2023 Texas Statutes › Business Organizations Code › Title 2 - Corporations › Chapter 22 - Nonprofit Corporations › Subchapter J. Ratification of Defective Corporate Acts; Proceedings › Section 22.512. Proceeding Regarding Validity of Defective Corporate Acts

Sec. 22.512.  PROCEEDING REGARDING VALIDITY OF DEFECTIVE CORPORATE ACTS.  (a)  The following may bring an action under this section:
(1)  the corporation;
(2)  any successor entity to the corporation;
(3)  any member of the corporation's board of directors or other person having fiduciary responsibility in relation to the actions of the corporation;
(4)  any member with voting rights; or
(5)  any record member with voting rights as of the time a defective corporate act was ratified in accordance with this subchapter.
(b)  Subject to Section 22.515, the district court, on application by a person described by Subsection (a), may:
(1)  determine the validity and effectiveness of any defective corporate act ratified in accordance with this subchapter;
(2)  determine the validity and effectiveness of the ratification of any defective corporate act in accordance with this subchapter;
(3)  determine the validity and effectiveness of:
(A)  any defective corporate act not ratified under this subchapter; or
(B)  any defective corporate act not ratified effectively under this subchapter;
(4)  determine the validity of any corporate act or transaction; and
(5)  modify or waive any of the procedures set forth in Sections 22.501 through 22.511 to ratify a defective corporate act.
(c)  In connection with an action brought under this section, the district court may:
(1)  declare that a ratification in accordance with and pursuant to this subchapter is not effective or that the ratification is effective only at a time or on conditions as specified by the district court;
(2)  validate and declare effective any defective corporate act and impose conditions on such a validation;
(3)  require measures to remedy or avoid harm to any person substantially and adversely affected by a ratification under this subchapter or from any order of the district court pursuant to this section, excluding any harm that would have resulted had the defective corporate act been valid when approved or effectuated;
(4)  order the filing officer to accept for filing an instrument with an effective date and time as specified by the court, which may be before or subsequent to the time of the order;
(5)  if the corporation has members with voting rights, order that a meeting of such members be held and determine the right and power of persons to vote at the meeting;
(6)  declare that a defective corporate act validated by the court is effective as of the time of the defective corporate act or at such other time as determined by the court; and
(7)  make any other order regarding such matters as the court considers appropriate under the circumstances.
(d)  In connection with the resolution of matters under Subsections (b) and (c), the district court may consider:
(1)  whether the defective corporate act was originally approved or effectuated with the belief that the approval or effectuation was in compliance with the provisions of the corporate statute or the governing documents of the corporation;
(2)  whether the corporation and the corporation's board of directors have treated the defective corporate act as a valid act or transaction and whether any person has acted in reliance on the public record that the defective corporate act was valid;
(3)  whether any person will be or was harmed by the ratification or validation of the defective corporate act, excluding any harm that would have resulted had the defective corporate act been valid when it was approved or took effect;
(4)  whether any person will be harmed by the failure to ratify or validate the defective corporate act; and
(5)  any other factors or considerations the district court considers just and equitable.
Added by Acts 2019, 86th Leg., R.S., Ch. 664 (S.B. 1969), Sec. 1, eff. September 1, 2019.