Bill Text: TX HB2622 | 2013-2014 | 83rd Legislature | Introduced

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Bill Title: Relating to the creation of a low-profit limited liability company.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2013-03-18 - Referred to Business & Industry [HB2622 Detail]

Download: Texas-2013-HB2622-Introduced.html

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83R8327 RWG-F
By: Creighton H.B. No. 2622

A BILL TO BE ENTITLED
AN ACT
relating to the creation of a low-profit limited liability company.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.002, Business Organizations Code, is
amended by amending Subdivision (46) and adding Subdivision (50-a)
to read as follows:
(46) "Limited liability company" means an entity
governed as a limited liability company under Title 3 or 7. The term
includes a professional limited liability company and a low-profit
limited liability company.
(50-a) "Low-profit limited liability company" means
an entity governed as a limited liability company under Title 3 that
meets the requirements of Section 2.013.
SECTION 2. Subchapter A, Chapter 2, Business Organizations
Code, is amended by adding Section 2.013 to read as follows:
Sec. 2.013. PURPOSES OF LOW-PROFIT LIMITED LIABILITY
COMPANY. (a) A limited liability company organized as a low-profit
limited liability company must be organized and operated for a
business purpose that significantly furthers the accomplishment of
one or more religious, charitable, scientific, literary, or
educational purposes as described by 26 U.S.C. Section
170(c)(2)(B).
(b) A limited liability company organized as a low-profit
limited liability company may not be operated with a significant
purpose of producing income or capital appreciation. The
production of significant income or capital appreciation by a
low-profit limited liability company alone is not conclusive
evidence of a significant purpose prohibited by this subsection.
(c) A low-profit limited liability company may not be
operated to accomplish a political or legislative purpose as
described by 26 U.S.C. Section 170(c)(2)(D).
(d) A limited liability company that ceases to meet the
requirements of this section:
(1) may not be designated as a low-profit limited
liability company; and
(2) must change the company's name in accordance with
Section 5.056(a).
SECTION 3. Subchapter A, Chapter 3, Business Organizations
Code, is amended by adding Section 3.0101 to read as follows:
Sec. 3.0101. SUPPLEMENTAL PROVISIONS REQUIRED IN
CERTIFICATE OF FORMATION OF LOW-PROFIT LIMITED LIABILITY COMPANY.
In addition to the information required by Sections 3.005 and
3.010, the certificate of formation of a low-profit limited
liability company must state a purpose or purposes for formation
that meet the requirements of Section 2.013.
SECTION 4. Subchapter B, Chapter 3, Business Organizations
Code, is amended by adding Section 3.0612 to read as follows:
Sec. 3.0612. SUPPLEMENTAL PROVISIONS FOR RESTATED
CERTIFICATE OF FORMATION FOR LIMITED LIABILITY COMPANY TO OPERATE
AS LOW-PROFIT LIMITED LIABILITY COMPANY. In addition to the
provisions authorized or required by Sections 3.059 and 3.0611, a
limited liability company may operate as a low-profit limited
liability company if the restated certificate of formation of the
limited liability company contains the information required by
Section 3.0101.
SECTION 5. Section 3.151, Business Organizations Code, is
amended by adding Subsection (d) to read as follows:
(d) The information kept by a low-profit limited liability
company under Subsection (a) must be sufficient to establish that
the purposes of the entity meet the requirements of Section 2.013.
SECTION 6. Section 3.153, Business Organizations Code, is
amended to read as follows:
Sec. 3.153. RIGHT OF EXAMINATION BY OWNER OR MEMBER. (a)
Each owner or member of a filing entity may examine the books and
records of the filing entity maintained under Section 3.151 and
other books and records of the filing entity to the extent provided
by the governing documents of the entity and the title of this code
governing the filing entity.
(b) In addition to the requirements of Subsection (a), a
private foundation, as defined by 26 U.S.C. Section 509(a), that is
an owner or member of a low-profit limited liability company may
examine the books and records of the company maintained under
Section 3.151 and other books and records of the company,
notwithstanding any provision of the governing documents of the
company or this code, as necessary for the foundation to determine
whether the foundation's operations and investments comply with
federal tax laws.
SECTION 7. Subchapter B, Chapter 5, Business Organizations
Code, is amended by adding Section 5.0561 to read as follows:
Sec. 5.0561. NAME OF LOW-PROFIT LIMITED LIABILITY COMPANY.
The name of a low-profit limited liability company must contain:
(1) the phrase "low-profit limited liability
company"; or
(2) the abbreviation "L.3.C."
SECTION 8. Subchapter B, Chapter 11, Business Organizations
Code, is amended by adding Section 11.0561 to read as follows:
Sec. 11.0561. SUPPLEMENTAL PROVISIONS FOR LOW-PROFIT
LIMITED LIABILITY COMPANY. In addition to the requirements of
Section 11.056, the failure of a low-profit limited liability
company to meet the requirements of Section 2.013 is an event
requiring winding up under Section 11.051(4) unless, not later than
the 60th day after the date of that event, the company files a
certificate of amendment to change the company's name to conform
with the requirements of Section 5.056.
SECTION 9. This Act takes effect September 1, 2013.