Bill Text: TX SB1514 | 2023-2024 | 88th Legislature | Enrolled


Bill Title: Relating to business entities and nonprofit entities.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Passed) 2023-05-13 - Effective on 9/1/23 [SB1514 Detail]

Download: Texas-2023-SB1514-Enrolled.html
 
 
  S.B. No. 1514
 
 
 
 
AN ACT
  relating to business entities and nonprofit entities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 71.002(2) and (7), Business & Commerce
  Code, are amended to read as follows:
               (2)  "Assumed name" means:
                     (A)  for an individual, a name that does not
  include the surname of the individual;
                     (B)  for a partnership, a name that does not
  include the surname or other legal name of each joint venturer or
  general partner;
                     (C)  for an individual or a partnership, a name,
  including a surname, that suggests the existence of additional
  owners by including words such as "Company," "& Company," "& Son,"
  "& Sons," "& Associates," "Brothers," and similar words, but not
  words that merely describe the business being conducted or the
  professional service being rendered;
                     (D)  for a limited partnership, a name other than
  the name stated in its certificate of formation;
                     (E)  for a company, a name used by the company;
                     (F)  for a corporation, a name other than the name
  stated in its certificate of formation or a comparable document;
                     (G)  for a limited liability partnership, a name
  other than the name stated in its application filed with the office
  of the secretary of state or a comparable document;
                     (H)  for a limited liability company, a name other
  than the name stated in its certificate of formation or a comparable
  document, including the name of any protected series of the limited
  liability company established by its company agreement if the name
  of the protected series does not include the name of the limited
  liability company stated in the limited liability company's
  certificate of formation or a comparable document; and
                     (I)  for a registered series of a domestic limited
  liability company, a name other than the name stated in its
  certificate of registered series.
               (7)  "Office" means,[:
                     [(A)]  for a person that is not an individual [or
  that is a corporation that is not required to or does not maintain a
  registered office in this state], the person's[:
                           [(i)]  principal office in this state or
  outside of this state, as applicable[; and
                           [(ii)  principal place of business if not
  the same as the person's principal office; and
                     [(B)  for a corporation, limited partnership,
  limited liability partnership, limited liability company, or
  foreign filing entity that is required to maintain a registered
  office in this state, the entity's:
                           [(i)  registered office; and
                           [(ii)  principal office if not the same as
  the entity's registered office].
         SECTION 2.  Subchapter B, Chapter 1, Business Organizations
  Code, is amended by adding Section 1.055 to read as follows:
         Sec. 1.055.  DOCTRINE OF INDEPENDENT LEGAL SIGNIFICANCE. An
  action validly taken under a provision of this code may not be
  considered invalid because the action is identical or similar in
  substance to an action that could have been taken under another
  provision of this code but fails to satisfy one or more requirements
  prescribed by that other provision.
         SECTION 3.  Section 3.059(b), Business Organizations Code,
  is amended to read as follows:
         (b)  A restated certificate of formation may omit:
               (1)  the name and address of each organizer other than
  the name and address of each general partner of a limited
  partnership or trust manager of a real estate investment trust;
  [and]
               (2)  the initial mailing address of the filing entity;
  and
               (3)  any other information that may be omitted under
  the provisions of this code applicable to the filing entity.
         SECTION 4.  Section 3.203, Business Organizations Code, is
  amended to read as follows:
         Sec. 3.203.  SIGNATURE REQUIREMENT. (a) A certificate
  representing an ownership interest in [The managerial official or
  officials of] a domestic entity must contain the signature or
  signatures of each managerial official of the entity that is
  authorized by the governing documents of the entity to sign
  certificated ownership interests of the entity [must sign any
  certificate representing an ownership interest in the entity].
         (b)  A certificated ownership interest that contains the
  [manual or facsimile] signature of a person who is no longer a
  managerial official of a domestic entity when the certificate is
  issued may be issued by the entity in the same manner and with the
  same effect as if the person had remained a managerial official.
         SECTION 5.  Section 3.251(3), Business Organizations Code,
  is amended to read as follows:
               (3)  "Emergency period" means any period during which
  the governing authority of a domestic entity, due to a condition
  that is a part of or results from an emergency, is unable to satisfy
  one or more requirements of the entity's governing documents or
  this code necessary for action by vote at a meeting of the governing
  authority outside of an emergency period.
         SECTION 6.  Section 4.005, Business Organizations Code, is
  amended by adding Subsection (f) to read as follows:
         (f)  Subject to any qualification stated in the certificate,
  a certificate issued by the secretary of state stating that a
  domestic registered series is in existence may be relied on as
  conclusive evidence of the existence of the domestic registered
  series.
         SECTION 7.  Section 5.051, Business Organizations Code, is
  amended to read as follows:
         Sec. 5.051.  ASSUMED NAME. A domestic entity, a protected
  series or registered series of a domestic limited liability
  company, or a foreign entity having authority to transact business
  in this state may transact business under an assumed name on
  compliance [by filing an assumed name certificate in accordance]
  with Chapter 71, Business & Commerce Code. The requirements of this
  subchapter do not apply to an assumed name set forth in an assumed
  name certificate filed under that chapter.
         SECTION 8.  Section 6.201(b-3), Business Organizations
  Code, is amended to read as follows:
         (b-3)  By a provision in the written consent or by a written
  instruction to an agent of the filing entity, a person signing a
  written consent may provide that the person's consent is to take
  effect at a future time, which must be not later than the 60th day
  after the date all persons entitled to vote on the action have
  signed the [person's] consent or consents. The [A] person's written
  consent is considered to have been given at the later of that future
  effective time or a later effective time determined under
  Subsection (b-1) or (b-2), so long as the person:
               (1)  is entitled to vote on the action subject to the
  consent, which is determined as of the applicable effective time
  or, if applicable, the record date established under Section 6.102;
  and
               (2)  did not revoke the consent before the applicable
  effective time.
         SECTION 9.  Sections 6.202(b) and (c-3), Business
  Organizations Code, are amended to read as follows:
         (b)  Except as provided by this code, the certificate of
  formation of a filing entity may authorize the owners or members of
  the entity to take action without holding a meeting, providing
  prior notice, or taking a vote if owners or members of the entity
  having at least the minimum number of votes that would be necessary
  to take the action that is the subject of the consent at a meeting,
  in which each owner or member entitled to vote on the action is
  present and votes, sign a written consent or consents stating the
  action taken.
         (c-3)  If two or more of the written consents described by
  Subsection (c-2) have different future effective times, the latest
  future effective time of those consents applies to all of the
  consents. The written consent or consents are considered to have
  been given for purposes of this section at the applicable effective
  time so long as owners or members satisfying the minimum
  requirements in Subsection (b):
               (1)  are determined to be owners or members, as
  applicable, as of:
                     (A)  that effective time; or
                     (B)  if applicable, the record date established
  under Section 6.102; and
               (2)  have signed and not revoked the [the owner's or
  member's] consent or consents at any time before the applicable
  effective time of the consent or consents.
         SECTION 10.  Section 10.151(a), Business Organizations
  Code, is amended to read as follows:
         (a)  A [After approval of a plan of merger or a plan of
  exchange as provided by this code, a] certificate of merger, which
  may also include an exchange, or a certificate of exchange, as
  applicable, must be filed for a merger or interest exchange to
  become effective if:
               (1)  for a merger:
                     (A)  any domestic entity that is a party to the
  merger is a filing entity; or
                     (B)  any domestic entity to be created under the
  plan of merger is a filing entity; or
               (2)  for an exchange, an ownership or membership
  interest in any filing entity is to be acquired in the interest
  exchange.
         SECTION 11.  Section 10.154(a), Business Organizations
  Code, is amended to read as follows:
         (a)  A [After approval of a plan of conversion as provided by
  this code, a] certificate of conversion must be filed for the
  conversion to become effective if:
               (1)  any domestic entity that is a party to the
  conversion is a filing entity; or
               (2)  any domestic entity to be created under the plan of
  conversion is a filing entity.
         SECTION 12.  Section 10.355(c), Business Organizations
  Code, is amended to read as follows:
         (c)  A notice required to be provided under Subsection (a),
  (b), or (b-1) must:
               (1)  be accompanied by:
                     (A)  a copy of this subchapter; or
                     (B)  information directing the owner to a publicly
  available electronic resource at which this subchapter may be
  accessed without subscription or cost; and
               (2)  advise the owner of the location of the
  responsible organization's principal executive offices to which a
  notice required under Section 10.356(b)(1) or a demand under
  Section 10.356(b)(3), or both, may be provided.
         SECTION 13.  Section 10.364(d), Business Organizations
  Code, is amended to read as follows:
         (d)  The responsible organization shall[:
               [(1)  immediately] pay the amount of the judgment to
  the [a] holder of the [an uncertificated] ownership interest on the
  terms and conditions ordered by the court[; and
               [(2)  pay the amount of the judgment to a holder of a
  certificated ownership interest immediately after the certificate
  holder surrenders to the responsible organization an endorsed
  certificate representing the ownership interest].
         SECTION 14.  Section 11.056, Business Organizations Code, is
  amended by amending Subsection (a) and adding Subsection (c) to
  read as follows:
         (a)  The termination of the continued membership of the last
  remaining member of a domestic limited liability company is an
  event requiring winding up under Section 11.051(4) unless, not
  later than one year [the 90th day] after the date of the termination
  or within the period of time provided by the company agreement:
               (1)  [,] the legal representative or successor of the
  last remaining member agrees:
                     (A) [(1)]  to continue the company; and
                     (B) [(2)]  to become a member of the company
  effective as of the date of the termination or to designate another
  person who agrees to become a member of the company effective as of
  the date of the termination; or
               (2)  a member is admitted to the company in the manner
  provided by the company agreement, effective as of the occurrence
  of the termination, under a provision of the company agreement that
  specifically provides for the admission of a member to the company
  after there is no longer a remaining member of the company.
         (c)  The company agreement may provide that the legal
  representative or successor of the last remaining member is
  obligated to agree to continue the company and to the admission of
  the legal representative or successor, or the representative's or
  successor's nominee or designee, as a member effective as of the
  occurrence of the event that terminates the continued membership of
  the last remaining member.
         SECTION 15.  Sections 11.202(a) and (c), Business
  Organizations Code, are amended to read as follows:
         (a)  To the extent applicable, a terminated entity, to be
  reinstated, must complete the requirements of this section [not
  later than the third anniversary of the date the termination of the
  terminated entity's existence took effect].
         (c)  After approval of the reinstatement of a filing entity
  that was terminated, [and not later than the third anniversary of
  the date of the filing of the entity's certificate of termination,]
  the filing entity shall file a certificate of reinstatement in
  accordance with Chapter 4.
         SECTION 16.  Section 11.253, Business Organizations Code, is
  amended by adding Subsection (e) to read as follows:
         (e)  The reinstatement of a terminated limited liability
  company automatically reinstates any protected series or
  registered series that terminated because of the termination of the
  company.
         SECTION 17.  Section 11.254, Business Organizations Code, is
  amended by adding Subsection (c) to read as follows:
         (c)  The reinstatement of a limited liability company's
  certificate of formation after its forfeiture automatically
  reinstates any protected series or registered series that
  terminated because of the forfeiture.
         SECTION 18.  Subchapter F, Chapter 11, Business
  Organizations Code, is amended by adding Section 11.255 to read as
  follows:
         Sec. 11.255.  REINSTATEMENT OF CERTIFICATE OF FORMATION
  FOLLOWING FAILURE TO REVIVE; REINSTATEMENT RETROACTIVE. (a) A
  nonprofit corporation whose certificate of formation has been
  terminated under Section 22.364 must follow the procedure required
  by Section 22.365 to reinstate the nonprofit corporation's
  certificate of formation. A nonprofit corporation whose
  certificate of formation is reinstated under Section 22.365 is
  considered to have continued in existence without interruption from
  the date of termination.
         (b)  A limited partnership whose certificate of formation
  has been terminated under Section 153.311 must follow the procedure
  required by Section 153.312 to reinstate the limited partnership's
  certificate of formation. A limited partnership whose certificate
  of formation is reinstated under Section 153.312 is considered to
  have continued in existence without interruption from the date of
  termination.
         SECTION 19.  Sections 11.356(a) and (b), Business
  Organizations Code, are amended to read as follows:
         (a)  Notwithstanding the termination of a domestic filing
  entity under this code or the Tax Code [chapter], the terminated
  filing entity continues in existence until the third anniversary of
  the effective date of the entity's termination only for purposes
  of:
               (1)  prosecuting or defending in the terminated filing
  entity's name an action or proceeding brought by or against the
  terminated entity;
               (2)  permitting the survival of an existing claim by or
  against the terminated filing entity;
               (3)  holding title to and liquidating property that
  remained with the terminated filing entity at the time of
  termination or property that is collected by the terminated filing
  entity after termination;
               (4)  applying or distributing property, or its
  proceeds, as provided by Section 11.053; and
               (5)  settling affairs not completed before
  termination.
         (b)  A terminated filing entity may not continue its
  existence for the purpose of continuing the business or affairs for
  which the terminated filing entity was formed unless the terminated
  filing entity is reinstated under this code or the Tax Code
  [Subchapter E].
         SECTION 20.  Section 11.359(c), Business Organizations
  Code, is amended to read as follows:
         (c)  Notwithstanding Subsections (a) and (b), the
  extinguishment of an existing claim with respect to a terminated
  filing entity as provided by this section is nullified if:
               (1)  the filing entity's termination is revoked with
  retroactive effect under Section 11.153;
               (2)  the terminated filing entity is reinstated with
  retroactive effect as provided by Section 11.206;
               (3)  the terminated filing entity is reinstated with
  retroactive effect as provided by Section 11.253(d); [or]
               (4)  the terminated filing entity's certificate of
  formation is reinstated under the Tax Code with retroactive effect
  as provided by Section 11.254;
               (5)  the terminated filing entity's certificate of
  formation is reinstated under Chapter 22 with retroactive effect as
  provided by Section 11.255(a); or
               (6)  the terminated filing entity's certificate of
  formation is reinstated under Chapter 153 with retroactive effect
  as provided by Section 11.255(b).
         SECTION 21.  Section 20.002(c), Business Organizations
  Code, is amended to read as follows:
         (c)  The fact that an act or transfer is beyond the scope of
  the expressed purpose or purposes of the corporation or is
  inconsistent with an expressed limitation on the authority of an
  officer or director may be asserted in a proceeding:
               (1)  by a shareholder or member against the corporation
  to enjoin the performance of an act or the transfer of property by
  or to the corporation;
               (2)  by the corporation, acting directly or through a
  receiver, trustee, or other legal representative, or through
  members or shareholders in a representative suit, against an
  officer or director or former officer or director of the
  corporation for exceeding that person's authority; or
               (3)  by the attorney general to:
                     (A)  terminate the corporation;
                     (B)  enjoin the corporation from performing an
  unauthorized act; or
                     (C)  enforce divestment of real property acquired
  or held contrary to the laws of this state.
         SECTION 22.  Section 21.157, Business Organizations Code, is
  amended by amending Subsections (a) and (d) and adding Subsections
  (e), (f), and (g) to read as follows:
         (a)  Except as provided by Section 21.158, a corporation may
  issue shares for consideration if authorized by the board of
  directors of the corporation. Shares may be issued in one or more
  transactions in the number, at the time, and for the consideration
  stated in or determined by the authorization of the board of
  directors.
         (d)  An authorization of the board of directors may delegate
  to a person or persons, in addition to the board of directors, the
  authority to enter into one or more transactions to issue shares.
  With respect to a transaction entered into by a person or persons to
  whom authority was delegated under this subsection, shares may be
  issued in the number, at the time, and for the consideration the
  person or persons may determine [The authorization by the board of
  directors for the issuance of shares may provide that any shares to
  be issued under the authorization may be issued:
               [(1)  in one or more transactions in the numbers and at
  the times as stated in or determined by the authorization; or
               [(2)  in the manner stated in the authorization, which
  may include a determination or action by any person or persons,
  including the corporation,] if that [the] authorization of the
  board of directors:
               (1)  states:
                     (A)  the maximum number of shares that may be
  issued under the authorization;
                     (B)  the period of time during which the shares
  may be issued; and
                     (C)  the minimum amount of consideration for which
  the shares may be issued; and
               (2)  does not permit the person or persons to whom
  authority was delegated to issue shares to that person or those
  persons.
         (e)  A provision of an authorization provided under
  Subsection (a) or (d) may depend on a fact ascertainable outside of
  the authorization, if the manner in which the fact operates on the
  authorization is clearly and expressly included in the
  authorization. In this subsection, "fact" includes the occurrence
  of any event, including a determination or action by any person or
  persons.
         (f)  If the authorization of the board of directors delegates
  to a person or persons the authority to enter into a transaction to
  issue shares under Subsection (d), the provisions of the
  authorization under Subsection (d)(1) may not depend on a
  determination or action by the person or persons to whom authority
  was delegated.
         (g)  In this section and notwithstanding Section 1.002,
  "person" includes a committee of the board of directors.
         SECTION 23.  Section 21.160(a), Business Organizations
  Code, is amended to read as follows:
         (a)  Subject to Subsection (b) and Section 21.157,
  consideration to be received for shares must be determined:
               (1)  by the board of directors;
               (2)  by a plan of conversion, if the shares are to be
  issued by a converted corporation under the plan; or
               (3)  by a plan of merger, if the shares are to be issued
  under the plan by a corporation created under the plan.
         SECTION 24.  Section 21.168, Business Organizations Code, is
  amended by amending Subsections (c) and (d) and adding Subsections
  (e), (f), (g), and (h) to read as follows:
         (c)  Subject to the certificate of formation, a right or
  option described by this section must state the terms and
  conditions on which, the time within which, and any consideration,
  including a formula by which the consideration may be determined,
  for which the shares may be purchased or received from the
  corporation on the exercise of the right or option. [A formula by
  which the consideration may be determined may include or be made
  dependent on facts ascertainable outside the formula, if the manner
  in which those facts operate on the formula is clearly or expressly
  set forth in the formula or in the authorization approving the
  formula.]
         (d)  Subject to the certificate of formation, convertible
  indebtedness described by this section must state the terms and
  conditions on which, the time within which, and the conversion
  ratio, which may be stated as a formula by which the conversion
  ratio may be determined, at which the indebtedness may be converted
  into shares. The formula may include or be made dependent on facts
  ascertainable outside the formula, if the manner in which those
  facts operate on the formula is clearly or expressly provided by the
  formula or in the authorization approving the formula.
         (e)  An authorization of the board of directors may delegate
  to a person or persons, in addition to the board of directors, the
  authority to enter into one or more transactions to issue rights or
  options. For a transaction entered into by a person or persons to
  whom authority was delegated under this subsection, the rights or
  options may be issued in the number, at the time, and for the
  consideration as the person or persons may determine if that
  authorization of the board of directors:
               (1)  states:
                     (A)  the maximum number of rights or options, and
  the maximum number of shares issuable on exercise of those rights or
  options, that may be issued under the authorization;
                     (B)  the period of time during which the rights or
  options, and the shares issuable on exercise of those rights or
  options, may be issued; and
                     (C)  the minimum amount of consideration:
                           (i)  if any, for which the rights or options
  may be issued; and
                           (ii)  for the shares issuable on exercise of
  the rights or options; and
               (2)  does not permit the person or persons to whom
  authority was delegated to issue rights, options, or shares to that
  person or those persons.
         (f)  A provision of a right or option or an authorization of a
  right or option under this section may depend on a fact
  ascertainable outside of the right, option, or authorization, if
  the manner in which the fact operates on the right, option, or
  authorization is clearly and expressly set forth in the right,
  option, or authorization. In this subsection, "fact" includes the
  occurrence of any event, including a determination or action by any
  person or persons.
         (g)  If the authorization of the board of directors delegates
  to a person or persons the authority to enter into a transaction to
  issue rights or options under Subsection (e), the provisions of the
  authorization under Subsection (e)(1) may not depend on a
  determination or action by the person or persons to whom authority
  was delegated.
         (h)  In this section and notwithstanding Section 1.002,
  "person" includes a committee of the board of directors.
         SECTION 25.  Section 21.169(c), Business Organizations
  Code, is amended to read as follows:
         (c)  Except as provided by Section 21.168, unless [Unless]
  otherwise provided under the terms of rights or options or the
  agreement or plan under which the rights or options are issued, the
  authority to grant, amend, redeem, extend, or replace the rights or
  options on behalf of a corporation is vested exclusively in the
  board of directors of the corporation. A bylaw may not require the
  board to grant, amend, redeem, extend, or replace the rights or
  options.
         SECTION 26.  Section 21.218, Business Organizations Code, is
  amended by amending Subsections (b) and (c) and adding Subsection
  (b-1) to read as follows:
         (b)  On written demand stating a proper purpose, a holder of
  shares of a corporation for at least six months immediately
  preceding the holder's demand, or a holder of at least five percent
  of all of the outstanding shares of a corporation, is entitled to
  examine and copy, at a reasonable time at the corporation's
  principal place of business or other location approved by the
  corporation and the holder, the corporation's books, records of
  account, minutes, [and] share transfer records, and other records,
  whether in written or other tangible form, if the record is
  reasonably related to and appropriate to examine and copy for that
  proper [relating to the stated] purpose.
         (b-1)  The examination and copying may be conducted by the
  holder of shares [in person] or through an agent, accountant, or
  attorney. An agent, accountant, or attorney who conducts an
  examination and copying under this section is subject to any
  obligations of the shareholder with respect to the records made
  available for examination and copying.
         (c)  This section does not impair the power of a court, on the
  presentation of proof of proper purpose by a beneficial or record
  holder of shares, to compel the production for examination by the
  holder, at the holder's cost, of the books and records of account
  [accounts], minutes, [and] share transfer records, and other
  records, whether in written or other tangible form, of a
  corporation, regardless of the period during which the holder was a
  beneficial holder or record holder and regardless of the number of
  shares held by the person.
         SECTION 27.  Section 21.220, Business Organizations Code, is
  amended to read as follows:
         Sec. 21.220.  PENALTY FOR FAILURE TO PREPARE VOTING LIST. An
  officer or agent of a corporation who is in charge of the
  corporation's share transfer records and who does not prepare the
  list of shareholders, keep the list on file for a 10-day period
  before the annual meeting, or [produce and] keep the list available
  for inspection [at the annual meeting] as required by Sections
  21.354 and 21.372 is liable to a shareholder who suffers damages
  because of the failure for the damage caused by the failure.
         SECTION 28.  Section 21.354(a), Business Organizations
  Code, is amended to read as follows:
         (a)  The list of shareholders entitled to vote at the meeting
  prepared under Section 21.372 shall be[:
               [(1)]  subject to inspection by a shareholder during
  regular business hours[; and
               [(2)  produced and kept open at the meeting].
         SECTION 29.  Section 21.372(a-1), Business Organizations
  Code, is amended to read as follows:
         (a-1)  Instead of being kept on file, the list required by
  Subsection (a) may be kept on a reasonably accessible electronic
  data system if the information required to gain access to the list
  is provided with notice of the meeting. Section 21.353(c)[,
  Section 21.354(a-1),] and this subsection may not be construed to
  require a corporation to include any electronic contact information
  of a shareholder on the list. A corporation that elects to make the
  list available on an electronic data system must take reasonable
  measures to ensure the information is available only to
  shareholders of the corporation.
         SECTION 30.  Section 22.220, Business Organizations Code, is
  amended by amending Subsection (a) and adding Subsection (c) to
  read as follows:
         (a)  The certificate of formation or bylaws of a corporation
  may provide that an action required by this chapter to be taken at a
  meeting of the corporation's directors or an action that may be
  taken at a meeting of the directors or a committee may be taken
  without holding a meeting, providing prior notice, or taking a vote
  if a written consent, stating the action to be taken, is signed by
  the number of directors or committee members necessary to take that
  action at a meeting at which all of the directors or committee
  members are present and voting. The consent must state the date of
  each director's or committee member's signature.
         (c)  Notwithstanding a provision of this code, advance
  notice is not required to be given to take an action by written
  consent as provided by this section.
         SECTION 31.  Section 22.230(e), Business Organizations
  Code, is amended to read as follows:
         (e)  If at least one of the conditions of Subsection (b) is
  satisfied, neither the corporation nor any of the corporation's
  members [shareholders] will have a cause of action against any of
  the persons described by Subsection (a) for breach of duty with
  respect to the making, authorization, or performance of the
  contract or transaction because the person had the relationship or
  interest described by Subsection (a) or took any of the actions
  authorized by Subsection (d).
         SECTION 32.  Section 101.001(1), Business Organizations
  Code, is amended to read as follows:
               (1)  "Company agreement" means any agreement, written,
  implied, or oral, of the members concerning the affairs or the
  conduct of the business of a limited liability company. A company
  agreement of a limited liability company having only one member is
  not unenforceable because only one person is a party to the company
  agreement. A written company agreement may consist of one or more
  agreements, instruments, or other writings and may include or
  incorporate one or more schedules, supplements, or other writings
  providing for the conduct of the business and affairs of the limited
  liability company or of a series of the limited liability company.
         SECTION 33.  Section 101.051, Business Organizations Code,
  is amended to read as follows:
         Sec. 101.051.  CERTAIN PROVISIONS CONTAINED IN CERTIFICATE
  OF FORMATION. (a) A provision that may be included [contained] in
  the company agreement of a limited liability company may
  [alternatively] be included in the certificate of formation of the
  company as provided by Section 3.005(b).
         (b)  A reference in this title to the company agreement of a
  limited liability company includes any provision contained in the
  company's certificate of formation to the extent that the provision
  reflects the agreement of each member concerning the affairs or the
  conduct of the business of the limited liability company [instead
  of the company agreement as provided by Subsection (a)].
         SECTION 34.  Section 101.052, Business Organizations Code,
  is amended by amending Subsection (f) and adding Subsection (g) to
  read as follows:
         (f)  A company agreement is enforceable by or against the
  limited liability company, including a protected series or
  registered series of the company, regardless of whether the
  company, or the protected series or registered series of the
  company, has signed or otherwise expressly adopted the agreement.
         (g)  A member or manager of a limited liability company, or
  an assignee of a membership interest of a limited liability
  company, is bound by the company agreement, regardless of whether
  the member, manager, or assignee signs the company agreement.
         SECTION 35.  Sections 101.054(a) and (e), Business
  Organizations Code, are amended to read as follows:
         (a)  Except as provided by this section, the following
  provisions may not be waived or modified in the company agreement of
  a limited liability company:
               (1)  this section;
               (2)  Section 101.101, 101.151, 101.206, 101.501, or
  Subchapter M of Chapter 101, except that Sections 101.601(d),
  101.610, 101.611, 101.613(a), 101.616(2)(A) through (D), 101.618,
  or 101.619(b) may be waived or modified in the company agreement;
               (3)  Chapter 1, if the provision is used to interpret a
  provision or define a word or phrase contained in a section listed
  in this subsection;
               (4)  Chapter 2, except that Section 2.104(c)(2),
  2.104(c)(3), or 2.113 may be waived or modified in the company
  agreement;
               (5)  Chapter 3, except that Subchapters C and E may be
  waived or modified in the company agreement; or
               (6)  Chapter 4, 5, 10, 11, or 12[, other than Section
  11.056].
         (e)  The company agreement may not unreasonably restrict a
  member's or assignee's rights [person's right of access to records
  and information] under Section 101.502.
         SECTION 36.  Subchapter B, Chapter 101, Business
  Organizations Code, is amended by adding Section 101.056 to read as
  follows:
         Sec. 101.056.  RATIFICATION OF VOID OR VOIDABLE ACTS OR
  TRANSACTIONS. (a) Any act or transaction taken by or with respect
  to a limited liability company under this code or a company
  agreement that is void or voidable when taken may be ratified, and
  the failure to comply with any requirements of the company
  agreement which caused the act or transaction to be void or voidable
  may be waived, in accordance with this section.
         (b)  An act or transaction may be ratified or waived, as
  applicable, with the approval of the members, managers, or other
  persons whose approval would be required under the company
  agreement at the time of the ratification or waiver:
               (1)  for the void or voidable act or transaction to be
  validly taken; or
               (2)  to amend the company agreement in a manner that
  would permit the void or voidable act or transaction to be validly
  taken.
         (c)  If the void or voidable act or transaction was the
  issuance or assignment of any membership interests, the membership
  interests purportedly issued or assigned are deemed to have not
  been issued or assigned for purposes of determining whether the
  void or voidable act or transaction is ratified or waived under this
  section.
         (d)  Any act or transaction ratified or waived under this
  section is deemed validly taken at the time the act or transaction
  occurred.
         (e)  This section may not be construed to limit the
  accomplishment of a ratification or waiver of a void or voidable act
  or transaction by other lawful means.
         SECTION 37.  Section 101.206(e), Business Organizations
  Code, is amended to read as follows:
         (e)  This section may not be construed to affect the
  obligation of a member of a limited liability company to return a
  distribution to the company under the company agreement, another
  agreement, or other state or federal law.
         SECTION 38.  Section 101.252, Business Organizations Code,
  is amended to read as follows:
         Sec. 101.252.  MANAGEMENT BY GOVERNING AUTHORITY. The
  governing authority of a limited liability company shall direct the
  management of [manage] the business and affairs of the company and
  exercise or authorize the exercise of the powers of the company as
  provided by:
               (1)  the company agreement; and
               (2)  this title and the provisions of Title 1
  applicable to a limited liability company to the extent that the
  company agreement does not provide for the management of the
  company.
         SECTION 39.  Section 101.358(b), Business Organizations
  Code, is amended to read as follows:
         (b)  Notwithstanding Sections 6.201 and 6.202, an action may
  be taken without holding a meeting, providing prior or subsequent
  notice, or taking a vote if a written consent or consents stating
  the action to be taken is signed by the number of governing persons,
  members, or committee members of a limited liability company, as
  appropriate, necessary to have at least the minimum number of votes
  that would be necessary to take the action at a meeting at which
  each governing person, member, or committee member, as appropriate,
  entitled to vote on the action is present and votes.
         SECTION 40.  Section 101.457, Business Organizations Code,
  is amended to read as follows:
         Sec. 101.457.  TOLLING OF STATUTE OF LIMITATIONS. A written
  demand filed with the limited liability company under Section
  101.453 tolls the statute of limitations on the claim on which
  demand is made until the later of:
               (1)  the 31st day after the expiration of any waiting
  period under Section 101.453 [101.453(a)]; or
               (2)  the 31st day after the expiration of any stay
  granted under Section 101.455, including all continuations of the
  stay.
         SECTION 41.  Section 101.502, Business Organizations Code,
  is amended to read as follows:
         Sec. 101.502.  RIGHT TO EXAMINE RECORDS [AND CERTAIN OTHER
  INFORMATION]. (a) A member of a limited liability company or an
  assignee of a membership interest in a limited liability company,
  [or a representative of the member or assignee,] on written demand
  stating [request and for] a proper purpose, is entitled to [may]
  examine and copy at a [any] 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 [and at the member's or assignee's expense:
               [(1)  records required under Sections 3.151 and
  101.501; and
               [(2)  other information regarding the business,
  affairs, and financial condition of the company that is reasonable
  for the person to examine and copy].
         (b)  The examination and copying under Subsection (a) may be
  conducted [A limited liability company shall provide to a member of
  the company or an assignee of a membership interest in the company,
  on written request] by the member or assignee or through an agent,
  accountant, or attorney. An agent, accountant, or attorney who
  conducts an examination and copying under this section is subject
  to any obligations of the member or assignee with respect to the
  records made available for examination and copying. [sent to the
  company's principal office in the United States or, if different,
  the person and address designated in the company agreement, a free
  copy of:]
         (c)  On written request of a member or an assignee of a
  membership interest, the limited liability company shall provide to
  the requesting member or assignee without charge copies of:
               (1)  the company's certificate of formation, including
  any amendments to or restatements of the certificate of formation;
               (2)  if in writing, the company agreement, including
  any amendments to or restatements of the company agreement; and
               (3)  any tax returns described by Section
  101.501(a)(2).
         (d)  A demand or request made by a member or assignee under
  Subsection (a) or (c) must be made to:
               (1)  the person who is designated to receive the demand
  or request in the company agreement at the address designated in the
  company agreement; or
               (2)  if there is no designation, a manager or managing
  member at the limited liability company's principal office in the
  United States.
         SECTION 42.  Section 101.601(c), Business Organizations
  Code, is amended to read as follows:
         (c)  Nothing in this subchapter shall be construed to limit
  the application of the principle of freedom of [to] contract to a
  series that is not a protected series or a registered series.
  Except as otherwise provided by Sections 101.627 through 101.636, a
  series may not merge or convert.
         SECTION 43.  Section 101.623(b), Business Organizations
  Code, is amended to read as follows:
         (b)  A certificate of registered series must state:
               (1)  the name of the limited liability company;
               (2)  the name of the registered series being formed,
  which must conform with the requirements of Section 5.0561
  [5.056(c)]; and
               (3)  if the registered series is formed under a plan of
  conversion or merger, a statement to that effect.
         SECTION 44.  Section 101.624(d), Business Organizations
  Code, is amended to read as follows:
         (d)  A manager associated with a registered series or, if
  there is no manager, any member associated with the registered
  series who becomes aware that any statement in a certificate of
  registered series filed with respect to the registered series was
  false when made, or that any provision in the certificate of
  registered series has changed making the certificate of registered
  series false in any material respect, or that the name of the
  registered series does not comply with Section 101.626, shall
  promptly amend the certificate of registered series.
         SECTION 45.  Section 101.625(b), Business Organizations
  Code, is amended to read as follows:
         (b)  The certificate of termination must contain:
               (1)  the name of the limited liability company;
               (2)  the name of the registered series;
               (3)  the registered series' filing number assigned by
  the secretary of state;
               (4)  the nature of the event requiring winding up of the
  registered series;
               (5)  a statement that the registered series has
  complied with the provisions of this code governing the series'
  winding up; and
               (6)  any other information the person filing the
  certificate of termination determines.
         SECTION 46.  Section 101.627(a), Business Organizations
  Code, is amended to read as follows:
         (a)  Upon compliance with Section 101.628, a registered
  series of a domestic limited liability company may convert to a
  protected series of the domestic limited liability company by
  filing a certificate of conversion that complies with Section
  101.631 with the secretary of state in accordance with[,] and
  taking effect as a filing instrument as specified[,] by Chapter 4.
         SECTION 47.  Section 101.628(g), Business Organizations
  Code, is amended to read as follows:
         (g)  Any of the terms of the plan of conversion may be made
  dependent on a fact ascertainable outside of the plan if the manner
  in which the fact [those facts] will operate on the terms of the
  conversion is clearly and expressly stated in the plan. In this
  subsection, "fact" ["facts"] includes the occurrence of any event,
  including a determination or action by any person.
         SECTION 48.  Section 101.631(a), Business Organizations
  Code, is amended to read as follows:
         (a)  A [After adoption of a plan of conversion as provided by
  Section 101.628, a] certificate of conversion must be signed by the
  converting series and must include a statement certifying the
  following:
               (1)  the name of the limited liability company and, if
  it has been changed, the name under which the company's certificate
  of formation was originally filed;
               (2)  the filing number of the limited liability company
  assigned by the secretary of state;
               (3)  the name of the converting series and, if it is a
  registered series and its name has been changed, the name under
  which its certificate of registered series was originally filed;
               (4)  if the converting series is a registered series,
  the filing number of the registered series assigned by the
  secretary of state;
               (5)  that a plan of conversion is on file at the
  principal place of business of the converting series, and the
  address of the principal place of business;
               (6)  that a plan of conversion will be on file after the
  conversion at the principal place of business of the converted
  series, and the address of the principal place of business;
               (7)  that a copy of the plan of conversion will be on
  written request furnished without cost by the converting series
  before the conversion or by the converted series after the
  conversion to any owner or member of the converting series or the
  converted series; and
               (8)  that the plan of conversion has been adopted as
  required by the company agreement of the limited liability company
  and Section 101.628.
         SECTION 49.  Section 101.633(a)(1), Business Organizations
  Code, is amended to read as follows:
               (1)  "Merger" means:
                     (A)  the division of a merging series into:
                           (i)  two or more new protected series or
  [and] registered series; or
                           (ii)  a surviving merging series and one or
  more new protected series or registered series; or
                     (B)  the combination of one or more merging series
  with one or more merging series resulting in:
                           (i)  one or more surviving merging series;
                           (ii)  the creation of one or more new
  protected series or registered series; or
                           (iii)  one or more surviving merging series
  and the creation of one or more new protected series or registered
  series.
         SECTION 50.  Sections 101.633(b) and (e), Business
  Organizations Code, are amended to read as follows:
         (b)  One or more merging series of the same limited liability
  company may effect [affect] a merger as provided by a plan of merger
  that is approved in accordance with this section and that complies
  with Sections 101.634 through 101.636. The plan of merger shall
  provide for one or more surviving or new protected series or
  registered series of the same limited liability company.
         (e)  An item required by Subsection [Subsections] (d)(6),
  (7), or [and] (8) may be included in the plan of merger by an
  attachment or exhibit to the plan.
         SECTION 51.  Sections 101.634(a), (d), and (e), Business
  Organizations Code, are amended to read as follows:
         (a)  If [After approval of a plan of merger as provided by
  Section 101.633, if] a registered series is a party to the merger or
  if a new registered series is to be created by the merger, a
  certificate of merger must be signed by each merging series that is
  a party to the merger and must include a statement certifying the
  following:
               (1)  the name of each merging series that is a party to
  the merger and the name of the limited liability company that formed
  that merging series;
               (2)  that a plan of merger has been approved and
  executed by or on behalf of each merging series that is to merge;
               (3)  the name of each merging series that survives the
  merger and each new registered series or protected series that is
  created by the merger;
               (4)  any amendment to the certificate of registered
  series of any registered series that is a surviving merging series,
  including a change in the name of the surviving registered series,
  to be effected by the merger or a statement that amendments are
  being made to the certificate of registered series of any
  registered series that is a surviving merging series under a
  certificate of amendment attached to the certificate of merger
  under Subsection (d);
               (5)  the certificate of registered series for each new
  registered series that is to be created by the merger is being filed
  with the certificate of merger;
               (6)  that the plan of merger is on file at a place of
  business of each surviving or new registered series or the limited
  liability company that formed the registered series, and the
  address of that place of business;
               (7)  that a copy of the plan of merger will be on
  written request furnished without cost by each surviving merging
  series or new registered series or protected series to any member of
  any merging series that is a party to the merger or any registered
  series or protected series created by the plan of merger and, for a
  merger with multiple surviving or new series, to any creditor or
  obligee of the parties to the merger at the time of the merger if a
  liability or obligation is then outstanding;
               (8)  if approval of the members of any merging series
  that was a party to the plan of merger is not required by this code
  or the company agreement, a statement to that effect; and
               (9)  a statement that the plan of merger has been
  approved as required by this code and by the company agreement.
         (d)  The certificate of merger must be filed with the
  secretary of state in accordance with[,] and take effect as a filing
  instrument as specified by Chapter 4. If a new registered series is
  to be created by the merger, a certificate of registered series for
  the new registered series that complies with Section 101.623 must
  be simultaneously filed with the certificate of merger in
  accordance with Chapter 4 as a filing instrument and must take
  effect simultaneously with the effectiveness of the certificate of
  merger.
         (e)  Whenever this section requires the filing of a
  certificate of merger, that requirement may be [is] satisfied by
  the filing of the plan of merger containing the information
  required to be included in the certificate of merger as provided by
  this section.
         SECTION 52.  Section 101.636, Business Organizations Code,
  is amended to read as follows:
         Sec. 101.636.  PROHIBITION ON MERGER PERMITTED. A company
  agreement may provide that a protected series or registered series
  [company] does not have the power to merge under Section 101.633.
         SECTION 53.  Section 151.001(5), Business Organizations
  Code, is amended to read as follows:
               (5)  "Partnership agreement" means any agreement,
  written, implied, or oral, of the partners concerning a partnership
  and the partnership's affairs or business, and includes amendments
  to the partnership agreement. A partnership is not required to sign
  its partnership agreement. A partnership is bound by its
  partnership agreement whether or not the partnership signs the
  partnership agreement. A partnership agreement may provide rights
  to any person, including a person who is not a party to the
  partnership agreement, to the extent contained in the partnership
  agreement. A partner of a partnership or a transferee or assignee
  of a partnership interest is bound by the partnership agreement
  whether or not the partner, transferee, or assignee signs the
  partnership agreement. A written partnership agreement may consist
  of one or more agreements, instruments, or other writings and may
  include or incorporate one or more schedules, supplements, or other
  writings providing for the conduct of the business and affairs of
  the partnership.
         SECTION 54.  Section 152.002(b), Business Organizations
  Code, is amended to read as follows:
         (b)  A partnership agreement or the partners may not:
               (1)  unreasonably restrict a partner's or former
  partner's right of access to books and records under Section
  152.212;
               (2)  eliminate the duty of loyalty under Section
  152.205, except that the partners by agreement may identify
  specific types of activities or categories of activities that do
  not violate the duty of loyalty if the types or categories are not
  manifestly unreasonable;
               (3)  eliminate the duty of care under Section 152.206,
  except that the partners by agreement may determine the standards
  by which the performance of the obligation is to be measured if the
  standards are not manifestly unreasonable;
               (4)  eliminate the obligation of good faith under
  Section 152.204(b), except that the partners by agreement may
  determine the standards by which the performance of the obligation
  is to be measured if the standards are not manifestly unreasonable;
               (5)  vary the power to withdraw as a partner under
  Section 152.501(b)(1), (7), or (8), except for the requirement that
  notice be in writing;
               (6)  vary the right to expel a partner by a court in an
  event specified by Section 152.501(b)(5);
               (7)  restrict rights of a third party under this
  chapter or the other partnership provisions, except for a
  limitation on an individual partner's liability in a limited
  liability partnership as provided by this chapter;
               (8)  select a governing law not permitted under
  Sections 1.103 and 1.002(43)(C); or
               (9)  except as provided in Subsections (c) and (d),
  waive or modify the following provisions of Title 1:
                     (A)  Chapter 1, if the provision is used to
  interpret a provision or to define a word or phrase contained in a
  section listed in this subsection;
                     (B)  Chapter 2, other than Sections 2.104(c)(2),
  2.104(c)(3), and 2.113;
                     (C)  Chapter 3, other than Subchapters C and E of
  that chapter; or
                     (D)  Chapters 4, 5, 10, 11, and 12, other than
  Sections 11.057(a), (b), (c)(1), (c)(3), (d), and (f).
         SECTION 55.  Section 153.004(a), Business Organizations
  Code, is amended to read as follows:
         (a)  Except as provided by this section, the following
  provisions of Title 1 may not be waived or modified in the
  partnership agreement of a limited partnership:
               (1)  Chapter 1, if the provision is used to interpret a
  provision or define a word or phrase contained in a section listed
  in this subsection;
               (2)  Chapter 2, other than Section 2.104(c)(2),
  2.104(c)(3), or 2.113;
               (3)  Chapter 3, other than Subchapters C and E of that
  chapter and Section 3.151 (provided, that in all events a
  partnership agreement may not validly waive or modify Section
  153.551 or unreasonably restrict a partner's or assignee's rights
  [right of access to books and records] under Section 153.552); or
               (4)  Chapter 4, 5, 10, 11, or 12, other than Section
  11.058.
         SECTION 56.  Section 153.112, Business Organizations Code,
  is amended to read as follows:
         Sec. 153.112.  RECEIPT OF WRONGFUL DISTRIBUTION. A limited
  partner who receives a distribution that is not permitted under
  Section 153.210 is not required to return the distribution unless
  the limited partner knew that the distribution violated the
  prohibition of Section 153.210. This section does not affect an
  obligation of the limited partner under the partnership agreement,
  another agreement, or other applicable law to return the
  distribution.
         SECTION 57.  Section 153.552, Business Organizations Code,
  is amended to read as follows:
         Sec. 153.552.  EXAMINATION OF RECORDS [AND INFORMATION].
  (a) On written demand [request] stating a proper purpose, a partner
  or an assignee of a partnership interest in a limited partnership is
  entitled [may examine and copy, in person or through a
  representative, records required to be kept under Section 153.551
  and other information regarding the business, affairs, and
  financial condition of the limited partnership as is just and
  reasonable for the person] 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.
         (b)  The examination and copying [records requested] under
  Subsection (a) may be conducted by the partner or assignee or
  through an agent, accountant, or attorney. An agent, accountant,
  or attorney who conducts an examination and copying under this
  section is subject to any obligations of the partner or assignee
  with respect to the records made available for examination and
  copying [examined and copied at a reasonable time and at the
  partner's sole expense].
         (c)  On written request by a partner or an assignee of a
  partnership interest, the partnership shall provide to the
  requesting partner or assignee without charge copies of:
               (1)  the partnership agreement and certificate of
  formation and all amendments or restatements; and
               (2)  any tax return described by Section 153.551(a)(2).
         (d)  A demand or request made by a partner or assignee under
  Subsection (a) or (c) must be made to:
               (1)  the person who is designated to receive the demand
  or request in the partnership agreement at the address designated
  in the partnership agreement; or
               (2)  if there is no designation, a general partner at
  the partnership's principal office in the United States.
         SECTION 58.  Subchapter C, Chapter 154, Business
  Organizations Code, is amended by adding Section 154.205 to read as
  follows:
         Sec. 154.205.  RATIFICATION OF VOID OR VOIDABLE ACTS OR
  TRANSACTIONS. (a) Any act or transaction taken by or with respect
  to a partnership under this code or a partnership agreement that is
  void or voidable when taken may be ratified, and the failure to
  comply with any requirements of the partnership agreement which
  caused the act or transaction to be void or voidable may be waived,
  in accordance with this section.
         (b)  An act or transaction may be ratified or waived, as
  applicable, with the approval of the partners or other persons
  whose approval would be required under the partnership agreement at
  the time of the ratification or waiver:
               (1)  for the void or voidable act or transaction to be
  validly taken; or
               (2)  to amend the partnership agreement in a manner
  that would permit the void or voidable act or transaction to be
  validly taken.
         (c)  If the void or voidable act or transaction was the
  issuance or assignment of any partnership interests, the
  partnership interests purportedly issued or assigned are deemed to
  have not been issued or assigned for purposes of determining
  whether the void or voidable act or transaction is ratified or
  waived under Subsection (b).
         (d)  Any act or transaction ratified or waived under this
  section is deemed validly taken at the time the act or transaction
  occurred.
         (e)  This section may not be construed to limit the
  accomplishment of a ratification or waiver of a void or voidable act
  or transaction by other lawful means.
         SECTION 59.  The following provisions of the Business
  Organizations Code are repealed:
               (1)  Section 21.160(d);
               (2)  Sections 21.169(d) and (e);
               (3)  Section 21.354(a-1); and
               (4)  Section 22.158(d).
         SECTION 60.  This Act takes effect September 1, 2023.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1514 passed the Senate on
  April 20, 2023, by the following vote:  Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1514 passed the House on
  April 28, 2023, by the following vote:  Yeas 139, Nays 5, two
  present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor
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