reglab/statecodes huggingface dataset:
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.153. Designations, Preferences, Limitations, and Rights of a Class or Series

Sec. 21.153.  DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RIGHTS OF A CLASS OR SERIES.  (a)  If more than one class or series of shares is authorized under Section 21.152(d), the certificate of formation must state the designations, preferences, limitations, and relative rights, including voting rights, of each class or series.
(b)  The certificate of formation may limit or deny the voting rights of, or provide special voting rights for, the shares of a class or series or the shares of a class or series held by a person or class of persons to the extent the limitation, denial, or provision is not inconsistent with this code.
(c)  A designation, preference, limitation, or relative right, including a voting right, of a class or series of shares of a corporation may be made dependent on facts not contained in the certificate of formation, including future acts of the corporation, if the manner in which those facts will operate on the designation, preference, limitation, or right is clearly and expressly stated in the certificate of formation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 28, eff. September 1, 2009.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.154. Certain Optional Characteristics of Shares

Sec. 21.154.  CERTAIN OPTIONAL CHARACTERISTICS OF SHARES.  (a)  Subject to Sections 21.152 and 21.153, if authorized by the corporation's certificate of formation, a corporation may issue shares that:
(1)  are redeemable, at the option of the corporation, shareholder, or other person or on the occurrence of a designated event, subject to Sections 21.303 and 21.304;
(2)  entitle the holders of the shares to cumulative, noncumulative, or partially cumulative distributions;
(3)  have preferences over any or all other classes or series of shares with respect to payment of distributions;
(4)  have preferences over any or all other classes or series of shares with respect to the assets of the corporation on the voluntary or involuntary winding up and termination of the corporation;
(5)  are exchangeable, at the option of the corporation, shareholder, or other person or on the occurrence of a designated event, for shares, obligations, indebtedness, evidence of ownership, rights to purchase securities of the corporation or one or more other entities, or other property or for a combination of those rights, assets, or obligations, subject to Section 21.303; and
(6)  are convertible into shares of any other class or series, at the option of the corporation, shareholder, or other person or on the occurrence of a designated event.
(b)  Shares without par value may not be converted into shares with par value unless:
(1)  at the time of conversion, the part of the corporation's stated capital represented by the shares without par value is at least equal to the aggregate par value of the shares to be converted;  or
(2)  the amount of any deficiency computed under Subdivision (1) is transferred from surplus to stated capital.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 29, eff. September 1, 2009.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.156. Actions With Respect to Series of Shares

Sec. 21.156.  ACTIONS WITH RESPECT TO SERIES OF SHARES.  (a)  To effect an action authorized under Section 21.155, the corporation must file with the secretary of state a statement that contains:
(1)  the name of the corporation;
(2)  if the statement relates to the establishment of a series of shares, a copy of the resolution establishing and designating the series and setting and determining the designations, preferences, limitations, and relative rights of the series;
(3)  if the statement relates to an increase or decrease in the number of shares of a series, a copy of the resolution setting and determining the new number of shares of each series in which the number of shares is increased or decreased;
(4)  if the statement relates to the deletion of a series of shares and all references to the series from the certificate of formation, a copy of the resolution deleting the series and all references to the series from the certificate of formation;
(5)  if the statement relates to the amendment of designations, preferences, limitations, or relative rights of shares of a series that was previously established by resolution of the board of directors, a copy of the resolution in which the amendment is specified;
(6)  the date of the adoption of the resolution;  and
(7)  a statement that the resolution was adopted by all necessary action on the part of the corporation.
(b)  On the filing of a statement described by Subsection (a), the following resolutions will become an amendment of the certificate of formation, as appropriate:
(1)  the resolution establishing and designating the series and setting and determining the designations, preferences, limitations, and relative rights of the series;
(2)  the resolution setting the new number of shares of each series in which the number of shares is increased or decreased;
(3)  the resolution deleting a series and all references to the series from the certificate of formation;  or
(4)  the resolution amending the designations, preferences, limitations, and relative rights of a series.
(c)  An amendment of the certificate of formation under this section is not subject to the procedure to amend the certificate of formation contained in Subchapter B.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.158. Issuance of Shares Under Plan of Merger or Conversion

Sec. 21.158.  ISSUANCE OF SHARES UNDER PLAN OF MERGER OR CONVERSION.  (a)  A converted corporation under a plan of conversion or a corporation created by a plan of merger may issue shares for consideration if authorized by the plan of conversion or plan of merger, as appropriate.
(b)  A corporation may issue shares in the manner provided by and for consideration specified under a plan of merger or plan of conversion.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.159. Types of Consideration for Shares

Sec. 21.159.  TYPES OF CONSIDERATION FOR SHARES.  Shares with or without par value may be issued for the following types of consideration:
(1)  a tangible or intangible benefit to the corporation;
(2)  cash;
(3)  a promissory note;
(4)  services performed or a contract for services to be performed;
(5)  a security of the corporation or any other organization;  and
(6)  any other property of any kind or nature.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.160. Determination of Consideration for Shares

Sec. 21.160.  DETERMINATION OF CONSIDERATION FOR SHARES.  (a)  Subject to Subsection (b) and Section 21.157, consideration to be received for shares must be determined:
(1)  by the board of directors;
(2)  by a plan of conversion, if the shares are to be issued by a converted corporation under the plan; or
(3)  by a plan of merger, if the shares are to be issued under the plan by a corporation created under the plan.
(b)  If the corporation's certificate of formation reserves to the shareholders the right to determine the consideration to be received for shares without par value, the shareholders shall determine the consideration for those shares before the shares are issued.  The board of directors may not determine the consideration for shares under this subsection.
(c)  A corporation may dispose of treasury shares for consideration that may be determined by the board of directors.
(d)  Repealed by Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 59(1), eff. September 1, 2023.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2015, 84th Leg., R.S., Ch. 32 (S.B. 860), Sec. 24, eff. September 1, 2015.
Acts 2017, 85th Leg., R.S., Ch. 75 (S.B. 1518), Sec. 7, eff. September 1, 2017.
Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 23, eff. September 1, 2023.
Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 59(1), eff. September 1, 2023.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.161. Amount of Consideration for Issuance of Certain Shares

Sec. 21.161.  AMOUNT OF CONSIDERATION FOR ISSUANCE OF CERTAIN SHARES.  (a)  Consideration to be received by a corporation for the issuance of shares with par value may not be less than the par value of the shares.
(b)  The part of the surplus of a corporation that is transferred to stated capital on the issuance of shares as a share distribution is considered to be the consideration for the issuance of those shares.
(c)  The consideration received by a corporation for the issuance of shares on the conversion or exchange of its indebtedness or shares is:
(1)  the principal of, and accrued interest on, the indebtedness exchanged or converted, or the stated capital on the issuance of the shares;
(2)  the part of surplus, if any, transferred to stated capital on the issuance of the shares;  and
(3)  any additional consideration paid to the corporation on the issuance of the shares.
(d)  The consideration received by a corporation for the issuance of shares on the exercise of rights or options is:
(1)  any consideration received by the corporation for the rights or options;  and
(2)  any consideration received by the corporation for the issuance of shares on the exercise of the rights or options.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.162. Value and Sufficiency of Consideration

Sec. 21.162.  VALUE AND SUFFICIENCY OF CONSIDERATION.  In the absence of fraud in the transaction, the judgment of the board of directors, the shareholders, or the party approving the plan of conversion or the plan of merger, as appropriate, is conclusive in determining the value and sufficiency of the consideration received for the shares.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.163. Issuance and Disposition of Fractional Shares or Scrip

Sec. 21.163.  ISSUANCE AND DISPOSITION OF FRACTIONAL SHARES OR SCRIP.  (a)  A corporation may:
(1)  issue fractions of a share, either certificated or uncertificated;
(2)  arrange for the disposition of fractional interests by persons entitled to the interests;
(3)  pay cash for the fair value of fractions of a share determined when the shareholders entitled to receive the fractions are determined; or
(4)  subject to Subsection (b), issue scrip in registered form that entitles the holder to receive a certificate for a full share or an uncertificated full share on the surrender of the scrip aggregating a full share.
(b)  The board of directors may issue scrip:
(1)  on the condition that the scrip will become void if not exchanged for certificated or uncertificated full shares before a specified date;
(2)  on the condition that the shares for which the scrip is exchangeable may be sold by the corporation and the proceeds from the sale of the shares may be distributed to the holders of scrip;  or
(3)  subject to any other condition the board of directors may determine advisable.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 31, eff. September 1, 2009.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.164. Rights of Holders of Fractional Shares or Scrip

Sec. 21.164.  RIGHTS OF HOLDERS OF FRACTIONAL SHARES OR SCRIP.  (a)  A holder of a certificated or uncertificated fractional share is entitled to exercise voting rights, receive distributions, and make a claim with respect to the assets of the corporation in the event of winding up and termination.
(b)  A holder of a certificate for scrip is not entitled to exercise voting rights, receive distributions, or make a claim with respect to the assets of the corporation in the event of winding up and termination unless the scrip provides for those rights.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.165. Subscriptions

Sec. 21.165.  SUBSCRIPTIONS.  (a)  A corporation may accept a subscription by notifying the subscriber in writing.
(b)  A subscription to purchase shares in a corporation in the process of being formed is irrevocable for six months if the subscription is in writing and signed by the subscriber, unless the subscription provides for a longer or shorter period or all of the other subscribers agree to the revocation of the subscription.
(c)  A written subscription entered into after the corporation is formed is a contract between the subscriber and the corporation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.166. Preformation Subscription

Sec. 21.166.  PREFORMATION SUBSCRIPTION.  (a)  The corporation may determine the payment terms of a preformation subscription unless the payment terms are specified by the subscription.  The payment terms may authorize payment in full on acceptance or by installments.
(b)  Unless the subscription provides otherwise, a corporation shall make calls placed to all subscribers of similar interests for payment on preformation subscriptions uniform as far as practicable.
(c)  After the corporation is formed, if a subscriber fails to pay any installment or call when due, a corporation may:
(1)  collect in the same manner as any other debt the amount due on any unpaid preformation subscription;  or
(2)  forfeit the subscription if the installment or call remains unpaid for 20 days after written notice to the subscriber.
(d)  Although the forfeiture of a subscription terminates all the rights and obligations of the subscriber, the corporation may retain any amount previously paid on the subscription.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.167. Commitment to Purchase Shares

Sec. 21.167.  COMMITMENT TO PURCHASE SHARES.  (a)  A person who contemplates the acquisition of shares in a corporation may commit to act in a specified manner with respect to the shares after the acquisition, including the voting of the shares or the retention or disposition of the shares.  To be binding, the commitment must be in writing and be signed by the person acquiring the shares.
(b)  A written commitment entered into under Subsection (a) is a contract between the shareholder and the corporation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.169. Terms and Conditions of Rights and Options

Sec. 21.169.  TERMS AND CONDITIONS OF RIGHTS AND OPTIONS.  (a)  The terms and conditions of rights or options may include restrictions or conditions that:
(1)  prohibit or limit the exercise, transfer, or receipt of the rights or options by certain persons or classes of persons, including:
(A)  a person who beneficially owns or offers to acquire a specified number or percentage of the outstanding common shares, voting power, or other securities of the corporation;  or
(B)  a transferee of a person described by Paragraph (A);  or
(2)  invalidate or void the rights or options held by a person or transferee described by Subdivision (1).
(b)  Rights or options created or issued before the effective date of this code that comply with this section and are not in conflict with other provisions of this code are ratified.
(c)  Except as provided by Section 21.168, unless otherwise provided under the terms of rights or options or the agreement or plan under which the rights or options are issued, the authority to grant, amend, redeem, extend, or replace the rights or options on behalf of a corporation is vested exclusively in the board of directors of the corporation.  A bylaw may not require the board to grant, amend, redeem, extend, or replace the rights or options.
(d)  Repealed by Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 59(2), eff. September 1, 2023.
(e)  Repealed by Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 59(2), eff. September 1, 2023.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 46, eff. January 1, 2006.
Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 25, eff. September 1, 2023.
Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 59(2), eff. September 1, 2023.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.170. Consideration for Rights, Options, and Convertible Indebtedness

Sec. 21.170.  CONSIDERATION FOR RIGHTS, OPTIONS, AND CONVERTIBLE INDEBTEDNESS.  (a)  In the absence of fraud in the transaction, the judgment of the board of directors of a corporation as to the adequacy of the consideration received for rights, options, or convertible indebtedness is conclusive.
(b)  A corporation may issue rights or options to its shareholders, officers, consultants, independent contractors, employees, or directors without consideration if, in the judgment of the board of directors, the issuance of the rights or options is in the interests of the corporation.
(c)  The consideration for shares having a par value, other than treasury shares, and issued on the exercise of the rights or options may not be less than the par value of the shares.
(d)  A privilege of conversion may not be conferred on, or altered with respect to, any indebtedness that would result in the corporation receiving less than the minimum consideration required to be received on issuance of the shares.
(e)  The consideration for shares issued on the exercise of rights, options, or convertible indebtedness shall be determined as provided by Section 21.161.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.171. Outstanding or Treasury Shares

Sec. 21.171.  OUTSTANDING OR TREASURY SHARES.  (a)  Shares that are issued are outstanding shares unless the shares are treasury shares or are canceled.
(b)  If there are outstanding shares, one or more shares that together have unlimited voting rights and one or more shares that together are entitled to receive the net assets of the corporation on the winding up and termination of the corporation must be outstanding shares.
(c)  Treasury shares are considered to be issued shares and not outstanding shares.
(d)  Treasury shares may not be included in the total assets of a corporation for purposes of determining the net assets of a corporation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 32, eff. September 1, 2009.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.172. Expenses of Organization, Reorganization, and Financing of Corporation

Sec. 21.172.  EXPENSES OF ORGANIZATION, REORGANIZATION, AND FINANCING OF CORPORATION.  A corporation may pay or authorize to be paid from the consideration received by the corporation as payment for the corporation's shares the reasonable charges and expenses of the organization or reorganization of the corporation and the sale or underwriting of the shares without rendering the shares not fully paid and nonassessable.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter D. Shares, Options, and Convertible Securities › Section 21.173. Supplemental Required Records

Sec. 21.173.  SUPPLEMENTAL REQUIRED RECORDS.  In addition to the books and records required to be kept under Section 3.151, a corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of:
(1)  the original issuance of shares issued by the corporation;
(2)  each transfer of those shares that have been presented to the corporation for registration of transfer;
(3)  the names and addresses of all past shareholders of the corporation;  and
(4)  the number and class or series of shares issued by the corporation held by each current and past shareholder.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.201. Registered Holders as Owners; Shares Held by Nominees

Sec. 21.201.  REGISTERED HOLDERS AS OWNERS; SHARES HELD BY NOMINEES.  (a)  Except as otherwise provided by this code and subject to Chapter 8, Business & Commerce Code, a corporation may consider the person registered as the owner of a share in the share transfer records of the corporation at a particular time, including a record date set under Section 6.101 or 6.102 or Subchapter H, as the owner of that share at that time for purposes of:
(1)  voting the share;
(2)  receiving distributions on the share;
(3)  transferring the share;
(4)  receiving notice, exercising rights of dissent, exercising or waiving a preemptive right, or giving proxies with respect to that share;
(5)  entering into agreements with respect to that share in accordance with Section 6.251, 6.252, or 21.210; or
(6)  any other shareholder action.
(b)  A corporation may establish a procedure by which the corporation recognizes as a shareholder the beneficial owner of shares registered in the name of a nominee.
(c)  A procedure established under Subsection (b) must:
(1)  determine the extent of the corporation's recognition of the beneficial owner as a shareholder; and
(2)  include the nominee's filing of a statement with the corporation that contains information regarding the beneficial owner.
(d)  A procedure established under Subsection (b) may set forth:
(1)  the types of nominees to which the procedure applies;
(2)  the rights or privileges that the corporation will recognize in a beneficial owner, to the extent that the rights or privileges are not inconsistent with Section 10.361(g);
(3)  the manner in which the procedure is selected by the nominee;
(4)  the information that must be provided when the procedure is selected;
(5)  the period for which the selection of the procedure is effective; and
(6)  any other aspect of the rights and duties to be established under the procedure.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 33, eff. September 1, 2009.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.202. Definition of Shares

Sec. 21.202.  DEFINITION OF SHARES.  In Sections 21.203-21.208, "shares" includes a security:
(1)  that is convertible into shares;  or
(2)  that carries a right to subscribe for or acquire shares.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.203. No Statutory Preemptive Right Unless Provided by Certificate of Formation

Sec. 21.203.  NO STATUTORY PREEMPTIVE RIGHT UNLESS PROVIDED BY CERTIFICATE OF FORMATION.  (a)  Except as provided by Section 21.208, a shareholder of a corporation does not have a preemptive right under this subchapter to acquire the corporation's unissued or treasury shares except to the extent provided by the corporation's certificate of formation.
(b)  If the certificate of formation includes a statement that the corporation "elects to have a preemptive right" or a similar statement, Section 21.204 applies to a shareholder except to the extent the certificate of formation expressly provides otherwise.
(c)  This section and Sections 21.204 through 21.208 do not invalidate or impair a corporation's right or power to grant an enforceable nonstatutory preemptive right in:
(1)  a contract between the corporation and a shareholder or other person; or
(2)  the governing documents of the corporation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 139 (S.B. 748), Sec. 23, eff. September 1, 2011.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.204. Statutory Preemptive Rights

Sec. 21.204.  STATUTORY PREEMPTIVE RIGHTS.  (a)  If the shareholders of a corporation have a preemptive right under this subchapter, the shareholders have a preemptive right to acquire proportional amounts of the corporation's unissued or treasury shares on the decision of the corporation's board of directors to issue the shares.  The preemptive right granted under this subsection is subject to uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the preemptive right.
(b)  No preemptive right exists with respect to:
(1)  shares issued or granted as compensation to a director, officer, agent, or employee of the corporation or a subsidiary or affiliate of the corporation;
(2)  shares issued or granted to satisfy conversion or option rights created to provide compensation to a director, officer, agent, or employee of the corporation or a subsidiary or affiliate of the corporation;
(3)  shares authorized in the corporation's certificate of formation that are issued not later than the 180th day after the effective date of the corporation's formation;  or
(4)  shares sold, issued, or granted by the corporation for consideration other than money.
(c)  A holder of a share of a class without general voting rights but with a preferential right to distributions of profits, income, or assets does not have a preemptive right with respect to shares of any class.
(d)  A holder of a share of a class with general voting rights but without preferential rights to distributions of profits, income, or assets does not have a preemptive right with respect to shares of any class with preferential rights to distributions of profits, income, or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.
(e)  For a one-year period after the date the shares have been offered to shareholders, shares subject to preemptive rights that are not acquired by a shareholder may be issued to a person at a consideration set by the corporation's board of directors that is not lower than the consideration set for the exercise of preemptive rights.  An offer at a lower consideration or after the expiration of the period prescribed by this subsection is subject to the shareholder's preemptive rights.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.205. Waiver of Preemptive Right

Sec. 21.205.  WAIVER OF PREEMPTIVE RIGHT.  (a)  A shareholder may waive a preemptive right granted to the shareholder.
(b)  A written waiver of a preemptive right is irrevocable regardless of whether the waiver is supported by consideration.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.206. Limitation on Action to Enforce Preemptive Right

Sec. 21.206.  LIMITATION ON ACTION TO ENFORCE PREEMPTIVE RIGHT.  (a)  An action brought against a corporation, the board of directors or an officer, shareholder, or agent of the corporation, or an owner of a beneficial interest in shares of the corporation for the violation of a preemptive right of a shareholder under Sections 21.203 and 21.204 must be brought not later than the earlier of:
(1)  the first anniversary of the date written notice is given to each shareholder whose preemptive right was violated; or
(2)  the fourth anniversary of the latest of:
(A)  the date the corporation issued the shares, securities, or rights;
(B)  the date the corporation sold the shares, securities, or rights; or
(C)  the date the corporation otherwise distributed the shares, securities, or rights.
(b)  The notice required by Subsection (a)(1) must:
(1)  be sent to the holder at the address for the holder as shown on the appropriate records of the corporation;  and
(2)  inform the holder that the issuance, sale, or other distribution of shares, securities, or rights violated the holder's preemptive right.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 139 (S.B. 748), Sec. 24, eff. September 1, 2011.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.207. Disposition of Shares Having Preemptive Rights

Sec. 21.207.  DISPOSITION OF SHARES HAVING PREEMPTIVE RIGHTS.  The transferee or successor of a share that has been transferred or otherwise disposed of by a shareholder of a corporation whose preemptive right to acquire shares in the corporation has been violated does not acquire the preemptive right, or any right or claim based on the violation, unless the previous shareholder has assigned the preemptive right to the transferee or successor.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.208. Preemptive Right in Existing Corporation

Sec. 21.208.  PREEMPTIVE RIGHT IN EXISTING CORPORATION.  Subject to the certificate of formation, a shareholder of a corporation incorporated before September 1, 2003, has a preemptive right to acquire unissued or treasury shares of the corporation to the extent provided by Sections 21.204, 21.206, and 21.207.  After September 1, 2003, a corporation may limit or deny the preemptive right of the shareholders of the corporation by amending the corporation's certificate of formation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 47, eff. January 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.209. Transfer of Shares and Other Securities

Sec. 21.209.  TRANSFER OF SHARES AND OTHER SECURITIES.  Except as otherwise provided by this code, the shares and other securities of a corporation are transferable in accordance with Chapter 8, Business & Commerce Code.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.210. Restriction on Transfer of Shares and Other Securities

Sec. 21.210.  RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES.  (a)  A restriction on the transfer or registration of transfer of a security, or on the amount of a corporation's securities that may be owned by a person or group of persons, may be imposed by:
(1)  the corporation's certificate of formation;
(2)  the corporation's bylaws;
(3)  a written agreement among two or more holders of the securities; or
(4)  a written agreement among one or more holders of the securities and the corporation if:
(A)  the corporation files a copy of the agreement at the principal place of business or registered office of the corporation; and
(B)  the copy of the agreement is subject to the same right of examination by a shareholder of the corporation, in person or by agent, attorney, or accountant, as the books and records of the corporation.
(b)  A restriction imposed under Subsection (a) is not valid with respect to a security issued before the restriction has been adopted, unless the holder of the security voted in favor of the restriction or is a party to the agreement imposing the restriction.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 48, eff. January 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.212. Bylaw or Agreement Restricting Transfer of Shares or Other Securities

Sec. 21.212.  BYLAW OR AGREEMENT RESTRICTING TRANSFER OF SHARES OR OTHER SECURITIES.  (a)  A corporation that has adopted a bylaw or is a party to an agreement that restricts the transfer of the shares or other securities of the corporation may file with the secretary of state, in accordance with Chapter 4, a copy of the bylaw or agreement and a statement attached to the copy that:
(1)  contains the name of the corporation;
(2)  states that the attached copy of the bylaw or agreement is a true and correct copy of the bylaw or agreement;  and
(3)  states that the filing has been authorized by the board of directors or, in the case of a corporation that is managed in some other manner under a shareholders' agreement, by the person empowered by the agreement to manage the corporation's business and affairs.
(b)  After a statement described by Subsection (a) is filed with the secretary of state, the bylaws or agreement restricting the transfer of shares or other securities is a public record, and the fact that the statement has been filed may be stated on a certificate representing the restricted shares or securities if required by Section 3.202.
(c)  A corporation that is a party to an agreement restricting the transfer of the shares or other securities of the corporation may make the agreement part of the corporation's certificate of formation without restating the provisions of the agreement in the certificate of formation by amending the certificate of formation.  If the agreement alters any provision of the certificate of formation, the certificate of amendment shall identify the altered provision by reference or description.  If the agreement is an addition to the certificate of formation, the certificate of amendment must state that fact.
(d)  The certificate of amendment must:
(1)  include a copy of the agreement restricting the transfer of shares or other securities;
(2)  state that the attached copy of the agreement is a true and correct copy of the agreement;  and
(3)  state that inclusion of the certificate of amendment as part of the certificate of formation has been authorized in the manner required by this code to amend the certificate of formation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.213. Enforceability of Restriction on Transfer of Certain Securities

Sec. 21.213.  ENFORCEABILITY OF RESTRICTION ON TRANSFER OF CERTAIN SECURITIES.  (a)  A restriction placed on the transfer or registration of the transfer of a security of a corporation is specifically enforceable against the holder, or a successor or transferee of the holder, if:
(1)  the restriction is reasonable and noted conspicuously on the certificate or other instrument representing the security;  or
(2)  with respect to an uncertificated security, the restriction is reasonable and a notation of the restriction is contained in the notice sent with respect to the security under Section 3.205.
(b)  Unless noted in the manner specified by Subsection (a) with respect to a certificate or other instrument or an uncertificated security, an otherwise enforceable restriction is ineffective against a transferee for value without actual knowledge of the restriction at the time of the transfer or against a subsequent transferee, regardless of whether the transfer is for value.  A restriction is specifically enforceable against a person other than a transferee for value from the time the person acquires actual knowledge of the restriction's existence.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.214. Joint Ownership of Shares

Sec. 21.214.  JOINT OWNERSHIP OF SHARES.  (a)  If shares are registered on the books of a corporation in the names of two or more persons as joint owners with the right of survivorship and one of the owners dies, the corporation may record on its books and effect the transfer of the shares to a person, including the surviving joint owner, and pay any distributions made with respect to the shares, as if the surviving joint owner was the absolute owner of the shares.  The recording and distribution authorized by this subsection must be made after the death of a joint owner and before the corporation receives actual written notice that a party other than a surviving joint owner is claiming an interest in the shares or distribution.
(b)  The discharge of a corporation from liability under Section 21.216 and the transfer of full legal and equitable title of the shares does not affect, reduce, or limit any cause of action existing in favor of an owner of an interest in the shares or distributions against the surviving owner.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.215. Liability for Designating Owner of Shares

Sec. 21.215.  LIABILITY FOR DESIGNATING OWNER OF SHARES.  A corporation or an officer, director, employee, or agent of the corporation may not be held liable for considering the person who is registered as the owner of a share in the share transfer records of the corporation at a particular time to be the owner of the share at that time for a purpose described by Section 21.201, regardless of whether the person possesses a certificate for that share.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.216. Liability Regarding Joint Ownership of Shares

Sec. 21.216.  LIABILITY REGARDING JOINT OWNERSHIP OF SHARES.  A corporation that transfers shares or makes a distribution to a surviving joint owner under Section 21.214 before the corporation has received a written claim for the shares or distribution from another person is discharged from liability for the transfer or payment.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.217. Liability of Assignee or Transferee

Sec. 21.217.  LIABILITY OF ASSIGNEE OR TRANSFEREE.  An assignee or transferee of certificated shares, uncertificated shares, or a subscription for shares in good faith and without knowledge that full consideration for the shares or subscription has not been paid may not be held personally liable to the corporation or a creditor of the corporation for an unpaid portion of the consideration.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.218. Examination of Records

Sec. 21.218.  EXAMINATION OF RECORDS.  (a)  In this section, a holder of a beneficial interest in a voting trust entered into under Section 6.251 is a holder of the shares represented by the beneficial interest.
(b)  On written demand stating a proper purpose, a holder of shares of a corporation for at least six months immediately preceding the holder's demand, or a holder of at least five percent of all of the outstanding shares of a corporation, is entitled to examine and copy, at a reasonable time at the corporation's principal place of business or other location approved by the corporation and the holder, the corporation's books, records of account, minutes, share transfer records, and other records, whether in written or other tangible form, if the record is reasonably related to and appropriate to examine and copy for that proper purpose.
(b-1)  The examination and copying may be conducted by the holder of shares or through an agent, accountant, or attorney.  An agent, accountant, or attorney who conducts an examination and copying under this section is subject to any obligations of the shareholder with respect to the records made available for examination and copying.
(c)  This section does not impair the power of a court, on the presentation of proof of proper purpose by a beneficial or record holder of shares, to compel the production for examination by the holder, at the holder's cost, of the books and records of account, minutes, share transfer records, and other records, whether in written or other tangible form, of a corporation, regardless of the period during which the holder was a beneficial holder or record holder and regardless of the number of shares held by the person.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2017, 85th Leg., R.S., Ch. 75 (S.B. 1518), Sec. 9, eff. September 1, 2017.
Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 26, eff. September 1, 2023.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.219. Annual and Interim Statements of Corporation

Sec. 21.219.  ANNUAL AND INTERIM STATEMENTS OF CORPORATION.  (a)  On written request of a shareholder of the corporation, a corporation shall mail to the shareholder:
(1)  the annual statements of the corporation for the last fiscal year that contain in reasonable detail the corporation's assets and liabilities and the results of the corporation's operations;  and
(2)  the most recent interim statements, if any, that have been filed in a public record or other publication.
(b)  The corporation shall be allowed a reasonable time to prepare the annual statements.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.220. Penalty for Failure to Prepare Voting List

Sec. 21.220.  PENALTY FOR FAILURE TO PREPARE VOTING LIST.  An officer or agent of a corporation who is in charge of the corporation's share transfer records and who does not prepare the list of shareholders, keep the list on file for a 10-day period before the annual meeting, or keep the list available for inspection as required by Sections 21.354 and 21.372 is liable to a shareholder who suffers damages because of the failure for the damage caused by the failure.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 688 (H.B. 1737), Sec. 72, eff. September 1, 2007.
Acts 2023, 88th Leg., R.S., Ch. 27 (S.B. 1514), Sec. 27, eff. September 1, 2023.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.221. Penalty for Failure to Provide Notice of Meeting

Sec. 21.221.  PENALTY FOR FAILURE TO PROVIDE NOTICE OF MEETING.  If an officer or agent of a corporation is unable to comply with the duties prescribed by Sections 21.354 and 21.372 because the officer or agent did not receive notice of a meeting of shareholders within a sufficient time before the date of the meeting, the corporation, rather than the officer or agent, is liable to a shareholder who suffers damages because of the failure for the extent of the damage caused by the failure.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 688 (H.B. 1737), Sec. 73, eff. September 1, 2007.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter E. Shareholder Rights and Restrictions › Section 21.222. Penalty for Refusal to Permit Examination of Certain Records

Sec. 21.222.  PENALTY FOR REFUSAL TO PERMIT EXAMINATION OF CERTAIN RECORDS.  (a)  A corporation that refuses to allow a person to examine and make copies of account records, minutes, and share transfer records under Section 21.218 is liable to the shareholder for any cost or expense, including attorney's fees, incurred in enforcing the shareholder's rights under Section 21.218.  The liability imposed on a corporation under this subsection is in addition to any other damages or remedy afforded to the shareholder by law.
(b)  It is a defense to an action brought under this section that the person suing:
(1)  has, within the two years preceding the date the action is brought, sold or offered for sale a list of shareholders or of holders of voting trust certificates for shares of the corporation or any other corporation;
(2)  has aided or abetted a person in procuring a list of shareholders or of holders of voting trust certificates for the purpose described by Subdivision (1);
(3)  has improperly used information obtained through a prior examination of the books and account records, minutes, or share transfer records of the corporation or any other corporation; or
(4)  was not acting in good faith or for a proper purpose in making the person's request for examination.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 139 (S.B. 748), Sec. 25, eff. September 1, 2011.