Texas 2025 - 89th Regular

Texas House Bill HB4862 Compare Versions

Only one version of the bill is available at this time.

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1	1	89R9470 SRA-F
2	2	By: Longoria H.B. No. 4862
3	3
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5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to business organizations.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subchapter B, Chapter 1, Business Organizations
12	12	Code, is amended by adding Sections 1.056 and 1.057 to read as
13	13	follows:
14	14	Sec. 1.056. REFERENCES IN CODE TO CERTAIN DISTRICT COURTS
15	15	INCLUDES BUSINESS COURTS. Notwithstanding any other law, a
16	16	reference or grant of jurisdiction in this code, including a grant
17	17	of exclusive jurisdiction, to a district court constitutes a
18	18	reference or grant of concurrent jurisdiction to a business court
19	19	established under Chapter 25A, Government Code, if the business
20	20	court has authority and jurisdiction under Chapter 25A, Government
21	21	Code, to adjudicate the action or claim. This section does not
22	22	expand the authority of the business court under Chapter 25A,
23	23	Government Code.
24	24	Sec. 1.057. LAWS GOVERNING FORMATION, INTERNAL AFFAIRS, AND
25	25	GOVERNANCE OF DOMESTIC ENTITY. (a) The plain meaning of the laws
26	26	enacted by the legislature in this code must not be supplanted,
27	27	contravened, or modified by the laws or judicial decisions of any
28	28	other state.
29	29	(b) The managerial officials of a domestic entity, in
30	30	exercising their powers with respect to the domestic entity, may
31	31	consider the laws and judicial decisions of other states and the
32	32	practices observed by entities formed in those other states. The
33	33	failure or refusal of a managerial official to consider, or to
34	34	conform the exercise of the managerial official's powers to, the
35	35	laws, judicial decisions, or practices of another state does not
36	36	constitute or imply a breach of this code or of any duty existing
37	37	under the laws of this state.
38	38	SECTION 2. Section 2.115(b), Business Organizations Code,
39	39	is amended to read as follows:
40	40	(b) The governing documents of a domestic entity [may
41	41	require], consistent with applicable state and federal
42	42	jurisdictional requirements, may require that:
43	43	(1) any internal entity claims shall be brought only
44	44	in a court in this state; and
45	45	(2) one or more courts in this state having
46	46	jurisdiction shall serve as the exclusive forum and venue for any or
47	47	all internal entity claims.
48	48	SECTION 3. Section 3.007(a), Business Organizations Code,
49	49	is amended to read as follows:
50	50	(a) In addition to the information required by Section
51	51	3.005, the certificate of formation of a for-profit or professional
52	52	corporation must state:
53	53	(1) the aggregate number of shares the corporation is
54	54	authorized to issue;
55	55	(2) if the shares the corporation is authorized to
56	56	issue consist of one class of shares only, the par value of each
57	57	share or a statement that each share is without par value;
58	58	(3) if the corporation is to be managed by a board of
59	59	directors, the number of directors constituting the initial board
60	60	of directors and the name and address of each individual [person]
61	61	who will serve as director until the first annual meeting of
62	62	shareholders and until a successor is elected and qualified; and
63	63	(4) if the corporation is to be managed pursuant to a
64	64	shareholders' agreement in a manner other than by a board of
65	65	directors, the name and address of each person who will perform the
66	66	functions required by this code to be performed by the initial board
67	67	of directors.
68	68	SECTION 4. Section 3.015(a), Business Organizations Code,
69	69	is amended to read as follows:
70	70	(a) In addition to containing the information required
71	71	under Sections 3.005 and 3.014, the certificate of formation of a
72	72	professional association must:
73	73	(1) be signed by each member of the association; and
74	74	(2) state:
75	75	(A) the name and address of each original member
76	76	of the association;
77	77	(B) whether the association is to be governed by
78	78	a board of directors or by an executive committee; and
79	79	(C) the name and address of each individual
80	80	[person] serving as an initial member of the board of directors or
81	81	executive committee of the association.
82	82	SECTION 5. Section 3.060, Business Organizations Code, is
83	83	amended by amending Subsection (a) and adding Subsection (c) to
84	84	read as follows:
85	85	(a) In addition to the provisions authorized or required by
86	86	Section 3.059, a restated certificate of formation for a for-profit
87	87	corporation or professional corporation may omit:
88	88	(1) any prior statements regarding the number of
89	89	directors and the names and addresses of the individuals [persons]
90	90	serving as directors and, at the corporation's election, may insert
91	91	a statement regarding the current number of directors and the names
92	92	and addresses of the individuals [persons] currently serving as
93	93	directors; and
94	94	(2) any provisions that were necessary to effect a
95	95	change, exchange, reclassification, subdivision, combination, or
96	96	cancellation of shares, if the change, exchange, reclassification,
97	97	subdivision, combination, or cancellation has become effective.
98	98	(c) Any omission or insertion under Subsection (a) or
99	99	omission under Section 3.059(b) is not considered an amendment that
100	100	requires shareholder approval.
101	101	SECTION 6. Section 3.061, Business Organizations Code, is
102	102	amended by amending Subsection (a) and adding Subsection (c) to
103	103	read as follows:
104	104	(a) In addition to the provisions authorized or required by
105	105	Section 3.059, a restated certificate of formation for a nonprofit
106	106	corporation may omit any prior statements regarding the number of
107	107	directors and the names and addresses of the individuals [persons]
108	108	serving as directors and, at the corporation's election, may insert
109	109	a statement regarding the current number of directors and the names
110	110	and addresses of the individuals [persons] currently serving as
111	111	directors.
112	112	(c) Any omission or insertion under Subsection (a) or
113	113	omission under Section 3.059(b) is not considered an amendment that
114	114	requires member approval.
115	115	SECTION 7. Section 3.0611, Business Organizations Code, is
116	116	amended to read as follows:
117	117	Sec. 3.0611. SUPPLEMENTAL PROVISIONS FOR RESTATED
118	118	CERTIFICATE OF FORMATION FOR LIMITED LIABILITY COMPANY. (a) In
119	119	addition to the provisions authorized or required by Section 3.059,
120	120	a restated certificate of formation for a limited liability company
121	121	may omit any prior statements regarding whether the company has or
122	122	does not have managers and the names and addresses of managers or
123	123	members and, at the company's election, may insert a statement:
124	124	(1) regarding whether the company currently has or
125	125	does not have managers;
126	126	(2) that the company currently has managers and the
127	127	names and addresses of the persons currently serving as managers;
128	128	or
129	129	(3) that the company currently does not have managers
130	130	and the names and addresses of the current members of the company.
131	131	(b) Any omission or insertion under Subsection (a) or
132	132	omission under Section 3.059(b) is not considered an amendment that
133	133	requires member approval.
134	134	SECTION 8. Section 3.062, Business Organizations Code, is
135	135	amended to read as follows:
136	136	Sec. 3.062. SUPPLEMENTAL PROVISIONS FOR RESTATED
137	137	CERTIFICATE OF FORMATION FOR REAL ESTATE INVESTMENT TRUST. (a) In
138	138	addition to the provisions authorized or required by Section 3.059,
139	139	a restated certificate of formation for a real estate investment
140	140	trust may update the current number of trust managers and the names
141	141	and addresses of the individuals [persons] serving as trust
142	142	managers.
143	143	(b) Any update under Subsection (a) or Section 3.059(b) is
144	144	not considered an amendment that requires shareholder approval.
145	145	SECTION 9. Subchapter C, Chapter 3, Business Organizations
146	146	Code, is amended by adding Section 3.106 to read as follows:
147	147	Sec. 3.106. AUTHORIZATION OF PLANS, AGREEMENTS,
148	148	INSTRUMENTS, AND OTHER DOCUMENTS. (a) If this code expressly
149	149	requires the governing authority to approve or take other action
150	150	with respect to any plan, agreement, instrument, or other document,
151	151	the plan, agreement, instrument, or other document may be approved
152	152	by the governing authority in final form or in substantially final
153	153	form.
154	154	(b) If the governing authority has acted to approve or take
155	155	other action with respect to a plan, agreement, instrument, or
156	156	other document that is required by this code to be filed with the
157	157	secretary of state or referenced in any certificate to be filed with
158	158	the secretary of state, the governing authority may, at any time
159	159	after acting to approve or taking that other action and before the
160	160	effectiveness of the filing with the secretary of state, act to
161	161	ratify the plan, agreement, instrument, or other document. That
162	162	ratification is considered:
163	163	(1) to be effective as of the time of the original act
164	164	to approve or the original taking of other action by the governing
165	165	authority; and
166	166	(2) to satisfy any requirement under this code that
167	167	the governing authority approve or take other action with respect
168	168	to the plan, agreement, instrument, or other document in a specific
169	169	manner or sequence.
170	170	SECTION 10. Section 4.152, Business Organizations Code, is
171	171	amended to read as follows:
172	172	Sec. 4.152. FILING FEES: FOR-PROFIT CORPORATIONS. For a
173	173	filing by or for a for-profit corporation, the secretary of state
174	174	shall impose the following fees:
175	175	(1) for filing a certificate of formation, $300;
176	176	(2) for filing a certificate of amendment, $150;
177	177	(3) for filing an application of a foreign corporation
178	178	for registration to transact business in this state, $750;
179	179	(4) for filing an application of a foreign corporation
180	180	for an amended registration to transact business in this state,
181	181	$150;
182	182	(5) for filing a restated certificate of formation and
183	183	accompanying statement, $300;
184	184	(6) for filing a statement of change of registered
185	185	office, registered agent, or both, $15;
186	186	(7) for filing a statement of change of name or address
187	187	of a registered agent, $15, except that the maximum fee for
188	188	simultaneous filings by a registered agent for more than one
189	189	corporation may not exceed $750;
190	190	(8) for filing a statement of resolution establishing
191	191	one or more series of shares, $15;
192	192	(9) for filing a certificate of termination, $40;
193	193	(10) for filing a certificate of withdrawal of a
194	194	foreign corporation, $15;
195	195	(11) for filing a certificate from the home state of a
196	196	foreign corporation that the corporation no longer exists in that
197	197	state, $15;
198	198	(12) for filing a bylaw or agreement restricting
199	199	transfer of shares or securities other than as an amendment to the
200	200	certificate of formation, $15;
201	201	(13) for filing an application for reinstatement of a
202	202	certificate of formation or registration as a foreign corporation
203	203	following forfeiture under the Tax Code, $75;
204	204	(14) for filing an application for reinstatement of a
205	205	corporation or registration as a foreign corporation after
206	206	involuntary termination or revocation, $75;
207	207	(15) for filing a certificate of validation, $15, plus
208	208	the filing fee imposed for filing each new filing instrument that is
209	209	attached as an exhibit to the certificate of validation under
210	210	Section 21.908(b)(3)(B) [21.908(b)(3)(C)]; and
211	211	(16) for filing any instrument as provided by this
212	212	code for which this section does not expressly provide a fee, $15.
213	213	SECTION 11. Section 4.153, Business Organizations Code, is
214	214	amended to read as follows:
215	215	Sec. 4.153. FILING FEES: NONPROFIT CORPORATIONS. For a
216	216	filing by or for a nonprofit corporation, the secretary of state
217	217	shall impose the following fees:
218	218	(1) for filing a certificate of formation, $25;
219	219	(2) for filing a certificate of amendment, $25;
220	220	(3) for filing a certificate of merger, conversion, or
221	221	consolidation, without regard to whether the surviving or new
222	222	corporation is a domestic or foreign corporation, $50;
223	223	(4) for filing a statement of change of a registered
224	224	office, registered agent, or both, $5;
225	225	(5) for filing a certificate of termination, $5;
226	226	(6) for filing an application of a foreign corporation
227	227	for registration to conduct affairs in this state, $25;
228	228	(7) for filing an application of a foreign corporation
229	229	for an amended registration to conduct affairs in this state, $25;
230	230	(8) for filing a certificate of withdrawal of a
231	231	foreign corporation, $5;
232	232	(9) for filing a restated certificate of formation and
233	233	accompanying statement, $50;
234	234	(10) for filing a statement of change of name or
235	235	address of a registered agent, $15, except that the maximum fee for
236	236	simultaneous filings by a registered agent for more than one
237	237	corporation may not exceed $250;
238	238	(11) for filing a report under Chapter 22, $5;
239	239	(12) for filing a report under Chapter 22 to reinstate
240	240	a corporation's right to conduct affairs in this state, $5, plus a
241	241	late fee in the amount of $5 or in the amount of $1 for each month or
242	242	part of a month that the report remains unfiled, whichever amount is
243	243	greater, except that the late fee may not exceed $25;
244	244	(13) for filing a report under Chapter 22 to reinstate
245	245	a corporation or registration following involuntary termination or
246	246	revocation, $25;
247	247	(14) for filing a certificate of validation, $5, plus
248	248	the filing fee imposed for filing each new filing instrument that is
249	249	attached as an exhibit to the certificate of validation under
250	250	Section 22.508(c)(3)(B) [22.508(c)(3)(C)]; and
251	251	(15) for filing any instrument of a domestic or
252	252	foreign corporation as provided by this code for which this section
253	253	does not expressly provide a fee, $5.
254	254	SECTION 12. Section 4.162(b), Business Organizations Code,
255	255	is amended to read as follows:
256	256	(b) For a filing by or for a registered series of a domestic
257	257	limited liability company when no other fee has been provided, the
258	258	secretary of state shall impose the same fee as the filing fee for a
259	259	similar instrument under Section 4.151 or 4.154.
260	260	SECTION 13. Section 6.051, Business Organizations Code, is
261	261	amended by adding Subsection (c) to read as follows:
262	262	(c) When a notice is required or permitted by this code or
263	263	the governing documents of a domestic entity to be given to an
264	264	owner, member, or governing person of the domestic entity, a
265	265	document enclosed with, or annexed or appended to, the notice is
266	266	considered part of the notice for the purpose of determining
267	267	whether notice was given under this code and the governing
268	268	documents.
269	269	SECTION 14. Section 6.202(d), Business Organizations Code,
270	270	is amended to read as follows:
271	271	(d) The entity shall promptly provide written notice to
272	272	[notify] each person who is an owner or member as of the record date
273	273	for the action, as determined by Section 6.102, who did not sign a
274	274	consent described by Subsection (b) of the action that is the
275	275	subject of the consent. The notice required by this subsection:
276	276	(1) in addition to other information required by
277	277	applicable law, must contain a reasonable description of the action
278	278	that is the subject of the consent; and
279	279	(2) may, instead of containing the complete notice in
280	280	writing, include information directing the owner or member to a
281	281	publicly available electronic resource at which a reasonable
282	282	description of the action that is the subject of the consent and any
283	283	other information required by applicable law may be accessed by the
284	284	owner or member without subscription or cost.
285	285	SECTION 15. Section 7.001, Business Organizations Code, is
286	286	amended to read as follows:
287	287	Sec. 7.001. LIMITATION OF LIABILITY OF MANAGERIAL OFFICIAL
288	288	[GOVERNING PERSON]. (a) Subsections (b) and (c) apply to:
289	289	(1) a domestic entity other than a partnership or
290	290	limited liability company;
291	291	(2) another organization incorporated or organized
292	292	under another law of this state; and
293	293	(3) to the extent permitted by federal law, a
294	294	federally chartered bank, savings and loan association, or credit
295	295	union.
296	296	(b) The certificate of formation or similar instrument of an
297	297	organization to which this section applies may provide that a
298	298	managerial official [governing person] of the organization is not
299	299	liable, or is liable only to the extent provided by the certificate
300	300	of formation or similar instrument, to the organization or its
301	301	owners or members for monetary damages for an act or omission by the
302	302	managerial official [person] in the managerial official's
303	303	[person's] capacity as a managerial official [governing person].
304	304	(c) Subsection (b) does not authorize the elimination or
305	305	limitation of the liability of a managerial official [governing
306	306	person] to the extent the managerial official [person] is found
307	307	liable under applicable law for:
308	308	(1) a breach of the managerial official's [person's]
309	309	duty of loyalty, if any, to the organization or its owners or
310	310	members;
311	311	(2) an act or omission not in good faith that:
312	312	(A) constitutes a breach of duty of the
313	313	managerial official [person] to the organization; or
314	314	(B) involves intentional misconduct or a knowing
315	315	violation of law;
316	316	(3) a transaction from which the managerial official
317	317	[person] received an improper benefit, regardless of whether the
318	318	benefit resulted from an action taken within the scope of the
319	319	managerial official's [person's] duties; or
320	320	(4) an act or omission for which the liability of a
321	321	managerial official [governing person] is expressly provided by an
322	322	applicable statute.
323	323	(d) The liability of a managerial official [governing
324	324	person] may be limited or eliminated:
325	325	(1) in a general partnership by its partnership
326	326	agreement to the same extent Subsections (b) and (c) permit the
327	327	limitation or elimination of liability of a managerial official
328	328	[governing person] of an organization to which those subsections
329	329	apply and to the additional extent permitted under Chapter 152;
330	330	(2) in a limited partnership by its partnership
331	331	agreement to the same extent Subsections (b) and (c) permit the
332	332	limitation or elimination of liability of a managerial official
333	333	[governing person] of an organization to which those subsections
334	334	apply and to the additional extent permitted under Chapter 153 and,
335	335	to the extent applicable to limited partnerships, Chapter 152; and
336	336	(3) in a limited liability company by its certificate
337	337	of formation or company agreement to the same extent Subsections
338	338	(b) and (c) permit the limitation or elimination of liability of a
339	339	managerial official [governing person] of an organization to which
340	340	those subsections apply and to the additional extent permitted
341	341	under Section 101.401.
342	342	SECTION 16. Section 10.002, Business Organizations Code, is
343	343	amended by adding Subsection (e) to read as follows:
344	344	(e) Unless otherwise expressly provided by the plan of
345	345	merger, a disclosure letter, disclosure schedules, or similar
346	346	documents or instruments delivered in connection with the plan of
347	347	merger is not considered part of the plan of merger for purposes of
348	348	this chapter, but those documents or instructions have the effects
349	349	provided in the plan of merger.
350	350	SECTION 17. Section 10.004, Business Organizations Code, is
351	351	amended to read as follows:
352	352	Sec. 10.004. PLAN OF MERGER: PERMISSIVE PROVISIONS. (a) A
353	353	plan of merger may include:
354	354	(1) amendments to, restatements of, or amendments and
355	355	restatements of the governing documents of any surviving
356	356	organization, including a certificate of amendment, a restated
357	357	certificate of formation without amendment, or a restated
358	358	certificate of formation containing amendments;
359	359	(2) provisions relating to an interest exchange,
360	360	including a plan of exchange; [and]
361	361	(3) provisions for the appointment, at or after the
362	362	time at which the plan of merger is adopted by the owners or members
363	363	of a party to the merger, of one or more persons, which may include
364	364	an entity surviving or resulting from the merger or any managerial
365	365	official, representative, or agent of a party to the merger or of a
366	366	surviving or resulting organization, as representative of the
367	367	owners or members of a party to the merger, including those whose
368	368	ownership interests or membership interests are cancelled,
369	369	converted, or exchanged in the merger; and
370	370	(4) any other provisions relating to the merger that
371	371	are not required by this chapter.
372	372	(b) Provisions for the appointment of a representative in a
373	373	plan of merger under Subsection (a)(3) may:
374	374	(1) delegate to the representative the sole and
375	375	exclusive authority to take action on behalf of the owners or
376	376	members under the plan of merger, including the authority to take
377	377	any action the representative determines is necessary or
378	378	appropriate to enforce or settle the rights of the owners or members
379	379	under the plan of merger, subject to the terms and conditions
380	380	prescribed by the plan of merger;
381	381	(2) prescribe the irrevocable nature and binding
382	382	effect of the appointment as to all owners or members to be bound by
383	383	the appointment from and after the approval of the plan of merger by
384	384	those owners or members in accordance with this subchapter; and
385	385	(3) provide that any of the provisions:
386	386	(A) may not be amended after the merger has
387	387	become effective; or
388	388	(B) may be amended only with the consent or
389	389	approval of persons specified in the plan of merger.
390	390	SECTION 18. Section 10.006(e), Business Organizations
391	391	Code, is amended to read as follows:
392	392	(e) Sections 10.001(c)-(e), 10.002(c), 10.003, 10.004, and
393	393	10.007-10.010 apply to a merger approved under Subsection (d),
394	394	except that the resolution approving the merger should be
395	395	considered the plan of merger for purposes of those sections.
396	396	SECTION 19. Section 10.052, Business Organizations Code, is
397	397	amended by adding Subsection (d) to read as follows:
398	398	(d) Unless otherwise expressly provided by the plan of
399	399	exchange, a disclosure letter, disclosure schedules, or similar
400	400	documents or instruments delivered in connection with the plan of
401	401	exchange is not considered part of the plan of exchange for purposes
402	402	of this chapter, but the documents or instruments have the effect
403	403	provided in the plan of exchange.
404	404	SECTION 20. Section 10.053, Business Organizations Code, is
405	405	amended to read as follows:
406	406	Sec. 10.053. PLAN OF EXCHANGE: PERMISSIVE PROVISIONS. (a)
407	407	A plan of exchange may include:
408	408	(1) provisions for the appointment, at or after the
409	409	time at which the plan of exchange is adopted by the owners or
410	410	members whose ownership or membership interests are being acquired
411	411	in the interest exchange, of one or more persons, which may include
412	412	an entity that is a party to the interest exchange or any managerial
413	413	official, representative, or agent of a party to the interest
414	414	exchange, as representative of those owners or members; and
415	415	(2) any other provisions not required by Section
416	416	10.052 relating to the interest exchange.
417	417	(b) Provisions for the appointment of a representative in a
418	418	plan of exchange under Subsection (a)(1) may:
419	419	(1) delegate to the representative the sole and
420	420	exclusive authority to take action on behalf of the owners or
421	421	members under the plan of exchange, including the authority to take
422	422	actions the representative determines necessary or appropriate to
423	423	enforce or settle the rights of the owners or members under the plan
424	424	of exchange, subject to the terms and conditions as prescribed by
425	425	the plan of exchange;
426	426	(2) prescribe the irrevocable nature and binding
427	427	effect of the appointment as to all owners or members to be bound by
428	428	the appointment from and after the approval of the plan of exchange
429	429	by those owners or members in accordance with this subchapter; and
430	430	(3) provide that any of the provisions:
431	431	(A) may not be amended after the interest
432	432	exchange has become effective; or
433	433	(B) may be amended only with the consent or
434	434	approval of persons specified in the plan of exchange.
435	435	SECTION 21. Section 10.104, Business Organizations Code, is
436	436	amended to read as follows:
437	437	Sec. 10.104. PLAN OF CONVERSION: PERMISSIVE PROVISIONS.
438	438	(a) A plan of conversion may include other provisions relating to
439	439	the conversion that are not inconsistent with law.
440	440	(b) An action to be taken by the converted entity in
441	441	connection with the conversion of the converting entity that is
442	442	provided by the plan of conversion adopted in the manner required by
443	443	Section 10.101 or 10.102, as applicable, and that is within the
444	444	power of the converted entity under the law of its jurisdiction of
445	445	formation:
446	446	(1) is considered authorized, adopted, and approved,
447	447	as applicable, by:
448	448	(A) the converted entity; and
449	449	(B) the governing authority and owners or members
450	450	of the converted entity, as applicable; and
451	451	(2) may not require any further action of the
452	452	governing authority, owners, or members of the converted entity for
453	453	purposes of this code.
454	454	SECTION 22. Section 21.053, Business Organizations Code, is
455	455	amended by amending Subsection (c) and adding Subsections (d), (e),
456	456	(f), and (g) to read as follows:
457	457	(c) Notwithstanding Section 21.054 and except as otherwise
458	458	provided by the certificate of formation, the board of directors of
459	459	a corporation that has outstanding shares:
460	460	(1) may, without shareholder approval, adopt an
461	461	amendment to the corporation's certificate of formation to:
462	462	(A) change the word or abbreviation in its
463	463	corporate name as required by Section 5.054(a) to be a different
464	464	word or abbreviation required by that section;
465	465	(B) omit any provision that specifies the name
466	466	and address of each organizer or director; or
467	467	(C) omit any provisions that were necessary to
468	468	effect a change, exchange, reclassification, subdivision,
469	469	combination, or cancellation of shares, if the change, exchange,
470	470	reclassification, subdivision, combination, or cancellation has
471	471	become effective; and
472	472	(2) if the corporation has only one class of
473	473	outstanding stock that is not divided into series and in which no
474	474	change is made in any par value of shares of that class, may,
475	475	without shareholder approval, adopt an amendment to the
476	476	corporation's certificate of formation to:
477	477	(A) reclassify by subdividing the issued shares
478	478	of the class into a greater number of issued shares of the class;
479	479	and
480	480	(B) if the reclassification is primarily for the
481	481	purpose of maintaining the listing eligibility of the class on any
482	482	applicable national securities exchange, reclassify by combining
483	483	the issued shares of the class into a lesser number of issued shares
484	484	of the class.
485	485	(d) An amendment described by Subsection (c)(2)(A) may also
486	486	increase the number of authorized shares of the class up to an
487	487	amount determined by multiplying the existing number of authorized
488	488	shares of the class by the same multiple by which the issued shares
489	489	of the class are subdivided in the reclassification and rounding up
490	490	any resulting fractional number of shares to a whole number of
491	491	shares.
492	492	(e) An amendment described by Subsection (c)(2)(B) may also
493	493	decrease the number of authorized shares of the class to an amount
494	494	determined by dividing the existing number of authorized shares of
495	495	the class by the same multiple by which the issued shares of the
496	496	class are combined in the reclassification and rounding up any
497	497	resulting fractional number of shares to a whole number of shares.
498	498	(f) When a reclassification of issued shares with par value
499	499	is made by a corporation under:
500	500	(1) Subsection (c)(2)(A), an amount of surplus
501	501	designated by the corporation's board of directors that is not less
502	502	than the aggregate par value of the shares issued as a result of the
503	503	reclassification shall be transferred to stated capital; or
504	504	(2) Subsection (c)(2)(B), an amount of surplus equal
505	505	to an aggregate value with respect to the shares issued as a result
506	506	of the reclassification, as set by the board of directors when the
507	507	reclassification is authorized, shall be transferred to stated
508	508	capital.
509	509	(g) A corporation may not effect a reclassification under
510	510	Subsection (c)(2)(A) if the surplus of the corporation is less than
511	511	the amount required by Subsection (f)(1) or (f)(2), as applicable,
512	512	to be transferred to stated capital at the time the
513	513	reclassification becomes effective.
514	514	SECTION 23. Section 21.160(c), Business Organizations
515	515	Code, is amended to read as follows:
516	516	(c) A corporation may dispose of treasury shares for
517	517	consideration that may be determined by the board of directors. The
518	518	consideration received for treasury shares may:
519	519	(1) have a value greater or less than, or equal to, the
520	520	par value, if any, of the shares; and
521	521	(2) consist of the types of consideration described by
522	522	Section 21.159.
523	523	SECTION 24. Section 21.168(e), Business Organizations
524	524	Code, is amended to read as follows:
525	525	(e) An authorization of the board of directors may delegate
526	526	to a person or persons, in addition to the board of directors, the
527	527	authority to enter into one or more transactions to issue rights or
528	528	options. For a transaction entered into by a person or persons to
529	529	whom authority was delegated under this subsection, the rights or
530	530	options may be issued in the number, at the time, and for the
531	531	consideration, and under the other terms on which shares may be
532	532	issued on the exercise of those rights and options, as the person or
533	533	persons may determine if that authorization of the board of
534	534	directors:
535	535	(1) states:
536	536	(A) the maximum number of [rights or options, and
537	537	the maximum number of] shares issuable on exercise of those rights
538	538	or options, that may be issued under the authorization;
539	539	(B) the period of time during which the rights or
540	540	options[,] and the period of time during which the shares issuable
541	541	on exercise of those rights or options, may be issued; and
542	542	(C) the minimum amount of consideration:
543	543	(i) if any, for which the rights or options
544	544	may be issued; and
545	545	(ii) for the shares issuable on exercise of
546	546	the rights or options; and
547	547	(2) does not permit the person or persons to whom
548	548	authority was delegated to issue rights, options, or shares to that
549	549	person or those persons.
550	550	SECTION 25. Section 21.218, Business Organizations Code, is
551	551	amended by amending Subsection (b) and adding Subsection (b-2) to
552	552	read as follows:
553	553	(b) On written demand stating a proper purpose, a holder of
554	554	shares of a corporation for at least six months immediately
555	555	preceding the holder's demand, or a holder of at least five percent
556	556	of all of the outstanding shares of a corporation, is entitled to
557	557	examine and copy, at a reasonable time at the corporation's
558	558	principal place of business or other location approved by the
559	559	corporation and the holder, the corporation's books, records of
560	560	account, minutes, share transfer records, and other records,
561	561	whether in written or other tangible form, if the records are
562	562	[record is] reasonably related to and appropriate to examine and
563	563	copy for that proper purpose.
564	564	(b-2) If the corporation reasonably determines that the
565	565	written demand is in connection with a pending derivative
566	566	proceeding in the right of the corporation under Subchapter L that
567	567	is instituted or maintained by the holder or the holder's
568	568	affiliate, or a pending civil lawsuit to which the corporation, or
569	569	its affiliate, and the holder, or the holder's affiliate, are
570	570	adversarial named parties, the demand is not a proper purpose under
571	571	Subsection (b). This subsection does not impair any rights of:
572	572	(1) the holder or the holder's affiliate to obtain
573	573	discovery of records from the corporation:
574	574	(A) in the civil lawsuit; or
575	575	(B) subject to Section 21.556, in the derivative
576	576	proceeding; and
577	577	(2) the holder to obtain a court order to compel
578	578	production of records of the corporation for examination by the
579	579	holder under Subsection (c).
580	580	SECTION 26. Section 21.402, Business Organizations Code, is
581	581	amended to read as follows:
582	582	Sec. 21.402. BOARD MEMBER ELIGIBILITY REQUIREMENTS. Unless
583	583	the certificate of formation or bylaws of a corporation provide
584	584	otherwise, a director [person] is not required to be a resident of
585	585	this state or a shareholder of the corporation [to serve as a
586	586	director]. The certificate of formation or bylaws may prescribe
587	587	other qualifications for directors.
588	588	SECTION 27. Section 21.404, Business Organizations Code, is
589	589	amended to read as follows:
590	590	Sec. 21.404. DESIGNATION OF INITIAL BOARD OF DIRECTORS. If
591	591	the corporation is to be managed by a board of directors, the
592	592	certificate of formation of a corporation must state the name and
593	593	address [names and addresses] of each individual who will serve as
594	594	director until the first annual meeting of shareholders and until a
595	595	successor is elected and qualified [the persons constituting the
596	596	initial board of directors of the corporation].
597	597	SECTION 28. Section 21.416, Business Organizations Code, is
598	598	amended by adding Subsections (g), (h), (i), (j), and (k) to read as
599	599	follows:
600	600	(g) Subject to Subsection (c), the board of directors may
601	601	adopt resolutions that authorize formation of a committee of
602	602	independent and disinterested directors to review and approve
603	603	transactions, whether or not contemplated at the time of the
604	604	committee's formation or the filing of a petition under Subsection
605	605	(h) that involves the corporation or any of its subsidiaries and the
606	606	persons described in the resolutions, including a controlling
607	607	shareholder, director, or officer.
608	608	(h) The corporation may petition a court having
609	609	jurisdiction to hold an evidentiary hearing to determine whether
610	610	the directors appointed to a committee under Subsection (g) are
611	611	independent and disinterested with respect to any transactions
612	612	involving the corporation or any of its subsidiaries and the
613	613	persons described in the resolution. In the petition, the
614	614	corporation shall designate legal counsel to act on behalf of the
615	615	corporation and its shareholders, other than the persons described
616	616	in the resolution, and shall give notice to the shareholders of the
617	617	designated counsel and the petition. If the corporation has a class
618	618	of shares listed on a national securities exchange, the required
619	619	notice may be provided through the filing of a current report with
620	620	the Securities and Exchange Commission in accordance with the
621	621	requirements of the Securities Exchange Act of 1934 (15 U.S.C.
622	622	Section 78a et seq.), including related regulations.
623	623	(i) Promptly after receiving the petition, and not later
624	624	than the 10th day after the date of the notice described by
625	625	Subsection (h) has been given, the court shall hold a preliminary
626	626	hearing to determine the appropriate legal counsel to represent the
627	627	corporation and its shareholders, other than the persons described
628	628	in the resolution, whether or not the same as the legal counsel
629	629	identified in the petition. Any other legal counsel representing a
630	630	shareholder, other than the persons described in the resolution,
631	631	may participate in the hearing to request designation by the court
632	632	as the appropriate legal counsel.
633	633	(j) Promptly after the determination of the appropriate
634	634	legal counsel by the court, the court shall hold an evidentiary
635	635	hearing as to whether the directors on the committee are
636	636	independent and disinterested with respect to transactions
637	637	involving the corporation or any of its subsidiaries and the
638	638	persons described in the resolution. The appropriate legal counsel
639	639	determined by Subsection (i) and legal counsel for the corporation
640	640	may participate in the hearing. After hearing and reviewing the
641	641	evidence presented, the court will make its determination as to
642	642	whether the directors are independent and disinterested.
643	643	(k) The court's determination that the directors are
644	644	independent and disinterested under Subsection (j) is
645	645	presumptively dispositive and binding in any subsequent lawsuit or
646	646	other legal proceeding involving the issue of whether those
647	647	directors are independent and disinterested with respect to a
648	648	particular transaction involving the corporation or any of its
649	649	subsidiaries and any of the persons described in the resolution. To
650	650	overcome that presumption, any person asserting in the subsequent
651	651	lawsuit or other legal proceeding that the directors are not
652	652	independent and disinterested:
653	653	(1) must provide evidence of material facts not
654	654	presented in the proceedings in which the court made that
655	655	determination; and
656	656	(2) has the burden to establish that one or more of
657	657	those directors is not independent and disinterested with respect
658	658	to the particular transaction involving the corporation or any of
659	659	its subsidiaries and any of the persons described in the
660	660	resolution.
661	661	SECTION 29. Section 21.551(2), Business Organizations
662	662	Code, is amended to read as follows:
663	663	(2) "Shareholder" includes:
664	664	(A) a shareholder as defined by Section 1.002;
665	665	(B) [or] a beneficial owner whose shares are held
666	666	in a voting trust or by a nominee on the beneficial owner's behalf;
667	667	or
668	668	(C) except for Section 21.563(a)(1), two or more
669	669	persons described by Paragraph (A) or (B) acting together, under
670	670	any agreement, arrangement, or understanding, with respect to a
671	671	derivative proceeding.
672	672	SECTION 30. Section 21.554, Business Organizations Code, is
673	673	amended to read as follows:
674	674	Sec. 21.554. DETERMINATION BY DIRECTORS OR INDEPENDENT
675	675	PERSONS. (a) A determination of how to proceed on allegations made
676	676	in a demand or petition relating to a derivative proceeding must be
677	677	made by an affirmative vote of the majority of:
678	678	(1) all independent and disinterested directors of the
679	679	corporation, regardless of whether the independent and
680	680	disinterested directors constitute a quorum of the board of
681	681	directors;
682	682	(2) a committee consisting of one or more independent
683	683	and disinterested directors appointed by an affirmative vote of the
684	684	majority of one or more independent and disinterested directors,
685	685	regardless of whether the independent and disinterested directors
686	686	constitute a quorum of the board of directors; or
687	687	(3) a panel of one or more independent and
688	688	disinterested individuals appointed by the court on a motion by the
689	689	corporation listing the names of the individuals, who may be
690	690	directors, to be appointed and stating that, to the best of the
691	691	corporation's knowledge, the individuals to be appointed are
692	692	disinterested and qualified to make the determinations
693	693	contemplated by Section 21.558.
694	694	(b) The court shall appoint a panel under Subsection (a)(3)
695	695	if the court determines [finds] that the individuals recommended by
696	696	the corporation are independent and disinterested and are otherwise
697	697	qualified with respect to expertise, experience, independent
698	698	judgment, and other factors considered appropriate by the court
699	699	under the circumstances to make the determinations. An individual
700	700	appointed by the court to a panel under this section may not be held
701	701	liable to the corporation or the corporation's shareholders for an
702	702	action taken or omission made by the individual in that capacity,
703	703	except for an act or omission constituting fraud or wilful
704	704	misconduct.
705	705	(c) Before the corporation's determination of how to
706	706	proceed on the allegations under Subsection (a), the corporation
707	707	may petition the court in which the derivative proceeding has been
708	708	instituted, or a court having jurisdiction if no derivative
709	709	proceeding has been instituted, to request a determination as to
710	710	whether the directors identified or appointed under Subsection
711	711	(a)(1) or (2) are independent and disinterested with respect to the
712	712	allegations made in the demand.
713	713	(d) For purposes of Subsection (c), if a derivative
714	714	proceeding has been instituted, the corporation must promptly
715	715	deliver a copy of the petition to the shareholder making the demand
716	716	who will have the right, if promptly exercised, to challenge the
717	717	petition before the court makes its determination.
718	718	(e) After hearing and reviewing the evidence presented, the
719	719	court will make its determination as to whether the directors are
720	720	independent and disinterested.
721	721	(f) The court's determination that the directors or
722	722	individuals are independent and disinterested under this section is
723	723	presumptively dispositive and binding in the derivative
724	724	proceeding, if it has been instituted, or in any subsequent lawsuit
725	725	or other legal proceeding involving the issue of whether those
726	726	directors or individuals were independent and disinterested when
727	727	they made the determination on how to proceed with respect to the
728	728	allegations made.
729	729	(g) To overcome the presumption under Subsection (f), any
730	730	person asserting in the derivative proceeding or the subsequent
731	731	lawsuit or other legal proceeding that the directors or individuals
732	732	are not independent and disinterested:
733	733	(1) must provide evidence of material facts not
734	734	presented in the proceedings in which the court made that
735	735	determination; and
736	736	(2) has the burden to establish that one or more of
737	737	those directors or individuals was not independent and
738	738	disinterested when the director or individuals made the
739	739	determination on how to proceed with respect to the allegations
740	740	made in the demand.
741	741	SECTION 31. Section 21.561, Business Organizations Code, is
742	742	amended by adding Subsection (c) to read as follows:
743	743	(c) For purposes of Subsection (b)(1), substantial benefit
744	744	to the corporation does not include additional or amended
745	745	disclosures made to the shareholders, regardless of materiality.
746	746	SECTION 32. Section 21.562(a), Business Organizations
747	747	Code, is amended to read as follows:
748	748	(a) In a derivative proceeding brought in the right of a
749	749	foreign corporation, the matters covered by this subchapter are
750	750	governed by the laws of the jurisdiction of formation of the foreign
751	751	corporation, except for Sections 21.555, 21.560, and 21.561, which
752	752	with respect to foreign corporations are procedural provisions and
753	753	do not relate to the internal affairs of the foreign corporation,
754	754	unless applying the laws of the jurisdiction of formation of the
755	755	foreign corporation requires otherwise with respect to Section
756	756	21.555.
757	757	SECTION 33. Section 21.563(b), Business Organizations
758	758	Code, is amended to read as follows:
759	759	(b) Sections 21.552-21.560 do not apply to [a claim or] a
760	760	derivative proceeding by a shareholder of a closely held
761	761	corporation against a present or former director, officer, or
762	762	shareholder of the corporation. In the event the shareholder also
763	763	asserts a claim in the [or] derivative proceeding [is also made]
764	764	against a person who is not a present or former [that] director,
765	765	officer, or shareholder, this subsection applies only to a [the]
766	766	claim in the [or] derivative proceeding against a present or former
767	767	[the] director, officer, or shareholder.
768	768	SECTION 34. Sections 21.901(2) and (4), Business
769	769	Organizations Code, are amended to read as follows:
770	770	(2) "Defective corporate act" means:
771	771	(A) an overissue;
772	772	(B) an election or appointment of directors that
773	773	is void or voidable due to a failure of authorization; or
774	774	(C) any act or transaction purportedly taken by
775	775	or on behalf of the corporation that is, and at the time the act or
776	776	transaction was purportedly taken would have been, within the power
777	777	of a corporation to take under the corporate statute, without
778	778	regard to the failure of authorization identified in Section
779	779	21.903(a)(4), but is ineffective, void, or voidable due to a
780	780	failure of authorization, including a failure to file with the
781	781	filing officer a filing instrument that was required under the
782	782	corporate statute to complete the effectiveness of the act or
783	783	transaction.
784	784	(4) "Failure of authorization" means:
785	785	(A) the failure to authorize or effect an act or
786	786	transaction in compliance with the provisions of the corporate
787	787	statute, the governing documents of the corporation, any plan or
788	788	agreement to which the corporation is a party, or the disclosure set
789	789	forth in any proxy or consent solicitation statement, if and to the
790	790	extent the failure would render the act or transaction ineffective,
791	791	void, or voidable; or
792	792	(B) the failure of the board of directors or an
793	793	officer of the corporation to authorize or approve an act or
794	794	transaction taken by or on behalf of the corporation that required
795	795	the prior authorization or approval of the board of directors or the
796	796	officer.
797	797	SECTION 35. Section 21.902, Business Organizations Code, is
798	798	amended to read as follows:
799	799	Sec. 21.902. RATIFICATION OF DEFECTIVE CORPORATE ACT AND
800	800	PUTATIVE SHARES. (a) Except as provided by Subsection (b) and
801	801	subject [Subject] to Section 21.909 or 21.910, a defective
802	802	corporate act or putative shares are not ineffective, void, or
803	803	voidable solely as a result of a failure of authorization if the act
804	804	or shares are:
805	805	(1) ratified in accordance with this subchapter; or
806	806	(2) validated by the district court in a proceeding
807	807	brought under Section 21.914.
808	808	(b) A corporation may not ratify with retroactive effect in
809	809	accordance with this subchapter a defective corporate act resulting
810	810	from a failure of authorization that is attributable to the failure
811	811	to file with the filing officer the following filing instrument:
812	812	(1) a statement of change of registered agent or a
813	813	statement of change of registered office under Subchapter E,
814	814	Chapter 5;
815	815	(2) a certificate of amendment or restated certificate
816	816	of formation that amends the registered agent or registered office
817	817	under Subchapter B, Chapter 3;
818	818	(3) a certificate of formation under Subchapter A,
819	819	Chapter 3;
820	820	(4) a certificate of termination under Subchapter C,
821	821	Chapter 11;
822	822	(5) a certificate of merger or certificate of
823	823	conversion under Subchapter D, Chapter 10; or
824	824	(6) a report under Subchapter E, Chapter 171, Tax
825	825	Code.
826	826	SECTION 36. Sections 21.908(a), (b), and (c), Business
827	827	Organizations Code, are amended to read as follows:
828	828	(a) The [If a defective corporate act ratified under this
829	829	subchapter would have required under any other provision of the
830	830	corporate statute the filing of a filing instrument or other
831	831	document with the filing officer, the] corporation shall file a
832	832	certificate of validation with respect to the defective corporate
833	833	act in accordance with Chapter 4, if:
834	834	(1) a defective corporate act ratified under this
835	835	subchapter would have required under any other provision of the
836	836	corporate statute the filing of a filing instrument or other
837	837	document with the filing officer; and
838	838	(2) the filing instrument or other document:
839	839	(A) previously filed with the filing officer
840	840	requires any change to give effect to the defective corporate act in
841	841	accordance with this subchapter, including a change to the date and
842	842	time of the effectiveness of the filed filing instrument or other
843	843	document; or
844	844	(B) was not previously filed with the filing
845	845	officer under any other provision of the corporate statute [,
846	846	regardless of whether a filing instrument or other document was
847	847	previously filed] with respect to the defective corporate act.
848	848	(b) The certificate of validation must include:
849	849	(1) a statement that the corporation has ratified one
850	850	or more defective corporate acts that would have required the
851	851	filing of a filing instrument or other document with the filing
852	852	officer under any provision of the corporate statute [each
853	853	defective corporate act that is a subject of the certificate of
854	854	validation, including:
855	855	[(A) for a defective corporate act involving the
856	856	issuance of putative shares, the number and type of putative shares
857	857	issued and the date or dates on which the putative shares were
858	858	purported to have been issued;
859	859	[(B) the date of the defective corporate act; and
860	860	[(C) the nature of the failure of authorization
861	861	with respect to the defective corporate act];
862	862	(2) a statement that each defective corporate act has
863	863	been [was] ratified in accordance with this subchapter [,
864	864	including:
865	865	[(A) the date on which the board of directors
866	866	ratified each defective corporate act; and
867	867	[(B) the date, if any, on which the shareholders
868	868	approved the ratification of each defective corporate act]; and
869	869	(3) as appropriate:
870	870	(A) if a filing instrument was previously filed
871	871	with a filing officer under the corporate statute with respect to
872	872	the defective corporate act and [no change to the filing instrument
873	873	is required to give effect to the defective corporate act as
874	874	ratified in accordance with this subchapter:
875	875	[(i) the name, title, and filing date of the
876	876	previously filed filing instrument and of any certificate of
877	877	correction to the filing instrument; and
878	878	[(ii) a statement that a copy of the
879	879	previously filed filing instrument, together with any certificate
880	880	of correction to the filing instrument, is attached as an exhibit to
881	881	the certificate of validation;
882	882	[(B) if a filing instrument was previously filed
883	883	with a filing officer under the corporate statute with respect to
884	884	the defective corporate act and] the filing instrument requires any
885	885	change to give effect to the defective corporate act as ratified in
886	886	accordance with this subchapter, including a change to the date and
887	887	time of the effectiveness of the filing instrument:
888	888	(i) the name, title, and filing date of the
889	889	previously filed filing instrument and of any certificate of
890	890	correction to the filing instrument;
891	891	(ii) a statement that a filing instrument
892	892	containing all the information required to be included under the
893	893	applicable provisions of this code to give effect to the ratified
894	894	defective corporate act is attached as an exhibit to the
895	895	certificate of validation; and
896	896	(iii) the date and time that the attached
897	897	filing instrument is considered to have become effective under this
898	898	subchapter; or
899	899	(B) [(C)] if a filing instrument was not
900	900	previously filed with a filing officer under the corporate statute
901	901	with respect to the defective corporate act and the defective
902	902	corporate act as ratified under this subchapter would have required
903	903	under the other applicable provisions of this code the filing of a
904	904	filing instrument in accordance with Chapter 4, if the defective
905	905	corporate act had occurred when this code was in effect:
906	906	(i) a statement that a filing instrument
907	907	containing all the information required to be included under the
908	908	applicable provisions of this code to give effect to the defective
909	909	corporate act, as if the defective corporate act had occurred when
910	910	this code was in effect, is attached as an exhibit to the
911	911	certificate of validation; and
912	912	(ii) the date and time that the attached
913	913	filing instrument is considered to have become effective under this
914	914	subchapter.
915	915	(c) A filing instrument attached to a certificate of
916	916	validation under this section [Subsection (b)(3)(B) or (C)] does
917	917	not need to be executed separately and does not need to include any
918	918	statement required by any other provision of this code that the
919	919	instrument has been approved and adopted in accordance with that
920	920	provision.
921	921	SECTION 37. Section 21.909, Business Organizations Code, is
922	922	amended to read as follows:
923	923	Sec. 21.909. ADOPTION OF RESOLUTIONS; EFFECT ON DEFECTIVE
924	924	CORPORATE ACT. On or after the validation effective time, unless
925	925	determined otherwise in an action brought under Section 21.914 and
926	926	subject to Sections 21.902(b) and [Section] 21.907(e), each
927	927	defective corporate act ratified in accordance with this subchapter
928	928	may not be considered ineffective, void, or voidable as a result of
929	929	the failure of authorization described by the resolutions adopted
930	930	under Sections 21.903 and 21.904, and the effect shall be
931	931	retroactive to the time of the defective corporate act.
932	932	SECTION 38. Section 21.910, Business Organizations Code, is
933	933	amended to read as follows:
934	934	Sec. 21.910. ADOPTION OF RESOLUTIONS; EFFECT ON PUTATIVE
935	935	SHARES. On or after the validation effective time, unless
936	936	determined otherwise in an action brought under Section 21.914 and
937	937	subject to Sections 21.902(b) and [Section] 21.907(e), each
938	938	putative share or fraction of a putative share issued or
939	939	purportedly issued pursuant to a defective corporate act ratified
940	940	in accordance with this subchapter and described by the resolutions
941	941	adopted under Sections 21.903 and 21.904 may not be considered
942	942	ineffective, void, or voidable and is considered to be an identical
943	943	share or fraction of a share outstanding as of the time it was
944	944	purportedly issued.
945	945	SECTION 39. Section 21.913(b), Business Organizations
946	946	Code, is amended to read as follows:
947	947	(b) The absence or failure of ratification of an act or
948	948	transaction in accordance with this subchapter or of validation of
949	949	an act or transaction as provided by Sections 21.914 through 21.917
950	950	does not, of itself, affect the validity or effectiveness of any act
951	951	or transaction or the issuance of any shares properly ratified
952	952	under common law or otherwise, nor does it create a presumption that
953	953	any such act or transaction is or was a defective corporate act or
954	954	that those shares are ineffective, void, or voidable.
955	955	SECTION 40. Section 21.915, Business Organizations Code, is
956	956	amended to read as follows:
957	957	Sec. 21.915. EXCLUSIVE JURISDICTION. Subject to Section
958	958	1.056, the [The] district court has exclusive jurisdiction to hear
959	959	and determine any action brought under Section 21.914.
960	960	SECTION 41. Section 21.917(b), Business Organizations
961	961	Code, is amended to read as follows:
962	962	(b) Notwithstanding any other provision of this subchapter:
963	963	(1) an action claiming that a defective corporate act
964	964	or putative shares are ineffective, void, or voidable due to a
965	965	failure of authorization identified in the resolutions adopted in
966	966	accordance with Section 21.903 may not be filed in or must be
967	967	dismissed by any court after the applicable validation effective
968	968	time; and
969	969	(2) an action claiming that a court of appropriate
970	970	jurisdiction, in its discretion, should declare that a ratification
971	971	in accordance with this subchapter not take effect or that the
972	972	ratification take effect only on certain conditions may not be
973	973	filed with the court after the expiration of the 120th day after the
974	974	later of the validation effective time or the time that any notice
975	975	required to be given under Section 21.911 is given with respect to
976	976	the ratification.
977	977	SECTION 42. Sections 22.001(1) and (3-a), Business
978	978	Organizations Code, are amended to read as follows:
979	979	(1) "Board of directors" means the group of
980	980	individuals [persons] vested with the management of the affairs of
981	981	the corporation, regardless of the name used to designate the
982	982	group. The term does not include the member or members of the
983	983	corporation if the certificate of formation of the corporation
984	984	vests the management of the affairs of the corporation in the
985	985	members.
986	986	(3-a) "Director" means an individual [a person] who is
987	987	a member of the board of directors, regardless of the name or title
988	988	used to designate the individual [person]. The term does not
989	989	include an individual [a person] designated as a director of the
990	990	corporation, or as an ex officio, honorary, or other type of
991	991	director of the corporation if the individual [person] is not
992	992	entitled to vote as a director.
993	993	SECTION 43. Section 22.218(a), Business Organizations
994	994	Code, is amended to read as follows:
995	995	(a) The [If authorized by the] certificate of formation or
996	996	bylaws of the corporation:
997	997	(1) [, the board of directors of a corporation, by
998	998	resolution adopted by the majority of the directors in office,] may
999	999	designate one or more committees to have and exercise all, or a
1000	1000	specified portion, of the authority of the board of directors of the
1001	1001	corporation in the management of the corporation; or
1002	1002	(2) may authorize the board of directors, by
1003	1003	resolution adopted by the majority of the directors in office, to
1004	1004	designate one or more committees to have and exercise all, or a
1005	1005	specified portion, of the authority of the board in the management
1006	1006	of the corporation to the extent permitted in the authorization in
1007	1007	the certificate of formation or bylaws [to the extent provided by:
1008	1008	[(1) the resolution;
1009	1009	[(2) the certificate of formation; or
1010	1010	[(3) the bylaws].
1011	1011	SECTION 44. Section 22.231(a), Business Organizations
1012	1012	Code, is amended to read as follows:
1013	1013	(a) The officers of a corporation shall include a president
1014	1014	and a secretary and may include one or more vice presidents, a
1015	1015	treasurer, and other officers and assistant officers as considered
1016	1016	necessary. Any two or more offices, other than the offices of
1017	1017	president and secretary, may be held by the same individual
1018	1018	[person].
1019	1019	SECTION 45. Sections 22.501(2) and (4), Business
1020	1020	Organizations Code, are amended to read as follows:
1021	1021	(2) "Defective corporate act" means:
1022	1022	(A) an election or appointment of directors that
1023	1023	is void or voidable due to a failure of authorization; or
1024	1024	(B) any act or transaction purportedly taken by
1025	1025	or on behalf of the corporation that is, and at the time the act or
1026	1026	transaction was purportedly taken would have been, within the power
1027	1027	of a corporation to take under the corporate statute, but is
1028	1028	ineffective, void, or voidable due to a failure of authorization,
1029	1029	including a failure to file with the filing officer a filing
1030	1030	instrument that was required under the corporate statute to
1031	1031	complete the effectiveness of the act or transaction.
1032	1032	(4) "Failure of authorization" means:
1033	1033	(A) the failure to authorize or effect an act or
1034	1034	transaction in compliance with the provisions of the corporate
1035	1035	statute, the governing documents of the corporation, a corporate
1036	1036	resolution, or any plan or agreement to which the corporation is a
1037	1037	party, if and to the extent the failure would render the act or
1038	1038	transaction ineffective, void, or voidable; or
1039	1039	(B) the failure of the board of directors or an
1040	1040	officer of the corporation to authorize or approve an act or
1041	1041	transaction taken by or on behalf of the corporation that required
1042	1042	the prior authorization or approval of the board of directors or the
1043	1043	officer.
1044	1044	SECTION 46. Section 22.502, Business Organizations Code, is
1045	1045	amended to read as follows:
1046	1046	Sec. 22.502. RATIFICATION OF DEFECTIVE CORPORATE ACT. (a)
1047	1047	Except as provided by Subsection (b) and subject [Subject] to
1048	1048	Section 22.509, a defective corporate act is not ineffective, void,
1049	1049	or voidable solely as a result of a failure of authorization if the
1050	1050	act is:
1051	1051	(1) ratified in accordance with this subchapter; or
1052	1052	(2) validated by the district court in a proceeding
1053	1053	brought under Section 22.512.
1054	1054	(b) A corporation may not ratify with retroactive effect in
1055	1055	accordance with this subchapter a defective corporate act resulting
1056	1056	from a failure of authorization that is attributable to the failure
1057	1057	to file with the filing officer the following filing instrument:
1058	1058	(1) a statement of change of registered agent or a
1059	1059	statement of change of registered office under Subchapter E,
1060	1060	Chapter 5;
1061	1061	(2) a certificate of amendment or restated certificate
1062	1062	of formation that amends the registered agent or registered office
1063	1063	under Subchapter B, Chapter 3;
1064	1064	(3) a certificate of formation under Subchapter A,
1065	1065	Chapter 3;
1066	1066	(4) a certificate of termination under Subchapter C,
1067	1067	Chapter 11;
1068	1068	(5) a certificate of merger or certificate of
1069	1069	conversion under Subchapter D, Chapter 10;
1070	1070	(6) a report under Subchapter E, Chapter 171, Tax
1071	1071	Code; or
1072	1072	(7) a report under Section 22.357.
1073	1073	SECTION 47. Sections 22.508(a), (c), and (d), Business
1074	1074	Organizations Code, are amended to read as follows:
1075	1075	(a) The [If a defective corporate act ratified under this
1076	1076	subchapter would have required under any other provision of the
1077	1077	corporate statute the filing of a filing instrument or other
1078	1078	document with the filing officer, the] corporation shall file a
1079	1079	certificate of validation with respect to the defective corporate
1080	1080	act in accordance with Chapter 4, if:
1081	1081	(1) a defective corporate act ratified under this
1082	1082	subchapter would have required under any other provision of the
1083	1083	corporate statute the filing of a filing instrument or other
1084	1084	document with the filing officer; and
1085	1085	(2) the filing instrument or other document:
1086	1086	(A) previously filed with the filing officer
1087	1087	requires any change to give effect to the defective corporate act in
1088	1088	accordance with this subchapter, including a change to the date and
1089	1089	time of the effectiveness of the filed filing instrument or other
1090	1090	document; or
1091	1091	(B) was not previously filed with the filing
1092	1092	officer under any other provision of the corporate statute [,
1093	1093	regardless of whether a filing instrument or other document was
1094	1094	previously filed] with respect to the defective corporate act.
1095	1095	(c) The certificate of validation must include:
1096	1096	(1) a statement that the corporation has ratified one
1097	1097	or more defective corporate acts that would have required the
1098	1098	filing of a filing instrument or other document with the filing
1099	1099	officer under any provision of the corporate statute [each
1100	1100	defective corporate act that is a subject of the certificate of
1101	1101	validation, including:
1102	1102	[(A) the date of the defective corporate act; and
1103	1103	[(B) the nature of the failure of authorization
1104	1104	with respect to the defective corporate act];
1105	1105	(2) a statement that each defective corporate act has
1106	1106	been [was] ratified in accordance with this subchapter [,
1107	1107	including:
1108	1108	[(A) the date on which the board of directors
1109	1109	ratified each defective corporate act; and
1110	1110	[(B) if the corporation has members with voting
1111	1111	rights, the date, if any, on which the members approved the
1112	1112	ratification of each defective corporate act or, if the management
1113	1113	of the affairs of the corporation is vested in its members under
1114	1114	Section 22.202, the date on which the members ratified each
1115	1115	defective corporate act]; and
1116	1116	(3) as appropriate:
1117	1117	(A) [if a filing instrument was previously filed
1118	1118	with a filing officer under the corporate statute with respect to
1119	1119	the defective corporate act and no change to the filing instrument
1120	1120	is required to give effect to the defective corporate act as
1121	1121	ratified in accordance with this subchapter:
1122	1122	[(i) the name, title, and filing date of the
1123	1123	previously filed filing instrument and of any certificate of
1124	1124	correction to the filing instrument; and
1125	1125	[(ii) a statement that a copy of the
1126	1126	previously filed filing instrument, together with any certificate
1127	1127	of correction to the filing instrument, is attached as an exhibit to
1128	1128	the certificate of validation;
1129	1129	[(B)] if a filing instrument was previously filed
1130	1130	with a filing officer under the corporate statute with respect to
1131	1131	the defective corporate act and the filing instrument requires any
1132	1132	change to give effect to the defective corporate act as ratified in
1133	1133	accordance with this subchapter, including a change to the date and
1134	1134	time of the effectiveness of the filing instrument:
1135	1135	(i) the name, title, and filing date of the
1136	1136	previously filed filing instrument and of any certificate of
1137	1137	correction to the filing instrument;
1138	1138	(ii) a statement that a filing instrument
1139	1139	containing all the information required to be included under the
1140	1140	applicable provisions of this code to give effect to the ratified
1141	1141	defective corporate act is attached as an exhibit to the
1142	1142	certificate of validation; and
1143	1143	(iii) the date and time that the attached
1144	1144	filing instrument is considered to have become effective under this
1145	1145	subchapter; or
1146	1146	(B) [(C)] if a filing instrument was not
1147	1147	previously filed with a filing officer under the corporate statute
1148	1148	with respect to the defective corporate act and the defective
1149	1149	corporate act as ratified under this subchapter would have required
1150	1150	under the other applicable provisions of this code the filing of a
1151	1151	filing instrument in accordance with Chapter 4, if the defective
1152	1152	corporate act had occurred when this code was in effect:
1153	1153	(i) a statement that a filing instrument
1154	1154	containing all the information required to be included under the
1155	1155	applicable provisions of this code to give effect to the defective
1156	1156	corporate act, as if the defective corporate act had occurred when
1157	1157	this code was in effect, is attached as an exhibit to the
1158	1158	certificate of validation; and
1159	1159	(ii) the date and time that the attached
1160	1160	filing instrument is considered to have become effective under this
1161	1161	subchapter.
1162	1162	(d) A filing instrument attached to a certificate of
1163	1163	validation under this section [Subsection (c)(3)(B) or (C)] does
1164	1164	not need to be executed separately and does not need to include any
1165	1165	statement required by any other provision of this code that the
1166	1166	instrument has been approved and adopted in accordance with that
1167	1167	provision.
1168	1168	SECTION 48. Section 22.509, Business Organizations Code, is
1169	1169	amended to read as follows:
1170	1170	Sec. 22.509. ADOPTION OF RESOLUTIONS; EFFECT ON DEFECTIVE
1171	1171	CORPORATE ACT. On or after the validation effective time, unless
1172	1172	determined otherwise in an action brought under Section 22.512 and
1173	1173	subject to Section 22.502(b), each defective corporate act ratified
1174	1174	in accordance with this subchapter may not be considered
1175	1175	ineffective, void, or voidable as a result of the failure of
1176	1176	authorization described by the resolutions adopted under Sections
1177	1177	22.503 and 22.504, and the effect shall be retroactive to the time
1178	1178	of the defective corporate act.
1179	1179	SECTION 49. Section 22.513, Business Organizations Code, is
1180	1180	amended to read as follows:
1181	1181	Sec. 22.513. EXCLUSIVE JURISDICTION. Subject to Section
1182	1182	1.056, the [The] district court has exclusive jurisdiction to hear
1183	1183	and determine any action brought under Section 22.512.
1184	1184	SECTION 50. Section 22.515(b), Business Organizations
1185	1185	Code, is amended to read as follows:
1186	1186	(b) Notwithstanding any other provision of this subchapter:
1187	1187	(1) an action claiming that a defective corporate act
1188	1188	is ineffective, void, or voidable due to a failure of authorization
1189	1189	identified in the resolutions adopted in accordance with Section
1190	1190	22.503 may not be filed in or must be dismissed by any court after
1191	1191	the applicable validation effective time; and
1192	1192	(2) an action claiming that a court of appropriate
1193	1193	jurisdiction, in its discretion, should declare that a ratification
1194	1194	in accordance with this subchapter not take effect or that the
1195	1195	ratification take effect only on certain conditions may not be
1196	1196	filed with the court after the expiration of the 120th day after the
1197	1197	later of the validation effective time or the time that any notice
1198	1198	required to be given under Section 22.510 is given with respect to
1199	1199	the ratification.
1200	1200	SECTION 51. Subchapter C, Chapter 101, Business
1201	1201	Organizations Code, is amended by adding Section 101.1055 to read
1202	1202	as follows:
1203	1203	Sec. 101.1055. SUBSCRIPTIONS. (a) A subscription to
1204	1204	purchase a membership interest in a limited liability company in
1205	1205	the process of being formed is irrevocable to the extent provided by
1206	1206	the terms of the subscription if:
1207	1207	(1) the subscription is in writing and signed by the
1208	1208	subscriber; and
1209	1209	(2) the subscription states that it is irrevocable.
1210	1210	(b) A written subscription entered into after the limited
1211	1211	liability company is formed is a contract between the subscriber
1212	1212	and the company.
1213	1213	SECTION 52. Section 101.109(a), Business Organizations
1214	1214	Code, is amended to read as follows:
1215	1215	(a) A person who is assigned a membership interest in a
1216	1216	limited liability company is entitled to:
1217	1217	(1) receive any allocation of income, gain, loss,
1218	1218	deduction, credit, or a similar item that the assignor is entitled
1219	1219	to receive to the extent the allocation of the item is assigned;
1220	1220	(2) receive any distribution the assignor is entitled
1221	1221	to receive to the extent the distribution is assigned; and
1222	1222	(3) the rights described by Section 101.502 [require,
1223	1223	for any proper purpose, reasonable information or a reasonable
1224	1224	account of the transactions of the company; and
1225	1225	[(4) make, for any proper purpose, reasonable
1226	1226	inspections of the books and records of the company].
1227	1227	SECTION 53. Section 101.463(b), Business Organizations
1228	1228	Code, is amended to read as follows:
1229	1229	(b) Sections 101.452-101.460 do not apply to [a claim or] a
1230	1230	derivative proceeding by a member of a closely held limited
1231	1231	liability company against a present or former governing person,
1232	1232	member, or officer of the limited liability company. In the event
1233	1233	the member also asserts a claim in the [or] derivative proceeding
1234	1234	[is also made] against a person who is not a present or former
1235	1235	[that] governing person, member, or officer, this subsection
1236	1236	applies only to a [the] claim in the [or] derivative proceeding
1237	1237	against a present or former [the] governing person, member, or
1238	1238	officer.
1239	1239	SECTION 54. Subchapter F, Chapter 153, Business
1240	1240	Organizations Code, is amended by adding Section 153.258 to read as
1241	1241	follows:
1242	1242	Sec. 153.258. SUBSCRIPTIONS. (a) A subscription to
1243	1243	purchase a partnership interest in a limited partnership in the
1244	1244	process of being formed is irrevocable to the extent provided by the
1245	1245	terms of the subscription if:
1246	1246	(1) the subscription is in writing and signed by the
1247	1247	subscriber; and
1248	1248	(2) the subscription states that it is irrevocable.
1249	1249	(b) A written subscription entered into after the limited
1250	1250	partnership is formed is a contract between the subscriber and the
1251	1251	partnership.
1252	1252	SECTION 55. Section 153.413(b), Business Organizations
1253	1253	Code, is amended to read as follows:
1254	1254	(b) Sections 153.402-153.410 do not apply to [a claim or] a
1255	1255	derivative proceeding by a limited partner of a closely held
1256	1256	limited partnership against a present or former general partner,
1257	1257	limited partner, or officer of the limited partnership. In the
1258	1258	event the limited partner also asserts a claim in the [or]
1259	1259	derivative proceeding [is also made] against a person who is not a
1260	1260	present or former [that] general partner, limited partner, or
1261	1261	officer, this subsection shall apply only to a [the] claim in the
1262	1262	[or] derivative proceeding against a present or former [the]
1263	1263	general partner, limited partner, or officer.
1264	1264	SECTION 56. Section 153.553(a-1), Business Organizations
1265	1265	Code, is amended to read as follows:
1266	1266	(a-1) The following certificates shall be executed as
1267	1267	follows:
1268	1268	(1) an initial certificate of formation must be signed
1269	1269	as provided in Section 3.004(b)(1);
1270	1270	(2) a certificate of amendment or restated certificate
1271	1271	of formation containing amendments must be signed by at least one
1272	1272	general partner and by each other general partner designated in the
1273	1273	certificate of amendment or the restated certificate of formation
1274	1274	as a new general partner, unless signed and filed by a person under
1275	1275	Section 153.052(b) or (c), but the certificate of amendment or the
1276	1276	restated certificate of formation need not be signed by a
1277	1277	withdrawing general partner;
1278	1278	(3) a certificate of termination must be signed by all
1279	1279	general partners participating in the winding up of the limited
1280	1280	partnership's business or, if no general partners are winding up
1281	1281	the limited partnership's business, by all nonpartner liquidators
1282	1282	or, if the limited partners are winding up the limited
1283	1283	partnership's business, by a majority-in-interest of the limited
1284	1284	partners;
1285	1285	(4) a certificate of merger [, conversion, or
1286	1286	exchange] filed on behalf of a domestic limited partnership must be
1287	1287	signed by at least one general partner and by each other general
1288	1288	partner designated as a new general partner by any amendment to the
1289	1289	certificate of formation of the limited partnership being made by
1290	1290	the certificate of merger, but the certificate of merger need not be
1291	1291	signed by a withdrawing general partner; [as provided by Chapter
1292	1292	10; and]
1293	1293	(5) a certificate of conversion or exchange filed on
1294	1294	behalf of a domestic limited partnership must be signed by at least
1295	1295	one general partner; and
1296	1296	(6) a certificate filed under Subchapter G, Chapter
1297	1297	10, must be signed by the person designated by the court.
1298	1298	SECTION 57. Section 251.352(a), Business Organizations
1299	1299	Code, is amended to read as follows:
1300	1300	(a) A cooperative association shall submit a written report
1301	1301	to its members at the annual meeting of the cooperative
1302	1302	association. The annual report must contain:
1303	1303	(1) a balance sheet;
1304	1304	(2) an income and expense statement;
1305	1305	(3) the amount and nature of the cooperative
1306	1306	association's authorized, subscribed, and paid-in capital;
1307	1307	(4) the total number of shareholders;
1308	1308	(5) the number of shareholders who were admitted to or
1309	1309	withdrew from the association during the year;
1310	1310	(6) the par value of the association's shares;
1311	1311	(7) the rate at which any investment dividends have
1312	1312	been paid; [and]
1313	1313	(8) if the cooperative association does not issue
1314	1314	shares:
1315	1315	(A) the total number of members;
1316	1316	(B) the number of members who were admitted to or
1317	1317	withdrew from the association during the year; and
1318	1318	(C) the amount of membership fees received;
1319	1319	(9) the name, address, occupation, and date of
1320	1320	expiration of the term of office of each officer and director; and
1321	1321	(10) any compensation paid by the association to each
1322	1322	officer or director of the association.
1323	1323	SECTION 58. Section 252.017(b), Business Organizations
1324	1324	Code, is amended to read as follows:
1325	1325	(b) Chapters 1, 2, 4, [and] 10, and 11 and, if a nonprofit
1326	1326	association designates an agent for service of process, Subchapter
1327	1327	E, Chapter 5, apply to a nonprofit association.
1328	1328	SECTION 59. Sections 153.502(c), 251.353, and 251.354,
1329	1329	Business Organizations Code, are repealed.
1330	1330	SECTION 60. Sections 21.551, 21.554, 21.561, and 21.562,
1331	1331	Business Organizations Code, as amended by this Act, apply only to a
1332	1332	derivative proceeding instituted on or after the effective date of
1333	1333	this Act. A derivative proceeding instituted before the effective
1334	1334	date of this Act is governed by the law in effect on the date the
1335	1335	proceeding was instituted, and the former law is continued in
1336	1336	effect for that purpose.
1337	1337	SECTION 61. This Act takes effect September 1, 2025.