Bill Text: TX HB4862 | 2025-2026 | 89th Legislature | Comm Sub

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Bill Title: Relating to business organizations.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2025-05-13 - Laid on the table subject to call [HB4862 Detail]

Download: Texas-2025-HB4862-Comm_Sub.html

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89R25227 SRA-F
By: Longoria H.B. No. 4862
Substitute the following for H.B. No. 4862:
By: Leach C.S.H.B. No. 4862

A BILL TO BE ENTITLED
AN ACT
relating to business organizations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 1, Business Organizations
Code, is amended by adding Sections 1.056 and 1.057 to read as
follows:
Sec. 1.056. REFERENCES IN CODE TO CERTAIN DISTRICT COURTS
INCLUDES BUSINESS COURTS. Notwithstanding any other law, a
reference or grant of jurisdiction in this code, including a grant
of exclusive jurisdiction, to a district court constitutes a
reference or grant of concurrent jurisdiction to a business court
established under Chapter 25A, Government Code, if the business
court has authority and jurisdiction under Chapter 25A, Government
Code, to adjudicate the action or claim. This section does not
expand the authority of the business court under Chapter 25A,
Government Code.
Sec. 1.057. LAWS GOVERNING FORMATION, INTERNAL AFFAIRS, AND
GOVERNANCE OF DOMESTIC ENTITY. (a) The plain meaning of the text
of this code may not be supplanted, contravened, or modified by the
laws or judicial decisions of any other state.
(b) The managerial officials of a domestic entity, in
exercising their powers with respect to the domestic entity, may
consider the laws and judicial decisions of other states and the
practices observed by entities formed in those other states. The
failure or refusal of a managerial official to consider, or to
conform the exercise of the managerial official's powers to, the
laws, judicial decisions, or practices of another state does not
constitute or imply a breach of this code or of any duty existing
under the laws of this state.
SECTION 2. Section 2.115(b), Business Organizations Code,
is amended to read as follows:
(b) The governing documents of a domestic entity [may
require], consistent with applicable state and federal
jurisdictional requirements, may require:
(1) that any internal entity claims shall be brought
only in a court in this state; and
(2) that one or more courts in this state having
jurisdiction shall serve as the exclusive forum and venue for any
internal entity claims.
SECTION 3. Section 3.007(a), Business Organizations Code,
is amended to read as follows:
(a) In addition to the information required by Section
3.005, the certificate of formation of a for-profit or professional
corporation must state:
(1) the aggregate number of shares the corporation is
authorized to issue;
(2) if the shares the corporation is authorized to
issue consist of one class of shares only, the par value of each
share or a statement that each share is without par value;
(3) if the corporation is to be managed by a board of
directors, the number of directors constituting the initial board
of directors and the name and address of each individual [person]
who will serve as director until the first annual meeting of
shareholders and until a successor is elected and qualified; and
(4) if the corporation is to be managed pursuant to a
shareholders' agreement in a manner other than by a board of
directors, the name and address of each person who will perform the
functions required by this code to be performed by the initial board
of directors.
SECTION 4. Section 3.015(a), Business Organizations Code,
is amended to read as follows:
(a) In addition to containing the information required
under Sections 3.005 and 3.014, the certificate of formation of a
professional association must:
(1) be signed by each member of the association; and
(2) state:
(A) the name and address of each original member
of the association;
(B) whether the association is to be governed by
a board of directors or by an executive committee; and
(C) the name and address of each individual
[person] serving as an initial member of the board of directors or
executive committee of the association.
SECTION 5. Section 3.060, Business Organizations Code, is
amended by amending Subsection (a) and adding Subsection (c) to
read as follows:
(a) In addition to the provisions authorized or required by
Section 3.059, a restated certificate of formation for a for-profit
corporation or professional corporation may omit:
(1) any prior statements regarding the number of
directors and the names and addresses of the individuals [persons]
serving as directors and, at the corporation's election, may insert
a statement regarding the current number of directors and the names
and addresses of the individuals [persons] currently serving as
directors; and
(2) any provisions that were necessary to effect a
change, exchange, reclassification, subdivision, combination, or
cancellation of shares, if the change, exchange, reclassification,
subdivision, combination, or cancellation has become effective.
(c) Any omission or insertion under Subsection (a) or
omission under Section 3.059(b) is not considered an amendment that
requires shareholder approval.
SECTION 6. Section 3.061, Business Organizations Code, is
amended by amending Subsection (a) and adding Subsection (c) to
read as follows:
(a) In addition to the provisions authorized or required by
Section 3.059, a restated certificate of formation for a nonprofit
corporation may omit any prior statements regarding the number of
directors and the names and addresses of the individuals [persons]
serving as directors and, at the corporation's election, may insert
a statement regarding the current number of directors and the names
and addresses of the individuals [persons] currently serving as
directors.
(c) Any omission or insertion under Subsection (a) or
omission under Section 3.059(b) is not considered an amendment that
requires member approval.
SECTION 7. Section 3.0611, Business Organizations Code, is
amended to read as follows:
Sec. 3.0611. SUPPLEMENTAL PROVISIONS FOR RESTATED
CERTIFICATE OF FORMATION FOR LIMITED LIABILITY COMPANY. (a) In
addition to the provisions authorized or required by Section 3.059,
a restated certificate of formation for a limited liability company
may omit any prior statements regarding whether the company has or
does not have managers and the names and addresses of managers or
members and, at the company's election, may insert a statement:
(1) regarding whether the company currently has or
does not have managers;
(2) that the company currently has managers and the
names and addresses of the persons currently serving as managers;
or
(3) that the company currently does not have managers
and the names and addresses of the current members of the company.
(b) Any omission or insertion under Subsection (a) or
omission under Section 3.059(b) is not considered an amendment that
requires member approval.
SECTION 8. Section 3.062, Business Organizations Code, is
amended to read as follows:
Sec. 3.062. SUPPLEMENTAL PROVISIONS FOR RESTATED
CERTIFICATE OF FORMATION FOR REAL ESTATE INVESTMENT TRUST. (a) In
addition to the provisions authorized or required by Section 3.059,
a restated certificate of formation for a real estate investment
trust may update the current number of trust managers and the names
and addresses of the individuals [persons] serving as trust
managers.
(b) Any update under Subsection (a) or Section 3.059(b) is
not considered an amendment that requires shareholder approval.
SECTION 9. Subchapter C, Chapter 3, Business Organizations
Code, is amended by adding Section 3.106 to read as follows:
Sec. 3.106. AUTHORIZATION OF PLANS, AGREEMENTS,
INSTRUMENTS, AND OTHER DOCUMENTS. (a) If this code expressly
requires the governing authority to approve or take other action
with respect to any plan, agreement, instrument, or other document,
the plan, agreement, instrument, or other document may be approved
by the governing authority in final form or in substantially final
form.
(b) If the governing authority has acted to approve or take
other action with respect to a plan, agreement, instrument, or
other document that is required by this code to be filed with the
secretary of state or referenced in any certificate to be filed with
the secretary of state, the governing authority may, at any time
after acting to approve or taking that other action and before the
effectiveness of the filing with the secretary of state, act to
ratify the plan, agreement, instrument, or other document. That
ratification is considered:
(1) to be effective as of the time of the original act
to approve or the original taking of other action by the governing
authority; and
(2) to satisfy any requirement under this code that
the governing authority approve or take other action with respect
to the plan, agreement, instrument, or other document in a specific
manner or sequence.
SECTION 10. Section 4.001(a), Business Organizations Code,
is amended to read as follows:
(a) A filing instrument must be:
(1) signed by a person authorized by this code to act
on behalf of the entity in regard to the filing instrument; and
(2) delivered to the secretary of state in person or by
mail, courier, [facsimile or] electronic transmission, or any other
method approved by the secretary of state [comparable form of
delivery].
SECTION 11. Section 4.152, Business Organizations Code, is
amended to read as follows:
Sec. 4.152. FILING FEES: FOR-PROFIT CORPORATIONS. For a
filing by or for a for-profit corporation, the secretary of state
shall impose the following fees:
(1) for filing a certificate of formation, $300;
(2) for filing a certificate of amendment, $150;
(3) for filing an application of a foreign corporation
for registration to transact business in this state, $750;
(4) for filing an application of a foreign corporation
for an amended registration to transact business in this state,
$150;
(5) for filing a restated certificate of formation and
accompanying statement, $300;
(6) for filing a statement of change of registered
office, registered agent, or both, $15;
(7) for filing a statement of change of name or address
of a registered agent, $15, except that the maximum fee for
simultaneous filings by a registered agent for more than one
corporation may not exceed $750;
(8) for filing a statement of resolution establishing
one or more series of shares, $15;
(9) for filing a certificate of termination, $40;
(10) for filing a certificate of withdrawal of a
foreign corporation, $15;
(11) for filing a certificate from the home state of a
foreign corporation that the corporation no longer exists in that
state, $15;
(12) for filing a bylaw or agreement restricting
transfer of shares or securities other than as an amendment to the
certificate of formation, $15;
(13) for filing an application for reinstatement of a
certificate of formation or registration as a foreign corporation
following forfeiture under the Tax Code, $75;
(14) for filing an application for reinstatement of a
corporation or registration as a foreign corporation after
involuntary termination or revocation, $75;
(15) for filing a certificate of validation, $15, plus
the filing fee imposed for filing each new filing instrument that is
attached as an exhibit to the certificate of validation under
Section 21.908(b)(3)(B) [21.908(b)(3)(C)]; and
(16) for filing any instrument as provided by this
code for which this section does not expressly provide a fee, $15.
SECTION 12. Section 4.153, Business Organizations Code, is
amended to read as follows:
Sec. 4.153. FILING FEES: NONPROFIT CORPORATIONS. For a
filing by or for a nonprofit corporation, the secretary of state
shall impose the following fees:
(1) for filing a certificate of formation, $25;
(2) for filing a certificate of amendment, $25;
(3) for filing a certificate of merger, conversion, or
consolidation, without regard to whether the surviving or new
corporation is a domestic or foreign corporation, $50;
(4) for filing a statement of change of a registered
office, registered agent, or both, $5;
(5) for filing a certificate of termination, $5;
(6) for filing an application of a foreign corporation
for registration to conduct affairs in this state, $25;
(7) for filing an application of a foreign corporation
for an amended registration to conduct affairs in this state, $25;
(8) for filing a certificate of withdrawal of a
foreign corporation, $5;
(9) for filing a restated certificate of formation and
accompanying statement, $50;
(10) for filing a statement of change of name or
address of a registered agent, $15, except that the maximum fee for
simultaneous filings by a registered agent for more than one
corporation may not exceed $250;
(11) for filing a report under Chapter 22, $5;
(12) for filing a report under Chapter 22 to reinstate
a corporation's right to conduct affairs in this state, $5, plus a
late fee in the amount of $5 or in the amount of $1 for each month or
part of a month that the report remains unfiled, whichever amount is
greater, except that the late fee may not exceed $25;
(13) for filing a report under Chapter 22 to reinstate
a corporation or registration following involuntary termination or
revocation, $25;
(14) for filing a certificate of validation, $5, plus
the filing fee imposed for filing each new filing instrument that is
attached as an exhibit to the certificate of validation under
Section 22.508(c)(3)(B) [22.508(c)(3)(C)]; and
(15) for filing any instrument of a domestic or
foreign corporation as provided by this code for which this section
does not expressly provide a fee, $5.
SECTION 13. Section 4.162(b), Business Organizations Code,
is amended to read as follows:
(b) For a filing by or for a registered series of a domestic
limited liability company when no other fee has been provided, the
secretary of state shall impose the same fee as the filing fee for a
similar instrument under Section 4.151 or 4.154.
SECTION 14. Section 6.051, Business Organizations Code, is
amended by adding Subsection (c) to read as follows:
(c) When a notice is required or permitted by this code or
the governing documents of a domestic entity to be given to an
owner, member, or governing person of the domestic entity, a
document enclosed with, or annexed or appended to, the notice is
considered part of the notice for the purpose of determining
whether notice was properly given under this code and the governing
documents.
SECTION 15. Section 6.202(d), Business Organizations Code,
is amended to read as follows:
(d) The entity shall promptly provide notice to [notify]
each person who is an owner or member as of the record date for the
action, as determined by Section 6.102, who did not sign a consent
described by Subsection (b) of the action that is the subject of the
consent. The notice required by this subsection:
(1) in addition to other information required by
applicable law, must contain a reasonable description of the action
that is the subject of the consent; and
(2) may, instead of containing the complete notice,
include information directing the owner or member to a publicly
available electronic resource at which a reasonable description of
the action that is the subject of the consent and any other
information required by applicable law may be accessed by the owner
or member without subscription or cost.
SECTION 16. Section 7.001, Business Organizations Code, is
amended to read as follows:
Sec. 7.001. LIMITATION OF LIABILITY OF MANAGERIAL OFFICIAL
[GOVERNING PERSON]. (a) Subsections (b) and (c) apply to:
(1) a domestic entity other than a partnership or
limited liability company;
(2) another organization incorporated or organized
under another law of this state; and
(3) to the extent permitted by federal law, a
federally chartered bank, savings and loan association, or credit
union.
(b) The certificate of formation or similar instrument of an
organization to which this section applies may provide that a
managerial official [governing person] of the organization is not
liable, or is liable only to the extent provided by the certificate
of formation or similar instrument, to the organization or its
owners or members for monetary damages for an act or omission by the
managerial official [person] in the managerial official's
[person's] capacity as a managerial official [governing person].
(c) Subsection (b) does not authorize the elimination or
limitation of the liability of a managerial official [governing
person] to the extent the managerial official [person] is found
liable under applicable law for:
(1) a breach of the managerial official's [person's]
duty of loyalty, if any, to the organization or its owners or
members;
(2) an act or omission not in good faith that:
(A) constitutes a breach of duty of the
managerial official [person] to the organization; or
(B) involves intentional misconduct or a knowing
violation of law;
(3) a transaction from which the managerial official
[person] received an improper benefit, regardless of whether the
benefit resulted from an action taken within the scope of the
managerial official's [person's] duties; or
(4) an act or omission for which the liability of a
managerial official [governing person] is expressly provided by an
applicable statute.
(d) The liability of a managerial official [governing
person] may be limited or eliminated:
(1) in a general partnership by its partnership
agreement to the same extent Subsections (b) and (c) permit the
limitation or elimination of liability of a managerial official
[governing person] of an organization to which those subsections
apply and to the additional extent permitted under Chapter 152;
(2) in a limited partnership by its partnership
agreement to the same extent Subsections (b) and (c) permit the
limitation or elimination of liability of a managerial official
[governing person] of an organization to which those subsections
apply and to the additional extent permitted under Chapter 153 and,
to the extent applicable to limited partnerships, Chapter 152; and
(3) in a limited liability company by its certificate
of formation or company agreement to the same extent Subsections
(b) and (c) permit the limitation or elimination of liability of a
managerial official [governing person] of an organization to which
those subsections apply and to the additional extent permitted
under Sections 101.052 and [Section] 101.401.
SECTION 17. Section 10.002, Business Organizations Code, is
amended by adding Subsection (e) to read as follows:
(e) Unless otherwise expressly provided by the plan of
merger, a disclosure letter, disclosure schedules, or similar
documents or instruments delivered in connection with the plan of
merger are not considered part of the plan of merger for purposes of
this chapter, but those documents or instruments have the effects
provided in the plan of merger.
SECTION 18. Section 10.004, Business Organizations Code, is
amended to read as follows:
Sec. 10.004. PLAN OF MERGER: PERMISSIVE PROVISIONS. (a) A
plan of merger may include:
(1) amendments to, restatements of, or amendments and
restatements of the governing documents of any surviving
organization, including a certificate of amendment, a restated
certificate of formation without amendment, or a restated
certificate of formation containing amendments;
(2) provisions relating to an interest exchange,
including a plan of exchange; [and]
(3) provisions for the appointment, at or after the
time at which the plan of merger is adopted by the owners or members
of a party to the merger, of one or more persons, which may include
an organization surviving or resulting from the merger or any
managerial official, representative, or agent of a party to the
merger or of a surviving or resulting organization, as
representative of the owners or members of a party to the merger,
including those whose ownership interests or membership interests
are cancelled, converted, or exchanged in the merger; and
(4) any other provisions relating to the merger that
are not required by this chapter.
(b) Provisions for the appointment of a representative in a
plan of merger under Subsection (a)(3) may:
(1) delegate to the representative the sole and
exclusive authority to take action on behalf of the owners or
members under the plan of merger, including the authority to take
any action the representative determines to enforce or settle the
rights of the owners or members under the plan of merger, subject to
the terms and conditions prescribed by the plan of merger;
(2) prescribe the irrevocable nature and binding
effect of the appointment as to all owners or members to be bound by
the appointment from and after the approval of the plan of merger by
those owners or members in accordance with this subchapter; and
(3) provide that any of the provisions:
(A) may not be amended after the merger has
become effective; or
(B) may be amended only with the consent or
approval of persons specified in the plan of merger.
SECTION 19. Section 10.006(e), Business Organizations
Code, is amended to read as follows:
(e) Sections 10.001(c)-(e), 10.002(c), 10.003, 10.004, and
10.007-10.010 apply to a merger approved under Subsection (d),
except that the resolution approving the merger should be
considered the plan of merger for purposes of those sections.
SECTION 20. Section 10.052, Business Organizations Code, is
amended by adding Subsection (d) to read as follows:
(d) Unless otherwise expressly provided by the plan of
exchange, a disclosure letter, disclosure schedules, or similar
documents or instruments delivered in connection with the plan of
exchange are not considered part of the plan of exchange for
purposes of this chapter, but the documents or instruments have the
effect provided in the plan of exchange.
SECTION 21. Section 10.053, Business Organizations Code, is
amended to read as follows:
Sec. 10.053. PLAN OF EXCHANGE: PERMISSIVE PROVISIONS. (a)
A plan of exchange may include:
(1) provisions for the appointment, at or after the
time at which the plan of exchange is adopted by the owners or
members whose ownership or membership interests are being acquired
in the interest exchange, of one or more persons, which may include
an organization that is a party to the interest exchange or any
managerial official, representative, or agent of a party to the
interest exchange, as representative of those owners or members;
and
(2) any other provisions not required by Section
10.052 relating to the interest exchange.
(b) Provisions for the appointment of a representative in a
plan of exchange under Subsection (a)(1) may:
(1) delegate to the representative the sole and
exclusive authority to take action on behalf of the owners or
members under the plan of exchange, including the authority to take
actions the representative determines to enforce or settle the
rights of the owners or members under the plan of exchange, subject
to the terms and conditions as prescribed by the plan of exchange;
(2) prescribe the irrevocable nature and binding
effect of the appointment as to all owners or members to be bound by
the appointment from and after the approval of the plan of exchange
by those owners or members in accordance with this subchapter; and
(3) provide that any of the provisions:
(A) may not be amended after the interest
exchange has become effective; or
(B) may be amended only with the consent or
approval of persons specified in the plan of exchange.
SECTION 22. Section 10.104, Business Organizations Code, is
amended to read as follows:
Sec. 10.104. PLAN OF CONVERSION: PERMISSIVE PROVISIONS.
(a) A plan of conversion may include other provisions relating to
the conversion that are not inconsistent with law.
(b) An action to be taken by the converted entity in
connection with the conversion of the converting entity that is
provided by the plan of conversion adopted in the manner required by
Section 10.101 or 10.102, as applicable, and that is within the
power of the converted entity under the law of its jurisdiction of
formation:
(1) is considered authorized, adopted, and approved,
as applicable, by:
(A) the converted entity; and
(B) the governing authority and owners or members
of the converted entity, as applicable; and
(2) does not require any further action of the
governing authority, owners, or members of the converted entity for
purposes of this code.
SECTION 23. Section 21.053, Business Organizations Code, is
amended by amending Subsection (c) and adding Subsections (d), (e),
(f), and (g) to read as follows:
(c) Notwithstanding Section 21.054 and except as otherwise
provided by the certificate of formation, the board of directors of
a corporation that has outstanding shares:
(1) may, without shareholder approval, adopt an
amendment to the corporation's certificate of formation to:
(A) change the word or abbreviation in its
corporate name as required by Section 5.054(a) to be a different
word or abbreviation required by that section;
(B) omit any provision that specifies the name
and address of each organizer or director; or
(C) omit any provisions that were necessary to
effect a change, exchange, reclassification, subdivision,
combination, or cancellation of shares, if the change, exchange,
reclassification, subdivision, combination, or cancellation has
become effective; and
(2) if the corporation has only one class of
outstanding stock that is not divided into series and in which no
change is made in any par value of shares of that class, may,
without shareholder approval, adopt an amendment to the
corporation's certificate of formation to:
(A) reclassify by subdividing the issued shares
of the class into a greater number of issued shares of the class;
and
(B) if the reclassification is primarily for the
purpose of maintaining the listing eligibility of the class on any
applicable national securities exchange, reclassify by combining
the issued shares of the class into a lesser number of issued shares
of the class.
(d) An amendment described by Subsection (c)(2)(A) may also
increase the number of authorized shares of the class up to an
amount determined by multiplying the existing number of authorized
shares of the class by the same multiple by which the issued shares
of the class are subdivided in the reclassification and rounding up
any resulting fractional number of shares to a whole number of
shares.
(e) An amendment described by Subsection (c)(2)(B) may also
decrease the number of authorized shares of the class to an amount
determined by dividing the existing number of authorized shares of
the class by the same multiple by which the issued shares of the
class are combined in the reclassification and rounding up any
resulting fractional number of shares to a whole number of shares.
(f) When a reclassification of issued shares:
(1) with par value is made by a corporation under
Subsection (c)(2)(A), an amount of surplus designated by the
corporation's board of directors that is not less than the
aggregate par value of the shares issued as a result of the
reclassification shall be transferred to stated capital; and
(2) without par value is made by a corporation under
Subsection (c)(2)(A), an amount of surplus equal to an aggregate
value with respect to the shares issued as a result of the
reclassification, as set by the board of directors when the
reclassification is authorized, shall be transferred to stated
capital.
(g) A corporation may not effect a reclassification under
Subsection (c)(2)(A) if the surplus of the corporation is less than
the amount required by Subsection (f)(1) or (f)(2), as applicable,
to be transferred to stated capital at the time the
reclassification becomes effective.
SECTION 24. Section 21.160(c), Business Organizations
Code, is amended to read as follows:
(c) A corporation may dispose of treasury shares for
consideration that may be determined by the board of directors. The
consideration received for treasury shares may:
(1) have a value greater or less than, or equal to, the
par value, if any, of the shares; and
(2) consist of the types of consideration described by
Section 21.159.
SECTION 25. Section 21.168(e), Business Organizations
Code, is amended to read as follows:
(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, and under the other terms on which shares may be
issued on the exercise of those rights and options, 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 period of time during which 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.
SECTION 26. Section 21.402, Business Organizations Code, is
amended to read as follows:
Sec. 21.402. BOARD MEMBER ELIGIBILITY REQUIREMENTS. Unless
the certificate of formation or bylaws of a corporation provide
otherwise, a director [person] is not required to be a resident of
this state or a shareholder of the corporation [to serve as a
director]. The certificate of formation or bylaws may prescribe
other qualifications for directors.
SECTION 27. Section 21.404, Business Organizations Code, is
amended to read as follows:
Sec. 21.404. DESIGNATION OF INITIAL BOARD OF DIRECTORS. If
the corporation is to be managed by a board of directors, the
certificate of formation of a corporation must state the name and
address [names and addresses] of each individual who will serve as
director until the first annual meeting of shareholders and until a
successor is elected and qualified [the persons constituting the
initial board of directors of the corporation].
SECTION 28. Section 21.561, Business Organizations Code, is
amended by adding Subsection (c) to read as follows:
(c) For purposes of Subsection (b)(1), substantial benefit
to the corporation does not include additional or amended
disclosures made to the shareholders, regardless of materiality.
SECTION 29. 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 30. Section 21.563(b), Business Organizations
Code, is amended to read as follows:
(b) Sections 21.552-21.560 do not apply to [a claim or] a
derivative proceeding by a shareholder of a closely held
corporation against a present or former director, officer, or
shareholder of the corporation. In the event the shareholder also
asserts a claim in the [or] derivative proceeding [is also made]
against a person who is not a present or former [that] director,
officer, or shareholder, this subsection applies only to a [the]
claim in the [or] derivative proceeding against a present or former
[the] director, officer, or shareholder.
SECTION 31. Sections 21.901(2) and (4), Business
Organizations Code, are amended to read as follows:
(2) "Defective corporate act" means:
(A) an overissue;
(B) an election or appointment of directors that
is void or voidable due to a failure of authorization; or
(C) any act or transaction purportedly taken by
or on behalf of the corporation that is, and at the time the act or
transaction was purportedly taken would have been, within the power
of a corporation to take under the corporate statute, without
regard to the failure of authorization identified in Section
21.903(a)(4), but is ineffective, void, or voidable due to a
failure of authorization, including a failure to file with the
filing officer a filing instrument that was required under the
corporate statute to complete the effectiveness of the act or
transaction.
(4) "Failure of authorization" means:
(A) the failure to authorize or effect an act or
transaction in compliance with the provisions of the corporate
statute, the governing documents of the corporation, any plan or
agreement to which the corporation is a party, or the disclosure set
forth in any proxy or consent solicitation statement, if and to the
extent the failure would render the act or transaction ineffective,
void, or voidable; or
(B) the failure of the board of directors or an
officer of the corporation to authorize or approve an act or
transaction taken by or on behalf of the corporation that required
the prior authorization or approval of the board of directors or the
officer.
SECTION 32. Section 21.902, Business Organizations Code, is
amended to read as follows:
Sec. 21.902. RATIFICATION OF DEFECTIVE CORPORATE ACT AND
PUTATIVE SHARES. (a) Except as provided by Subsection (b) and
subject [Subject] to Section 21.909 or 21.910, a defective
corporate act or putative shares are not ineffective, void, or
voidable solely as a result of a failure of authorization if the act
or shares are:
(1) ratified in accordance with this subchapter; or
(2) validated by the district court in a proceeding
brought under Section 21.914.
(b) A corporation may not ratify with retroactive effect in
accordance with this subchapter a defective corporate act resulting
from a failure of authorization that is attributable to the failure
to file with the filing officer the following filing instrument:
(1) a statement of change of registered agent or a
statement of change of registered office under Subchapter E,
Chapter 5;
(2) a certificate of amendment or restated certificate
of formation that amends the registered agent or registered office
under Subchapter B, Chapter 3;
(3) a certificate of formation under Subchapter A,
Chapter 3;
(4) a certificate of termination under Subchapter C,
Chapter 11;
(5) a certificate of merger or certificate of
conversion under Subchapter D, Chapter 10; or
(6) a report under Subchapter E, Chapter 171, Tax
Code.
SECTION 33. Sections 21.908(a), (b), and (c), Business
Organizations Code, are amended to read as follows:
(a) The [If a defective corporate act ratified under this
subchapter would have required under any other provision of the
corporate statute the filing of a filing instrument or other
document with the filing officer, the] corporation shall file a
certificate of validation with respect to the defective corporate
act in accordance with Chapter 4, if:
(1) a defective corporate act ratified under this
subchapter would have required under any other provision of the
corporate statute the filing of a filing instrument or other
document with the filing officer; and
(2) the filing instrument or other document:
(A) previously filed with the filing officer
requires any change to give effect to the defective corporate act in
accordance with this subchapter, including a change to the date and
time of the effectiveness of the filed filing instrument or other
document; or
(B) was not previously filed with the filing
officer under any other provision of the corporate statute [,
regardless of whether a filing instrument or other document was
previously filed] with respect to the defective corporate act.
(b) The certificate of validation must include:
(1) a statement that the corporation has ratified one
or more defective corporate acts that would have required the
filing of a filing instrument or other document with the filing
officer under any provision of the corporate statute [each
defective corporate act that is a subject of the certificate of
validation, including:
[(A) for a defective corporate act involving the
issuance of putative shares, the number and type of putative shares
issued and the date or dates on which the putative shares were
purported to have been issued;
[(B) the date of the defective corporate act; and
[(C) the nature of the failure of authorization
with respect to the defective corporate act];
(2) a statement that each defective corporate act has
been [was] ratified in accordance with this subchapter [,
including:
[(A) the date on which the board of directors
ratified each defective corporate act; and
[(B) the date, if any, on which the shareholders
approved the ratification of each defective corporate act]; and
(3) as appropriate:
(A) if a filing instrument was previously filed
with a filing officer under the corporate statute with respect to
the defective corporate act and [no change to the filing instrument
is required to give effect to the defective corporate act as
ratified in accordance with this subchapter:
[(i) the name, title, and filing date of the
previously filed filing instrument and of any certificate of
correction to the filing instrument; and
[(ii) a statement that a copy of the
previously filed filing instrument, together with any certificate
of correction to the filing instrument, is attached as an exhibit to
the certificate of validation;
[(B) if a filing instrument was previously filed
with a filing officer under the corporate statute with respect to
the defective corporate act and] the filing instrument requires any
change to give effect to the defective corporate act as ratified in
accordance with this subchapter, including a change to the date and
time of the effectiveness of the filing instrument:
(i) the name, title, and filing date of the
previously filed filing instrument and of any certificate of
correction to the filing instrument;
(ii) a statement that a filing instrument
containing all the information required to be included under the
applicable provisions of this code to give effect to the ratified
defective corporate act is attached as an exhibit to the
certificate of validation; and
(iii) the date and time that the attached
filing instrument is considered to have become effective under this
subchapter; or
(B) [(C)] if a filing instrument was not
previously filed with a filing officer under the corporate statute
with respect to the defective corporate act and the defective
corporate act as ratified under this subchapter would have required
under the other applicable provisions of this code the filing of a
filing instrument in accordance with Chapter 4, if the defective
corporate act had occurred when this code was in effect:
(i) a statement that a filing instrument
containing all the information required to be included under the
applicable provisions of this code to give effect to the defective
corporate act, as if the defective corporate act had occurred when
this code was in effect, is attached as an exhibit to the
certificate of validation; and
(ii) the date and time that the attached
filing instrument is considered to have become effective under this
subchapter.
(c) A filing instrument attached to a certificate of
validation under this section [Subsection (b)(3)(B) or (C)] does
not need to be executed separately and does not need to include any
statement required by any other provision of this code that the
instrument has been approved and adopted in accordance with that
provision.
SECTION 34. Section 21.909, Business Organizations Code, is
amended to read as follows:
Sec. 21.909. ADOPTION OF RESOLUTIONS; EFFECT ON DEFECTIVE
CORPORATE ACT. On or after the validation effective time, unless
determined otherwise in an action brought under Section 21.914 and
subject to Sections 21.902(b) and [Section] 21.907(e), each
defective corporate act ratified in accordance with this subchapter
may not be considered ineffective, void, or voidable as a result of
the failure of authorization described by the resolutions adopted
under Sections 21.903 and 21.904, and the effect shall be
retroactive to the time of the defective corporate act.
SECTION 35. Section 21.910, Business Organizations Code, is
amended to read as follows:
Sec. 21.910. ADOPTION OF RESOLUTIONS; EFFECT ON PUTATIVE
SHARES. On or after the validation effective time, unless
determined otherwise in an action brought under Section 21.914 and
subject to Sections 21.902(b) and [Section] 21.907(e), each
putative share or fraction of a putative share issued or
purportedly issued pursuant to a defective corporate act ratified
in accordance with this subchapter and described by the resolutions
adopted under Sections 21.903 and 21.904 may not be considered
ineffective, void, or voidable and is considered to be an identical
share or fraction of a share outstanding as of the time it was
purportedly issued.
SECTION 36. Section 21.913(b), Business Organizations
Code, is amended to read as follows:
(b) The absence or failure of ratification of an act or
transaction in accordance with this subchapter or of validation of
an act or transaction as provided by Sections 21.914 through 21.917
does not, of itself, affect the validity or effectiveness of any act
or transaction or the issuance of any shares properly ratified
under common law or otherwise, nor does it create a presumption that
any such act or transaction is or was a defective corporate act or
that those shares are ineffective, void, or voidable.
SECTION 37. Section 21.915, Business Organizations Code, is
amended to read as follows:
Sec. 21.915. EXCLUSIVE JURISDICTION. Subject to Section
1.056, the [The] district court has exclusive jurisdiction to hear
and determine any action brought under Section 21.914.
SECTION 38. Section 21.917(b), Business Organizations
Code, is amended to read as follows:
(b) Notwithstanding any other provision of this subchapter:
(1) an action claiming that a defective corporate act
or putative shares are ineffective, void, or voidable due to a
failure of authorization identified in the resolutions adopted in
accordance with Section 21.903 may not be filed in or must be
dismissed by any court after the applicable validation effective
time; and
(2) an action claiming that a court of appropriate
jurisdiction, in its discretion, should declare that a ratification
in accordance with this subchapter not take effect or that the
ratification take effect only on certain conditions may not be
filed with the court after the expiration of the 120th day after the
later of the validation effective time or the time that any notice
required to be given under Section 21.911 is given with respect to
the ratification.
SECTION 39. Sections 22.001(1) and (3-a), Business
Organizations Code, are amended to read as follows:
(1) "Board of directors" means the group of
individuals [persons] vested with the management of the affairs of
the corporation, regardless of the name used to designate the
group. The term does not include the member or members of the
corporation if the certificate of formation of the corporation
vests the management of the affairs of the corporation in the
members.
(3-a) "Director" means an individual [a person] who is
a member of the board of directors, regardless of the name or title
used to designate the individual [person]. The term does not
include an individual [a person] designated as a director of the
corporation, or as an ex officio, honorary, or other type of
director of the corporation if the individual [person] is not
entitled to vote as a director.
SECTION 40. Section 22.218(a), Business Organizations
Code, is amended to read as follows:
(a) The [If authorized by the] certificate of formation or
bylaws of the corporation:
(1) [, the board of directors of a corporation, by
resolution adopted by the majority of the directors in office,] may
designate one or more committees to have and exercise all, or a
specified portion, of the authority of the board of directors of the
corporation in the management of the corporation; or
(2) may authorize the board of directors, by
resolution adopted by the majority of the directors in office, to
designate one or more committees to have and exercise all, or a
specified portion, of the authority of the board in the management
of the corporation to the extent permitted in the authorization in
the certificate of formation or bylaws [to the extent provided by:
[(1) the resolution;
[(2) the certificate of formation; or
[(3) the bylaws].
SECTION 41. Section 22.231(a), Business Organizations
Code, is amended to read as follows:
(a) The officers of a corporation shall include a president
and a secretary and may include one or more vice presidents, a
treasurer, and other officers and assistant officers as considered
necessary. Any two or more offices, other than the offices of
president and secretary, may be held by the same individual
[person].
SECTION 42. Sections 22.501(2) and (4), Business
Organizations Code, are amended to read as follows:
(2) "Defective corporate act" means:
(A) an election or appointment of directors that
is void or voidable due to a failure of authorization; or
(B) any act or transaction purportedly taken by
or on behalf of the corporation that is, and at the time the act or
transaction was purportedly taken would have been, within the power
of a corporation to take under the corporate statute, but is
ineffective, void, or voidable due to a failure of authorization,
including a failure to file with the filing officer a filing
instrument that was required under the corporate statute to
complete the effectiveness of the act or transaction.
(4) "Failure of authorization" means:
(A) the failure to authorize or effect an act or
transaction in compliance with the provisions of the corporate
statute, the governing documents of the corporation, a corporate
resolution, or any plan or agreement to which the corporation is a
party, if and to the extent the failure would render the act or
transaction ineffective, void, or voidable; or
(B) the failure of the board of directors or an
officer of the corporation to authorize or approve an act or
transaction taken by or on behalf of the corporation that required
the prior authorization or approval of the board of directors or the
officer.
SECTION 43. Section 22.502, Business Organizations Code, is
amended to read as follows:
Sec. 22.502. RATIFICATION OF DEFECTIVE CORPORATE ACT. (a)
Except as provided by Subsection (b) and subject [Subject] to
Section 22.509, a defective corporate act is not ineffective, void,
or voidable solely as a result of a failure of authorization if the
act is:
(1) ratified in accordance with this subchapter; or
(2) validated by the district court in a proceeding
brought under Section 22.512.
(b) A corporation may not ratify with retroactive effect in
accordance with this subchapter a defective corporate act resulting
from a failure of authorization that is attributable to the failure
to file with the filing officer the following filing instrument:
(1) a statement of change of registered agent or a
statement of change of registered office under Subchapter E,
Chapter 5;
(2) a certificate of amendment or restated certificate
of formation that amends the registered agent or registered office
under Subchapter B, Chapter 3;
(3) a certificate of formation under Subchapter A,
Chapter 3;
(4) a certificate of termination under Subchapter C,
Chapter 11;
(5) a certificate of merger or certificate of
conversion under Subchapter D, Chapter 10;
(6) a report under Subchapter E, Chapter 171, Tax
Code; or
(7) a report under Sections 22.357 through 22.359.
SECTION 44. Sections 22.508(a), (c), and (d), Business
Organizations Code, are amended to read as follows:
(a) The [If a defective corporate act ratified under this
subchapter would have required under any other provision of the
corporate statute the filing of a filing instrument or other
document with the filing officer, the] corporation shall file a
certificate of validation with respect to the defective corporate
act in accordance with Chapter 4, if:
(1) a defective corporate act ratified under this
subchapter would have required under any other provision of the
corporate statute the filing of a filing instrument or other
document with the filing officer; and
(2) the filing instrument or other document:
(A) previously filed with the filing officer
requires any change to give effect to the defective corporate act in
accordance with this subchapter, including a change to the date and
time of the effectiveness of the filed filing instrument or other
document; or
(B) was not previously filed with the filing
officer under any other provision of the corporate statute [,
regardless of whether a filing instrument or other document was
previously filed] with respect to the defective corporate act.
(c) The certificate of validation must include:
(1) a statement that the corporation has ratified one
or more defective corporate acts that would have required the
filing of a filing instrument or other document with the filing
officer under any provision of the corporate statute [each
defective corporate act that is a subject of the certificate of
validation, including:
[(A) the date of the defective corporate act; and
[(B) the nature of the failure of authorization
with respect to the defective corporate act];
(2) a statement that each defective corporate act has
been [was] ratified in accordance with this subchapter [,
including:
[(A) the date on which the board of directors
ratified each defective corporate act; and
[(B) if the corporation has members with voting
rights, the date, if any, on which the members approved the
ratification of each defective corporate act or, if the management
of the affairs of the corporation is vested in its members under
Section 22.202, the date on which the members ratified each
defective corporate act]; and
(3) as appropriate:
(A) [if a filing instrument was previously filed
with a filing officer under the corporate statute with respect to
the defective corporate act and no change to the filing instrument
is required to give effect to the defective corporate act as
ratified in accordance with this subchapter:
[(i) the name, title, and filing date of the
previously filed filing instrument and of any certificate of
correction to the filing instrument; and
[(ii) a statement that a copy of the
previously filed filing instrument, together with any certificate
of correction to the filing instrument, is attached as an exhibit to
the certificate of validation;
[(B)] if a filing instrument was previously filed
with a filing officer under the corporate statute with respect to
the defective corporate act and the filing instrument requires any
change to give effect to the defective corporate act as ratified in
accordance with this subchapter, including a change to the date and
time of the effectiveness of the filing instrument:
(i) the name, title, and filing date of the
previously filed filing instrument and of any certificate of
correction to the filing instrument;
(ii) a statement that a filing instrument
containing all the information required to be included under the
applicable provisions of this code to give effect to the ratified
defective corporate act is attached as an exhibit to the
certificate of validation; and
(iii) the date and time that the attached
filing instrument is considered to have become effective under this
subchapter; or
(B) [(C)] if a filing instrument was not
previously filed with a filing officer under the corporate statute
with respect to the defective corporate act and the defective
corporate act as ratified under this subchapter would have required
under the other applicable provisions of this code the filing of a
filing instrument in accordance with Chapter 4, if the defective
corporate act had occurred when this code was in effect:
(i) a statement that a filing instrument
containing all the information required to be included under the
applicable provisions of this code to give effect to the defective
corporate act, as if the defective corporate act had occurred when
this code was in effect, is attached as an exhibit to the
certificate of validation; and
(ii) the date and time that the attached
filing instrument is considered to have become effective under this
subchapter.
(d) A filing instrument attached to a certificate of
validation under this section [Subsection (c)(3)(B) or (C)] does
not need to be executed separately and does not need to include any
statement required by any other provision of this code that the
instrument has been approved and adopted in accordance with that
provision.
SECTION 45. Section 22.509, Business Organizations Code, is
amended to read as follows:
Sec. 22.509. ADOPTION OF RESOLUTIONS; EFFECT ON DEFECTIVE
CORPORATE ACT. On or after the validation effective time, unless
determined otherwise in an action brought under Section 22.512 and
subject to Section 22.502(b), each defective corporate act ratified
in accordance with this subchapter may not be considered
ineffective, void, or voidable as a result of the failure of
authorization described by the resolutions adopted under Sections
22.503 and 22.504, and the effect shall be retroactive to the time
of the defective corporate act.
SECTION 46. Section 22.513, Business Organizations Code, is
amended to read as follows:
Sec. 22.513. EXCLUSIVE JURISDICTION. Subject to Section
1.056, the [The] district court has exclusive jurisdiction to hear
and determine any action brought under Section 22.512.
SECTION 47. Section 22.515(b), Business Organizations
Code, is amended to read as follows:
(b) Notwithstanding any other provision of this subchapter:
(1) an action claiming that a defective corporate act
is ineffective, void, or voidable due to a failure of authorization
identified in the resolutions adopted in accordance with Section
22.503 may not be filed in or must be dismissed by any court after
the applicable validation effective time; and
(2) an action claiming that a court of appropriate
jurisdiction, in its discretion, should declare that a ratification
in accordance with this subchapter not take effect or that the
ratification take effect only on certain conditions may not be
filed with the court after the expiration of the 120th day after the
later of the validation effective time or the time that any notice
required to be given under Section 22.510 is given with respect to
the ratification.
SECTION 48. Subchapter C, Chapter 101, Business
Organizations Code, is amended by adding Section 101.1055 to read
as follows:
Sec. 101.1055. SUBSCRIPTIONS. (a) A subscription to
purchase a membership interest in a limited liability company in
the process of being formed is irrevocable to the extent provided by
the terms of the subscription if:
(1) the subscription is in writing and signed by the
subscriber; and
(2) the subscription states that it is irrevocable.
(b) A written subscription entered into after the limited
liability company is formed is a contract between the subscriber
and the company.
SECTION 49. Section 101.109(a), Business Organizations
Code, is amended to read as follows:
(a) A person who is assigned a membership interest in a
limited liability company is entitled to:
(1) receive any allocation of income, gain, loss,
deduction, credit, or a similar item that the assignor is entitled
to receive to the extent the allocation of the item is assigned;
(2) receive any distribution the assignor is entitled
to receive to the extent the distribution is assigned; and
(3) the rights described by Section 101.502 [require,
for any proper purpose, reasonable information or a reasonable
account of the transactions of the company; and
[(4) make, for any proper purpose, reasonable
inspections of the books and records of the company].
SECTION 50. Section 101.463(b), Business Organizations
Code, is amended to read as follows:
(b) Sections 101.452-101.460 do not apply to [a claim or] a
derivative proceeding by a member of a closely held limited
liability company against a present or former governing person,
member, or officer of the limited liability company. In the event
the member also asserts a claim in the [or] derivative proceeding
[is also made] against a person who is not a present or former
[that] governing person, member, or officer, this subsection
applies only to a [the] claim in the [or] derivative proceeding
against a present or former [the] governing person, member, or
officer.
SECTION 51. Subchapter F, Chapter 153, Business
Organizations Code, is amended by adding Section 153.258 to read as
follows:
Sec. 153.258. SUBSCRIPTIONS. (a) A subscription to
purchase a partnership interest in a limited partnership in the
process of being formed is irrevocable to the extent provided by the
terms of the subscription if:
(1) the subscription is in writing and signed by the
subscriber; and
(2) the subscription states that it is irrevocable.
(b) A written subscription entered into after the limited
partnership is formed is a contract between the subscriber and the
partnership.
SECTION 52. Section 153.413(b), Business Organizations
Code, is amended to read as follows:
(b) Sections 153.402-153.410 do not apply to [a claim or] a
derivative proceeding by a limited partner of a closely held
limited partnership against a present or former general partner,
limited partner, or officer of the limited partnership. In the
event the limited partner also asserts a claim in the [or]
derivative proceeding [is also made] against a person who is not a
present or former [that] general partner, limited partner, or
officer, this subsection shall apply only to a [the] claim in the
[or] derivative proceeding against a present or former [the]
general partner, limited partner, or officer.
SECTION 53. Section 153.553(a-1), Business Organizations
Code, is amended to read as follows:
(a-1) The following certificates shall be executed as
follows:
(1) an initial certificate of formation must be signed
as provided in Section 3.004(b)(1);
(2) a certificate of amendment or restated certificate
of formation containing amendments must be signed by at least one
general partner and by each other general partner designated in the
certificate of amendment or the restated certificate of formation
as a new general partner, unless signed and filed by a person under
Section 153.052(b) or (c), but the certificate of amendment or the
restated certificate of formation need not be signed by a
withdrawing general partner;
(3) a certificate of termination must be signed by all
general partners participating in the winding up of the limited
partnership's business or, if no general partners are winding up
the limited partnership's business, by all nonpartner liquidators
or, if the limited partners are winding up the limited
partnership's business, by a majority-in-interest of the limited
partners;
(4) a certificate of merger [, conversion, or
exchange] filed on behalf of a domestic limited partnership must be
signed by at least one general partner and by each other general
partner designated as a new general partner by any amendment to the
certificate of formation of the limited partnership being made by
the certificate of merger, but the certificate of merger need not be
signed by a withdrawing general partner; [as provided by Chapter
10; and]
(5) a certificate of conversion or exchange filed on
behalf of a domestic limited partnership must be signed by at least
one general partner; and
(6) a certificate filed under Subchapter G, Chapter
10, must be signed by the person designated by the court.
SECTION 54. Section 251.352(a), Business Organizations
Code, is amended to read as follows:
(a) A cooperative association shall submit a written report
to its members at the annual meeting of the cooperative
association. The annual report must contain:
(1) a balance sheet;
(2) an income and expense statement;
(3) the amount and nature of the cooperative
association's authorized, subscribed, and paid-in capital;
(4) the total number of shareholders;
(5) the number of shareholders who were admitted to or
withdrew from the association during the year;
(6) the par value of the association's shares;
(7) the rate at which any investment dividends have
been paid; [and]
(8) if the cooperative association does not issue
shares:
(A) the total number of members;
(B) the number of members who were admitted to or
withdrew from the association during the year; and
(C) the amount of membership fees received;
(9) the name, address, occupation, and date of
expiration of the term of office of each officer and director; and
(10) any compensation paid by the association to each
officer or director of the association.
SECTION 55. Section 252.017(b), Business Organizations
Code, is amended to read as follows:
(b) Chapters 1, 2, 4, [and] 10, and 11 and, if a nonprofit
association designates an agent for service of process, Subchapter
E, Chapter 5, apply to a nonprofit association.
SECTION 56. Sections 153.502(c), 251.353, and 251.354,
Business Organizations Code, are repealed.
SECTION 57. Section 4.001(a), Business Organizations Code,
as amended by this Act, applies only to a filing instrument
delivered to the secretary of state on or after the effective date
of this Act. A filing instrument delivered to the secretary of state
before the effective date of this Act is governed by the law in
effect on the date the filing instrument was delivered to the
secretary of state, and the former law is continued in effect for
that purpose.
SECTION 58. Sections 21.561 and 21.562, 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 59. This Act takes effect September 1, 2025.