2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 21 - For-Profit Corporations › Subchapter R. Ratification of Defective Corporate Acts or Shares; Proceedings › Section 21.901. Definitions

Sec. 21.901.  DEFINITIONS.  In this subchapter:
(1)  "Corporate statute," with respect to an action or filing, means this code, the former Texas Business Corporation Act, or any predecessor statute of this state that governed the action or the filing.
(2)  "Defective corporate act" means:
(A)  an overissue;
(B)  an election or appointment of directors that is void or voidable due to a failure of authorization; or
(C)  any act or transaction purportedly taken by or on behalf of the corporation that is, and at the time the act or transaction was purportedly taken would have been, within the power of a corporation to take under the corporate statute, without regard to the failure of authorization identified in Section 21.903(a)(4), but is void or voidable due to a failure of authorization.
(3)  "District court" means a district court in:
(A)  the county in which the corporation's principal office in this state is located; or
(B)  the county in which the corporation's registered office in this state is located, if the corporation does not have a principal office in this state.
(4)  "Failure of authorization" means:
(A)  the failure to authorize or effect an act or transaction in compliance with the provisions of the corporate statute, the governing documents of the corporation, any plan or agreement to which the corporation is a party, or the disclosure set forth in any proxy or consent solicitation statement, if and to the extent the failure would render the act or transaction void or voidable; or
(B)  the failure of the board of directors or an officer of the corporation to authorize or approve an act or transaction taken by or on behalf of the corporation that required the prior authorization or approval of the board of directors or the officer.
(5)  "Overissue" means the purported issuance of:
(A)  shares of a class or series in excess of the number of shares of that class or series that the corporation has the power to issue under the governing documents of the corporation and the corporate statute at the time of issuance; or
(B)  shares of any class or series that are not at the time of issuance authorized for issuance by the governing documents of the corporation.
(5-a)  "Putative record date" means, with respect to any defective corporate act that involved the establishment of a record date for a meeting of or action by shareholders or any other purpose, that record date.
(6)  "Putative shares" means the shares of any class or series of the corporation, including shares issued on exercise of options, rights, warrants, or other securities convertible into shares of the corporation, or interests with respect to the shares that were created or issued pursuant to a defective corporate act, that:
(A)  would constitute valid shares, if not for a failure of authorization; or
(B)  cannot be determined by the board of directors to be valid shares.
(7)  "Time of the defective corporate act" means the date and time the defective corporate act was purported to have been taken.
(8)  "Validation effective time" or "effective time of the validation," with respect to any defective corporate act ratified under this subchapter, means the latest of:
(A)  the time at which the defective corporate act submitted to the shareholders for approval under Section 21.905 is approved by the shareholders or, if no shareholder approval is required, the time at which the board of directors adopts the resolutions required by Section 21.903;
(B)  if a certificate of validation is not required to be filed under Section 21.908, the time, if any, specified by the board of directors in the resolutions adopted under Section 21.903, which may not precede the time at which the resolutions are adopted; or
(C)  the time at which any certificate of validation filed under Section 21.908 takes effect in accordance with Chapter 4.
(9)  "Valid shares" means the shares of any class or series of the corporation that have been authorized and validly issued in accordance with the corporate statute.
Added by Acts 2015, 84th Leg., R.S., Ch. 32 (S.B. 860), Sec. 30, eff. September 1, 2015.
Amended by:
Acts 2017, 85th Leg., R.S., Ch. 75 (S.B. 1518), Sec. 15, eff. September 1, 2017.
Acts 2019, 86th Leg., R.S., Ch. 665 (S.B. 1971), Sec. 10, eff. September 1, 2019.