Texas 2019 - 86th Regular

Texas House Bill HB3602 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	~~86R16839~~ CLG-F
	1	+	86R6930 CLG-F
2	2		By: Martinez Fischer H.B. No. 3602
3		-	Substitute the following for H.B. No. 3602:
4		-	By: Darby C.S.H.B. No. 3602
5	3
6	4
7	5		A BILL TO BE ENTITLED
8	6		AN ACT
9	7		relating to domestic corporations and other domestic entities.
10	8		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	9		SECTION 1. Section 6.252, Business Organizations Code, is
12	10		amended by amending Subsections (a), (b), and (c) and adding
13	11		Subsections (c-1), (c-2), (c-3), (c-4), and (g) to read as follows:
14	12		(a) Except as provided by this code or the governing
15	13		documents, any number of owners of a domestic entity, or any number
16	14		of owners of the domestic entity and the domestic entity itself, may
17	15		enter into a written voting agreement that is not set forth in the
18		-	~~domestic~~ entity's governing documents to provide the manner of
19		-	~~voting of the~~ ownership interests of the domestic entity. A voting
20		-	~~agreement~~ entered into under this subsection is not part of the
21		-	~~governing~~ documents of the domestic entity.
	16	+	entity's governing documents to provide the manner of voting of the
	17	+	ownership interests of the domestic entity. A voting agreement
	18	+	entered into under this subsection is not part of the governing
	19	+	documents of the domestic entity.
22	20		(b) A copy of a voting agreement entered into under
23	21		Subsection (a):
24	22		(1) may [shall] be deposited with the domestic entity
25	23		at the domestic entity's principal executive office or registered
26	24		office; and
27	25		(2) if deposited as provided by Subdivision (1), is
28	26		subject to examination by an owner, whether in person or by the
29	27		owner's agent or attorney, in the same manner as the owner is
30	28		entitled to examine the books and records of the domestic entity.
31	29		(c) A voting agreement entered into under Subsection (a) is
32	30		specifically enforceable against the owner [holder] of an ownership
33	31		interest that is the subject of the agreement if the owner executes
34	32		the voting agreement or acknowledges in writing that the owner or
35	33		the ownership interest is bound by the agreement [, and any
36	34		successor or transferee of the holder, if:
37	35		[(1) the voting agreement is noted conspicuously on
38	36		the certificate representing the ownership interests; or
39	37		[(2) a notation of the voting agreement is contained
40	38		in a notice sent by or on behalf of the domestic entity in
41	39		accordance with Section 3.205, if the ownership interest is not
42	40		represented by a certificate].
43	41		(c-1) A voting agreement entered into under Subsection (a)
44	42		is specifically enforceable against any subsequent owner of the
45	43		ownership interest subject to the voting agreement if the
46	44		subsequent owner:
47	45		(1) has notice or actual knowledge of the voting
48	46		agreement at or before the time of transfer to the subsequent owner;
49	47		(2) is not a transferee for value and receives notice
50	48		or obtains actual knowledge of the voting agreement; or
51	49		(3) acknowledges in writing that the subsequent owner
52	50		or the ownership interest is bound by the voting agreement.
53	51		(c-2) A subsequent owner is considered to have notice of a
54	52		voting agreement for purposes of Subsection (c-1)(1) if, at the
55	53		time of transfer, the existence of the voting agreement is noted
56	54		conspicuously on any certificate representing the ownership
57	55		interest held by the transferor owner. The notice described by this
58	56		subsection is not the exclusive method by which notice of the voting
59	57		agreement may be received by a subsequent owner for purposes of
60	58		Subsection (c-1)(1).
61	59		(c-3) A voting agreement that becomes specifically
62	60		enforceable against a subsequent owner under Subsection (c-1)(2) is
63	61		specifically enforceable from the time the subsequent owner first
64	62		receives notice or obtains actual knowledge of the voting
65	63		agreement.
66	64		(c-4) A voting agreement that becomes specifically
67	65		enforceable against a subsequent owner under Subsection (c-1)(3) is
68	66		specifically enforceable from the time of the written
69	67		acknowledgment by the subsequent owner.
70	68		(g) This section does not impair the right of the domestic
71	69		entity to treat an owner of record as entitled to vote the ownership
72	70		interest standing in the owner's name or to accept that owner's vote
73	71		of the ownership interest.
74	72		SECTION 2. Sections 10.354(b) and (c), Business
75	73		Organizations Code, are amended to read as follows:
76	74		(b) Notwithstanding Subsection (a), subject to Subsection
77	75		(c), an owner may not dissent from a plan of merger or conversion in
78	76		which there is a single surviving or new domestic entity or non-code
79	77		organization, or from a plan of exchange, if:
80	78		(1) the ownership interest, or a depository receipt in
81	79		respect of the ownership interest, held by the owner:
82		-	(A) in the case of a plan of merger, conversion,
83		-	or exchange, other than a plan of merger pursuant to Section
84		-	21.459(c), is part of a class or series of ownership interests, or
85		-	depository receipts in respect of ownership interests, that [are],
86		-	on the record date set for purposes of determining which owners are
87		-	entitled to vote on the plan of merger, conversion, or exchange, as
88		-	appropriate, are either:
	80	+	(A) is part of a class or series of ownership
	81	+	interests, or depository receipts in respect of ownership
	82	+	interests, that [are], on the record date set for purposes of
	83	+	determining which owners are entitled to vote on the plan of merger,
	84	+	other than a merger pursuant to Section 21.459(c), conversion, or
	85	+	exchange, as appropriate, are either:
89	86		(i) [(A)] listed on a national securities
90	87		exchange; or
91	88		(ii) [(B)] held of record by at least 2,000
92	89		owners; or
93		-	(B) in the case of a plan of merger pursuant to
94		-	Section 21.459(c), is part of a class or series of ownership
95		-	interests, or depository receipts in respect of ownership
96		-	interests, that, immediately before the date the board of directors
97		-	of the corporation that issued the ownership interest held,
98		-	directly or indirectly, by the owner approves the plan of merger,
99		-	are either:
	90	+	(B) in the case of a merger pursuant to Section
	91	+	21.459(c), is part of a class or series of ownership interests, or
	92	+	depository receipts in respect of ownership interests, that,
	93	+	immediately before the date the board of directors of the
	94	+	corporation that issued the ownership interest held by the owner,
	95	+	directly or indirectly, approves the plan of merger, are either:
100	96		(i) listed on a national securities
101	97		exchange; or
102	98		(ii) held of record by at least 2,000
103	99		owners;
104	100		(2) the owner is not required by the terms of the plan
105	101		of merger, conversion, or exchange, as appropriate, to accept for
106	102		the owner's ownership interest any consideration that is different
107	103		from the consideration to be provided to any other holder of an
108	104		ownership interest of the same class or series as the ownership
109	105		interest held by the owner, other than cash instead of fractional
110	106		shares or interests the owner would otherwise be entitled to
111	107		receive; and
112	108		(3) the owner is not required by the terms of the plan
113	109		of merger, conversion, or exchange, as appropriate, to accept for
114	110		the owner's ownership interest any consideration other than:
115	111		(A) ownership interests, or depository receipts
116	112		in respect of ownership interests, of a domestic entity or non-code
117	113		organization of the same general organizational type that,
118	114		immediately after the effective date of the merger, conversion, or
119	115		exchange, as appropriate, will be part of a class or series of
120	116		ownership interests, or depository receipts in respect of ownership
121	117		interests, that are:
122	118		(i) listed on a national securities
123	119		exchange or authorized for listing on the exchange on official
124	120		notice of issuance; or
125	121		(ii) held of record by at least 2,000
126	122		owners;
127	123		(B) cash instead of fractional ownership
128	124		interests, or fractional depository receipts in respect of
129	125		ownership interests, the owner would otherwise be entitled to
130	126		receive; or
131	127		(C) any combination of the ownership interests,
132	128		or fractional depository receipts in respect of ownership
133	129		interests, and cash described by Paragraphs (A) and (B).
134	130		(c) Subsection (b) shall not apply [either] to a domestic
135	131		entity that is a subsidiary with respect to a merger under Section
136	132		10.006 [or to a corporation with respect to a merger under Section
137	133		21.459(c)].
138	134		SECTION 3. Sections 10.355(d) and (f), Business
139	135		Organizations Code, are amended to read as follows:
140	136		(d) In addition to the requirements prescribed by
141	137		Subsection (c), a notice required to be provided:
142	138		(1) under Subsection (a)(1) must accompany the notice
143	139		of the meeting to consider the action;
144	140		(2) under Subsection (a)(2) must be provided to:
145	141		(A) each owner who consents in writing to the
146	142		action before the owner delivers the written consent; and
147	143		(B) each owner who is entitled to vote on the
148	144		action and does not consent in writing to the action before the 11th
149	145		day after the date the action takes effect; and
150	146		(3) under Subsection (b-1) must be provided:
151	147		(A) if given before the consummation of the
152	148		[tender or exchange] offer described by Section 21.459(c)(2), to
153	149		each shareholder to whom that offer is made; or
154	150		(B) if given after the consummation of the
155	151		[tender or exchange] offer described by Section 21.459(c)(2), to
156	152		each shareholder who did not tender the shareholder's shares in
157	153		that offer.
158	154		(f) If the notice given under Subsection (b-1) did not
159	155		include a statement of the effective date of the merger, the
160	156		responsible organization shall, not later than the 10th day after
161	157		the effective date, give a second notice to the shareholders
162	158		notifying them of the merger's effective date. If the second notice
163	159		is given after the later of the date on which the [tender or
164	160		exchange] offer described by Section 21.459(c)(2) is consummated or
165	161		the 20th day after the date notice under Subsection (b-1) is given,
166	162		then the second notice is required to be given to only those
167	163		shareholders who have made a demand under Section 10.356(b)(3).
168	164		SECTION 4. Section 10.356(b), Business Organizations Code,
169	165		is amended to read as follows:
170	166		(b) To perfect the owner's rights of dissent and appraisal
171	167		under Section 10.354, an owner:
172	168		(1) if the proposed action is to be submitted to a vote
173	169		of the owners at a meeting, must give to the domestic entity a
174	170		written notice of objection to the action that:
175	171		(A) is addressed to the entity's president and
176	172		secretary;
177	173		(B) states that the owner's right to dissent will
178	174		be exercised if the action takes effect;
179	175		(C) provides an address to which notice of
180	176		effectiveness of the action should be delivered or mailed; and
181	177		(D) is delivered to the entity's principal
182	178		executive offices before the meeting;
183	179		(2) with respect to the ownership interest for which
184	180		the rights of dissent and appraisal are sought:
185	181		(A) must vote against the action if the owner is
186	182		entitled to vote on the action and the action is approved at a
187	183		meeting of the owners; and
188	184		(B) may not consent to the action if the action is
189	185		approved by written consent; and
190	186		(3) must give to the responsible organization a demand
191	187		in writing that:
192	188		(A) is addressed to the president and secretary
193	189		of the responsible organization;
194	190		(B) demands payment of the fair value of the
195	191		ownership interests for which the rights of dissent and appraisal
196	192		are sought;
197	193		(C) provides to the responsible organization an
198	194		address to which a notice relating to the dissent and appraisal
199	195		procedures under this subchapter may be sent;
200	196		(D) states the number and class of the ownership
201	197		interests of the domestic entity owned by the owner and the fair
202	198		value of the ownership interests as estimated by the owner; and
203	199		(E) is delivered to the responsible organization
204	200		at its principal executive offices at the following time:
205	201		(i) not later than the 20th day after the
206	202		date the responsible organization sends to the owner the notice
207	203		required by Section 10.355(e) that the action has taken effect, if
208	204		the action was approved by a vote of the owners at a meeting;
209	205		(ii) not later than the 20th day after the
210	206		date the responsible organization sends to the owner the notice
211	207		required by Section 10.355(d)(2) that the action has taken effect,
212	208		if the action was approved by the written consent of the owners;
213	209		(iii) not later than the 20th day after the
214	210		date the responsible organization sends to the owner a notice that
215	211		the merger was effected, if the action is a merger effected under
216	212		Section 10.006; or
217	213		(iv) not later than the 20th day after the
218	214		date the responsible organization gives to the shareholder the
219	215		notice required by Section 10.355(b-1) or the date of the
220	216		consummation of the [tender or exchange] offer described by Section
221	217		21.459(c)(2), whichever is later, if the action is a merger
222	218		effected under Section 21.459(c).
223	219		SECTION 5. Section 21.002, Business Organizations Code, is
224	220		amended by adding Subdivision (10-a) to read as follows:
225	221		(10-a) "Share transfer records" means one or more
226	222		records maintained by or on behalf of a corporation in accordance
227	223		with Section 3.151 in which the names of all of the corporation's
228	224		shareholders of record, the address of and number of shares
229	225		registered in the name of each shareholder of record, and all
230	226		issuances and transfers of shares of the corporation are recorded.
231	227		SECTION 6. Section 21.305(b), Business Organizations Code,
232	228		is amended to read as follows:
233	229		(b) The notice of redemption shall be sent to each holder of
234	230		redeemable shares being called not later than the 21st day or
235	231		earlier than the 60th day before the date set for redemption, unless
236	232		otherwise provided by the terms of the class or series of shares
237	233		contained in the certificate of formation.
238	234		SECTION 7. Sections 21.372(a) and (a-1), Business
239	235		Organizations Code, are amended to read as follows:
240	236		(a) Not later than the 11th day before the date of each
241	237		meeting of the shareholders of a corporation, [an officer or agent
242	238		of the corporation who is in charge of the corporation's share
243	239		transfer records shall prepare] an alphabetical list of the
244	240		shareholders entitled to vote at the meeting or at any adjournment
245	241		of the meeting shall be prepared by or on behalf of the corporation.
246	242		The list of shareholders must:
247	243		(1) state:
248	244		(A) the address of each shareholder;
249	245		(B) the type of shares held by each shareholder;
250	246		(C) the number of shares held by each
251	247		shareholder; and
252	248		(D) the number of votes that each shareholder is
253	249		entitled to if the number of votes is different from the number of
254	250		shares stated under Paragraph (C); and
255	251		(2) be kept on file at the registered office or
256	252		principal executive office of the corporation for at least 10 days
257	253		before the date of the meeting.
258	254		(a-1) Instead of being kept on file, the list required by
259	255		Subsection (a) may be kept on a reasonably accessible electronic
260	256		data system [network] if the information required to gain access to
261	257		the list is provided with notice of the meeting. Section 21.353(c),
262	258		Section 21.354(a-1), and this subsection may not be construed to
263	259		require a corporation to include any electronic contact information
264	260		of a shareholder on the list. A corporation that elects to make the
265	261		list available on an electronic data system [network] must take
266	262		reasonable measures to ensure the information is available only to
267	263		shareholders of the corporation.
268	264		SECTION 8. Section 21.459, Business Organizations Code, is
269	265		amended by amending Subsections (c), (d), and (e) and adding
270	266		Subsection (f) to read as follows:
271	267		(c) This subsection applies only to a corporation that is a
272	268		party to the merger and has a class or series of [whose] shares that
273	269		are, immediately before the date its board of directors approves
274	270		the plan of merger, either listed on a national securities exchange
275	271		or held of record by at least 2,000 shareholders. Unless required
276	272		by the corporation's certificate of formation, a plan of merger is
277	273		not required to be approved by the shareholders of the corporation
278	274		if:
279	275		(1) the plan of merger expressly:
280	276		(A) permits or requires the merger to be effected
281	277		under this subsection; and
282	278		(B) provides that any merger effected under this
283	279		subsection shall be effected as soon as practicable following the
284	280		consummation of the offer [described by Subdivision (2)];
285	281		(2) an organization consummates an [a tender or
286	282		exchange] offer for all of the outstanding shares of the
287	283		corporation on the terms provided in the plan of merger that, absent
288	284		this subsection, would be entitled to vote on the approval of the
289	285		plan of merger, except that:
290	286		(A) the offer may be conditioned on the tender of
291	287		a minimum number or percentage of shares of the corporation or of
292	288		any class or series of shares of the corporation;
293	289		(B) the offer may exclude any excluded shares;
294	290		and
295	291		(C) the organization may consummate separate
296	292		offers for separate classes or series of shares of the corporation
297	293		[owned at the time of the commencement of the offer by:
298	294		[(A) the corporation;
299	295		[(B) the organization making the offer;
300	296		[(C) any person who owns, directly or indirectly,
301	297		all of the ownership interests in the organization making the
302	298		offer; or
303	299		[(D) any direct or indirect wholly owned
304	300		subsidiary of a person described by Paragraph (A), (B), or (C)];
305	301		(3) immediately following the consummation of the
306	302		offer, shares that are irrevocably accepted for purchase or
307	303		exchange pursuant to the consummation of the offer [described by
308	304		Subdivision (2)] and that are received by the depository before the
309	305		expiration of the offer, together with [in addition to] the shares
310	306		that are otherwise owned by the consummating organization or its
311	307		qualified affiliates and any rollover shares, equal at least the
312	308		percentage of the shares of the corporation, and of each class or
313	309		series of those shares[, of the corporation] that, absent this
314	310		subsection, would be required to approve the plan of merger by:
315	311		(A) Section 21.457 and, if applicable, Section
316	312		21.458; and
317	313		(B) the certificate of formation of the
318	314		corporation;
319	315		(4) the organization consummating the offer or one of
320	316		its qualified affiliates [described by Subdivision (2)] merges with
321	317		or into the corporation pursuant to the plan of merger; and
322	318		(5) each outstanding share, other than excluded
323	319		shares, of each class or series of the corporation that is the
324	320		subject of and is not irrevocably accepted for purchase or exchange
325	321		in the offer [described by Subdivision (2)] is to be converted or
326	322		exchanged in the merger into, or into the right to receive, the same
327	323		amount and kind of consideration, as described by Section
328	324		10.002(a)(5), as to be paid or delivered for shares of such class or
329	325		series of the corporation irrevocably accepted for purchase or
330	326		exchange in the offer.
331	327		(d) In Subsection (c) and this subsection and, as
332	328		applicable, in Sections 10.355(d)(3)(B), 10.355(f), and
333	329		10.356(b)(3)(E)(iv):
334	330		(1) "Consummates," "consummation," or "consummating"
335	331		means irrevocably accepts for purchase or exchange shares tendered
336	332		pursuant to an [a tender or exchange] offer.
337	333		(2) "Depository" means an agent appointed to
338	334		facilitate consummation of an [the] offer [described by Subsection
339	335		(c)(2)].
340	336		(3) "Offer" means a tender offer or an exchange offer
341	337		that satisfies the requirements of Subsection (c)(2).
342	338		(e) For purposes of Subsection (c) and this subsection:
343	339		(1) "Excluded shares" means:
344	340		(A) shares of the corporation that are owned at
345	341		the commencement of the offer by:
346	342		(i) the corporation;
347	343		(ii) the organization consummating the
348	344		offer;
349	345		(iii) any person that owns, directly or
350	346		indirectly, all of the outstanding ownership interests of the
351	347		organization consummating the offer; or
352	348		(iv) any direct or indirect wholly owned
353		-	subsidiary of ~~the~~ corporation, ~~the organization consummating the~~
354		-	~~offer, or any person~~ described by ~~Subparagraph~~ (iii); and
	349	+	subsidiary of any corporation, organization, or other person
	350	+	described by Subparagraphs (i)-(iii); and
355	351		(B) rollover shares.
356	352		(2) "Qualified affiliate" means, with respect to the
357	353		organization consummating an offer, any person that:
358	354		(A) owns, directly or indirectly, all of the
359	355		outstanding ownership interests of the organization consummating
360	356		the offer; or
361	357		(B) is a direct or indirect wholly owned
362	358		subsidiary of the organization consummating the offer or of any
363	359		person described by Paragraph (A).
364	360		(3) "Received" means:
365	361		(A) [(c)(3), "received,"] with respect to
366	362		certificated shares, [means:
367	363		[(1)] physical receipt of a certificate representing
368	364		shares accompanied by an executed letter of transmittal [, in the
369	365		case of certificated shares]; [and]
370	366		(B) [(2)] transfer into the depository's account
371	367		by means of [or] an agent's message; and
372	368		(C) with respect to uncertificated shares held of
373	369		record by a person other than a clearing corporation as nominee,
374	370		physical receipt of an executed letter of transmittal by the
375	371		depository [being received by the depository, in the case of
376	372		uncertificated shares].
377	373		(4) "Rollover shares" means any shares of the
378	374		corporation that are the subject of a written agreement, separate
379	375		from the offer, requiring the shares to be transferred,
380	376		contributed, or delivered to the organization consummating the
381	377		offer or any of the organization's qualified affiliates in exchange
382	378		for ownership interests in the organization consummating the offer
383	379		or a qualified affiliate of that organization. The term does not
384	380		include shares of a corporation described by this subdivision that,
385	381		immediately before the time a merger described by Subsection (c)
386	382		becomes effective, have not been transferred, contributed, or
387	383		delivered to the organization consummating the offer or any of the
388	384		organization's qualified affiliates pursuant to the written
389	385		agreement.
390	386		(f) For purposes of Subsections (c) and (e), shares cease to
391	387		be "received":
392		-	(1) with respect to certificated shares, if the
	388	+	(A) with respect to certificated shares, if the
393	389		certificate representing the shares was canceled before
394	390		consummation of the offer; and
395		-	(2) with respect to uncertificated shares, to the
	391	+	(B) with respect to uncertificated shares, to the
396	392		extent the uncertificated shares have been reduced or eliminated
397	393		due to any sale of those shares before the consummation of the
398	394		offer.
399	395		SECTION 9. Section 21.701, Business Organizations Code, is
400	396		amended to read as follows:
401	397		Sec. 21.701. DEFINITIONS. In this subchapter and
402	398		Subchapter P:
403	399		(1) "Close corporation" means a domestic corporation
404	400		formed under this subchapter or governed by this subchapter because
405	401		of Section 21.705, 21.706, or 21.707.
406	402		(2) "Close corporation provision" means a provision in
407	403		the certificate of formation of a close corporation or in a
408	404		shareholders' agreement of a close corporation.
409	405		(3) "Ordinary corporation" means a domestic
410	406		corporation that is not a close corporation.
411	407		(4) "Shareholders' agreement" means a written
412	408		agreement regulating an aspect of the business and affairs of or the
413	409		relationship among the shareholders of a close corporation that has
414	410		been executed under this subchapter.
415	411		SECTION 10. Section 21.901, Business Organizations Code, is
416	412		amended by amending Subdivisions (2) and (4) and adding Subdivision
417	413		(5-a) to read as follows:
418	414		(2) "Defective corporate act" means:
419	415		(A) an overissue;
420	416		(B) an election or appointment of directors that
421	417		is void or voidable due to a failure of authorization; or
422	418		(C) any act or transaction purportedly taken by
423	419		or on behalf of the corporation that is, and at the time the act or
424	420		transaction was purportedly taken would have been, within the power
425	421		of a corporation to take under the corporate statute, without
426	422		regard to the failure of authorization identified in Section
427	423		21.903(a)(4), but is void or voidable due to a failure of
428	424		authorization.
429	425		(4) "Failure of authorization" means:
430	426		(A) the failure to authorize or effect an act or
431	427		transaction in compliance with the provisions of the corporate
432	428		statute, the governing documents of the corporation, [or] any plan
433	429		or agreement to which the corporation is a party, or the disclosure
434	430		set forth in any proxy or consent solicitation statement, if and to
435	431		the extent the failure would render the act or transaction void or
436	432		voidable; or
437	433		(B) the failure of the board of directors or an
438	434		officer of the corporation to authorize or approve an act or
439	435		transaction taken by or on behalf of the corporation that required
440	436		the prior authorization or approval of the board of directors or the
441	437		officer.
442	438		(5-a) "Putative record date" means, with respect to
443	439		any defective corporate act that involved the establishment of a
444	440		record date for a meeting of or action by shareholders or any other
445	441		purpose, that record date.
446	442		SECTION 11. Section 21.905, Business Organizations Code, is
447	443		amended to read as follows:
448	444		Sec. 21.905. SHAREHOLDER APPROVAL OF RATIFIED DEFECTIVE
449	445		CORPORATE ACT REQUIRED; EXCEPTION. Each defective corporate act
450	446		ratified under Section 21.903 must be submitted to shareholders for
451	447		approval as provided by Sections 21.906 and 21.907, unless:
452	448		(1)(A) no other provision of the corporate statute, no
453	449		provision of the corporation's governing documents, and no
454	450		provision of any plan or agreement to which the corporation is a
455	451		party would have required shareholder approval of:
456	452		(i) [(A)] the defective corporate act to be
457	453		ratified at the time of that defective corporate act; or
458	454		(ii) [(B)] the type of defective corporate
459	455		act to be ratified at the time the board of directors adopts the
460	456		resolutions ratifying that defective corporate act under Section
461	457		21.903; and
462	458		(B) [(2)] the defective corporate act to be
463	459		ratified did not result from a failure to comply with Subchapter M;
464	460		or
465	461		(2) as of the record date for determining the
466	462		shareholders entitled to vote on the ratification of the defective
467	463		corporate act, there are no valid shares outstanding and entitled
468	464		to vote on the ratification, regardless of whether as of that record
469	465		date there exist any putative shares.
470	466		SECTION 12. Section 21.906(a), Business Organizations
471	467		Code, is amended to read as follows:
472	468		(a) If the ratification of a defective corporate act is
473	469		required to be submitted to the shareholders for approval under
474	470		Section 21.905, notice of the time, place, if any, and purpose of
475	471		the meeting shall be given at least 20 days before the date of the
476	472		meeting to:
477	473		(1) each holder of record, as of the record date of the
478	474		meeting, of valid shares and putative shares, regardless of whether
479	475		the shares are voting or nonvoting, at the address of the holder as
480	476		it appears or most recently appeared, as appropriate, on the
481	477		corporation's records; and
482	478		(2) each holder of record of valid shares and putative
483	479		shares, regardless of whether the shares are voting or nonvoting,
484	480		other than to a holder whose identity or address cannot be
485	481		ascertained from the corporation's records:
486	482		(A) as of the time of the defective corporate
487	483		act; or
488	484		(B) in the case of any defective corporate act
489	485		that involved the establishment of a putative record date, as of
490	486		that putative record date [, except that notice is not required to
491	487		be given to a holder whose identity or address cannot be ascertained
492	488		from the corporation's records].
493	489		SECTION 13. Section 21.911(e), Business Organizations
494	490		Code, is amended to read as follows:
495	491		(e) Notwithstanding Subsections (a)-(d):
496	492		(1) notice is not required to be given under this
497	493		section to a person if notice of the ratification of the defective
498	494		corporate act is given to that person in accordance with Section
499	495		21.906; and
500	496		(2) for a corporation that has a class of stock listed
501	497		on a national securities exchange, the notice required by this
502	498		section and Section 21.906(a)(2) may be considered given if the
503	499		information contained in the notice is disclosed in a document
504	500		publicly filed by the corporation with the Securities and Exchange
505	501		Commission under Section 13, 14, or 15(d), Securities Exchange Act
506	502		of 1934 (15 U.S.C. Section 78m, 78n, or 78o(d)), and any rules
507	503		promulgated under that Act.
508	504		SECTION 14. Section 21.953(c), Business Organizations
509	505		Code, is amended to read as follows:
510	506		(c) The name of the public benefit corporation specified in
511	507		its certificate of formation may contain the words "public benefit
512	508		corporation," the abbreviation "P.B.C.," or the designation "PBC."
513	509		If the name does not contain those words or that abbreviation or
514	510		designation, [the corporation must,] before the issuance of
515	511		[issuing] unissued shares or the disposition [disposing] of
516	512		treasury shares and except as provided by Subsection (d), [provide]
517	513		notice that the corporation is a public benefit corporation shall
518	514		be given to any person:
519	515		(1) to whom the unissued shares are issued; or
520	516		(2) who acquires the treasury shares.
521	517		SECTION 15. Section 21.955(b), Business Organizations
522	518		Code, is amended to read as follows:
523	519		(b) A notice sent to any person [by a public benefit
524	520		corporation] under Section 3.205 must state conspicuously that the
525	521		corporation is a public benefit corporation governed by this
526	522		subchapter.
527	523		SECTION 16. Section 22.001, Business Organizations Code, is
528	524		amended by adding Subdivision (3-a) to read as follows:
529	525		(3-a) "Director" means a person who is a member of the
530	526		board of directors, regardless of the name or title used to
531	527		designate the person. The term does not include a person designated
532	528		as a director of the corporation, or as an ex officio, honorary, or
533	529		other type of director of the corporation if the person is not
534	530		entitled to vote as a director.
535	531		SECTION 17. Section 22.002, Business Organizations Code, is
536	532		amended to read as follows:
537	533		Sec. 22.002. MEETINGS BY REMOTE COMMUNICATIONS TECHNOLOGY.
538	534		A [Subject to the provisions of this code and the certificate of
539	535		formation and bylaws of a corporation, a] meeting of the members of
540	536		a corporation, the board of directors of a corporation, or any
541	537		committee designated by the board of directors of a corporation may
542	538		be held by means of a conference telephone or similar
543	539		communications equipment, another suitable [remote] electronic
544	540		communications system, including videoconferencing technology or
545	541		the Internet, or any combination of those means, in accordance with
546	542		Section 6.002 [only if:
547	543		[(1) each person entitled to participate in the
548	544		meeting consents to the meeting being held by means of that system;
549	545		and
550	546		[(2) the system provides access to the meeting in a
551	547		manner or using a method by which each person participating in the
552	548		meeting can communicate concurrently with each other participant].
553	549		SECTION 18. Section 22.210, Business Organizations Code, is
554	550		amended to read as follows:
555	551		Sec. 22.210. NON-DIRECTOR RIGHTS AND LIMITATIONS [EX
556	552		OFFICIO MEMBER OF BOARD]. [(a)] The certificate of formation or
557	553		bylaws of a corporation may provide that a person who is not a
558	554		director [may be an ex officio member of the board of directors of
559	555		the corporation.
560	556		[(b) A person designated as an ex officio member of the
561	557		board] is entitled to receive notice of and to attend [board]
562	558		meetings of the board of directors. By having those rights, the
563	559		person does not have the authority, duties, or liabilities of a
564	560		director and is not a governing person of the corporation.
565	561		[(c) An ex officio member is not entitled to vote unless the
566	562		certificate of formation or bylaws authorize the member to vote. An
567	563		ex officio member of the board who is not entitled to vote does not
568	564		have the duties or liabilities of a director provided by this
569	565		chapter.]
570	566		SECTION 19. Section 22.356(b), Business Organizations
571	567		Code, is amended to read as follows:
572	568		(b) The books and records of a corporation other than a bona
573	569		fide alumni association are subject to audit at the discretion of
574	570		the state auditor if:
575	571		(1) the corporation's certificate of formation
576	572		[charter] specifically dedicates the corporation's activities to
577	573		the benefit of a particular state agency; and
578	574		(2) a board member, officer, or employee of that state
579	575		agency is a director [sits on the board of directors] of the
580	576		corporation [in other than an ex officio capacity].
581	577		SECTION 20. Sections 6.252(d) and (e), Business
582	578		Organizations Code, are repealed.
583	579		SECTION 21. This Act takes effect September 1, 2019.