2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter H. Shareholders' Meetings; Notice to Shareholders; Voting and Quorum › Section 21.364. Vote Required to Approve Fundamental Action

Sec. 21.364.  VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.  (a)  In this section, a "fundamental action" means:
(1)  an amendment of a certificate of formation, including an amendment required for cancellation of an event requiring winding up in accordance with Section 11.152(b);
(2)  a voluntary winding up under Chapter 11;
(3)  a revocation of a voluntary decision to wind up under Section 11.151;
(4)  a cancellation of an event requiring winding up under Section 11.152(a); or
(5)  a reinstatement under Section 11.202.
(b)  Except as otherwise provided by this code or the certificate of formation of a corporation in accordance with Section 21.365, the vote required for approval of a fundamental action by the shareholders is the affirmative vote of the holders of at least two-thirds of the outstanding shares entitled to vote on the fundamental action.
(c)  If a class or series of shares is entitled to vote as a class or series on a fundamental action, the vote required for approval of the action by the shareholders is the affirmative vote of the holders of at least two-thirds of the outstanding shares in each class or series of shares entitled to vote on the action as a class or series and at least two-thirds of the outstanding shares otherwise entitled to vote on the action.  Shares entitled to vote as a class or series shall be entitled to vote only as a class or series unless otherwise entitled to vote on each matter submitted to the shareholders generally or otherwise provided by the certificate of formation.
(d)  Unless an amendment to the certificate of formation is undertaken by the board of directors under Section 21.155, separate voting by a class or series of shares of a corporation is required for approval of an amendment to the certificate of formation that would result in:
(1)  the increase or decrease of the aggregate number of authorized shares of the class or series;
(2)  the increase or decrease of the par value of the shares of the class or series, including changing shares with par value into shares without par value or changing shares without par value into shares with par value;
(3)  effecting an exchange, reclassification, or cancellation of all or part of the shares of the class or series;
(4)  effecting an exchange or creating a right of exchange of all or part of the shares of another class or series into the shares of the class or series;
(5)  the change of the designations, preferences, limitations, or relative rights of the shares of the class or series;
(6)  the change of the shares of the class or series, with or without par value, into the same or a different number of shares, with or without par value, of the same class or series or another class or series;
(7)  the creation of a new class or series of shares with rights and preferences equal, prior, or superior to the shares of the class or series;
(8)  increasing the rights and preferences of a class or series with rights and preferences equal, prior, or superior to the shares of the class or series;
(9)  increasing the rights and preferences of a class or series with rights or preferences later or inferior to the shares of the class or series in such a manner that the rights or preferences will be equal, prior, or superior to the shares of the class or series;
(10)  dividing the shares of the class into series and setting and determining the designation of the series and the variations in the relative rights and preferences between the shares of the series;
(11)  the limitation or denial of existing preemptive rights or cumulative voting rights of the shares of the class or series;
(12)  canceling or otherwise affecting the dividends on the shares of the class or series that have accrued but have not been declared;  or
(13)  the inclusion or deletion from the certificate of formation of provisions required or permitted to be included in the certificate of formation of a close corporation under Subchapter O.
(e)  The vote required under Subsection (d) by a class or series of shares of a corporation is required notwithstanding that shares of that class or series do not otherwise have a right to vote under the certificate of formation.
(f)  Unless otherwise provided by the certificate of formation, if the holders of the outstanding shares of a class that is divided into series are entitled to vote as a class on a proposed amendment that would affect equally all series of the class, other than a series in which no shares are outstanding or a series that is not affected by the amendment, the holders of the separate series are not entitled to separate class votes.
(g)  Unless otherwise provided by the certificate of formation, a proposed amendment to the certificate of formation that would solely effect changes in the designations, preferences, limitations, or relative rights, including voting rights, of one or more series of shares of the corporation that have been established under the authority granted to the board of directors in the certificate of formation in accordance with Section 21.155 does not require the approval of the holders of the outstanding shares of a class or series other than the affected series if, after giving effect to the amendment:
(1)  the preferences, limitations, or relative rights of the affected series may be set and determined by the board of directors with respect to the establishment of a new series of shares under the authority granted to the board of directors in the certificate of formation in accordance with Section 21.155;  or
(2)  any new series established as a result of a reclassification of the affected series are within the preferences, limitations, and relative rights that are described by Subdivision (1).
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. 75, eff. September 1, 2007.