86R9908 JES-D
By: Miles S.B. No. 2019
A BILL TO BE ENTITLED
AN ACT
relating to requiring female representation on the governing
authorities of certain business entities; authorizing an
administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 3, Business Organizations Code, is
amended by adding Subchapter C-1 to read as follows:
SUBCHAPTER C-1. COMPOSITION OF GOVERNING AUTHORITY FOR CERTAIN
BUSINESS ENTITIES
Sec. 3.115. DEFINITIONS. (a) In this subchapter:
(1) "Female" means an individual who self-identifies
the individual's gender as female.
(2) "Governing authority" has the meaning assigned by
Section 1.002.
(3) "Headquarters" means:
(A) with respect to a publicly traded
corporation, the location listed on the corporation's most recent
Form 10-K filed with the Securities and Exchange Commission; and
(B) with respect to a for-profit entity that is
not a publicly traded corporation, the location of the entity's
principal office.
(4) "Publicly traded corporation" means a corporation
that has a class or series of the corporation's voting shares
qualified for trading on a national securities exchange.
(5) "Qualifying business" means a for-profit entity
that is formed under the laws of or has its headquarters located in
this state and that is either:
(A) a publicly traded corporation; or
(B) a corporation, limited liability company, or
other business organization, however organized, that generates
annual revenue of more than $20 million.
Sec. 3.116. COMPOSITION OF GOVERNING AUTHORITY FOR CERTAIN
BUSINESS ENTITIES: FEMALE REPRESENTATION REQUIRED. (a) This
section does not apply to a qualifying business that has one owner.
(b) A qualifying business must have at least one member on
the business's governing authority who is female.
(c) A qualifying business is considered to be in compliance
with Subsection (b) if, for at least six months during a calendar
year, the business has at least one member who is female on the
business's governing authority.
Sec. 3.117. NOTICE OF VIOLATION. The secretary of state
shall provide notice of a violation of Section 3.116(b) to each
qualifying business that violates that subsection not later than
January 31 of the year following the calendar year in which the
violation occurred.
Sec. 3.118. ADMINISTRATIVE PENALTY FOR VIOLATION OF
GOVERNING AUTHORITY COMPOSITION REQUIREMENTS. (a) Except as
provided by Subsection (d), the secretary of state may impose an
administrative penalty on a qualifying business that violates
Section 3.116(b). The penalty may be in an amount not to exceed
$100,000 for each violation.
(b) The amount of an administrative penalty imposed under
this section must be based on:
(1) the history of any previous violations;
(2) the amount necessary to deter future violations;
and
(3) efforts to correct the violation.
(c) An administrative penalty collected under this section
shall be remitted to the comptroller for deposit in the general
revenue fund.
(d) The secretary of state may not impose an administrative
penalty on a qualifying business under this section if the business
has at least one member of the business's governing authority who is
female before the 61st day following the date a notice of violation
under Section 3.117 was provided.
Sec. 3.119. PUBLIC REPORT ON COMPLIANCE. Not later than
June 1 of each year, the secretary of state shall publish on the
secretary of state's Internet website a report regarding the
compliance of qualifying businesses with Section 3.116(b) during
the preceding calendar year. The report must include:
(1) the number of qualifying businesses that were in
compliance with Section 3.116(b) at any time during the preceding
calendar year; and
(2) the number of entities that were subject to the
requirements of that section at any time during the preceding
calendar year but are no longer subject to that section because the
entity is no longer considered a qualifying business.
Sec. 3.120. RULES. The secretary of state may adopt rules
necessary to implement this subchapter.
SECTION 2. Section 11.251(b), Business Organizations Code,
is amended to read as follows:
(b) The secretary of state may terminate a filing entity's
existence if the secretary finds that:
(1) the entity has failed to, and, before the 91st day
after the date notice was mailed has not corrected the entity's
failure to:
(A) file a report within the period required by
law or pay a fee or penalty prescribed by law when due and payable;
or
(B) maintain a registered agent or registered
office in this state as required by law; [or]
(2) the entity has failed to, and, before the 16th day
after the date notice was mailed has not corrected the entity's
failure to, pay a fee required in connection with the filing of its
certificate of formation, or payment of the fee was dishonored when
presented by the state for payment; or
(3) the entity violated Section 3.116(b), and, before
the 61st day after the date notice of the violation was provided as
required by Section 3.117, the entity has not corrected the
entity's failure to comply with Section 3.116(b).
SECTION 3. The secretary of state is required to publish the
initial report required by Section 3.119, Business Organizations
Code, as added by this Act, not later than June 1, 2021.
SECTION 4. A qualifying business, as defined by Section
3.115, Business Organizations Code, as added by this Act, must
comply with Section 3.116(b), Business Organizations Code, as added
by this Act, beginning with the 2020 calendar year.
SECTION 5. This Act takes effect September 1, 2019.