reglab/statecodes huggingface dataset:
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter J. Fundamental Business Transactions › Section 21.455. Approval of Sale of All or Substantially All of Assets

Sec. 21.455.  APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF ASSETS.  (a)  Except as provided by the certificate of formation of a domestic corporation, a sale, lease, pledge, mortgage, assignment, transfer, or other conveyance of an interest in real property or other assets of the corporation does not require the approval or consent of the shareholders of the corporation unless the transaction constitutes a sale of all or substantially all of the assets of the corporation.
(b)  A corporation must approve the sale of all or substantially all of its assets by complying with this section.
(c)  The board of directors of the corporation shall adopt a resolution that approves the sale of all or substantially all of the assets of the corporation and:
(1)  recommends that the sale of all or substantially all of the assets of the corporation be approved by the shareholders of the corporation;  or
(2)  directs that the sale of all or substantially all of the assets of the corporation be submitted to the shareholders for approval without recommendation if the board of directors determines for any reason not to recommend approval of the sale.
(d)  The resolution proposing the sale of all or substantially all of the assets of the corporation shall be submitted to the shareholders of the corporation for approval as provided by this subchapter.  The board of directors may place conditions on the submission of the proposed sale to the shareholders.
(e)  If the board of directors approves the sale of all or substantially all of the assets of the corporation but does not adopt a resolution recommending that the proposed sale be approved by the shareholders of the corporation, the board of directors shall communicate to the shareholders the reason for the board's determination to submit the proposed sale to shareholders without a recommendation.
(f)  The shareholders of the corporation shall approve the sale of all or substantially all of the assets of the corporation as provided by this subchapter.  After the approval of the sale by the shareholders, the board of directors may abandon the sale of all or substantially all of the assets of the corporation, subject to the rights of a third party under a contract relating to the assets, without further action or approval by the shareholders.
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 J. Fundamental Business Transactions › Section 21.456. General Procedure for Submission to Shareholders of Fundamental Business Transaction

Sec. 21.456.  GENERAL PROCEDURE FOR SUBMISSION TO SHAREHOLDERS OF FUNDAMENTAL BUSINESS TRANSACTION.  (a)  If a fundamental business transaction involving a corporation is required to be submitted to the shareholders of the corporation under this subchapter, the corporation shall notify each shareholder of the corporation that the fundamental business transaction is being submitted to the shareholders for approval at a meeting of shareholders as required by this subchapter, regardless of whether the shareholder is entitled to vote on the matter.
(b)  If the fundamental business transaction is a merger, conversion, or interest exchange, the notice required by Subsection (a) shall contain or be accompanied by a copy or summary of the plan of merger, conversion, or interest exchange, as appropriate, and the notice required by Section 10.355.
(c)  The notice of the meeting must:
(1)  be given not later than the 21st day before the date of the meeting;  and
(2)  state that the purpose, or one of the purposes, of the meeting is to consider the fundamental business transaction.
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 J. Fundamental Business Transactions › Section 21.457. General Vote Requirement for Approval of Fundamental Business Transaction

Sec. 21.457.  GENERAL VOTE REQUIREMENT FOR APPROVAL OF FUNDAMENTAL BUSINESS TRANSACTION.  (a)  Except as provided by this code or the certificate of formation of a corporation in accordance with Section 21.365, the affirmative vote of the holders of at least two-thirds of the outstanding shares of the corporation entitled to vote on a fundamental business transaction is required to approve the transaction.
(b)  Unless provided by the certificate of formation or Section 21.458, shares of a class or series that are not otherwise entitled to vote on matters submitted to shareholders generally are not entitled to vote for the approval of a fundamental business transaction.
(c)  Except as provided by this code, if a class or series of shares of a corporation is entitled to vote on a fundamental business transaction as a class or series, in addition to the vote required under Subsection (a), 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 fundamental business transaction as a class or series is required to approve the transaction.  Shares entitled to vote as a class or series shall only be entitled to vote as a class or series on the fundamental business transaction unless that class or series is otherwise entitled to vote on each matter submitted to the shareholders generally or is otherwise entitled to vote under the certificate of formation.
(d)  Unless required by the certificate of formation, approval of a merger by shareholders is not required under this code for a corporation that is a party to the plan of merger unless that corporation is also a party to the merger.
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 J. Fundamental Business Transactions › Section 21.458. Class Voting Requirements for Certain Fundamental Business Transactions

Sec. 21.458.  CLASS VOTING REQUIREMENTS FOR CERTAIN FUNDAMENTAL BUSINESS TRANSACTIONS.  (a)  Separate voting by a class or series of shares of a corporation is required for approval of a plan of merger or conversion if:
(1)  that class or series of shares is, under the plan of merger or conversion, to be converted into or exchanged for other securities, interests, obligations, rights to acquire shares, interests, or other securities, cash, property, or any combination of the items described by this subdivision;
(2)  the plan of merger or conversion contains a provision that would require approval by that class or series of shares under Section 21.364 if the provision was contained in a proposed amendment to the corporation's certificate of formation; or
(3)  that class or series of shares is entitled under the certificate of formation to vote as a class or series on the plan of merger or conversion.
(b)  Separate voting by a class or series of shares of a corporation is required for approval of a plan of exchange if:
(1)  shares of that class or series are to be exchanged under the terms of the plan of exchange;  or
(2)  that class or series is entitled under the certificate of formation to vote as a class or series on the plan of exchange.
(c)  Separate voting by a class or series of shares of a corporation is required for approval of a sale of all or substantially all of the assets of a corporation if that class or series of shares is entitled under the certificate of formation to vote as a class or series on the sale of the corporation's assets.
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. 12, eff. September 1, 2017.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter J. Fundamental Business Transactions › Section 21.460. Rights of Dissent and Appraisal

Sec. 21.460.  RIGHTS OF DISSENT AND APPRAISAL.  A shareholder of a domestic corporation has the rights of dissent and appraisal under Subchapter H, Chapter 10, with respect to a fundamental business transaction.
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 J. Fundamental Business Transactions › Section 21.461. Pledge, Mortgage, Deed of Trust, or Trust Indenture

Sec. 21.461.  PLEDGE, MORTGAGE, DEED OF TRUST, OR TRUST INDENTURE.  Except as provided by the corporation's certificate of formation:
(1)  the board of directors of a corporation may authorize a pledge, mortgage, deed of trust, or trust indenture;  and
(2)  an authorization or consent of shareholders is not required for the validity of the transaction or for any sale under the terms of the transaction.
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 J. Fundamental Business Transactions › Section 21.462. Conveyance by Corporation

Sec. 21.462.  CONVEYANCE BY CORPORATION.  A corporation may convey real property of the corporation when authorized by appropriate resolution of the board of directors.
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 K. Winding Up and Termination › Section 21.501. Approval of Voluntary Winding Up, Reinstatement, or Revocation of Voluntary Winding Up

Sec. 21.501.  APPROVAL OF VOLUNTARY WINDING UP, REINSTATEMENT, OR REVOCATION OF VOLUNTARY WINDING UP.  A corporation must approve a voluntary winding up in accordance with Chapter 11, a reinstatement in accordance with Section 11.202, a cancellation of an event requiring winding up under Section 11.152(a), or revocation of a voluntary decision to wind up in accordance with Section 11.151 by complying with one of the procedures prescribed by this subchapter.
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. 83, eff. September 1, 2007.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter K. Winding Up and Termination › Section 21.502. Certain Procedures Relating to Winding Up

Sec. 21.502.  CERTAIN PROCEDURES RELATING TO WINDING UP.  To approve a voluntary winding up, a reinstatement, a cancellation of an event requiring winding up, or a revocation of a voluntary decision to wind up, a corporation must follow one of the following procedures:
(1)  all shareholders of the corporation must consent in writing to the winding up, the reinstatement, the cancellation of an event requiring winding up, or the revocation of a voluntary decision to wind up the corporation;
(2)  if the corporation has not commenced business and has not issued any shares, a majority of the organizers or the board of directors of the corporation must adopt a resolution to wind up, to reinstate, to cancel an event requiring winding up, or to revoke a voluntary decision to wind up;  or
(3)(A) the board of directors of the corporation must adopt a resolution:
(i)  recommending the winding up, reinstatement, cancellation of an event requiring winding up, or revocation of a voluntary decision to wind up the corporation;  and
(ii)  directing that the winding up, reinstatement, cancellation of an event requiring winding up, or revocation of a voluntary decision to wind up the corporation be submitted to the shareholders for approval at an annual or special meeting of shareholders;  and
(B)  the shareholders must approve the action described by Paragraph (A) in accordance with Section 21.503.
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 K. Winding Up and Termination › Section 21.503. Meeting of Shareholders; Notice

Sec. 21.503.  MEETING OF SHAREHOLDERS;  NOTICE.  (a)  Each shareholder of record entitled to vote at a meeting described by Section 21.502(3)(A)(ii) must be given written notice stating that the purpose or one of the purposes of the meeting is to consider the winding up, reinstatement, cancellation of the event requiring winding up, or revocation of the voluntary decision to wind up the corporation.  The notice must be given in the time and manner provided by Chapter 6 and this chapter for the giving of notice of shareholders' meetings.
(b)  A vote of shareholders entitled to vote at the meeting shall be taken on the resolution to wind up, reinstate, cancel the event requiring winding up, or revoke the voluntary decision to wind up the corporation.  The shareholders must approve the resolution by the affirmative vote required by Section 21.364.
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 K. Winding Up and Termination › Section 21.504. Responsibility for Winding Up

Sec. 21.504.  RESPONSIBILITY FOR WINDING UP.  If a corporation determines or is required to wind up, the directors of the corporation shall manage the process of winding up the business or affairs of 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 L. Derivative Proceedings › Section 21.551. Definitions

Sec. 21.551.  DEFINITIONS.  In this subchapter:
(1)  "Derivative proceeding" means a civil suit in the right of a domestic corporation or, to the extent provided by Section 21.562, in the right of a foreign corporation.
(2)  "Shareholder" includes a shareholder as defined by Section 1.002 or a beneficial owner whose shares are held in a voting trust or by a nominee on the beneficial owner's behalf.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 1, eff. September 1, 2019.
Acts 2021, 87th Leg., R.S., Ch. 39 (S.B. 1203), Sec. 23, eff. September 1, 2021.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.552. Standing to Bring Proceeding

Sec. 21.552.  STANDING TO BRING PROCEEDING.  (a)  Subject to Subsection (b), a shareholder may not institute or maintain a derivative proceeding unless:
(1)  the shareholder:
(A)  was a shareholder of the corporation at the time of the act or omission complained of; or
(B)  became a shareholder by operation of law originating from a person that was a shareholder at the time of the act or omission complained of; and
(2)  the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
(b)  If the converted entity in a conversion is a corporation, a shareholder of that corporation may not institute or maintain a derivative proceeding based on an act or omission that occurred with respect to the converting entity before the date of the conversion unless:
(1)  the shareholder was an equity owner of the converting entity at the time of the act or omission; and
(2)  the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 63, eff. January 1, 2006.
Acts 2011, 82nd Leg., R.S., Ch. 93 (S.B. 1568), Sec. 1, eff. September 1, 2011.
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 2, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.553. Demand

Sec. 21.553.  DEMAND.  (a)  A shareholder may not institute a derivative proceeding until the 91st day after the date a written demand is filed with the corporation stating with particularity the act, omission, or other matter that is the subject of the claim or challenge and requesting that the corporation take suitable action.
(b)  The waiting period required by Subsection (a) before a derivative proceeding may be instituted is not required or, if applicable, shall terminate if:
(1)  the shareholder has been notified that the demand has been rejected by the corporation;
(2)  the corporation is suffering irreparable injury; or
(3)  irreparable injury to the corporation would result by waiting for the expiration of the 90-day period.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 3, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.554. Determination by Directors or Independent Persons

Sec. 21.554.  DETERMINATION BY DIRECTORS OR INDEPENDENT PERSONS.  (a)  A determination of how to proceed on allegations made in a demand or petition relating to a derivative proceeding must be made by an affirmative vote of the majority of:
(1)  all independent and disinterested directors of the corporation, regardless of whether the independent and disinterested directors constitute a quorum of the board of directors;
(2)  a committee consisting of one or more independent and disinterested directors appointed by an affirmative vote of the majority of one or more independent and disinterested directors, regardless of whether the independent and disinterested directors constitute a quorum of the board of directors; or
(3)  a panel of one or more independent and disinterested individuals appointed by the court on a motion by the corporation listing the names of the individuals to be appointed and stating that, to the best of the corporation's knowledge, the individuals to be appointed are disinterested and qualified to make the determinations contemplated by Section 21.558.
(b)  The court shall appoint a panel under Subsection (a)(3) if the court finds that the individuals recommended by the corporation 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.  An individual appointed by the court to a panel under this section may not be held liable to the corporation or the corporation's shareholders for an action taken or omission made by the individual in that capacity, except for an act or omission constituting fraud or wilful misconduct.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 4, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.555. Stay of Proceeding

Sec. 21.555.  STAY OF PROCEEDING.  (a)  If the corporation 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 Section 21.554 is conducting an active review of the allegations in good faith, the court shall stay a derivative proceeding for not more than 60 days 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 corporation must provide the court with a written statement agreeing to advise the court and the shareholder making the demand of the determination promptly on the completion of the review of the matter.
(c)  A stay, on motion, may be reviewed every 60 days for continuation of the stay if the corporation provides the court and the shareholder with a written statement of the status of the review and the reasons why an extension for a period not to exceed 60 additional days is appropriate.  An extension shall be granted for a period not to exceed 60 days if the court determines that the continuation is appropriate in the interests of the corporation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 5, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.556. Discovery

Sec. 21.556.  DISCOVERY.  (a)  If a corporation proposes to dismiss a derivative proceeding under Section 21.558, discovery by a shareholder after the filing of the derivative proceeding in accordance with this subchapter shall be limited to:
(1)  facts relating to whether the person or persons described by Section 21.554 are independent and disinterested;
(2)  the good faith of the inquiry and review by the person or group; and
(3)  the reasonableness of the procedures followed by the person or group in conducting the review.
(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 but the scope of discovery shall not be so limited if the court determines after notice and hearing that a good faith review of the allegations has not been made by an independent and disinterested person or group in accordance with Sections 21.554 and 21.558.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 6, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.557. Tolling of Statute of Limitations

Sec. 21.557.  TOLLING OF STATUTE OF LIMITATIONS.  A written demand filed with the corporation under Section 21.553 tolls the statute of limitations on the claim on which demand is made until the later of:
(1)  the 31st day after the expiration of any waiting period under Section 21.553; or
(2)  the 31st day after the expiration of any stay granted under Section 21.555, including all continuations of the stay.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 7, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.558. Dismissal of Derivative Proceeding

Sec. 21.558.  DISMISSAL OF DERIVATIVE PROCEEDING.  (a)  A court, sitting in equity as the finder of fact, shall dismiss a derivative proceeding on a motion by the corporation if the person or group of persons described by Section 21.554 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 corporation.
(b)  In determining whether the requirements of Subsection (a) have been met, the burden of proof shall be on:
(1)  the plaintiff shareholder if:
(A)  the majority of the board of directors consists of independent and disinterested directors at the time the determination is made;
(B)  the determination is made by a panel of one or more independent and disinterested persons appointed under Section 21.554(a)(3); or
(C)  the corporation presents prima facie evidence that demonstrates that the applicable person or persons making the determination under Section 21.554(a) are independent and disinterested; or
(2)  the corporation in any other circumstance.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 8, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.559. Allegations After Demand Rejected

Sec. 21.559.  ALLEGATIONS AFTER 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 and standards under Sections 21.554 and 21.558.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 9, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.560. Discontinuance or Settlement

Sec. 21.560.  DISCONTINUANCE OR SETTLEMENT.  (a)  A derivative proceeding may not be discontinued or settled without court approval.
(b)  The court shall direct that notice be given to the affected shareholders if the court determines that a proposed discontinuance or settlement may substantially affect the interests of other shareholders.
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 L. Derivative Proceedings › Section 21.561. Payment of Expenses

Sec. 21.561.  PAYMENT OF EXPENSES.  (a)  In this section, "expenses" means reasonable expenses incurred by a party in a derivative proceeding, including:
(1)  attorney's fees;
(2)  costs in pursuing an investigation of the matter that was the subject of the derivative proceeding; or
(3)  expenses for which the corporation may be required to indemnify another person.
(b)  On termination of a derivative proceeding, the court may order:
(1)  the corporation to pay expenses the plaintiff incurred in the proceeding if the court finds the proceeding has resulted in a substantial benefit to the corporation;
(2)  the plaintiff to pay expenses the corporation or other defendant incurred in investigating and defending the proceeding if the court finds the proceeding has been instituted or maintained without reasonable cause or for an improper purpose; or
(3)  a party to pay expenses incurred by another party relating to the filing of a pleading, motion, or other paper if the court finds the pleading, motion, or other paper:
(A)  was not well grounded in fact after reasonable inquiry;
(B)  was not warranted by existing law or a good faith argument for the application, extension, modification, or reversal of existing law; or
(C)  was interposed for an improper purpose, such as to harass, cause unnecessary delay, or cause a needless increase in the cost of litigation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 10, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.562. Application to Foreign Corporations

Sec. 21.562.  APPLICATION TO FOREIGN CORPORATIONS.  (a)  In a derivative proceeding brought in the right of a foreign corporation, the matters covered by this subchapter are governed by the laws of the jurisdiction of formation of the foreign corporation, except for Sections 21.555, 21.560, and 21.561, which are procedural provisions and do not relate to the internal affairs of the foreign corporation, unless applying the laws of the jurisdiction of formation of the foreign corporation requires otherwise with respect to Section 21.555.
(b)  In the case of matters relating to a foreign corporation under Section 21.555, a reference to a person or group of persons described by Section 21.554 refers to a person or group entitled under the laws of the jurisdiction of formation of the foreign corporation to make the determination described by Section 21.554(a).  The standard of review of a determination made by the person or group shall be governed by the laws of the jurisdiction of formation of the foreign corporation.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 11, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter L. Derivative Proceedings › Section 21.563. Closely Held Corporation

Sec. 21.563.  CLOSELY HELD CORPORATION.  (a)  In this section, "closely held corporation" means a corporation that has:
(1)  fewer than 35 shareholders; and
(2)  no shares 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)  Sections 21.552-21.560 do not apply to a claim or a derivative proceeding by a shareholder of a closely held corporation against a director, officer, or shareholder of the corporation.  In the event the claim or derivative proceeding is also made against a person who is not that director, officer, or shareholder, this subsection applies only to the claim or derivative proceeding against the director, officer, or shareholder.
(c)  If Sections 21.552-21.560 do not apply because of Subsection (b) and if justice requires:
(1)  a derivative proceeding brought by a shareholder of a closely held corporation may be treated by a court as a direct action brought by the shareholder for the shareholder's own benefit; and
(2)  a recovery in a direct or derivative proceeding by a shareholder may be paid directly to the plaintiff or to the corporation if necessary to protect the interests of creditors or other shareholders of the corporation.
(d)  Other provisions of state law govern whether a shareholder has a direct cause of action or right to sue a director, officer, or shareholder, and this section may not be construed to create that direct cause of action or right to sue.
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. 84, eff. September 1, 2007.
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 12, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter M. Affiliated Business Combinations › Section 21.601. Definitions

Sec. 21.601.  DEFINITIONS.  In this subchapter:
(1)  "Issuing public corporation" means a domestic corporation that has:
(A)  100 or more shareholders of record as shown by the share transfer records of the corporation;
(B)  a class or series of the corporation's voting shares registered under the Securities Exchange Act of 1934 (15 U.S.C. Section 77b et seq.), as amended; or
(C)  a class or series of the corporation's voting shares qualified for trading on a national securities exchange.
(2)  "Person" includes two or more persons acting as a partnership, limited partnership, syndicate, or other group under an agreement, arrangement, or understanding, regardless of whether in writing, to acquire, hold, vote, or dispose of a corporation's shares.
(3)  "Share acquisition date" means the date a person initially becomes an affiliated shareholder of an issuing public corporation.
(4)  "Subsidiary" means a domestic or foreign corporation or other entity of which a majority of the outstanding voting shares are owned, directly or indirectly, by an issuing public corporation.
(5)  "Voting share" means a share of capital stock of a corporation that entitles the holder of the share to vote generally in the election of directors.
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. 30, eff. September 1, 2011.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter M. Affiliated Business Combinations › Section 21.602. Affiliated Shareholder

Sec. 21.602.  AFFILIATED SHAREHOLDER.  (a)  For purposes of this subchapter, a person, other than the issuing public corporation or a wholly owned subsidiary of the issuing public corporation, is an affiliated shareholder if the person:
(1)  is the beneficial owner of 20 percent or more of the outstanding voting shares of the issuing public corporation;  or
(2)  during the preceding three-year period, was the beneficial owner of 20 percent or more of the outstanding voting shares of the issuing public corporation.
(b)  To determine whether a person is an affiliated shareholder, the number of voting shares of the issuing public corporation considered outstanding includes shares considered beneficially owned by that person under Section 21.603, but does not include other unissued voting shares of the issuing public corporation that may be issuable under an agreement, arrangement, or understanding, or on exercise of conversion rights, warrants, 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 M. Affiliated Business Combinations › Section 21.603. Beneficial Owner of Shares or Other Securities

Sec. 21.603.  BENEFICIAL OWNER OF SHARES OR OTHER SECURITIES.  (a)  For purposes of this subchapter, a person is a beneficial owner of shares or other securities if the person individually, or through an affiliate or associate, directly or indirectly beneficially owns the shares or other securities or has the right to:
(1)  acquire the shares or other securities immediately or after the passage of time according to an oral or written agreement, arrangement, or understanding, or on the exercise of conversion rights, exchange rights, warrants, or options;
(2)  vote the shares or other securities according to an oral or written agreement, arrangement, or understanding; or
(3)  acquire, hold or dispose of, or vote the shares or other securities with another person who individually, or through an affiliate or associate, beneficially owns, directly or indirectly, the shares or other securities.
(b)  A person, however, is not considered a beneficial owner of shares or other securities for purposes of this subchapter if:
(1)  the shares or other securities are:
(A)  tendered under a tender or exchange offer made by the person or an affiliate or associate of the person before the tendered shares or securities are accepted for purchase or exchange; or
(B)  subject to an agreement, arrangement, or understanding that expressly conditions the acquisition or purchase of shares or securities on the approval of the acquisition or purchase under Section 21.606 if the person has no direct or indirect rights of ownership or voting with respect to the shares or other securities until the time the approval is obtained; or
(2)  the agreement, arrangement, or understanding to vote the shares:
(A)  arises solely from an immediately revocable proxy that authorizes the person named in the proxy to vote at a meeting of the shareholders that has been called when the proxy is delivered or at an adjournment of the meeting; and
(B)  would not be reportable on a Schedule 13D under the Securities Exchange Act of 1934 (15 U.S.C. Section 77b et seq.), as amended, or a comparable or successor report.
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. 31, eff. September 1, 2011.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter M. Affiliated Business Combinations › Section 21.605. Control

Sec. 21.605.  CONTROL.  (a)  For purposes of this subchapter, a person has control of another person if the person has possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the other person, through the ownership of equity securities, by contract, or in another manner.
(b)  A person's beneficial ownership of 10 percent or more of a person's outstanding voting shares or similar interests creates a presumption that the person has control of the other person, but a person is not considered to have control of another person who holds the voting shares or similar interests in good faith and not to circumvent this part, as an agent, bank, broker, nominee, custodian, or trustee for one or more beneficial owners who do not individually or as a group have control of the person.
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 M. Affiliated Business Combinations › Section 21.606. Three-Year Moratorium on Certain Business Combinations

Sec. 21.606.  THREE-YEAR MORATORIUM ON CERTAIN BUSINESS COMBINATIONS.  An issuing public corporation may not, directly or indirectly, enter into or engage in a business combination with an affiliated shareholder, or any affiliate or associate of the affiliated shareholder, during the three-year period immediately following the affiliated shareholder's share acquisition date unless:
(1)  the business combination or the purchase or acquisition of shares made by the affiliated shareholder on the affiliated shareholder's share acquisition date is approved by the board of directors of the issuing public corporation before the affiliated shareholder's share acquisition date;  or
(2)  the business combination is approved, by the affirmative vote of the holders of at least two-thirds of the outstanding voting shares of the issuing public corporation not beneficially owned by the affiliated shareholder or an affiliate or associate of the affiliated shareholder, at a meeting of shareholders called for that purpose not less than six months after the affiliated shareholder's share acquisition date.  Approval may not be by written consent.
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 M. Affiliated Business Combinations › Section 21.608. Effect on Other Actions

Sec. 21.608.  EFFECT ON OTHER ACTIONS.  (a)  This subchapter does not affect, directly or indirectly, the validity of another action by the board of directors of an issuing public corporation.
(b)  This subchapter does not preclude the board of directors of an issuing public corporation from taking other action in accordance with law.
(c)  The board of directors of an issuing public corporation does not incur liability for an election made or not made under this subchapter.
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 M. Affiliated Business Combinations › Section 21.609. Conflicting Provisions

Sec. 21.609.  CONFLICTING PROVISIONS.  If this subchapter conflicts with another provision of this code, this subchapter controls.
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 M. Affiliated Business Combinations › Section 21.610. Change in Voting Requirements

Sec. 21.610.  CHANGE IN VOTING REQUIREMENTS.  The affirmative vote or concurrence of shareholders required for approval of an action that is required to be submitted to a vote of the shareholders under this subchapter may be increased but not decreased under Section 21.365.
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 N. Provisions Relating to Investment Companies › Section 21.651. Definition

Sec. 21.651.  DEFINITION.  In this subchapter, "investment company" means a corporation registered as an open-end company under the Investment Company Act.
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 N. Provisions Relating to Investment Companies › Section 21.652. Establishing Class or Series of Shares; Change in Number of Shares

Sec. 21.652.  ESTABLISHING CLASS OR SERIES OF SHARES;  CHANGE IN NUMBER OF SHARES.  (a)  In addition to the actions the board may undertake under Subchapters D, E, and F, the board of directors of an investment company may:
(1)  establish classes of shares and series of unissued shares of a class by setting and determining the designations, preferences, limitations, and relative rights, including voting rights, of the shares of the class or series established under this subdivision to the same extent that the designations, preferences, limitations, and relative rights could be stated if fully stated in the certificate of formation;  and
(2)  increase or decrease the aggregate number of shares or the number of shares of, or delete from the investment company's certificate of formation, a class or series of shares the corporation has authority to issue, unless a provision has been included in the certificate of formation of the corporation after September 1, 1993, expressly prohibiting those actions by the board of directors.
(b)  The board of directors of an investment company may not:
(1)  decrease the number of shares in a class or series to a number that is less than the number of shares of that class or series that are outstanding at the time;  or
(2)  delete from the certificate of formation a reference to a class or series that has shares outstanding at the time.
(c)  To establish a class or series under this section, the board of directors must adopt a resolution stating the designation of the class or series and setting and determining the designations, preferences, limitations, and relative rights, including voting rights, of the class or series.
(d)  To increase or decrease the number of shares of a class or series of shares or to delete from the certificate of formation a reference to a class or series of shares, the board of directors of an investment company must adopt a resolution setting and determining the new number of shares of each class or series in which the number of shares is increased or decreased or deleting the class or series and any reference to the class or series from the certificate of formation.  The shares of a series removed from the certificate of formation shall resume the status of authorized but unissued shares of the class of shares from which the series was established unless otherwise provided by the resolution or the certificate of formation of the investment company.
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 N. Provisions Relating to Investment Companies › Section 21.653. Required Statement Relating to Shares

Sec. 21.653.  REQUIRED STATEMENT RELATING TO SHARES.  (a)  Before the first issuance of shares of a class or series established or increased or decreased by resolution adopted by the board of directors of an investment company under Section 21.652, and to delete from the investment company's certificate of formation a class or series of shares and all references to the class or series contained in the certificate of formation, the investment company shall file with the secretary of state a statement that contains:
(1)  the name of the investment company;
(2)  if the statement relates to the establishment of a class or series of shares, a copy of the resolution establishing and designating the class or series or establishing and designating the class or series and setting and determining the preferences, limitations, and relative rights of the class or series;
(3)  if the statement relates to an increase or decrease in the number of shares of a class or series, a copy of the resolution setting and determining the new number of shares of each class or series in which the number of shares is increased or decreased;
(4)  if the statement relates to the deletion of a class or series of shares and all references to the class or series from the certificate of formation, a copy of the resolution deleting the class or series and all references to the class or series from the certificate of formation;
(5)  the date of adoption of the resolution;  and
(6)  a statement that the resolution was adopted by all necessary action on the part of the investment company.
(b)  After the statement described by Subsection (a) is filed, a resolution adopted under Section 21.652 becomes an amendment of the certificate of formation.  An amendment of the certificate of formation described 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 N. Provisions Relating to Investment Companies › Section 21.654. Term of Office of Directors

Sec. 21.654.  TERM OF OFFICE OF DIRECTORS.  Unless the director resigns or is removed in accordance with the certificate of formation or bylaws of the investment company, a director of an investment company shall serve as director for the term for which the director is elected and holds office until a successor is elected and qualifies.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 65, eff. January 1, 2006.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter N. Provisions Relating to Investment Companies › Section 21.655. Meetings of Shareholders

Sec. 21.655.  MEETINGS OF SHAREHOLDERS.  (a)  If provided by the certificate of formation or bylaws of an investment company, the investment company is not required to hold an annual meeting of shareholders or elect directors in a year in which an election of directors is not required under the Investment Company Act.
(b)  If an investment company is required to hold a meeting of shareholders to elect directors under the Investment Company Act, the meeting shall be designated as the annual meeting of shareholders for that year.
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 O. Close Corporation › Section 21.701. Definitions

Sec. 21.701.  DEFINITIONS.  In this subchapter and Subchapter P:
(1)  "Close corporation" means a domestic corporation formed under this subchapter or governed by this subchapter because of Section 21.705, 21.706, or 21.707.
(2)  "Close corporation provision" means a provision in the certificate of formation of a close corporation or in a shareholders' agreement of a close corporation.
(3)  "Ordinary corporation" means a domestic corporation that is not a close corporation.
(4)  "Shareholders' agreement" means a written agreement regulating an aspect of the business and affairs of or the relationship among the shareholders of a close corporation that has been executed under this subchapter.
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. 32, eff. September 1, 2011.
Acts 2019, 86th Leg., R.S., Ch. 665 (S.B. 1971), Sec. 9, eff. September 1, 2019.
2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter O. Close Corporation › Section 21.702. Applicability of Subchapter

Sec. 21.702.  APPLICABILITY OF SUBCHAPTER.  (a)  This subchapter applies only to a close corporation.
(b)  This chapter applies to a close corporation to the extent not inconsistent with this subchapter.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.