Bill Text: TX SB860 | 2015-2016 | 84th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to corporations and fundamental business transactions.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2015-05-18 - Effective on 9/1/15 [SB860 Detail]
Download: Texas-2015-SB860-Introduced.html
Bill Title: Relating to corporations and fundamental business transactions.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2015-05-18 - Effective on 9/1/15 [SB860 Detail]
Download: Texas-2015-SB860-Introduced.html
84R5351 CLG-F | ||
By: Eltife | S.B. No. 860 |
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relating to corporations and fundamental business transactions. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 1.002, Business Organizations Code, is | ||
amended by adding Subdivision (63-a) to read as follows: | ||
(63-a) "Owner liability" means personal liability for a | ||
liability or other obligation of an organization that is imposed on | ||
a person: | ||
(A) by statute solely because of the person's | ||
status as an owner or member of the organization; or | ||
(B) by a governing document of an organization | ||
under a provision of this code or the laws of the organization's | ||
jurisdiction of formation that authorizes the governing document to | ||
make one or more specified owners or members of the organization | ||
liable in their capacity as owners or members for all or specified | ||
liabilities or other obligations of the organization. | ||
SECTION 2. Section 3.054, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 3.054. EXECUTION OF CERTIFICATE OF AMENDMENT OF | ||
FOR-PROFIT CORPORATION. Except as provided by Title 2 or this | ||
section, an [ |
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behalf of the for-profit corporation. If shares of the for-profit | ||
corporation have not been issued and the certificate of amendment | ||
is adopted by the board of directors, one or more [ |
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the directors may sign the certificate of amendment on behalf of the | ||
for-profit corporation. | ||
SECTION 3. Section 3.060(b), Business Organizations Code, | ||
is amended to read as follows: | ||
(b) Except as provided by Title 2 or this subsection, an | ||
[ |
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behalf of the corporation. If shares of the corporation have not | ||
been issued and the restated certificate of formation is adopted by | ||
the board of directors, one or more [ |
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may sign the restated certificate of formation on behalf of the | ||
corporation. | ||
SECTION 4. Section 3.201(b), Business Organizations Code, | ||
is amended to read as follows: | ||
(b) The ownership interests in a for-profit corporation, | ||
real estate investment trust, or professional corporation must be | ||
certificated unless a [ |
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entity or a resolution adopted by the governing authority of the | ||
entity provides that some or all of any of the classes or series of | ||
[ |
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some or all of each of the classes or series of the ownership | ||
interests are uncertificated. The entity may have both outstanding | ||
certificated and uncertificated ownership interests of the same | ||
class or series. If a domestic entity changes the form of its | ||
ownership interests from certificated to uncertificated, a | ||
certificated ownership interest subject to the change becomes an | ||
uncertificated ownership interest only after the certificate is | ||
surrendered to the domestic entity. | ||
SECTION 5. Section 10.001(e), Business Organizations Code, | ||
is amended to read as follows: | ||
(e) A domestic entity may not merge under this subchapter if | ||
an owner or member of that entity that is a party to the merger will, | ||
as a result of the merger, become subject to owner liability | ||
[ |
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a liability or other obligation of any other person. | ||
SECTION 6. Section 10.002(a), Business Organizations Code, | ||
is amended to read as follows: | ||
(a) A plan of merger must be in writing and must include: | ||
(1) the name of each organization that is a party to | ||
the merger; | ||
(2) the name of each organization that will survive | ||
the merger; | ||
(3) the name of each new organization that is to be | ||
created by the plan of merger; | ||
(4) a description of the organizational form of each | ||
organization that is a party to the merger or that is to be created | ||
by the plan of merger and its jurisdiction of formation; | ||
(5) the manner and basis, including use of a formula, | ||
of converting or exchanging any of the ownership or membership | ||
interests of each organization that is a party to the merger into: | ||
(A) ownership interests, membership interests, | ||
obligations, rights to purchase securities, or other securities of | ||
one or more of the surviving or new organizations; | ||
(B) cash; | ||
(C) other property, including ownership | ||
interests, membership interests, obligations, rights to purchase | ||
securities, or other securities of any other person or entity; or | ||
(D) any combination of the items described by | ||
Paragraphs (A)-(C); | ||
(6) the identification of any of the ownership or | ||
membership interests of an organization that is a party to the | ||
merger that are: | ||
(A) to be canceled rather than converted or | ||
exchanged; or | ||
(B) to remain outstanding rather than converted | ||
or exchanged if the organization survives the merger; | ||
(7) the certificate of formation of each new domestic | ||
filing entity to be created by the plan of merger; | ||
(8) the governing documents of each new domestic | ||
nonfiling entity to be created by the plan of merger; and | ||
(9) the governing documents of each non-code | ||
organization that: | ||
(A) is to survive the merger or to be created by | ||
the plan of merger; and | ||
(B) is an entity that is not: | ||
(i) organized under the laws of any state or | ||
the United States; or | ||
(ii) required to file its certificate of | ||
formation or similar document under which the entity is organized | ||
with the appropriate governmental authority. | ||
SECTION 7. Section 10.004, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 10.004. PLAN OF MERGER: PERMISSIVE PROVISIONS. 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) any other provisions relating to the merger that | ||
are not required by this chapter. | ||
SECTION 8. Section 10.008(a), Business Organizations Code, | ||
is amended to read as follows: | ||
(a) When a merger takes effect: | ||
(1) the separate existence of each domestic entity | ||
that is a party to the merger, other than a surviving or new | ||
domestic entity, ceases; | ||
(2) all rights, title, and interests to all real | ||
estate and other property owned by each organization that is a party | ||
to the merger is allocated to and vested, subject to any existing | ||
liens or other encumbrances on the property, in one or more of the | ||
surviving or new organizations as provided in the plan of merger | ||
without: | ||
(A) reversion or impairment; | ||
(B) any further act or deed; or | ||
(C) any transfer or assignment having occurred; | ||
(3) all liabilities and obligations of each | ||
organization that is a party to the merger are allocated to one or | ||
more of the surviving or new organizations in the manner provided by | ||
the plan of merger; | ||
(4) each surviving or new domestic organization to | ||
which a liability or obligation is allocated under the plan of | ||
merger is the primary obligor for the liability or obligation, and, | ||
except as otherwise provided by the plan of merger or by law or | ||
contract, no other party to the merger, other than a surviving | ||
domestic entity or non-code organization liable or otherwise | ||
obligated at the time of the merger, and no other new domestic | ||
entity or non-code organization created under the plan of merger is | ||
liable for the debt or other obligation; | ||
(5) any proceeding pending by or against any domestic | ||
entity or by or against any non-code organization that is a party to | ||
the merger may be continued as if the merger did not occur, or the | ||
surviving or new domestic entity or entities or the surviving or new | ||
non-code organization or non-code organizations to which the | ||
liability, obligation, asset, or right associated with that | ||
proceeding is allocated to and vested in under the plan of merger | ||
may be substituted in the proceeding; | ||
(6) the governing documents of each surviving domestic | ||
entity are amended, restated, or amended and restated to the extent | ||
provided by the plan of merger, and a certificate of amendment, a | ||
restated certificate of formation without amendment, or a restated | ||
certificate of formation containing amendments of a surviving | ||
filing entity shall have the effect stated in Section 3.063; | ||
(7) each new filing entity whose certificate of | ||
formation is included in the plan of merger under this chapter, on | ||
meeting any additional requirements, if any, of this code for its | ||
formation, is formed as a domestic entity under this code as | ||
provided by the plan of merger; | ||
(8) the ownership or membership interests of each | ||
organization that is a party to the merger and that are to be | ||
converted or exchanged, in whole or part, into ownership or | ||
membership interests, obligations, rights to purchase securities, | ||
or other securities of one or more of the surviving or new | ||
organizations, into cash or other property, including ownership or | ||
membership interests, obligations, rights to purchase securities, | ||
or other securities of any organization, or into any combination of | ||
these, or that are to be canceled or remain outstanding, are | ||
converted, exchanged, [ |
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provided in the plan of merger, and the former owners or members who | ||
held ownership or membership interests of each domestic entity that | ||
is a party to the merger are entitled only to the rights provided by | ||
the plan of merger or, if applicable, any rights to receive the fair | ||
value for the ownership interests provided under Subchapter H; and | ||
(9) notwithstanding Subdivision (4), the surviving or | ||
new organization named in the plan of merger as primarily obligated | ||
to pay the fair value of an ownership or membership interest under | ||
Section 10.003(2) is the primary obligor for that payment and all | ||
other surviving or new organizations are secondarily liable for | ||
that payment. | ||
SECTION 9. Section 10.051(f), Business Organizations Code, | ||
is amended to read as follows: | ||
(f) A plan of exchange may not be effected if any owner or | ||
member of a domestic entity that is a party to the interest exchange | ||
will, as a result of the interest exchange, become subject to owner | ||
liability [ |
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member, for the liabilities or obligations of any other person or | ||
organization. | ||
SECTION 10. Section 10.052(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) A plan of exchange must be in writing and must include: | ||
(1) the name of each domestic entity the ownership or | ||
membership interests of which are to be acquired; | ||
(2) the name of each acquiring organization; | ||
(3) if there is more than one acquiring organization, | ||
the ownership or membership interests to be acquired by each | ||
organization; | ||
(4) the terms and conditions of the exchange; and | ||
(5) the manner and basis, including use of a formula, | ||
of exchanging the ownership or membership interests to be acquired | ||
for: | ||
(A) ownership or membership interests, | ||
obligations, rights to purchase securities, or other securities of | ||
one or more of the acquiring organizations that is a party to the | ||
plan of exchange; | ||
(B) cash; | ||
(C) other property, including ownership or | ||
membership interests, obligations, rights to purchase securities, | ||
or other securities of any other person or entity; or | ||
(D) any combination of those items. | ||
SECTION 11. Section 10.101(f), Business Organizations | ||
Code, is amended to read as follows: | ||
(f) A domestic entity may not convert under this section if | ||
an owner or member of the domestic entity, as a result of the | ||
conversion, becomes subject to owner liability [ |
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or other obligation of the converted entity. | ||
SECTION 12. Section 10.103(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) A plan of conversion must be in writing and must | ||
include: | ||
(1) the name of the converting entity; | ||
(2) the name of the converted entity; | ||
(3) a statement that the converting entity is | ||
continuing its existence in the organizational form of the | ||
converted entity; | ||
(4) a statement of the type of entity that the | ||
converted entity is to be and the converted entity's jurisdiction | ||
of formation; | ||
(5) if Sections 10.1025 and 10.109 do not apply, the | ||
manner and basis, including use of a formula, of converting the | ||
ownership or membership interests of the converting entity into | ||
ownership or membership interests of the converted entity; | ||
(6) any certificate of formation required to be filed | ||
under this code if the converted entity is a filing entity; | ||
(7) the certificate of formation or similar | ||
organizational document of the converted entity if the converted | ||
entity is not a filing entity; and | ||
(8) if Sections 10.1025 and 10.109 apply, a statement | ||
that the converting entity is electing to continue its existence in | ||
its current organizational form and jurisdiction of formation after | ||
the conversion takes effect. | ||
SECTION 13. Section 10.151, Business Organizations Code, is | ||
amended by amending Subsection (b) and adding Subsection (d) to | ||
read as follows: | ||
(b) If a certificate of merger or exchange is required to be | ||
filed in connection with an interest exchange or a merger, other | ||
than a merger under Section 10.006, the certificate must be signed | ||
on behalf of each domestic entity and non-code organization that is | ||
a party to the merger or exchange by an officer or other authorized | ||
representative and must include: | ||
(1) the plan of merger or exchange or a statement | ||
certifying: | ||
(A) the name and organizational form of each | ||
domestic entity or non-code organization that is a party to the | ||
merger or exchange; | ||
(B) for a merger, the name and organizational | ||
form of each domestic entity or non-code organization that is to be | ||
created by the plan of merger; | ||
(C) the name of the jurisdiction in which each | ||
domestic entity or non-code organization named under Paragraph (A) | ||
or (B) is incorporated or organized; | ||
(D) for a merger, the amendments or changes to | ||
the certificate of formation of any [ |
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party to the merger, or a statement that amendments or changes are | ||
being made to the certificate of formation of any filing entity that | ||
is a party to the merger as set forth in a restated certificate of | ||
formation containing amendments or a certificate of amendment | ||
attached to the certificate of merger under Subsection (d) [ |
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(E) for a merger, if no amendments or changes to | ||
the certificate of formation of a filing entity are made under | ||
Paragraph (D), a statement to that effect, which may include a | ||
reference to a restated certificate of formation attached to the | ||
certificate of merger under Subsection (d); | ||
(F) for a merger, that the certificate of | ||
formation of each new filing entity to be created under the plan of | ||
merger is being filed with the certificate of merger; | ||
(G) [ |
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exchange is on file at the principal place of business of each | ||
surviving, acquiring, or new domestic entity or non-code | ||
organization, and the address of each principal place of business; | ||
and | ||
(H) [ |
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exchange will be on written request furnished without cost by each | ||
surviving, acquiring, or new domestic entity or non-code | ||
organization to any owner or member of any domestic entity that is a | ||
party to or created by the plan of merger or exchange and, for a | ||
merger with multiple surviving domestic entities or non-code | ||
organizations, to any creditor or obligee of the parties to the | ||
merger at the time of the merger if a liability or obligation is | ||
then outstanding; | ||
(2) if approval of the owners or members of any | ||
domestic entity that was a party to the plan of merger or exchange | ||
is not required by this code, a statement to that effect; and | ||
(3) a statement that the plan of merger or exchange has | ||
been approved as required by the laws of the jurisdiction of | ||
formation of each organization that is a party to the merger or | ||
exchange and by the governing documents of those organizations. | ||
(d) As provided by Subsections (b)(1)(D) and (E), a | ||
certificate of merger filed under this section may include as an | ||
attachment a certificate of amendment, a restated certificate of | ||
formation without amendment, or a restated certificate of formation | ||
containing amendments for any filing entity that is a party to the | ||
merger. | ||
SECTION 14. Section 10.154(b), Business Organizations | ||
Code, is amended to read as follows: | ||
(b) If a certificate of conversion is required to be filed | ||
in connection with a conversion, the certificate must be signed on | ||
behalf of the converting entity and must include: | ||
(1) the plan of conversion or a statement certifying | ||
the following: | ||
(A) the name, organizational form, and | ||
jurisdiction of formation of the converting entity; | ||
(B) the name, organizational form, and | ||
jurisdiction of formation of the converted entity; | ||
(C) that a [ |
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at the principal place of business of the converting entity, and the | ||
address of the principal place of business; | ||
(D) that a [ |
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file after the conversion at the principal place of business of the | ||
converted entity, and the address of the principal place of | ||
business; and | ||
(E) that a copy of the plan of conversion will be | ||
on written request furnished without cost by the converting entity | ||
before the conversion or by the converted entity after the | ||
conversion to any owner or member of the converting entity or the | ||
converted entity; and | ||
(2) a statement that the plan of conversion has been | ||
approved as required by the laws of the jurisdiction of formation | ||
and the governing documents of the converting entity. | ||
SECTION 15. Sections 10.354(a) and (c), Business | ||
Organizations Code, are amended to read as follows: | ||
(a) Subject to Subsection (b), an owner of an ownership | ||
interest in a domestic entity subject to dissenters' rights is | ||
entitled to: | ||
(1) dissent from: | ||
(A) a plan of merger to which the domestic entity | ||
is a party if owner approval is required by this code and the owner | ||
owns in the domestic entity an ownership interest that was entitled | ||
to vote on the plan of merger; | ||
(B) a sale of all or substantially all of the | ||
assets of the domestic entity if owner approval is required by this | ||
code and the owner owns in the domestic entity an ownership interest | ||
that was entitled to vote on the sale; | ||
(C) a plan of exchange in which the ownership | ||
interest of the owner is to be acquired; | ||
(D) a plan of conversion in which the domestic | ||
entity is the converting entity if owner approval is required by | ||
this code and the owner owns in the domestic entity an ownership | ||
interest that was entitled to vote on the plan of conversion; [ |
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(E) a merger effected under Section 10.006 in | ||
which: | ||
(i) the owner is entitled to vote on the | ||
merger; or | ||
(ii) the ownership interest of the owner is | ||
converted or exchanged; or | ||
(F) a merger effected under Section 21.459(c) in | ||
which the shares of the shareholders are converted or exchanged; | ||
and | ||
(2) subject to compliance with the procedures set | ||
forth in this subchapter, obtain the fair value of that ownership | ||
interest through an appraisal. | ||
(c) Subsection (b) shall not apply either to a domestic | ||
entity that is a subsidiary with respect to a merger under Section | ||
10.006 or to a corporation with respect to a merger under Section | ||
21.459(c). | ||
SECTION 16. Section 10.355, Business Organizations Code, is | ||
amended by adding Subsections (b-1) and (f) and amending | ||
Subsections (c) and (d) to read as follows: | ||
(b-1) If a corporation effects a merger under Section | ||
21.459(c), the responsible organization shall provide to the | ||
shareholders of that corporation who have a right to dissent to a | ||
plan of merger under Section 10.354 notice of their rights under | ||
this subchapter not later than the 10th day after the effective date | ||
of the merger. Notice required under this subsection that is given | ||
to shareholders before the effective date of the merger may, but is | ||
not required to, contain a reference to that date. If the notice is | ||
not given to the shareholders until on or after the effective date | ||
of the merger, the notice must contain a reference to that date. | ||
(c) A notice required to be provided under Subsection (a), | ||
[ |
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(1) be accompanied by a copy of this subchapter; and | ||
(2) advise the owner of the location of the | ||
responsible organization's principal executive offices to which a | ||
notice required under Section 10.356(b)(1) or a demand under | ||
Section 10.356(b)(3), or both, [ |
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(d) In addition to the requirements prescribed by | ||
Subsection (c), a notice required to be provided: | ||
(1) under Subsection (a)(1) must accompany the notice | ||
of the meeting to consider the action; | ||
(2) [ |
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must be provided to: | ||
(A) [ |
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the action before the owner delivers the written consent; and | ||
(B) [ |
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the action and does not consent in writing to the action before the | ||
11th day after the date the action takes effect; and | ||
(3) under Subsection (b-1) must be provided: | ||
(A) if given before the consummation of the | ||
tender or exchange offer described by Section 21.459(c)(2), to each | ||
shareholder to whom that offer is made; or | ||
(B) if given after the consummation of the tender | ||
or exchange offer described by Section 21.459(c)(2), to each | ||
shareholder who did not tender the shareholder's shares in that | ||
offer. | ||
(f) If the notice given under Subsection (b-1) did not | ||
include a reference to the effective date of the merger, the | ||
responsible organization shall, not later than the 10th day after | ||
that date, give a second notice to the shareholders notifying them | ||
of the merger's effective date. If the second notice is given after | ||
the later of the date on which the tender or exchange offer | ||
described by Section 21.459(c)(2) is consummated or the 20th day | ||
after the date notice under Subsection (b-1) is given, then the | ||
second notice is required to be given to only those shareholders who | ||
have made a demand under Section 10.356(b)(3). | ||
SECTION 17. Section 10.356(b), Business Organizations | ||
Code, is amended to read as follows: | ||
(b) To perfect the owner's rights of dissent and appraisal | ||
under Section 10.354, an owner: | ||
(1) if the proposed action is to be submitted to a vote | ||
of the owners at a meeting, must give to the domestic entity a | ||
written notice of objection to the action that: | ||
(A) is addressed to the entity's president and | ||
secretary; | ||
(B) states that the owner's right to dissent will | ||
be exercised if the action takes effect; | ||
(C) provides an address to which notice of | ||
effectiveness of the action should be delivered or mailed; and | ||
(D) is delivered to the entity's principal | ||
executive offices before the meeting; | ||
(2) with respect to the ownership interest for which | ||
the rights of dissent and appraisal are sought: | ||
(A) must vote against the action if the owner is | ||
entitled to vote on the action and the action is approved at a | ||
meeting of the owners; and | ||
(B) may not consent to the action if the action is | ||
approved by written consent; and | ||
(3) must give to the responsible organization a demand | ||
in writing that: | ||
(A) is addressed to the president and secretary | ||
of the responsible organization; | ||
(B) demands payment of the fair value of the | ||
ownership interests for which the rights of dissent and appraisal | ||
are sought; | ||
(C) provides to the responsible organization an | ||
address to which a notice relating to the dissent and appraisal | ||
procedures under this subchapter may be sent; | ||
(D) states the number and class of the ownership | ||
interests of the domestic entity owned by the owner and the fair | ||
value of the ownership interests as estimated by the owner; and | ||
(E) is delivered to the responsible organization | ||
at its principal executive offices at the following time: | ||
(i) not later than the 20th day after the | ||
date the responsible organization sends to the owner the notice | ||
required by Section 10.355(e) that the action has taken effect, if | ||
the action was approved by a vote of the owners at a meeting; | ||
(ii) not later than the 20th day after the | ||
date the responsible organization sends to the owner the notice | ||
required by Section 10.355(d)(2) that the action has taken effect, | ||
if the action was approved by the written consent of the owners; | ||
[ |
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(iii) not later than the 20th day after the | ||
date the responsible organization sends to the owner a notice that | ||
the merger was effected, if the action is a merger effected under | ||
Section 10.006; or | ||
(iv) not later than the 20th day after the | ||
date the responsible organization gives to the shareholder the | ||
notice required by Section 10.355(b-1) or the date of the | ||
consummation of the tender or exchange offer described by Section | ||
21.459(c)(2), whichever is later, if the action is a merger | ||
effected under Section 21.459(c). | ||
SECTION 18. 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 [ |
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before the entity's termination and is not barred by limitations; | ||
or | ||
(B) a contractual obligation incurred after | ||
termination. | ||
SECTION 19. Section 20.001, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 20.001. SIGNATURE REQUIREMENTS FOR FILING INSTRUMENTS | ||
[ |
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Unless otherwise provided by Section 3.054 or 3.060(b) or this | ||
title, a filing instrument of a corporation must be signed by an | ||
officer of the corporation. | ||
(b) A certificate of termination, a certificate of | ||
reinstatement, a certificate of amendment to cancel an event | ||
requiring winding up, or a restated certificate of formation that | ||
contains an amendment to cancel an event requiring winding up may be | ||
signed by: | ||
(1) one of the organizers if the winding up, the | ||
reinstatement, or the cancellation of an event requiring winding up | ||
was authorized by the organizers under Section 21.502(2) or | ||
22.302(1)(B); or | ||
(2) one of the directors if the winding up, the | ||
reinstatement, or the cancellation of an event requiring winding up | ||
was authorized by the board of directors under Section 21.502(2) or | ||
22.302(1)(B). | ||
SECTION 20. Section 21.052, Business Organizations Code, is | ||
amended by adding Subsection (d) to read as follows: | ||
(d) This section does not affect: | ||
(1) the authority of the shareholders of a corporation | ||
to consent in writing to the cancellation of an event requiring | ||
winding up in accordance with Section 21.502(1) or (2); or | ||
(2) the authority of the organizers of a corporation | ||
to adopt a resolution to cancel an event requiring winding up in | ||
accordance with Section 21.502(1) or (2). | ||
SECTION 21. Section 21.053, Business Organizations Code, is | ||
amended by amending Subsection (a) and adding Subsection (c) to | ||
read as follows: | ||
(a) If a corporation does not have any issued and | ||
outstanding shares, or in the case of an amendment under Subsection | ||
(b) or (c), the board of directors may adopt a proposed amendment to | ||
the corporation's certificate of formation by resolution without | ||
shareholder approval. | ||
(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 may, without shareholder | ||
approval, adopt an amendment to the corporation's certificate of | ||
formation to 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. | ||
SECTION 22. Section 21.056(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) A corporation may adopt a restated certificate of | ||
formation as provided by Subchapter B, Chapter 3, by following the | ||
same procedures to amend its certificate of formation under | ||
Sections 21.052-21.055, except that: | ||
(1) shareholder approval is not required if an | ||
amendment is not adopted; and | ||
(2) the shareholders of a corporation may consent in | ||
writing, or the organizers of a corporation may adopt a resolution, | ||
to authorize a restated certificate of formation that contains an | ||
amendment to cancel an event requiring winding up in accordance | ||
with Section 21.502(1) or (2). | ||
SECTION 23. Section 21.102, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.102. TERM OF AGREEMENT. Any limit on the term or | ||
duration of a shareholders' agreement under this subchapter must be | ||
set forth in the agreement. A shareholders' agreement under this | ||
subchapter that was in effect before September 1, 2015, remains in | ||
effect for 10 years, unless the agreement provides otherwise. [ |
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SECTION 24. Section 21.160, Business Organizations Code, is | ||
amended by adding Subsection (d) 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 formula to determine that amount. | ||
SECTION 25. Section 21.371, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 21.371. PROCEDURES IN BYLAWS RELATING TO PROXIES. (a) | ||
A corporation may establish in the corporation's bylaws procedures | ||
consistent with this code for determining the validity of proxies | ||
and determining whether shares that are held of record by a bank, | ||
broker, or other nominee are represented at a meeting of | ||
shareholders. The procedures may incorporate rules of and | ||
determinations made by a stock exchange or self-regulatory | ||
organization regulating the corporation or that bank, broker, or | ||
other nominee. | ||
(b) Subject to any procedures or conditions as may be | ||
provided in the bylaws, the bylaws may contain one or both of the | ||
following: | ||
(1) a provision requiring that, when soliciting | ||
proxies or consents with respect to an election of directors, the | ||
corporation include in both its proxy statement and any form of its | ||
proxy or consent, in addition to individuals nominated by the board | ||
of directors, one or more individuals nominated by a shareholder; | ||
or | ||
(2) a provision requiring that the corporation | ||
reimburse expenses incurred by a shareholder in soliciting proxies | ||
or consents with respect to an election of directors so long as the | ||
provision does not apply to any election for which the record date | ||
precedes the adoption of the bylaw provision. | ||
SECTION 26. Section 21.459, Business Organizations Code, is | ||
amended by adding Subsections (c), (d), and (e) to read as follows: | ||
(c) This subsection applies only to a corporation that is a | ||
party to the merger and whose shares are, immediately before the | ||
date its board of directors approves the plan of merger, either | ||
listed on a national securities exchange or held of record by at | ||
least 2,000 shareholders. Unless required by the corporation's | ||
certificate of formation, a plan of merger is not required to be | ||
approved by the shareholders of the corporation if: | ||
(1) the plan of merger expressly: | ||
(A) permits or requires the merger to be effected | ||
under this subsection; and | ||
(B) provides that any merger effected under this | ||
subsection shall be effected as soon as practicable following the | ||
consummation of the offer described by Subdivision (2); | ||
(2) an organization consummates a tender or exchange | ||
offer for all of the outstanding shares of the corporation on the | ||
terms provided in the plan of merger that, absent this subsection, | ||
would be entitled to vote on the approval of the plan of merger, | ||
except that the offer may exclude shares of the corporation owned at | ||
the time of the commencement of the offer by: | ||
(A) the corporation; | ||
(B) the organization making the offer; | ||
(C) any person who owns, directly or indirectly, | ||
all of the ownership interests in the organization making the | ||
offer; or | ||
(D) any direct or indirect wholly owned | ||
subsidiary of a person described by Paragraph (A), (B), or (C); | ||
(3) shares that are irrevocably accepted for purchase | ||
or exchange pursuant to the consummation of the offer described by | ||
Subdivision (2) and that are received by the depository before the | ||
expiration of the offer in addition to the shares that are otherwise | ||
owned by the consummating organization equal at least the | ||
percentage of the shares, and of each class or series of those | ||
shares, of the corporation that, absent this subsection, would be | ||
required by: | ||
(A) Section 21.457 and, if applicable, Section | ||
21.458; and | ||
(B) the certificate of formation of the | ||
corporation to approve the plan of merger; | ||
(4) the organization consummating the offer described | ||
by Subdivision (2) merges with or into the corporation pursuant to | ||
the plan of merger; and | ||
(5) each outstanding share of each class or series of | ||
the corporation that is the subject of and not irrevocably accepted | ||
for purchase or exchange in the offer described by Subdivision (2) | ||
is to be converted or exchanged in the merger into, or into the | ||
right to receive, the same amount and kind of consideration, as | ||
described by Section 10.002(a)(5), as to be paid or delivered for | ||
shares of such class or series of the corporation irrevocably | ||
accepted for purchase or exchange in the offer. | ||
(d) In Subsection (c) and this subsection and, as | ||
applicable, in Sections 10.355(d)(3)(B), 10.355(f), and | ||
10.356(b)(3)(E)(iv): | ||
(1) "Consummates," "consummation," or "consummating" | ||
means irrevocably accepts for purchase or exchange shares tendered | ||
pursuant to a tender or exchange offer. | ||
(2) "Depository" means an agent appointed to | ||
facilitate consummation of the offer described by Subsection | ||
(c)(2). | ||
(e) For purposes of Subsection (c)(3), "received," with | ||
respect to shares, means: | ||
(1) physical receipt of a certificate representing | ||
shares, in the case of certificated shares; and | ||
(2) transfer into the depository's account or an | ||
agent's message being received by the depository, in the case of | ||
uncertificated shares. | ||
SECTION 27. Section 22.109(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) A [ |
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restated certificate of formation as provided by Subchapter B, | ||
Chapter 3, by following the same procedure to amend its [ |
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22.104-22.107, except that: | ||
(1) member approval is required only if the restated | ||
certificate of formation contains an amendment; and | ||
(2) the members may consent in writing, or the | ||
organizers of a corporation may adopt a resolution, to authorize a | ||
restated certificate of formation that contains an amendment to | ||
cancel an event requiring winding up in accordance with Section | ||
22.302(1)(B) or 22.302(2). | ||
SECTION 28. Section 22.164, Business Organizations Code, is | ||
amended by amending Subsection (b) and adding Subsection (d) to | ||
read as follows: | ||
(b) Except as otherwise provided by Subsection (c) or (d), | ||
or the certificate of formation in accordance with Section 22.162, | ||
the vote required for approval of a fundamental action is: | ||
(1) at least two-thirds of the votes that members | ||
present in person or by proxy are entitled to cast at the meeting at | ||
which the action is submitted for a vote, if the corporation has | ||
members with voting rights; | ||
(2) at least two-thirds of the votes of members | ||
present at the meeting at which the action is submitted for a vote, | ||
if the management of the affairs of the corporation is vested in the | ||
corporation's members under Section 22.202; or | ||
(3) the affirmative vote of the majority of the | ||
directors in office, if the corporation has no members or has no | ||
members with voting rights. | ||
(d) If the corporation has no members or has no members with | ||
voting rights and the corporation has not commenced its nonprofit | ||
activities, the vote required for approval of a fundamental action | ||
consisting of an amendment to the certificate of formation to | ||
cancel an event requiring winding up or any of the actions described | ||
by Subsections (a)(2) through (a)(6) is the affirmative vote of a | ||
majority of the organizers or a majority of the directors in office. | ||
SECTION 29. Section 22.302, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 22.302. CERTAIN PROCEDURES FOR APPROVAL. To approve a | ||
voluntary winding up, a reinstatement, a cancellation of an event | ||
requiring winding up, a revocation of a voluntary decision to wind | ||
up, or a distribution plan, a corporation must follow the following | ||
procedures: | ||
(1) if the corporation has no members or has no members | ||
with voting rights and the corporation: | ||
(A) has engaged in any nonprofit activities, the | ||
corporation's board of directors must adopt a resolution to wind | ||
up, to reinstate, to cancel the event requiring winding up, to | ||
revoke a voluntary decision to wind up, or to effect the | ||
distribution plan by the vote of directors required by Section | ||
22.164(b)(3) [ |
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(B) has not commenced its nonprofit activities, a | ||
majority of the organizers or the board of directors of the | ||
corporation must adopt a resolution to wind up, to reinstate, to | ||
cancel an event requiring winding up, to revoke a voluntary | ||
decision to wind up, or to effect the distribution plan by the vote | ||
required by Section 22.164(d); | ||
(2) if the management of the affairs of the | ||
corporation is vested in the corporation's members under Section | ||
22.202, the winding up, reinstatement, cancellation of event | ||
requiring winding up, revocation of voluntary decision to wind up, | ||
or distribution plan: | ||
(A) must be submitted to a vote at an annual, | ||
regular, or special meeting of members; and | ||
(B) must be approved by the members by the vote | ||
required by Section 22.164; or | ||
(3) if the corporation has members with voting rights: | ||
(A) the corporation's board of directors must | ||
approve a resolution: | ||
(i) recommending the winding up, | ||
reinstatement, cancellation of event requiring winding up, | ||
revocation of a voluntary decision to wind up, or distribution | ||
plan; and | ||
(ii) directing that the winding up, | ||
reinstatement, cancellation of event requiring winding up, | ||
revocation of a voluntary decision to wind up, or distribution plan | ||
of the corporation be submitted to a vote at an annual or special | ||
meeting of members; and | ||
(B) the members must approve the action described | ||
by Paragraph (A) in accordance with Section 22.303. | ||
SECTION 30. Chapter 21, Business Organizations Code, is | ||
amended by adding Subchapter R to read as follows: | ||
SUBCHAPTER R. RATIFICATION OF DEFECTIVE CORPORATE ACTS OR SHARES; | ||
PROCEEDINGS | ||
Sec. 21.901. DEFINITIONS. In this subchapter: | ||
(1) "Corporate statute," with respect to an action or | ||
filing, means this code, the former Texas Business Corporation Act, | ||
or any predecessor statute of this state that governed the action or | ||
the filing. | ||
(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, but is void or | ||
voidable due to a failure of authorization. | ||
(3) "District court" means a district court in: | ||
(A) the county in which the corporation's | ||
principal office in this state is located; or | ||
(B) the county in which the corporation's | ||
registered office in this state is located, if the corporation does | ||
not have a principal office in this state. | ||
(4) "Failure of authorization" means 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. | ||
(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 corporate statute at the time of | ||
issuance; or | ||
(B) shares of any class or series that are not at | ||
the time authorized for issuance by the governing documents of the | ||
corporation. | ||
(6) "Putative shares" means the shares of any class or | ||
series of the corporation, including shares issued on exercise of | ||
options, rights, warrants, or other securities convertible into | ||
shares of the corporation, or interests with respect to the shares | ||
that were created or issued pursuant to a defective corporate act, | ||
that: | ||
(A) would constitute valid shares, if not for a | ||
failure of authorization; or | ||
(B) cannot be determined by the board of | ||
directors to be valid shares. | ||
(7) "Time of the defective corporate act" means the | ||
date and time the defective corporate act was purported to have been | ||
taken. | ||
(8) "Validation effective time" or "effective time of | ||
the validation," with respect to any defective corporate act | ||
ratified under this subchapter, means the later of: | ||
(A) the time at which the resolution submitted to | ||
the shareholders for adoption under Section 21.905 is adopted by | ||
the shareholders or, if no shareholder approval is required for | ||
adoption, the time at which the notice required by Section 21.911 is | ||
given; or | ||
(B) the time at which any certificate of | ||
validation filed under Section 21.908 takes effect in accordance | ||
with Chapter 4. | ||
(9) "Valid shares" means the shares of any class or | ||
series of the corporation that have been authorized and validly | ||
issued in accordance with the corporate statute. | ||
Sec. 21.902. RATIFICATION OF DEFECTIVE CORPORATE ACT AND | ||
PUTATIVE SHARES. Subject to Section 21.909 or 21.910, a defective | ||
corporate act or putative shares are not 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. | ||
Sec. 21.903. RATIFICATION OF DEFECTIVE CORPORATE ACT; | ||
ADOPTION OF RESOLUTION. (a) To ratify a defective corporate act, | ||
the board of directors of the corporation shall adopt a resolution | ||
stating: | ||
(1) the defective corporate act to be ratified; | ||
(2) the time of the defective corporate act; | ||
(3) if the defective corporate act 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 the defective corporate act to be ratified; and | ||
(5) that the board of directors approves the | ||
ratification of the defective corporate act. | ||
(b) The resolution may also state that, notwithstanding the | ||
adoption of the resolution by the shareholders, the board of | ||
directors at any time before the validation effective time may | ||
abandon the resolution without further shareholder action. | ||
Sec. 21.904. QUORUM AND VOTING REQUIREMENTS FOR ADOPTION OF | ||
RESOLUTION. (a) The quorum and voting requirements applicable to | ||
the adoption of a resolution under Section 21.903 are the same as | ||
the quorum and voting requirements applicable at the time of the | ||
adoption of a resolution for the type of 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, a larger number or portion of | ||
directors or the presence 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 of which are in effect at the time of | ||
the defective corporate act, then the larger number or portion of | ||
such directors must be required for a quorum to be present or the | ||
presence of such directors must be required to adopt the | ||
resolution, as applicable. | ||
(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, may not be required for a quorum to be present or to | ||
adopt the resolution. | ||
Sec. 21.905. SHAREHOLDER APPROVAL OF RESOLUTION REQUIRED. | ||
The resolution adopted under Section 21.903 must be submitted to | ||
shareholders for adoption as provided by Sections 21.906 and | ||
21.907, unless: | ||
(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 require shareholder approval of the defective corporate | ||
act to be ratified, either at the time of the act or at the time when | ||
the resolution required by Section 21.903 is adopted; and | ||
(2) the defective corporate act to be ratified did not | ||
result from a failure to comply with Subchapter M. | ||
Sec. 21.906. NOTICE REQUIREMENTS FOR RESOLUTION SUBMITTED | ||
FOR SHAREHOLDER APPROVAL. (a) If Section 21.905 requires that the | ||
resolution be submitted to the shareholders for approval, notice of | ||
the time, place, if any, and purpose of the meeting shall be given | ||
at least 20 days before the date of the meeting to each holder of | ||
valid shares and putative shares, whether voting or nonvoting, at | ||
the address of the holder as it appears or most recently appeared, | ||
as appropriate, on the corporation's records. | ||
(b) Notice under this section shall be given to each 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. | ||
(c) The notice must contain: | ||
(1) a copy of the resolution; and | ||
(2) a statement that the following must be brought not | ||
later than the 120th day of the validation effective time: | ||
(A) any claim that the defective corporate act or | ||
putative shares ratified under this subchapter are void or voidable | ||
due to the identified failure of authorization; or | ||
(B) any claim that the district court, in its | ||
discretion, should declare that a ratification made in accordance | ||
with this subchapter not take effect or that it take effect only on | ||
certain conditions. | ||
Sec. 21.907. SHAREHOLDER MEETING; QUORUM AND VOTING. (a) | ||
At the shareholder meeting, the quorum and voting requirements | ||
applicable to the adoption of the resolution under Section 21.905 | ||
shall be the same as the quorum and voting requirements applicable | ||
at the time of such adoption by the shareholders for the type of | ||
defective corporate act to be ratified, except as provided by this | ||
section. | ||
(b) If the approval of a larger number or portion of shares | ||
or of any class or series of shares or the presence of specified | ||
shareholders for a quorum to be present or to approve the defective | ||
corporate act would have been required by the corporation's | ||
governing documents, any plan or agreement to which the corporation | ||
was a party, or any provision of the corporate statute in effect as | ||
of the time of the defective corporate act, then the approval of the | ||
larger number or portion of shares or of the class or series of | ||
shares or the presence of such specified shareholders shall be | ||
required for a quorum to be present or to adopt the resolution, as | ||
applicable, except that approval of shares of any class or series of | ||
which no shares are then outstanding, or the presence of any person | ||
that is no longer a shareholder, may not be required. | ||
(c) The adoption of a resolution to ratify the election of a | ||
director requires the affirmative vote of the majority of shares | ||
present at the meeting and entitled to vote on the election of the | ||
director, 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 to elect the director, | ||
in which case the affirmative vote of the larger number or portion | ||
of shares is required to ratify the election of the director. | ||
(d) If a failure of authorization results from the failure | ||
to comply with Subchapter M, the ratification of the defective | ||
corporate act must require the vote set forth by Section 21.606(2), | ||
regardless of whether that vote would have otherwise been required. | ||
Sec. 21.908. CERTIFICATE OF VALIDATION. (a) If the | ||
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, instead of filing the filing instrument | ||
or other document otherwise required by this code, shall file a | ||
certificate of validation in accordance with Chapter 4, 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 set forth: | ||
(1) a copy of the resolution adopted in accordance | ||
with Sections 21.903 and 21.904, the date of adoption of the | ||
resolution by the board of directors and, if applicable, by the | ||
shareholders, and a statement that the resolution was adopted in | ||
accordance with this subchapter; | ||
(2) if a filing instrument or document was previously | ||
filed with a filing officer under the corporate statute in respect | ||
of the defective corporate act, the title and date of filing of the | ||
prior filing instrument or document and any articles or certificate | ||
of correction to the filing instrument; and | ||
(3) the provisions that would be required under any | ||
other section of this code to be included in the filing instrument | ||
that otherwise would have been required to be filed with respect to | ||
the defective corporate act under this code. | ||
Sec. 21.909. ADOPTION OF RESOLUTION; EFFECT ON DEFECTIVE | ||
CORPORATE ACT. On or after the validation effective time, unless | ||
determined otherwise in an action brought under Section 21.914, | ||
each defective corporate act set forth in the resolution adopted | ||
under Sections 21.903 and 21.904 may not be considered void or | ||
voidable as a result of a failure of authorization identified in the | ||
resolution, and the effect shall be retroactive to the time of the | ||
defective corporate act. | ||
Sec. 21.910. ADOPTION OF RESOLUTION; EFFECT ON PUTATIVE | ||
SHARES. On or after the validation effective time, unless | ||
determined otherwise in an action brought under Section 21.914, | ||
each putative share or fraction of a putative share issued or | ||
purportedly issued pursuant to the defective corporate act and | ||
identified in the resolution required by Sections 21.903 and 21.904 | ||
may not be considered void or voidable as a result of a failure of | ||
authorization identified in the resolution and, in the absence of | ||
any failure of authorization not ratified, is considered to be an | ||
identical share or fraction of a share outstanding as of the time it | ||
was purportedly issued. | ||
Sec. 21.911. NOTICE TO SHAREHOLDERS FOLLOWING ADOPTION OF | ||
RESOLUTION. (a) Notice of the adoption of a resolution under this | ||
subchapter 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 resolution; and | ||
(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 on which the | ||
resolution is adopted, as established by the board of directors. | ||
(b) Notice under this section shall be sent to the address | ||
of a holder of shares described by Subsection (a)(1) or (a)(2) as | ||
the address appears or most recently appeared, as appropriate, on | ||
the records of the corporation. | ||
(c) Notice under this section shall also be given to each | ||
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. | ||
(d) The notice must contain: | ||
(1) a copy of the resolution; and | ||
(2) a statement that the following must be brought not | ||
later than the 120th day of the validation effective time: | ||
(A) any claim that the defective corporate act or | ||
putative shares ratified under this subchapter are void or voidable | ||
due to the identified failure of authorization; or | ||
(B) any claim that the district court, in its | ||
discretion, should declare that a ratification made in accordance | ||
with this subchapter not take effect or that it take effect only on | ||
certain conditions. | ||
(e) Notwithstanding Subsections (a)-(d), notice is not | ||
required to be given under this section if notice of the resolution | ||
is given in accordance with Section 21.906. | ||
(f) For purposes of Section 21.906 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, 21.353, and 21.3531. | ||
Sec. 21.912. VALID SHARES OR PUTATIVE SHARES. In the | ||
absence of actual fraud in the transaction, the judgment of the | ||
board of directors of a corporation that shares of the corporation | ||
are valid shares or putative shares is conclusive, unless otherwise | ||
determined by the district court in a proceeding brought under | ||
Section 21.914. | ||
Sec. 21.913. RATIFICATION PROCEDURES OR COURT PROCEEDINGS | ||
CONCERNING VALIDATION NOT EXCLUSIVE. (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 may not | ||
be considered to be 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. | ||
(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 | ||
may 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 shall it create a presumption | ||
that any such act or transaction is or was a defective corporate act | ||
or that those shares are void or voidable. | ||
Sec. 21.914. PROCEEDING REGARDING VALIDITY OF DEFECTIVE | ||
CORPORATE ACTS AND SHARES. (a) The following may bring an action | ||
under this section: | ||
(1) the corporation; | ||
(2) any successor entity to the corporation; | ||
(3) any member of the corporation's board of | ||
directors; | ||
(4) any record or beneficial holder of valid shares or | ||
putative shares of the corporation; | ||
(5) any record or beneficial holder of valid shares or | ||
putative shares as of the time a defective corporate act was | ||
ratified in accordance with this subchapter; or | ||
(6) any other person claiming to be substantially and | ||
adversely affected by a ratification under this subchapter. | ||
(b) Subject to Section 21.917, the district court, on | ||
application by a person described by Subsection (a), may: | ||
(1) determine the validity and effectiveness of any | ||
defective corporate act ratified in accordance with this | ||
subchapter; | ||
(2) determine the validity and effectiveness of the | ||
ratification of any defective corporate act in accordance with this | ||
subchapter; | ||
(3) determine the validity and effectiveness of: | ||
(A) any defective corporate act not ratified | ||
under this subchapter; or | ||
(B) any defective corporate act not ratified | ||
effectively under this subchapter; | ||
(4) determine the validity of any corporate act or | ||
transaction and of any shares, rights, or options to acquire | ||
shares; and | ||
(5) modify or waive any of the procedures set forth in | ||
Sections 21.901 through 21.913 to ratify a defective corporate act. | ||
(c) In connection with an action brought under this section, | ||
the district court may: | ||
(1) declare that a ratification in accordance with and | ||
pursuant to this subchapter is not effective or that the | ||
ratification may be effective only at a time or on conditions as | ||
specified by the district court; | ||
(2) validate and declare effective any defective | ||
corporate act or putative shares and impose conditions on such a | ||
validation; | ||
(3) require measures to remedy or avoid harm to any | ||
person substantially and adversely affected by a ratification under | ||
this subchapter or from any order of the district court pursuant to | ||
this section, excluding any harm that would have resulted had the | ||
defective corporate act been valid when approved or effectuated; | ||
(4) order the filing officer to accept for filing an | ||
instrument with an effective date and time as specified by the | ||
court, which may be before or subsequent to the time of the order; | ||
(5) approve share records for the corporation that | ||
include any shares ratified in accordance with this subchapter or | ||
validated in accordance with this section and Sections 21.915 | ||
through 21.917; | ||
(6) declare that putative shares are valid shares or | ||
require a corporation to issue and deliver valid shares in place of | ||
any putative shares; | ||
(7) order that a meeting of holders of valid shares or | ||
putative shares be held and determine the right and power of persons | ||
to vote at the meeting; | ||
(8) declare that a defective corporate act validated | ||
by the court is effective as of the time of the defective corporate | ||
act or at such other time as determined by the court; | ||
(9) declare that putative shares validated by the | ||
district court are considered to be an identical valid share or a | ||
fraction of a valid share as of the time the shares were originally | ||
or purportedly issued or at such other time as determined by the | ||
district court; and | ||
(10) make any other order regarding such matters as | ||
the court considers appropriate under the circumstances. | ||
(d) In connection with the resolution of matters under | ||
Subsections (b) and (c), the district court may consider: | ||
(1) whether the defective corporate act was originally | ||
approved or effectuated with the belief that the approval or | ||
effectuation was in compliance with the provisions of the corporate | ||
statute or the governing documents of the corporation; | ||
(2) whether the corporation and the corporation's | ||
board of directors have treated the defective corporate act as a | ||
valid act or transaction and whether any person has acted in | ||
reliance on the public record that the defective corporate act was | ||
valid; | ||
(3) whether any person will be or was harmed by the | ||
ratification or validation of the defective corporate act, | ||
excluding any harm that would have resulted had the defective | ||
corporate act been valid when approved or took effect; | ||
(4) whether any person will be harmed by the failure to | ||
ratify or validate the defective corporate act; and | ||
(5) any other factors or considerations the district | ||
court considers just and equitable. | ||
Sec. 21.915. EXCLUSIVE JURISDICTION. The district court | ||
has exclusive jurisdiction to hear and determine any action brought | ||
under Section 21.914. | ||
Sec. 21.916. SERVICE. (a) Service of an application filed | ||
under Section 21.914 on the registered agent of a corporation or in | ||
any other manner permitted by applicable law is considered to be | ||
service on the corporation, and no other party need be joined in | ||
order for the district court to adjudicate the matter. | ||
(b) If an action is brought by a corporation under this | ||
section, the district court may require that notice of the action be | ||
provided to other persons identified by the court and permit those | ||
other persons to intervene in the action. | ||
Sec. 21.917. STATUTE OF LIMITATIONS. (a) This section does | ||
not apply to: | ||
(1) an action asserting that a ratification was not | ||
accomplished in accordance with this subchapter; or | ||
(2) any person to whom notice of the ratification was | ||
not given as required by Sections 21.906 and 21.911. | ||
(b) Notwithstanding any other provision of this subchapter, | ||
the following may not be brought after the expiration of the 120th | ||
day of the validation effective time: | ||
(1) an action asserting that a defective corporate act | ||
or putative shares ratified in accordance with this subchapter are | ||
void or voidable due to a failure of authorization identified in the | ||
resolution adopted in accordance with Section 21.903; or | ||
(2) an action asserting that the district court, 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. | ||
SECTION 31. This Act takes effect September 1, 2015. |