2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter S. Public Benefit Corporations › Section 21.954. Certain Amendments, Mergers, Exchanges, and Conversions; Voter Approval Required

Sec. 21.954.  CERTAIN AMENDMENTS, MERGERS, EXCHANGES, AND CONVERSIONS; VOTER APPROVAL REQUIRED.  (a)  Notwithstanding any other provision of this chapter, a domestic for-profit corporation that is not a public benefit corporation may not, without the approval of the owners of two-thirds of the outstanding shares of the corporation entitled to vote on the matter, which must be a vote by class or series of shares if otherwise required by Section 21.364, 21.457, or 21.458:
(1)  amend the corporation's certificate of formation to comply with the requirements of Section 3.007(e) to elect for the corporation to be governed as a public benefit corporation;
(2)  merge or effect an interest exchange with another entity if, as a result of the merger or exchange, the shares in the corporation would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign public benefit corporation or similar entity; or
(3)  convert into a foreign public benefit corporation or similar entity.
(b)  Subsection (a) does not apply until the corporation has issued and outstanding shares of the corporation's capital stock.
(c)  A domestic entity that is not a domestic for-profit corporation may not, without the approval of the owners of two-thirds of the outstanding ownership interests of the entity entitled to vote on the matter:
(1)  merge or effect an interest exchange with another entity if, as a result of the merger or exchange, the ownership interests in the entity would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign public benefit corporation or similar entity; or
(2)  convert into a domestic or foreign public benefit corporation or similar entity.
(d)  Notwithstanding any other provision of this chapter, a public benefit corporation may not, without the approval of two-thirds of the outstanding shares of the corporation entitled to vote on the matter, which must be a vote by class or series of shares if otherwise required by Section 21.364, 21.457, or 21.458:
(1)  amend the corporation's certificate of formation to delete or amend a provision required by Section 3.007(e) or described by Section 21.957(c);
(2)  convert into a domestic or foreign entity:
(A)  that is not a public benefit corporation or similar entity; and
(B)  that does not contain in its certificate of formation or similar governing document provisions identical to the provisions in the certificate of formation of the public benefit corporation containing the public benefit or benefits specified under Section 3.007(e) or imposing requirements under Section 21.957(c); or
(3)  merge or effect an interest exchange with another entity if, as a result of the merger or exchange, the shares in the corporation would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign entity:
(A)  that is not a public benefit corporation or similar entity; and
(B)  that does not contain in its certificate of formation or similar governing document provisions identical to the provisions in the certificate of formation of the public benefit corporation containing the public benefit or benefits specified under Section 3.007(e) or imposing requirements under Section 21.957(c).
(e)  Notwithstanding any other provision of this section, a nonprofit corporation or nonprofit association may not:
(1)  with respect to a merger governed by this section, be a party to the merger; or
(2)  convert into a public benefit corporation.
(f)  An owner of a domestic entity affected by an action described by this section has the rights of dissent and appraisal as an owner described by Section 10.354 and to the extent provided by Subchapter H, Chapter 10.
Added by Acts 2017, 85th Leg., R.S., Ch. 776 (H.B. 3488), Sec. 4, eff. September 1, 2017.