's |
|
|
certificate of formation or company agreement, provided that the |
|
|
required ownership threshold does not exceed three percent of the |
|
|
outstanding membership interests of the limited liability company. |
|
|
SECTION 19. Section 101.461, Business Organizations Code, |
|
|
is amended by adding Subsection (c) to read as follows: |
|
|
(c) For purposes of Subsection (b), a substantial benefit to |
|
|
the limited liability company does not include additional or |
|
|
amended disclosures made to the members, regardless of materiality. |
|
|
SECTION 20. Section 101.502, Business Organizations Code, |
|
|
is amended by amending Subsection (a) and adding Subsections (a-1), |
|
|
(a-2), and (a-3) to read as follows: |
|
|
(a) Unless otherwise provided by the governing documents of |
|
|
a limited liability company, a [A] member of a limited liability |
|
|
company or an assignee of a membership interest in a limited |
|
|
liability company, on written demand stating a proper purpose, is |
|
|
entitled to examine and copy at a reasonable time at the limited |
|
|
liability company's principal office identified under Section |
|
|
101.501(c) or another location approved by the limited liability |
|
|
company and the member or assignee, any records of the limited |
|
|
liability company, whether in written or other tangible form, which |
|
|
are reasonably related to and appropriate to examine and copy for |
|
|
that proper purpose. For purposes of this subsection, the records |
|
|
of the limited liability company shall not include e-mails, text |
|
|
messages or similar electronic communications, or information from |
|
|
social media accounts unless the particular e-mail, communication, |
|
|
or social media information effectuates an action by the limited |
|
|
liability company. |
|
|
(a-1) This subsection applies only to a limited liability |
|
|
company that has a class or series of voting membership interests |
|
|
listed on a national securities exchange or that has made an |
|
|
affirmative election to be governed by Section 101.256. For |
|
|
purposes of Subsection (a), a written demand may be made only by a |
|
|
member or an assignee that has held the membership interest for at |
|
|
least six months immediately preceding the member's or assignee's |
|
|
demand. |
|
|
(a-2) This subsection applies only to a limited liability |
|
|
company that has a class or series of voting membership interests |
|
|
listed on a national securities exchange or that has made an |
|
|
affirmative election to be governed by Section 101.256. For |
|
|
purposes of Subsection (a), a written demand shall not be for a |
|
|
proper purpose if the limited liability company reasonably |
|
|
determines that the demand is in connection with: |
|
|
(1) an active or pending derivative proceeding in the |
|
|
right of the limited liability company under Subchapter J that is or |
|
|
is expected to be instituted or maintained by the member or assignee |
|
|
or the member's or assignee's affiliate; or |
|
|
(2) an active or pending civil lawsuit to which the |
|
|
company, or its affiliate, and the member or assignee, or the |
|
|
member's or assignee's affiliate, are or are expected to be |
|
|
adversarial named parties. |
|
|
(a-3) Subsection (a-2) does not impair any rights of the |
|
|
member or assignee or the member's or assignee's affiliate to obtain |
|
|
discovery of records from the limited liability company in: |
|
|
(1) a civil lawsuit described by Subsection (a-2)(2); |
|
|
or |
|
|
(2) the derivative proceeding subject to Section |
|
|
101.456. |
|
|
SECTION 21. Section 152.002, Business Organizations Code, |
|
|
is amended by adding Subsection (e) to read as follows: |
|
|
(e) This subsection applies only to a limited partnership |
|
|
that has a class or series of voting limited partnership interests |
|
|
listed on a national securities exchange or that has made an |
|
|
affirmative election to be governed by Section 153.163. |
|
|
Notwithstanding Subsection (b)(2), (3), or (4), a partnership |
|
|
agreement may eliminate the duty of loyalty under Section 152.205, |
|
|
the duty of care under Section 152.206, and the obligation of good |
|
|
faith under Section 152.204(b), to the extent the governing |
|
|
documents of the partnership include a statement affirmatively |
|
|
electing to do so under this subsection. |
|
|
SECTION 22. Subchapter D, Chapter 153, Business |
|
|
Organizations Code, is amended by adding Section 153.163 to read as |
|
|
follows: |
|
|
Sec. 153.163. PRESUMPTIONS FOR GENERAL PARTNERS AND |
|
|
OFFICERS OF CERTAIN LIMITED PARTNERSHIPS. (a) This section |
|
|
applies only to a limited partnership that has: |
|
|
(1) a class or series of voting limited partnership |
|
|
interests listed on a national securities exchange; or |
|
|
(2) included in its governing documents a statement |
|
|
affirmatively electing to be governed by this section. |
|
|
(b) In taking or declining to take any action on any matters |
|
|
of a limited partnership's business, any general partner of the |
|
|
limited partnership, including any director, officer, member, or |
|
|
other affiliate of the general partner, is presumed to act: |
|
|
(1) in good faith; |
|
|
(2) on an informed basis; |
|
|
(3) in furtherance of the interests of the limited |
|
|
partnership; and |
|
|
(4) in obedience to the law and the limited |
|
|
partnership's partnership agreement. |
|
|
(c) Neither a limited partnership nor any of the limited |
|
|
partnership's partners has a cause of action against a general |
|
|
partner of the limited partnership, including any director, |
|
|
officer, member, or other affiliate of the general partner, as a |
|
|
result of any act or omission in the person's capacity as a general |
|
|
partner or as an officer or director of the general partner unless: |
|
|
(1) the claimant rebuts one or more of the |
|
|
presumptions established by Subsection (b); and |
|
|
(2) it is proven by the claimant that: |
|
|
(A) the general partner's or any director, |
|
|
officer, member, or other affiliate of the general partner's act or |
|
|
omission constituted a breach of one or more of the person's duties |
|
|
as a general partner, director, or officer; and |
|
|
(B) the breach involved fraud, intentional |
|
|
misconduct, an ultra vires act, or a knowing violation of law. |
|
|
(d) The presumptions established by this section: |
|
|
(1) are in addition to any legal presumption arising |
|
|
under common law or this code, in favor of any general partner or |
|
|
member or managerial official of a general partner to which this |
|
|
section applies; and |
|
|
(2) do not abrogate, preempt, or lessen any other |
|
|
defense, presumption, immunity, or privilege under other |
|
|
constitutional, statutory, case, or common law or rule provisions, |
|
|
in favor of any managerial official of any domestic entity, |
|
|
including any limited partnership to which this section does not |
|
|
apply. |
|
|
(e) In alleging fraud, intentional misconduct, an ultra |
|
|
vires act, or a knowing violation of the law under Subsection |
|
|
(c)(2)(B), a party must state with particularity the circumstances |
|
|
constituting the fraud, intentional misconduct, ultra vires act, or |
|
|
knowing violation of law. |
|
|
(f) This section does not limit the effectiveness or |
|
|
applicability of a provision contained in the certificate of |
|
|
formation or partnership agreement or similar instrument of a |
|
|
partnership limiting monetary liability of a governing person. |
|
|
SECTION 23. Section 153.401(2), Business Organizations |
|
|
Code, is amended to read as follows: |
|
|
(2) "Limited partner" means: |
|
|
(A) a person who is a limited partner or is an |
|
|
assignee of a partnership interest, including the partnership |
|
|
interest of a general partner; and |
|
|
(B) two or more limited partners described by |
|
|
Paragraph (A) acting in concert under an informal or formal |
|
|
agreement or understanding with respect to a derivative proceeding. |
|
|
SECTION 24. Section 153.402(a), Business Organizations |
|
|
Code, is amended to read as follows: |
|
|
(a) Subject to Subsection (b), a limited partner may not |
|
|
institute or maintain a derivative proceeding unless: |
|
|
(1) the limited partner: |
|
|
(A) was a limited partner of the limited |
|
|
partnership at the time of the act or omission complained of; or |
|
|
(B) became a limited partner by operation of law |
|
|
originating from a person that was a limited partner or general |
|
|
partner at the time of the act or omission complained of; [and] |
|
|
(2) the limited partner fairly and adequately |
|
|
represents the interests of the limited partnership in enforcing |
|
|
the right of the limited partnership; and |
|
|
(3) for a limited partnership with limited partnership |
|
|
interests listed on a national securities exchange or that has made |
|
|
an affirmative election to be governed by Section 153.163 and has |
|
|
500 or more limited partners, at the time the derivative proceeding |
|
|
is instituted, the partner beneficially owns a number of limited |
|
|
partnership interests sufficient to meet the required ownership |
|
|
threshold to institute a derivative proceeding in the right of the |
|
|
limited partnership identified in the limited partnership's |
|
|
certificate of formation or partnership agreement, provided that |
|
|
the required ownership threshold does not exceed three percent of |
|
|
the outstanding limited partnership interests of the limited |
|
|
partnership. |
|
|
SECTION 25. Section 153.411, Business Organizations Code, |
|
|
is amended by adding Subsection (c) to read as follows: |
|
|
(c) For purposes of Subsection (b), a substantial benefit to |
|
|
the limited partnership does not include additional or amended |
|
|
disclosures made to the limited partners, regardless of |
|
|
materiality. |
|
|
SECTION 26. Section 153.552, Business Organizations Code, |
|
|
is amended by amending Subsection (a) and adding Subsections (a-1) |
|
|
and (a-2) to read as follows: |
|
|
(a) Unless otherwise provided by the governing documents of |
|
|
a limited partnership, on [On] written demand stating a proper |
|
|
purpose, a partner or an assignee of a partnership interest in a |
|
|
limited partnership is entitled to examine and copy, at a |
|
|
reasonable time at the partnership's principal office identified |
|
|
under Section 153.551 or other location approved by the partnership |
|
|
and the partner or assignee, any records of the partnership, |
|
|
whether in written or other tangible form, which are reasonably |
|
|
related to and appropriate to examine and copy for that proper |
|
|
purpose. For purposes of this subsection, the records of the |
|
|
limited partnership shall not include e-mails, text messages or |
|
|
similar electronic communications, or information from social |
|
|
media accounts unless the particular e-mail, communication, or |
|
|
social media information effectuates an action by the limited |
|
|
partnership. |
|
|
(a-1) This subsection applies only to a limited partnership |
|
|
that has a class or series of voting limited partnership interests |
|
|
listed on a national securities exchange or that has made an |
|
|
affirmative election to be governed by Section 153.163. For |
|
|
purposes of Subsection (a), a written demand: |
|
|
(1) may be made only by a limited partner or an |
|
|
assignee that has held the limited partnership interest for at |
|
|
least six months immediately preceding the limited partner's or |
|
|
assignee's demand; and |
|
|
(2) shall not be for a proper purpose if the limited |
|
|
partnership reasonably determines that the demand is in connection |
|
|
with: |
|
|
(A) an active or pending derivative proceeding in |
|
|
the right of the limited partnership under Subchapter I that is or |
|
|
is expected to be instituted or maintained by the limited partner or |
|
|
assignee or the limited partner's or assignee's affiliate; or |
|
|
(B) an active or pending civil lawsuit to which |
|
|
the partnership, or its affiliate, and the limited partner or |
|
|
assignee, or the limited partner's or assignee's affiliate, are or |
|
|
are expected to be adversarial named parties. |
|
|
(a-2) Subsection (a-1) does not impair any rights of the |
|
|
limited partner or assignee or the limited partner's or assignee's |
|
|
affiliate to obtain discovery of records from the limited |
|
|
partnership in: |
|
|
(1) a civil lawsuit described by Subsection |
|
|
(a-1)(2)(B); or |
|
|
(2) the derivative proceeding subject to Section |
|
|
153.406. |
|
|
SECTION 27. Sections 21.552(a), 21.561, 101.452(a), |
|
|
101.461, 153.402(a), and 153.411, Business Organizations Code, as |
|
|
amended by this Act, apply only to a derivative proceeding |
|
|
instituted on or after the effective date of this Act. A derivative |
|
|
proceeding instituted before the effective date of this Act is |
|
|
governed by the law in effect on the date the proceeding was |
|
|
instituted, and the former law is continued in effect for that |
|
|
purpose. |
|
|
SECTION 28. This Act takes effect immediately if it |
|
|
receives a vote of two-thirds of all the members elected to each |
|
|
house, as provided by Section 39, Article III, Texas Constitution. |
|
|
If this Act does not receive the vote necessary for immediate |
|
|
effect, this Act takes effect September 1, 2025. |