Texas 2017 - 85th Regular

Texas Senate Bill SB1518 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1518
	1	+	By: Hancock S.B. No. 1518
	2	+	(Oliveira)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to corporations, associations, real estate investment
6	8		trusts, and related entities; authorizing fees.
7	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	10		SECTION 1. Section 4.152, Business Organizations Code, is
9	11		amended to read as follows:
10	12		Sec. 4.152. FILING FEES: FOR-PROFIT CORPORATIONS. For a
11	13		filing by or for a for-profit corporation, the secretary of state
12	14		shall impose the following fees:
13	15		(1) for filing a certificate of formation, $300;
14	16		(2) for filing a certificate of amendment, $150;
15	17		(3) for filing an application of a foreign corporation
16	18		for registration to transact business in this state, $750;
17	19		(4) for filing an application of a foreign corporation
18	20		for an amended registration to transact business in this state,
19	21		$150;
20	22		(5) for filing a restated certificate of formation and
21	23		accompanying statement, $300;
22	24		(6) for filing a statement of change of registered
23	25		office, registered agent, or both, $15;
24	26		(7) for filing a statement of change of name or address
25	27		of a registered agent, $15, except that the maximum fee for
26	28		simultaneous filings by a registered agent for more than one
27	29		corporation may not exceed $750;
28	30		(8) for filing a statement of resolution establishing
29	31		one or more series of shares, $15;
30	32		(9) for filing a certificate of termination, $40;
31	33		(10) for filing a certificate of withdrawal of a
32	34		foreign corporation, $15;
33	35		(11) for filing a certificate from the home state of a
34	36		foreign corporation that the corporation no longer exists in that
35	37		state, $15;
36	38		(12) for filing a bylaw or agreement restricting
37	39		transfer of shares or securities other than as an amendment to the
38	40		certificate of formation, $15;
39	41		(13) for filing an application for reinstatement of a
40	42		certificate of formation or registration as a foreign corporation
41	43		following forfeiture under the Tax Code, $75;
42	44		(14) for filing an application for reinstatement of a
43	45		corporation or registration as a foreign corporation after
44	46		involuntary termination or revocation, $75; [and]
45	47		(15) for filing a certificate of validation, $15, plus
46	48		the filing fee imposed for filing each new filing instrument that is
47	49		attached as an exhibit to the certificate of validation under
48	50		Section 21.908(b)(3)(C); and
49	51		(16) for filing any instrument as provided by this
50	52		code for which this section does not expressly provide a fee, $15.
51	53		SECTION 2. Section 4.159, Business Organizations Code, is
52	54		amended to read as follows:
53	55		Sec. 4.159. FILING FEES: NONPROFIT ASSOCIATIONS. For a
54	56		filing by or for a nonprofit association, the secretary of state
55	57		shall impose the following fees:
56	58		(1) for filing a statement appointing an agent to
57	59		receive service of process, $25;
58	60		(2) for filing an amendment of a statement appointing
59	61		an agent, $5; [and]
60	62		(3) for filing a cancellation of a statement
61	63		appointing an agent, $5;
62	64		(4) for filing a certificate of merger or conversion,
63	65		regardless of whether the surviving or new nonprofit organization
64	66		is a domestic or foreign entity, $50; and
65	67		(5) for filing any instrument of a nonprofit
66	68		association as provided by this code for which this section does not
67	69		expressly provide a fee, $5.
68	70		SECTION 3. Subchapter D, Chapter 6, Business Organizations
69	71		Code, is amended by adding Section 6.157 to read as follows:
70	72		Sec. 6.157. VOTING OF JOINTLY HELD OWNERSHIP INTERESTS.
71	73		(a) In this section, "jointly held ownership interest" means:
72	74		(1) an ownership interest that is held of record in the
73	75		names of two or more persons, whether fiduciaries, joint tenants,
74	76		tenants in common, or otherwise; or
75	77		(2) an ownership interest for which two or more
76	78		persons have the right to vote the interest under Section 6.154.
77	79		(b) A jointly held ownership interest may be voted by:
78	80		(1) for a jointly held ownership interest as defined
79	81		by Subsection (a)(1), any one of the record owners; or
80	82		(2) for a jointly held ownership interest as defined
81	83		by Subsection (a)(2), any one of the persons having the right to
82	84		vote the interest, as described by Section 6.154.
83	85		(c) If a jointly held ownership interest is voted by more
84	86		than one person as described by Subsection (b), the act of a
85	87		majority of the persons voting binds all of the record owners or
86	88		persons having the right to vote the interest.
87	89		(d) If a jointly held ownership interest is voted by more
88	90		than one person as described by Subsection (b), and the votes of the
89	91		persons are evenly split on any particular matter, each faction may
90	92		vote the interest proportionately.
91	93		(e) Subsection (b), (c), or (d) does not apply if the
92	94		secretary or other person tabulating votes on the entity's behalf
93	95		has a good faith belief, based on written information the person
94	96		received regarding rights or obligations with respect to voting the
95	97		jointly held ownership interest, that reliance on Subsection (b),
96	98		(c), or (d), as applicable, is unwarranted.
97	99		SECTION 4. Section 10.010, Business Organizations Code, is
98	100		amended to read as follows:
99	101		Sec. 10.010. SPECIAL PROVISIONS APPLYING TO NONPROFIT
100	102		CORPORATION AND NONPROFIT ASSOCIATION MERGERS. (a) A domestic
101	103		nonprofit corporation or nonprofit association may not merge into
102	104		another entity if the domestic nonprofit corporation or nonprofit
103	105		association would, because of the merger, lose or impair its
104	106		charitable status.
105	107		(b) One or more domestic or foreign for-profit entities or
106	108		non-code organizations may merge into one or more domestic
107	109		nonprofit corporations or nonprofit associations that continue as
108	110		the surviving entity or entities.
109	111		(c) A domestic nonprofit corporation or nonprofit
110	112		association may not merge with a foreign for-profit entity if the
111	113		domestic nonprofit corporation or nonprofit association does not
112	114		continue as the surviving entity.
113	115		(d) One or more domestic nonprofit corporations or
114	116		nonprofit associations and non-code organizations may merge into
115	117		one or more foreign nonprofit entities that continue as the
116	118		surviving entity or entities.
117	119		SECTION 5. Section 10.108, Business Organizations Code, is
118	120		amended to read as follows:
119	121		Sec. 10.108. SPECIAL PROVISIONS APPLYING TO NONPROFIT
120	122		CORPORATION AND NONPROFIT ASSOCIATION CONVERSIONS. A domestic
121	123		nonprofit corporation or nonprofit association may not convert into
122	124		a for-profit entity.
123	125		SECTION 6. Section 21.157, Business Organizations Code, is
124	126		amended by adding Subsection (d) to read as follows:
125	127		(d) The authorization by the board of directors for the
126	128		issuance of shares may provide that any shares to be issued under
127	129		the authorization may be issued:
128	130		(1) in one or more transactions in the numbers and at
129	131		the times as stated in or determined by the authorization; or
130	132		(2) in the manner stated in the authorization, which
131	133		may include a determination or action by any person or persons,
132	134		including the corporation, if the authorization states:
133	135		(A) the maximum number of shares that may be
134	136		issued under the authorization;
135	137		(B) the period during which the shares may be
136	138		issued; and
137	139		(C) the minimum amount of consideration for which
138	140		the shares may be issued.
139	141		SECTION 7. Section 21.160(d), Business Organizations Code,
140	142		is amended to read as follows:
141	143		(d) The amount of the consideration to be received for
142	144		shares may be determined in accordance with Subsection (a) by the
143	145		approval of a minimum amount of consideration or a formula to
144	146		determine that amount. The formula may include or be made dependent
145	147		on facts ascertainable outside the formula, if the manner in which
146	148		those facts operate on the formula is clearly or expressly set forth
147	149		in the formula or in the authorization approving the formula.
148	150		SECTION 8. Section 21.168(c), Business Organizations Code,
149	151		is amended to read as follows:
150	152		(c) Subject to the certificate of formation, a right or
151	153		option described by this section must state the terms on which, the
152	154		time within which, and any consideration, including a formula by
153	155		which the consideration may be determined, for which the shares may
154	156		be purchased or received from the corporation on the exercise of the
155	157		right or option. A formula by which the consideration may be
156	158		determined may include or be made dependent on facts ascertainable
157	159		outside the formula, if the manner in which those facts operate on
158	160		the formula is clearly or expressly set forth in the formula or in
159	161		the authorization approving the formula.
160	162		SECTION 9. Section 21.218(b), Business Organizations Code,
161	163		is amended to read as follows:
162	164		(b) On [Subject to the governing documents and on] written
163	165		demand stating a proper purpose, a holder of shares of a corporation
164	166		for at least six months immediately preceding the holder's demand,
165	167		or a holder of at least five percent of all of the outstanding
166	168		shares of a corporation, is entitled to examine and copy, at a
167	169		reasonable time, the corporation's [relevant] books, records of
168	170		account, minutes, and share transfer records relating to the stated
169	171		purpose. The examination may be conducted in person or through an
170	172		agent, accountant, or attorney.
171	173		SECTION 10. Section 21.302, Business Organizations Code, is
172	174		amended to read as follows:
173	175		Sec. 21.302. AUTHORITY FOR DISTRIBUTIONS. (a) The board
174	176		of directors of a corporation may authorize a distribution and the
175	177		corporation may make a distribution, subject to Section 21.303.
176	178		(b) The board of directors may authorize a distribution by
177	179		determining the maximum amount that may be distributed and the
178	180		period during which the maximum amount may be distributed,
179	181		including by setting a formula to determine the amount to be
180	182		distributed. The authorization by the board of directors for a
181	183		distribution may provide that the distribution be paid:
182	184		(1) in the amounts and at the times as stated in the
183	185		authorization; or
184	186		(2) in the manner stated in the authorization, which
185	187		may include a determination or action by any person or persons,
186	188		including the corporation, if the authorization states the maximum
187	189		amount that may be distributed under the authorization and the
188	190		period during which the maximum amount may be distributed.
189	191		SECTION 11. Section 21.414, Business Organizations Code, is
190	192		amended to read as follows:
191	193		Sec. 21.414. DISSENT TO OR ABSTENTION FROM ACTION. (a) A
192	194		director of a corporation who is present at a meeting of the board
193	195		of directors at which action has been taken is presumed to have
194	196		assented to the action taken unless:
195	197		(1) the director's dissent or abstention has been
196	198		entered in the minutes of the meeting;
197	199		(2) the director has filed a written dissent or
198	200		abstention with respect to the action with the person acting as the
199	201		secretary of the meeting before the meeting is adjourned; or
200	202		(3) the director has sent [a written dissent by
201	203		registered mail] to the secretary of the corporation, within a
202	204		reasonable time [immediately] after the meeting has been adjourned,
203	205		a written dissent or abstention by:
204	206		(A) certified or registered mail, return receipt
205	207		requested; or
206	208		(B) other means specified in the corporation's
207	209		governing documents.
208	210		(b) A director who voted in favor of an action may not
209	211		dissent or abstain with respect to the action.
210	212		SECTION 12. Section 21.458(a), Business Organizations
211	213		Code, is amended to read as follows:
212	214		(a) Separate voting by a class or series of shares of a
213	215		corporation is required for approval of a plan of merger or
214	216		conversion if:
215	217		(1) that class or series of shares is, under the plan
216	218		of merger or conversion, to be converted into or exchanged for other
217	219		securities, interests, obligations, rights to acquire shares,
218	220		interests, or other securities, cash, property, or any combination
219	221		of the items described by this subdivision;
220	222		(2) the plan of merger or conversion contains a
221	223		provision that would require approval by that class or series of
222	224		shares under Section 21.364 if the provision was contained in a
223	225		proposed amendment to the corporation's certificate of formation;
224	226		or
225	227		(3) [(2)] that class or series of shares is entitled
226	228		under the certificate of formation to vote as a class or series on
227	229		the plan of merger or conversion.
228	230		SECTION 13. Section 21.607, Business Organizations Code, is
229	231		amended to read as follows:
230	232		Sec. 21.607. APPLICATION OF MORATORIUM. Section 21.606
231	233		does not apply to:
232	234		(1) a business combination of an issuing public
233	235		corporation if:
234	236		(A) the original articles of incorporation or
235	237		certificate of formation, as applicable, or the original bylaws of
236	238		the corporation contain a provision expressly electing not to be
237	239		governed by this subchapter;
238	240		(B) before December 31, 1997, the corporation
239	241		adopted an amendment to the articles of incorporation or bylaws of
240	242		the corporation expressly electing not to be governed by this
241	243		subchapter; or
242	244		(C) after December 31, 1997, the corporation
243	245		adopts an amendment to the articles of incorporation or certificate
244	246		of formation, as applicable, or the bylaws of the corporation,
245	247		approved by the affirmative vote of the holders, other than an
246	248		affiliated shareholder or an affiliate or associate of the
247	249		affiliated shareholder, of at least two-thirds of the outstanding
248	250		voting shares of the issuing public corporation, expressly electing
249	251		not to be governed by this subchapter, except that the amendment to
250	252		the articles of incorporation or certificate of formation, as
251	253		applicable, or the bylaws takes effect 18 months after the date of
252	254		the vote and does not apply to a business combination of the issuing
253	255		public corporation with an affiliated shareholder whose share
254	256		acquisition date is on or before the effective date of the
255	257		amendment;
256	258		(2) a business combination of an issuing public
257	259		corporation with an affiliated shareholder who became an affiliated
258	260		shareholder inadvertently, if the affiliated shareholder:
259	261		(A) as soon as practicable divests itself of a
260	262		sufficient number of the voting shares of the issuing public
261	263		corporation so that the affiliated shareholder no longer is the
262	264		beneficial owner, directly or indirectly, of 20 percent or more of
263	265		the outstanding voting shares of the issuing public corporation;
264	266		and
265	267		(B) would not at any time within the three-year
266	268		period preceding the announcement date of the business combination
267	269		have been an affiliated shareholder except for the inadvertent
268	270		acquisition;
269	271		(3) a business combination with an affiliated
270	272		shareholder who was the beneficial owner of 20 percent or more of
271	273		the outstanding voting shares of the issuing public corporation on
272	274		December 31, 1996, and continuously until the announcement date of
273	275		the business combination;
274	276		(4) a business combination with an affiliated
275	277		shareholder who became an affiliated shareholder through a transfer
276	278		of shares of the issuing public corporation by will or intestate
277	279		succession and continuously was an affiliated shareholder until the
278	280		announcement date of the business combination; or
279	281		(5) a business combination of an issuing public
280	282		corporation with a domestic wholly owned subsidiary if the domestic
281	283		subsidiary is not an affiliate or associate of the affiliated
282	284		shareholder for a reason other than the affiliated shareholder's
283	285		beneficial ownership of voting shares in the issuing public
284	286		corporation.
285	287		SECTION 14. Section 21.729(c), Business Organizations
286	288		Code, is amended to read as follows:
287	289		(c) The dissent of a shareholder may be proven by:
288	290		(1) an entry in the minutes of the meeting of
289	291		shareholders;
290	292		(2) a written dissent filed with the secretary of the
291	293		meeting before the adjournment of the meeting;
292	294		(3) a written dissent that is sent [by registered
293	295		mail] to the secretary of the close corporation:
294	296		(A) promptly after the meeting or after a written
295	297		consent was obtained from the other shareholders; and
296	298		(B) by certified or registered mail, return
297	299		receipt requested, or by other means specified in the corporation's
298	300		governing documents; or
299	301		(4) any other means reasonably evidencing the dissent.
300	302		SECTION 15. Sections 21.901(4), (5), and (8), Business
301	303		Organizations Code, are amended to read as follows:
302	304		(4) "Failure of authorization" means:
303	305		(A) the failure to authorize or effect an act or
304	306		transaction in compliance with the provisions of the corporate
305	307		statute, the governing documents of the corporation, or any plan or
306	308		agreement to which the corporation is a party, if and to the extent
307	309		the failure would render the act or transaction void or voidable; or
308	310		(B) the failure of the board of directors or an
309	311		officer of the corporation to authorize or approve an act or
310	312		transaction taken by or on behalf of the corporation that required
311	313		the prior authorization or approval of the board of directors or the
312	314		officer.
313	315		(5) "Overissue" means the purported issuance of:
314	316		(A) shares of a class or series in excess of the
315	317		number of shares of that class or series that the corporation has
316	318		the power to issue under the governing documents of the corporation
317	319		and the corporate statute at the time of issuance; or
318	320		(B) shares of any class or series that are not at
319	321		the time of issuance authorized for issuance by the governing
320	322		documents of the corporation.
321	323		(8) "Validation effective time" or "effective time of
322	324		the validation," with respect to any defective corporate act
323	325		ratified under this subchapter, means the latest [later] of:
324	326		(A) the time at which the defective corporate act
325	327		[resolution] submitted to the shareholders for approval [adoption]
326	328		under Section 21.905 is approved [adopted] by the shareholders or,
327	329		if no shareholder approval is required [for adoption], the time at
328	330		which the board of directors adopts the resolutions [notice]
329	331		required by Section 21.903 [21.911 is given]; [or]
330	332		(B) if a certificate of validation is not
331	333		required to be filed under Section 21.908, the time, if any,
332	334		specified by the board of directors in the resolutions adopted
333	335		under Section 21.903, which may not precede the time at which the
334	336		resolutions are adopted; or
335	337		(C) the time at which any certificate of
336	338		validation filed under Section 21.908 takes effect in accordance
337	339		with Chapter 4.
338	340		SECTION 16. Section 21.903, Business Organizations Code, is
339	341		amended to read as follows:
340	342		Sec. 21.903. RATIFICATION OF DEFECTIVE CORPORATE ACT;
341	343		ADOPTION OF RESOLUTIONS [RESOLUTION]. (a) To ratify one or more
342	344		[a] defective corporate acts [act], the board of directors of the
343	345		corporation shall adopt resolutions [a resolution] stating:
344	346		(1) the defective corporate act or acts to be
345	347		ratified;
346	348		(2) the date [time] of each [the] defective corporate
347	349		act;
348	350		(3) if the defective corporate act or acts involved
349	351		the issuance of putative shares, the number and type of putative
350	352		shares issued and the date or dates on which the putative shares
351	353		were purportedly issued;
352	354		(4) the nature of the failure of authorization with
353	355		respect to each [the] defective corporate act to be ratified; and
354	356		(5) that the board of directors approves the
355	357		ratification of the defective corporate act or acts.
356	358		(b) A [The] resolution may also state that, notwithstanding
357	359		shareholder approval of the ratification of a defective corporate
358	360		act that is a subject of the resolution [the adoption of the
359	361		resolution by the shareholders], the board of directors may, with
360	362		respect to the defective corporate act [at any time before the
361	363		validation effective time], abandon the ratification of the
362	364		defective corporate act at any time before the validation effective
363	365		time [resolution] without further shareholder action.
364	366		SECTION 17. Section 21.904, Business Organizations Code, is
365	367		amended to read as follows:
366	368		Sec. 21.904. QUORUM AND VOTING REQUIREMENTS FOR ADOPTION OF
367	369		RESOLUTIONS [RESOLUTION]. (a) The quorum and voting requirements
368	370		applicable to the adoption of the resolutions to ratify a defective
369	371		corporate act [a resolution] under Section 21.903 are the same as
370	372		the quorum and voting requirements applicable at the time of the
371	373		adoption of the resolutions [a resolution] for the type of
372	374		defective corporate act proposed to be ratified.
373	375		(b) Notwithstanding Subsection (a) and except as provided
374	376		by Subsection (c), if in order for a quorum to be present or to
375	377		approve the defective corporate act, the presence or approval of a
376	378		larger number or portion of directors or of specified directors
377	379		would have been required by the governing documents of the
378	380		corporation, any plan or agreement to which the corporation was a
379	381		party, or any provision of the corporate statute, each as in effect
380	382		at the time of the defective corporate act, then the presence or
381	383		approval of the larger number or portion of such directors or of
382	384		such specified directors must be required for a quorum to be present
383	385		or to adopt the resolutions to ratify the defective corporate act
384	386		[resolution], as applicable.
385	387		(c) The presence or approval of any director elected,
386	388		appointed, or nominated by holders of any class or series of which
387	389		no shares are then outstanding, or by any person that is no longer a
388	390		shareholder, shall not be required for a quorum to be present or to
389	391		adopt the resolutions [resolution].
390	392		SECTION 18. Section 21.905, Business Organizations Code, is
391	393		amended to read as follows:
392	394		Sec. 21.905. SHAREHOLDER APPROVAL [ADOPTION] OF RATIFIED
393	395		DEFECTIVE CORPORATE ACT [RESOLUTION] REQUIRED; EXCEPTION. Each
394	396		defective corporate act ratified [The resolution adopted] under
395	397		Section 21.903 must be submitted to shareholders for approval
396	398		[adoption] as provided by Sections 21.906 and 21.907, unless:
397	399		(1) no other provision of the corporate statute, no
398	400		provision of the corporation's governing documents, and no
399	401		provision of any plan or agreement to which the corporation is a
400	402		party would have required shareholder approval of:
401	403		(A) the defective corporate act to be ratified[,
402	404		either] at the time of that defective corporate [the] act; or
403	405		(B) the type of defective corporate act to be
404	406		ratified at the time the board of directors adopts the resolutions
405	407		ratifying that defective corporate act under [when the resolution
406	408		required by] Section 21.903 [is adopted]; and
407	409		(2) the defective corporate act to be ratified did not
408	410		result from a failure to comply with Subchapter M.
409	411		SECTION 19. Section 21.906, Business Organizations Code, is
410	412		amended to read as follows:
411	413		Sec. 21.906. NOTICE REQUIREMENTS FOR RATIFIED DEFECTIVE
412	414		CORPORATE ACT [RESOLUTION] SUBMITTED FOR SHAREHOLDER APPROVAL.
413	415		(a) If the ratification of a defective corporate act is required
414	416		to be submitted to the shareholders for approval under Section
415	417		21.905 [requires that the resolution be submitted to the
416	418		shareholders for approval], notice of the time, place, if any, and
417	419		purpose of the meeting shall be given at least 20 days before the
418	420		date of the meeting to:
419	421		(1) each holder of record, as of the record date of the
420	422		meeting, of valid shares and putative shares, regardless of whether
421	423		the shares are voting or nonvoting, at the address of the holder as
422	424		it appears or most recently appeared, as appropriate, on the
423	425		corporation's records; and
424	426		(2) [.
425	427		[(b) Notice under this section shall be given to] each
426	428		holder of record of valid shares and putative shares, regardless of
427	429		whether the shares are voting or nonvoting, as of the time of the
428	430		defective corporate act, except that notice is not required to be
429	431		given to a holder whose identity or address cannot be ascertained
430	432		from the corporation's records.
431	433		(b) [(c)] The notice must contain:
432	434		(1) copies [a copy] of the resolutions adopted by the
433	435		board of directors under Section 21.903 or the information required
434	436		by Sections 21.903(a)(1)-(5) [resolution]; and
435	437		(2) a statement that, on shareholder approval of the
436	438		ratification of the defective corporate act or putative shares made
437	439		in accordance with this subchapter, the holder's rights to
438	440		challenge the defective corporate act or putative shares are
439	441		limited to an action claiming [the following must be brought not
440	442		later than the 120th day of the validation effective time:
441	443		[(A) any claim that the defective corporate act
442	444		or putative shares ratified under this subchapter are void or
443	445		voidable due to the identified failure of authorization; or
444	446		[(B) any claim] that a [the district] court of
445	447		appropriate jurisdiction, in its discretion, should declare:
446	448		(A) that the [a] ratification [made in accordance
447	449		with this subchapter] not take effect or that it take effect only on
448	450		certain conditions, if that action is filed with the court not later
449	451		than the 120th day after the applicable validation effective time;
450	452		or
451	453		(B) that the ratification was not accomplished in
452	454		accordance with this subchapter.
453	455		SECTION 20. Section 21.907, Business Organizations Code, is
454	456		amended to read as follows:
455	457		Sec. 21.907. SHAREHOLDER MEETING; QUORUM AND VOTING.
456	458		(a) At the shareholder meeting, the quorum and voting requirements
457	459		applicable to the approval of the ratification [adoption] of a
458	460		defective corporate act [the resolution] under Section 21.905 are
459	461		[shall be] the same as the quorum and voting requirements
460	462		applicable at the time of the approval [such adoption] by the
461	463		shareholders of the ratification for the type of ratified defective
462	464		corporate act proposed to be approved [ratified], except as
463	465		provided by this section.
464	466		(b) If the presence or approval of a larger number or
465	467		portion of shares or of any class or series of shares or of
466	468		specified shareholders would have been required for a quorum to be
467	469		present or to approve the defective corporate act, as applicable,
468	470		by the corporation's governing documents, any plan or agreement to
469	471		which the corporation was a party, or any provision of the corporate
470	472		statute, each as in effect at the time of the defective corporate
471	473		act, then the presence or approval of the larger number or portion
472	474		of shares or of the class or series of shares or of such specified
473	475		shareholders shall be required for a quorum to be present or to
474	476		approve the ratification of the defective corporate act [adopt the
475	477		resolution], as applicable, except that the presence or approval of
476	478		shares of any class or series of which no shares are then
477	479		outstanding, or of any person that is no longer a shareholder, is
478	480		[shall] not [be] required.
479	481		(c) The approval by the shareholders of the ratification of
480	482		[adoption of a resolution to ratify] the election of a director
481	483		requires the affirmative vote of the majority of shares present at
482	484		the meeting and entitled to vote on the election of the director at
483	485		the time of the approval, unless the governing documents of the
484	486		corporation then in effect or in effect at the time of the defective
485	487		election require or required a larger number or portion of shares or
486	488		of any class or series of shares or of specified shareholders to
487	489		elect the director, in which case the affirmative vote of the larger
488	490		number or portion of shares or of the class or series of shares or of
489	491		the specified shareholders is required to ratify the election of
490	492		the director, except that the presence or approval of shares of any
491	493		class or series of which no shares are then outstanding, or of any
492	494		person that is no longer a shareholder, is not required.
493	495		(d) If a failure of authorization results from the failure
494	496		to comply with Subchapter M, the approval of the ratification of the
495	497		defective corporate act requires the vote set forth by Section
496	498		21.606(2), regardless of whether that vote would have otherwise
497	499		been required.
498	500		(e) Putative shares on the record date for determining
499	501		shareholders entitled to vote on any matter submitted to
500	502		shareholders under Section 21.905 are not entitled to be counted
501	503		for voting or quorum purposes in any vote to approve the
502	504		ratification of any defective corporate act, regardless of any
503	505		ratification that becomes effective after the record date.
504	506		SECTION 21. Section 21.908, Business Organizations Code, is
505	507		amended to read as follows:
506	508		Sec. 21.908. CERTIFICATE OF VALIDATION. (a) If a [the]
507	509		defective corporate act ratified under this subchapter would have
508	510		required under any other provision of the corporate statute the
509	511		filing of a filing instrument or other document with the filing
510	512		officer, the corporation[, instead of filing the filing instrument
511	513		or other document otherwise required by this code,] shall file a
512	514		certificate of validation with respect to the defective corporate
513	515		act in accordance with Chapter 4, regardless of whether a filing
514	516		instrument or other document was previously filed with respect to
515	517		the defective corporate act. The filing of another filing
516	518		instrument or document is not required.
517	519		(a-1) A separate certificate of validation is required for
518	520		each defective corporate act for which a certificate of validation
519	521		is required under this section, except that:
520	522		(1) two or more defective corporate acts may be
521	523		included in a single certificate of validation if the corporation
522	524		filed, or to comply with the applicable provisions of this code
523	525		could have filed, a single filing instrument or other document
524	526		under another provision of this code to effect the acts;
525	527		(2) a single certificate of validation may be filed to
526	528		amend the certificate of formation of the corporation to establish
527	529		a new class or series of shares or to increase the number of
528	530		authorized shares of any class or series of shares, in order to cure
529	531		multiple previous overissues of the shares of the class or series;
530	532		and
531	533		(3) a single certificate of validation may be filed to
532	534		amend the corporation's certificate of formation to establish two
533	535		or more new classes or series of shares, to increase the number of
534	536		authorized shares of two or more classes or series of shares, or to
535	537		establish one or more new classes or series of shares and increase
536	538		the number of authorized shares of one or more classes or series of
537	539		shares, in order to cure multiple previous overissues of the shares
538	540		of all the classes and series that are the subjects of the
539	541		certificate of validation.
540	542		(a-2) An amendment effected by a certificate of validation
541	543		described by Subsection (a-1)(2) or (3) is effective as to each
542	544		class or series that is a subject of the certificate of validation
543	545		as of the first overissue of the shares of the class or series.
544	546		(b) The certificate of validation must include [set forth]:
545	547		(1) each defective corporate act that is a subject of
546	548		the certificate of validation, including:
547	549		(A) for a defective corporate act involving the
548	550		issuance of putative shares, the number and type of putative shares
549	551		issued and the date or dates on which the putative shares were
550	552		purported to have been issued;
551	553		(B) the date of the defective corporate act; and
552	554		(C) the nature of the failure of authorization
553	555		with respect to the defective corporate act [a copy of the
554	556		resolution adopted in accordance with Sections 21.903 and 21.904,
555	557		the date of adoption of the resolution by the board of directors
556	558		and, if applicable, the date of adoption by the shareholders, and a
557	559		statement that the resolution was adopted in accordance with this
558	560		subchapter];
559	561		(2) a statement that each defective corporate act was
560	562		ratified in accordance with this subchapter, including:
561	563		(A) the date on which the board of directors
562	564		ratified each defective corporate act; and
563	565		(B) the date, if any, on which the shareholders
564	566		approved the ratification of each defective corporate act; and
565	567		(3) as appropriate:
566	568		(A) if a filing instrument [or document] was
567	569		previously filed with a filing officer under the corporate statute
568	570		with [in] respect to [of] the defective corporate act and no change
569	571		to the filing instrument is required to give effect to the defective
570	572		corporate act as ratified in accordance with this subchapter:
571	573		(i) the name, [the] title, and filing date
572	574		[of filing] of the previously filed [prior] filing instrument and
573	575		of any certificate of correction to the filing instrument; and
574	576		(ii) a statement that a copy of the
575	577		previously filed filing instrument, together with [or document and]
576	578		any [articles or] certificate of correction to the filing
577	579		instrument, is attached as an exhibit to the certificate of
578	580		validation [filing instrument]; [and]
579	581		(B) if a filing instrument was previously filed
580	582		with a filing officer under the corporate statute with respect to
581	583		the defective corporate act and the filing instrument requires any
582	584		change to give effect to the defective corporate act as ratified in
583	585		accordance with this subchapter, including a change to the date and
584	586		time of the effectiveness of the filing instrument:
585	587		(i) the name, title, and filing date of the
586	588		previously filed filing instrument and of any certificate of
587	589		correction to the filing instrument;
588	590		(ii) a statement that a filing instrument
589	591		containing all the information required to be included under the
590	592		applicable provisions of this code to give effect to the ratified
591	593		defective corporate act is attached as an exhibit to the
592	594		certificate of validation; and
593	595		(iii) the date and time that the attached
594	596		filing instrument is considered to have become effective under this
595	597		subchapter; or
596	598		(C) if a filing instrument was not previously
597	599		filed with a filing officer under the corporate statute with
598	600		respect to the defective corporate act and the defective corporate
599	601		act as ratified under this subchapter would have required under the
600	602		other applicable provisions of this code the filing of a filing
601	603		instrument in accordance with Chapter 4, if the defective corporate
602	604		act had occurred when this code was in effect:
603	605		(i) a statement that a filing instrument
604	606		containing all the information required to be included under the
605	607		applicable provisions of this code to give effect to the defective
606	608		corporate act, as if the defective corporate act had occurred when
607	609		this code was in effect, is attached as an exhibit to the
608	610		certificate of validation; and
609	611		(ii) the date and time that the attached
610	612		filing instrument is considered to have become effective under this
611	613		subchapter
612	614		[(3) the provisions that would be required under any
613	615		other section of this code to be included in the filing instrument
614	616		that otherwise would have been required to be filed with respect to
615	617		the defective corporate act under this code].
616	618		(c) A filing instrument attached to a certificate of
617	619		validation under Subsection (b)(3)(B) or (C) does not need to be
618	620		executed separately and does not need to include any statement
619	621		required by any other provision of this code that the instrument has
620	622		been approved and adopted in accordance with that provision.
621	623		SECTION 22. Section 21.909, Business Organizations Code, is
622	624		amended to read as follows:
623	625		Sec. 21.909. ADOPTION OF RESOLUTIONS [RESOLUTION]; EFFECT
624	626		ON DEFECTIVE CORPORATE ACT. On or after the validation effective
625	627		time, unless determined otherwise in an action brought under
626	628		Section 21.914 and subject to Section 21.907(e), each defective
627	629		corporate act ratified in accordance with this subchapter [set
628	630		forth in the resolution adopted under Sections 21.903 and 21.904]
629	631		may not be considered void or voidable as a result of the [a]
630	632		failure of authorization described by [identified in] the
631	633		resolutions adopted under Sections 21.903 and 21.904 [resolution],
632	634		and the effect shall be retroactive to the time of the defective
633	635		corporate act.
634	636		SECTION 23. Section 21.910, Business Organizations Code, is
635	637		amended to read as follows:
636	638		Sec. 21.910. ADOPTION OF RESOLUTIONS [RESOLUTION]; EFFECT
637	639		ON PUTATIVE SHARES. On or after the validation effective time,
638	640		unless determined otherwise in an action brought under Section
639	641		21.914 and subject to Section 21.907(e), each putative share or
640	642		fraction of a putative share issued or purportedly issued pursuant
641	643		to a [the] defective corporate act ratified in accordance with this
642	644		subchapter and described by [identified in] the resolutions
643	645		[resolution] adopted under Sections 21.903 and 21.904 may not be
644	646		considered void or voidable [as a result of a failure of
645	647		authorization identified in the resolution] and[, in the absence of
646	648		any failure of authorization not ratified,] is considered to be an
647	649		identical share or fraction of a share outstanding as of the time it
648	650		was purportedly issued.
649	651		SECTION 24. The heading to Section 21.911, Business
650	652		Organizations Code, is amended to read as follows:
651	653		Sec. 21.911. NOTICE TO SHAREHOLDERS FOLLOWING RATIFICATION
652	654		OF DEFECTIVE CORPORATE ACT [ADOPTION OF RESOLUTION].
653	655		SECTION 25. Section 21.911, Business Organizations Code, is
654	656		amended by amending Subsections (a), (d), (e), and (f) and adding
655	657		Subsection (g) to read as follows:
656	658		(a) For each defective corporate act ratified by the board
657	659		of directors under Sections 21.903 and 21.904, notice [Notice] of
658	660		the ratification [adoption of a resolution under this subchapter]
659	661		shall be given promptly to:
660	662		(1) each holder of valid shares and putative shares,
661	663		regardless of whether the shares are voting or nonvoting, as of the
662	664		date the board of directors adopted the resolutions ratifying the
663	665		defective corporate act [resolution]; or
664	666		(2) each holder of valid shares and putative shares,
665	667		regardless of whether the shares are voting or nonvoting, as of a
666	668		date not later than the 60th day after the date of adoption [on
667	669		which the resolution is adopted], as established by the board of
668	670		directors.
669	671		(d) The notice must contain:
670	672		(1) copies [a copy] of the resolutions adopted by the
671	673		board of directors under Section 21.903 or the information required
672	674		by Sections 21.903(a)(1)-(5) [resolution]; and
673	675		(2) a statement that, on ratification of the defective
674	676		corporate act or putative shares made in accordance with this
675	677		subchapter, the holder's rights to challenge the defective
676	678		corporate act or putative shares are limited to an action claiming
677	679		[the following must be brought not later than the 120th day of the
678	680		validation effective time:
679	681		[(A) any claim that the defective corporate act
680	682		or putative shares ratified under this subchapter are void or
681	683		voidable due to the identified failure of authorization; or
682	684		[(B) any claim] that a [the district] court of
683	685		appropriate jurisdiction, in its discretion, should declare:
684	686		(A) that the [a] ratification [made in accordance
685	687		with this subchapter] not take effect or that it take effect only on
686	688		certain conditions, if the action is filed not later than the 120th
687	689		day after the later of the applicable validation effective time or
688	690		the time at which the notice required by this section is given; or
689	691		(B) that the ratification was not accomplished in
690	692		accordance with this subchapter.
691	693		(e) Notwithstanding Subsections (a)-(d):
692	694		(1) [,] notice is not required to be given under this
693	695		section to a person if notice of the ratification of the defective
694	696		corporate act [resolution] is given to that person in accordance
695	697		with Section 21.906; and
696	698		(2) for a corporation that has a class of stock listed
697	699		on a national securities exchange, the notice required by this
698	700		section may be considered given if the information contained in the
699	701		notice is disclosed in a document publicly filed by the corporation
700	702		with the Securities and Exchange Commission under Section 13, 14,
701	703		or 15(d), Securities Exchange Act of 1934 (15 U.S.C. Section 78m,
702	704		78n, or 78o(d)), and any rules promulgated under that Act.
703	705		(f) For purposes of Sections 21.905, [Section] 21.906, and
704	706		21.907 and this section, notice to holders of putative shares and
705	707		notice to holders of valid shares and putative shares as of the time
706	708		of the defective corporate act shall be treated as notice to holders
707	709		of valid shares for purposes of Sections 6.051, 6.052, 6.053,
708	710		6.201, 6.202, 6.203, 6.204, 6.205, 21.353, and 21.3531.
709	711		(g) If the ratification of a defective corporate act has
710	712		been approved by shareholders acting under Section 6.202, the
711	713		notice required by this section may be included in any notice
712	714		required to be given under Section 6.202(d) and, if included:
713	715		(1) shall be sent to the shareholders entitled to the
714	716		notice under Section 6.202(d) and all other holders of valid shares
715	717		and putative shares otherwise entitled to the notice under
716	718		Subsection (a) of this section; and
717	719		(2) is not required to be sent to shareholders or
718	720		holders of valid shares or putative shares who signed a consent
719	721		described by Section 6.202(b).
720	722		SECTION 26. Section 21.913(a), Business Organizations
721	723		Code, is amended to read as follows:
722	724		(a) Ratification of an act or transaction under this
723	725		subchapter or validation of an act or transaction as provided by
724	726		Sections 21.914 through 21.917 is not the exclusive means of
725	727		ratifying or validating any act or transaction taken by or on behalf
726	728		of the corporation, including any defective corporate act or any
727	729		issuance of putative shares or other shares, or of adopting or
728	730		endorsing any act or transaction taken by or in the name of the
729	731		corporation before the corporation exists.
730	732		SECTION 27. Section 21.917, Business Organizations Code, is
731	733		amended by amending Subsection (b) and adding Subsection (c) to
732	734		read as follows:
733	735		(b) Notwithstanding any other provision of this
734	736		subchapter[, the following may not be brought after the expiration
735	737		of the 120th day of the validation effective time]:
736	738		(1) an action claiming [asserting] that a defective
737	739		corporate act or putative shares [ratified in accordance with this
738	740		subchapter] are void or voidable due to a failure of authorization
739	741		identified in the resolutions [resolution] adopted in accordance
740	742		with Section 21.903 may not be filed in or must be dismissed by any
741	743		court after the applicable validation effective time; and [or]
742	744		(2) an action claiming [asserting] that a [the
743	745		district] court of appropriate jurisdiction, in its discretion,
744	746		should declare that a ratification in accordance with this
745	747		subchapter not take effect or that the ratification take effect
746	748		only on certain conditions may not be filed with the court after the
747	749		expiration of the 120th day after the later of the validation
748	750		effective time or the time that any notice required to be given
749	751		under Section 21.911 is given with respect to the ratification.
750	752		(c) Except as otherwise provided by a corporation's
751	753		governing documents, for purposes of this section, notice under
752	754		Section 21.911 that is:
753	755		(1) mailed is considered to be given on the date the
754	756		notice is deposited in the United States mail with postage paid in
755	757		an envelope addressed to the holder at the holder's address
756	758		appearing or most recently appearing, as appropriate, in the
757	759		records of the corporation; and
758	760		(2) transmitted by facsimile or electronic message is
759	761		considered to be given when the facsimile or electronic message is
760	762		transmitted to a facsimile number or an electronic message address
761	763		provided by the holder, or to which the holder consents, for the
762	764		purpose of receiving notice.
763	765		SECTION 28. Section 22.154(a), Business Organizations
764	766		Code, is amended to read as follows:
765	767		(a) If the board of directors of a corporation fails to call
766	768		the annual meeting of members when required, a member of the
767	769		corporation may demand that the meeting be held within a reasonable
768	770		time. The demand must be made in writing and sent to an officer of
769	771		the corporation by certified or registered mail, return receipt
770	772		requested, or by other means specified in the corporation's
771	773		governing documents.
772	774		SECTION 29. Section 22.214, Business Organizations Code, is
773	775		amended to read as follows:
774	776		Sec. 22.214. ACTION BY DIRECTORS. The act of a majority of
775	777		the directors present in person or by proxy at a meeting at which a
776	778		quorum is present at the time of the act is the act of the board of
777	779		directors of a corporation, unless the act of a greater number is
778	780		required by the certificate of formation or bylaws of the
779	781		corporation.
780	782		SECTION 30. Section 22.227, Business Organizations Code, is
781	783		amended to read as follows:
782	784		Sec. 22.227. DISSENT TO OR ABSTENTION FROM ACTION. (a) A
783	785		director of a corporation who is present at a meeting of the board
784	786		of directors at which action is taken on a corporate matter
785	787		described by Section 22.226(a) is presumed to have assented to the
786	788		action unless:
787	789		(1) the director's dissent or abstention has been
788	790		entered in the minutes of the meeting;
789	791		(2) the director has filed a written dissent or
790	792		abstention with respect to the action with the person acting as the
791	793		secretary of the meeting before the meeting is adjourned; or
792	794		(3) the director has sent [a written dissent by
793	795		registered mail] to the secretary of the corporation, within a
794	796		reasonable time [immediately] after the meeting has been adjourned,
795	797		a written dissent or abstention by:
796	798		(A) certified or registered mail, return receipt
797	799		requested; or
798	800		(B) other means specified in the corporation's
799	801		governing documents.
800	802		(b) The right to dissent or abstain under this section does
801	803		not apply to a director who voted in favor of the action.
802	804		SECTION 31. Section 200.251, Business Organizations Code,
803	805		is amended by amending Subsection (b) and adding Subsection (b-1)
804	806		to read as follows:
805	807		(b) If the annual meeting is not held at the designated
806	808		time, a shareholder may [by certified or registered mail] make a
807	809		written request to an officer or trust manager of the real estate
808	810		investment trust that the meeting be held within a reasonable time.
809	811		The request calling for the meeting must be made by:
810	812		(1) certified or registered mail, return receipt
811	813		requested; or
812	814		(2) other means specified in the real estate
813	815		investment trust's governing documents.
814	816		(b-1) If the annual meeting is not called before the 61st
815	817		day after the date the written request calling for a meeting is made
816	818		under Subsection (b), any shareholder may bring suit at law or in
817	819		equity to compel the meeting to be held.
818	820		SECTION 32. Sections 251.354(a) and (b), Business
819	821		Organizations Code, are amended to read as follows:
820	822		(a) If a cooperative association required by Section
821	823		251.353 to file a copy of a report with the secretary of state does
822	824		not file the report within the prescribed time, the secretary of
823	825		state shall send written notice of the requirement [by registered
824	826		mail] to the cooperative association at[. The notice must be sent
825	827		to] the cooperative association's principal office not later than
826	828		the 60th day after the date the report becomes due.
827	829		(b) If a cooperative association [is] required by Section
828	830		251.353 to file a report at the cooperative association's [its]
829	831		registered office, but not with the secretary of state, [and] fails
830	832		to file the report within the prescribed time, the secretary of
831	833		state or any member of the cooperative association may send written
832	834		notice of the requirement [by registered mail] to the cooperative
833	835		association's principal office.
834	836		SECTION 33. Section 252.017(b), Business Organizations
835	837		Code, is amended to read as follows:
836	838		(b) Chapters 1, [and] 4, and 10 and, if a nonprofit
837	839		association designates an agent for service of process, Subchapter
838	840		E, Chapter 5, apply to a nonprofit association.
839	841		SECTION 34. Chapter 252, Business Organizations Code, is
840	842		amended by adding Section 252.018 to read as follows:
841	843		Sec. 252.018. MERGERS AND CONVERSIONS. A nonprofit
842	844		association may effect a merger or conversion by complying with the
843	845		applicable provisions of Chapter 10 and the nonprofit association's
844	846		governing documents.
845	847		SECTION 35. Chapter 402, Business Organizations Code, is
846	848		amended by adding Section 402.015 to read as follows:
847	849		Sec. 402.015. PERPETUAL DURATION OF OLD CORPORATIONS.
848	850		(a) Notwithstanding any provision in the articles of
849	851		incorporation limiting the period of duration of a domestic
850	852		for-profit corporation formed before September 6, 1955, the period
851	853		of duration of the corporation became perpetual on May 2, 1979, if
852	854		the corporation was in existence according to the records of the
853	855		secretary of state on May 2, 1979. A corporation described by this
854	856		subsection may amend the corporation's articles of incorporation or
855	857		certificate of formation, as applicable, to limit the corporation's
856	858		period of duration after May 2, 1979.
857	859		(b) Notwithstanding a provision in the articles of
858	860		incorporation limiting the period of duration of a domestic
859	861		nonprofit corporation formed before August 10, 1959, the period of
860	862		duration of the corporation became perpetual on May 2, 1979, if the
861	863		corporation was in existence according to the records of the
862	864		secretary of state on May 2, 1979. A corporation described by this
863	865		subsection may amend the corporation's articles of incorporation or
864	866		certificate of formation, as applicable, to limit the corporation's
865	867		period of duration after May 2, 1979.
866	868		SECTION 36. This Act takes effect September 1, 2017.
867		-	______________________________ ______________________________
868		-	President of the Senate Speaker of the House
869		-	I hereby certify that S.B. No. 1518 passed the Senate on
870		-	April 19, 2017, by the following vote: Yeas 31, Nays 0.
871		-	______________________________
872		-	Secretary of the Senate
873		-	I hereby certify that S.B. No. 1518 passed the House on
874		-	May 9, 2017, by the following vote: Yeas 144, Nays 1, two present
875		-	not voting.
876		-	______________________________
877		-	Chief Clerk of the House
878		-	Approved:
879		-	______________________________
880		-	Date
881		-	______________________________
882		-	Governor