Texas 2021 - 87th Regular

Texas Senate Bill SB1203 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1203
	1	+	By: Hancock S.B. No. 1203
	2	+	(Turner of Tarrant)
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. Sections 1.002(33), (49), and (53), Business
8	10		Organizations Code, are amended to read as follows:
9	11		(33) "General partner" means:
10	12		(A) each partner in a general partnership; or
11	13		(B) a person who has become, and has not ceased to
12	14		be, [is admitted to a limited partnership as] a general partner in a
13	15		limited partnership in accordance with the governing documents of
14	16		the limited partnership or this code.
15	17		(49) "Limited partner" means a person who has become,
16	18		and has not ceased to be, [been admitted to a limited partnership
17	19		as] a limited partner in a limited partnership in accordance with
18	20		the governing documents of the limited partnership or this code [as
19	21		provided by:
20	22		[(A) in the case of a domestic limited
21	23		partnership, Chapter 153; or
22	24		[(B) in the case of a foreign limited partnership,
23	25		the laws of its jurisdiction of formation].
24	26		(53) "Member" means:
25	27		(A) in the case of a limited liability company, a
26	28		person who [is a member or] has become, and has not ceased to be,
27	29		[been admitted as] a member in the limited liability company as
28	30		provided by [under] its governing documents or this code;
29	31		(B) in the case of a nonprofit corporation, a
30	32		person who has membership rights in the nonprofit corporation under
31	33		its governing documents;
32	34		(C) in the case of a cooperative association, a
33	35		member of a nonshare or share association;
34	36		(D) in the case of a nonprofit association, a
35	37		person who has membership rights in the nonprofit association under
36	38		its governing documents; or
37	39		(E) in the case of a professional association, a
38	40		person who has membership rights in the professional association
39	41		under its governing documents.
40	42		SECTION 2. Subchapter B, Chapter 2, Business Organizations
41	43		Code, is amended by adding Section 2.115 to read as follows:
42	44		Sec. 2.115. CHOICE OF FORUM PROVISIONS. (a) In this
43	45		section, "internal entity claim" means a claim of any nature,
44	46		including a derivative claim in the right of an entity, that is
45	47		based on, arises from, or relates to the internal affairs of the
46	48		entity, as defined by Section 1.105.
47	49		(b) The governing documents of a domestic entity may
48	50		require, consistent with applicable state and federal
49	51		jurisdictional requirements, that any internal entity claims shall
50	52		be brought only in a court in this state.
51	53		SECTION 3. Section 3.010, Business Organizations Code, is
52	54		amended to read as follows:
53	55		Sec. 3.010. SUPPLEMENTAL PROVISIONS REQUIRED IN
54	56		CERTIFICATE OF FORMATION OF LIMITED LIABILITY COMPANY. In addition
55	57		to the information required by Section 3.005, the certificate of
56	58		formation of a limited liability company must state:
57	59		(1) whether the limited liability company initially
58	60		has [will] or does [will] not have managers;
59	61		(2) if the limited liability company initially has
60	62		[will have] managers, the name and address of each initial manager
61	63		of the limited liability company; and
62	64		(3) if the limited liability company does [will] not
63	65		initially have managers, the name and address of each initial
64	66		member of the limited liability company.
65	67		SECTION 4. Section 3.060(a), Business Organizations Code,
66	68		is amended to read as follows:
67	69		(a) In addition to the provisions authorized or required by
68	70		Section 3.059, a restated certificate of formation for a for-profit
69	71		corporation or professional corporation may omit any prior
70	72		statements regarding [update] the [current] number of directors and
71	73		the names and addresses of the persons serving as directors and, at
72	74		the corporation's election, may insert a statement regarding the
73	75		current number of directors and the names and addresses of the
74	76		persons currently serving as directors.
75	77		SECTION 5. Section 3.061(a), Business Organizations Code,
76	78		is amended to read as follows:
77	79		(a) In addition to the provisions authorized or required by
78	80		Section 3.059, a restated certificate of formation for a nonprofit
79	81		corporation may omit any prior statements regarding [update] the
80	82		[current] number of directors and the names and addresses of the
81	83		persons serving as directors and, at the corporation's election,
82	84		may insert a statement regarding the current number of directors
83	85		and the names and addresses of the persons currently serving as
84	86		directors.
85	87		SECTION 6. Section 3.0611, Business Organizations Code, is
86	88		amended to read as follows:
87	89		Sec. 3.0611. SUPPLEMENTAL PROVISIONS FOR RESTATED
88	90		CERTIFICATE OF FORMATION FOR LIMITED LIABILITY COMPANY. In
89	91		addition to the provisions authorized or required by Section 3.059,
90	92		a restated certificate of formation for a limited liability company
91	93		may omit any prior statements regarding whether the company has or
92	94		does not have managers and the names and addresses of managers or
93	95		members and, at the company's election, may insert a statement:
94	96		(1) regarding whether [if the company's certificate of
95	97		formation states that] the company currently has or does not [will]
96	98		have [one or more] managers[, update the names and addresses of the
97	99		persons serving as managers]; [or]
98	100		(2) [if the certificate of formation states] that the
99	101		company currently has [will not have] managers and[, update] the
100	102		names and addresses of the persons currently serving as managers;
101	103		or
102	104		(3) that the company currently does not have managers
103	105		and the names and addresses of the current members of the company.
104	106		SECTION 7. Section 3.251, Business Organizations Code, is
105	107		amended to read as follows:
106	108		Sec. 3.251. DEFINITIONS [EMERGENCY DEFINED]. In [For
107	109		purposes of] this subchapter:
108	110		(1) "Emergency" means any of the following:
109	111		(A) an attack on the United States, a state, or a
110	112		political subdivision of a state;
111	113		(B) a nuclear or atomic disaster;
112	114		(C) the occurrence of a catastrophic event,
113	115		including:
114	116		(i) an epidemic or pandemic;
115	117		(ii) a hurricane, tropical storm, tornado,
116	118		or other weather condition; or
117	119		(iii) a riot or civil disturbance;
118	120		(D) the declaration of a national emergency by
119	121		the United States government;
120	122		(E) the declaration of an emergency by a state or
121	123		a political subdivision of a state; or
122	124		(F) any other similar emergency situation.
123	125		(2) "Emergency action" means an action taken by
124	126		majority vote of the governing persons present at a meeting of the
125	127		governing authority of a domestic entity during an emergency
126	128		period.
127	129		(3) "Emergency period" means any period during which
128	130		the governing authority of a domestic entity, due to a condition
129	131		that is a part of or results from an emergency, is unable to satisfy
130	132		one or more requirements of the entity's governing documents or
131	133		this code necessary for action by vote of the governing authority
132	134		outside of an emergency period[, an emergency exists if a majority
133	135		of a domestic entity's governing persons cannot readily participate
134	136		in a meeting because of the occurrence of a catastrophic event].
135	137		SECTION 8. Section 3.252, Business Organizations Code, is
136	138		amended to read as follows:
137	139		Sec. 3.252. PROVISIONS IN GOVERNING DOCUMENTS. (a) The
138	140		[Except as otherwise provided by the entity's governing documents,
139	141		the] governing persons and, if applicable, the owners[,] or members
140	142		of a domestic entity may adopt provisions in the domestic entity's
141	143		governing documents regarding [the management of the entity during
142	144		an] emergency actions, including provisions that apply only during
143	145		an emergency period that authorize, limit, or prohibit:
144	146		(1) [prescribing] procedures for calling a meeting of
145	147		the governing persons;
146	148		(2) the necessity of a quorum for action by vote at a
147	149		meeting of the governing persons;
148	150		(3) [establishing] minimum requirements for
149	151		participation at the meeting of the governing persons; and
150	152		(4) the designation of [(3) designating] additional
151	153		or substitute governing persons.
152	154		(b) Any [The emergency] provisions in a domestic entity's
153	155		governing documents that apply only during an emergency period must
154	156		be adopted in accordance with:
155	157		(1) the requirements of the governing documents that
156	158		apply outside of an emergency period; and
157	159		(2) the applicable provisions of this code that apply
158	160		outside of an emergency period.
159	161		SECTION 9. Subchapter F, Chapter 3, Business Organizations
160	162		Code, is amended by adding Section 3.2535 to read as follows:
161	163		Sec. 3.2535. ACTIONS DURING EMERGENCY PERIOD. (a) Except
162	164		as otherwise limited or prohibited by the domestic entity's
163	165		governing documents or except as provided by Subsection (b), the
164	166		governing authority of a domestic entity may take an emergency
165	167		action during an emergency period without satisfying the
166	168		requirements of the entity's governing documents or this code that
167	169		apply outside of an emergency period with respect to:
168	170		(1) procedures for calling a meeting of the governing
169	171		persons;
170	172		(2) the necessity of a quorum for action by vote at a
171	173		meeting of the governing persons;
172	174		(3) minimum requirements for participation at a
173	175		meeting of the governing persons; and
174	176		(4) any other procedural requirements for action at a
175	177		meeting of the governing persons.
176	178		(b) Subsection (a) does not apply to an action by the
177	179		governing authority of a domestic entity:
178	180		(1) to amend the entity's governing documents; or
179	181		(2) that must be approved by a separate vote of the
180	182		owners or members of the entity in accordance with the requirements
181	183		of the entity's governing documents or this code that apply outside
182	184		of an emergency period.
183	185		SECTION 10. Section 3.255, Business Organizations Code, is
184	186		amended to read as follows:
185	187		Sec. 3.255. EFFECT OF EMERGENCY ACTION [TAKEN]. An
186	188		emergency action taken by the governing persons of a domestic
187	189		entity in accordance with the entity's governing documents or
188	190		Section 3.2535, if taken in good faith and based on the reasonable
189	191		belief that the emergency action was in the entity's best interest
190	192		[in accordance with the emergency provisions]:
191	193		(1) is binding on the entity; and
192	194		(2) may not be used to impose liability on a managerial
193	195		official, employee, or agent of the entity.
194	196		SECTION 11. Section 6.201, Business Organizations Code, is
195	197		amended by amending Subsection (b) and adding Subsections (b-1),
196	198		(b-2), (b-3), (b-4), and (b-5) to read as follows:
197	199		(b) The owners or members or the governing authority of a
198	200		filing entity, or a committee of the governing authority, may take
199	201		action without holding a meeting, providing notice, or taking a
200	202		vote if each person entitled to vote on the action signs a written
201	203		consent or consents stating the action taken. Except as provided by
202	204		this section, the written consent or consents take effect when
203	205		signed by all persons entitled to vote on the action.
204	206		(b-1) By a provision in the written consent or consents or
205	207		by a written instruction to an agent of the filing entity by one or
206	208		more persons granting the written consent or consents, a written
207	209		consent or consents may be made to take effect at a future time,
208	210		which must be not later than the 60th day after the date all persons
209	211		entitled to vote on the action have signed the consent or consents.
210	212		If a written consent or consents described by this subsection are to
211	213		take effect at a future time, all of the written consents take
212	214		effect at that future effective time.
213	215		(b-2) If two or more of the written consents described by
214	216		Subsection (b-1) have different future effective times, the latest
215	217		future effective time of those consents applies to all of the
216	218		consents. The written consent or consents are considered to have
217	219		been given at the applicable effective time so long as all of the
218	220		persons entitled to vote on the action, which is determined as of
219	221		that effective time or, if applicable, the record date established
220	222		under Section 6.102, have:
221	223		(1) signed the consent or consents; and
222	224		(2) not revoked their consent or consents before the
223	225		applicable effective time.
224	226		(b-3) By a provision in the written consent or by a written
225	227		instruction to an agent of the filing entity, a person signing a
226	228		written consent may provide that the person's consent is to take
227	229		effect at a future time, which must be not later than the 60th day
228	230		after the date all persons entitled to vote on the action have
229	231		signed the person's consent or consents. A person's written consent
230	232		is considered to have been given at the later of that future
231	233		effective time or a later effective time determined under
232	234		Subsection (b-1) or (b-2), so long as the person:
233	235		(1) is entitled to vote on the action subject to the
234	236		consent, which is determined as of the applicable effective time
235	237		or, if applicable, the record date established under Section 6.102;
236	238		and
237	239		(2) did not revoke the consent before the applicable
238	240		effective time.
239	241		(b-4) A person signing a written consent may revoke the
240	242		person's consent any time before the applicable effective time of
241	243		the consent.
242	244		(b-5) For purposes of this section, a "future time" includes
243	245		a time that is determined on the happening of an event.
244	246		SECTION 12. Section 6.202, Business Organizations Code, is
245	247		amended by amending Subsection (c) and adding Subsections (c-1),
246	248		(c-2), (c-3), (c-4), (e), and (f) to read as follows:
247	249		(c) A written consent or consents described by Subsection
248	250		(b) must include:
249	251		(1) the date each owner or member signed the consent;
250	252		and
251	253		(2) the date of signing of the latest dated consent
252	254		satisfying the minimum number of owners or members necessary to
253	255		approve the action that is the subject of the consent.
254	256		(c-1) The date described by Subsection (c)(2) must be [is
255	257		effective to take the action that is the subject of the consent only
256	258		if the consent or consents are delivered to the entity] not later
257	259		than the 60th day after the date of the signing of the earliest
258	260		dated consent of the owners or members signing the consent or
259	261		consents. If a consent does not contain the date that an owner or
260	262		member signed the consent, the date that the owner or member signed
261	263		the consent is considered to be the date that the consent is
262	264		received by the filing entity. A written consent or consents
263	265		described by Subsection (b) that are not solicited by or on behalf
264	266		of a filing entity or the filing entity's governing authority must
265	267		be delivered to the entity as required by Section 6.203 to take
266	268		effect [is delivered to the entity as required by Section 6.203].
267	269		(c-2) By a provision in the written consent or consents or
268	270		by a written instruction to an agent of the filing entity from one
269	271		or more persons granting the written consent or consents, a written
270	272		consent or consents described by Subsection (b) may be made to take
271	273		effect at a future time, which must be not later than the 60th day
272	274		after the date the last of the minimum number of owners or members
273	275		necessary to sign the consent or consents as required by Subsection
274	276		(b) have signed the consent or consents. If the written consent or
275	277		consents described by this subsection are to take effect at a future
276	278		time, all of the written consent or consents take effect at that
277	279		future effective time.
278	280		(c-3) If two or more of the written consents described by
279	281		Subsection (c-2) have different future effective times, the latest
280	282		future effective time of those consents applies to all of the
281	283		consents. The written consent or consents are considered to have
282	284		been given for purposes of this section at the applicable effective
283	285		time so long as owners or members satisfying the minimum
284	286		requirements in Subsection (b):
285	287		(1) are determined to be owners or members, as
286	288		applicable, as of:
287	289		(A) that effective time; or
288	290		(B) if applicable, the record date established
289	291		under Section 6.102; and
290	292		(2) have signed and not revoked the owner's or member's
291	293		consent or consents at any time before the applicable effective
292	294		time of the consent.
293	295		(c-4) By a provision in the written consent or by a written
294	296		instruction to an agent of the filing entity, an owner or member of
295	297		a filing entity signing a written consent described by Subsection
296	298		(b) may provide that the owner's or member's consent is to take
297	299		effect at a future time, which must be not later than the 60th day
298	300		after the date on which the consent is signed by the last of the
299	301		minimum number of owners or members of the entity necessary to sign
300	302		the consent or consents as required by Subsection (b). The owner's
301	303		or member's consent is considered to have been given for purposes of
302	304		this section at the later of that future effective time or a later
303	305		effective time determined under Subsection (c-3) so long as:
304	306		(1) the person is an owner or member, as applicable, as
305	307		of:
306	308		(A) the applicable effective time; or
307	309		(B) if applicable, the record date established
308	310		under Section 6.102; and
309	311		(2) the owner or member did not revoke the consent at
310	312		any time before the applicable effective time of the consent.
311	313		(e) An owner or member of a filing entity signing a written
312	314		consent may revoke the owner's or member's consent at any time
313	315		before the applicable effective time of the consent.
314	316		(f) For purposes of this section, a "future time" includes a
315	317		time that is determined on the happening of an event.
316	318		SECTION 13. Section 8.002(a), Business Organizations Code,
317	319		is amended to read as follows:
318	320		(a) Except as provided by Subsection (b) and Section 8.005,
319	321		this chapter does not apply to a:
320	322		(1) general partnership; or
321	323		(2) limited liability company.
322	324		SECTION 14. Section 8.003, Business Organizations Code, is
323	325		amended to read as follows:
324	326		Sec. 8.003. LIMITATIONS IN GOVERNING DOCUMENTS. A
325	327		governing document [(a) The certificate of formation] of an
326	328		enterprise may restrict the circumstances under which the
327	329		enterprise must or may indemnify or may advance expenses to a person
328	330		under this chapter.
329	331		[(b) The written partnership agreement of a limited
330	332		partnership may restrict the circumstances in the same manner as
331	333		the certificate of formation under Subsection (a).]
332	334		SECTION 15. Subchapter A, Chapter 8, Business Organizations
333	335		Code, is amended by adding Section 8.005 to read as follows:
334	336		Sec. 8.005. INDEMNIFICATION AGAINST NEGLIGENCE. (a) This
335	337		section applies to:
336	338		(1) an enterprise subject to this chapter; and
337	339		(2) notwithstanding Section 8.002, a general
338	340		partnership or limited liability company.
339	341		(b) A requirement under the laws of this state that
340	342		indemnification or exculpation for negligence be expressly and
341	343		conspicuously stated does not apply to a provision in an
342	344		enterprise's governing documents that provides for indemnification
343	345		or exculpation.
344	346		SECTION 16. Section 9.251, Business Organizations Code, is
345	347		amended to read as follows:
346	348		Sec. 9.251. ACTIVITIES NOT CONSTITUTING TRANSACTING
347	349		BUSINESS IN THIS STATE. For purposes of this chapter, activities
348	350		that do not constitute transaction of business in this state
349	351		include:
350	352		(1) maintaining or defending an action or suit or an
351	353		administrative or arbitration proceeding, or effecting the
352	354		settlement of:
353	355		(A) such an action, suit, or proceeding; or
354	356		(B) a claim or dispute to which the entity is a
355	357		party;
356	358		(2) holding a meeting of the entity's managerial
357	359		officials, owners, or members or carrying on another activity
358	360		concerning the entity's internal affairs;
359	361		(3) maintaining a bank account;
360	362		(4) maintaining an office or agency for:
361	363		(A) transferring, exchanging, or registering
362	364		securities the entity issues; or
363	365		(B) appointing or maintaining a trustee or
364	366		depositary related to the entity's securities;
365	367		(5) voting the interest of an entity the foreign
366	368		entity has acquired;
367	369		(6) effecting a sale through an independent
368	370		contractor;
369	371		(7) creating, as borrower or lender, or acquiring
370	372		indebtedness or a mortgage or other security interest in real or
371	373		personal property;
372	374		(8) securing or collecting a debt due the entity or
373	375		enforcing a right in property that secures a debt due the entity;
374	376		(9) transacting business in interstate commerce;
375	377		(10) conducting an isolated transaction that:
376	378		(A) is completed within a period of 30 days; and
377	379		(B) is not in the course of a number of repeated,
378	380		similar transactions;
379	381		(11) in a case that does not involve an activity that
380	382		would constitute the transaction of business in this state if the
381	383		activity were one of a foreign entity acting in its own right:
382	384		(A) exercising a power of executor or
383	385		administrator of the estate of a nonresident decedent under
384	386		ancillary letters issued by a court of this state; or
385	387		(B) exercising a power of a trustee under the
386	388		will of a nonresident decedent, or under a trust created by one or
387	389		more nonresidents of this state, or by one or more foreign entities;
388	390		(12) regarding a debt secured by a mortgage or lien on
389	391		real or personal property in this state:
390	392		(A) acquiring the debt in a transaction outside
391	393		this state or in interstate commerce;
392	394		(B) collecting or adjusting a principal or
393	395		interest payment on the debt;
394	396		(C) enforcing or adjusting a right or property
395	397		securing the debt;
396	398		(D) taking an action necessary to preserve and
397	399		protect the interest of the mortgagee in the security; or
398	400		(E) engaging in any combination of transactions
399	401		described by this subdivision;
400	402		(13) investing in or acquiring, in a transaction
401	403		outside of this state, a royalty or other nonoperating mineral
402	404		interest;
403	405		(14) executing a division order, contract of sale, or
404	406		other instrument incidental to ownership of a nonoperating mineral
405	407		interest; [or]
406	408		(15) owning, without more, real or personal property
407	409		in this state; or
408	410		(16) acting as a governing person of a domestic or
409	411		foreign entity that is registered to transact business in this
410	412		state.
411	413		SECTION 17. Section 11.001(3), Business Organizations
412	414		Code, is amended to read as follows:
413	415		(3) "Existing claim" with respect to an entity means:
414	416		(A) a claim that existed before the entity's
415	417		termination and is not barred by limitations; or
416	418		(B) a claim that exists after the entity's
417	419		termination and before the third anniversary of the date of the
418	420		entity's termination and is not barred by limitations, including a
419	421		claim under a contractual or other obligation incurred after
420	422		termination.
421	423		SECTION 18. Section 11.153, Business Organizations Code, is
422	424		amended to read as follows:
423	425		Sec. 11.153. COURT REVOCATION OF FRAUDULENT TERMINATION.
424	426		(a) Notwithstanding any provision of this code to the contrary, a
425	427		court may order the revocation of termination of an entity's
426	428		existence that was terminated as a result of actual or constructive
427	429		fraud. In an action under this section, any limitation period
428	430		provided by law is tolled in accordance with the discovery
429	431		rule. The secretary of state shall take any action necessary to
430	432		implement an order under this section.
431	433		(b) If the termination of an entity's existence is revoked
432	434		under Subsection (a):
433	435		(1) the revocation relates back to the effective date
434	436		of the termination and takes effect as of that date; and
435	437		(2) the entity's status as an entity continues in
436	438		effect as if the termination of the entity's existence had never
437	439		occurred.
438	440		SECTION 19. Section 11.254, Business Organizations Code, is
439	441		amended to read as follows:
440	442		Sec. 11.254. REINSTATEMENT OF CERTIFICATE OF FORMATION
441	443		FOLLOWING TAX FORFEITURE. (a) A filing entity whose certificate of
442	444		formation has been forfeited under the provisions of the Tax Code
443	445		must follow the procedures in the Tax Code to reinstate its
444	446		certificate of formation. A filing entity whose certificate of
445	447		formation is reinstated under the provisions of the Tax Code is
446	448		considered to have continued in existence without interruption from
447	449		the date of forfeiture.
448	450		(b) The reinstatement of a filing entity's certificate of
449	451		formation after its forfeiture has no effect on any issue of the
450	452		personal liability of the governing persons, officers, or agents of
451	453		the filing entity during the period between forfeiture and
452	454		reinstatement of the certificate of formation.
453	455		SECTION 20. Section 11.359, Business Organizations Code, is
454	456		amended by adding Subsection (c) to read as follows:
455	457		(c) Notwithstanding Subsections (a) and (b), the
456	458		extinguishment of an existing claim with respect to a terminated
457	459		filing entity as provided by this section is nullified if:
458	460		(1) the filing entity's termination is revoked with
459	461		retroactive effect under Section 11.153;
460	462		(2) the terminated filing entity is reinstated with
461	463		retroactive effect as provided by Section 11.206;
462	464		(3) the terminated filing entity is reinstated with
463	465		retroactive effect as provided by Section 11.253(d); or
464	466		(4) the terminated filing entity's certificate of
465	467		formation is reinstated under the Tax Code with retroactive effect
466	468		as provided by Section 11.254.
467	469		SECTION 21. Section 21.314(a), Business Organizations
468	470		Code, is amended to read as follows:
469	471		(a) For purposes of this subchapter, the determination of
470	472		whether a corporation is or would be insolvent and the
471	473		determination of the amount [value] of a corporation's [net
472	474		assets,] stated capital[,] or surplus, the value of the
473	475		corporation's net assets, and the amount or value of any component
474	476		of the corporation's stated capital, surplus, or net assets, [each
475	477		of the components of net assets, stated capital, or surplus] may be
476	478		based on:
477	479		(1) financial statements of the corporation, which may
478	480		include financial statements of subsidiary entities or other
479	481		entities accounted for on a consolidated basis or on the equity
480	482		method of accounting, [including financial statements] that:
481	483		(A) [include subsidiary corporations or other
482	484		corporations accounted for on a consolidated basis or on the equity
483	485		method of accounting; or
484	486		[(B)] present the financial condition of the
485	487		corporation, and any subsidiary or other entities included in those
486	488		financial statements, in accordance with generally accepted
487	489		accounting principles or international financial reporting
488	490		standards; or
489	491		(B) have been [(2) financial statements]
490	492		prepared using the method of accounting used to file the
491	493		corporation's federal income tax return or using any other
492	494		accounting practices and principles that are reasonable under the
493	495		circumstances;
494	496		(2) [(3)] financial information, including condensed
495	497		or summary financial statements, that is prepared on the same basis
496	498		as financial statements described by Subdivision (1) [or (2)];
497	499		(3) [(4)] a projection, a forecast, or other
498	500		forward-looking information relating to the future economic
499	501		performance, financial condition, or liquidity of the corporation
500	502		that is reasonable under the circumstances;
501	503		(4) [(5)] a fair valuation or information from any
502	504		other method that is reasonable under the circumstances; or
503	505		(5) [(6)] a combination of a statement, a valuation,
504	506		or information authorized by this section.
505	507		SECTION 22. Subchapter H, Chapter 21, Business
506	508		Organizations Code, is amended by adding Section 21.3521 to read as
507	509		follows:
508	510		Sec. 21.3521. SHAREHOLDER MEETINGS BY REMOTE
509	511		COMMUNICATION. Except for any limitation or other requirements in
510	512		the governing documents of the corporation, if a meeting of a
511	513		corporation's shareholders under Section 21.351 or 21.352 is held
512	514		by means of a telephone conference or other communication system
513	515		authorized by Section 6.002, the meeting is considered to have
514	516		satisfied the requirement of Section 6.002(a) that shareholders
515	517		participating in the meeting be able to communicate with all other
516	518		persons participating in the meeting if the corporation implements
517	519		reasonable measures to provide each shareholder entitled to vote at
518	520		the meeting, or the shareholder's proxyholder, a reasonable
519	521		opportunity to:
520	522		(1) vote on matters submitted to the shareholders; and
521	523		(2) read or hear the proceedings of the meeting
522	524		substantially concurrently with those proceedings.
523	525		SECTION 23. Section 21.551(2), Business Organizations
524	526		Code, is amended to read as follows:
525	527		(2) "Shareholder" includes [means] a shareholder as
526	528		defined by Section 1.002 or a beneficial owner whose shares are held
527	529		in a voting trust or by a nominee on the beneficial owner's behalf.
528	530		SECTION 24. Section 21.908(a), Business Organizations
529	531		Code, is amended to read as follows:
530	532		(a) If a defective corporate act ratified under this
531	533		subchapter would have required under any other provision of the
532	534		corporate statute the filing of a filing instrument or other
533	535		document with the filing officer, the corporation shall file a
534	536		certificate of validation with respect to the defective corporate
535	537		act in accordance with Chapter 4, regardless of whether a filing
536	538		instrument or other document was previously filed with respect to
537	539		the defective corporate act. [The filing of another filing
538	540		instrument or document is not required.]
539	541		SECTION 25. Section 22.508(a), Business Organizations
540	542		Code, is amended to read as follows:
541	543		(a) If a defective corporate act ratified under this
542	544		subchapter would have required under any other provision of the
543	545		corporate statute the filing of a filing instrument or other
544	546		document with the filing officer, the corporation shall file a
545	547		certificate of validation with respect to the defective corporate
546	548		act in accordance with Chapter 4, regardless of whether a filing
547	549		instrument or other document was previously filed with respect to
548	550		the defective corporate act. [The filing of another filing
549	551		instrument or document is not required.]
550	552		SECTION 26. Section 101.052(d), Business Organizations
551	553		Code, is amended to read as follows:
552	554		(d) The company agreement may contain any provisions for the
553	555		regulation and management of the affairs of the limited liability
554	556		company not inconsistent with law [or the certificate of
555	557		formation].
556	558		SECTION 27. Section 101.206, Business Organizations Code,
557	559		is amended by adding Subsections (c-1), (c-2), and (g) to read as
558	560		follows:
559	561		(c-1) For purposes of this section, the determination of the
560	562		amount of a limited liability company's liabilities or the value of
561	563		a company's assets may be based on:
562	564		(1) financial statements of the company, which may
563	565		include the financial statements of subsidiary entities or other
564	566		entities accounted for on a consolidated basis or on the equity
565	567		method of accounting, that:
566	568		(A) present the financial condition of the
567	569		company and any subsidiary or other entities included in those
568	570		financial statements, in accordance with generally accepted
569	571		accounting principles or international financial reporting
570	572		standards; or
571	573		(B) have been prepared using the method of
572	574		accounting used to file the company's federal income tax return or
573	575		using any other accounting practices and principles that are
574	576		reasonable under the circumstances;
575	577		(2) financial information, including condensed or
576	578		summary financial statements, that is prepared on the same basis as
577	579		financial statements described by Subdivision (1);
578	580		(3) projections, forecasts, or other forward-looking
579	581		information relating to the future economic performance, financial
580	582		condition, or liquidity of the company that is reasonable under the
581	583		circumstances;
582	584		(4) a fair valuation or information from any other
583	585		method that is reasonable under the circumstances; or
584	586		(5) a combination of a statement, valuation, or
585	587		information authorized by this subsection.
586	588		(c-2) Subsection (c-1) does not apply to the computation of
587	589		the franchise tax or any other tax imposed on a limited liability
588	590		company under the laws of this state.
589	591		(g) An action alleging a distribution is made in violation
590	592		of this section must be commenced not later than the second
591	593		anniversary of the date of the distribution.
592	594		SECTION 28. Section 101.251, Business Organizations Code,
593	595		is amended to read as follows:
594	596		Sec. 101.251. GOVERNING AUTHORITY. (a) The governing
595	597		authority of a limited liability company consists of:
596	598		(1) the managers of the company, if the company
597	599		agreement provides [company's certificate of formation states]
598	600		that the company is managed by [will have] one or more managers; or
599	601		(2) the members of the company, if the company
600	602		agreement provides [company's certificate of formation states]
601	603		that the company is managed by the members [will not have managers].
602	604		(b) If the company agreement does not provide otherwise, the
603	605		governing authority of a limited liability company consists of:
604	606		(1) the managers of the company, if the company's
605	607		certificate of formation states that the company has managers; or
606	608		(2) the members of the company, if the company's
607	609		certificate of formation does not state that the company has
608	610		managers.
609	611		SECTION 29. Section 101.451(3), Business Organizations
610	612		Code, is amended to read as follows:
611	613		(3) "Member" includes [means] a person who is a member
612	614		or is an assignee of a membership interest or a person who
613	615		beneficially owns a membership interest through a voting trust or a
614	616		nominee on the person's behalf.
615	617		SECTION 30. Section 101.457, Business Organizations Code,
616	618		is amended to read as follows:
617	619		Sec. 101.457. TOLLING OF STATUTE OF LIMITATIONS. A written
618	620		demand filed with the limited liability company under Section
619	621		101.453 tolls the statute of limitations on the claim on which
620	622		demand is made until the later of:
621	623		(1) the 31st day after the expiration of any waiting
622	624		period under Section 101.453(a) [153.403]; or
623	625		(2) the 31st day after the expiration of any stay
624	626		granted under Section 101.455 [153.405], including all
625	627		continuations of the stay.
626	628		SECTION 31. Section 153.151, Business Organizations Code,
627	629		is amended by adding Subsection (a-1) to read as follows:
628	630		(a-1) On formation of a limited partnership, a person
629	631		becomes a general partner if the person:
630	632		(1) has entered into the partnership agreement as a
631	633		general partner; and
632	634		(2) is named as a general partner in the certificate of
633	635		formation of the limited partnership.
634	636		SECTION 32. Section 153.210, Business Organizations Code,
635	637		is amended by adding Subsections (c), (d), and (e) to read as
636	638		follows:
637	639		(c) For purposes of this section, the determination of the
638	640		amount of a limited partnership's liabilities or the value of a
639	641		limited partnership's assets may be based on:
640	642		(1) financial statements of the limited partnership,
641	643		which may include the financial statements of subsidiary entities
642	644		or other entities accounted for on a consolidated basis or on the
643	645		equity method of accounting, that:
644	646		(A) present the financial condition of the
645	647		limited partnership and any subsidiary or other entities included
646	648		in those financial statements in accordance with generally accepted
647	649		accounting principles or international financial reporting
648	650		standards; or
649	651		(B) have been prepared using the method of
650	652		accounting used to file the partnership's federal income tax return
651	653		or using any other accounting practices and principles that are
652	654		reasonable under the circumstances;
653	655		(2) financial information, including condensed or
654	656		summary financial statements, that are prepared on the same basis
655	657		as financial statements described by Subdivision (1);
656	658		(3) projections, forecasts, or other forward-looking
657	659		information relating to the future economic performance, financial
658	660		condition, or liquidity of the limited partnership that is
659	661		reasonable under the circumstances;
660	662		(4) a fair valuation or information from any other
661	663		method that is reasonable under the circumstances; or
662	664		(5) a combination of a statement, valuation, or
663	665		information authorized by this subsection.
664	666		(d) Subsection (c) does not apply to the computation of the
665	667		franchise tax or any other tax imposed on a limited partnership
666	668		under the laws of this state.
667	669		(e) An action alleging a distribution is made in violation
668	670		of this section must be commenced not later than the second
669	671		anniversary of the date of the distribution.
670	672		SECTION 33. Section 200.209, Business Organizations Code,
671	673		is amended to read as follows:
672	674		Sec. 200.209. DETERMINATION OF SOLVENCY, NET ASSETS, STATED
673	675		CAPITAL, AND SURPLUS. (a) The determination of whether a real
674	676		estate investment trust is or would be insolvent and the
675	677		determination of the amount [value] of a real estate investment
676	678		trust's [net assets,] stated capital[,] or surplus or any component
677	679		of the trust's stated capital or surplus, or the value of the real
678	680		estate investment trust's net assets or any component of the trust's
679	681		net assets, [and each of the components of net assets, stated
680	682		capital, or surplus] may be based on:
681	683		(1) financial statements of the real estate investment
682	684		trust that present the financial condition of the real estate
683	685		investment trust in accordance with generally accepted accounting
684	686		principles or international financial reporting standards,
685	687		including financial statements that include subsidiary entities or
686	688		other entities accounted for on a consolidated basis or on the
687	689		equity method of accounting;
688	690		(2) financial statements prepared using the method of
689	691		accounting used to file the real estate investment trust's federal
690	692		income tax return or using any other accounting practices and
691	693		principles that are reasonable under the circumstances;
692	694		(3) financial information, including condensed or
693	695		summary financial statements, that is prepared on the same basis as
694	696		financial statements described by Subdivision (1) or (2);
695	697		(4) a projection, a forecast, or other forward-looking
696	698		information relating to the future economic performance, financial
697	699		condition, or liquidity of the real estate investment trust that is
698	700		reasonable under the circumstances;
699	701		(5) a fair valuation or information from any other
700	702		method that is reasonable under the circumstances; or
701	703		(6) a combination of a statement, a valuation, or
702	704		information authorized by this section.
703	705		(b) Subsection (a) does not apply to the computation of the
704	706		franchise tax or any other tax imposed on a real estate investment
705	707		trust under the laws of this state.
706	708		SECTION 34. The following provisions of the Business
707	709		Organizations Code are repealed:
708	710		(1) Section 3.253; and
709	711		(2) Section 3.254.
710	712		SECTION 35. Sections 101.206 and 153.210, Business
711	713		Organizations Code, as amended by this Act, apply only to a
712	714		distribution made on or after the effective date of this Act. A
713	715		distribution made before the effective date of this Act is governed
714	716		by the law in effect on the date the distribution was made, and the
715	717		former law is continued in effect for that purpose.
716	718		SECTION 36. This Act takes effect September 1, 2021.
717		-	______________________________ ______________________________
718		-	President of the Senate Speaker of the House
719		-	I hereby certify that S.B. No. 1203 passed the Senate on
720		-	April 9, 2021, by the following vote: Yeas 31, Nays 0.
721		-	______________________________
722		-	Secretary of the Senate
723		-	I hereby certify that S.B. No. 1203 passed the House on
724		-	April 30, 2021, by the following vote: Yeas 125, Nays 16, two
725		-	present not voting.
726		-	______________________________
727		-	Chief Clerk of the House
728		-	Approved:
729		-	______________________________
730		-	Date
731		-	______________________________
732		-	Governor