Texas House Bill HB2235 Introduced / Bill

                    81R12881 CLG-F
 By: Giddings H.B. No. 2235


 A BILL TO BE ENTITLED
 AN ACT
 relating to business entities and associations.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 SECTION 1. Section 1.002, Business Organizations Code, is
 amended by amending Subdivisions (10), (11), (12), and (81) and
 adding Subdivisions (56-a) and (56-b) to read as follows:
 (10) "Conversion" means:
 (A) the continuance of a domestic entity as a
 non-code organization [foreign entity] of any type;
 (B) the continuance of a non-code organization
 [foreign entity] as a domestic entity of any type; [or]
 (C) the continuance of a domestic entity of one
 type as a domestic entity of another type;
 (D)  the continuance of a domestic entity of one
 type as a foreign entity of the same type that may be treated as a
 domestication, continuance, or transfer transaction under the laws
 of the jurisdiction of formation of the foreign entity; or
 (E)  the continuance of a foreign entity of one
 type as a domestic entity of the same type that may be treated as a
 domestication, continuance, or transfer transaction under the laws
 of the jurisdiction of formation of the foreign entity.
 (11) "Converted entity" means an organization
 [entity] resulting from a conversion.
 (12) "Converting entity" means an organization
 [entity] as the organization [entity] existed before the
 organization's [entity's] conversion.
 (56-a)  "Non-United States entity" means a foreign
 entity formed under, and the internal affairs of which are governed
 by, the laws of a non-United States jurisdiction.
 (56-b)  "Non-United States jurisdiction" means a
 foreign country or other foreign jurisdiction that is not the
 United States or a state of the United States.
 (81) "Shareholder" or "holder of shares" means:
 (A) the person in whose name shares issued by a
 for-profit corporation, professional corporation, or real estate
 investment trust are registered in the share transfer records
 maintained by the for-profit corporation, professional
 corporation, or real estate investment trust; or
 (B)  the beneficial owner of shares issued by a
 for-profit corporation, whose shares are held in a voting trust or
 by a nominee on the beneficial owner's behalf, to the extent of the
 rights granted by a nominee statement on file with the for-profit
 corporation in accordance with Sections 21.201(b) and (c).
 SECTION 2. Section 2.003, Business Organizations Code, is
 amended to read as follows:
 Sec. 2.003. GENERAL PROHIBITED PURPOSES. A domestic entity
 may not:
 (1) engage in a business or activity that:
 (A) is expressly unlawful or prohibited by a law
 of this state; or
 (B) cannot lawfully be engaged in by that entity
 under state law; or
 (2) operate as a:
 (A) bank;
 (B) trust company;
 (C) savings association;
 (D) insurance company;
 (E) [railroad company;
 [(F)] cemetery organization, except as
 authorized by Chapter 711, 712, or 715, Health and Safety Code; or
 (F) [(G)] abstract or title company governed by
 Title 11, Insurance Code.
 SECTION 3. Section 3.202, Business Organizations Code, is
 amended by adding Subsection (f) to read as follows:
 (f)  A certificate representing ownership interests may not
 be issued in bearer form.
 SECTION 4. Chapter 3, Business Organizations Code, is
 amended by adding Subchapter F to read as follows:
 SUBCHAPTER F.  EMERGENCY GOVERNANCE
 Sec. 3.251.  EMERGENCY DEFINED. For purposes of this
 subchapter, an emergency exists if a majority of a domestic
 entity's governing persons cannot readily participate in a meeting
 because of the occurrence of a catastrophic event.
 Sec. 3.252.  PROVISIONS IN GOVERNING DOCUMENTS. (a)  Except
 as otherwise provided by the entity's governing documents, the
 governing persons, owners, or members of a domestic entity may
 adopt provisions in the entity's governing documents regarding the
 management of the entity during an emergency, including provisions:
 (1)  prescribing procedures for calling a meeting of
 the governing persons;
 (2)  establishing minimum requirements for
 participation at the meeting of the governing persons; and
 (3)  designating additional or substitute governing
 persons.
 (b)  The emergency provisions must be adopted in accordance
 with:
 (1) the requirements of the governing documents; and
 (2) the applicable provisions of this code.
 Sec. 3.253.  EFFECT OF EMERGENCY PROVISIONS. The emergency
 provisions adopted under Section 3.252 take effect only in the
 event of an emergency.  The emergency provisions will no longer be
 effective after the emergency ends.
 Sec. 3.254.  EFFECT OF OTHER PROVISIONS IN GOVERNING
 DOCUMENTS DURING EMERGENCY. A provision of an entity's governing
 documents that is consistent with the emergency provisions adopted
 under Section 3.252 remains in effect during an emergency.
 Sec. 3.255.  EFFECT OF ACTION TAKEN. An action of a domestic
 entity taken in good faith in accordance with the emergency
 provisions:
 (1) is binding on the entity; and
 (2)  may not be used to impose liability on a managerial
 official, employee, or agent of the entity.
 SECTION 5. Section 4.005, Business Organizations Code, is
 amended by adding Subsections (d) and (e) to read as follows:
 (d)  Subject to any qualification stated in the certificate,
 a certificate issued by the secretary of state stating that a
 domestic filing entity is in existence may be relied on as
 conclusive evidence of the entity's existence.
 (e)  Subject to any qualification stated in the certificate,
 a certificate issued by the secretary of state stating that a
 foreign filing entity is in existence or registered may be relied on
 as conclusive evidence that the foreign filing entity is registered
 and authorized to transact business in this state.
 SECTION 6. Section 4.101(b), Business Organizations Code,
 is amended to read as follows:
 (b) A certificate of correction must be signed by the person
 authorized by this code to sign the filing instrument to be
 corrected [act on behalf of the entity].
 SECTION 7. Section 6.052, Business Organizations Code, is
 amended by adding Subsection (d) to read as follows:
 (d)  The participation or attendance at a meeting of a person
 entitled to notice of the meeting constitutes a waiver by the person
 of notice of a particular matter at the meeting that is not included
 in the purposes or business of the meeting described in the notice
 unless the person objects to considering the matter when it is
 presented.
 SECTION 8. Section 6.205, Business Organizations Code, is
 amended to read as follows:
 Sec. 6.205. REPRODUCTION OR ELECTRONIC TRANSMISSION OF
 CONSENT. (a) Any photographic, photostatic, facsimile, or
 similarly reliable reproduction of a consent in writing signed by
 an owner, member, or governing person of a filing entity may be
 substituted or used instead of the original writing for any purpose
 for which the original writing could be used, if the reproduction is
 a complete reproduction of the entire original writing.
 (b)  Except as otherwise provided by an entity's governing
 documents, an electronic transmission of a consent by an owner,
 member, or governing person to the taking of an action by the entity
 is considered a signed writing if the transmission contains or is
 accompanied by information from which it can be determined:
 (1)  that the electronic transmission was transmitted
 by the owner, member, or governing person; and
 (2)  the date on which the owner, member, or governing
 person transmitted the electronic transmission.
 (c)  Unless the consent is otherwise dated, the date
 specified in Subsection (b)(2) is the date on which the consent is
 considered signed.
 SECTION 9. Subchapter A, Chapter 9, Business Organizations
 Code, is amended by adding Section 9.005 to read as follows:
 Sec. 9.005.  SUPPLEMENTAL INFORMATION REQUIRED IN
 APPLICATION FOR REGISTRATION OF FOREIGN LIMITED LIABILITY COMPANY.
 (a)  This section applies only to a foreign limited liability
 company governed by a company agreement that establishes or
 provides for the establishment of a designated series of members,
 managers, membership interests, or assets that has any of the
 characteristics described by Subsection (b).
 (b)  A foreign limited liability company must state in its
 application for registration as a foreign limited liability company
 whether:
 (1) the series has:
 (A)  separate rights, powers, or duties with
 respect to specified property or obligations of the foreign limited
 liability company; or
 (B)  separate profits and losses associated with
 specified property or obligations of the foreign limited liability
 company;
 (2)  any debts, liabilities, obligations, and expenses
 incurred, contracted for, or otherwise existing with respect to a
 particular series shall be enforceable against the assets of that
 series only, and not against the assets of the company generally or
 the assets of any other series; and
 (3)  any debts, liabilities, obligations, and expenses
 incurred, contracted for, or otherwise existing with respect to the
 company generally or any other series shall be enforceable against
 the assets of that series.
 SECTION 10. Section 9.009(a), Business Organizations Code,
 is amended to read as follows:
 (a) A foreign filing entity must amend its registration to
 reflect:
 (1) a change to its name; [or]
 (2) a change in the business or activity stated in its
 application for registration; and
 (3) if the foreign filing entity is a limited
 partnership:
 (A) the admission of a new general partner;
 (B) the withdrawal of a general partner; and
 (C) a change in the name of the general partner
 stated in its application for registration [or business or activity
 has changed].
 SECTION 11. Section 9.011(c), Business Organizations Code,
 is amended to read as follows:
 (c) A certificate from the comptroller stating that all
 [franchise] taxes administered by the comptroller under Title 2,
 Tax Code, have been paid must be filed with the certificate of
 withdrawal in accordance with Chapter 4 if the foreign filing
 entity is a taxable entity under Chapter 171, Tax Code, other than a
 foreign nonprofit [professional] corporation[, foreign for-profit
 corporation, or foreign limited liability company].
 SECTION 12. Subchapter A, Chapter 9, Business Organizations
 Code, is amended by adding Section 9.012 to read as follows:
 Sec. 9.012.  AUTOMATIC WITHDRAWAL ON CONVERSION TO DOMESTIC
 FILING ENTITY. A foreign filing entity or foreign limited
 liability partnership registered in this state that converts to a
 domestic filing entity is considered to have withdrawn its
 registration on the effective date of the conversion. This section
 also applies to a conversion and continuance under Section 10.1025.
 SECTION 13. Section 9.104(d), Business Organizations Code,
 is amended to read as follows:
 (d) A tax clearance letter [of eligibility] from the
 comptroller stating that the foreign filing entity has satisfied
 all franchise tax liabilities and its registration may be
 reinstated must be filed with the certificate of reinstatement if
 the foreign filing entity is a taxable entity under Chapter 171, Tax
 Code, other than a foreign nonprofit [professional] corporation[,
 for-profit corporation, or limited liability company].
 SECTION 14. Section 9.251, Business Organizations Code, is
 amended to read as follows:
 Sec. 9.251. ACTIVITIES NOT CONSTITUTING TRANSACTING
 BUSINESS IN THIS STATE. For purposes of this chapter, activities
 that do not constitute transaction of business in this state
 include:
 (1) maintaining or defending an action or suit or an
 administrative or arbitration proceeding, or effecting the
 settlement of:
 (A) such an action, suit, or proceeding; or
 (B) a claim or dispute to which the entity is a
 party;
 (2) holding a meeting of the entity's managerial
 officials, owners, or members or carrying on another activity
 concerning the entity's internal affairs;
 (3) maintaining a bank account;
 (4) maintaining an office or agency for:
 (A) transferring, exchanging, or registering
 securities the entity issues; or
 (B) appointing or maintaining a trustee or
 depositary related to the entity's securities;
 (5) voting the interest of an entity the foreign
 entity has acquired;
 (6) effecting a sale through an independent
 contractor;
 (7) creating, as borrower or lender, or acquiring
 indebtedness or a mortgage or other security interest in real or
 personal property;
 (8) securing or collecting a debt due the entity or
 enforcing a right in property that secures a debt due the entity;
 (9) transacting business in interstate commerce;
 (10) conducting an isolated transaction that:
 (A) is completed within a period of 30 days; and
 (B) is not in the course of a number of repeated,
 similar transactions;
 (11) in a case that does not involve an activity that
 would constitute the transaction of business in this state if the
 activity were one of a foreign entity acting in its own right:
 (A) exercising a power of executor or
 administrator of the estate of a nonresident decedent under
 ancillary letters issued by a court of this state; or
 (B) exercising a power of a trustee under the
 will of a nonresident decedent, or under a trust created by one or
 more nonresidents of this state, or by one or more foreign entities;
 (12) regarding a debt secured by a mortgage or lien on
 real or personal property in this state:
 (A) acquiring the debt in a transaction outside
 this state or in interstate commerce;
 (B) collecting or adjusting a principal or
 interest payment on the debt;
 (C) enforcing or adjusting a right or property
 securing the debt;
 (D) taking an action necessary to preserve and
 protect the interest of the mortgagee in the security; or
 (E) engaging in any combination of transactions
 described by this subdivision;
 (13) investing in or acquiring, in a transaction
 outside of this state, a royalty or other nonoperating mineral
 interest; [or]
 (14) executing [the execution of] a division order,
 contract of sale, or other instrument incidental to ownership of a
 nonoperating mineral interest; or
 (15)  owning, without more, real or personal property
 in this state.
 SECTION 15. Subchapter C, Chapter 10, Business
 Organizations Code, is amended by adding Section 10.1025 to read as
 follows:
 Sec. 10.1025.  CONVERSION AND CONTINUANCE. (a) A
 converting entity may elect to continue its existence in its
 current organizational form and jurisdiction of formation in
 connection with the entity's:
 (1)  conversion under Section 10.101 as a domestic
 entity of one organizational form into a non-United States entity
 of the same organizational form; or
 (2)  conversion under Section 10.102 as a non-United
 States entity of one organizational form into a domestic entity of
 the same organizational form.
 (b)  The election permitted by Subsection (a) for the
 converting entity to continue its existence in its current
 organizational form and jurisdiction of formation must be:
 (1)  adopted and approved as part of the plan of
 conversion for the converting entity as required by Section
 10.101(b) or 10.102(b), as applicable; and
 (2)  permitted by, or not prohibited by and
 inconsistent with, the laws of the applicable non-United States
 jurisdiction.
 (c)  Section 10.156(2) does not apply in connection with the
 filing of the certificate of conversion if the converting entity is
 a domestic filing entity that elects to continue its existence in
 accordance with this section.
 (d)  Chapter 9 does not apply to a non-United States entity
 that also exists as a domestic filing entity because of a conversion
 and election to continue its existence in accordance with this
 section.
 SECTION 16. Section 10.103(a), Business Organizations
 Code, is amended to read as follows:
 (a) A plan of conversion 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 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; [and]
 (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 17. Subchapter C, Chapter 10, Business
 Organizations Code, is amended by adding Section 10.109 to read as
 follows:
 Sec. 10.109.  SPECIAL PROVISIONS APPLYING TO CONVERSION AND
 CONTINUANCE. (a) This section applies only to a converting entity
 that elects to continue its existence in accordance with Section
 10.1025.
 (b)  When the conversion of a converting entity to which this
 section applies takes effect:
 (1)  notwithstanding Section 10.106(1), the converting
 entity continues to exist both in its current organizational form
 and jurisdiction of formation and, as the converted entity, in the
 same organizational form in the new jurisdiction of formation;
 (2)  the converting entity and the converted entity,
 for purposes of the laws of this state, constitute a single entity
 formed, incorporated, created, or otherwise having come into being,
 as applicable, and existing under the laws of this state and the
 laws of the applicable non-United States jurisdiction, so long as
 the entity continues to exist as a domestic entity under the laws of
 this state following the conversion;
 (3)  if the converting entity is a domestic entity,
 this code and the other laws of this state apply to the converted
 entity to the same extent as the laws applied to the entity before
 the conversion;
 (4)  if the converting entity is a non-United States
 entity, the laws of the applicable non-United States jurisdiction
 apply to the converted entity to the same extent as the laws applied
 to the entity before the conversion;
 (5)  notwithstanding Section 10.106(2), all rights,
 title, and interests in all property owned by the converting entity
 continue to be owned by the converted entity, subject to any
 existing liens or other encumbrances on the property, in both the
 organizational form of the converting entity and the organizational
 form of the converted entity without:
 (A) reversion or impairment;
 (B) further act or deed; or
 (C)  the occurrence of a transfer or assignment;
 and
 (6)  notwithstanding Section 10.106(3), all
 liabilities and obligations of the converting entity remain the
 liabilities and obligations of the converted entity in both the
 organizational form of the converting entity and the organizational
 form of the converted entity without impairment or diminution
 because of the conversion.
 SECTION 18. Section 10.154, Business Organizations Code, is
 amended by adding Subsection (c) to read as follows:
 (c)  In addition to complying with the requirements of
 Subsections (a) and (b), if Sections 10.1025 and 10.109 apply to the
 conversion, the certificate of conversion required by this section
 must:
 (1)  be titled "Certificate of Conversion and
 Continuance"; and
 (2)  include a statement certifying that the converting
 entity is electing to continue its existence in its current
 organizational form and jurisdiction of formation.
 SECTION 19. Section 10.361, Business Organizations Code, is
 amended by adding Subsection (g) to read as follows:
 (g)  The beneficial owner of an ownership interest subject
 to dissenters' rights held in a voting trust or by a nominee on the
 beneficial owner's behalf may file a petition described by
 Subsection (a) if no agreement between the dissenting owner of the
 ownership interest and the responsible organization has been
 reached within the period prescribed by Section 10.358(d). When
 the beneficial owner files a petition described by Subsection (a):
 (1)  the beneficial owner shall at that time be
 considered, for purposes of this subchapter, the owner, the
 dissenting owner, and the holder of the ownership interest subject
 to the petition; and
 (2)  the dissenting owner who demanded payment under
 Section 10.356 has no further rights regarding the ownership
 interest subject to the petition.
 SECTION 20. Section 10.366(b), Business Organizations
 Code, is amended to read as follows:
 (b) An owner who has demanded payment for the owner's
 ownership interest under Section 10.356 is not entitled to vote or
 exercise any other rights of an [another] owner with respect to the
 ownership interest except the right to:
 (1) receive payment for the ownership interest under
 this subchapter; and
 (2) bring an appropriate action to obtain relief on
 the ground that the action to which the demand relates would be or
 was fraudulent.
 SECTION 21. Section 10.367(b), Business Organizations
 Code, is amended to read as follows:
 (b) On termination of the right of dissent under this
 section:
 (1) the dissenting owner and all persons claiming a
 right under the owner are conclusively presumed to have approved
 and ratified the action to which the owner dissented and are bound
 by that action;
 (2) the owner's right to be paid the fair value of the
 owner's ownership interests ceases;
 (3) [and] the owner's status as an owner of those
 ownership interests is restored, as if the owner's demand for
 payment of the fair value of the ownership interests had not been
 made under Section 10.356, [without prejudice to any interim
 proceeding] if the owner's ownership interests were not canceled,
 converted, or exchanged as a result of the action or a subsequent
 action;
 (4)  the dissenting owner is entitled to receive the
 same cash, property, rights, and other consideration received by
 owners of the same class and series of ownership interests held by
 the owner, as if the owner's demand for payment of the fair value of
 the ownership interests had not been made under Section 10.356, if
 the owner's ownership interests were canceled, converted, or
 exchanged as a result of the action or a subsequent action;
 (5)  any action of the domestic entity taken after the
 date of the demand for payment by the owner under Section 10.356
 will not be considered ineffective or invalid because of the
 restoration of the owner's ownership interests or the other rights
 or entitlements of the owner under this subsection; and
 (6) [fundamental business transaction; and
 [(3)] the dissenting owner is entitled to receive
 dividends or other distributions made after the date of the owner's
 payment demand under Section 10.356, [in the interim] to owners of
 the same class and series of ownership interests held by the owner
 as if the [a] demand [for the payment of the ownership interests]
 had not been made [under Section 10.356], subject to any change in
 or adjustment to the ownership interests because of an action taken
 by the domestic entity [the cancellation or exchange of the
 ownership interests] after the date of the [a] demand [under
 Section 10.356 was made pursuant to a fundamental business
 transaction].
 SECTION 22. Section 11.101(b), Business Organizations
 Code, is amended to read as follows:
 (b) A certificate from the comptroller that all taxes
 administered by the comptroller under Title 2, Tax Code, have been
 paid must be filed with the certificate of termination [in
 accordance with Chapter 4] if the filing entity is a taxable entity
 under Chapter 171, Tax Code, other than a nonprofit [professional]
 corporation[, for-profit corporation, or limited liability
 company].
 SECTION 23. Section 11.202(e), Business Organizations
 Code, is amended to read as follows:
 (e) A tax clearance letter [of eligibility] from the
 comptroller stating that the filing entity has satisfied all
 franchise tax liabilities and may be reinstated must be filed with
 the certificate of reinstatement if the filing entity is a taxable
 entity under Chapter 171, Tax Code, other than a nonprofit
 [professional] corporation[, for-profit corporation, or limited
 liability company].
 SECTION 24. Section 11.253(c), Business Organizations
 Code, is amended to read as follows:
 (c) A certificate of reinstatement must be accompanied by:
 (1) each amendment to the entity's certificate of
 formation that is required by intervening events, including
 circumstances requiring an amendment to the filing entity's name as
 described in Section 11.203; and
 (2)  a tax clearance letter from the comptroller
 stating that the filing entity has satisfied all franchise tax
 liabilities and may be reinstated, if the filing entity is a taxable
 entity under Chapter 171, Tax Code, other than a nonprofit
 corporation.
 SECTION 25. Section 11.314, Business Organizations Code, is
 amended to read as follows:
 Sec. 11.314. INVOLUNTARY WINDING UP AND TERMINATION OF
 PARTNERSHIP OR LIMITED LIABILITY COMPANY. A district court in the
 county in which the registered office or principal place of
 business in this state of a domestic partnership or limited
 liability company is located has jurisdiction to order the winding
 up and termination of the domestic partnership or limited liability
 company on application by:
 (1) a partner in the partnership if the court
 determines that:
 (A) the economic purpose of the partnership is
 likely to be unreasonably frustrated; or
 (B) another partner has engaged in conduct
 relating to the partnership's business that makes it not reasonably
 practicable to carry on the business in partnership with that
 partner; or
 (2) an owner of the partnership or limited liability
 company if the court determines that it is not reasonably
 practicable to carry on the entity's business in conformity with
 its governing documents.
 SECTION 26. Section 12.001, Business Organizations Code, is
 amended by adding Subsections (c) and (d) to read as follows:
 (c)  The secretary of state, on acceptance of the filing of
 an instrument authorized to be filed with the secretary of state
 under this code, may issue:
 (1)  a certificate that evidences the filing of the
 instrument;
 (2)  a letter that acknowledges the filing of the
 instrument; or
 (3)  a certificate that evidences the filing of the
 instrument and a letter that acknowledges the filing of the
 instrument.
 (d)  This section and Sections 12.003 and 12.004 do not apply
 to a domestic real estate investment trust.
 SECTION 27. Section 21.152, Business Organizations Code, is
 amended by amending Subsections (a) and (c) and adding Subsection
 (d) to read as follows:
 (a) A corporation's certificate of formation may divide the
 corporation's authorized shares into one or more classes and may
 divide one or more classes into one or more series. If more than one
 class or series of shares is authorized, the [The] certificate of
 formation must designate each class and series of authorized shares
 to distinguish that class and series from any other class or series.
 (c) Shares of the same class must be identical in all
 respects unless the shares have been divided into one or more
 series. If the shares of a class have been divided into one or more
 series, the shares may vary between series, but all shares of the
 same series must [will] be identical in all respects.
 (d)  A corporation's certificate of formation must
 authorize:
 (1)  one or more classes or series of shares that
 together have unlimited voting rights; and
 (2)  one or more classes or series of shares, which may
 be the same class or series of shares as those with voting rights,
 that together are entitled to receive the net assets of the
 corporation on winding up and termination.
 SECTION 28. Section 21.153(a), Business Organizations
 Code, is amended to read as follows:
 (a) If more than one class or series of shares is authorized
 under Section 21.152(d), the certificate of formation must state
 [Each class or series of authorized shares of a corporation must
 have] the designations, preferences, limitations, and relative
 rights, including voting rights, of each class or series [stated in
 the corporation's certificate of formation].
 SECTION 29. Section 21.154(a), Business Organizations
 Code, is amended to read as follows:
 (a) Subject to Sections 21.152 and [Section] 21.153, if
 authorized by the corporation's certificate of formation, a
 corporation may issue shares that:
 (1) are redeemable, at the option of the corporation,
 shareholder, or other person or on the occurrence of a designated
 event, subject to Sections 21.303 and 21.304;
 (2) entitle the holders of the shares to cumulative,
 noncumulative, or partially cumulative distributions;
 (3) have preferences over any or all other classes or
 series of shares with respect to payment of distributions;
 (4) have preferences over any or all other classes or
 series of shares with respect to the assets of the corporation on
 the voluntary or involuntary winding up and termination of the
 corporation;
 (5) are exchangeable, at the option of the
 corporation, shareholder, or other person or on the occurrence of a
 designated event, for shares, obligations, indebtedness, evidence
 of ownership, rights to purchase securities of the corporation or
 one or more other entities, or other property or for a combination
 of those rights, assets, or obligations, subject to Section 21.303;
 and
 (6) are convertible into shares of any other class or
 series, at the option of the corporation, shareholder, or other
 person or on the occurrence of a designated event.
 SECTION 30. Section 21.157, Business Organizations Code, is
 amended by adding Subsection (c) to read as follows:
 (c)  This subsection applies only to shares issued in
 accordance with Subsections (a) and (b) and Sections 21.160 and
 21.161 for consideration consisting, wholly or partly, of a
 contract for future services or benefits or a promissory note. A
 corporation may place the shares, although fully paid and
 nonassessable, in escrow, or make other arrangements to restrict
 the transfer of the shares, and may credit distributions made with
 respect to the shares against their purchase price, until the
 services are performed, the note is paid, or the benefits are
 received. If the services are not performed, the note is not paid,
 or the benefits are not received, the corporation may pursue
 remedies provided or afforded under law or in the contract or note,
 including causing the shares that are placed in escrow or
 restricted to be forfeited or returned to or reacquired by the
 corporation and the distributions that have been credited to be
 wholly or partly returned to the corporation.
 SECTION 31. Section 21.163(a), Business Organizations
 Code, is amended to read as follows:
 (a) A corporation may:
 (1) issue fractions of a share, either certificated or
 uncertificated;
 (2) arrange for the disposition of fractional
 interests by persons entitled to the interests;
 (3) pay cash for the fair value of fractions of a share
 determined when the shareholders entitled to receive the fractions
 are determined; or
 (4) subject to Subsection (b), issue scrip in
 registered [or bearer] form that entitles the holder to receive a
 certificate for a full share or an uncertificated full share on the
 surrender of the scrip aggregating a full share.
 SECTION 32. Section 21.171, Business Organizations Code, is
 amended to read as follows:
 Sec. 21.171. OUTSTANDING OR TREASURY SHARES. (a) Shares
 that are issued are outstanding shares unless the shares are
 treasury shares or are canceled.
 (b)  If there are outstanding shares, one or more shares that
 together have unlimited voting rights and one or more shares that
 together are entitled to receive the net assets of the corporation
 on the winding up and termination of the corporation must be
 outstanding shares.
 (c) Treasury shares are considered to be issued shares and
 not outstanding shares.
 (d) [(b)] Treasury shares may not be included in the total
 assets of a corporation for purposes of determining the net assets
 of a corporation.
 SECTION 33. Section 21.201, Business Organizations Code, is
 amended to read as follows:
 Sec. 21.201. REGISTERED HOLDERS AS OWNERS; SHARES HELD BY
 NOMINEES. (a) Except as otherwise provided by this code and
 subject to Chapter 8, Business & Commerce Code, a corporation may
 consider the person registered as the owner of a share in the share
 transfer records of the corporation at a particular time, including
 a record date set under Section 6.101 or 6.102 or Subchapter H, as
 the owner of that share at that time for purposes of:
 (1) voting the share;
 (2) receiving distributions on the share;
 (3) transferring the share;
 (4) receiving notice, exercising rights of dissent,
 exercising or waiving a preemptive right, or giving proxies with
 respect to that share;
 (5) entering into agreements with respect to that
 share in accordance with Section 6.251, 6.252, or 21.210; or
 (6) any other shareholder action.
 (b)  A corporation may establish a procedure by which the
 corporation recognizes as a shareholder the beneficial owner of
 shares registered in the name of a nominee.
 (c) A procedure established under Subsection (b) must:
 (1)  determine the extent of the corporation's
 recognition of the beneficial owner as a shareholder; and
 (2)  include the nominee's filing of a statement with
 the corporation that contains information regarding the beneficial
 owner.
 (d)  A procedure established under Subsection (b) may set
 forth:
 (1)  the types of nominees to which the procedure
 applies;
 (2)  the rights or privileges that the corporation will
 recognize in a beneficial owner, to the extent that the rights or
 privileges are not inconsistent with Section 10.361(g);
 (3)  the manner in which the procedure is selected by
 the nominee;
 (4)  the information that must be provided when the
 procedure is selected;
 (5)  the period for which the selection of the
 procedure is effective; and
 (6)  any other aspect of the rights and duties to be
 established under the procedure.
 SECTION 34. Section 21.224, Business Organizations Code,
 is amended to read as follows:
 Sec. 21.224. PREEMPTION OF LIABILITY. The liability of a
 holder, beneficial owner, or subscriber of shares of a corporation,
 or any affiliate of such a holder, owner, or subscriber or of the
 corporation, for an obligation that is limited by Section 21.223 is
 exclusive and preempts any other liability imposed for that
 obligation under common law or otherwise.
 SECTION 35. Section 21.361(a), Business Organizations
 Code, is amended to read as follows:
 (a) At [If expressly authorized by a corporation's
 certificate of formation in general or with respect to a specified
 class or series of shares or group of classes or series of shares
 and subject to Subsections (b) and (c), at] each election of
 directors of the corporation, each shareholder entitled to vote at
 the election is entitled to:
 (1) vote the number of shares owned by the shareholder
 for as many candidates as there are directors to be elected and for
 whose election the shareholder is entitled to vote; or
 (2) if expressly authorized by a corporation's
 certificate of formation in general or with respect to a specified
 class or series of shares or group of classes or series of shares
 and subject to Subsections (b) and (c), cumulate votes by:
 (A) giving one candidate as many votes as the
 total of the number of the directors to be elected multiplied by the
 shareholder's shares; or
 (B) distributing the votes among one or more
 candidates using the same principle.
 SECTION 36. Section 21.406(a), Business Organizations
 Code, is amended to read as follows:
 (a) The certificate of formation of a corporation may
 provide that directors, regardless of whether elected by the
 holders of a class or series of shares or by a group of classes or
 series of shares [entitled to elect one or more directors], as
 provided by Section 21.405, are entitled to cast more or less than
 one vote on all matters or on specified matters. Such a provision
 also applies to directors voting in any committee or subcommittee
 regarding all matters or the specified matters, as applicable,
 unless otherwise provided by the certificate of formation.
 SECTION 37. Section 21.418(b), Business Organizations
 Code, is amended to read as follows:
 (b) An otherwise valid contract or transaction described by
 Subsection (a) is valid notwithstanding that the [a] director or
 officer having the relationship or interest described by Subsection
 (a) [of the corporation] is present at or participates in the
 meeting of the board of directors, or of a committee of the board
 that authorizes the contract or transaction, or votes or signs, in
 the person's capacity as a director or committee member, a
 unanimous written consent of directors or committee members to
 authorize the contract or transaction, if:
 (1) the material facts as to the relationship or
 interest described by Subsection (a) and as to the contract or
 transaction are disclosed to or known by:
 (A) the corporation's board of directors or a
 committee of the board of directors and the board of directors or
 committee in good faith authorizes the contract or transaction by
 the approval [affirmative vote] of the majority of the
 disinterested directors or committee members, regardless of
 whether the disinterested directors or committee members
 constitute a quorum; or
 (B) the shareholders entitled to vote on the
 authorization of the contract or transaction, and the contract or
 transaction is specifically approved in good faith by a vote of the
 shareholders; or
 (2) the contract or transaction is fair to the
 corporation when the contract or transaction is authorized,
 approved, or ratified by the board of directors, a committee of the
 board of directors, or the shareholders.
 SECTION 38. Section 101.054(a), Business Organizations
 Code, is amended to read as follows:
 (a) Except as provided by this section, the following
 provisions may not be waived or modified in the company agreement of
 a limited liability company:
 (1) this section;
 (2) Section 101.101 [101.101(b)], 101.151, 101.206,
 101.501, or 101.502;
 (3) Chapter 1, if the provision is used to interpret a
 provision or define a word or phrase contained in a section listed
 in this subsection;
 (4) Chapter 2, except that Section 2.104(c)(2),
 2.104(c)(3), or 2.113 may be waived or modified in the company
 agreement;
 (5) Chapter 3, except that Subchapters C and E may be
 waived or modified in the company agreement; or
 (6) Chapter 4, 5, 7, 10, 11, or 12, other than Section
 11.056.
 SECTION 39. Section 101.106, Business Organizations Code,
 is amended by adding Subsection (c) to read as follows:
 (c)  Sections 9.406 and 9.408, Business & Commerce Code, do
 not apply to a membership interest in a limited liability company,
 including the rights, powers, and interests arising under the
 company's certificate of formation or company agreement or under
 this code. To the extent of any conflict between this subsection
 and Section 9.406 or 9.408, Business & Commerce Code, this
 subsection controls. It is the express intent of this subsection to
 permit the enforcement, as a contract among the members of a limited
 liability company, of any provision of a company agreement that
 would otherwise be ineffective under Section 9.406 or 9.408,
 Business & Commerce Code.
 SECTION 40. Section 101.112(c), Business Organizations
 Code, is amended to read as follows:
 (c) A charging order constitutes a lien on the judgment
 debtor's membership interest. The charging order lien may not be
 foreclosed on under this code or any other law.
 SECTION 41. Section 101.206, Business Organizations Code,
 is amended by amending Subsections (a) and (d) and adding
 Subsection (f) to read as follows:
 (a) Unless the distribution is made in compliance with
 Chapter 11, a [A] limited liability company may not make a
 distribution to a member of the company if, immediately after
 making the distribution, the company's total liabilities, other
 than liabilities described by Subsection (b), exceed the fair value
 of the company's total assets.
 (d) A member of a limited liability company who receives a
 distribution from the company in violation of this section is not
 required to return the distribution to the company unless [if] the
 member had knowledge of the violation.
 (f)  For purposes of this section, "distribution" does not
 include an amount constituting reasonable compensation for present
 or past services or a reasonable payment made in the ordinary course
 of business under a bona fide retirement plan or other benefits
 program.
 SECTION 42. Subchapter E, Chapter 101, Business
 Organizations Code, is amended by adding Section 101.208 to read as
 follows:
 Sec. 101.208.  RECORD DATE. A company agreement may
 establish or provide for the establishment of a record date with
 respect to allocations and distributions.
 SECTION 43. The heading to Section 101.251, Business
 Organizations Code, is amended to read as follows:
 Sec. 101.251. GOVERNING AUTHORITY [MEMBERSHIP].
 SECTION 44. Section 101.255(b), Business Organizations
 Code, is amended to read as follows:
 (b) An otherwise valid contract or transaction described by
 Subsection (a) is valid notwithstanding that the [a] governing
 person or officer having the relationship or interest described by
 Subsection (a) [of the company] is present at or participates in the
 meeting of the governing authority, or of a committee of the
 governing [person's] authority, that authorizes the contract or
 transaction or votes or signs, in the person's capacity as a
 governing person or committee member, a written consent of
 governing persons or committee members to authorize the contract or
 transaction, if:
 (1) the material facts as to the relationship or
 interest described by Subsection (a) and as to the contract or
 transaction are disclosed to or known by:
 (A) the company's governing authority or a
 committee of the governing authority and the governing authority or
 committee in good faith authorizes the contract or transaction by
 the approval [affirmative vote] of the majority of the
 disinterested governing persons or committee members, regardless
 of whether the disinterested governing persons or committee members
 constitute a quorum; or
 (B) the members of the company, and the members
 in good faith approve the contract or transaction by vote of the
 members; or
 (2) the contract or transaction is fair to the company
 when the contract or transaction is authorized, approved, or
 ratified by the governing authority, a committee of the governing
 authority, or the members of the company.
 SECTION 45. Chapter 101, Business Organizations Code, is
 amended by adding Subchapter M to read as follows:
 SUBCHAPTER M. SERIES LIMITED LIABILITY COMPANY
 Sec. 101.601.  SERIES OF MEMBERS, MANAGERS, MEMBERSHIP
 INTERESTS, OR ASSETS. (a)  A company agreement may establish or
 provide for the establishment of one or more designated series of
 members, managers, membership interests, or assets that:
 (1)  has separate rights, powers, or duties with
 respect to specified property or obligations of the limited
 liability company or profits and losses associated with specified
 property or obligations; or
 (2)  has a separate business purpose or investment
 objective.
 (b)  A series established in accordance with Subsection (a)
 may carry on any business, purpose, or activity, whether or not for
 profit, that is not prohibited by Section 2.003.
 Sec. 101.602.  ENFORCEABILITY OF OBLIGATIONS AND EXPENSES OF
 SERIES AGAINST ASSETS. (a) Notwithstanding any other provision of
 this chapter or any other law, but subject to Subsection (b) and any
 other provision of this subchapter:
 (1)  the debts, liabilities, obligations, and expenses
 incurred, contracted for, or otherwise existing with respect to a
 particular series shall be enforceable against the assets of that
 series only, and shall not be enforceable against the assets of the
 limited liability company generally or any other series; and
 (2)  none of the debts, liabilities, obligations, and
 expenses incurred, contracted for, or otherwise existing with
 respect to the limited liability company generally or any other
 series shall be enforceable against the assets of a particular
 series.
 (b) Subsection (a) applies only if:
 (1)  the records maintained for that particular series
 account for the assets associated with that series separately from
 the other assets of the company or any other series;
 (2)  the company agreement contains a statement to the
 effect of the limitations provided in Subsection (a); and
 (3)  the company's certificate of formation contains a
 notice of the limitations provided in Subsection (a).
 Sec. 101.603.  ASSETS OF SERIES. (a)  Assets associated with
 a series may be held directly or indirectly, including being held in
 the name of the series, in the name of the limited liability
 company, through a nominee, or otherwise.
 (b)  If the records of a series are maintained in a manner so
 that the assets of the series can be reasonably identified by
 specific listing, category, type, quantity, or computational or
 allocational formula or procedure, including a percentage or share
 of any assets, or by any other method in which the identity of the
 assets can be objectively determined, the records are considered to
 satisfy the requirements of Section 101.602(b)(1).
 Sec. 101.604.  NOTICE OF LIMITATION ON LIABILITIES OF
 SERIES. Notice of the limitation on liabilities of a series
 required by Section 101.602 that is contained in a certificate of
 formation filed with the secretary of state satisfies the
 requirements of Section 101.602(b)(3), regardless of whether:
 (1)  the limited liability company has established any
 series under this subchapter when the notice is contained in the
 certificate of formation; and
 (2)  the notice makes a reference to a specific series
 of the limited liability company.
 Sec. 101.605.  GENERAL POWERS OF SERIES. A series
 established under this subchapter has the power and capacity, in
 the series' own name, to:
 (1) sue and be sued;
 (2) contract;
 (3)  hold title to assets of the series, including real
 property, personal property, and intangible property; and
 (4)  grant liens and security interests in assets of
 the series.
 Sec. 101.606.  LIABILITY OF MEMBER OR MANAGER FOR
 OBLIGATIONS; DUTIES. (a) Except as and to the extent the company
 agreement specifically provides otherwise, a member or manager
 associated with a series or a member or manager of the company is
 not liable for a debt, obligation, or liability of a series,
 including a debt, obligation, or liability under a judgment,
 decree, or court order.
 (b)  The company agreement may expand or restrict any duties,
 including fiduciary duties, and related liabilities that a member,
 manager, officer, or other person associated with a series has to:
 (1) the series or the company;
 (2) a member or manager associated with the series; or
 (3) a member or manager of the company.
 Sec. 101.607.  CLASS OR GROUP OF MEMBERS OR MANAGERS. (a)
 The company agreement may:
 (1)  establish classes or groups of one or more members
 or managers associated with a series each of which has certain
 express relative rights, powers, and duties, including voting
 rights; and
 (2)  provide for the manner of establishing additional
 classes or groups of one or more members or managers associated with
 the series each of which has certain express rights, powers, and
 duties, including providing for voting rights and rights, powers,
 and duties senior to existing classes and groups of members or
 managers associated with the series.
 (b)  The company agreement may provide for the taking of an
 action, including the amendment of the company agreement, without
 the vote or approval of any member or manager or class or group of
 members or managers, to create under the provisions of the company
 agreement a class or group of the series of membership interests
 that was not previously outstanding.
 (c) The company agreement may provide that:
 (1)  all or certain identified members or managers or a
 specified class or group of the members or managers associated with
 a series have the right to vote on any matter separately or with all
 or any class or group of the members or managers associated with the
 series;
 (2)  any member or class or group of members associated
 with a series has no voting rights; and
 (3)  voting by members or managers associated with a
 series is on a per capita, number, financial interest, class,
 group, or any other basis.
 Sec. 101.608.  GOVERNING AUTHORITY. (a) Notwithstanding
 any conflicting provision of the certificate of formation of a
 limited liability company, the governing authority of a series
 consists of the managers or members associated with the series as
 provided in the company agreement.
 (b)  If the company agreement does not provide for the
 governing authority of the series, the governing authority of the
 series consists of:
 (1)  the managers associated with the series, if the
 company's certificate of formation states that the company will
 have one or more managers; or
 (2)  the members associated with the series, if the
 company's certificate of formation states that the company will not
 have managers.
 Sec. 101.609.  APPLICABILITY OF OTHER PROVISIONS OF CHAPTER;
 SYNONYMOUS TERMS. (a)  To the extent not inconsistent with this
 subchapter, this chapter applies to a series and its associated
 members and managers.
 (b)  For purposes of the application of any other provision
 of this chapter to a provision of this subchapter, and as the
 context requires:
 (1)  a reference to "limited liability company" or
 "company" means the "series";
 (2)  a reference to "member" means "member associated
 with the series"; and
 (3)  a reference to "manager" means "manager associated
 with the series."
 Sec. 101.610.  EFFECT OF CERTAIN EVENT ON MANAGER OR MEMBER.
 (a)  An event that under this chapter or the company agreement
 causes a manager to cease to be a manager with respect to a series
 does not, in and of itself, cause the manager to cease to be a
 manager of the limited liability company or with respect to any
 other series of the company.
 (b)  An event that under this chapter or the company
 agreement causes a member to cease to be associated with a series
 does not, in and of itself, cause the member to cease to be
 associated with any other series or terminate the continued
 membership of a member in the limited liability company or require
 the winding up of the series, regardless of whether the member was
 the last remaining member associated with the series.
 Sec. 101.611.  MEMBER STATUS WITH RESPECT TO DISTRIBUTION.
 (a)  Subject to Sections 101.613, 101.617, 101.618, 101.619, and
 101.620, when a member associated with a series established under
 this subchapter is entitled to receive a distribution with respect
 to the series, the member, with respect to the distribution, has the
 same status as a creditor of the series and is entitled to any
 remedy available to a creditor of the series.
 (b)  Section 101.207 does not apply to a distribution with
 respect to the series.
 Sec. 101.612.  RECORD DATE FOR ALLOCATIONS AND
 DISTRIBUTIONS.  A company agreement may establish or provide for
 the establishment of a record date for allocations and
 distributions with respect to a series.
 Sec. 101.613.  DISTRIBUTIONS.  (a)  A limited liability
 company may make a distribution with respect to a series.
 (b)  A limited liability company may not make a distribution
 with respect to a series to a member if, immediately after making
 the distribution, the total amount of the liabilities of the
 series, other than liabilities described by Subsection (c), exceeds
 the fair value of the assets associated with the series.
 (c)  For purposes of Subsection (b), the liabilities of a
 series do not include:
 (1)  a liability related to the member's membership
 interest; or
 (2)  except as provided by Subsection (e), a liability
 of the series for which the recourse of creditors is limited to
 specified property of the series.
 (d)  For purposes of Subsection (b), the assets associated
 with a series include the fair value of property of the series
 subject to a liability for which recourse of creditors is limited to
 specified property of the series only if the fair value of that
 property exceeds the liability.
 (e)  A member who receives a distribution from a series in
 violation of this section is not required to return the
 distribution to the series unless the member had knowledge of the
 violation.
 (f)  This section may not be construed to affect the
 obligation of a member to return a distribution to the series under
 the company agreement or other state or federal law.
 (g)  Section 101.206 does not apply to a distribution with
 respect to a series.
 (h)  For purposes of this section, "distribution" does not
 include an amount constituting reasonable compensation for present
 or past services or a reasonable payment made in the ordinary course
 of business under a bona fide retirement plan or other benefits
 program.
 Sec. 101.614.  AUTHORITY TO WIND UP AND TERMINATE SERIES.
 Except to the extent otherwise provided in the company agreement
 and subject to Sections 101.617, 101.618, 101.619, and 101.620, a
 series and its business and affairs may be wound up and terminated
 without causing the winding up of the limited liability company.
 Sec. 101.615.  TERMINATION OF SERIES.  (a) Except as
 otherwise provided by Sections 101.617, 101.618, 101.619, and
 101.620, the series terminates on the completion of the winding up
 of the business and affairs of the series in accordance with
 Sections 101.617, 101.618, 101.619, and 101.620.
 (b)  The limited liability company shall provide notice of
 the termination of a series in the manner provided in the company
 agreement for notice of termination, if any.
 (c)  The termination of the series does not affect the
 limitation on liabilities of the series provided by Section
 101.602.
 Sec. 101.616.  EVENT REQUIRING WINDING UP. Subject to
 Sections 101.617, 101.618, 101.619, and 101.620, the business and
 affairs of a series are required to be wound up:
 (1)  if the winding up of the limited liability company
 is required under Section 101.552(a) or Chapter 11; or
 (2) on the earlier of:
 (A)  the time specified for winding up the series
 in the company agreement;
 (B)  the occurrence of an event specified with
 respect to the series in the company agreement;
 (C)  the occurrence of a majority vote of all of
 the members associated with the series approving the winding up of
 the series or, if there is more than one class or group of members
 associated with the series, a majority vote of the members of each
 class or group of members associated with the series approving the
 winding up of the series;
 (D)  if the series has no members, the occurrence
 of a majority vote of all of the managers associated with the series
 approving the winding up of the series or, if there is more than one
 class or group of managers associated with the series, a majority
 vote of the managers of each class or group of managers associated
 with the series approving the winding up of the series; or
 (E)  a determination by a court in accordance with
 Section 101.621.
 Sec. 101.617.  PROCEDURES FOR WINDING UP AND TERMINATION OF
 SERIES. (a)  The following provisions apply to a series and the
 associated members and managers of the series:
 (1) Subchapters A, G, H, and I, Chapter 11; and
 (2)  Subchapter B, Chapter 11, other than Sections
 11.051, 11.056, 11.057, 11.058, and 11.059.
 (b)  For purposes of the application of Chapter 11 to a
 series and as the context requires:
 (1)  a reference to "domestic entity," "filing entity,"
 or "entity" means the "series";
 (2)  a reference to an "owner" means a "member
 associated with the series";
 (3)  a reference to the "governing authority" or a
 "governing person" means the "governing authority associated with
 the series" or a "governing person associated with the series"; and
 (4)  a reference to "business," "property,"
 "obligations," or "liabilities" means the "business associated
 with the series," "property associated with the series,"
 "obligations associated with the series," or "liabilities
 associated with the series."
 (c)  After the occurrence of an event requiring winding up of
 a series under Section 101.616, unless a revocation as provided by
 Section 101.618 or a cancellation as provided by Section 101.619
 occurs, the winding up of the series must be carried out by:
 (1)  the governing authority of the series or one or
 more persons, including a governing person, designated by:
 (A) the governing authority of the series;
 (B) the members associated with the series; or
 (C) the company agreement; or
 (2)  a person appointed by the court to carry out the
 winding up of the series under Section 11.054, 11.405, 11.409, or
 11.410.
 (d)  An action taken in accordance with this section does not
 affect the limitation on liability of members and managers provided
 by Section 101.606.
 Sec. 101.618.  REVOCATION OF VOLUNTARY WINDING UP.  Before
 the termination of the series takes effect, a voluntary decision to
 wind up the series under Section 101.616(2)(C) or (D) may be revoked
 by:
 (1)  a majority vote of all of the members associated
 with the series approving the revocation or, if there is more than
 one class or group of members associated with the series, a majority
 vote of the members of each class or group of members associated
 with the series approving the revocation; or
 (2)  if the series has no members, a majority vote of
 all the managers associated with the series approving the
 revocation or, if there is more than one class or group of managers
 associated with the series, a majority vote of the managers of each
 class or group of managers associated with the series approving the
 revocation.
 Sec. 101.619.  CANCELLATION OF EVENT REQUIRING WINDING UP.
 (a) Unless the cancellation is prohibited by the company
 agreement, an event requiring winding up of the series under
 Section 101.616(1) or (2) may be canceled by the consent of all of
 the members of the series before the termination of the series takes
 effect.
 (b)  In connection with the cancellation, the members must
 amend the company agreement to:
 (1)  eliminate or extend the time specified for the
 series if the event requiring winding up of the series occurred
 under Section 101.616(1); or
 (2)  eliminate or revise the event specified with
 respect to the series if the event requiring winding up of the
 series occurred under Section 101.616(2).
 Sec. 101.620.  CONTINUATION OF BUSINESS. The series may
 continue its business following the revocation under Section
 101.618 or the cancellation under Section 101.619.
 Sec. 101.621.  WINDING UP BY COURT ORDER. A district court
 in the county in which the registered office or principal place of
 business in this state of a domestic limited liability company is
 located, on application by or for a member associated with the
 series, has jurisdiction to order the winding up and termination of
 a series if the court determines that it is not reasonably
 practicable to carry on the business of the series in conformity
 with the company agreement.
 SECTION 46. Chapter 151, Business Organizations Code, is
 amended by adding Section 151.004 to read as follows:
 Sec. 151.004.  OFFICERS. A partnership may have elected or
 appointed officers in accordance with Section 3.103.
 SECTION 47. Section 152.801(a), Business Organizations
 Code, is amended to read as follows:
 (a) Except as provided by Subsection (b) or the partnership
 agreement, a partner in a limited liability partnership is not
 personally liable to any person, including a partner, directly or
 indirectly, by contribution, indemnity, or otherwise, for a debt or
 obligation of the partnership incurred while the partnership is a
 limited liability partnership.
 SECTION 48. Section 152.802(f), Business Organizations
 Code, is amended to read as follows:
 (f) A registration may be withdrawn by filing a withdrawal
 notice with the secretary of state in accordance with Chapter 4. A
 certificate from the comptroller stating that all taxes
 administered by the comptroller under Title 2, Tax Code, have been
 paid must be filed with the notice of withdrawal. A withdrawal
 notice terminates the status of the partnership as a limited
 liability partnership from the date on which the notice is filed or
 a later date specified in the notice, but not later than the
 expiration date under Subsection (e). A withdrawal notice must:
 (1) contain:
 (A) the name of the partnership;
 (B) the federal tax identification number of the
 partnership;
 (C) the date of registration of the partnership's
 last application under this subchapter; and
 (D) the current street address of the
 partnership's principal office in this state and outside this
 state, if applicable; and
 (2) be signed by:
 (A) a majority-in-interest of the partners; or
 (B) one or more partners authorized by a
 majority-in-interest of the partners.
 SECTION 49. Section 152.906, Business Organizations Code,
 is amended by adding Subsection (c) to read as follows:
 (c)  A certificate from the comptroller stating that all
 taxes administered by the comptroller under Title 2, Tax Code, have
 been paid must be filed with the withdrawal of registration.
 SECTION 50. Section 152.914, Business Organizations Code,
 is amended by adding Subsection (f) to read as follows:
 (f)  A tax clearance letter from the comptroller stating that
 a foreign limited liability partnership has satisfied all franchise
 tax liabilities and may be reinstated must be filed with the
 certificate of reinstatement if the foreign limited liability
 partnership is a taxable entity under Chapter 171, Tax Code.
 SECTION 51. Section 153.103, Business Organizations Code,
 is amended to read as follows:
 Sec. 153.103. ACTIONS NOT CONSTITUTING PARTICIPATION IN
 BUSINESS FOR LIABILITY PURPOSES. For purposes of this section and
 Sections 153.102, 153.104, and 153.105, a limited partner does not
 participate in the control of the business because the limited
 partner has or has acted in one or more of the following capacities
 or possesses or exercises one or more of the following powers:
 (1) acting as:
 (A) a contractor for or an officer or other agent
 or employee of the limited partnership;
 (B) a contractor for or an agent or employee of a
 general partner;
 (C) an officer, director, or stockholder of a
 corporate general partner;
 (D) a partner of a partnership that is a general
 partner of the limited partnership; or
 (E) a member or manager of a limited liability
 company that is a general partner of the limited partnership;
 (2) acting in a capacity similar to that described in
 Subdivision (1) with any other person that is a general partner of
 the limited partnership;
 (3) consulting with or advising a general partner on
 any matter, including the business of the limited partnership;
 (4) acting as surety, guarantor, or endorser for the
 limited partnership, guaranteeing or assuming one or more specific
 obligations of the limited partnership, or providing collateral for
 borrowings of the limited partnership;
 (5) calling, requesting, attending, or participating
 in a meeting of the partners or the limited partners;
 (6) winding up the business of a limited partnership
 under Chapter 11 and Subchapter K of this chapter;
 (7) taking an action required or permitted by law to
 bring, pursue, settle, or otherwise terminate a derivative action
 in the right of the limited partnership;
 (8) serving on a committee of the limited partnership
 or the limited partners; or
 (9) proposing, approving, or disapproving, by vote or
 otherwise, one or more of the following matters:
 (A) the winding up or termination of the limited
 partnership;
 (B) an election to reconstitute the limited
 partnership or continue the business of the limited partnership;
 (C) the sale, exchange, lease, mortgage,
 assignment, pledge, or other transfer of, or granting of a security
 interest in, an asset of the limited partnership;
 (D) the incurring, renewal, refinancing, or
 payment or other discharge of indebtedness by the limited
 partnership;
 (E) a change in the nature of the business of the
 limited partnership;
 (F) the admission, removal, or retention of a
 general partner;
 (G) the admission, removal, or retention of a
 limited partner;
 (H) a transaction or other matter involving an
 actual or potential conflict of interest;
 (I) an amendment to the partnership agreement or
 certificate of formation;
 (J) if the limited partnership is qualified as an
 investment company under the federal Investment Company Act of 1940
 (15 U.S.C. Section 80a-1 et seq.), as amended, any matter required
 by that Act or the rules and regulations of the Securities and
 Exchange Commission under that Act, to be approved by the holders of
 beneficial interests in an investment company, including:
 (i) electing directors or trustees of the
 investment company;
 (ii) approving or terminating an investment
 advisory or underwriting contract;
 (iii) approving an auditor; and
 (iv) acting on another matter that that Act
 requires to be approved by the holders of beneficial interests in
 the investment company;
 (K) indemnification of a general partner under
 Chapter 8 or otherwise;
 (L) any other matter stated in the partnership
 agreement;
 (M) the exercising of a right or power granted or
 permitted to limited partners under this code and not specifically
 enumerated in this section; or
 (N) the merger or conversion of a limited
 partnership.
 SECTION 52. Section 153.210, Business Organizations Code,
 is amended to read as follows:
 Sec. 153.210. LIMITATION ON DISTRIBUTION. (a)  Unless the
 distribution is made in compliance with Chapter 11, a [A] limited
 partnership may not make a distribution to a partner if,
 immediately after giving effect to the distribution and despite any
 compromise of a claim referred to by Sections 153.203 and 153.204,
 all liabilities of the limited partnership, other than liabilities
 to partners with respect to their partnership interests and
 liabilities for which the recourse of creditors is limited to
 specified property of the limited partnership, exceed the fair
 value of the partnership assets. The fair value of property that is
 subject to a liability for which recourse of creditors is limited
 shall be included in the partnership assets for purposes of this
 subsection only to the extent that the fair value of that property
 exceeds that liability.
 (b)  For purposes of this section, "distribution" does not
 include an amount constituting reasonable compensation for present
 or past services or a reasonable payment made in the ordinary course
 of business under a bona fide retirement plan or other benefits
 program.
 SECTION 53. Section 153.256(c), Business Organizations
 Code, is amended to read as follows:
 (c) A charging order constitutes a lien on the judgment
 debtor's partnership interest. The charging order lien may not be
 foreclosed on under this code or any other law.
 SECTION 54. Section 153.309(c), Business Organizations
 Code, is amended to read as follows:
 (c) This section and Sections 153.307 and 153.308 do not
 affect the liability of a limited partner [to the limited
 partnership].
 SECTION 55. Section 153.311, Business Organizations Code,
 is amended to read as follows:
 Sec. 153.311. TERMINATION [CANCELLATION] OF CERTIFICATE OR
 REVOCATION OF REGISTRATION AFTER FORFEITURE. (a) The secretary of
 state may terminate [cancel] the certificate of formation of a
 domestic limited partnership, or revoke the registration of a
 foreign limited partnership, if the limited partnership:
 (1) forfeits its right to transact business in this
 state under Section 153.307; and
 (2) fails to revive that right under Section 153.310.
 (b) Termination [Cancellation] of the certificate or
 revocation of registration takes effect without judicial
 ascertainment.
 (c) The secretary of state shall note the termination or
 revocation [cancellation] and the date [of cancellation] on the
 record kept in the secretary's office relating to the limited
 partnership.
 (d) On termination or revocation [cancellation], the status
 of the limited partnership is changed to inactive according to the
 records of the secretary of state. The change to inactive status
 does not affect the liability of a limited partner [to the limited
 partnership].
 SECTION 56. Sections 153.312(a) and (b), Business
 Organizations Code, are amended to read as follows:
 (a) A limited partnership the certificate of formation or
 registration of which has been terminated or revoked [canceled] as
 provided by Section 153.311 may be relieved of the termination or
 revocation [cancellation] by filing the report required by Section
 153.301, accompanied by the filing fees provided by Chapter 4.
 (b) If the limited partnership pays the fees required by
 Subsection (a) and all taxes, penalties, and interest due and
 accruing before termination or revocation, the secretary of state
 shall:
 (1) reinstate the certificate or registration of the
 limited partnership without judicial ascertainment;
 (2) change the status of the limited partnership to
 active; and
 (3) note the reinstatement on the record kept in the
 secretary's office relating to the limited partnership.
 SECTION 57. Section 154.001, Business Organizations Code,
 is amended by adding Subsection (d) to read as follows:
 (d)  Sections 9.406 and 9.408, Business & Commerce Code, do
 not apply to a partnership interest in a partnership, including the
 rights, powers, and interests arising under the governing documents
 of the partnership or under this code.  To the extent of any
 conflict between this subsection and Section 9.406 or 9.408,
 Business & Commerce Code, this subsection controls. It is the
 express intent of this subsection to permit the enforcement, as a
 contract among the partners of a partnership, of any provision of a
 partnership agreement that would otherwise be ineffective under
 Section 9.406 or 9.408, Business & Commerce Code.
 SECTION 58. Section 200.317(b), Business Organizations
 Code, is amended to read as follows:
 (b) An otherwise valid contract or transaction described by
 Subsection (a) is valid notwithstanding that the [a] trust manager
 or officer having the relationship or interest described by
 Subsection (a) [of the trust] is present at or participates in the
 meeting of the trust managers or of a committee of the trust
 managers that authorizes the contract or transaction, or votes or
 signs, in the person's capacity as a trust manager or committee
 member, a unanimous written consent of trust managers or committee
 members to authorize the contract or transaction, if:
 (1) the material facts as to the relationship or
 interest described by Subsection (a) and as to the contract or
 transaction are disclosed to or known by:
 (A) the trust managers or a committee of the
 trust managers, and the trust managers or committee of the trust
 managers in good faith authorize the contract or transaction by the
 approval [affirmative vote] of the majority of disinterested trust
 managers or committee members, regardless of whether the
 disinterested trust managers or committee members constitute a
 quorum; or
 (B) the shareholders entitled to vote on the
 authorization of the contract or transaction, and the contract or
 transaction is specifically approved in good faith by a vote of the
 shareholders; or
 (2) the contract or transaction is fair to the real
 estate investment trust when the contract or transaction is
 authorized, approved, or ratified by the trust managers, a
 committee of the trust managers, or the shareholders.
 SECTION 59. Section 402.005(a), Business Organizations
 Code, is amended to read as follows:
 (a) On or after January 1, 2010, if a domestic entity formed
 before January 1, 2006, or a foreign filing entity registered with
 the secretary of state to transact business in this state before
 January 1, 2006, has not taken the actions specified by Section
 402.003 [402.003(a)] or 402.004 to elect to adopt this code:
 (1) this code applies to the entity and all actions
 taken by the managerial officials, owners, or members of the
 entity, except as otherwise expressly provided by this title;
 (2) if the entity is a domestic or foreign filing
 entity, the entity is not considered to have failed to comply with
 this code if the entity's certificate of formation or application
 for registration, as appropriate, does not comply with this code;
 (3) if the entity is a domestic filing entity, the
 entity shall conform its certificate of formation to the
 requirements of this code when it next files an amendment to its
 certificate of formation; and
 (4) if the entity is a foreign filing entity, the
 entity shall conform its application for registration to the
 requirements of this code when it next files an amendment to its
 application for registration.
 SECTION 60. Section 9.406, Business & Commerce Code, is
 amended by adding Subsection (j) to read as follows:
 (j)  This section does not apply to an interest in a
 partnership or limited liability company.
 SECTION 61. Section 9.408, Business & Commerce Code, is
 amended by adding Subsection (e) to read as follows:
 (e)  This section does not apply to an interest in a
 partnership or limited liability company.
 SECTION 62. Section 71.002, Business & Commerce Code, is
 amended by amending Subdivisions (2), (4), (7), (8), and (9) and
 adding Subdivision (6-a) to read as follows:
 (2) "Assumed name" means:
 (A) for an individual, a name that does not
 include the surname of the individual;
 (B) for a partnership, a name that does not
 include the surname or other legal name of each joint venturer or
 general partner;
 (C) for an individual or a partnership, a name,
 including a surname, that suggests the existence of additional
 owners by including words such as "Company," "& Company," "& Son,"
 "& Sons," "& Associates," "Brothers," and similar words, but not
 words that merely describe the business being conducted or the
 professional service being rendered;
 (D) for a limited partnership, a name other than
 the name stated in its certificate of formation;
 (E) for a company, a name used by the company;
 (F) for a corporation, a name other than the name
 stated in its certificate of formation or a comparable document;
 (G) for a [registered] limited liability
 partnership, a name other than the name stated in its application
 filed with the office of the secretary of state or a comparable
 document; and
 (H) for a limited liability company, a name other
 than the name stated in its certificate of formation or a comparable
 document.
 (4) "Company" means a real estate investment trust, a
 joint-stock company, or any other business, professional, or other
 association or legal entity that is not incorporated, other than a
 partnership, limited partnership, limited liability company, [or
 registered] limited liability partnership, or foreign filing
 entity.
 (6-a)  "Foreign filing entity" means an entity formed
 under the laws of a jurisdiction other than this state that
 registers or is required by law to register with the secretary of
 state to conduct business or render professional services in this
 state under Chapter 9, Business Organizations Code.
 (7) "Office" means:
 (A) for a person that is not an individual or that
 is a corporation that is not required to or does not maintain a
 registered office in this state, the person's:
 (i) principal office; and
 (ii) principal place of business if not the
 same as the person's principal office; and
 (B) for a corporation, limited partnership,
 [registered] limited liability partnership, [or] limited liability
 company, or foreign filing entity that is required to maintain a
 registered office in this state, the entity's:
 (i) registered office; and
 (ii) principal office if not the same as the
 entity's registered office.
 (8) "Partnership" means a joint venture or general
 partnership other than a limited partnership or a [registered]
 limited liability partnership.
 (9) "Person" includes an individual, partnership,
 limited partnership, limited liability company, [registered]
 limited liability partnership, company, [or] corporation, or
 foreign filing entity.
 SECTION 63. Section 71.003(b), Business & Commerce Code, is
 amended to read as follows:
 (b) This chapter does not require a corporation, limited
 partnership, [registered] limited liability partnership, [or]
 limited liability company, or foreign filing entity or its
 shareholders, associates, partners, or members to file a
 certificate to conduct business or render a professional service in
 this state under the name of the entity as stated in the certificate
 of formation, application filed with the office of the secretary of
 state, or other comparable document of the entity.
 SECTION 64. Section 71.051, Business & Commerce Code, is
 amended to read as follows:
 Sec. 71.051. CERTIFICATE FOR CERTAIN UNINCORPORATED
 PERSONS. A person must file a certificate under this subchapter if
 the person regularly conducts business or renders a professional
 service in this state under an assumed name other than as a
 corporation, limited partnership, [registered] limited liability
 partnership, [or] limited liability company, or foreign filing
 entity.
 SECTION 65. Section 71.052, Business & Commerce Code, is
 amended to read as follows:
 Sec. 71.052. CONTENTS OF CERTIFICATE. The certificate must
 state:
 (1) the assumed name under which the business is or is
 to be conducted or the professional service is or is to be rendered;
 (2) if the registrant is:
 (A) an individual, the individual's full name and
 residence address;
 (B) a partnership:
 (i) the venture or partnership name;
 (ii) the venture or partnership office
 address;
 (iii) the full name of each joint venturer
 or general partner; and
 (iv) each joint venturer's or general
 partner's residence address if the venturer or partner is an
 individual or the joint venturer's or general partner's office
 address if the venturer or partner is not an individual;
 (C) an estate:
 (i) the name of the estate;
 (ii) the estate's office address, if any;
 (iii) the full name of each representative
 of the estate; and
 (iv) each representative's residence
 address if the representative is an individual or the
 representative's office address if the representative is not an
 individual;
 (D) a real estate investment trust:
 (i) the name of the trust;
 (ii) the address of the trust;
 (iii) the full name of each trustee
 manager; and
 (iv) each trustee manager's residence
 address if the trustee manager is an individual or the trustee
 manager's office address if the trustee manager is not an
 individual; or
 (E) a company, other than a real estate
 investment trust[, or a corporation]:
 (i) the name of the company [or
 corporation];
 (ii) the state, country, or other
 jurisdiction under the laws of which the company [or corporation]
 was organized [or incorporated]; and
 (iii) the company's [or corporation's]
 office address;
 (3) the period, not to exceed 10 years, during which
 the registrant will use the assumed name; and
 (4) a statement specifying that the business that is
 or will be conducted or the professional service that is or will be
 rendered in the county under the assumed name is being or will be
 conducted or rendered as a proprietorship, sole practitioner,
 partnership, real estate investment trust, joint-stock company, or
 other form of unincorporated business or professional association
 or entity other than a limited partnership, limited liability
 company, [or registered] limited liability partnership, or foreign
 filing entity.
 SECTION 66. Section 71.101, Business & Commerce Code, is
 amended to read as follows:
 Sec. 71.101. CERTIFICATE FOR INCORPORATED BUSINESS OR
 PROFESSION, LIMITED PARTNERSHIP, [REGISTERED] LIMITED LIABILITY
 PARTNERSHIP, [OR] LIMITED LIABILITY COMPANY, OR FOREIGN FILING
 ENTITY. A corporation, limited partnership, [registered] limited
 liability partnership, [or] limited liability company, or foreign
 filing entity must file a certificate under this subchapter if the
 entity:
 (1) regularly conducts business or renders
 professional services in this state under an assumed name; or
 (2) is required by law to use an assumed name in this
 state to conduct business or render professional services.
 SECTION 67. Section 71.102, Business & Commerce Code, is
 amended to read as follows:
 Sec. 71.102. CONTENTS OF CERTIFICATE. The certificate must
 state:
 (1) the assumed name under which the business is or is
 to be conducted or the professional service is or is to be rendered;
 (2) the registrant's name as stated in the
 registrant's certificate of formation or application filed with the
 office of the secretary of state or other comparable document;
 (3) the state, country, or other jurisdiction under
 the laws of which the registrant was incorporated or organized and
 the registrant's registered or similar office address in that
 state, country, or jurisdiction;
 (4) the period, not to exceed 10 years, during which
 the registrant will use the assumed name;
 (5) a statement specifying that the registrant is:
 (A) a for-profit [business] corporation,
 nonprofit corporation, professional corporation, professional
 association, or other type of corporation;
 (B) a limited partnership, [registered] limited
 liability partnership, or limited liability company; or
 (C) another type of incorporated business,
 professional or other association, or legal entity, foreign or
 domestic;
 (6) the address of:
 (A) the registrant's[:
 [(i)     registered office in this state and
 the name of its registered agent at that address; and
 [(ii)] principal office[, if the principal
 office address is not the same as the registrant's registered
 office address in this state]; or
 (B) if the registrant is not required to or does
 not maintain a registered office in this state:
 (i) the registrant's office in this state;
 and
 (ii) the registrant's place of business in
 this state and any office of the registrant outside this state, if
 the registrant is not incorporated or organized under the laws of
 this state; and
 (7) the county or counties in this state where the
 registrant is or will be conducting business or rendering
 professional services under the assumed name.
 SECTION 68. Section 71.103, Business & Commerce Code, is
 amended to read as follows:
 Sec. 71.103. PLACE OF FILING. (a) The corporation, limited
 partnership, [registered] limited liability partnership, [or]
 limited liability company, or foreign filing entity shall file the
 certificate in the office of the secretary of state and in the
 office or offices of each county clerk as specified by Subsection
 (b) or (c).
 (b) An [Except as provided by Subsection (c), the] entity
 that maintains a registered office in this state shall file the
 certificate in the office [offices] of the county clerk of the
 county in which the entity's:
 (1) registered office is located, if the entity's
 principal office is not located in this state; or [and]
 (2) principal office is located, if the entity's
 principal office is located in this state [and not in the same
 county where the registered office is located].
 (c) An [If the] entity that [is not required to or] does not
 maintain a registered office in this state[, the entity] shall file
 the certificate:
 (1) in the office of the county clerk of the county in
 which the entity's office in this state is located; or
 (2) in the office of the county clerk of the county in
 which the entity's principal place of business in this state is
 located, if:
 (A) the entity is not incorporated or organized
 under the laws of this state; and
 (B) the county in which the entity's principal
 place of business in this state is located is not the same county
 where the entity's office is located.
 SECTION 69. Section 71.152(b), Business & Commerce Code, is
 amended to read as follows:
 (b) An event that causes the information in a certificate to
 become materially misleading includes:
 (1) a change in the name, identity, entity, form of
 business or professional organization, or location of a registrant;
 (2) for a proprietorship or sole practitioner, a
 change in ownership; or
 (3) for a partnership:
 (A) the admission of a new partner or joint
 venturer; or
 (B) the end of a general partner's or joint
 venturer's association with the partnership[; or
 [(4)     for a registrant required by law to maintain a
 registered office or similar office and a registered agent or
 similar agent at that office, a change in the address of the office
 or in the identity of the agent].
 SECTION 70. Section 19(A), Texas Professional Association
 Act (Article 1528f, Vernon's Texas Civil Statutes), is amended to
 read as follows:
 (A) The original and a copy of the articles of dissolution
 shall be delivered to the Secretary of State, together with a
 certificate from the comptroller stating that all taxes
 administered by the comptroller under Title 2, Tax Code, have been
 paid. If the Secretary of State finds that the articles of
 dissolution conform to law, he shall, when all fees have been paid
 as required by law:
 (1) Endorse on the original and the copy the word
 "Filed," and the month, day, and year of the filing thereof.
 (2) File the original in his office.
 (3) Issue a certificate of dissolution to which he
 shall affix the copy.
 SECTION 71. Section 2.03(a), Texas Revised Limited
 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
 is amended to read as follows:
 (a) A certificate of limited partnership shall be canceled
 by paying the filing fee and filing a certificate of cancellation,
 together with a certificate from the comptroller stating that all
 taxes administered by the comptroller under Title 2, Tax Code, have
 been paid, with the secretary of state:
 (1) on the completion of the winding up of the
 partnership;
 (2) when there are no limited partners; or
 (3) subject to Subsection (c) of this section, on a
 merger or conversion as provided by Subsection (b) of Section 2.11
 of this Act or Subsection (c) of Section 2.15 of this Act.
 SECTION 72. Section 9.06, Texas Revised Limited Partnership
 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
 read as follows:
 Sec. 9.06. CANCELLATION OF REGISTRATION. A foreign limited
 partnership may cancel its registration by paying the application
 fee and filing with the secretary of state a certificate of
 cancellation executed by a general partner, conforming to the
 requirements of Section 2.03 of this Act as if it were a domestic
 limited partnership, together with a certificate from the
 comptroller stating that all taxes administered by the comptroller
 under Title 2, Tax Code, have been paid. A cancellation does not
 terminate the authority of the secretary of state to accept service
 of process on the foreign limited partnership with respect to
 causes of action arising out of the transaction of business in
 Texas.
 SECTION 73. Section 2.006, Business Organizations Code, is
 repealed.
 SECTION 74. This Act takes effect September 1, 2009.