Texas 2019 - 86th Regular

Texas Senate Bill SB1859 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1859
	1	+	By: Hancock S.B. No. 1859
	2	+	(Martinez Fischer)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to business entities.
6	8		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
7	9		SECTION 1. Section 1.002, Business Organizations Code, is
8	10		amended by amending Subdivisions (20-a) and (81) and adding
9	11		Subdivision (20-b) to read as follows:
10	12		(20-a) "Electronic data system" means an electronic
11	13		network or database. The term includes a distributed electronic
12	14		network or database, including one that employs blockchain or
13	15		distributed ledger technology.
14	16		(20-b) "Electronic transmission" means a form of
15	17		communication, including communication by use of or participation
16	18		in one or more electronic data systems, that:
17	19		(A) does not directly involve the physical
18	20		transmission of paper;
19	21		(B) creates a record that may be retained,
20	22		retrieved, and reviewed by the recipient; and
21	23		(C) may be directly reproduced in paper form by
22	24		the recipient through an automated process.
23	25		(81) "Shareholder" or "holder of shares" means:
24	26		(A) the person in whose name shares issued by a
25	27		for-profit corporation, professional corporation, or real estate
26	28		investment trust are registered in the share transfer records
27	29		maintained by or on behalf of the for-profit corporation,
28	30		professional corporation, or real estate investment trust; or
29	31		(B) the beneficial owner of shares issued by a
30	32		for-profit corporation, whose shares are held in a voting trust or
31	33		by a nominee on the beneficial owner's behalf, to the extent of the
32	34		rights granted by a nominee statement on file with the for-profit
33	35		corporation in accordance with Sections 21.201(b) and (c).
34	36		SECTION 2. Sections 3.151(a) and (b), Business
35	37		Organizations Code, are amended to read as follows:
36	38		(a) Each filing entity shall keep:
37	39		(1) books and records of accounts;
38	40		(2) minutes of the proceedings of the owners or
39	41		members or governing authority of the filing entity and committees
40	42		of the owners or members or governing authority of the filing
41	43		entity;
42	44		(3) [at its registered office or principal place of
43	45		business, or at the office of its transfer agent or registrar,] a
44	46		current record of the name and mailing address of each owner or
45	47		member of the filing entity; and
46	48		(4) other books and records as required by the title of
47	49		this code governing the entity.
48	50		(b) The books, records, minutes, and ownership or
49	51		membership records of any filing entity[, including those described
50	52		in Subsection (a)(4),] may be:
51	53		(1) in written paper form; or
52	54		(2) maintained by or on behalf of the filing entity on,
53	55		or by means of, an information storage device or method or one or
54	56		more electronic data systems, provided that any books, records,
55	57		minutes, and ownership or membership records so maintained can be
56	58		[another form capable of being] converted into written paper form
57	59		within a reasonable time.
58	60		SECTION 3. Sections 3.205(a) and (c), Business
59	61		Organizations Code, are amended to read as follows:
60	62		(a) Except as provided by Subsection (c) and in accordance
61	63		with Chapter 8, Business & Commerce Code, after an issuance
62	64		[issuing] or transfer of [transferring] an uncertificated
63	65		ownership interest in a domestic entity, [a domestic entity shall
64	66		notify] the owner of the ownership interest shall be notified in
65	67		writing or by electronic transmission of any information required
66	68		under this subchapter to be stated on a certificate representing
67	69		the ownership interest.
68	70		(c) The owner of an uncertificated ownership interest in a
69	71		[A] domestic entity is not required to be notified [send a notice]
70	72		under Subsection (a) if:
71	73		(1) the required information is included in the
72	74		governing documents of the entity; and
73	75		(2) the owner of the uncertificated ownership interest
74	76		is provided with a copy of the governing documents.
75	77		SECTION 4. Sections 4.052, 4.053, 4.054, 4.055, and 4.056,
76	78		Business Organizations Code, are amended to read as follows:
77	79		Sec. 4.052. DELAYED EFFECTIVENESS OF CERTAIN FILINGS.
78	80		(a) Except as provided by Section 4.058, a filing instrument may
79	81		take effect after the time the instrument would otherwise take
80	82		effect as provided by this code for the entity filing the
81	83		instrument.
82	84		(b) If the effectiveness of a filing instrument is to be
83	85		delayed as permitted by this section, the filing instrument may
84	86		take effect [and]:
85	87		(1) at a specified date;
86	88		(2) at a specified date and time; [or]
87	89		(3) [(2)] on the occurrence of a specified future
88	90		event or fact, including an act of any person; or
89	91		(4) after the occurrence of a future event or fact,
90	92		including the act of any person, at a specified date, at a specified
91	93		date and time, or after the passage of a specified period of time.
92	94		Sec. 4.053. CONDITIONS FOR DELAYED EFFECTIVENESS. (a) The
93	95		date, or the date and time, at which a filing instrument takes
94	96		effect is delayed if the instrument clearly and expressly states,
95	97		in addition to any other required statement or information:
96	98		(1) the specified date, or the specified [specific]
97	99		date and time, at which the instrument takes effect; or
98	100		(2) if the instrument takes effect on or after the
99	101		occurrence of a future event or fact that may occur:
100	102		(A) the [manner in which the] event or fact that
101	103		will cause the instrument to take effect; [and]
102	104		(B) when the filing instrument is to take effect
103	105		if the instrument is to take effect after the occurrence of a
104	106		specified future event or fact; and
105	107		(C) the date of the 90th day after the date the
106	108		instrument is signed.
107	109		(b) If the effectiveness of a filing instrument is to be
108	110		delayed as permitted by Section 4.052 [take effect on a specific
109	111		date and time other than that provided by this code]:
110	112		(1) the effective date may not be later than the 90th
111	113		day after the date the instrument is signed; and
112	114		(2) the specified [specific] time at which the
113	115		instrument is to take effect may not be specified as "12:00 a.m." or
114	116		"12:00 p.m."
115	117		Sec. 4.054. DELAYED EFFECTIVENESS ON FUTURE EVENT OR FACT.
116	118		A filing instrument that is to take effect on or after the
117	119		occurrence of a future event or fact in accordance with Section
118	120		4.053(a)(2)[, other than the passage of time,] and for which the
119	121		statement required by Section 4.055 is filed within the prescribed
120	122		time[,] takes effect on:
121	123		(1) the date, or the date and time, at which the [last
122	124		specified] event or fact occurs or is waived; or
123	125		(2) the specified date, the specified date and time,
124	126		or the passage of the specified period of time after the occurrence
125	127		or waiver of the event or fact [or the date and time at which a
126	128		condition is satisfied or waived].
127	129		Sec. 4.055. STATEMENT OF EVENT OR FACT. An entity that
128	130		files a filing instrument that takes effect on or after the
129	131		occurrence of a future event or fact in accordance with Section
130	132		4.053(a)(2)[, other than the passage of time,] must sign and file as
131	133		provided by Subchapter A, not later than the 90th day after the date
132	134		the filing instrument is filed, a statement that:
133	135		(1) confirms that each event or fact on which the
134	136		effect of the instrument is conditioned has been satisfied or
135	137		waived; [and]
136	138		(2) states the date, or the date and time, on which the
137	139		condition was satisfied or waived; and
138	140		(3) if the filing instrument was to take effect after
139	141		the occurrence of a specified future event or fact, states the date,
140	142		or the date and time, at which the filing instrument took effect.
141	143		Sec. 4.056. FAILURE TO FILE STATEMENT. (a) If the [effect
142	144		of a] filing instrument is to take effect on or after [conditioned
143	145		on] the occurrence of a future event or fact in accordance with
144	146		Section 4.053(a)(2)[, other than the passage of time,] and the
145	147		statement required by Section 4.055 is not filed before the
146	148		expiration of the prescribed time, the filing instrument does not
147	149		take effect. This section does not preclude the filing of a
148	150		subsequent filing instrument required by this code to make the
149	151		action or transaction evidenced by the original filing instrument
150	152		effective.
151	153		(b) If the [effect of a] filing instrument is to take effect
152	154		on or after [conditioned on] the occurrence of a future event or
153	155		fact[, other than the passage of time,] and the specified event or
154	156		fact does not occur and is not waived, the parties to the filing
155	157		instrument must sign and file a certificate of abandonment as
156	158		provided by Section 4.057.
157	159		SECTION 5. Section 4.057(e), Business Organizations Code,
158	160		is amended to read as follows:
159	161		(e) If in the interim before a certificate of abandonment is
160	162		filed the name of an entity that is a party to the action or
161	163		transaction becomes indistinguishable from [the same as or
162	164		deceptively similar to] the name of another entity already on file
163	165		or reserved or registered under this code, the filing officer may
164	166		not file the certificate of abandonment unless the entity by or for
165	167		whom the certificate is filed changes its name in the manner
166	168		provided by this code for that entity.
167	169		SECTION 6. Section 4.059, Business Organizations Code, is
168	170		amended to read as follows:
169	171		Sec. 4.059. ACKNOWLEDGMENT OF FILING WITH DELAYED
170	172		EFFECTIVENESS. (a) An acknowledgment of filing issued or other
171	173		action taken by the secretary of state affirming the filing of a
172	174		filing instrument that has a specific delayed effective date, or a
173	175		specific delayed effective date and time, must state the date, or
174	176		the date and time, at which the instrument takes effect.
175	177		(b) An acknowledgment of filing issued or other action taken
176	178		by the secretary of state affirming the filing of a filing
177	179		instrument the effectiveness [effect] of which is delayed until on
178	180		or after the occurrence of a future event or fact must[:
179	181		[(1) state that the effective date and time of the
180	182		filing instrument is conditioned on the occurrence of a future
181	183		event or fact as described in the filing instrument; or
182	184		[(2) otherwise] indicate that the effective date, or
183	185		the effective date and time, of the instrument is conditioned on the
184	186		occurrence of a future event or fact.
185	187		SECTION 7. Section 6.205(b), Business Organizations Code,
186	188		is amended to read as follows:
187	189		(b) Except as otherwise provided by an entity's governing
188	190		documents, an electronic transmission of a consent by an owner,
189	191		member, or governing person to the taking of an action by the entity
190	192		is considered a signed writing if the transmission contains or is
191	193		accompanied by information from which it can be determined:
192	194		(1) that the electronic transmission was transmitted
193	195		by or on behalf of the owner, member, or governing person; and
194	196		(2) the date on which the electronic transmission was
195	197		transmitted by or on behalf of the owner, member, or governing
196	198		person [transmitted the electronic transmission].
197	199		SECTION 8. Section 101.302(c), Business Organizations
198	200		Code, is amended to read as follows:
199	201		(c) The number of managers of a limited liability company
200	202		may be increased or decreased by amendment to, or as provided by,
201	203		the company agreement[, except that a decrease in the number of
202	204		managers may not shorten the term of an incumbent manager].
203	205		SECTION 9. Section 101.501, Business Organizations Code, is
204	206		amended by adding Subsection (d) to read as follows:
205	207		(d) All books and records required to be maintained by a
206	208		limited liability company under this section may be maintained in
207	209		any form and manner permitted under Section 3.151(b).
208	210		SECTION 10. Section 101.503(a), Business Organizations
209	211		Code, is amended to read as follows:
210	212		(a) A limited liability company that refuses to allow a
211	213		member or an assignee of a membership interest to examine and copy,
212	214		on written request that complies with Section 101.502(a), records
213	215		or other information described by that section is liable to the
214	216		member or assignee for any cost or expense, including attorney's
215	217		fees, incurred in enforcing the member's or assignee's rights under
216	218		Section 101.502. The liability imposed on a limited liability
217	219		company under this subsection is in addition to any other damages or
218	220		remedy afforded to the member or assignee by law.
219	221		SECTION 11. Section 101.621, Business Organizations Code,
220	222		is amended to read as follows:
221	223		Sec. 101.621. WINDING UP BY COURT ORDER. A district court
222	224		in the county in which the registered office or principal place of
223	225		business in this state of a domestic limited liability company is
224	226		located, on application by or for a member associated with the
225	227		series, has jurisdiction to order the winding up and termination of
226	228		a series if the court determines that:
227	229		(1) it is not reasonably practicable to carry on the
228	230		business of the series in conformity with the company agreement;
229	231		(2) the economic purpose of the series is likely to be
230	232		unreasonably frustrated; or
231	233		(3) another member associated with the series has
232	234		engaged in conduct relating to the series' business that makes it
233	235		not reasonably practicable to carry on the business with that
234	236		member.
235	237		SECTION 12. Sections 152.306(b) and (c), Business
236	238		Organizations Code, are amended to read as follows:
237	239		(b) Except as provided by Subsection (c), a creditor may
238	240		proceed against [one or more partners or] the property of one or
239	241		more [the] partners to satisfy a judgment based on a claim against
240	242		the partnership only if a judgment:
241	243		(1) is [also] obtained against the partner; and
242	244		(2) based on the same claim:
243	245		(A) is obtained against the partnership;
244	246		(B) has not been reversed or vacated; and
245	247		(C) remains unsatisfied for 90 days after:
246	248		(i) the date on which the judgment is
247	249		entered; or
248	250		(ii) the date on which the stay expires, if
249	251		the judgment is contested by appropriate proceedings and execution
250	252		on the judgment is stayed.
251	253		(c) Subsection (b)(2) [(b)] does not prohibit a creditor
252	254		from proceeding directly against [one or more partners or] the
253	255		property of one or more [the] partners [without first seeking
254	256		satisfaction from partnership property] if:
255	257		(1) the partnership is a debtor in bankruptcy;
256	258		(2) the creditor and the partner or partners whose
257	259		property is the subject of the proceeding brought by the creditor
258	260		[partnership] agreed that the creditor is not required to comply
259	261		with Subsection (b)(2) [(b)];
260	262		(3) a court orders otherwise, based on a finding that
261	263		partnership property subject to execution in the state is clearly
262	264		insufficient to satisfy the judgment or that compliance with
263	265		Subsection (b)(2) [(b)] is excessively burdensome; or
264	266		(4) liability is imposed on the partner by law or
265	267		contract independently of the person's status as a partner.
266	268		SECTION 13. Section 152.606, Business Organizations Code,
267	269		is amended to read as follows:
268	270		Sec. 152.606. INDEMNIFICATION OF WITHDRAWN PARTNER [FOR
269	271		CERTAIN LIABILITY]. [(a)] A partnership shall indemnify a
270	272		withdrawn partner whose interest is redeemed against all [a]
271	273		partnership obligations, whether [liability] incurred before or
272	274		after the date of withdrawal, except for an obligation [a
273	275		liability:
274	276		[(1) that is unknown to the partnership at the time; or
275	277		[(2)] incurred by an act of the withdrawn partner
276	278		under Section 152.504.
277	279		[(b) For purposes of this section, a liability is unknown to
278	280		the partnership if it is not known to a partner other than the
279	281		withdrawn partner.]
280	282		SECTION 14. Sections 153.551(b) and (c), Business
281	283		Organizations Code, are amended to read as follows:
282	284		(b) All books and records required to be maintained by a [A]
283	285		limited partnership under this section may be maintained in any
284	286		form and manner permitted under Section 3.151(b) [shall maintain
285	287		its records in written form or in another form capable of being
286	288		converted to written form in a reasonable time].
287	289		(c) A limited partnership shall keep in its registered
288	290		office in this state and make available to a partner on reasonable
289	291		request the street address of its principal office in the United
290	292		States in which the records required by this section are maintained
291	293		or made available.
292	294		SECTION 15. This Act takes effect September 1, 2019.
293		-	______________________________ ______________________________
294		-	President of the Senate Speaker of the House
295		-	I hereby certify that S.B. No. 1859 passed the Senate on
296		-	May 3, 2019, by the following vote: Yeas 31, Nays 0.
297		-	______________________________
298		-	Secretary of the Senate
299		-	I hereby certify that S.B. No. 1859 passed the House on
300		-	May 22, 2019, by the following vote: Yeas 138, Nays 6, two
301		-	present not voting.
302		-	______________________________
303		-	Chief Clerk of the House
304		-	Approved:
305		-	______________________________
306		-	Date
307		-	______________________________
308		-	Governor