Court Opinion

ID: 4063160
Source: CourtListenerOpinion
Date Created: 2016-09-29 20:45:15.851945+00
Date Added: 2024-06-11T14:05:49.281897
License: Public Domain

Tex. Business Organizations Code § 101.463
                             This document is current through the 2013 3rd Called Session

Texas Statutes and Codes > BUSINESS ORGANIZATIONS CODE > TITLE 3. LIMITED LIABILITY
COMPANIES > CHAPTER 101. LIMITED LIABILITY COMPANIES > SUBCHAPTER J.
DERIVATIVE PROCEEDINGS

§ 101.463. Closely Held Limited Liability Company
  (a) In this section, ″closely held limited liability company″ means a limited liability company that has:
       (1) fewer than 35 members; and
       (2) no membership interests 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 101.452--101.459 do not apply to a closely held limited liability company.
  (c) If justice requires:
       (1) a derivative proceeding brought by a member of a closely held limited liability company may be treated by
           a court as a direct action brought by the member for the member’s own benefit; and
       (2) a recovery in a direct or derivative proceeding by a member may be paid directly to the plaintiff or to the
           limited liability company if necessary to protect the interests of creditors or other members of the limited
           liability company.

History

Enacted by Acts 2003, 78th Leg., ch. 182 (H.B. 1156), § 1, effective January 1, 2006; am. Acts 2007, 80th Leg., ch.
688 (H.B. 1737), § 100, effective September 1, 2007.

Annotations

Notes

Revisor’s Notes. --

 See the revisor’s note to Section 101.451. No substantive change is intended.
 2007 amendment,
 deleted ″Subject to Subsection (c)″ at the beginning of (b).

Case Notes

Business & Corporate Law: Closely Held Corporations: Management Duties & Liabilities
Business & Corporate Law: Limited Liability Companies: Management Duties & Liabilities

LexisNexis (R) Notes

 Business & Corporate Law: Closely Held Corporations: Management Duties & Liabilities
1. Texas does not recognize a broad formal fiduciary relationship between majority and minority shareholders in
closely-held companies that would apply to every transaction among them. The Court of Appeals of Texas therefore
declines to recognize such a fiduciary duty between members of an LLC on this basis, Tex. Bus. Orgs. Code Ann. §§

                                                  MATT SOLIDAY