Texas 2017 - 85th Regular

Texas Senate Bill SB1517 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1517
	1	+	By: Hancock S.B. No. 1517
	2	+	(Oliveira)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to partnerships, limited liability companies, and other
6	8		domestic and foreign entities and to series of limited liability
7	9		companies and foreign entities.
8	10		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	11		SECTION 1. Section 1.002(69-b), Business Organizations
10	12		Code, is amended to read as follows:
11	13		(69-b) "Person" means an individual or a corporation,
12	14		partnership, limited liability company, business trust, trust,
13	15		association, or other organization, estate, government or
14	16		governmental subdivision or agency, or other legal entity, or a
15	17		series of a domestic limited liability company or foreign entity.
16	18		SECTION 2. Section 5.053(b), Business Organizations Code,
17	19		is amended to read as follows:
18	20		(b) Subsection (a) does not apply if the other entity or the
19	21		person for whom the name is reserved or registered, as appropriate,
20	22		provides to the secretary of state a notarized written statement of
21	23		the entity's or person's consent to the use of the similar name.
22	24		Sections 4.007 and 4.008 apply to a written consent to the use of a
23	25		similar name under this subsection to the same extent those
24	26		sections apply to filing instruments.
25	27		SECTION 3. The heading to Subchapter F, Chapter 5, Business
26	28		Organizations Code, is amended to read as follows:
27	29		SUBCHAPTER F. SERVICE OF PROCESS ON ENTITY
28	30		SECTION 4. Chapter 5, Business Organizations Code, is
29	31		amended by adding Subchapter F-1 to read as follows:
30	32		SUBCHAPTER F-1. SERVICE OF PROCESS ON SERIES OF LIMITED LIABILITY
31	33		COMPANY OR FOREIGN ENTITY
32	34		Sec. 5.301. APPLICABILITY OF SUBCHAPTER. This subchapter
33	35		applies to service of process, notice, or demand on a series of a
34	36		domestic limited liability company or a series of a foreign entity.
35	37		Sec. 5.302. AGENT FOR SERIES. (a) The registered agent
36	38		designated and maintained by a domestic limited liability company
37	39		or foreign entity under Subchapter E is an agent of each series of
38	40		the company or entity for the purpose of service of process, notice,
39	41		or demand required or permitted by law to be served on a particular
40	42		series of the company or entity.
41	43		(b) A process, notice, or demand required or permitted by
42	44		law to be served on a series of a domestic limited liability company
43	45		or foreign entity that is served on the company's or entity's
44	46		registered agent must include:
45	47		(1) the name of the company or entity; and
46	48		(2) the name of the series on which the process,
47	49		notice, or demand is required or permitted to be served.
48	50		Sec. 5.303. DUTIES OF REGISTERED AGENT. (a) For purposes
49	51		of Section 5.206, on service or receipt of process, notice, or
50	52		demand that complies with the requirements of Section 5.302(b), the
51	53		only duties of the registered agent are to:
52	54		(1) receive or accept, and forward to the represented
53	55		domestic limited liability company or foreign entity at the address
54	56		most recently provided to the registered agent by the represented
55	57		company or entity, the process, notice, or demand that is served on
56	58		or received by the registered agent under Section 5.302(b); or
57	59		(2) otherwise notify the represented company or entity
58	60		at the address described by Subdivision (1) regarding the process,
59	61		notice, or demand that is served on or received by the registered
60	62		agent under Section 5.302(b).
61	63		(b) The registered agent is not required to send a copy of
62	64		the process, notice, or demand directly to the series of the
63	65		represented domestic limited liability company or foreign entity.
64	66		Sec. 5.304. SERVICE ON SECRETARY OF STATE. (a) The
65	67		secretary of state is an agent of a series of a domestic limited
66	68		liability company or foreign entity for purposes of service of
67	69		process, notice, or demand on the series of the company or entity if
68	70		the secretary of state is the agent of the company or entity
69	71		pursuant to Section 5.251.
70	72		(b) The duplicate copies of a process, notice, or demand
71	73		that are delivered to the secretary of state pursuant to Section
72	74		5.252(a) as agent for a series of a domestic limited liability
73	75		company or foreign entity must include:
74	76		(1) the name of the company or entity; and
75	77		(2) the name of the series of the company or entity on
76	78		which the process, notice, or demand is to be served.
77	79		(c) For purposes of Section 5.253, after service on the
78	80		secretary of state in compliance with the requirements of
79	81		Subsection (b), the secretary of state shall send to the domestic
80	82		limited liability company or foreign entity named in the process,
81	83		notice, or demand one of the copies of the process, notice, or
82	84		demand as provided in Section 5.253.
83	85		(d) The secretary of state is not required to send a copy of
84	86		the process, notice, or demand directly to the series of the named
85	87		domestic limited liability company or foreign entity.
86	88		Sec. 5.305. SERVICE ON GOVERNING PERSONS. (a) Each
87	89		governing person of a series of a domestic limited liability
88	90		company as described by Section 101.608 is an agent of the series
89	91		for the purpose of service of process, notice, or demand required or
90	92		permitted by law to be served on the series.
91	93		(b) Each governing person of a series of a foreign entity is
92	94		an agent of the series for the purpose of service of process,
93	95		notice, or demand required or permitted by law to be served on the
94	96		series.
95	97		Sec. 5.306. SERVICE OF PROCESS BY POLITICAL SUBDIVISION.
96	98		(a) For purposes of Section 5.257, a process, notice, or demand
97	99		may be served on a series of a domestic limited liability company by
98	100		delivery of the process, notice, or demand to any governing person
99	101		of the series as described by Section 101.608.
100	102		(b) For purposes of Section 5.257, a process, notice, or
101	103		demand may be served on a series of a foreign entity by delivery of
102	104		the process, notice, or demand to any governing person of the
103	105		series.
104	106		(c) If the governing persons of a series of a domestic
105	107		limited liability company or foreign entity are unknown or cannot
106	108		be found, service on the series of the company or entity may be made
107	109		in the same manner as service is made on unknown shareholders under
108	110		law.
109	111		(d) Notwithstanding any disability or reinstatement of a
110	112		domestic limited liability company or foreign entity, service of
111	113		process under this section is sufficient for a judgment against a
112	114		series of the company or entity or a judgment in rem against any
113	115		property to which a series of the company or entity holds title.
114	116		SECTION 5. Section 9.105, Business Organizations Code, is
115	117		amended to read as follows:
116	118		Sec. 9.105. USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED
117	119		NAME. If the secretary of state determines that a foreign filing
118	120		entity's name or the name under which it is registered to transact
119	121		business in this state is the same as, deceptively similar to, or
120	122		similar to a name of a filing entity or foreign filing entity as
121	123		provided by or reserved or registered under this code, the
122	124		secretary of state may not accept for filing the certificate of
123	125		reinstatement unless the foreign filing entity amends its
124	126		registration to change its name or obtains written consent for the
125	127		use of the similar name. Sections 4.007 and 4.008 apply to a
126	128		written consent for the use of a similar name under this section to
127	129		the same extent those sections apply to filing instruments.
128	130		SECTION 6. Section 11.203, Business Organizations Code, is
129	131		amended to read as follows:
130	132		Sec. 11.203. USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED
131	133		NAME. If the secretary of state determines that a filing entity's
132	134		name contained in a certificate of reinstatement filed under
133	135		Section 11.202 is the same as, deceptively similar to, or similar to
134	136		a name of a filing entity or foreign entity on file as provided by or
135	137		reserved or registered under this code, the secretary of state may
136	138		not accept for filing the certificate of reinstatement unless the
137	139		filing entity contemporaneously amends its certificate of
138	140		formation to change its name or obtains written consent for the use
139	141		of the similar name. Sections 4.007 and 4.008 apply to a written
140	142		consent for the use of a similar name under this section to the same
141	143		extent those sections apply to filing instruments.
142	144		SECTION 7. Section 11.314, Business Organizations Code, is
143	145		amended to read as follows:
144	146		Sec. 11.314. INVOLUNTARY WINDING UP AND TERMINATION OF
145	147		PARTNERSHIP OR LIMITED LIABILITY COMPANY. A district court in the
146	148		county in which the registered office or principal place of
147	149		business in this state of a domestic partnership or limited
148	150		liability company is located has jurisdiction to order the winding
149	151		up and termination of the domestic partnership or limited liability
150	152		company on application by an owner of[:
151	153		[(1) a partner in] the partnership or limited
152	154		liability company if the court determines that:
153	155		(1) [(A)] the economic purpose of the entity
154	156		[partnership] is likely to be unreasonably frustrated; [or]
155	157		(2) [(B)] another owner [partner] has engaged in
156	158		conduct relating to the entity's [partnership's] business that
157	159		makes it not reasonably practicable to carry on the business [in
158	160		partnership] with that owner [partner]; or
159	161		(3) [(2) an owner of the partnership or limited
160	162		liability company if the court determines that] it is not
161	163		reasonably practicable to carry on the entity's business in
162	164		conformity with its governing documents.
163	165		SECTION 8. Section 101.052, Business Organizations Code, is
164	166		amended by adding Subsection (f) to read as follows:
165	167		(f) A company agreement is enforceable by or against the
166	168		limited liability company, regardless of whether the company has
167	169		signed or otherwise expressly adopted the agreement.
168	170		SECTION 9. Section 101.054(a), Business Organizations
169	171		Code, is amended to read as follows:
170	172		(a) Except as provided by this section, the following
171	173		provisions may not be waived or modified in the company agreement of
172	174		a limited liability company:
173	175		(1) this section;
174	176		(2) Section 101.101, 101.151, 101.206, 101.501,
175	177		101.602(b), or 101.613;
176	178		(3) Chapter 1, if the provision is used to interpret a
177	179		provision or define a word or phrase contained in a section listed
178	180		in this subsection;
179	181		(4) Chapter 2, except that Section 2.104(c)(2),
180	182		2.104(c)(3), or 2.113 may be waived or modified in the company
181	183		agreement;
182	184		(5) Chapter 3, except that Subchapters C and E may be
183	185		waived or modified in the company agreement; or
184	186		(6) Chapter 4, 5, [7,] 10, 11, or 12, other than
185	187		Section 11.056.
186	188		SECTION 10. Section 101.305, Business Organizations Code,
187	189		is amended to read as follows:
188	190		Sec. 101.305. MANAGER VACANCY. (a) Subject to Section
189	191		101.306(b), a vacancy in the position of a manager of a limited
190	192		liability company may be filled by:
191	193		(1) the affirmative vote of the majority of the
192	194		remaining managers of the company, without regard to whether the
193	195		remaining managers constitute a quorum; or
194	196		(2) the members [if the vacancy is a result of an
195	197		increase in the number of managers, an election] at a [an annual or
196	198		special] meeting of the company's members called for that purpose.
197	199		(b) A person elected to fill a vacancy in the position of a
198	200		manager serves for the unexpired term, if any, of the person's
199	201		predecessor.
200	202		SECTION 11. Subchapter K, Chapter 101, Business
201	203		Organizations Code, is amended by adding Section 101.503 to read as
202	204		follows:
203	205		Sec. 101.503. PENALTY FOR REFUSAL TO PERMIT EXAMINATION OF
204	206		CERTAIN RECORDS. (a) A limited liability company that refuses to
205	207		allow a member to examine and copy, on written request that complies
206	208		with Section 101.502(a), records or other information described by
207	209		that section is liable to the member for any cost or expense,
208	210		including attorney's fees, incurred in enforcing the member's
209	211		rights under Section 101.502. The liability imposed on a limited
210	212		liability company under this subsection is in addition to any other
211	213		damages or remedy afforded to the member by law.
212	214		(b) It is a defense to an action brought under this section
213	215		that the person suing:
214	216		(1) has improperly used information obtained through a
215	217		prior examination of the records or other information of the
216	218		limited liability company or any other limited liability company,
217	219		under Section 101.502; or
218	220		(2) was not acting in good faith or for a proper
219	221		purpose in making the person's request for examination.
220	222		SECTION 12. Section 101.602, Business Organizations Code,
221	223		is amended by adding Subsection (c) to read as follows:
222	224		(c) Subsection (a) or any provision contained in a limited
223	225		liability company agreement or certificate of formation pursuant to
224	226		Subsection (a) does not restrict:
225	227		(1) a particular series or a limited liability company
226	228		on behalf of a particular series from expressly agreeing in the
227	229		company agreement or other written agreement that any or all of the
228	230		debts, liabilities, obligations, and expenses incurred, contracted
229	231		for, or otherwise existing with respect to the company generally or
230	232		any other series of the company shall be enforceable against the
231	233		assets of that particular series; or
232	234		(2) a limited liability company from expressly
233	235		agreeing in the company agreement or other written agreement that
234	236		any or all of the debts, liabilities, obligations, and expenses
235	237		incurred, contracted for, or otherwise existing with respect to a
236	238		particular series shall be enforceable against the assets of the
237	239		company generally.
238	240		SECTION 13. Section 101.605, Business Organizations Code,
239	241		is amended to read as follows:
240	242		Sec. 101.605. GENERAL POWERS OF SERIES. A series
241	243		established under this subchapter has the power and capacity, in
242	244		the series' own name, to:
243	245		(1) sue and be sued;
244	246		(2) contract;
245	247		(3) acquire, sell, and hold title to assets of the
246	248		series, including real property, personal property, and intangible
247	249		property;
248	250		(4) grant liens and security interests in assets of
249	251		the series;
250	252		(5) be a promoter, organizer, partner, owner, member,
251	253		associate, or manager of an organization; and
252	254		(6) [(5)] exercise any power or privilege as necessary
253	255		or appropriate to the conduct, promotion, or attainment of the
254	256		business, purposes, or activities of the series.
255	257		SECTION 14. Sections 152.212(b) and (c), Business
256	258		Organizations Code, are amended to read as follows:
257	259		(b) A partnership shall keep or make available its books and
258	260		records, if any, at its chief executive office.
259	261		(c) A partnership shall make available or provide access to
260	262		its books and records to a partner or an agent or attorney of a
261	263		partner.
262	264		SECTION 15. Subchapter L, Chapter 153, Business
263	265		Organizations Code, is amended by adding Section 153.5521 to read
264	266		as follows:
265	267		Sec. 153.5521. PENALTY FOR REFUSAL TO PERMIT EXAMINATION OF
266	268		CERTAIN RECORDS. (a) A limited partnership that refuses to allow
267	269		a partner or assignee of a partnership interest to examine and copy,
268	270		on written request that complies with Section 153.552(a), records
269	271		or other information described by that section is liable to the
270	272		partner or assignee for any cost or expense, including attorney's
271	273		fees, incurred in enforcing the partner's or assignee's rights
272	274		under Section 153.552. The liability imposed on a limited
273	275		partnership under this subsection is in addition to any other
274	276		damages or remedy afforded to the partner or assignee by law.
275	277		(b) It is a defense to an action brought under this section
276	278		that the person suing:
277	279		(1) has improperly used information obtained through a
278	280		prior examination of the records or other information of the
279	281		limited partnership or any other limited partnership under Section
280	282		153.552; or
281	283		(2) was not acting in good faith or for a proper
282	284		purpose in making the person's request for examination.
283	285		SECTION 16. Section 154.101(a), Business Organizations
284	286		Code, is amended to read as follows:
285	287		(a) A [written] partnership agreement may establish or
286	288		provide for the future creation of additional classes or groups of
287	289		one or more partners that have certain express relative rights,
288	290		powers, and duties, including voting rights. The future creation
289	291		of additional classes or groups may be expressed in the partnership
290	292		agreement or at the time of creation of the class or group.
291	293		SECTION 17. Section 154.102, Business Organizations Code,
292	294		is amended to read as follows:
293	295		Sec. 154.102. PROVISIONS RELATING TO VOTING. A [written]
294	296		partnership agreement that grants or provides for granting a right
295	297		to vote to a partner may contain a provision relating to:
296	298		(1) giving notice of the time, place, or purpose of a
297	299		meeting at which a matter is to be voted on by the partners;
298	300		(2) waiver of notice;
299	301		(3) action by consent without a meeting;
300	302		(4) the establishment of a record date;
301	303		(5) quorum requirements;
302	304		(6) voting in person or by proxy; or
303	305		(7) other matters relating to the exercise of the
304	306		right to vote.
305	307		SECTION 18. Subchapter B, Chapter 154, Business
306	308		Organizations Code, is amended by adding Section 154.105 to read as
307	309		follows:
308	310		Sec. 154.105. PARTNERSHIP BOUND BY PARTNERSHIP AGREEMENT.
309	311		A partnership agreement is enforceable by or against the
310	312		partnership, regardless of whether the partnership has signed or
311	313		otherwise expressly adopted the agreement.
312	314		SECTION 19. Section 154.103, Business Organizations Code,
313	315		is repealed.
314	316		SECTION 20. This Act takes effect September 1, 2017.
315		-	______________________________ ______________________________
316		-	President of the Senate Speaker of the House
317		-	I hereby certify that S.B. No. 1517 passed the Senate on
318		-	April 19, 2017, by the following vote: Yeas 31, Nays 0.
319		-	______________________________
320		-	Secretary of the Senate
321		-	I hereby certify that S.B. No. 1517 passed the House on
322		-	May 9, 2017, by the following vote: Yeas 145, Nays 0, two present
323		-	not voting.
324		-	______________________________
325		-	Chief Clerk of the House
326		-	Approved:
327		-	______________________________
328		-	Date
329		-	______________________________
330		-	Governor