Texas 2015 - 84th Regular

Texas Senate Bill SB860 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Eltife S.B. No. 860
2		-	(Oliveira, Villalba)
	1	+	S.B. No. 860
3	2
4	3
5		-	A BILL TO BE ENTITLED
6	4		AN ACT
7	5		relating to corporations and fundamental business transactions.
8	6		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	7		SECTION 1. Section 1.002, Business Organizations Code, is
10	8		amended by adding Subdivision (63-a) to read as follows:
11	9		(63-a) "Owner liability" means personal liability for a
12	10		liability or other obligation of an organization that is imposed on
13	11		a person:
14	12		(A) by statute solely because of the person's
15	13		status as an owner or member of the organization; or
16	14		(B) by a governing document of an organization
17	15		under a provision of this code or the law of the organization's
18	16		jurisdiction of formation that authorizes the governing document to
19	17		make one or more specified owners or members of the organization
20	18		liable in their capacity as owners or members for all or specified
21	19		liabilities or other obligations of the organization.
22	20		SECTION 2. Section 3.054, Business Organizations Code, is
23	21		amended to read as follows:
24	22		Sec. 3.054. EXECUTION OF CERTIFICATE OF AMENDMENT OF
25	23		FOR-PROFIT CORPORATION. Except as provided by Title 2 or this
26	24		section, an [An] officer shall sign the certificate of amendment on
27	25		behalf of the for-profit corporation. If shares of the for-profit
28	26		corporation have not been issued and the certificate of amendment
29	27		is adopted by the board of directors, one or more [a majority] of
30	28		the directors may sign the certificate of amendment on behalf of the
31	29		for-profit corporation.
32	30		SECTION 3. Section 3.060(b), Business Organizations Code,
33	31		is amended to read as follows:
34	32		(b) Except as provided by Title 2 or this subsection, an
35	33		[An] officer shall sign the restated certificate of formation on
36	34		behalf of the corporation. If shares of the corporation have not
37	35		been issued and the restated certificate of formation is adopted by
38	36		the board of directors, one or more [the majority] of the directors
39	37		may sign the restated certificate of formation on behalf of the
40	38		corporation.
41	39		SECTION 4. Section 3.201(b), Business Organizations Code,
42	40		is amended to read as follows:
43	41		(b) The ownership interests in a for-profit corporation,
44	42		real estate investment trust, or professional corporation must be
45	43		certificated, except to the extent a [unless the] governing
46	44		document [documents] of the entity or a resolution adopted by the
47	45		governing authority of the entity provides that some or all of the
48	46		classes or series of [states that] the ownership interests are
49	47		uncertificated or that some or all of the ownership interests in any
50	48		class or series of the ownership interests are uncertificated. The
51	49		entity may have outstanding both certificated and uncertificated
52	50		ownership interests of the same class or series. If a domestic
53	51		entity changes the form of its ownership interests from
54	52		certificated to uncertificated, a certificated ownership interest
55	53		subject to the change becomes an uncertificated ownership interest
56	54		only after the certificate is surrendered to the domestic entity.
57	55		SECTION 5. Section 10.001(e), Business Organizations Code,
58	56		is amended to read as follows:
59	57		(e) A domestic entity may not merge under this subchapter if
60	58		an owner or member of that entity that is a party to the merger will,
61	59		as a result of the merger, become subject to owner liability
62	60		[personally liable], without that owner's or member's consent, for
63	61		a liability or other obligation of any other person.
64	62		SECTION 6. Section 10.002, Business Organizations Code, is
65	63		amended by amending Subsection (a) and adding Subsection (d) to
66	64		read as follows:
67	65		(a) A plan of merger must be in writing and must include:
68	66		(1) the name of each organization that is a party to
69	67		the merger;
70	68		(2) the name of each organization that will survive
71	69		the merger;
72	70		(3) the name of each new organization that is to be
73	71		created by the plan of merger;
74	72		(4) a description of the organizational form of each
75	73		organization that is a party to the merger or that is to be created
76	74		by the plan of merger and its jurisdiction of formation;
77	75		(5) the manner and basis, including use of a formula,
78	76		of converting or exchanging any of the ownership or membership
79	77		interests of each organization that is a party to the merger into:
80	78		(A) ownership interests, membership interests,
81	79		obligations, rights to purchase securities, or other securities of
82	80		one or more of the surviving or new organizations;
83	81		(B) cash;
84	82		(C) other property, including ownership
85	83		interests, membership interests, obligations, rights to purchase
86	84		securities, or other securities of any other person or entity; or
87	85		(D) any combination of the items described by
88	86		Paragraphs (A)-(C);
89	87		(6) the identification of any of the ownership or
90	88		membership interests of an organization that is a party to the
91	89		merger that are:
92	90		(A) to be canceled rather than converted or
93	91		exchanged; or
94	92		(B) to remain outstanding rather than converted
95	93		or exchanged if the organization survives the merger;
96	94		(7) the certificate of formation of each new domestic
97	95		filing entity to be created by the plan of merger;
98	96		(8) the governing documents of each new domestic
99	97		nonfiling entity to be created by the plan of merger; and
100	98		(9) the governing documents of each non-code
101	99		organization that:
102	100		(A) is to survive the merger or to be created by
103	101		the plan of merger; and
104	102		(B) is an entity that is not:
105	103		(i) organized under the laws of any state or
106	104		the United States; or
107	105		(ii) required to file its certificate of
108	106		formation or similar document under which the entity is organized
109	107		with the appropriate governmental authority.
110	108		(d) Any of the terms of the plan of merger may be made
111	109		dependent on facts ascertainable outside of the plan if the manner
112	110		in which those facts will operate on the terms of the merger is
113	111		clearly and expressly stated in the plan. In this subsection,
114	112		"facts" includes the occurrence of any event, including a
115	113		determination or action by any person.
116	114		SECTION 7. Section 10.004, Business Organizations Code, is
117	115		amended to read as follows:
118	116		Sec. 10.004. PLAN OF MERGER: PERMISSIVE PROVISIONS. A plan
119	117		of merger may include:
120	118		(1) amendments to, restatements of, or amendments and
121	119		restatements of the governing documents of any surviving
122	120		organization, including a certificate of amendment, a restated
123	121		certificate of formation without amendment, or a restated
124	122		certificate of formation containing amendments;
125	123		(2) provisions relating to an interest exchange,
126	124		including a plan of exchange; and
127	125		(3) any other provisions relating to the merger that
128	126		are not required by this chapter.
129	127		SECTION 8. Section 10.008(a), Business Organizations Code,
130	128		is amended to read as follows:
131	129		(a) When a merger takes effect:
132	130		(1) the separate existence of each domestic entity
133	131		that is a party to the merger, other than a surviving or new
134	132		domestic entity, ceases;
135	133		(2) all rights, title, and interests to all real
136	134		estate and other property owned by each organization that is a party
137	135		to the merger is allocated to and vested, subject to any existing
138	136		liens or other encumbrances on the property, in one or more of the
139	137		surviving or new organizations as provided in the plan of merger
140	138		without:
141	139		(A) reversion or impairment;
142	140		(B) any further act or deed; or
143	141		(C) any transfer or assignment having occurred;
144	142		(3) all liabilities and obligations of each
145	143		organization that is a party to the merger are allocated to one or
146	144		more of the surviving or new organizations in the manner provided by
147	145		the plan of merger;
148	146		(4) each surviving or new domestic organization to
149	147		which a liability or obligation is allocated under the plan of
150	148		merger is the primary obligor for the liability or obligation, and,
151	149		except as otherwise provided by the plan of merger or by law or
152	150		contract, no other party to the merger, other than a surviving
153	151		domestic entity or non-code organization liable or otherwise
154	152		obligated at the time of the merger, and no other new domestic
155	153		entity or non-code organization created under the plan of merger is
156	154		liable for the debt or other obligation;
157	155		(5) any proceeding pending by or against any domestic
158	156		entity or by or against any non-code organization that is a party to
159	157		the merger may be continued as if the merger did not occur, or the
160	158		surviving or new domestic entity or entities or the surviving or new
161	159		non-code organization or non-code organizations to which the
162	160		liability, obligation, asset, or right associated with that
163	161		proceeding is allocated to and vested in under the plan of merger
164	162		may be substituted in the proceeding;
165	163		(6) the governing documents of each surviving domestic
166	164		entity are amended, restated, or amended and restated to the extent
167	165		provided by the plan of merger, and a certificate of amendment, a
168	166		restated certificate of formation without amendment, or a restated
169	167		certificate of formation containing amendments of a surviving
170	168		filing entity shall have the effect stated in Section 3.063;
171	169		(7) each new filing entity whose certificate of
172	170		formation is included in the plan of merger under this chapter, on
173	171		meeting any additional requirements, if any, of this code for its
174	172		formation, is formed as a domestic entity under this code as
175	173		provided by the plan of merger;
176	174		(8) the ownership or membership interests of each
177	175		organization that is a party to the merger and that are to be
178	176		converted or exchanged, in whole or part, into ownership or
179	177		membership interests, obligations, rights to purchase securities,
180	178		or other securities of one or more of the surviving or new
181	179		organizations, into cash or other property, including ownership or
182	180		membership interests, obligations, rights to purchase securities,
183	181		or other securities of any organization, or into any combination of
184	182		these, or that are to be canceled or remain outstanding, are
185	183		converted, exchanged, [or] canceled, or remain outstanding as
186	184		provided in the plan of merger, and the former owners or members who
187	185		held ownership or membership interests of each domestic entity that
188	186		is a party to the merger are entitled only to the rights provided by
189	187		the plan of merger or, if applicable, any rights to receive the fair
190	188		value for the ownership interests provided under Subchapter H; and
191	189		(9) notwithstanding Subdivision (4), the surviving or
192	190		new organization named in the plan of merger as primarily obligated
193	191		to pay the fair value of an ownership or membership interest under
194	192		Section 10.003(2) is the primary obligor for that payment and all
195	193		other surviving or new organizations are secondarily liable for
196	194		that payment.
197	195		SECTION 9. Section 10.051(f), Business Organizations Code,
198	196		is amended to read as follows:
199	197		(f) A plan of exchange may not be effected if any owner or
200	198		member of a domestic entity that is a party to the interest exchange
201	199		will, as a result of the interest exchange, become subject to owner
202	200		liability [personally liable], without the consent of the owner or
203	201		member, for the liabilities or obligations of any other person or
204	202		organization.
205	203		SECTION 10. Section 10.052, Business Organizations Code, is
206	204		amended by amending Subsection (a) and adding Subsection (c) to
207	205		read as follows:
208	206		(a) A plan of exchange must be in writing and must include:
209	207		(1) the name of each domestic entity the ownership or
210	208		membership interests of which are to be acquired;
211	209		(2) the name of each acquiring organization;
212	210		(3) if there is more than one acquiring organization,
213	211		the ownership or membership interests to be acquired by each
214	212		organization;
215	213		(4) the terms and conditions of the exchange; and
216	214		(5) the manner and basis, including use of a formula,
217	215		of exchanging the ownership or membership interests to be acquired
218	216		for:
219	217		(A) ownership or membership interests,
220	218		obligations, rights to purchase securities, or other securities of
221	219		one or more of the acquiring organizations that is a party to the
222	220		plan of exchange;
223	221		(B) cash;
224	222		(C) other property, including ownership or
225	223		membership interests, obligations, rights to purchase securities,
226	224		or other securities of any other person or entity; or
227	225		(D) any combination of those items.
228	226		(c) Any of the terms of the plan of exchange may be made
229	227		dependent on facts ascertainable outside of the plan if the manner
230	228		in which those facts will operate on the terms of the interest
231	229		exchange is clearly and expressly stated in the plan. In this
232	230		subsection, "facts" includes the occurrence of any event, including
233	231		a determination or action by any person.
234	232		SECTION 11. Section 10.101(f), Business Organizations
235	233		Code, is amended to read as follows:
236	234		(f) A domestic entity may not convert under this section if
237	235		an owner or member of the domestic entity, as a result of the
238	236		conversion, becomes subject to owner liability [personally
239	237		liable], without the consent of the owner or member, for a liability
240	238		or other obligation of the converted entity.
241	239		SECTION 12. Section 10.103, Business Organizations Code, is
242	240		amended by amending Subsection (a) and adding Subsection (c) to
243	241		read as follows:
244	242		(a) A plan of conversion must be in writing and must
245	243		include:
246	244		(1) the name of the converting entity;
247	245		(2) the name of the converted entity;
248	246		(3) a statement that the converting entity is
249	247		continuing its existence in the organizational form of the
250	248		converted entity;
251	249		(4) a statement of the type of entity that the
252	250		converted entity is to be and the converted entity's jurisdiction
253	251		of formation;
254	252		(5) if Sections 10.1025 and 10.109 do not apply, the
255	253		manner and basis, including use of a formula, of converting the
256	254		ownership or membership interests of the converting entity into
257	255		ownership or membership interests of the converted entity;
258	256		(6) any certificate of formation required to be filed
259	257		under this code if the converted entity is a filing entity;
260	258		(7) the certificate of formation or similar
261	259		organizational document of the converted entity if the converted
262	260		entity is not a filing entity; and
263	261		(8) if Sections 10.1025 and 10.109 apply, a statement
264	262		that the converting entity is electing to continue its existence in
265	263		its current organizational form and jurisdiction of formation after
266	264		the conversion takes effect.
267	265		(c) Any of the terms of the plan of conversion may be made
268	266		dependent on facts ascertainable outside of the plan if the manner
269	267		in which those facts will operate on the terms of the conversion is
270	268		clearly and expressly stated in the plan. In this subsection,
271	269		"facts" includes the occurrence of any event, including a
272	270		determination or action by any person.
273	271		SECTION 13. Section 10.151, Business Organizations Code, is
274	272		amended by amending Subsection (b) and adding Subsection (d) to
275	273		read as follows:
276	274		(b) If a certificate of merger or exchange is required to be
277	275		filed in connection with an interest exchange or a merger, other
278	276		than a merger under Section 10.006, the certificate must be signed
279	277		on behalf of each domestic entity and non-code organization that is
280	278		a party to the merger or exchange by an officer or other authorized
281	279		representative and must include:
282	280		(1) the plan of merger or exchange or a statement
283	281		certifying:
284	282		(A) the name and organizational form of each
285	283		domestic entity or non-code organization that is a party to the
286	284		merger or exchange;
287	285		(B) for a merger, the name and organizational
288	286		form of each domestic entity or non-code organization that is to be
289	287		created by the plan of merger;
290	288		(C) the name of the jurisdiction in which each
291	289		domestic entity or non-code organization named under Paragraph (A)
292	290		or (B) is incorporated or organized;
293	291		(D) for a merger, the amendments or changes to
294	292		the certificate of formation of any [each] filing entity that is a
295	293		party to the merger, or a statement that amendments or changes are
296	294		being made to the certificate of formation of any filing entity that
297	295		is a party to the merger as set forth in a restated certificate of
298	296		formation containing amendments or a certificate of amendment
299	297		attached to the certificate of merger under Subsection (d) [if no
300	298		amendments are desired to be effected by the merger, a statement to
301	299		that effect];
302	300		(E) for a merger, if no amendments or changes to
303	301		the certificate of formation of a filing entity are made under
304	302		Paragraph (D), a statement to that effect, which may also refer to a
305	303		restated certificate of formation attached to the certificate of
306	304		merger under Subsection (d);
307	305		(F) for a merger, that the certificate of
308	306		formation of each new filing entity to be created under the plan of
309	307		merger is being filed with the certificate of merger;
310	308		(G) [(F)] that a [signed] plan of merger or
311	309		exchange is on file at the principal place of business of each
312	310		surviving, acquiring, or new domestic entity or non-code
313	311		organization, and the address of each principal place of business;
314	312		and
315	313		(H) [(G)] that a copy of the plan of merger or
316	314		exchange will be on written request furnished without cost by each
317	315		surviving, acquiring, or new domestic entity or non-code
318	316		organization to any owner or member of any domestic entity that is a
319	317		party to or created by the plan of merger or exchange and, for a
320	318		merger with multiple surviving domestic entities or non-code
321	319		organizations, to any creditor or obligee of the parties to the
322	320		merger at the time of the merger if a liability or obligation is
323	321		then outstanding;
324	322		(2) if approval of the owners or members of any
325	323		domestic entity that was a party to the plan of merger or exchange
326	324		is not required by this code, a statement to that effect; and
327	325		(3) a statement that the plan of merger or exchange has
328	326		been approved as required by the laws of the jurisdiction of
329	327		formation of each organization that is a party to the merger or
330	328		exchange and by the governing documents of those organizations.
331	329		(d) As provided by Subsections (b)(1)(D) and (E), a
332	330		certificate of merger filed under this section may include as an
333	331		attachment a certificate of amendment, a restated certificate of
334	332		formation without amendment, or a restated certificate of formation
335	333		containing amendments for any filing entity that is a party to the
336	334		merger.
337	335		SECTION 14. Section 10.154(b), Business Organizations
338	336		Code, is amended to read as follows:
339	337		(b) If a certificate of conversion is required to be filed
340	338		in connection with a conversion, the certificate must be signed on
341	339		behalf of the converting entity and must include:
342	340		(1) the plan of conversion or a statement certifying
343	341		the following:
344	342		(A) the name, organizational form, and
345	343		jurisdiction of formation of the converting entity;
346	344		(B) the name, organizational form, and
347	345		jurisdiction of formation of the converted entity;
348	346		(C) that a [signed] plan of conversion is on file
349	347		at the principal place of business of the converting entity, and the
350	348		address of the principal place of business;
351	349		(D) that a [signed] plan of conversion will be on
352	350		file after the conversion at the principal place of business of the
353	351		converted entity, and the address of the principal place of
354	352		business; and
355	353		(E) that a copy of the plan of conversion will be
356	354		on written request furnished without cost by the converting entity
357	355		before the conversion or by the converted entity after the
358	356		conversion to any owner or member of the converting entity or the
359	357		converted entity; and
360	358		(2) a statement that the plan of conversion has been
361	359		approved as required by the laws of the jurisdiction of formation
362	360		and the governing documents of the converting entity.
363	361		SECTION 15. Sections 10.354(a) and (c), Business
364	362		Organizations Code, are amended to read as follows:
365	363		(a) Subject to Subsection (b), an owner of an ownership
366	364		interest in a domestic entity subject to dissenters' rights is
367	365		entitled to:
368	366		(1) dissent from:
369	367		(A) a plan of merger to which the domestic entity
370	368		is a party if owner approval is required by this code and the owner
371	369		owns in the domestic entity an ownership interest that was entitled
372	370		to vote on the plan of merger;
373	371		(B) a sale of all or substantially all of the
374	372		assets of the domestic entity if owner approval is required by this
375	373		code and the owner owns in the domestic entity an ownership interest
376	374		that was entitled to vote on the sale;
377	375		(C) a plan of exchange in which the ownership
378	376		interest of the owner is to be acquired;
379	377		(D) a plan of conversion in which the domestic
380	378		entity is the converting entity if owner approval is required by
381	379		this code and the owner owns in the domestic entity an ownership
382	380		interest that was entitled to vote on the plan of conversion; [or]
383	381		(E) a merger effected under Section 10.006 in
384	382		which:
385	383		(i) the owner is entitled to vote on the
386	384		merger; or
387	385		(ii) the ownership interest of the owner is
388	386		converted or exchanged; or
389	387		(F) a merger effected under Section 21.459(c) in
390	388		which the shares of the shareholders are converted or exchanged;
391	389		and
392	390		(2) subject to compliance with the procedures set
393	391		forth in this subchapter, obtain the fair value of that ownership
394	392		interest through an appraisal.
395	393		(c) Subsection (b) shall not apply either to a domestic
396	394		entity that is a subsidiary with respect to a merger under Section
397	395		10.006 or to a corporation with respect to a merger under Section
398	396		21.459(c).
399	397		SECTION 16. Section 10.355, Business Organizations Code, is
400	398		amended by adding Subsections (b-1) and (f) and amending
401	399		Subsections (c) and (d) to read as follows:
402	400		(b-1) If a corporation effects a merger under Section
403	401		21.459(c), the responsible organization shall notify the
404	402		shareholders of that corporation who have a right to dissent to the
405	403		plan of merger under Section 10.354 of their rights under this
406	404		subchapter not later than the 10th day after the effective date of
407	405		the merger. Notice required under this subsection that is given to
408	406		shareholders before the effective date of the merger may, but is not
409	407		required to, contain a statement of the merger's effective date. If
410	408		the notice is not given to the shareholders until on or after the
411	409		effective date of the merger, the notice must contain a statement of
412	410		the merger's effective date.
413	411		(c) A notice required to be provided under Subsection (a),
414	412		[or] (b), or (b-1) must:
415	413		(1) be accompanied by a copy of this subchapter; and
416	414		(2) advise the owner of the location of the
417	415		responsible organization's principal executive offices to which a
418	416		notice required under Section 10.356(b)(1) or a demand under
419	417		Section 10.356(b)(3), or both, [(3)] may be provided.
420	418		(d) In addition to the requirements prescribed by
421	419		Subsection (c), a notice required to be provided:
422	420		(1) under Subsection (a)(1) must accompany the notice
423	421		of the meeting to consider the action;
424	422		(2) [, and a notice required] under Subsection (a)(2)
425	423		must be provided to:
426	424		(A) [(1)] each owner who consents in writing to
427	425		the action before the owner delivers the written consent; and
428	426		(B) [(2)] each owner who is entitled to vote on
429	427		the action and does not consent in writing to the action before the
430	428		11th day after the date the action takes effect; and
431	429		(3) under Subsection (b-1) must be provided:
432	430		(A) if given before the consummation of the
433	431		tender or exchange offer described by Section 21.459(c)(2), to each
434	432		shareholder to whom that offer is made; or
435	433		(B) if given after the consummation of the tender
436	434		or exchange offer described by Section 21.459(c)(2), to each
437	435		shareholder who did not tender the shareholder's shares in that
438	436		offer.
439	437		(f) If the notice given under Subsection (b-1) did not
440	438		include a statement of the effective date of the merger, the
441	439		responsible organization shall, not later than the 10th day after
442	440		the effective date, give a second notice to the shareholders
443	441		notifying them of the merger's effective date. If the second notice
444	442		is given after the later of the date on which the tender or exchange
445	443		offer described by Section 21.459(c)(2) is consummated or the 20th
446	444		day after the date notice under Subsection (b-1) is given, then the
447	445		second notice is required to be given to only those shareholders who
448	446		have made a demand under Section 10.356(b)(3).
449	447		SECTION 17. Section 10.356(b), Business Organizations
450	448		Code, is amended to read as follows:
451	449		(b) To perfect the owner's rights of dissent and appraisal
452	450		under Section 10.354, an owner:
453	451		(1) if the proposed action is to be submitted to a vote
454	452		of the owners at a meeting, must give to the domestic entity a
455	453		written notice of objection to the action that:
456	454		(A) is addressed to the entity's president and
457	455		secretary;
458	456		(B) states that the owner's right to dissent will
459	457		be exercised if the action takes effect;
460	458		(C) provides an address to which notice of
461	459		effectiveness of the action should be delivered or mailed; and
462	460		(D) is delivered to the entity's principal
463	461		executive offices before the meeting;
464	462		(2) with respect to the ownership interest for which
465	463		the rights of dissent and appraisal are sought:
466	464		(A) must vote against the action if the owner is
467	465		entitled to vote on the action and the action is approved at a
468	466		meeting of the owners; and
469	467		(B) may not consent to the action if the action is
470	468		approved by written consent; and
471	469		(3) must give to the responsible organization a demand
472	470		in writing that:
473	471		(A) is addressed to the president and secretary
474	472		of the responsible organization;
475	473		(B) demands payment of the fair value of the
476	474		ownership interests for which the rights of dissent and appraisal
477	475		are sought;
478	476		(C) provides to the responsible organization an
479	477		address to which a notice relating to the dissent and appraisal
480	478		procedures under this subchapter may be sent;
481	479		(D) states the number and class of the ownership
482	480		interests of the domestic entity owned by the owner and the fair
483	481		value of the ownership interests as estimated by the owner; and
484	482		(E) is delivered to the responsible organization
485	483		at its principal executive offices at the following time:
486	484		(i) not later than the 20th day after the
487	485		date the responsible organization sends to the owner the notice
488	486		required by Section 10.355(e) that the action has taken effect, if
489	487		the action was approved by a vote of the owners at a meeting;
490	488		(ii) not later than the 20th day after the
491	489		date the responsible organization sends to the owner the notice
492	490		required by Section 10.355(d)(2) that the action has taken effect,
493	491		if the action was approved by the written consent of the owners;
494	492		[or]
495	493		(iii) not later than the 20th day after the
496	494		date the responsible organization sends to the owner a notice that
497	495		the merger was effected, if the action is a merger effected under
498	496		Section 10.006; or
499	497		(iv) not later than the 20th day after the
500	498		date the responsible organization gives to the shareholder the
501	499		notice required by Section 10.355(b-1) or the date of the
502	500		consummation of the tender or exchange offer described by Section
503	501		21.459(c)(2), whichever is later, if the action is a merger
504	502		effected under Section 21.459(c).
505	503		SECTION 18. Section 11.001(3), Business Organizations
506	504		Code, is amended to read as follows:
507	505		(3) "Existing claim" with respect to an entity means:
508	506		(A) a claim [against the entity] that existed
509	507		before the entity's termination and is not barred by limitations;
510	508		or
511	509		(B) a contractual obligation incurred after
512	510		termination.
513	511		SECTION 19. Section 20.001, Business Organizations Code, is
514	512		amended to read as follows:
515	513		Sec. 20.001. SIGNATURE REQUIREMENTS FOR FILING INSTRUMENTS
516	514		[REQUIREMENT THAT FILING INSTRUMENT BE SIGNED BY OFFICER].
517	515		(a) Unless otherwise provided by Section 3.054 or 3.060(b) or this
518	516		title, a filing instrument of a corporation must be signed by an
519	517		officer of the corporation.
520	518		(b) A certificate of termination, a certificate of
521	519		reinstatement, a certificate of amendment to cancel an event
522	520		requiring winding up, or a restated certificate of formation that
523	521		contains an amendment to cancel an event requiring winding up may be
524	522		signed by:
525	523		(1) one of the organizers if the winding up, the
526	524		reinstatement, or the cancellation of an event requiring winding up
527	525		was authorized by the organizers under Section 21.502(2) or
528	526		22.302(1)(B); or
529	527		(2) one of the directors if the winding up, the
530	528		reinstatement, or the cancellation of an event requiring winding up
531	529		was authorized by the board of directors under Section 21.502(2) or
532	530		22.302(1)(B).
533	531		SECTION 20. Section 21.052, Business Organizations Code, is
534	532		amended by adding Subsection (d) to read as follows:
535	533		(d) This section does not affect:
536	534		(1) the authority of the shareholders of a corporation
537	535		to consent in writing to the cancellation of an event requiring
538	536		winding up in accordance with Section 21.502(1); or
539	537		(2) the authority of the organizers of a corporation
540	538		to adopt a resolution to cancel an event requiring winding up in
541	539		accordance with Section 21.502(2).
542	540		SECTION 21. Section 21.053, Business Organizations Code, is
543	541		amended by amending Subsection (a) and adding Subsection (c) to
544	542		read as follows:
545	543		(a) If a corporation does not have any issued and
546	544		outstanding shares, or in the case of an amendment under Subsection
547	545		(b) or (c), the board of directors may adopt a proposed amendment to
548	546		the corporation's certificate of formation by resolution without
549	547		shareholder approval.
550	548		(c) Notwithstanding Section 21.054 and except as otherwise
551	549		provided by the certificate of formation, the board of directors of
552	550		a corporation that has outstanding shares may, without shareholder
553	551		approval, adopt an amendment to the corporation's certificate of
554	552		formation to change the word or abbreviation in its corporate name
555	553		as required by Section 5.054(a) to be a different word or
556	554		abbreviation required by that section.
557	555		SECTION 22. Section 21.056(a), Business Organizations
558	556		Code, is amended to read as follows:
559	557		(a) A corporation may adopt a restated certificate of
560	558		formation as provided by Subchapter B, Chapter 3, by following the
561	559		same procedures to amend its certificate of formation under
562	560		Sections 21.052-21.055, except that:
563	561		(1) shareholder approval is not required if an
564	562		amendment is not adopted; and
565	563		(2) the shareholders of a corporation may consent in
566	564		writing, or the organizers of a corporation may adopt a resolution,
567	565		to authorize a restated certificate of formation that contains an
568	566		amendment to cancel an event requiring winding up in accordance
569	567		with Section 21.502(1) or (2).
570	568		SECTION 23. Section 21.102, Business Organizations Code, is
571	569		amended to read as follows:
572	570		Sec. 21.102. TERM OF AGREEMENT. Any limit on the term or
573	571		duration of a shareholders' agreement under this subchapter must be
574	572		set forth in the agreement. A shareholders' agreement under this
575	573		subchapter that was in effect before September 1, 2015, remains in
576	574		effect for 10 years, unless the agreement provides otherwise. [A
577	575		shareholders' agreement under this subchapter is valid for 10
578	576		years, unless the agreement provides otherwise.]
579	577		SECTION 24. Section 21.160, Business Organizations Code, is
580	578		amended by adding Subsection (d) to read as follows:
581	579		(d) The amount of the consideration to be received for
582	580		shares may be determined in accordance with Subsection (a) by the
583	581		approval of a formula to determine that amount.
584	582		SECTION 25. Section 21.371, Business Organizations Code, is
585	583		amended to read as follows:
586	584		Sec. 21.371. PROCEDURES IN BYLAWS RELATING TO PROXIES.
587	585		(a) A corporation may establish in the corporation's bylaws
588	586		procedures consistent with this code for determining the validity
589	587		of proxies and determining whether shares that are held of record by
590	588		a bank, broker, or other nominee are represented at a meeting of
591	589		shareholders. The procedures may incorporate rules of and
592	590		determinations made by a stock exchange or self-regulatory
593	591		organization regulating the corporation or that bank, broker, or
594	592		other nominee.
595	593		(b) The bylaws may contain one or both of the following:
596	594		(1) a provision requiring that, when soliciting
597	595		proxies or consents with respect to an election of directors, the
598	596		corporation include in both its proxy statement and any form of its
599	597		proxy or consent, in addition to individuals nominated by the board
600	598		of directors, one or more individuals nominated by a shareholder,
601	599		subject to any procedures or conditions as may be provided in the
602	600		bylaws; and
603	601		(2) a provision requiring that the corporation
604	602		reimburse expenses incurred by a shareholder in soliciting proxies
605	603		or consents with respect to an election of directors so long as the
606	604		provision does not apply to any election for which the record date
607	605		precedes the adoption of the bylaw provision, but subject to any
608	606		procedures or conditions as may be provided in the bylaws.
609	607		SECTION 26. Section 21.459, Business Organizations Code, is
610	608		amended by adding Subsections (c), (d), and (e) to read as follows:
611	609		(c) This subsection applies only to a corporation that is a
612	610		party to the merger and whose shares are, immediately before the
613	611		date its board of directors approves the plan of merger, either
614	612		listed on a national securities exchange or held of record by at
615	613		least 2,000 shareholders. Unless required by the corporation's
616	614		certificate of formation, a plan of merger is not required to be
617	615		approved by the shareholders of the corporation if:
618	616		(1) the plan of merger expressly:
619	617		(A) permits or requires the merger to be effected
620	618		under this subsection; and
621	619		(B) provides that any merger effected under this
622	620		subsection shall be effected as soon as practicable following the
623	621		consummation of the offer described by Subdivision (2);
624	622		(2) an organization consummates a tender or exchange
625	623		offer for all of the outstanding shares of the corporation on the
626	624		terms provided in the plan of merger that, absent this subsection,
627	625		would be entitled to vote on the approval of the plan of merger,
628	626		except that the offer may exclude shares of the corporation owned at
629	627		the time of the commencement of the offer by:
630	628		(A) the corporation;
631	629		(B) the organization making the offer;
632	630		(C) any person who owns, directly or indirectly,
633	631		all of the ownership interests in the organization making the
634	632		offer; or
635	633		(D) any direct or indirect wholly owned
636	634		subsidiary of a person described by Paragraph (A), (B), or (C);
637	635		(3) shares that are irrevocably accepted for purchase
638	636		or exchange pursuant to the consummation of the offer described by
639	637		Subdivision (2) and that are received by the depository before the
640	638		expiration of the offer in addition to the shares that are otherwise
641	639		owned by the consummating organization equal at least the
642	640		percentage of the shares, and of each class or series of those
643	641		shares, of the corporation that, absent this subsection, would be
644	642		required to approve the plan of merger by:
645	643		(A) Section 21.457 and, if applicable, Section
646	644		21.458; and
647	645		(B) the certificate of formation of the
648	646		corporation;
649	647		(4) the organization consummating the offer described
650	648		by Subdivision (2) merges with or into the corporation pursuant to
651	649		the plan of merger; and
652	650		(5) each outstanding share of each class or series of
653	651		the corporation that is the subject of and not irrevocably accepted
654	652		for purchase or exchange in the offer described by Subdivision (2)
655	653		is to be converted or exchanged in the merger into, or into the
656	654		right to receive, the same amount and kind of consideration, as
657	655		described by Section 10.002(a)(5), as to be paid or delivered for
658	656		shares of such class or series of the corporation irrevocably
659	657		accepted for purchase or exchange in the offer.
660	658		(d) In Subsection (c) and this subsection and, as
661	659		applicable, in Sections 10.355(d)(3)(B), 10.355(f), and
662	660		10.356(b)(3)(E)(iv):
663	661		(1) "Consummates," "consummation," or "consummating"
664	662		means irrevocably accepts for purchase or exchange shares tendered
665	663		pursuant to a tender or exchange offer.
666	664		(2) "Depository" means an agent appointed to
667	665		facilitate consummation of the offer described by Subsection
668	666		(c)(2).
669	667		(e) For purposes of Subsection (c)(3), "received," with
670	668		respect to shares, means:
671	669		(1) physical receipt of a certificate representing
672	670		shares, in the case of certificated shares; and
673	671		(2) transfer into the depository's account or an
674	672		agent's message being received by the depository, in the case of
675	673		uncertificated shares.
676	674		SECTION 27. Section 22.109(a), Business Organizations
677	675		Code, is amended to read as follows:
678	676		(a) A [The board of directors of a] corporation may adopt a
679	677		restated certificate of formation as provided by Subchapter B,
680	678		Chapter 3, by following the same procedure to amend its [the
681	679		corporation's] certificate of formation provided by Sections
682	680		22.104-22.107, except that:
683	681		(1) member approval is required only if the restated
684	682		certificate of formation contains an amendment; and
685	683		(2) the members may consent in writing, or the
686	684		organizers of a corporation may adopt a resolution, to authorize a
687	685		restated certificate of formation that contains an amendment to
688	686		cancel an event requiring winding up in accordance with Section
689	687		22.302(1)(B) or 22.302(2), as applicable.
690	688		SECTION 28. Section 22.164, Business Organizations Code, is
691	689		amended by amending Subsection (b) and adding Subsection (d) to
692	690		read as follows:
693	691		(b) Except as otherwise provided by Subsection (c) or (d) or
694	692		the certificate of formation in accordance with Section 22.162, the
695	693		vote required for approval of a fundamental action is:
696	694		(1) at least two-thirds of the votes that members
697	695		present in person or by proxy are entitled to cast at the meeting at
698	696		which the action is submitted for a vote, if the corporation has
699	697		members with voting rights;
700	698		(2) at least two-thirds of the votes of members
701	699		present at the meeting at which the action is submitted for a vote,
702	700		if the management of the affairs of the corporation is vested in the
703	701		corporation's members under Section 22.202; or
704	702		(3) the affirmative vote of the majority of the
705	703		directors in office, if the corporation has no members or has no
706	704		members with voting rights.
707	705		(d) If the corporation has no members or has no members with
708	706		voting rights and the corporation does not hold any assets and has
709	707		not solicited any assets or otherwise engaged in activities, the
710	708		vote required for approval of a fundamental action consisting of an
711	709		amendment to the certificate of formation to cancel an event
712	710		requiring winding up or any of the actions described by Subsections
713	711		(a)(2) through (a)(6) is the affirmative vote of a majority of the
714	712		organizers or a majority of the directors in office.
715	713		SECTION 29. Section 22.302, Business Organizations Code, is
716	714		amended to read as follows:
717	715		Sec. 22.302. CERTAIN PROCEDURES FOR APPROVAL. To approve a
718	716		voluntary winding up, a reinstatement, a cancellation of an event
719	717		requiring winding up, a revocation of a voluntary decision to wind
720	718		up, or a distribution plan, a corporation must follow the following
721	719		procedures:
722	720		(1) if the corporation has no members or has no members
723	721		with voting rights and the corporation:
724	722		(A) holds any assets or has solicited any assets
725	723		or otherwise engaged in activities, the corporation's board of
726	724		directors must adopt a resolution to wind up, to reinstate, to
727	725		cancel the event requiring winding up, to revoke a voluntary
728	726		decision to wind up, or to effect the distribution plan by the vote
729	727		of directors required by Section 22.164(b)(3) [22.164]; or
730	728		(B) does not hold any assets and has not
731	729		solicited any assets or otherwise engaged in activities, a majority
732	730		of the organizers or the board of directors of the corporation must
733	731		adopt a resolution to wind up, to reinstate, to cancel an event
734	732		requiring winding up, to revoke a voluntary decision to wind up, or
735	733		to effect the distribution plan by the vote required by Section
736	734		22.164(d);
737	735		(2) if the management of the affairs of the
738	736		corporation is vested in the corporation's members under Section
739	737		22.202, the winding up, reinstatement, cancellation of event
740	738		requiring winding up, revocation of voluntary decision to wind up,
741	739		or distribution plan:
742	740		(A) must be submitted to a vote at an annual,
743	741		regular, or special meeting of members; and
744	742		(B) must be approved by the members by the vote
745	743		required by Section 22.164(b)(2) [22.164]; or
746	744		(3) if the corporation has members with voting rights:
747	745		(A) the corporation's board of directors must
748	746		approve a resolution:
749	747		(i) recommending the winding up,
750	748		reinstatement, cancellation of event requiring winding up,
751	749		revocation of a voluntary decision to wind up, or distribution
752	750		plan; and
753	751		(ii) directing that the winding up,
754	752		reinstatement, cancellation of event requiring winding up,
755	753		revocation of a voluntary decision to wind up, or distribution plan
756	754		of the corporation be submitted to a vote at an annual or special
757	755		meeting of members; and
758	756		(B) the members must approve the action described
759	757		by Paragraph (A) in accordance with Section 22.303.
760	758		SECTION 30. Chapter 21, Business Organizations Code, is
761	759		amended by adding Subchapter R to read as follows:
762	760		SUBCHAPTER R. RATIFICATION OF DEFECTIVE CORPORATE ACTS OR SHARES;
763	761		PROCEEDINGS
764	762		Sec. 21.901. DEFINITIONS. In this subchapter:
765	763		(1) "Corporate statute," with respect to an action or
766	764		filing, means this code, the former Texas Business Corporation Act,
767	765		or any predecessor statute of this state that governed the action or
768	766		the filing.
769	767		(2) "Defective corporate act" means:
770	768		(A) an overissue;
771	769		(B) an election or appointment of directors that
772	770		is void or voidable due to a failure of authorization; or
773	771		(C) any act or transaction purportedly taken by
774	772		or on behalf of the corporation that is, and at the time the act or
775	773		transaction was purportedly taken would have been, within the power
776	774		of a corporation to take under the corporate statute, but is void or
777	775		voidable due to a failure of authorization.
778	776		(3) "District court" means a district court in:
779	777		(A) the county in which the corporation's
780	778		principal office in this state is located; or
781	779		(B) the county in which the corporation's
782	780		registered office in this state is located, if the corporation does
783	781		not have a principal office in this state.
784	782		(4) "Failure of authorization" means the failure to
785	783		authorize or effect an act or transaction in compliance with the
786	784		provisions of the corporate statute, the governing documents of the
787	785		corporation, or any plan or agreement to which the corporation is a
788	786		party, if and to the extent the failure would render the act or
789	787		transaction void or voidable.
790	788		(5) "Overissue" means the purported issuance of:
791	789		(A) shares of a class or series in excess of the
792	790		number of shares of that class or series that the corporation has
793	791		the power to issue under the corporate statute at the time of
794	792		issuance; or
795	793		(B) shares of any class or series that are not at
796	794		the time authorized for issuance by the governing documents of the
797	795		corporation.
798	796		(6) "Putative shares" means the shares of any class or
799	797		series of the corporation, including shares issued on exercise of
800	798		options, rights, warrants, or other securities convertible into
801	799		shares of the corporation, or interests with respect to the shares
802	800		that were created or issued pursuant to a defective corporate act,
803	801		that:
804	802		(A) would constitute valid shares, if not for a
805	803		failure of authorization; or
806	804		(B) cannot be determined by the board of
807	805		directors to be valid shares.
808	806		(7) "Time of the defective corporate act" means the
809	807		date and time the defective corporate act was purported to have been
810	808		taken.
811	809		(8) "Validation effective time" or "effective time of
812	810		the validation," with respect to any defective corporate act
813	811		ratified under this subchapter, means the later of:
814	812		(A) the time at which the resolution submitted to
815	813		the shareholders for adoption under Section 21.905 is adopted by
816	814		the shareholders or, if no shareholder approval is required for
817	815		adoption, the time at which the notice required by Section 21.911 is
818	816		given; or
819	817		(B) the time at which any certificate of
820	818		validation filed under Section 21.908 takes effect in accordance
821	819		with Chapter 4.
822	820		(9) "Valid shares" means the shares of any class or
823	821		series of the corporation that have been authorized and validly
824	822		issued in accordance with the corporate statute.
825	823		Sec. 21.902. RATIFICATION OF DEFECTIVE CORPORATE ACT AND
826	824		PUTATIVE SHARES. Subject to Section 21.909 or 21.910, a defective
827	825		corporate act or putative shares are not void or voidable solely as
828	826		a result of a failure of authorization if the act or shares are:
829	827		(1) ratified in accordance with this subchapter; or
830	828		(2) validated by the district court in a proceeding
831	829		brought under Section 21.914.
832	830		Sec. 21.903. RATIFICATION OF DEFECTIVE CORPORATE ACT;
833	831		ADOPTION OF RESOLUTION. (a) To ratify a defective corporate act,
834	832		the board of directors of the corporation shall adopt a resolution
835	833		stating:
836	834		(1) the defective corporate act to be ratified;
837	835		(2) the time of the defective corporate act;
838	836		(3) if the defective corporate act involved the
839	837		issuance of putative shares, the number and type of putative shares
840	838		issued and the date or dates on which the putative shares were
841	839		purportedly issued;
842	840		(4) the nature of the failure of authorization with
843	841		respect to the defective corporate act to be ratified; and
844	842		(5) that the board of directors approves the
845	843		ratification of the defective corporate act.
846	844		(b) The resolution may also state that, notwithstanding the
847	845		adoption of the resolution by the shareholders, the board of
848	846		directors may, at any time before the validation effective time,
849	847		abandon the resolution without further shareholder action.
850	848		Sec. 21.904. QUORUM AND VOTING REQUIREMENTS FOR ADOPTION OF
851	849		RESOLUTION. (a) The quorum and voting requirements applicable to
852	850		the adoption of a resolution under Section 21.903 are the same as
853	851		the quorum and voting requirements applicable at the time of the
854	852		adoption of a resolution for the type of defective corporate act
855	853		proposed to be ratified.
856	854		(b) Notwithstanding Subsection (a) and except as provided
857	855		by Subsection (c), if in order for a quorum to be present or to
858	856		approve the defective corporate act, the presence or approval of a
859	857		larger number or portion of directors or of specified directors
860	858		would have been required by the governing documents of the
861	859		corporation, any plan or agreement to which the corporation was a
862	860		party, or any provision of the corporate statute, each as in effect
863	861		at the time of the defective corporate act, then the presence or
864	862		approval of the larger number or portion of such directors or of
865	863		such specified directors must be required for a quorum to be present
866	864		or to adopt the resolution, as applicable.
867	865		(c) The presence or approval of any director elected,
868	866		appointed, or nominated by holders of any class or series of which
869	867		no shares are then outstanding, or by any person that is no longer a
870	868		shareholder, shall not be required for a quorum to be present or to
871	869		adopt the resolution.
872	870		Sec. 21.905. SHAREHOLDER ADOPTION OF RESOLUTION REQUIRED.
873	871		The resolution adopted under Section 21.903 must be submitted to
874	872		shareholders for adoption as provided by Sections 21.906 and
875	873		21.907, unless:
876	874		(1) no other provision of the corporate statute, no
877	875		provision of the corporation's governing documents, and no
878	876		provision of any plan or agreement to which the corporation is a
879	877		party would have required shareholder approval of the defective
880	878		corporate act to be ratified, either at the time of the act or at the
881	879		time when the resolution required by Section 21.903 is adopted; and
882	880		(2) the defective corporate act to be ratified did not
883	881		result from a failure to comply with Subchapter M.
884	882		Sec. 21.906. NOTICE REQUIREMENTS FOR RESOLUTION SUBMITTED
885	883		FOR SHAREHOLDER APPROVAL. (a) If Section 21.905 requires that the
886	884		resolution be submitted to the shareholders for approval, notice of
887	885		the time, place, if any, and purpose of the meeting shall be given
888	886		at least 20 days before the date of the meeting to each holder of
889	887		valid shares and putative shares, whether voting or nonvoting, at
890	888		the address of the holder as it appears or most recently appeared,
891	889		as appropriate, on the corporation's records.
892	890		(b) Notice under this section shall be given to each holder
893	891		of record of valid shares and putative shares, regardless of
894	892		whether the shares are voting or nonvoting, as of the time of the
895	893		defective corporate act, except that notice is not required to be
896	894		given to a holder whose identity or address cannot be ascertained
897	895		from the corporation's records.
898	896		(c) The notice must contain:
899	897		(1) a copy of the resolution; and
900	898		(2) a statement that the following must be brought not
901	899		later than the 120th day of the validation effective time:
902	900		(A) any claim that the defective corporate act or
903	901		putative shares ratified under this subchapter are void or voidable
904	902		due to the identified failure of authorization; or
905	903		(B) any claim that the district court, in its
906	904		discretion, should declare that a ratification made in accordance
907	905		with this subchapter not take effect or that it take effect only on
908	906		certain conditions.
909	907		Sec. 21.907. SHAREHOLDER MEETING; QUORUM AND VOTING.
910	908		(a) At the shareholder meeting, the quorum and voting requirements
911	909		applicable to the adoption of the resolution under Section 21.905
912	910		shall be the same as the quorum and voting requirements applicable
913	911		at the time of such adoption by the shareholders for the type of
914	912		defective corporate act to be ratified, except as provided by this
915	913		section.
916	914		(b) If the presence or approval of a larger number or
917	915		portion of shares or of any class or series of shares or of
918	916		specified shareholders would have been required for a quorum to be
919	917		present or to approve the defective corporate act, as applicable,
920	918		by the corporation's governing documents, any plan or agreement to
921	919		which the corporation was a party, or any provision of the corporate
922	920		statute, each as in effect at the time of the defective corporate
923	921		act, then the presence or approval of the larger number or portion
924	922		of shares or of the class or series of shares or of such specified
925	923		shareholders shall be required for a quorum to be present or to
926	924		adopt the resolution, as applicable, except that the presence or
927	925		approval of shares of any class or series of which no shares are
928	926		then outstanding, or of any person that is no longer a shareholder,
929	927		shall not be required.
930	928		(c) The adoption of a resolution to ratify the election of a
931	929		director requires the affirmative vote of the majority of shares
932	930		present at the meeting and entitled to vote on the election of the
933	931		director, unless the governing documents of the corporation then in
934	932		effect or in effect at the time of the defective election require or
935	933		required a larger number or portion of shares to elect the director,
936	934		in which case the affirmative vote of the larger number or portion
937	935		of shares is required to ratify the election of the director.
938	936		(d) If a failure of authorization results from the failure
939	937		to comply with Subchapter M, the ratification of the defective
940	938		corporate act requires the vote set forth by Section 21.606(2),
941	939		regardless of whether that vote would have otherwise been required.
942	940		Sec. 21.908. CERTIFICATE OF VALIDATION. (a) If the
943	941		defective corporate act ratified under this subchapter would have
944	942		required under any other provision of the corporate statute the
945	943		filing of a filing instrument or other document with the filing
946	944		officer, the corporation, instead of filing the filing instrument
947	945		or other document otherwise required by this code, shall file a
948	946		certificate of validation in accordance with Chapter 4, regardless
949	947		of whether a filing instrument or other document was previously
950	948		filed with respect to the defective corporate act.
951	949		(b) The certificate of validation must set forth:
952	950		(1) a copy of the resolution adopted in accordance
953	951		with Sections 21.903 and 21.904, the date of adoption of the
954	952		resolution by the board of directors and, if applicable, the date of
955	953		adoption by the shareholders, and a statement that the resolution
956	954		was adopted in accordance with this subchapter;
957	955		(2) if a filing instrument or document was previously
958	956		filed with a filing officer under the corporate statute in respect
959	957		of the defective corporate act, the title and date of filing of the
960	958		prior filing instrument or document and any articles or certificate
961	959		of correction to the filing instrument; and
962	960		(3) the provisions that would be required under any
963	961		other section of this code to be included in the filing instrument
964	962		that otherwise would have been required to be filed with respect to
965	963		the defective corporate act under this code.
966	964		Sec. 21.909. ADOPTION OF RESOLUTION; EFFECT ON DEFECTIVE
967	965		CORPORATE ACT. On or after the validation effective time, unless
968	966		determined otherwise in an action brought under Section 21.914,
969	967		each defective corporate act set forth in the resolution adopted
970	968		under Sections 21.903 and 21.904 may not be considered void or
971	969		voidable as a result of a failure of authorization identified in the
972	970		resolution, and the effect shall be retroactive to the time of the
973	971		defective corporate act.
974	972		Sec. 21.910. ADOPTION OF RESOLUTION; EFFECT ON PUTATIVE
975	973		SHARES. On or after the validation effective time, unless
976	974		determined otherwise in an action brought under Section 21.914,
977	975		each putative share or fraction of a putative share issued or
978	976		purportedly issued pursuant to the defective corporate act and
979	977		identified in the resolution adopted under Sections 21.903 and
980	978		21.904 may not be considered void or voidable as a result of a
981	979		failure of authorization identified in the resolution and, in the
982	980		absence of any failure of authorization not ratified, is considered
983	981		to be an identical share or fraction of a share outstanding as of
984	982		the time it was purportedly issued.
985	983		Sec. 21.911. NOTICE TO SHAREHOLDERS FOLLOWING ADOPTION OF
986	984		RESOLUTION. (a) Notice of the adoption of a resolution under this
987	985		subchapter shall be given promptly to:
988	986		(1) each holder of valid shares and putative shares,
989	987		regardless of whether the shares are voting or nonvoting, as of the
990	988		date the board of directors adopted the resolution; or
991	989		(2) each holder of valid shares and putative shares,
992	990		regardless of whether the shares are voting or nonvoting, as of a
993	991		date not later than the 60th day after the date on which the
994	992		resolution is adopted, as established by the board of directors.
995	993		(b) Notice under this section shall be sent to the address
996	994		of a holder of shares described by Subsection (a)(1) or (a)(2) as
997	995		the address appears or most recently appeared, as appropriate, on
998	996		the records of the corporation.
999	997		(c) Notice under this section shall also be given to each
1000	998		holder of record of valid shares and putative shares, regardless of
1001	999		whether the shares are voting or nonvoting, as of the time of the
1002	1000		defective corporate act, except that notice is not required to be
1003	1001		given to a holder whose identity or address cannot be ascertained
1004	1002		from the corporation's records.
1005	1003		(d) The notice must contain:
1006	1004		(1) a copy of the resolution; and
1007	1005		(2) a statement that the following must be brought not
1008	1006		later than the 120th day of the validation effective time:
1009	1007		(A) any claim that the defective corporate act or
1010	1008		putative shares ratified under this subchapter are void or voidable
1011	1009		due to the identified failure of authorization; or
1012	1010		(B) any claim that the district court, in its
1013	1011		discretion, should declare that a ratification made in accordance
1014	1012		with this subchapter not take effect or that it take effect only on
1015	1013		certain conditions.
1016	1014		(e) Notwithstanding Subsections (a)-(d), notice is not
1017	1015		required to be given under this section if notice of the resolution
1018	1016		is given in accordance with Section 21.906.
1019	1017		(f) For purposes of Section 21.906 and this section, notice
1020	1018		to holders of putative shares and notice to holders of valid shares
1021	1019		and putative shares as of the time of the defective corporate act
1022	1020		shall be treated as notice to holders of valid shares for purposes
1023	1021		of Sections 6.051, 6.052, 6.053, 21.353, and 21.3531.
1024	1022		Sec. 21.912. VALID SHARES OR PUTATIVE SHARES. In the
1025	1023		absence of actual fraud in the transaction, the judgment of the
1026	1024		board of directors of a corporation that shares of the corporation
1027	1025		are valid shares or putative shares is conclusive, unless otherwise
1028	1026		determined by the district court in a proceeding brought under
1029	1027		Section 21.914.
1030	1028		Sec. 21.913. RATIFICATION PROCEDURES OR COURT PROCEEDINGS
1031	1029		CONCERNING VALIDATION NOT EXCLUSIVE. (a) Ratification of an act
1032	1030		or transaction under this subchapter or validation of an act or
1033	1031		transaction as provided by Sections 21.914 through 21.917 is not
1034	1032		the exclusive means of ratifying or validating any act or
1035	1033		transaction taken by or on behalf of the corporation, including any
1036	1034		defective corporate act or any issuance of putative shares or other
1037	1035		shares.
1038	1036		(b) The absence or failure of ratification of an act or
1039	1037		transaction in accordance with this subchapter or of validation of
1040	1038		an act or transaction as provided by Sections 21.914 through 21.917
1041	1039		does not, of itself, affect the validity or effectiveness of any act
1042	1040		or transaction or the issuance of any shares properly ratified
1043	1041		under common law or otherwise, nor does it create a presumption that
1044	1042		any such act or transaction is or was a defective corporate act or
1045	1043		that those shares are void or voidable.
1046	1044		Sec. 21.914. PROCEEDING REGARDING VALIDITY OF DEFECTIVE
1047	1045		CORPORATE ACTS AND SHARES. (a) The following may bring an action
1048	1046		under this section:
1049	1047		(1) the corporation;
1050	1048		(2) any successor entity to the corporation;
1051	1049		(3) any member of the corporation's board of
1052	1050		directors;
1053	1051		(4) any record or beneficial holder of valid shares or
1054	1052		putative shares of the corporation;
1055	1053		(5) any record or beneficial holder of valid shares or
1056	1054		putative shares as of the time a defective corporate act was
1057	1055		ratified in accordance with this subchapter; or
1058	1056		(6) any other person claiming to be substantially and
1059	1057		adversely affected by a ratification under this subchapter.
1060	1058		(b) Subject to Section 21.917, the district court, on
1061	1059		application by a person described by Subsection (a), may:
1062	1060		(1) determine the validity and effectiveness of any
1063	1061		defective corporate act ratified in accordance with this
1064	1062		subchapter;
1065	1063		(2) determine the validity and effectiveness of the
1066	1064		ratification of any defective corporate act in accordance with this
1067	1065		subchapter;
1068	1066		(3) determine the validity and effectiveness of:
1069	1067		(A) any defective corporate act not ratified
1070	1068		under this subchapter; or
1071	1069		(B) any defective corporate act not ratified
1072	1070		effectively under this subchapter;
1073	1071		(4) determine the validity of any corporate act or
1074	1072		transaction and of any shares, rights, or options to acquire
1075	1073		shares; and
1076	1074		(5) modify or waive any of the procedures set forth in
1077	1075		Sections 21.901 through 21.913 to ratify a defective corporate act.
1078	1076		(c) In connection with an action brought under this section,
1079	1077		the district court may:
1080	1078		(1) declare that a ratification in accordance with and
1081	1079		pursuant to this subchapter is not effective or that the
1082	1080		ratification is effective only at a time or on conditions as
1083	1081		specified by the district court;
1084	1082		(2) validate and declare effective any defective
1085	1083		corporate act or putative shares and impose conditions on such a
1086	1084		validation;
1087	1085		(3) require measures to remedy or avoid harm to any
1088	1086		person substantially and adversely affected by a ratification under
1089	1087		this subchapter or from any order of the district court pursuant to
1090	1088		this section, excluding any harm that would have resulted had the
1091	1089		defective corporate act been valid when approved or effectuated;
1092	1090		(4) order the filing officer to accept for filing an
1093	1091		instrument with an effective date and time as specified by the
1094	1092		court, which may be before or subsequent to the time of the order;
1095	1093		(5) approve share records for the corporation that
1096	1094		include any shares ratified in accordance with this subchapter or
1097	1095		validated in accordance with this section and Sections 21.915
1098	1096		through 21.917;
1099	1097		(6) declare that putative shares are valid shares or
1100	1098		require a corporation to issue and deliver valid shares in place of
1101	1099		any putative shares;
1102	1100		(7) order that a meeting of holders of valid shares or
1103	1101		putative shares be held and determine the right and power of persons
1104	1102		to vote at the meeting;
1105	1103		(8) declare that a defective corporate act validated
1106	1104		by the court is effective as of the time of the defective corporate
1107	1105		act or at such other time as determined by the court;
1108	1106		(9) declare that putative shares validated by the
1109	1107		district court are considered to be an identical valid share or a
1110	1108		fraction of a valid share as of the time the shares were originally
1111	1109		or purportedly issued or at such other time as determined by the
1112	1110		district court; and
1113	1111		(10) make any other order regarding such matters as
1114	1112		the court considers appropriate under the circumstances.
1115	1113		(d) In connection with the resolution of matters under
1116	1114		Subsections (b) and (c), the district court may consider:
1117	1115		(1) whether the defective corporate act was originally
1118	1116		approved or effectuated with the belief that the approval or
1119	1117		effectuation was in compliance with the provisions of the corporate
1120	1118		statute or the governing documents of the corporation;
1121	1119		(2) whether the corporation and the corporation's
1122	1120		board of directors have treated the defective corporate act as a
1123	1121		valid act or transaction and whether any person has acted in
1124	1122		reliance on the public record that the defective corporate act was
1125	1123		valid;
1126	1124		(3) whether any person will be or was harmed by the
1127	1125		ratification or validation of the defective corporate act,
1128	1126		excluding any harm that would have resulted had the defective
1129	1127		corporate act been valid when it was approved or took effect;
1130	1128		(4) whether any person will be harmed by the failure to
1131	1129		ratify or validate the defective corporate act; and
1132	1130		(5) any other factors or considerations the district
1133	1131		court considers just and equitable.
1134	1132		Sec. 21.915. EXCLUSIVE JURISDICTION. The district court
1135	1133		has exclusive jurisdiction to hear and determine any action brought
1136	1134		under Section 21.914.
1137	1135		Sec. 21.916. SERVICE. (a) Service of an application filed
1138	1136		under Section 21.914 on the registered agent of a corporation or in
1139	1137		any other manner permitted by applicable law is considered to be
1140	1138		service on the corporation, and no other party need be joined in
1141	1139		order for the district court to adjudicate the matter.
1142	1140		(b) If an action is brought by a corporation under Section
1143	1141		21.914, the district court may require that notice of the action be
1144	1142		provided to other persons identified by the court and permit those
1145	1143		other persons to intervene in the action.
1146	1144		Sec. 21.917. STATUTE OF LIMITATIONS. (a) This section
1147	1145		does not apply to:
1148	1146		(1) an action asserting that a ratification was not
1149	1147		accomplished in accordance with this subchapter; or
1150	1148		(2) any person to whom notice of the ratification was
1151	1149		not given as required by Sections 21.906 and 21.911.
1152	1150		(b) Notwithstanding any other provision of this subchapter,
1153	1151		the following may not be brought after the expiration of the 120th
1154	1152		day of the validation effective time:
1155	1153		(1) an action asserting that a defective corporate act
1156	1154		or putative shares ratified in accordance with this subchapter are
1157	1155		void or voidable due to a failure of authorization identified in the
1158	1156		resolution adopted in accordance with Section 21.903; or
1159	1157		(2) an action asserting that the district court, in
1160	1158		its discretion, should declare that a ratification in accordance
1161	1159		with this subchapter not take effect or that the ratification take
1162	1160		effect only on certain conditions.
1163	1161		SECTION 31. This Act takes effect September 1, 2015.
	1162	+	______________________________ ______________________________
	1163	+	President of the Senate Speaker of the House
	1164	+	I hereby certify that S.B. No. 860 passed the Senate on
	1165	+	April 9, 2015, by the following vote: Yeas 31, Nays 0.
	1166	+	______________________________
	1167	+	Secretary of the Senate
	1168	+	I hereby certify that S.B. No. 860 passed the House on
	1169	+	May 4, 2015, by the following vote: Yeas 135, Nays 0, two present
	1170	+	not voting.
	1171	+	______________________________
	1172	+	Chief Clerk of the House
	1173	+	Approved:
	1174	+	______________________________
	1175	+	Date
	1176	+	______________________________
	1177	+	Governor