Source: https://chowinslaw.com/resources/texas-business-laws/316-derivative-proceedings-texas-limited-liability-companies
Timestamp: 2019-04-23 04:51:09+00:00

Document:
(1) "Derivative proceeding" means a civil suit in the right of a domestic limited liability company or, to the extent provided by § 101.462, in the right of a foreign limited liability company.
(2) "Member" includes a person who beneficially owns a membership interest through a voting trust or a nominee on the person's behalf.
§ 101.452. STANDING TO BRING PROCEEDING.
(2) the member fairly and adequately represents the interests of the limited liability company in enforcing the right of the limited liability company.
(a) A member may not institute a derivative proceeding until the 91st day after the date a written demand is filed with the limited liability company stating with particularity the act, omission, or other matter that is the subject of the claim or challenge and requesting that the limited liability company take suitable action.
(3) irreparable injury to the limited liability company would result by waiting for the expiration of the 90-day period.
§ 101.454. DETERMINATION BY GOVERNING OR INDEPENDENT PERSONS.
(3) a panel of one or more independent and disinterested persons appointed by the court on a motion by the limited liability company listing the names of the persons to be appointed and stating that, to the best of the limited liability company's knowledge, the persons to be appointed are disinterested and qualified to make the determinations contemplated by § 101.458.
(b) The court shall appoint a panel under Subsection (a)(3) if the court finds that the persons recommended by the limited liability company are independent and disinterested and are otherwise qualified with respect to expertise, experience, independent judgment, and other factors considered appropriate by the court under the circumstances to make the determinations. A person appointed by the court to a panel under this § may not be held liable to the limited liability company or the limited liability company's members for an action taken or omission made by the person in that capacity, except for acts or omissions constituting fraud or wilful misconduct.
§ 101.455. STAY OF PROCEEDING.
(a) If the domestic or foreign limited liability company that is the subject of a derivative proceeding commences an inquiry into the allegations made in a demand or petition and the person or group of persons described by § 101.454 is conducting an active review of the allegations in good faith, the court shall stay a derivative proceeding until the review is completed and a determination is made by the person or group regarding what further action, if any, should be taken.
(b) To obtain a stay, the domestic or foreign limited liability company shall provide the court with a written statement agreeing to advise the court and the member making the demand of the determination promptly on the completion of the review of the matter. A stay, on motion, may be reviewed every 60 days for the continued necessity of the stay.
(c) If the review and determination made by the person or group is not completed before the 61st day after the date on which the court orders the stay, the stay may be renewed for one or more additional 60-day periods if the domestic or foreign limited liability company provides the court and the member with a written statement of the status of the review and the reasons why a continued extension of the stay is necessary.
(b) Discovery described by Subsection (a) may not be expanded to include a fact or substantive matter regarding the act, omission, or other matter that is the subject matter of the derivative proceeding. The scope of discovery may be expanded if the court determines after notice and hearing that a good faith review of the allegations for purposes of § 101.458 has not been made by an independent and disinterested person or group in accordance with that section.
§ 101.457. TOLLING OF STATUTE OF LIMITATIONS.
(2) the 31st day after the date the limited liability company advises the member that the demand has been rejected or the review has been completed.
§ 101.458. DISMISSAL OF DERIVATIVE PROCEEDING.
(a) A court shall dismiss a derivative proceeding on a motion by the limited liability company if the person or group of persons described by § 101.454 determines in good faith, after conducting a reasonable inquiry and based on factors the person or group considers appropriate under the circumstances, that continuation of the derivative proceeding is not in the best interests of the limited liability company.
(2) the limited liability company in any other circumstance.
§ 101.459. ALLEGATIONS IF DEMAND REJECTED.
If a derivative proceeding is instituted after a demand is rejected, the petition must allege with particularity facts that establish that the rejection was not made in accordance with the requirements of §§ 101.454 and 101.458.
§ 101.460. DISCONTINUANCE OR SETTLEMENT.
(b) The court shall direct that notice be given to the affected members if the court determines that a proposed discontinuance or settlement may substantially affect the interests of other members.
§ 101.461. PAYMENT OF EXPENSES.
(3) expenses for which the domestic or foreign limited liability company may be required to indemnify another person.
§ 101.462. APPLICATION TO FOREIGN LIMITED LIABILITY COMPANIES.
(a) In a derivative proceeding brought in the right of a foreign limited liability company, the matters covered by this subchapter are governed by the laws of the jurisdiction of organization of the foreign limited liability company, except for §§ 101.455, 101.460, and 101.461, which are procedural provisions and do not relate to the internal affairs of the foreign limited liability company.
(b) In the case of matters relating to a foreign limited liability company under § 101.454, a reference to a person or group of persons described by that § refers to a person or group entitled under the laws of the jurisdiction of organization of the foreign limited liability company to review and dispose of a derivative proceeding. The standard of review of a decision made by the person or group to dismiss the derivative proceeding shall be governed by the laws of the jurisdiction of organization of the foreign limited liability company.
§ 101.463. CLOSELY HELD LIMITED LIABILITY COMPANY.
(2) no membership interests listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national securities association.
(b) §§ 101.452-101.459 do not apply to a closely held limited liability company.
(2) a recovery in a direct or derivative proceeding by a member may be paid directly to the plaintiff or to the limited liability company if necessary to protect the interests of creditors or other members of the limited liability company.

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