| 1 | 1 | | 89R5005 SRA-F |
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| 2 | 2 | | By: Hopper H.B. No. 4716 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to the authority of filing and foreign filing entities to |
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| 10 | 10 | | transact business in this state and the authority of the attorney |
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| 11 | 11 | | general to investigate those entities. |
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| 12 | 12 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 13 | 13 | | SECTION 1. Section 11.301(a), Business Organizations Code, |
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| 14 | 14 | | is amended to read as follows: |
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| 15 | 15 | | (a) A court may enter a decree requiring winding up of a |
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| 16 | 16 | | filing entity's business and termination of the filing entity's |
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| 17 | 17 | | existence if, as the result of an action brought under Section |
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| 18 | 18 | | 11.303, the court finds that one or more of the following problems |
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| 19 | 19 | | exist: |
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| 20 | 20 | | (1) the filing entity or its organizers did not comply |
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| 21 | 21 | | with a condition precedent to its formation; |
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| 22 | 22 | | (2) the certificate of formation of the filing entity |
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| 23 | 23 | | or any amendment to the certificate of formation was fraudulently |
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| 24 | 24 | | filed; |
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| 25 | 25 | | (3) a misrepresentation of a material matter has been |
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| 26 | 26 | | made in an application, report, affidavit, or other document |
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| 27 | 27 | | submitted by the filing entity under this code; |
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| 28 | 28 | | (4) the filing entity has continued to transact |
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| 29 | 29 | | business beyond the scope of the purpose of the filing entity as |
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| 30 | 30 | | expressed in its certificate of formation; or |
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| 31 | 31 | | (5) public interest requires winding up and |
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| 32 | 32 | | termination of the filing entity because: |
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| 33 | 33 | | (A) the filing entity has been: |
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| 34 | 34 | | (i) convicted of a felony or a high |
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| 35 | 35 | | managerial agent of the filing entity has been convicted of a felony |
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| 36 | 36 | | committed in the conduct of the filing entity's affairs; or |
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| 37 | 37 | | (ii) in an action brought by the attorney |
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| 38 | 38 | | general in a district court in this state, proved by a preponderance |
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| 39 | 39 | | of the evidence to be civilly liable for conduct that constitutes a |
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| 40 | 40 | | felony or a high managerial agent of the filing entity has been |
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| 41 | 41 | | proved by a preponderance of the evidence to be civilly liable for |
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| 42 | 42 | | conduct that constitutes a felony committed in the conduct of the |
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| 43 | 43 | | filing entity's affairs; |
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| 44 | 44 | | (B) the filing entity or high managerial agent |
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| 45 | 45 | | has engaged in a persistent course of the [felonious] conduct; and |
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| 46 | 46 | | (C) termination is necessary to prevent future |
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| 47 | 47 | | [felonious] conduct of the same character. |
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| 48 | 48 | | SECTION 2. Section 12.151, Business Organizations Code, is |
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| 49 | 49 | | amended to read as follows: |
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| 50 | 50 | | Sec. 12.151. AUTHORITY OF ATTORNEY GENERAL TO EXAMINE OR |
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| 51 | 51 | | INVESTIGATE CERTAIN ENTITIES [BOOKS AND RECORDS]. (a) Each filing |
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| 52 | 52 | | entity and foreign filing entity shall permit the attorney general |
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| 53 | 53 | | to: |
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| 54 | 54 | | (1) inspect, examine, and make copies, as the attorney |
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| 55 | 55 | | general considers necessary in the performance of a power or duty of |
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| 56 | 56 | | the attorney general, of any record of the entity, including the |
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| 57 | 57 | | entity's[. A record of the entity includes] minutes and a book, |
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| 58 | 58 | | account, letter, memorandum, document, check, voucher, telegram, |
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| 59 | 59 | | constitution, and bylaw of the entity; and |
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| 60 | 60 | | (2) on receipt of a notice received under Section |
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| 61 | 61 | | 11.302, interview witnesses and gather evidence necessary to |
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| 62 | 62 | | investigate the notice. |
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| 63 | 63 | | (b) An entity may file a suit for injunctive relief or a |
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| 64 | 64 | | declaratory judgment to contest an investigative action brought by |
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| 65 | 65 | | the attorney general under Subsection (a)(2). |
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| 66 | 66 | | SECTION 3. Section 11.301(b), Business Organizations Code, |
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| 67 | 67 | | is repealed. |
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| 68 | 68 | | SECTION 4. This Act takes effect September 1, 2025. |
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