Bill Text: TX SB1518 | 2017-2018 | 85th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to corporations, associations, real estate investment trusts, and related entities; authorizing fees.
Spectrum: Bipartisan Bill
Status: (Passed) 2017-05-22 - Effective on 9/1/17 [SB1518 Detail]
Download: Texas-2017-SB1518-Introduced.html
Bill Title: Relating to corporations, associations, real estate investment trusts, and related entities; authorizing fees.
Spectrum: Bipartisan Bill
Status: (Passed) 2017-05-22 - Effective on 9/1/17 [SB1518 Detail]
Download: Texas-2017-SB1518-Introduced.html
85R5333 EES-F | ||
By: Hancock | S.B. No. 1518 |
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relating to corporations, associations, real estate investment | ||
trusts, and related entities. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. 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; [ |
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(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)(C); and | ||
(16) for filing any instrument as provided by this | ||
code for which this section does not expressly provide a fee, $15. | ||
SECTION 2. Section 4.159, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 4.159. FILING FEES: NONPROFIT ASSOCIATIONS. For a | ||
filing by or for a nonprofit association, the secretary of state | ||
shall impose the following fees: | ||
(1) for filing a statement appointing an agent to | ||
receive service of process, $25; | ||
(2) for filing an amendment of a statement appointing | ||
an agent, $5; [ |
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(3) for filing a cancellation of a statement | ||
appointing an agent, $5; | ||
(4) for filing a certificate of merger or conversion, | ||
regardless of whether the surviving or new nonprofit organization | ||
is a domestic or foreign entity, $50; and | ||
(5) for filing any instrument of a nonprofit | ||
association as provided by this code for which this section does not | ||
expressly provide a fee, $5. | ||
SECTION 3. Subchapter D, Chapter 6, Business Organizations | ||
Code, is amended by adding Section 6.157 to read as follows: | ||
Sec. 6.157. VOTING OF JOINTLY HELD OWNERSHIP INTERESTS. | ||
(a) In this section, "jointly held ownership interest" means: | ||
(1) an ownership interest that is held of record in the | ||
names of two or more persons, whether fiduciaries, joint tenants, | ||
tenants in common, or otherwise; or | ||
(2) an ownership interest for which two or more | ||
persons have the right to vote the interest under Section 6.154. | ||
(b) A jointly held ownership interest may be voted by: | ||
(1) for a jointly held ownership interest as defined | ||
by Subsection (a)(1), any one of the record owners; or | ||
(2) for a jointly held ownership interest as defined | ||
by Subsection (a)(2), any one of the persons having the right to | ||
vote the interest, as described by Section 6.154. | ||
(c) If a jointly held ownership interest is voted by more | ||
than one person as described by Subsection (b), the act of a | ||
majority of the persons voting binds all of the record owners or | ||
persons having the right to vote the interest. | ||
(d) If a jointly held ownership interest is voted by more | ||
than one person as described by Subsection (b), and the votes of the | ||
persons are evenly split on any particular matter, each faction may | ||
vote the interest proportionately. | ||
(e) Subsection (b), (c), or (d) does not apply if the | ||
secretary or other person tabulating votes on the entity's behalf | ||
has a good faith belief, based on written information the person | ||
received regarding rights or obligations with respect to voting the | ||
jointly held ownership interest, that reliance on Subsection (b), | ||
(c), or (d), as applicable, is unwarranted. | ||
SECTION 4. Section 10.010, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 10.010. SPECIAL PROVISIONS APPLYING TO NONPROFIT | ||
CORPORATION AND NONPROFIT ASSOCIATION MERGERS. (a) A domestic | ||
nonprofit corporation or nonprofit association may not merge into | ||
another entity if the domestic nonprofit corporation or nonprofit | ||
association would, because of the merger, lose or impair its | ||
charitable status. | ||
(b) One or more domestic or foreign for-profit entities or | ||
non-code organizations may merge into one or more domestic | ||
nonprofit corporations or nonprofit associations that continue as | ||
the surviving entity or entities. | ||
(c) A domestic nonprofit corporation or nonprofit | ||
association may not merge with a foreign for-profit entity if the | ||
domestic nonprofit corporation or nonprofit association does not | ||
continue as the surviving entity. | ||
(d) One or more domestic nonprofit corporations or | ||
nonprofit associations and non-code organizations may merge into | ||
one or more foreign nonprofit entities that continue as the | ||
surviving entity or entities. | ||
SECTION 5. Section 10.108, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 10.108. SPECIAL PROVISIONS APPLYING TO NONPROFIT | ||
CORPORATION AND NONPROFIT ASSOCIATION CONVERSIONS. A domestic | ||
nonprofit corporation or nonprofit association may not convert into | ||
a for-profit entity. | ||
SECTION 6. Section 21.157, Business Organizations Code, is | ||
amended by adding Subsection (d) to read as follows: | ||
(d) The authorization by the board of directors for the | ||
issuance of shares may provide that any shares to be issued under | ||
the authorization may be issued: | ||
(1) in one or more transactions in the numbers and at | ||
the times as stated in or determined by the authorization; or | ||
(2) in the manner stated in the authorization, which | ||
may include a determination or action by any person or persons, | ||
including the corporation, if the authorization states: | ||
(A) the maximum number of shares that may be | ||
issued under the authorization; | ||
(B) the period during which the shares may be | ||
issued; and | ||
(C) the minimum amount of consideration for which | ||
the shares may be issued. | ||
SECTION 7. Section 21.160(d), Business Organizations Code, | ||
is amended to read as follows: | ||
(d) The amount of the consideration to be received for | ||
shares may be determined in accordance with Subsection (a) by the | ||
approval of a minimum amount of consideration or a formula to | ||
determine that amount. The formula may include or be made dependent | ||
on facts ascertainable outside the formula, if the manner in which | ||
those facts operate on the formula is clearly or expressly set forth | ||
in the formula or in the authorization approving the formula. | ||
SECTION 8. Section 21.168(c), Business Organizations Code, | ||
is amended to read as follows: | ||
(c) Subject to the certificate of formation, a right or | ||
option described by this section must state the terms on which, the | ||
time within which, and any consideration, including a formula by | ||
which the consideration may be determined, for which the shares may | ||
be purchased or received from the corporation on the exercise of the | ||
right or option. A formula by which the consideration may be | ||
determined may include or be made dependent on facts ascertainable | ||
outside the formula, if the manner in which those facts operate on | ||
the formula is clearly or expressly set forth in the formula or in | ||
the authorization approving the formula. | ||
SECTION 9. Section 21.218(b), Business Organizations Code, | ||
is amended to read as follows: | ||
(b) On [ |
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demand stating a proper purpose, a holder of shares of a corporation | ||
for at least six months immediately preceding the holder's demand, | ||
or a holder of at least five percent of all of the outstanding | ||
shares of a corporation, is entitled to examine and copy, at a | ||
reasonable time, the corporation's [ |
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account, minutes, and share transfer records relating to the stated | ||
purpose. The examination may be conducted in person or through an | ||
agent, accountant, or attorney. | ||
SECTION 10. Section 21.302, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.302. AUTHORITY FOR DISTRIBUTIONS. (a) The board of | ||
directors of a corporation may authorize a distribution and the | ||
corporation may make a distribution, subject to Section 21.303. | ||
(b) The board of directors may authorize a distribution by | ||
determining the maximum amount that may be distributed and the | ||
period during which the maximum amount may be distributed, | ||
including by setting a formula to determine the amount to be | ||
distributed. The authorization by the board of directors for a | ||
distribution may provide that the distribution be paid: | ||
(1) in the amounts and at the times as stated in the | ||
authorization; or | ||
(2) in the manner stated in the authorization, which | ||
may include a determination or action by any person or persons, | ||
including the corporation, if the authorization states the maximum | ||
amount that may be distributed under the authorization and the | ||
period during which the maximum amount may be distributed. | ||
SECTION 11. Section 21.414, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.414. DISSENT TO OR ABSTENTION FROM ACTION. (a) A | ||
director of a corporation who is present at a meeting of the board | ||
of directors at which action has been taken is presumed to have | ||
assented to the action taken unless: | ||
(1) the director's dissent or abstention has been | ||
entered in the minutes of the meeting; | ||
(2) the director has filed a written dissent or | ||
abstention with respect to the action with the person acting as the | ||
secretary of the meeting before the meeting is adjourned; or | ||
(3) the director has sent [ |
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reasonable time [ |
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a written dissent or abstention by: | ||
(A) certified or registered mail, return receipt | ||
requested; or | ||
(B) other means specified in the corporation's | ||
governing documents. | ||
(b) A director who voted in favor of an action may not | ||
dissent or abstain with respect to the action. | ||
SECTION 12. Section 21.458(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) Separate voting by a class or series of shares of a | ||
corporation is required for approval of a plan of merger or | ||
conversion if: | ||
(1) that class or series of shares is, under the plan | ||
of merger or conversion, to be converted into or exchanged for other | ||
securities, interests, obligations, rights to acquire shares, | ||
cash, property, or any combination of the items described by this | ||
subdivision; | ||
(2) the plan of merger or conversion contains a | ||
provision that would require approval by that class or series of | ||
shares under Section 21.364 if the provision was contained in a | ||
proposed amendment to the corporation's certificate of formation; | ||
or | ||
(3) [ |
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under the certificate of formation to vote as a class or series on | ||
the plan of merger or conversion. | ||
SECTION 13. Section 21.607, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.607. APPLICATION OF MORATORIUM. Section 21.606 | ||
does not apply to: | ||
(1) a business combination of an issuing public | ||
corporation if: | ||
(A) the original articles of incorporation or | ||
certificate of formation, as applicable, or the original bylaws of | ||
the corporation contain a provision expressly electing not to be | ||
governed by this subchapter; | ||
(B) before December 31, 1997, the corporation | ||
adopted an amendment to the articles of incorporation or bylaws of | ||
the corporation expressly electing not to be governed by this | ||
subchapter; or | ||
(C) after December 31, 1997, the corporation | ||
adopts an amendment to the articles of incorporation or certificate | ||
of formation, as applicable, or the bylaws of the corporation, | ||
approved by the affirmative vote of the holders, other than an | ||
affiliated shareholder or an affiliate or associate of the | ||
affiliated shareholder, of at least two-thirds of the outstanding | ||
voting shares of the issuing public corporation, expressly electing | ||
not to be governed by this subchapter, except that the amendment to | ||
the articles of incorporation or certificate of formation, as | ||
applicable, or the bylaws takes effect 18 months after the date of | ||
the vote and does not apply to a business combination of the issuing | ||
public corporation with an affiliated shareholder whose share | ||
acquisition date is on or before the effective date of the | ||
amendment; | ||
(2) a business combination of an issuing public | ||
corporation with an affiliated shareholder who became an affiliated | ||
shareholder inadvertently, if the affiliated shareholder: | ||
(A) as soon as practicable divests itself of a | ||
sufficient number of the voting shares of the issuing public | ||
corporation so that the affiliated shareholder no longer is the | ||
beneficial owner, directly or indirectly, of 20 percent or more of | ||
the outstanding voting shares of the issuing public corporation; | ||
and | ||
(B) would not at any time within the three-year | ||
period preceding the announcement date of the business combination | ||
have been an affiliated shareholder except for the inadvertent | ||
acquisition; | ||
(3) a business combination with an affiliated | ||
shareholder who was the beneficial owner of 20 percent or more of | ||
the outstanding voting shares of the issuing public corporation on | ||
December 31, 1996, and continuously until the announcement date of | ||
the business combination; | ||
(4) a business combination with an affiliated | ||
shareholder who became an affiliated shareholder through a transfer | ||
of shares of the issuing public corporation by will or intestate | ||
succession and continuously was an affiliated shareholder until the | ||
announcement date of the business combination; or | ||
(5) a business combination of an issuing public | ||
corporation with a domestic wholly owned subsidiary if the domestic | ||
subsidiary is not an affiliate or associate of the affiliated | ||
shareholder for a reason other than the affiliated shareholder's | ||
beneficial ownership of voting shares in the issuing public | ||
corporation. | ||
SECTION 14. Section 21.729(c), Business Organizations | ||
Code, is amended to read as follows: | ||
(c) The dissent of a shareholder may be proven by: | ||
(1) an entry in the minutes of the meeting of | ||
shareholders; | ||
(2) a written dissent filed with the secretary of the | ||
meeting before the adjournment of the meeting; | ||
(3) a written dissent that is sent [ |
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(A) promptly after the meeting or after a written | ||
consent was obtained from the other shareholders; and | ||
(B) by certified or registered mail, return | ||
receipt requested, or by other means specified in the corporation's | ||
governing documents; or | ||
(4) any other means reasonably evidencing the dissent. | ||
SECTION 15. Sections 21.901(4), (5), and (8), Business | ||
Organizations Code, are amended to read as follows: | ||
(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, 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 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. | ||
(5) "Overissue" means the purported issuance of: | ||
(A) shares of a class or series in excess of the | ||
number of shares of that class or series that the corporation has | ||
the power to issue under the governing documents of the corporation | ||
and the corporate statute at the time of issuance; or | ||
(B) shares of any class or series that are not at | ||
the time of issuance authorized for issuance by the governing | ||
documents of the corporation. | ||
(8) "Validation effective time" or "effective time of | ||
the validation," with respect to any defective corporate act | ||
ratified under this subchapter, means the latest [ |
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(A) the time at which the defective corporate act | ||
[ |
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under Section 21.905 is approved [ |
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if no shareholder approval is required [ |
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which the board of directors adopts the resolutions [ |
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required by Section 21.903 [ |
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(B) if a certificate of validation is not | ||
required to be filed under Section 21.908, the time, if any, | ||
specified by the board of directors in the resolutions adopted | ||
under Section 21.903, which may not precede the time at which the | ||
resolutions are adopted; or | ||
(C) the time at which any certificate of | ||
validation filed under Section 21.908 takes effect in accordance | ||
with Chapter 4. | ||
SECTION 16. Section 21.903, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.903. RATIFICATION OF DEFECTIVE CORPORATE ACT; | ||
ADOPTION OF RESOLUTIONS [ |
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[ |
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corporation shall adopt resolutions [ |
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(1) the defective corporate act or acts to be | ||
ratified; | ||
(2) the date [ |
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act; | ||
(3) if the defective corporate act or acts involved | ||
the issuance of putative shares, the number and type of putative | ||
shares issued and the date or dates on which the putative shares | ||
were purportedly issued; | ||
(4) the nature of the failure of authorization with | ||
respect to each [ |
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(5) that the board of directors approves the | ||
ratification of the defective corporate act or acts. | ||
(b) A [ |
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shareholder approval of the ratification of a defective corporate | ||
act that is a subject of the resolution [ |
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respect to the defective corporate act [ |
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defective corporate act at any time before the validation effective | ||
time [ |
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SECTION 17. Section 21.904, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.904. QUORUM AND VOTING REQUIREMENTS FOR ADOPTION OF | ||
RESOLUTIONS [ |
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applicable to the adoption of the resolutions to ratify a defective | ||
corporate act [ |
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the quorum and voting requirements applicable at the time of the | ||
adoption of the resolutions [ |
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defective corporate act proposed to be ratified. | ||
(b) Notwithstanding Subsection (a) and except as provided | ||
by Subsection (c), if in order for a quorum to be present or to | ||
approve the defective corporate act, the presence or approval of a | ||
larger number or portion of directors or of specified directors | ||
would have been required by the governing documents of the | ||
corporation, any plan or agreement to which the corporation was a | ||
party, or any provision of the corporate statute, each as in effect | ||
at the time of the defective corporate act, then the presence or | ||
approval of the larger number or portion of such directors or of | ||
such specified directors must be required for a quorum to be present | ||
or to adopt the resolutions to ratify the defective corporate act | ||
[ |
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(c) The presence or approval of any director elected, | ||
appointed, or nominated by holders of any class or series of which | ||
no shares are then outstanding, or by any person that is no longer a | ||
shareholder, shall not be required for a quorum to be present or to | ||
adopt the resolutions [ |
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SECTION 18. Section 21.905, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.905. SHAREHOLDER APPROVAL [ |
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DEFECTIVE CORPORATE ACT [ |
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defective corporate act ratified [ |
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Section 21.903 must be submitted to shareholders for approval | ||
[ |
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(1) no other provision of the corporate statute, no | ||
provision of the corporation's governing documents, and no | ||
provision of any plan or agreement to which the corporation is a | ||
party would have required shareholder approval of: | ||
(A) the defective corporate act to be ratified[ |
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(B) the type of defective corporate act to be | ||
ratified at the time the board of directors adopts the resolutions | ||
ratifying that defective corporate act under [ |
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(2) the defective corporate act to be ratified did not | ||
result from a failure to comply with Subchapter M. | ||
SECTION 19. Section 21.906, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.906. NOTICE REQUIREMENTS FOR RATIFIED DEFECTIVE | ||
CORPORATE ACT [ |
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If the ratification of a defective corporate act is required to be | ||
submitted to the shareholders for approval under Section 21.905 | ||
[ |
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meeting shall be given at least 20 days before the date of the | ||
meeting to: | ||
(1) each holder of record, as of the record date of the | ||
meeting, of valid shares and putative shares, regardless of whether | ||
the shares are voting or nonvoting, at the address of the holder as | ||
it appears or most recently appeared, as appropriate, on the | ||
corporation's records; and | ||
(2) [ |
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[ |
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holder of record of valid shares and putative shares, regardless of | ||
whether the shares are voting or nonvoting, as of the time of the | ||
defective corporate act, except that notice is not required to be | ||
given to a holder whose identity or address cannot be ascertained | ||
from the corporation's records. | ||
(b) [ |
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(1) copies [ |
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board of directors under Section 21.903 or the information | ||
contained in those resolutions as required by that section | ||
[ |
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(2) a statement that, on shareholder approval of the | ||
ratification of the defective corporate act or putative shares made | ||
in accordance with this subchapter, the holder's rights to | ||
challenge the defective corporate act or putative shares are | ||
limited to an action claiming [ |
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[ |
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[ |
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appropriate jurisdiction, in its discretion, should declare: | ||
(A) that the [ |
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certain conditions, if that action is filed with the court not later | ||
than the 120th day after the applicable validation effective time; | ||
or | ||
(B) that the ratification was not accomplished in | ||
accordance with this subchapter. | ||
SECTION 20. Section 21.907, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.907. SHAREHOLDER MEETING; QUORUM AND VOTING. (a) | ||
At the shareholder meeting, the quorum and voting requirements | ||
applicable to the approval of the ratification [ |
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defective corporate act [ |
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[ |
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applicable at the time of the approval [ |
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shareholders of the ratification for the type of ratified defective | ||
corporate act proposed to be approved [ |
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provided by this section. | ||
(b) If the presence or approval of a larger number or | ||
portion of shares or of any class or series of shares or of | ||
specified shareholders would have been required for a quorum to be | ||
present or to approve the defective corporate act, as applicable, | ||
by the corporation's governing documents, any plan or agreement to | ||
which the corporation was a party, or any provision of the corporate | ||
statute, each as in effect at the time of the defective corporate | ||
act, then the presence or approval of the larger number or portion | ||
of shares or of the class or series of shares or of such specified | ||
shareholders shall be required for a quorum to be present or to | ||
approve the ratification of the defective corporate act [ |
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shares of any class or series of which no shares are then | ||
outstanding, or of any person that is no longer a shareholder, is | ||
[ |
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(c) The approval by the shareholders of the ratification of | ||
[ |
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requires the affirmative vote of the majority of shares present at | ||
the meeting and entitled to vote on the election of the director at | ||
the time of the approval, unless the governing documents of the | ||
corporation then in effect or in effect at the time of the defective | ||
election require or required a larger number or portion of shares or | ||
of any class or series of shares or of specified shareholders to | ||
elect the director, in which case the affirmative vote of the larger | ||
number or portion of shares or of the class or series of shares or of | ||
the specified shareholders is required to ratify the election of | ||
the director, except that the presence or approval of shares of any | ||
class or series of which no shares are then outstanding, or of any | ||
person that is no longer a shareholder, is not required. | ||
(d) If a failure of authorization results from the failure | ||
to comply with Subchapter M, the approval of the ratification of the | ||
defective corporate act requires the vote set forth by Section | ||
21.606(2), regardless of whether that vote would have otherwise | ||
been required. | ||
(e) Putative shares on the record date for determining | ||
shareholders entitled to vote on any matter submitted to | ||
shareholders under Section 21.905 are not entitled to be counted | ||
for voting or quorum purposes in any vote to approve the | ||
ratification of any defective corporate act, regardless of any | ||
ratification that becomes effective after the record date. | ||
SECTION 21. Section 21.908, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.908. CERTIFICATE OF VALIDATION. (a) If a [ |
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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[ |
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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. | ||
(a-1) A separate certificate of validation is required for | ||
each defective corporate act for which a certificate of validation | ||
is required under this section, except that: | ||
(1) two or more defective corporate acts may be | ||
included in a single certificate of validation if the corporation | ||
filed, or to comply with the applicable provisions of this code | ||
could have filed, a single filing instrument or other document | ||
under another provision of this code to effect the acts; | ||
(2) a single certificate of validation may be filed to | ||
amend the certificate of formation of the corporation to establish | ||
a new class or series of shares or to increase the number of | ||
authorized shares of any class or series of shares, in order to cure | ||
multiple previous overissues of the shares of the class or series; | ||
and | ||
(3) a single certificate of validation may be filed to | ||
amend the corporation's certificate of formation to establish two | ||
or more new classes or series of shares, to increase the number of | ||
authorized shares of two or more classes or series of shares, or to | ||
establish one or more new classes or series of shares and increase | ||
the number of authorized shares of one or more classes or series of | ||
shares, in order to cure multiple previous overissues of the shares | ||
of all the classes and series that are the subjects of the | ||
certificate of validation. | ||
(a-2) A certificate of validation described by Subsection | ||
(a-1)(2) is effective as of the first overissue of the shares of the | ||
class or series that is the subject of the certificate of | ||
validation. | ||
(a-3) A certificate of validation described by Subsection | ||
(a-1)(3) is effective as to each class or series that is a subject | ||
of the certificate of validation as of the first overissue of the | ||
shares of the class or series. | ||
(b) The certificate of validation must include [ |
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(1) 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 [ |
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(2) a statement that each defective corporate act 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 [ |
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previously filed with a filing officer under the corporate statute | ||
with [ |
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to the filing instrument is required to give effect to the defective | ||
corporate act as ratified in accordance with this subchapter: | ||
(i) the name, [ |
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[ |
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of any certificate of correction to the filing instrument; and | ||
(ii) a statement that a copy of the | ||
previously filed filing instrument, together with [ |
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any [ |
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instrument, is attached as an exhibit to the certificate of | ||
validation [ |
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(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 | ||
(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 | ||
[ |
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(c) A filing instrument attached to a certificate of | ||
validation under Subsection (b)(3)(B) or (b)(3)(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 22. Section 21.909, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.909. ADOPTION OF RESOLUTIONS [ |
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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 Section 21.907(e), each defective | ||
corporate act ratified in accordance with this subchapter [ |
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may not be considered void or voidable as a result of the [ |
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failure of authorization described by [ |
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resolutions adopted under Sections 21.903 and 21.904 [ |
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and the effect shall be retroactive to the time of the defective | ||
corporate act. | ||
SECTION 23. Section 21.910, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.910. ADOPTION OF RESOLUTIONS [ |
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ON PUTATIVE SHARES. On or after the validation effective time, | ||
unless determined otherwise in an action brought under Section | ||
21.914 and subject to Section 21.907(e), each putative share or | ||
fraction of a putative share issued or purportedly issued pursuant | ||
to a [ |
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subchapter and described by [ |
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[ |
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considered void or voidable [ |
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an identical share or fraction of a share outstanding as of the time | ||
it was purportedly issued. | ||
SECTION 24. The heading to Section 21.911, Business | ||
Organizations Code, is amended to read as follows: | ||
Sec. 21.911. NOTICE TO SHAREHOLDERS FOLLOWING RATIFICATION | ||
OF DEFECTIVE CORPORATE ACT [ |
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SECTION 25. Section 21.911, Business Organizations Code, is | ||
amended by amending Subsections (a), (d), (e), and (f) and adding | ||
Subsection (g) to read as follows: | ||
(a) For each defective corporate act ratified by the board | ||
of directors under Sections 21.903 and 21.904, notice [ |
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the ratification [ |
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shall be given promptly to: | ||
(1) each holder of valid shares and putative shares, | ||
regardless of whether the shares are voting or nonvoting, as of the | ||
date the board of directors adopted the resolutions ratifying the | ||
defective corporate act [ |
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(2) each holder of valid shares and putative shares, | ||
regardless of whether the shares are voting or nonvoting, as of a | ||
date not later than the 60th day after the date of adoption [ |
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directors. | ||
(d) The notice must contain: | ||
(1) copies [ |
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board of directors under Section 21.903 or the information | ||
contained in those resolutions [ |
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(2) a statement that, on ratification of the defective | ||
corporate act or putative shares made in accordance with this | ||
subchapter, the holder's rights to challenge the defective | ||
corporate act or putative shares are limited to an action claiming | ||
[ |
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[ |
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[ |
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appropriate jurisdiction, in its discretion, should declare: | ||
(A) that the [ |
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certain conditions, if the action is filed not later than the 120th | ||
day after the later of the applicable validation effective time or | ||
the time at which the notice required by this section is given; or | ||
(B) that the ratification was not accomplished in | ||
accordance with this subchapter. | ||
(e) Notwithstanding Subsections (a)-(d): | ||
(1) [ |
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section to a person if notice of the ratification of the defective | ||
corporate act [ |
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with Section 21.906; and | ||
(2) for a corporation that has a class of stock listed | ||
on a national securities exchange, the notice required by this | ||
section may be considered given if the information contained in the | ||
notice is disclosed in a document publicly filed by the corporation | ||
with the Securities and Exchange Commission under Section 13, 14, | ||
or 15(d), Securities Exchange Act of 1934 (15 U.S.C. Section 78m, | ||
78n, or 78o(d)), and any rules promulgated under that Act. | ||
(f) For purposes of Sections 21.905, [ |
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21.907 and this section, notice to holders of putative shares and | ||
notice to holders of valid shares and putative shares as of the time | ||
of the defective corporate act shall be treated as notice to holders | ||
of valid shares for purposes of Sections 6.051, 6.052, 6.053, | ||
6.201, 6.202, 6.203, 6.204, 6.205, 21.353, and 21.3531. | ||
(g) If the ratification of a defective corporate act has | ||
been approved by shareholders acting under Section 6.202, the | ||
notice required by this section may be included in any notice | ||
required to be given under Section 6.202(d) and, if included: | ||
(1) shall be sent to the shareholders entitled to the | ||
notice under Section 6.202(d); and | ||
(2) is not required to be sent to shareholders who | ||
signed a consent described by Section 6.202(b). | ||
SECTION 26. Section 21.913(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) Ratification of an act or transaction under this | ||
subchapter or validation of an act or transaction as provided by | ||
Sections 21.914 through 21.917 is not the exclusive means of | ||
ratifying or validating any act or transaction taken by or on behalf | ||
of the corporation, including any defective corporate act or any | ||
issuance of putative shares or other shares, or of adopting or | ||
endorsing any act or transaction taken by or in the name of the | ||
corporation before the corporation exists. | ||
SECTION 27. Section 21.917, Business Organizations Code, is | ||
amended by amending Subsection (b) and adding Subsection (c) to | ||
read as follows: | ||
(b) Notwithstanding any other provision of this | ||
subchapter[ |
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(1) an action claiming [ |
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corporate act or putative shares [ |
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identified in the resolutions [ |
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with Section 21.903 may not be filed in or must be dismissed by any | ||
court after the applicable validation effective time; and [ |
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(2) an action claiming [ |
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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. | ||
(c) Except as otherwise provided by a corporation's | ||
governing documents, for purposes of this section, notice under | ||
Section 21.911 that is: | ||
(1) mailed is considered to be given on the date the | ||
notice is deposited in the United States mail with postage paid in | ||
an envelope addressed to the holder at the holder's address | ||
appearing or most recently appearing, as appropriate, in the | ||
records of the corporation; and | ||
(2) transmitted by facsimile or electronic message is | ||
considered to be given when the facsimile or electronic message is | ||
transmitted to a facsimile number or an electronic message address | ||
provided by the holder, or to which the holder consents, for the | ||
purpose of receiving notice. | ||
SECTION 28. Section 22.154(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) If the board of directors of a corporation fails to call | ||
the annual meeting of members when required, a member of the | ||
corporation may demand that the meeting be held within a reasonable | ||
time. The demand must be made in writing and sent to an officer of | ||
the corporation by certified or registered mail, return receipt | ||
requested, or by other means specified in the corporation's | ||
governing documents. | ||
SECTION 29. Section 22.214, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 22.214. ACTION BY DIRECTORS. The act of a majority of | ||
the directors present in person or by proxy at a meeting at which a | ||
quorum is present at the time of the act is the act of the board of | ||
directors of a corporation, unless the act of a greater number is | ||
required by the certificate of formation or bylaws of the | ||
corporation. | ||
SECTION 30. Section 22.227, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 22.227. DISSENT TO OR ABSTENTION FROM ACTION. (a) A | ||
director of a corporation who is present at a meeting of the board | ||
of directors at which action is taken on a corporate matter | ||
described by Section 22.226(a) is presumed to have assented to the | ||
action unless: | ||
(1) the director's dissent or abstention has been | ||
entered in the minutes of the meeting; | ||
(2) the director has filed a written dissent or | ||
abstention with respect to the action with the person acting as the | ||
secretary of the meeting before the meeting is adjourned; or | ||
(3) the director has sent [ |
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reasonable time [ |
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a written dissent or abstention by: | ||
(A) certified or registered mail, return receipt | ||
requested; or | ||
(B) other means specified in the corporation's | ||
governing documents. | ||
(b) The right to dissent or abstain under this section does | ||
not apply to a director who voted in favor of the action. | ||
SECTION 31. Section 200.251, Business Organizations Code, | ||
is amended by amending Subsection (b) and adding Subsection (b-1) | ||
to read as follows: | ||
(b) If the annual meeting is not held at the designated | ||
time, a shareholder may [ |
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written request to an officer or trust manager of the real estate | ||
investment trust that the meeting be held within a reasonable time. | ||
The request calling for the meeting must be made by: | ||
(1) certified or registered mail, return receipt | ||
requested; or | ||
(2) other means specified in the real estate | ||
investment trust's governing documents. | ||
(b-1) If the annual meeting is not called before the 61st | ||
day after the date the written request calling for a meeting is made | ||
under Subsection (b), any shareholder may bring suit at law or in | ||
equity to compel the meeting to be held. | ||
SECTION 32. Sections 251.354(a) and (b), Business | ||
Organizations Code, are amended to read as follows: | ||
(a) If a cooperative association required by Section | ||
251.353 to file a copy of a report with the secretary of state does | ||
not file the report within the prescribed time, the secretary of | ||
state shall send written notice of the requirement [ |
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the 60th day after the date the report becomes due. | ||
(b) If a cooperative association [ |
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251.353 to file a report at the cooperative association's [ |
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registered office, but not with the secretary of state, [ |
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to file the report within the prescribed time, the secretary of | ||
state or any member of the cooperative association may send written | ||
notice of the requirement [ |
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association's principal office. | ||
SECTION 33. Section 252.017(b), Business Organizations | ||
Code, is amended to read as follows: | ||
(b) Chapters 1, [ |
||
association designates an agent for service of process, Subchapter | ||
E, Chapter 5, apply to a nonprofit association. | ||
SECTION 34. Chapter 252, Business Organizations Code, is | ||
amended by adding Section 252.018 to read as follows: | ||
Sec. 252.018. MERGERS AND CONVERSIONS. A nonprofit | ||
association may effect a merger or conversion by complying with the | ||
applicable provisions of Chapter 10 and the nonprofit association's | ||
governing documents. | ||
SECTION 35. Chapter 402, Business Organizations Code, is | ||
amended by adding Section 402.015 to read as follows: | ||
Sec. 402.015. PERPETUAL DURATION OF OLD CORPORATIONS. (a) | ||
Notwithstanding any provision in the articles of incorporation | ||
limiting the period of duration of a domestic for-profit | ||
corporation formed before September 6, 1955, the period of duration | ||
of the corporation became perpetual on May 2, 1979, if the | ||
corporation was in existence according to the records of the | ||
secretary of state on May 2, 1979. A corporation described by this | ||
subsection may amend the corporation's articles of incorporation or | ||
certificate of formation, as applicable, to limit the corporation's | ||
period of duration after May 2, 1979. | ||
(b) Notwithstanding a provision in the articles of | ||
incorporation limiting the period of duration of a domestic | ||
nonprofit corporation formed before August 10, 1959, the period of | ||
duration of the corporation became perpetual on May 2, 1979, if the | ||
corporation was in existence according to the records of the | ||
secretary of state on May 2, 1979. A corporation described by this | ||
subsection may amend the corporation's articles of incorporation or | ||
certificate of formation, as applicable, to limit the corporation's | ||
period of duration after May 2, 1979. | ||
SECTION 36. This Act takes effect September 1, 2017. |