Texas 2019 - 86th Regular

Texas Senate Bill SB1971 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1971
	1	+	By: Hancock S.B. No. 1971
	2	+	(Martinez Fischer)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to domestic corporations and other domestic entities.
6	8		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
7	9		SECTION 1. Section 6.252, Business Organizations Code, is
8	10		amended by amending Subsections (a), (b), and (c) and adding
9	11		Subsections (c-1), (c-2), (c-3), (c-4), and (g) to read as follows:
10	12		(a) Except as provided by this code or the governing
11	13		documents, any number of owners of a domestic entity, or any number
12	14		of owners of the domestic entity and the domestic entity itself, may
13	15		enter into a written voting agreement that is not set forth in the
14	16		domestic entity's governing documents to provide the manner of
15	17		voting of the ownership interests of the domestic entity. A voting
16	18		agreement entered into under this subsection is not part of the
17	19		governing documents of the domestic entity.
18	20		(b) A copy of a voting agreement entered into under
19	21		Subsection (a):
20	22		(1) may [shall] be deposited with the domestic entity
21	23		at the domestic entity's principal executive office or registered
22	24		office; and
23	25		(2) if deposited as provided by Subdivision (1), is
24	26		subject to examination by an owner, whether in person or by the
25	27		owner's agent or attorney, in the same manner as the owner is
26	28		entitled to examine the books and records of the domestic entity.
27	29		(c) A voting agreement entered into under Subsection (a) is
28	30		specifically enforceable against the owner [holder] of an ownership
29	31		interest that is the subject of the agreement if the owner executes
30	32		the voting agreement or acknowledges in writing that the owner or
31	33		the ownership interest is bound by the agreement[, and any
32	34		successor or transferee of the holder, if:
33	35		[(1) the voting agreement is noted conspicuously on
34	36		the certificate representing the ownership interests; or
35	37		[(2) a notation of the voting agreement is contained
36	38		in a notice sent by or on behalf of the domestic entity in
37	39		accordance with Section 3.205, if the ownership interest is not
38	40		represented by a certificate].
39	41		(c-1) A voting agreement entered into under Subsection (a)
40	42		is specifically enforceable against any subsequent owner of the
41	43		ownership interest subject to the voting agreement if the
42	44		subsequent owner:
43	45		(1) has notice or actual knowledge of the voting
44	46		agreement at or before the time of transfer to the subsequent owner;
45	47		(2) is not a transferee for value and receives notice
46	48		or obtains actual knowledge of the voting agreement; or
47	49		(3) acknowledges in writing that the subsequent owner
48	50		or the ownership interest is bound by the voting agreement.
49	51		(c-2) A subsequent owner is considered to have notice of a
50	52		voting agreement for purposes of Subsection (c-1)(1) if, at the
51	53		time of transfer, the existence of the voting agreement is noted
52	54		conspicuously on any certificate representing the ownership
53	55		interest held by the transferor owner. The notice described by this
54	56		subsection is not the exclusive method by which notice of the voting
55	57		agreement may be received by a subsequent owner for purposes of
56	58		Subsection (c-1)(1).
57	59		(c-3) A voting agreement that becomes specifically
58	60		enforceable against a subsequent owner under Subsection (c-1)(2) is
59	61		specifically enforceable from the time the subsequent owner first
60	62		receives notice or obtains actual knowledge of the voting
61	63		agreement.
62	64		(c-4) A voting agreement that becomes specifically
63	65		enforceable against a subsequent owner under Subsection (c-1)(3) is
64	66		specifically enforceable from the time of the written
65	67		acknowledgment by the subsequent owner.
66	68		(g) This section does not impair the right of the domestic
67	69		entity to treat an owner of record as entitled to vote the ownership
68	70		interest standing in the owner's name or to accept that owner's vote
69	71		of the ownership interest.
70	72		SECTION 2. Sections 10.354(b) and (c), Business
71	73		Organizations Code, are amended to read as follows:
72	74		(b) Notwithstanding Subsection (a), subject to Subsection
73	75		(c), an owner may not dissent from a plan of merger or conversion in
74	76		which there is a single surviving or new domestic entity or non-code
75	77		organization, or from a plan of exchange, if:
76	78		(1) the ownership interest, or a depository receipt in
77	79		respect of the ownership interest, held by the owner:
78	80		(A) in the case of a plan of merger, conversion,
79	81		or exchange, other than a plan of merger pursuant to Section
80	82		21.459(c), is part of a class or series of ownership interests, or
81	83		depository receipts in respect of ownership interests, that [are],
82	84		on the record date set for purposes of determining which owners are
83	85		entitled to vote on the plan of merger, conversion, or exchange, as
84	86		appropriate, are either:
85	87		(i) [(A)] listed on a national securities
86	88		exchange; or
87	89		(ii) [(B)] held of record by at least 2,000
88	90		owners; or
89	91		(B) in the case of a plan of merger pursuant to
90	92		Section 21.459(c), is part of a class or series of ownership
91	93		interests, or depository receipts in respect of ownership
92	94		interests, that, immediately before the date the board of directors
93	95		of the corporation that issued the ownership interest held,
94	96		directly or indirectly, by the owner approves the plan of merger,
95	97		are either:
96	98		(i) listed on a national securities
97	99		exchange; or
98	100		(ii) held of record by at least 2,000
99	101		owners;
100	102		(2) the owner is not required by the terms of the plan
101	103		of merger, conversion, or exchange, as appropriate, to accept for
102	104		the owner's ownership interest any consideration that is different
103	105		from the consideration to be provided to any other holder of an
104	106		ownership interest of the same class or series as the ownership
105	107		interest held by the owner, other than cash instead of fractional
106	108		shares or interests the owner would otherwise be entitled to
107	109		receive; and
108	110		(3) the owner is not required by the terms of the plan
109	111		of merger, conversion, or exchange, as appropriate, to accept for
110	112		the owner's ownership interest any consideration other than:
111	113		(A) ownership interests, or depository receipts
112	114		in respect of ownership interests, of a domestic entity or non-code
113	115		organization of the same general organizational type that,
114	116		immediately after the effective date of the merger, conversion, or
115	117		exchange, as appropriate, will be part of a class or series of
116	118		ownership interests, or depository receipts in respect of ownership
117	119		interests, that are:
118	120		(i) listed on a national securities
119	121		exchange or authorized for listing on the exchange on official
120	122		notice of issuance; or
121	123		(ii) held of record by at least 2,000
122	124		owners;
123	125		(B) cash instead of fractional ownership
124	126		interests, or fractional depository receipts in respect of
125	127		ownership interests, the owner would otherwise be entitled to
126	128		receive; or
127	129		(C) any combination of the ownership interests,
128	130		or fractional depository receipts in respect of ownership
129	131		interests, and cash described by Paragraphs (A) and (B).
130	132		(c) Subsection (b) shall not apply [either] to a domestic
131	133		entity that is a subsidiary with respect to a merger under Section
132	134		10.006 [or to a corporation with respect to a merger under Section
133	135		21.459(c)].
134	136		SECTION 3. Sections 10.355(d) and (f), Business
135	137		Organizations Code, are amended to read as follows:
136	138		(d) In addition to the requirements prescribed by
137	139		Subsection (c), a notice required to be provided:
138	140		(1) under Subsection (a)(1) must accompany the notice
139	141		of the meeting to consider the action;
140	142		(2) under Subsection (a)(2) must be provided to:
141	143		(A) each owner who consents in writing to the
142	144		action before the owner delivers the written consent; and
143	145		(B) each owner who is entitled to vote on the
144	146		action and does not consent in writing to the action before the 11th
145	147		day after the date the action takes effect; and
146	148		(3) under Subsection (b-1) must be provided:
147	149		(A) if given before the consummation of the
148	150		[tender or exchange] offer described by Section 21.459(c)(2), to
149	151		each shareholder to whom that offer is made; or
150	152		(B) if given after the consummation of the
151	153		[tender or exchange] offer described by Section 21.459(c)(2), to
152	154		each shareholder who did not tender the shareholder's shares in
153	155		that offer.
154	156		(f) If the notice given under Subsection (b-1) did not
155	157		include a statement of the effective date of the merger, the
156	158		responsible organization shall, not later than the 10th day after
157	159		the effective date, give a second notice to the shareholders
158	160		notifying them of the merger's effective date. If the second notice
159	161		is given after the later of the date on which the [tender or
160	162		exchange] offer described by Section 21.459(c)(2) is consummated or
161	163		the 20th day after the date notice under Subsection (b-1) is given,
162	164		then the second notice is required to be given to only those
163	165		shareholders who have made a demand under Section 10.356(b)(3).
164	166		SECTION 4. Section 10.356(b), Business Organizations Code,
165	167		is amended to read as follows:
166	168		(b) To perfect the owner's rights of dissent and appraisal
167	169		under Section 10.354, an owner:
168	170		(1) if the proposed action is to be submitted to a vote
169	171		of the owners at a meeting, must give to the domestic entity a
170	172		written notice of objection to the action that:
171	173		(A) is addressed to the entity's president and
172	174		secretary;
173	175		(B) states that the owner's right to dissent will
174	176		be exercised if the action takes effect;
175	177		(C) provides an address to which notice of
176	178		effectiveness of the action should be delivered or mailed; and
177	179		(D) is delivered to the entity's principal
178	180		executive offices before the meeting;
179	181		(2) with respect to the ownership interest for which
180	182		the rights of dissent and appraisal are sought:
181	183		(A) must vote against the action if the owner is
182	184		entitled to vote on the action and the action is approved at a
183	185		meeting of the owners; and
184	186		(B) may not consent to the action if the action is
185	187		approved by written consent; and
186	188		(3) must give to the responsible organization a demand
187	189		in writing that:
188	190		(A) is addressed to the president and secretary
189	191		of the responsible organization;
190	192		(B) demands payment of the fair value of the
191	193		ownership interests for which the rights of dissent and appraisal
192	194		are sought;
193	195		(C) provides to the responsible organization an
194	196		address to which a notice relating to the dissent and appraisal
195	197		procedures under this subchapter may be sent;
196	198		(D) states the number and class of the ownership
197	199		interests of the domestic entity owned by the owner and the fair
198	200		value of the ownership interests as estimated by the owner; and
199	201		(E) is delivered to the responsible organization
200	202		at its principal executive offices at the following time:
201	203		(i) not later than the 20th day after the
202	204		date the responsible organization sends to the owner the notice
203	205		required by Section 10.355(e) that the action has taken effect, if
204	206		the action was approved by a vote of the owners at a meeting;
205	207		(ii) not later than the 20th day after the
206	208		date the responsible organization sends to the owner the notice
207	209		required by Section 10.355(d)(2) that the action has taken effect,
208	210		if the action was approved by the written consent of the owners;
209	211		(iii) not later than the 20th day after the
210	212		date the responsible organization sends to the owner a notice that
211	213		the merger was effected, if the action is a merger effected under
212	214		Section 10.006; or
213	215		(iv) not later than the 20th day after the
214	216		date the responsible organization gives to the shareholder the
215	217		notice required by Section 10.355(b-1) or the date of the
216	218		consummation of the [tender or exchange] offer described by Section
217	219		21.459(c)(2), whichever is later, if the action is a merger
218	220		effected under Section 21.459(c).
219	221		SECTION 5. Section 21.002, Business Organizations Code, is
220	222		amended by adding Subdivision (10-a) to read as follows:
221	223		(10-a) "Share transfer records" means one or more
222	224		records maintained by or on behalf of a corporation in accordance
223	225		with Section 3.151 in which the names of all of the corporation's
224	226		shareholders of record, the address of and number of shares
225	227		registered in the name of each shareholder of record, and all
226	228		issuances and transfers of shares of the corporation are recorded.
227	229		SECTION 6. Section 21.305(b), Business Organizations Code,
228	230		is amended to read as follows:
229	231		(b) The notice of redemption shall be sent to each holder of
230	232		redeemable shares being called not later than the 21st day or
231	233		earlier than the 60th day before the date set for redemption, unless
232	234		otherwise provided by the terms of the class or series of shares
233	235		contained in the certificate of formation.
234	236		SECTION 7. Sections 21.372(a) and (a-1), Business
235	237		Organizations Code, are amended to read as follows:
236	238		(a) Not later than the 11th day before the date of each
237	239		meeting of the shareholders of a corporation, [an officer or agent
238	240		of the corporation who is in charge of the corporation's share
239	241		transfer records shall prepare] an alphabetical list of the
240	242		shareholders entitled to vote at the meeting or at any adjournment
241	243		of the meeting shall be prepared by or on behalf of the corporation.
242	244		The list of shareholders must:
243	245		(1) state:
244	246		(A) the address of each shareholder;
245	247		(B) the type of shares held by each shareholder;
246	248		(C) the number of shares held by each
247	249		shareholder; and
248	250		(D) the number of votes that each shareholder is
249	251		entitled to if the number of votes is different from the number of
250	252		shares stated under Paragraph (C); and
251	253		(2) be kept on file at the registered office or
252	254		principal executive office of the corporation for at least 10 days
253	255		before the date of the meeting.
254	256		(a-1) Instead of being kept on file, the list required by
255	257		Subsection (a) may be kept on a reasonably accessible electronic
256	258		data system [network] if the information required to gain access to
257	259		the list is provided with notice of the meeting. Section 21.353(c),
258	260		Section 21.354(a-1), and this subsection may not be construed to
259	261		require a corporation to include any electronic contact information
260	262		of a shareholder on the list. A corporation that elects to make the
261	263		list available on an electronic data system [network] must take
262	264		reasonable measures to ensure the information is available only to
263	265		shareholders of the corporation.
264	266		SECTION 8. Section 21.459, Business Organizations Code, is
265	267		amended by amending Subsections (c), (d), and (e) and adding
266	268		Subsection (f) to read as follows:
267	269		(c) This subsection applies only to a corporation that is a
268	270		party to the merger and has a class or series of [whose] shares that
269	271		are, immediately before the date its board of directors approves
270	272		the plan of merger, either listed on a national securities exchange
271	273		or held of record by at least 2,000 shareholders. Unless required
272	274		by the corporation's certificate of formation, a plan of merger is
273	275		not required to be approved by the shareholders of the corporation
274	276		if:
275	277		(1) the plan of merger expressly:
276	278		(A) permits or requires the merger to be effected
277	279		under this subsection; and
278	280		(B) provides that any merger effected under this
279	281		subsection shall be effected as soon as practicable following the
280	282		consummation of the offer [described by Subdivision (2)];
281	283		(2) an organization consummates an [a tender or
282	284		exchange] offer for all of the outstanding shares of the
283	285		corporation on the terms provided in the plan of merger that, absent
284	286		this subsection, would be entitled to vote on the approval of the
285	287		plan of merger, except that:
286	288		(A) the offer may be conditioned on the tender of
287	289		a minimum number or percentage of shares of the corporation or of
288	290		any class or series of shares of the corporation;
289	291		(B) the offer may exclude any excluded shares;
290	292		and
291	293		(C) the organization may consummate separate
292	294		offers for separate classes or series of shares of the corporation
293	295		[owned at the time of the commencement of the offer by:
294	296		[(A) the corporation;
295	297		[(B) the organization making the offer;
296	298		[(C) any person who owns, directly or indirectly,
297	299		all of the ownership interests in the organization making the
298	300		offer; or
299	301		[(D) any direct or indirect wholly owned
300	302		subsidiary of a person described by Paragraph (A), (B), or (C)];
301	303		(3) immediately following the consummation of the
302	304		offer, shares that are irrevocably accepted for purchase or
303	305		exchange pursuant to the consummation of the offer [described by
304	306		Subdivision (2)] and that are received by the depository before the
305	307		expiration of the offer, together with [in addition to] the shares
306	308		that are otherwise owned by the consummating organization or its
307	309		qualified affiliates and any rollover shares, equal at least the
308	310		percentage of the shares of the corporation, and of each class or
309	311		series of those shares[, of the corporation] that, absent this
310	312		subsection, would be required to approve the plan of merger by:
311	313		(A) Section 21.457 and, if applicable, Section
312	314		21.458; and
313	315		(B) the certificate of formation of the
314	316		corporation;
315	317		(4) the organization consummating the offer or one of
316	318		its qualified affiliates [described by Subdivision (2)] merges with
317	319		or into the corporation pursuant to the plan of merger; and
318	320		(5) each outstanding share, other than excluded
319	321		shares, of each class or series of the corporation that is the
320	322		subject of and is not irrevocably accepted for purchase or exchange
321	323		in the offer [described by Subdivision (2)] is to be converted or
322	324		exchanged in the merger into, or into the right to receive, the same
323	325		amount and kind of consideration, as described by Section
324	326		10.002(a)(5), as to be paid or delivered for shares of such class or
325	327		series of the corporation irrevocably accepted for purchase or
326	328		exchange in the offer.
327	329		(d) In Subsection (c) and this subsection and, as
328	330		applicable, in Sections 10.355(d)(3)(B), 10.355(f), and
329	331		10.356(b)(3)(E)(iv):
330	332		(1) "Consummates," "consummation," or "consummating"
331	333		means irrevocably accepts for purchase or exchange shares tendered
332	334		pursuant to an [a tender or exchange] offer.
333	335		(2) "Depository" means an agent appointed to
334	336		facilitate consummation of an [the] offer [described by Subsection
335	337		(c)(2)].
336	338		(3) "Offer" means a tender offer or an exchange offer
337	339		that satisfies the requirements of Subsection (c)(2).
338	340		(e) For purposes of Subsection (c) and this subsection:
339	341		(1) "Excluded shares" means:
340	342		(A) shares of the corporation that are owned at
341	343		the commencement of the offer by:
342	344		(i) the corporation;
343	345		(ii) the organization consummating the
344	346		offer;
345	347		(iii) any person that owns, directly or
346	348		indirectly, all of the outstanding ownership interests of the
347	349		organization consummating the offer; or
348	350		(iv) any direct or indirect wholly owned
349	351		subsidiary of the corporation, the organization consummating the
350	352		offer, or any person described by Subparagraph (iii); and
351	353		(B) rollover shares.
352	354		(2) "Qualified affiliate" means, with respect to the
353	355		organization consummating an offer, any person that:
354	356		(A) owns, directly or indirectly, all of the
355	357		outstanding ownership interests of the organization consummating
356	358		the offer; or
357	359		(B) is a direct or indirect wholly owned
358	360		subsidiary of the organization consummating the offer or of any
359	361		person described by Paragraph (A).
360	362		(3) "Received" means:
361	363		(A) [(c)(3), "received,"] with respect to
362	364		certificated shares, [means:
363	365		[(1)] physical receipt of a certificate representing
364	366		shares accompanied by an executed letter of transmittal[, in the
365	367		case of certificated shares]; [and]
366	368		(B) [(2)] transfer into the depository's account
367	369		by means of [or] an agent's message; and
368	370		(C) with respect to uncertificated shares held of
369	371		record by a person other than a clearing corporation as nominee,
370	372		physical receipt of an executed letter of transmittal by the
371	373		depository [being received by the depository, in the case of
372	374		uncertificated shares].
373	375		(4) "Rollover shares" means any shares of the
374	376		corporation that are the subject of a written agreement, separate
375	377		from the offer, requiring the shares to be transferred,
376	378		contributed, or delivered to the organization consummating the
377	379		offer or any of the organization's qualified affiliates in exchange
378	380		for ownership interests in the organization consummating the offer
379	381		or a qualified affiliate of that organization. The term does not
380	382		include shares of a corporation described by this subdivision that,
381	383		immediately before the time a merger described by Subsection (c)
382	384		becomes effective, have not been transferred, contributed, or
383	385		delivered to the organization consummating the offer or any of the
384	386		organization's qualified affiliates pursuant to the written
385	387		agreement.
386	388		(f) For purposes of Subsections (c) and (e), shares cease to
387	389		be "received":
388	390		(1) with respect to certificated shares, if the
389	391		certificate representing the shares was canceled before
390	392		consummation of the offer; and
391	393		(2) with respect to uncertificated shares, to the
392	394		extent the uncertificated shares have been reduced or eliminated
393	395		due to any sale of those shares before the consummation of the
394	396		offer.
395	397		SECTION 9. Section 21.701, Business Organizations Code, is
396	398		amended to read as follows:
397	399		Sec. 21.701. DEFINITIONS. In this subchapter and
398	400		Subchapter P:
399	401		(1) "Close corporation" means a domestic corporation
400	402		formed under this subchapter or governed by this subchapter because
401	403		of Section 21.705, 21.706, or 21.707.
402	404		(2) "Close corporation provision" means a provision in
403	405		the certificate of formation of a close corporation or in a
404	406		shareholders' agreement of a close corporation.
405	407		(3) "Ordinary corporation" means a domestic
406	408		corporation that is not a close corporation.
407	409		(4) "Shareholders' agreement" means a written
408	410		agreement regulating an aspect of the business and affairs of or the
409	411		relationship among the shareholders of a close corporation that has
410	412		been executed under this subchapter.
411	413		SECTION 10. Section 21.901, Business Organizations Code, is
412	414		amended by amending Subdivisions (2) and (4) and adding Subdivision
413	415		(5-a) to read as follows:
414	416		(2) "Defective corporate act" means:
415	417		(A) an overissue;
416	418		(B) an election or appointment of directors that
417	419		is void or voidable due to a failure of authorization; or
418	420		(C) any act or transaction purportedly taken by
419	421		or on behalf of the corporation that is, and at the time the act or
420	422		transaction was purportedly taken would have been, within the power
421	423		of a corporation to take under the corporate statute, without
422	424		regard to the failure of authorization identified in Section
423	425		21.903(a)(4), but is void or voidable due to a failure of
424	426		authorization.
425	427		(4) "Failure of authorization" means:
426	428		(A) the failure to authorize or effect an act or
427	429		transaction in compliance with the provisions of the corporate
428	430		statute, the governing documents of the corporation, [or] any plan
429	431		or agreement to which the corporation is a party, or the disclosure
430	432		set forth in any proxy or consent solicitation statement, if and to
431	433		the extent the failure would render the act or transaction void or
432	434		voidable; or
433	435		(B) the failure of the board of directors or an
434	436		officer of the corporation to authorize or approve an act or
435	437		transaction taken by or on behalf of the corporation that required
436	438		the prior authorization or approval of the board of directors or the
437	439		officer.
438	440		(5-a) "Putative record date" means, with respect to
439	441		any defective corporate act that involved the establishment of a
440	442		record date for a meeting of or action by shareholders or any other
441	443		purpose, that record date.
442	444		SECTION 11. Section 21.905, Business Organizations Code, is
443	445		amended to read as follows:
444	446		Sec. 21.905. SHAREHOLDER APPROVAL OF RATIFIED DEFECTIVE
445	447		CORPORATE ACT REQUIRED; EXCEPTION. Each defective corporate act
446	448		ratified under Section 21.903 must be submitted to shareholders for
447	449		approval as provided by Sections 21.906 and 21.907, unless:
448	450		(1)(A) no other provision of the corporate statute, no
449	451		provision of the corporation's governing documents, and no
450	452		provision of any plan or agreement to which the corporation is a
451	453		party would have required shareholder approval of:
452	454		(i) [(A)] the defective corporate act to be
453	455		ratified at the time of that defective corporate act; or
454	456		(ii) [(B)] the type of defective corporate
455	457		act to be ratified at the time the board of directors adopts the
456	458		resolutions ratifying that defective corporate act under Section
457	459		21.903; and
458	460		(B) [(2)] the defective corporate act to be
459	461		ratified did not result from a failure to comply with Subchapter M;
460	462		or
461	463		(2) as of the record date for determining the
462	464		shareholders entitled to vote on the ratification of the defective
463	465		corporate act, there are no valid shares outstanding and entitled
464	466		to vote on the ratification, regardless of whether as of that record
465	467		date there exist any putative shares.
466	468		SECTION 12. Section 21.906(a), Business Organizations
467	469		Code, is amended to read as follows:
468	470		(a) If the ratification of a defective corporate act is
469	471		required to be submitted to the shareholders for approval under
470	472		Section 21.905, notice of the time, place, if any, and purpose of
471	473		the meeting shall be given at least 20 days before the date of the
472	474		meeting to:
473	475		(1) each holder of record, as of the record date of the
474	476		meeting, of valid shares and putative shares, regardless of whether
475	477		the shares are voting or nonvoting, at the address of the holder as
476	478		it appears or most recently appeared, as appropriate, on the
477	479		corporation's records; and
478	480		(2) each holder of record of valid shares and putative
479	481		shares, regardless of whether the shares are voting or nonvoting,
480	482		other than to a holder whose identity or address cannot be
481	483		ascertained from the corporation's records:
482	484		(A) as of the time of the defective corporate
483	485		act; or
484	486		(B) in the case of any defective corporate act
485	487		that involved the establishment of a putative record date, as of
486	488		that putative record date[, except that notice is not required to be
487	489		given to a holder whose identity or address cannot be ascertained
488	490		from the corporation's records].
489	491		SECTION 13. Section 21.911(e), Business Organizations
490	492		Code, is amended to read as follows:
491	493		(e) Notwithstanding Subsections (a)-(d):
492	494		(1) notice is not required to be given under this
493	495		section to a person if notice of the ratification of the defective
494	496		corporate act is given to that person in accordance with Section
495	497		21.906; and
496	498		(2) for a corporation that has a class of stock listed
497	499		on a national securities exchange, the notice required by this
498	500		section and Section 21.906(a)(2) may be considered given if the
499	501		information contained in the notice is disclosed in a document
500	502		publicly filed by the corporation with the Securities and Exchange
501	503		Commission under Section 13, 14, or 15(d), Securities Exchange Act
502	504		of 1934 (15 U.S.C. Section 78m, 78n, or 78o(d)), and any rules
503	505		promulgated under that Act.
504	506		SECTION 14. Section 21.953(c), Business Organizations
505	507		Code, is amended to read as follows:
506	508		(c) The name of the public benefit corporation specified in
507	509		its certificate of formation may contain the words "public benefit
508	510		corporation," the abbreviation "P.B.C.," or the designation "PBC."
509	511		If the name does not contain those words or that abbreviation or
510	512		designation, [the corporation must,] before the issuance of
511	513		[issuing] unissued shares or the disposition [disposing] of
512	514		treasury shares and except as provided by Subsection (d), [provide]
513	515		notice that the corporation is a public benefit corporation shall
514	516		be given to any person:
515	517		(1) to whom the unissued shares are issued; or
516	518		(2) who acquires the treasury shares.
517	519		SECTION 15. Section 21.955(b), Business Organizations
518	520		Code, is amended to read as follows:
519	521		(b) A notice sent to any person [by a public benefit
520	522		corporation] under Section 3.205 must state conspicuously that the
521	523		corporation is a public benefit corporation governed by this
522	524		subchapter.
523	525		SECTION 16. Section 22.001, Business Organizations Code, is
524	526		amended by adding Subdivision (3-a) to read as follows:
525	527		(3-a) "Director" means a person who is a member of the
526	528		board of directors, regardless of the name or title used to
527	529		designate the person. The term does not include a person designated
528	530		as a director of the corporation, or as an ex officio, honorary, or
529	531		other type of director of the corporation if the person is not
530	532		entitled to vote as a director.
531	533		SECTION 17. Section 22.002, Business Organizations Code, is
532	534		amended to read as follows:
533	535		Sec. 22.002. MEETINGS BY REMOTE COMMUNICATIONS TECHNOLOGY.
534	536		A [Subject to the provisions of this code and the certificate of
535	537		formation and bylaws of a corporation, a] meeting of the members of
536	538		a corporation, the board of directors of a corporation, or any
537	539		committee designated by the board of directors of a corporation may
538	540		be held by means of a conference telephone or similar
539	541		communications equipment, another suitable [remote] electronic
540	542		communications system, including videoconferencing technology or
541	543		the Internet, or any combination of those means, in accordance with
542	544		Section 6.002 [only if:
543	545		[(1) each person entitled to participate in the
544	546		meeting consents to the meeting being held by means of that system;
545	547		and
546	548		[(2) the system provides access to the meeting in a
547	549		manner or using a method by which each person participating in the
548	550		meeting can communicate concurrently with each other participant].
549	551		SECTION 18. Section 22.210, Business Organizations Code, is
550	552		amended to read as follows:
551	553		Sec. 22.210. NON-DIRECTOR RIGHTS AND LIMITATIONS [EX
552	554		OFFICIO MEMBER OF BOARD]. [(a)] The certificate of formation or
553	555		bylaws of a corporation may provide that a person who is not a
554	556		director [may be an ex officio member of the board of directors of
555	557		the corporation.
556	558		[(b) A person designated as an ex officio member of the
557	559		board] is entitled to receive notice of and to attend [board]
558	560		meetings of the board of directors. By having those rights, the
559	561		person does not have the authority, duties, or liabilities of a
560	562		director and is not a governing person of the corporation.
561	563		[(c) An ex officio member is not entitled to vote unless the
562	564		certificate of formation or bylaws authorize the member to vote. An
563	565		ex officio member of the board who is not entitled to vote does not
564	566		have the duties or liabilities of a director provided by this
565	567		chapter.]
566	568		SECTION 19. Section 22.356(b), Business Organizations
567	569		Code, is amended to read as follows:
568	570		(b) The books and records of a corporation other than a bona
569	571		fide alumni association are subject to audit at the discretion of
570	572		the state auditor if:
571	573		(1) the corporation's certificate of formation
572	574		[charter] specifically dedicates the corporation's activities to
573	575		the benefit of a particular state agency; and
574	576		(2) a board member, officer, or employee of that state
575	577		agency is a director [sits on the board of directors] of the
576	578		corporation [in other than an ex officio capacity].
577	579		SECTION 20. Sections 6.252(d) and (e), Business
578	580		Organizations Code, are repealed.
579	581		SECTION 21. This Act takes effect September 1, 2019.
580		-	______________________________ ______________________________
581		-	President of the Senate Speaker of the House
582		-	I hereby certify that S.B. No. 1971 passed the Senate on
583		-	May 3, 2019, by the following vote: Yeas 31, Nays 0.
584		-	______________________________
585		-	Secretary of the Senate
586		-	I hereby certify that S.B. No. 1971 passed the House on
587		-	May 22, 2019, by the following vote: Yeas 144, Nays 0, two
588		-	present not voting.
589		-	______________________________
590		-	Chief Clerk of the House
591		-	Approved:
592		-	______________________________
593		-	Date
594		-	______________________________
595		-	Governor