Bill Text: TX SB1203 | 2021-2022 | 87th Legislature | Enrolled

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Bill Title: Relating to business entities.

Spectrum: Bipartisan Bill

Status: (Passed) 2021-05-15 - Effective on 9/1/21 [SB1203 Detail]

Download: Texas-2021-SB1203-Enrolled.html

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S.B. No. 1203

AN ACT
relating to business entities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 1.002(33), (49), and (53), Business
Organizations Code, are amended to read as follows:
(33) "General partner" means:
(A) each partner in a general partnership; or
(B) a person who has become, and has not ceased to
be, [is admitted to a limited partnership as] a general partner in a
limited partnership in accordance with the governing documents of
the limited partnership or this code.
(49) "Limited partner" means a person who has become,
and has not ceased to be, [been admitted to a limited partnership
as] a limited partner in a limited partnership in accordance with
the governing documents of the limited partnership or this code [as
provided by:
[(A) in the case of a domestic limited
partnership, Chapter 153; or
[(B) in the case of a foreign limited partnership,
the laws of its jurisdiction of formation].
(53) "Member" means:
(A) in the case of a limited liability company, a
person who [is a member or] has become, and has not ceased to be,
[been admitted as] a member in the limited liability company as
provided by [under] its governing documents or this code;
(B) in the case of a nonprofit corporation, a
person who has membership rights in the nonprofit corporation under
its governing documents;
(C) in the case of a cooperative association, a
member of a nonshare or share association;
(D) in the case of a nonprofit association, a
person who has membership rights in the nonprofit association under
its governing documents; or
(E) in the case of a professional association, a
person who has membership rights in the professional association
under its governing documents.
SECTION 2. Subchapter B, Chapter 2, Business Organizations
Code, is amended by adding Section 2.115 to read as follows:
Sec. 2.115. CHOICE OF FORUM PROVISIONS. (a) In this
section, "internal entity claim" means a claim of any nature,
including a derivative claim in the right of an entity, that is
based on, arises from, or relates to the internal affairs of the
entity, as defined by Section 1.105.
(b) The governing documents of a domestic entity may
require, consistent with applicable state and federal
jurisdictional requirements, that any internal entity claims shall
be brought only in a court in this state.
SECTION 3. Section 3.010, Business Organizations Code, is
amended to read as follows:
Sec. 3.010. SUPPLEMENTAL PROVISIONS REQUIRED IN
CERTIFICATE OF FORMATION OF LIMITED LIABILITY COMPANY. In addition
to the information required by Section 3.005, the certificate of
formation of a limited liability company must state:
(1) whether the limited liability company initially
has [will] or does [will] not have managers;
(2) if the limited liability company initially has
[will have] managers, the name and address of each initial manager
of the limited liability company; and
(3) if the limited liability company does [will] not
initially have managers, the name and address of each initial
member of the limited liability company.
SECTION 4. Section 3.060(a), Business Organizations Code,
is amended 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 any prior
statements regarding [update] the [current] number of directors and
the names and addresses of the 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
persons currently serving as directors.
SECTION 5. Section 3.061(a), Business Organizations Code,
is amended 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 [update] the
[current] number of directors and the names and addresses of the
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 persons currently serving as
directors.
SECTION 6. 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. 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 [if the company's certificate of
formation states that] the company currently has or does not [will]
have [one or more] managers[, update the names and addresses of the
persons serving as managers]; [or]
(2) [if the certificate of formation states] that the
company currently has [will not have] managers and[, update] 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.
SECTION 7. Section 3.251, Business Organizations Code, is
amended to read as follows:
Sec. 3.251. DEFINITIONS [EMERGENCY DEFINED]. In [For
purposes of] this subchapter:
(1) "Emergency" means any of the following:
(A) an attack on the United States, a state, or a
political subdivision of a state;
(B) a nuclear or atomic disaster;
(C) the occurrence of a catastrophic event,
including:
(i) an epidemic or pandemic;
(ii) a hurricane, tropical storm, tornado,
or other weather condition; or
(iii) a riot or civil disturbance;
(D) the declaration of a national emergency by
the United States government;
(E) the declaration of an emergency by a state or
a political subdivision of a state; or
(F) any other similar emergency situation.
(2) "Emergency action" means an action taken by
majority vote of the governing persons present at a meeting of the
governing authority of a domestic entity during an emergency
period.
(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 of the governing authority
outside of an emergency period[, an emergency exists if a majority
of a domestic entity's governing persons cannot readily participate
in a meeting because of the occurrence of a catastrophic event].
SECTION 8. Section 3.252, Business Organizations Code, is
amended to read as follows:
Sec. 3.252. PROVISIONS IN GOVERNING DOCUMENTS. (a) The
[Except as otherwise provided by the entity's governing documents,
the] governing persons and, if applicable, the owners[,] or members
of a domestic entity may adopt provisions in the domestic entity's
governing documents regarding [the management of the entity during
an] emergency actions, including provisions that apply only during
an emergency period that authorize, limit, or prohibit:
(1) [prescribing] procedures for calling a meeting of
the governing persons;
(2) the necessity of a quorum for action by vote at a
meeting of the governing persons;
(3) [establishing] minimum requirements for
participation at the meeting of the governing persons; and
(4) the designation of [(3) designating] additional
or substitute governing persons.
(b) Any [The emergency] provisions in a domestic entity's
governing documents that apply only during an emergency period must
be adopted in accordance with:
(1) the requirements of the governing documents that
apply outside of an emergency period; and
(2) the applicable provisions of this code that apply
outside of an emergency period.
SECTION 9. Subchapter F, Chapter 3, Business Organizations
Code, is amended by adding Section 3.2535 to read as follows:
Sec. 3.2535. ACTIONS DURING EMERGENCY PERIOD. (a) Except
as otherwise limited or prohibited by the domestic entity's
governing documents or except as provided by Subsection (b), the
governing authority of a domestic entity may take an emergency
action during an emergency period without satisfying the
requirements of the entity's governing documents or this code that
apply outside of an emergency period with respect to:
(1) procedures for calling a meeting of the governing
persons;
(2) the necessity of a quorum for action by vote at a
meeting of the governing persons;
(3) minimum requirements for participation at a
meeting of the governing persons; and
(4) any other procedural requirements for action at a
meeting of the governing persons.
(b) Subsection (a) does not apply to an action by the
governing authority of a domestic entity:
(1) to amend the entity's governing documents; or
(2) that must be approved by a separate vote of the
owners or members of the entity in accordance with the requirements
of the entity's governing documents or this code that apply outside
of an emergency period.
SECTION 10. Section 3.255, Business Organizations Code, is
amended to read as follows:
Sec. 3.255. EFFECT OF EMERGENCY ACTION [TAKEN]. An
emergency action taken by the governing persons of a domestic
entity in accordance with the entity's governing documents or
Section 3.2535, if taken in good faith and based on the reasonable
belief that the emergency action was in the entity's best interest
[in accordance with the emergency provisions]:
(1) is binding on the entity; and
(2) may not be used to impose liability on a managerial
official, employee, or agent of the entity.
SECTION 11. Section 6.201, Business Organizations Code, is
amended by amending Subsection (b) and adding Subsections (b-1),
(b-2), (b-3), (b-4), and (b-5) to read as follows:
(b) The owners or members or the governing authority of a
filing entity, or a committee of the governing authority, may take
action without holding a meeting, providing notice, or taking a
vote if each person entitled to vote on the action signs a written
consent or consents stating the action taken. Except as provided by
this section, the written consent or consents take effect when
signed by all persons entitled to vote on the action.
(b-1) By a provision in the written consent or consents or
by a written instruction to an agent of the filing entity by one or
more persons granting the written consent or consents, a written
consent or consents may be made 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 consent or consents.
If a written consent or consents described by this subsection are to
take effect at a future time, all of the written consents take
effect at that future effective time.
(b-2) If two or more of the written consents described by
Subsection (b-1) 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 at the applicable effective time so long as all of the
persons entitled to vote on the action, which is determined as of
that effective time or, if applicable, the record date established
under Section 6.102, have:
(1) signed the consent or consents; and
(2) not revoked their consent or consents before the
applicable effective time.
(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. 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.
(b-4) A person signing a written consent may revoke the
person's consent any time before the applicable effective time of
the consent.
(b-5) For purposes of this section, a "future time" includes
a time that is determined on the happening of an event.
SECTION 12. Section 6.202, Business Organizations Code, is
amended by amending Subsection (c) and adding Subsections (c-1),
(c-2), (c-3), (c-4), (e), and (f) to read as follows:
(c) A written consent or consents described by Subsection
(b) must include:
(1) the date each owner or member signed the consent;
and
(2) the date of signing of the latest dated consent
satisfying the minimum number of owners or members necessary to
approve the action that is the subject of the consent.
(c-1) The date described by Subsection (c)(2) must be [is
effective to take the action that is the subject of the consent only
if the consent or consents are delivered to the entity] not later
than the 60th day after the date of the signing of the earliest
dated consent of the owners or members signing the consent or
consents. If a consent does not contain the date that an owner or
member signed the consent, the date that the owner or member signed
the consent is considered to be the date that the consent is
received by the filing entity. A written consent or consents
described by Subsection (b) that are not solicited by or on behalf
of a filing entity or the filing entity's governing authority must
be delivered to the entity as required by Section 6.203 to take
effect [is delivered to the entity as required by Section 6.203].
(c-2) By a provision in the written consent or consents or
by a written instruction to an agent of the filing entity from one
or more persons granting the written consent or consents, a written
consent or consents described by Subsection (b) may be made to take
effect at a future time, which must be not later than the 60th day
after the date the last of the minimum number of owners or members
necessary to sign the consent or consents as required by Subsection
(b) have signed the consent or consents. If the written consent or
consents described by this subsection are to take effect at a future
time, all of the written consent or consents take effect at that
future effective time.
(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 owner's or member's
consent or consents at any time before the applicable effective
time of the consent.
(c-4) By a provision in the written consent or by a written
instruction to an agent of the filing entity, an owner or member of
a filing entity signing a written consent described by Subsection
(b) may provide that the owner's or member's consent is to take
effect at a future time, which must be not later than the 60th day
after the date on which the consent is signed by the last of the
minimum number of owners or members of the entity necessary to sign
the consent or consents as required by Subsection (b). The owner's
or member's consent is considered to have been given for purposes of
this section at the later of that future effective time or a later
effective time determined under Subsection (c-3) so long as:
(1) the person is an owner or member, as applicable, as
of:
(A) the applicable effective time; or
(B) if applicable, the record date established
under Section 6.102; and
(2) the owner or member did not revoke the consent at
any time before the applicable effective time of the consent.
(e) An owner or member of a filing entity signing a written
consent may revoke the owner's or member's consent at any time
before the applicable effective time of the consent.
(f) For purposes of this section, a "future time" includes a
time that is determined on the happening of an event.
SECTION 13. Section 8.002(a), Business Organizations Code,
is amended to read as follows:
(a) Except as provided by Subsection (b) and Section 8.005,
this chapter does not apply to a:
(1) general partnership; or
(2) limited liability company.
SECTION 14. Section 8.003, Business Organizations Code, is
amended to read as follows:
Sec. 8.003. LIMITATIONS IN GOVERNING DOCUMENTS. A
governing document [(a) The certificate of formation] of an
enterprise may restrict the circumstances under which the
enterprise must or may indemnify or may advance expenses to a person
under this chapter.
[(b) The written partnership agreement of a limited
partnership may restrict the circumstances in the same manner as
the certificate of formation under Subsection (a).]
SECTION 15. Subchapter A, Chapter 8, Business Organizations
Code, is amended by adding Section 8.005 to read as follows:
Sec. 8.005. INDEMNIFICATION AGAINST NEGLIGENCE. (a) This
section applies to:
(1) an enterprise subject to this chapter; and
(2) notwithstanding Section 8.002, a general
partnership or limited liability company.
(b) A requirement under the laws of this state that
indemnification or exculpation for negligence be expressly and
conspicuously stated does not apply to a provision in an
enterprise's governing documents that provides for indemnification
or exculpation.
SECTION 16. Section 9.251, Business Organizations Code, is
amended to read as follows:
Sec. 9.251. ACTIVITIES NOT CONSTITUTING TRANSACTING
BUSINESS IN THIS STATE. For purposes of this chapter, activities
that do not constitute transaction of business in this state
include:
(1) maintaining or defending an action or suit or an
administrative or arbitration proceeding, or effecting the
settlement of:
(A) such an action, suit, or proceeding; or
(B) a claim or dispute to which the entity is a
party;
(2) holding a meeting of the entity's managerial
officials, owners, or members or carrying on another activity
concerning the entity's internal affairs;
(3) maintaining a bank account;
(4) maintaining an office or agency for:
(A) transferring, exchanging, or registering
securities the entity issues; or
(B) appointing or maintaining a trustee or
depositary related to the entity's securities;
(5) voting the interest of an entity the foreign
entity has acquired;
(6) effecting a sale through an independent
contractor;
(7) creating, as borrower or lender, or acquiring
indebtedness or a mortgage or other security interest in real or
personal property;
(8) securing or collecting a debt due the entity or
enforcing a right in property that secures a debt due the entity;
(9) transacting business in interstate commerce;
(10) conducting an isolated transaction that:
(A) is completed within a period of 30 days; and
(B) is not in the course of a number of repeated,
similar transactions;
(11) in a case that does not involve an activity that
would constitute the transaction of business in this state if the
activity were one of a foreign entity acting in its own right:
(A) exercising a power of executor or
administrator of the estate of a nonresident decedent under
ancillary letters issued by a court of this state; or
(B) exercising a power of a trustee under the
will of a nonresident decedent, or under a trust created by one or
more nonresidents of this state, or by one or more foreign entities;
(12) regarding a debt secured by a mortgage or lien on
real or personal property in this state:
(A) acquiring the debt in a transaction outside
this state or in interstate commerce;
(B) collecting or adjusting a principal or
interest payment on the debt;
(C) enforcing or adjusting a right or property
securing the debt;
(D) taking an action necessary to preserve and
protect the interest of the mortgagee in the security; or
(E) engaging in any combination of transactions
described by this subdivision;
(13) investing in or acquiring, in a transaction
outside of this state, a royalty or other nonoperating mineral
interest;
(14) executing a division order, contract of sale, or
other instrument incidental to ownership of a nonoperating mineral
interest; [or]
(15) owning, without more, real or personal property
in this state; or
(16) acting as a governing person of a domestic or
foreign entity that is registered to transact business in this
state.
SECTION 17. Section 11.001(3), Business Organizations
Code, is amended to read as follows:
(3) "Existing claim" with respect to an entity means:
(A) a claim that existed before the entity's
termination and is not barred by limitations; or
(B) a claim that exists after the entity's
termination and before the third anniversary of the date of the
entity's termination and is not barred by limitations, including a
claim under a contractual or other obligation incurred after
termination.
SECTION 18. Section 11.153, Business Organizations Code, is
amended to read as follows:
Sec. 11.153. COURT REVOCATION OF FRAUDULENT TERMINATION.
(a) Notwithstanding any provision of this code to the contrary, a
court may order the revocation of termination of an entity's
existence that was terminated as a result of actual or constructive
fraud. In an action under this section, any limitation period
provided by law is tolled in accordance with the discovery
rule. The secretary of state shall take any action necessary to
implement an order under this section.
(b) If the termination of an entity's existence is revoked
under Subsection (a):
(1) the revocation relates back to the effective date
of the termination and takes effect as of that date; and
(2) the entity's status as an entity continues in
effect as if the termination of the entity's existence had never
occurred.
SECTION 19. Section 11.254, Business Organizations Code, is
amended to read as follows:
Sec. 11.254. REINSTATEMENT OF CERTIFICATE OF FORMATION
FOLLOWING TAX FORFEITURE. (a) A filing entity whose certificate of
formation has been forfeited under the provisions of the Tax Code
must follow the procedures in the Tax Code to reinstate its
certificate of formation. A filing entity whose certificate of
formation is reinstated under the provisions of the Tax Code is
considered to have continued in existence without interruption from
the date of forfeiture.
(b) The reinstatement of a filing entity's certificate of
formation after its forfeiture has no effect on any issue of the
personal liability of the governing persons, officers, or agents of
the filing entity during the period between forfeiture and
reinstatement of the certificate of formation.
SECTION 20. Section 11.359, Business Organizations Code, is
amended by adding Subsection (c) 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.
SECTION 21. Section 21.314(a), Business Organizations
Code, is amended to read as follows:
(a) For purposes of this subchapter, the determination of
whether a corporation is or would be insolvent and the
determination of the amount [value] of a corporation's [net
assets,] stated capital[,] or surplus, the value of the
corporation's net assets, and the amount or value of any component
of the corporation's stated capital, surplus, or net assets, [each
of the components of net assets, stated capital, or surplus] may be
based on:
(1) financial statements of the corporation, which may
include financial statements of subsidiary entities or other
entities accounted for on a consolidated basis or on the equity
method of accounting, [including financial statements] that:
(A) [include subsidiary corporations or other
corporations accounted for on a consolidated basis or on the equity
method of accounting; or
[(B)] present the financial condition of the
corporation, and any subsidiary or other entities included in those
financial statements, in accordance with generally accepted
accounting principles or international financial reporting
standards; or
(B) have been [(2) financial statements]
prepared using the method of accounting used to file the
corporation's federal income tax return or using any other
accounting practices and principles that are reasonable under the
circumstances;
(2) [(3)] financial information, including condensed
or summary financial statements, that is prepared on the same basis
as financial statements described by Subdivision (1) [or (2)];
(3) [(4)] a projection, a forecast, or other
forward-looking information relating to the future economic
performance, financial condition, or liquidity of the corporation
that is reasonable under the circumstances;
(4) [(5)] a fair valuation or information from any
other method that is reasonable under the circumstances; or
(5) [(6)] a combination of a statement, a valuation,
or information authorized by this section.
SECTION 22. Subchapter H, Chapter 21, Business
Organizations Code, is amended by adding Section 21.3521 to read as
follows:
Sec. 21.3521. SHAREHOLDER MEETINGS BY REMOTE
COMMUNICATION. Except for any limitation or other requirements in
the governing documents of the corporation, if a meeting of a
corporation's shareholders under Section 21.351 or 21.352 is held
by means of a telephone conference or other communication system
authorized by Section 6.002, the meeting is considered to have
satisfied the requirement of Section 6.002(a) that shareholders
participating in the meeting be able to communicate with all other
persons participating in the meeting if the corporation implements
reasonable measures to provide each shareholder entitled to vote at
the meeting, or the shareholder's proxyholder, a reasonable
opportunity to:
(1) vote on matters submitted to the shareholders; and
(2) read or hear the proceedings of the meeting
substantially concurrently with those proceedings.
SECTION 23. Section 21.551(2), Business Organizations
Code, is amended to read as follows:
(2) "Shareholder" includes [means] a shareholder as
defined by Section 1.002 or a beneficial owner whose shares are held
in a voting trust or by a nominee on the beneficial owner's behalf.
SECTION 24. Section 21.908(a), Business Organizations
Code, is amended to read as follows:
(a) 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, regardless of whether a filing
instrument or other document was previously filed with respect to
the defective corporate act. [The filing of another filing
instrument or document is not required.]
SECTION 25. Section 22.508(a), Business Organizations
Code, is amended to read as follows:
(a) 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, regardless of whether a filing
instrument or other document was previously filed with respect to
the defective corporate act. [The filing of another filing
instrument or document is not required.]
SECTION 26. Section 101.052(d), Business Organizations
Code, is amended to read as follows:
(d) The company agreement may contain any provisions for the
regulation and management of the affairs of the limited liability
company not inconsistent with law [or the certificate of
formation].
SECTION 27. Section 101.206, Business Organizations Code,
is amended by adding Subsections (c-1), (c-2), and (g) to read as
follows:
(c-1) For purposes of this section, the determination of the
amount of a limited liability company's liabilities or the value of
a company's assets may be based on:
(1) financial statements of the company, which may
include the financial statements of subsidiary entities or other
entities accounted for on a consolidated basis or on the equity
method of accounting, that:
(A) present the financial condition of the
company and any subsidiary or other entities included in those
financial statements, in accordance with generally accepted
accounting principles or international financial reporting
standards; or
(B) have been prepared using the method of
accounting used to file the company's federal income tax return or
using any other accounting practices and principles that are
reasonable under the circumstances;
(2) financial information, including condensed or
summary financial statements, that is prepared on the same basis as
financial statements described by Subdivision (1);
(3) projections, forecasts, or other forward-looking
information relating to the future economic performance, financial
condition, or liquidity of the company that is reasonable under the
circumstances;
(4) a fair valuation or information from any other
method that is reasonable under the circumstances; or
(5) a combination of a statement, valuation, or
information authorized by this subsection.
(c-2) Subsection (c-1) does not apply to the computation of
the franchise tax or any other tax imposed on a limited liability
company under the laws of this state.
(g) An action alleging a distribution is made in violation
of this section must be commenced not later than the second
anniversary of the date of the distribution.
SECTION 28. Section 101.251, Business Organizations Code,
is amended to read as follows:
Sec. 101.251. GOVERNING AUTHORITY. (a) The governing
authority of a limited liability company consists of:
(1) the managers of the company, if the company
agreement provides [company's certificate of formation states]
that the company is managed by [will have] one or more managers; or
(2) the members of the company, if the company
agreement provides [company's certificate of formation states]
that the company is managed by the members [will not have managers].
(b) If the company agreement does not provide otherwise, the
governing authority of a limited liability company consists of:
(1) the managers of the company, if the company's
certificate of formation states that the company has managers; or
(2) the members of the company, if the company's
certificate of formation does not state that the company has
managers.
SECTION 29. Section 101.451(3), Business Organizations
Code, is amended to read as follows:
(3) "Member" includes [means] a person who is a member
or is an assignee of a membership interest or a person who
beneficially owns a membership interest through a voting trust or a
nominee on the person's behalf.
SECTION 30. 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(a) [153.403]; or
(2) the 31st day after the expiration of any stay
granted under Section 101.455 [153.405], including all
continuations of the stay.
SECTION 31. Section 153.151, Business Organizations Code,
is amended by adding Subsection (a-1) to read as follows:
(a-1) On formation of a limited partnership, a person
becomes a general partner if the person:
(1) has entered into the partnership agreement as a
general partner; and
(2) is named as a general partner in the certificate of
formation of the limited partnership.
SECTION 32. Section 153.210, Business Organizations Code,
is amended by adding Subsections (c), (d), and (e) to read as
follows:
(c) For purposes of this section, the determination of the
amount of a limited partnership's liabilities or the value of a
limited partnership's assets may be based on:
(1) financial statements of the limited partnership,
which may include the financial statements of subsidiary entities
or other entities accounted for on a consolidated basis or on the
equity method of accounting, that:
(A) present the financial condition of the
limited partnership and any subsidiary or other entities included
in those financial statements in accordance with generally accepted
accounting principles or international financial reporting
standards; or
(B) have been prepared using the method of
accounting used to file the partnership's federal income tax return
or using any other accounting practices and principles that are
reasonable under the circumstances;
(2) financial information, including condensed or
summary financial statements, that are prepared on the same basis
as financial statements described by Subdivision (1);
(3) projections, forecasts, or other forward-looking
information relating to the future economic performance, financial
condition, or liquidity of the limited partnership that is
reasonable under the circumstances;
(4) a fair valuation or information from any other
method that is reasonable under the circumstances; or
(5) a combination of a statement, valuation, or
information authorized by this subsection.
(d) Subsection (c) does not apply to the computation of the
franchise tax or any other tax imposed on a limited partnership
under the laws of this state.
(e) An action alleging a distribution is made in violation
of this section must be commenced not later than the second
anniversary of the date of the distribution.
SECTION 33. Section 200.209, Business Organizations Code,
is amended to read as follows:
Sec. 200.209. DETERMINATION OF SOLVENCY, NET ASSETS, STATED
CAPITAL, AND SURPLUS. (a) The determination of whether a real
estate investment trust is or would be insolvent and the
determination of the amount [value] of a real estate investment
trust's [net assets,] stated capital[,] or surplus or any component
of the trust's stated capital or surplus, or the value of the real
estate investment trust's net assets or any component of the trust's
net assets, [and each of the components of net assets, stated
capital, or surplus] may be based on:
(1) financial statements of the real estate investment
trust that present the financial condition of the real estate
investment trust in accordance with generally accepted accounting
principles or international financial reporting standards,
including financial statements that include subsidiary entities or
other entities accounted for on a consolidated basis or on the
equity method of accounting;
(2) financial statements prepared using the method of
accounting used to file the real estate investment trust's federal
income tax return or using any other accounting practices and
principles that are reasonable under the circumstances;
(3) financial information, including condensed or
summary financial statements, that is prepared on the same basis as
financial statements described by Subdivision (1) or (2);
(4) a projection, a forecast, or other forward-looking
information relating to the future economic performance, financial
condition, or liquidity of the real estate investment trust that is
reasonable under the circumstances;
(5) a fair valuation or information from any other
method that is reasonable under the circumstances; or
(6) a combination of a statement, a valuation, or
information authorized by this section.
(b) Subsection (a) does not apply to the computation of the
franchise tax or any other tax imposed on a real estate investment
trust under the laws of this state.
SECTION 34. The following provisions of the Business
Organizations Code are repealed:
(1) Section 3.253; and
(2) Section 3.254.
SECTION 35. Sections 101.206 and 153.210, Business
Organizations Code, as amended by this Act, apply only to a
distribution made on or after the effective date of this Act. A
distribution made before the effective date of this Act is governed
by the law in effect on the date the distribution was made, and the
former law is continued in effect for that purpose.
SECTION 36. This Act takes effect September 1, 2021.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1203 passed the Senate on
April 9, 2021, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1203 passed the House on
April 30, 2021, by the following vote: Yeas 125, Nays 16, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor