Source: https://chowinslaw.com/resources/texas-business-laws/305-ratification-of-defective-corporate-acts
Timestamp: 2019-04-23 04:04:06+00:00

Document:
(1) "Corporate statute," with respect to an action or filing, means this code, the former Texas Business Corporation Act, or any predecessor statute of this state that governed the action or the filing.
(C) any act or transaction purportedly taken by or on behalf of the corporation that is, and at the time the act or transaction was purportedly taken would have been, within the power of a corporation to take under the corporate statute, but is void or voidable due to a failure of authorization.
(B) the county in which the corporation's registered office in this state is located, if the corporation does not have a principal office in this state.
(B) the failure of the board of directors or an officer of the corporation to authorize or approve an act or transaction taken by or on behalf of the corporation that required the prior authorization or approval of the board of directors or the officer.
(B) shares of any class or series that are not at the time of issuance authorized for issuance by the governing documents of the corporation.
(B) cannot be determined by the board of directors to be valid shares.
(7) "Time of the defective corporate act" means the date and time the defective corporate act was purported to have been taken.
(C) the time at which any certificate of validation filed under § 21.908 takes effect in accordance with Chapter 4.
(9) "Valid shares" means the shares of any class or series of the corporation that have been authorized and validly issued in accordance with the corporate statute.
§ 21.902. RATIFICATION OF DEFECTIVE CORPORATE ACT AND PUTATIVE SHARES.
(2) validated by the district court in a proceeding brought under § 21.914.
§ 21.903. RATIFICATION OF DEFECTIVE CORPORATE ACT; ADOPTION OF RESOLUTIONS.
(5) that the board of directors approves the ratification of the defective corporate act or acts.
(b) A resolution may also state that, notwithstanding shareholder approval of the ratification of a defective corporate act that is a subject of the resolution, the board of directors may, with respect to the defective corporate act, abandon the ratification of the defective corporate act at any time before the validation effective time without further shareholder action.
§ 21.904. QUORUM AND VOTING REQUIREMENTS FOR ADOPTION OF RESOLUTIONS.
(a) The quorum and voting requirements applicable to the adoption of the resolutions to ratify a defective corporate act under § 21.903 are the same as the quorum and voting requirements applicable at the time of the adoption of the resolutions for the type of defective corporate act proposed to be ratified.
(b) Notwithstanding Subsection (a) and except as provided by Subsection (c), if in order for a quorum to be present or to approve the defective corporate act, the presence or approval of a larger number or portion of directors or of specified directors would have been required by the governing documents of the corporation, any plan or agreement to which the corporation was a party, or any provision of the corporate statute, each as in effect at the time of the defective corporate act, then the presence or approval of the larger number or portion of such directors or of such specified directors must be required for a quorum to be present or to adopt the resolutions to ratify the defective corporate act, as applicable.
(c) The presence or approval of any director elected, appointed, or nominated by holders of any class or series of which no shares are then outstanding, or by any person that is no longer a shareholder, shall not be required for a quorum to be present or to adopt the resolutions.
§ 21.905. SHAREHOLDER APPROVAL OF RATIFIED DEFECTIVE CORPORATE ACT REQUIRED; EXCEPTION.
(2) the defective corporate act to be ratified did not result from a failure to comply with Subchapter M.
§ 21.906. NOTICE REQUIREMENTS FOR RATIFIED DEFECTIVE CORPORATE ACT SUBMITTED FOR SHAREHOLDER APPROVAL.
(2) each holder of record of valid shares and putative shares, regardless of whether the shares are voting or nonvoting, as of the time of the defective corporate act, except that notice is not required to be given to a holder whose identity or address cannot be ascertained from the corporation's records.
(B) that the ratification was not accomplished in accordance with this subchapter.
§ 21.907. SHAREHOLDER MEETING; QUORUM AND VOTING.
(a) At the shareholder meeting, the quorum and voting requirements applicable to the approval of the ratification of a defective corporate act under § 21.905 are the same as the quorum and voting requirements applicable at the time of the approval by the shareholders of the ratification for the type of ratified defective corporate act proposed to be approved, except as provided by this section.
(b) If the presence or approval of a larger number or portion of shares or of any class or series of shares or of specified shareholders would have been required for a quorum to be present or to approve the defective corporate act, as applicable, by the corporation's governing documents, any plan or agreement to which the corporation was a party, or any provision of the corporate statute, each as in effect at the time of the defective corporate act, then the presence or approval of the larger number or portion of shares or of the class or series of shares or of such specified shareholders shall be required for a quorum to be present or to approve the ratification of the defective corporate act, as applicable, except that the presence or approval of shares of any class or series of which no shares are then outstanding, or of any person that is no longer a shareholder, is not required.
(c) The approval by the shareholders of the ratification of the election of a director requires the affirmative vote of the majority of shares present at the meeting and entitled to vote on the election of the director at the time of the approval, unless the governing documents of the corporation then in effect or in effect at the time of the defective election require or required a larger number or portion of shares or of any class or series of shares or of specified shareholders to elect the director, in which case the affirmative vote of the larger number or portion of shares or of the class or series of shares or of the specified shareholders is required to ratify the election of the director, except that the presence or approval of shares of any class or series of which no shares are then outstanding, or of any person that is no longer a shareholder, is not required.
(d) If a failure of authorization results from the failure to comply with Subchapter M, the approval of the ratification of the defective corporate act requires the vote set forth by § 21.606(2), regardless of whether that vote would have otherwise been required.
(e) Putative shares on the record date for determining shareholders entitled to vote on any matter submitted to shareholders under § 21.905 are not entitled to be counted for voting or quorum purposes in any vote to approve the ratification of any defective corporate act, regardless of any ratification that becomes effective after the record date.
§ 21.908. CERTIFICATE OF VALIDATION.
(a) If a defective corporate act ratified under this subchapter would have required under any other provision of the corporate statute the filing of a filing instrument or other document with the filing officer, the corporation shall file a certificate of validation with respect to the defective corporate act in accordance with Chapter 4, regardless of whether a filing instrument or other document was previously filed with respect to the defective corporate act. The filing of another filing instrument or document is not required.
(3) a single certificate of validation may be filed to amend the corporation's certificate of formation to establish two or more new classes or series of shares, to increase the number of authorized shares of two or more classes or series of shares, or to establish one or more new classes or series of shares and increase the number of authorized shares of one or more classes or series of shares, in order to cure multiple previous overissues of the shares of all the classes and series that are the subjects of the certificate of validation.
(a-2) An amendment effected by a certificate of validation described by Subsection (a-1)(2) or (3) is effective as to each class or series that is a subject of the certificate of validation as of the first overissue of the shares of the class or series.
(ii) the date and time that the attached filing instrument is considered to have become effective under this subchapter.
(c) A filing instrument attached to a certificate of validation under Subsection (b)(3)(B) or (C) does not need to be executed separately and does not need to include any statement required by any other provision of this code that the instrument has been approved and adopted in accordance with that provision.
§ 21.909. ADOPTION OF RESOLUTIONS; EFFECT ON DEFECTIVE CORPORATE ACT.
On or after the validation effective time, unless determined otherwise in an action brought under § 21.914 and subject to § 21.907(e), each defective corporate act ratified in accordance with this subchapter may not be considered void or voidable as a result of the failure of authorization described by the resolutions adopted under §§ 21.903 and 21.904, and the effect shall be retroactive to the time of the defective corporate act.
§ 21.910. ADOPTION OF RESOLUTIONS; EFFECT ON PUTATIVE SHARES.
On or after the validation effective time, unless determined otherwise in an action brought under § 21.914 and subject to § 21.907(e), each putative share or fraction of a putative share issued or purportedly issued pursuant to a defective corporate act ratified in accordance with this subchapter and described by the resolutions adopted under §§ 21.903 and 21.904 may not be considered void or voidable and is considered to be an identical share or fraction of a share outstanding as of the time it was purportedly issued.
§ 21.911. NOTICE TO SHAREHOLDERS FOLLOWING RATIFICATION OF DEFECTIVE CORPORATE ACT.
(2) each holder of valid shares and putative shares, regardless of whether the shares are voting or nonvoting, as of a date not later than the 60th day after the date of adoption, as established by the board of directors.
(b) Notice under this § shall be sent to the address of a holder of shares described by Subsection (a)(1) or (a)(2) as the address appears or most recently appeared, as appropriate, on the records of the corporation.
(c) Notice under this § shall also be given to each holder of record of valid shares and putative shares, regardless of whether the shares are voting or nonvoting, as of the time of the defective corporate act, except that notice is not required to be given to a holder whose identity or address cannot be ascertained from the corporation's records.
(2) for a corporation that has a class of stock listed on a national securities exchange, the notice required by this § may be considered given if the information contained in the notice is disclosed in a document publicly filed by the corporation with the Securities and Exchange Commission under § 13, 14, or 15(d), Securities Exchange Act of 1934 (15 U.S.C. § 78m, 78n, or 78o(d)), and any rules promulgated under that Act.
(f) For purposes of §§ 21.905, 21.906, and 21.907 and this section, notice to holders of putative shares and notice to holders of valid shares and putative shares as of the time of the defective corporate act shall be treated as notice to holders of valid shares for purposes of §§ 6.051, 6.052, 6.053, 6.201, 6.202, 6.203, 6.204, 6.205, 21.353, and 21.3531.
(2) is not required to be sent to shareholders or holders of valid shares or putative shares who signed a consent described by § 6.202(b).
§ 21.912. VALID SHARES OR PUTATIVE SHARES.
In the absence of actual fraud in the transaction, the judgment of the board of directors of a corporation that shares of the corporation are valid shares or putative shares is conclusive, unless otherwise determined by the district court in a proceeding brought under § 21.914.
§ 21.913. RATIFICATION PROCEDURES OR COURT PROCEEDINGS CONCERNING VALIDATION NOT EXCLUSIVE.
(a) Ratification of an act or transaction under this subchapter or validation of an act or transaction as provided by §§ 21.914 through 21.917 is not the exclusive means of ratifying or validating any act or transaction taken by or on behalf of the corporation, including any defective corporate act or any issuance of putative shares or other shares, or of adopting or endorsing any act or transaction taken by or in the name of the corporation before the corporation exists.
(b) The absence or failure of ratification of an act or transaction in accordance with this subchapter or of validation of an act or transaction as provided by §§ 21.914 through 21.917 does not, of itself, affect the validity or effectiveness of any act or transaction or the issuance of any shares properly ratified under common law or otherwise, nor does it create a presumption that any such act or transaction is or was a defective corporate act or that those shares are void or voidable.
§ 21.914. PROCEEDING REGARDING VALIDITY OF DEFECTIVE CORPORATE ACTS AND SHARES.
(6) any other person claiming to be substantially and adversely affected by a ratification under this subchapter.
(5) modify or waive any of the procedures set forth in §§ 21.901 through 21.913 to ratify a defective corporate act.
(10) make any other order regarding such matters as the court considers appropriate under the circumstances.
(5) any other factors or considerations the district court considers just and equitable.
The district court has exclusive jurisdiction to hear and determine any action brought under § 21.914.
(a) Service of an application filed under § 21.914 on the registered agent of a corporation or in any other manner permitted by applicable law is considered to be service on the corporation, and no other party need be joined in order for the district court to adjudicate the matter.
(b) If an action is brought by a corporation under § 21.914, the district court may require that notice of the action be provided to other persons identified by the court and permit those other persons to intervene in the action.
§ 21.917. STATUTE OF LIMITATIONS.
(2) any person to whom notice of the ratification was not given as required by §§ 21.906 and 21.911.
(2) an action claiming that a court of appropriate jurisdiction, in its discretion, should declare that a ratification in accordance with this subchapter not take effect or that the ratification take effect only on certain conditions may not be filed with the court after the expiration of the 120th day after the later of the validation effective time or the time that any notice required to be given under § 21.911 is given with respect to the ratification.
(2) transmitted by facsimile or electronic message is considered to be given when the facsimile or electronic message is transmitted to a facsimile number or an electronic message address provided by the holder, or to which the holder consents, for the purpose of receiving notice.

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