84R14900 CLG-F
By: Oliveira, Villalba H.B. No. 2142
Substitute the following for H.B. No. 2142:
By: Simmons C.S.H.B. No. 2142
A BILL TO BE ENTITLED
AN ACT
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 law 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 [An] officer shall sign the certificate of amendment on
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 [a majority] of
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
[An] officer shall sign the restated certificate of formation on
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 [the majority] of the directors
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, except to the extent a [unless the] governing
document [documents] of the entity or a resolution adopted by the
governing authority of the entity provides that some or all of the
classes or series of [states that] the ownership interests are
uncertificated or that some or all of the ownership interests in any
class or series of the ownership interests are uncertificated. The
entity may have outstanding both 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
[personally liable], without that owner's or member's consent, for
a liability or other obligation of any other person.
SECTION 6. Section 10.002, Business Organizations Code, is
amended by amending Subsection (a) and adding Subsection (d) 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.
(d) Any of the terms of the plan of merger may be made
dependent on facts ascertainable outside of the plan if the manner
in which those facts will operate on the terms of the merger is
clearly and expressly stated in the plan. In this subsection,
"facts" includes the occurrence of any event, including a
determination or action by any person.
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, [or] canceled, or remain outstanding as
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 [personally liable], without the consent of the owner or
member, for the liabilities or obligations of any other person or
organization.
SECTION 10. Section 10.052, Business Organizations Code, is
amended by amending Subsection (a) and adding Subsection (c) 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.
(c) Any of the terms of the plan of exchange may be made
dependent on facts ascertainable outside of the plan if the manner
in which those facts will operate on the terms of the interest
exchange is clearly and expressly stated in the plan. In this
subsection, "facts" includes the occurrence of any event, including
a determination or action by any person.
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 [personally
liable], without the consent of the owner or member, for a liability
or other obligation of the converted entity.
SECTION 12. Section 10.103, Business Organizations Code, is
amended by amending Subsection (a) and adding Subsection (c) 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.
(c) Any of the terms of the plan of conversion may be made
dependent on facts ascertainable outside of the plan if the manner
in which those facts will operate on the terms of the conversion is
clearly and expressly stated in the plan. In this subsection,
"facts" includes the occurrence of any event, including a
determination or action by any person.
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 [each] filing entity that is a
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) [if no
amendments are desired to be effected by the merger, a statement to
that effect];
(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 also refer 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) [(F)] that a [signed] plan of merger or
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) [(G)] that a copy of the plan of merger or
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 [signed] plan of conversion is on file
at the principal place of business of the converting entity, and the
address of the principal place of business;
(D) that a [signed] plan of conversion will be on
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; [or]
(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 notify the
shareholders of that corporation who have a right to dissent to the
plan of merger under Section 10.354 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 statement of the merger's effective 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 statement of
the merger's effective date.
(c) A notice required to be provided under Subsection (a),
[or] (b), or (b-1) must:
(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, [(3)] may be provided.
(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) [, and a notice required] under Subsection (a)(2)
must be provided to:
(A) [(1)] each owner who consents in writing to
the action before the owner delivers the written consent; and
(B) [(2)] each owner who is entitled to vote on
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 statement of the effective date of the merger, the
responsible organization shall, not later than the 10th day after
the effective 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;
[or]
(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 [against the entity] that existed
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
[REQUIREMENT THAT FILING INSTRUMENT BE SIGNED BY OFFICER]. (a)
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) 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(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. [A
shareholders' agreement under this subchapter is valid for 10
years, unless the agreement provides otherwise.]
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) 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,
subject to any procedures or conditions as may be provided in the
bylaws; and
(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, but subject to any
procedures or conditions as may be provided in the bylaws.
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 to approve the plan of merger by:
(A) Section 21.457 and, if applicable, Section
21.458; and
(B) the certificate of formation of the
corporation;
(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 [The board of directors of a] corporation may adopt a
restated certificate of formation as provided by Subchapter B,
Chapter 3, by following the same procedure to amend its [the
corporation's] certificate of formation provided by Sections
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), as applicable.
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 does not hold any assets and has
not solicited any assets or otherwise engaged in 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) holds any assets or has solicited any assets
or otherwise engaged in 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) [22.164]; or
(B) does not hold any assets and has not
solicited any assets or otherwise engaged in 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(b)(2) [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 may, at any time before the validation effective time,
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, the presence or approval of a
larger number or portion of directors or of specified directors
would have been required by the governing documents of the
corporation, any plan or agreement to which the corporation was a
party, or any provision of the corporate statute, each as in effect
at the time of the defective corporate act, then the presence or
approval of the larger number or portion of such directors or of
such specified directors must be required for a quorum to be present
or to adopt the 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, shall not be required for a quorum to be present or to
adopt the resolution.
Sec. 21.905. SHAREHOLDER ADOPTION 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 have required 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 presence or approval of a larger number or
portion of shares or of any class or series of shares or of
specified shareholders would have been required for a quorum to be
present or to approve the defective corporate act, as applicable,
by the corporation's governing documents, any plan or agreement to
which the corporation was a party, or any provision of the corporate
statute, each as in effect at the time of the defective corporate
act, then the presence or approval of the larger number or portion
of shares or of the class or series of shares or of such specified
shareholders shall be required for a quorum to be present or to
adopt the resolution, as applicable, except that the presence or
approval of shares of any class or series of which no shares are
then outstanding, or of any person that is no longer a shareholder,
shall 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 requires 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, the date of
adoption 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 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, 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; or
(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 is not
the exclusive means of ratifying or validating any act or
transaction taken by or on behalf of the corporation, including any
defective corporate act or any issuance of putative shares or other
shares.
(b) The absence or failure of ratification of an act or
transaction in accordance with this subchapter or of validation of
an act or transaction as provided by Sections 21.914 through 21.917
does not, of itself, affect the validity or effectiveness of any act
or transaction or the issuance of any shares properly ratified
under common law or otherwise, nor does it create a presumption that
any such act or transaction is or was a defective corporate act or
that those shares are 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 is 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 it was 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 Section
21.914, 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.